RAYTHEON TECHNOLOGIES CORP - FORM 8-K - EX-99 - EXHIBIT - April 22, 2014

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Exhibit 99

UTC REPORTS FIRST QUARTER 2014 RESULTS

•EPS of $1.32 on sales of $14.75 billion
•Organic sales growth of 5%
•Increases lower end of 2014 EPS range, now expects EPS of $6.65 to $6.85

HARTFORD, Conn., April 22, 2014 - United Technologies Corp. (NYSE:UTX) reported first quarter earnings per share of $1.32 and net income attributable to common shareowners of $1.2 billion, down 5 percent and 4 percent respectively, over the year ago quarter. Results for the current quarter include $0.09 per share of restructuring costs. Earnings per share in the year ago quarter included $0.11 of favorable one-time items net of restructuring costs. Excluding these items in both quarters, earnings per share increased 10 percent year over year.
Sales of $14.75 billion increased 2 percent, reflecting the benefit of organic growth (5 points) partially offset by net divestitures (2 points) and adverse foreign exchange (1 point). First quarter segment operating profit increased 4 percent over the prior year quarter. Adjusted for restructuring costs and net one-time items, segment operating profit grew 9 percent.
“UTC delivered strong results to start the year with continued momentum coming out of 2013,” said Louis Chênevert, UTC Chairman & Chief Executive Officer. “All five of the segments contributed to UTC’s organic sales growth in the quarter. Our focus on growth and execution is paying off as we capitalize on improving end markets.”
New equipment orders at Otis increased 9 percent over the year ago first quarter, led by 27 percent growth in China. Foreign currency had an unfavorable impact of 2 points overall and a favorable impact of 2 points in China. Equipment orders at UTC Climate, Controls & Security increased 1 percent organically, with growth in HVAC and fire and security products partially offset by a decline at Transicold. Large commercial engine spares orders were up 11 percent at Pratt & Whitney and commercial spares orders increased 9 percent at UTC Aerospace Systems.
“Continued organic growth and orders strength give us confidence in our sales expectation of $64 billion for 2014,” added Chênevert. “Based on visibility to additional restructuring projects with solid returns, we now plan to increase restructuring spending from $300 million to $375 million, which we expect to be offset by one-time gains. The sales outlook together with continued cost reduction positions us to increase the lower end of our earnings per share range. We now expect earnings per share of $6.65 to $6.85, up from $6.55 to $6.85 previously.”
Cash flow from operations was $1.3 billion and capital expenditures were $333 million in the quarter. Share repurchase was $335 million and UTC continues to anticipate share repurchase, acquisitions, and debt paydown of $1 billion each in 2014. The company continues to target cash flow from operations less capital expenditures equal to net income attributable to common shareowners for the year.    





United Technologies Corp., based in Hartford, Connecticut, provides high technology products and services to the building and aerospace industries. Additional information, including a webcast, is available on the Internet at http://www.utc.com. To learn more about UTC, visit the website or follow the company on Twitter: @UTC
All financial results and projections reflect continuing operations unless otherwise noted. The accompanying tables include information integral to assessing the company’s financial position, operating performance, and cash flow, including a reconciliation of differences between non-GAAP measures used in this release and the comparable financial measures calculated in accordance with generally accepted accounting principles in the United States.
This press release includes statements that constitute “forward-looking statements” under the securities laws. Forward-looking statements often contain words such as “believe,” “expect,” “plans,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “confident” and similar terms. Forward-looking statements may include, among other things, statements relating to future and estimated sales, earnings, cash flow, charges, expenditures, share repurchases and other measures of financial performance. All forward-looking statements involve risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Risks and uncertainties include, without limitation, the effect of economic conditions in the markets in which we operate, including financial market conditions, fluctuation in commodity prices, interest rates and foreign currency exchange rates; future levels of research and development spending; levels of end market demand in construction and in the aerospace industry; levels of air travel; financial difficulties of commercial airlines; the impact of government budget and funding decisions on the economy; changes in government procurement priorities and funding; weather conditions and natural disasters; delays and disruption in delivery of materials and services from suppliers; company and customer directed cost reduction efforts and restructuring costs and consequences thereof; the impact of acquisitions, dispositions, joint ventures and similar transactions; the development and production of new products and services; the impact of diversification across product lines, regions and industries; the outcome of legal proceedings, investigations and other contingencies; pension plan assumptions and future contributions; the effect of changes in tax, environmental and other laws and regulations and political conditions; and other factors beyond our control. The level of share repurchases depends upon market conditions and the level of other investing activities and uses of cash. The forward-looking statements speak only as of the date of this press release and we undertake no obligation to update or revise any forward-looking statements as of a later date. 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 the SEC from time to time, including, but not limited to, the information included in UTC's Forms 10-K and 10-Q under the headings “Business,” “Risk Factors,” “Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Legal Proceedings” and in the notes to the financial statements included in UTC's Forms 10-K and 10-Q.

UTC-IR
# # #






United Technologies Corporation
Condensed Consolidated Statement of Comprehensive Income
 
 
Quarter Ended March 31,
 
 
(Unaudited)
(Millions, except per share amounts)
2014
 
2013
Net Sales
$
14,745

 
$
14,399

Costs and Expenses:
 
 
 
 
Cost of products and services sold
10,690

 
10,465

 
Research and development
624

 
610

 
Selling, general and administrative
1,596

 
1,627

 
Total Costs and Expenses
12,910

 
12,702

Other income, net
263

 
309

Operating profit
2,098

 
2,006

 
Interest expense, net
225

 
236

Income from continuing operations before income taxes
1,873

 
1,770

 
Income tax expense
567

 
418

Income from continuing operations
1,306

 
1,352

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

 
82

Income from continuing operations attributable to common shareowners
1,213

 
1,270

Discontinued Operations:
 
 
 
 
Income from operations
—

 
20

 
Loss on disposal
—

 
(15
)
 
Income tax expense
—

 
(9
)
Loss from discontinued operations attributable to common shareowners
—

 
(4
)
Net income attributable to common shareowners
$
1,213

 
$
1,266

Comprehensive income
$
1,238

 
$
908

 
Less: Comprehensive income attributable to noncontrolling interests
86

 
61

Comprehensive income attributable to common shareowners
$
1,152

 
$
847

Earnings Per Share of Common Stock - Basic:
 
 
 
 
From continuing operations attributable to common shareowners
$
1.35

 
$
1.41

 
From discontinued operations attributable to common shareowners
—

 
—

Earnings Per Share of Common Stock - Diluted:
 
 
 
 
From continuing operations attributable to common shareowners
$
1.32

 
$
1.39

 
From discontinued operations attributable to common shareowners
—

 
—

Weighted Average Number of Shares Outstanding:
 
 
 
 
Basic shares
901

 
901

 
Diluted shares
917

 
914

As described on the following pages, consolidated results for the quarters ended March 31, 2014 and 2013 include restructuring costs and non-recurring items that management believes should be considered 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 March 31,
 
(Unaudited)
(Millions)
2014
 
2013
Net Sales
 
 
 
Otis
$
2,955

 
$
2,814

UTC Climate, Controls & Security
3,851

 
3,837

Pratt & Whitney
3,329

 
3,402

UTC Aerospace Systems
3,450

 
3,263

Sikorsky
1,361

 
1,249

Segment Sales
14,946

 
14,565

Eliminations and other
(201
)
 
(166
)
Consolidated Net Sales
$
14,745

 
$
14,399

 
 
 
 
Operating Profit
 
 
 
Otis
$
570

 
$
575

UTC Climate, Controls & Security
537

 
520

Pratt & Whitney
388

 
406

UTC Aerospace Systems
590

 
501

Sikorsky
86

 
90

Segment Operating Profit
2,171

 
2,092

Eliminations and other
39

 
21

General corporate expenses
(112
)
 
(107
)
Consolidated Operating Profit
$
2,098

 
$
2,006

 
 
 
 
 
 
 
 
Segment Operating Profit Margin
 
 
 
Otis
19.3
%
 
20.4
%
UTC Climate, Controls & Security
13.9
%
 
13.6
%
Pratt & Whitney
11.7
%
 
11.9
%
UTC Aerospace Systems
17.1
%
 
15.4
%
Sikorsky
6.3
%
 
7.2
%
Segment Operating Profit Margin
14.5
%
 
14.4
%

As described on the following pages, consolidated results for the quarters ended March 31, 2014 and 2013 include restructuring costs and non-recurring items that management believes should be considered when evaluating the underlying financial performance.




United Technologies Corporation
Restructuring Costs and Non-Recurring Items Included in Consolidated Results
 
Quarter Ended March 31,
 
(Unaudited)
In Millions - Income (Expense)
2014
 
2013
Restructuring Costs included in Operating Profit:
 
 
 
Otis
$
(17
)
 
$
(10
)
UTC Climate, Controls & Security
(43
)
 
(22
)
Pratt & Whitney
(42
)
 
(7
)
UTC Aerospace Systems
(6
)
 
(8
)
Sikorsky
(17
)
 
(5
)
 
(125
)
 
(52
)
Non-Recurring items included in Operating Profit:
 
 
 
UTC Climate, Controls & Security
—

 
38

 
—

 
38

Total impact on Consolidated Operating Profit
(125
)
 
(14
)
Tax effect of restructuring and non-recurring items above
42

 
16

Non-Recurring items included in Income Tax Expense
—

 
95

Impact on Net Income from Continuing Operations Attributable to Common Shareowners
$
(83
)
 
$
97

Impact on Diluted Earnings Per Share from Continuing Operations
$
(0.09
)
 
$
0.11





Details of the non-recurring items for the quarter ended March 31, 2013 above are as follows:

UTC Climate, Controls & Security: Approximately $38 million net gain from UTC Climate, Controls & Security's ongoing portfolio transformation, primarily due to a gain on the sale of a business in Hong Kong.
Income Tax Expense:  Approximately $95 million of favorable income tax adjustments as a result of the enactment of the American Taxpayer Relief Act of 2012 in January 2013. The $95 million is primarily related to the retroactive extension of the research and development credit to 2012.





United Technologies Corporation
Segment Net Sales and Operating Profit Adjusted for Restructuring Costs and Non-Recurring Items (as reflected on the previous pages)

 
Quarter Ended March 31,
 
(Unaudited)
(Millions)
2014
 
2013
Net Sales
 
 
 
Otis
$
2,955

 
$
2,814

UTC Climate, Controls & Security
3,851

 
3,837

Pratt & Whitney
3,329

 
3,402

UTC Aerospace Systems
3,450

 
3,263

Sikorsky
1,361

 
1,249

Segment Sales
14,946

 
14,565

Eliminations and other
(201
)
 
(166
)
Consolidated Net Sales
$
14,745

 
$
14,399

 
 
 
 
Adjusted Operating Profit
 
 
 
Otis
$
587

 
$
585

UTC Climate, Controls & Security
580

 
504

Pratt & Whitney
430

 
413

UTC Aerospace Systems
596

 
509

Sikorsky
103

 
95

Segment Operating Profit
2,296

 
2,106

Eliminations and other
39

 
21

General corporate expenses
(112
)
 
(107
)
Adjusted Consolidated Operating Profit
$
2,223

 
$
2,020

 
 
 
 
Adjusted Segment Operating Profit Margin
 
 
 
Otis
19.9
%
 
20.8
%
UTC Climate, Controls & Security
15.1
%
 
13.1
%
Pratt & Whitney
12.9
%
 
12.1
%
UTC Aerospace Systems
17.3
%
 
15.6
%
Sikorsky
7.6
%
 
7.6
%
Adjusted Segment Operating Profit Margin
15.4
%
 
14.5
%




United Technologies Corporation
Condensed Consolidated Balance Sheet
 
March 31,
 
December 31,
 
2014
 
2013
(Millions)
(Unaudited)
 
(Unaudited)
Assets
 
 
 
Cash and cash equivalents
$
4,477

 
$
4,619

Accounts receivable, net
11,537

 
11,458

Inventories and contracts in progress, net
10,992

 
10,330

Other assets, current
2,814

 
3,035

Total Current Assets
29,820

 
29,442

Fixed assets, net
8,895

 
8,866

Goodwill
28,216

 
28,168

Intangible assets, net
15,528

 
15,521

Other assets
8,770

 
8,597

Total Assets
$
91,229

 
$
90,594

 
 
 
 
Liabilities and Equity
 
 
 
Short-term debt
$
304

 
$
500

Accounts payable
6,949

 
6,965

Accrued liabilities
15,678

 
15,335

Total Current Liabilities
22,931

 
22,800

Long-term debt
19,739

 
19,741

Other long-term liabilities
14,727

 
14,723

Total Liabilities
57,397

 
57,264

Redeemable noncontrolling interest
137

 
111

Shareowners' Equity:
 
 

Common Stock
14,813

 
14,638

Treasury Stock
(20,760
)
 
(20,431
)
Retained earnings
41,205

 
40,539

Accumulated other comprehensive loss
(2,941
)
 
(2,880
)
Total Shareowners' Equity
32,317

 
31,866

Noncontrolling interest
1,378

 
1,353

Total Equity
33,695

 
33,219

Total Liabilities and Equity
$
91,229

 
$
90,594

 
 
 
 
Debt Ratios:
 
 
 
Debt to total capitalization
37
%
 
38
%
Net debt to net capitalization
32
%
 
32
%
See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Condensed Consolidated Statement of Cash Flows
 
Quarter Ended March 31,
 
(Unaudited)
(Millions)
2014
 
2013
Operating Activities of Continuing Operations:
 
 
 
Income from continuing operations
$
1,306

 
$
1,352

Adjustments to reconcile net income from continuing operations to net cash flows provided by operating activities of continuing operations:
 
 
 
Depreciation and amortization
467

 
444

Deferred income tax provision (benefit)
44

 
(40
)
Stock compensation cost
60

 
70

Change in working capital
(521
)
 
(198
)
Global pension contributions
(84
)
 
(29
)
Other operating activities, net
63

 
(190
)
Net cash flows provided by operating activities of continuing operations
1,335

 
1,409

Investing Activities of Continuing Operations:
 
 
 
Capital expenditures
(333
)
 
(295
)
Acquisitions and dispositions of businesses, net
106

 
722

Increase in collaboration intangible assets
(142
)
 
(157
)
Other investing activities, net
(73
)
 
69

Net cash flows (used in) provided by investing activities of continuing operations
(442
)
 
339

Financing Activities of Continuing Operations:
 
 
 
Issuance (repayment) of long-term debt, net
6

 
(46
)
Decrease in short-term borrowings, net
(200
)
 
(329
)
Dividends paid on Common Stock
(514
)
 
(465
)
Repurchase of Common Stock
(335
)
 
(335
)
Other financing activities, net
48

 
156

Net cash flows used in financing activities of continuing operations
(995
)
 
(1,019
)
Discontinued Operations:
 
 
 
Net cash used in operating activities
—

 
(715
)
Net cash used in investing activities
—

 
(51
)
Net cash flows used in discontinued operations
—

 
(766
)
Effect of foreign exchange rate changes on cash and cash equivalents
(40
)
 
(18
)
Net decrease in cash and cash equivalents
(142
)
 
(55
)
Cash and cash equivalents, beginning of period
4,619

 
4,836

Cash and cash equivalents, end of period
4,477

 
4,781

Less: Cash and cash equivalents of assets held for sale
—

 
14

Cash and cash equivalents of continuing operations, end of period
$
4,477

 
$
4,767

See accompanying Notes to Condensed Consolidated Financial Statements.




United Technologies Corporation
Free Cash Flow Reconciliation
 
Quarter Ended March 31,
 
(Unaudited)
(Millions)
2014
 
2013
 
 
 
 
 
 
Net income from continuing operations attributable to common shareowners
$
1,213

 
 
$
1,270

 
Net cash flows provided by operating activities of continuing operations
$
1,335

 
 
$
1,409

 
Net cash flows provided by operating activities of continuing operations as a percentage of net income from continuing operations attributable to common shareowners
 
110
 %
 
 
111
 %
Capital expenditures
(333
)
 
 
(295
)
 
Capital expenditures as a percentage of net income from continuing operations attributable to common shareowners
 
(27
)%
 
 
(23
)%
Free cash flow from continuing operations
$
1,002

 
 
$
1,114

 
Free cash flow from continuing operations as a percentage of net income from continuing operations attributable to common shareowners
 
83
 %
 
 
88
 %
Notes to Condensed Consolidated Financial Statements
(1)
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.
(2)
Organic sales growth represents the total reported increase within the Corporation's ongoing businesses less the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and significant non-recurring items.
(3)
Free cash flow, which represents cash flow from operations less capital expenditures, is the principal cash performance measure used by UTC. Management believes free cash flow provides a relevant measure of liquidity and a useful 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. Other companies that use the term free cash flow may calculate it differently. The reconciliation of net cash flow provided by operating activities, prepared in accordance with generally accepted accounting principles, to free cash flow is shown above.



RAYTHEON TECHNOLOGIES CORP Reports