EX-99 3 eightkex991203.htm 8-K

Exhibit 99.1
Contact: Paul Jackson

FOR IMMEDIATE RELEASE
(860) 728-7912

 www.utc.com

 

UTC's FOURTH QUARTER EARNINGS PER SHARE INCREASE 9 PERCENT; FULL-YEAR UP 6 PERCENT TO $4.69 PER SHARE WITH CASH FLOW FROM OPERATIONS OF $2.9 BILLION; 2004 OUTLOOK AFFIRMED

HARTFORD, Conn., January 20, 2004 - United Technologies Corp. (NYSE:UTX) today reported fourth quarter 2003 earnings per share increased 9 percent to $1.16 compared with the year ago quarter.  Consolidated revenues increased 19 percent to $8.6 billion, primarily reflecting the Chubb acquisition and favorable foreign currency translation.  Full year earnings per share were 6 percent above 2002 on a 10 percent increase in revenues to $31.0 billion.

Fourth quarter net income increased to $588 million, 10 percent above the comparable 2002 period. Cash flow from operations was $798 million including $252 million in voluntary contributions to pension plans globally.  Capital expenditures in the quarter were $208 million. 

Full year earnings per share were $4.69, 6 percent increased from 2002.  Full year cash flow from operations was $2.9 billion.  This result included $994 million in voluntary contributions to pension plans globally and was approximately equal to net income after capital expenditures of $530 million.

"These strong results speak to UTC's operating disciplines and business balance," said Chairman and Chief Executive Officer George David.  "Double digit operating profit increases at Otis and Carrier and growth in UTC's military aerospace business more than offset the third year of weakness in commercial aviation. The weaker U.S. dollar, growth in China, and the addition of Chubb also contributed to year over year performance."

"Cash performance net of capital expenditures for the year again met our usual high standard," continued David, "essentially equal to net income even after substantial pension contributions."  The company's debt-to-capital ratio decreased six points to 31 percent in 2003 inclusive of the Chubb acquisition. 

A non cash gain at Otis, lower effective tax rate, and the translation benefit from a weaker dollar offset $138 million of restructuring and related charges taken in the quarter.  David said, "That we were able to initiate these significant cost reduction actions positions us well for earnings growth in 2005 and beyond."

"We intend to initiate further cost reduction actions in the first quarter of 2004, funded by the recently announced gain on DaimlerChrysler's sale of MTU to KKR.  There may be further actions later in the year coincident with the potentially favorable settlement of certain open tax years." 

"Our outlook is unchanged," said David.  "We expect 2004 earnings in the range of $5.00 to $5.30 per share.  Cash flow from operations less capital expenditures should equal net income in 2004, before potential voluntary contributions in the $500 million range to UTC's pension plans globally.  We're on top of an excellent year in 2003 and look for more of the same in 2004."

The accompanying tables include information integral to assessing the company's financial position, operating performance, and cash flow.

United Technologies Corp., based in Hartford, Connecticut, is a diversified company that provides a broad range of high technology products and support services to the building systems and aerospace industries. 

This 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 "General," "Description of Business by Segment" and "Other Matters Relating to the Corporation's Business as a Whole" and the information included in UTC's 10-K and 10-Q reports under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations."

# # #

UNITED TECHNOLOGIES CORPORATION
 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 (In Millions, except per share amounts)

Quarter Ended
December 31,
 (Unaudited)

Year Ended
December 31,
(Audited)
   

2003

2002

2003

2002
     

  

                    
Revenues

$

 8,588    

$

 7,215    

$

 31,034   

$

28,212    
     

  

                
Cost and Expenses
Cost of goods and services sold 6,310     5,248     22,508    20,161    
Research and development 251     278     1,027    1,191    
Selling, general and administrative 1,100     862     3,654    3,203    
Interest 96     93     375    381    
      7,757        6,481        27,564       24,936    
                                          
Income before income taxes and minority interests 831     734     3,470    3,276    
Income taxes (202)    (165)    (941)   (887)   
Minority interests (41)    (36)    (168)   (153)   
  Net Income

$

 588    

$

 533    

$

 2,361   

$

 2,236    
                          
Earnings Per Share of Common Stock
  Basic $ 1.21     $ 1.11     $ 4.93     $ 4.67    
  Diluted $ 1.16     $ 1.06     $ 4.69     $ 4.42    
                            
Average Number of Shares Outstanding
  Basic 484     472     474     472    
  Diluted 507     504     503     506    

 See accompanying Notes to Condensed Consolidated Financial Statements.

UNITED TECHNOLOGIES CORPORATION
SEGMENT REVENUES and OPERATING PROFIT



(In Millions)		 Quarter Ended
December 31,
(Unaudited)		 Year Ended
December 31,
(Audited)
2003 2002 2003 2002
Revenues
                          
Otis $

2,210   

$

1,850   

$

7,927   

$

 6,811   
Carrier 2,196    1,996    9,246    8,773   
Chubb 720    -    1,136    -   
Pratt & Whitney 1,967    2,048    7,505    7,645   
Flight 1,575    1,483    5,708    5,571   
Segment Revenues 8,668    7,377    31,522    28,800   
Eliminations and other (80)   (162)   (488)   (588)  
                         
Consolidated Revenues $ 8,588    $ 7,215    $ 31,034    $ 28,212   
                           
Operating Profits
                          
Otis $

377   

$

275   

$

1,377   

$

 1,057   
Carrier 93    107    911    779   
Chubb 35    -    55    -   
Pratt & Whitney 299    296    1,125    1,282   
Flight 226    192    785    741   
Segment Operating Profit 1,030    870    4,253    3,859   
Eliminations and other (34)   (27)   (174)   (27)  
General corporate expenses (69)   (16)   (234)   (175)  
                          
Consolidated Operating Profits $ 927    $ 827    $ 3,845    $ 3,657   
 

As described on the following page, consolidated operating profit for the years and quarters ended December 31, 2003 and 2002 includes restructuring and related charges and favorable non-recurring items.

See accompanying Notes to Condensed Consolidated Financial Statements.

UNITED TECHNOLOGIES CORPORATION
Consolidated Operating Profit
 (Unaudited)

Consolidated operating profit for the quarters ended December 31, 2003 and 2002 includes restructuring and related charges totaling $138 million and $125 million, respectively.  Consolidated operating profit for the years ended December 31, 2003 and 2002 includes restructuring and related charges totaling $182 million and $321 million, respectively.

   Quarter Ended
December 31,		 Year Ended
December 31,
                          
Restructuring and Related Charges 2003 2002 2003 2002
Otis $

47   

$

35   

$

65   

$

 73   
Carrier 65    23    65    114   
Chubb -    -    -    -   
Pratt & Whitney 13    37    19    80   
Flight 10    32    23    55   
Segment Operating Profit 135    127    172    322   
Corporate Expense -    -    -    -   
Eliminations and Other 3    (2)   10    (1)  
Consolidated Operating Profit $ 138    $ 125    $ 182    $ 321   
  

Notes:

(1) Otis operating profit for the fourth quarter of 2003 includes a $50 million non-cash gain resulting from a transaction involving an exchange of equity interests.
     
(2) The Corporation's effective tax rate in the fourth quarters of 2003 and 2002 is lower than the respective full year rates reflecting the realization of certain tax benefits, including use of a capital loss carryback in 2002 and the tax benefit associated with a non-core divestiture in 2003.
    

4th Quarter

Full Year
2003

24.3%    

27.1%      
2002 22.5%     27.1%      
   
(3) The favorable impact of foreign currency translation contributed $.06 per share and $.23 per share in the fourth quarter and year-ended December 31, 2003, respectively.
  
(4)

The following favorable items are included in prior year results:
Q1 2002:
  • Approximately $100 million gain recorded in eliminations and other related to the settlement of environmental claims.
Q3 2002:
  • $43 million curtailment gain from the modification of certain post-retirement benefits recorded in segment results.
Q4 2002:
  • $33 million benefit from the favorable resolution of an employee benefit plan exposure recorded in Corporate expense.

 

See accompanying Notes to Condensed Consolidated Financial Statements.

UNITED TECHNOLOGIES CORPORATION
 CONDENSED CONSOLIDATED BALANCE SHEET
 (Audited)



(Millions)

December 31,
2003

December 31,
2002

Assets
             
Cash and cash equivalents

$

 1,623    

$

 2,080    
Accounts receivable, net 5,187     4,277    
Inventories and contracts in progress, net 3,794     3,803    
Other current assets 1,760            1,675    
Total Current Assets 12,364       11,835    
              
Fixed assets, net 5,080     4,587    
Goodwill, net 9,329     6,981    
Other assets 7,875           5,791    
      

  

      
Total Assets

$

 34,648    

$

 29,194    
  

Liabilities and Shareowners' Equity
             
Short-term debt

$

 1,044   

$

 241   
Accounts payable 2,867    2,095   
Accrued liabilities 6,384    5,449   
Total Current Liabilities     10,295       7,785    
  

  

         
Long-term debt 4,257    4,632   
Other liabilities 8,389    7,994   
             
ESOP Convertible Preferred Stock, net -    428   
             
Shareowners' Equity:

Common Stock

 6,314    5,447   
Treasury Stock (5,335)   (4,951)  
Retained Earnings

12,527   

10,836   
Accumulated other non-shareowners' changes
    in equity
   (1,799)  
   (2,977)  
    11,707       8,355   
      

  

      
Total Liabilities and Shareowners' Equity

$

 34,648   

$

 29,194   
             
Debt Ratios:
Debt to total capitalization  31%    37%   
Net debt to total capitalization 24%    25%   

See accompanying Notes to Condensed Consolidated Financial Statements.

UNITED TECHNOLOGIES CORPORATION
 CONDENSED CASH FLOWS FROM OPERATIONS

(Unaudited)
(Millions)		 Quarter Ended
December 31,		 Year Ended
December 31,
2003 2002 2003 2002
Net Income $ 588     $ 533     $ 2,361     $ 2,236    
Adjustments to reconcile net income

   to net cash flows provided by operating activities                        
      Depreciation and amortization 229     190     799     727    
      Deferred income taxes and minority interest 57     156     422     471    
Changes in working capital 140     236     56     116    
Voluntary contributions to pension plans (252)    (517)    (994)    (530)   
Other, net 36     (35)    231     (167)   
Net Cash Flows Provided by Operating Activities $ 798     $ 563     $ 2,875     $ 2,853    

See accompanying Notes to Condensed Consolidated Financial Statements.

UNITED TECHNOLOGIES CORPORATION
Notes to Condensed Consolidated Financial Statements

(1) Certain reclassifications have been made to prior year amounts to conform to the current year presentation.
     
(2) In 2002 the Corporation made voluntary stock and cash contributions to its pension plans totaling $783 million, including $253 million of stock, reported as an increase in Other assets in the accompanying condensed consolidated balance sheet.  In addition, in the fourth quarter of 2002, the Corporation recorded a $1.6 billion after tax equity charge, reflecting an increase to the additional minimum liability under its pension plans of $2.4 billion, which is included in Other liabilities.  The offsetting deferred tax benefit is reflected in Other assets.
  
(3) During the fourth quarter of 2003, the convertible preferred shares held by the ESOP were converted into common shares.   The conversion had no impact on the Corporation's fully diluted earnings per share and slightly decreased the Corporation's debt-to-capital ratio, as these shares were reclassified to equity.
  
(4) During the fourth quarter of 2003, the Corporation recorded a $570 million after-tax credit to equity, reflecting a decrease in the additional minimum liability under its pension plans of approximately $900 million, which is included in Other liabilities.  The offsetting deferred tax charge is reflected in Other assets.