UTC reports fourth quarter EPS up 16 percent to $0.71 and full year EPS up 18 percent to $3.12 before adopting FIN 47; 2005 cash flow from operations reaches $4.3 billion; 2006 outlook affirmed
HARTFORD, Conn., January 24, 2006 -- United Technologies Corp. (NYSE:UTX) today reported fourth quarter 2005 earnings per share of $0.71 and net income of $721 million, up 16 percent and 18 percent, respectively. References in this release to net income and earnings per share are before the cumulative effect of a change in accounting related to the adoption of FASB Interpretation No. 47 (Accounting for Conditional Asset Retirement Obligations) which resulted in a non-cash after tax cumulative impact of $95 million or $0.09 per share and was recorded in fourth quarter results. Consolidated revenues for the quarter increased 14 percent to $11.3 billion, reflecting organic growth of 9 percent and the addition of recent acquisitions, principally Kidde and Rocketdyne.
In the quarter, foreign currency translation reduced earnings by $0.02 per share and revenues by 1 percent.
Full year earnings per share of $3.12 and net income of $3.16 billion were both 18 percent higher than 2004 results. Revenues increased 14 percent to $42.7 billion, including 7 points of organic growth and the benefit of acquisitions.
Cash flow from operations after capital expenditures exceeded net income for both the quarter and the full year. In the fourth quarter, cash flow from operations was $1.15 billion and capital expenditures were $345 million. For the full year, cash flow from operations was $4.33 billion and capital expenditures were $929 million. Voluntary contributions to pension plans were $298 million in the fourth quarter and $663 million for the year.
“We had an exceptional year in 2005 and see more of the same in 2006,” said UTC Chairman and Chief Executive Officer George David.
“Organic growth for the year was a solid 7 percent, and we ended the year on an up quarter at 9 percent. Following 2004’s 8 percent, these rates reflect favorable conditions in most of our markets and UTC’s currently strong product line-up. All UTC segments delivered double digit operating profit increases for the year. Cash flow after capital expenditures exceeded net income in both the quarter and year, our usual standard.”
“We’re starting 2006 with lots of momentum,” David added. “We confirm expectations for earnings per share in the range of $3.40 to $3.55 and for cash flow after capital expenditures equal to net income for the year. We also expect to continue the current share repurchase rate into 2006 taking the total to approximately $1.5 billion for the year.”
Share repurchase in the quarter was $421 million and brought the year’s total to $1.18 billion. Acquisition spending, including debt assumed, was $4.6 billion for the year with approximately $500 million in the fourth quarter. Debt to capital ended the year at 33 percent.
Fourth quarter results include restructuring costs of $97 million. For the year, restructuring costs totaled $267 million and slightly exceeded the impact of favorable items. Additional favorable items are anticipated in 2006 to offset trailing costs from previous restructuring actions as well as to fund potential new actions initiated throughout the year.
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 is supplemented by presentation materials that are available on UTC’s website at www.utc.com, and includes “forward looking statements” concerning expected revenue, earnings, cash flow and other matters that are subject to risks and uncertainties. Important factors that could cause actual results to differ materially from those anticipated or implied in forward looking statements include the health of the global economy; strength of end market demand in building construction and in both the commercial and defense segments of the aerospace industry; fluctuation in commodity prices, interest rates, foreign currency exchange rates, and the impact of weather conditions; and company specific items including the availability and impact of acquisitions, the rate and ability to effectively integrate these acquired businesses, the ability to achieve cost reductions at planned levels, and the outcome of legal proceedings. For information identifying other important economic, political, regulatory, legal, technological, competitive and other uncertainties, see UTC’s SEC filings as submitted from time to time, including but not limited to, the information in the “Business” section of UTC’s Annual Report on Form 10-K, 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,” and the information included in Current Reports on Form 8-K.
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