2014 Annual Report Financial and Corporate Responsibility Performance
2014 Annual Report
Financial and Corporate
Responsibility Performance
Shareowner
Letter
Gregory J. Hayes
President and Chief Executive Officer
At a Glance
Financials
Sustainability

United Technologies Corporation provides high-technology products and services for the aerospace and commercial building industries worldwide. In 2014, UTC net sales were $65.1 billion.

  1. Amounts include company- and customer-funded research and development.
  2. The increase in the 2012 debt to capitalization ratio reflects debt issuances to finance the Goodrich acquisition.
  • NET SALES
    Dollars in billions
  • DILUTED EARNINGS
    PER COMMON SHARE
    Dollars per share
  • CASH FLOW
    FROM OPERATIONS
    Dollars in billions
  • RESEARCH AND
    DEVELOPMENT1
    Dollars in billions
  • DIVIDENDS PAID
    PER COMMON SHARE
    Dollars per share
  • DEBT TO CAPITAL2
    Percent
  1. Amounts include company- and customer-funded research and development.
  2. The increase in the 2012 debt to capitalization ratio reflects debt issuances to finance the Goodrich acquisition.
Businesses in Balance

UTC's portfolio is balanced across customer segments, markets and geographies.

NET SALES BY TYPE
as a percent of total net sales
NET SALES BY GEOGRAPHY
as a percent of total net sales
NET SALES BY TYPE
as a percent of total net sales


NET SALES BY GEOGRAPHY
as a percent of total net sales

At UTC, sustainability means profitable, responsible operations that do not compromise the environmental or economic health of future generations. Twenty years ago, we were among the first companies to set sustainability targets, and we continue to improve our environmental performance — steadily reducing greenhouse gas and chemical emissions, energy and water consumption, and industrial waste in our operations and supply chain.

We apply the same disciplined approach to product development, designing energy-efficient products while minimizing the amount of material used to make them and their environmental impact.

A leading voice in promoting sustainable building design, we are the only company in the world to be a founding member of Green Building Councils on four continents. In 2014, our Carrier business convened its inaugural World Cold Chain Summit to Reduce Food Waste, bringing together experts to develop strategies for decreasing the estimated one-third of the world's food that goes to waste each year.

At UTC, responsible operations begin with protecting and promoting the health and well-being of our employees. We continue to invest in the tools, processes and training necessary to allow employees to do their jobs safely and to promote a healthy work environment.

Across the company, we continue to look for ways to improve our products, our environment and our world.

  • NON-GREENHOUSE
    GAS EMISSIONS
    Million lbs
  • GREENHOUSE
    GAS EMISSIONS
    Million metric tons CO2e
  • INDUSTRIAL
    PROCESS WASTE
    Million lbs
  • NON-RECYCLED
    INDUSTRIAL
    PROCESS WASTE
    Million lbs
  • WORLDWIDE WATER
    CONSUMPTION
    Billion gals
  • LOST WORKDAY
    INCIDENT RATE
    Cases/100 employees
  • TOTAL RECORDABLE
    INCIDENT RATE
    Cases/100 employees
  • Key Performance Indicators measure UTC's sustainability performance for current operations.

    The increases in our 2013 environmental performance results reflect the addition of 100 former Goodrich sites to our EH&S management system.

    UTC reporting standards include the ongoing analysis and correction of data, as applicable, following the close of a reporting period. Consequently, previously reported annual metric results may change between annual reporting periods, and UTC may include any prior-year data revisions in current reporting.

    Learn more about our progress in protecting the environment and the health and safety of our employees at www.utc.com/Corporate-Responsibility.

Corporate Responsibility
Business Highlights
UTC Building & Industrial Systems

The Otis Gen2 system with ReGen drive technology captures energy generated during an elevator's ascent and descent and recycles it back into a building's power grid, reducing energy consumption by up to 75 percent.

Hong Kong's iconic iSQUARE shopping complex is being equipped with intelligent systems from UTC Building & Industrial Systems, designed to reduce the building's energy consumption, predict maintenance needs and manage people flow.

Carrier Transicold and Refrigeration Systems' cold-chain solutions preserve food from field to point of sale, helping to reduce global food waste.

Kidde's Worry-Free product line features smoke, carbon monoxide and combination alarms, each proven to provide a decade of protection.

The Otis Gen2 system with ReGen drive technology captures energy generated during an elevator's ascent and descent and recycles it back into a building's power grid, reducing energy consumption by up to 75 percent.

Hong Kong's iconic iSQUARE shopping complex is being equipped with intelligent systems from UTC Building & Industrial Systems, designed to reduce the building's energy consumption, predict maintenance needs and manage people flow.

Carrier Transicold and Refrigeration Systems' cold-chain solutions preserve food from field to point of sale, helping to reduce global food waste.

Kidde's Worry-Free product line features smoke, carbon monoxide and combination alarms, each proven to provide a decade of protection.

Ben Dixon is a CCTV agent for Chubb in Nottingham, United Kingdom. Founded in 1818 as a lock manufacturer, Chubb today is a global leader in security and fire protection.

The expanded-capacity AquaEdge water-cooled chiller provides environmentally responsible, reliable and quiet operation for large-scale projects, including data centers, commercial buildings and infrastructure projects.

Making the world smarter, safer, more sustainable

UTC BUILDING & INDUSTRIAL SYSTEMS, the world's largest provider of building technologies, makes modern life possible with products that promote intelligent, sustainable buildings: elevators and escalators; fire-safety and security systems; building automation technology; and heating, ventilating, air-conditioning and refrigeration systems and services.

The organization, which combines Otis and UTC Climate, Controls & Security, enables UTC to build on existing customer relationships and offer more integrated solutions to win a larger share of major projects. In Hong Kong, the iconic iSQUARE shopping complex, already equipped with Otis elevators, Carrier chillers and Chubb security solutions, chose UTC Building & Industrial Systems to provide intelligent systems, including video analytics, remote monitoring and energy management systems.

In the Middle East, the new Midfield Terminal Complex of Abu Dhabi International Airport, one of the world's largest airport construction projects, will be equipped with Carrier chillers and Otis elevators and escalators.

St. Patrick's Cathedral in New York City chose Marioff's HI-FOG system, which suppresses fire with significantly less water than traditional sprinkler systems, reducing water damage, cleanup time and operational downtime.

The business maintained the momentum of UTC Climate, Controls & Security, which has grown earnings over the last four years while increasing margins from 9.9 percent in 2010 to 16.5 percent in 2014.

It also continued progress on improving the growth trajectory of Otis, where equipment orders have risen 22 percent over the last two years, including 7 percent in 2014 on a constant currency basis.

Otis won the largest new equipment contract in its history in 2014, to supply and install 411 escalators and 167 Gen2 elevators for a mass transit project in Singapore. It will also supply 107 high-rise elevators and escalators for the Abu Dhabi Plaza in Kazakhstan, which at 1,050 feet will be the tallest building in central Asia when completed in 2017.

In early 2015, Otis won the contract to provide 73 elevators and escalators for 30 Hudson Yards, a 92-story office tower that will be among the first buildings constructed as part of Hudson Yards on Manhattan's West Side — the largest development in New York City since construction of Rockefeller Center in the 1930s.

Innovation remains core to our mission. As an example of our smart technologies, Lenel's OnGuard security platform can now be integrated with the Otis CompassPlus building destination management system, Edwards life safety systems and Interlogix TruVision video recorders. This offers customers enhanced elevator dispatching, added safety and security capabilities, and a centralized platform for building management.

Carrier Transicold's new line of Citifresh truck refrigeration units are designed to meet the challenges of transporting fresh food long distances in India, where an estimated $2 billion worth of fruits and vegetables go to waste each year because of a lack of an integrated cold chain. Carrier introduced the expanded-capacity AquaEdge water-cooled chiller, designed to meet the high-efficiency cooling needs of large-scale projects in today's fast-growing cities.

118,369
employees1
$29.8 billion
net sales2
$5.4 billion
operating profit3

Otis and UTC Climate, Controls & Security (CCS) report their financial and operational results as separate segments:

EMPLOYEES1 NET SALES2 OPERATING PROFIT3
Otis 64,741 $13.0 billion $2.6 billion
CCS 53,628 $16.8 billion $2.8 billion
Pratt & Whitney

Successfully completing its first flight in September, the Airbus A320neo is powered by Pratt & Whitney's PurePower PW1100G-JM engines and equipped with nacelles, thrust reversers, wheels and carbon brakes, and other systems from UTC Aerospace Systems.

Pratt & Whitney secured contracts for the seventh and eighth lots of F135 engines for the F-35 Lightning II, the next-generation fighter for the United States and its allies. UTC Aerospace Systems is supplying multiple systems for the aircraft.

Darby Capone, an assembly and test mechanic at Pratt & Whitney's new state-of-the-art engine assembly and test facility in West Palm Beach, Florida, which will play a key role in supporting production of the F135 engine for the F-35 Lightning II and the PurePower PW1100G-JM engine for the Airbus A320neo aircraft.

Successfully completing its first flight in September, the Airbus A320neo is powered by Pratt & Whitney's PurePower PW1100G-JM engines and equipped with nacelles, thrust reversers, wheels and carbon brakes, and other systems from UTC Aerospace Systems.

Pratt & Whitney secured contracts for the seventh and eighth lots of F135 engines for the F-35 Lightning II, the next-generation fighter for the United States and its allies. UTC Aerospace Systems is supplying multiple systems for the aircraft.

Darby Capone, an assembly and test mechanic at Pratt & Whitney's new state-of-the-art engine assembly and test facility in West Palm Beach, Florida, which will play a key role in supporting production of the F135 engine for the F-35 Lightning II and the PurePower PW1100G-JM engine for the Airbus A320neo aircraft.

Powering the future of aviation

PRATT & WHITNEY celebrated numerous wins and milestones with customers around the world in 2014, validating our past investments and demonstrating our technology leadership.

In France, the Airbus A320neo made its maiden flight powered by Pratt & Whitney's PurePower PW1100G-JM engines, which also received Federal Aviation Administration type certification in 2014 — marking a key milestone in the development program and positioning the engine to enter service well ahead of the competition. Pratt & Whitney also delivered its first PurePower PW1200G engines to Mitsubishi Aircraft for the MRJ regional jet, Japan's first new commercial jet in 50 years.

Gulfstream Aerospace announced the selection of Pratt & Whitney Canada's PurePower PW800 engine to exclusively power its new G500 and G600 family of business jets. The PW800 engine is optimized for long-range business jets and shares the same proven core technology used in Pratt & Whitney's Geared Turbofan commercial engines. AVIC Xi'an Aircraft Industry Company, China, selected Pratt & Whitney Canada's PW150C turboprop engine to power its new MA700 regional turboprop aircraft.

In the Military Engines business, the F-35B Lightning II fighter, powered by the company's F135 engine, is on track to be declared combat ready in 2015. By the end of 2014, the F135 engine had completed more than 26,000 ground test hours and 21,500 flight hours, proving its durability and performing flawlessly in sea trials conducted by the U.S. Navy. In Brazil, Embraer rolled out its KC-390 military transport, powered by V2500-E5 engines. The V2500 is the most technologically advanced engine in its class, with 5,350 in service today.

As it prepares to double engine production over the next five years, Pratt & Whitney is investing in smart manufacturing technologies and expanding capacity at facilities around the world. In 2014, it celebrated the grand opening of its new 97,000-square-foot, state-of-the-art engine center in West Palm Beach, Florida.

In its aftermarket business, Pratt & Whitney continues its move to Fleet Management Programs, which benefit customers by improving reliability and keeping engines on wing longer.

33,591
employees
$14.5 billion
net sales
$2.0 billion
operating profit
UTC Aerospace Systems

Gulfstream's new G500 and G600 long-range business jets will be equipped with aircraft landing gear from UTC Aerospace Systems and PurePower PW800 engines from Pratt & Whitney Canada.

Air-data probes from UTC Aerospace Systems on the Airbus A350 XWB commercial jet supply critical information to the aircraft's flight control and pilot display systems.

Krzysztof Walawender, a mill operator for complex cylindrical components at UTC Aerospace Systems, in Rzeszów, Poland, where landing gear components for multiple aircraft are manufactured, including the Boeing 737 and 777, and the Airbus A380 and A350.

Gulfstream's new G500 and G600 long-range business jets will be equipped with aircraft landing gear from UTC Aerospace Systems and PurePower PW800 engines from Pratt & Whitney Canada.

Air-data probes from UTC Aerospace Systems on the Airbus A350 XWB commercial jet supply critical information to the aircraft's flight control and pilot display systems.

Krzysztof Walawender, a mill operator for complex cylindrical components at UTC Aerospace Systems, in Rzeszów, Poland, where landing gear components for multiple aircraft are manufactured, including the Boeing 737 and 777, and the Airbus A380 and A350.

Developing more integrated, more intelligent systems

UTC AEROSPACE SYSTEMS, celebrating its second anniversary, continued building momentum as the world's leading supplier of integrated aerospace solutions. Every second, a commercial flight takes off equipped with our systems, designed to make aircraft safer, lighter, more reliable and more efficient. UTC Aerospace Systems anticipates that current programs offer the potential for future sales of more than $200 billion over the life of those programs.

The company designed and built systems that supported numerous industry milestones, including the entry into service of the Boeing 787-9 Dreamliner; first flight of the Airbus A320neo; and rollout of the Mitsubishi MRJ regional jet, the Gulfstream G500 and G600 business jets, and the Embraer KC-390 military transport. Technology from UTC Aerospace Systems was integral to the fly-by-wire control systems used to enhance flight handling and reduce pilot workload on two high-performance military aircraft rolled out by Sikorsky: the S-97 RAIDER armed reconnaissance helicopter and the CH-53K King Stallion heavy-lift helicopter.

UTC Aerospace Systems also won significant content on new platforms, including the Boeing 777X, 787-10 and 737 MAX; the second generation of the Embraer E-Jet aircraft family; and the AVIC MA700 regional turboprop aircraft. In the aftermarket, the business signed long-term agreements with premier customers, including All Nippon Airways, China Airlines and JetBlue Airways.

UTC Aerospace Systems also expanded its global footprint to be closer to customers and increase operational efficiency. New locations included a Global Engineering Center in Wrocław, Poland, and a facility in Toulouse, France, to support thrust reverser production for the Airbus A350 XWB. In China, the UTC Aerospace Systems joint venture with AVIC EM began operations to develop and manufacture the electric power system for the new C919 jetliner, built by the Commercial Aircraft Corporation of China.

42,550
employees
$14.2 billion
net sales
$2.4 billion
operating profit
Sikorsky Aircraft

The S-97 RAIDER helicopter with X2 Technology has a cruising speed twice that of conventional helicopters.

The U.S. Navy selected Sikorsky to develop the next fleet of Marine One helicopters to carry the president of the United States — a responsibility that has been entrusted to Sikorsky since the administration of Dwight D. Eisenhower, who in 1957 became the first U.S. president to fly in a helicopter. The next Marine One will be built on the proven Sikorsky S-92 platform.

The new CH-53K King Stallion heavy-lift helicopter will effectively triple the external load-carrying capacity of its predecessor.

The S-97 RAIDER helicopter with X2 Technology has a cruising speed twice that of conventional helicopters.

The U.S. Navy selected Sikorsky to develop the next fleet of Marine One helicopters to carry the president of the United States — a responsibility that has been entrusted to Sikorsky since the administration of Dwight D. Eisenhower, who in 1957 became the first U.S. president to fly in a helicopter. The next Marine One will be built on the proven Sikorsky S-92 platform.

The new CH-53K King Stallion heavy-lift helicopter will effectively triple the external load-carrying capacity of its predecessor.

Pioneering flight solutions that bring people home — every time

SIKORSKY, whose name has been synonymous with helicopters for nearly 80 years, today remains an industry leader through its commitment to innovation, excellence and safety, serving commercial and military markets worldwide.

In 2014, Sikorsky secured every strategic competition it entered — a string of wins that contributed to a record backlog and sets the stage for long-term organic growth.

The company won contracts to develop the next fleet of Marine One helicopters for the U.S. president and combat rescue helicopters for the U.S. Air Force. The U.S. Army also selected the Sikorsky-Boeing SB>1 Defiant demonstrator, a medium-lift helicopter configured to Sikorsky's X2 coaxial design, as one of two finalists in the Joint Multi-Role Technology Demonstrator program to compete for a future next-generation vertical-lift aircraft program.

Sikorsky continued its momentum in international markets. It signed agreements with the Turkish government and key aerospace companies there to license production of 109 helicopters — the Turkish variant of the S-70i BLACK HAWK helicopter. India's Navy selected the S-70B SEAHAWK for its multi-role helicopter needs, representing a major strategic win in an important growth market.

Sikorsky rolled out two new advanced military helicopters — the CH-53K heavy-lift helicopter for the U.S. Marine Corps and the X2-based S-97 RAIDER armed reconnaissance helicopter, both scheduled to begin flight tests in 2015. These two programs will set new standards for helicopter performance and represent the future of vertical flight.

On the commercial side, the company delivered a record number of its best-selling S-92 helicopters, with the global fleet growing to 220 aircraft and accruing nearly 769,000 flight hours since its introduction. The new S-76D helicopter has quickly spread to markets around the world, including the United States, China, Japan and South Africa. The Yunnan Jingcheng Group took delivery of China's first S-76D helicopter, configured for transportation of corporate and government VIPs. Sikorsky also delivered the first search-and-rescue variant of the S-76D to the Japanese Coast Guard. The worldwide legacy S-76 fleet has now flown more than 6.6 million hours.

15,264
employees
$7.5 billion
net sales
$219 million
operating profit