UTX presentation
-
Upload
shirley-lee -
Category
Economy & Finance
-
view
96 -
download
0
description
Transcript of UTX presentation
Audit Risk Assessment of United Technologies Corporation
Yaocheng Li Amit Shrestha Siyuan Liu
United Technologies ! Introduction
! a conglomerate that has the worldwide industrial expertise to lift you up and cool you down.
! Two-thirds of its revenues coming from abroad.
! The dominant player in the Chinese elevator market.
! On July 26, 2012, United Technologies Corporation purchased Goodrich, complements and strengthens Position In Aerospace And Defense Industry.
! Subsidiaries
! Otis elevators, escalators and moving walkways
! Pratt & Whitney aircraft engines
! Goodrich actuation systems, aerostrucures.
! Sikorsky helicopters
! UTC Aerospace Systems aircraft and power, controls & sensing systems
! UTC Climate, Controls & Security heating, air conditioning and refrigeration systems, building controls and automation, and fire and security solutions.
Analytical procedures (AU 329) United Technologies 5 Year summary
50
51
52
53
54
55
56
57
58
59
2007 2008 2009 2010 2011 2012 2013
Net Sales ! Dividends Paid per Common Share
0
0.5
1
1.5
2
2.5
2007 2008 2009 2010 2011 2012 2013
Analytical procedures (AU 329) United Technologies
5 Year summary
0
1
2
3
4
5
6
7
2007 2008 2009 2010 2011 2012 2013
Cash Flow From Operation
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2007 2008 2009 2010 2011 2012 2013
Research and Development
Analytical procedures (AU 329) UTC Consolidated Statement of Operations
Particulars 2012 2011 % change
Net Sales: Product sales 40,729.00 38,882.00 0.05
Service sales 16,979.00 16,872.00 0.01
Total Net Sales 57,708.00 55,754.00 0.04
Cost of products sold 31,094.00 29,252.00 0.06
Cost of services sold 11,059.00 11,117.00 (0.01)
Research and development 2,371.00 1,951.00 0.22
Total Expenses 50,976.00 48,481.00 0.05
Other income net 952.00 573.00 0.66
Interest expense, net 773.00 496.00 0.56
Net income from discontinued operations 290.00 158.00 0.84
Net Income 5,490.00 5,374.00 0.02
Analytical procedures (AU 329) UTC Consolidated Balance Sheet Assets Side
Particulars 2012 2011 % change
Cash and cash equivalents 4,819 5,960 (0.19)
Accounts receivable 11,099 9,546 0.16
Inventories and contracts in progress, net 9,537 7,797 0.22
Other assets, current 1,473 793 0.86
Total Current Assets 29,610 25,758 0.15
Customer financing assets 1,150 1,035 0.11
Fixed assets, net 8,518 6,201 0.37
Goodwill 27,801 17,943 0.55
Intangible assets, net 15,189 3,918 2.88
Other assets 5,542 4,210 0.32
Total Assets 89,409 61,452 0.45
Analytical procedures (AU 329) UTC Consolidated Balance Sheet Liabilities and
Equity Side Particulars 2012 2011 % change
Short-term borrowings 503 630 (0.20)
Accrued liabilities 15,310 12,287 0.25
Long-term debt currently due 1,121 129 7.69
Total Current Liabilities 23,786 18,616 0.28
Long-term debt 21,597 9,501 1.27 Future pension and postretirement benefit obligations 7,520 5,007 0.50
Other long-term liabilities 9,199 5,150 0.79
Total Liabilities 62,102 38,274 0.62
Total Shareowners’ Equity 25,914 21,880 0.18
Total Equity 27,069 22,820 0.19
Total Liabilities and Equity 89,409 61,452 0.45
Common Size Consolidated Statement of
Operations Of UTC Particulars 2012 2011
Net Sales: Product sales 70.58 69.74 Service sales 29.42 30.26 Total Net Sales 100 100 Cost of products sold 53.9 52.5 Cost of services sold 19.2 19.9 Research and development 4.1 3.5 Selling, general and administrative 11.2 11.1 Total Expenses 88.33 86.96 Net income from continuing operations 9.01 9.36 Net income from discontinued operations 0.50 0.28 Net income 9.51 9.64
Common Size Balance Sheet of Operations Of UTC
Particulars 2012 2011
Cash and cash equivalents 5.39 9.70 Accounts receivable 12.41 15.53 Inventories and contracts in progress, net 10.67 12.69 Total Current Assets 33.12 41.92 Goodwill 31.09 29.20 Intangible assets, net 16.99 6.38 Other assets 6.20 6.85 Total Assets 100.00 100.00 Accounts payable 7.19 9.06 Accrued liabilities 17.12 19.99 Total Current Liabilities 26.60 30.29 Long-term debt 24.16 15.46 Total Liabilities 69.46 62.28 Total Equity 30.28 37.13 Total Liabilities and Equity 100.00 100.00
Key Financial Ratio Liquidity Ratio 2012 2011
Current Ratio 1.24 1.38 Quick 0.84 0.96
Solvency 2012 2011
Debt to Assets 0.69 0.62 time intrest earn 9.94 15.82 Long term debt to equity 1.42 0.86
Activity 2012 2011
Inventory turnover 4.42 5.18 Account Receivable 5.20 5.84 Total Assets turnover 0.65 0.91
Profitability 2012 2011
Profit margin on sales 8.89 8.93 Return on Total Assests 0.86 0.81 Retun on equity 18.95 21.82
Industry Analysis
! Pratt & Whitney's major competitors in the sale of aircraft engines are GE Aviation, Honeywell, Rolls-Royce Holding PLC, ThyssenKrupp’s Technology Group.
! Goodrich reinforced the competition with Messier-Bugatti and SNECMA( Safran S.A.).
! The main competitors of UTC Aerospace (Hamilton Sundstrand+ Goodrich) are Honeywell, Northrop Grumman, and Parker Hannifin.
! Sikorsky's main competitors are Bell Helicopter Textron, AgustaWestland, and Eurocopter S.A..
Company Name Market Capitalization( Billion Dollar)
Industry Average 7.60
United Technologies Corp. 99.60
General Electric Co. 273.67
Honey well International, Inc 68.61
Boeing 100.31
Rolls-royce 36.40
Parker-Hannifin Corp. 17.33
Safran S.A. 19.74
0.00
50.00
100.00
150.00
200.00
250.00
300.00
Industry Average
United Technologies
Corp.
General Electric Co.
Honey well International,
Inc
Boeing Rolls-royce Parker-Hannifin Corp.
Safran S.A.
Market Capitalization( Billion Dollar)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Industry Average
United Technologies
Corp.
General Electric Co.
Honey well International,
Inc
Boeing Rolls-royce ThyssenKrupp AG Co.
Parker-Hannifin Corp.
Safran S.A.
Employee
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Industry Average
United Technologies Corp.
General Electric Co.
Honey well International, Inc
Boeing
Rolls-royce
Parker-Hannifin Corp.
Safran S.A.
Capital or labor intensive
Revenue & Revenue
-20
0
20
40
60
80
100
120
140
160
United Technologies
Corp.
General Electric Co.
Honey well International,
Inc
Boeing Rolls-royce ThyssenKrupp AG Co.
Parker-Hannifin Corp.
Safran S.A.
Revenue
Net Income(Billion)
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
United Technologies Corp. General Electric Co. Honey well International, Inc Boeing Rolls-royce Parker-Hannifin Corp. Safran S.A.
Profit Margin %
Operating Margin%
Profitability
Management Effectiveness
0.00
10.00
20.00
30.00
40.00
50.00
60.00
ROA %
ROE %
UTC VS GE
GE Aviation 19.9 billion Dollars
GE revenue in million dollars
Power & Water
Oil & Gas
Healthcare
Energy Management
Aviation
Misstatement
! In June 2012, it was discovered that UTC sold military technology to the Chinese. For pleading guilty to violating the Arms Export Control Act and making false statements, United Technologies and its subsidiaries were fined $75 million
! Pratt & Whitney Canada and Hamilton Sundstrand were charged $75 million by the federal government to settle their criminal and civil charges of violating export control laws.
! Between 2002 and 2005, Pratt & Whitney Canada sold engine control software made by Hamilton Sundstrand to China, which violated certain law. Certain exports weren’t disclosed in their statement. Also, numerous false statement were included.
Goodwill
! Increased by 55% from $6.2 billion to $8.5 billion
! Merger with Goodrich Corp
! $16.5 billion
! Merger document. (Valuation Report, Audited Financial Statement, Contract)
! Goodrich is a leading supplier of systems and products to the global defense and space markets. Once the Acquisition is complete, it is expected that Goodrich and Hamilton Sundstrand are combined to form a new segment named UTC Aerospace Systems.
Long-term Debt
! In 2012, UTC’s long term debt increased by 12 billion, which is 127% higher than in 2011.
! Detail records about where they spent those cash
Income Tax Expense
! Income tax expense decreased by $423 million from $2,134 million to $1,711 million.
! Income from continuing operations before income taxes decreased by $439 million from $7,350 million to $6,911 million.
! Tax return & Related Documents
Detection Risk
! Research and Development
! Payroll require substantial procedure
! Lawsuits Cost
Thank you!