<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C.
20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period
from____________________________to__________________________
Commission file number 1-812
UNITED TECHNOLOGIES CORPORATION
DELAWARE 06-0570975
One Financial Plaza, Hartford, Connecticut 06101
(203) 728-7000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X . No .
At September 30, 1995 there were 122,007,844 shares of Common Stock outstanding.
<PAGE>
<PAGE>
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
CONTENTS OF QUARTERLY REPORT ON FORM 10-Q
Quarter Ended September 30, 1995
Page
Part I - Financial Information
Item 1. Financial Statements:
Condensed Consolidated Statement of
Operations for the three months ended
September 30, 1995 and 1994 1
Condensed Consolidated Statement of
Operations for the nine months ended
September 30, 1995 and 1994 2
Condensed Consolidated Balance Sheet at
September 30, 1995 and December 31, 1994 3
Condensed Consolidated Statement of Cash
Flows for the nine months ended September
30, 1995 and 1994 4
Notes to Condensed Consolidated Financial
Statements 5
Report of Independent Accountants 8
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Position 9
Part II - Other Information
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit Index<PAGE>
<PAGE> 1
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended
September 30,
In Millions of Dollars (except per share amounts) 1995 1994
<S> <C> <C>
Revenues:
Product sales $ 4,420 $ 4,094
Service sales 1,184 1,041
Financing revenues and other income, net 47 115
5,651 5,250
Costs and expenses:
Cost of products sold 3,610 3,359
Cost of services sold 715 652
Research and development 251 229
Selling, general and administrative 642 610
Interest 57 69
5,275 4,919
Income before income taxes and minority interests 376 331
Income taxes 131 114
Minority interests 35 29
Net Income $ 210 $ 188
Preferred Stock Dividend Requirement 7 6
Earnings Applicable to Common Stock $ 203 $ 182
Earnings per share of common stock and common stock
equivalents $ 1.60 $ 1.41
Dividends per share of common stock $ .50 $ .50
Average common and equivalent shares outstanding (in
thousands) 130,813 132,012
</TABLE>
See Accompanying Notes<PAGE>
<PAGE> 2
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
In Millions of Dollars (except per share amounts) 1995 1994
<S> <C> <C>
Revenues:
Product sales $ 13,285 $ 12,154
Service sales 3,411 3,032
Financing revenues and other income, net 139 336
16,835 15,522
Costs and expenses:
Cost of products sold 10,944 10,056
Cost of services sold 2,050 1,892
Research and development 702 730
Selling, general and administrative 1,943 1,861
Interest 186 208
15,825 14,747
Income before income taxes and minority interests 1,010 775
Income taxes 351 277
Minority interests 96 78
Net Income $ 563 $ 420
Preferred Stock Dividend Requirement 20 16
Earnings Applicable to Common Stock $ 543 $ 404
Earnings per share of common stock and common stock
equivalents $ 4.28 $ 3.14
Dividends per share of common stock $ 1.50 $ 1.40
Average common and equivalent shares outstanding (in
thousands) 130,414 132,571
</TABLE>
See Accompanying Notes<PAGE>
<PAGE> 3
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
<S> <C> <C>
September 30, December 31,
In Millions of Dollars 1995 1994
(Unaudited)
</TABLE>
Assets
<TABLE><CAPTION>
<S> <C> <C>
Cash and cash equivalents $ 904 $ 386
Accounts receivable, net 3,713 3,745
Inventories and contracts in progress, net 2,957 2,955
Future income tax benefits 860 929
Other current assets 202 213
Total Current Assets 8,636 8,228
Fixed assets 10,316 10,193
Less - accumulated depreciation (5,967) (5,661)
4,349 4,532
Other assets 2,756 2,864
Total Assets $ 15,741 $ 15,624
</TABLE>
Liabilities and Shareowners' Equity
<TABLE><CAPTION>
<S> <C> <C>
Short-term borrowings $ 266 $ 402
Accounts payable 1,851 1,924
Accrued liabilities 4,150 4,071
Long-term debt currently due 91 156
Total Current Liabilities 6,358 6,553
Long-term debt 1,707 1,885
Future pension and postretirement benefit obligations 1,438 1,389
Other long-term liabilities 1,900 1,706
Series A ESOP Convertible Preferred Stock 894 905
ESOP deferred compensation (508) (566)
386 339
Shareowners' Equity:
Common Stock 2,225 2,148
Treasury Stock (1,162) (947)
Retained earnings 3,143 2,790
Currency translation and pension liability
adjustments (254) (239)
3,952 3,752
Total Liabilities and Shareowners' Equity $ 15,741 $ 15,624
</TABLE>
See Accompanying Notes<PAGE>
<PAGE> 4
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
In Millions of Dollars 1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 563 $ 420
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 621 623
Change in:
Accounts receivable 26 (395)
Inventories and contracts in progress (28) 40
Accounts payable and accrued liabilities 73 (189)
Future income taxes payable and future income
tax benefits 3 95
ESOP deferred compensation 38 106
Other, net 218 168
Net Cash Flows from Operating Activities 1,514 868
Cash flows from investing activities:
Capital expenditures (486) (489)
Acquisitions of business units (151) (106)
Dispositions of business units 103 238
Decrease in customer financing assets, net 276 17
Other, net 50 35
Net Cash Flows from Investing Activities (208) (305)
Cash flows from financing activities:
Issuance of long-term debt 1 31
Repayments of long-term debt (250) (150)
Decrease in short-term borrowings, net (136) (50)
Dividends paid on Common Stock (185) (177)
Common Stock repurchase (215) (164)
Other, net (4) 68
Net Cash Flows from Financing Activities (789) (442)
Effect of foreign exchange rate changes on cash and
cash equivalents 1 2
Net Increase in Cash and Cash Equivalents 518 123
Cash and Cash Equivalents, Beginning of year 386 421
Cash and Cash Equivalents, End of period $ 904 $ 544
</TABLE>
See Accompanying Notes<PAGE>
<PAGE> 5
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The condensed consolidated financial statements at September 30, 1995 and for
the three-month and nine-month periods ended September 30, 1995 and 1994 are
unaudited, but in the opinion of the Corporation include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results for the interim periods. Certain 1994 amounts have
been reclassified to conform with the presentation at September 30, 1995.
Accounting and Reporting Changes
In the fourth quarter of 1994 the Corporation adopted, effective January 1,
1994, AICPA Statement of Position (SOP) 93-6, "Employers' Accounting for
Employee Stock Ownership Plans." The principal impact of the accounting change
on ongoing results is to consider as outstanding only those ESOP Convertible
Preferred shares committed to employee accounts, to report as interest expense
all interest on the debt of the ESOP trust and to report preferred stock
dividends only on those shares considered as outstanding.
As this accounting change was adopted in the fourth quarter of 1994,
previously reported 1994 quarterly information has been restated to reflect the
change effective January 1, 1994.
As a result of this change, the Corporation's pretax income was reduced by
$10 million for the three month period and $85 million, including a one-time
charge of $51 million ($31 million after tax or $.23 per share) for the nine-
month period. This one-time charge represents the cumulative difference between
the expense determined under the new accounting method and that previously
recognized from inception of the ESOP through January 1, 1994. The one-time
charge has been recorded in Financing revenues and other income, net in the
Consolidated Statement of Operations.
The 1994 ESOP accounting change, excluding the one-time charge, reduced
pretax income by $10 million and $34 million, reduced net income by $6 million
and $21 million, and reduced reported preferred stock dividends by $4 million
and $16 million for the three-month and nine-month periods ended September 30,
1994, respectively. These reductions in net income and preferred stock dividend
requirements, and the reduction in ESOP shares considered outstanding of 8.4
million and 8.6 million shares, have the combined effect of increasing earnings
per share by $.06 and $.13, excluding the one-time charge, for the three-month
and nine-month periods ended September 30, 1994, respectively. Overall,
earnings per share for the three-month period ended September 30, 1994 were
increased by $.06 and for the nine-month period ended September 30, 1994 were
reduced by $.10 as a result of this accounting change.
Borrowings and Lines of Credit
In July, the Corporation executed an in-substance defeasance of $30 million
of its 8.26% medium term notes due June 3, 1996, bringing the total of in-
substance defeasances to $130 million for the nine-month period. The
Corporation deposited U.S. Government securities into irrevocable trusts to
cover the interest and principal payments on this debt. For financial reporting
purposes, the debt has been considered extinguished and the loss on these
transactions, which was immaterial, is included in Financing revenues and other
income, net. In addition, during the third quarter the Corporation retired $55
million of long-term debt.<PAGE>
<PAGE> 6
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
During the nine-month period of 1995, the Corporation canceled $600 million
of outstanding interest rate hedges. As a result of debt reduction and these
contract cancellations, the percentage of total debt at floating interest rates,
after taking effect of the remaining outstanding interest rate contracts, is 15%
at September 30, 1995, versus 42% at December 31, 1994.
Contingent Liabilities
While there has been no significant change in the Corporation's material
contingencies during 1995, the matters previously described in Note 14 of Notes
to Financial Statements in the Corporation's Annual Report on Form 10K for
calendar year 1994 are summarized below.
Environmental
The Corporation's operations are subject to environmental regulation by
federal, state, and local authorities in the United States and regulatory
authorities with jurisdiction over its foreign operations.
It is the Corporation's policy to accrue environmental investigatory and
remediation costs when it is probable that a liability has been incurred by the
Corporation for known sites and the amount of loss can be reasonably estimated.
Where no amount within a range of estimates is more likely, the minimum is
accrued. Otherwise, the most likely cost to be incurred is accrued. The
measurement of the liability is based on an evaluation of currently available
facts with respect to each individual site and takes into account factors such
as existing technology, presently enacted laws and regulations, and prior
experience in remediation of contaminated sites.
Where the Corporation is not the only party responsible for the remediation
of a site, the Corporation considers its likely proportionate share of the
anticipated remediation expense in establishing a provision for those costs.
Included within the sites known to the Corporation are those sites at which the
Corporation has been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"
or Superfund). Under the provisions of this statute, the Corporation may be
held liable for all costs of environmental remediation without regard to the
legality of the Corporation's actions resulting in the contamination. In
estimating its liability for remediation, the Corporation considers its likely
proportionate share of the anticipated remediation expense and the ability of
the other potentially responsible parties to fulfill their obligations.
Some of the Corporation's liabilities, including certain Superfund
liabilities, relate to facilities that were acquired by the Corporation with
indemnities from the sellers or former owners. In estimating the potential
liability at these sites, the Corporation has considered the indemnification
separately from the liability.
The Corporation has instituted legal proceedings against its insurers seeking
insurance coverage for remediation costs, defense costs, physical loss or damage
to the property of the Corporation and others, and for related costs.
Settlements to date, which have not been material, have been recorded upon
receipt. It is expected that one or more of these cases will last several
years. Environmental liabilities are not reduced by potential insurance
reimbursements.<PAGE>
<PAGE> 7
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
U.S. Government
The Corporation is now and believes that, in light of the current government
contracting environment, it will be the subject of one or more government
investigations. If the Corporation or one of its business units were charged
with wrongdoing as a result of any of these investigations, the Corporation or
one of its business units could be suspended from bidding on or receiving awards
of new government contracts pending the completion of legal proceedings. If
convicted or found liable, the Corporation could be fined and debarred from new
government contracting for a period generally not to exceed three years. Any
contracts found to be tainted by fraud could be voided by the Government.
The Corporation's contracts with the U.S. Government are also subject to
audits. Like many defense contractors, the Corporation has received audit
reports which recommend that certain contract prices should be reduced to comply
with various government regulations. Some of these audit reports involve
substantial amounts. The Corporation has made voluntary refunds in those cases
it believes appropriate.
Other
The Corporation extends performance and operating cost guarantees, which are
beyond its normal warranty and service policies, for extended periods on some of
its products, particularly commercial aircraft engines. Liability under such
guarantees is contingent upon future product performance and durability. The
Corporation has accrued its estimated liability that may result under these
guarantees.
The Corporation also has other commitments and contingent liabilities related
to legal proceedings and matters arising out of the normal course of business.
The Corporation has accrued its liability for environmental investigation and
remediation, performance guarantees, and other litigation and claims based on
management's estimate of the probable outcome of these matters. While it is
possible that the outcome of these matters may differ from the recorded
liability, management believes that resolution of these matters will not have a
material adverse effect upon either results of operations, cash flows, or
financial position of the Corporation.<PAGE>
<PAGE> 8
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
With respect to the unaudited condensed consolidated financial information of
United Technologies Corporation for the three and nine-month periods ended
September 30, 1995 and 1994, Price Waterhouse LLP ("Price Waterhouse") reported
that they have applied limited procedures in accordance with professional
standards for a review of such information. However, their separate report
dated October 25, 1995 appearing below, states that they did not audit and they
do not express an opinion on that unaudited condensed consolidated financial
information. Price Waterhouse has not carried out any significant or additional
audit tests beyond those which would have been necessary if their report had not
been included. Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited nature of the review
procedures applied. Price Waterhouse is not subject to the liability provisions
of section 11 of the Securities Act of 1933 for their report on the unaudited
condensed consolidated financial information because that report is not a
"report" or a "part" of the registration statement prepared or certified by
Price Waterhouse within the meaning of sections 7 and 11 of the Act.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
United Technologies Corporation
We have reviewed the accompanying condensed consolidated statement of
operations of United Technologies Corporation and consolidated subsidiaries for
the three and nine-month periods ended September 30, 1995 and 1994, the
condensed consolidated statement of cash flows for the nine months ended
September 30, 1995 and 1994, and the condensed consolidated balance sheet as of
September 30, 1995. This financial information is the responsibility of the
company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial information for it to be in
conformity with generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1994, and the
related consolidated statements of operations, of cash flows and of changes in
shareowners' equity for the year then ended (not presented herein), and in our
report dated January 26, 1995, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of December 31, 1994,
when read in conjunction with the consolidated financial statements from which
it has been derived, is fairly stated in all material respects in relation
thereto.
PRICE WATERHOUSE LLP
Hartford, Connecticut
October 25, 1995<PAGE>
<PAGE> 9
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL POSITION
BUSINESS ENVIRONMENT
The Corporation's Otis, Carrier and UT Automotive subsidiaries serve
customers in the commercial property, residential housing and automotive
businesses. Additionally, the Corporation's Pratt & Whitney, Sikorsky and
Hamilton Standard businesses serve commercial and government customers in the
aerospace industry. As world-wide businesses, these operations are affected by
global as well as regional economic factors.
U.S. residential housing starts in the first nine months decreased
approximately 7% over the same period in 1994. While commercial construction
starts in the U.S. are higher than last year they remain weak. U.S. commercial
vacancy rates have improved only marginally from the 1992 peak.
North American car and light truck production and European car sales were
down in the Third Quarter and essentially flat for the first nine months of 1995
versus the comparable period in 1994.
Worldwide airline profits in 1994 were nominal despite load factors at
historically high levels. Reported airline results in the first nine months of
1995 have shown improvement through higher revenues and relatively flat costs.
However, competitive pricing strategies and disparate cost structures continue
to make it difficult for the U.S. airlines to achieve the financial condition
necessary to make significant investments in new aircraft. For many
international airlines, increasing competition, high cost structures and
privatization initiatives will strain financial results and resources in the
near term. While airlines have historically begun ordering new equipment
approximately 18 months after returning to profitability, management believes
the current recovery may be slower. It is too early to determine what impact,
if any, the labor strike at Boeing may have on Pratt & Whitney's operating
profits or cash flow or on negotiations of its labor contract, which expires in
December.
The U.S. Defense industry continues to experience significant downsizing, and
further consolidation within the industry is expected. As a result, the
Corporation has continued to reduce its reliance on U.S. Defense contracts.
RESULTS OF OPERATIONS
Consolidated revenues and margin percentages were as follows:
<TABLE><CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
In Millions of Dollars 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Product sales $ 4,420 $ 4,094 $ 13,285 $ 12,154
Service sales 1,184 1,041 3,411 3,032
Financing revenues and
other income, net 47 115 139 336
Product margin % 18.3% 18.0% 17.6% 17.3%
Service margin % 39.6% 37.4% 39.9% 37.6%
/TABLE
<PAGE>
<PAGE> 10
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Consolidated revenues increased 8% for the three-month and nine-month periods
ended September 30, 1995, over the comparable periods of 1994. Excluding the
favorable effect of foreign exchange translation, consolidated revenues
increased approximately 6% for the same periods. All segments, excluding Flight
Systems, reported increased revenues in the third quarter. UTC's commercial and
industrial segments increased 11% and 14% for the three-month and nine-month
periods, respectively. The aerospace segments, excluding the impacts of the
second quarter 1994 sale of the equity share holding in Westland Group plc and
Norden divestiture, increased 3% and 4% for the three-month and nine-month
periods, respectively.
Financing revenues and other income decreased in the third quarter, from the
comparable period in the prior year, principally due to lower financing revenues
in 1995 on a lower customer financing asset base and the absence of
miscellaneous asset sales and insurance litigation settlements. Financing
revenues and other income for the 1994 nine-month period includes a $51 million
charge relating to the adoption of SOP 93-6, "Employers' Accounting for Employee
Stock Ownership Plans" and an $87 million gain realized on the sale of the
equity share holding in Westland Group plc. Excluding these effects, financing
revenues and other income for the nine-month period decreased due to the same
effects as in the third quarter.
Product margin percentage for the nine months ended September 30, 1994 was
18.0% before the impact of 1994 charges for downsizing and other actions. The
product margin percentage for the comparable 1995 period of 17.6% is down
slightly as improved product margins at Pratt & Whitney and Hamilton Standard
were offset by decreases at Sikorsky and Otis, and by the first quarter 1995
charges for the wafer fabrication facility of Hamilton Standard and a workforce
reduction at Sikorsky. Service margins as a percentage of sales improved in all
of the Corporation's businesses.
Research and development expenses increased $22 million (10%) for the third
quarter and decreased $28 million (4%) in the nine-month period as compared to
1994. As a percentage of revenue, research and development was 4.4% in the
third quarter and 4.2% in the nine-month period compared to 4.4% and 4.7% in the
corresponding 1994 periods last year. The decrease for the nine-month period
occurred principally in the Flight Systems Segment as several development
programs at Hamilton Standard reached completion. Research and development
expenses in 1995 are expected to be essentially flat with the spending level of
1994 and lower as a percentage of revenues.
Selling, general and administrative expenses in the 1995 third quarter and
nine-month period increased by $32 million (5%) and $82 million (4%) over the
1994 comparable periods. However, as a percentage of revenues, these expenses
decreased from 11.6% to 11.4% for the three-month period and from 12.0% to 11.5%
for the nine-month period as the Corporation achieved increased sales while
continuing to control expenses.<PAGE>
<PAGE> 11
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Segment revenues and operating profits in the Corporation's principal
business segments for the three-month and nine-month periods ended September 30,
1995 and 1994 are as follows (in millions of dollars):
<TABLE><CAPTION>
Operating
Revenues Operating Profits Profit Margin
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended
September 30,
Otis $ 1,323 $ 1,158 $ 130 $ 111 9.8% 9.6%
Carrier 1,462 1,363 144 127 9.8% 9.3%
Automotive 687 606 35 31 5.1% 5.1%
Pratt & Whitney 1,521 1,376 131 110 8.6% 8.0%
Flight Systems 688 768 40 57 5.8% 7.4%
Nine Months Ended
September 30,
Otis $ 3,858 $ 3,348 $ 364 $ 309 9.4% 9.2%
Carrier 4,122 3,721 303 252 7.4% 6.8%
Automotive 2,234 1,914 148 131 6.6% 6.8%
Pratt & Whitney 4,507 4,214 383 247 8.5% 5.9%
Flight Systems 2,204 2,428 144 203 6.5% 8.4%
</TABLE>
Otis segment revenues for the three-month and nine-month periods ended
September 30, 1995 were 14% and 15% higher than the comparable periods of 1994,
respectively. Excluding the favorable impact of foreign exchange translation
effects, 1995 revenues increased approximately 8% for the third quarter and
nine-month periods over 1994 with all geographic regions showing an increase
compared to last year.
Operating profits at Otis increased $19 million and $55 million in the third
quarter and nine-month period of 1995 compared to 1994. Approximately one-half
of the increase in the third quarter and nine-month period was due to favorable
foreign exchange translation effects with the balance due to improved
performance in all geographic regions compared to last year.
Carrier 1995 third quarter and nine-month period revenues increased 7% and
11% from 1994, respectively. Excluding the favorable impact of foreign exchange
translation effects, 1995 revenues increased approximately 5% and 8% over the
three-month and nine-month periods of 1994, respectively. The increased
revenues in both periods were led by continued strong growth in the Asia Pacific
region and the recovery in Europe.
Operating profits at Carrier increased $17 million and $51 million in the
third quarter and nine-month period of 1995 compared to 1994 with approximately
one-third of the increases in both periods due to favorable foreign exchange
translation effects. Higher volumes and continued cost reductions more than
offset cost increases in raw materials such as copper and aluminum. Nine-month
results include improved Brazilian profits, particularly in the first quarter on
a strong summer selling season and a gain from selling a joint venture interest
in its Arkadelphia scroll compressor plant, which was substantially offset by
charges for closure and consolidation of certain facilities, inventory reserves,
and start-up costs of four new joint ventures in China.
Automotive segment revenues increased 13% and 17% in the 1995 third quarter
and nine-month period, respectively, as compared to 1994. Revenue increases in<PAGE>
<PAGE> 12
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
both periods were a result of higher vehicle content, and favorable product mix
in North America and increased market penetration in Europe.
Operating profits at the Automotive segment increased $4 million and $17
million in the 1995 third quarter and nine-month period compared to the same
periods in 1994, while margins as a percentage of revenues were flat in the
third quarter and decreased slightly for the nine-month period as compared to
1994. The positive effects of higher revenues in Europe and North America were
partially offset by global increases in raw material costs and continuing costs
in support of new vehicle model awards in North America. UT Automotive
management is considering cost reduction actions to be taken, including
consolidation of certain production facilities as a part of its ongoing cost and
productivity improvement. This should help mitigate price reductions under
long-term agreements with OEM customers. Appropriate provisions will be charged
to the Automotive segment results as decisions are made and actions taken.
Pratt & Whitney revenue during the third quarter and nine-month period ended
September 30, 1995 increased 11% and 7%, respectively, as compared to 1994;
however, revenues for the full year are expected to be essentially the same as
last year. The increase in the third quarter and nine-month period over the
prior year is due to increases in Pratt & Whitney's commercial, government, and
general aviation businesses.
Operating profits for Pratt & Whitney for the third quarter and nine-month
period ended September 30, 1995 increased $21 million and $136 million,
respectively, over the comparable periods of 1994. The increases reflect higher
revenues and improved margins arising from cost reduction initiatives. While
research and development expenses were lower in the first six months of 1995
they were moderately higher in the third quarter. Improved 1995 third quarter
results were partially offset by increases to manufacturing cost estimates on
commercial engine contracts, principally higher production costs on the PW4084
engine. In addition, the nine-month period results reflect the absence of a $50
million downsizing charge partially offset by the sale of a participation
interest in the PW4000 engine program, both of which occurred in the second
quarter of 1994.
Flight Systems revenues decreased 10% and 9% in the third quarter and nine-
month period ended September 30, 1995, respectively, compared to 1994. Revenue
decreases in the third quarter of 1995 were the result of lower helicopter
shipments as compared to 1994. Revenue decreases for the nine-month period were
a result of the sale of the equity share holding in Westland Group plc and the
Norden divestiture, both in the second quarter of 1994, and lower 1995 revenues
at Sikorsky. Revenues at Sikorsky are expected to decrease versus last year due
to fewer scheduled deliveries of helicopters.
Operating profits for Flight Systems decreased $17 million and $59 million in
the third quarter and nine-month period ended September 30, 1995, respectively,
as compared to 1994. Nine-month period 1994 results include an $87 million gain
realized on the sale of the equity share holding in Westland Group plc and $35
million in downsizing charges. Operating profits excluding those items
decreased $7 million in the nine-month period ended September 30, 1995. The
third quarter decrease reflects continuing operating improvement at Hamilton
Standard, offset by lower helicopter volume at Sikorsky and a service and
warranty provision for a Hamilton Standard propeller, including estimated costs
for inspections, repairs and replacements. The nine-month period results reflect
improved performance at Hamilton Standard, offset by costs associated with
selling the wafer fabrication facility of Hamilton Standard's Microelectronics
Center and lower volumes and charges in the first quarter of 1995 for a
workforce reduction at Sikorsky.<PAGE>
<PAGE> 13
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Interest expense decreased $12 million and $22 million in the three-month and
nine-month periods ended September 30, 1995 to $57 million and $186 million,
respectively. This decrease is mainly due to a reduced average borrowing level
during the third quarter and nine-month period compared to last year as the
Corporation continues to retire or extinguish debt with its improved cash flow,
partially offset by increased interest rates.
The effective tax rate for the first nine months of 1995 was 34.8%, compared
to an effective tax rate of 35.7% for the corresponding period of 1994. The
Corporation has reduced its effective income tax rate by implementing tax
reduction strategies.
FINANCIAL POSITION AND LIQUIDITY
Management assesses the Corporation's liquidity in terms of its overall
ability to generate cash to fund its operating and investing activities. Of
particular importance in the management of liquidity are cash flows generated
from operating activities, capital expenditure levels, customer financing
requirements, adequate bank lines of credit, and financial flexibility to
attract long-term capital on satisfactory terms.
Set forth below is selected key cash flow data:
<TABLE><CAPTION>
Nine Months Ended
September 30,
In Millions of Dollars 1995 1994
<S> <C> <C>
Operating Activities
Net Cash Flows from Operating Activities $ 1,514 $ 868
Investing Activities
Capital expenditures (486) (489)
Acquisitions of business units (151) (106)
Dispositions of business units 103 238
Decrease in customer financing assets, net 276 17
Financing Activities
Common Stock repurchase (215) (164)
Decrease in total debt (379) (151)
Decrease in net debt (897) (274)
</TABLE>
Cash flows from operating activities were $1,514 million during the first
nine months of 1995 compared to $868 million for the corresponding period of
1994. The improvement resulted primarily from improved operating performance
and working capital management, and the absence of a $150 million payment to the
U.S. Government made in the second quarter of 1994 for a previously reported
settlement by Sikorsky Aircraft.
Cash flows from investing activities were a use of funds of $208 million
during the first nine months of 1995 compared to a $305 million use in the
corresponding period of 1994. During the nine-month period ended September 30,
1995, the Corporation received proceeds of $103 million from dispositions of
business units, the largest item being proceeds received in the second quarter
of 1995 from the sale of a joint venture interest in Carrier's Arkadelphia
scroll compressor plant. During the nine-month period ended September 30, 1995,
<PAGE>
<PAGE> 14
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
the Corporation invested $151 million for the acquisition of business units, the
largest item being the purchase of an Australian elevator company in the third
quarter. Capital expenditures in the nine-month period of 1995 were $486
million, a $3 million decrease over the corresponding period of 1994. The
Corporation expects 1995 full year capital spending to be slightly higher than
1994. The decrease in customer financing assets in the 1995 period includes
loan repayments and asset sales. While the Corporation now believes that
changes in customer financing assets in 1995 will be a net source of funds,
actual funding is subject to usage under existing customer financing commitments
during the remainder of the year.
The Corporation repurchased $215 million of common stock, representing 2.76
million shares, in the first nine months of 1995 under previously announced
stock repurchase programs.
Other selected financial data is as follows:
<TABLE><CAPTION>
September 30, December 31, September 30,
In Millions of Dollars 1995 1994 1994
<S> <C> <C> <C>
Cash and cash equivalents $ 904 $ 386 $ 544
Total debt 2,064 2,443 2,808
Net debt (total debt less cash) 1,160 2,057 2,264
Shareowners' equity 3,952 3,752 3,734
Debt-to-total capitalization 34.3% 39.4% 42.9%
Net debt-to-total capitalization 22.7% 35.4% 37.7%
</TABLE>
In July, the Corporation executed an in-substance defeasance of $30 million
of its 8.26% medium term notes due June 3, 1996, bringing the total of in-
substance defeasances to $130 million for the nine-month period. The
Corporation deposited U.S. Government securities into irrevocable trusts to
cover the interest and principal payments on this debt. For financial reporting
purposes, the debt has been considered extinguished and the loss on these
transactions, which was immaterial, is included in Financing revenues and other
income, net. In addition, during the third quarter the Corporation retired $55
million of long-term debt.
During the nine-month period of 1995, the Corporation canceled $600 million
of outstanding interest rate hedges. As a result of debt reduction and these
contract cancellations, the percentage of total debt at floating interest rates,
after taking effect of the remaining outstanding interest rate contracts, is 15%
at September 30, 1995, versus 42% at December 31, 1994.
Management believes that its existing cash position and other available
sources of liquidity are sufficient to meet current and anticipated requirements
for the foreseeable future.<PAGE>
<PAGE> 15
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Part II - Other Information
Item 1. Legal Proceedings
On October 12, 1995 following discussions with the United States
Environmental Agency, Region V, UT Automotive paid a fine of $125,000 to settle
certain allegations of violations of water discharge permits issued under the
Clean Water Act at a facility formerly owned by UT Automotive in Columbia City,
Indiana. This matter which was previously reported in the Corporation's Annual
Report on Form 10K for calendar year 1994 is now concluded.
Other than the matter described above, there has been no material change in
legal proceedings during the third quarter of 1995. (For a description of
previously reported legal proceedings, refer to Part 1, Item 3 - Legal
Proceedings of the Corporation's Annual Report on Form 10K for calendar year
1994, and to Part II, Item 1 - Legal Proceedings of the Corporation's Report on
Form 10Q for the first and second quarters of calendar year 1995.)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(10) (xvi) United Technologies Corporation Special Retention and Stock
Appreciation Program
(11) Computation of per share earnings
(12) Computation of ratio of earnings to fixed charges
(15) Letter re unaudited interim financial information
(27) Financial data schedule (submitted electronically herewith)
(b) No reports on Form 8-K were filed during the quarter ended September 30,
1995.<PAGE>
<PAGE> 16
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED TECHNOLOGIES CORPORATION
Dated: October 30, 1995 By: Stephen F. Page
Stephen F. Page
Executive Vice President and
Chief Financial Officer
Dated: October 30, 1995 By: George E. Minnich
George E. Minnich
Vice President and Controller
Dated: October 30, 1995 By: William H. Trachsel
William H. Trachsel
Vice President and Secretary<PAGE>
<PAGE>
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit 10 (xvi) - United Technologies Corporation Special Retention and Stock
Appreciation Program
Exhibit 11 - Computation of per share earnings
Exhibit 12 - Computation of ratio of earnings to fixed charges
Exhibit 15 - Letter re unaudited interim financial information
Exhibit 27 - Financial data schedule (submitted electronically herewith)<PAGE>
<PAGE>
<TABLE>
Exhibit 11
<CAPTION>
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
Three Months Ended
September 30,
In Millions of Dollars (except per share amounts) 1995 1994
<S> <C> <C>
Earnings applicable to Common Stock $ 203 $ 182
ESOP Convertible Preferred Stock adjustment 6 4
Net earnings for calculation of primary and fully
diluted earnings per share $ 209 $ 186
Average number of common shares and common stock
equivalents outstanding during period (four month-
end average) 130,813,139 132,011,619
Fully diluted average number of common shares and
common stock equivalents outstanding during period
(four month-end average) 131,189,176 132,185,586
Primary earnings per common share $ 1.60 $ 1.41
Fully diluted earnings per common share (Note1) $ 1.59 $ 1.41
</TABLE>
Note 1 - Fully diluted earnings per common share is less than 3% dilutive and is
not shown separately on the Condensed Consolidated Statement of
Operations.<PAGE>
<PAGE>
<TABLE>
Exhibit 11
<CAPTION>
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
Nine Months Ended
September 30,
In Millions of Dollars (except per share amounts) 1995 1994
<S> <C> <C>
Earnings applicable to Common Stock $ 543 $ 404
ESOP Convertible Preferred Stock adjustment 16 12
Net earnings for calculation of primary and fully
diluted earnings per share $ 559 $ 416
Average number of common shares and common stock
equivalents outstanding during period (ten month-
end average) 130,413,809 132,570,827
Fully diluted average number of common shares and
common stock equivalents outstanding during period
(ten month-end average) 131,418,808 132,738,029
Primary earnings per common share $ 4.28 $ 3.14
Fully diluted earnings per common share (Note 1) $ 4.25 $ 3.13
</TABLE>
Note 1 - Fully diluted earnings per common share is less than 3% dilutive and is
not shown separately on the Condensed Consolidated Statement of
Operations.<PAGE>
<PAGE>
<TABLE>
Exhibit 12
<CAPTION>
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Nine Months Ended
September 30,
In Millions of Dollars 1995 1994
<S> <C> <C>
Fixed Charges:
Interest on indebtedness $ 186 $ 208
Interest capitalized 15 17
One-third of rents* 57 76
Total Fixed Charges $ 258 $ 301
Earnings:
Income before income taxes and minority interests $ 1,010 $ 775
Fixed charges per above 258 301
Less: interest capitalized (15) (17)
243 284
Amortization of interest capitalized 31 32
Total Earnings $ 1,284 $ 1,091
Ratio of Earnings to Fixed Charges 4.98 3.62
* Reasonable approximation of the interest factor.
/TABLE
<PAGE>
<PAGE>
Exhibit 15
October 30, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Dear Sirs:
We are aware that United Technologies Corporation has incorporated by reference
our report dated October 25, 1995 (issued pursuant to the provisions of
Statement on Auditing Standards No. 71) in the Prospectus constituting part of
its Registration Statements on Form S-3 (Nos. 33-46916, 33-40163, 33-34320, 33-
31514, 33-29687, and 33-6452) and Form S-8 (Nos. 33-57769, 33-45440, 33-11255,
33-26580, 33-26627, 33-28974, 33-51385, 33-58937 and 2-87322). We are also
aware of our responsibilities under the Securities Act of 1933.
Yours very truly,
Price Waterhouse LLP<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the Condensed
Consolidated Balance Sheet at September 30, 1995 (Unaudited) and the Condensed
Consolidated Statement of Operations for the nine months ended September 30,
1995 (Unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 904
<SECURITIES> 0
<RECEIVABLES> 4,062
<ALLOWANCES> 349
<INVENTORY> 2,957
<CURRENT-ASSETS> 8,636
<PP&E> 10,316
<DEPRECIATION> 5,967
<TOTAL-ASSETS> 15,741
<CURRENT-LIABILITIES> 6,358
<BONDS> 1,707
<COMMON> 2,225
386
0
<OTHER-SE> 1,727
<TOTAL-LIABILITY-AND-EQUITY> 15,741
<SALES> 13,285
<TOTAL-REVENUES> 16,835
<CGS> 10,944
<TOTAL-COSTS> 12,994
<OTHER-EXPENSES> 702
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 186
<INCOME-PRETAX> 1,010
<INCOME-TAX> 351
<INCOME-CONTINUING> 563
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 563
<EPS-PRIMARY> 4.28
<EPS-DILUTED> 4.28
</TABLE>
Exhibit (10) (xvi)
UNITED TECHNOLOGIES CORPORATION
SPECIAL RETENTION
AND STOCK APPRECIATION PROGRAM
INTRODUCTION
The Board of Directors Committee on Compensation and Executive Development
(the `Committee') of United Technologies Corporation (the `Corporation')
has established a special award program for certain key employees whose
continued performance and retention is deemed to be important to the future
success of the Corporation. The purpose of the Special Retention and Stock
Appreciation Program (the `Program') is: (i) to provide certain of the
Corporation's employees as selected by the Committee (the `Participants')
with a specific performance based incentive award directly linked to
shareowner value; and (ii) to enhance the Corporation's ability to retain
those of its most valuable employees whom the Committee has selected to
participate herein.
PROGRAM AWARDS
Under the Program, certain of the Corporation's senior executives, as
determined by the Committee, will be awarded stock appreciation units (the
`Units'), as more fully described hereafter and in each Participant's
Statement of Award (an `Award'). Units are performance-based Awards that
will vest if the Corporation or the Participant's business unit achieves
certain objectives as established by the Committee (the `Performance
Target'). The Performance Target applicable to an Award and the date by
which such Performance Target must be achieved (the `Award Expiration
Date') are described in the Statement of Award (see `Vesting of Units').
Awards may also be subject to a combination of time-based vesting criteria
and performance-based vesting criteria. The Units can be settled only in
cash. In no event may the Committee grant Awards of more than 1,000,000
Units in any calendar year.
VESTING OF UNITS
Units will vest and become immediately redeemable following the achievement
of the performance-based and time-based vesting criteria (if applicable),
as set forth in the Statement of Award (the `Vesting Date'). Performance-
based vesting criteria may be based on a Performance Target such as a
specified increase in the value of the Corporation's Common Stock, total
shareholder return, or other quantitative performance criteria applicable
to the Corporation or the Participant's business unit, as specified by the
Committee. If the applicable Performance Target is not achieved prior to
the Award Expiration Date or termination of employment, the Units will be
forfeited without value (except in the case of death, disability, the
occurrence of an event described in `Change of Control' or if otherwise
extended by the Committee, as hereafter provided).
VALUE AND PAYMENT OF UNITS
Beginning on the Vesting Date (but in no event prior to the earlier of the
date that is six months following the date of the Award or the date of
termination of employment by reason of disability, retirement or death), a
Participant will be entitled to redeem all or a portion of the Units and
receive in exchange a cash payment per Unit equal to the excess of the
closing price of Common Stock on the New York Stock Exchange on the date
the Participant notifies the Director, Compensation of his or her intention
to redeem Units over the closing price of Common Stock on the date the
Committee awards the Unit (the `Unit Value'). Following the Vesting Date,
the value of the Units will be continuously variable by reference to the
price of Common Stock. Accordingly, there can be no guarantee that the
future value of the Units will not be less than the value on the Vesting
Date.<PAGE>
- 2 -
<PAGE>
EXPIRATION OF PROGRAM
The Program expires on June 27, 2005 (the `Program Expiration Date'). No
Awards shall be granted after the Program Expiration Date.
EXPIRATION OF AWARDS
Participants will automatically receive a cash payment promptly following
an Award Expiration Date equal to the aggregate Unit Value of outstanding
vested Units, determined as of the Award Expiration Date.
TERMINATION OF EMPLOYMENT
A.Termination Before Vesting Date
If a Participant's employment with the Corporation terminates prior to the
Vesting Date (other than by reason of the death or disability of the
Participant or the occurrence of an event described in `Change of Control',
as hereafter provided for), all non-vested Units held by the Participant
will be forfeited without value as of the termination date, unless the
Committee, in its sole discretion, decides to either: (i) extend all or a
portion of the non-vested Units for a period of time, as determined by the
Committee (not to exceed the Award Expiration Date), in which case such
Units will vest if the applicable Performance Target is achieved during the
extension period; or (ii) immediately vest all or a portion of the Units
without regard to the achievement of the Performance Target, in which case
the vested Units will be immediately redeemable, for a period of time as
specified by the Committee.
B.Termination After Vesting Date
If a Participant's employment with the Corporation terminates on or after
the Vesting Date, the vested Units will be redeemable by the Participant
for a period of time following the Termination Date, as determined by the
Committee, in its sole discretion (but not beyond the Award Expiration
Date).
C.Death
In the event of the death of a Participant, all Units of such Participant
then outstanding will be immediately vested (without regard to whether any
applicable Performance Target or other vesting criteria have been
achieved), effective as of the date of death. Such Units may be redeemed
at the applicable Unit Value by the Participant's estate for a period of up
to one year following the date of death.
D.Disability
In the event of the termination of a Participant's employment as a result
of the Participant's total and permanent disability (as determined under
the Corporation's long term disability program), the Participant's then
outstanding Units shall be extended until the Award Expiration Date.
CHANGE OF CONTROL
Notwithstanding any other provision herein to the contrary, in the event of
a Change of Control of the Corporation, Participants will be fully vested
in their Units without regard to the achievement of any Performance Target
or other vesting criteria and Participants will be entitled to redeem then
outstanding Units at any time following the Change of Control until the
Award Expiration Date. The Committee will provide for such other
adjustments or modifications with respect to outstanding Units as the
Committee may deem appropriate to assure fair and equitable treatment of
Participants under the Program in response to: (i) a Change of Control;
(ii) an event, which if consummated, would constitute a Change of Control;
or (iii) any other significant change pertaining to the ownership of the
Corporation and the involuntary or constructive termination of the
Participant within two years of such change. With respect to Participants<PAGE>
- 3 -
<PAGE>
who participate in the Corporation's Senior Executive Severance Plan,
amounts realized from the redemption of Units following accelerated vesting
pursuant to this Section are subject to additional `gross up' payments to
the extent that excise taxes may be imposed under Internal Revenue Code
Section 4999, the amount of such gross up payments to be determined in
accordance with the procedures set forth in the Corporation's Senior
Executive Severance Program.
For purposes of the Plan, a `Change of Control' means the acquisition of
20% or more of the Corporation's outstanding voting shares by a person or
group (as defined in Section 13 (d) (3) of the Securities Exchange Act of
1934) of which such person is a member or a change in the majority of the
Board of Directors such that, within any consecutive two-year period, the
members of the new majority are not approved by two-thirds of the members
incumbent at the beginning of such two-year period. Members approved after
such date by two-thirds of such incumbents as of the beginning of such two-
year period shall be deemed to be incumbents as of the beginning of such
two-year period for purposes of this computation. A merger or
consolidation of the Corporation with another company where the Corporation
is not the surviving company, a sale of substantially all of the assets of
the Corporation, a dissolution or liquidation of the Corporation or other
event or transaction having similar effect also constitutes a `Change of
Control' for purposes of this Program.
ADJUSTMENT OF PERFORMANCE TARGET, NUMBER OF UNITS
If the Corporation effects a subdivision or consolidation of shares of
Common Stock, the number of Units and any Performance Target established by
reference to the value of Common Stock on the date of the Award shall be
adjusted by the Committee so that the relative value of a Unit, a share of
Common Stock and the Performance Target are not affected as a result of any
significant change to the Corporation's capital structure. In the case of
a stock split with respect to Common Stock, the number of Units will be
proportionately increased and the Performance Target and the Unit grant
price will be proportionately decreased. Conversely, in the case of a
reverse stock split with respect to Common Stock, the number of Units will
be decreased proportionately and the Performance Target and the Unit grant
price will be increased proportionately. The Committee shall make such
adjustments with respect to Units awarded hereunder as it deems necessary
or appropriate to prevent the enlargement or dilution of the rights of
Participants in the Program in the event of a change in the Corporation's
capital structure resulting from: the payment of a special dividend (other
than regular quarterly dividends) or other special distributions to
shareowners without receiving consideration therefore; the spin-off of a
subsidiary; the sale of a substantial portion of the Corporation's assets;
the merger, consolidation or acquisition of the Corporation; or other
extraordinary non-recurring events or transactions affecting the
Corporation's capital structure that the Committee determines to be
significant for purposes of this Program.
NONASSIGNABILITY
No assignment or transfer of any interest of the Participant in any of the
rights represented by any Award hereunder or any Deferred Account that may
be established (as hereinafter described), whether voluntary or
involuntary, by operation of law or otherwise shall be permitted except by
will or by the laws of descent and distribution. Any attempt to assign
such interests shall be void and shall be without force or effect.
AWARDS NOT TO AFFECT OR BE AFFECTED BY CERTAIN TRANSACTIONS
Neither the Program nor the award of Units hereunder shall affect in any
way the right or power of the Corporation or its shareowners to make or<PAGE>
- 4 -
<PAGE>
authorize: (a) any or all adjustments, recapitalizations, reorganizations
or other changes in the Corporation's capital structure or its business;
(b) any merger or consolidation of the Corporation; (c) any issue of bonds,
debentures, preferred or prior preference stocks holding any priority or
preferred to, or otherwise affecting in any respect the Common Stock of the
Corporation or the rights of the holders of such Common Stock; (d) the
dissolution or liquidation of the Corporation; (e) any sale or transfer of
all or any part of its assets or business; or (f) any other corporate act
or proceeding.
NOTICES
Every notice or other communication relating to this Program and any Award
hereunder shall be in writing, and shall be mailed to or delivered to the
party for whom it is intended at such address as may from time to time be
designated by such party. Unless and until some other address has been so
designated, all notices by the Participant to the Corporation shall be
mailed to or delivered to the Corporation's Director, Compensation at
United Technologies Building, MS 504, Hartford, Connecticut 06101, and all
notices by the Corporation to the Participant shall be given to the
Participant personally or be mailed to the Participant at his or her
address as shown on the records of the Corporation.
ADMINISTRATION
This Program and all rights in respect of Units awarded hereunder shall be
interpreted and administered by the Committee. The Committee shall
establish such procedures as it deems necessary and appropriate to
administer the Units in a manner that is consistent with the objectives of
the Program.
Any question of administration or interpretation arising under this Program
shall be determined by the Committee, such determination to be final and
binding upon all parties in interest. The Program is intended to meet the
requirements of Rule 16a-1(c)(3)(i) under Section 16(a) of the Securities
Exchange Act of 1934, as amended, and shall be interpreted accordingly.
TAXES/WITHHOLDING
The Participant shall be responsible for any income or other tax liability
attributable to amounts realized from the Units, except to the extent
provided in `Change of Control' with respect to gross up payments for
excise taxes under Section 4999 of the Internal Revenue Code. The
Corporation shall take such steps as are appropriate to assure compliance
with applicable federal, state and local tax withholding requirements. The
Corporation shall, to the extent required by law, have the right to deduct
directly from any payment due the Participant or from the Participant's
regular compensation, all federal, state and local taxes of any kind
required by law to be withheld with respect to payments in respect of the
redemption of Units.
LIMITATIONS IMPOSED BY SECTION 162(m)
No Award shall be granted hereunder to any individual who at the time of
the Award is a `covered employee' within the meaning of Section 162(m) of
the Internal Revenue Code. Notwithstanding any other provision hereunder,
if and to the extent that the Committee determines that the Company's
federal tax deduction in respect of the payment of any amounts due upon
the redemption of a Unit may be limited as a result of Section 162(m) of
the Internal Revenue Code, the Committee and the Participant may agree to
delay the payment in respect of such Units until a date that is within 30
days after the earlier to occur of: (i) the date the Participant ceases to
be a `covered employee' within the meaning of Section 162(m) of the Code;
or (ii) the occurrence of a Change in Control. In the event that a<PAGE>
- 5 -
<PAGE>
Participant desires to redeem Units at a time when the Participant is a
`covered employee,' and the Committee and the Participant agree to delay
the payment in respect of such Units, the Committee shall then establish a
book account for such Participant (the `Deferred Account'). The amount
initially credited to such account will equal the cash amount that would
otherwise have been paid to the Participant. The Committee will credit
additional amounts to such Deferred Account as it may determine in its sole
discretion, provided however, that in no event will the amount so credited
be less than the average interest rate on 10 year U.S. Treasury Bonds over
the preceding 12 month period, plus 1%. Any Deferred Account created
hereunder will not be funded in advance and represents only an unfunded
unsecured promise by the Company to pay the amount credited thereto to the
Participant in the future. In this regard, the Participants' interests in
a Deferred Account will be those of a general, unsecured creditor of the
Corporation.
RIGHT OF DISCHARGE RESERVED
Nothing in the Program or in any Award granted hereunder shall confer upon
any Participant the right to continue in the employment or service of the
Corporation or any affiliate thereof for any period of time or affect any
right that the Corporation may have to terminate the employment or service
of such Participant at any time for any reason.
RIGHT OF COMMITTEE TO REVOKE AWARDS
Notwithstanding any other provision herein, the Committee reserves the
right, prior to a Change of Control of the Corporation, to cancel any
Award, whether or not the Performance Target has been achieved or the Award
has otherwise vested, if the Committee determines that the Participant has
engaged in any act or practice with respect to the affairs of the
Corporation, whether or not employed by the Corporation at the time, that
is materially detrimental to the Corporation, provided, however that the
Committee shall not take any such action in an arbitrary or capricious
manner.
NATURE OF PAYMENTS
All Awards made pursuant to the Program are in consideration of services
performed for the Corporation. Any gains realized pursuant to such Awards
constitute a special incentive payment to the Participant and shall not be
taken into account as compensation for purposes of any of the employee
benefit plans of the Corporation.
UNFUNDED PROGRAM
The Program is unfunded. Neither the Corporation nor the Board of
Directors shall separate assets or establish a trust for the purpose of
funding the obligations represented by the Units awarded hereunder. The
Corporation's liability to the Program Participants in respect of the Units
is based solely upon its contractual obligations created by the Program.
In this regard, the Program Participants' rights for payment in respect of
the Units or any Deferred Accounts shall be those of a general, unsecured
creditor of the Corporation.
AMENDMENT AND TERMINATION
The Committee reserves the right to amend, suspend or terminate the Program
at any time provided that any such actions shall not have the effect of
reducing the value of Participants' interests in this Program, determined
as of the date of any such action. Upon the termination of the Program and
without regard to any other provision hereof, the Committee may, in its
discretion, elect to cancel all of the outstanding Units by paying each
Participant the Unit Value with respect to each canceled Unit.<PAGE>
- 6 -
<PAGE>
GOVERNING LAW
The Program shall be governed by and construed in accordance with the laws
of the State of Connecticut.
ELECTION TO PARTICIPATE
An Award recipient may elect to participate in this Program by returning one
signed copy of the Statement of Award to the Director, Compensation, United
Technologies Corporation, MS-504, United Technologies Building, Hartford, CT
06101.<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains restated summary financial information extracted from the
Condensed Consolidated Balance Sheet at September 30, 1994 (Unaudited) and the
Condensed Consolidated Statement of Operations for the nine months ended
September 30, 1994 (Unaudited) and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 544
<SECURITIES> 0
<RECEIVABLES> 3,727
<ALLOWANCES> 295
<INVENTORY> 3,139
<CURRENT-ASSETS> 7,896
<PP&E> 10,184
<DEPRECIATION> 5,704
<TOTAL-ASSETS> 15,709
<CURRENT-LIABILITIES> 6,609
<BONDS> 1,894
<COMMON> 2,131
312
0
<OTHER-SE> 1,603
<TOTAL-LIABILITY-AND-EQUITY> 15,709
<SALES> 12,154
<TOTAL-REVENUES> 15,522
<CGS> 10,056
<TOTAL-COSTS> 11,948
<OTHER-EXPENSES> 730
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208
<INCOME-PRETAX> 775
<INCOME-TAX> 277
<INCOME-CONTINUING> 420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 420
<EPS-PRIMARY> 3.14
<EPS-DILUTED> 3.14
</TABLE>
