<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 March 31, 1996
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
(860) 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 March 31, 1996 there were 121,792,164 shares of Common Stock outstanding.<PAGE>
<PAGE>
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
CONTENTS OF QUARTERLY REPORT ON FORM 10-Q
Quarter Ended March 31, 1996
Page
Part I - Financial Information
Item 1. Financial Statements:
Condensed Consolidated Statement of
Operations for the three months ended
March 31, 1996 and 1995 1
Condensed Consolidated Balance Sheet at March
31, 1996 and December 31, 1995 2
Condensed Consolidated Statement of Cash
Flows for the three months ended March 31,
1996 and 1995 3
Notes to Condensed Consolidated Financial
Statements 4
Report of Independent Accountants 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Position 7
Part II - Other Information
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index<PAGE>
<PAGE> 1
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
In Millions of Dollars (except per share amounts) 1996 1995
<S> <C> <C>
Revenues:
Product sales $ 4,260 $ 4,252
Service sales 1,189 1,066
Financing revenues and other income, net 44 26
5,493 5,344
Costs and expenses:
Cost of products sold 3,480 3,528
Cost of services sold 729 655
Research and development 250 218
Selling, general and administrative 683 629
Interest 58 62
5,200 5,092
Income before income taxes and minority interests 293 252
Income taxes 99 88
Minority interests 30 29
Net Income $ 164 $ 135
Earnings per share of common stock and common stock
equivalents $ 1.24 $ 1.03
Dividends per share of common stock $ .55 $ .50
Average common and equivalent shares outstanding
(in thousands) 131,298 130,071
</TABLE>
See Accompanying Notes<PAGE>
<PAGE> 2
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
<S> <C> <C>
March 31, December 31,
In Millions of Dollars 1996 1995
(Unaudited)
</TABLE>
Assets
<TABLE><CAPTION>
<S> <C> <C>
Cash and cash equivalents $ 1,088 $ 900
Accounts receivable, net 3,495 3,682
Inventories and contracts in progress, net 3,259 2,954
Future income tax benefits 908 950
Other current assets 419 466
Total Current Assets 9,169 8,952
Fixed assets 10,403 10,326
Less - accumulated depreciation (6,063) (5,906)
4,340 4,420
Other assets 2,517 2,586
Total Assets $ 16,026 $ 15,958
</TABLE>
Liabilities and Shareowners' Equity
<TABLE><CAPTION>
<S> <C> <C>
Short-term borrowings $ 316 $ 294
Accounts payable 1,951 2,084
Accrued liabilities 4,231 4,183
Long-term debt currently due 95 98
Total Current Liabilities 6,593 6,659
Long-term debt 1,641 1,649
Future pension and postretirement benefit obligations 1,426 1,399
Other long-term liabilities 1,885 1,832
Series A ESOP Convertible Preferred Stock 888 892
ESOP deferred compensation (480) (494)
408 398
Shareowners' Equity:
Common Stock 2,272 2,249
Treasury Stock (1,230) (1,168)
Retained earnings 3,339 3,252
Currency translation and pension liability
adjustments (308) (312)
4,073 4,021
Total Liabilities and Shareowners' Equity $ 16,026 $ 15,958
</TABLE>
See Accompanying Notes<PAGE>
<PAGE> 3
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
In Millions of Dollars 1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 164 $ 135
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 209 207
Change in:
Accounts receivable 193 129
Inventories and contracts in progress (316) (239)
Accounts payable and accrued liabilities (89) (180)
Other, net 172 53
Net Cash Flows from Operating Activities 333 105
Cash flows from investing activities:
Capital expenditures (129) (148)
Acquisitions of business units (26) (10)
Dispositions of business units 30 1
Decrease in customer financing assets, net 102 90
Other, net 16 12
Net Cash Flows from Investing Activities (7) (55)
Cash flows from financing activities:
Repayments of long-term debt (20) (27)
Increase in short-term borrowings, net 2 116
Dividends paid on Common Stock (67) (62)
Common Stock repurchase (62) (17)
Other, net 11 10
Net Cash Flows from Financing Activities (136) 20
Effect of foreign exchange rate changes on cash and
cash equivalents (2) 5
Net Increase in Cash and Cash Equivalents 188 75
Cash and Cash Equivalents, Beginning of year 900 386
Cash and Cash Equivalents, End of period $ 1,088 $ 461
</TABLE>
See Accompanying Notes<PAGE>
<PAGE> 4
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The condensed consolidated financial statements at March 31, 1996 and for the
three-month periods ended March 31, 1996 and 1995 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 1995 amounts have been reclassified to conform with
the presentation at March 31, 1996.
Employee Benefit Plans
The aggregate amount set aside under the Annual Executive Incentive
Compensation Plan in the Corporate Fund for 1995 was approximately $10 million.
Contingent Liabilities
While there has been no significant change in the Corporation's material
contingencies during 1996, the matters previously described in Note 15 of Notes
to Financial Statements in the Corporation's Annual Report on Form 10-K for
calendar year 1995 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.<PAGE>
<PAGE> 5
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
The Corporation has had liability and property insurance in force over its
history with a number of insurance companies, and the Corporation has commenced
litigation seeking indemnity and defense under these insurance policies in
relation to its environmental liabilities. Settlements to date, which have not
been material, have been recorded upon receipt. While the litigation against
the Corporation's historic liability insurers has concluded, it is expected that
the case against the Corporation's property insurers will last several years.
Environmental liabilities are not reduced by potential insurance reimbursements.
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, product liability, 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> 6
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
With respect to the unaudited condensed consolidated financial information of
United Technologies Corporation for the three-month periods ended March 31, 1996
and 1995, 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 April 23, 1996
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-month periods ended March 31, 1996 and 1995, the condensed
consolidated statement of cash flows for the three months ended March 31, 1996
and 1995, and the condensed consolidated balance sheet as of March 31, 1996.
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, 1995, and the
related consolidated statements of operations and cash flows for the year then
ended (not presented herein), and in our report dated January 24, 1996, 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, 1995, is fairly stated in all
material respects in relation to the consolidated balance sheet from which it
has been derived.
Price Waterhouse LLP
Hartford, Connecticut
April 23, 1996<PAGE>
<PAGE> 7
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 increased in the first quarter of 1996 over
the same period last year, while commercial construction starts in the U.S. are
lower than the same period last year. U.S. commercial vacancy rates have made
modest improvements from the 1992 peak.
North American car and light truck production was lower in the first quarter
of 1996 compared to the first quarter of 1995 while European car sales were
higher.
Worldwide airline profits improved during 1995 as a result of increased load
factors. However, near term profitability at most U.S. airlines is being used
to improve their financial condition and they have yet to achieve the financial
condition necessary to make significant investments in new aircraft. For many
European airlines, increasing competition, higher cost structures and
privatization initiatives will strain financial results and resources in the
near term. Strong economic growth in the Asia Pacific region has contributed to
an increase in new aircraft orders from that market that began in 1994 and has
continued into 1996.
The defense portion of the Corporation's aerospace businesses continues to
respond to a changing global political environment. The U.S. defense industry
is continuing its downsizing in response to the reductions in the U.S. defense
budget. International orders for defense programs have also declined and some
important foreign orders have been delayed. As a result, the Corporation has
continued to reduce its reliance on U.S. defense contracts.
Cost reduction continues to be a corporate-wide imperative, implemented by
each business unit. Manufacturing costs and floor space must continue to be
reduced to remain competitive in all of our businesses, but particularly in the
aerospace segments where these cost reductions are needed to offset the effects
of lower volumes.<PAGE>
<PAGE> 8
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
RESULTS OF OPERATIONS
Consolidated revenues and margin percentages were as follows:
<TABLE><CAPTION>
Three Months Ended
March 31,
In Millions of Dollars 1996 1995
<S> <C> <C>
Product sales $ 4,260 $ 4,252
Service sales 1,189 1,066
Financing revenues and
other income, net 44 26
Product margin % 18.3% 17.0%
Service margin % 38.7% 38.6%
</TABLE>
Consolidated revenues in the first quarter of 1996 increased 3% over the
comparable period of 1995, with less than one percent related to the favorable
effect of foreign exchange translation. Increased revenues at Carrier, Otis
and Pratt & Whitney were partially offset by decreases at Flight Systems and
Automotive in the first quarter as UTC's commercial segments increased 10% while
the aerospace segments decreased 6%.
Financing revenues and other income increased in the first quarter, from the
comparable period in the prior year, as a result of higher interest income and
gains from miscellaneous asset sales, which were partially offset by lower
financing revenues in 1996 on a lower customer financing asset base.
Product margin as a percentage of sales increased 1.3 percentage points
compared to last year primarily as a result of improved margin percentages at
Pratt & Whitney, and the absence of 1995 charges associated with closing the
wafer fabrication facility of Hamilton Standard's Microelectronics Center and
charges for a workforce reduction at Sikorsky. Service margins as a percentage
of sales were relatively flat compared to a year ago.
Research and development expenses increased $32 million (15%) in the first
quarter of 1996 as compared to 1995. As a percentage of sales, research and
development was 4.6% in the first quarter of 1996 compared to 4.1% in the
corresponding period last year. The increase occurred in all segments, but
principally at Pratt & Whitney's government, general aviation and power
generation businesses. Research and development expenses in 1996 are expected
to increase from the spending level of 1995, but will remain between 4% and 5%
of sales.
Selling, general and administrative expenses in the first quarter of 1996
increased by $54 million (9%) over the 1995 comparable period. As a percentage
of sales, these expenses increased seven-tenths of a percentage point to 12.5%
from 11.8% due to higher expenses for incentive based compensation plans,
higher expenses at Pratt & Whitney and lower revenues at Flight Systems.
The provisions of Financial Accounting Standards No. 121 (FAS 121),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" which became effective January 1, 1996, had no effect on the
Corporation's first quarter results.<PAGE>
<PAGE> 9
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Revenues and operating profits of the Corporation's principal business
segments for the three-month periods ended March 31, 1996 and 1995 are as
follows (in millions of dollars):
<TABLE><CAPTION>
Operating
Revenues Operating Profits Profit Margin
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended
March 31,
Otis $ 1,303 $ 1,185 $ 117 $ 110 9.0% 9.3%
Carrier 1,325 1,131 55 29 4.2% 2.6%
Automotive 744 750 50 51 6.7% 6.8%
Pratt & Whitney 1,517 1,491 140 125 9.2% 8.4%
Flight Systems 638 813 49 45 7.7% 5.5%
</TABLE>
Otis segment revenues for the first quarter of 1996 were 10% higher than the
comparable period of 1995. Excluding the favorable impact of foreign exchange
translation effects, 1996 revenues increased approximately 9% over 1995 with all
geographic regions showing an increase compared to last year.
Operating profits at Otis increased $7 million in the first quarter of 1996
compared to 1995, with nominally favorable impact from foreign currency
translation. Margins as a percentage of revenues decreased slightly as
operating income improvements at Otis were partially dampened by aggressive new
equipment pricing in certain international markets.
Carrier first quarter 1996 revenues increased 17% from the first quarter of
1995, with foreign exchange translation effects having little impact in the
quarter. Revenues increased in all geographic regions as well as Carrier's
Transicold business with particular strength in the North American and Asia
Pacific regions.
Operating profits for the first quarter of 1996 at Carrier increased $26
million compared to 1995, in a seasonally weak quarter, with foreign exchange
translation having no effect. All geographic regions except the Latin American
region, which had a strong first quarter in 1995, showed improvement as well as
Carrier's Transicold business. Results benefited from North American dealer
replenishments following a strong 1995, and continued expansion in the Asia
Pacific region.
Automotive segment revenues decreased slightly in the first quarter of 1996
compared to the first quarter of 1995. The decrease in revenues was a result of
lower European volumes on certain high content vehicles and lower North American
volumes as a result of a 17 day strike at General Motors Corporation.
Operating profits and margins as a percentage of revenues at the Automotive
segment were relatively flat in the first quarter of 1996 compared to the same
quarter in 1995.
Pratt & Whitney revenues during the first quarter of 1996 increased 2% as
compared to 1995. The increase in the first quarter is due to increases in
commercial spare parts and the general aviation business partially offset by
decreased shipments of large commercial engines as a continuing effect of the
fourth quarter Boeing Company strike.<PAGE>
<PAGE> 10
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Operating profits for Pratt & Whitney for the first quarter 1996 increased
$15 million over the comparable quarter of 1995. The increase reflects
continuing cost reductions and higher general aviation and commercial spare
parts sales, more than offsetting planned increases in research and development
spending and higher selling, general and administrative expenses.
Flight Systems revenues decreased 22% in the first quarter 1996 compared to
1995. Revenue decreases in the first quarter of 1996 were the result of lower
helicopter shipments as compared to 1995.
Operating profits for Flight Systems increased $4 million in the first
quarter 1996 as compared to 1995. Results reflect the absence of first quarter
1995 costs associated with selling the wafer fabrication facility of Hamilton
Standard's Microelectronics Center and a workforce reduction at Sikorsky,
coupled with lower first quarter 1996 helicopter volume at Sikorsky and
continuing operating profit at Hamilton Standard.
Interest expense decreased $4 million to $58 million for the first quarter of
1996. This decrease is mainly due to a reduced average borrowing level during
the first quarter compared to last year as the Corporation continues to retire
or extinguish debt with its improved cash flow.
The effective tax rate for the first quarter of 1996 was 33.8%, compared to
an effective tax rate of 35% for the first quarter of 1995. The Corporation has
continued to reduce 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>
Three Months Ended
March 31,
In Millions of Dollars 1996 1995
<S> <C> <C>
Operating Activities
Net Cash Flows from Operating Activities $ 333 $ 105
Investing Activities
Capital expenditures (129) (148)
Decrease in customer financing assets, net 102 90
Financing Activities
Common Stock repurchase (62) (17)
Increase in total debt 11 106
Increase (decrease) in net debt (177) 31
/TABLE
<PAGE>
<PAGE> 11
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Cash flows from operating activities were $333 million during the first
quarter of 1996 compared to $105 million for the corresponding period of 1995.
The improvement resulted primarily from improved operating performance and
working capital management.
Cash flows from investing activities were a use of funds of $7 million during
the first quarter of 1996 compared to a use of $55 million in the corresponding
period of 1995. Capital expenditures in the first quarter of 1996 were $129
million, a $19 million decrease over the first quarter of 1995. The Corporation
expects 1996 full year capital spending to be comparable to 1995. The decrease
in customer financing assets in the first quarter of 1996 includes loan
repayments and asset sales. While the Corporation expects that changes in
customer financing assets in 1996 will be a net use of funds, actual funding is
subject to usage under existing customer financing commitments during the
remainder of the year. During the first quarter of 1996 the Corporation entered
into commitments to finance or arrange financing of commercial aircraft for $360
million, bringing the Corporation's total commitments at March 31, 1996 to $1.35
billion.
The Corporation repurchased $62 million of common stock, representing 652,400
shares, in the first quarter of 1996 under previously announced stock repurchase
programs. In April 1996, the Corporation's Board of Directors authorized
management, at its discretion and depending on market conditions, to acquire up
to an additional 5.5 million shares of UTC common stock over the next two years.
Total common stock repurchases authorized by the Board since the April 1994
inception of the repurchase program now total 15 million shares, of which 7.8
million shares have been repurchased through the end of the first quarter.
Share repurchase continues to be a significant use of our strong cash flows and
serves to offset the dilutive effect resulting from the issuance of stock under
stock-based employee benefit programs.
Other selected financial data is as follows:
<TABLE><CAPTION>
March 31, December 31, March 31,
In Millions of Dollars 1996 1995 1995
<S> <C> <C> <C>
Cash and cash equivalents $ 1,088 $ 900 $ 461
Total debt 2,052 2,041 2,549
Net debt (total debt less cash) 964 1,141 2,088
Shareowners' equity 4,073 4,021 3,804
Debt-to-total capitalization 33.5% 33.7% 40.1%
Net debt-to-total capitalization 19.1% 22.1% 35.4%
</TABLE>
The Corporation manages its worldwide cash requirements with consideration of
available funds among the many subsidiaries through which it conducts its
business and the cost effectiveness with which those funds can be accessed. The
repatriation of cash balances from certain of the Corporation's subsidiaries
could have adverse tax consequences, however, those balances are generally
available without legal restrictions to fund ordinary business operations. The
Corporation has and will continue to transfer cash from those subsidiaries to
the parent and to other international subsidiaries as it is cost effective to do
so.<PAGE>
<PAGE> 12
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
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.
This Report on Form 10-Q contains statements which, to the extent they are
not historical fact, constitute "forward looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All forward looking statements involve risks and
uncertainties. The forward looking statements in this document are intended to
be subject to the safe harbor protection provided by Sections 27A and 21E.
For a discussion identifying some important factors such as the economic,
political, climatic, currency, regulatory, technological and competitive changes
which may affect the Corporation's operations, products, and markets and other
factors that could cause actual results to vary materially from those
anticipated in the forward looking statements, see the Corporation's Securities
and Exchange Commission filings, including, but not limited to, the
Corporation's 1995 Annual Report on Form 10-K. See particularly Form 10-K Item
I - Business, the sections entitled "Description of Business by Industry
Segment" and "Other Matters Relating to the Corporation's Business as a Whole,"
and Form 10-K Item 7 - Management's Discussion and Analysis of Results of
Operations and Financial Position, which also may be found at pages 20 through
27 of the Corporation's 1995 Annual Report to Shareowners.<PAGE>
<PAGE> 13
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Part II - Other Information
Item 1. Legal Proceedings
In February, 1996, Ford Motor Company ("Ford"), a principal customer of
United Technologies Automotive ("UTA"), informed UTA that several lawsuits had
been filed covering purchasers of numerous Ford vehicle lines. Since that time,
additional lawsuits have been filed. UTA has been named as a defendant in at
least one of these lawsuits. These lawsuits allege that the ignition switch in
these North American produced vehicles is defective and that the defect could
result in a vehicle fire. UTA disagrees with these allegations. Plaintiffs
seek injunctive relief requiring replacement of the ignition switch in all
affected vehicles, compensatory and punitive damages, and other relief. UTA
supplies the ignition switch in question.
Ford has recalled approximately 8.7 million vehicles to replace the ignition
switch. UTA supplies the replacement switches. UTA is cooperating with Ford in
the investigation, defense and resolution of this matter. Based on currently
available information, UTC management does not believe that this matter will
have a material adverse effect on the Corporation.
Other than the matter described above, there has been no material change in
legal proceedings during the first quarter of 1996. (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
1995.)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(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 March 31, 1996.<PAGE>
<PAGE> 14
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: May 15, 1996 By: /s/ STEPHEN F. PAGE
Stephen F. Page
Executive Vice President and
Chief Financial Officer
Dated: May 15, 1996 By: /s/ GEORGE E. MINNICH
George E. Minnich
Vice President and Controller
Dated: May 15, 1996 By: /s/ WILLIAM H. TRACHSEL
William H. Trachsel
Vice President and Secretary<PAGE>
<PAGE>
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
EXHIBIT INDEX
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
March 31,
In Millions of Dollars (except per share amounts) 1996 1995
<S> <C> <C>
Net Income $ 164 $ 135
Preferred Stock Dividend Requirement 7 6
Earnings applicable to Common Stock 157 129
ESOP Convertible Preferred Stock adjustment 6 5
Net earnings for calculation of primary and fully
diluted earnings per share $ 163 $ 134
Average number of common shares and common stock
equivalents outstanding during period (four month-
end average) 131,298,062 130,071,357
Fully diluted average number of common shares and
common stock equivalents outstanding during period
(four month-end average) 131,782,546 130,506,775
Primary earnings per common share $ 1.24 $ 1.03
Fully diluted earnings per common share (Note1) $ 1.23 $ 1.03
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.
/TABLE
<PAGE>
<PAGE>
<TABLE>
Exhibit 12
<CAPTION>
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months Ended
March 31,
In Millions of Dollars 1996 1995
<S> <C> <C>
Fixed Charges:
Interest on indebtedness $ 58 $ 62
Interest capitalized 5 5
One-third of rents* 22 22
Total Fixed Charges $ 85 $ 89
Earnings:
Income before income taxes and minority interests $ 293 $ 252
Fixed charges per above 85 89
Less: interest capitalized (5) (5)
80 84
Amortization of interest capitalized 10 10
Total Earnings $ 383 $ 346
Ratio of Earnings to Fixed Charges 4.51 3.89
* Reasonable approximation of the interest factor.
/TABLE
<PAGE>
<PAGE>
Exhibit 15
May 15, 1996
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 April 23, 1996 (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 in the Registration Statements on 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 March 31, 1996 (Unaudited) and the Condensed
Consolidated Statement of Operations for the three months ended March 31, 1996
(Unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,088
<SECURITIES> 0
<RECEIVABLES> 3,869
<ALLOWANCES> 374
<INVENTORY> 3,259
<CURRENT-ASSETS> 9,169
<PP&E> 10,403
<DEPRECIATION> 6,063
<TOTAL-ASSETS> 16,026
<CURRENT-LIABILITIES> 6,593
<BONDS> 1,641
408
0
<COMMON> 2,272
<OTHER-SE> 1,801
<TOTAL-LIABILITY-AND-EQUITY> 16,026
<SALES> 4,260
<TOTAL-REVENUES> 5,493
<CGS> 3,480
<TOTAL-COSTS> 4,209
<OTHER-EXPENSES> 250
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58
<INCOME-PRETAX> 293
<INCOME-TAX> 99
<INCOME-CONTINUING> 164
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 164
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
</TABLE>
