<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, 1997
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, 1997 there were 236,888,815 shares of Common Stock outstanding.<PAGE>
<PAGE>
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
CONTENTS OF QUARTERLY REPORT ON FORM 10-Q
Quarter Ended March 31, 1997
Page
Part I - Financial Information
Item 1. Financial Statements:
Condensed Consolidated Statement of
Operations for the quarters ended March
31, 1997 and 1996 1
Condensed Consolidated Balance Sheet at March
31, 1997 and December 31, 1996 2
Condensed Consolidated Statement of Cash
Flows for the quarters ended March 31,
1997 and 1996 3
Notes to Condensed Consolidated Financial
Statements 4
Report of Independent Accountants 7
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Position 8
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>
Quarter Ended
March 31,
In Millions of Dollars (except per share amounts) 1997 1996
<S> <C> <C>
Revenues:
Product sales $ 4,645 $ 4,159
Service sales 1,241 1,189
Financing revenues and other income, net 48 44
5,934 5,392
Costs and expenses:
Cost of products sold 3,760 3,379
Cost of services sold 776 729
Research and development 271 250
Selling, general and administrative 702 683
Interest 48 58
5,557 5,099
Income before income taxes and minority interests 377 293
Income taxes 124 99
Minority interests 29 30
Net Income $ 224 $ 164
Earnings per share of common stock and common stock
equivalents $ .86 $ .62
Dividends per share of common stock $ .31 $ .275
Average common and equivalent shares outstanding
(in thousands) 259,438 262,596
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements<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 1997 1996
(Unaudited)
</TABLE>
Assets
<TABLE><CAPTION>
<S> <C> <C>
Cash and cash equivalents $ 1,265 $ 1,127
Accounts receivable, net 3,532 3,717
Inventories and contracts in progress, net 3,565 3,342
Future income tax benefits 979 946
Other current assets 416 479
Total Current Assets 9,757 9,611
Fixed assets 10,595 10,661
Less - accumulated depreciation (6,340) (6,290)
4,255 4,371
Other assets 2,677 2,763
Total Assets $ 16,689 $ 16,745
</TABLE>
Liabilities and Shareowners' Equity
<TABLE><CAPTION>
<S> <C> <C>
Short-term borrowings $ 257 $ 251
Accounts payable 2,022 2,186
Accrued liabilities 5,096 4,856
Long-term debt currently due 90 97
Total Current Liabilities 7,465 7,390
Long-term debt 1,398 1,437
Future pension and postretirement benefit obligations 1,240 1,247
Other long-term liabilities 1,908 1,931
Series A ESOP Convertible Preferred Stock 878 880
ESOP deferred compensation (439) (446)
439 434
Shareowners' Equity:
Common Stock 2,383 2,345
Treasury Stock (1,770) (1,626)
Retained earnings 3,973 3,849
Currency translation and pension liability
adjustments (347) (262)
4,239 4,306
Total Liabilities and Shareowners' Equity $ 16,689 $ 16,745
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements<PAGE>
<PAGE> 3
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Quarter Ended
March 31,
In Millions of Dollars 1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 224 $ 164
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 211 209
Change in:
Accounts receivable 209 193
Inventories and contracts in progress (193) (316)
Accounts payable and accrued liabilities 42 (89)
Other, net 16 172
Net Cash Flows from Operating Activities 509 333
Cash flows from investing activities:
Capital expenditures (161) (129)
Acquisitions of business units (46) (26)
Dispositions of business units 26 30
Decrease in customer financing assets, net 28 102
Other, net 43 16
Net Cash Flows from Investing Activities (110) (7)
Cash flows from financing activities:
Repayments of long-term debt (34) (20)
Increase/(decrease) in short-term borrowings, net (6) 2
Dividends paid on Common Stock (74) (67)
Common Stock repurchase (145) (62)
Other, net 19 11
Net Cash Flows from Financing Activities (240) (136)
Effect of foreign exchange rate changes on Cash and
cash equivalents (21) (2)
Net increase in cash and cash equivalents 138 188
Cash and cash equivalents, beginning of year 1,127 900
Cash and cash equivalents, end of period $ 1,265 $ 1,088
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements<PAGE>
<PAGE> 4
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The condensed consolidated financial statements at March 31, 1997 and for the
quarters ended March 31, 1997 and 1996 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 reclassifications have been made to prior year amounts to conform to
the current year presentation.
Beginning January 1, 1997, international operating subsidiaries which had
generally been included in the Condensed Consolidated Financial Statements based
on fiscal years ending November 30, are now included based on fiscal years
ending December 31. The change, which primarily affected the commercial and
industrial businesses, was made to present the results of these operations on a
more timely basis. December 1996 results from these international
subsidiaries, which were not significant, are included in retained earnings. As
a result of this change, the pattern of 1997 quarterly results will differ from
the past due in part to seasonality in some business segments. If this change
had been made effective January 1, 1996, the estimated impact would have been an
increase in 1996 first quarter earnings per share of $.10, with no significant
impact on the full year.
In February of 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share." The
Corporation will adopt this standard, as required, at the end of this year. Had
this standard been adopted in the first quarter of 1997, the Corporation would
have reported basic earnings per share of $.91.
Contingent Liabilities
While there has been no significant change in the Corporation's material
contingencies during 1997, the matters previously described in Note 14 of the
Notes to Consolidated Financial Statements in the Corporation's Annual Report on
Form 10-K for calendar year 1996 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, in accordance with AICPA Statement
of Position 96-1, 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.<PAGE>
<PAGE> 5
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
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 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.<PAGE>
<PAGE> 6
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
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> 7
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
With respect to the unaudited condensed consolidated financial information of
United Technologies Corporation for the quarters ended March 31, 1997 and 1996,
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, 1997 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 ("the Act") 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 quarters ended March 31, 1997 and 1996, the condensed consolidated statement
of cash flows for the quarters ended March 31, 1997 and 1996, and the condensed
consolidated balance sheet as of March 31, 1997. 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, 1996, and the
related consolidated statements of operations and cash flows for the year then
ended (not presented herein), and in our report dated January 23, 1997, 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, 1996, 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, 1997<PAGE>
<PAGE> 8
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 decreased in the first quarter of 1997
compared to the same period in 1996, while commercial construction starts in the
U.S. improved over the same period in 1996. U.S. commercial vacancy rates
continue to improve.
North American car and light truck production was higher in the first quarter
of 1997 as compared to the first quarter of 1996, while European car sales were
flat compared to the first quarter of 1996.
Worldwide airline profits continue to improve as a result of increased load
factors and lower costs. Strong traffic growth continues to drive new aircraft
orders from the U.S. and Asia Pacific regions, while European airline financial
resources remain constrained in the near term by increasing competition, higher
cost structures and privatization.
The defense portion of the Corporation's aerospace businesses continues to
respond to a changing global political environment. The U.S. defense industry
continues to downsize and consolidate in response to continued pressure on U.S.
defense spending. As a result, the Corporation has continued to reduce its
reliance on U.S. defense contracts.
The Corporation continues to reduce manufacturing costs and floor space to
remain competitive.<PAGE>
<PAGE> 9
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
RESULTS OF OPERATIONS
Consolidated revenues and margin percentages were as follows:
<TABLE><CAPTION>
Quarter Ended
March 31,
In Millions of Dollars 1997 1996
<S> <C> <C>
Product sales $ 4,645 $ 4,159
Service sales 1,241 1,189
Financing revenues and
other income, net 48 44
Product margin % 19.1% 18.8%
Service margin % 37.5% 38.7%
</TABLE>
Consolidated revenues for the first quarter of 1997 were 10% higher than the
reported first quarter of 1996 with all segments, excluding Automotive,
reporting increases. The 1997 first quarter increase was primarily driven by
Pratt & Whitney and Flight Systems. Foreign currency translation, which reduced
1997 revenues by 2% essentially offset the impact of the change in reporting
period described in the Notes to Condensed Consolidated Financial Statements.
Product margin as a percentage of sales increased three-tenths of a
percentage point in the first quarter of 1997, compared to the first quarter of
1996. Service margins as a percentage of sales decreased 1.2 percentage points
in the first quarter of 1997, compared to the first quarter of 1996, with Otis,
Carrier, Pratt & Whitney and Flight Systems experiencing declines.
Research and development expenses increased $21 million (8%) in the first
quarter of 1997 compared to 1996, with higher expenses in all segments, but
principally Pratt & Whitney. As a percentage of sales, research and development
was 4.6% in the first quarter of 1997 compared to 4.7% in the first quarter of
1996. Research and development expenses in 1997 are expected to increase from
1996, but should remain between 4% and 5% of sales.
Selling, general and administrative expenses in the first quarter of 1997
increased $19 million (3%) over the first quarter of 1996 due to higher expenses
in most segments. However, these expenses decreased as a percentage of sales,
to 11.9% in the first quarter of 1997 from 12.8% in the first quarter of 1996.
Interest expense decreased $10 million in the first quarter of 1997 to $48
million. 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.
The effective tax rate for the first quarter of 1997 was 33%, compared to an
effective tax rate of 33.8% for the first quarter of 1996. The Corporation has
continued to reduce its effective income tax rate by implementing tax reduction
strategies.<PAGE>
<PAGE> 10
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Revenues and operating profits of the Corporation's principal business
segments for the quarters ended March 31, 1997 and 1996 are as follows (in
millions of dollars):
<TABLE><CAPTION>
Operating
Revenues Operating Profits Profit Margin
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended
March 31,
Otis $ 1,368 $ 1,303 $ 131 $ 117 9.6% 9.0%
Carrier 1,387 1,325 70 55 5.0% 4.2%
Automotive 741 744 31 50 4.2% 6.7%
Pratt & Whitney 1,719 1,416 182 140 10.6% 9.9%
Flight Systems 751 638 69 49 9.2% 7.7%
</TABLE>
Otis segment revenues for the first quarter of 1997 were 5% higher than the
reported first quarter of 1996. Foreign currency translation reduced 1997
revenues by 6%. The increase in 1997 revenues was due to increases in all
geographic regions, including the impact of acquisitions made in Europe during
1996 and the change in the reporting period.
Operating profits at Otis increased $14 million (12%) in the first quarter of
1997 compared to the reported first quarter of 1996 due to improvements at
European, North American and South American operations in 1997 compared to 1996.
The impact of the change in reporting period was largely offset by the effect of
foreign currency translation, which reduced 1997 operating profit by 9%.
Carrier segment revenues for the first quarter of 1997 were 5% higher
compared to the reported first quarter of 1996. Foreign currency translation
reduced 1997 revenues by 2%. The increase in revenues resulted from the change
in the reporting period and acquisitions made primarily in Europe and Latin
America during 1996, partially offset by revenue declines in North America due
to softness in the large commercial chiller market, and lower revenues at
Carrier Transicold.
Operating profits at Carrier increased $15 million (27%) in the first quarter
of 1997 compared to the reported first quarter of 1996. Foreign currency
translation reduced 1997 operating profits by 3%. The 1997 increase was
primarily due to the change in the reporting period. In addition, profits in
North America improved while declining at European and Carrier Transicold
operations.
Automotive segment revenues for the first quarter of 1997 were essentially
flat compared to the reported first quarter of 1996. Foreign currency
translation reduced 1997 revenues by 3%. The impact of the change in the
reporting period was offset by the reduction in revenues resulting from the
fourth quarter 1996 sale of the Steering Wheels business.
Reported operating profits at the Automotive segment decreased $19 million
(38%) from the reported first quarter of 1996, reflecting continued performance
issues at the Interiors business and ongoing customer pricing pressures. Foreign
currency translation reduced 1997 operating profits by 6%.<PAGE>
<PAGE> 11
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Pratt & Whitney revenues increased 21% in the first quarter of 1997 compared
to 1996. The 1997 increase reflects higher volumes in both the after-market
and new engine businesses.
Operating profits for Pratt & Whitney increased $42 million (30%) in the
first quarter of 1997 compared to the first quarter of 1996, reflecting
continued productivity improvements, higher after-market sales, and increased
military and commercial engine shipments, partially offset by higher research
and development spending.
Flight Systems revenues increased 18% in the first quarter of 1997 compared
to 1996. 1997 benefited from an increase in helicopter shipments at Sikorsky
and increased revenues at Hamilton Standard.
Operating profits for Flight Systems increased $20 million (41%) in the first
quarter of 1997 compared to 1996 as a result of increased helicopter shipments
at Sikorsky and continuing operating performance improvement at Hamilton
Standard.<PAGE>
<PAGE> 12
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
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.
Significant factors affecting the management of liquidity are cash flows
generated from operating activities, capital expenditures, 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>
Quarter Ended
March 31,
In Millions of Dollars 1997 1996
<S> <C> <C>
Operating Activities
Net Cash Flows from Operating Activities $ 509 $ 333
Investing Activities
Capital expenditures (161) (129)
Acquisitions of business units (46) (26)
Dispositions of business units 26 30
Decrease in customer financing assets, net 28 102
Financing Activities
Common Stock repurchase (145) (62)
Increase/(decrease) in total debt (40) 11
Decrease in net debt (178) (177)
</TABLE>
Cash flows from operating activities were $509 million during the first
quarter of 1997 compared to $333 million for the reported first quarter of 1996.
The improvement resulted primarily from improved operating performance.
Cash flows from investing activities were a use of funds of $110 million
during the first quarter of 1997 compared to a use of $7 million in the first
quarter of 1996. Capital expenditures in the first quarter of 1997 were $161
million, a $32 million increase from the first quarter of 1996. The Corporation
expects 1997 full year capital spending to be moderately higher than 1996. Cash
inflows from customer financing activities are lower in the first quarter of
1997, compared to 1996. The 1996 decrease in customer financing assets includes
loan repayments and asset sales. While the Corporation expects that changes in
customer financing assets in 1997 will be a net use of funds, actual funding is
subject to usage under existing customer financing commitments during the
remainder of the year. The Corporation's total commitments to finance or
arrange financing of commercial aircraft and related equipment at March 31, 1997
was approximately $1.0 billion.
The Corporation repurchased $145 million of common stock, representing 2.0
million shares, in the first quarter of 1997 under previously announced stock
repurchase programs. Share repurchase continues to be a significant use of the
Corporation's strong cash flows and serves, in part, to offset the dilutive
effect resulting from the issuance of stock under stock-based employee benefit
programs.<PAGE>
<PAGE> 13
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Other selected financial data is as follows:
<TABLE><CAPTION>
March 31, December 31, March 31,
In Millions of Dollars 1997 1996 1996
<S> <C> <C> <C>
Cash and cash equivalents $ 1,265 $ 1,127 $ 1,088
Total debt 1,745 1,785 2,052
Net debt (total debt less cash) 480 658 964
Shareowners' equity 4,239 4,306 4,073
Debt-to-total capitalization 29% 29% 34%
Net debt-to-total capitalization 10% 13% 19%
</TABLE>
The Corporation manages its worldwide cash requirements considering 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 when it is cost effective to do so.
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> 14
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
SAFE HARBOR STATEMENT
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 that could cause actual
results to vary materially from those anticipated in the forward looking
statements, such as the economic, political, climatic, currency, regulatory,
technological and competitive changes which may affect the Corporation's
operations, products, and markets, see the Corporation's Securities and Exchange
Commission filings, including, but not limited to, the Corporation's 1996 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 22 through 27 of the Corporation's
1996 Annual Report to Shareowners.<PAGE>
<PAGE> 15
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
Part II - Other Information
Item 1. Legal Proceedings
As previously reported, a jury in Chromalloy Gas Turbine Corporation v. United
Technologies Corporation, No. 95-CI-12541, a Texas state action, found in
November 1996 that Pratt & Whitney did not monopolize any relevant market but
did willfully attempt to monopolize an unspecified market. The jury found that
Chromalloy suffered neither monetary damage nor irreparable injury. The court
has rejected Chromalloy's request for injunctive relief and asked the parties to
provide the court with a form of judgment.
Other than the matter described above, there has been no material change in
legal proceedings during the first quarter of 1997. (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
1996.)
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
(b) No reports on Form 8-K were filed during the quarter ended March 31, 1997.<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: April 25, 1997 By: /s/ STEPHEN F. PAGE
Stephen F. Page
Executive Vice President and
Chief Financial Officer
Dated: April 25, 1997 By: /s/ JAY L. HABERLAND
Jay L. Haberland
Vice President and Controller
Dated: April 25, 1997 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>
<PAGE>
<TABLE>
Exhibit 11
<CAPTION>
UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
Quarter Ended
March 31,
In Millions of Dollars (except per share amounts) 1997 1996
<S> <C> <C>
Net Income $ 224 $ 164
ESOP Convertible Preferred Stock Dividend requirement (8) (7)
Earnings applicable to Common Stock 216 157
ESOP Convertible Preferred Stock adjustment 6 6
Net earnings for calculation of primary and fully
diluted earnings per share $ 222 $ 163
Average number of common shares and common stock
equivalents outstanding during the period (four
month-end average, in thousands) 259,438 262,596
Fully diluted average number of common shares and
common stock equivalents outstanding during the
period (four month-end average, in thousands) 259,901 263,565
Primary earnings per common share $ .86 $ .62
Fully diluted earnings per common share (Note 1) $ .85 $ .62
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
Quarter Ended
March 31,
In Millions of Dollars 1997 1996
<S> <C> <C>
Fixed Charges:
Interest on indebtedness $ 48 $ 58
Interest capitalized 3 5
One-third of rents* 22 22
Total Fixed Charges $ 73 $ 85
Earnings:
Income before income taxes and minority interests $ 377 $ 293
Fixed charges per above 73 85
Less: interest capitalized (3) (5)
70 80
Amortization of interest capitalized 10 10
Total Earnings $ 457 $ 383
Ratio of Earnings to Fixed Charges 6.26 4.51
* Reasonable approximation of the interest factor.
/TABLE
<PAGE>
<PAGE>
Exhibit 15
April 25, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Ladies and Gentlemen:
We are aware that United Technologies Corporation has included our report dated
April 23, 1997 (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. 333-21853,
333-18743, 333-21851, 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, 1997 (Unaudited) and the Condensed
Consolidated Statement of Operations for the quarter ended March 31, 1997
(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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,265
<SECURITIES> 0
<RECEIVABLES> 3,857
<ALLOWANCES> 325
<INVENTORY> 3,565
<CURRENT-ASSETS> 9,757
<PP&E> 10,595
<DEPRECIATION> 6,340
<TOTAL-ASSETS> 16,689
<CURRENT-LIABILITIES> 7,465
<BONDS> 1,398
439
0
<COMMON> 2,383
<OTHER-SE> 1,856
<TOTAL-LIABILITY-AND-EQUITY> 16,689
<SALES> 4,645
<TOTAL-REVENUES> 5,934
<CGS> 3,760
<TOTAL-COSTS> 4,536
<OTHER-EXPENSES> 271
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48
<INCOME-PRETAX> 377
<INCOME-TAX> 124
<INCOME-CONTINUING> 224
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 224
<EPS-PRIMARY> .86
<EPS-DILUTED> .86
</TABLE>
