<PAGE>
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Plan period ended December 31, 1996
Commission File Number 1-812
UNITED TECHNOLOGIES CORPORATION
EMPLOYEE SAVINGS PLAN
(Full title of the plan)
UNITED TECHNOLOGIES CORPORATION
One Financial Plaza
Hartford, Connecticut 06101
(Name of issuer of the securities held pursuant to
the plan and the address of its principal executive office)<PAGE>
<PAGE>
FINANCIAL STATEMENTS OF THE UNITED TECHNOLOGIES CORPORATION
EMPLOYEE SAVINGS PLAN
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
United Technologies Corporation
Employee Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
with fund information and the related statement of changes in net assets
available for benefits with fund information present fairly, in all material
respects, the net assets available for benefits of the United Technologies
Corporation Employee Savings Plan at December 31, 1996 and December 31, 1995,
and the changes in net assets available for benefits for the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
June 26, 1997<PAGE>
<PAGE>
<TABLE>
UNITED TECHNOLOGIES CORPORATION EMPLOYEE SAVINGS PLAN
Statement of Net Assets Available for Benefits With Fund Information
December 31, 1996
(Thousands of Dollars, except unit value)
<CAPTION>
UTC Funds
Income Equity Stock Global Loan ESOP Combined
Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
Beneficial interests in
contracts issued by insurance
companies, at cost plus accrued
interest $ 2,920,121 $ - $ - $ - $ - $ - $2,920,121
Beneficial interests in Bankers
Trust Company Pyramid Fixed
Income Index Fund, at market - - - 34,139 - - 34,139
Beneficial interests in Bankers
Trust Company Pyramid Equity
Index Fund, at market - 654,420 - 39,834 - - 694,254
Beneficial interests in Bankers
Trust Company Pyramid
International Securities Index
Fund, at market - - - 44,878 - - 44,878
United Technologies Corporation
Common Stock, at market - - 328,760 - - - 328,760
United Technologies Corporation
ESOP Preferred Stock, at market - - - - - 1,758,882 1,758,882
Participant loans, at cost - - - - 53,658 - 53,658
Temporary investments, at cost
plus accrued interest 121 - 34 - - 1,512 1,667
Total Investments 2,920,242 654,420 328,794 118,851 53,658 1,760,394 5,836,359
Contributions and fund and plan
transfers receivable 1,191 285 742 63 361 - 2,642
Accrued ESOP contribution
receivable - - - - - 80,132 80,132
Total Assets 2,921,433 654,705 329,536 118,914 54,019 1,840,526 5,919,133
Liabilities:
Contributions and fund and plan
transfers payable 20 269 - 404 - 780 1,473
Loans payable, net 348 (155) 504 (31) (199) - 467
Accrued interest on ESOP debt
and notes payable - - - - - 2,452 2,452
ESOP debt - - - - - 445,300 445,300
Notes payable to United
Technologies Corporation - - - - - 79,233 79,233
Total Liabilities 368 114 504 373 (199) 527,765 528,925
Net Assets Available for
Benefits $ 2,921,065 $ 654,591 $ 329,032 $ 118,541 $ 54,218 $ 1,312,761 $5,390,208
Units of participation 511,545,534 41,549,958 30,372,710 57,356,443 54,218,000 258,588,435
Unit value $ 5.71 $ 15.75 $ 10.83 $ 2.07 $ 1.00 $ 5.08
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
UNITED TECHNOLOGIES CORPORATION EMPLOYEE SAVINGS PLAN
Statement of Net Assets Available for Benefits With Fund Information
December 31, 1995
(Thousands of Dollars, except unit value)
<CAPTION>
UTC Funds
Income Equity Stock Global Loan ESOP Combined
Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
Beneficial interests in
contracts issued by insurance $ 2,862,117 $ - $ - $ - $ - $ - $2,862,117
companies, at cost plus accrued
interest
Beneficial interests in Bankers
Trust Company Pyramid Fixed
Income Index Fund, at market - - - 26,777 - - 26,777
Beneficial interests in Bankers
Trust Company Pyramid Equity
Index Fund, at market - 479,711 - 33,752 - - 513,463
Beneficial interests in Bankers
Trust Company Pyramid
International Securities Index
Fund, at market - - - 31,132 - - 31,132
United Technologies Corporation
Common Stock, at market - - 195,627 - - - 195,627
United Technologies Corporation
ESOP Preferred Stock, at market - - - - - 1,271,994 1,271,994
Participant loans, at cost - - - - 50,436 - 50,436
Temporary investments, at cost
plus accrued interest 121 8 4,758 6 - 430 5,323
Total Investments 2,862,238 479,719 200,385 91,667 50,436 1,272,424 4,956,869
Contributions and fund and plan
transfers receivable 921 4,990 3,138 2,799 326 - 12,174
Accrued ESOP contribution
receivable - - - - - 90,046 90,046
Total Assets 2,863,159 484,709 203,523 94,466 50,762 1,362,470 5,059,089
Liabilities:
Contributions and fund and plan
transfers payable 9,541 - - - - - 9,541
Loans payable, net 2,088 706 646 168 482 - 4,090
Accrued interest on ESOP debt
and note payable - - - - - 2,508 2,508
ESOP debt - - - - - 481,600 481,600
Note payable to United
Technologies Corporation - - - - - 83,733 83,733
Accrued investment purchases - - - 936 - - 936
Total Liabilities 11,629 706 646 1,104 482 567,841 582,408
Net Assets Available for Benefits $ 2,851,530 $ 484,003 $ 202,877 $ 93,362 $ 50,280 $ 794,629 $4,476,681
Units of participation 537,129,738 37,844,580 26,614,066 50,182,173 50,280,000 170,235,991
Unit value $ 5.31 $ 12.79 $ 7.62 $ 1.86 $ 1.00 $ 4.67
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
UNITED TECHNOLOGIES CORPORATION EMPLOYEE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits With Fund Information
Period Ended December 31, 1996
(Thousands of Dollars)
<CAPTION>
UTC Funds
Income Equity Stock Global Loan ESOP Combined
Fund Fund Fund Fund Fund Fund
<C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
<S>
Investment Income:
Net appreciation in fair value
of investments $ - $ 119,932 $ 85,746 $ 12,098 $ - $ 490,615 $ 708,391
Interest 208,056 6 255 7 4,078 288 212,690
Dividends - - 5,083 - - 64,083 69,166
Total Investment Income 208,056 119,938 91,084 12,105 4,078 554,986 990,247
Contributions:
Participants' 82,760 38,773 12,013 11,006 - - 144,552
Employer's 142 34 7 8 - 31,751 31,942
Total Contributions 82,902 38,807 12,020 11,014 - 31,751 176,494
Repayments on loans 16,679 5,688 2,019 1,472 (25,858) - -
Deductions from net assets
attributed to:
Distributions to participants 154,651 20,382 9,910 3,618 2,990 16,387 207,938
Loans to participants 18,052 6,232 2,892 1,523 (28,699) - -
Interest expense - - - - - 45,232 45,232
Total Deductions 172,703 26,614 12,802 5,141 (25,709) 61,619 253,170
Inter-fund and inter-plan
transfers (65,399) 32,769 33,834 5,729 9 (6,986) (44)
Net Increase 69,535 170,588 126,155 25,179 3,938 518,132 913,527
Net Assets Available for
Benefits December 31, 1995 2,851,530 484,003 202,877 93,362 50,280 794,629 4,476,681
Net Assets Available for
Benefits December 31, 1996 $ 2,921,065 $ 654,591 $ 329,032 $ 118,541 $ 54,218 $ 1,312,761 $5,390,208
</TABLE>
The accompanying notes are an integral part of these financial statements.
UNITED TECHNOLOGIES CORPORATION EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
NOTE 1 - DESCRIPTION OF THE PLAN
General. The United Technologies Corporation (UTC) Employee Savings Plan (the
Plan) is a defined contribution savings plan administered by UTC. It is subject
to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA). Generally, non-represented employees in participating business units
of United Technologies Corporation (UTC) are eligible to participate in the Plan
after completing one year of service. The following is a brief description of
the Plan. For more complete information, participants should refer to the plan
document which is available from UTC.
Contributions and Vesting. Participants may elect to contribute, through
payroll deductions, between 2 and 16 percent of their total compensation.
Participant contributions, plus actual earnings thereon, are fully vested at all
times under the Plan.
UTC has established a leveraged Employee Stock Ownership Plan (ESOP) to fund the
employer matching contributions to the Plan. The ESOP is primarily invested in
UTC Series A ESOP Convertible Preferred Stock. UTC will match 60 percent of a
participant's contributions, up to specified limits, in ESOP Preferred Stock
(See Note 4). However, participants who have reached at least age 55 and have
completed at least 10 years of continuous service may direct up to 50 percent,
in multiples of 25 percent, of their ESOP account balances and future employer
contributions to be invested in the other investment funds offered through the
Plan. Generally, employer contributions, plus actual earnings thereon, become
fully vested after two years of Plan participation.
Participant Accounts. Each participant's account is credited with the
participant's contributions and allocations of (a) UTC's contributions and (b)
Plan earnings. Allocations are based on participant earnings or account
balances, as defined. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested account. Forfeited
balances of terminated participants' nonvested amounts are used to reduce future
UTC contributions. For the period ended December 31, 1996, approximately $
236,000 of forfeitures were used to fund UTC's contributions.
Investment Options. Participants may elect to allocate the contributions in any
whole percentage among the following funds. Participants are permitted to
transfer their accounts between investment funds once per quarter in any whole
percentage.
. The Income Fund is invested in contracts issued by five insurance companies.
. The Equity Fund is principally invested in the BT Pyramid Equity Index Fund,
which is a commingled trust fund managed by Bankers Trust Company (BT), the
Trustee, and includes a portfolio of common stocks replicating the Standard &
Poor's Composite Index of 500 stocks.
. The UTC Stock Fund consists principally of 4,962,417 and 4,123,840 shares of
UTC Common Stock at December 31 1996 and 1995, respectively. Share amounts
reflect the 2 for 1 stock split effective December 10, 1996.
. The Global Fund is invested in almost equal proportions in three different
funds managed by the Trustee: the BT Pyramid International Securities Index
Fund, the BT Pyramid Fixed Income Index Fund and the BT Pyramid Equity Index
Fund (as described above). The BT Pyramid International Securities Index
Fund invests in four other international index funds managed by the Trustee.
The BT Pyramid Fixed Income Index Fund invests primarily in obligations of<PAGE>
<PAGE>
the U.S. Government and its agencies and other publicly traded, high-grade
domestic debt instruments.
Participant Loans Receivable. Participants with at least two years of plan
participation are allowed to borrow up to 50 percent of their vested account
balances (excluding the ESOP). Loan amounts can range from $1,000 to $50,000
and must be repaid within 5 years. The loans are secured by the balance in the
participant's account and bear interest at Bankers Trust's prime rate plus one
percent. Principal and interest are paid ratably through payroll deductions.
Payment of Benefits. Generally, benefits are paid in a lump sum to a
terminating participant. A participant terminating due to retirement may elect
to receive benefits in installments over two to twenty years. At the
participant's election, the portion of a lump sum distribution attributable to
the UTC Stock Fund and ESOP may be paid in shares of UTC Common Stock instead of
cash. Distributions in common stock for the period ended December 31, 1996 were
approximately $ 1,736,000.
Other. Participants who transfer to a new UTC location with a different savings
plan have the option of transferring their account balances in accordance with
the provisions of the new savings plan.
NOTE 2 - SUMMARY OF ACCOUNTING PRINCIPLES
Basis of Accounting. The financial statements of the Plan are prepared under
the accrual method of accounting. Benefits are recorded when paid.
Master Trust. The Plan's assets are kept in a Master Trust maintained by the
Trustee. Under the Master Trust agreement, the assets of certain employee
savings plans of UTC and its subsidiaries are combined. Participating plans
purchase units of participation in the investment funds based on their monthly
contribution to such funds and the unit value of the applicable investment fund
at the end of the month. The unit value of each fund is determined at each
month end by dividing the sum of uninvested cash, accrued income and the current
value of investments by the total number of outstanding units in such funds.
Income from the funds' investments increases the plans' unit values.
Distributions to participants reduce the number of participation units held by
the plans.
Investment Valuation. Except for the Income Fund, the Plan's investments are
stated at fair value. The fair value of the Equity Fund, the UTC Stock Fund,
and the Global Fund is determined by the Trustee by reference to published
market data. The ESOP Preferred Stock's fair value is the higher of the
guaranteed value ($65) or twice the market value of UTC's Common Stock (See Note
4). The Income Fund's investment contracts are stated at contract value which
represents contributions plus earnings, less Plan withdrawals.
Plan Expenses. Plan expenses are payable out of Plan assets, unless paid by the
employer. The expenses for the 1996 plan year were paid by the employer.
Use of Estimates. The preparation of financial statements requires UTC to make
estimates and assumptions that affect the reported amounts in the financial
statements. Actual results could differ from those estimates.
NOTE 3 - INVESTMENT CONTRACTS
Under these contracts, each insurance company guarantees repayment in full of
the principal amount invested plus interest credited at a fixed rate for a
specified period. Interest is credited to each contract based on an annual
interest rate set each year by the individual insurance companies. This rate,
which differs among contracts, takes into account any difference between prior<PAGE>
<PAGE>
year credited interest and the actual amount of investment earnings allocable to
the contract in accordance with the established allocation procedures of the
insurance company. The weighted average rate for 1996 and 1995 were 7.5% and
7.25%, respectively. The following is a summary of the investment contracts
held in the Income Fund and the portion allocable to the Plan:
<TABLE><CAPTION>
(Thousands of Dollars) December 31, December 31,
1996 1995
<S> <C> <C>
CIGNA $ 1,512,307 $ 1,566,944
Aetna 457,815 494,944
Travelers 388,845 432,342
Prudential 236,966 219,677
Metropolitan Life 782,764 587,847
$ 3,378,697 $ 3,301,754
Amount of the contracts allocable $ 2,920,121 $ 2,862,117
to the Plan
</TABLE>
NOTE 4 - EMPLOYEE STOCK OWNERSHIP PLAN
Since 1989, the ESOP has purchased approximately 14.5 million shares of $1.00
par value Series A ESOP Convertible Preferred Stock, with a $4.80 per share
annual dividend from UTC. After the December 1996 UTC Common Stock split, each
share of ESOP Preferred Stock (ESOP Share) is convertible into two shares of
UTC's Common Stock. The ESOP financed the ESOP Share purchases with interest
bearing promissory notes. See Notes 5 and 6.
Participants are allocated shares of ESOP Preferred Stock as they earn UTC's
matching contributions. For the period ended December 31, 1996, participants
were credited with matching contributions of $54.4 million representing
approximately 469,000 shares. Additionally, in lieu of receiving cash,
participants are allocated ESOP Shares for dividends paid on their shares.
During 1996, participants earned dividends of approximately $30.1 million
representing approximately 215,600 shares. ESOP Shares allocated are calculated
at the higher of twice the month end price of UTC Common Stock or the $65
guaranteed value.
ESOP Shares are released for allocation to participants as principal and
interest payments are made on the debt. The ESOP uses the ESOP Shares' cash
dividends and additional contributions from UTC to repay the principal and
interest. The Employer Contributions presented in the Statement of Changes in
Net Assets Available for Benefits include approximately $27.7 million of
additional cash contributions from UTC plus $4.0 million of Employer
Contributions receivable from UTC at December 31, 1996. The $4.0 million is due
to share allocations exceeding share releases during 1996. To the extent that
ESOP Shares released through debt service payments are not sufficient to meet
the allocation requirement, UTC is required to contribute additional ESOP
Shares, UTC Common Stock or cash. The total Accrued ESOP contribution
receivable is principally attributable to ESOP Share releases and will decrease
as loan principal payments are made.
Shares allocated to a participant generally may not be distributed until the
participant's termination, disability, retirement or death. Upon distribution,
a participant may elect to receive either cash or two shares of UTC Common Stock
for each ESOP Share valued at the higher of twice the market value of UTC's
common stock or $65. A participant cannot elect to receive the distribution in
ESOP Shares.<PAGE>
<PAGE>
The ESOP Fund's investment in ESOP Preferred Stock at period end is as follows:
<TABLE><CAPTION>
(Thousands of Dollars, December 31, 1996 December 31, 1995
except share amounts)
Allocated Total Allocated Total
<S> <C> <C> <C> <C>
Number of Shares 6,530,685 13,274,579 6,023,794 13,407,056
Guaranteed Value $ 424,495 $ 862,848 $ 391,547 $ 871,459
Market $ 865,316 $ 1,758,882 $ 571,507 $ 1,271,994
</TABLE>
As discussed above, market is represented by the higher of the guaranteed value
of $65 per share or twice the month end price of UTC's Common Stock. As such,
the market value of the ESOP Preferred Stock was $132.5 and $94.875 at December
31, 1996 and 1995, respectively. Further, the Net Assets Available for Benefits
in the ESOP Fund at December 31, 1996 and 1995 include unrealized appreciation
of approximately $896.0 million and $400.5 million, of which $455.2 million and
$220.6 million is on unallocated shares.
The ESOP Preferred Stock is redeemable, in whole or in part, at the option of
UTC at a redemption price of $66.44 per share plus accrued and unpaid dividends.
The redemption price decreases annually until it reaches $65. However, upon
notice to the Trustee of UTC's intention to redeem, the Trustee can convert each
preferred share into two shares of UTC Common Stock if more beneficial to
participants.
NOTE 5 - ESOP DEBT
In 1990, the Master Trust with UTC as guarantor executed a Note and Guaranty
Agreement and issued $660,000,000 of Series A, B, C and D notes (described
below) representing the ESOP's permanent financing. The amounts outstanding
under the Agreement, with interest rates and maturity dates, are as follows at
December 31, 1996:
<TABLE><CAPTION>
Principal Rate of
Note Series (000's) Interest Due
<S> <C> <C> <C>
A $ 108,700 7.24% 1997 -
1999
B 286,600 7.68% 2000 -
2008
C 17,300 7.68% 2008
D 32,700 7.68% 2009
$ 445,300
</TABLE>
Required payments on these Notes, in aggregate, for the next five plan years are
$36.4 million in 1997, $36.3 million in 1998, $36.0 million in 1999, $35.5
million in 2000, and $35.0 million in 2001.
NOTE 6 - NOTE PAYABLE
The Note Payable is a promissory note to UTC issued in 1990, bearing interest at
10.5%, and due over the period 1997 to 2009. At December 31, 1996, $79,233,000
was outstanding. Required principal payments on the Note for the next five
years are $4.6 million in 1997, $4.6 million in 1998, $4.8 million in 1999, $4.9
million in 2000 and $ 5.0 million in 2001.<PAGE>
<PAGE>
NOTE 7 - PLAN TERMINATION
Although it has not expressed any intent to do so, UTC has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100 percent vested in their accounts.
NOTE 8 - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following are reconciliations of net assets available for benefits and
benefits paid from the financial statements to Form 5500:
<TABLE><CAPTION>
December 31,
(Thousands of Dollars) 1996 1995
<S> <C><C> <C> <C>
Net assets available for benefits per the
financial statements $5,390,208 $4,476,681
Amounts allocated to participant withdrawals (38,084) (24,765)
Net assets available for benefits per Form
5500 $5,352,124 $4,451,916
</TABLE>
Year Ended December
31, 1996
Benefits paid to participants per the
financial statements $ 207,938
Add: Amounts allocated to participant
withdrawals at December 31, 1996 38,084
Less: Amounts allocated to participant
withdrawals at December 31, 1995 (24,765)
Benefits paid to participants per Form
5500 $ 221,257
Amounts allocated to participant withdrawals are recorded on Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31 but not yet paid as of that date.
NOTE 9 - TAX STATUS
The Internal Revenue Service has determined and informed UTC by letter dated
September 23, 1996 that the Plan and related trust are designed in accordance
with applicable sections of the Internal Revenue Code (IRC). The Plan has been
amended since receiving the determination letter. However, the Plan
administrator and tax counsel believe that the Plan is designed and is currently
being operated in compliance with the applicable requirements of the IRC.
NOTE 10 - SUBSEQUENT EVENTS<PAGE>
<PAGE>
Effective January 1, 1997, Fidelity Institutional Retirement Services Company
assumed the participant account recordkeeping responsibilities from Bankers
Trust.<PAGE>
<PAGE>
SIGNATURES
The Plan (or persons who administer the employee benefit plan), pursuant to the
requirements of the Securities Exchange Act of 1934, has duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
UNITED TECHNOLOGIES CORPORATION
EMPLOYEE SAVINGS PLAN
Dated: June 26, 1997 By: /s/ Daniel P. O'Connell
Daniel P. O'Connell
Corporate Director, Employee Benefits and Human
Resources Systems
United Technologies Corporation<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-26627) of United Technologies Corporation of our
report dated June 26, 1997 appearing in the United Technologies Corporation
Employee Savings Plan's Annual Report on Form 11-K for the year ended December
31, 1996.
PRICE WATERHOUSE LLP
Hartford, Connecticut
June 26, 1997<PAGE>
