<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, 1997
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, 1997 and December 31, 1996,
and the changes in net assets available for benefits for the period ended
December 31, 1997, 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.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The fund information in the statement of
net assets available for benefits and the statement of changes in net assets
available for benefits is presented for purposes of additional analysis rather
than to present the net assets available for plan benefits and changes in net
assets available for benefits of each fund. The fund information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
PRICE WATERHOUSE LLP
Hartford, Connecticut
June 26, 1998<PAGE>
<PAGE>
<TABLE>
UNITED TECHNOLOGIES CORPORATION EMPLOYEE SAVINGS PLAN
Statement of Net Assets Available for Benefits With Fund Information
December 31, 1997
(Thousands of Dollars, except unit value)
<CAPTION>
Small UTC INVESCO
Company International Common Total
Income Equity Stock Index Equity Index Global Stock Return
Fund Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value:
Beneficial interests in Bankers Trust
Company Pyramid:
Large Capitalization Equity Index Fund $ - $ 809,958 $ - $ - $ 29,900 $ - $ -
Russell 2000 Equity Index Fund - - 20,980 - - - -
Daily Japanese Equity Index Fund - - - 1,227 - - -
Daily Non Japanese Equity Index Fund - - - 3,681 - - -
Government/Corporate Fixed Income
Index Fund - - - - 24,463 - -
Daily International Equity Index Fund - - - - 28,688 - -
United Technologies Corporation Common
Stock - - - - - 388,403 -
United Technologies Corporation ESOP
Preferred Stock - - - - - - -
Shares of respective registered
investment companies - - - - - - 11,352
Investments, at contract value or cost:
Beneficial interests in investment
contracts, at contract value 2,815,491 - - - - - -
Participant loans, at cost - - - - - - -
Temporary investments, at cost plus
accrued interest - - - - - 5,833 -
Total Investments 2,815,491 809,958 20,980 4,908 83,051 394,236 11,352
Plan receivables 1,996 676 25 8 88 1,078 17
Accrued ESOP contribution receivable - - - - - - -
Total Assets 2,817,487 810,634 21,005 4,916 83,139 395,314 11,369
Liabilities:
Accrued liabilities - - - - - 2,509 -
Loans payable, net - - - - - - -
Accrued interest on ESOP debt and notes
payable - - - - - - -
ESOP debt - - - - - - -
Notes payable to United Technologies
Corporation - - - - - - -
Total Liabilities - - - - - 2,509 -
Net Assets Available for Benefits $2,817,487 $ 810,634 $ 21,005 $ 4,916 $ 83,139 $ 392,805 $ 11,369
Units of participation 456,642,903 38,564,887 1,735,924 466,827 34,932,354 32,516,958 390,823
Unit value $ 6.17 $ 21.02 $ 12.10 $ 10.53 $ 2.38 $ 12.08 $ 29.09
</TABLE>
The accompanying notes are an integral part of these financial statements.
PAGE
<PAGE>
<TABLE>
UNITED TECHNOLOGIES CORPORATION EMPLOYEE SAVINGS PLAN
Statement of Net Assets Available for Benefits With Fund Information
December 31, 1997
(Thousands of Dollars, except unit value)
<CAPTION>
Putnam
Fidelity Putnam New SoGen
Growth & Fund for Fidelity Low- PBHG Opportun- Interna-
Income Growth Fidelity Priced Stock Growth ities tional
Portfolio and Income Contrafund Fund Fund Fund Fund, Inc.
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value:
Beneficial interests in Bankers Trust
Company Pyramid:
Large Capitalization Equity Index Fund $ - $ - $ - $ - $ - $ - $ -
Russell 2000 Equity Index Fund - - - - - - -
Daily Japanese Equity Index Fund - - - - - - -
Daily Non Japanese Equity Index Fund - - - - - - -
Government/Corporate Fixed Income
Index Fund - - - - - - -
Daily International Equity Index Fund - - - - - - -
United Technologies Corporation Common
Stock - - - - - - -
United Technologies Corporation ESOP
Preferred Stock - - - - - - -
Shares of respective registered
investment companies 88,982 29,327 35,471 38,276 55,770 42,073 9,434
Investments, at contract value or cost:
Beneficial interests in investments
contracts, at contract value - - - - - - -
Participant loans, at cost - - - - - - -
Temporary investments, at cost plus
accrued interest - - - - - - -
Total investments 88,982 29,327 35,471 38,276 55,770 42,073 9,434
Plan receivables 127 42 60 53 107 72 18
Accrued ESOP contribution receivable - - - - - - -
Total Assets 89,109 29,369 35,531 38,329 55,877 42,145 9,452
Liabilities:
Accrued liabilities - - - - - - -
Loans payable, net - - - - - - -
Accrued interest on ESOP debt and notes
payable - - - - - - -
ESOP debt - - - - - - -
Notes payable to United Technologies
Corporation - - - - - - -
Total Liabilities - - - - - - -
Net Assets Available for Benefits $ 89,109 $ 29,369 $ 35,531 $ 38,329 $ 55,877 $ 42,145 $ 9,452
Units of participation 2,338,837 1,501,494 761,983 1,525,236 2,200,755 858,340 371,399
Unit value $ 38.10 $ 19.56 $ 46.63 $ 25.13 $ 25.39 $ 49.10 $ 25.45
The accompanying notes are an integral part of these financial statements.
</TABLE>
PAGE
<PAGE>
<TABLE>
UNITED TECHNOLOGIES CORPORATION EMPLOYEE SAVINGS PLAN
Statement of Net Assets Available for Benefits With Fund Information
December 31, 1997
(Thousands of Dollars, except unit value)
<CAPTION>
Templeton
Templeton Developing
Foreign Markets
Fund I Trust I Loan Fund ESOP Fund Total
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
Beneficial interests in Bankers Trust
Company Pyramid:
Large Capitalization Equity Index Fund $ - $ - $ - $ - $ 839,858
Russell 2000 Equity Index Fund - - - - 20,980
Daily Japanese Equity Index Fund - - - - 1,227
Daily Non Japanese Equity Index Fund - - - - 3,681
Government/Corporate Fixed Income
Index Fund - - - - 24,463
Daily International Equity Index Fund - - - - 28,688
United Technologies Corporation Common
Stock - - - 340 388,743
United Technologies Corporation ESOP
Preferred Stock - - - 1,897,956 1,897,956
Shares of respective registered
investment companies 17,216 8,766 - - 336,667
Investments, at contract value or cost:
Beneficial interests in investment
contracts, at contract value - - - - 2,815,491
Participant loans, at cost - - 62,048 - 62,048
Temporary investments, at cost plus
accrued interest - - - 1,402 7,235
Total Investments 17,216 8,766 62,048 1,899,698 6,427,037
Plan receivables 31 18 - 962 5,378
Accrued ESOP contribution receivable - - - 87,188 87,188
Total Assets 17,247 8,784 62,048 1,987,848 6,519,603
Liabilities:
Accrued liabilities - - - 171 2,680
Loans payable, net - - - - -
Accrued interest on ESOP debt and notes
payable - - - 2,271 2,271
ESOP debt - - - 408,900 408,900
Notes payable to United Technologies
Corporation - - - 89,633 89,633
Total Liabilities - - - 500,975 503,484
Net Assets Available for Benefits $ 17,247 $ 8,784 $ 62,048 $ 1,486,873 $6,016,119
Units of participation 1,733,322 678,876 62,048,000 263,507,383
Unit value $ 9.95 $ 12.94 $ 1.00 $ 5.64
The accompanying notes are an integral part of these financial statements.<PAGE>
</TABLE>
<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>
Income Equity UTC Common Global
Fund Fund Stock Fund Fund Loan Fund ESOP Fund Total
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value:
Beneficial interests in Bankers Trust
Company Pyramid:
Government/Corporate Fixed Income
Index Fund $ - $ - $ - $ 34,139 $ - $ - $ 34,139
Large Capitalization Equity Index Fund - 654,420 - 39,834 - - 694,254
Daily International Equity Index Fund - - - 44,878 - - 44,878
United Technologies Corporation Common
Stock - - 328,760 - - - 328,760
United Technologies Corporation ESOP
Preferred Stock - - - - - 1,758,882 1,758,882
Investments, at contract value or cost:
Beneficial interests in investment
contracts, at contract value 2,920,121 - - - - - 2,920,121
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
Plan receivables 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:
Accrued liabilities 20 269 - 404 - 780 1,473
Loans payable, net 348 (155) 504 (31) (199) - 467
Accrued interest on ESOP debt and note
payable - - - - - 2,452 2,452
ESOP debt - - - - - 445,300 445,300
Note 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
The accompanying notes are an integral part of these financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
UNITED TECHNOLOGIES CORPORATION EMPLOYEE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits With Fund Information
Period Ended December 31, 1997
(Thousands of Dollars)
<CAPTION>
Small
Company UTC INVESCO
Stock International Common Total
Income Equity Index Equity Index Global Stock Return
Fund Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in fair
value of investments $ - $203,723 $ 1,656 $ 160 $ 13,057 $ 37,975 $ 965
Interest 216,006 4 1 1 (25) 201 -
Dividends - - - - - - 394
Total Investment Income 216,006 203,727 1,657 161 13,032 38,176 1,359
Contributions:
Participants' 70,501 38,622 958 494 7,097 16,748 616
Employer's 115 29 1 - 8 7 -
Total Contributions 70,616 38,651 959 494 7,105 16,755 616
Repayments on loans 16,716 6,209 103 35 1,067 2,687 62
Deductions from net assets attributed to:
Distributions to participants 171,452 31,958 262 50 3,286 14,280 464
Loans to participants 18,890 7,812 56 39 1,007 4,454 54
Administrative expenses 76 12 - - 3 4 -
Interest expense - - - - - - -
Total Deductions 190,418 39,782 318 89 4,296 18,738 518
Net increase / (decrease) prior to transfers 112,920 208,805 2,401 601 16,908 38,880 1,519
Inter-fund transfers (215,503) (51,818) 18,604 4,315 (52,125) 25,322 9,850
Assets transferred out of Plan (995) (944) - - (185) (429) -
Net increase / (decrease) (103,578) 156,043 21,005 4,916 (35,402) 63,773 11,369
Net Assets Available for Benefits
December 31, 1996 2,921,065 654,591 - - 118,541 329,032 -
Net Assets Available for Benefits
December 31, 1997 $2,817,487 $810,634 $21,005 $ 4,916 $ 83,139 $392,805 $ 11,369
The accompanying notes are an integral part of these financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
UNITED TECHNOLOGIES CORPORATION EMPLOYEE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits With Fund Information
Period Ended December 31, 1997
(Thousands of Dollars)
<CAPTION>
Putnam
Fidelity Putnam New SoGen
Growth & Fund Fidelity Low- PBHG Opportun- Interna-
Income for Growth Fidelity Priced Stock Growth ities tional
Portfolio and Income Contrafund Fund Fund Fund Fund, Inc.
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in fair
value of investments $ 9,037 $ (423) $ 1,374 $ 2,628 $ 2,036 $ 4,624 $ (508)
Interest - - - - - - -
Dividends 3,560 3,659 2,876 2,200 (8) 887 926
Total Investment Income 12,597 3,236 4,250 4,828 2,028 5,511 418
Contributions:
Participants' 5,938 2,141 2,936 2,308 6,862 3,836 947
Employer's 3 1 2 1 4 5 -
Total Contributions 5,941 2,142 2,938 2,309 6,866 3,841 947
Repayments on loans 630 257 300 230 712 434 65
Deductions from net assets attributed to:
Distributions to participants 2,351 664 981 828 1,437 687 242
Loans to participants 535 213 242 194 549 453 38
Administrative expenses - - - 13 2 - -
Interest expense - - - - - - -
Total Deductions 2,886 877 1,223 1,035 1,988 1,140 280
Net increase / (decrease) prior
to transfers 16,282 4,758 6,265 6,332 7,618 8,646 1,150
Inter-fund transfers 72,827 24,611 29,266 31,997 48,259 33,499 8,302
Assets transferred out of Plan - - - - - - -
Net increase / (decrease) 89,109 29,369 35,531 38,329 55,877 42,145 9,452
Net Assets Available for Benefits
December 31, 1996 - - - - - - -
Net Assets Available for Benefits
December 31, 1997 $ 89,109 $ 29,369 $ 35,531 $ 38,329 $ 55,877 $ 42,145 $ 9,452
The accompanying notes are an integral part of these financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
UNITED TECHNOLOGIES CORPORATION EMPLOYEE SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits With Fund Information
Period Ended December 31, 1997
(Thousands of Dollars)
<CAPTION>
Templeton
Templeton Developing
Foreign Markets
Fund I Trust I Loan Fund ESOP Fund Total
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in fair
value of investments $ (1,664) $ (2,998) $ - $ 177,220 $ 448,862
Interest - - 4,765 449 221,402
Dividends 1,844 599 - 63,002 79,939
Total Investment Income 180 (2,399) 4,765 240,671 750,203
Contributions:
Participants' 1,503 924 - - 162,431
Employer's 1 - - 17,910 18,087
Total Contributions 1,504 924 - 17,910 180,518
Repayments on loans 131 99 (29,737) - -
Deductions from net assets attributed to:
Distributions to participants 270 316 1,535 27,093 258,156
Loans to participants 109 82 (34,727) - -
Administrative expenses - 1 - - 111
Interest expense - - - 41,974 41,974
Total Deductions 379 399 (33,192) 69,067 300,241
Net increase / (decrease) prior to transfers 1,436 (1,775) 8,220 189,514 630,480
Inter-fund transfers 15,811 10,559 - (13,776) -
Assets transferred out of Plan - - (390) (1,626) (4,569)
Net increase / (decrease) 17,247 8,784 7,830 174,112 625,911
Net Assets Available for Benefits
December 31, 1996 - - 54,218 1,312,761 5,390,208
Net Assets Available for Benefits
December 31, 1997 $ 17,247 $ 8,784 $ 62,048 $ 1,486,873 $6,016,119
The accompanying notes are an integral part of these financial statements.
/TABLE
<PAGE>
<PAGE>
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 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 based on
a percentage of the participant's contribution and (b) Plan earnings based on
account balances. 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, 1997, approximately
$232,000 of forfeitures were used to fund UTC's contributions.
Trustee and Recordkeeper. All of the Plan's assets are held by Bankers Trust
Company, the Plan Trustee. As of January 1, 1997, Fidelity Institutional
Retirement Services Company assumed the participant account recordkeeping
responsibilities.
Investment Options. On January 1, 1997, investment options increased to sixteen
from the previous four. Participants may elect to allocate their contributions
in any whole percentage among the following funds. Participants are permitted
to transfer their accounts between investment funds daily in any whole
percentage or whole dollar amount. The investment funds are as follows:
. The Income Fund invests in contracts issued by five insurance companies. See
Note 3.
. The Equity Fund invests in a portfolio of common stocks replicating the
Standard & Poor's Composite Index of 500 stocks (S&P 500).
. The Small Company Stock Index Fund invests in a portfolio of common stocks
replicating the Russell 2000 Index.
. The International Equity Index Fund invests in the equities of a mix of stock
markets outside the U.S.<PAGE>
<PAGE>
. The Global Fund invests in both U.S. and foreign investments to replicate the
performance, in approximately equal portions, of three indices: the S&P 500,
the EAFE Index (an international stock index of large companies in Europe,
Australia and the Far East), and the Lehman Brothers Government/Corporate
Index.
. The UTC Common Stock Fund consists principally of 5,334,294 and 4,962,417
shares of UTC Common Stock at December 31 1997 and 1996, respectively.
. The INVESCO Total Return Fund invests in shares of a registered investment
company that principally invests in both equity and fixed or variable income
securities to achieve a moderate total return from capital appreciation and
current income.
. The Fidelity Growth & Income Portfolio invests in shares of a registered
investment company that principally invests in U.S. and foreign equity
securities that pay current dividends and show potential earnings growth.
. The Putnam Fund for Growth and Income invests in shares of a registered
investment company that principally invests in equity securities of companies
that pay regular dividends to shareowners.
. The Fidelity Contrafund invests in shares of a registered investment company
that principally invests in equity securities of U.S. and foreign companies
believed to be undervalued or out of favor.
. The Fidelity Low-Priced Stock Fund invests in shares of a registered
investment company that principally invests in equity securities of companies
believed to be undervalued, overlooked or out of favor, which are generally
priced at $35 or less.
. The PBHG Growth Fund invests in shares of a registered investment company
that principally invests in equity securities of companies believed to have
an outlook for strong earnings growth.
. The Putnam New Opportunities Fund invests in shares of a registered
investment company that principally invests in equity securities of companies
in certain emerging industry groups.
. The SoGen International Fund, Inc. invests in shares of a registered
investment company that invests in U.S. and foreign equity, fixed income and
gold-related securities and cash.
. The Templeton Foreign Fund I invests in shares of a registered investment
company that principally invests in equity securities of companies in
developed and developing countries outside the U.S.
. The Templeton Developing Markets Trust I invests in shares of a registered
investment company that principally invests in equity securities of companies
in developing countries.
Participant Loans. 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<PAGE>
<PAGE>
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, 1997 were
approximately $5,825,000.
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
contribution to such funds and the unit value of the applicable investment fund
at the end of the trading day in which a transaction occurs. The unit value of
each fund is determined at the close of each day 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.
At December 31, 1997, the Plan's interest in the Master Trust comprised
902,776,301 units of the 1,012,560,383 total units of participation, or 89.16%.
At December 31, 1996, the Plan's interest in the Master Trust comprised
953,631,080 units of the total 1,062,864,802 units of participation, or 89.72%.
Investment Valuation. The Income Fund's investment contracts are stated at
contract value which represents contributions plus earnings, less Plan
withdrawals. 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). All other funds are stated at fair value, as determined by the Trustee,
typically by reference to published market data.
Plan Expenses. Plan administrative expenses, including Trustee and recordkeeper
fees were paid directly by the employer in 1997. The employer also paid certain
investment management fees for the Bankers Trust managed funds. All other
administrative and investment expenses were paid out of Plan assets.
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
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 interest rates earned for 1997 and 1996 were 8.1% and
7.5%, respectively. The following is a summary of the investment contracts
held in the Income Fund and the portion allocable to the Plan:<PAGE>
<PAGE
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31, December 31,
1997 1996
<PAGE>
<S> <C> <C>
CIGNA $ 1,456,404 $ 1,512,307
Aetna 437,582 457,815
Travelers 367,509 388,845
Prudential 231,133 236,966
Metropolitan Life 780,096 782,764
$ 3,272,724 $ 3,378,697
Amount of the contracts allocable to the Plan $ 2,815,491 $ 2,920,121
</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 ("ESOP Shares"), with a
$4.80 per share annual dividend from UTC. Each 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 ESOP Shares as they earn UTC's matching
contributions. For the period ended December 31, 1997, participants were
credited with matching contributions of $56.7 million representing approximately
367,400 shares. Additionally, in lieu of receiving cash, participants are
allocated ESOP Shares for dividends paid on their shares. During 1997,
participants earned dividends of approximately $31.9 million representing
approximately 171,300 shares. ESOP Shares allocated are calculated at the
higher of twice the daily ending 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 $8.4 million of
additional cash contributions from UTC plus $9.5 million of Employer
Contributions receivable from UTC at December 31, 1997. The $9.5 million is due
to share allocations exceeding share releases during 1997. The number of ESOP
Shares allocated to participants' accounts is equal in value to the fixed
matching contributions specified by the Plan. To the extent that ESOP Shares
released through debt service payments are not sufficient to meet the matching
contribution requirement, UTC will contribute additional ESOP Shares, UTC Common
Stock or cash. To the extent that ESOP Shares released through debt service
will exceed the matching contribution requirement, management intends to
restructure the debt so that the value of the released ESOP Shares does not
exceed the matching contribution requirement.
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 Shares at period end is as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars, December 31, 1997 December 31, 1996
except share amounts) Allocated Total Allocated Total
<S> <C> <C> <C> <C>
Number of Shares 6,826,380 13,033,172 6,530,685 13,274,579
Guaranteed Value $ 443,715 $ 847,156 $ 424,495 $ 862,848
Market $ 994,092 $ 1,897,956 $ 865,316 $ 1,758,882
</TABLE>
As discussed above, market value is represented by the higher of the guaranteed
value of $65 per share or the daily closing price of two shares of UTC's Common
Stock. As such, the market value of the ESOP Shares was $145.625 and $132.50
per share at December 31, 1997 and 1996, respectively. Further, the Net Assets
Available for Benefits in the ESOP Fund at December 31, 1997 and 1996 include
unrealized appreciation of approximately $1.05 billion and $896.0 million, of
which $500.4 million and $455.2 million is on unallocated shares.
The ESOP Shares are redeemable, in whole or in part, at the option of UTC at a
redemption price of $65.96 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, 1997:
<TABLE>
<CAPTION>
Principal Rate of
Note Series (000's) Interest Due
<S> <C> <C> <C>
A $ 72,300 7.24% 1998 - 1999
B 286,600 7.68% 2000 - 2008
C 17,300 7.68% 2008
D 32,700 7.68% 2009
$ 408,900
</TABLE>
Required payments on these Notes, in aggregate, for the next five plan years are
$36.3 million in 1998, $36.0 million in 1999, $35.5 million in 2000, $35.0
million in 2001, and $34.5 million in 2002.
NOTE 6 - NOTE PAYABLE
In conjunction with the ESOP financing discussed in Note 5, UTC issued a
promissory note in 1990, bearing interest at 10.5%, and due over the period 1998
to 2009. At December 31, 1997, $74,633,000 was outstanding. Required principal
payments on the Note for the next five plan years are $4.6 million in 1998,
$4.8 million in 1999, $4.9 million in 2000, $ 5.0 million in 2001, and $5.2
million in 2002.<PAGE>
<PAGE>
On December 10, 1997, the Trustee executed an additional $15,000,000 promissory
note to UTC. This note bears an interest rate of 6.35%, has a December 10, 2007
maturity date, and replaced a portion of the 1990 ESOP Debt notes described in
Note 5 above.
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 and to certain Plan provisions that limit
this right when certain ESOP loans remain outstanding. 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 the Form 5500:
<TABLE>
<CAPTION>
December 31,
(Thousands of Dollars) 1997 1996
<S> <C> <C>
Net assets available for benefits per the
financial statements $6,016,119 $5,390,208
Amounts allocated to participant withdrawals (907) (38,084)
Net assets available for benefits per Form
5500 $6,015,212 $5,352,124
</TABLE>
<TABLE>
Year Ended
December 31,
1997
<S> <C>
Benefits paid to participants per the
financial statements $ 258,156
Add: Amounts allocated to participant
withdrawals at December 31, 1997 907
Less: Amounts allocated to participant
withdrawals at December 31, 1996 (38,084)
Benefits paid to participants per Form
5500 $ 220,979
</TABLE>
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.<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, 1998 By: /s/ Daniel P. O'Connell
Daniel P. O'Connell
Corporate Director, Employee Benefits and Human
Resources Systems
United Technologies Corporation<PAGE>
<PAGE>
<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, 1998 appearing in the United Technologies Corporation
Employee Savings Plan's Annual Report on Form 11-K for the year ended December
31, 1997.
PRICE WATERHOUSE LLP
Hartford, Connecticut
June 26, 1998<PAGE>
