<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 14, 1999
UNITED TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
001-00812 06-0570975
(Commission File No.) (IRS Employer Identification No.)
One Financial Plaza
Hartford, Connecticut 06101
(Address of principal executive offices, including ZIP code)
(860) 728-7000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
As previously reported, on March 16, 1999, United Technologies
Corporation, a Delaware corporation (the "Company"), issued a press release
announcing that a wholly owned subsidiary of the Company and Lear Corporation, a
Delaware corporation ("Lear"), had entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement"), pursuant to which the Company will sell its UT
Automotive unit to Lear (the "Disposition") for consideration of $2.3 billion in
cash, subject to a post-closing adjustment based on working capital and cash as
set forth in the Stock Purchase Agreement. The financial terms of the
Disposition were determined by negotiations between the Company and Lear. The
UT Automotive unit is a supplier of automotive electrical distribution systems
and related components in the Americas and Europe and a supplier in North
America of modular headliners, instrument panels, door trim assemblies, vehicle
remote entry systems, and fractional horsepower DC electric motors used in
commercial and industrial applications. The UT Automotive unit also produces
other products such as interior trim, mirrors, thermal and acoustical barriers,
airbag covers, electronic controls and modules, engine cooling modules, interior
lighting systems, windshield wiper systems, and electrical starters for
commercial applications. Consummation of the Disposition is conditioned upon,
among other things, expiration or termination of the applicable waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act.
On February 22, 1999, the Company and Sundstrand Corporation, a
Delaware corporation ("Sundstrand"), issued a joint press release announcing
that they had entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which Sundstrand will merge with HSSail Inc., a wholly
owned and newly formed subsidiary of the Company, and become a wholly owned
subsidiary of the Company (the "Merger"). Sundstrand designs and manufactures
proprietary, technology-based components and subsystems for aerospace and
industrial customers. Consummation of the Merger is conditioned upon, among
other things, the requisite approval of the holders of Sundstrand common stock
and customary regulatory and governmental approvals.
Under the terms of the Merger Agreement, each outstanding share of
Sundstrand common stock will be converted into the right to receive $35.00 in
cash plus a fraction of a share of Company common stock initially set at .2790,
but subject to adjustment. To the extent necessary, depending on the average
closing price of Company common stock during the ten trading days before the
fifth trading day prior to the Sundstrand stockholders' meeting to be held to
approve and adopt the Merger and the Merger Agreement, the common stock exchange
ratio will be reduced or increased, as the case may be, to provide for a maximum
value of $39.25 and a minimum value of $35.00 of Company common stock (based
upon the average closing price of Company common stock during such period) for
each share of Sundstrand common stock. In addition, if the average closing
price of Company common stock during such measurement period is equal to or less
than $112.8938, then the Company has the right to convert the merger
consideration to an all cash payment of $70.00 per share of Sundstrand common
stock. The closing price per share of Company common stock on March 31, 1999
was $135.4375.
<PAGE>
In connection with the Merger, each director or employee option to
purchase Sundstrand common stock which is outstanding and unexercised
immediately prior to the Merger will be converted into an option to purchase
Company common stock pursuant to a formula based on the merger consideration or,
if the holder does not consent to such conversion, into an option to acquire
Company common stock and cash pursuant to a formula based on the merger
consideration. If the Company elects to pay the merger consideration solely in
cash, the options of holders who do not consent to the conversion will be
canceled immediately prior to the Merger and such holders will receive a lump
sum cash payment based on the excess of $70.00 over the exercise price per share
of Sundstrand common stock subject to such option. Other equity awards or
equity accounts under Sundstrand's employee or director incentive or benefit
plans, programs or arrangements will be converted into similar instruments of
the Company, with appropriate adjustments. The financial terms of the Merger
were determined by negotiations between the Company and Sundstrand.
The Company will pay for the transaction in part by issuing or
delivering shares of Company common stock with a value of approximately $2.0
billion. The cash consideration and the cash transaction costs will be funded
by the issuance of long-term and medium-term debt and cash proceeds from the
sale of its UT Automotive unit. If the UT Automotive unit's sale is not
completed before the completion of the Merger, cash consideration and cash
transaction costs associated with the Merger will be financed as short-term debt
under one or more of the Company's existing credit facilities and/or under one
or more short-term debt facilities that the Company may establish for the
purpose of financing the Merger. On March 10, 1999, the Company filed a shelf
registration statement relating to long-term and medium-term debt securities
that could be offered and sold for aggregate proceeds of approximately $1
billion. If the Company elects to convert the merger consideration to all cash,
under the terms of the Merger Agreement, no shares of Company common stock will
be issued or delivered other than in connection with the settlement of stock
options, and additional debt of approximately $2 billion will need to be
incurred. The incurrence of this additional debt would have to be approved by
the Company's Board of Directors.
The above descriptions of the Stock Purchase Agreement, the Merger
Agreement and the press releases are qualified in their entirety by reference to
those documents, which have been previously filed with the Securities and
Exchange Commission and are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS, AND EXHIBITS
(b) Pro Forma Financial Information.
The following pro forma financial information of the Company,
giving effect to the Merger and the Disposition, is set forth as Exhibit 99.3
and is incorporated herein by reference:
Unaudited Pro Forma Condensed Financial Statements -- Introduction.
-3-
<PAGE>
Unaudited Pro Forma Condensed Balance Sheet as of December 31,
1998.
Notes to Unaudited Pro Forma Condensed Balance Sheet.
Unaudited Pro Forma Condensed Statement of Operations for the year
ended December 31, 1998.
Unaudited Pro Forma Condensed Statement of Operations for the year
ended December 31, 1997.
Unaudited Pro Forma Condensed Statement of Operations for the year
ended December 31, 1996.
Notes to Unaudited Pro Forma Condensed Statement of Operations.
(c) Exhibits.
2.1 Merger Agreement, dated as of February 21, 1999, among United
Technologies Corporation, HSSail Inc. and Sundstrand
Corporation, incorporated by reference to Exhibit 2.1 to the
Current Report on Form 8-K of the Company filed on February
23, 1999 (the "February 23 8-K").
2.2 Stock Purchase Agreement, dated as of March 16, 1999, by and
between Nevada Bond Investment Corp. II and Lear Corporation,
incorporated by reference to Exhibit 99.1 to the Current
Report on Form 8-K of the Company filed on March 19, 1999
(the "March 19 8-K").
99.1 Press Release, dated as of February 22, 1999, jointly issued
by United Technologies Corporation and Sundstrand
Corporation, incorporated by reference to Exhibit 99.1 to the
February 23 8-K.
99.2 Press Release, dated as of March 16, 1999 issued by United
Technologies Corporation, incorporated by reference to
Exhibit 99.2 to the March 19 8-K.
99.3 Unaudited Pro Forma Condensed Financial Statements related to
the potential Merger and Disposition.
-4-
<PAGE>
SIGNATURE
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.
Dated: April 14, 1999
UNITED TECHNOLOGIES CORPORATION
By: /s/ William H. Trachsel
------------------------------------------
Name: William H. Trachsel
Title: Senior Vice President, General Counsel
and Secretary
-5-
<PAGE>
EXHIBIT LIST
Exhibit Description
-----------
No.
--
2.1 Merger Agreement, dated as of February 21, 1999, among United
Technologies Corporation, HSSail Inc. and Sundstrand Corporation,
incorporated by reference to Exhibit 2.1 to the Current Report on
Form 8-K of the Company filed on February 23, 1999 (the "February
23 8-K").
2.2 Stock Purchase Agreement, dated as of March 16, 1999, by and
between Nevada Bond Investment Corp. II and Lear Corporation,
incorporated by reference to Exhibit 99.1 to the Current Report
on Form 8-K of the Company filed on March 19, 1999 (the "March 19
8-K").
99.1 Press Release, dated as of February 22, 1999, jointly issued by
United Technologies Corporation and Sundstrand Corporation,
incorporated by reference to Exhibit 99.1 to the February 23 8-K.
99.2 Press Release, dated as of March 16, 1999 issued by United
Technologies Corporation, incorporated by reference to Exhibit
99.2 to the March 19 8-K.
99.3 Unaudited Pro Forma Condensed Financial Statements related to the
potential Merger and Disposition.
-6-
<PAGE>
Exhibit 99.3
INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
On February 22, 1999, the Company and Sundstrand announced the Merger
Agreement. On March 16, 1999, the Company announced the Stock Purchase
Agreement.
The following unaudited pro forma condensed financial information has
been prepared from the historical financial statements of the Company and
Sundstrand adjusted to reflect the Merger using the purchase method of
accounting.
The unaudited pro forma condensed balance sheet has been adjusted to
reflect the Disposition as though it had occurred on December 31, 1998. This
adjustment assumes net cash proceeds of $2.0 billion after payment of taxes and
cash transaction costs, the accrual of other transaction related expenses and
the estimated gain on the sale resulting from the completion of the Disposition.
The pro forma condensed statement of operations reflects UT Automotive as a
discontinued operation for the years ended December 31, 1996, 1997 and 1998 and
does not reflect the effects of the anticipated gain or proceeds.
The unaudited pro forma condensed balance sheet has been prepared to
reflect the Merger and the issuance of 0.2790 shares of Company common stock and
$35 in cash for each outstanding share of Sundstrand common stock, as if the
Merger occurred on December 31, 1998, and the issuance of Company stock options
to Sundstrand stock option holders in exchange for Sundstrand stock options.
Based on the price per share of Company common stock of $125.4375 on February
19, 1999, the last trading day prior to entering into the Merger Agreement,
total consideration would be $70 per share resulting in an aggregate purchase
price of approximately $3.9 billion including related transaction costs of
approximately $40 million. The purchase price of Sundstrand common stock has
been preliminarily allocated to tangible and intangible assets and liabilities
of Sundstrand based upon estimates of their respective values. These
allocations will be subsequently adjusted based upon appraisals, valuations and
other studies, which will be conducted over the next several months. Final
values may differ substantially from those shown herein. The unaudited pro
forma condensed statement of operations combines the results of operations of
the Company and Sundstrand as if the Merger occurred on January 1, 1998.
The pro forma condensed financial statements should be read in
conjunction with the Company's and Sundstrand's historical financial statements.
The pro forma information presented is for informational purposes only and it is
not necessarily indicative of future earnings or financial position or of what
the earnings or financial position would have been had the Merger been completed
on January 1, 1998 or as of December 31, 1998.
This pro forma financial information should be read in conjunction
with the historical financial statements of the Company and Sundstrand.
Historical financial statements of the Company can be found in the Company's
annual report on Form 10-K filed on February 16, 1999. Sundstrand's historical
financial statements can be found in its annual report on Form 10-K filed on
March 31, 1999.
<PAGE>
PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1998
(IN MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTED MERGER UNITED
UNITED UT AUTOMOTIVE UNITED HISTORICAL PRO FORMA TECHNOLOGIES
TECHNOLOGIES ADJUSTMENT TECHNOLOGIES SUNDSTRAND ADJUSTMENTS PRO FORMA
------------ ------------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents........... $ 550 $2,000 $ 2,550 $ 15 $ (889)(1) $ 1,676
Accounts and notes receivable,
net................................ 3,993 (576) 3,417 381 - 3,798
Inventories and contracts in
progress........................... 3,362 (171) 3,191 401 24 (3) 3,616
Other current assets................ 1,450 (68) 1,382 68 - 1,450
------- ------ ------- ------ ------- -------
Total Current Assets................ 9,355 1,185 10,540 865 (865) 10,540
Fixed assets, net................... 4,265 (710) 3,555 527 263 (3) 4,345
Goodwill............................ 1,750 (333) 1,417 332 3,107 (5) 4,856
Other assets........................ 3,005 (59) 2,946 83 - 3,029
------- ------ ------- ------ ------- -------
Total Assets........................ $18,375 $ 83 $18,458 $1,807 $ 2,505 $22,770
======= ====== ======= ====== ======= =======
LIABILITIES AND SHAREOWNERS'
EQUITY
Short-term borrowings............... $ 512 $ (8) $ 504 $ 163 $ - $ 667
Accounts payable.................... 2,237 (377) 1,860 128 - 1,988
Accrued liabilities................. 4,886 (56) 4,830 204 40 (l) 5,074
Long-term debt currently due........ 100 (1) 99 4 - 103
------- ------ ------- ------ ------- -------
Total Current Liabilities........... 7,735 (442) 7,293 499 40 7,832
Long-term debt...................... 1,575 (5) 1,570 295 1,031 (l)(3) 2,896
Other long-term liabilities......... 4,231 (70) 4,161 468 6 (3)(4) 4,635
Series A ESOP Convertible...........
Preferred Stock.................... 836 - 836 - - 836
ESOP Deferred Compensation......... (380) - (380) - - (380)
------- ------ ------- ------ ------- -------
456 - 456 - - 456
Shareowners' Equity:
Common Stock....................... 2,708 - 2,708 203 1,059 (l)(2) 3,970
Unamortized value of restricted
stock issued...................... - - - (6) 6 (2) -
Treasury Stock..................... (3,117) - (3,117) (645) 1,356 (l)(2) (2,406)
Retained Earnings.................. 5,411 600 6,011 1,007 (1,007)(2) 6,011
Accumulated other
non-shareowner changes in
equity............................ (624) - (624) (14) 14 (2) (624)
------- ------ ------- ------ ------- -------
4,378 600 4,978 545 1,428 6,951
------- ------ ------- ------ ------- -------
Total Liabilities and
Shareowners' Equity................ $18,375 $ 83 $18,458 $1,807 $ 2,505 $22,770
======= ====== ======= ====== ======= =======
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1998
The unaudited pro forma condensed balance sheet includes the pro forma
adjustments to reflect the Disposition and the Merger as if both took place on
December 31, 1998.
UT Automotive Adjustment:
Reflects the Disposition for net cash proceeds of approximately $2.0
billion after payment of taxes and cash transaction costs, the accrual
of other transaction related expenses and the estimated gain on the
sale.
Merger Pro Forma Adjustments:
(1) Adjustment to reflect the issuance of 15.1 million shares of Company
common stock based on a common stock exchange ratio of .2790, the
payment of $1.889 billion for the cash consideration paid to Sundstrand
stockholders and for the cash transaction costs, and the issuance of
Company stock options to Sundstrand stock option holders. The Merger
Agreement provides that if the average closing price per share of
Company common stock for the ten trading day period before the fifth
trading day prior to the Sundstrand stockholder meeting to be held to
approve and adopt the Merger Agreement and the Merger exceeds $140.68
per share, the common stock exchange ratio will be adjusted to reflect
a maximum market value (based upon the average closing price of Company
common stock during such period) of Company common stock to be received
for each share of Sundstrand common stock of $39.25. If the common
stock exchange ratio is adjusted pursuant to this provision of the
Merger Agreement, the aggregate purchase price and goodwill will be
increased by approximately $230 million, based on the outstanding
shares of Sundstrand common stock on February 24, 1999. The adjustment
assumes that the cash consideration and the cash transaction costs of
$1.889 billion will be funded by the issuance of approximately $1.0
billion of medium-term and long-term debt and $889 million of cash from
the Disposition. If the Disposition closes after the Merger, $889
million of the cash consideration and the cash transaction costs will
be funded by the issuance of short-term debt under one or more of the
Company's existing or new credit facilities.
Although the cash election is not reflected in these pro forma
financial statements, if the Company elects to convert the merger
consideration to an all cash payment of $70 per share of Sundstrand
common stock, under the terms of the Merger Agreement, additional cash
consideration of $1.889 billion would be required in lieu of the
issuance of shares of Company common stock. Any financing required to
pay the additional cash consideration would have to be approved by the
Company's Board of Directors. This cash consideration would result in
additional borrowings and related interest expense.
<PAGE>
(2) Adjustment to eliminate Sundstrand equity pursuant to the Merger.
(3) Adjustment to record Sundstrand assets and liabilities at their
estimated fair market value.
(4) Adjustment to record the tax effects related to the pro forma
adjustments.
(5) Adjustment to reflect the incremental goodwill resulting from the
Merger.
<PAGE>
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTED MERGER UNITED
UNITED UT AUTOMOTIVE UNITED HISTORICAL PRO FORMA TECHNOLOGIES
TECHNOLOGIES ADJUSTMENT TECHNOLOGIES SUNDSTRAND ADJUSTMENTS PRO FORMA
------------ ------------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Product sales.......................... $ 20,248 $(2,900) $ 17,348 $2,005 $ (25)(D) $ 19,328
Service sales.......................... 5,439 - 5,439 - - 5,439
-------- ------- -------- ------ ------- --------
Net sales.............................. 25,687 (2,900) 22,787 2,005 (25) 24,767
Financing revenues and other
income, net.......................... 28 (6) 22 10 - 32
-------- ------- -------- ------ ------- --------
25,715 (2,906) 22,809 2,015 (25) 24,799
Cost of products sold.................. 15,815 (2,379) 13,436 1,316 60(A)(C)(D) 14,812
Cost of services sold.................. 3,461 - 3,461 - - 3,461
Research and development............... 1,315 (147) 1,168 92 - 1,260
Selling, general and administrative.... 2,957 (220) 2,737 225 - 2,962
Interest............................... 204 (7) 197 35 65(B) 297
-------- ------- -------- ------ ------- --------
23,752 (2,753) 20,999 1,668 125 22,792
Income from continuing operations
before income taxes and
minority interests................... 1,963 (153) 1,810 347 (150) 2,007
Income taxes........................... 623 (55) 568 121 (32)(E) 657
Minority interests in
subsidiaries' earnings............... 85 - 85 - - 85
-------- ------- -------- ------ ------- --------
Income from continuing operations...... $ 1,255 $ (98) $ 1,157 $ 226 $ (118) $ 1,265
Discontinued Operation:
Income from operations of discontinued
UT Automotive subsidiary (net of
applicable income tax provision of
$55 million)......................... - 98 98 - - 98
-------- ------- -------- ------ ------- --------
Net Income............................. $ 1,255 $ - $ 1,255 $ 226 $ (118) $ 1,363
======== ======= ======== ====== ======= ========
Earnings Per Share of
Common Stock:
Continuing Operations:
Basic:
Average shares (thousands)........... 227,767 227,767 15,100 242,867
Earnings per share................... $ 5.36 $ 4.94 - $ 5.07
Diluted:
Average shares (thousands)........... 247,380 247,380 15,800 263,180
Earnings per share................... $ 5.05 $ 4.66 - $ 4.79
Discontinued Operation:
Basic:
Average shares (thousands)........... 227,767 227,767 15,100 242,867
Earnings per share................... $ - $ 0.42 - $ 0.41
Diluted:
Average shares (thousands)........... 247,380 247,380 15,800 263,180
Earnings per share................... $ - $ 0.39 - $ 0.37
Net Earnings Per Share:
Basic:
Average shares (thousands)........... 227,767 227,767 15,100 242,867
Earnings per share................... $ 5.36 $ 5.36 - $ 5.48
Diluted:
Average shares (thousands)........... 247,380 247,380 15,800 263,180
Earnings per share................... $ 5.05 $ 5.05 - $ 5.16
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.
<PAGE>
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTED
UNITED UT AUTOMOTIVE UNITED
TECHNOLOGIES ADJUSTMENT TECHNOLOGIES
-------------- ------------- --------------
<S> <C> <C> <C>
Product sales..................................................... $ 18,873 $(2,927) $ 15,946
Service sales..................................................... 5,116 - 5,116
-------- ------- --------
Net sales......................................................... 23,989 (2,927) 21,062
Financing revenues and other income, net.......................... 233 (7) 226
-------- --------
24,222 (2,934) 21,288
Cost of products sold............................................. 15,080 (2,442) 12,638
Cost of services sold............................................. 3,208 - 3,208
Research and development.......................................... 1,187 (118) 1,069
Selling, general and administrative............................... 2,820 (209) 2,611
Interest.......................................................... 191 (3) 188
-------- ------- --------
22,486 (2,772) 19,714
Income from continuing operations before income
taxes and minority interests.................................... 1,736 (162) 1,574
Income taxes...................................................... 565 (51) 514
Minority interests in subsidiaries' earnings...................... 99 (1) 98
-------- ------- --------
Income from continuing operations................................. $ 1,072 $ (110) $ 962
Discontinued Operation:
Income from operations of discontinued UT
Automotive subsidiary (net of applicable income
tax provision of $51 million)................................... - 110 110
-------- ------- --------
Net Income........................................................ $ 1,072 $ - $ 1,072
======== ======= ========
Earnings Per Share of Common Stock:
Continuing Operations:
Basic:
Average shares (thousands)...................................... 234,443 234,443
Earnings per share.............................................. $ 4.44 $ 3.97
Diluted:
Average shares (thousands)...................................... 253,555 253,555
Earnings per share.............................................. $ 4.21 $ 3.77
Discontinued Operation:
Basic:
Average shares (thousands)...................................... 234,443 234,443
Earnings per share.............................................. $ - $ 0.47
Diluted:
Average shares (thousands)...................................... 253,555 253,555
Earnings per share.............................................. $ - $ 0.44
Net Earnings Per Share:
Basic:
Average shares (thousands)...................................... 234,443 234,443
Earnings per share.............................................. $ 4.44 $ 4.44
Diluted:
Average shares (thousands)...................................... 253,555 253,555
Earnings per share.............................................. $ 4.21 $ 4.21
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.
<PAGE>
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTED
UNITED UT AUTOMOTIVE UNITED
TECHNOLOGIES ADJUSTMENT TECHNOLOGIES
-------------- ------------- --------------
<S> <C> <C> <C>
Product sales................................................... $ 17,799 $(3,086) $ 14,713
Service sales................................................... 4,989 - 4,989
-------- ------- --------
Net sales....................................................... 22,788 (3,086) 19,702
Financing revenues and other income, net........................ 263 (93) 170
-------- ------- --------
23,051 (3,179) 19,872
Cost of products sold........................................... 14,327 (2,674) 11,653
Cost of services sold........................................... 3,088 - 3,088
Research and development........................................ 1,122 (108) 1,014
Selling, general and administrative............................. 2,796 (209) 2,587
Interest........................................................ 217 (4) 213
-------- ------- --------
21,550 (2,995) 18,555
Income from continuing operations before income taxes
and minority interests........................................ 1,501 (184) 1,317
Income taxes.................................................... 494 (64) 430
Minority interests in subsidiaries' earnings.................... 101 (2) 99
-------- ------- --------
Income from continuing operations............................... $ 906 $ (118) $ 788
Discontinued Operation:
Income from operations of discontinued UT Automotive
subsidiary (net of applicable income tax provision
of $64 million)............................................... - 118 118
-------- ------- --------
Net Income...................................................... $ 906 $ - $ 906
======== ======= ========
Earnings Per Share of Common Stock:
Continuing Operations:
Basic:
Average shares (thousands).................................... 241,454 241,454
Earnings per share............................................ $ 3.63 $ 3.14
Diluted:
Average shares (thousands).................................... 258,606 258,606
Earnings per share............................................ $ 3.48 $ 3.02
Discontinued Operation:
Basic:
Average shares (thousands).................................... 241,454 241,454
Earnings per share............................................ $ - $ 0.49
Diluted:
Average shares (thousands).................................... 258,606 258,606
Earnings per share............................................ $ - $ 0.46
Net Earnings Per Share:
Basic:
Average shares (thousands).................................... 241,454 241,454
Earnings per share............................................ $ 3.63 $ 3.63
Diluted:
Average shares (thousands).................................... 258,606 258,606
Earnings per share............................................ $ 3.48 $ 3.48
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
The unaudited pro forma condensed statement of operations includes the
pro forma adjustment to reflect UT Automotive as a discontinued operation for
the years ended December 31, 1996, 1997 and 1998 and the Merger as if it took
place on January 1, 1998.
A. Adjustment to reflect the incremental goodwill amortization from the Merger
over an estimated useful life of 40 years. If the common stock exchange
ratio is adjusted, as described in Note 1 to the Pro Forma Condensed
Balance Sheet, goodwill amortization would be increased by approximately $6
million.
B. Reflects the interest expense incurred by the Company in connection with
the Merger. Interest expense was calculated for the full year (360 days) on
a pro forma basis using an interest rate of 6.5% on medium-term and long-
term debt of $1.0 billion.
If the Company elects to convert the merger consideration to an all cash
payment of $70 per share of Sundstrand common stock, under the terms of the
Merger Agreement, additional cash consideration of $1.889 billion would be
required in lieu of the issuance of Company common stock. Any financing
required to pay the additional cash consideration would have to be approved
by the Company's Board of Directors. This consideration would result in
additional borrowings and related interest expense of $109 million.
C. Adjustment reflects the additional depreciation on the write-up of fixed
assets to fair value over a 10 year useful life.
D. Adjustment to eliminate sales and cost of sales between Sundstrand and the
Company.
E. Adjustment to record the tax effects related to the pro forma adjustments.
