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FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Plan period ended December 31, 1999
Commission File Number 1-812
UNITED TECHNOLOGIES CORPORATION
DEFINED CONTRIBUTION RETIREMENT PLAN
UNITED TECHNOLOGIES CORPORATION
One Financial Plaza
Hartford, Connecticut 06101
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FINANCIAL STATEMENTS OF THE UNITED TECHNOLOGIES CORPORATION
DEFINED CONTRIBUTION RETIREMENT PLAN
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the United Technologies Corporation
Defined Contribution Retirement Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the United Technologies Corporation Defined Contribution Retirement Plan (the
"Plan") at December 31, 1999 and December 31, 1998, and the changes in net
assets available for benefits for the year ended December 31, 1999 in conformity
with accounting principles generally accepted in the United States. 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
auditing standards generally accepted in the United States, 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.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Hartford, Connecticut
June 28, 2000
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United Technologies Corporation Defined Contribution Retirement Plan
Statement of Net Assets Available for Benefits
(Thousands of Dollars)
December 31, December 31,
1999 1998
Assets:
Plan's interest in Master Trust (Notes 3, 4 and 5) $ 13,364 $ 8,698
Net Assets Available for Benefits $ 13,364 $ 8,698
The accompanying notes are an integral part of these financial statements.
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United Technologies Corporation Defined Contribution Retirement Plan
Statement of Changes in Net Assets Available for Benefits
(Thousands of Dollars)
Year Ended
December 31,
1999
Additions to net assets attributed to:
Investment Income:
Net appreciation in fair value of investments $ 744
Interest 369
Dividends 44
Total investment income 1,157
Deductions from net assets attributed to:
Distributions to participants (440)
Total deductions (440)
Net increase prior to transfers 717
Plan transfers:
Assets transferred into Plan (Note 10) 4,010
Assets transferred out of Plan (61)
Net Plan transfers 3,949
Net increase 4,666
Net Assets Available for Benefits, December 31, 1998 8,698
Net Assets Available for Benefits, December 31, 1999 $13,364
The accompanying notes are an integral part of these financial statements.
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UNITED TECHNOLOGIES CORPORATION
DEFINED CONTRIBUTION RETIREMENT PLAN
Notes to Financial Statements
NOTE 1 - DESCRIPTION OF THE PLAN
General. The United Technologies Corporation ("UTC") Defined Contribution
Retirement Plan (the "Plan") is a defined contribution savings and money
purchase plan administered by UTC. It is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). Eligible employees
of UTC and certain of its subsidiaries may participate after completing one year
of service. As described in Note 9, all active Plan participants became
participants of the UTC Employee Savings Plan II (formerly, the UTC Savings Plan
for Hourly Management-Represented Employees) in 1998. 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. The employer made contributions for each participant
for up to 3.5 percent of the participant's compensation through July 1998. No
participant contributions were made during the 1999 and 1998 Plan years (see
Note 9). Participant contributions, plus actual earnings thereon, are fully
vested at all times under 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, 1999, no forfeitures were used
to fund employer contributions.
Trustee and Recordkeeper. All of the Plan's assets are held by Bankers Trust
Company ("Bankers Trust"), the Plan trustee. Fidelity Institutional Retirement
Services Company ("Fidelity") performs participant account recordkeeping
responsibilities.
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
an investment in the UTC Common Stock Fund investment option may be paid in
shares of UTC Common Stock instead of cash. There were no distributions in UTC
Common Stock for the year ended December 31, 1999.
Other. Participants who transfer to a new UTC location with a different savings
plan may 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, except for benefits which are recorded when
paid.
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Master Trust. The Plan's assets are kept in a Master Trust maintained by the
Plan's 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 participating plans' unit values. Distributions to
participants reduce the number of participation units held by the participating
plans (see Note 5).
Investment Valuation and Income Recognition. The Income Fund's investments in
insurance contracts (see Note 4) are stated at contract value, which represents
contributions plus earnings, less Plan withdrawals. All other funds are stated
at fair value, as determined by the Plan trustee, typically by reference to
published market data.
Purchases and sales of securities are recorded on a trade-date basis. Dividends
are recorded on the ex-dividend date.
Plan Expenses. Plan administrative expenses, including Plan trustee and
recordkeeping fees, were paid directly by the employer in 1999. The employer
also paid certain investment management fees for the Bankers Trust managed
funds. There were no other administrative and investment expenses paid out of
Plan assets during 1999.
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 - INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets:
December 31,
(Thousand of Dollars, 1999 1998
except unit amounts)
Equity Fund, 97,426 and 106,205
units, respectively $3,190 $2,874
UTC Common Stock Fund, 40,260
units in 1999 $ 848 N/A
Income Fund, 64,260 and 73,901
units, respectively $4,653 $4,942
NOTE 4 - INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
The Plan's Income Fund invests in insurance contracts with insurance companies.
Under these contracts, each insurance company guarantees repayment in full of
the principal amount 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
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in accordance with the established allocation procedures of the insurance
company. The interest rates earned for 1999 and 1998 were 8.1% and 8.5%,
respectively.
NOTE 5 - INVESTMENT IN MASTER TRUST
UTC has entered into a Master Trust agreement with Bankers Trust. Under this
agreement, certain savings plans of UTC and its subsidiaries combine their trust
fund investments in the Master Trust.
Participating plans purchase units of participation in the investment funds
based on their contribution to such funds along with income that the investment
funds may earn, less distributions made to the plans' participants.
At December 31, 1999, the Plan's interest in the Master Trust comprised 225,050
units of the 510,203,518 total units of participation, or 0.04%. At December 31,
1998, the Plan's interest in the Master Trust comprised 223,357 units of the
total 522,172,913 units of participation, or 0.04%.
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The following is a summary of the financial information and data for the Master
Trust and the portion applicable to the Plan:
United Technologies Corporation
Master Trust Statement of Net Assets
(Thousands of Dollars)
December 31, December 31,
1999 1998
Assets:
Short-term investments $ 23,147 $ 6,646
Investments:
Equity:
Mutual funds 663,679 483,050
Equity commingled index funds 1,466,274 1,310,686
Common stock 784,371 526,457
ESOP stock fund 3,152,372 2,736,411
Debt:
Fixed income commingled index funds 28,140 26,874
Insurance company investment contracts 3,883,142 3,731,589
Participant notes receivable 81,647 83,257
Subtotal 10,082,772 8,904,970
ESOP receivables 116,234 101,138
Interest and dividend receivables 20,085 8,824
Total assets 10,219,091 9,014,932
Liabilities:
Accrued liabilities 6,014 1,378
Accrued ESOP interest 2,154 2,205
ESOP debt 336,600 372,600
Notes payable to UTC 131,233 104,033
Total liabilities 476,001 480,216
Net Assets $ 9,743,090 $8,534,716
Net assets of the Master Trust allocable to the Plan $ 13,364 $ 8,698
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United Technologies Corporation
Master Trust Statement of Changes in Net Assets
(Thousands of Dollars)
Year Ended
December 31,
1999
Additions:
Interest and dividend income $ 414,622
Net appreciation on fair value of investments 1,004,193
Contributions from participating plans for
purchase of units 289,582
Total additions 1,708,397
Deductions:
Benefit payments on behalf of participating plans (437,791)
Master trust expenses (38,225)
Total deductions (476,016)
Net increase prior to transfers 1,232,381
Plan transfers:
Assets transferred in 41,739
Assets transferred out (65,746)
Net Plan transfers (24,007)
Increase in net assets 1,208,374
Net assets:
Beginning of year 8,534,716
End of year $9,743,090
Amounts pertaining to the Plan:
Plan interest in net appreciation and investment
income of Master Trust $ 1,157
Assets transferred into Plan (Note 10) $ 4,010
Pension benefits paid $ (440)
Assets transferred out of Plan $ (61)
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NOTE 6 - RELATED-PARTY TRANSACTIONS
Certain Plan investment options are managed by Bankers Trust and Fidelity.
Bankers Trust and Fidelity are the Plan's trustee and recordkeeper,
respectively, as defined by the Plan and, therefore, these transactions qualify
as party-in-interest transactions
NOTE 7 - FUNDING POLICY
The Corporation funds its obligation to the Plan on a monthly basis. At
December 31, 1999, the minimum funding requirements under ERISA have been met.
NOTE 8 - PLAN TERMINATION
Although it has not expressed any intent to do so, UTC has the right under the
Plan 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 9 - FROZEN PLAN
During 1998, all active Plan participants became participants of the UTC
Employee Savings Plan II. Previously accumulated participant balances will
remain in the Plan. No additional contributions will be made to the Plan.
Participants will continue to be able to direct or withdraw their remaining
investment balances in accordance with Plan provisions.
NOTE 10 - PLAN MERGER
On June 10, 1999, UTC acquired Sundstrand Corporation and merged it with its
Hamilton Standard division and formed a wholly owned subsidiary, Hamilton
Sundstrand. Effective December 31, 1999, a former plan of Sundstrand
Corporation, the Sullair Corporation Employees' Supplemental Retirement Plan
(the "Sullair Plan") was merged into the Plan. The Sullair Plan has been frozen
since 1984 thereby requiring no future employer or employee contributions.
Participant accounts are credited with earnings less administrative expenses.
On January 3, 2000 (trade date December 31, 1999), approximately $4,010,000 of
net assets were transferred into the Plan.
NOTE 11 - TAX STATUS
The Internal Revenue Service has determined and informed UTC by letter dated
April 22, 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 currently
being operated in compliance with the applicable requirements of the IRC.
NOTE 12 - SUBSEQUENT EVENT
During 1999, UTC approved the merger of the Ardco Money Purchase Plan into the
Plan. Salaried participants of the Ardco Money Purchase Plan are eligible to
participate in the Plan effective January 1, 2000. Subsequent to year-end,
approximately $3,194,000 of net assets was transferred into the Plan.
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SIGNATURES
The Plan (or other 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
DEFINED CONTRIBUTION RETIREMENT PLAN
Dated: June 28, 2000 By: /s/ Michael C. Sankner
Michael C. Sankner
Manager, Actuarial Administrator
United Technologies Corporation
