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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
REPRESENTED EMPLOYEE SAVINGS PLAN
UNITED TECHNOLOGIES CORPORATION
One Financial Plaza
Hartford, Connecticut 06101
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FINANCIAL STATEMENTS OF THE UNITED TECHNOLOGIES CORPORATION
REPRESENTED EMPLOYEE SAVINGS PLAN
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the United Technologies Corporation
Represented Employee Savings 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 Represented Employee Savings 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 Represented Employee Savings 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) $922,102 $809,298
Contribution receivable 125 150
Net Assets Available for Benefits $922,227 $809,448
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United Technologies Corporation Represented Employee Savings 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 $ 63,511
Interest 39,117
Dividends 5,133
Contributions:
Participants' 45,424
Employer's 12,307
Total additions 165,492
Deductions from net assets attributed to:
Distributions to participants (51,717)
Administrative expenses (97)
Total deductions (51,814)
Net increase prior to transfers 113,678
Plan transfers:
Assets transferred into Plan 38
Assets transferred out of Plan (937)
Net Plan transfers (899)
Net increase 112,779
Net Assets Available for Benefits, December 31, 1998 809,448
Net Assets Available for Benefits, December 31, 1999 $922,227
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UNITED TECHNOLOGIES CORPORATION
REPRESENTED EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
NOTE 1 - DESCRIPTION OF THE PLAN
General. The United Technologies Corporation ("UTC") Represented 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"). Union represented employees of UTC, covered by
collective bargaining agreements that provide for Plan participation, are
eligible to participate in the Plan after completing at least 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. All participants may elect, through payroll
deductions, to make tax deferred contributions of between $2 per week and the
maximum amount permitted by the relevant collective bargaining agreement.
Certain participants, depending on their collective bargaining agreement, may
also make after-tax contributions. Participants direct the investment of their
contributions into various investment options offered by the Plan. The Plan
currently offers ten mutual funds, four commingled index funds, one stable value
fund, and a company stock fund as investment options for participants. Partici-
pant contributions, plus actual earnings thereon, are fully vested at all times
under the Plan. The employer will match 50 percent of the participant's
contributions, up to specified limits. Generally, employer contributions, plus
actual earnings thereon, become fully vested after two years of Plan
participation.
Certain participants may also make limited tax-deferred or after-tax
contributions to an individual medical account ("IMA") or tax-deferred
contributions for cost of living adjustments ("COLA"), where permitted. The
employer will match 75 percent of the participant's IMA contribution. All
contributions to an IMA will be invested 100 percent in the Income Fund and may
not be withdrawn until retirement or termination.
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 year ended December 31, 1999, approximately $2,600 of
forfeitures were used to fund UTC's 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.
Participant Loans. Certain participants with at least two years of Plan
participation are allowed to borrow up to 50 percent of their vested account
balances excluding IMA and COLA. Loan amounts can range from $1,000 to $50,000
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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 terminating
participants. Participants 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. Distributions in UTC Common Stock for the year
ended December 31, 1999 were approximately $267,000.
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.
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. 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.
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NOTE 3 - INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets:
December 31,
1999 1998
(Thousand of Dollars,
except unit amounts)
Equity Fund, 6,763,808 and
7,401,803 units, respectively $221,450 $200,259
UTC Common Stock Fund, 4,750,418
and 3,226,829 units, respectively $100,153 $ 57,990
Income Fund, 6,918,254 and
7,088,290 units, respectively $500,949 $473,892
NOTE 4 - INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
The Plan's Income Fund invests in insurance contracts with insurance companies.
Under the 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
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
41,731,235 units of the 510,203,518 total units of participation, or 8.18%. At
December 31, 1998, the Plan's interest in the Master Trust comprised 40,075,357
units of the total 522,172,913 units of participation, or 7.68%.
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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 $ 922,102 $ 809,298
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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 $ 107,761
Contributions received (cash basis) $ 57,756
Assets transferred into Plan $ 38
Pension benefits paid $ (51,717)
Plan expenses $ (97)
Assets transferred out of Plan $ (937)
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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 - 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 - TAX STATUS
The Internal Revenue Service has determined and informed UTC by letter dated
February 8, 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 9 - SUBSEQUENT EVENT
On June 10, 1999, UTC acquired Sundstrand Corporation and merged it with its
Hamilton Standard division and formed a wholly owned subsidiary, Hamilton
Sundstrand. During 1999, UTC approved the merger of the Sundstrand Corporation
Employee Savings Plan (the "Sundstrand Plan") with the UTC Employee Savings Plan
and the UTC Represented Employee Savings Plan (the "UTC Plans"). Salaried and
hourly participants of the Sundstrand Plan are eligible to participate in the
UTC Plans effective January 1, 2000. On January 13, 2000, approximately
$425,503,000 of net assets were transferred into the UTC Plans of which
$7,981,000 was transferred into this 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
REPRESENTED EMPLOYEE SAVINGS PLAN
Dated: June 28, 2000 By: /s/ Michael C. Sankner
Michael C. Sankner
Manager, Actuarial Administrator
United Technologies Corporation
