<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, 1999
Commission File Number 1-812
UNITED TECHNOLOGIES CORPORATION
EMPLOYEE SAVINGS PLAN
UNITED TECHNOLOGIES CORPORATION
One Financial Plaza
Hartford, Connecticut 06101
<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
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 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
<PAGE>
United Technologies Corporation 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) $8,654,973 $7,621,230
Contribution receivable 798 1,110
Net Assets Available for Benefits $8,655,771 $7,622,340
The accompanying notes are an integral part of these financial statements.
<PAGE>
United Technologies Corporation 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 $ 929,376
Interest 260,148
Dividends 102,658
Contributions:
Participants' 188,461
Employer's 15,457
Total additions 1,496,100
Deductions from net assets attributed to:
Distributions to participants (375,188)
Interest expense (37,886)
Administrative expenses (203)
Total deductions (413,277)
Net increase prior to transfers 1,082,823
Plan transfers:
Assets transferred into Plan (Note 12) 12,442
Assets transferred out of Plan (Note 12) (61,834)
Net Plan transfers (49,392)
Net increase 1,033,431
Net Assets Available for Benefits, December 31, 1998 7,622,340
Net Assets Available for Benefits, December 31, 1999 $8,655,771
The accompanying notes are an integral part of these financial statements.
<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 immediately upon employment with
UTC. Participants are eligible for matching employer contributions after 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 20 percent of their total compensation.
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 to participants. 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 7). However, participants who have reached at least age 55 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. In such cases, UTC may redeem the ESOP Preferred Stock
in the participants' accounts for cash, and such stock may be allocated in the
future. 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 year ended December 31, 1999, approximately $449,000 of
forfeitures were used to fund UTC's contributions.
Trustee and Recordkeeper. All of the Plan's assets are held by Bankers Trust
Company ("Bankers Trust"), the Plan trustee. Fidelity Institutional Retirement
Services Company ("Fidelity") performs participant account recordkeeping
responsibilities.
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 their ESOP account balance). 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.
<PAGE>
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 and ESOP investment options 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 $16,183,000.
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 6).
Investment Valuation and Income Recognition. The Income Fund's investments in
insurance contracts (see Note 5) 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 four times the daily
ending price of UTC's Common Stock, giving effect to the May 7, 1999 stock split
(see Note 7). All other funds are stated at fair value, as determined by the
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
recordkeeper 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.
<PAGE>
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, 33,816,508 and
36,435,523 units, respectively $1,107,166 $ 985,696
UTC Common Stock Fund, 31,496,578
and 25,470,182 units, respectively $ 663,898 $ 457,714
UTC ESOP Fund, 248,715,761 and
258,919,085 units, respectively $3,152,372 * $2,736,411 *
Income Fund, 45,676,863 and
47,947,610 units, respectively $3,307,451 $3,205,795
* Non-participant-directed
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$929,376,000 as follows:
Mutual Funds $400,089,000
ESOP Fund 529,287,000
$929,376,000
<PAGE>
NOTE 4 - NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
December 31,
(Thousand of Dollars) 1999 1998
Net Assets:
ESOP Fund $2,803,034 $2,363,126
Year Ended
December 31, 1999
(Thousand of Dollars)
Changes in Net Assets:
Investment income $588,943
Contributions 15,060
Benefits paid to participants (53,511)
Interest expenses (37,886)
Transfers to participant-directed investments (49,095)
Transfers to non-affiliated plans (23,603)
$439,908
NOTE 5 - 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 ofinvestment 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 6 - 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
460,428,818 units of the 510,203,518 total units of participation, or 90.24%. At
December 31, 1998, the Plan's interest in the Master Trust comprised 476,384,961
units of the total 522,172,913 units of participation, or 91.23%.
<PAGE>
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 $ 8,654,973 $7,621,230
<PAGE>
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 $1,292,182
Contributions received (cash basis) $ 204,230
Assets transferred into Plan (Note 12) $ 12,442
Pension benefits paid $ (375,188)
Plan expenses $ (38,089)
Assets transferred out of Plan (Note 12) $ (61,834)
<PAGE>
NOTE 7 - EMPLOYEE STOCK OWNERSHIP PLAN
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. On April 30, 1999, UTC announced a two-for-one
stock split, effective May 7, 1999. As a result, each ESOP share is convertible
into four shares of UTC's Common Stock. The ESOP financed the ESOP Share
purchases with interest bearing promissory notes. See Notes 8 and 9.
ESOP Shares are allocated to participant accounts as they earn UTC's matching
contributions. 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. To the extent that ESOP Shares released through debt
service payments are not sufficient to meet the matching contribution
requirement, UTC must contribute additional ESOP Shares, UTC Common Stock or
cash. To the extent that ESOP Shares released through debt service exceed the
matching contribution requirement, the debt is restructured so that the value of
the released ESOP Shares does not exceed the Plan's matching contribution
requirement. For the period ended December 31, 1999, participants were credited
with matching contributions of $58.9 million representing approximately 245,600
shares. Additionally, in lieu of receiving cash, participants are allocated
ESOP Shares for dividends paid on their shares. During 1999, participants
earned dividends of approximately $32.6 million representing approximately
125,400 shares.
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 four shares of UTC Common
Stock for each ESOP Share. Each ESOP share is valued at the higher of four
times the market value of UTC's Common Stock or $65. A participant cannot elect
to receive the distribution in ESOP Shares. The ESOP Fund's investment in ESOP
Shares at period end is as follows:
<TABLE>
(Thousands of December 31, 1999 December 31, 1998
Dollars, except share amounts) Allocated Total Allocated Total
<S> <C> <C> <C> <C>
Number of Shares 6,732,230 12,124,064 6,869,316 12,581,201
Guaranteed Value $ 437,595 $ 788,064 $ 446,506 $ 817,778
Market $1,750,380 $ 3,152,257 $1,494,076 $ 2,736,411
</TABLE>
The market value of the ESOP Shares was $260.00 and $217.50 per share at
December 31, 1999 and 1998, respectively. Further, the Net Assets Available for
Benefits in the ESOP Fund at December 31, 1999 and 1998 include unrealized
appreciation of approximately $2.4 billion and $1.9 billion, of which $1.1
billion and $0.9 billion is on unallocated shares.
The ESOP Shares are redeemable, in whole or in part, at the option of UTC at a
redemption price of $65.00 per share plus accrued and unpaid dividends.
However, upon notice to the Trustee of UTC's intention to redeem, the Trustee
can convert each preferred share into four shares of UTC Common Stock if more
beneficial to participants.
<PAGE>
NOTE 8 - ESOP DEBT
In 1990, the Master Trust, with UTC as guarantor, executed a Note and Guaranty
Agreement (the "Agreement") and issued $660,000,000 of Series A, B, C and D
notes (described below) representing the ESOP's permanent financing. The Series
A ESOP Debt was repaid in full during 1999. The amounts outstanding under the
Agreement, with interest rates and maturity dates, are as follows at December
31, 1999:
Principal Rate of
Note Series (000's) Interest Due
B 286,600 7.68% 2000 - 2008
C 17,300 7.68% 2008
D 32,700 7.68% 2009
$ 336,600
Required payments on these Notes, in aggregate, for the next five plan years are
$35.5 million in 2000, $35.0 million in 2001, $34.5 million in 2002, $34.0
million in 2003, and $33.6 million in 2004.
NOTE 9 - NOTES PAYABLE
In conjunction with the ESOP financing discussed in Note 7, the Master Trust
issued a promissory note to UTC issued in 1990, bearing interest at 10.5%, and
due over the period 1999 to 2009. At December 31, 1999, $65.2 million was
outstanding. Required principal payments on the Note for the next five plan
years are $4.9 million in 2000, $5.0 million in 2001, $5.2 million in 2002,
$5.5 million in 2003, and $5.7 million in 2004. The Trustee executed additional
$15 million, $19 million and $32 million of promissory notes to UTC on December
10, 1997, 1998 and 1999, respectively. The notes bear an interest rate of 6.35%,
5.50% and 6.95% and mature on December 10, 2007, 2008 and 2009, respectively.
These promissory notes replace a portion of the 1990 ESOP Debt notes described
in Note 8 above.
NOTE 10 - 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 11 - 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.
<PAGE>
NOTE 12 - PLAN TRANSFERS
During 1998, UTC approved the merger of certain defined contribution plans of
Northwestern Elevator Corporation (a subsidiary of Otis Elevator Company) into
the Plan effective January 1, 1999. Participants of the former Northwestern
Elevator Corporation defined contribution plans were eligible to participate in
the Plan effective January 1, 1999. On April 1, 1999, approximately $7,507,000
of net assets were transferred into the Plan.
On May 4, 1999, UTC completed its sale of UTA to Lear Corporation. All UTA
employees who were participants in the Plan were permitted to continue making
contributions to the Plan through May 31, 1999. In addition, UTA employees, who
were active as of May 4, 1999, became fully vested in the employer matching
contributions. In November 1999, approximately $46,581,000 of net assets,
including investment income earned since May 4, 1999, were transferred out of
the Plan to a defined contribution plan sponsored by Lear Corporation.
On October 1, 1999, UTC transferred a contract held between USBI, a subsidiary
of UTC, and NASA to United Space Alliance, LLC ("USA"). USA assumed
responsibility as trustee for Plan participants employed by UTC's United Space
Booster, Inc. and USBI Booster Production Company, Inc. (collectively, "USBI")
subsidiaries. All USBI employees, who were active as of September 30, 1999,
became fully immediately vested in their employer matching contributions.
During October 1999, approximately $9,485,000 of net assets were transferred to
a qualified plan sponsored by USA.
NOTE 13 - 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:
(Thousands of Dollars) December 31,
1999 1998
Net assets available for benefits
per the financial statements $8,655,771 $7,622,340
Amounts allocated to participant
withdrawals (713) (659)
Net assets available for benefits
per Form 5500 $8,655,058 $7,621,681
Year Ended
December 31,
1999
Benefits paid to participants per the
financial statements $375,188
Add: Amounts allocated to participant
withdrawals at December 31, 1999 713
Less: Amounts allocated to participant
withdrawals at December 31, 1998 (659)
Benefits paid to participants per Form 5500 $375,242
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.
<PAGE>
NOTE 14 - TAX STATUS
The Internal Revenue Service has determined and informed UTC by letter dated
September 23, 1996 that the Plan and related trust are designed in accordance
with applicable sections of the Internal Revenue Code ("IRC"). The Plan has
been amended since receiving the determination letter. However, the Plan
administrator and tax counsel believe that the Plan is designed and is currently
being operated in compliance with the applicable requirements of the IRC.
NOTE 15 - 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
$417,522,000 was transferred into this Plan.
<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 28, 2000 By: /s/ Michael C. Sankner
Michael C. Sankner
Manager, Actuarial Administrator
United Technologies Corporation
