<PAGE> 1
Sundstrand Corporation Annual Report - 1997
1997 PERFORMANCE
Pie charts
Pie Chart 1 - Aerospace 57% and Industrial 43%
Pie Chart 2 - Commercial 85% and Military 15%
Pie Chart 3 - Domestic 58% and International 42%
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
Sales (millons of dollars)
<S> <C> <C> <C> <C> <C>
Aerospace 1,001 785 726 710 754
Industrial 751 736 747 663 629
----- ----- ----- ----- -----
Total sales 1,752 1,521 1,473 1,373 1,383
===== ===== ===== ===== =====
Net Earnings From Continuing
Operations
(millions of dollars)
Reported 188 114 79 96 91
Restructuring 1 26
Operating Cash Flow Per Share 2.22 1.70 2.14 .86 2.60
After Capital Spending
(dollars)
Diluted Earnings Per Share From
Continuing Operations
(dollars)
Reported 3.15 1.87 1.25 1.46 1.28
Restructuring .02 .43 .64 - -
Return On Average Equity After .35 .23 .16 .19 .27
Taxes
(percent)
</TABLE>
This Summary Annual Report contains forward-looking information which is
subject to market risks and opportunities that could have a material impact on
actual results, and accordingly should be considered in conjunction with the
cautionary language set forth in Sundstrand's most recent report on Form 8-K
which is on file with the Securities and Exchange Commission.
- 1 -
<PAGE> 2
TO OUR SHAREHOLDERS
Our company had another excellent year in 1997. We once again set records in
all important categories, and our forward momentum continues to build.
1997 HIGHLIGHTS AND OBSERVATIONS
(Results before restructuring and other one-time items)
When compared to our record 1996 results, 1997 sales grew 15% to $1,752
million. Our non-U.S. sales were 42% or $736 million of this total which
reflects our strong presence in international markets. We are committed to
continuing growth in all global markets.
Our 1997 earnings also set a record by growing 29% to $180 million. Our
diluted earnings per share grew 31% from $2.29/share in 1996 to $3.00/share in
1997. This growth reflects share repurchases for the year of 2.5 million
shares. We ended 1997 with approximately 4 million shares remaining in our
Board-authorized share repurchase program. During January, we repurchased an
additional 865 thousand shares. With our share repurchase authorization
approaching 3 million shares, our Board of Directors, on January 26, 1998,
authorized the repurchase of an additional 10 million shares. Our purchases
and the additional authorization reflect our commitment to maintaining and
enhancing shareholder value.
For 1998, we expect sales to grow between 10% and 15% with diluted
earnings per share expected to be between $3.55 and $3.80. Additional share
repurchases are not reflected in this EPS forecast. However, reflected in the
forecast is a $ .20/share downward adjustment based on uncertainties associated
with Asia/Pacific markets.
Our Aerospace group had a terrific 1997 with sales of $1,001 million up
28% over 1996. During the year, our people did an outstanding job in meeting
customer delivery and service requirements, while initiating progress in moving
to simplified manufacturing configurations. We expect increasing
- 2 -
<PAGE> 3
progress with these programs over the next two years resulting in improved
efficiencies, lower cycle time, and substantially reduced inventories.
We continue to benefit from strong global demand for new aircraft as well
as increased passenger and freight traffic. Our after-market business reflects
significant aircraft utilization and is expected to continue growing in 1998.
After several years of decline, our military sales grew in 1997 and we expect
additional growth in 1998.
Our Aerospace Power Systems business experienced substantial growth in
1997, but more importantly, continued to win major new orders for our auxiliary
power unit product line. The acquisition in late 1996 of our joint venture
partner's share in our APIC auxiliary power unit business has gone very well.
We believe our Power Systems business will be an important contributor to sales
and earnings growth in the years ahead. For 1998, we expect our Aerospace
group to grow total sales 15 to 20% with operating profit margins in excess of
20%.
Our Industrial group also experienced growth in sales and earnings for
1997. Our sales grew 2% to $751 million. When readjusted for the effects of a
strong U.S. dollar, this total growth was approximately 4%, about in line with
our early expectations for the year. Operating earnings for this group of
companies grew 7%. This earnings growth reflects improved operating margins
despite the currency impact.
Our Industrial businesses made excellent progress with programs which will
add to sales and earnings growth in the future. Programs directed at
manufacturing efficiencies, new product introductions, and the restructuring of
Sullair Europe all have been executed during the year as planned. For 1998, we
expect our Industrial sales to grow between 5%-10% with operating margins in
the range of 16.5% to 17.0%.
One of Sundstrand's important strengths is our generation of cash flow.
During 1997, we generated $133 million in cash flow after capital expenditures,
which is up 28% over 1996 despite a
- 3 -
<PAGE> 4
$55 million increase in capital expenditures to support our manufacturing
initiatives. For 1998, our cash flow is expected to be between $150 million
and $175 million despite slight increases in both R & D and capital
expenditures. We are pleased to be able to grow cash flow during a period when
we are investing strongly for the future.
OUR FUTURE
Sundstrand is a manufacturer of highly engineered products and systems for
aerospace and industrial customers around the world. We will maintain our
focus on this heritage for the future, deriving growth from new technologies,
products, markets, and complementary acquisitions.
Our goal is to be recognized as a "sought-after" company based upon
exceeding the expectations of our investors, our customers, our suppliers, and
our people.
With our manufacturing and operating effectiveness growing, we are placing
increasing attention on growth. New technologies and products, as well as
bolt-on acquisitions are resulting from our decentralized businesses. This
decentralized structure now has a total of 27 business enterprises focused
uniquely on technologies, products, or markets. This new structure is the real
story behind Sundstrand's growing success and is clearly based upon our
outstanding people. Our people are increasingly meeting business challenges in
ways which make us a preferred business partner - a sought-after company.
ORGANIZATION CHANGES
In November, Ilene Gordon of Tenneco Packaging joined our Board of
Directors. Ilene brings a history of manufacturing and operations experience
to Sundstrand and we look forward to her contributions in the years ahead.
In December, after nearly 30 years of service, Richard M. Schilling
retired as Vice President, General Counsel and Secretary. Dick's contributions
to Sundstrand have been great in number
- 4 -
<PAGE> 5
(Photo of Patrick Thomas, Robert Jenkins, Ronald McKenna, and Paul Donovan)
[Caption]
Patrick L. Thomas, Executive Vice President and Chief Operating Office,
Industrial;
Robert H. Jenkins, Chairman of the Board, President, and Chief Executive
Officer; Ronald F. McKenna, Executive Vice president and Chief Operating
Officer, Aerospace;
Paul Donovan, Executive Vice President and Chief Financial Officer.
and his wise counsel has been highly valued. We extend to Dick our
appreciation and best wishes.
In February 1998, we announced that Mary Ann Hynes will become
Sundstrand's Vice President, General Counsel and Secretary. Mary Ann joins us
from Wolters Kluwer US Inc. where she has been General Counsel.
The officers and people of Sundstrand thank our shareholders for their
support.
/s/ ROBERT H. JENKINS
Robert H. Jenkins
Chairman of the Board,
President and
Chief Executive Officer
- 5 -
<PAGE> 6
SUNDSTRAND AT A GLANCE
(Photo of an A340, a GV and a V22 aircraft)
AEROSPACE
PRODUCTS AND SERVICES
ELECTRIC SYSTEMS
Electric Power Generating, Distribution and Control Systems including
Generators; Solid State Power Controls; Integrated Drive Generators; and
Constant Speed Drives
MECHANICAL SYSTEMS
Actuation Systems; Secondary and Emergency Power Systems; Engine and Airframe
Transmissions and Pumps; Motors; Torpedo Propulsion; and Space Systems
POWER SYSTEMS
Auxiliary Power Units, Gas Turbine Engines, Fans and Environmental Control
Systems
CUSTOMER SERVICE
Creating satified customers with on-site technical service; logistics support;
and repair services.
OPERATING PERFORMANCE
Bar Charts (four total)
<TABLE>
<CAPTION>
Sales Operating Profit
(millions of dollars) (millions of dollars)
<S> <C>
1993 - 754 1993 (Reported) - 106
1994 - 710 1994 (Reported) - 88
1995 - 726 1995 (Reported) - 54 and (Restructuring) - 54
1996 - 785 1996 (Reported) - 138 and (Restructuring) - 5
1997 - 1,001 1997 (Reported) - 209
Orders Received Unfilled Orders
(millions of dollars) (millions of dollars)
1993 - 527 1993 - 572
1994 - 736 1994 - 599
1995 - 896 1995 - 769
1996 - 822 1996 - 806
1997 - 1,266 1997 - 1,071
</TABLE>
- 6 -
<PAGE> 7
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 Aerospace
- -----------------------------------------
<S> <C> <C> <C> <C> <C>
$754 $710 $726 $785 $1,001 Sales (millions)
</TABLE>
1997 PRIMARY MARKETS
Pie Chart
Military OEM 17%
Military Aftermarket 9%
Commercial Aftermarket 41%
Commercial OEM 33%
<PAGE> 8
(Photo of F-22 aircraft, a paper machine, an off-shore oil rig, a man with a
compressor and pavement breaker.)
INDUSTRIAL
BUSINESSES
The Falk Corporation
Enclosed Gear Drives; Shaft Couplings; Large Open Gear Sets; and Alloy Steel
Castings.
Milton Roy Company
Metering Pumps; Specialty Pumps
Sundstrand Fluid Handling
Heavy Duty API Pumps; Process Gas Compressors; High Pressure Pumps; Canned
Motor Pumps; Sealless Magnet Drive Pumps; and Sanitary Positive Displacement
Pumps
Sullair Corporation
Rotary Screw Air and Gas Compressors; Pneumatic Tools, Dryers and Filters
OPERATING PERFORMANCE
Bar Charts (four total)
<TABLE>
<CAPTION>
Sales Operating Profit
(millions of dollars) (millions of dollars)
<S> <C>
1993 - 629 1993 (Reported) - 84
1994 - 663 1994 (Reported) - 106
1995 - 747 1995 (Reported) - 121 and (Restructuring) - 4
1996 - 736 1996 (Reported) - 84 and (Restructuring) - 32
1997 - 751 1997 (Reported) - 128 and (Restructuring) - 2
Orders Received Unfilled Orders
(millioins of dollars) (millions of dollars)
1993 - 625 1993 - 110
1994 - 701 1994 - 148
1995 - 761 1995 - 162
1996 - 735 1996 - 161
1997 - 745 1997 - 156
</TABLE>
- 7 -
<PAGE> 9
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 Industrial
- ----------------------------------------
<S> <C> <C> <C> <C> <C>
$629 $663 $747 $736 $751 Sales (millions)
</TABLE>
1997 PRIMARY MARKETS
Pie Chart
Construction & Cement 15%
Mining & Metals 11%
Chemical 9%
Water/Waste Treatment 8%
Wood & Paper 7%
Agribusiness 5%
Other 5%
Consumer 2%
Transportation 2%
General Industry 20%
Hydrocarbon 16%
<PAGE> 10
AEROSPACE
(Graphic - Four circles clustered together with a triangle in the middle of the
four. First upper left circle contains these words Institute Supply Chain
Management, the lower left circle contains these words Replace Information
Systems, the top right circle contains these words Create Business Enterprises,
and the lower right circle contains these words Improve Business Processes.
The triangle contains these words Focus, Culture Change, Simplify, and Trust.)
The commercial aircraft and air transport markets remained strong in 1997.
This translated into increased demand for Sundstrand systems for both original
equipment manufacturer (OEM) installs on new airplanes and for spares.
Defense systems sales grew slightly, but declined as a percent of total
sales due to the strong commercial sales growth. Sundstrand also increased the
sales of repair services of our products to aircraft operators worldwide.
The increased demand for finished systems and spare parts was anticipated,
with the result that orders have been filled on time. While achieving this
production ramp-up we launched a six-month period of internal studies to
discover how we could further improve performance; the result is our roadmap of
changes called "Key Initiatives".
Our objectives are Improved Customer Satisfaction; Reduction in Unit Cost;
Reduction in Cycle Times; Improved Quality/ Reduced Defects; and Profitable
Business Growth. These are being addressed by improving our business processes,
improving management of the supply chain, creation of focused business
"Enterprises", and information systems improvements.
KEY INITIATIVES TEAM
Overseeing these changes is a team of people experienced in our
disciplines and business requirements. Their charter is to define and
implement changes in every aspect of our product design, development,
manufacturing and business processes that will achieve our objectives while
maintaining seamless interoperation.
INVESTMENTS
Machines, fixtures and test equipment are being reconfigured to create new
manufacturing "cells" within our facilities. These cells start with raw
materials and produce finished goods and subassemblies that can immediately be
used for OEM installation or for sale as spares. The objective is to
dramatically reduce the cycle time to create a salable product, and with it,
the investment in work-in-process inventory.
This will benefit our customers through faster responsiveness to demand
and more consistent quality. We are already gaining these benefits from initial
cells, and we continue to reconfigure work flow into cells in all of our
manufacturing and assembly operations worldwide.
ENTERPRISES
APUs and related products have long been designed, developed, marketed and
produced by dedicated teams at our Power Systems unit in San Diego. In 1997 we
formed similar focused Enterprises in our Rockford, Illinois locations for
other services and products.
These Enterprises remain grouped under the Electric Systems, Mechanical
Systems and Customer Service organizations, sharing some services in common.
Their locations, management, mission and facilities are dedicated to end-to-end
control of their products or services, providing 'ownership' and simplified
structure for improved speed, cost awareness and customer satisfaction.
- 8 -
<PAGE> 11
(Continued)
RESULTS
In the increasingly competitive future our decentralized structure will
allow us to continue to be a global, highly rewarding, technology-leading and
manufacturing-leading aerospace business; an integrated supplier that designs,
produces and supports subsystems and components with customer recognized
superior value for commercial aircraft, defense and space.
(Photo of Manufacturing Cell. Pointing out the following: Generator Stator
Manufacturing Cell, Stator blanks prepared for winding, Assemblies in process
travel only within the cell, Output: Finished stators for assembly into
generators or for sales as spares, Tested Stators are laced and packaged,
Dielectric Test, and Raw in-process material in Kanban containers coming into
cell.)
<PAGE> 12
(Photo of Aerospace Change Management Team)
[Caption]
Aerospace Change Management Team (l to r) Adella Sefrhans; Tom Wirth; Bob
Harms; Brad Considine; Bruce Rudie; Roy Dawson; Dirk Klein; Judy Andrychuk,
Director of Aerospace Key Initiatives; Cindy Wheeler; Sandy Lopez.
(Photo of four technicians)
[Caption]
Techicians Tadd Johnson; Linda Sipe; Leroy johnson; Barb Hendrick; and tim
Nuckles Assemble and Test Ram Air Turbines in the Emergency and Secondary Power
Enterprise Manufacturing Cells.
(Photo of a Manufacturing Cell)
[Caption]
Derek Abbott, Mark Young, and Bill Wood in the Denver, Colorado Cell
Manufacturing Hydromechanical Governors for Constant Speed Drives and
Integrated Drive Generators.
- 9 -
<PAGE> 13
(Photo of two Integrated Drive Generators)
[Caption]
Integrated Drive Generators
(Photo of Generator Control Units and Ground/Auxiliary Power Control Unit)
[Caption]
Generator Control Units and Ground/Auxiliary Power Control Unit
(Photo of Airbus A340-500 airplane)
[Caption]
Airbus A340-500
(Photo of Auxiliary Power Unit Generator)
[Caption]
Auxiliary Power Unit Generator
(Photo of two Integrated Drive Generators)
[Caption]
Integrated Drive Generators
(Photo of Canadair RJ-700 airplane)
[Caption]
Canadair RJ-700
(Photo of Integrated Drive Generators, Auxiliary Power Unit Generator,
Generator Control Units and Bus Power Control Unit)
[Caption]
Integrated Drive Generators, Auxiliary Power Unit Generator, Generator Control
Units and Bus Power Control Unit
- 10 -
<PAGE> 14
ELECTRIC SYSTEMS
(Photo of 767-400ER airplane)
[Caption]
Boeing is developing the new 767-400ER with a Sundstrand electric power
generating system.
(Photo of MD-10 Controls)
[Caption]
MD-10 Controls
(Photo of 767-400ER Integrated Drive Generator)
[Caption]
767-400ER Integrated Drive Generator
Our flagship product remains aircraft Electric Systems, including Constant
Speed Drives, Generators, Controls, Integrated Drive Generators, and complete
Integrated Electric Systems. Systems are sized for each aircraft type, from
Regional Jets like the Canadair RJ-700 to widebodies like the Airbus
A340-500/600 and Boeing 767-400. As aircraft evolve into derivative
configurations Sundstrand works with the manufacturer to tailor electric
systems and components.
Many existing Boeing DC-10s are being reconfigured with new MD-11 cockpits
and new Sundstrand electric system controls to emerge as Boeing MD-10
freighters.
Our design, development, test and manufacturing expertise enables
airframers to depend on Sundstrand for the best system for their aircraft.
Generating system types now offered include constant frequency IDG
systems; constant frequency solid state VSCF systems; variable frequency
systems; 270 Vdc systems; and hybrid systems.
Sundstrand continues to develop Reliability Improvement Programs (RIPs),
aimed at increasing the on-wing life of all our rotating hardware to provide
operators with added value.
- 11 -
<PAGE> 15
ELECTRIC SYSTEMS
(Photo of Raytheon Hawker Horizon Business Jet)
[Caption]
Raytheon Hawker Horizon Business Jet
(Photo of Secondary Power Distribution Assembly)
(Photo of Power Conversion Distribution Unit)
(Photo of Constant Speed Motor Generator)
(Photo of Variable Frequency Generator)
(Photo of Auxiliary Power Unit)
(Photo of Boeing 717-200 Commercial Transport)
New aircraft designs can utilize the latest Sundstrand innovation, integrated
electric systems. The Boeing 717 and Raytheon Hawker Horizon systems will use
Sundstrand's Power Conversion Distribution Unit. These new systems require
fewer components and less wiring for electric conversion, distribution and
control functions. The Horizon will also employ Sundstrand's distributed
secondary power distribution and automated load switching without pilot
intervention.
The Horizon system comprises the complete electrical system for everything
betwteen the engines and the loads.
- 12-
<PAGE> 16
(Photo of Electrical Power Control Unit)
(Photo of Raytheon Hawker Horizon)
(Photo of Boeing 717-200)
(Photo of Integrated Drive Generator)
(Photo of Auxiliary Power Unit Generator)
- 13 -
<PAGE> 17
MECHANICAL SYSTEMS
(Photo of Bell/Boeing 609 Civil Tiltrotor and its Pylon Actuation System)
[Caption]
Bell/Boeing 609 Civil Tiltrotor Actuation System
Mechanical Systems products include actuation systems, such as the Bell/Boeing
609 Tilt Rotor Conversion system and Canadair RJ-700 Leading Edge/Flap system;
and emergency Ram Air Turbines as on the RJ-700. Other products are
transmissions, such as the Boeing/Northrop F/A-18 E/F Airframe Mounted
Accessory Drive; and pumps like the F/A-18 Motive Flow Boost Pump. Other
systems are used on launch vehicles and the Space Shuttle, as well as torpedo
propulsion.
These are members of product design 'families' that are scaled in size and
power capacity for the needs of each platform. Efficient in energy conversion,
the building blocks are ideal for rapid application to new vehicles. Common
materials and manufacturing processes ensure repeatable success with minimum
redesign.
(Photo of Ram Air Turbine, Flap/Slat Electronic Control Unit, Slat Actuator,
Flap Actuator, Electric Flap/Slat Power Drive Unit, and Canadair RJ-700
Regional Jet)
[Caption]
Canadair RJ-700 Regional Jet Emergency Ram Air Turbine and High Lift Actuation
System
- 14 -
<PAGE> 18
(Photo of Boeing/Northrop F/A-18 E/F)
[Caption]
Boeing/Northrop F/A-18 E/F Airframe Mounted Accessory Drive Gearbox with Motive
Flow Boost Pump
- 15 -
<PAGE> 19
POWER SYSTEMS
Power Systems products include auxiliary power units (APUs), small gas turbine
engines that run a generator and produce pressurized air for cabin air
conditioning and main engine starting.
Our APS family of commercial APUs has had considerable market success on
the Embraer RJ145, DeHavilland DHC Dash8-400, Boeing 717, and the Airbus A320
family. In 1997 most customers of new A319, A320 and A321 aircraft selected
the APS3200 APU based on its low cost of ownership, high reliability and
Sundstrand's world class support services. They included All Nippon Airways,
Asiana, British Midland, Condor, Croatia, China Southern, Silk Air, Singapore
Aircraft Leasing and US Airways.
In 1997 Sundstrand was awarded a contract for a new APU on the Saab JAS-39
Gripen fighter. Other defense aircraft with Sundstrand APUs include the
Bell/Boeing V-22 and Sikorsky UH-60.
Other Power Systems products are environmental control systems and highly
reliable fans such as those used for avionics cooling, galley ventilation and
cabin air circulation on Boeing 7 series aircraft and many other aerospace
applications.
(Photos of APS 500 APU, Embraer RJ145 airplane, Auxiliary Power Engine Start
System, and Saab JAS-39)
- 16 -
<PAGE> 20
(Photos of Boeing 717-200, Airbus A320, APS 2100 APU, APS 3200 APU, Boeing 777,
and Air Circulation Fans)
- 17 -
<PAGE> 21
(Photo of two women)
[Caption]
Denise Dallman, (left) On-Site Logistics Support Representative with a customer
at America West Airlines.
- 18 -
<PAGE> 22
CUSTOMER SERVICE
Aircraft operators prefer Sundstrand service, giving our systems a competitive
market advantage. Innovation, teamwork and on-site support are three reasons
for our success.
One new service is spares monitoring for airlines to help them minimize
shortages with more effective inventory levels. For operators without an MRO
shop for our products, we tailor repair services to their individual
requirements. Sundstrand facilities in North America, Europe and Asia provide
OEM quality repair with fast turnarounds.
We train customer personnel in operation and maintenance of our systems
and conduct regular forums of product user groups for peer networking and field
performance feedback.
Our field engineering personnel are stationed around the world at key
airport locations to support aircraft operators where they need us, on the
flight line.
(Photo of women assembling)
[Caption]
Denise Seaman assembling a repaired Ram Air Turine in the Rockford, Illinois
Repair Center
(Photo of four men looking at hardware)
[Caption]
Boeing, Airline, and Airbus representatives contribute product performance
feedback to Pat Liddell (third from left), Sundstrand Service Engineering, at
an Electric Systems Airline Technical Forum
(Photo of three men)
[Caption]
Jose Lara; Janel Delva; Isabel Fernandez; and Ives Etienne, members of the
Repair Services Generator Rewinind Team, Miami, Florida
- 19 -
<PAGE> 23
AEROSPACE AFTERMARKET
(Photo of parts)
REPLACEMENT PARTS
Logistical support for products in service is an essential element of the
aircraft systems business. Commercial jet aircraft service lives are
approaching 30 years. In addition, long aircraft model production runs mean
that many will still be in service 50+ years after first airplane delivery.
(Photo of Sundstrand Aerospace aircraft applications map)
- 20 -
<PAGE> 24
REPAIRS
Many aircraft operators find it cost effective not to maintain shops to
overhaul subsystems. We rework and restore useable subassemblies, replace
parts as needed and return hardware to customers with service lives equivalent
to new units - available any time as long as aircraft are flying.
(Photo of a woman)
[Caption]
Cindy Handlogten with a generator assembly, Rockford, IL
(Photo of Sundstrand Aerospace aircraft applications map)
- 21 -
<PAGE> 25
INDUSTRIAL
(Photo of two men)
[Caption]
Falk Sales Engineer Rich Chyko works to rapidly solve customer application
requirements by sizing drive components with Speedquote automated specification
software.
(Photo of five people)
[Caption]
Sundstrand Compressors Business Unit Members (l to r) Joni Reeves, Jeff
Wiemelt, Chuck Zachrich, Kerry Kramlich, Tim Zgabay.
With the exception of the Asian currency crisis from midyear, overall economic
conditions were acceptable for ongoing industrial growth in 1997. The
increasingly global nature of our industrial businesses has allowed them to
become less sensitive to economic changes in a single region. The greater
relative strength of the U.S. dollar overall provided a challenge to export
orders and reduced the profitability of foreign operations, but did not
substantially affect our results or our commitment to globalisation.
The changing alignments of economies reinforces the necessity for our
continuing decentralization and establishment of production and distribution
facilities closer to our customers worldwide. Increasing dollar values create
improved sales opportunities for operations based in other currency zones. We
continue to look at new geographic market opportunities for all our product
families.
In internal structures, each business moved toward improving manufacturing
efficiencies in ways appropriate to their operations, inplementing key
principles of Market Rate of Demand Manufacturing. These include techniques
such as cellular manufacturing, 'kanban' signals for production and restocking,
supplier-owned floor stock, and creation of entreprenurial teams centered
around defined product types.
The results have been proving out the objectives: faster cycle times for
product development and manufacturing; lower lead times for customers;
reductions in work-in-process inventory; increased product quality and more job
satisfaction for employees.
Falk improved European market penetration in 1997 and continued to have
good customer response to their joint ventures in Mexico and Australia. After
establishing the coupling product in a separate facility last year, two more
dedicated business units were set up for standard product types.
Milton Roy completed conversion of all models in two product families to
Market Rate of Demand cellular manufacturing. Standardization of features in
some products has allowed reductions in elements manufactured without affecting
performance or customer acceptance.
Fluid Handling completed several manufacturing cells and opened its
Sundyne/Sunflo Service Center in Shanghai, China. A compressor business unit
was created and set up as a stand-alone group. Compressor teams began technical
exchanges with other Sundstrand Industrial and Aerospace units for
manufacturing improvement and cooperative engineering initiatives.
Sullair's Shenzhen, China joint venture facility opened in April and
market acceptance improved throughout the year. China's import duty structure
now favors indigenous manufacturers like Sullair at the expense of competing
imported products.
- 22 -
<PAGE> 26
(Photo of a guest house and a Metronics unit)
[Caption]
Milton Roy's Liquid Metronics unit supplied the water purification system used
in the Shenzhen guest house reserved for Chinese government officials during
the ceremony returning Hong Kong to China.
- 23 -
<PAGE> 27
FALK
(Photo of a man looking at gear machine)
[Caption]
Mike Hoye reviews the setup of a spiral bevel gear machine.
(Photo of Falk Ring Gears)
[Caption]
Falk Ring Gears drive grinding mills at the Escondida Copper Mine, Chile.
(Photos of Ultramax Concentric Drive, Lifelign Gear Coupling, and Steel Mill
Caster)
[Caption]
Ultramax Concentric Drive
[Caption]
Lifelign Gear Coupling
[Caption]
Falk drives and couplings are used on steel mill casters.
The Falk Corporation is an established world leader manufacturing a broad range
of standard enclosed gear drives, shaft couplings, large open gear sets, alloy
steel castings, and custom engineered enclosed gear drives. Falk supplies
components and mechanical systems to mining, cement, paper, wood products,
chemical, coal, power, and a host of other process industries. Falk is well
known for its exceptional product reliability and extraordinary customer
service.
In 1997, Falk restructured its operations into four business units
centered around couplings, standard products, customer engineered products, and
after market repair and service. This restructuring allows each unit to focus
on superior customer satisfaction with exceptional product solutions and
manufacturing excellence through process simplification.
Demand has been strong for Falk's new products introduced in 1997,
including the Quadrive Shaft Mounted Drives, UltraMax(TM) Concentric Drives,
and Lifelign(TM) Gear Couplings. New metric features have also been added to
Falk products for improved global acceptance.
Customer focus, exceptional products, investments in additional capacity,
and expanded global presence are Falk strengths for 1998 and beyond.
- 24 -
<PAGE> 28
(Photo of two men)
[Caption]
Falk Salesman, Mark Hoye, assists a quarry operator with expansion plans.
(Photo of shaft)
[Caption]
Quadrive(R) Shaft Mounted Drive
(Photo of a man looking at a belt conveyor drive system)
[Caption]
Ed Zembinski reviews final assembly of a 1500 hp (119kW) belt conveyor drive
system
(Photo of A-Plus Right Angle Drive)
[Caption]
A-Plus Right Angle Drive
- 25 -
<PAGE> 29
MILTON ROY
(Photo of a man and women)
[Caption]
Liquid Metronics assembler Kevin Vuong in Market Rate of Demand manufacturing
cell with General Manager Diane Laverty
(Photo of pumps)
[Caption]
35 Centrac(TM) pumps are used in the new Long Beach, CA Citizens Water Treatment
plant
(Photo of pumps with high pressure water feed applications)
[Caption]
Two MILROYAL(R) pumps in a high pressure water feed application at the Bayer
Corporation, Orange, TX
The four divisions of Milton Roy have facilities in the United States, France,
the United Kingdom, Spain and a joint venture in India. They provide a broad
range of metering and circulating pumps, systems and associated equipment to
world markets.
Milton Roy metering pumps are typically used to inject precisely
controlled flows of chemicals into process streams and are used in agriculture,
chemical processing, electronic device manufacture, municipal and industrial
water and wastewater treatment, oil and gas production, as well as pulp and
paper applications.
Dosapro Milton Roy had an outstanding year of increased competitiveness
due to currency fluctuations and our ability to meet the demands of European
and Asian customers.
The Flow Control Division also experienced growth in 1997 with sales of
their standard mRoy(R) and MILROYAL(R) products up significantly over 1996.
Today customers expect customization of products to met their exact need. Flow
Control Division meets this need with a new short run production shop for
customized pumps in short lead times.
Liquid Metronics, Inc. continued the trend in sales growth experienced
over the last several years. A significant part of recent growth is
attributable to new products; LMI recently introduced the Liquid-Pro(TM) series
of pumps and is working on further enhancements to their pump line.
Concentration on Market Rate of Demand manufacturing techniques,
simplification of business practices, and significant investments in new
products and worldwide marketing will continue to provide growth and
profitability for Milton Roy into the future.
- 26 -
<PAGE> 30
(Photo of MILROYAL(R) pumps and offshore oil platform with two men)
[Caption]
Multiplexed MILROYAL(R) Pumps in an offshore oil platform system which uses a
total of 37 Milton Roy pumps
(Photo of water treatment systems)
[Caption]
Industrial water treatment systems in final assembly at Milton Roy Asia LMI
(Photo of Dosapro pumps)
[Caption]
An order of Dosapro pumps to be used in primary blending of Polypropylene in
China
- 27 -
<PAGE> 31
(Photo of HMD/Kontro Pumps)
[Caption]
HMD/Kontro Pumps installed in an OEM skid package in a heavy water application
- 28 -
<PAGE> 32
FLUID HANDLING
(Photo of HMD/Kontro H-Range Pumps)
[Caption]
HMD/Kontro H-Range Pumps and Sundyne LMV-311 pump in a petrochemical facility
in the U.K. Photo courtesy of EXXON Chemical Ltd.
(Photo of pump)
[No Caption]
(Photo of man beside a pump)
[Caption]
Manufacturing Manager Tom Helmreich with a Sundyne LMV-311 pump
(Photo of women beside a pump)
[Caption]
Spares Team Leader Vicki Heronema with a Sundyne LMV-322 pump
(Photo of man beside a pump)
[Caption]
Assembly Specialist Mike Martinez with a Sundyne LMV-806
Sundstrand Fluid Handling is a global leader in process fluid and gas handling
technologies, with manufacturing facilities in the U.S., Britain, France, and
in Japan with our joint venture partner Nikkiso/Sundstrand. We have for many
years been known as the preferred supplier to the worldwide hydrocarbon and
chemical processing, pulp and paper, power generation, and the food and
beverage processing industries.
Product families include high speed centrifugal pumps and compressors,
sealless pumps, sanitary pumps and engineered packages.
Our continuing sales growth in international markets was led by demand
from the hydrocarbon and chemical processing industries, in which we have for
many years been a leader with our reliable Sundyne(R) line of heavy duty and
sealless pumps, and Kontro(R), HMD(TM), and Sundyne canned motor pump lines.
Our Sunflo pumps also continue to have a strong market position in
specialized high pressure applications such as in power generation or pulp and
paper industries.
Processors of foods and beverages rely on our Sine positive displacement
sanitary pumps, which are also in demand for pharmaceutical and cosmetic
applications.
Sundstrand Fluid Handling expanded its global presence and service
capabilities in 1997, opening our Shanghai, China service center and adding
four additional service centers in Latin America. We are committed to
continuing exemplary service to all of our customers around the world.
- 29 -
<PAGE> 33
SULLAIR
(Photo of drill compressor)
[Caption]
Sullair is a leader in on-board drill compressors
Sullair Corporation is one of the world's leading manufacturers of rotary screw
compressors, and an industry leader in compressed air contaminant-removal
equipment, vacuum systems and air tools. Our leadership is founded on
cutting-edge rotary screw technology, highly skilled people and a partnership
approach to customer relationships.
The global acceptance of new products like the DS Oil-Free and ES Encapsulated
compressors are clear indications of the confidence our customers have placed
in Sullair. We, in turn, have dedicated ourselves to even closer communication
with our customers and even greater responsiveness to their needs. Here are
some of the steps taken by Sullair during 1997 to make this commitment a
reality:
RESTRUCTURE AND CONSOLIDATION OF SULLAIR EUROPE
Sullair consolidated all manufacturing, assembly and administrative operations
in Montbrison, France, the site of its recently constructed manufacturing
facility. By combining the manufacturing capabilities and technical expertise
of its St. Priest and Montbrison organizations, Sullair Europe has confirmed
its commitment to its customers in Europe, Africa, and the Middle East.
NEW HEADQUARTERS IN CHINA
The Sullair Asia joint venture began producing compressors at its recently
completed facilities in Chiwan, Shenzhen, China. Sullair can now offer its
Asia Pacific customers state-of-the-art compressors with technology that
Sullair has perfected over the years, excellent parts and service assistance,
and expert local compressor training at its dedicated training center in the
Chiwan facility.
IMPROVED PRODUCTION TECHNIQUES
Sullair instituted productivity improvements in manfacturing through
implementing Market Rate of Demand production techniques. This process has
improved the Company's ability to respond to varying customer demands while
improving manufacturing efficiency.
BUSINESS SEGMENTATION
Acknowledging the market's needs for quickness and flexilibility, Sullair began
the process of focusing its businesses. The Company is improving its position
in its served markets and strengthening its distribution channels. Sullair's
focused sales and marketing team for air tools is but one example of the
success of this approach.
By cultivating closer relationships with its cusotmers, globalizing both its
products and its manufacturing resources, and introducing new productivity
improvements, Sullair is working to assure its long-term competitive position
as a worldwide manufacturer and an industry leader.
- 30 -
<PAGE> 34
(Photo of two men looking at a compressor)
[Caption]
A Sullair TS Series 32 tandem two-stage compressor is used as part of a total
energy saving system at Bourns Electronics, Cork, Ireland. Process air used in
the plant is recycled through a heat recovery system.
(Photo of Sullair's facility in China)
[Caption]
Sullair's Chiwan, China manufacturing and support facility opened in 1997.
(Photo of an assembler working on a compressor package)
[Caption]
Assembler Chuck Morrison works on a compressor package. Market Rate of Demand
manufacturing matches produciton rate and models to customer requirements for
shorter lead times.
- 31 -
<PAGE> 35
CONDENSED FINANCIAL REPORT
The 1997 summary annual report contains condensed consolidated balance sheets,
statements of earnings and statements of cash flows. Complete consolidated
financial statements, including notes to the consolidated financial statements,
as well as management's discussion and analysis of financial condition and
results of operations, are presented in the Company's 1997 Annual Report on
Form 10-K.
- -------------------------------------------------------------------------------
Management's Report
The management of Sundstrand is responsible for the preparation and
presentation of the consolidated financial statements in the Annual Report on
Form 10-K and related financial information included in this annual report.
The financial statements in the Annual Report on Form 10-K have been prepared
in conformity with generally accepted accounting principles consistently
applied and, as such, include amounts based on estimates by management. The
consolidated financial statements have been audited by Ernst & Young LLP, the
Company's independent auditors. The condensed statements included in this
annual report have been derived from the audited financial statements and are
fairly stated in all material respects in relation to those statements.
Management also is responsible for maintaining a system of internal
accounting controls which is designed to provide reasonable assurance that
assets are safeguarded and that transactions are executed in accordance with
management's authorization and are properly recorded. To assure the
maintenance of effective internal controls, management adopts and disseminates
policies, procedures and directives; selects and trains qualified personnel;
establishes organizational structures which permit the delegation of authority
and responsibility; and maintains an active program of internal audits and
appropriate follow-up by management.
The management of Sundstrand also recognizes its responsibility to promote
a strong ethical climate throughout the Company. Toward this end, the Company
provides training in ethical decision making to each employee. In addition,
each employee receives a copy of the Company's manual on Business Conduct and
Ethics.
The Board of Directors elects an Audit Committee from among its members
who are not employees of the Company. The Audit Committee meets periodically
with management, the internal auditors, and the independent auditors to review
the work of each and satisfy itself that they are properly discharging their
responsibilities. Both the independent auditors and internal auditors have
free access to the Audit Committee, without the presence of management, to
discuss internal accounting controls, auditing, and financial reporting
matters.
(Signature) (Signature)
Robert H. Jenkins Paul Donovan
Chairman of the Board, Executive Vice President and
President and Chief Financial Officer
Chief Executive Officer
January 27, 1998
- -------------------------------------------------------------------------------
- 32 -
<PAGE> 36
Independent Auditor's Report
To the Shareholders and Board of Directors, Sundstrand Corporation,
We have audited, in accordance with generally accepted auditing standards,
the consolidated balance sheets of Sundstrand Corporation and subsidiaries as
of December 31, 1997 and 1996, and the related consolidated statements of
earnings, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1997. These consolidated financial statements
are included in the Annual Report on Form 10-K of Sundstrand Corporation and
subsidiaries for the year ended December 31, 1997 and have not been presented
herein. In our report dated January 28, 1998 which also appears in the Annual
Report on Form 10-K, we expressed an unqualified opinion on those consolidated
financial statements.
In our opinion, the information in the accompanying condensed financial
statements appearing on pages 33 through 35 is fairly stated, in all material
respects, in relation to the consolidated financial statements from which it
was derived.
Ernst & Young LLP
Chicago, Illinois
January 27, 1998
<PAGE> 37
SUNDSTRAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
Year Ended December 31, 1997 1996
- -------------------------------------------------------------------------------
(Amounts in millions except per share data)
<S> <C> <C>
Net sales ................................................ $ 1,752 $ 1,521
- -------------------------------------------------------------------------------
Costs and expenses:
Costs of products sold ................................. 1,148 990
Marketing and administration ........................... 286 300
Restructuring charges, net ............................. - 24
- -------------------------------------------------------------------------------
1,434 1,314
- -------------------------------------------------------------------------------
Earnings before other income (deductions) ................ 318 207
Other income (deductions):
Interest expense ....................................... (30) (29)
Interest income ........................................ 6 5
Other, net ............................................. - 1
- -------------------------------------------------------------------------------
(24) (23)
- -------------------------------------------------------------------------------
Earnings before income taxes and cumulative effect of
accounting change ...................................... 294 184
Less income taxes ........................................ 106 70
- -------------------------------------------------------------------------------
Net earnings before cumulative effect of
accounting change ...................................... 188 114
Cumulative effect of change in method of accounting for
certain consulting costs, net of taxes ................. (5) -
- -------------------------------------------------------------------------------
Net earnings ............................................. $ 183 $ 114
===============================================================================
Weighted-average number of common shares outstanding ..... 59.8 61.0
Weighted-average number of common shares outstanding --
assuming dilution ...................................... 60.2 61.3
Basic earnings per share:
Earnings before cumulative effect of accounting change.. $ 3.15 $ 1.87
Cumulative effect of change in accounting .............. (.09) -
- -------------------------------------------------------------------------------
Net earnings ........................................... $ 3.06 $ 1.87
===============================================================================
Diluted earnings per share:
Earnings before cumulative effect of accounting change.. $ 3.13 $ 1.86
Cumulative effect of change in accounting .............. (.09) -
- -------------------------------------------------------------------------------
Net earnings ........................................... $ 3.04 $ 1.86
===============================================================================
Cash dividends per common share .......................... $ 0.68 $ 0.68
===============================================================================
</TABLE>
- 33 -
<PAGE> 38
SUNDSTRAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31, 1997 1996
- -------------------------------------------------------------------------------
(Amounts in millions)
<S> <C> <C>
Cash flow from operating activities:
Net earnings ........................................... $ 183 $ 114
Adjustment to reconcile net earnings to cash provided by
operating activities:
Depreciation ......................................... 58 61
Amortization ......................................... 15 12
Deferred income taxes ................................ 51 6
Change in operating assets and liabilities excluding
the effects of acquisitions and divestitures:
Accounts receivable ................................ (13) (18)
Inventories ........................................ (75) (37)
Other assets ....................................... (20) 5
Accounts payable ................................... 23 (4)
Accrued expenses ................................... 23 20
Other ................................................ 7 9
- -------------------------------------------------------------------------------
Total adjustments .................................... 69 54
- -------------------------------------------------------------------------------
Net cash provided by operating activities ................ 252 168
- -------------------------------------------------------------------------------
Cash flow from investing activities:
Cash paid for property, plant, and equipment ........... (119) (64)
Proceeds from the sale of assets ....................... 15 2
Cash paid for acquisitions, net of cash acquired ....... (18) (29)
Investment in IRB trust ................................ 1 5
- -------------------------------------------------------------------------------
Net cash used for investing activities ................... (121) (86)
- -------------------------------------------------------------------------------
Cash flow from financing activities:
Net borrowings (payments) supported by lines of credit.. 25 (50)
Principal payments on long-term debt ................... (4) (7)
Purchase of treasury stock ............................. (125) (49)
Proceeds from stock options exercised .................. 5 3
Dividends paid ......................................... (41) (41)
- -------------------------------------------------------------------------------
Net cash used for financing activities ................... (140) (144)
- -------------------------------------------------------------------------------
Effect of exchange rate changes on cash .................. 4 5
- -------------------------------------------------------------------------------
Decrease in cash and cash equivalents .................. (5) (57)
Cash and cash equivalents at January 1 ................. 18 75
- -------------------------------------------------------------------------------
Cash and cash equivalents at December 31 ................. $ 13 $ 18
===============================================================================
Supplemental cash flow information:
Interest paid .......................................... $ 29 $ 31
Income taxes paid ...................................... $ 74 $ 55
</TABLE>
- 34 -
<PAGE> 39
SUNDSTRAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, 1997 1996
- -------------------------------------------------------------------------------
(Amounts in millions except share data)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents ............................ $ 13 $ 18
Accounts receivable, net ............................. 326 313
Inventories, net of progress payments ................ 462 378
Deferred income taxes ................................ 49 53
Other current assets ................................. 30 10
- -------------------------------------------------------------------------------
Total current assets ............................... 880 772
Property, Plant, and Equipment, net .................. 472 427
Intangible Assets, net ............................... 265 273
Deferred Income Taxes ................................ 34 78
Other Assets ......................................... 49 45
- -------------------------------------------------------------------------------
$ 1,700 $ 1,595
===============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable ........................................ $ 143 $ 118
Long-term debt due within one year ................... 9 4
Accounts payable ..................................... 124 104
Accrued salaries, wages, and commissions ............. 26 25
Accrued postretirement benefits other than pensions .. 17 18
Restructuring liability .............................. 5 20
Other accrued liabilities ............................ 143 108
- -------------------------------------------------------------------------------
Total current liabilities .......................... 467 397
Long-Term Debt ........................................... 213 222
Accrued Postretirement Benefits Other Than Pensions ...... 357 367
Other Liabilities ........................................ 121 96
- -------------------------------------------------------------------------------
1,158 1,082
- -------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common stock, par value $.50 per share; authorized
150,000,000 shares: issued 1997 and 1996 --
75,686,028 shares (including shares in
treasury) .......................................... 38 38
Additional contributed capital ....................... 160 155
Retained earnings .................................... 819 677
Foreign currency translation adjustment .............. (9) (8)
Common stock in treasury (at cost); 1997 -- 17,598,391
shares and 1996 -- 15,324,019 shares ............... (456) (337)
Unamortized value of restricted stock issued ......... (10) (12)
- -------------------------------------------------------------------------------
$ 542 $ 513
- -------------------------------------------------------------------------------
$ 1,700 $ 1,595
===============================================================================
</TABLE>
- 35 -
<PAGE> 40
DIRECTORS
<TABLE>
<S> <C>
Robert H. Jenkins (4) Charles Marshall (1,2)
President and Chief Executive Officer Retired Vice Chairman
Sundstrand Corporation American Telephone and Telegraph Company
Director since 1995 Director since 1989
Richard A. Abdoo (2,4) Klaus H. Murmann (2,3)
Chairman, President and Chief Executive Chairman and Chief Executive Officer
Officer Sauer Inc.
Wisconsin Energy Corporation, and Director since 1981
Chief Executive Officer
Wisconsin Electric Power Company
Director since 1996
J. P. Bolduc (1,3) Ward Smith (2,3)
Chairman and Chief Executive Officer Retired Chairman
JPB Enterprises, Inc. NACCO Industries, Inc.
Director since 1991 Director since 1983
Ilene S. Gordon (2,4) Berger G. Wallin (1,4)
Vice President and General Manager Retired Executive Vice President for Special Projects
Tenneco Packaging Sundstrand Corporation
Director since 1997 Director since 1995
Gerald Grinstein (1,3) (1) Nominating Committee
Non-Executive (2) Audit Committee
Chairman of the Board of Delta Air Lines, Inc. (3) Compensation Committee
Director since 1981 (4) Finance Committee
</TABLE>
- 36 -
<PAGE> 41
OFFICERS
<TABLE>
<S> <C>
Robert H. Jenkins DeWayne J. Fellows
Chairman of the Board, President and Vice President and Controller.
Chief Executive Officer. Controller since February 16, 1989; elected to additional
Elected Chairman of the Board, President and Chief Executive Officer, position of Vice President August 7, 1990.
April 15, 1997; President and Chief Executive Officer from Age 53
October 1, 1995 to April 14, 1997; Executive Vice President,
Illinois Tool Works, Inc., from March 1, 1990, to
September 30, 1995.
Age 56
Patrick L. Thomas James R. Carlson
Executive Vice President and Chief Operating Officer, Vice President and Treasurer.
Industrial. Elected Vice President and Treasurer November 18, 1997
Elected Executive Vice President and Chief Operating Officer, Vice President Treasury Operations and Assistant
Industrial January 2, 1995; President of Milton Roy Company Treasurer from January 6, 1997, to November 18, 1997;
from April 1, 1991 to January 1, 1995. Assistant Treasurer for more than five years prior to
Age 52 January 6, 1997.
Age 54
Ronald F. McKenna
Executive Vice President and Chief Operating Officer,
Aerospace. Neil D. Traubenberg
Elected Executive Vice President and Chief Operating Vice President, Tax.
Officer, Aerospace May 6, 1996; Vice President of Elected Vice President, Tax November 18, 1997;
Business Development, Sundstrand Aerospace from Appointed Vice President, Tax from January 6, 1997, to
January 28, 1995 to May 6, 1996; Vice President November 18, 1997; Tax Director from more than five
and General Manager of Sundstrand Aerospace Electric Power years prior to January 6, 1997
from December 2, 1989, to January 27, 1995. Age 48
Age 57
Patrick J. Winn
Paul Donovan Vice President, Corporate Human Resources.
Executive Vice President and Chief Elected Corporate Vice President, Human Resources
Financial Officer. November 18, 1997; Appointed Vice President, Corporate
Chief Financial Officer since December 2, 1988; elected to additional Human Resources from September 13, 1997 to November
position of Executive Vice President August 7, 1990; 18, 1997; for more than five years prior to September
Age 50 13, 1997, Senior Corporate Attorney.
Age 48
Mary Ann Hynes
Vice President, General Counsel and Secretary.
Elected Vice President, General Counsel and Secretary
February 26, 1998; General Counsel of Wolters Kluwer
U.S., Inc. January 1996 to February 1997; General
Council of Commerce Clearing House, Inc. for more
than five years prior to January 1996.
Age 50
</TABLE>
- 37 -
<PAGE> 42
SUNDSTRAND CORPORATE INFORMATION
ANNUAL MEETING
The Company's Annual Meeting will be held in the Auditorium at Northern
Illinois University, Rockford Education Center, 8500 East State Street,
Rockford, Illinois, on Tuesday, April 21, 1998 at 11:00 a.m. Central time.
COMMON STOCK INFORMATION
Sundstrand common stock is listed on the New York, Chicago, and Pacific stock
exchanges under the symbol SNS.
SHAREHOLDER INVESTMENT SERVICE
Sundstrand offers to shareholders of its common stock a Shareholder Investment
Service which provides a simple, cost-free way of applying dividends and
voluntary cash investments to purchase additional shares of stock. The Company
absorbs brokerage commissions and bank service fees for all participants.
Requests for information about the Shareholder Investment Service should be
directed to the Company's transfer agent.
TRANSFER AGENT
Requests for information about stock registration, stock transfers, dividend
disbursements or the Shareholder Investment Service should be directed to the
Company's transfer agent.
<TABLE>
<S> <C>
Address correspondence to: With questions, call:
Harris Trust and Savings Bank Shareholder Services Division
Shareholder Services Harris Trust and Savings Bank
P.O. Box A3504 (800) 293-8207
Chicago, Illinois 60606-4607
</TABLE>
FORM 10-K AND OTHER FINANCIAL PUBLICATIONS
A copy of the Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission, and other financial publications may be
obtained without charge by writing to Investor Relations at the address below
or by voice mail at (815) 226-2988.
INVESTOR RELATIONS
Analyst inquiries should be directed to:
Doug Smiley
Corporate Manager, Investor Relations
Sundstrand Corporation
4949 Harrison Avenue
P.O. Box 7003
Rockford, Illinois 61125-7003
(815) 226-2136
- 38 -
