<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________.
Commission file number 1-5358
Sundstrand Corporation
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(Exact name of registrant as specified in its charter)
Delaware 36-1840610
------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4949 Harrison Avenue, P.O. Box 7003, Rockford, IL 61125-7003
-------------------------------------------------------------
(Address of principal executive offices and zip code)
(815) 226-6000
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(Registrant's telephone number, including area code)
_________________
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 23, 1998
- -------------------------------------- -------------------------------
Common Stock, par value $.50 per share 54,748,064
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SUNDSTRAND CORPORATION
FORM 10-Q
For the Quarter Ended September 30, 1998
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. Other Information
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
SUNDSTRAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -----------------------
(Amounts in millions except per share data) 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 498 $ 433 $ 1,473 $ 1,262
Costs, expenses, and other income:
Costs of products sold 326 282 966 830
Marketing and administration 77 57 237 204
Interest expense 9 7 25 22
Interest income (1) (1) (3) (4)
Other, net (1) 2 (6) 2
--------- --------- --------- ---------
410 347 1,219 1,054
--------- --------- --------- ---------
Earnings before income taxes 88 86 254 208
Less income taxes 31 31 89 75
--------- --------- --------- ---------
Net earnings $ 57 $ 55 $ 165 $ 133
========= ========= ========= =========
Weighted-average number of common
shares outstanding 55.6 60.0 56.7 60.0
Weighted-average number of common
shares outstanding -- assuming dilution 55.9 60.4 57.1 60.4
Basic net earnings per share $ 1.02 $ .92 $ 2.91 $ 2.21
========= ========= ========= =========
Diluted net earnings per share $ 1.02 $ .91 $ 2.89 $ 2.20
========= ========= ========= =========
Cash dividends per common share $ .17 $ .17 $ .51 $ .51
========= ========= ========= =========
</TABLE>
3
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SUNDSTRAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- ---------------------------
(Amounts in millions) 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net earnings $ 57 $ 55 $ 165 $ 133
Other comprehensive loss, net of taxes --
Foreign currency translation adjustments - (1) (2) (4)
--------- --------- --------- ---------
Comprehensive income $ 57 $ 54 $ 163 $ 129
========= ========= ========= =========
</TABLE>
4
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SUNDSTRAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------
(Amounts in millions) 1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C>
Cash flow from operating activities:
Net earnings $ 165 $ 133
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation 47 45
Amortization 12 11
Deferred income taxes 9 15
Change in operating assets and liabilities excluding
the effects of acquisitions:
Accounts receivable (24) (15)
Inventories 27 (58)
Other assets 14 -
Accounts payable (13) 13
Accrued expenses (5) (1)
Other (15) 3
--------- ---------
Total adjustments 52 13
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 217 146
--------- ---------
Cash flow from investing activities:
Cash paid for property, plant and equipment (76) (74)
Proceeds from sale of assets 6 10
Cash paid for acquisitions, net of cash acquired (43) (15)
Other investing activities - 1
--------- ---------
NET CASH USED FOR INVESTING ACTIVITIES (113) (78)
--------- ---------
Cash flow from financing activities:
Net borrowings (payments) supported by lines of credit 104 (4)
Principal payments on long-term debt (5) (2)
Additional debt for acquisitions 3 -
Proceeds from stock options exercised 4 5
Purchase of treasury stock (178) (42)
Dividends paid (29) (31)
--------- ---------
NET CASH USED FOR FINANCING ACTIVITIES (101) (74)
--------- ---------
Effect of exchange rate changes on cash (2) 5
--------- ---------
Increase (decrease) in cash and cash equivalents 1 (1)
Cash and cash equivalents at January 1 13 18
--------- ---------
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 $ 14 $ 17
========= =========
Supplemental cash flow information:
Interest paid $ 21 $ 17
Income taxes paid $ 60 $ 65
</TABLE>
5
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SUNDSTRAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
(Amounts in millions) 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 14 $ 13
Accounts receivable, net 352 326
Inventories, net of progress payments 437 462
Deferred income taxes 49 49
Other current assets 19 30
----------- ----------
Total current assets 871 880
Property, Plant, and Equipment, net 500 472
Intangible Assets, net 292 265
Deferred Income Taxes 26 34
Other Assets 53 49
----------- ----------
$ 1,742 $ 1,700
=========== ==========
Liabilities and Shareholders' Equity
Current Liabilities
Notes payable $ 247 $ 143
Long-term debt due within one year 5 9
Accounts payable 113 124
Accrued salaries, wages, and commissions 27 26
Accrued postretirement benefits other than pensions 17 17
Other accrued liabilities 141 148
----------- ----------
Total current liabilities 550 467
Long-Term Debt 216 213
Accrued Postretirement Benefits Other Than Pensions 348 357
Other Liabilities 122 121
----------- ----------
1,236 1,158
----------- ----------
Shareholders' Equity
Common stock, at par value 38 38
Other shareholders' equity 468 504
----------- ----------
506 542
----------- ----------
$ 1,742 $ 1,700
=========== ==========
</TABLE>
6
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The financial information contained herein is unaudited but, in the opinion of
the management of the Registrant, includes all adjustments (all of which are
normal recurring adjustments) necessary for a fair presentation of the results
of operations for the periods indicated.
Notes to Consolidated Financial Statements
(Unaudited)
ACCOUNTING POLICIES
The financial statements should be read in conjunction with the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1997.
PRINCIPLES OF CONSOLIDATION provide for the inclusion of the accounts of
Sundstrand Corporation and all subsidiaries. All intercompany transactions are
eliminated in consolidation.
CASH EQUIVALENTS are considered by the Registrant to be all highly liquid debt
instruments purchased with original maturities of three months or less.
INVENTORIES
The components of inventories at September 30, 1998, and December 31, 1997,
were:
SEPTEMBER 30, December 31,
(Amounts in millions) 1998 1997
- ------------------------------------------------------------------------------
Raw materials $ 56 $ 59
Work in process 154 160
Finished goods and parts 259 260
----------- ----------
469 479
Less progress payments 32 17
----------- ----------
$ 437 $ 462
=========== ==========
Prior to the application of progress payments, the inventories shown above
included costs related to long-term contracts of $83 million and $82 million, at
September 30, 1998, and December 31, 1997, respectively.
RESTRUCTURING
In December 1996, the Registrant initiated a restructuring plan related
primarily to the operations of Sullair Europe S.A. which resulted in a pretax
charge of $32 million. The restructuring was undertaken as a result of
continuing losses at this operation, weakness in the European economy, and
significant competitive pressures in the European markets. The charge included
$11 million in cash termination benefits for approximately 140 employees,
primarily consisting of workers at Sullair Europe's St. Priest, France,
facility. The charge also included $14 million for the partial write-down of
assets of Sullair Europe and $7 million (primarily cash related charges) for
disposition of the St. Priest facility and professional fees. Operations
previously at the St. Priest facility were transferred to other plant sites in
Europe and the United States. The shutdown of the St. Priest facility and the
termination or transfer of the employees was completed during 1997, and it is
anticipated that the sale of the facility will be completed by the end of the
first quarter of 1999.
Since the charge was recorded in 1996, approximately $9 million in cash has been
paid and charged against the restructuring liability, including costs to
terminate 124 employees. The Registrant expects to spend another $6 million to
complete the restructuring plan. Period costs related to the 1996 restructuring
were approximately $1 million and $2 million in the first nine months of 1998
and 1997, respectively.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The financial information for the quarter ended September 30, 1998, as compared
with the financial information for the quarter ended September 30, 1997, and the
balance sheet at December 31, 1997, is discussed below, and should be read in
conjunction with the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997, and the financial data as presented in Item 1 above.
RESULTS OF OPERATIONS
Third quarter 1998 sales increased by $65 million or 15 percent, to $498
million, compared with third quarter 1997 sales of $433 million. The increase
was due primarily to higher shipments to Aerospace commercial OEM and
aftermarket customers. Net earnings in the third quarter of 1998 were $57
million, or $1.02 per share assuming dilution, compared with $55 million, or
$.91 per share assuming dilution, in 1997. Excluding restructuring related
period costs and the one-time curtailment gain, net earnings in third quarter
1997 were $47 million, or $.77 per share assuming dilution. The
quarter-over-quarter earnings per share increase was primarily attributable to
improved Aerospace operating profit margins and the favorable impact from the
Registrant's share repurchase program.
Sales for the first nine months of 1998 were $1,473 million, an increase of $211
million from sales of $1,262 million for the same period of 1997. Aerospace
segment sales increased by $187 million to $894 million in the first nine months
of 1998 from $707 million in the same period of 1997. The increase was due
primarily to higher shipments to Aerospace commercial OEM and aftermarket
customers. Industrial segment sales of $579 million in the first nine months of
1998 were up approximately 4 percent compared with 1997.
Net earnings were $165 million, or $2.89 per share assuming dilution, for the
first nine months of 1998 compared with $133 million, or $2.20 per share
assuming dilution, in the first nine months of 1997. Excluding restructuring
related period costs and the one-time curtailment gain, net income was $165
million, or $2.90 per share assuming dilution, and $125 million, or $2.07 per
share assuming dilution, for the first nine months of 1998 and 1997,
respectively. The increase is due primarily to higher Aerospace operating
profit resulting from the increase in sales to commercial customers. Earnings
per share also benefited from the effects of the share repurchase program.
ORDERS
Orders for third quarter 1998 increased $33 million to $438 million compared
with $405 million in the third quarter of 1997, primarily as a result of higher
Aerospace commercial aftermarket orders. New orders for the first nine months
of 1998, were $1,474 million compared with new orders of $1,397 million for the
same period last year. The increase is due to higher orders for Aerospace
commercial aftermarket and military orders, partially offset by a decrease in
commercial OEM orders. Total unfilled orders on September 30, 1998, were $1,227
million, compared with $1,102 million on September 30, 1997, and $1,226 million
at December 31, 1997.
AEROSPACE OVERVIEW (EXCLUDING CURTAILMENT GAIN)
Third quarter sales for the Aerospace segment were $310 million, an increase of
$58 million or 23 percent from the third quarter of 1997 as a result of
increases in both commercial and military sales. As a result of the higher
sales and improved operating efficiency, operating profit increased $18 million
or 34 percent to $71 million and operating profit margins increased to 22.9
percent during the third quarter of 1998 from 21.0 percent achieved during the
third quarter of 1997.
8
<PAGE> 9
Orders in the third quarter were $259 million, an increase of $33 million or 15
percent compared with the third quarter of 1997. This increase was largely due
to a 24 percent increase in commercial aftermarket orders in addition to strong
military orders when compared with the third quarter of 1997.
INDUSTRIAL OVERVIEW (EXCLUDING RESTRUCTURING RELATED PERIOD COSTS AND
CURTAILMENT GAIN)
Third quarter 1998 sales for the Industrial segment were $188 million, an
increase of $7 million or 4 percent compared with the third quarter of 1997.
Operating profit was $28 million, a decrease of $1 million or 3 percent from the
third quarter of 1997. Third quarter operating profit margin was 14.9 percent,
down from 16.0 percent when compared to the third quarter of 1997. The decrease
was due primarily to continuing pressure from the ongoing instability of the
Asian economies, lower commodity prices and reduced absorption caused by
increased inventory levels.
Orders in the third quarter were flat at $179 million when compared with the
third quarter of 1997.
ACQUISITIONS
As previously announced, the Milton Roy Company and The Falk Corporation,
members of the Registrant's Industrial segment, made small, niche-type
acquisitions during the third quarter. Milton Roy acquired Williams Instrument
Company, Inc., headquartered in Valencia, California. Williams manufactures
pneumatically powered metering pumps for the oil and gas production industry.
Its gas-powered pumps will complement Milton Roy's electric-powered metering
pump offerings. Williams also will provide expansion opportunities for Milton
Roy's electric-powered products through its well-developed domestic and
international sales channels in the oil and gas industry.
The Falk Corporation has agreed to acquire the gear products business of A.
Goninan & Co. Ltd., located in New Castle, New South Wales, Australia. The
acquisition of Goninan, a manufacturer of steel and iron gears primarily for
mining applications, will support Falk's strategy of expanding product offerings
and providing new opportunities for Falk's current product lines in the
Australian and South East Asian markets.
LIQUIDITY AND CAPITAL RESOURCES
Working capital decreased by $92 million to $321 million at September 30, 1998,
compared with $413 million at December 31, 1997. The decrease was due primarily
to an increase in notes payable, resulting from the Registrant's acquisitions
mentioned above and share repurchase activity.
Net cash provided by operating activities increased to $217 million for the
first nine months of 1998 from $146 million for the first nine months of 1997.
The increase was due primarily to higher net earnings, a reduction in
inventories, and a decrease in other assets as benefits were paid from a
previously funded trust for incurred but not reported health care claims.
In the first nine months of 1998 and 1997, the Registrant used $113 million and
$78 million of cash, respectively, for investments in fixed assets and small
product-line acquisitions. During the same periods, $101 million and $74
million of cash, respectively, was used for financing activities, primarily for
the payment of dividends and the repurchase of common stock. An increase in
commercial paper borrowings partially offset the cash used for the payment of
dividends and the repurchase of common stock during the first nine months of
1998.
The Registrant repurchased 1,777,900 shares of its common stock during the third
quarter and an additional 42,800 shares, through October 27, 1998, bringing the
total shares repurchased in 1998 to 3,496,700. Through October 27, 1998, the
Registrant has purchased a total of 19.4 million shares of the 30 million shares
authorized for repurchase by the Board of Directors.
9
<PAGE> 10
On September 30, 1998, the Registrant's ratio of total-debt-to-total-capital was
48.0 percent compared with 40.2 percent at December 31, 1997. The increase was
due primarily to the Registrant's share repurchase and acquisition activity.
On October 2, 1998, the Registrant executed a letter agreement for a committed
line of credit in the amount of $100 million with a single bank. The credit
line, which expires on September 30, 1999, raises the total committed lines of
credit available to the Registrant to $435 million.
OUTLOOK
The Registrant maintains its previous full-year 1998 earnings projection of
$3.80 to $4.05 and continues to forecast operating cash flow after capital
expenditures to be between $175 million and $200 million.
Aerospace OEM sales are expected to increase approximately 35 percent in 1998,
with commercial aftermarket sales advancing slightly more than 10 percent and
military aftermarket sales increasing approximately 15 percent for the same
period. Due to this projected sales growth and improving productivity, the
Registrant now projects Aerospace operating profit improvement of between 30
percent and 35 percent in 1998, with operating profit margins approaching 22
percent on a full year basis.
The Registrant expects that the very good revenue and operating profit growth
during the last few years will continue through 1999, as the major aerospace
original equipment manufacturers are currently forecasting higher production
levels for next year. In the year 2000 and beyond, the Registrant expects new
aircraft production to remain relatively strong by historical standards, with
production down modestly compared to the significant drops experienced in past
cycles. The Registrant's belief is based on the continuing growth in revenue
passenger miles, the increasing age of the world's fleet and the expansion of
the young regional and business jet markets. The Registrant also believes with
50 percent of Aerospace revenues coming from its very profitable aftermarket
business, that the continued growth in and aging of the world's fleet bodes well
for this business in the foreseeable future.
The Registrant's Industrial segment revenue is expected to grow by approximately
5 percent in 1998, including the impact of acquisitions made in the first nine
months of this year. Industrial operating profit margins are now forecast at
approximately 15 percent on a full year basis. When considering the current
world economic condition, the Registrant's Industrial businesses have continued
to perform relatively well. If the world economy does not deteriorate
significantly, the Registrant expects its Industrial revenues to increase
slightly in 1999.
The Registrant believes the strategic initiatives it launched two years ago are
beginning to produce results that should allow the Registrant to achieve
meaningful growth in earnings during the next two years. In addition,
implementation of market rate of demand manufacturing processes should enable
the Registrant to improve cycle times and reduce working capital requirements.
The Registrant's goal for the years beyond 1998 continues to be to grow earnings
per share by 15 percent in ordinary economic times. Currently the world
economic situation is unclear and future demand may begin to soften as a result
of this uncertainty. If a mild economic downturn occurs, the Registrant
believes that significant earnings per share growth could still be achieved
without taking into account any additional shares that the Registrant might
repurchase. Similarly, the Registrant expects fiscal 1999 operating cash flow,
before capital expenditures, to range between $320 million and $350 million or
approximately $6.05 per share.
Given the strength of its cash flow generating capabilities, the Registrant has
the ability to reduce its debt-to-total capital ratio significantly during 1999.
However, the Registrant believes it is likely that this ratio will remain in the
40 percent to 50 percent range as the Registrant intends to continue its share
repurchase and acquisition programs on an opportunistic basis.
10
<PAGE> 11
YEAR 2000 READINESS DISCLOSURE
The Registrant is working to correct it's Year 2000 Issue, which if not resolved
could result in the failure of a variety of systems or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities. The Registrant's assessment process related to the Year 2000 Issue
has been divided into the following categories: business operating systems
(examples include accounting and treasury), other operating systems (examples
include engineering, computer aided drafting, production facilities and
environmental systems), suppliers/customers, and products. Following is the
current status of each category.
Business Operating Systems
In 1994, the Registrant began the assessment and modification process to address
the year 2000 Issue. Based on a completed assessment of all business operating
systems, the Registrant determined that it will be required to modify or replace
portions of its software so that its computer systems will function properly in
the year 2000 and thereafter. The Registrant believes that with modifications
to existing software and, in some cases, conversions to new software, the Year
2000 Issue will not pose significant operational problems. In the unlikely event
that modifications and conversions are not completed on a timely basis, the Year
2000 issue could have a material impact on the operations of the Registrant.
The Registrant is utilizing both internal and external resources to reprogram,
or replace, and test software for Year 2000 modifications. The Registrant
estimates the modification and replacement plan is approximately 80 percent
complete and anticipates the majority of the systems will be Year 2000 ready by
December 31, 1998, with all systems being revised or replaced by July 1999.
Other Operating Systems
The Registrant is in the process of finalizing its assessment of Year 2000
Issues associated with other operating systems, such as manufacturing machinery,
test equipment and environmental systems with date sensitive software and
embedded microprocessors. To date, the assessment phase has identified no
significant operational issues and the Registrant expects to complete all
necessary revisions or replacements of these systems by June 1999.
Suppliers / Customers
The Registrant has initiated communications with its significant suppliers,
customers, and other relevant third parties to determine the extent to which the
Registrant's operations may be vulnerable to those third parties' failure to
resolve their own Year 2000 Issues. In addition, the Registrant has conducted
seven symposiums with approximately 200 significant suppliers, and some visits
have taken place with suppliers and customers. This activity will continue
until the Registrant believes its significant suppliers and customers are Year
2000 ready.
Due to the difficulty in determining whether third-parties have resolved their
Year 2000 issues, the Registrant will develop contingency plans, as considered
necessary, such as identifying alternative suppliers and/or implementing
inventory management steps such as stock-piling purchased materials, in order to
minimize any adverse effect to the Registrant's operations. An area of concern,
which the Registrant is monitoring, involves utility suppliers, principally
electric power suppliers. The inability of electric power suppliers to become
Year 2000 compliant in a timely manner could result in wide-spread power outages
or rolling brown-outs. The failure of the systems of such companies could
adversely effect the Registrant's operations, the extent of which is not
currently known.
11
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Products
The Registrant is in the process of finalizing an assessment of its exposure to
contingencies related to the Year 2000 Issue for the products it has previously
sold. Based upon this assessment, the Registrant does not believe any exposure
would have a material adverse affect on the Registrant's financial position,
results of operations or liquidity.
Summary
The total cost to make modifications to resolve Year 2000 issues is estimated to
be between $10 million and $15 million and is being funded through operating
cash flows. To date, the Registrant has incurred approximately $6 million
related to operating systems modifications.
The costs of the project and the date on which the Registrant believes it will
complete the Year 2000 modifications are based on management's best estimates.
These estimates were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources, third party
modification plans and other factors. These estimates may not be achieved and
actual results could differ materially from those anticipated. Specific factors
that might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties. Furthermore,
the Registrant could be subject to litigation for the failure of computer
systems, equipment shutdowns and product delivery delays. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY
When used in this Management's Discussion and Analysis of Financial Condition
and Results of Operations, the terms "anticipate," "believe," "estimate,"
"expect," "forecast," "goal," "outlook," "plan," "project" and similar
expressions are intended to identify "forward-looking" statements. These
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those contemplated in such forward-looking
statements. Such risks and uncertainties include the Registrant's successful
execution of internal strategic initiatives, including implementation of
business unit concepts; governmental export and import policies; factors that
result in significant and prolonged disruption to air travel worldwide; overall
expenditures for capital equipment and infrastructure development; relations
with the Registrant's employees; competitive pricing pressures; global trade
policies; worldwide political stability and economic conditions, particularly
Asia; termination of and/or difficulties related to significant government
programs (particularly military procurement programs serviced by the
Registrant); and potential risks associated with efforts by the Registrant, its
suppliers and customers to modify their information systems to be ready for the
year 2000.
12
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Registrant has disclosed certain legal proceedings in its Annual Report on
Form 10-K for the fiscal year ended December 31, 1997. There have been no
material changes in those proceedings or other material legal developments since
that time.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3) Articles of Incorporation and By-Laws
(a) Registrant's By-Laws, including all amendments, as effective
September 22, 1998.
(b) Text of resolution adopted by the Board of Directors of
Registrant on September 22, 1998, amending Registrant's
By-Laws effective September 22, 1998.
(4) Instruments Defining the Rights of Security Holders, including
Indentures.
(a) Credit Agreement dated as of October 1, 1998, between the
Registrant and the First National Bank of Chicago.
(27) Financial Data Schedule
(b) Reports on Form 8-K
None
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Sundstrand Corporation
-------------------------------------
(Registrant)
Date: November 5, 1998 /s/ Mary Ann Hynes
-------------------------------------
Mary Ann Hynes
Vice President and General
Counsel and Secretary
Date: November 5, 1998 /s/ DeWayne J. Fellows
------------------------------------
DeWayne J. Fellows
Vice President and Controller
14
<PAGE> 1
Exhibit (3) (a)
BY-LAWS
OF
SUNDSTRAND CORPORATION
(A Delaware Corporation)
Effective September 22, 1998
ARTICLE I
OFFICES
Section 1.1. PRINCIPAL OFFICE. The principal office of the Corporation in
the State of Delaware shall be in the City of Wilmington, County of New Castle.
Section 1.2. OTHER OFFICES. The Corporation may also have offices at such
other places, either within or without the State of Delaware, as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS' MEETINGS
Section 2.1. PLACE OF MEETINGS. All annual and special meetings of the
stockholders shall be held at such place, either within or without the State of
Delaware, as may be fixed by the Board and specified in the notice of the
meeting.
Section 2.2. ANNUAL MEETINGS. An annual meeting of stockholders shall be
held on such date and at such hour as may be fixed by the Board and specified in
the notice of the meeting, when they shall elect by a plurality vote a Board of
Directors and transact such other business as may properly be brought before the
meeting.
Section 2.3. LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
at least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The original or duplicate stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine such list or stock ledger or transfer book or to vote in person or by
proxy at any meeting of stockholders.
Section 2.4. SPECIAL MEETINGS OF STOCKHOLDERS. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute, may be called by the Chairman of the Board, President and Chief
Executive Officer and shall be called by the Chairman of the Board, President
and Chief Executive Officer or Secretary at the request in writing of a majority
of the Board of Directors, or at the request in writing of stockholders owning
eighty percent or more in amount of the entire capital stock of the Corporation
issued and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting.
Section 2.5. NOTICE OF MEETINGS. Except as otherwise expressly provided by
law or by the Certificate of Incorporation or these By-Laws, written or printed
notice of each annual or special meeting of stockholders shall be given by mail
at least ten but not more than sixty days before the meeting to the stockholders
of record entitled to vote thereat. Every such notice shall be directed to a
stockholder at his address as it shall appear on the transfer books of the
Corporation; shall state the date, time and place of the meeting; and, in the
case of a special meeting, shall state briefly the purposes thereof. Business
transacted at all special meetings shall be confined to the purposes stated in
the notice thereof.
Section 2.6. QUORUM AND ADJOURNMENTS. The holders of a majority of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall be necessary and sufficient to
<PAGE> 2
constitute a quorum at all meetings of the stockholders for the transaction of
business, except as otherwise provided by statute, by the Certificate of
Incorporation, or by these By-Laws. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting, at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The absence from any meeting of the number required by law
or by the Certificate of Incorporation or these By-Laws for action upon any
given matter shall not prevent action at such meeting upon any other matter or
matters which may properly come before the meeting if the number required in
respect of such other matter or matters shall be present. Once a quorum is
present at a meeting, it shall be deemed to be acting thereafter throughout the
meeting, irrespective of any withdrawals. Nothing in these By-Laws shall affect
the right to adjourn where a quorum is present.
Section 2.7. VOTING BY STOCKHOLDERS. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of the statutes or of the Certificate of Incorporation or of these By-Laws a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
At any meeting of the stockholders every stockholder having the right to
vote shall be entitled to vote in person, or by proxy appointed by an instrument
in writing, subscribed by such stockholder or by his attorney or agent thereunto
authorized in writing, and bearing a date not more than three years prior to
said meeting, unless said instrument provides for a longer period. Except as
otherwise provided by the Certificate of Incorporation, each stockholder present
in person or by proxy at any meeting shall have, on each matter on which
stockholders are entitled to vote, one vote for each share of stock having
voting power, registered in his name on the books of the Corporation.
Section 2.8. NEW BUSINESS PROPOSALS AT ANNUAL MEETINGS. Only such new
business shall be conducted, and only such proposals shall be acted upon at an
annual meeting of stockholders, as shall have been properly brought before such
annual meeting (a) by, or at the direction of, the Board of Directors, or (b) by
any stockholder of the Corporation who complies with the notice procedures set
forth in this Section 2.8. A stockholder who wishes to bring a proposal before
an annual meeting shall give timely notice thereof in writing to the Secretary
of the Corporation. Such notice, to be timely, shall be delivered to, or mailed
and received by the Secretary at the principal executive offices of the
Corporation at least sixty days but not more than ninety days prior to the
scheduled annual meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date; provided, however, that if less
than seventy days' notice or prior public disclosure of the date of the
scheduled annual meeting is given or made, such notice by a stockholder to be
timely shall be so delivered or received not later than the close of business on
the tenth day following the earlier of the day on which notice of the scheduled
annual meeting was mailed or the day on which public disclosure thereof was
made.
Each such stockholder notice shall set forth as to each proposal to be
brought before the annual meeting (a) a brief description of the proposal and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the transfer books of the Corporation, of the
stockholder proposing such business and any other stockholders known by such
stockholder to be supporting the proposal, (c) the class and number of shares of
the Corporation's stock which are beneficially owned by the stockholder on the
date of such stockholder notice and by any other stockholders known by such
stockholder to be supporting such proposal, and (d) any financial interest of
the stockholder in such proposal.
The Board of Directors may reject any stockholder proposal not timely made
in accordance with the terms of this Section 2.8. If the Board of Directors, or
a designated committee thereof, determines that the information provided in a
stockholder's notice does not satisfy the informational requirements of this
Section 2.8 in any material respect, the Secretary shall promptly notify such
stockholder of the deficiency in the notice. The stockholder shall have an
opportunity to cure the deficiency by providing additional information to the
Secretary within five days from the date such notice of deficiency is given to
the stockholder, as the Board of Directors or such committee shall reasonably
determine. If the deficiency is not cured within such period, or if the Board
of Directors or such committee determines that the additional information
provided by the stockholder, together with the information previously provided,
does not satisfy the requirements of this Section 2.8 in any material respect,
then the Board of Directors may reject such proposal. The Secretary shall
notify the stockholder in writing whether his proposal has been made in
accordance with the time and informational requirements of this Section
<PAGE> 3
2.8. Notwithstanding the procedure set forth in this Section 2.8, if neither the
Board of Directors nor such committee makes a determination as to the validity
of any stockholder proposal, the presiding officer of the annual meeting shall
determine and declare at the annual meeting whether the stockholder proposal was
made in accordance with the terms of this Section 2.8. If the presiding officer
determines that the stockholder's proposal was not made in accordance with the
terms of this Section 2.8, he shall so declare at the annual meeting and any
such proposal shall not be acted upon at the annual meeting.
This Section 2.8 shall not prevent the consideration and approval or
disapproval at an annual meeting of reports of officers, directors and
committees of the Board of Directors, but, in connection with such reports, no
new business shall be acted upon at such annual meeting unless stated, filed and
received as herein provided.
ARTICLE III
DIRECTORS
Section 3.1. NUMBER, ELECTION AND TERMS OF OFFICE OF DIRECTORS. The number
of directors which shall constitute the whole Board shall be nine in number.
Directors need not be stockholders in the Corporation. Except as provided in
Section 3.3, the directors shall be elected at the annual meeting of the
stockholders, and each director elected shall hold office until his successor is
elected and qualified or until his earlier resignation. The directors shall be
divided into three classes: Class I, Class II and Class III. Such classes shall
be as nearly equal in number as possible. The term of office of the initial
Class I directors shall expire at the annual meeting of stockholders in 1971,
the term of office of the initial Class II directors shall expire at the annual
meeting of stockholders in 1972, and the term of office of the initial Class III
directors shall expire at the annual meeting of stockholders in 1973, or
thereafter in each case when their respective successors are elected and
qualified. At each annual election held after classification and the initial
election of directors according to classes, the directors chosen to succeed
those whose terms then expire shall be identified as being of the same class as
the directors they succeed and shall be elected for a term expiring at the third
succeeding annual meeting or thereafter when their respective successors in each
case are elected and qualified.
Section 3.2. CORPORATE RECORDS. The directors may keep the books of the
Corporation, except such as are required by law to be kept within the State of
Delaware, outside of Delaware at such place or places as they may from time to
time determine.
Section 3.3. VACANCIES. Vacancies occurring in the Board of Directors and
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office,
although less than a quorum, and any director so chosen shall hold office until
his successor is elected and qualified. A director elected to fill a vacancy
shall be elected for the unexpired portion of the term of his predecessor in
office. A director elected to fill a newly created directorship shall serve for
the term provided herein for the class of directors for which such director was
elected.
Section 3.4. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by its Board of Directors which may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by statute or
by the Certificate of Incorporation or by these By-Laws directed or required to
be exercised or done by the stockholders.
Section 3.5. PLACE OF MEETINGS. The Board of Directors of the Corporation
may hold meetings, both regular and special, either within or without the State
of Delaware.
Section 3.6. ANNUAL MEETINGS. The first meeting of each newly elected
Board shall constitute the annual meeting of said Board and shall be convened as
soon as is conveniently possible but in no event more than two weeks after the
date of the annual meeting of stockholders in each year at such time and place
as shall be fixed by the Chairman of the Board, President and Chief Executive
Officer.
Section 3.7. REGULAR MEETINGS. Regular meetings of the Board shall be held
upon notice, or without notice, at least quarterly, at such time and place as
shall from time to time be determined by the Board.
Section 3.8. SPECIAL MEETINGS. Special meetings of the Board may be called
by the Chairman of the Board, President and Chief Executive Officer or any four
directors. Notice of each special meeting of the Board may be given by mail,
telegraph or cable, personal delivery or telephone. Notice by mail shall be
given at least
<PAGE> 4
three days before the meeting; notice by any other means shall be given a
reasonable period of time before the time of such meeting but in no event shall
such notice be given less than one hour before such meeting. If notice is by
telephone, such notice shall be promptly confirmed by telegraph or cable to each
director.
Section 3.9. QUORUM. At all meetings of the Board, the presence of a
majority of the full number of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a majority
of the directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors, except as may be otherwise specifically provided
by statute or by the Certificate of Incorporation or by these By-Laws. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 3.10. ACTION BY BOARD WITHOUT MEETING. Notwithstanding anything
contained in these By-Laws, any action required or permitted to be taken at any
meeting of the Board of Directors or of any Committee thereof may be taken
without a meeting, if a written consent thereto is signed by all members of the
Board or of such Committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board of Directors or the
Committee.
Section 3.11. COMPENSATION OF DIRECTORS. The Board of Directors, by
resolution adopted by a majority of the whole Board, may establish reasonable
compensation of all directors for services to the Corporation as directors,
officers or otherwise. No such payment shall preclude any director from serving
the Corporation in any other capacity and receiving compensation therefor.
Members of any Committee may be allowed like compensation for their services to
the Corporation.
Section 3.12. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board or Committee which authorizes the
contract or transaction, or solely because his or their votes are counted for
such purpose, if (1) the material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the Committee, and the Board or Committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (2) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (3) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified, by the Board of Directors, Committee, or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board or of the Committee which authorizes the contract or
transaction.
Section 3.13. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more Committees, each
Committee to consist of two or more of the directors of the Corporation. Any
such Committee, to the extent provided in the resolution not inconsistent with
the provisions of the Statutes of Delaware, shall have and may exercise the
powers and authority of the Board of Directors in the management of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers which may require it. A majority of the members of the Committee then
holding office shall constitute a quorum at all meetings and each such Committee
shall keep regular minutes of its proceedings and report the same to the whole
Board.
Section 3.14. NOMINATION FOR ELECTION OF DIRECTORS. Nominations for the
election of Directors shall be properly made by the Board of Directors or a
nominating committee appointed by the Board of Directors or by any stockholder
entitled to vote in the election of Directors generally; provided, however, that
any such stockholder may nominate one or more persons for election as Directors
at a meeting only if such stockholder has given written notice of such
stockholder's intent, either by personal delivery or by United States mail,
postage prepaid, to the Secretary not later than (1) with respect to an election
to be held at an annual meeting of stockholders, ninety days prior to the
anniversary date of the immediately preceding annual meeting, and (2) with
respect to an election to be held at a special meeting of stockholders for the
election of directors, the close of business on the tenth day following the date
on which notice of such meeting is first given to stockholders. Each such
notice shall set forth: (a) the name and address, as they appear on the transfer
books of the Corporation, of
<PAGE> 5
the stockholder who intends to make the nomination and of the person or persons
to be nominated; (b) a representation that the stockholder is a holder of record
of stock of the Corporation entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations are to
be made by the stockholder; (d) such other information regarding each nominee
proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission as then in effect; and (e) the consent of each nominee to serve as a
director of the Corporation if so elected.
The presiding officer of any meeting at which a stockholder or its
representative attempts to nominate one or more persons for election as
directors may refuse to acknowledge the nomination of any person not made in
compliance with the provisions of this Section 3.14.
ARTICLE IV
OFFICERS
Section 4.1. DESIGNATION: NUMBER. The officers of the Corporation shall
consist of a Chairman of the Board, President and Chief Executive Officer; an
Executive Vice President and Chief Financial Officer; an Executive Vice
President and Chief Operating Officer, Aerospace; an Executive Vice President
and Chief Operating Officer, Industrial; a Vice President and General Counsel; a
Vice President, Corporate Human Resources; a Vice President, Tax; one or more
other Vice Presidents; a Secretary; a Treasurer; and a Controller, all of whom
shall be elected by the Board of Directors and shall hold office until their
successors are duly elected and qualified. In addition, the Chairman of the
Board, President and Chief Executive Officer may appoint one or more Assistant
Secretaries, Assistant Treasurers and Assistant Controllers and such other
officers and agents as the Chairman of the Board, President and Chief Executive
Officer may deem necessary or desirable, who shall hold their offices for such
terms and shall have such authority and perform such duties as shall be
determined by the Chairman of the Board, President and Chief Executive Officer
from time to time. Any Executive Vice President or Vice President designated by
a resolution of the Board of Directors or by delegation of the Chairman of the
Board, President and Chief Executive Officer shall have authority to sign
contracts and any other documents as specifically authorized by the Board of
Directors or the Chairman of the Board, President and Chief Executive Officer or
which are within the ordinary course of the business of the Corporation.
Section 4.2. NON-CORPORATE OFFICERS. The Chairman of the Board, President
and Chief Executive Officer shall have authority to appoint from time to time
officers of divisions, product groups or other segments of the Corporation's
business for such terms, with such authority and at such salary as the Chairman
of the Board, President and Chief Executive Officer in his sole discretion shall
determine; provided, however, such appointed officer shall under no
circumstances have authority to bind any other division, product group or other
segment of the Corporation's business nor to bind the Corporation, except as to
the normal and usual business affairs of the division, product group or other
segment of the Corporation's business of which he is an officer. Such appointed
officer, as such, shall not be construed as an officer of the Corporation.
Section 4.3. SALARIES. The salaries of the officers elected pursuant to
Section 4.1 above shall be determined by the Board of Directors. The salaries
of all other officers and agents of the Corporation appointed by the Chairman of
the Board, President and Chief Executive Officer shall be determined by the
Board of Directors or the Chairman of the Board, President and Chief Executive
Officer.
Section 4.4. REMOVAL. Any officer elected by the Board of Directors and
any officer or agent appointed by the Chairman of the Board, President and Chief
Executive Officer, as the case may be, may be removed at any time by the Board
of Directors or the Chairman of the Board, President and Chief Executive
Officer, respectively, whenever in its or his judgment the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Any vacancy occurring
in any elected office of the Corporation shall be filled by the Board of
Directors.
Section 4.5. CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER.
The Chairman of the Board, President and Chief Executive Officer shall be the
chief executive officer of the Corporation. The Chairman of the Board,
President and Chief Executive Officer shall preside at all meetings of
stockholders and of the Board and shall see that all orders and resolutions of
the Board are carried into effect. Subject to the control
<PAGE> 6
of the Board, the Chairman of the Board, President and Chief Executive Officer
shall have general supervision, control and management of the affairs and
business of the Corporation. The Chairman of the Board, President and Chief
Executive Officer and/or the Executive Vice President and Chief Financial
Officer shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, except where required by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
Section 4.6. EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER. The
Executive Vice President and Chief Financial Officer shall be the chief
financial officer of the Corporation and shall be in charge of the financial,
accounting, taxation, and administration activities of the Corporation and shall
be under the direction of and report to the Chairman of the Board, President and
Chief Executive Officer. He and/or the Chairman of the Board, President and
Chief Executive Officer shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the Corporation.
Section 4.7. EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER,
AEROSPACE. The Executive Vice President and Chief Operating Officer, Aerospace
shall be the chief operating officer of the Corporation's aerospace businesses.
He shall assist the Chairman of the Board, President and Chief Executive Officer
in the general supervision, control and management of the affairs and business
of the Corporation's aerospace businesses and the Corporation's government
contracts and compliance activities.
Section 4.8. EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER,
INDUSTRIAL. The Executive Vice President and Chief Operating Officer,
Industrial shall be the chief operating officer of the Corporation's industrial
businesses. He shall assist the Chairman of the Board, President and Chief
Executive Officer in the general supervision, control and management of the
affairs and business of the Corporation's industrial businesses.
Section 4.9. VICE PRESIDENT AND GENERAL COUNSEL. The Vice President and
General Counsel shall be the chief legal officer of the Corporation, shall be
responsible for all legal and environmental matters involving the Corporation
and shall direct the Corporation's legal and environmental affairs staffs. He
shall be under the direction of and report to the Chairman of the Board,
President and Chief Executive Officer.
Section 4.10. VICE PRESIDENT, CORPORATE HUMAN RESOURCES. The Vice
President, Corporate Human Resources shall be in charge of the personnel and
public relations activities of the Corporation and shall be under the direction
of and report to the Chairman of the Board, President and Chief Executive
Officer.
Section 4.11. VICE PRESIDENT, TAX. The Vice President, Tax shall be
responsible for the tax affairs of the Corporation, including the preparation
and signing of all federal and state tax returns, consents, elections, closing
agreements and all other documents related to the determination of any federal
or state tax liability of the Corporation. The Vice President, Tax shall be
under the direction of and report to the Executive Vice President and Chief
Financial Officer.
Section 4.12. OTHER VICE PRESIDENTS. The other Vice Presidents shall
perform such duties as may be prescribed by the Board of Directors or the
Chairman of the Board, President and Chief Executive Officer.
Section 4.13. SECRETARY AND ASSISTANT SECRETARIES.
(a) The Secretary shall attend all sessions of the Board of Directors and
all meetings of the stockholders and record the minutes of all proceedings in a
book to be kept for that purpose, and shall perform like duties for Committees
of the Board when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or the Chairman
of the Board, President and Chief Executive Officer. He shall keep in safe
custody the seal of the Corporation, and affix the same to any instrument
requiring it, and when affixed it shall be attested by his signature or by the
signature of the Treasurer or an Assistant Secretary.
(b) The Assistant Secretaries in the order of their seniority shall, in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary, and shall perform such other duties as the Chairman of
the Board, President and Chief Executive Officer shall prescribe.
Section 4.14. TREASURER AND ASSISTANT TREASURERS.
<PAGE> 7
(a) The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all money
and other valuable effects in the name and to the credit of the Corporation, in
such depositories as may be designated by the Board of Directors. The Treasurer
shall be under the direction of the Executive Vice President and Chief Financial
Officer.
(b) He shall disburse the funds of the Corporation when proper to do so,
taking proper vouchers for such disbursements, and shall render to the Chairman
of the Board, President and Chief Executive Officer and the Board of Directors,
at the regular meetings of the Board, or whenever they may require it, an
account of all his transactions as Treasurer and of the financial condition of
the Corporation.
(c) If required by the Board of Directors, he shall give the Corporation a
bond in such sum, and with such surety or sureties as shall be satisfactory to
the Board, for the faithful performance of the duties of his office, and for the
restoration to the Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
Corporation.
(d) The Assistant Treasurers in the order of their seniority shall, in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties as the Board of
Directors shall prescribe.
Section 4.15. CONTROLLER AND ASSISTANT CONTROLLERS.
(a) The Controller shall be the chief accounting officer of the Corporation
and shall be responsible for the installation and supervision of all accounting
records, including the preparation and interpretation of financial statements,
the continuous audit of accounts and records, and such other duties usually
incident to the office of Controller. He shall be under the direction of the
Executive Vice President and Chief Financial Officer and shall, in addition to
the foregoing duties, perform such other duties as may be assigned to him by the
Board of Directors or the Executive Vice President and Chief Financial Officer.
(b) The Assistant Controllers in the order of their seniority shall, in the
absence or disability of the Controller, perform the duties and exercise the
powers of the Controller and shall perform such other duties as the Board of
Directors or the Executive Vice President and Chief Financial Officer shall
prescribe.
ARTICLE V
SHARES AND THEIR TRANSFER
Section 5.1. CERTIFICATES OF STOCK. Certificates for shares of stock of
the Corporation shall be in such form as shall be approved by the Board, and
during the period while more than one class of stock or more than one series of
any class of the Corporation is authorized, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificates which the Corporation shall
issue to represent such class or series of stock, or else there shall appear on
the certificates a statement that the Corporation shall furnish such information
to a stockholder without charge if it be requested. They shall exhibit the
holder's name and number of shares, and, with respect to each class of stock of
the Corporation, or series thereof, if there be more than one class or series
thereof, shall bear a distinguishing letter, and each class or series thereof,
if any, shall be numbered serially and be issued in consecutive order. They
shall bear the Corporate seal or a facsimile thereof and shall be signed by the
Chairman of the Board, President and Chief Executive Officer, an Executive Vice
President, or a Vice President, and by the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary of the Corporation. If such
certificate is countersigned (1) by a transfer agent other than the Corporation
or its employee, or, (2) by a registrar other than the Corporation or its
employee, any other signature on the certificate may be a facsimile. In case
any officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued by the Corporation with same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
Section 5.2. TRANSFER OF STOCK. Upon surrender to the Corporation or its
transfer agent of a certificate representing shares, duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, and
the old certificate canceled, and the transaction recorded upon the books of the
Corporation.
<PAGE> 8
Section 5.3. LOST, STOLEN OR DESTROYED CERTIFICATES. Any person, claiming
a certificate for shares of the Corporation to be lost, stolen or destroyed,
shall make affidavit of the fact and lodge the same with the Secretary of the
Corporation accompanied by a signed application for a new certificate. Such
person shall also give the Corporation a bond of indemnity with one or more
sureties satisfactory to the Board of Directors, and in an amount which in their
judgment shall be sufficient to save the Corporation from loss, or shall qualify
under such blanket bond as may from time to time be approved by the Board of
Directors, and thereupon the proper officers may cause to be issued a new
certificate of like tenor with the one alleged to be lost, stolen or destroyed.
Section 5.4. RECORD DATE. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action.
Section 5.5. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
Section 5.6. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may
from time to time appoint a transfer agent and registrar in one or more cities;
may require all certificates evidencing shares of stock of the Corporation to
bear the signatures of a transfer agent and registrar; and may provide that such
certificates shall be transferable in more than one city.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Corporation shall, to the fullest extent to which it is empowered to do
so by the General Corporation Law of Delaware, or any other applicable laws, as
from time to time in effect, indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Corporation or
a division thereof, or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding.
The provisions of this Article shall be deemed to be a contract between the
Corporation and each director or officer who serves in any such capacity at any
time while this Article and the relevant provisions of the General Corporation
Law of Delaware or other applicable law, if any, are in effect, and any repeal
or modification of any such law or of this Article shall not affect any rights
or obligations then existing with respect to any state of facts then or
theretofore existing or any action, suit or proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
The Corporation shall, to the fullest extent to which it is empowered to do
so by the General Corporation Law of Delaware, and with respect to the Employee
Retirement Income Security Act of 1974, or any other applicable laws, as from
time to time in effect, indemnify any officer, director or employee of the
Corporation or an affiliated corporation, who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was serving at the request of the Corporation as an
individual Trustee, Committee member, administrator or fiduciary of a pension or
other benefit plan for employees of the Corporation, or of an affiliated
corporation or other enterprise.
Persons who are not covered by the foregoing provisions of this Article and
who are or were employees or agents of the Corporation or a division thereof, or
are or were serving at the request of the Corporation as employees or agents of
another corporation, partnership, joint venture, trust or other enterprise, may
be
<PAGE> 9
indemnified to the extent authorized at any time or from time to time by the
Board of Directors of the Corporation.
The indemnification provided or permitted by this Article shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
by law or otherwise, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article.
The Corporation shall, to the fullest extent to which it is empowered to do
so by the General Corporation Law of Delaware, or any other applicable laws, as
from time to time in effect, pay expenses, including attorneys' fees, incurred
in defending any action, suit or proceeding, in advance of the final disposition
of such action, suit or proceeding, to any person who is or was a party or is
threatened to be made a party to any such threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director or
officer of the Corporation, upon receipt of an undertaking by or on behalf of
such person to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the Corporation as authorized by
applicable laws.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. CHECKS, DRAFTS AND OTHER INSTRUMENTS; SECURITY VOTING AND
PROXIES. All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness, issued in the name of the Corporation shall be
signed by such officer or officers, or such other person or persons, as the
Board of Directors may from time to time designate. In the absence of specific
action by the Board of Directors, the Chairman of the Board, President and Chief
Executive Officer or any Executive Vice President or Vice President shall have
the authority to grant proxies to vote, or vote, on behalf of the Corporation
the securities of other corporations, both domestic and foreign, held by the
Corporation.
Section 7.2. SEAL. The corporate seal of the Corporation shall be in such
form as the Board of Directors may determine and shall include the name of the
Corporation and the words "Corporate Seal, Delaware." The seal may be used by
causing it, or a facsimile thereof, to be impressed or affixed or in any manner
reproduced.
Section 7.3. FISCAL YEAR. The fiscal year of the Corporation shall
commence on the first day of January in each year and end on the following 31st
day of December.
Section 7.4. NOTICES. Notice by mail shall be deemed to have been given at
the time the same shall be mailed. Notice by telegraph shall be deemed to have
been given when the same shall have been delivered for prepaid transmission into
the custody of a company ordinarily engaged in the transmission of such
messages.
Section 7.5. WAIVER OF NOTICE. Whenever any notice whatever is required to
be given under the provisions of the laws of the State of Delaware or under the
provisions of the Certificate of Incorporation or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto. Except as may be otherwise specifically provided by law, any waiver by
mail, telegraph, cable or wireless bearing the name of the person entitled to
notice shall be deemed a waiver in writing duly signed. The presence of any
person at any meeting either in person or by proxy shall be deemed the
equivalent of a waiver in writing duly signed, except where the person attends
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened.
Section 7.6. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board at any regular or special meeting,
<PAGE> 10
pursuant to law. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of law and of the Certificate of
Incorporation.
Section 7.7. CREATION OF RESERVES. Before payment of any dividend or
making any distribution of profits, there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the Board from time
to time, in its absolute discretion, may think proper as a reserve or reserves
to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
Board shall think conducive to the interest of the Corporation, and the Board
may at any time modify or abolish any such reserve in the manner in which it was
created.
Section 7.8. AMENDMENTS. These By-Laws may be altered or repealed by the
affirmative vote of eighty percent of the entire number of directors specified
from time to time in the restated Certificate of Incorporation at any regular
meeting of the Board or at any special meeting of the Board, if notice of the
proposed alteration or repeal be contained in the notice of such special
meeting; provided, however, that any provisions of these By-Laws resulting from
such alteration or repeal shall at all times be in conformance with the Restated
Certificate of Incorporation and the laws of the State of Delaware.
<PAGE> 1
Exhibit (3)(b)
AMENDMENT OF BY-LAWS
--------------------
RESOLVED, by the Board of Directors of Sundstrand Corporation, that the
By-Laws of the Corporation be, and they hereby are, amended as follows:
Section 7.8 is amended to provide that alteration or repeal of the
By-Laws is permitted upon the "vote of 80% of the entire number of
directors" rather than upon the "vote of the majority of the entire
number of directors".
<PAGE> 1
Exhibit (4)(a)
[LETTERHEAD OF THE FIRST NATIONAL BANK OF CHICAGO]
October 1, 1998
Sundstrand Corporation
4949 Harrison Avenue
P.O. Box 7003
Rockford, IL 61125-7003
Attention: James Carlson, Treasurer
Ladies and Gentlemen:
The First National Bank of Chicago (the "Lender") is pleased to establish a
committed line of credit in favor of Sundstrand Corporation (the "Borrower") in
the amount of $100,000,000 (the "Commitment"), which shall continue from October
1, 1998 through September 30, 1999 (the "Maturity Date") unless the line of
credit is terminated on an earlier date as set forth below.
(a) Loans under this line of credit will be evidenced and governed by the
form of master note (the "Note"), a copy of which is attached hereto. Loans
bearing interest at the corporate base rate of interest shall be available on
same day notice received on or before 12:00 noon. Loans under this line of
credit will bear interest, at the Borrower's option, at:
(i) a rate equal to the Lender's corporate base rate of interest
announced by the Lender from time to time, changing when and as the
corporate base rate changes, with interest payable on the last day of
each month, on the Maturity Date, and on demand thereafter; or
(ii) subject to availability and for a maturity to be agreed upon,
at a fixed rate equal to the sum of the "Euro-Dollar Margin" (as defined
in that certain Credit Agreement dated as of January 28, 1993 by and
among the Borrower, the lenders party thereto and Morgan Guaranty Trust
Company of New York, as agent for such lenders, as amended to the date
hereof (the "Agreement")) plus the Eurodollar rate, where the Eurodollar
rate is the rate at which deposits in U.S. dollars in the amount and for
a maturity corresponding to that of the loan are offered by the Lender in
the offshore interbank market at approximately 10 a.m. (Chicago time) two
business days prior to the date on which such loan is made, adjusted for
maximum statutory reserve requirements.
(b) No interest period for or maturity of a loan hereunder shall extend
beyond the Maturity Date. The Borrower shall pay the Lender a facility fee on
the Commitment at the rate determined pursuant to Section 2.08(b) of the
Agreement, such fee payable quarterly in arrears. Interest and fees will be
computed on the basis of actual days elapsed on a 360-day year basis. During the
continuance of a payment default hereunder each loan bearing interest at (i) a
rate other than the corporate base rate shall bear interest for the remainder of
the applicable interest period at the rate otherwise applicable to such interest
period plus 2% per annum and (ii) the corporate base rate shall bear interest at
a rate per annum equal to the corporate base rate plus 2% per annum.
<PAGE> 2
(c) The Borrower will use the proceeds of this line of credit for general
corporate purposes.
(d) The Borrower will perform, comply with and observe for the Lender's
benefit the agreements set forth in Articles IV, V and VI of the Agreement. For
purposes hereof, the definition of "Euro-Dollar Margin," the facility fee rates
set forth in Section 2.08(b) and Articles IV, V and VI of the Agreement,
together with related definitions and ancillary provisions, are hereby
incorporated herein by reference, mutatis mutandis, and shall be deemed to
continue in effect for the Lender's benefit as in effect on the date hereof,
whether or not the Agreement remains in effect or is amended, waived or
otherwise modified by the parties thereto; provided, however, that if, prior to
the Maturity Date, the Lender has expressly consented to an amendment or waiver
of the terms and conditions of the Agreement incorporated herein by reference,
such amendment or waiver shall be incorporated herein by reference.
(e) The Borrower may not borrow under this line of credit unless (i) the
borrowing request was given by an authorized person (for purposes hereof, an
"authorized person" means a person designated in writing as such by the Vice
President and Treasurer of the Borrower) and (ii) after giving effect to the
proposed borrowing, the following statements are true and correct on the date of
borrowing: (A) there exists no Default (as defined below) or event which, with
giving of notice, or lapse of time, or both, would be a Default and (B) the
representations and warranties set forth in Article IV of the Agreement are true
and correct. Any request by the Borrower for a borrowing hereunder shall be
deemed to be a representation and warranty by the Borrower that the statements
set forth in the previous sentence are true and correct in all material
respects.
(f) All outstanding loans and accrued and unpaid interest, at the option
of the Lender, may be declared immediately due and payable without notice if
there exists any Default hereunder. "Default" means (i) any failure by the
Borrower under this letter or the Note to pay principal when due or interest
within 5 days of when due or fees or other obligations within 30 days after
notice of such failure from the Lender, (ii) the existence of any default under
the Note, or any violation or failure to comply with any provision of the Note
or (iii) the existence of any Event of Default under and as defined in the
Agreement.
(g) The Lender may make assignments and sell participations in this line
of credit, the Note and the loans made hereunder, and may disclose information
pertaining to the Borrower to prospective assignees and participants; provided
that the Borrower shall first approve the disclosure of any non-public
information sought to be disclosed. Any assignment will release the Lender of
its funding obligation with respect to the amount assigned, provided that any
such assignment may be made only with the Borrower's consent (which consent will
not unreasonably be withheld). The Borrower agrees that if it fails to pay any
loan when due, any purchaser of a participation interest in such loan shall be
entitled to seek enforcement of this note if the purchaser is permitted to do so
pursuant to the terms of the participation agreement between the Lender and such
purchaser.
(h) This line of credit shall be effective as of the date of this letter
when the Borrower has signed and returned to the Lender a copy of this letter
and has provided the Lender with executed originals of the Note, resolutions and
an incumbency certificate in form and substance satisfactory to the Lender.
(i) THIS LETTER AND THE NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS (AND
NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, GIVING EFFECT, HOWEVER, TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. BOTH PARTIES HERETO HEREBY WAIVE
TRIAL BY JURY IN THE EVENT THIS LETTER OR THE NOTE BECOMES THE SUBJECT OF A
DISPUTE.
<PAGE> 3
If this letter reflects the Borrower's understanding, please cause it to be
executed and returned to my attention, together with the other items referred to
in paragraph (h).
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Barry Lutwin
--------------------------
Title: Senior Vice President
Accepted and agreed:
SUNDSTRAND CORPORATION
By: /s/ James R. Carlson
--------------------------------
Vice President and Treasurer
Date: October 1, 1998
-------------------------------
<PAGE> 4
MASTER NOTE
Chicago, Illinois
$100,000,000 Date: October 1, 1998
FOR VALUE RECEIVED, SUNDSTRAND CORPORATION (the "Borrower") promises to pay
to the order of THE FIRST NATIONAL BANK OF CHICAGO (the "Lender"), in lawful
money of the United States at the office of the Lender at One First National
Plaza, Chicago, Illinois, or as the Lender may otherwise direct, the lesser of
One Hundred Million Dollars ($100,000,000.00) or the aggregate outstanding
unpaid principal amount of loans advanced hereunder, together with interest as
provided below. All principal amounts outstanding under this Note, together
with any unpaid interest, shall be due and payable on September 30, 1999.
The Borrower and the Lender may agree to a fixed interest rate and a
specific maturity for a loan (a "fixed rate loan") at the time of borrowing.
Interest on each fixed rate loan shall be payable upon the maturity of such
fixed rate loan and, in the case of a fixed rate loan with an original maturity
in excess of three months, interest shall also be payable on the last day of
each three-month interval while such fixed rate loan is outstanding. A fixed
rate loan may be prepaid, subject to funding indemnification but without penalty
or premium on at least three business days' prior written notice in a minimum
amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof.
Any loan as to which a fixed rate is not agreed shall bear interest at a
rate equal to the sum of the corporate base rate of interest announced by the
Lender from time to time, changing when and as the corporate base rate changes.
Any loan not paid at the maturity date of such loan (which maturity date shall
be September 30, 1999 for corporate base rate loans) shall bear interest as
described in the Letter (hereinafter defined). Interest on all loans bearing
interest at a rate related to the corporate base rate shall be payable on the
last day of each month, on September 30, 1999 or such earlier date on which the
obligations hereunder are accelerated or the Borrower terminates the commitment
and prepays all outstanding loans, and on demand thereafter. Loans bearing
interest at a rate related to the corporate base rate may be prepaid by the
Borrower, without premium or penalty.
Any person authorized to borrow on behalf of the Borrower (an "authorized
person") may request a loan hereunder by telephone or telex. The Borrower
agrees that, in implementing this arrangement, the Lender is authorized to honor
requests which it reasonably believes, in good faith, to emanate from an
authorized person acting pursuant to this note, whether in fact that be the case
or not. If the Lender requests a written confirmation, the Borrower will
confirm the terms of each loan so requested by mailing a confirmation letter to
the Lender signed by any authorized person. The Lender shall confirm the terms
of a loan to the Borrower and the Borrower will notify the Lender in writing
within 10 days after the Borrower's receipt of such confirmation if it believes
such confirmation to be inaccurate, and the Borrower hereby waives any right to
contest the accuracy of such confirmation after such 10-day period.
The Borrower hereby authorizes the Lender to record loans, maturities,
repayments, interest rates and payment dates on the schedule attached to this
note or otherwise in accordance with the Lender's usual practice. The
obligation of the Borrower to repay each loan made hereunder shall be absolute
and unconditional notwithstanding any failure of the Lender to enter such
amounts on such schedule or to receive written confirmation of the transaction
from the Borrower, Subject to the last sentence of the immediately preceding
paragraph, in the event of disagreement as to the terms of a transaction, the
Lender's records shall govern, absent manifest error. The Borrower hereby
authorizes the Lender to deposit the proceeds of loans to, and to charge
payments of principal and interest against, the Borrower's deposit account with
the Lender.
Each payment of principal or interest hereunder shall be made in
immediately available funds. If any payment shall become due and payable on a
Saturday, Sunday or legal holiday under the laws of
<PAGE> 5
Illinois, such payment shall be made on the next succeeding business day in
Illinois and any such extended time of the payment of principal or interest
shall be included in computing interest at the rate this note bears in
connection with such payment. All interest hereunder shall be computed for the
actual number of days elapsed on a 360-day year basis.
If any change in any law, rule, regulation or directive (including, without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) imposes any condition the result of which is to increase the cost to the
Lender of making, funding or maintaining any fixed rate loan hereunder or
reduces any amount receivable by the Lender hereunder in connection with a fixed
rate loan, the Borrower shall pay the Lender the amount of such increased
expense incurred or the reduction in any amount received which the Lender
determines is attributable to making, funding and maintaining the fixed rate
loans hereunder. If, for any reason, any payment of a fixed rate loan occurs
prior to maturity of that loan, the Borrower will indemnify the Lender for any
loss or cost resulting therefrom, including, without limitation, any loss or
cost in liquidating or employing deposits acquired to fund or maintain the fixed
rate loan.
The Borrower expressly waives any presentment, demand, protest or notice in
connection with this note now, or hereafter, required by applicable law and
agrees to pay all costs and expenses of collection. This note shall be governed
by the internal law (and not the law of conflicts) of the State of Illinois,
giving effect, however, to federal laws applicable to national banks. THE
BORROWER HEREBY WAIVES TRIAL BY JURY IN THE EVENT THIS LETTER OR THE NOTE
BECOMES THE SUBJECT OF A DISPUTE.
This Note is issued pursuant to, and is entitled to the benefits of, the
Line of Credit Letter, dated as of October 1, 1998 (the "Letter") addressed by
the Lender to the Borrower to which Letter, as it may be amended from time to
time, reference is hereby made for a statement of certain of the terms and
conditions governing this Note, including the terms and conditions under which
the maturity date hereof may be accelerated. Capitalized terms used herein and
not otherwise defined herein are used with the meanings attributed to them in
the Letter.
SUNDSTRAND CORPORATION
By:
Vice President and Treasurer
<PAGE> 6
SCHEDULE
To be attached to and become a part of
the Master Note dated October 1, 1998
executed by Sundstrand Corporation
and payable to
The First National Bank of Chicago
Unpaid Initials
Amount Principal of
Date Amount of Balance Person
of of Interest Principal Payment of Making
Transaction Loan Maturity Rate Payment Date Note Notation
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 14
<SECURITIES> 0
<RECEIVABLES> 352
<ALLOWANCES> 0
<INVENTORY> 437
<CURRENT-ASSETS> 871
<PP&E> 500
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,742
<CURRENT-LIABILITIES> 550
<BONDS> 216
0
0
<COMMON> 38
<OTHER-SE> 468
<TOTAL-LIABILITY-AND-EQUITY> 1,742
<SALES> 1,473
<TOTAL-REVENUES> 1,473
<CGS> 966
<TOTAL-COSTS> 1,203
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> 254
<INCOME-TAX> 89
<INCOME-CONTINUING> 168
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 168
<EPS-PRIMARY> 2.91
<EPS-DILUTED> 2.89
</TABLE>
