FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Plan period ended December 31, 1997 Commission File Number 1-812 UNITED TECHNOLOGIES CORPORATION DEFINED CONTRIBUTION RETIREMENT PLAN (Full title of the plan) UNITED TECHNOLOGIES CORPORATION One Financial Plaza Hartford, Connecticut 06101 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office) FINANCIAL STATEMENTS OF THE UNITED TECHNOLOGIES CORPORATION DEFINED CONTRIBUTION RETIREMENT PLAN REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrator of the United Technologies Corporation Defined Contribution Retirement Plan In our opinion, the accompanying statements of net assets available for benefits with fund information and the related statement of changes in net assets available for benefits with fund information present fairly, in all material respects, the net assets available for benefits of the United Technologies Corporation Defined Contribution Retirement Plan at December 31, 1997 and 1996 and the changes in net assets available for benefits for the period ended December 31, 1997, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The fund information in the statement of net assets available for benefits and the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for benefits of each fund. The fund information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. PRICE WATERHOUSE LLP Hartford, Connecticut June 26, 1998 UNITED TECHNOLOGIES CORPORATION DEFINED CONTRIBUTION RETIREMENT PLAN Statement of Net Assets Available for Benefits With Fund Information December 31, 1997
Small UTC INVESCO Company International Common Total Income Equity Stock Index Equity Index Global Stock Return Fund Fund Fund Fund Fund Fund Fund Assets: Investments, at fair value: Beneficial interests in Bankers Trust Company Pyramid: Large Capitalization Equity Index Fund $ - $2,300,279 $ - $ - $ 3,135 $ - $ - Russell 2000 Equity Index Fund - - 19,401 - - - - Daily Japanese Equity Index Fund - - - 3,871 - - - Daily Non Japanese Equity Index Fund - - - 11,614 - - - Government/Corporate Fixed Income Index Fund - - - - 2,566 Daily International Equity Index Fund - - - - 3,009 - - United Technologies Corporation Common Stock - - - - - 278,575 - Shares of respective registered investment companies - - - - - - 7,389 Investments, at contract value or cost: Beneficial interests in investment contracts, at contract value 4,831,402 - - - - - - Temporary investments, at cost plus accrued interest - - - - - 4,183 - Total Investments 4,831,402 2,300,279 19,401 15,485 8,710 282,758 7,389 Plan receivables 8,175 1,731 23 2 50 1,087 5 Total Assets 4,839,577 2,302,010 19,424 15,487 8,760 283,845 7,394 Liabilities: Accrued liabilities - - - - - 1,800 - Total Liabilities - - - - - 1,800 - Net Assets Available for Benefits $4,839,577 $2,302,010 $ 19,424 $ 15,487 $ 8,760 $ 282,045 $ 7,394 Units of participation 784,372 109,515 1,605 1,471 3,681 23,348 254 Unit value $ 6.17 $ 21.02 $ 12.10 $ 10.53 $ 2.38 $ 12.08 $ 29.09 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION DEFINED CONTRIBUTION RETIREMENT PLAN Statement of Net Assets Available for Benefits With Fund Information December 31, 1997
Putnam Fidelity Putnam New SoGen Growth & Fund Fidelity Low- PBHG Opportun- Interna- Income for Growth Fidelity Priced Stock Growth ities tional Portfolio and Income Contrafund Fund Fund Fund Fund, Inc. Assets: Investments, at fair value: Beneficial interests in Bankers Trust Company Pyramid: Large Capitalization Equity Index Fund $ - $ - $ - $ - $ - $ - $ - Russell 2000 Equity Index Fund - - - - - - - Daily Japanese Equity Index Fund - - - - - - - Daily Non Japanese Equity Index Fund - - - - - - - Government/Corporate Fixed Income Index Fund - - - - - - - Daily International Equity Index Fund - - - - - - - United Technologies Corporation Common Stock - - - - - - - Shares of respective registered investment companies 127,199 16,760 51,632 18,826 126,959 65,644 10,830 Investments, at contract value or cost: Beneficial interests in investment contracts, at contract value - - - - - - - Temporary investments, at cost plus accrued interest - - - - - - - Total Investments 127,199 16,760 51,632 18,826 126,959 65,644 10,830 Plan receivables 261 65 65 - 117 68 12 Total Assets 127,460 16,825 51,697 18,826 127,076 65,712 10,842 Liabilities: Accrued liabilities - - - - - - - Total Liabilities - - - - - - - Net Assets Available for Benefits $ 127,460 $ 16,825 $ 51,697 $ 18,826 $ 127,076 $ 65,712 $ 10,842 Units of participation 3,345 860 1,109 749 5,005 1,338 426 Unit value $ 38.10 $ 19.56 $ 46.63 $ 25.13 $ 25.39 $ 49.10 $ 25.45 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION DEFINED CONTRIBUTION RETIREMENT PLAN Statement of Net Assets Available for Benefits With Fund Information December 31, 1997
Templeton Templeton Developing Foreign Markets Fund I Trust I Total Assets: Investments, at fair value: Beneficial interests in Bankers Trust Company Pyramid: Large Capitalization Equity Index Fund $ - $ - $ 2,303,414 Russell 2000 Equity Index Fund - - 19,401 Daily Japanese Equity Index Fund - - 3,871 Daily Non Japanese Equity Index Fund - - 11,614 Government/Corporate Fixed Income Index Fund - - 2,566 Daily International Equity Index Fund - - 3,009 United Technologies Corporation Common Stock - - 278,575 Shares of respective registered investment companies 32,842 12,530 470,611 Investments, at contract value or cost: Beneficial interests in investment contracts, at contract value - - 4,831,402 Temporary investments, at cost plus accrued interest - - 4,183 Total Investments 32,842 12,530 7,928,646 Plan receivables 12 - 11,673 Total Assets 32,854 12,530 7,940,319 Liabilities: Accrued liabilities - - 1,800 Total Liabilities - - 1,800 Net Assets Available for Benefits $ 32,854 $ 12,530 $ 7,938,519 Units of participation 3,302 968 Unit value $ 9.95 $ 12.94 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION DEFINED CONTRIBUTION RETIREMENT PLAN Statement of Net Assets Available for Benefits With Fund Information December 31, 1996
Income Equity UTC Common Fund Fund Stock Fund Global Fund Total Assets: Investments, at fair value: Beneficial interests in Bankers Trust Company Pyramid: Government/Corporate Fixed Income Index Fund $ - $ - $ - $ 598 $ 598 Large Capitalization Equity Index Fund - 1,886,841 - 697 1,887,538 Daily International Equity Index Fund - - - 972 972 United Technologies Corporation Common Stock - - 111,182 - 111,182 Investments, at contract value or cost: Beneficial interests in investment contracts, at contract value 5,006,173 - - - 5,006,173 Temporary investments, at cost plus accrued interest 210 - 11 - 221 Total Investments 5,006,383 1,886,841 111,193 2,267 7,006,684 Plan receivables 1,402 - 2,109 - 3,511 Total Assets 5,007,785 1,886,841 113,302 2,267 7,010,195 Liabilities: Accrued liabilities 16,559 32,564 3,315 61 52,499 Total Liabilities 16,559 32,564 3,315 61 52,499 Net Assets Available for Benefits $4,991,226 $1,854,277 $ 109,987 $ 2,206 $6,957,696 Units of participation 874,078 117,700 10,153 1,067 Unit value $ 5.71 $ 15.75 $ 10.83 $ 2.07 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION DEFINED CONTRIBUTION RETIREMENT PLAN Statement of Changes in Net Assets Available for Benefits With Fund Information Period Ended December 31, 1997
Small UTC INVESCO Company International Common Total Income Equity Stock Index Equity Index Global Stock Return Fund Fund Fund Fund Fund Fund Fund Additions to net assets attributed to: Investment Income: Net appreciation (depreciation) in fair value of investments $ - $ 574,275 $ 3,033 $ (619) $ 903 $ 3,631 $ 714 Interest 365,249 - - - - - - Dividends - - - - - - 278 Total Investment Income 365,249 574,275 3,033 (619) 903 3,631 992 Contributions: Participants' 146,443 69,791 303 509 1,691 16,731 22 Employer's 296,021 66,398 269 498 1,916 14,056 32 Total Contributions 442,464 136,189 572 1,007 3,607 30,787 54 Deductions from net assets attributed to: Distributions to participants 506,794 113,066 - 406 1,115 4,303 - Administrative expenses - - - - - - - Total Deductions 506,794 113,066 - 406 1,115 4,303 - Net increase / (decrease) prior to transfers 300,919 597,398 3,605 (18) 3,395 30,115 1,046 Inter-fund transfers (452,568) (149,665) 15,819 15,505 3,159 141,943 6,348 Net increase / (decrease) (151,649) 447,733 19,424 15,487 6,554 172,058 7,394 Net Assets Available for Benefits December 31, 1996 4,991,226 1,854,277 - - 2,206 109,987 - Net Assets Available for Benefits December 31, 1997 $4,839,577 $2,302,010 $ 19,424 $ 15,487 $ 8,760 $ 282,045 $ 7,394 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION DEFINED CONTRIBUTION RETIREMENT PLAN Statement of Changes in Net Assets Available for Benefits With Fund Information Period Ended December 31, 1997
Putnam Fidelity Putnam New SoGen Growth & Fund for Fidelity Low- PBHG Opportun- Interna- Income Growth Fidelity Priced Stock Growth ities tional Portfolio and Income Contrafund Fund Fund Fund Fund, Inc. Additions to net assets attributed to: Investment Income: Net appreciation (depreciation) in fair value of investments $ 12,810 $ 178 $ 2,169 $ 1,156 $ 3,829 $ 8,113 $ (615) Interest - - - - - - - Dividends 4,773 2,190 4,244 1,014 - 1,418 1,081 Total Investment Income 17,583 2,368 6,413 2,170 3,829 9,531 466 Contributions: Participants' 7,105 1,135 2,733 1,201 10,319 3,207 1,562 Employer's 4,539 1,233 1,599 583 6,927 1,942 1,008 Total Contributions 11,644 2,368 4,332 1,784 17,246 5,149 2,570 Deductions from net assets attributed to: Distributions to participants 5,832 8,509 6,232 - 17,050 4,945 - Administrative expenses - - - 2 - - - Total Deductions 5,832 8,509 6,232 2 17,050 4,945 - Net increase / (decrease) prior to transfers 23,395 (3,773) 4,513 3,952 4,025 9,735 3,036 Inter-fund transfers 104,065 20,598 47,184 14,874 123,051 55,977 7,806 Net increase / (decrease) 127,460 16,825 51,697 18,826 127,076 65,712 10,842 Net Assets Available for Benefits December 31, 1996 - - - - - - - Net Assets Available for Benefits December 31, 1997 $ 127,460 $ 16,825 $ 51,697 $ 18,826 $ 127,076 $ 65,712 $ 10,842 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION DEFINED CONTRIBUTION RETIREMENT PLAN Statement of Changes in Net Assets Available for Benefits With Fund Information Period Ended December 31, 1997
Templeton Templeton Developing Foreign Markets Fund I Trust I Total Additions to net assets attributed to: Investment Income: Net appreciation (depreciation) in fair value of investments $ (3,358) $ (4,180) $ 602,039 Interest - - 365,249 Dividends 3,508 866 19,372 Total Investment Income 150 (3,314) 986,660 Contributions: Participants' 959 725 264,436 Employer's 623 337 397,981 Total Contributions 1,582 1,062 662,417 Deductions from net assets attributed to: Distributions to participants - - 668,252 Administrative expenses - - 2 Total Deductions - - 668,254 Net increase / (decrease) prior to transfers 1,732 (2,252) 980,823 Inter-fund transfers 31,122 14,782 - Net increase / (decrease) 32,854 12,530 980,823 Net Assets Available for Benefits December 31, 1996 - - 6,957,696 Net Assets Available for Benefits December 31, 1997 $ 32,854 $ 12,530 $ 7,938,519 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION DEFINED CONTRIBUTION RETIREMENT PLAN Notes to Financial Statements NOTE 1 - DESCRIPTION OF THE PLAN General. The United Technologies Corporation (UTC) Defined Contribution Retirement Plan (the Plan) is a defined contribution savings and money purchase plan administered by UTC. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Eligible employees of UTC and certain of its subsidiaries may participate after completing one year of service. The following is a brief description of the Plan. For more complete information, participants should refer to the plan document which is available from UTC. Contributions and Vesting. The employer makes contributions for each participant up to 3.5 percent of the participant's compensation. In addition, certain participants may elect to contribute, through payroll deductions, between 1 and 12 percent of their total compensation with up to the first 4 percent of each participant's contribution being matched 50 percent by the employer. Participant contributions, plus actual earnings thereon, are fully vested at all times under the Plan. Generally, employer contributions, plus actual earnings thereon, become fully vested after two years of Plan participation. Participant Accounts. Each participant's account is credited with the participant's contributions and allocations of (a) UTC's contributions based on a percentage of the participant's contribution and (b) Plan earnings based on account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Forfeited balances of terminated participants' nonvested amounts are used to reduce future UTC contributions. For the period ended December 31, 1997, approximately $1,300 of forfeitures were used to fund employer contributions. Trustee and Recordkeeper. All of the Plan's assets are held by Bankers Trust Company, the Plan Trustee. As of January 1, 1997, Fidelity Institutional Retirement Services Company assumed the participant account recordkeeping responsibilities. Investment Options. On January 1, 1997, investment options increased to sixteen from the previous four. Participants may elect to allocate their contributions in any whole percentage among the following funds. Participants are permitted to transfer their accounts between investment funds daily in any whole percentage or whole dollar amount. The investment funds are as follows: . The Income Fund invests in contracts issued by five insurance companies. See Note 3. . The Equity Fund invests in a portfolio of common stocks replicating the Standard & Poor's Composite Index of 500 stocks (S&P 500). . The Small Company Stock Index Fund invests in a portfolio of common stocks replicating the Russell 2000 Index. . The International Equity Index Fund invests in the equities of a mix of stock markets outside the U.S. . The Global Fund invests in both U.S. and foreign investments to replicate the performance, in approximately equal portions, of three indices: the S&P 500, the EAFE Index (an international stock index of large companies in Europe, Australia and the Far East), and the Lehman Brothers Government/Corporate Index. . The UTC Common Stock Fund consists principally of 3,826 and 1,678 shares of UTC Common Stock at December 31, 1997 and 1996, respectively. . The INVESCO Total Return Fund invests in shares of a registered investment company that principally invests in both equity and fixed or variable income securities to achieve a moderate total return from capital appreciation and current income. . The Fidelity Growth & Income Portfolio invests in shares of a registered investment company that principally invests in U.S. and foreign equity securities that pay current dividends and show potential earnings growth. . The Putnam Fund for Growth and Income invests in shares of a registered investment company that principally invests in equity securities of companies that pay regular dividends to shareowners. . The Fidelity Contrafund invests in shares of a registered investment company that principally invests in equity securities of U.S. and foreign companies believed to be undervalued or out of favor. . The Fidelity Low-Priced Stock Fund invests in shares of a registered investment company that principally invests in equity securities of companies believed to be undervalued, overlooked or out of favor, which are generally priced at $35 or less. . The PBHG Growth Fund invests in shares of a registered investment company that principally invests in equity securities of companies believed to have an outlook for strong earnings growth. . The Putnam New Opportunities Fund invests in shares of a registered investment company that principally invests in equity securities of companies in certain emerging industry groups. . The SoGen International Fund, Inc. invests in shares of a registered investment company that invests in U.S. and foreign equity, fixed income and gold-related securities and cash. . The Templeton Foreign Fund I invests in shares of a registered investment company that principally invests in equity securities of companies in developed and developing countries outside the U.S. . The Templeton Developing Markets Trust I invests in shares of a registered investment company that principally invests in equity securities of companies in developing countries. Payment of Benefits. Generally, benefits are paid in a lump sum to a terminating participant. A participant terminating due to retirement may elect to receive benefits in installments over two to twenty years. At the participant's election, the portion of a lump sum distribution attributable to the UTC Common Stock Fund may be paid in shares of UTC Common Stock instead of cash. There were no distributions in common stock for the period ended December 31, 1997. NOTE 2 - SUMMARY OF ACCOUNTING PRINCIPLES Basis of Accounting. The financial statements of the Plan are prepared under the accrual method of accounting. Benefits are recorded when paid. Master Trust. The Plan's assets are kept in a Master Trust maintained by the Trustee. Under the Master Trust agreement, the assets of certain employee savings plans of UTC and its subsidiaries are combined. Participating Plans purchase units of participation in the investment funds based on their contribution to such funds and the unit value of the applicable investment fund at the end of the trading day in which a transaction occurs. The unit value of each fund is determined at the close of each day by dividing the sum of uninvested cash, accrued income and the current value of investments by the total number of outstanding units in such funds. Income from the funds' investments increases the Plans' unit values. Distributions to participants reduce the number of participation units held by the Plans. At December 31, 1997, the Plan's interest in the Master Trust comprised 941,348 units of the 1,012,560,383 total units of participation, or 0.09%. At December 31, 1996, the Plan's interest in the Master Trust comprised 1,002,998 units of the total 1,062,864,802 units of participation, or 0.09%. Investment Valuation. The Income Fund's investment contracts are stated at contract value which represents contributions plus earnings, less Plan withdrawals. All other funds are stated at fair value, as determined by the Trustee, typically by reference to published market data. Plan Expenses. Plan administrative expenses, including Trustee and recordkeeper fees were paid directly by the employer in 1997. The employer also paid certain investment management fees for the Bankers Trust managed funds. All other administrative and investment expenses were paid out of Plan assets. Use of Estimates. The preparation of financial statements requires UTC to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates. NOTE 3 - INVESTMENT CONTRACTS Under these contracts, each insurance company guarantees repayment in full of the principal amount invested plus interest credited at a fixed rate for a specified period. Interest is credited to each contract based on an annual interest rate set each year by the individual insurance companies. This rate, which differs among contracts, takes into account any difference between prior year credited interest and the actual amount of investment earnings allocable to the contract in accordance with the established allocation procedures of the insurance company. The interest rates earned for 1997 and 1996 were 8.1% and 7.5%, respectively. The following is a summary of the investment contracts held in the Income Fund and the portion allocable to the Plan:
(Thousands of Dollars) December 31, December 31, 1997 1996 CIGNA $ 1,456,404 $ 1,512,307 Aetna 437,582 457,815 Travelers 367,509 388,845 Prudential 231,133 236,966 Metropolitan Life 780,096 782,764 $ 3,272,724 $ 3,378,697 Amount of the contracts allocable to the Plan $ 4,831 $ 5,006 /TABLE NOTE 4 - FUNDING POLICY The Corporation funds its obligation to the plan on a monthly basis. At December 31, 1997, the minimum funding requirements under ERISA have been met. NOTE 5 - PLAN TERMINATION Although it has not expressed any intent to do so, UTC has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. NOTE 6 - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 The following are reconciliations of net assets available for benefits and benefits paid from the financial statements to the Form 5500:
December 31, 1997 1996 Net assets available for benefits per the financial statements $7,938,519 $6,957,696 Amounts allocated to participant withdrawals - (150,301) Net assets available for benefits per Form 5500 $7,938,519 $6,807,395 Year Ended December 31, 1997
Amounts allocated to participant withdrawals are recorded on Form 5500 for benefit claims that have been processed and approved for payment prior to December 31 but not yet paid as of that date. NOTE 7 - TAX STATUS The Internal Revenue Service has determined and informed UTC by letter dated April 22, 1996 that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letters. However, the Plan administrator and tax counsel believe that the Plan is designed and currently being operated in compliance with the applicable requirements of the IRC.Benefits paid to participants per the financial statements $ 668,252 Add: Amounts allocated to participant withdrawals at December 31, 1997 - Less: Amounts allocated to participant withdrawals at December 31, 1996 (150,301) Benefits paid to participants per Form 5500 $ 517,951 SIGNATURES The Plan (or other persons who administer the employee benefit plan), pursuant to the requirements of the Securities Exchange Act of 1934, has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. UNITED TECHNOLOGIES CORPORATION DEFINED CONTRIBUTION RETIREMENT PLAN Dated: June 26, 1998 By: /s/ Daniel P. O'Connell Daniel P. O'Connell Corporate Director, Employee Benefits and Human Resources Systems United Technologies Corporation Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-58937) of United Technologies Corporation of our report dated June 26, 1998 appearing in the United Technologies Corporation Defined Contribution Retirement Plan's Annual Report on Form 11-K for the year ended December 31, 1997. PRICE WATERHOUSE LLP Hartford, Connecticut June 26, 1998