FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Plan period ended December 31, 2000
Commission File Number 1-812
UNITED TECHNOLOGIES CORPORATION
REPRESENTED EMPLOYEE SAVINGS PLAN
UNITED TECHNOLOGIES CORPORATION
One Financial Plaza
Hartford, Connecticut 06101
FINANCIAL STATEMENTS OF THE UNITED
TECHNOLOGIES CORPORATION
REPRESENTED EMPLOYEE SAVINGS PLAN
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the United Technologies Corporation
Represented Employee Savings Plan
In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the United Technologies Corporation Represented Employee Savings Plan (the "Plan") at December 31, 2000 and December 31, 1999, and the changes in net assets available for benefits for the year ended December 31, 2000 in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Plan’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Hartford, Connecticut
June 29, 2001
United Technologies Corporation
Represented Employee Savings Plan
Statement of Net Assets Available for Benefits
(Thousands of Dollars)
| December 31, | December 31, | |||
| 2000 | 1999 | |||
| Assets: | ||||
| Plan's interest in Master Trust (Notes 3, 4, and 5) | $ |
954,548 | $ |
922,102 |
| Contribution receivable: | ||||
| Participants' | 657 |
97 | ||
| Employer's | 173 |
28 | ||
830 |
125 | |||
| Net Assets Available for Benefits | $ |
955,378 | $ |
922,227 |
| ======= | ======= |
The accompanying notes are an integral part of these financial statements.
United Technologies Corporation Represented
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
(Thousands of Dollars)
| Year Ended | ||
| December 31, | ||
| 2000 | ||
| Additions to net assets attributed to: | ||
| Investment Income: | ||
| Net depreciation in fair value of investments | $ |
(21,550) |
| Interest | 42,669 | |
| Dividends | 9,469 | |
| Contributions: | ||
| Participants' | 43,128 | |
| Employer's | 11,424 | |
|
85,140 | |
| Deductions from net assets attributed to: | ||
| Distributions to participants | (61,803) | |
| Administrative expenses | (113) | |
| Total deductions | (61,916) | |
| Net increase prior to transfers | 23,224 | |
| Plan transfers: | ||
| Assets transferred into Plan (Note 8) | 10,679 | |
| Assets transferred out of Plan | (752) | |
| Net Plan transfers | 9,927 | |
| Net increase | 33,151 | |
| Net Assets Available for Benefits, December 31, 1999 | 922,227 | |
| Net Assets Available for Benefits, December 31, 2000 | $ |
955,378 |
| ======= |
The accompanying notes are an integral part of these financial statements.
UNITED TECHNOLOGIES CORPORATION
REPRESENTED EMPLOYEE SAVINGS PLAN
Notes to Financial Statements
NOTE 1 - DESCRIPTION OF THE PLAN
General. The United Technologies Corporation ("UTC") Represented Employee Savings Plan (the "Plan") is a defined contribution savings plan administered by UTC. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Union represented employees of UTC, covered by collective bargaining agreements that provide for Plan participation, are eligible to participate in the Plan after completing at least one year of service. The following is a brief description of the Plan. For more complete information, participants should refer to the Plan document which is available from UTC.
Contributions and Vesting. All participants may elect, through payroll deductions, to make tax deferred contributions of between $2 per week and the maximum amount permitted by the relevant collective bargaining agreement. Certain participants, depending on their collective bargaining agreement, may also make after-tax contributions. Participants direct the investment of their contributions into various investment options offered by the Plan. The Plan currently offers ten mutual funds, four commingled index funds, one stable value fund, and a company stock fund as investment options for participants. Participant contributions, plus actual earnings thereon, are fully vested at all times under the Plan. The employer will match 50 percent of the participant's contributions, up to specified limits. Generally, employer contributions, plus actual earnings thereon, become fully vested after two years of Plan participation.
Certain participants may also make limited tax-deferred or after-tax contributions to an individual medical account ("IMA") or tax-deferred contributions for cost of living adjustments ("COLA"), where permitted. The employer will match 75 percent of the participant’s IMA contribution. All contributions to an IMA will be invested 100 percent in the Income Fund and may not be withdrawn until retirement or termination.
Participant Accounts. Each participant’s account is credited with the participant's contributions and allocations of (a) UTC's contributions based on a percentage of the participant’s contribution and (b) Plan earnings based on account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Forfeited balances of terminated participants’ nonvested amounts are used to reduce future UTC contributions. For the year ended December 31, 2000, approximately $15,000 of forfeitures were used to fund UTC's contributions.
Trustee and Recordkeeper. All of the Plan's assets are held by Bankers Trust Company ("Bankers Trust"), the Plan trustee. Bankers Trust is a subsidiary of Deutsche Bank. Fidelity Institutional Retirement Services Company ("Fidelity") performs participant account recordkeeping responsibilities.
Participant Loans. Certain participants with at least two years of Plan participation are allowed to borrow up to 50 percent of their vested account balances excluding IMA and COLA.
Loan amounts can range from $1,000 to $50,000 and must be repaid within 5 years. The loans are secured by the balance in the participant's account and bear interest at Deutsche Bank's prime rate plus one percent. Principal and interest are paid ratably through payroll deductions.
Payment of Benefits. Generally, benefits are paid in a lump sum to terminating participants. Participants terminating due to retirement may elect to receive benefits in installments over two to twenty years. At the participant’s election, the portion of a lump sum distribution attributable to an investment in the UTC Common Stock Fund investment option may be paid in shares of UTC Common Stock instead of cash. Distributions in UTC Common Stock for the year ended December 31, 2000 were approximately $308,000.
Other. Participants who transfer to a new UTC location with a different savings plan may have the option of transferring their account balances in accordance with the provisions of the new savings plan.
NOTE 2 - SUMMARY OF ACCOUNTING PRINCIPLES
Basis of Accounting. The financial statements of the Plan are prepared under the accrual method of accounting, except for benefits which are recorded when paid.
Master Trust. The Plan’s assets are kept in a Master Trust maintained by the Plan's trustee. Under the Master Trust agreement, the assets of certain employee savings plans of UTC and its subsidiaries are combined. Participating plans purchase units of participation in the investment funds based on their contribution to such funds and the unit value of the applicable investment fund at the end of the trading day in which a transaction occurs. The unit value of each fund is determined at the close of each day by dividing the sum of uninvested cash, accrued income and the current value of investments by the total number of outstanding units in such funds. Income from the funds’ investments increases the participating plans' unit values. Distributions to participants reduce the number of participation units held by the participating plans (see Note 5).
Investment Valuation and Income Recognition. The Income Fund's investments in insurance contracts (see Note 4) are stated at contract value, which represents contributions plus earnings, less Plan withdrawals. All other funds are stated at fair value, as determined by the Plan trustee, typically by reference to published market data.
Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date.
Plan Expenses. Plan administrative expenses, including Plan trustee and recordkeeping fees, were paid directly by the employer in 2000. The employer also paid certain investment management fees for the funds administered by Deutsche Asset Management. All other administrative and investment expenses were paid out of Plan assets during 2000.
Use of Estimates. The preparation of financial statements requires UTC management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates.
NOTE 3 - INVESTMENTS
The following presents investments that represent 5 percent or more of the Plan's net assets:
| December 31, | ||||
| (Thousands of Dollars, except unit amounts) | 2000 | 1999 | ||
| Equity Fund, 6,387,637 and
6,763,808 units, respectively |
|
|
|
|
| UTC Common Stock Fund, 3,829,359
and 4,750,418 units, respectively |
|
|
|
|
| Income Fund, 7,036,382 and
6,918,254 units, respectively |
|
|
||
NOTE 4 - INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
The Plan's Income Fund invests in insurance contracts with insurance companies. Under the contracts, each insurance company guarantees repayment in full of the principal amount plus interest credited at a fixed rate for a specified period. Interest is credited to each contract based on an annual interest rate set each year by the individual insurance companies. This rate, which differs among contracts, takes into account any difference between prior year credited interest and the actual amount of investment earnings allocable to the contract in accordance with the established allocation procedures of the insurance company. The interest rates earned for 2000 and 1999 were 8.3% and 8.1%, respectively.
NOTE 5 - INVESTMENT IN MASTER TRUST
UTC has entered into a Master Trust agreement with Bankers Trust. Under this agreement, certain savings plans of UTC and its subsidiaries combine their trust fund investments in the Master Trust.
Participating plans purchase units of participation in the investment funds based on their contribution to such funds along with income that the investment funds may earn, less distributions made to the plans' participants.
At December 31, 2000, the Plan’s interest in the Master Trust comprised 43,878,093 units of the 519,377,890 total units of participation, or 8.45%. At December 31, 1999, the Plan's interest in the Master Trust comprised 41,731,235 units of the total 510,203,518 units of participation, or 8.18%.
The following is a summary of the financial information and data for the Master Trust and the portion applicable to the Plan:
United Technologies Corporation
Master Trust Statement of Net Assets
(Thousands of Dollars)
| December 31, | December 31, | |||
| 2000 | 1999 | |||
| Assets: | ||||
| Short-term investments | $ |
2,640 | $ | 23,147 |
| Investments: | ||||
| Equity: | ||||
| Mutual funds | 784,876 | 663,679 | ||
| Equity commingled index funds | 1,460,037 | 1,466,274 | ||
| Common stock | 759,152 | 784,371 | ||
| ESOP stock fund | 3,641,487 | 3,152,372 | ||
| Debt: | ||||
| Fixed income commingled index funds | 24,916 | 28,140 | ||
| Insurance company investment contracts | 4,364,663 | 3,883,142 | ||
| Participant notes receivable | 99,935 | 81,647 | ||
Subtotal |
11,137,706 | 10,082,772 | ||
| ESOP receivables | 128,988 | 116,234 | ||
| Interest and dividend receivables | 14,678 | 20,085 | ||
Total assets |
11,281,372 | 10,219,091 | ||
Liabilities: |
||||
| Accrued liabilities | 8,708 | 6,014 | ||
| Accrued ESOP interest | 2,070 | 2,154 | ||
| ESOP debt | 301,100 | 336,600 | ||
| Notes payable to UTC | 153,333 | 131,233 | ||
Total liabilities |
465,211 | 476,001 | ||
Net Assets |
$ |
10,816,161 | $ |
9,743,090 |
| ======== | ======== | |||
| Net assets of the Master Trust allocable to the Plan |
|
954,548 |
|
922,102 |
| ======== | ======== |
United Technologies Corporation
Master Trust Statement of Changes in Net Assets
(Thousands of Dollars)
Year Ended |
||
| December 31, | ||
| 2000 | ||
| Additions: | ||
| Interest and dividend income | $ |
484,236 |
| Net appreciation on fair value of investments | 422,709 | |
| Contributions from participating plans for purchase of units | 294,212 | |
| Total additions | 1,201,157 | |
| Deductions: | ||
| Benefit payments on behalf of participating plans | (583,163) | |
| Master trust expenses | (37,444) | |
| Total deductions | (620,607) | |
| Net increase prior to transfers | 580,550 | |
| Plan transfers: | ||
| Assets transferred in | 495,024 | |
| Assets transferred out | (2,503) | |
| Net Plan transfers | 492,521 | |
Increase in net assets |
1,073,071 | |
Net assets: |
||
| Beginning of year | 9,743,090 | |
| End of year | $ |
10,816,161 |
| ======== | ||
| Amounts pertaining to the Plan: | ||
| Plan interest in net
appreciation and investment income of Master Trust |
|
30,588 |
| ======== | ||
| Contributions received (cash basis) | $ |
53,847 |
| ======== | ||
| Assets transferred into Plan (Note 8) | $ |
10,679 |
| ======== | ||
| Pension benefits paid | $ |
(61,803) |
| ======== | ||
| Plan expenses | $ |
(113) |
| ======== | ||
| Assets transferred out of Plan | $ |
(752) |
| ======== |
NOTE 6 - RELATED-PARTY TRANSACTIONS
Certain Plan investment options are managed by Deutsche Asset Management and Fidelity. Bankers Trust, a subsidiary of Deutsche Bank, and Fidelity are the Plan’s trustee and recordkeeper, respectively, as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions.
NOTE 7 - PLAN TERMINATION
Although it has not expressed any intent to do so, UTC has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts.
NOTE 8 – PLAN TRANSFER
On June 10, 1999, UTC acquired Sundstrand Corporation and merged it with its Hamilton Standard division and formed a wholly owned subsidiary, Hamilton Sundstrand. During 1999, UTC approved the merger of the Sundstrand Corporation Employee Savings Plan (the "Sundstrand Plan") with the UTC Employee Savings Plan and the UTC Represented Employee Savings Plan (the "UTC Plans"). Salaried and hourly participants of the Sundstrand Plan were eligible to participate in the UTC Plans effective January 1, 2000. On January 13, 2000, approximately $425,503,000 of net assets were transferred into the UTC Plans of which $7,981,000 was transferred into this Plan.
NOTE 9 – TAX STATUS
The Internal Revenue Service has determined and informed UTC by letter dated February 8, 1996 that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code ("IRC"). The Plan has been amended since receiving the determination letter. However, the Plan administrator and tax counsel believe that the Plan is designed and currently being operated in compliance with the applicable requirements of the IRC.
SIGNATURES
The Plan (or other persons who administer the employee benefit plan), pursuant to the requirements of the Securities Exchange Act of 1934, has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
UNITED TECHNOLOGIES CORPORATION
REPRESENTED EMPLOYEE SAVINGS PLAN
Dated: June 29, 2001 By:
/s/ Laurie P. Havanec
Laurie P. Havanec
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. 33-26580) of United Technologies Corporation of our report dated June 29, 2001 relating to the financial statements of the United Technologies Corporation Represented Employee Savings Plan, which appears in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Hartford, Connecticut
June 29, 2001