UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES[X]
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
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 1-812
UNITED TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06 0570975
(State or other (I.R.S. Employer
jurisdiction of
incorporation or Identification No.)
organization)
United Technologies Building, Hartford, 06101
Connecticut
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: ( 203) 728-7000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
Medium-Term Notes, Series B, New York Stock Exchange
PEN
Notes due September 8, 1997
Common Stock ($5 par value) New York Stock Exchange
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and is not to be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ X ]
At February 1, 1994, there were 126,610,856 shares of Common Stock
outstanding; the aggregate market value of the voting Common Stock held by non
affiliates at February 1, 1994 was approximately $8,435,448,281.
List hereunder the following documents if incorporated by reference and the
Part of the Form
10-K into which the document is incorporated: (1) United Technologies
Corporation 1993 Annual Report to Shareowners, Parts I, II and IV; and (2)
United Technologies Corporation Proxy Statement for the 1994 Annual Meeting of
Shareowners, Part III.
PAGE
UNITED TECHNOLOGIES CORPORATION
________________________________
Index to Annual Report
on Form 10-K
Year Ended December 31, 1993
PART I
Page
Item 1. Business 1
Item 2. Properties 13
Item 3. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security 16
Holders
- ----- Executive Officers of the Registrant 16
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 19
Item 6. Selected Financial Data 19
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Position 19
Item 8. Financial Statements and Supplementary Data 19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 19
PART III
Item 10. Directors and Executive Officers of the Registrant 19
Item 11. Executive Compensation 19
Item 12. Security Ownership of Certain Beneficial Owners 19
and Management
Item 13. Certain Relationships and Related Transactions 19
PART IV
Item 14. Exhibits, Financial Statement Schedules, and 20
Reports on Form 8-K
PAGE
Item 1. Business
History of Business
United Technologies Corporation was incorporated in Delaware in 1934. Since
1973, growth has been enhanced by the acquisition of several companies and by
internal growth of existing businesses of the Corporation*.
In the first quarter of 1988, the Corporation sold its Essex Group. In
December 1988, the Corporation purchased a 46 percent equity interest in
Sheller-Globe Corporation, and purchased the remaining equity of the company in
the fourth quarter of 1989. During 1990, the Corporation sold its interests in
several of the Automotive segment's non-core businesses. In January 1994, the
Corporation announced that it was planning to sell 40% of the economic interest
in its Automotive segment to the public through an initial public offering. See
the description of Automotive at pages 11 through 12 of this Report. In
February of 1994, the Corporation announced an agreement to sell Norden Systems,
Inc., to Westinghouse Electric Corporation, subject to approval of the U.S.
Government.
Management's Discussion and Analysis of the Corporation's Results of
Operations for 1993 compared to 1992, and for 1992 compared to 1991, and its
Financial Position at December 31, 1993 and 1992, and Selected Financial Data
for each year in the five year period ended December 31, 1993 are set forth on
pages 27 through 35 of the Corporation's 1993 Annual Report to Shareowners.
Whenever reference is made in this report to specific pages in the 1993 Annual
Report to Shareowners, such pages are incorporated herein by reference.
Operating Units and Industry Segments
The Corporation conducts its business principally through its Pratt &
Whitney, Sikorsky, Hamilton Standard, Norden, Carrier, Otis, and UT Automotive
units and also the United Technologies Research Center.
The operating units of the Corporation conduct their business within five
principal industry segments or lines of business--Pratt & Whitney, Flight
Systems, Carrier, Otis, and Automotive. Management believes that during 1993
the principal products produced by the major business units within these five
segments held in many instances, rankings of either number one or two. The
principal products of the operating units reported within each of these industry
segments are as follows:
Industry Segment Principal Products
Pratt & Whitney --Pratt & Whitney engines and parts
Flight Systems --Sikorsky helicopters and parts
--Hamilton Standard engine controls, environmental
systems, propellers and other flight systems
--Norden airborne and ground radar and
command/control systems
--Chemical Systems and USBI rocket boosters and
preparation and refurbishment of rocket boosters
Carrier --Carrier heating, ventilating, air conditioning,
and refrigeration equipment and service
Otis --Otis elevators, escalators and service
Automotive --Automotive components and systems
The Consolidated Summary of Business Segment Financial Data for the years
1991 through 1993 appears on pages 51 through 54 of the Corporation's 1993
Annual Report to Shareowners.
_______________
*"Corporation," unless the context otherwise requires, means United
Technologies Corporation and its consolidated subsidiaries.
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2
Description of Business by Industry Segment
The following description of the Corporation's business by industry segment
should be read in conjunction with Management's Discussion and Analysis of
Results of Operations and Financial Position appearing in the Corporation's 1993
Annual Report to Shareowners, especially the information contained therein under
the headings "Business Environment" and "Restructuring and Other Actions."
Pratt & Whitney
Pratt & Whitney's business consists almost entirely of revenues* from the
sale of aircraft gas turbine engines and spare parts and from the overhaul and
repair of engines. Pratt & Whitney products are sold principally to aircraft
manufacturers, airlines and other aircraft operators, aircraft leasing
companies, and the U.S. and foreign governments. Direct and indirect revenues
from sales to the U.S. Government amounted to $1,556 million, or approximately
26 percent, of Pratt & Whitney revenues in 1993. Sales to the Boeing Company
and McDonnell Douglas Corporation, consisting primarily of commercial aircraft
jet engines, amounted to $1,218 million, or approximately 21 percent, and $452
million, or approximately 8 percent, respectively, of total Pratt & Whitney
revenues in 1993.
Commercial Aircraft Engines and Parts
Pratt & Whitney is one of the world's leading producers of large turbofan
(jet) engines and parts for commercial aircraft. During the years 1991 through
1993, the Corporation's total revenues from its commercial engine business were
as follows:
Year Total Revenues Engines & Parts
1991 $3,778 million
1992 $3,700 million
1993 $3,266 million
As of December 31, 1993, Pratt & Whitney jet engines powered approximately
6,600 commercial aircraft for approximately 725 domestic and foreign airlines
and other owners and operators. Jet engines currently in production at Pratt &
Whitney for installation in commercial aircraft are as follows:
Year of Current
Commercial First Maximum Current Production Number of
Engine Commercial Takeoff Aircraft in which Engines per
Designation Service Thrust Installed Aircraft
JT8D-200 1980 21,000 lbs. Douglas MD-80** 2
PW2000 1984 41,700 lbs. Boeing 757-200/PF*** 2
PW4000 1987 62,000 lbs. Airbus A310-300*** 2
Airbus A300-600*** 2
Boeing 747-400*** 4
Boeing 767-200/- 2
300***
Douglas MD-11*** 3
IAE V2500 1989 30,000 lbs. Airbus A320/A321**** 2
Douglas MD-90***** 2
_______________
For the definition of "revenues" as used in this report, see Notes to *
Consolidated Summary of Business Segment Financial Data at page 54 of the
Corporation's 1993 Annual Report to Shareowners.
** Powered exclusively by Pratt & Whitney engines.
Powered by competitive as well as Pratt & Whitney engines.***
**** Powered by competitive as well as IAE International Aero Engines AG
engines.
*****Powered exclusively by IAE International Aero Engines AG engines.
PAGE
3
During 1992, International Lease Finance and Shorouk Air announced firm
orders for 14 Boeing 757 aircraft, each powered by two PW2000 engines. At
December 31, 1993, a total of 14 customers had announced firm orders for 376
Boeing 757 aircraft powered by 752 PW2000 engines, of which 568 engines had been
delivered.
The PW4000 is operating in airline service today at up to 62,000 pounds of
thrust and was certified at 68,000 pounds of thrust for the Airbus A330 in
August, 1993, and is scheduled to be certified at 84,000 pounds of thrust for
the Boeing 777 in April 1994. The PW4000 engine powers current production
McDonnell Douglas MD-11, Boeing 747 and 767, and Airbus A300 and A310 aircraft.
During 1990, United Airlines selected the PW4000 as the launch engine on the new
Boeing 777 aircraft as part of a $4 billion engine order, the largest in Pratt &
Whitney's history. During 1991, All Nippon Airways became the second customer
to select the PW4000-powered Boeing 777. In 1993, firm orders for 45 installed
PW4000 engines were announced by six customers. At December 31, 1993, 67
customers had ordered a total of 674 aircraft powered by 1,748 PW4000 engines,
of which 984 engines had been delivered.
Motoren-und Turbinen-Union GmbH (MTU), a subsidiary of Daimler-Benz of
Germany, and Pratt & Whitney have agreed that each company will participate with
the other in the development, manufacture and marketing of commercial gas
turbine engines. Under terms of a general collaboration agreement signed in
March 1991, Pratt & Whitney will be the lead company on the PW4084, the growth
version of the PW4000 engine intended for the Boeing 777 aircraft. MTU will
have a 12.5 percent share of this program. Pratt & Whitney/MTU presently
collaborate in the development, manufacture and marketing of the JT8D-200,
the PW300 (see the discussion of General Aviation Engines and Parts
beginning at page 4 of this Report), the PW2000 and the V2500 commercial gas
turbine engines. P&W, GE, SNECMA and MTU are negotiating an agreement under
which a European company could be formed to produce small turbofan engines in
the range of the 12,000 to 20,000 pound thrust class.
IAE International Aero Engines AG (IAE), a corporation whose shareholders
consist of Pratt & Whitney, Rolls-Royce plc of England, Japanese Aero Engines
Corporation, MTU, and FiatAvio of Italy, is providing the V2500 engine, to cover
the range of 18,000 to 30,000 pounds of thrust. Pratt & Whitney has a 30
percent equity share in IAE. At December 31, 1993, 18 customers had placed firm
orders for 311 A320 and A321 (a larger capacity derivative of the A320) aircraft
to be powered by the V2500 engine. In addition, at December 31, 1993, seven
customers had placed firm orders for 101 MD-90s, a two engine aircraft which
will be powered exclusively by the V2500.
The competitive environment encountered in introducing new airframe/engine
combinations into the fleets of individual airlines, and the manner in which
Pratt & Whitney and other engine suppliers respond to that environment, are
discussed at pages 5 through 7 of this Report.
Military Engines and Parts
Pratt & Whitney is one of two major suppliers to the U.S. Government of
large jet engines and jet engine parts for military aircraft. During the years
1991 through 1993, the Corporation's total revenues from its government engine
business were as follows:
Year Total Revenues Engines & Parts
1991 $2,062 million
1992 $2,006 million
1993 $1,595 million
At December 31, 1993, approximately 16,500 Pratt & Whitney jet engines were
in active military inventories of the U.S. and foreign governments.
Jet engines currently in production at Pratt & Whitney for installation on
military aircraft are as follows:
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4
Current Current Number of
Military Year of Maximum Production Engines per
Engine First Takeoff Aircraft in Aircraft
Designation Operational Thrust which Installed
Use
F100 1974 29,000 lbs. Air Force F-15 2
class Air Force F-16 1
F117 1992 41,700 lbs. Air Force C-17 4
Pratt & Whitney competes with General Electric Company (GE) for engine
orders for F-15 and F-16 fighter aircraft. The F-15 is produced by McDonnell
Douglas Corporation, and the F-16 is currently produced by Lockheed Corporation.
Since 1982, Pratt & Whitney's F100 engine has been used to fill approximately
one-half of the U.S. Air Force's engine orders for these aircraft. The number
of engines for these aircraft ordered annually by the Air Force has decreased
from 231 engines ordered in 1989 to 12 engines ordered in 1993, all 12 of which
have been awarded to GE. The Corporation has been notified by the U.S. Air
Force that no further F-16 acquisitions are planned at present.
During 1993, Pratt & Whitney delivered two F100 engines under a contract
with the South Korean Air Force which calls for production and licensed
production of a total of 132 F100 engines. Delivery of 18 engines under an F-16
program with Taiwan is scheduled for 1994, and current orders call for Pratt &
Whitney to sell 166 F100 engines under that program. In March 1993, the Royal
Saudi Air Force issued a letter of intent announcing the selection of Pratt &
Whitney's F100-PW-229 to power its F-15 fleet, which contemplated the delivery
of approximately 154 engines, commencing in 1994. However, in February 1994
Saudi Arabia reached an agreement in principle with the U.S. Government and
five U.S. defense contractors to restructure certain payments for military
hardware, which included stretching out deliveries of the 72 F-15s involved.
In January 1994, Israel selected an F-15 derivative with the F100 engine for
an anticipated procurement of 20 aircraft, with an option to purchase five
more, plus an undetermined number of spares.
Currently, all orders for the F117 engine, a version of the PW2000 which
powers the C-17 airlift aircraft produced by McDonnell Douglas for the U.S. Air
Force, are placed directly with Pratt & Whitney by the Air Force. Twenty F117
engines were delivered to the Air Force in 1993, and 35 F117 engines are
scheduled for delivery in 1994. Original Air Force plans called for delivery of
120 C-17s; however, management believes that number may be reduced as a result
of either or both of U.S. defense budget cuts and possible Air Force procurement
of non-military aircraft to fill the C-17's anticipated role.
Jet engines under development by Pratt & Whitney are designated the J52-P-
409 and the F119-PW-100 (formerly PW5000). The J52-P-409 is an improved
performance version of the J52-P-408 and J52-P-8 engines and is rated at
approximately 12,500 pounds of takeoff thrust. Due to reductions in the U.S.
defense budget, management cannot predict with certainty whether this engine
will be produced in significant numbers. The F119 was selected to power the Air
Force's F-22 aircraft under development by the team of Lockheed Corporation and
the Boeing Company, and it is a 35,000-pound-thrust class engine. This engine
is being developed under an Engineering and Manufacturing Development contract.
Also, as a result of reductions in the U.S. defense budget, management cannot
predict with certainty when, and in what quantities, production of the F119 will
commence.
The competitive environment encountered in supplying military jet engines
and jet engine parts to the U.S. Government is discussed beginning at page 12 of
this Report.
General Aviation Engines and Parts
Pratt & Whitney is one of the world's leading producers of small gas turbine
engines and parts for business and regional/commuter aircraft, and also supplies
small turbine engines and parts for military aircraft, for helicopters and as
auxiliary power units for large transport aircraft.
Small gas turbine engines are manufactured by Pratt & Whitney Canada and
consist of the PT6 series of turboprop/turboshaft engines, which produce up to
1,650 shaft-horsepower, the JT15D series of turbofan engines, which produce up
to 3,095 pounds of takeoff thrust and the PW100 series, a turboprop engine,
which produces up to 2,750 shaft-horsepower. Typical applications are six to
PAGE
5
eighty-passenger business and regional airline aircraft, including the Beech
King Air and Super King Air series, the Beech Starship I and Piaggio Avanti
pusher turboprops, the Beech 1900 airliner and the Beechjet, Cessna Citation II
and V and Caravan I and II, de Havilland Dash 8-100 and Dash 8-300, Piper
Cheyenne IIIA, Embraer EMB-120, British Aerospace ATP, Fokker 50, Dornier DO 328
and Aerospatiale/Aeritalia ATR-42 and ATR-72 aircraft, and the Bell 212/412 and
Sikorsky S-76B helicopters.
On December 31, 1993, more than 17,000 PT6, JT15D and PW100 powered aircraft
and helicopters were in use in approximately 160 countries and territories.
During 1993, two Pratt & Whitney powered contenders for the Air Force Joint
Primary Aircraft Training System completed first flight, one with the PT6 and
the other with the JT15D. The PT6, JT15D and PW100 were each selected for a new
or derivative installation in 1993.
The PW300, a 5,000 pound thrust class turbofan engine, has been developed
for mid-size business jets under a collaboration agreement with MTU. The engine
powers two applications, the Raytheon Corporate Jets Hawker 1000 and the Learjet
Model 60, which started production deliveries in 1991 and 1993, respectively.
The PW200 series, a new 500 to 800 shaft-horsepower turboshaft engine, is
being developed in Canada to power a series of light helicopters. The first
model received Canadian Department of Transport certification in 1991 and is
installed in the McDonnell Douglas MD Explorer helicopter which achieved first
flight in 1992. The PW206B is installed in the Eurocopter EC 135, currently
being developed.
In September 1993, Pratt & Whitney Canada launched the PW500 program, a new
family of turbofan engines in the 2,500-4,000 thrust class aimed at light to
medium business jets. An engine supply contract has been signed with a launch
customer but no firm orders have yet been received.
The PW901A engine is used as the auxiliary power unit for the Boeing 747-400
aircraft. An auxiliary power unit provides aircraft with starting power,
electric power, lighting and air conditioning. More than 430 units have now
been ordered by Boeing.
Other Pratt & Whitney Products
Other activities in the Pratt & Whitney Segment include the production of
the RL10 liquid hydrogen fuel rocket motor used for upper stage propulsion for
the National Aeronautics and Space Administration (NASA) Atlas-Centaur and
Titan-Centaur launch vehicles; the supply of contract services for the
construction, outfitting and operation of aircraft and aircraft engine
maintenance centers for foreign customers; and the overhaul and repair of Pratt
& Whitney engines in the U.S. and Canada and in overseas locations. Pratt &
Whitney is a participant in the National Aero-space Plane (NASP) team with
Rockwell, Rocketdyne, McDonnell Douglas and Lockheed under contract with the
U.S. Air Force. The contract for the NASP involves research and concept studies
for the X-30 design.
Other Pratt & Whitney Segment Information
Pratt & Whitney's business is subject to rapid changes in technology;
lengthy and costly development cycles; heavy dependence on a small number of
products and programs; changes in legislation and in government procurement and
other regulations and procurement practices (such as the current Defense
Department emphasis on development of prototypes rather than full production of
new systems and on upgrading
existing systems rather than developing new systems); procurement preferences
and policies of some foreign customers which require in-country manufacture
through co-production (such as the co-production of the F100-PW-229 for the
South Korean Fighter Program), offset procurement (where in-country purchases
are required as a condition to obtaining orders), joint ventures and production
sharing (such as exist in the case of the IAE V2500, JT8D, PW300, PW2000 and
PW4000 engines), licensing or other arrangements; substantial competition from
major domestic manufacturers and from foreign manufacturers whose governments
sometimes give them direct and indirect research and development, marketing
subsidies and other assistance for their commercial products; and changes in
economic, industrial and international conditions.
The principal methods of competition in Pratt & Whitney's business are
price, product performance, service, delivery schedule and other terms and
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6
conditions of sale, including fleet introductory assistance allowances and
performance and operating cost guarantees, and the participation by the
Corporation and its finance subsidiaries in customer financing arrangements in
connection with sales of commercial jet engines. Fleet introductory allowances
are financial incentives offered by the Corporation to airline customers in
order to make engine sales which lead, in turn, to the sale of spare parts and
services. Pratt & Whitney's major competitors are the aircraft engine
businesses of GE and Rolls Royce. (For information regarding the Corporation's
finance subsidiaries and commitments to finance or arrange financing for
commercial aircraft, see Note 5 of Notes to Financial Statements at page 43 of
the Corporation's 1993 Annual Report to Shareowners.)
Historically, it was common to new aircraft programs for only one engine to
be selected for a given airplane. In those situations, competition between
engine manufacturers occurred principally at the time of the selection of the
engine for the particular aircraft. That approach still prevails in some
situations, including general aviation aircraft, the McDonnell Douglas MD-80,
which is powered exclusively by the Pratt & Whitney JT8D engine, and the MD-90,
which is powered exclusively by the IAE V2500. In those situations, when the
customer chooses an aircraft, there is no choice of engines. The customer must
buy the engine originally selected for that aircraft.
In the case of commercial aircraft such as the Boeing 747, 757, 767 and 777,
the McDonnell Douglas MD-11, and the Airbus Industrie A300, A300-600, A310, A320
and A321, aircraft manufacturers offer their customers a choice of engines,
giving rise to substantial competition among engine manufacturers at the time of
the sale of aircraft. This competition has become increasingly significant
where new commercial airframe/engine combinations are first introduced to the
market and into the fleets of individual airlines. Financial incentives granted
by engine suppliers, and performance and operating cost guarantees on their
part, are frequently important factors in such sales and can be substantial.
(For information regarding participation in guarantees of customer financing
arrangements granted by Pratt & Whitney and performance and operating cost
guarantees, see Notes 1, 5, 12 and 13 of Notes to Financial Statements at pages
41 to 43 and 50, of the Corporation's 1993 Annual Report to Shareowners.)
Sales of Pratt & Whitney military engines are adversely affected by
declining defense budgets (both in the U.S. and, to some extent, abroad) and the
presence of competitors, such as General Electric. Military spare parts sales
have been, and will continue to be, adversely affected by the decline in overall
procurement by the U.S. Government and, to a lesser extent, by the U. S.
Government's policy of increasing its parts purchases from suppliers other than
the original equipment manufacturers. The combined impact of these developments
is not believed to be material to the Corporation at the present time. The
Corporation's sales to the U.S. Government of spare parts for military products,
a substantial portion of which are manufactured by the Corporation's suppliers
and subcontractors, were approximately $374 million or 6 percent of total Pratt
& Whitney revenues in 1993.
Pratt & Whitney sales in the U.S. and Canada are made directly to the
customer by the Corporation and, to a limited extent, through independent
distributors. Other export sales from the U.S. are made with the assistance of
an overseas network of sales offices and representatives outside the U.S.
Export sales amounted to $2,289 million, or approximately 33 percent, and $2,031
million, or approximately 34 percent, of total Pratt & Whitney revenues in 1992
and 1993, respectively.
Pratt & Whitney's revenues associated with manufacturing operations outside
the U.S., which consist primarily of small gas turbine engines and parts
manufactured in the Corporation's plants near Montreal, Canada, amounted to
$1,217 million, or approximately 18 percent, and $1,118 million, or
approximately 19 percent, of total Pratt & Whitney revenues in 1992 and 1993,
respectively. Such operations are subject to local government regulations as
well as to varying political and economic risks.
At December 31, 1993, the business backlog in the Pratt & Whitney business
amounted to $9,484 million, including $1,600 million under funded contracts and
subcontracts with the U.S. Government, as compared to $11,627 million and $1,553
million, respectively, at December 31, 1992. Of the total Pratt & Whitney
business backlog at December 31, 1993, approximately $5,133 million is expected
to be realized as sales in 1994. Pratt & Whitney's backlog is based on the
terms of firm orders received and does not include discounts granted directly to
airline and other customers. Beginning in 1992, a number of major domestic
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7
airlines, foreign airlines and other owners and operators expressed their
interest in postponing delivery of aircraft on order and, in some cases,
existing orders and options for future delivery were canceled. The Corporation
has negotiated with United Airlines changes to previously negotiated engine
contract terms, including deferral of some engine deliveries. These factors
could affect the amount of Pratt & Whitney business backlog which will
ultimately be realized as sales.
Flight Systems
The Corporation's Flight Systems business is conducted through Sikorsky
Aircraft, Hamilton Standard, Norden Systems, Chemical Systems, USBI, and
International Fuel Cells.
Flight Systems products are sold principally to the U.S. Government,
airframe and aircraft engine manufacturers, airlines and other aircraft
operators, and foreign governments. Direct and indirect revenues from sales to
the U.S. Government amounted to $2,416 million, or approximately 62 percent, of
total Flight Systems revenues in 1993.
Military and Commercial Helicopters
Sikorsky is one of the world's leading manufacturers of military and
commercial helicopters. Sikorsky is the primary supplier of transport
helicopters to the U.S. Army. Sikorsky is currently producing helicopters for a
variety of uses including passenger, utility/transport, cargo, anti-submarine
warfare, search and rescue, mine countermeasures and heavy-lift operations. In
addition to all branches of the U.S. military, Sikorsky supplies helicopters to
foreign governments and the worldwide commercial market. Sikorsky's business
base also encompasses spare parts for past and current helicopters produced by
Sikorsky, and, through the Sikorsky Support Services, Inc. subsidiary of the
Corporation, repair and retrofit of helicopters in the U.S. military fleet.
Other helicopter manufacturers include Bell Helicopters, Eurocopter, Boeing
Helicopters, Agusta and Westland.
Current production programs at Sikorsky include the BLACK HAWK medium-
transport helicopter for the U.S. Army and derivatives for foreign governments;
the SEAHAWK and CV Helo medium-sized helicopters for anti-submarine warfare
missions for the U.S. Navy and derivatives for both the U.S. and foreign
governments; the HH-60 JAYHAWK medium-range recovery helicopter for the U.S.
Coast Guard; the CH-53E SUPER STALLION heavy-lift and MH-53E SEA DRAGON mine
counter-measures helicopters for the U.S. Navy and Marine Corps and derivatives
for Japan; and the S-76 intermediate-sized helicopter for executive transport
and offshore oil platform support.
In 1993, seven HH-60J JAYHAWK helicopters were delivered to the U.S. Coast
Guard. On the commercial side, 10 of the 11 deliveries of S-76 helicopters in
1993 were made to international customers.
Although in 1992 Sikorsky was awarded a U.S. Government contract for 300
BLACK HAWK helicopters through 1997, declining Defense Department budgets are
such that Sikorsky's future will be increasingly dependent upon expanding its
international position. Typically, these sales are expected to require the
development of an in-country co-production program. Sikorsky succeeded in
developing such a program in South Korea in 1990 by entering into a contract
with Korean Airlines for 81 BLACK HAWK helicopters, 74 of which were to be co-
produced. With this contract substantially completed, a supplemental contract
was signed on December 31, 1993 for an additional 57 helicopter kits. In
December 1992, Sikorsky signed a contract to provide up to 95 BLACK HAWK
helicopters to the Turkish Armed Forces. The first 45 aircraft will be produced
by Sikorsky. Of these, 40 have been delivered to and accepted by Turkey with
the remainder scheduled to be delivered by June 1994. Sikorsky currently is
negotiating a contract for the remaining 50 helicopters that are to be co-
produced with Turkish industry participation.
Sikorsky has been teamed with Boeing Helicopter Company for the Engineering
and Manufacturing Development (EMD) of the U.S. Army's next generation light
helicopter program, the RAH-66 Comanche. The Boeing/Sikorsky team has been
performing under the EMD cost reimbursement contract awarded in 1991. Present
requirements call for a minimum of 1,292 aircraft; however, due in part to
declining defense budgets, the Department of Defense in early 1992 called for an
extension of the development contract and a deferral of Comanche production
beyond 1997. The Corporation cannot predict the quantity of aircraft which
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8
ultimately will be built. Based on Department of Defense direction, the Army
and Sikorsky in January 1993 completed negotiations of a restructured
Demonstration Validation Prototype Program to validate crucial components of the
Comanche design.
Sikorsky's development of a new S-92 commercial helicopter continues.
Other Flight Systems Products
Hamilton Standard is a leading domestic producer of a number of Flight
Systems products. Major production programs include engine controls,
environmental controls, flight controls and propellers for commercial and
military aircraft. In addition, Hamilton Standard produces the space suit for
the NASA space shuttle astronauts and environmental controls for the shuttle's
orbiter.
Norden Systems produces airborne, shipboard and ground based radar systems,
electronic systems and anti-submarine warfare systems for the U.S. and foreign
governments. Current production programs include the limited rate initial
production (LRIP) of the AN/APY-3 Joint STARS (Surveillance Target Attack Radar
System) for the U.S. Air Force, the AN/APG-76 Multi-Mode Radar System (MMRS) for
the Israeli F-4 Super Phantom Program, the Airport Surface Detection Equipment
(ASDE-3) surface traffic control radar for the Federal Aviation Administration
(FAA), the fire control radar for the Multiple Launch Rocket System (MLRS), the
AN/SPS-40 and AN/SPS-67 shipboard radars, the AN/SYS sensor fusion system, and
the AN/WLR-9 acoustic intercept system which is operational on all U.S. Navy
submarines.
Development programs include Joint STARS, which was utilized in the Persian
Gulf conflict to identify ground targets; a podded version of the MMRS, which
will extend the aircraft and customer base of the radar; the Airport Movement
Area Safety System (AMASS) which, in conjunction with ASDE-3, will provide the
FAA an automatic runway incursion warning system designed to prevent aircraft
runway collisions; the EA-6B Advanced Capability Radar (ADVCAP) for the U.S.
Navy; and the WYL-1 Acoustic Intercept System, which is an advanced version of
the AN/WLR-9.
The Chemical Systems Division manufactures and provides launch services for
solid rocket propellant boosters producing more than one million pounds of
thrust which, when used in pairs, constitute the initial booster stage for the
U.S. Air Force's Titan IV launch vehicle as well as for the Martin Marietta
Titan III commercial launch vehicle. In addition, Chemical Systems Division
produces other propulsion systems, such as shuttle booster separation motors,
the Inertial Upper Stage solid rocket motors for the U.S. Air Force and NASA,
the third stage rocket motor for the Navy's Trident II Missile, Tomahawk missile
boosters and Aegis booster motors for the U.S. Navy, and is currently a
qualified supplier of the U.S. Air Force's Minuteman III/Stage III propulsion
system. In 1992, Chemical Systems received a contract from Lockheed Space and
Missiles Company for the demonstration and validation of the solid propellant
rocket, which will power the U.S. Army's Theater High Altitude Area Defense
(THAAD) ballistic missile defense system.
USBI is under contract with NASA for the Space Shuttle Solid Rocket Boosters
and is responsible for the design, assembly, test, launch operations support and
refurbishment of the solid rocket boosters. In addition, USBI provides design
support to the Shuttle Processing Contractor in the stacking and testing of the
Space Shuttle vehicle, and is responsible for the integration of the solid
rocket motors with solid rocket boosters.
International Fuel Cells Corporation (IFC) develops, manufactures and sells
fuel cell systems and fuel cell electric generating power plants to commercial,
aerospace and military customers. ONSI Corporation, an IFC subsidiary
established with investments by Toshiba Corporation of Japan and Ansaldo S.p.A.
of Italy to manufacture, sell and develop future models of stationary, packaged
fuel cell power plants of 1,000 kilowatts or less, delivered 25 of its 200-
kilowatt PC25_ fuel cell power plants to commercial customers in 1993.
Other Flight Systems Segment Information
The Flight Systems business is subject to rapid changes in technology;
lengthy and costly development cycles; heavy dependence on a small number of
products and programs; changes in legislation and in government procurement and
other regulations and procurement practices (such as the current Defense
PAGE
9
Department emphasis on development of prototypes rather than full production of
new systems and on upgrading existing systems rather than developing new
systems); declining defense budgets (both in the U.S. and abroad); procurement
preferences and policies of some foreign governments which require in-country
manufacture through co-production or offset procurement (such as co-production
and offset arrangements entered into with the governments of South Korea and
Turkey with respect to the sales discussed at page 7 of this Report), licensing
or other arrangements; substantial competition from a large number of companies,
including competition from major domestic and foreign manufacturers; and changes
in economic, industrial and international conditions.
The principal methods of competition in the Flight Systems business are
price, delivery schedules, product performance, service and other terms and
conditions of sale, including participation in the financing of helicopter
sales.
Sales in the U.S. are usually made directly to the customer by the
Corporation. Export sales to Canada from the U.S. are made directly to the
customer. All other export sales are made with the assistance of an overseas
network of sales offices and representatives outside the U.S. Such export sales
amounted to $810 million, or approximately 20 percent, and $1,000 million, or
approximately 25 percent, of total Flight Systems revenues in 1992 and 1993,
respectively.
At December 31, 1993, the Flight Systems business backlog amounted to $4,877
million, including $3,277 million under funded contracts and subcontracts with
the U.S. Government, as compared to $5,571 million and $4,026 million,
respectively, at December 31, 1992. Of the total Flight Systems business
backlog at December 31, 1993, approximately $2,897 million is expected to be
realized as sales in 1994.
Carrier
Carrier is the world's largest manufacturer of heating, ventilating and air
conditioning (HVAC) systems and equipment. Carrier also participates in the
commercial, industrial and transport refrigeration businesses. During the years
1991 through 1993, the Corporation's total revenues from these businesses were:
Total Revenues--HVAC and Refrigeration
Year Systems, Equipment and Service
1991 $3,843 million
1992 $4,328 million
1993 $4,480 million
Carrier manufactures and sells 15 major global product lines, with over
10,000 different products manufactured. The products manufactured include
chillers and airside equipment, commercial unitary systems, residential split
systems (cooling only and heat pump), duct-free split systems, window and
portable room air conditioners and furnaces.
Other Carrier Segment Information
Carrier's business is subject to changes in economic, industrial and
international conditions, including possible increases in interest rates, which
could reduce the demand for HVAC systems and equipment; changes in legislation
and in government regulations; changes in technology; decreases in construction
starts; and competition from a large number of companies, including other major
domestic and foreign manufacturers. The principal methods of competition are
delivery schedule, product performance, price, service and other terms and
conditions of sale.
Carrier's products and services are sold principally to builders and
building contractors and owners. Sales are made both directly to the customer
and by or through manufacturers' representatives, distributors, dealers,
individual wholesalers and retail outlets.
In 1992 and 1993, Carrier's revenues associated with operations outside of
the U.S. amounted to $2,335 million, or approximately 54 percent, and $2,284
million, or approximately 51 percent, respectively, of total Carrier Segment
revenues. International operations are subject to local government regulations
(including regulations relating to capital contributions, currency conversion
PAGE
10
and repatriation of earnings), as well as to varying political and economic
risks.
At December 31, 1993, the Carrier business backlog amounted to $780 million,
as compared to $685 million at December 31, 1992. Substantially all of the
total business backlog at December 31, 1993 is expected to be realized as sales
in 1994.
Otis
Otis is the world's leader in the production, installation and service of
elevators and escalators. During the years 1991 through 1993, the Corporation's
total revenues from elevators, escalators and services were as follows:
Total Revenues--
Elevators,
Year Escalators & Services
1991 $4,304 million
1992 $4,512 million
1993 $4,418 million
Included in the above amounts are service revenues of $2,379 million, $2,666
million, and $2,636 million, in 1991, 1992 and 1993, respectively.
Otis manufactures a wide range of passenger and freight elevators, including
geared and hydraulic elevators for medium and low speed passenger and freight
applications and gearless elevators for high-speed passenger operations in high
rise buildings, and modernizes older elevators and escalators. Otis also
produces a broad line of escalators, moving sidewalks, and shuttle systems for
horizontal transportation.
Otis services a substantial portion of the elevators and escalators which it
has sold in the past and also services elevators and escalators of other
manufacturers. At December 31, 1993, Otis serviced more than 750,000 elevators
and escalators worldwide, the majority of which are under regular service
contracts.
Otis conducts its business principally through various affiliated companies
worldwide. In some cases, consolidated affiliates have significant minority
interests.
In addition, Otis continues to invest in emerging markets in Central and
Eastern Europe and Asia (e.g., Russia, Ukraine, and the People's Republic of
China) through the establishment of affiliated companies, with varying amounts
of equity participation. Management cannot predict how these markets will
progress, but does not believe that any adverse developments in these markets
will have a material effect on the Corporation.
Other Otis Segment Information
Otis' business is subject to changes in economic, industrial and
international conditions, including possible increases in interest rates, which
could reduce the demand for elevators, escalators and services; changes in
legislation and in government regulations; changes in technology; decreases in
construction starts; and substantial competition from a large number of
companies including other major domestic and foreign manufacturers. The
principal methods of competition are price, delivery schedule, product
performance, service and other terms and conditions of sale. Otis' products and
services are sold principally to builders and building contractors and owners.
In 1992 and 1993, revenues associated with operations outside of the U.S.
amounted to $3,754 million, or approximately 83 percent, and $3,723 million, or
approximately 84 percent, respectively, of total Otis Segment revenues.
International operations are subject to local government regulations (including
regulations relating to capital contributions, currency conversion and
repatriation of earnings), as well as to varying political and economic risks.
At December 31, 1993, the Otis business backlog amounted to $2,812 million
as compared to $2,868 million at December 31, 1992. Of the total business
backlog at December 31, 1993, approximately $2,442 million is expected to be
realized as sales in 1994.
PAGE
11
Automotive
The Corporation's Automotive business is conducted through the Automotive
Group. The Automotive Group is a major domestic supplier of wire harness
systems, switches, terminals and connectors, steering wheels, instrument panels,
consoles, fractional horsepower motors and other automotive components. The
Automotive Group also supplies wire harness systems, fractional horsepower
motors, steering wheels and other automotive components to customers in Europe
and Asia.
During 1990, the Corporation sold its interests in (1) the Sealing Systems
Division of Sheller-Globe Corporation, a supplier of rubber molded products
principally used as weather stripping for automotive windows, with domestic
operations in Iowa, Indiana and California and international operations in
France and Spain; (2) Diavia S.p.A. and Aura S.r.L., two Italian automotive
aftermarket air conditioning system suppliers; (3) Sheller-Ryobi Corporation, an
Indiana aluminum die casting manufacturer; and (4) Sheller-Globe Engineered
Polymers Corporation, a Minnesota non-automotive plastic components producer.
During 1992, the Corporation sold its interest in the Hose, Fittings and
Industrial Products Division of United Technologies Automotive, Inc., a supplier
of coupled hose assemblies and fittings products and extruded plastic and
plastic sheet products, hydraulic valves and machined products to the automotive
and commercial marketplace, which had domestic operations in Georgia, Illinois,
Indiana, Michigan, North Carolina and Ohio and an international operation in the
United Kingdom.
On January 19, 1994, the Corporation announced that it was planning to sell
40% of the economic interest of its Automotive segment to the public through an
initial public offering of the Class A Common Stock of UT Automotive, Inc.
("UTA"). UTA filed a registration statement on Form S-1 under the Securities
Act of 1933 relating to the offering (the "Registration Statement"). The
Registration Statement has not yet been declared effective and is subject to
amendment. The Corporation currently plans to retain 60% of the economic
interest in UTA and will have the ability to elect at least 80% of the board of
directors of UTA.
Sales to the Automotive Industry
Sales to the major domestic automotive manufacturers are made against
periodic short-term releases issued by the automotive manufacturers under annual
orders for a percentage of the respective manufacturer's requirements for the
products ordered. In 1991, sales to the major domestic automotive manufacturers
were $1,302 million, or approximately 62 percent, of total Automotive revenues.
In 1992, sales to the major domestic automotive manufacturers were $1,554
million, or approximately 65 percent, of total Automotive revenues. In 1993,
sales to the major domestic automotive manufacturers were $1,602 million, or
approximately 67 percent, of total Automotive revenues.
In 1991, sales to Ford Motor Company were $851 million, or approximately 65
percent, of sales to the major domestic automotive manufacturers and
approximately 41 percent of total Automotive revenues. In 1992, sales to Ford
Motor Company were $991 million, or approximately 64 percent, of sales to the
major domestic automotive manufacturers and approximately 42 percent of total
Automotive revenues. In 1993, sales to Ford Motor Company were $965 million, or
approximately 60 percent, of sales to the major domestic automotive
manufacturers and approximately 41 percent of total Automotive revenues.
Other Automotive Segment Products
The Automotive Group also produces headliners, door trim panels, sun visors,
armrests, package trays and other interior trim, acoustical padding, foam
products, mirrors, sun visors, thermal and acoustic barriers, horn pads, airbag
covers, steering wheels, electronic controls and modules, vehicle entry systems,
relays, interior lighting systems, switches and controls for turn signals,
headlights, windshield wipers and ignition systems, power window motors, power
door lock activators, anti-lock brake system pump motors, vehicle emission air
blower motors, and windshield wiper motors and systems. United Technologies
Industrial Lasers Division designs, builds and sells worldwide, high-power,
continuous-wave CO2 industrial lasers.
PAGE
12
Other Automotive Segment Information
The Automotive segment's business is subject to changes in economic,
industrial and international conditions; increases in interest rates and
decreases in the level of automotive production which could reduce the demand
for many of the industrial products of the Corporation; changes in the prices of
essential raw materials and petroleum-based materials; changes in legislation
and in government regulations; changes in technology; and substantial
competition from a large number of companies including other major domestic and
foreign manufacturers. The principal methods of competition are price, delivery
schedule and product performance.
Automotive segment sales are made principally to automotive original
equipment manufacturers and systems suppliers. Sales are made both directly to
the customer and by or through manufacturers' representatives.
Original equipment manufacturers throughout the world are outsourcing an
increasing share of the design and manufacture of their automotive systems and
subsystems. This trend benefits a select group of large, first-tier suppliers
that can provide sophisticated design and engineering services, low-cost
manufacturing, high product quality, and total systems capabilities on a global
basis. To remain competitive in this environment, the ability to consistently
deliver, on time, products of ever-increasing quality has become a critical
requirement.
In 1991, 1992 and 1993, revenues associated with operations outside of the
U.S. amounted to $831 million, or approximately 40 percent, $1,062 million, or
approximately 45 percent, and $743 million, or approximately 31 percent,
respectively, of total Automotive segment revenues. International operations
are subject to local government regulations (including regulations relating to
currency conversion and repatriation of earnings), as well as to varying
political and economic risks.
Other Matters Relating to the Corporation's
Business as a Whole
Research and Development
To maintain its competitive position, the Corporation spends substantial
amounts of its own funds on research and development. Such expenditures, net of
reimbursements from participating suppliers to the Corporation's advanced
commercial aircraft engine programs which are charged against income as incurred
and relate principally to the Pratt & Whitney business, were $1,137 million or 5
percent of total revenues in 1993, as compared with $1,221 million or 6 percent
of total revenues in 1992 and $1,133 million or 5 percent of total revenues in
1991. The Corporation also performs research and development work under
contracts funded by the U.S. Government and some other customers. Such contract
research and development, which is performed principally in the Pratt & Whitney
business and to a lesser extent in the Flight Systems business, amounted to $918
million in 1993, as compared with $1,012 million in 1992 and $750 million in
1991.
Contracts, Environmental and Other Matters
Contracts with the U.S. Government are subject to termination for the
convenience of the government, in which event the Corporation normally would be
entitled to reimbursement for its allowable costs incurred plus a reasonable
profit.
Most of the Corporation's sales are made under fixed-price type contracts;
only six percent of the Corporation's total sales for 1993 were made under cost-
reimbursement type contracts. Development contracts awarded in 1991 for the
RAH-66 Comanche and the F119 Advanced Tactical Fighter engine are on a cost-
reimbursement basis.
Like many defense contractors, the Corporation has received allegations from
the U.S. Government that some contract prices should be reduced because cost or
pricing data submitted in negotiation of the contract prices may not have been
in conformance with government regulations. The Corporation has made voluntary
refunds in those cases it believes appropriate, has settled some allegations,
and does not believe that any further price reductions that may be required will
have a material effect upon its financial position or results of operations.
PAGE
13
The Corporation is now and believes that, in light of the current government
contracting environment, it will be the subject of one or more government
investigations. See Item 3 Legal Proceedings at page 14 of this report for
further discussion.
Recent peace initiatives and related changes in Eastern Europe have served
to reduce both U.S. and foreign defense spending as a whole. Management does
not currently believe that Defense Department budget cutbacks will have a
material adverse effect on the profitability of the Corporation, however, due in
part to the Corporation's efforts to reduce its reliance on defense contracts.
The Corporation purchases substantial quantities of materials, components
and supplies from a large number of sources. Like other users in the U.S., the
Corporation is largely dependent on foreign sources located in Africa for its
requirements of cobalt, and on sources located in Africa, Eastern and Central
Europe and the countries of the former U.S.S.R. for its requirements of
chromium. The Corporation does not foresee any unavailability of materials or
components which will have any material adverse effect on its overall business,
or on any of its business segments, in the near term. To alleviate possible
longer term effects, the Corporation has a number of ongoing programs which
include the expansion of its internal production capacity for precision parts;
the development of new vendor sources; the increased use of more readily
available materials through material substitutions and the development of new
alloys; and conservation of materials through scrap reclamation and new
manufacturing processes such as net shape forging.
While the Corporation's patents, trademarks, licenses and franchises are
cumulatively important to its business, the Corporation does not believe that
the loss of any one or group of related patents, trademarks, licenses or
franchises would have a material adverse effect on the overall business of the
Corporation or on any of its business segments.
The Corporation does not anticipate that compliance with federal, state and
local provisions relating to the protection of the environment will have a
material adverse effect upon its capital expenditures, competitive position,
financial position or results of operations. (Environmental matters are the
subject of certain of the Legal Proceedings described in Item 3 beginning at
page 14 of this Report, and are further addressed in "Management's Discussion
and Analysis of Results of Operations and Financial Position" at pages 34 and 35
and Note 13 of Notes to Financial Statements at page 50 of the Corporation's
1993 Annual Report to Shareowners.)
Most of the laws governing environmental matters include criminal
provisions. If the Corporation were convicted of a violation of the federal
Clean Air Act or the Clean Water Act, the facility or facilities involved in the
violation would be listed on the Environmental Protection Agency's (EPA) List of
Violating Facilities. The listing would continue until the EPA concluded that
the cause of the violation had been cured. Any listed facility cannot be used
in performing any U.S. Government contract awarded to the Corporation during any
period of listing by the EPA.
In March 1990, it was announced that the Corporation and MTU, a subsidiary
of Daimler-Benz AG (Daimler) had signed a memorandum of understanding concerning
future business collaboration between the two companies. In March 1991, a
formal agreement was executed providing for expanded cooperation between the
parties with respect to commercial and general aviation engine research and
development, manufacturing and marketing. See page 3 of this report for further
description of this matter.
Employees
At December 31, 1993, the Corporation's total employment was approximately
168,600, a reduction of approximately 9,400 over the prior year.
Item 2. Properties
The Corporation's fixed assets include the plants and warehouses described
below and a substantial quantity of machinery and equipment, most of which is
general purpose machinery and equipment using special jigs, tools and fixtures
and in many instances having modern automatic control features and special
adaptations. The Corporation's plants, warehouses, machinery and equipment are
in good operating condition, are well maintained, and substantially all of its
PAGE
14
facilities are in regular use. The Corporation considers the present level of
fixed assets capitalized as of December 31, 1993, suitable and adequate for the
respective industry segment's operations in the current business environment.
For a further discussion of management's effort to restructure the Corporation,
see "Management's Discussion and Analysis of Results of Operations and Financial
Position" appearing in the Corporation's 1993 Annual Report to Shareowners,
especially the information contained under the heading "Restructuring and Other
Actions". The square footage numbers set forth in the succeeding paragraphs of
this Item 2 are approximations.
At December 31, 1993, the Corporation operated (a) plants in the U.S. which
had 35.7 million square feet, of which 5.7 million square feet were leased; (b)
plants outside the U.S. which had 17.9 million square feet, of which 2.4 million
square feet were leased; (c) warehouses in the U.S. which had 6.4 million square
feet, of which 4.8 million square feet were leased; and (d) warehouses outside
the U.S. which had 5.8 million square feet, of which 4.1 million square feet
were leased.
Pratt & Whitney segment plants are located in six states, Canada,
Singapore, the Netherlands and other areas. At December 31, 1993, the U.S.
plants operated by the Pratt & Whitney segment had aggregate floor areas of 14.2
million square feet, of which 0.7 million square feet were leased and the plants
outside the U.S. had aggregate floor areas of 3.0 million square feet, of which
0.2 million square feet were leased. In the Pratt & Whitney segment, outdoor
testing of engines is conducted on 7,100 acres in Palm Beach County, Florida.
In addition, the Corporation currently owns and operates airports in East
Hartford, Connecticut and Palm Beach County, Florida. Plans have been announced
to move the Corporation's East Hartford airport operations to Bradley
International Airport in Windsor Locks, Connecticut.
Flight Systems plants are located in ten states, Italy and the Federal
Republic of Germany. At December 31, 1993, the U.S. plants operated by the
Flight Systems segment had aggregate floor areas of 8.8 million square feet, of
which 1.9 million square feet were leased, and the plants outside the U.S. had
aggregate floor areas of 0.7 million square feet, of which 0.1 million square
feet were leased. Flight Systems also operates company-owned helicopter air
fields in Bridgeport and Stratford, Connecticut, a company-owned rotary-wing
aircraft completion, training and test center in Palm Beach County, Florida and
a 5,100 acre outdoor rocket engine test center in Coyote, California.
Carrier plants are located in seven states, Europe, Asia, Latin America,
Australia and Canada. At December 31, 1993, the U.S. plants had an aggregate
floor area of 5.7 million square feet, of which 1.9 million square feet were
leased, and the plants outside the U.S. had an aggregate floor area of 4.4
million square feet, of which 0.6 million square feet were leased.
Otis plants are located in one state, Europe, Asia and Latin America. At
December 31, 1993, the U.S. plants had an aggregate floor area of 0.8 million
square feet, of which none was leased, and the plants outside the U.S. had an
aggregate floor area of 5.9 million square feet, of which 0.6 million square
feet were leased.
Automotive segment plants are located in fourteen states, Canada, Mexico,
Europe and Asia. At December 31, 1993, the U.S. plants had an aggregate floor
area of 5.7 million square feet, of which 1.1 million square feet were leased;
and the plants outside the U.S. had an aggregate floor area of 4.0 million
square feet, of which 1.0 million square feet were leased.
Management believes that the facilities for the production of its products
are suitable and adequate for the business conducted therein, are being
appropriately utilized in line with experience and have sufficient production
capacity for their present intended purposes. Utilization of the facilities
varies based on demand for the products. The Corporation continuously reviews
its anticipated requirements for facilities and, based on that review, may from
time to time acquire additional facilities and/or dispose of existing
facilities.
Item 3. Legal Proceedings
In June 1989, Sikorsky Aircraft submitted a voluntary disclosure report to
the Department of Defense describing the conditions that gave rise to a $75
million downward adjustment of progress payments in April 1988 and related
matters. On May 18, 1989, an employee filed under seal a "qui tam" action under
PAGE
15
the Civil False Claims Act in the United States District court for the District
of Connecticut (Civil Action No. H-89-323-AHM) based on information that he
learned while working on the Corporation's investigation of the matter. The
Corporation and the Department of Justice have entered into a settlement
agreement whereby the Corporation will pay the Government $150 million for any
damage it has suffered. The amount of the settlement has been previously
accrued.
On June 29, 1992, the Department of Justice filed a Civil False Claims Act
complaint in the United States District Court for the District of Connecticut,
No. 592CV375, against Sikorsky Aircraft alleging that the government was
overcharged by nearly $4 million in connection with the pricing of parts
supplied for the reconditioning of the Navy's Sea King helicopter. The
Complaint seeks treble damages plus a $10,000 penalty for each false claim
submitted. Management believes that resolution of this matter will not have a
material adverse effect upon its capital expenditures, competitive position,
financial position or results of operations.
In November 1991, the Corporation was served with a Department of Defense
Inspector General subpoena for records relating to Pratt & Whitney's government
contracts accounting practices for aircraft engine parts produced by foreign
companies under certain commercial engine collaboration programs. Pratt &
Whitney made a voluntary payment of $13,932,000 to the U.S. Government on
December 23, 1992. A federal grand jury in the District of Connecticut is
investigating this matter. Management believes that resolution of this matter
will not have a material adverse effect upon its capital expenditures,
competitive position, financial position or results of operations.
In March 1992, the Corporation received a subpoena from the Department of
Defense Inspector General requesting documents in connection with Pratt &
Whitney's sales of goods and services to the Israeli Government. The
investigation relates to the activities of former Israeli General Rami Dotan who
pleaded guilty in Israel to engaging in corrupt practices in connection with
Israeli Air Force procurements involving another engine manufacturer. A federal
grand jury in the Southern District of Florida and the Civil Division of the
Department of Justice are investigating this matter.
A federal grand jury continues to investigate alleged violations of law in
connection with marketing helicopters to the Government of the Kingdom of
Saudi Arabia. The Corporation has responded to a grand jury subpoena
requesting documents in connection with this matter and several current
and former employees have been interviewed. A related civil suit filed by a
former employee has been settled. Management believes that resolution of this
matter will not have a material adverse effect upon its capital expenditures,
competitive position, financial position or results of operations.
The Corporation believes that, in light of the current government
contracting environment, it will be the subject of one or more government
investigations in the foreseeable future. If the Corporation or one of its
business units were charged with wrongdoing as a result of any of these
investigations, the Corporation or one of its business units could be suspended
from bidding on or receiving awards of new government contracts pending the
completion of legal proceedings. If convicted or found liable, the Corporation
could be fined and debarred from new government contracting for a period
generally not to exceed three years. Any contracts found to be tainted by fraud
could be voided by the Government.
In 1991, two complaints, each purporting to commence derivative and class
actions by shareholders of the Corporation, were filed in the United States
District Court for the District of Connecticut. The suits sought unspecified
treble damages as well as other relief. On June 26, 1992, the District Court
dismissed these two complaints in their entirety. Plaintiffs filed a
consolidated amended complaint on September 23, 1992. The amended complaint,
like the original complaints, named nine of the Corporation's directors as
defendants and related to the Corporation's conduct of its defense business.
Defendants moved to dismiss the complaint, and on February 4, 1994, the District
Court dismissed the amended consolidated complaint in its entirety.
Various state and federal government authorities have designated the
Corporation as a potentially responsible party for liabilities under the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
and similar state statutes. Said authorities seek expenditures and damages for
contamination due to the release of pollutants into the environment. The
PAGE
16
Corporation believes that any payments it may be required to make as a result of
these claims will not be material to the business or financial condition of the
Corporation. The Corporation has had liability and property insurance in force
over its history with a number of insurance companies, and the Corporation has
commenced litigation seeking indemnity and defense under these insurance
policies. No prediction can be made at this time as to the eventual outcome of
this litigation. (For information regarding the matters discussed in this
paragraph, see "Environmental Matters" in Management's Discussion and Analysis
of Results of Operations and Financial Position at pages 34 and 35 of the
Corporation's 1993 Annual Report to Shareowners.)
In January 1994, UT Automotive (UTA) received a letter from the Michigan
Department of Natural Resources (MDNR) alleging violations of certain provisions
of an air permit for its Niles, Michigan facility. MDNR also asserted that
these were violations of a Consent Judgment between the MDNR and UTA (Consent
Judgment No. 92-1811-CET, Berrien County Circuit Court). It alleged that the
VOC emission rates established by the permit were exceeded. UTA is discussing
the allegations with MDNR. Management believes that the resolution of this
matter, including payments of any fines or penalties, will not have a material
adverse effect upon its capital expenditures, competitive position, financial
position or results of operations.
In July 1992, the Maine Department of Environmental Conservation (MDEC)
filed a Consent Agreement and Enforcement Order against the Corporation related
to a Pratt & Whitney facility in North Berwick, Maine. On October 27, 1993, the
Corporation and MDEC entered into a settlement agreement, under which the
Corporation agreed to pay a penalty of $134,200, to improve its hazardous waste
management procedures and submit certain reports and studies regarding hazardous
waste management to the MDEC. The matter is now concluded.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to security holders for a vote during the fourth
quarter ended December 31, 1993.
- ----- Executive Officers of the Registrant
The executive officers of United Technologies Corporation, together with the
offices in United Technologies Corporation presently held by them, their
business experience since January 1, 1989, and their ages, are as follows:
PAGE
17
Other Business Age
Name Title Experience 2/1/94
Since 1/1/89
Norman R. President, UT President, Electrical 51
Bodine Automotive (since Systems & Components;
1992) President, Automotive
Products Division, UT
Automotive
Eugene Buckley President, Sikorsky ------- 63
Aircraft (since
1987)
William L. Senior Vice Vice President, Human 51
Bucknall, Jr. President, Human Resources &
Resources & Organization, United
Organization (since Technologies; Vice
1992) President, Human
Resources, Carrier;
Corporate Director,
Compensation and
Benefits; Corporate
Director, Salaried
Employee Relations
Franklyn A. Senior Vice Senior Vice President, 43
Caine President, Planning Controller; Senior Vice
and Corporate President, Human
Development (since Resources &
1993) Organization; Vice
President, Treasurer
Mark S. Coran Executive Vice Vice President, 50
President, Controller, United
Operations, Pratt & Technologies; Vice
Whitney (since 1991) President, Group
Finance, Pratt & Whitney
Robert F. Chairman (since President and Chief 60
Daniell 1987), Chief Operating Officer (1984-
Executive Officer 1992)
(since 1986)
George David President and Chief Executive Vice President 51
Operating Officer and President,
(since 1992) Commercial/Industrial;
Senior Vice President,
United Technologies;
President and Chief
Executive Officer, Otis
Elevator
Thomas J. Fay Senior Vice Senior Vice President, 60
President, Corporate Affairs, Aetna
Communications Life & Casualty
(since 1990)
Frederick C. Vice President, Director, Financial 43
Flynn, Jr. Treasurer (since Programs; Director,
1989) Business Development
William S. President, Carrier President, Carrier North 51
Frago Corporation (since American Operations;
1992) Vice President,
Worldwide Marketing &
Product Management,
General Electric
Lighting
Bruno Grob President, European Executive Vice 44
& Transcontinental President, European &
Operations, Otis Transcontinental
Elevator (since Operations; President,
1992) Director General, Otis
France; Vice President &
Regional Manager, North
American Operations,
Otis Elevator
PAGE
18
Other Business Age
Name Title Experience 2/1/94
Since 1/1/89
Robert J. Senior Vice Vice President, Science 60
Hermann President Science & & Technology
Technology (since
1992)
James T. Executive Vice Vice President and 51
Johnson President, General Manager-Everett
Pratt & Whitney and Division, Boeing
President-Large Commercial Airplane
Commercial Engines Group
(since 1993)
Karl J. Krapek President, Pratt & Chairman, President and 45
Whitney Chief Executive Officer,
(since 1992) Carrier Corporation;
President and Chief
Operating Officer;
President, North
American Operations,
Otis Elevator
Frank W. Senior Vice Vice President, Business 63
McAbee, Jr. President, Practices; Vice
Environmental and President, Government
Business Practices Contracts and Compliance
(since 1990)
George E. Vice President - Partner - Price 44
Minnich Controller Waterhouse
(since 1993)
Stephen F. Page Executive Vice Executive Vice President 54
President and Chief
and Chief Financial Financial Officer; Vice
Officer (since 1993) President Finance &
Treasurer, Black &
Decker Corporation
William F. Paul Senior Vice Senior Vice President, 57
President, Washington Office;
Government Affairs Senior Vice President &
(since 1991) Executive Vice
President,
Aerospace/Defense;
Senior Vice President,
Defense & Space Systems
Karl M. Thomas Executive Vice Group Vice President, 57
President, Operations; President,
Technical, Pratt & Manufacturing, Pratt &
Whitney (since 1991) Whitney
William H. Vice President, Vice President and 50
Trachsel Secretary and Deputy Deputy General Counsel
General Counsel
(since 1993)
Jean-Pierre van President, Otis Executive Vice President 59
Rooy Elevator (since and Chief Operating
1991) Officer; President,
North American
Operations; Senior Vice
President, European &
Transcontinental
Operations, Otis
Elevator
Irving B. Executive Vice Senior Vice President 48
Yoskowitz President and and General Counsel
General Counsel
(since 1990)
All of the officers serve at the pleasure of the Board of Directors of United
Technologies Corporation or the subsidiary designated.
PAGE
19
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
See "Comparative Stock Data" appearing on page 35 of the Corporation's 1993
Annual Report to its Shareowners containing the following data relating to the
Corporation's Common Stock: principal market, quarterly high and low sales
prices, approximate number of shareowners and frequency and amount of dividends.
All such data are incorporated by reference in this Report.
Item 6. Selected Financial Data
See the Five-Year Summary appearing on page 27 of the Corporation's 1993
Annual Report to its Shareowners containing the following data: sales, net
income, primary and fully diluted earnings per share, cash dividends on Common
Stock, total assets and long-term debt. All such data are incorporated by
reference in this Report.
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Position
See "Management's Discussion and Analysis of Results of Operations and
Financial Position" appearing on pages 28 through 35 of the Corporation's 1993
Annual Report to its Shareowners; such discussion and analysis is incorporated
by reference in this Report.
Item 8. Financial Statements and Supplementary Data
The 1993 and 1992 Balance Sheets, and other financial statements for the
years 1993, 1992 and 1991, together with the report thereon of Price Waterhouse
dated January 26, 1994, appearing on pages 36 through 54 in the Corporation's
1993 Annual Report to its Shareowners are incorporated by reference in this
Report.
The 1993 and 1992 Selected Quarterly Financial Data appearing on page 55 in
the Corporation's 1993 Annual Report to its Shareowners are incorporated by
reference in this Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
Item 10. Directors and Executive Officers of the Registrant
The information required by Item 10 with respect to directors is
incorporated herein by reference from pages 4 through 6 of the Corporation's
Proxy Statement for the 1994 Annual Meeting of Shareowners. Information
regarding executive officers is contained in Part I of this Report (pages 16
through 18).
Item 11. Executive Compensation
The information required by Item 11 is incorporated herein by reference from
pages 8 through 13, and pages 18 through 19 of the Corporation's Proxy Statement
for the 1994 Annual Meeting of Shareowners. Such incorporation by reference
shall not be deemed to specifically incorporate by reference the information
referred to in Item 402(a)(8) of Regulation S-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by Item 12 is incorporated herein by reference from
pages 7 through 8 of the Corporation's Proxy Statement for the 1994 Annual
Meeting of Shareowners.
Item 13. Certain Relationships and Related Transactions
The information required by Item 13 is incorporated herein by reference from
page 8 of the Corporation's Proxy Statement for the 1994 Annual Meeting of
Shareowners.
PAGE
20
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Page No. in
Annual
Report
(a) (1) Financial Statements (incorporated by
reference from the 1993 Annual
Report to Shareowners):
Report of Independent Accountants 36
Consolidated Statement of Operations
for the Three Years ended December 37
31, 1993
Consolidated Balance Sheet--December
31, 1993 and 1992 38
Consolidated Statement of Cash Flows
for the Three Years ended December 39
31, 1993
Consolidated Statement of Changes in
Shareowners' Equity for the Three 40
Years ended December 31, 1993
Notes to Financial Statements 41
Consolidated Summary of Business
Segment Financial Data 51
Selected Quarterly Financial Data 55
(Unaudited)
Page No. in
Form 10-K
(2) Financial Statement Schedules:
For the three years ended December
31, 1993:
Report of Independent Accountants on
Financial Statement Schedules S-1
V-- Property, Plant and Equipment S-2
VI-- Accumulated Depreciation and
Amortization of Property, Plant and S-3
Equipment
VIII-- Valuation and Qualifying Accounts S-4
IX-- Short-Term Borrowings S-5
X-- Supplementary Income Statement S-6
Information
Consent of Independent Accountants F-1
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or the notes thereto.
(3) Exhibits:
(3) (i) Restated Certificate of Incorporation
[incorporated by reference to Exhibit (3)(i)
to Form 10K for the year ended December 31,
1992]
(ii) Bylaws
(4) (i) In accordance with Item 601 of Regulation S-K
of the Securities and Exchange Commission, the
Corporation hereby agrees to furnish upon
request to the Commission a copy of each
instrument defining the rights of holders of
long-term debt of the Corporation and its
consolidated subsidiaries and any
unconsolidated subsidiaries for which
financial statements otherwise would be
required to be filed with this annual report
on Form 10-K for the year ended December 31,
1993
PAGE
21
(10) (i) United Technologies Corporation 1979 Long Term
Incentive Plan [incorporated by reference to
Exhibit (10)(i) to Form 10K for the year ended
December 31, 1992]
(ii) United Technologies Corporation Annual
Executive Incentive Compensation Plan
[incorporated by reference to Exhibit (10)(ii)
to Form 10K for the year ended December 31,
1992]
(iii) United Technologies Corporation Disability
Insurance Benefits for Executive Control Group
[incorporated by reference to Exhibit
(10)(iii) to Form 10K for the year ended
December 31, 1992]
(iv) United Technologies Corporation Executive
Estate Preservation Program [incorporated by
reference to Exhibit (10)(iv) to Form 10K for
the year ended December 31, 1992]
(v) Pension Preservation Plan [incorporated by
reference to Exhibit (10)(v) to Form 10K for
the year ended December 31, 1992]
(vi) Senior Executive Severance Plan [incorporated
by reference to Exhibit (10)(vi) to Form 10K
for the year ended December 31, 1992]
(vii) United Technologies Corporation Deferred
Compensation Plan [incorporated by reference
to Exhibit (10)(vii) to Form 10K for the year
ended December 31, 1992]
(viii) Otis Elevator Company Incentive Compensation
Plan [incorporated by reference to Exhibit
(10)(viii) to Form 10K for the year ended
December 31, 1992]
(ix) Directors Retirement Plan [incorporated by
reference to Exhibit (10)(ix) to Form 10K for
the year ended December 31, 1992]
(x) United Technologies Corporation Deferred
Compensation Plan for Non-Employee Directors
[incorporated by reference to Exhibit (10)(x)
to Form 10K for the year ended December 31,
1992]
(xi) United Technologies Corporation Long Term
Incentive Plan [ incorporated by reference to
Exhibit (10)(xi) to Form 10K for the year
ended December 31, 1992]
(xii) United Technologies Corporation Executive
Disability, Income Protection and Standard
Separation Agreement Plan [incorporated by
reference to Exhibit (10)(xii) to Form 10K for
the year ended December 31, 1992]
(xiii) United Technologies Corporation Directors'
Restricted Stock/Unit Program [incorporated by
reference to Exhibit (10)(xiii) to Form 10K
for the year ended December 31, 1992]
(xiv) United Technologies Corporation Directors'
Stock and Deferred Stock Unit Retainer Program
(xv) United Technologies Corporation Pension
Replacement Plan
(11) Statement re Computation of Per Share Earnings
(12) Computation of Ratio of Earnings to Fixed Charges
(13) Annual Report to Shareowners for year ended December 31,
1993 (except for the pages and information thereof
expressly incorporated by reference in this Form
10-K, the Annual Report to Shareowners is provided solely
for the information of the Securities and Exchange
Commission and is not to be deemed "filed" as part of
this Form 10-K)
(22) Subsidiaries of the Registrant
(25) Powers of Attorney of Howard H. Baker, Jr., Antonia
Handler Chayes, Robert F. Daniell, Robert F. Dee,
Charles W. Duncan, Jr., Pehr G. Gyllenhammar,
Gerald D. Hines, Charles R. Lee,
Robert H. Malott, and Jacqueline G. Wexler
(b) A report on Form 8-K was filed by the Registrant on January 19, 1994, in
response to both Item 5 and Item 7.
PAGE
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
UNITED TECHNOLOGIES CORPORATION
By /s/ Stephen F. Page Date: March 31, 1994
Stephen F. Page, Executive Vice
President and Chief Financial
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, on the date set forth above.
Signature Title
ROBERT F. DANIELL* Chairman and Chief Executive
(Robert F. Daniell) Officer; Director
/s/ GEORGE DAVID President and Chief Operating
(George David) Officer; Director
/s/ GEORGE E. MINNICH Vice President Controller;
(George E. Minnich) Principal
Accounting Officer
/s/ STEPHEN F. PAGE Executive Vice President and
(Stephen F. Page) Chief
Financial Officer
HOWARD H. BAKER, JR.* Director
(Howard H. Baker, Jr.)
ANTONIA HANDLER CHAYES* Director
(Antonia Handler Chayes)
ROBERT F. DEE* Director
(Robert F. Dee)
CHARLES W. DUNCAN, JR.* Director
(Charles W. Duncan, Jr.)
PEHR G. GYLLENHAMMAR* Director
(Pehr G. Gyllenhammar)
GERALD D. HINES* Director
(Gerald D. Hines)
CHARLES R. LEE* Director
(Charles R. Lee)
ROBERT H. MALOTT* Director
(Robert H. Malott)
JACQUELINE G. WEXLER* Director
(Jacqueline G. Wexler)
* By William H. Trachsel
(WILLIAM H. TRACHSEL, AS ATTORNEY-IN-FACT)
PAGE
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of United Technologies Corporation
Our audits of the consolidated financial statements referred to in our report
dated January 26, 1994 appearing on page 36 of the 1993 Annual Report to
Shareowners of United Technologies Corporation (which report and consolidated
financial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the Financial Statement Schedules listed in Item
14(a)(2) of this Form 10-K. In our opinion, these Financial Statement Schedules
present fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements.
Price Waterhouse
Hartford, Connecticut
January 26, 1994
S-1
PAGE
SCHEDULE V
UNITED TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Schedule V - Property, Plant and Equipment
Three Years Ended December 31, 1993
(Millions of Dollars)
Balance at Other Changes - Foreign Balance at
Beginning of Additions Retirements Debit or Currency Close of
Year at Cost or Sales (Credit) Translation Year
1993:
Land $ 161 $ 1 $ 2 $ 1 (A) $ (2) $ 158
(1) (B)
Buildings and improvements 2,620 162 29 16 (A) (29) 2,754
14 (B)
Machinery, tools and equipment 6,206 761 228 21 (A) (109) 6,427
(224) (B)
Under construction 543 (78) 6 4 (A) (4) 457
(2) (B)
$ 9,530 $ 846 $ 265 $ (171) $ (144) $ 9,796
1992:
Land $ 164 $ 5 $ 13 $ 1 (A) $ - $ 161
4 (B)
Buildings and improvements 2,456 240 58 5 (A) (28) 2,620
5 (B)
Machinery, tools and equipment 6,005 736 269 7 (A) (106) 6,206
(167) (B)
Under construction 608 (61) 5 - (A) (2) 543
3 (B)
$ 9,233 $ 920 $ 345 $ (142) $ (136) $ 9,530
1991:
Land $ 149 $ 5 $ 3 $ 15 (A) $ (3) $ 164
1 (B)
Buildings and improvements 2,292 195 21 39 (A) (20) 2,456
(29) (B)
Machinery, tools and equipment 5,497 860 220 91 (A) (59) 6,005
(164) (B)
Under construction 651 (12) 6 - (A) (3) 608
(22) (B)
$ 8,589 $ 1,048 $ 250 $ (69) $ (85) $ 9,233
(A)Acquired companies.
(B)Other, including transfers from under construction, certain fully
depreciated or fully amortized assets eliminated and disposition of
business units. Reference is made to the following Notes to Financial
Statements: Note 1 - Summary of Accounting Principles with respect to
depreciation methods and rates, Note 3 - Restructuring and Employee
Severance Plans, and Note 4 - International Operations with respect to
foreign currency translation.
S-2PAGE
SCHEDULE VI
UNITED TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Schedule VI - Accumulated Depreciation and Amortization
of Property, Plant and Equipment
Three Years Ended December 31, 1993
(Millions of Dollars)
Balance at Additions Other Changes - Foreign Balance at
Beginning of Charged Retirements (Debit) or Currency Close of
Year to Income or Sales Credit Translation Year
1993:
Buildings and improvements $ 1,212 $ 101 $ 19 $ 3 (A) $ (10) $ 1,289
2 (B)
Machinery, tools and equipment 3,716 676 188 9 (A) (63) 3,942
(208) (B)
$ 4,928 $ 777 $ 207 $ (194) $ (73) $ 5,231
1992:
Buildings and improvements $ 1,141 $ 110 $ 30 $ - (A) $ (8) $ 1,212
(1) (B)
Machinery, tools and equipment 3,485 667 204 1 (A) (60) 3,716
(173) (B)
$ 4,626 $ 777 $ 234 $ (173) $ (68) $ 4,928
1991:
Buildings and improvements $ 1,058 $ 102 $ 12 $ 4 (A) $ (8) $ 1,141
(3) (B)
Machinery, tools and equipment 3,135 633 158 30 (A) (30) 3,485
(125) (B)
$ 4,193 $ 735 $ 170 $ (94) $ (38) $ 4,626
Notes:
(A)Acquired companies.
(B)Other, including reserves in respect of certain fully depreciated or
fully amortized assets eliminated and disposition of business units.
Reference is made to the following Notes to Financial Statements: Note
1 - Summary of Accounting Principles with respect to depreciation
methods and rates, Note 3 - Restructuring and Employee Severance Plans,
and Note 4 - International Operations with respect to foreign currency
translation.
S-3PAGE
SCHEDULE VIII
UNITED TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Schedule VIII - Valuation and Qualifying Accounts and Reserves
Three Years Ended December 31, 1993
(Millions of Dollars)
Allowances for Doubtful Accounts and Other Customer Financing Activity:
Balance December 31, 1990 $ 119
Provision charged to income 45
Doubtful accounts written off (net) (27)
Other adjustments 4
Balance December 31, 1991 141
Provision charged to income 414
Doubtful accounts written off (net) (19)
Other adjustments (12)
Balance December 31, 1992 524
Provision charged to income 40
Doubtful accounts written off (net) (72)
Other adjustments (26)
Balance December 31, 1993 $ 466
Future Income Tax Benefits - Valuation
allowance:
Balance December 31, 1991 $ -
Additions due to adoption of FAS 109 149
Additions charged to income tax expense 68
Balance December 31, 1992 $ 217
Additions charged to income tax expense 130
Reductions credited to income tax expense (50)
Balance December 31, 1993 $ 297
Certain 1992 and 1991 amounts have been restated to conform with 1993
presentation.
S-4PAGE
SCHEDULE IX
UNITED TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Schedule IX - Short-Term Borrowings
Three Years Ended December 31, 1993
(Millions of Dollars)
Maximum Average Weighted
Category of Weighted Amount Amount Average
Aggregate Balance Average Outstanding Outstanding Interest Rate
Short-Term at End Interest During the During the During the
Borrowings of Period Rate Period (A) Period (B) Period (C)
1993:
Bank borrowings $ 279 9.3% $ 415 $ 346 10.8%
Commercial paper 501 3.3 856 799 3.2
1992:
Bank borrowings $ 328 10.0% $ 404 $ 333 13.2%
Commercial paper 49 3.6 285 273 3.7
1991:
Bank borrowings $ 289 10.9% $ 289 $ 192 23.4%
Commercial paper 3 4.9 698 436 6.1
Notes:
(A)Maximum amount of combined short-term borrowings outstanding at any
month end during the period totaled $1,207 in 1993, $605 in 1992 and
$869 in 1991.
(B)Bank borrowings amounts are based upon a thirteen month-end average,
while commercial paper amounts are based upon a daily average.
(C)Interest expense for the period divided by the average amount
outstanding.
Reference is made to Note 9 - Borrowings and Lines of Credit of Notes to
Financial Statements with respect to the general terms of short-term
borrowings.
S-5PAGE
SCHEDULE X
UNITED TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Schedule X - Supplementary Income Statement Information
Three Years Ended December 31, 1993
(Millions of Dollars)
Maintenance and Repairs:
1993 . . . . . . . . . . . . . . . . . . . . . . . $ 242
1992 . . . . . . . . . . . . . . . . . . . . . . . 291
1991 . . . . . . . . . . . . . . . . . . . . . . . 284
S-6PAGE
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (Nos. 33-46916, 33-
40163, 33-34320, 33-31514, 33-29687 and 33-6452) and Form S-8 (Nos. 33-45440,
33-11255, 33-26580, 33-26627, 33-28974, 33-51385, and 2-87322) of United
Technologies Corporation of our report dated January 26, 1994 appearing on page
36 of the 1993 Annual Report to Shareowners which is incorporated by reference
in this Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules, which appears on
page S-1 of this Form 10-K.
Price Waterhouse
Hartford, Connecticut
March 29, 1994
F-1
PAGE
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
EXHIBITS FILED
with
FORM 10 - K ANNUAL REPORT
(Fiscal Year ended December 31, 1993)
Under
The Securities Exchange Act of 1934
________________
UNITED TECHNOLOGIES CORPORATION
PAGE
INDEX TO EXHIBITS
Exhibit (3)(i) -- Restated Certificate of Incorporation
*
Exhibit (3)(ii) -- Bylaws
Exhibit (10)(i) -- United Technologies Corporation *
1979 Long Term Incentive Plan
Exhibit (10)(ii) -- United Technologies Corporation *
Annual Executive Incentive
Compensation Plan
Exhibit (10)(iii) -- United Technologies Corporation
*
Disability Insurance Benefits for
Executive Control Group
Exhibit (10)(iv) -- United Technologies Corporation *
Executive Estate Preservation
Program
Exhibit (10)(v) -- Pension Preservation Plan *
Exhibit (10)(vi) -- Senior Executive Severance Plan *
Exhibit (10)(vii) -- United Technologies Corporation
*
Deferred Compensation Plan
Exhibit -- Otis Elevator Company Incentive
(10)(viii) *
Compensation Plan
Exhibit (10)(ix) -- Directors Retirement Plan *
Exhibit (10)(x) -- United Technologies Corporation *
Deferred Compensation Plan for
Non-Employee Directors
Exhibit (10)(xi) -- United Technologies Corporation *
Long Term Incentive Plan
Exhibit (10)(xii) -- United Technologies Corporation *
Executive Disability, Income
Protection Plan and Standard
Separation Agreement
Exhibit -- United Technologies Corporation *
(10)(xiii) Directors' Restricted Stock/Unit
Program
Exhibit (10)(xiv) -- United Technologies Corporation
Directors' Stock and Deferred Stock
Unit Retainer Program
_______________
* Incorporated by reference (see Item 14).
PAGE
Exhibit (10)(xv) -- United Technologies Corporation
Pension Replacement Plan
Exhibit (11) -- Statement re Computation of Per
Share Earnings
Exhibit (12) -- Computation of Ratio of Earnings to
Fixed Charges
Exhibit (13) -- Annual Report to Shareowners for
year ended December 31, 1993
Exhibit (22) -- Subsidiaries of the Registrant
Exhibit (25) -- Powers of Attorney of Howard H.
Baker, Jr., Antonia Handler Chayes,
Robert F. Daniell, Robert F. Dee,
Charles W. Duncan, Jr.,
Pehr G. Gyllenhammar, Gerald D. Hines,
Charles R. Lee, Robert H. Malott,
and Jacqueline G. Wexler
PAGE
PAGE
Exhibit (3ii)
___________________________________________________
UNITED
TECHNOLOGIES
CORPORATION
BYLAWS
___________________________________________________
Adopted April 1, 1993
BYLAWS
OF
UNITED TECHNOLOGIES CORPORATION
SECTION 1
SHAREHOLDER'S MEETING
SECTION 1.1 Annual Meetings. Annual meetings of shareholders shall be
held on or prior to April 30 in each year for the purpose of electing directors
and transacting such other proper business as may come before the meeting.
SECTION 1.2 Special Meetings. Special meetings of shareholders may be
called from time to time by the Board of Directors or by the chief executive
officer of the Corporation. Special meetings shall be held solely for the
purpose or purposes specified in the notice of meeting.
SECTION 1.3 Time and Place of Meetings. Subject to the provisions of
Section 1.1, each meeting of shareholders shall be held on such date, at such
hour and at such place as fixed by the Board of Directors or in the notice of
the meeting or, in the case of an adjourned meeting, as announced at the meeting
at which the adjournment is taken.
SECTION 1.4 Notice of Meetings. A written notice of each meeting of
shareholders, stating the place, date and hour of the meeting and, in the case
of a special meeting, the purpose or purposes for which the meeting is called,
shall be given either personally or by mail to each shareholder entitled to vote
at the meeting. Unless otherwise provided by statute, the notice shall be given
not less than ten nor more than sixty days before the date of the meeting and,
if mailed, shall be deposited in the United States mail, postage prepaid,
directed to the shareholder at his address as it appears on the records of the
Corporation. No notice need be given to any person with whom communication is
unlawful, nor shall there be any duty to apply for any permit or license to give
notice to any such person. If the time and place of an adjourned meeting of
shareholders are announced at the meeting at which the adjournment is taken, no
notice need be given of the adjourned meeting unless that adjournment is for
more than thirty days or unless, after the adjournment, a new record date is
fixed for the adjourned meeting.
3
SECTION 1.5 Waiver of Notice. Anything herein to the contrary
notwithstanding, notice of any meeting of shareholders need not be given to any
shareholder who in person or by proxy shall have waived in writing notice of the
meeting, either before or after such meeting, or who shall attend the meeting in
person or by proxy, unless he attends for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 1.6 Quorum and Manner of Acting. Subject to the provisions of
these bylaws, the certificate of incorporation and statute as to the vote that
is required for a specified action, the presence in person or by proxy of the
holders of a majority of the outstanding shares of the Corporation entitled to
vote at any meeting of shareholders shall constitute a quorum for the
transaction of business, and the vote in person or by proxy of the holders of a
majority of the shares constituting such quorum shall be binding on all
shareholders of the Corporation. A majority of the shares present in person or
by proxy and entitled to vote may, regardless of whether or not they constitute
a quorum, adjourn the meeting to another time and place. Any business which
might have been transacted at the original meeting may be transacted at any
adjourned meeting at which a quorum is present.
SECTION 1.7 Voting. Shareholders shall be entitled to cumulative voting
at all elections of directors to the extent provided in or pursuant to the
certificate of incorporation. Shareholders may vote by proxy, provided that the
instrument authorizing such proxy to act shall have been executed in writing
(which shall include telegraph or cable) by the shareholder himself or by his
duly authorized attorney. No proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period.
SECTION 1.8 Judges. The votes at each meeting of shareholders shall be
supervised by not less than two judges who shall decide all questions respecting
the qualification of voters, the validity of the proxies and the acceptance or
rejection of votes. The judges shall be appointed by the Board of Directors but
if, for any reason, there are less than two judges present and acting at any
meeting, the chairman of the meeting shall appoint an additional judge or judges
so that there shall always be at least two judges to act at the meeting.
SECTION 1.9 List of Shareholders. A complete list of the shareholders
entitled to vote at each meeting of shareholders, arranged in alphabetical
order, and showing the address and number of shares registered in the name of
each shareholder, shall be prepared and made available for examination during
regular business hours by any shareholder for any purpose germane to the
meeting. The list shall be available for such examination at the place where
the meeting is to be held for a period of not less than ten days prior to the
meeting and during the whole time of the meeting.
SECTION 1.10 Notice of Shareholder Business. At an annual meeting of
the shareholders, only such business shall be conducted as shall have been
brought before the meeting (a) by or at the direction of the Board of Directors
or (b) by any shareholder of the Corporation who complies with the notice
procedures set forth in this Section 1.10. For business to be properly brought
before an annual meeting by a shareholder, the shareholder must have given
timely notice thereof in writing to the Secretary of the Corporation. To be
timely, a shareholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation, not less than thirty days
nor more than sixty days prior to the meeting; provided, however, that in the
event that less than forty days' notice or prior public disclosure of the date
of the meeting is given or made to the shareholders, notice by the shareholder
to be timely must be received not later than the close of business on the 10th
day following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made. A shareholder's notice to the
Secretary shall set forth as to each matter the shareholder proposes to bring
4
before the annual meeting (a) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting; (b) the name and address, as they appear on the
Corporation's books, of the shareholder proposing such business; (c) the class
and number of shares of the Corporation which are beneficially owned by the
shareholder; and (d) any material interest of the shareholder in such business.
Notwithstanding anything in these bylaws to the contrary, no business shall be
conducted at an annual meeting except in accordance with the procedures set
forth in this Section 1.10. The chairman of an annual meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this Section 1.10, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted. Notwithstanding the foregoing provisions of this Section 1.10, a
shareholder seeking to have a proposal included in the Corporation's proxy
statement shall comply with the requirements of Regulation 14A under the
Securities Exchange Act of 1934, as amended (including, but not limited to, Rule
14a-8 or its successor provision).
5
SECTION 1.11 Notice of Shareholder Nominees. Only persons who are
nominated in accordance with the procedures set forth in these bylaws shall be
eligible for election as directors. Nominations of persons for election to the
Board of Directors of the Corporation may be made at a meeting of shareholders
(a) by or at the direction of the Board of Directors or (b) by any shareholder
of the Corporation entitled to vote for the election of directors at the meeting
who complies with the notice procedures set forth in this Section 1.11.
Nominations by shareholders shall be made pursuant to timely notice in writing
to the Secretary of the Corporation. To be timely, a shareholder's notice shall
be delivered to or mailed and received at the principal executive offices of the
Corporation not less than thirty days nor more than sixty days prior to the
meeting; provided, however, that in the event that less than forty days' notice
or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
Such shareholder's notice shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or re-election as a director, all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (b) as to
the shareholder giving the notice (i) the name and address, as they appear on
the Corporation's books, of such shareholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by such shareholder. At
the request of the Board of Directors any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in a shareholder's notice
of nomination which pertains to the nominee. No person shall be eligible for
election as a director of the Corporation unless nominated in accordance with
the procedures set forth in these bylaws. The chairman of the meeting shall, if
the facts warrant, determine and declare to the meeting that nomination was not
made in accordance with the procedures prescribed by these bylaws, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
SECTION 1.12 (a) Consents to Corporate Action. Any action which is
required to be or may be taken at any annual or special meeting of shareholders
of the Corporation, subject to the provisions of Subsections (b) and (c) of this
Section 1.12, may be taken without a meeting, without prior notice and without a
vote if consents in writing, setting forth the action so taken, shall have been
signed by the holders of the outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or to take such action at a
meeting at which all shares entitled to vote thereon were present and voted;
provided, however, that prompt notice of the taking of the corporate action
without a meeting and by less than unanimous written consent shall be given to
those shareholders who have not consented in writing.
(b) Determination of Record Date of Action by Written Consent.
The record date for determining shareholders entitled to express consent to
corporate action in writing without a meeting shall be fixed by the Board of
Directors of the Corporation. Any shareholder of record seeking to have the
shareholders authorize or take corporate action by written consent without a
meeting shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. Upon receipt of such a request, the Secretary
shall place such request before the Board of Directors at its next regularly
scheduled meeting, provided, however, that if the shareholder represents in such
request that he intends, and is prepared, to commence a consent solicitation as
soon as is permitted by the Securities Exchange Act of 1934, as amended, and the
regulations thereunder and other applicable law, the Secretary shall as promptly
6
as practicable, call a special meeting of the Board of Directors, which meeting
shall be held as promptly as practicable. At such regular or special meeting,
the Board of Directors shall fix a record date as provided in Section 213(a) (or
its successor provision) of the Delaware General Corporation Law. Should the
Board fail to fix a record date as provided for in this Subsection (b), then the
record date shall be the day on which the first written consent is expressed.
(c) Procedures for Written Consent. In the event of the delivery to the
Corporation of a written consent or consents purporting to represent the
requisite voting power to authorize or take corporate action and/or related
revocations, the Secretary of the Corporation shall provide for the safekeeping
of such consents and revocations and shall, as promptly as practicable, engage
nationally recognized independent judges of election for the purpose of promptly
performing a ministerial review of the validity of the consents and revocations.
No action by written consent and without a meeting shall be effective until such
judges have completed their review, determined that the requisite number of
valid and unrevoked consents has been obtained to authorize or take the action
specified in the consents, and certified such determination for entry in the
records of the Corporation kept for the purpose of recording the proceedings of
meetings of shareholders.
SECTION 2
Board of Directors
SECTION 2.1 Number and Term of Office. The number of directors shall be
not less than 10 nor more than 19. The exact number, within those limits, shall
be fixed from time to time by the Board of Directors. Each director shall hold
office until a successor is elected and qualified or until his earlier death,
resignation or removal.
SECTION 2.2 Election. The directors shall be elected annually by written
ballot and, at each election, the nominees receiving the greatest number of
votes shall be the directors.
SECTION 2.3 Organization Meetings. As promptly as practicable after each
annual meeting of shareholders, an organization meeting of the Board of
Directors shall be held for the purpose of organization and the transaction of
other business.
SECTION 2.4 Stated Meetings. The Board of Directors may provide for
stated meetings of the Board.
SECTION 2.5 Special Meetings. Special meetings of the Board of Directors
may be called from time to time by any four directors, by the chief executive
officer, or by the chief operating officer of the Corporation in concert with
two directors.
SECTION 2.6 Business of Meetings. Except as otherwise expressly provided
in these bylaws, any and all business may be transacted at any meeting of the
Board of Directors; provided, that if so stated in the notice of meeting, the
business transacted at a special meeting shall be limited to the purpose or
purposes specified in the notice.
SECTION 2.7 Time and Place of Meetings. Subject to the provisions of
Section 2.3, each meeting of the Board of Directors shall be held on such date,
at such hour and in such place as fixed by the Board or in the notice of waivers
of notice of the meeting or, in the case of an adjourned meeting, as announced
at the meeting at which the adjournment is taken.
7
SECTION 2.8 Notice of Meetings. No notice need be given of any
organization or stated meeting of the Board of Directors for which the date,
hour and place have been fixed by the Board. Notice of the date, hour and place
of all other organization and stated meetings, and of all special meetings,
shall be given to each director personally, by telephone or telegraph or by
mail. If by mail, the notice shall be deposited in the United States mail,
postage prepaid, directed to the director at his residence or usual place of
business as the same appear on the books of the Corporation not later than four
days before the meeting. If given by telegraph, the notice shall be directed to
the director at his residence or usual place of business as the same appear on
the books of the Corporation not later than at any time during the day before
the meeting. If given personally or by telephone, the notice shall be given not
later than the day before the meeting.
SECTION 2.9 Waiver of Notice. Anything herein to the contrary
notwithstanding, notice of any meeting of the Board of Directors need not be
given to any director who shall have waived in writing notice of the meeting,
either before or after the meeting, or who shall attend such meeting, unless he
attends for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened.
SECTION 2.10 Attendance by Telephone. Directors may participate in
meetings of the Board of Directors by means of conference telephone or similar
communications equipment by means of which all directors participating in the
meeting can hear one another, and such participation shall constitute presence
in person at the meeting.
SECTION 2.11 Quorum and Manner of Acting. One-third of the total
number of directors at the time provided for pursuant to Section 2.1 shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors and, except as otherwise provided in these bylaws, in the
certificate of incorporation or by statute, the act of a majority of the
directors present at any meeting at which a quorum is present shall be the act
of the Board. A majority of the directors present at any meeting, regardless of
whether or not they constitute a quorum, may adjourn the meeting to another time
or place. Any business which might have been transacted at the original meeting
may be transacted at any adjourned meeting at which a quorum is present.
SECTION 2.12 Action Without a Meeting. Any action which could be
taken at a meeting of the Board of Directors may be taken without a meeting if
all of the directors consent to the action in writing and the writing or
writings are filed with the minutes of the Board.
SECTION 2.13 Compensation of Directors. Each director of the
Corporation who is not a salaried officer or employee of the Corporation, or of
a subsidiary of the Corporation, may receive compensation for serving as a
director and for serving as a member of any Committee of the Board, and may also
receive fees for attendance at any meetings of the Board or any Committee of the
Board, and the Board may from time to time fix the amount and method of payment
of such compensation and fees; provided, that no director of the Corporation
shall receive any bonus or share in the earnings or profits of the Corporation
or any subsidiary of the Corporation except pursuant to a plan approved by the
shareholders at a meeting called for the purpose. The Board may also, by vote
of a majority of disinterested directors, provide for and pay fair compensation
to directors rendering services to the Corporation not ordinarily rendered by
directors as such.
SECTION 2.14 Resignation of Directors. Any director may resign at any
time upon written notice to the Corporation. The resignation shall become
effective at the time specified in the notice and, unless otherwise provided in
8
the notice, acceptance of the resignation shall not be necessary to make it
effective.
SECTION 2.15 Removal of Directors. Any director may be removed,
either for or without cause, at any time, by the affirmative vote of the holders
of record of a majority of the outstanding shares of stock entitled to vote at a
meeting of the shareholders called for the purpose, and the vacancy in the Board
caused by any such removal may be filled by the shareholders at such meeting or
at any subsequent meeting; provided, that no director elected by a class vote of
less than all the outstanding shares of the Corporation may, so long as the
right to such a class vote continues in effect, be removed pursuant to this
section except for cause and by the affirmative vote of the holders of record of
a majority of the outstanding shares of such class at a meeting called for the
purpose, and the vacancy in the Board caused by the removal of any such director
may, so long as the right to such class vote continues in effect, be filled by
the holders of the outstanding shares of such class at such meeting or at any
subsequent meeting; provided, further, that if less than all the directors then
in office are to be removed, no director may be removed without cause if the
votes cast against his removal would be sufficient to elect him if then
cumulatively voted at an election of the whole Board of Directors or, in the
case of directors elected by a class vote the right to which is still then in
effect, if the votes cast against his removal would be sufficient to elect him
if then cumulatively voted at an election of the class of directors of which he
is a part.
SECTION 2.16 Filling of Vacancies Not Caused by Removal. Vacancies
and newly created directorships resulting from an increase in the authorized
number of directors may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director; provided, that if
the vacancy to be filled would, at an election of the whole Board of Directors,
be filled by a class vote of less than all of the outstanding shares of the
Corporation, and if any of the directors remaining in office were elected by the
same class, such majority vote of the directors shall be effective only if it is
concurred in by a majority of the remaining directors elected by such class, or
by a sole remaining director elected by such class. If for any reason there
shall be no directors in office, any officer or any shareholder or any executor,
administrator, trustee or guardian of a shareholder, or other fiduciary with
like responsibility for the person or estate of a shareholder, may call a
special meeting of shareholders in accordance with the provisions of these
bylaws for the purpose of electing directors.
SECTION 3
Committees of the Board of Directors
SECTION 3.1 Executive Committee. By resolution adopted by an affirmative
vote of the majority of the whole Board of Directors, the Board may appoint an
Executive Committee consisting of the directors who occupy the offices of the
chief executive and operating officers of the Corporation, ex officio, and two
or more other directors and, if deemed desirable, one or more directors as
alternate members who may replace any absentee or disqualified member at any
meeting of the Executive Committee. If so appointed, the Executive Committee
shall, when the Board is not in session, have all the power and authority of the
Board in the management of the business and affairs of the Corporation not
reserved to the Board by Section 3.3. The Executive Committee shall keep a
record of its acts and proceedings and shall report the same from time to time
to the Board of Directors.
9
SECTION 3.2 Other Committees. By resolution adopted by an affirmative
vote of the majority of the whole Board of Directors, the Board may from time to
time appoint such other Committees of the Board, consisting of one or more
directors and, if deemed desirable, one or more directors who shall act as
alternate members and who may replace any absentee or disqualified member at any
meeting of the Committee, and may delegate to each such Committee any of the
powers and authority of the Board in the management of the business and affairs
of the Corporation not reserved to the Board pursuant to Section 3.3. Each such
Committee shall keep a record of its acts and proceedings.
10
SECTION 3.3 Powers Reserved to the Board. No Committee of the Board shall
take any action to amend the certificate of incorporation or these bylaws, adopt
any agreement to merge or consolidate the Corporation, declare any dividend or
recommend to the shareholders a sale, lease or exchange of all or substantially
all of the assets and property of the Corporation, a dissolution of the
Corporation or a revocation of a dissolution of the Corporation; nor shall any
Committee of the Board take any action which is required in these bylaws, in the
certificate of incorporation or by statute to be taken by a vote of a specified
proportion of the whole Board of Directors.
SECTION 3.4 Election of Committee Members; Vacancies. So far as
practicable, members of the Committees of the Board and their alternates (if
any) shall be appointed at each organization meeting of the Board of Directors
and, unless sooner discharged by an affirmative vote of the majority of the
whole Board, shall hold office until the next organization meeting of the Board
and until their respective successors are appointed. In the absence or
disqualification of any member of a Committee of the Board, the member or
members (including alternates) present at any meeting of the Committee and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another director to act at the meeting in place of any
absent or disqualified member. Vacancies in Committees of the Board created by
death, resignation or removal may be filled by an affirmative vote of a majority
of the whole Board of Directors.
SECTION 3.5 Meetings. Each Committee of the Board may provide for stated
meetings of such Committee. Special meetings of each Committee may be called by
any two members of the Committee (or, if there is only one member, by that
member in concert with the chief executive officer) or by the chief executive
and chief operating officers of the Corporation. The provisions of Section 2
regarding the business, time and place, notice and waivers of notice of
meetings, attendance at meetings and action without a meeting shall apply to
each Committee of the Board, except that the references in such provisions to
the directors and the Board of Directors shall be deemed respectively to be
references to the members of the Committee and to the Committee.
SECTION 3.6 Quorum and Manner of Acting. A majority of the members of any
Committee of the Board shall constitute a quorum for the transaction of business
at meetings of the Committee, and the act of a majority of the members present
at any meeting at which a quorum is present shall be the act of the Committee.
A majority of the members present at any meeting, regardless of whether or not
they constitute a quorum, may adjourn the meeting to another time or place. Any
business which might have been transacted at the original meeting may be
transacted at any adjourned meeting at which a quorum is present.
SECTION 4
Officers
SECTION 4.1 Election and Appointment. The elected officers of the
Corporation shall consist of a Chairman, a President, one or more Vice
Presidents, a Controller, a Treasurer, a Secretary and such other elected
officers as shall from time to time be designated by the Board of Directors.
The Board shall designate from among such elected officers a chief executive
officer, a chief operating officer, a chief financial officer and a chief
accounting officer of the Corporation, and may from time to time make, or
provide for, other designations it deems appropriate. The Board may also
appoint, or provide for the appointment of, such other officers and agents as
may from time to time appear necessary or advisable in the conduct of the
affairs of the Corporation. Any number of offices may be held by the same
11
person, except no person may at the same time be both the chief executive and
the chief financial officer.
SECTION 4.2 Duties of Chief Executive Officer. The chief executive
officer of the Corporation shall preside at all meetings of shareholders and at
all meetings of the Board of Directors, the Executive Committee and, except to
the extent otherwise provided in these bylaws or by the Board, shall have
general authority to execute any and all documents in the name of the
Corporation and general and active supervision and control of all of the
business and affairs of the Corporation. In the absence of the chief executive
officer, his duties shall be performed and his powers may be exercised by the
chief operating officer or by such other officer as shall be designated either
by the chief executive officer in writing or (failing such designation) by the
Executive Committee or Board of Directors
SECTION 4.3 Duties of Other Officers. The other officers of the
Corporation shall have such powers and duties not inconsistent with these bylaws
as may from time to time be conferred upon them in or pursuant to resolutions of
the Board of Directors, and shall have such additional powers and duties not
inconsistent with such resolutions as may from time to time be assigned to them
by any competent superior officer. The Board shall assign to one or more of the
officers of the Corporation the duty to record the proceedings of the meetings
of the shareholders and the Board of Directors in a book to be kept for that
purpose.
SECTION 4.4 Term of Office and Vacancy. So far as practicable, the
elected officers shall be elected at each organization meeting of the Board, and
shall hold office until the next organization meeting of the Board and until
their respective successors are elected and qualified. If a vacancy shall occur
in any elected office, the Board of Directors may elect a successor for the
remainder of the term. Appointed officers shall hold office at the pleasure of
the Board or of the officer or officers authorized by the Board to make such
appointments. Any officer may resign by written notice to the Corporation.
SECTION 4.5 Removal of Elected Officers. Elected officers may be removed
at any time, either for or without cause, by the affirmative vote of a majority
of the whole Board of Directors at a meeting called for that purpose.
SECTION 4.6 Compensation of Elected Officers. The compensation of all
elected officers of the Corporation shall be fixed from time to time by the
Board of Directors; provided, that no elected officer of the Corporation shall
receive any bonus or share in the earnings or profits of the Corporation or any
subsidiary of the Corporation except pursuant to a plan approved by the
shareholders at a meeting called for the purpose.
SECTION 5
Shares and Transfer of Shares
SECTION 5.1 Certificates. Every shareholder shall be entitled to a
certificate signed by the Chairman or the President or a Vice President and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, certifying the class and number of shares owned by him in the
Corporation; provided, that, where such certificate is countersigned by a
Transfer Agent or a Registrar, the signature of any such Chairman, President,
Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary
may be facsimile. In case any officer or officers who shall have signed or
whose facsimile signature or signatures shall have been used on any such
certificate or certificates shall cease to be such officer or officers, whether
12
because of death, resignation or otherwise, before such certificate or
certificates shall have been issued by the Corporation, such certificate or
certificates may be issued by the Corporation with the same effect as if he or
they were such officer or officers at the date of issue.
SECTION 5.2 Transfer Agents and Registrars. The Board of Directors may,
in its discretion, appoint one or more responsible banks or trust companies in
the City of New York and in such other city or cities (if any) as the Board may
deem advisable, from time to time, to act as Transfer Agents and Registrars of
shares of the Corporation; and, when such appointments shall have been made, no
certificate for shares of the Corporation shall be valid until countersigned by
one of such Transfer Agents and registered by one of such Registrars.
SECTION 5.3 Transfers of Shares. Shares of the Corporation may be
transferred by delivery of the certificates therefor, accompanied either by an
assignment in writing on the back of the certificates or by written power of
attorney to sell, assign and transfer the same, signed by the record holder
thereof; but no transfer shall affect the right of the Corporation to pay any
dividend upon the shares to the holder of record thereof, or to treat the holder
of record as the holder in fact thereof for all purposes, and no transfer shall
be valid, except between the parties thereto, until such transfer shall have
been made upon the books of the Corporation.
SECTION 5.4 Lost Certificates. In case any certificate for shares of the
Corporation shall be lost, stolen or destroyed, the Board of Directors, in its
discretion, or any Transfer Agent thereunto duly authorized by the Board, may
authorize the issue of a substitute certificate in place of the certificate so
lost, stolen or destroyed, and may cause such substitute certificate to be
countersigned by the appropriate Transfer Agent (if any) and registered by the
appropriate Registrar (if any); provided, that in each such case, the applicant
for a substitute certificate shall furnish to the Corporation and to such of its
Transfer Agents and Registrars as may require same, evidence to their
satisfaction, in their discretion, of the loss, theft or destruction of such
certificate and of the ownership thereof, and also such security or indemnity as
may by them be required.
SECTION 5.5 Record Dates. In order that the Corporation may determine the
shareholders entitled to notice of or to vote at any meeting of shareholders, or
any adjournment thereof, or to express consent to 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 shares or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date which shall be
not more than sixty nor less than ten days before the date of any meeting of
shareholders, and not more than sixty days prior to any other action. In such
case, those shareholders, and only those shareholders, who are shareholders of
record on the date fixed by the Board of Directors shall, notwithstanding any
subsequent transfer of shares on the books of the Corporation, be entitled to
notice of and to vote at such meeting of shareholders, or any adjournment
thereof, or to express consent to such corporate action in writing without a
meeting, or entitled to receive payment of such dividend or other distribution
or allotment of rights, or entitled to exercise rights in respect of any such
change, conversion or exchange of shares or to participate in any such other
lawful action.
SECTION 6
Miscellaneous
13
SECTION 6.1 Fiscal Year. The fiscal year of the Corporation shall be the
calendar year.
SECTION 6.2 Surety Bonds. The chief financial officer, the Controller,
the Treasurer, each Assistant Treasurer, and such other officers and agents of
the Corporation as the Board of Directors may from time to time direct shall be
bonded at the expense of the Corporation for the faithful performance of their
duties in such amounts and by such surety companies as the Board may from time
to time determine.
SECTION 6.3 Signature of Negotiable Instruments. All bills, notes, checks
or other instruments for the payment of money shall be signed or countersigned
in such manner as from time to time may be prescribed by resolution of the Board
of Directors.
SECTION 6.4 General Auditor. At each annual meeting, the shareholders
shall appoint an independent public accountant or firm of independent public
accountants to act as the General Auditor of the Corporation until the next
annual meeting. Among other duties, it shall be the duty of the General Auditor
so appointed to make periodic audits of the books and accounts of the
Corporation. As soon as reasonably practicable after the close of the fiscal
year, the shareholders shall be furnished with consolidated financial statements
of the Corporation and its consolidated subsidiaries, as at the end of such
fiscal year, duly certified by such General Auditor, subject to such notes or
comments as the General Auditor shall deem necessary or desirable for the
information of the shareholders. In case the shareholders shall at any time
fail to appoint a General Auditor or in case the General Auditor appointed by
the shareholders shall decline to act or shall resign or otherwise become
incapable of acting, the Board of Directors shall appoint a General Auditor to
discharge the duties herein provided for. Any General Auditor appointed
pursuant to any of the provisions hereof shall be directly responsible to the
shareholders, and the fees and expenses of any such General Auditor shall be
paid by the Corporation.
SECTION 6.5 Indemnification of Officers, Directors, Employees, Agents and
Fiduciaries; Insurance. (a) The Corporation may indemnify, in accordance
with and to the full extend permitted by the laws of the State of Delaware as in
effect at the time of the adoption of this Section 6.5 or as such laws may be
amended from time to time, and shall so indemnify to the full extent permitted
by such laws, any person (and the heirs and legal representatives of any such
person) made or 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 such person is or was a director,
officer, employee, agent, or fiduciary of the Corporation or any constituent
Corporation absorbed in a consolidation or merger, or serves as such with
another corporation, or with a partnership, joint venture, trust or other
enterprise at the request of the Corporation or any such constituent
corporation.
(b) By action of the Board of Directors notwithstanding any interest of the
directors in such action, the Corporation may purchase and maintain in such
amounts as the Board of Directors deems appropriate on behalf of any person who
is or was a director, officer, employee, agent or fiduciary of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee, agent or fiduciary 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 shall have the power to indemnify him against
such liability under the provisions of this Section.
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SECTION 7
Bylaws Amendments
SECTION 7.1 By the Shareholders. These bylaws may be amended by the
shareholders at a meeting called for the purpose in any manner not inconsistent
with any provision of law or of the certificate of incorporation.
SECTION 7.2 By the Directors. These bylaws may be amended by the
affirmative vote of a majority of the whole Board of Directors in any manner not
inconsistent with any provision of law or of the certificate of incorporation;
provided, that the Board may not amend this Section, or the bonus proviso of
Section 2.13 (Compensation of Directors), or Section 2.15 (Removal of
Directors), Section 4.5 (Removal of Elected Officers) or Section 4.6
(Compensation of Elected Officers).
STATE OF CONNECTICUT,
County of Hartford
The Undersigned, _____________________________, Secretary of UNITED
TECHNOLOGIES CORPORATION, a corporation of the State of Delaware, HEREBY
CERTIFIES that the foregoing is a complete copy of the Bylaws of the said
Corporation, as at present in force.
IN WITNESS WHEREOF, the undersigned has hereto set his hand and affixed the
seal of the said Corporation, this _______________day
of__________________________, 19____.
SECRETARY
Exhibit (10)(xiv)
Excerpt from United Technologies Corporation Board minutes of September 23,
1993, concerning a program under which non-employee Directors receive 60% of
their annual retainer in either shares of Common Stock of the Corporation or in
deferred stock units which automatically convert to shares of Common Stock upon
termination of service on the Board.
RESOLVED, that, effective January 1, 1994, payment of
60% (currently $15,000 out of $25,000) of the
annual retainer be paid in either tax
deferred "Stock Units" or in UTC Common
Stock.
RESOLVED, that Directors be provided the option, once
a year, to elect to take the stock portion of
the annual retainer in either:
a.Tax deferred "Stock Units", which will be
credited to an account established for each
Director. The number of "Stock Units" will
be determined annually and calculated by
dividing the annual retainer paid in "Stock
Units" by the closing price of UTC stock on
the first business day of the year.
Fractional "Stock Units" will accumulate in
the Director's account. All whole "Stock
Units" held in the account as of each
dividend payment date, will be eligible for
dividend equivalents equal to the
Corporation's declared dividend and will be
converted to additional "Stock Units" or
fractional units on the date the dividend is
paid. Upon retirement or termination from
the Board, all "Stock Units" held in the
Director's account will be converted to
actual shares of UTC Common Stock. The value
of "Stock Units" will not be taxable until
the "Stock Units" are converted to actual
shares and distributed to the Director upon
termination from Board service; or,
b.Shares of UTC Common Stock, with the number
of shares determined annually and calculated
by dividing the annual retainer paid in stock
by the closing price of UTC stock on the
first business day of the year, with
fractional shares paid in cash. The value of
the shares will be considered taxable income
upon receipt. UTC will acquire the shares on
the open market.
RESOLVED, that the remaining 40% (currently $10,000)
of the annual retainer, as well as all
Committee, Meeting and Chairmanship fees will
continue to be paid in cash on a quarterly or
per meeting basis, as appropriate.
RESOLVED, that the portion of the retainer paid in
cash, and all other fees paid in cash,
continue to be eligible for deferral under
the "Deferred Compensation Plan for Non-
Employee Directors".
PAGE
EXHIBIT (10)(xv)
UNITED TECHNOLOGIES CORPORATION
PENSION REPLACEMENT PLAN
The Corporation previously implemented a Deferred Compensation Plan for certain
employees. The first class year was established in 1985, with additional class
years in 1986 and 1994.
As a result of participating in the Deferred Compensation Plan, participants may
find their pensionable earnings reduced if compensation is deferred in a year
which ultimately counts toward their final five-year average compensation for
pension benefit determination. As a result, pension benefits could be reduced
under the Qualified Pension Plan and Pension Preservation Plan. The Deferred
Compensation Plan provides that no pension shortfall will occur as a result of
participation in the Deferred Compensation Plan. The Corporation will,
therefore, replace any pension shortfall in either the Qualified Pension Plan or
the Pension Preservation Plan.
Whenever an executive terminates or retires from active employment with a vested
pension benefit in the Corporation's Qualified Pension Plan, his or her pension
benefit will be calculated under the current rules and procedures of such plan
and, if applicable, the Pension Preservation Plan. Next, the executive's
pension benefit will be calculated as if all compensation that had been deferred
during the Qualified Pension Plan's salary averaging period were pensionable
earnings. If this computation results in a greater benefit, the difference will
be paid to the executive from a Pension Replacement Account established under
the Deferred Compensation Plan. Pension replacement payments will be made by
the Disbursing Agent for the Qualified Pension Plan in the same manner as the
benefit option elected under the Qualified Pension Plan.
PAGE
EXHIBIT 11
UNITED TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Computations of Earnings Per Share and Fully Diluted Earnings Per Share
Assuming All Outstanding Dilutive Convertible Securities Had Been Converted
For the Five Years Ended December 31, 1993
(Millions of Dollars, except per share amounts)
1993 1992 1991 1990 1989
Earnings (loss) applicable to $ 444 $ (329) $ (1,083) $ 715 $ 687
Common Stock
ESOP Convertible Preferred Stock 16 16 23 22 8
adjustment (1)
Fully diluted net earnings (loss) $ 460 $ (313) $ (1,060) $ 737 $ 695
for period
Average number of common shares
outstanding during period (thirteen
month-end average) (thousands)
125,997 123,238 121,537 120,845 128,693
Fully diluted average number of
common shares outstanding, assuming
all outstanding convertible
securities had been converted on 139,614 137,157 136,012 133,192 133,840
the dates of issue (thousands)
Primary earnings (loss) per common $ 3.53 $ (2.67) $ (8.91) $ 5.91 $ 5.34
share
Fully diluted earnings (loss) per $ 3.30 $ (2.67) $ (8.91) $ 5.53 $ 5.20
common share
(1)Each share of the ESOP Preferred Stock is convertible into one share of Common Stock. A reduction in
earnings applicable to Common Stock is required in the calculation of fully diluted earnings per share
representing the Corporation's additional contribution to the ESOP to enable it to meet its debt repayment
responsibilities were the preferred dividends not available for this purpose. The adjustment also reflects
the adding back of the ESOP Preferred Stock dividend.
EXHIBIT 12
UNITED TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(Millions of Dollars)
Years Ended December 31,
1993 1992 1991 1990 1989
Fixed Charges:
Interest on indebtedness $ 251 $ 282 $ 339 $ 362 $ 330
Interest capitalized 29 52 70 60 61
One-third of rents* 115 135 130 126 114
Total Fixed Charges $ 395 $ 469 $ 539 $ 548 $ 505
Earnings:
Income (loss) before income taxes
and minority interests $ 909 $ 200 $ (891) $ 1,291 $ 1,260
Fixed charges per above 395 469 539 548 505
Less: interest capitalized (29) (52) (70) (60) (61)
366 417 469 488 444
Amortization of interest
capitalized 42 43 40 37 33
Total Earnings $ 1,317 $ 660 $ (382) $ 1,816 $ 1,737
Ratio of Earnings to Fixed Charges 3.33 1.41 ** 3.31 3.44
* Reasonable approximation of the interest factor.
** Not relevant.
26
EXHIBIT 13
Financial Section
27 Five-Year Summary
28 Management's Discussion and Analysis
35 Comparative Stock Data
36 Management's Responsibility for
Financial Statements
36 Report of Independent Accountants
37 Consolidated Financial Statements
and Notes
55 Selected Quarterly Financial Data
27
Five-Year Summary
In Millions of Dollars (except per share amounts) 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------
For the Year
Sales $ 20,736 $ 21,641 $ 20,840 $ 21,442 $ 19,532
Percent to United States Government 19% 21% 21% 22% 24%
Research and development 1,137 1,221 1,133 1,028 1,030
Restructuring provision - 85 1,275 - -
Income (loss) before cumulative effect of accounting
principle changes 487 35 (1,021) 751 702
Net income (loss) 487 (287) (1,021) 751 702
Earnings (loss) applicable to Common Stock 444 (329) (1,083) 715 687
Earnings (loss) per share before cumulative effect of
accounting principle changes:
Primary 3.53 (.05) (8.91) 5.91 5.34
Fully diluted 3.30 (.05) (8.91) 5.53 5.20
Earnings (loss) per share:
Primary 3.53 (2.67) (8.91) 5.91 5.34
Fully diluted 3.30 (2.67) (8.91) 5.53 5.20
Cash dividends on Common Stock 224 222 219 218 206
Per share 1.80 1.80 1.80 1.80 1.60
Average number of shares of Common Stock
outstanding (thousands):
Primary 125,997 123,238 121,537 120,845 128,693
Fully diluted 139,614 137,157 136,012 133,192 133,840
Return on average common shareowners' equity, after tax 13.1% (8.7)% (20.9)% 14.5% 14.2%
At Year End
Net working capital $ 786 $ 1,064 $ 2,354 $ 3,061 $ 2,131
Current asset ratio 1.1 to 1 1.2 to 1 1.4 to 1 1.5 to 1 1.3 to 1
Total assets 15,618 15,928 15,985 15,918 14,598
Short-term borrowings 780 377 292 342 1,281
Long-term debt, including current portion 2,179 2,769 3,101 3,220 2,312
Debt to total capitalization 45% 48% 46% 40% 43%
ESOP Preferred Stock, net 176 151 126 81 -
Shareowners' equity 3,598 3,370 3,961 5,343 4,739
Equity per common share 28.54 27.23 32.49 44.10 39.14
Business backlog 18,414 21,175 20,700 20,875 20,125
Number of employees:
United States 81,700 91,400 98,000 108,100 115,100
International:
Europe 40,300 40,600 41,800 38,200 38,300
Other 46,600 46,000 45,300 46,300 48,000
Total 168,600 178,000 185,100 192,600 201,400
Number of common shareowners 30,000 32,600 35,400 37,200 39,500
Equity per common share is based on shares outstanding at each year end.
See Note 2 of Notes to Financial Statements for discussion of 1992 accounting
changes.
For Pratt and Whitney, backlog is based on the terms of firm orders received and
does not include discounts granted directly to airline and other customers.
28
Management's Discussion and Analysis
Management's Discussion and Analysis of Results of
Operations and Financial Position
The following discussion and analysis sets forth major factors affecting
the Corporation's results of operations during the three-year period ended
December 31, 1993. It also comments on the Corporation's financial position at
that date as presented in the accompanying financial statements. Operating
results for the Corporation's business segments are shown in the Consolidated
Summary of Business Segment Financial Data on pages 51 through 54 of this Annual
Report.
Business Environment
The Corporation's major business units serve government and commercial
aerospace, commercial property and residential housing, and automotive
manufacturing customers. Like many businesses, these operations are increasingly
affected by global, as well as regional, economic cycles.
In 1993, the U.S. economy continued to strengthen while key international
economies were mixed and will continue to exert a negative influence on the
Corporation's results of operations in the near term. In the U.S., residential
housing starts increased for the second consecutive year, up 14% over 1992 which
itself was up 18% over 1991, but U.S. commercial vacancy rates improved only
marginally to 17% from the 1992 all-time high of 18% and commercial construction
starts remained weak. Construction activity in Europe and Japan remained weak
while China and other Pacific Rim countries showed continued strength.
North American car and light truck production surged 12% in 1993 to 12.8
million units, only slightly below the recent peak of 12.9 million units in
1988. However, European car production, an increasingly important market to the
Corporation, was adversely affected by the recession in Europe with production
declining 14% in 1993 to the lowest levels since 1985.
The financial performance of the Corporation's Pratt & Whitney segment, and
to a lesser extent, the Flight Systems segment, is directly tied to the
commercial airline industry. The Pratt & Whitney segment is a major supplier of
commercial engines and spare parts. The Flight Systems segment, through Hamilton
Standard, provides fuel and environmental control systems and propellers for
commercial aircraft.
The poor financial condition of the commercial airline industry has had a
significant impact on the Corporation's 1992 and 1993 results. However, during
1993, the commercial airline industry experienced moderate, but distinct
financial improvement, and traffic for the U.S. domestic airlines increased
approximately 5% over 1992. Some airlines recorded operating profits for the
first time in several years. This improvement over prior years' performance
principally resulted from restructuring actions and other adjustments in airline
operating strategies, rather than significant improvement in the economic
conditions which caused the current decline in the industry.
Beginning in 1992, in response to the depressed levels of business, several
major domestic and foreign airlines negotiated extensions in delivery schedules
of aircraft on firm order and, in some cases, canceled existing orders and
options for future delivery. Changes in engine contract terms and schedules
generally involve economic concessions by the airline and more favorable
financial terms to the supplier. However, these actions adversely affect the
production schedules for new engines and exacerbate the already significant
engine pricing competition for new engine orders. Pratt & Whitney's large
commercial engine shipments totaled 442 in 1993, down from 610 in 1992 and 692
in 1991. In addition, the mix of engine sales has continued to shift to newer,
lower margin engines.
The follow-on spare parts sales for Pratt & Whitney engines in service has
traditionally been an important source of profit to the Corporation, and its
decline has had a significantly adverse impact on operating results of Pratt &
Whitney. Spare parts sales in 1993 were somewhat lower than 1992 which had been
flat against the depressed levels of 1991. However, sales in the fourth quarter
1993 were higher than prior quarters and higher than the prior year fourth
quarter. In addition, orders for spare parts in 1993 were higher than those
received in 1992.
The development of commercial aircraft engines requires substantial
investment by the Corporation. Over the past decade, Pratt & Whitney has
developed three new families of engines which are in production and airline
service today; the V2500, the PW2000 and the PW4000. Presently, the PW4084 and
PW4168 engines, derivatives of the PW4000 family of engines, are being
introduced for the Boeing 777 and Airbus A330 aircraft, respectively. Pratt &
Whitney's research and development expense in 1993 was $632 million compared to
$723 million in 1992. With the PW4168 engine certified in August 1993 and the
PW4084 scheduled for certification in April 1994, Pratt & Whitney's research and
development expenses are expected to continue to decline.
BAR CHART DESCRIPTION:
Revenues ($ Billions)
1989 - $19.8
1990 - $21.8
1991 - $21.3
1992 - $22.0
1993 - $21.1
29
In view of the global nature of the commercial aircraft industry and the
risk and cost associated with launching new engine development programs, Pratt &
Whitney has developed strategic alliances and collaboration arrangements on
commercial engine programs. These alliances also facilitate access to
international markets and technology. At December 31, 1993, other participants
in these alliances represented 29% and 20% of the PW2000 and PW4000 programs,
respectively, and 30% of the PW4084. Also, Pratt & Whitney has a 33% interest in
International Aero Engines, an international consortium of five partners for the
V2500 commercial aircraft engine.
The Corporation's aerospace and defense businesses continue to respond to a
changing global political environment. The defense industry is downsizing
further as the U.S. Defense budget shrinks and as the threat of large scale
conflict between superpowers has diminished. However, management believes the
Corporation is well positioned as a major supplier for key domestic and foreign
defense programs that will be important to military needs in the 1990's and
beyond.
The Corporation will continue to supply Black Hawk helicopters to the U.S.
and foreign governments under contracts extending to 1997 and 1998. The
Corporation is also well positioned on three major U.S. Defense programs of the
future, the F-22 fighter, powered by the Pratt & Whitney F119 engine, and RAH-66
Comanche helicopter, both in development, and the C-17 airlifter, powered by
Pratt & Whitney's F117 engine, which became operational with the Air Force in
1993. While these programs are expected to retain support by the U.S. military
and Congress, these and other U.S. military programs will continue to compete
for available defense funds.
The Corporation has, however, continued to reduce its reliance on U.S.
Defense contracts over the past few years and its exposure to loss from fixed-
price development contracts. This trend has been partially offset by increased
foreign military sales. Business derived from the U.S. Government declined from
24% of total sales in 1989 to 19% in 1993.
While the changing world political climate has reduced defense spending,
ongoing changes in the former Soviet Union and the People's Republic of China,
where potentially enormous markets for aircraft engines are developing, present
significant opportunities for the commercial aircraft industry. The Corporation
has been developing strategic alliances in these markets and believes it is well
positioned to take advantage of these opportunities.
Pratt & Whitney is aggressively reducing manufacturing costs to remain
competitive and regain the profit margins commensurate with the risks and
investment this industry requires. From 1991 to December 31, 1993, Pratt &
Whitney's workforce was reduced from 44,600 to 33,700 employees and
manufacturing space has been reduced by 1.1 million square feet. Pratt & Whitney
plans to reduce its workforce to no more than 30,000 during 1994, and further
reductions may be required if commercial engine volumes continue to decline.
Restructuring and Other Actions
In December 1992 the Corporation recorded charges of $447 million for
credit and other exposures related to the airline industry, $169 million for
various contract matters and $85 million for restructuring actions. The 1992
restructuring actions were incremental to the $1.275 billion pre-tax
restructuring charge recorded in 1991. The 1991 restructuring program included
eliminating jobs, closing or consolidating facilities, and improving design,
engineering and manufacturing processes.
Program to date workforce reductions total 24,710 positions. Workforce
reductions during 1993 totaled 11,690 positions. Manufacturing floor space
totaling 2.8 million and 5.6 million square feet has been eliminated during 1993
and program to date, respectively. This represents 57% of the goal to eliminate
9.9 million square feet of manufacturing space by 1995.
Results of Operations
Revenues:
Decreased 4% or $951 million from 1992 to 1993;
Increased 4% or $770 million from 1991 to 1992.
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
Product sales $16,671 $17,559 $17,054
Service sales 4,065 4,082 3,786
Financing revenues and other 345 391 422
- -------------------------------------------------------------------------------
The negative impact of the commercial airline industry and unfavorable
foreign currency translation impacts are the principal causes for the overall
reduction in 1993 sales.
It is estimated that increases in selling prices to customers averaged
approximately 2% in 1993 and were not significant in 1992. The net impact of
translating sales of foreign subsidiaries decreased
30
sales by 3% in 1993 and was not significant in 1992, indicating that the real
volume of sales decreased 3% in 1993 and increased 4% in 1992.
Financing revenues and other income, less other deductions, decreased $46
million and $31 million in 1993 and 1992, respectively. The 1993 decrease
resulted primarily from lower royalties and interest income partially offset by
an increase in the amount of commercial aircraft engine participation fees. The
decrease in 1992 resulted primarily from lower commercial aircraft engine
participation fees partially offset by higher licensing and royalty fees.
Revenues of the Corporation's principal business segments for the years
ended December 31 were:
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
Pratt & Whitney $5,942 $6,894 $7,133
Flight Systems 3,930 4,045 4,024
Carrier 4,480 4,328 3,843
Otis 4,418 4,512 4,304
Automotive 2,382 2,378 2,084
- -------------------------------------------------------------------------------
Pratt & Whitney segment revenues decreased $952 million (14%) in 1993 and
$239 million (3%) in 1992. The decrease in 1993 reflects decreases in commercial
and government engine and spare parts sales. Although commercial spare parts
sales were lower than the depressed levels of 1992, sales during the second half
of 1993 showed modest growth and exceeded the comparable 1992 period. The
overall decrease was partially offset by revenues resulting from the
renegotiation of certain aircraft leases during the second quarter of 1993. The
decrease in 1992 resulted from reductions in commercial and government engine
sales offset somewhat by a slight increase in government spare parts sales.
Flight Systems segment revenues for 1993 decreased $115 million (3%)
compared to 1992. As a result of substantially increased international Black
Hawk shipments, helicopter business revenues in 1993 contributed 59% of Flight
Systems segment revenues (51% in 1992 and 50% in 1991). This increase was more
than offset by reductions in defense electronics and commercial aerospace
volumes in the segment's other businesses. Flight Systems segment revenues in
1992 remained essentially unchanged from 1991.
Carrier segment revenues increased $152 million (4%) in 1993 and $485
million (13%) in 1992. The translation impact of a stronger U.S. dollar
negatively impacted 1993 revenues by approximately $115 million (3%). Revenues
for 1992 were positively impacted by approximately $30 million (1%) as a result
of foreign currency translation. Both 1993 and 1992 revenues reflect continuing
volume increases in the North American and Asia-Pacific regions as well as the
transportation refrigeration business. Revenues were also positively impacted by
increased Latin American volumes during 1993. These increases were partially
offset by the effects of the continuing recession in Europe, particularly
affecting the Spanish and Italian operations.
Otis segment revenues decreased $94 million (2%) in 1993 and increased
$208 million (5%) in 1992. The impact of currency exchange rates versus the U.S.
dollar reduced revenues by approximately $278 million (6%) in 1993 and increased
revenues by approximately $107 million (2%) in 1992. Revenues in 1993 and 1992,
exclusive of the translation impact, reflect the continuing increase in service
volumes in all regions. In addition, new equipment revenues were slightly higher
in 1993 primarily due to higher volumes in the European and Latin American
regions offset partially by lower North American volume. New equipment revenues
in 1992 were lower than 1991 levels primarily due to decreases in the North
American and Latin American regions.
Automotive segment revenues were essentially unchanged from 1992. Revenues
in 1992 were $294 million (14%) higher than 1991. During 1993 and 1992, the
segment was positively impacted by increased North American car and light truck
production and European market penetration. North American car and light truck
production increased 12% in 1993 over 1992 and 9% in 1992 over 1991. During
1993, these increases were substantially offset by the overall reduction in
European vehicle production, the negative translation impact of the stronger
U.S. dollar of approximately $112 million (5%), and the absence of sales in 1993
from certain automotive business units divested in the third quarter of 1992.
Cost of products and services sold as a percent of sales decreased:
1% from 1992 to 1993;
1% from 1991 to 1992.
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
Cost of products sold $13,666 $14,642 $14,331
Product margin % 18.0% 16.6% 16.0%
Cost of services sold $ 2,571 $ 2,591 $ 2,408
Service margin % 36.8% 36.5% 36.4%
- -------------------------------------------------------------------------------
The cost of products sold as a percentage of sales, excluding the impact of
special charges recorded in 1992 and 1991, remained
31
relatively constant in 1993 and 1992 from the respective prior years. The on-
going efforts of the Corporation's cost reduction programs were offset by a
shift in the mix of commercial aircraft engines sold to newer, lower margin en-
gines and lower spare parts sales in the commercial aircraft and general avia-
tion businesses.
- --------------------------------------------------------------------------------
Research and development expenses:
decreased 7% or $84 million from 1992 to 1993;
increased 8% or $88 million from 1991 to 1992.
- --------------------------------------------------------------------------------
Gross research and development expenditures in 1993 and 1992, before the
reductions described below, were 5% lower and 2% higher than in 1992 and 1991,
respectively. The reduction in expenditures during 1993 occurred primarily at
Pratt & Whitney where the PW4084 and PW4168 commercial engine development
programs are reaching maturity. Overall, expenditures for military aircraft
engine programs during 1993 and 1992 were substantially lower than in previous
years and in 1992 were offset by higher expenditures for commercial engine
programs, as well as increased expenditures at Carrier and Otis.
Billings to participants for certain advanced commercial aircraft engine
program expenditures and partial sponsorship of military aircraft engine
programs aggregating $84 million, $67 million, and $134 million in 1993, 1992,
and 1991, respectively, have been applied as reductions of research and
development expenses. While billings remained relatively constant in 1993, the
decrease in billings during 1992 is the result of lower fees from reduced
sponsorship of military aircraft engine programs, partially offset by higher
commercial engine program fees.
BAR CHART DESCRIPTION:
R&D Expenses ($ Millions)
1989 - $1,030
1990 - $1,028
1991 - $1,133
1992 - $1,221
1993 - $1,137
- -------------------------------------------------------------------------------
Selling, general and administrative expenses:
decreased 15% or $464 million from 1992 to 1993;
increased 13% or $344 million from 1991 to 1992.
- -------------------------------------------------------------------------------
The decrease from 1992 to 1993 results from the effects of the Corporation's
restructuring efforts initiated in the first quarter of 1992 which have
increasingly reduced ongoing general and administrative expenses and the absence
of the $360 million charges recorded during the fourth quarter of 1992 for
commercial airline industry exposures and other contract matters. The effects of
the restructuring efforts were overshadowed in 1992 primarily from the $360
million charges as well as the incremental 1992 impact of FAS 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions."
BAR CHART DESCRIPTION:
SG&A Expenses ($ Millions)
1989 - $2,811
1990 - $3,094
1991 - $2,667
1992 - $3,011
1993 - $2,547
- -------------------------------------------------------------------------------
Operating profits increased:
123% or $725 million from 1992 to 1993;
$1,086 million from 1991 to 1992.
- -------------------------------------------------------------------------------
Operating profits (losses) of the Corporation's principal business segments
for the years ended December 31 were:
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
Pratt & Whitney $156 $(288) $(282)
Flight Systems 385 275 (224)
Carrier 226 152 (159)
Otis 377 313 163
Automotive 148 111 2
- -------------------------------------------------------------------------------
In the first quarter of 1993, the Corporation changed its presentation of
general corporate expenses to report those costs which do not directly benefit
the reporting segments as general corporate items. This change in presentation
is consistent with the manner in which the individual operating units are both
managed and measured from an internal profitability perspective. Operating
profits (losses) for 1992 are shown below on both the current and former bases
of presentation. The comparisons below of operating results between 1993 and
1992 are based on the current presentation while comparisons between 1992 and
1991 are based on the former presentation. In addition, the operating profits
(losses) above include the restructuring provisions recorded in 1992 and 1991
and discussed previously. For purposes of analysis and comparison, the operating
profits (losses) below exclude these amounts.
1992 1992
In Millions of Dollars 1993 Current Former 1991
- -------------------------------------------------------------------------------
Pratt & Whitney $156 $(171) $(218) $406
Flight Systems 385 316 290 (82)
Carrier 226 183 152 31
Otis 377 346 313 296
Automotive 148 128 111 61
- -------------------------------------------------------------------------------
Pratt & Whitney segment operating profits increased $327 million in 1993.
The 1992 results include the impact of the special charges recorded during the
fourth quarter for commercial airline exposures. Excluding the impact of these
charges, the 1993 results decreased due to lower commercial and government
engine and spare parts sales, partially offset by an increase in a partner's
interest in the PW4000 engine program during 1993. In addition, Pratt & Whitney
reduced research and development expenditures during 1993 as the PW4084 and
PW4168 commercial engine programs
32
reach maturity. The decrease in 1992 resulted from the previously discussed
charges recorded in the fourth quarter of 1992, reduced commercial engine
shipments, lower margins on the mix of sales, and lower commercial aircraft
engine participation fees.
Flight Systems segment operating profits increased $69 million (22%) and
$372 million in 1993 and 1992, respectively. The increase in 1993 results
primarily from improved operating performance and increased Black Hawk shipments
by Sikorsky and better than expected contract performance related principally to
Norden's Multi Mode Radar System contract. These increases were partially offset
by declines in commercial aerospace volumes at Hamilton Standard and the absence
of the favorable impacts of the settlement of several government contracting
claims recorded in 1992. The 1992 increase in profitability resulted primarily
from improved operating performance at Sikorsky, the absence of the 1991 $148
million charge relating to Norden's Multi Mode Radar System and other contract
matters, and the absence of the $148 million charge for environmental
remediation activities recorded in 1991.
Carrier segment operating profits increased $43 million (23%) in 1993 and
$121 million (390%) in 1992. Improved operating profits resulting from increased
volumes and margins in the Asia-Pacific and Latin American regions were
partially offset by the effects of the continuing recession in Europe. The 1992
increase was primarily a result of increased new equipment volumes, most notably
in the North American region and the transportation refrigeration business, as
well as a more profitable mix of sales.
Otis segment operating profits increased $31 million (9%) and $17 million
(6%) in 1993 and 1992, respectively. The translation impact of the stronger U.S.
dollar negatively impacted segment operating profits in 1993 by $38 million. The
improved operating profits reflect the effect of continued growth in service
volumes during both 1992 and 1993. During 1993, increases in Latin American and
European new equipment volumes and improvement in Latin American new equipment
margins contributed to the growth. New equipment revenues in 1992 were lower
than 1991 levels primarily due to decreases in the North American and Latin
American regions.
Automotive segment operating profits increased $20 million (16%) and $50
million (82%) in 1993 and 1992, respectively. Operating profits during 1993 and
1992 reflect the impact of increased North American production volumes and
European market penetration. During 1993, these increases were partially offset
by the reduction in European vehicle production and the absence of the operating
results of certain automotive business units divested during the third quarter
of 1992. In addition, 1992 results include the gain on sale of these units.
- -------------------------------------------------------------------------------
Interest expense decreased:
11% or $31 million from 1992 to 1993;
17% or $57 million from 1991 to 1992.
- -------------------------------------------------------------------------------
The Corporation's interest expense continues to be favorably impacted by
reductions in the amount of debt outstanding during 1993 and 1992 combined with
reductions in interest rate levels for both years.
The weighted-average interest rate on the Corporation's short-term
borrowings in 1993 was 5.5% (8.9% in 1992 and 11.4% in 1991), and the average
composite rate for short-term borrowings and long-term debt, excluding the ESOP
debt guarantee, for 1993 was 7.2% (7.8% in 1992 and 8.9% in 1991). The average
rate applicable to debt outstanding at December 31, 1993 was 5.4% for short-term
borrowings, and the average composite rate, including all long-term debt other
than the ESOP debt guarantee, was 6.8%.
- -------------------------------------------------------------------------------
Net income increased $774 million from 1992 to 1993;
Net loss decreased $734 million from 1991 to 1992.
- -------------------------------------------------------------------------------
In addition to the matters previously discussed, the Corporation adopted
FAS 106 in the fourth quarter of 1992 with effect from January 1, 1992. The
transition obligation at that date of $482 million, net of tax, was recorded as
a charge to earnings. The incremental expense associated with FAS 106 was $23
million and $71 million in 1993 and 1992, respectively. This reduction was
attributable to revisions in the Corporation's substantive postretirement
medical plan for certain of its employee population.
The Corporation also adopted the provisions of FAS 109, "Accounting for
Income Taxes," in the fourth quarter of 1992, with effect from January 1, 1992,
resulting in a credit to earnings of $160 million representing recognition of
previously unrecognized tax benefits. This standard requires, among other
things, recognition of deferred tax assets (representing future tax benefits)
attributable to deductible temporary differences between financial statement and
income tax bases of assets and liabilities and to tax carryforwards to the
extent that realization of these benefits is more likely than not. If the more
likely than not threshold cannot be met, valuation allowances must be recorded
to reduce the deferred tax assets to amounts expected to be realized.
Deductible and taxable temporary differences in the same taxing
jurisdiction are offset for presentation in the Consolidated Balance Sheet. The
following table summarizes the future income tax
33
benefits arising from net deductible temporary differences and tax carryforwards
at December 31, 1993:
In Millions of Dollars
- -------------------------------------------------------------------------------
Net deductible temporary differences $1,463
Tax carryforwards:
Acquired loss carryforwards 18
Foreign and state loss carryforwards 155
Foreign and state tax credit carryforwards 69
Alternative minimum tax credits (MTC) 84
-------
1,789
Valuation allowance (297)
--------
Total future income tax benefits $1,492
========
The future tax benefit arising from net deductible temporary differences of
$1,463 million relates to expenses recognized for financial reporting purposes
which will result in tax deductions over varying future periods. The realization
of this amount is dependent upon the generation of sufficient taxable income,
primarily in the United States, over the varying future periods in which the tax
deductions will be recognized, including applicable carryforward periods. Future
tax benefits of $368 million attributable to postretirement benefits will be
realized as paid over a period of forty years or more based on the Corporation's
healthcare plans for retirees. Conversely, expenses associated with the
Corporation's restructuring program (tax benefits of $182 million) are expected
to result in tax deductions primarily within two years. Other future tax
benefits of $913 million relate to such matters as environmental accruals,
warranty provisions and the timing of inventory and contract cost recognition
which are expected to result in tax deductions in periods up to generally ten
years.
Prior to 1992, the Corporation's U.S. operations consistently produced
taxable income, averaging $300 million of domestic source taxable income per
year for the five years ending in 1991. In 1992 and 1993, primarily as a result
of depressed conditions in the commercial airline industry and actual
expenditures relating to the 1991 restructuring provision, domestic tax losses
were incurred which have been utilized by carryback to prior years.
Based on the Corporation's business plans, including the benefits of the
cost reductions resulting from the restructuring program, and the tax planning
strategies available, management believes that the Corporation's domestic
earnings during the periods identified above will be sufficient to realize these
future income tax benefits.
Minimum tax credit and certain state tax credit carryforwards have no
expiration date. Foreign and state tax loss carryforwards arise in a number of
different taxing jurisdictions with expiration dates ranging from 1994 to 2008.
For those jurisdictions where the expiration date or the projected operating
results indicate that realization is not likely, a valuation allowance has been
provided. Foreign tax credit carryforwards, which require future foreign source
income to be utilized, expire after five years and generally are fully reserved
through valuation allowances.
Liquidity and Financing Commitments
Management assesses the Corporation's liquidity in terms of its overall
ability to generate cash to fund its operating and investing activities. Of
particular importance in the management of liquidity are cash flows generated
from operating activities, capital expenditure levels, adequate bank lines of
credit, and financial flexibility to attract long-term capital on satisfactory
terms.
Set forth below is selected key cash flow data from the Consolidated
Statement of Cash Flows:
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
Net Cash Flows from
Operating Activities $ 1,508 $ 1,203 $ 1,890
======= ======= =======
Purchases of fixed assets $ (846) $ (920) $(1,048)
(Acquisitions) dispositions
of business units, net - 64 (7)
Other investing activities (180) (70) 27
------- ------- -------
Net Cash Flows from
Investing Activities $(1,026) $ (926) $(1,028)
======= ======= =======
Net Cash Flows from
Financing Activities $ (379) $ (435) $ (517)
======= ======= =======
Net cash flows from operating activities in 1993 improved over 1992
primarily due to operating results. Operating cash flows remain lower than the
1991 level primarily because of the impact of the Corporation's restructuring
activities.
BAR CHART DESCRIPTION:
Operating Cash Flows ($ Millions)
1989 - $1,129
1990 - $1,333
1991 - $1,890
1992 - $1,203
1993 - $1,508
The substantial fixed asset additions during the period 1991 through 1993,
while decreasing in each year, have been necessary to increase productivity, to
modernize certain of the Corporation's facilities and to provide for expansion
of some product lines. The great
34
majority of these expenditures were for machinery and equipment and were made
across all business segments. Cash used for financing activities during the
period included dividends to preferred and common shareowners.
BAR CHART DESCRIPTION:
Capital Expenditures and Depreciation ($ Millions)
Capital
Expenditures Depreciation
1989 - $1,023 $591
1990 - $1,200 $675
1991 - $1,048 $735
1992 - $ 920 $777
1993 - $ 846 $777
During the years ended December 31, 1993 and 1992, the Corporation met its
net financing requirements by adjusting its level of short-term borrowings as
required and issuing long-term debt when conditions were considered favorable.
The results of the foregoing activities upon the Corporation's financial
structure are shown in the following tabulation:
In Millions of Dollars 1993 1992
- -------------------------------------------------------------------------------
Short-term borrowings and current
portion of long-term debt $ 1,020 $ 788
Long-term debt 1,560 1,964
Capital lease obligations 379 394
Shareowners' equity 3,598 3,370
Debt to total capitalization 45% 48%
The Corporation's ratio of debt to total capitalization reflects a three
percentage point decrease from 1992. Operating results in 1993 combined with the
improved cash flow caused the decrease in this ratio. The impact of fourth
quarter charges combined with the net charge taken as a result of the adoption
of FAS 106 and FAS 109 caused a decrease in shareowners' equity which more than
offset the effect of debt reductions and increased the Corporation's debt to
total capitalization ratio two percentage points at December 31, 1992. The
Corporation expects the costs of the restructuring actions will be funded from
operations and from the cash flow benefits associated with the restructuring.
Consequently, the Corporation's restructuring actions are not expected to result
in significant increases in borrowing levels.
The Corporation believes that existing sources of liquidity are adequate
to meet anticipated short-term borrowing needs at similar risk-based interest
rates for the foreseeable future. While Moody's Investor Services reduced the
Corporation's debt rating from A1 to A2 in 1993, Standard & Poor's reaffirmed
the Corporation's debt rating at A+. Accordingly, the Corporation does not
believe its long-term borrowing costs will be materially impacted.
At December 31, 1993, the Corporation had credit commitments from banks
totaling $1.0 billion under two Revolving Credit Agreements. Each agreement
provides for borrowings of $500 million at interest rates up to the prime rate.
One commitment expires October 14, 1994 and the other on January 1, 1996. At
December 31, 1993, there were no borrowings under either Revolving Credit
Agreement. Long-term financing will continue to be considered in the future if
conditions are advantageous, and in that regard, under an effective Registration
Statement on file with the Securities and Exchange Commission at December 31,
1993, up to $871 million of medium-term and long-term debt of the Corporation
might be issued.
In addition to the requirements discussed above, the Corporation had
commitments to finance or arrange financing for customers at December 31, 1993
of approximately $1.3 billion of commercial aircraft, of which $174 million may
be required to be disbursed in 1994.
New FASB Pronouncement
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 112 (FAS 112), "Employers' Accounting for
Postemployment Benefits," in November 1992. FAS 112 requires that the liability
for certain postemployment benefits, including salary continuation, supplemental
unemployment benefits and job training, be recognized over the employees'
service lives when certain conditions are met. Liabilities for FAS 112 type
benefits have already been recorded pursuant to FAS 106 and other pre-existing
policies of the Corporation.
Environmental Matters
The Corporation's operations are subject to environmental regulation by
federal, state, and local authorities in the United States and regulatory
authorities with jurisdiction over its foreign operations.
The Corporation has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA" or Superfund) for environmental remediation at 84 federal Superfund
sites, many of which relate to formerly-owned businesses. To date, the
Corporation has made expenditures of $37 million for remediation at these
Superfund sites and its share of future expenditures at these Superfund sites is
estimated to be in the range of $110-$140 million. Additionally, the Corporation
is potentially responsible for remediation under federal, state and/or local
regulations at other sites. The Corporation has adequately provided for its
share of future remediation and related expenditures at Superfund and other
known sites for which it may have some remediation responsibility.
35
The Corporation had expenditures related to remediation at Superfund and
other sites of $64 million in 1993, $58 million in 1992 and $57 million in 1991.
These expenditures are not expected to exceed $100 million in each of the next
two years.
Since environmental laws are becoming increasingly more stringent, the
Corporation's capital expenditures and costs for environmental compliance may
increase in the future.
The Corporation has instituted legal proceedings against its insurers
seeking insurance coverage for remediation and related expenditures. These
proceedings are expected to last several years. As no prediction can be made as
to the outcome of these proceedings, potential insurance reimbursements are not
recorded. The above uncertainties notwithstanding, the Corporation believes that
expenditures necessary to comply with the present regulations governing
environmental protection will not have a material effect upon its capital
expenditures, competitive position, financial position or results of operations.
Other Contingencies
In June 1989, Sikorsky Aircraft submitted a voluntary disclosure report to
the Department of Defense describing the conditions that gave rise to a $75
million downward adjustment of progress payments in April 1988 and related
matters. An employee filed a "qui tam" action under the Civil False Claims Act
based on matters that he learned while working on the Corporation's
investigation of the matter. The Civil Division of the Department of Justice has
stated that it would accept $150 million in full settlement of the matter, which
compensates the Government for damages it has suffered, but the terms and
conditions of such a settlement are the subject of continuing negotiations. The
Corporation has accrued its estimated liability for this matter based on
available information. If the Corporation is unable to negotiate a satisfactory
settlement, it intends to litigate.
The Corporation is now and believes that, in light of the current
government contracting environment, it will be the subject of one or more
government investigations. If the Corporation or one of its business units were
charged with wrongdoing as a result of any of these investigations, the
Corporation or one of its business units could be suspended from bidding on or
receiving awards of new government contracts pending the completion of legal
proceedings. If convicted or found liable, the Corporation could be fined and
debarred from new government contracting for a period generally not to exceed
three years. Any contracts found to be tainted by fraud could be voided by the
Government.
Subsequent Event
On January 19, 1994, the Corporation filed a registration statement with
the Securities and Exchange Commission pursuant to its plan to sell to the
public a 40 to 44 percent equity interest in UT Automotive, the Corporation's
Automotive segment. The Corporation has not made decisions regarding the use of
proceeds, which for purposes of the filing were estimated at $470 million.
Comparative Stock Data 1993 1992
- ---------------------------------------------------- -------------------------
Common Stock High Low Dividend High Low Dividend
First Quarter 49 7/8 43 3/4 $.45 56 5/8 49 $.45
Second Quarter 55 7/8 46 1/4 .45 56 50 1/4 .45
Third Quarter 59 3/8 51 1/2 .45 57 1/4 47 3/4 .45
Fourth Quarter 66 1/8 56 1/2 .45 49 42 1/4 .45
The Corporation's Common Stock is listed on the New York Stock Exchange. The
high and low prices are based on the Composite Tape. There were 30,000 common
shareowners of record at December 31, 1993.
36
Management's Responsibility for Financial Statements
The financial statements of United Technologies Corporation and subsidiaries,
and all other information presented in this Annual Report, are the
responsibility of the management of the Corporation. The financial statements
have been prepared in accordance with generally accepted accounting principles.
Management is responsible for the integrity and objectivity of the
financial statements, including estimates and judgments reflected in them. It
fulfills this responsibility primarily by establishing and maintaining
accounting systems and practices adequately supported by internal accounting
controls. These controls include the selection and training of management and
supervisory personnel; maintenance of an organizational structure providing for
delegation of authority and establishment of responsibilities; communication of
requirements for compliance with approved accounting, control and business
practices throughout the organization; business planning and review; and a
program of internal audit. Management believes the internal accounting controls
in use provide reasonable assurance that the Corporation's assets are
safeguarded, that transactions are executed in accordance with management's
authorizations, and that the financial records are reliable for the purpose of
preparing financial statements.
Independent accountants are elected annually by the Corporation's
shareowners to audit the financial statements in accordance with generally
accepted auditing standards. Their report appears in this Annual Report. Their
audits, as well as those of the Corporation's internal audit department, include
a review of internal accounting controls and selective tests of transactions.
The Audit Review Committee of the Board of Directors, consisting of six
directors who are not officers or employees of the Corporation, meets regularly
with management, the independent accountants and the internal auditors, to
review matters relating to financial reporting, internal accounting controls and
auditing.
/s/ Robert F. Daniell /s/ George David
Robert F. Daniell George David
Chairman and President and
Chief Executive Officer Chief Operating Officer
/s/ Stephen F. Page
Stephen F. Page
Executive Vice President
and Chief Financial Officer
Report of Independent Accountants
To the Shareowners of United Technologies Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of changes in shareowners' equity and of
cash flows present fairly, in all material respects, the financial position of
United Technologies Corporation and its subsidiaries at December 31, 1993 and
1992, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Corporation'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.
As discussed in Note 2, the Corporation changed its methods of accounting
for postretirement benefits other than pensions and for income taxes in 1992.
/s/ Price Waterhouse
One Financial Plaza
Hartford, Connecticut
January 26, 1994
37
Consolidated Statement of Operations United Technologies Corporation
Years Ended December 31,
----------------------------
In Millions of Dollars (except per share amounts) 1993 1992 1991
- --------------------------------------------------------------------------------------------------------
Revenues
Product sales $ 16,671 $ 17,559 $ 17,054
Service sales 4,065 4,082 3,786
Financing revenues and other income, less other deductions 345 391 422
-------- -------- --------
21,081 22,032 21,262
-------- -------- --------
Costs and Expenses
Cost of products sold 13,666 14,642 14,331
Cost of services sold 2,571 2,591 2,408
Research and development 1,137 1,221 1,133
Selling, general and administrative 2,547 3,011 2,667
Interest 251 282 339
Restructuring provision - 85 1,275
-------- -------- --------
20,172 21,832 22,153
-------- -------- --------
Income (loss) before income taxes and minority interests 909 200 (891)
Income taxes 336 77 75
-------- -------- --------
Income (loss) before minority interests 573 123 (966)
Less-Minority interests in subsidiaries' earnings 86 88 55
-------- -------- --------
Income (loss) before cumulative effect of accounting principle changes 487 35 (1,021)
Cumulative effect of changes in accounting principles for:
Income taxes - 160 -
Postretirement benefits other than pensions - (482) -
-------- -------- --------
Net Income (Loss) $ 487 $ (287) $ (1,021)
======== ======== ========
Preferred Stock Dividend Requirement $ 43 $ 42 $ 62
-------- -------- --------
Earnings (Loss) Applicable to Common Stock $ 444 $ (329) $ (1,083)
-------- -------- --------
Per Share of Common Stock:
Primary:
Earnings (loss) before cumulative effect of accounting principle changes $ 3.53 $ (0.05) $ (8.91)
Cumulative effect of changes in accounting principles for:
Income taxes - 1.29 -
Postretirement benefits other than pensions - (3.91) -
-------- -------- --------
Earnings (Loss) $ 3.53 $ (2.67) $ (8.91)
======== ======== ========
Fully Diluted:
Earnings (loss) before cumulative effect of accounting principle changes $ 3.30 $ (0.05) $ (8.91)
Cumulative effect of changes in accounting principles for:
Income taxes - 1.29 -
Postretirement benefits other than pensions - (3.91) -
-------- -------- --------
Earnings (Loss) $ 3.30 $ (2.67) $ (8.91)
======== ======== ========
See accompanying Notes to Financial Statements
38
Consolidated Balance Sheet United Technologies Corporation
December 31,
-----------------
In Millions of Dollars 1993 1992
- -----------------------------------------------------------------------------------------------
Assets
Cash and short-term cash investments $ 421 $ 354
Accounts receivable (net of allowance for doubtful accounts of $336 and $447) 2,981 3,135
Future income tax benefits 794 802
Inventories and contracts in progress 4,635 5,095
Less-Progress payments and billings on contracts in progress (1,482) (1,587)
Prepaid expenses 357 302
------- -------
Total Current Assets 7,706 8,101
------- -------
Investments and receivables due after one year 457 416
------- -------
Customer financing assets 914 647
------- -------
Fixed assets (net of accumulated depreciation of $5,231 and $4,928) 4,565 4,602
------- -------
Future income tax benefits 698 783
------- -------
Deferred charges:
Costs in excess of net assets of acquired companies (net of accumulated
amortization of $254 and $230) 544 577
Prepaid pension costs and other 734 802
------- -------
1,278 1,379
------- -------
Total Assets $15,618 $15,928
======= =======
Liabilities and Shareowners' Equity
Short-term borrowings $ 780 $ 377
Accounts payable 1,815 2,097
Accrued salaries, wages and employee benefits 912 945
Accrued restructuring costs 245 435
Other accrued liabilities 2,053 2,056
Long-term debt - currently due 240 411
Income taxes currently payable 314 232
Advances on sales contracts 561 484
------- -------
Total Current Liabilities 6,920 7,037
------- -------
Future income taxes payable 177 186
------- -------
Long-term debt 1,939 2,358
------- -------
Future pension and postretirement benefit obligations 1,440 1,395
------- -------
Other long-term liabilities 999 1,085
------- -------
Commitments and contingent liabilities (Notes 5 and 13)
Minority interests in subsidiary companies 369 346
------- -------
Series A ESOP Convertible Preferred Stock, $1 par value (Authorized -
20,000,000 shares)
Outstanding-12,459,932 and 12,661,738 shares 822 836
ESOP deferred charge and note receivable (646) (685)
------- -------
176 151
------- -------
Shareowners' Equity:
Capital Stock:
Preferred Stock, $1 par value (Authorized - 230,000,000 shares; none issued
and outstanding) - -
Common Stock, $5 par value (Authorized - 500,000,000 shares)
Issued-138,712,505 and 136,438,880 shares 2,075 1,965
Cost of 12,665,188 and 12,664,188 common shares in treasury (677) (677)
Retained earnings 2,466 2,247
Deferred foreign currency translation adjustments (227) (135)
Minimum pension liability adjustment (39) (30)
------- -------
Total Shareowners' Equity 3,598 3,370
------- -------
Total Liabilities and Shareowners' Equity $15,618 $15,928
======= =======
See accompanying Notes to Financial Statements
39
Consolidated Statement of Cash Flows United Technologies Corporation
Years Ended December 31,
---------------------------
In Millions of Dollars 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income (loss) $ 487 $ (287) $(1,021)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Restructuring provision - 85 1,275
Environmental remediation provision, less portion in current liabilities 30 39 291
Depreciation and amortization 815 852 764
(Increase) decrease in:
Accounts receivable 45 239 302
Inventories, net of progress payments 335 328 168
Prepaid expenses (55) (135) 96
Increase (decrease) in:
Accounts and taxes payable, and accrued liabilities (25) 359 501
Future income taxes payable and future income tax benefits 33 (626) (346)
Noncurrent postretirement benefit obligation 37 808 -
Advances on sales contracts 77 (133) 84
Restructuring liabilities (393) (354) (208)
Environmental liabilities (54) (52) (41)
Minority interests in subsidiaries' earnings 86 88 55
Gains from dispositions of business units - (16) -
Other, net 90 8 (30)
------- ------- -------
Net Cash Flows from Operating Activities 1,508 1,203 1,890
Cash flows from investing activities: ------- ------- -------
Purchases of fixed assets (846) (920) (1,048)
Sales of fixed assets 47 95 64
Increase in customer financing assets (356) (202) (81)
Decrease in customer financing assets 148 - 74
Investments - other companies (20) 29 (31)
Acquisitions of business units - - (7)
Dispositions of business units - 64 -
Other, net 1 8 1
------- ------- -------
Net Cash Flows from Investing Activities (1,026) (926) (1,028)
Cash flows from financing activities: ------- ------- -------
Issuance of long-term debt 27 13 509
Repayments of long-term debt (636) (355) (690)
Increase (decrease) in short-term borrowings 403 85 (64)
Decrease in ESOP note receivable and debt guarantee, net of $14 million,
$16 million and $7 million ESOP Preferred Stock retirements 25 25 45
Common Stock issued for employee stock plans and other 110 87 28
Dividends paid on Common and ESOP Preferred Stocks (267) (264) (281)
Other, net (41) (26) (64)
------- ------- -------
Net Cash Flows from Financing Activities (379) (435) (517)
------- ------- -------
Effect of foreign exchange rate changes on cash and short-term cash investments (36) (11) (23)
------- ------- -------
Net Increase (Decrease) in Cash and Short-Term Cash Investments 67 (169) 322
Cash and Short-Term Cash Investments, Beginning of year 354 523 201
------- ------- -------
Cash and Short-Term Cash Investments, End of year $ 421 $ 354 $ 523
Supplemental Disclosure of Cash Flow Information: ======= ======= =======
Interest paid, net of amounts capitalized $ 239 $ 293 $ 330
Income taxes paid, net of refunds 179 403 436
Non-cash investing and financing activities:
Assets of businesses acquired - - 191
Liabilities of businesses acquired - - 155
Assets of businesses sold - 64 -
Liabilities of businesses sold - 16 -
See accompanying Notes to Financial Statements
40
Consolidated Statement of Changes in Shareowners' Equity United Technologies Corporation
In Millions of Dollars
-----------------------------------
Common Treasury Retained
Stock Stock Earnings Other
- ---------------------------------------------------------------------------------------------------------------------
Balance December 31, 1990 $1,850 $(677) $4,089 $ 81
Issued under employee incentive plans, with no tax benefit (742,147 shares
of Common Stock, net of 25,761 shares purchased and reissued) 28
Net loss (1,021)
Dividends on -Common Stock ($1.80 per share) (219)
-ESOP Preferred Stock ($4.80 per share), with no tax benefit (62)
Deferred foreign currency translation adjustments:
Translation and hedging adjustments, with no tax benefit (107)
Sale of foreign investments (1)
- ---------------------------------------------------------------------------------------------------------------------
Balance December 31, 1991 1,878 (677) 2,787 (27)
Issued under employee incentive plans, and related tax benefit (1,868,645 shares
of Common Stock, net of 160,002 shares purchased and reissued) 87 (1)
Redemption of Common Stock Rights (12)
Net loss (287)
Dividends on -Common Stock ($1.80 per share) (222)
-ESOP Preferred Stock ($4.80 per share), net of
income tax benefits of $19 million (42)
-Recognition of previously unrecognized tax benefit on
ESOP Preferred Stock dividends 24
Deferred foreign currency translation adjustments:
Translation and hedging adjustments, including income taxes of $12 million (108)
Minimum pension liability adjustment, net of income tax benefits of $19 million (30)
- ---------------------------------------------------------------------------------------------------------------------
Balance December 31, 1992 1,965 (677) 2,247 (165)
Issued under employee incentive plans, and related tax benefit (2,273,625 shares
of Common Stock, net of 21,409 shares purchased and reissued) 110 (1)
Net income 487
Dividends on -Common Stock ($1.80 per share) (224)
-ESOP Preferred Stock ($4.80 per share), net of
income tax benefits of $18 million (43)
Deferred foreign currency translation adjustments:
Translation and hedging adjustments, including income taxes of $4 million (92)
Minimum pension liability adjustment, net of income tax benefits of $7 million (9)
- ---------------------------------------------------------------------------------------------------------------------
Balance December 31, 1993 $2,075 $(677) $2,466 $(266)
See accompanying Notes to Financial Statements
41
Notes to Financial Statements
Note 1
Summary of Accounting Principles
Principles of Consolidation: The consolidated financial statements include
the accounts of the Corporation and its subsidiaries. International operating
subsidiaries are included generally on the basis of fiscal years ending November
30. All material intercompany transactions have been eliminated. Certain
reclassifications have been made to 1992 and 1991 amounts to conform with 1993
presentation.
Revenue Recognition: Sales under government and commercial fixed-price
contracts and government fixed-price-incentive contracts are recorded at the
time deliveries are made or, in some cases, on a percentage of completion basis.
Sales under cost-reimbursement contracts are recorded as work is performed and
billed. Sales of commercial aircraft engines sometimes require significant
participation by the Corporation in aircraft financing arrangements; when
appropriate, such sales are accounted for as operating leases. Sales under
elevator and escalator installation and modernization contracts are accounted
for under the percentage of completion method.
Prospective losses, if any, on contracts are provided for when the losses
become anticipated. Loss provisions are based upon any anticipated excess of
inventoriable manufacturing or engineering cost and estimated warranty costs
over the net revenue from the products contemplated by the specific order.
Service sales, representing aftermarket repair and maintenance activities
performed on produced or similar use equipment, are recognized over the
contractual period or as services are performed.
Inventories and Contracts in Progress: Inventories and contracts in
progress are stated at the lower of cost or estimated realizable value.
Inventories consist primarily of raw materials and work in process. Materials in
excess of requirements for contracts and orders currently in effect or
anticipated have been eliminated. A considerable portion of inventories is based
on cost standards which are adjusted to reflect approximate current costs. The
remainder of inventories is stated either at average cost or at actual cost
accumulated against specific contracts or orders or, in the case of a sub-
stantial portion of inventories in the Carrier and Automotive businesses, at
last-in, first-out (LIFO) cost. Manufacturing tooling costs are charged to
inventories or to fixed assets depending upon their nature, general
applicability and useful lives. Tooling costs included in inventory are charged
to cost of sales based on usage, generally within two years after they enter
productive use. All other manufacturing costs are allocated to current
production; no such costs are deferred and assigned to future production.
Contracts in progress relate to elevator and escalator contracts and
include standard cost of manufactured components, accumulated installation costs
and estimated earnings on uncompleted contracts.
Depreciation and Amortization: Provisions for depreciation of plant and
equipment related to the Corporation's aerospace operations have generally been
made using accelerated methods. Provisions for depreciation of other plant and
equipment have primarily been made using the straight-line method. Estimated
useful lives principally range from 30 to 50 years for buildings and
improvements, from 8 to 20 years for machinery and equipment, and from 5 to 10
years for office equipment. Improvements to leased property are amortized over
the life of the lease.
Environmental Activities: Provisions for environmental remediation
activities are recorded when assessments are made, remedial efforts are probable
and related amounts can be reasonably estimated; potential insurance
reimbursements are not recorded. The Corporation periodically assesses its
environmental liabilities through reviews of contractual commitments, site
assessments, feasibility studies and formal remedial design and action plans.
Research and Development and Other Costs: Research and development costs
not specifically covered by contracts and those related to the Corporation-
sponsored share of research and development activity in connection with cost-
sharing arrangements are charged to operations as incurred. General and
administrative expenses also are charged to operations as incurred. Costs
pertaining to fulfillment of the Corporation's warranty and service policies and
product guarantees are estimated on the basis of past experience and current
product performance and, where believed to be significant and reasonably
predictable in amount, are accrued at the time products are sold.
Goodwill: Costs in excess of values assigned to the underlying net assets
of acquired companies are included in deferred charges and are generally being
amortized over periods ranging from 25 to 40 years.
Hedging Activity: The Corporation enters into a variety of interest rate
futures, options, currency swaps and forward contracts in its management of
interest rate and foreign currency exposures. Realized and unrealized gains and
losses are deferred and either recognized as interest expense over the
borrowing period or recognized in shareowners' equity, depending on the
exposure hedged.
The Corporation enters into forward foreign exchange contracts to hedge
foreign currency denominated receivables and payables. Such contracts generally
have maturities of one year or less and the counterparties are typically major
international financial institutions.
42
Cash flows attributable to the forward foreign exchange contracts are
generally included with the cash flows from the associated hedged receivables or
payables.
Income Taxes: Provisions for income taxes are based upon income and
expenses recorded in accordance with the Corporation's regular accounting
practices and as shown in the financial statements. The income tax effects of
differences in the time when items of income and expense are reflected in
accordance with such regular accounting practices and the time they are
recognized for income tax purposes are shown in the balance sheet as future
income tax benefits or as future income taxes payable, as appropriate.
Earnings Per Share: Primary earnings per share computations are based on
the average number of shares of Common Stock outstanding during the year. Fully
diluted earnings per share reflect the maximum dilution of per share earnings,
if applicable, which would have occurred if all the ESOP Convertible Preferred
Stock of the Corporation had been converted as of the date of issue. Each share
of the ESOP Preferred Stock is convertible into one share of Common Stock. A
reduction in earnings applicable to common shares is required in the calculation
of fully diluted earnings per share representing the Corporation's assumed
additional contribution to the ESOP to enable it to meet its debt repayment
responsibilities were the preferred dividends not available for this purpose.
Cash and Cash Equivalents: Short-term cash investments are highly liquid in
nature and have original maturities of three months or less.
Note 2
Accounting and Reporting Changes
Effective January 1, 1992, the Corporation adopted Statement of Financial
Accounting Standards No. 106 (FAS 106), "Employers' Accounting for
Postretirement Benefits Other Than Pensions," using the immediate recognition
transition option. The after-tax cumulative effect attributable to prior years
as of January 1, 1992 for this change in accounting for retiree health care and
life insurance benefits reduced 1992 earnings by $482 million ($3.91 per share).
Prior to 1992 the Corporation recognized the cost of providing these benefits as
premiums were incurred. The incremental expense associated with FAS 106 was $23
million and $71 million in 1993 and 1992, respectively. This reduction was
attributable to revisions in the Corporation's substantive postretirement
medical plan for certain of its employee population.
Effective January 1, 1992, the Corporation adopted Statement of Financial
Accounting Standards No. 109 (FAS 109), "Accounting for Income Taxes." The
Statement requires the liability method of accounting for income taxes rather
than the deferred method previously used. The cumulative effect attributable to
prior years as of January 1, 1992 for this change in accounting for income taxes
increased 1992 earnings by $160 million ($1.29 per share).
Prior years' financial statements were not restated.
Note 3
Restructuring and Employee Severance Plans
On January 20, 1992, the Corporation's Board of Directors approved
restructuring plans which resulted in a $1.275 billion pre-tax ($1.21 billion
after-tax, or $10.06 per share) charge to 1991 operations. The restructuring
actions included eliminating jobs, closing or consolidating facilities, and
improving design, engineering and manufacturing processes.
As a result of the continued worsening of the commercial airline industry,
the Corporation recorded additional restructuring provisions of $85 million in
the fourth quarter of 1992 to reflect the need for further workforce reductions
in the Pratt & Whitney and Flight Systems segments.
Note 4
International Operations
A substantial portion of the Corporation's revenues and assets is
attributable to international operations. The Corporation has significant
manufacturing facilities in Canada, Italy, France, Japan, South Korea, Spain,
Australia, Mexico, the United Kingdom, Brazil, China, Ireland, Singapore, and
Germany and operations of lesser size in a number of other countries. At
December 31, 1993, the investment (identifiable assets) in any single country
outside the United States did not exceed 5% of the Corporation's total
identifiable assets, other than investments in Canada which amounted to slightly
more than 5% of total identifiable assets.
Amounts included in the accompanying consolidated financial statements
associated with operations outside the United States consist of the following:
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
Sales $7,854 $8,396 $7,720
Net income 264 254 179
Assets 4,722 4,999 5,096
Liabilities 2,076 2,395 2,758
Minority interests 364 340 328
- -------------------------------------------------------------------------------
The financial position and results of operations of substantially all of
the Corporation's significant foreign subsidiaries are measured using local
currency as the functional currency. The aggregate effects of translating the
financial statements of these subsidiaries are deferred as a separate component
of shareowners' equity.
At December 31, 1993, the Corporation had $667 million notional principal
amount of outstanding currency swaps and forward exchange contracts to hedge its
foreign net investment exposures. In addition, at December 31, 1993 and 1992,
the
43
Corporation had $1.6 billion and $1.7 billion, respectively, of forward foreign
exchange contracts hedging other foreign currency exposures.
Earnings were credited or charged with foreign exchange gains (losses),
including gains and losses of operations in highly inflationary economies, of
$3 million, $6 million and $(22) million in 1993, 1992 and 1991, respectively.
Note 5
Airline Industry and Customer Financing Assets
The Corporation has significant receivables and other financing assets
which result from its business activities with commercial airline industry
customers totaling $2,235 million and $2,219 million at December 31, 1993 and
1992, respectively. The commercial airline industry and customer financing
asset amounts primarily include assets of Pratt & Whitney, Hamilton Standard and
UT Finance Corporation.
Customer financing assets consist of the following:
In Millions of Dollars 1993 1992
- -------------------------------------------------------------------------------
Notes receivable $570 $365
Leases receivable, less unearned income
of $311 and $13 367 73
Products under lease 19 255
---- ----
956 693
Less: receivables due within one year 42 46
---- ----
$914 $647
==== ====
- -------------------------------------------------------------------------------
Scheduled maturities of amounts included in notes and leases receivable due
after one year for the next five years are $40 million in 1995, $49 million in
1996, $105 million in 1997, $58 million in 1998 and $643 million in 1999 and
thereafter.
Customer aircraft financing activities are conducted principally through UT
Finance Corporation, its consolidated subsidiaries and certain other customer
financing operations.
The competitive commercial aircraft engine market often requires customer
financing commitments. These commitments may be in the form of guarantees,
secured debt or lease financing. At December 31, 1993, the Corporation had
commitments to finance or arrange financing for approximately $1.3 billion of
commercial aircraft. The Corporation cannot currently predict the extent to
which these commitments will be utilized, since certain customers may be able
to obtain more favorable terms using traditional financing sources. From time
to time, the Corporation also arranges for third party investors to assume a
portion of its commitments. However, should all current commitments be
exercised as scheduled, the maximum amounts that will be disbursed are as
follows: $174 million in 1994, $280 million in 1995, $204 million in 1996,
$440 million in 1997, $112 million in 1998 and $67 million in 1999 and beyond.
If exercised, the financing arrangements will be secured by assets with fair
values exceeding the financed amounts.
The Corporation's customer financing activities include leasing aircraft
and subleasing the aircraft to customers. In some instances, customers have
cancellation provisions which may result in sublease periods shorter than the
Corporation's lease obligation. At December 31, 1993, the Corporation's rental
commitments under long-term noncancelable operating leases aggregated $290
million ($25 million in each of the years 1994 through 1998). At December 31,
1993, the Corporation also had approximately $421 million of residual value and
other guarantees related to various commercial aircraft engine customer
financing arrangements. These guarantees may extend for up to twenty-two years
and may be used by the customers to obtain more favorable financing terms than
would otherwise be available. Where applicable, the estimated fair market values
of the assets securing these guarantees and operating lease obligations equaled
or exceeded the related guarantees and obligations, after considering existing
reserves. As with financing commitments, the Corporation may arrange for third
party investors to assume a portion of its guarantees or operating lease
obligations.
Allowances for possible losses relating to financing activities with
commercial airline customers total $374 million and $409 million at December 31,
1993 and 1992, respectively.
Note 6
Inventories and Contracts in Progress
Inventories and contracts in progress at December 31, 1993 consist of
inventories of $3,629 million ($4,018 million at December 31, 1992) and elevator
and escalator contracts in progress of $1,006 million ($1,077 million at
December 31, 1992).
The methods of accounting followed by the Corporation do not permit
classification of inventories by categories of finished goods, work in process
and raw materials. The Corporation's sales contracts in many cases are long-term
contracts expected to be performed over periods exceeding twelve months.
Approximately 58% (60% at December 31, 1992) of the total inventories and
contracts in progress has been acquired or manufactured under such long-term
contracts. It is impracticable for the Corporation to determine the amounts of
inventory scheduled for delivery under long-term contracts within the next
twelve months.
The principal elements of cost included in inventories are materials,
purchased components, direct labor and manufacturing overhead (engineering
overhead in the case of engineering contracts). Tooling and other costs are an
insignificant portion of inventories.
A substantial portion of the Corporation's inventories in its Carrier and
Automotive businesses is valued under the LIFO method. If these inventories had
been valued at the lower of replacement value or cost under the first-in, first-
out method, they
44
would have been higher by $137 million at December 31, 1993 ($148 million at
December 31, 1992).
The book basis of LIFO inventories exceeded the tax basis of such inventories
by approximately $57 million at December 31, 1993 and 1992 resulting from the
assignment of fair value to inventories acquired in a business acquisition
accounted for under the purchase method of accounting.
At December 31, 1993, progress payments, secured by lien, on United States
Government contracts and billings on contracts in progress amounted to $347
million ($333 million at December 31, 1992) and $1,135 million ($1,254 million
at December 31, 1992), respectively.
Note 7
Investments and Receivables Due After One Year
Investments and receivables due after one year consist of the following:
In Millions of Dollars 1993 1992
- -------------------------------------------------------------------------------
Receivables due after one year $239 $216
Investments 218 200
---- ----
$457 $416
==== ====
- -------------------------------------------------------------------------------
Current and long-term accounts receivable at December 31, 1993 and 1992
include approximately $105 million and $144 million, respectively, representing
retainage under contract provisions and amounts which are not presently billable
because of lack of funding or final prices or contractual documents under
government contracts or for other reasons. These items are expected to be
collected in the normal course of business.
Note 8
Fixed Assets
In Millions of Dollars 1993 1992
- -------------------------------------------------------------------------------
Fixed assets, at cost:
Land $ 158 $ 161
Buildings and improvements 2,754 2,620
Machinery, tools and equipment 6,427 6,206
Under construction 457 543
------- -------
9,796 9,530
Accumulated depreciation (5,231) (4,928)
------- -------
$ 4,565 $ 4,602
======= =======
- -------------------------------------------------------------------------------
Depreciation expense was $777 million in 1993 and 1992, and $735 million in
1991.
Note 9
Borrowings and Lines of Credit
The following summarizes the short-term borrowings, lines of credit and
long-term debt of the Corporation and its subsidiaries. Short-term borrowings:
In Millions of Dollars 1993 1992
- -------------------------------------------------------------------------------
Foreign bank borrowings $204 $253
Commercial paper and notes 576 124
---- ----
$780 $377
==== ====
- -------------------------------------------------------------------------------
At December 31, 1993, the Corporation had credit commitments from banks
totaling $1.0 billion under two Revolving Credit Agreements. Each agreement
provides for borrowings of $500 million at interest rates up to the prime rate.
The termination date for one agreement is January 1, 1996 with a facility fee
not to exceed 1/4% per year on the aggregate commitment. The other is effective
through October 14, 1994 and has a facility fee not to exceed 3/16% per annum on
the aggregate commitment. There were no borrowings under either Revolving Credit
Agreement during the two years ended December 31, 1993.
Long-term debt:
In Millions
1993 Debt of Dollars
----------------------------- ----------------
Weighted Average
Type of Issue Interest Rate Maturity 1993 1992
- -------------------------------------------------------------------------------
Denominated in U.S. Dollars:
Notes and other debt 6.3% 1995-2021 $1,003 $1,316
Denominated in foreign currency:
Notes and other debt 8.0% 1995-2030 40 95
Capital lease obligations 9.5% 1995-2013 379 394
ESOP debt guarantee 7.5% 1995-2009 517 553
------ ------
$1,939 $2,358
====== ======
45
Principal payments required on long-term debt for the next five years are
$240 million in 1994, $148 million in 1995, $119 million in 1996, $185 million
in 1997 and $80 million in 1998.
The terms of the indentures relating to certain issues of long-term debt
include provisions intended to restrict, under certain conditions, the
availability of retained earnings for payment of dividends on the Common Stock.
At December 31, 1993, all of the Corporation's retained earnings were free of
such restrictions.
At December 31, 1993, the Corporation had entered into various interest
rate swap contracts (including options thereon) related to approximately $805
million of its outstanding borrowings. The expiration dates of the various
contracts are tied to scheduled debt and capital lease obligation payment dates
and extend to 2002.
Capitalized Interest: During 1993, the Corporation and its consolidated
subsidiaries capitalized $29 million ($52 million in 1992 and $70 million in
1991) of interest, to be depreciated over the lives of the related fixed assets.
Note 10
Taxes on Income
The provision for income taxes for the years ended December 31 comprises
the following:
In Millions of Dollars 1993 1992 1991*
- -------------------------------------------------------------------------------
Current:
United States:
Federal $ 6 $(145) $138
State 22 9 48
Foreign 226 263 246
----- ----- ----
254 127 432
Future: ----- ----- ----
United States:
Federal 4 (19) (275)
State 22 (44) (31)
Foreign 27 (24) (51)
----- ----- ----
53 (87) (357)
----- ----- ----
307 40 75
Benefits attributable to items
credited to equity 29 37 -
----- ----- ----
$ 336 $ 77 $ 75
===== ===== ====
* 1991 amounts have not been restated for FAS109.
As discussed in Note 2, the Corporation adopted FAS 109 as of January 1,
1992, and the cumulative effect of this change is reported in the 1992
Consolidated Statement of Operations.
Future income taxes represent the tax effects of transactions which are
reported in different periods for financial and tax reporting purposes. These
temporary differences are determined in accordance with FAS 109 and are more
inclusive in nature than "timing differences" as determined under previously
applicable accounting principles. Temporary differences and carryforwards which
gave rise to future income tax benefits and payables at December 31, 1993 and
1992 are as follows:
In Millions of Dollars 1993 1992
- -------------------------------------------------------------------------------
Future income tax benefits:
Tax depreciation and foreign capital
allowances $ (129) $ (147)
Capitalization of interest cost, less
related depreciation (99) (105)
Adjustment of inventories and
contract losses to tax basis 393 304
Provisions for warranty 286 306
Insurance and employee benefits 554 468
Restructuring provisions 182 351
Alternative minimum tax credits 84 51
Environmental remediation provisions 195 199
Federal, foreign and state tax loss
carryforwards 173 123
Foreign and state tax credit
carryforwards 69 31
Other items, net 81 221
Valuation allowance (297) (217)
------ ------
1,492 1,585
Future income taxes payable: ------ ------
Use of completed-contract method
for reporting taxable income 11 17
Tax depreciation and foreign capital
allowances 104 109
Capitalization of interest cost, less
related depreciation 21 23
Insurance and employee benefits 42 34
Lease transactions, finance subsidiaries 23 21
Other items, net 9 69
------ ------
210 273
------ ------
Net future income tax benefits $1,282 $1,312
====== ======
Current and non-current future income tax benefits and payables within the
same tax jurisdiction are offset for presentation in the Consolidated Balance
Sheet. Valuation allowances have been established for state and foreign tax
credit and tax loss carryforwards to reduce the future income tax benefits to
amounts expected to be realized. Federal loss carryforwards arise from business
acquisitions with significant restrictions as to their future realization and
consequently are fully reserved.
46
Deferred U.S. federal, state and foreign income taxes shown in the income
tax provision for 1991 are comprised principally of the income tax effects of
insurance and employee benefit items $(107) million, restructuring provisions
$(59) million, and environmental remediation provisions $(102) million.
The sources of income (loss) before income taxes and minority interests
were:
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
United States $291 $(374) $(1,311)
Foreign 618 574 420
---- ----- -------
$909 $ 200 $ (891)
==== ===== =======
Future income taxes payable generally have not been provided on
undistributed earnings of international subsidiaries, of $1,288 million, which
are included in consolidated retained earnings at December 31, 1993. A
substantial portion of the undistributed earnings of the international
subsidiaries has been reinvested, and the Corporation believes that income taxes
otherwise payable upon repatriation of earnings not reinvested would not be
significant.
Differences between effective income tax rates and the statutory U.S.
federal income tax rates are as follows:
1993 1992 1991*
- -------------------------------------------------------------------------------
Statutory U.S. federal income
tax rate 35.0% 34.0% (34.0)%
State and local income taxes,
net of federal tax benefit 3.4 (9.6) 1.3
Varying tax rates of consolidated
subsidiaries (including Foreign
Sales Corporation) (1.0) (5.7) 7.1
Amortization of excess purchase
accounting and goodwill
adjustments, without tax effect 0.5 3.4 0.4
Foreign tax credits (0.4) 15.6 33.5
Other (0.5) 0.7 0.1
---- ---- ----
Effective income tax rates 37.0% 38.4% 8.4%
==== ==== ====
* 1991 amounts have not been restated for FAS109.
Foreign and state tax credit carryforwards total $69 million at December
31, 1993, $27 million of which expire in 1998. Federal, state and foreign tax
loss carryforwards total $1,418 million at December 31, 1993 and expire as
follows:
In Millions of Dollars Federal State Foreign
- -------------------------------------------------------------------------------
1994-1998 $ - $640 $120
1999-2003 51 107 2
2004-2008 1 455 -
Indefinite - - 42
Note 11
Employee Benefit Plans
Employee Pension Benefits: The Corporation and its domestic subsidiaries
have a number of defined benefit pension plans covering substantially all U.S.
employees. Plan benefits are generally based on years of service and the
employee's compensation during the last several years of employment. The
Corporation's funding policy is based on an actuarially determined cost method
allowable under Internal Revenue Service regulations. The funds are invested
either in various securities by trustees or in insurance annuity contracts.
Certain foreign subsidiaries have defined benefit pension plans or severance
indemnity plans covering their employees. The Corporation accounts for the cost
of its defined benefit plans in accordance with Statement of Financial
Accounting Standards No. 87 (FAS 87), "Employers' Accounting for Pensions."
In addition to the defined benefit plans covering U.S. and foreign
employees discussed above, the Corporation makes contributions to multiemployer
plans (predominantly defined benefit plans) covering certain employees in some
of its U.S. operations. Certain additional employees, primarily located in
foreign countries, are covered by retirement arrangements which do not meet the
reporting requirements of FAS 87.
Summarized below are the components of net periodic pension cost for
defined benefit plans, net pension cost for multiemployer plans and other costs
for pension and severance indemnity plans:
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
Defined benefit plans:
Service cost-benefits earned
during the period $ 204 $ 195 $ 210
Interest cost on projected
benefit obligation 573 551 524
Actual return on assets (1,024) (286) (1,198)
Net amortization and deferral
of actuarial gains (losses) 305 (433) 508
------- ----- -------
Net periodic pension cost $ 58 $ 27 $ 44
======= ===== =======
Net pension cost:
Multiemployer plans $ 19 $ 17 $ 21
Other costs 20 11 22
Summarized below is the funded status of the defined benefit pension plans
and the related amounts that are recognized in the Consolidated Balance Sheet at
December 31:
47
December 31, 1993 December 31, 1992
------------------------ ------------------------
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
Millions of Dollars Benefits Exceed Assets Benefits Exceed Assets
- --------------------------------------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested $4,894 $1,702 $4,176 $1,566
Nonvested 615 128 223 147
------ ------ ------ ------
Accumulated benefit obligation 5,509 1,830 4,399 1,713
Effect of projected future salary increases 834 106 1,081 130
------ ------ ------ ------
Projected benefit obligation for services rendered to date 6,343 1,936 5,480 1,843
Plan assets available for benefits 5,937 1,532 5,283 1,475
------ ------ ------ ------
Plan assets less than projected benefit obligation (406) (404) (197) (368)
Unrecognized net loss (gain) 609 195 363 166
Prior service cost not yet recognized in net periodic pension cost 58 128 88 146
Unrecognized net (asset) obligation at transition (112) (25) (148) (11)
Additional minimum liability recognized - (207) - (207)
Prepaid pension cost (pension liability) included in deferred ------ ------ ------ ------
charges (future pension and postretirement benefit obligations) $ 149 $ (313) $ 106 $ (274)
====== ====== ====== ======
The pension funds are valued at September 30 of the respective years in the
table above. Major assumptions used in the accounting for the defined benefit
pension plans are shown in the following table. Net periodic pension cost is
determined using these factors as of the end of the prior year, whereas the
funded status of the plans uses only the first two factors as of the end of the
current year.
December 31,
-------------------------------------
1993 1992 1991 1990
- -------------------------------------------------------------------------------
Weighted-average
discount rate 7.3% 8.1% 8.6% 9.0%
Rate of increase in future
compensation 5.1% 5.2% 6.1% 7.0%
Expected long-term rate
of return on assets 9.7% 10.5% 10.5% 10.5%
In accordance with the provisions of FAS 87, the Corporation was required
to record an additional minimum pension liability at December 31, 1993 and 1992.
This amount represents the excess of the accumulated benefit obligations over
the fair value of plan assets and accrued pension liabilities. The liabilities
have been offset by intangible assets to the extent possible. Because the asset
recognized may not exceed the amount of unrecognized prior service cost, the
balance of the liability at the end of each period is reported as a separate
reduction to shareowners' equity, net of tax benefits.
Amounts are summarized as follows:
December 31,
---------------
In Millions of Dollars 1993 1992
- -------------------------------------------------------------------------------
Additional minimum liability $207 $207
==== ====
Intangible assets $142 $158
Reduction of shareowners' equity 39 30
Tax benefits 26 19
Certain of the Corporation's international subsidiaries generally do not
determine the actuarial value of accumulated benefits and the value of net
assets on the basis shown above. For these plans, unfunded vested benefits as of
December 31, 1993 and 1992 were insignificant. Unfunded liabilities for pension
plans of certain international subsidiaries and for employee severance benefits,
including those accruing to employees under foreign government regulations, are
included in future pension and postretirement benefit obligations in the
accompanying balance sheet.
Employee Health Care and Insurance Benefits: As discussed in Note 2, the
Corporation adopted FAS 106 as of January 1, 1992.
The Corporation expects to continue funding postretirement health care and
insurance benefit costs principally on a pay-as-you-go basis. Substantially all
domestic full-time employees who retire from the Corporation between age 55 and
age 65, and certain foreign employees, are eligible to receive postretirement
health care and life insurance benefits. Beginning in the first quarter of 1993
and continuing through the year, the Corporation revised its substantive
postretirement medical plan for certain of its employee population. The revised
plan calls for defined dollar benefits for all domestic salaried employees and
certain domestic hourly employees. Most other employees who retire from the
Corporation between ages 55 and 65, are eligible to receive, at a cost to the
retiree equal to the Corporation's cost for an active employee, certain health
care benefits identical to those available to active employees. After attaining
age 65, an eligible retiree's health care benefit coverage
48
becomes coordinated with Medicare, with the retiree paying substantially all of
the cost of the coverage. Certain retired employees of businesses acquired by
the company are covered under other health care plans that differ from current
plans in coverage, deductibles, and retiree contributions. In addition, certain
retirees may elect, at retirement, to continue life insurance coverage of up to
twice their annual base pay as of that date.
Summary information on the Corporation's plans is as follows:
December 31,
---------------
In Millions of Dollars 1993 1992
- -------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $ 505 $ 433
Fully eligible, active plan participants 32 32
Other active participants 341 565
----- ------
878 1,030
Less: plan assets at fair value 107 118
----- ------
Postretirement benefit obligation in
excess of plan assets 771 912
Unrecognized net loss (73) (4)
Unrecognized net reduction in prior
service costs 222 -
----- ------
Accrued postretirement benefit cost $ 920 $ 908
===== ======
The components of net periodic postretirement benefit cost are as follows:
December 31,
---------------
In Millions of Dollars 1993 1992
- -------------------------------------------------------------------------------
Service cost of benefits earned $ 17 $ 35
Interest cost on accumulated postretirement
benefit obligation 65 80
Actual return on plan assets (7) (10)
Net amortization and deferral of actuarial
(gains) losses (17) -
---- ----
Net periodic postretirement benefit cost $ 58 $105
==== ====
The discount rate used in determining the APBO was 7.4% and 8.1% for 1993
and 1992, respectively. The expected long-term rate of return on plan assets
used in determining the net periodic postretirement benefit cost was 8.5% and
8.35% in 1993 and 1992, respectively. The assumed health care cost trend rate
used in measuring the accumulated postretirement benefit obligation was 14.25%
and 15% in 1993 and 1992, respectively, declining by .75% per year to an
ultimate rate of 8%.
If the health care cost trend rate assumptions were increased by 1%, the
APBO as of December 31, 1993 would be increased by 5%. The December 31, 1992
APBO would have been increased by 10% for the change. The effect of this change
on the sum of the service cost and interest cost components of the net periodic
postretirement benefit cost for 1993 and 1992 would be an increase of 5% and
13%, respectively. The impact of changes in expected health care trend rates was
substantially reduced during 1993 as a result of postretirement medical plan
revisions calling for defined dollar benefits for many domestic employees.
Curtailment: During 1993 and 1991, the Corporation recognized net
curtailment losses of $56 million and $54 million, respectively, in accordance
with FAS 88 and FAS 106. These losses resulted from the net increase in the
Corporation's benefit obligation for pension and postretirement benefits for
certain employees affected by workforce reductions at several operating units
and from enhanced early retirement benefits.
Employee Savings Plans: In 1989, the Corporation established an Employee
Stock Ownership Plan (ESOP) to serve as the vehicle for the Corporation's match
of employee contributions within one of its existing savings plans. The
Corporation's Board of Directors authorized 20,000,000 shares of Series A ESOP
Convertible Preferred Stock, par value $1.00 per share, having a 7.38% dividend
rate per annum. Each share of ESOP Preferred Stock is convertible into one share
of Common Stock. In 1990 and 1989, the ESOP Trust acquired 2,900,000 and
10,153,847 shares of this new series of ESOP Preferred Stock, respectively, in
exchange for individual promissory notes aggregating $202 million and $660
million, respectively. In 1990, the ESOP Trust arranged $660 million of
permanent financing guaranteed by the Corporation and repaid the note issued in
1989. The Corporation has no intention at this time of arranging permanent
financing for the remaining balance of the 10.5% $202 million promissory note.
The guarantee of the ESOP's debt resulted in the Corporation recording such
debt in its Consolidated Balance Sheet with a corresponding offset to the ESOP
Preferred Stock. The Corporation is required to contribute sufficient funds,
when combined with dividends paid on the ESOP Preferred Stock, to meet the ESOP
Trust's debt service requirements on the permanent financing and promissory
note. In 1993 and 1992, the ESOP incurred interest expense aggregating $54
million and $58 million, respectively, on its outstanding indebtedness. In 1993,
the ESOP made principal payments of $34 million and $5 million on its permanent
financing and promissory note, respectively.
Shares of ESOP Preferred Stock are held by the ESOP Trustee with the number
of shares allocated to each employee determined annually in accordance with a
method approved by the Internal Revenue Service. To the extent that allocated
shares are not sufficient to meet the matching requirement of the savings plan,
the Corporation will contribute additional ESOP Preferred Stock, Common Stock or
cash.
49
Shares allocated to employees generally may not be withdrawn until the
employee's termination, disability, retirement or death. Upon withdrawal, shares
of ESOP Preferred Stock must be converted into one share of the Corporation's
Common Stock or, if the value of the Common Stock is less than the original cost
of the ESOP Preferred Stock, the ESOP Trustee may require the Corporation to
repurchase the ESOP Preferred Stock at its original cost. Because of the
guaranteed value, the ESOP Preferred Stock is classified outside of permanent
equity. In conjunction with the establishment of the ESOP, the Corporation
purchased approximately 1.7 million shares and 10.4 million shares of its Common
Stock in 1990 and 1989, respectively, at a combined average cost of $53.48 per
share to substantially provide for the conversion feature of the ESOP Preferred
Stock.
Dividends on ESOP Preferred Stock are deductible for U.S. income tax
purposes. Tax benefits available to the Corporation resulting from such
dividends are applied as a reduction of the ESOP Preferred Stock dividends in
the financial statements.
The ESOP Preferred Stock is redeemable, in whole or in part, generally at
the option of the Corporation at redemption prices ranging from $67.88-$69.77
per share plus accrued and unpaid dividends. At December 31, 1993, the aggregate
redemption value of the ESOP Preferred Stock was $851 million.
Contributions to the ESOP together with the value of additional ESOP
Preferred Stock, Common Stock or cash necessary to satisfy the savings plan
matching requirement are charged to expense. The Corporation and a number of its
subsidiaries have additional savings plans in which a portion of employee
contributions is matched in cash by the employer. The amount expensed related to
all savings plans totaled $77 million in 1993 ($77 million in 1992 and $88
million in 1991).
Employee Incentive Plans: On April 24, 1989, the Corporation's shareowners
approved the Long-Term Incentive Plan (1989 Plan) under which shares of Common
Stock may be sold or awarded to officers and key employees. The 1989 Plan in
effect replaced the 1979 Long-Term Incentive Plan (1979 Plan). The 1989 Plan
also had the effect of amending the terms of all grants and awards under the
1979 Plan that remain outstanding inasmuch as they shall be administered in
accordance with the terms and provisions of the 1989 Plan.
The 1989 Plan authorized various types of market-based incentive and
performance-based awards. The exercise price of an option, which will be set at
the time of the grant, will not be less than the fair market value of the shares
subject thereto on the date of grant. The maximum number of shares which may be
utilized for awards granted during a given calendar year may not exceed 2% of
the aggregate shares of Common Stock, common stock equivalents and treasury
shares as reported outstanding in the Annual Report on Form 10-K for the
preceding fiscal year.
At December 31, 1993, stock options for 5,338,917 shares of Common Stock
were exercisable at an average price of $46.41 per share.
At December 31, 1993, 7,983,128 shares of Common Stock were reserved for
issuance under various employee incentive plans.
For 1993, $67 million ($58 million in 1992 and $54 million in 1991) was
charged to income with respect to employee incentive plans of the Corporation
and certain of its subsidiaries, of which $32 million ($35 million in 1992 and
$24 million in 1991) relates to the Corporation's principal incentive
compensation plan, and the remainder to the 1989 Plan and other plans.
A summary of the transactions under all Plans for the three years ended
December 31 follows:
Stock Options
Average Other Incentive
Shares Price Awards
- -------------------------------------------------------------------------------
Outstanding - December 31, 1990 8,164,005 $42.32 247,099
Granted 1,438,054 $48.92 654,816
Exercised/earned (705,691) $33.21 (68,157)
Cancelled (192,996) $47.88 (149,197)
---------- --------
Outstanding - December 31, 1991 8,703,372 $44.03 684,561
Granted 1,618,726 $50.28 640,595
Exercised/earned (1,698,513) $38.26 (468,209)
Cancelled (179,832) $48.49 (266,622)
---------- --------
Outstanding - December 31, 1992 8,443,753 $46.30 590,325
Granted 1,395,273 $47.36 438,865
Exercised/earned (2,103,123) $44.62 (338,681)
Cancelled (180,846) $48.21 (74,017)
---------- --------
Outstanding - December 31, 1993 7,555,057 $46.92 616,492
========== ========
50
Note 12
Fair Value of Financial Instruments
FAS 107, "Disclosures about Fair Value of Financial Instruments," requires
the determination of fair value for certain of the Corporation's assets,
liabilities and contingent liabilities. When practicable, the following methods
and assumptions were used to estimate the fair value of those financial
instruments included in the following categories:
Cash and short-term cash investments: The carrying amount approximates fair
value because of the short maturity of those instruments.
Investments and receivables due after one year: The fair values of some
investments and receivables are estimated based on quoted market prices for
those or similar instruments. For other investments and receivables for which
there are no quoted market prices, an approximation of fair value is based upon
projected cash flows discounted at an estimated current market rate of interest.
Customer financing assets: The fair values of customer financing assets are
estimated based upon projected cash flows discounted at an estimated current
market rate of interest.
Long-term debt: The fair value of the Corporation's long-term debt is
estimated based on the quoted market prices for the same or similar issues or on
the current rates offered to the Corporation for debt of the same remaining
maturities.
Interest rate swap agreements: The fair value of interest rate swaps (used
for hedging purposes) is the estimated amount that the Corporation would receive
or pay to terminate the swap agreements at the reporting date, taking into
account current interest rates and the current credit worthiness of the swap
counterparties.
Foreign currency contracts: The fair value of foreign currency contracts
(used for hedging purposes) is estimated by obtaining quotes from brokers.
Financing commitments: It was not practicable, without incurring excessive
cost, to estimate the fair value of the Corporation's financing commitments
totaling $1.3 billion at December 31, 1993. The fair value of such commitments
would be based upon the amount a third party would charge for assuming the
Corporation's obligation under the commitments. Additional information
pertaining to these commitments is included in Note 5.
Except for the financing commitments described above and long-term debt,
it is estimated that the carrying value of all of the Corporation's financial
instruments approximate fair value at December 31, 1993. Based upon market
conditions at December 31, 1993, the fair value of the Corporation's long-term
debt exceeded the carrying value by approximately $180 million.
Note 13
Commitments and Contingent Liabilities
The Corporation and its consolidated subsidiaries occupy space and use
certain equipment under lease arrangements. Rent expense in 1993, 1992 and 1991
under such arrangements totaled $344 million, $405 million and $389 million,
respectively. Rental commitments at December 31, 1993 under long-term
noncancelable operating leases are as follows (See Note 5 for lease commitments
associated with customer financing arrangements):
Land, Machinery,
Buildings and Tools and
In Millions of Dollars Office Space Equipment
- -------------------------------------------------------------------------------
1994 $127 $ 58
1995 99 37
1996 76 20
1997 60 9
1998 49 7
After 1998 122 2
---- ----
$533 $133
==== ====
The Corporation extends performance and operating cost guarantees, which
are beyond its normal warranty and service policies, for extended periods on
some of its products, particularly commercial aircraft engines. Liability under
such guarantees is contingent upon future product performance and durability.
The Corporation has accrued its estimated liability that may result under these
guarantees.
The Corporation has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA" or Superfund) for environmental remediation at 84 federal Superfund
sites, many of which relate to formerly-owned businesses. Additionally, the
Corporation is potentially responsible for remediation under federal, state
and/or local regulations at other sites. The Corporation has adequately provided
for its share of future remediation and related expenditures at Superfund and
other known sites for which it may have some remediation responsibility.
The Corporation has instituted legal proceedings against its insurers
seeking insurance coverage for remediation and related expenditures. These
proceedings are expected to last several years. As no prediction can be made as
to the outcome of these proceedings, potential insurance reimbursements are not
recorded. The above uncertainties notwithstanding, the Corporation believes that
expenditures necessary to comply with the present regulations governing
environmental protection will not have a material effect upon its capital
expenditures, competitive position, financial position or results of operations.
51
In June 1989, Sikorsky Aircraft submitted a voluntary disclosure report to
the Department of Defense describing the conditions that gave rise to a $75
million downward adjustment of progress payments in April 1988 and related
matters. An employee filed a "qui tam" action under the Civil False Claims Act
based on matters that he learned while working on the Corporation's
investigation of the matter. The Civil Division of the Department of Justice has
stated that it would accept $150 million in full settlement of the matter, which
compensates the Government for damages it has suffered, but the terms and
conditions of such a settlement are the subject of continuing negotiations. The
Corporation has accrued its estimated liability for this matter based on
available information. If the Corporation is unable to negotiate a satisfactory
settlement, it intends to litigate.
The Corporation is now and believes that, in light of the current
government contracting environment, it will be the subject of one or more
government investigations. If the Corporation or one of its business units were
charged with wrongdoing as a result of any of these investigations, the
Corporation or one of its business units could be suspended from bidding on or
receiving awards of new government contracts pending the completion of legal
proceedings. If convicted or found liable, the Corporation could be fined and
debarred from new government contracting for a period generally not to exceed
three years. Any contracts found to be tainted by fraud could be voided by the
Government.
The Corporation also has other commitments and contingent liabilities
related to legal proceedings and matters arising out of the normal course of
business.
Management believes that resolution of these matters will not have a
material adverse effect upon either results of operations, cash flows, or
financial position of the Corporation.
Note 14
Subsequent Event
On January 19, 1994, the Corporation filed a registration statement with
the Securities and Exchange Commission pursuant to its plan to sell to the
public a 40 to 44 percent equity interest in UT Automotive, the Corporation's
Automotive segment. The Corporation has not made decisions regarding the use of
proceeds, which for purposes of the filing were estimated at $470 million.
Note 15
Business Segment Financial Data
The Corporation and its subsidiaries design, develop, manufacture and sell
high-technology products, classified in five principal industry segments or
lines of business.
Pratt & Whitney products are principally aircraft engines and substantial
spare parts sold to a diversified customer base including international and
domestic commercial airlines and aircraft leasing companies, aircraft
manufacturers, regional and commuter airlines, and U.S. and non-U.S.
governments. Modified aircraft engines used for electrical power generation and
other applications are also included.
Flight Systems products include helicopters and spare parts, propellers,
rocket motors, and fuel control, environmental, radar, cockpit and integrated
display and other airborne and space systems sold primarily to U.S. and non-U.S.
governments, aerospace and defense prime contractors, and airframe and jet
engine manufacturers. Products also include fuel cells and the design and manu-
facture of microelectronic circuits.
Carrier products include air conditioning equipment, substantial service,
maintenance and spare parts sold to a diversified international customer base
in commercial and residential real estate development.
Otis products include elevators and escalators, substantial service,
maintenance and spare parts sold to a diversified international customer base in
commercial real estate development.
Automotive products include electrical wiring systems, electromechanical
and hydraulic devices, electric motors, car and truck interior trim components,
steering wheels, instrument panels and other products for the automotive
industry principally in the United States and Canada.
Activities classified as "Other" consist of a variety of business and
developmental activities.
Business segment information for the three years ended December 31, 1993
appears in the Consolidated Summary of Business Segment Financial Data on pages
52 through 54.
52
Consolidated Summary of Business Segment United Technologies Corporation
Financial Data
Industry Segments Years Ended December 31,
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
Revenues
Pratt & Whitney $ 5,942 $ 6,894 $ 7,133
Flight Systems 3,930 4,045 4,024
Carrier 4,480 4,328 3,843
Otis 4,418 4,512 4,304
Automotive 2,382 2,378 2,084
Other 43 40 33
Corporate items and eliminations (114) (165) (159)
------- ------- -------
Consolidated revenues $21,081 $22,032 $21,262
======= ======= =======
Operating Profits (Losses)
Pratt & Whitney $ 156 $ (288) $ (282)
Flight Systems 385 275 (224)
Carrier 226 152 (159)
Otis 377 313 163
Automotive 148 111 2
Other 22 25 (3)
Eliminations - 1 6
------- ------- -------
Operating profits (losses) 1,314 589 (497)
Financing revenues and other income,
less other deductions 15 4 50
Interest expense (251) (282) (339)
General corporate expenses (169) (111) (105)
------- ------- -------
Consolidated income (loss) before income taxes $ 909 $ 200 $ (891)
======= ======= =======
Identifiable Assets
Pratt & Whitney $ 4,270 $ 4,483 $ 5,122
Flight Systems 2,011 2,170 2,323
Carrier 2,639 2,616 2,619
Otis 1,689 1,821 1,827
Automotive 1,557 1,537 1,625
General corporate assets and other 3,452 3,301 2,469
------- ------- -------
Consolidated assets $15,618 $15,928 $15,985
======= ======= =======
Capital Expenditures
Pratt & Whitney $ 252 $ 274 $ 351
Flight Systems 139 159 196
Carrier 176 175 203
Otis 124 139 128
Automotive 141 136 113
General corporate assets and other 14 37 57
------- ------- -------
Consolidated additions to fixed assets $ 846 $ 920 $ 1,048
======= ======= =======
See accompanying Notes to Consolidated Summary of Business Segment Financial
Data
53
Consolidated Summary of Business Segment United Technologies Corporation
Financial Data (Continued)
Geographic Areas Years Ended December 31,
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
Revenues
United States operations $13,818 $14,403 $14,201
International operations:
Europe 4,018 4,572 4,121
Other 4,130 4,131 3,908
Corporate items and eliminations (885) (1,074) (968)
------- ------- -------
Consolidated revenues $21,081 $22,032 $21,262
======= ======= =======
Operating Profits (Losses)
United States operations $ 663 $ (83) $(1,034)
International operations:
Europe 375 469 370
Other 333 272 184
Eliminations (57) (69) (17)
------- ------- --------
Operating profits (losses) 1,314 589 (497)
Financing revenues and other income,
less other deductions 15 4 50
Interest expense (251) (282) (339)
General corporate expenses (169) (111) (105)
------- ------- -------
Consolidated income (loss) before income taxes $ 909 $ 200 $ (891)
======= ======= =======
Identifiable Assets
United States operations $ 7,934 $ 8,200 $ 8,959
International operations:
Europe 1,883 2,247 2,392
Other 2,520 2,311 2,255
General corporate assets and other 3,281 3,170 2,379
------- ------- -------
Consolidated assets $15,618 $15,928 $15,985
======= ======= =======
See accompanying Notes to Consolidated Summary of Business Segment Financial
Data
54
Notes to Consolidated Summary Of Business Segment
Financial Data
Revenues: Revenues by industry segment and geographic area include inter-
segment sales and transfers between geographic areas. Generally, such sales and
transfers are made at prices approximating those which the selling or
transferring entity is able to obtain on sales of similar products to
unaffiliated customers.
Revenues include sales under prime contracts and subcontracts to the U.S.
Government, for the most part Pratt & Whitney and Flight Systems products, as
follows:
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
Pratt & Whitney $1,556 $1,905 $1,922
Flight Systems 2,416 2,616 2,511
Revenues from United States operations include export sales of $3,503
million in 1993, $3,451 million in 1992 and $3,587 million in 1991. Export sales
to Europe were $932 million, $1,114 million and $1,375 million of the 1993, 1992
and 1991 amounts, respectively. Export sales include direct sales to commercial
customers outside the United States and sales to the U.S. Government, commercial
and affiliated customers which are known to be for resale to customers outside
the United States.
Operating Profits: The Corporation changed its presentation of general
corporate expenses in 1993 to reflect in each segment's results only those
expenses which directly benefit the segment. As required by generally accepted
accounting principles, 1992 and 1991 operating profits have not been restated
for the 1993 change in presentation. Operating profits for 1993 on the old basis
of presentation of general corporate expenses would be as follows: Pratt &
Whitney - $121 million; Flight Systems - $362 million; Carrier - $199 million;
Otis - $350 million; and Automotive - $134 million.
Identifiable Assets: Identifiable assets are those which are specifically
identified with the industry segments and geographic areas in which operations
are conducted. General corporate assets consist principally of short-term cash
investments, customer financing subsidiaries, future income tax benefits, and
investments in other companies.
Depreciation and amortization charges are as follows:
In Millions of Dollars 1993 1992 1991
- -------------------------------------------------------------------------------
Pratt & Whitney $304 $322 $306
Flight Systems 157 168 138
Carrier 132 132 121
Otis 97 92 76
Automotive 96 95 91
Eliminations: Eliminations made in reconciling industry and geographic area
data with the related consolidated amounts include intersegment sales and
transfers between geographic areas, unrealized profits in inventory and similar
items.
Restructuring: The Corporation recorded charges of $85 million and $1,275
million to operations for restructuring actions in 1992 and 1991, respectively.
Restructuring provisions, by business segment and in total, were as follows:
In Millions of Dollars 1992 1991
- -------------------------------------------------------------------------------
Pratt & Whitney $ 70 $ 688
Flight Systems 15 142
Carrier - 190
Otis - 133
Automotive - 59
Other - 16
---- ------
85 1,228
Financing revenues and other income,
less other deductions - 6
General corporate expenses - 41
---- ------
$ 85 $1,275
==== ======
The Summary of Business Segment Financial Data should be read in
conjunction with the consolidated financial statements of the Corporation and
notes thereto appearing elsewhere in this Annual Report.
55
Selected Quarterly Financial Data United Technologies Corporation
In Millions of Dollars (except per share amounts)
Quarter Ended
------------------------------------------------------
1993 March 31 June 30 September 30 December 31
- ------------------------------------------------------------------------------------------------------------------
Sales $4,725 $5,508 $5,056 $5,447
Financing revenues and other income, less other deductions 139 62 72 72
Gross profit 976 1,188 1,142 1,193
Net income 64 130 157 136
Earnings per share-primary .43 .95 1.16 .98
-fully diluted .42 .89 1.08 .92
1992
- ------------------------------------------------------------------------------------------------------------------
Sales $5,058 $5,635 $5,287 $5,661
Financing revenues and other income, less other deductions 108 101 88 94
Gross profit 1,107 1,202 1,199 900
Income (loss) before cumulative effect of accounting
principle changes 94 148 126 (333)
Net income (loss) (228) 148 126 (333)
Primary earnings (loss) per share before cumulative
effect of accounting principle changes .68 1.11 .94 (2.77)
Primary earnings (loss) per share (1.95) 1.11 .94 (2.77)
Fully diluted earnings (loss) per share before cumulative
effect of accounting principle changes .68 1.03 .87 (2.77)
Fully diluted earnings (loss) per share (1.95) 1.03 .87 (2.77)
The cumulative effect of the accounting principle changes appears in the
Corporation's Consolidated Statement of Operations on page 37 of this Annual
Report.
In the fourth quarter of 1992, the Corporation recorded charges of $447 million
for credit and other exposures related to the commercial airline industry, $169
million for various contract matters, and $85 million for additional
restructuring.
Exhibit (22)
SUBSIDIARIES OF THE REGISTRANT
The companies listed below are direct or indirect subsidiaries of the
Registrant. Their names and jurisdictions of incorporation are as follows:
United Technologies Automotive Delaware
Holdings, Inc.
Carrier Corporation Delaware
Otis Elevator Company New Jersey
Otis Europe S.A. France
Pratt & Whitney Canada Inc. Canada
Other subsidiaries of the Registrant have been omitted from this listing
since, considered in the aggregate or as a single subsidiary, they would not
constitute a significant subsidiary.
Exhibit 25
___________________________________________________
UNITED
TECHNOLOGIES
CORPORATION
Powers of Attorney
___________________________________________________
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, as a member
of the Board of Directors, or as an officer of UNITED TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Corporation"), or as a member of a
committee of said Board, or in all of said capacities, hereby constitutes
and appoints STEPHEN F. PAGE, IRVING B. YOSKOWITZ, WILLIAM H. TRACHSEL, AND
GEORGE E. MINNICH, or any one of them, his true and lawful attorneys and
agents to do any and all acts and things and execute any and all instruments
which the said attorneys and agents may deem necessary or advisable to
enable the Corporation to comply with the Securities Exchange Act of 1934
and any rules and regulations and requirements of the Securities and
Exchange Commission in respect thereof in connection with the filing of the
Annual Report of the Corporation on Form 10-K, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned, in the capacities aforesaid or in any
other capacity, to the Corporation's Form 10-K Annual Reports filed or to be
filed with the Securities and Exchange Commission, and any and all
amendments to the said Form 10-K Annual Reports, and any and all instruments
and documents filed as a part of or in connection with the said Form 10-K
Annual Reports or any amendments thereto; hereby ratifying and confirming
all that the said attorneys and agents, or any one of them, have done, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents
this 30th day of January, 1994.
/s/ HOWARD H. BAKER, JR.
Howard H. Baker, Jr.
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, as a member
of the Board of Directors, or as an officer of UNITED TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Corporation"), or as a member of a
committee of said Board, or in all of said capacities, hereby constitutes
and appoints STEPHEN F. PAGE, IRVING B. YOSKOWITZ, WILLIAM H. TRACHSEL, AND
GEORGE E. MINNICH, or any one of them, her true and lawful attorneys and
agents to do any and all acts and things and execute any and all instruments
which the said attorneys and agents may deem necessary or advisable to
enable the Corporation to comply with the Securities Exchange Act of 1934
and any rules and regulations and requirements of the Securities and
Exchange Commission in respect thereof in connection with the filing of the
Annual Report of the Corporation on Form 10-K, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned, in the capacities aforesaid or in any
other capacity, to the Corporation's Form 10-K Annual Reports filed or to be
filed with the Securities and Exchange Commission, and any and all
amendments to the said Form 10-K Annual Reports, and any and all instruments
and documents filed as a part of or in connection with the said Form 10-K
Annual Reports or any amendments thereto; hereby ratifying and confirming
all that the said attorneys and agents, or any one of them, have done, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents
this 30th day of January, 1994.
/s/ ANTONIA HANDLER CHAYES
Antonia Handler Chayes.
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, as a member
of the Board of Directors, or as an officer of UNITED TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Corporation"), or as a member of a
committee of said Board, or in all of said capacities, hereby constitutes
and appoints STEPHEN F. PAGE, IRVING B. YOSKOWITZ, WILLIAM H. TRACHSEL, AND
GEORGE E. MINNICH, or any one of them, his true and lawful attorneys and
agents to do any and all acts and things and execute any and all instruments
which the said attorneys and agents may deem necessary or advisable to
enable the Corporation to comply with the Securities Exchange Act of 1934
and any rules and regulations and requirements of the Securities and
Exchange Commission in respect thereof in connection with the filing of the
Annual Report of the Corporation on Form 10-K, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned, in the capacities aforesaid or in any
other capacity, to the Corporation's Form 10-K Annual Reports filed or to be
filed with the Securities and Exchange Commission, and any and all
amendments to the said Form 10-K Annual Reports, and any and all instruments
and documents filed as a part of or in connection with the said Form 10-K
Annual Reports or any amendments thereto; hereby ratifying and confirming
all that the said attorneys and agents, or any one of them, have done, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents
this 30th day of January, 1994.
/s/ ROBERT F. DANIELL
Robert F. Daniell
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, as a member
of the Board of Directors, or as an officer of UNITED TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Corporation"), or as a member of a
committee of said Board, or in all of said capacities, hereby constitutes
and appoints STEPHEN F. PAGE, IRVING B. YOSKOWITZ, WILLIAM H. TRACHSEL, AND
GEORGE E. MINNICH, or any one of them, his true and lawful attorneys and
agents to do any and all acts and things and execute any and all instruments
which the said attorneys and agents may deem necessary or advisable to
enable the Corporation to comply with the Securities Exchange Act of 1934
and any rules and regulations and requirements of the Securities and
Exchange Commission in respect thereof in connection with the filing of the
Annual Report of the Corporation on Form 10-K, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned, in the capacities aforesaid or in any
other capacity, to the Corporation's Form 10-K Annual Reports filed or to be
filed with the Securities and Exchange Commission, and any and all
amendments to the said Form 10-K Annual Reports, and any and all instruments
and documents filed as a part of or in connection with the said Form 10-K
Annual Reports or any amendments thereto; hereby ratifying and confirming
all that the said attorneys and agents, or any one of them, have done, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents
this 30th day of January, 1994.
/s/ ROBERT F. DEE
Robert F. Dee
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, as a member
of the Board of Directors, or as an officer of UNITED TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Corporation"), or as a member of a
committee of said Board, or in all of said capacities, hereby constitutes
and appoints STEPHEN F. PAGE, IRVING B. YOSKOWITZ, WILLIAM H. TRACHSEL, AND
GEORGE E. MINNICH, or any one of them, his true and lawful attorneys and
agents to do any and all acts and things and execute any and all instruments
which the said attorneys and agents may deem necessary or advisable to
enable the Corporation to comply with the Securities Exchange Act of 1934
and any rules and regulations and requirements of the Securities and
Exchange Commission in respect thereof in connection with the filing of the
Annual Report of the Corporation on Form 10-K, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned, in the capacities aforesaid or in any
other capacity, to the Corporation's Form 10-K Annual Reports filed or to be
filed with the Securities and Exchange Commission, and any and all
amendments to the said Form 10-K Annual Reports, and any and all instruments
and documents filed as a part of or in connection with the said Form 10-K
Annual Reports or any amendments thereto; hereby ratifying and confirming
all that the said attorneys and agents, or any one of them, have done, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents
this 30th day of January, 1994.
/s/ CHARLES W. DUNCAN, JR.
Charles W. Duncan, Jr.
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, as a member
of the Board of Directors, or as an officer of UNITED TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Corporation"), or as a member of a
committee of said Board, or in all of said capacities, hereby constitutes
and appoints STEPHEN F. PAGE, IRVING B. YOSKOWITZ, WILLIAM H. TRACHSEL, AND
GEORGE E. MINNICH, or any one of them, his true and lawful attorneys and
agents to do any and all acts and things and execute any and all instruments
which the said attorneys and agents may deem necessary or advisable to
enable the Corporation to comply with the Securities Exchange Act of 1934
and any rules and regulations and requirements of the Securities and
Exchange Commission in respect thereof in connection with the filing of the
Annual Report of the Corporation on Form 10-K, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned, in the capacities aforesaid or in any
other capacity, to the Corporation's Form 10-K Annual Reports filed or to be
filed with the Securities and Exchange Commission, and any and all
amendments to the said Form 10-K Annual Reports, and any and all instruments
and documents filed as a part of or in connection with the said Form 10-K
Annual Reports or any amendments thereto; hereby ratifying and confirming
all that the said attorneys and agents, or any one of them, have done, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents
this 30th day of January, 1994.
/s/ PEHR G. GYLLENHAMMAR
Pehr G. Gyllenhammar
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, as a member
of the Board of Directors, or as an officer of UNITED TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Corporation"), or as a member of a
committee of said Board, or in all of said capacities, hereby constitutes
and appoints STEPHEN F. PAGE, IRVING B. YOSKOWITZ, WILLIAM H. TRACHSEL, AND
GEORGE E. MINNICH, or any one of them, his true and lawful attorneys and
agents to do any and all acts and things and execute any and all instruments
which the said attorneys and agents may deem necessary or advisable to
enable the Corporation to comply with the Securities Exchange Act of 1934
and any rules and regulations and requirements of the Securities and
Exchange Commission in respect thereof in connection with the filing of the
Annual Report of the Corporation on Form 10-K, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned, in the capacities aforesaid or in any
other capacity, to the Corporation's Form 10-K Annual Reports filed or to be
filed with the Securities and Exchange Commission, and any and all
amendments to the said Form 10-K Annual Reports, and any and all instruments
and documents filed as a part of or in connection with the said Form 10-K
Annual Reports or any amendments thereto; hereby ratifying and confirming
all that the said attorneys and agents, or any one of them, have done, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents
this 30th day of January, 1994.
/s/ GERALD D. HINES
Gerald D. Hines
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, as a member
of the Board of Directors, or as an officer of UNITED TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Corporation"), or as a member of a
committee of said Board, or in all of said capacities, hereby constitutes
and appoints STEPHEN F. PAGE, IRVING B. YOSKOWITZ, WILLIAM H. TRACHSEL, AND
GEORGE E. MINNICH, or any one of them, his true and lawful attorneys and
agents to do any and all acts and things and execute any and all instruments
which the said attorneys and agents may deem necessary or advisable to
enable the Corporation to comply with the Securities Exchange Act of 1934
and any rules and regulations and requirements of the Securities and
Exchange Commission in respect thereof in connection with the filing of the
Annual Report of the Corporation on Form 10-K, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned, in the capacities aforesaid or in any
other capacity, to the Corporation's Form 10-K Annual Reports filed or to be
filed with the Securities and Exchange Commission, and any and all
amendments to the said Form 10-K Annual Reports, and any and all instruments
and documents filed as a part of or in connection with the said Form 10-K
Annual Reports or any amendments thereto; hereby ratifying and confirming
all that the said attorneys and agents, or any one of them, have done, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents
this 28th day of March, 1994.
/s/ CHARLES R. LEE
Charles R. Lee
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, as a member
of the Board of Directors, or as an officer of UNITED TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Corporation"), or as a member of a
committee of said Board, or in all of said capacities, hereby constitutes
and appoints STEPHEN F. PAGE, IRVING B. YOSKOWITZ, WILLIAM H. TRACHSEL, AND
GEORGE E. MINNICH, or any one of them, his true and lawful attorneys and
agents to do any and all acts and things and execute any and all instruments
which the said attorneys and agents may deem necessary or advisable to
enable the Corporation to comply with the Securities Exchange Act of 1934
and any rules and regulations and requirements of the Securities and
Exchange Commission in respect thereof in connection with the filing of the
Annual Report of the Corporation on Form 10-K, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned, in the capacities aforesaid or in any
other capacity, to the Corporation's Form 10-K Annual Reports filed or to be
filed with the Securities and Exchange Commission, and any and all
amendments to the said Form 10-K Annual Reports, and any and all instruments
and documents filed as a part of or in connection with the said Form 10-K
Annual Reports or any amendments thereto; hereby ratifying and confirming
all that the said attorneys and agents, or any one of them, have done, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents
this 30th day of January , 1994.
/s/ ROBERT H. MALOTT
Robert H. Malott
UNITED TECHNOLOGIES CORPORATION
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, as a member
of the Board of Directors, or as an officer of UNITED TECHNOLOGIES
CORPORATION, a Delaware corporation (the "Corporation"), or as a member of a
committee of said Board, or in all of said capacities, hereby constitutes
and appoints STEPHEN F. PAGE, IRVING B. YOSKOWITZ, WILLIAM H. TRACHSEL, AND
GEORGE E. MINNICH, or any one of them, her true and lawful attorneys and
agents to do any and all acts and things and execute any and all instruments
which the said attorneys and agents may deem necessary or advisable to
enable the Corporation to comply with the Securities Exchange Act of 1934
and any rules and regulations and requirements of the Securities and
Exchange Commission in respect thereof in connection with the filing of the
Annual Report of the Corporation on Form 10-K, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned, in the capacities aforesaid or in any
other capacity, to the Corporation's Form 10-K Annual Reports filed or to be
filed with the Securities and Exchange Commission, and any and all
amendments to the said Form 10-K Annual Reports, and any and all instruments
and documents filed as a part of or in connection with the said Form 10-K
Annual Reports or any amendments thereto; hereby ratifying and confirming
all that the said attorneys and agents, or any one of them, have done, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents
this 30th day of January, 1994.
/s/ JACQUELINE G. WEXLER
Jacqueline G. Wexler
