FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Plan period ended December 31, 1997 Commission File Number 1-812 UNITED TECHNOLOGIES CORPORATION REPRESENTED EMPLOYEE SAVINGS PLAN (Full title of the plan) UNITED TECHNOLOGIES CORPORATION One Financial Plaza Hartford, Connecticut 06101 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office) FINANCIAL STATEMENTS OF THE UNITED TECHNOLOGIES CORPORATION REPRESENTED EMPLOYEE SAVINGS PLAN REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrator of the United Technologies Corporation Represented Employee Savings Plan In our opinion, the accompanying statements of net assets available for benefits with fund information and the related statement of changes in net assets available for benefits with fund information present fairly, in all material respects, the net assets available for benefits of the United Technologies Corporation Represented Employee Savings Plan at December 31, 1997 and 1996, and the changes in net assets available for benefits for the period ended December 31, 1997, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The fund information in the statement of net assets available for benefits and the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for benefits of each fund. The fund information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. PRICE WATERHOUSE LLP Hartford, Connecticut June 26, 1998 UNITED TECHNOLOGIES CORPORATION REPRESENTED EMPLOYEE SAVINGS PLAN Statement of Net Assets Available for Benefits With Fund Information December 31, 1997 (Thousands of Dollars, except unit value)
Small UTC INVESCO Company International Common Total Income Equity Stock Index Equity Index Global Stock Return Fund Fund Fund Fund Fund Fund Fund Assets: Investments, at fair value: Beneficial interests in Bankers Trust Company Pyramid: Large Capitalization Equity Index Fund $ - $ 163,490 $ - $ - $ 2,830 $ - $ - Russell 2000 Equity Index Fund - - 1,836 - - - - Daily Japanese Equity Index Fund - - - 104 - - - Daily Non Japanese Equity Index Fund - - - 313 - - - Government/Corporate Fixed Income Index Fund - - - - 2,316 - - Daily International Equity Index Fund - - - - 2,716 - - United Technologies Corporation Common Stock - - - - - 41,537 - Shares of respective registered investment companies - - - - - - 1,074 Investments, at contract value or cost: Beneficial interests in investment contracts, at contract value 413,162 - - - - - - Participant loans, at cost - - - - - - - Temporary investments, at cost plus accrued interest - - - - - 624 - Total Investments 413,162 163,490 1,836 417 7,862 42,161 1,074 Plan receivables 616 195 4 2 17 172 3 Total Assets 413,778 163,685 1,840 419 7,879 42,333 1,077 Liabilities: Accrued liabilities - - - - - 269 - Loans payable, net - - - - - - - Total Liabilities - - - - - 269 - Net Assets Available for Benefits $ 413,778 $ 163,685 $ 1,840 $ 419 $ 7,879 $ 42,064 $ 1,077 Units of participation 67,062,978 7,787,073 152,037 39,785 3,310,348 3,482,194 37,006 Unit value $ 6.17 $ 21.02 $ 12.10 $ 10.53 $ 2.38 $ 12.08 $ 29.09 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION REPRESENTED EMPLOYEE SAVINGS PLAN Statement of Net Assets Available for Benefits With Fund Information December 31, 1997 (Thousands of Dollars, except unit value)
Putnam Fidelity Putnam New SoGen Growth & Fund for Fidelity Low- PBHG Opportun- Interna- Income Growth Fidelity Priced Stock Growth ities tional Portfolio and Income Contrafund Fund Fund Fund Fund, Inc. Assets: Investments, at fair value: Beneficial interests in Bankers Trust Company Pyramid: Large Capitalization Equity Index Fund $ - $ - $ - $ - $ - $ - $ - Russell 2000 Equity Index Fund - - - - - - - Daily Japanese Equity Index Fund - - - - - - - Daily Non Japanese Equity Index Fund - - - - - - - Government/Corporate Fixed Income Index Fund - - - - - - - Daily International Equity Index Fund - - - - - - - United Technologies Corporation Common Stock - - - - - - - Shares of respective registered investment companies 9,817 3,804 4,213 3,104 5,227 4,153 724 Investments, at contract value or cost: Beneficial interests in investment contracts, at contract value - - - - - - - Participant loans, at cost - - - - - - - Temporary investments, at cost plus accrued interest - - - - - - - Total Investments 9,817 3,804 4,213 3,104 5,227 4,153 724 Plan receivables 24 9 11 7 15 13 2 Total Assets 9,841 3,813 4,224 3,111 5,242 4,166 726 Liabilities: Accrued liabilities - - - - - - - Loans payable, net - - - - - - - Total Liabilities - - - - - - - Net Assets Available for Benefits $ 9,841 $ 3,813 $ 4,224 $ 3,111 $ 5,242 $ 4,166 $ 726 Units of participation 258,277 194,964 90,579 123,791 206,464 84,824 28,567 Unit value $ 38.10 $ 19.56 $ 46.63 $ 25.13 $ 25.39 $ 49.10 $ 25.45 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION REPRESENTED EMPLOYEE SAVINGS PLAN Statement of Net Assets Available for Benefits With Fund Information December 31, 1997 (Thousands of Dollars, except unit value)
Templeton Templeton Developing Foreign Markets Fund I Trust I Loan Fund Total Assets: Investments, at fair value: Beneficial interests in Bankers Trust Company Pyramid: Large Capitalization Equity Index Fund $ - $ - $ - $ 166,320 Russell 2000 Equity Index Fund - - - 1,836 Daily Japanese Equity Index Fund - - - 104 Daily Non Japanese Equity Index Fund - - - 313 Government/Corporate Fixed Income Index Fund - - - 2,316 Daily International Equity Index Fund - - - 2,716 United Technologies Corporation Common Stock - - - 41,537 Shares of respective registered investment companies 1,577 721 - 34,414 Investments, at contract value or cost: Beneficial interests in investment contracts, at contract value - - - 413,162 Participant loans, at cost - - 15,663 15,663 Temporary investments, at cost plus accrued interest - - - 624 Total Investments 1,577 721 15,663 679,005 Plan receivables 5 2 - 1,097 Total Assets 1,582 723 15,663 680,102 Liabilities: Accrued liabilities - - - 269 Loans payable, net - - - - Total Liabilities - - - 269 Net Assets Available for Benefits $ 1,582 $ 723 $ 15,663 $ 679,833 Units of participation 158,995 55,923 15,663,000 Unit value $ 9.95 $ 12.94 $ 1.00 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION REPRESENTED EMPLOYEE SAVINGS PLAN Statement of Net Assets Available for Benefits With Fund Information December 31, 1996 (Thousands of Dollars, except unit value)
Income Equity UTC Common Fund Fund Stock Fund Global Fund Loan Fund Total Assets: Investments, at fair value: Beneficial interests in Bankers Trust Company Pyramid: Government/Corporate Fixed Income Index Fund $ - $ - $ - $ 2,686 $ - $ 2,686 Large Capitalization Equity Index Fund - 121,763 - 3,135 - 124,898 Daily International Equity Index Fund - - - 3,558 - 3,558 United Technologies Corporation Common Stock - - 28,987 - - 28,987 Investments, at contract value or cost: Beneficial interests in investment contracts, at contract value 413,873 - - - - 413,873 Participant loans, at cost - - - - 11,411 11,411 Temporary investments, at cost plus accrued interest 17 - 3 - - 20 Total Investments 413,890 121,763 28,990 9,379 11,411 585,433 Plan receivables 1,013 276 137 42 77 1,545 Total Assets 414,903 122,039 29,127 9,421 11,488 586,978 Liabilities: Accrued liabilities - 73 7 38 2 120 Loans payable, net (75) (76) 41 (14) 27 (97) Total Liabilities (75) (3) 48 24 29 23 Net Assets Available for Benefits $ 414,978 $ 122,042 $ 29,079 $ 9,397 $ 11,459 $ 586,955 Units of participation 72,672,216 7,746,597 2,684,290 4,546,961 11,459,000 Unit value $ 5.71 $ 15.75 $ 10.83 $ 2.07 $ 1.00 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION REPRESENTED EMPLOYEE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits With Fund Information Period Ended December 31, 1997 (Thousands of Dollars)
Small UTC INVESCO Company International Common Total Income Equity Stock Index Equity Index Global Stock Return Fund Fund Fund Fund Fund Fund Fund Additions to net assets attributed to: Investment Income: Net appreciation (depreciation) in fair value of investments $ - $ 39,732 $ 133 $ 20 $ 1,171 $ 2,663 $ 91 Interest 31,101 37 - 1 - 4 - Dividends - - - - - - 38 Total Investment Income 31,101 39,769 133 21 1,171 2,667 129 Contributions: Participants' 23,058 7,780 95 53 777 3,279 74 Employer's 7,253 1,966 22 13 234 824 18 Total Contributions 30,311 9,746 117 66 1,011 4,103 92 Repayments on loans 3,920 1,452 7 7 174 610 10 Deductions from net assets attributed to: Distributions to participants 25,606 6,982 12 8 259 1,696 8 Loans to participants 6,370 2,158 19 9 175 836 6 Administrative expenses 39 5 - - 1 1 - Total Deductions 32,015 9,145 31 17 435 2,533 14 Net increase / (decrease) prior to transfers 33,317 41,822 226 77 1,921 4,847 217 Inter-fund transfers (34,489) (130) 1,614 342 (3,439) 8,172 860 Assets transferred out of Plan (28) (49) - - - (34) - Net increase / (decrease) (1,200) 41,643 1,840 419 (1,518) 12,985 1,077 Net Assets Available for Benefits December 31, 1996 414,978 122,042 - - 9,397 29,079 - Net Assets Available for Benefits December 31, 1997 $ 413,778 $ 163,685 $ 1,840 $ 419 $ 7,879 $ 42,064 $ 1,077 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION REPRESENTED EMPLOYEE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits With Fund Information Period Ended December 31, 1997 (Thousands of Dollars)
Putnam Fidelity Putnam New SoGen Growth & Fund Fidelity Low- PBHG Opportun- Interna- Income for Growth Fidelity Priced Stock Growth ities tional Portfolio and Income Contrafund Fund Fund Fund Fund, Inc. Additions to net assets attributed to: Investment Income: Net appreciation (depreciation) in fair value of investments $ 887 $ (66) $ 165 $ 180 $ 190 $ 440 $ (41) Interest - - - - - - - Dividends 378 418 348 170 (5) 89 72 Total Investment Income 1,265 352 513 350 185 529 31 Contributions: Participants' 715 312 362 192 673 418 98 Employer's 174 80 91 47 161 98 27 Total Contributions 889 392 453 239 834 516 125 Repayments on loans 87 39 70 18 101 49 10 Deductions from net assets attributed to: Distributions to participants 149 47 33 22 106 41 3 Loans to participants 76 36 87 21 82 54 12 Administrative expenses - - - 3 - - - Total Deductions 225 83 120 46 188 95 15 Net increase / (decrease) prior to transfers 2,016 700 916 561 932 999 151 Inter-fund transfers 7,825 3,113 3,308 2,550 4,310 3,167 575 Assets transferred out of Plan - - - - - - - Net increase / (decrease) 9,841 3,813 4,224 3,111 5,242 4,166 726 Net Assets Available for Benefits December 31, 1996 - - - - - - - Net Assets Available for Benefits December 31, 1997 $ 9,841 $ 3,813 $ 4,224 $ 3,111 $ 5,242 $ 4,166 $ 726 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION REPRESENTED EMPLOYEE SAVINGS PLAN Statement of Changes in Net Assets Available for Benefits With Fund Information Period Ended December 31, 1997 (Thousands of Dollars)
Templeton Templeton Developing Foreign Markets Fund I Trust I Loan Fund Total Additions to net assets attributed to: Investment Income: Net appreciation (depreciation) in fair value of investments $ (144) $ (244) $ - $ 45,177 Interest - - 1,086 32,229 Dividends 164 54 - 1,726 Total Investment Income 20 (190) 1,086 79,132 Contributions: Participants' 151 80 - 38,117 Employer's 39 19 - 11,066 Total Contributions 190 99 - 49,183 Repayments on loans 17 11 (6,582) - Deductions from net assets attributed to: Distributions to participants 18 16 263 35,269 Loans to participants 25 5 (9,971) - Administrative expenses - - - 49 Total Deductions 43 21 (9,708) 35,318 Net increase / (decrease) prior to transfers 184 (101) 4,212 92,997 Inter-fund transfers 1,398 824 - - Assets transferred out of Plan - - (8) (119) Net increase / (decrease) 1,582 723 4,204 92,878 Net Assets Available for Benefits December 31, 1996 - - 11,459 586,955 Net Assets Available for Benefits December 31, 1997 $ 1,582 $ 723 $ 15,663 $ 679,833 The accompanying notes are an integral part of these financial statements. /TABLE UNITED TECHNOLOGIES CORPORATION REPRESENTED EMPLOYEE SAVINGS PLAN Notes to Financial Statements NOTE 1 - DESCRIPTION OF THE PLAN General. The United Technologies Corporation (UTC) Represented Employee Savings Plan (the Plan) is a defined contribution savings plan administered by UTC. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Union represented employees of UTC, covered by collective bargaining agreements that provide for Plan participation, are eligible to participate in the Plan after completing at least one year of service. The following is a brief description of the Plan. For more complete information, participants should refer to the plan document which is available from UTC. Contributions and Vesting. All participants may elect, through payroll deductions, to make tax deferred contributions of between $2 per week and the maximum amount permitted by the relevant collective bargaining agreement. Certain participants, depending on their collective bargaining agreement, may also make after-tax contributions. Participant contributions, plus actual earnings thereon, are fully vested at all times under the Plan. The employer will match 50 percent of the participant's contributions, up to specified limits. Generally, employer contributions, plus actual earnings thereon, become fully vested after two years of Plan participation. Certain participants may also make limited tax-deferred or after-tax contributions to an individual medical account (IMA) or tax-deferred contributions for cost of living adjustment (COLA), where permitted. The employer will match 75 percent of the participant's IMA contribution. All contributions to an IMA will be invested 100 percent in the Income Fund and may not be withdrawn until retirement or termination. Participant Accounts. Each participant's account is credited with the participant's contributions and allocations of (a) UTC's contributions based on a percentage of the participant's contribution and (b) Plan earnings based on account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Forfeited balances of terminated participants' nonvested amounts are used to reduce future UTC contributions. For the period ended December 31, 1997, approximately $7,100 of forfeitures were used to fund UTC's contributions. Trustee and Recordkeeper. All of the Plan's assets are held by Bankers Trust Company, the Plan Trustee. As of January 1, 1997, Fidelity Institutional Retirement Services Company assumed the participant account recordkeeping responsibilities. Investment Options. On January 1, 1997, investment options increased to sixteen from the previous four. Participants may elect to allocate their contributions in any whole percentage among the following funds. Participants are permitted to transfer their accounts between investment funds daily in any whole percentage or whole dollar amount. The investment funds are as follows: . The Income Fund invests in contracts issued by five insurance companies. See Note 3. . The Equity Fund invests in a portfolio of common stocks replicating the Standard & Poor's Composite Index of 500 stocks (S&P 500). . The Small Company Stock Index Fund invests in a portfolio of common stocks replicating the Russell 2000 Index. . The International Equity Index Fund invests in the equities of a mix of stock markets outside the U.S. . The Global Fund invests in both U.S. and foreign investments to replicate the performance, in approximately equal portions, of three indices: the S&P 500, the EAFE Index (an international stock index of large companies in Europe, Australia and the Far East), and the Lehman Brothers Government/Corporate Index. . The UTC Common Stock Fund consists principally of 570,464 and 437,548 shares of UTC Common Stock at December 31, 1997 and 1996, respectively. . The INVESCO Total Return Fund invests in shares of a registered investment company that principally invests in both equity and fixed or variable income securities to achieve a moderate total return from capital appreciation and current income. . The Fidelity Growth & Income Portfolio invests in shares of a registered investment company that principally invests in U.S. and foreign equity securities that pay current dividends and show potential earnings growth. . The Putnam Fund for Growth and Income invests in shares of a registered investment company that principally invests in equity securities of companies that pay regular dividends to shareowners. . The Fidelity Contrafund invests in shares of a registered investment company that principally invests in equity securities of U.S. and foreign companies believed to be undervalued or out of favor. . The Fidelity Low-Priced Stock Fund invests in shares of a registered investment company that principally invests in equity securities of companies believed to be undervalued, overlooked or out of favor, which are generally priced at $35 or less. . The PBHG Growth Fund invests in shares of a registered investment company that principally invests in equity securities of companies believed to have an outlook for strong earnings growth. . The Putnam New Opportunities Fund invests in shares of a registered investment company that principally invests in equity securities of companies in certain emerging industry groups. . The SoGen International Fund, Inc. invests in shares of a registered investment company that invests in U.S. and foreign equity, fixed income and gold-related securities and cash. . The Templeton Foreign Fund I invests in shares of a registered investment company that principally invests in equity securities of companies in developed and developing countries outside the U.S. . The Templeton Developing Markets Trust I invests in shares of a registered investment company that principally invests in equity securities of companies in developing countries. Participant Loans. Certain participants with at least two years of plan participation are allowed to borrow up to 50 percent of their vested account balances excluding IMA and COLA. Loan amounts can range from $1,000 to $50,000 and must be repaid within 5 years. The loans are secured by the balance in the participant's account and bear interest at Bankers Trust's prime rate plus one percent. Principal and interest are paid ratably through payroll deductions. Payment of Benefits. Generally, benefits are paid in a lump sum to terminating participants. Participants terminating due to retirement may elect to receive benefits in installments over two to twenty years. At the participant's election, the portion of a lump sum distribution attributable to the UTC Common Stock Fund may be paid in shares of UTC Common Stock instead of cash. Distributions in common stock for the period ended December 31, 1997 were approximately $136,000. Other. Participants who transfer to a new UTC location with a different savings plan have the option of transferring their account balances in accordance with the provisions of the new savings plan. NOTE 2 - SUMMARY OF ACCOUNTING PRINCIPLES Basis of Accounting. The financial statements of the Plan are prepared under the accrual method of accounting. Benefits are recorded when paid. Master Trust. The Plan's assets are kept in a Master Trust maintained by the Trustee. Under the Master Trust agreement, the assets of certain employee savings plans of UTC and its subsidiaries are combined. Participating Plans purchase units of participation in the investment funds based on their contribution to such funds and the unit value of the applicable investment fund at the end of the trading day in which a transaction occurs. The unit value of each fund is determined at the close of each day by dividing the sum of uninvested cash, accrued income and the current value of investments by the total number of outstanding units in such funds. Income from the funds' investments increases the Plans' unit values. Distributions to participants reduce the number of participation units held by the Plans. At December 31, 1997, the Plan's interest in the Master Trust comprised 98,736,805 units of the 1,012,560,383 total units of participation, or 9.75%. At December 31, 1996, the Plan's interest in the Master Trust comprised 99,109,064 units of the total 1,062,864,802 units of participation, or 9.33%. Investment Valuation. The Income Fund's investment contracts are stated at contract value which represents contributions plus earnings, less Plan withdrawals. All other funds are stated at fair value, as determined by the Trustee, typically by reference to published market data. Plan Expenses. Plan administrative expenses, including Trustee and recordkeeper fees were paid directly by the employer in 1997. The employer also paid certain investment management fees for the Bankers Trust managed funds. All other administrative and investment expenses were paid out of Plan assets. Use of Estimates. The preparation of financial statements requires UTC to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates. NOTE 3 - INVESTMENT CONTRACTS Under these contracts, each insurance company guarantees repayment in full of the principal amount invested plus interest credited at a fixed rate for a specified period. Interest is credited to each contract based on an annual interest rate set each year by the individual insurance companies. This rate, which differs among contracts, takes into account any difference between prior year credited interest and the actual amount of investment earnings allocable to the contract in accordance with the established allocation procedures of the insurance company. The interest rates earned for 1997 and 1996 were 8.1% and 7.5%, respectively. The following is a summary of the investment contracts held in the Income Fund and the portion allocable to the Plan: NOTE 4 - PLAN TERMINATION Although it has not expressed any intent to do so, UTC has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. NOTE 5 - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 The following are reconciliations of net assets available for benefits and benefits paid from the financial statements to the Form 5500:
(Thousands of Dollars) December 31, December 31, 1997 1996 CIGNA $ 1,456,404 $ 1,512,307 Aetna 437,582 457,815 Travelers 367,509 388,845 Prudential 231,133 236,966 Metropolitan Life 780,096 782,764 $ 3,272,724 $ 3,378,697 Amount of the contracts allocable to the Plan $ 413,162 $ 413,873
(Thousands of Dollars) December 31, 1997 1996 Net assets available for benefits per the financial statements $ 679,833 $ 586,955 Amounts allocated to participant withdrawals - (5,348) Net assets available for benefits per Form 5500 $ 679,833 $ 581,607 Year Ended December 31, 1997
Benefits paid to participants per the financial statements $ 35,269 Add: Amounts allocated to participant withdrawals at December 31, 1997 - Less: Amounts allocated to participant withdrawals at December 31, 1996 (5,348) Benefits paid to participants per Form 5500 $ 29,921 Amounts allocated to participant withdrawals are recorded on Form 5500 for benefit claims that have been processed and approved for payment prior to December 31 but not yet paid as of that date. NOTE 6 - TAX STATUS The Internal Revenue Service has determined and informed UTC by letter dated February 8, 1996 that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letters. However, the Plan administrator and tax counsel believe that the Plan is designed and currently being operated in compliance with the applicable requirements of the IRC. SIGNATURES The Plan (or other persons who administer the employee benefit plan), pursuant to the requirements of the Securities Exchange Act of 1934, has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. UNITED TECHNOLOGIES CORPORATION REPRESENTED EMPLOYEE SAVINGS PLAN Dated: June 26, 1998 By: /s/ Daniel P. O'Connell Daniel P. O'Connell Corporate Director, Employee Benefits and Human Resources Systems United Technologies Corporation Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-26580) of United Technologies Corporation of our report dated June 26, 1998 appearing in the United Technologies Corporation Represented Employee Savings Plan's Annual Report on Form 11-K for the year ended December 31, 1997. PRICE WATERHOUSE LLP Hartford, Connecticut June 26, 1998