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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
Commission file number 1-812
UNITED TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06 0570975
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Financial Plaza, Hartford, Connecticut 06101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 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, PEN New York Stock Exchange
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. [ ]
At February 1, 1996, there were 121,724,402 shares of Common Stock outstanding;
the aggregate market value of the voting Common Stock held by non affiliates at
February 1, 1996 was approximately $12,324,595,703.
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 1995 Annual Report to Shareowners, Parts I, II and IV;
and (2) United Technologies Corporation Proxy Statement for the 1996 Annual
Meeting of Shareowners, Part III.
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UNITED TECHNOLOGIES CORPORATION
________________________________
Index to Annual Report
on Form 10-K
Year Ended December 31, 1995
PART I Page
Item 1. Business 1
Item 2. Properties 8
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security 9
Holders
- ----- Executive Officers of the Registrant 9
PART II
Item 5. Market for the Registrant's Common Equity and 10
Related Stockholder Matters
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Results of 11
Operations and Financial Position
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes in and Disagreements with Accountants on 11
Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant 11
Item 11. Executive Compensation 11
Item 12. Security Ownership of Certain Beneficial Owners 11
and Management
Item 13. Certain Relationships and Related Transactions 11
PART IV
Item 14. Exhibits, Financial Statement Schedules, and 12
Reports on Form 8-K
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Item 1. Business
United Technologies Corporation was incorporated in Delaware in 1934.
Growth has been enhanced by acquisitions and by the internal growth of existing
businesses of the Corporation*.
Management's Discussion and Analysis of the Corporation's Results of
Operations for 1995 compared to 1994, and for 1994 compared to 1993, and its
Financial Position at December 31, 1995 and 1994, and Selected Financial Data
for each year in the five year period ended December 31, 1995 are set forth on
pages 19 through 27 of the Corporation's 1995 Annual Report to Shareowners.
Whenever reference is made in this report to specific pages in the 1995 Annual
Report to Shareowners, such pages are incorporated herein by reference.
Operating Units and Industry Segments
The Corporation conducts its business within five principal industry
segments. The principal products of operating units reported within each
industry segment are as follows:
Industry Segment Principal Products
Otis --Otis elevators, escalators and service
Carrier --Carrier heating, ventilating, air conditioning,
and transport and commercial refrigeration
equipment and service
Automotive --Automotive components and systems
Pratt & Whitney --Pratt & Whitney engines, service and space
propulsion
Flight Systems --Sikorsky helicopters and parts
--Hamilton Standard engine controls, environmental
systems, propellers and other flight systems
Business segment financial data for the years 1993 through 1995 is included
in footnote 16 of Notes to Consolidated Financial Statements on pages 44 through
45 of the Corporation's 1995 Annual Report to Shareowners.
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 1995
Annual Report to Shareowners, especially the information contained therein under
the heading "Business Environment".
Otis
Otis is the world's leader in production, installation and service in the
elevator industry, defined as elevators, escalators and moving sidewalks. Otis
designs, manufactures, sells and installs a wide range of passenger and freight
elevators, including hydraulic and geared elevators for low and medium speed
applications and gearless elevators for high-speed passenger operations in
high-rise buildings. Otis also produces a broad line of escalators, moving
sidewalks and shuttle systems for horizontal transportation. In addition to
new equipment, Otis provides modernization products and services to upgrade
elevators and escalators.
___________
* "Corporation", unless the context otherwise requires, means United
Technologies Corporation and its consolidated subsidiaries.
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Otis provides maintenance services for a substantial portion of the
elevators and escalators which it sells and also services elevators and
escalators of other manufacturers. 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 (such as Russia and
Ukraine) and Asia (such as the People's Republic of China). These investments
carry a higher level of currency, political and economic risks than investments
in developed markets.
Otis' business is subject to changes in economic, industrial and
international conditions, including possible changes in interest rates, which
could affect the demand for elevators, escalators and services; changes in
legislation and in government regulations; changes in technology; changes in
construction starts; and substantial competition from a large number of
companies including other major domestic and foreign manufacturers and service
providers. 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.
Revenues generated by Otis' international operations were approximately 85
percent of total Otis segment revenues in 1995 and 1994. 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, 1995, the Otis business backlog amounted to $3,644 million
as compared to $3,325 million at December 31, 1994. Of the total business
backlog at December 31, 1995, approximately $3,435 million is expected to be
realized as sales in 1996.
Carrier
Carrier is the world's largest manufacturer of heating, ventilating and air
conditioning (HVAC) systems and equipment. Carrier also participates in the
commercial and transport refrigeration businesses.
Carrier manufactures and sells 15 major global product lines. The products
manufactured include chillers and airside equipment, commercial unitary systems,
residential split systems (cooling only and heat pump), duct-free split systems,
transport refrigeration equipment, window and portable room air conditioners and
furnaces.
Carrier continues to invest in emerging markets primarily in Asia (such as
the People's Republic of China). These investments carry a higher level of
currency, political and economic risks than investments in developed markets.
Carrier's business is subject to changes in economic, industrial, international
and climate conditions, including possible changes in interest rates, which
could affect the demand for HVAC systems and equipment; changes in legislation
and government regulations, including those relating to refrigerants and their
effect on global environmental conditions; changes in technology; changes 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.
Revenues generated by Carrier's international operations were approximately
55 percent and 51 percent of total Carrier segment revenues in 1995 and 1994,
respectively. 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, 1995, the Carrier business backlog amounted to $926 million,
as compared to $940 million at December 31, 1994. Substantially all of the
business backlog at December 31, 1995 is expected to be realized as sales in
1996.
Automotive
The Corporation's Automotive business is conducted through United
Technologies Automotive, Inc. ("UTA"). UTA is a leading independent supplier of
wire harnesses in both North America and Europe. Also, UTA
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is a leading independent supplier in North America of modular headliners, door
trim assemblies, vehicle remote entry systems, and fractional horsepower DC
electric motors used in automotive applications. UTA competes worldwide to
sell products to automotive manufacturers.
UTA also produces other products such as interior trim (instrument panels,
sun visors, armrests, package trays and consoles), mirrors, thermal and
acoustical barriers, airbag covers, steering wheels, electronic controls and
modules, relays, interior lighting systems, switches, terminals and connectors,
and windshield wiper systems.
Sales to the major domestic automotive manufacturers are made against
periodic short-term releases issued by the automotive manufacturers under
contracts generally awarded for a particular car or light truck model. To serve
its worldwide customer base, UTA maintains over 100 facilities in North America,
Europe and Asia.
In 1995, sales to Ford Motor Company were $1,238 million, or approximately
40 percent of total UTA revenues. In 1994, sales to Ford Motor Company were
$1,004 million, or approximately 37 percent of total UTA revenues. In 1993,
sales to Ford Motor Company were $965 million, or approximately 41 percent of
total UTA revenues.
UTA's business is subject to changes in economic, industrial and
international conditions; changes in interest rates and in the level of
automotive production which could affect the demand for many of its products;
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, quality and product
performance.
Automotive manufacturers apply significant pricing pressures on their
suppliers such as UTA, requiring continuing cost reductions and value
engineering to maintain and improve profit margins. Suppliers have also been
required to bear an increasing portion of engineering, design, development and
tooling expenditures. While recognizing the increased risks and
responsibilities associated with providing these services, UTA plans to
position itself among the first tier suppliers providing these services. UTA
has entered into long term supply agreements with many of its customers which
require price reductions which anticipate future productivity improvements that
must be realized in order for such arrangements to be profitable.
Revenue generated by UTA's international operations (excluding revenues from
certain non-U.S. operations which manufacture exclusively for the U.S. market)
were approximately 35 percent and 32 percent of total Automotive segment
revenues in 1995 and 1994, respectively. 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, 1995, the UTA business backlog amounted to $703 million as
compared to $847 million at December 31, 1994. Substantially all of the
business backlog at December 31, 1995 is expected to be realized as sales in
1996.
Aerospace and Defense Businesses
The Corporation's aerospace and defense businesses are 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;
procurement preferences and policies of some foreign customers which require in-
country manufacture through co-production, offset procurement (where in-country
purchases are required as a condition to obtaining orders), joint ventures and
production sharing, 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 the Corporation's aerospace and
defense businesses are price, product performance, service, delivery schedule
and other terms and 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
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commercial jet engines and helicopters. 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 parts and services.
Sales of military products are affected by defense budgets (both in the U.S.
and, to some extent, abroad) and the presence of competitors. Military spare
parts sales have been, and will continue to be, affected by the decline in
overall procurement by the U.S. and foreign governments and, to a lesser extent,
by the U.S. and foreign governments' policy of increasing parts purchases from
suppliers other than the original equipment manufacturers.
Pratt & Whitney
Pratt & Whitney is one of the world's leading producers of large turbofan
(jet) engines and jet engine parts for commercial and military aircraft and
small gas turbine engines and parts for business and regional/commuter aircraft.
Pratt & Whitney also provides overhaul and repair services. Pratt & Whitney
also produces propulsion systems and solid rocket boosters for the United States
Air Force ("USAF") and the National Aeronautics and Space Administration
("NASA") and land based power generation equipment. Pratt & Whitney products
are sold principally to aircraft manufacturers, airlines and other aircraft
operators, aircraft leasing companies, and the U.S. and foreign governments.
Sales to the Boeing Company, Airbus Industrie and McDonnell Douglas Corporation,
consisting primarily of commercial aircraft jet engines, amounted to
approximately 26 percent of total Pratt & Whitney revenues in 1995. Pratt &
Whitney's major competitors are the aircraft engine businesses of General
Electric Company ("GE") and Rolls-Royce plc.
Jet engines currently in production at Pratt & Whitney for installation in
commercial aircraft are as follows:
Commercial Current Production
Engine Aircraft in which
Designation Installed
JT8D-200 Douglas MD-80*
PW2000 Boeing 757-200/PF**
PW4000 Airbus A310-300, A300-600, A330-300**
Boeing 747-400, 767-200/-300, 777-200**
Douglas MD-11**
IAE V2500 Airbus A319/A320/A321**
Douglas MD-90*
______________________
* Powered exclusively by Pratt & Whitney or International Aero Engines, AG
("IAE")
** Powered by Pratt & Whitney or IAE as well as competitive engines
In the case of most commercial aircraft today, 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 intense particularly 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 customer financing commitments, participation in
guarantees of customer financing arrangements and performance and operating cost
guarantees, see Notes 1, 4, 14 and 15 of Notes to Consolidated Financial
Statements at pages 32 to 33 and 41 to 43, of the Corporation's 1995 Annual
Report to Shareowners.)
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. At December 31, 1995, other participants in these
alliances represented 29 percent and 22 percent of the PW2000 and PW4000
programs, respectively, and 31 percent of the PW4084 program.
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IAE, a corporation whose shareholders consist of Pratt & Whitney, Rolls-
Royce plc of England, Japanese Aero Engines Corporation, Motoren-und-Turbinen-
Union Munchen GmbH ("MTU"), and Fiat Aviazione SpA of Italy, manufactures the
V2500 engine. Pratt & Whitney has a 33 percent interest in IAE.
Pratt & Whitney currently produces two military aircraft engines, the F100
(powering F-15 and F-16 fighter aircraft) and the F117 (powering C-17 transport
aircraft). All of Pratt & Whitney's F100 and F117 sales contracts are with the
USAF or with foreign governments. Pratt & Whitney competes with GE for F-16
engine orders. Presently, Pratt & Whitney is the exclusive provider of engines
which power the F-15 aircraft. During 1995, the USAF issued a contract to GE
that could result in qualification of a GE engine for use on F-15s. Pratt &
Whitney is presently the sole source for C-17 engines.
Pratt & Whitney is under contract with the USAF to develop the F119 engine.
The F119 is the only anticipated source of propulsion for the two-engine F-22
fighter aircraft being developed by Lockheed Martin Corporation and the Boeing
Company. Management cannot predict with certainty whether, when, and in what
quantities Pratt & Whitney will produce F119 engines.
Pratt & Whitney Space Propulsion Operations produces the RL10 Liquid
Hydrogen-Fueled rocket engines used for upper stage propulsion for certain NASA
launch vehicles. The Chemical Systems Division ("CSD"), which is within Pratt &
Whitney Space Propulsion Operations, manufactures and provides launch services
for solid rocket propellant boosters producing more than one million pounds of
thrust which, when used in pairs, currently constitute the initial booster stage
for the USAF's Titan IV launch vehicle. CSD's solid rocket motors ("SRM") on
Titan IV are expected to be phased out during the later portion of the decade by
an upgraded, higher performing booster SRM, which is being made by another
company. In addition, CSD produces other propulsion systems. USBI, also within
Pratt & Whitney Space Propulsion Operations, 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.
Gas turbine engines manufactured by Pratt & Whitney Canada ("PWC") include
the PT6 series of turboprop/turboshaft engines, the JT15D series of turbofan
engines, the PW100 series turboprop engines, the PW200 series turboshaft engines
developed to power light and intermediate helicopters, and the PW300 turbofan
engines, developed for mid-size business jets under a collaboration agreement
with MTU of Germany. The PW500 turbofan engines are also being developed in
conjunction with MTU. Typical applications are six to eighty passenger business
and regional airline aircraft and light and medium helicopters.
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 independent foreign representatives outside the U.S.
Revenues from Pratt & Whitney's international locations which consist
primarily of small gas turbine engines and parts manufactured in the
Corporation's plants in Canada were approximately 19 percent of total Pratt &
Whitney segment revenues in 1995 and 1994. Such operations are subject to local
government regulations as well as to varying political and economic risks.
At December 31, 1995, the business backlog for Pratt & Whitney amounted to
$9,496 million, including $1,563 million of U.S. Government funded contracts and
subcontracts, as compared to $9,517 million and $1,951 million, respectively, at
December 31, 1994. Of the total Pratt & Whitney business backlog at December
31, 1995, approximately $4,036 million is expected to be realized as sales in
1996. Pratt & Whitney's backlog is based on the terms of firm orders received
and is not reduced by discounts granted directly to airline and other customers.
Flight Systems
The Corporation's Flight Systems business is conducted through Sikorsky
Aircraft and Hamilton Standard. Effective January 1, 1995, Sikorsky Aircraft
Division of United Technologies Corporation was incorporated as a separate
wholly-owned subsidiary identified as Sikorsky Aircraft Corporation.
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 also producing helicopters for a
variety of uses including passenger, utility/transport, cargo, anti-submarine
warfare, search and rescue and heavy-lift
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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 its subsidiary, Sikorsky
Support Services, Inc., the repair and retrofit of helicopters in the U.S.
military fleet. Other major helicopter manufacturers include Bell Helicopters,
Eurocopter, Boeing Helicopters, McDonnell Douglas, 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 medium-sized helicopter for anti-submarine warfare missions for the
U.S. Navy and derivatives for both the U.S. and foreign governments; the CH-53E
SUPER STALLION heavy-lift helicopter for the U.S. Marine Corps; and the S-76
intermediate-sized helicopter for executive transport, offshore oil platform
support, search and rescue, emergency medical service and other utility
operations.
Although in 1992 Sikorsky was awarded a U.S. Government contract for 300
BLACK HAWK helicopters through June 1997, declining Defense Department budgets
make Sikorsky increasingly dependent upon expanding its international position.
Such sales sometimes require the development of in-country co-production
programs such as the one Sikorsky has in South Korea.
During 1995, Sikorsky commenced full scale development of the S-92 aircraft,
a large cabin helicopter for commercial and military markets. Certification of
the first S-92 is expected in the year 2000. A significant portion of the
development will be carried out by companies in Brazil, the People's Republic of
China, Japan, Spain and Taiwan under collaborative arrangements.
Sikorsky is teamed with Boeing Helicopters for the development of the U.S.
Army's next generation light helicopter, the RAH-66 Comanche. The Boeing
Sikorsky Team is performing under the cost reimbursement contract awarded in
1991. The first prototype aircraft performed a successful flight in January
1996 and will undergo further flight testing. Sikorsky and Boeing are working
with the Army Comanche Program Office to restructure the program to provide for
early operational capability to be used by the U.S. Army in field tests. The
Corporation cannot predict whether the Comanche will go into production or
predict the quantity of aircraft that ultimately will be built.
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. Hamilton Standard also produces the space suit for the NASA
space shuttle astronauts and environmental controls for the shuttle's orbiter.
International Fuel Cells Corporation ("IFC"), also within Flight Systems
business segment, develops, manufactures and sells fuel cell power plants and
fuel cell components to commercial, aerospace and military customers. In 1995,
IFC's subsidiary ONSI Corporation delivered the first production units of its
200 kilowatt PC25 Trademark Model C fuel cell power plant.
At December 31, 1995, the Flight Systems business backlog amounted to $2,954
million, including $1,936 million under funded contracts and subcontracts with
the U.S. Government, as compared to $3,832 million and $2,646 million,
respectively, at December 31, 1994. Of the total Flight Systems business
backlog at December 31, 1995, approximately $2,111 million is expected to be
realized as sales in 1996.
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, which
are charged to income as incurred, were $963 million or 4.2 percent of total
revenues in 1995, as compared with $978 million or 4.6 percent of total revenues
in 1994 and $1,137 million or 5.4 percent of total revenues in 1993. 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 segment and
to a lesser extent in the Flight Systems segment, amounted to $871 million in
1995, as compared with $838 million in 1994 and $918 million in 1993.
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Contracts, Environmental and Other Matters
Government contracts 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 5
percent of the Corporation's total sales for 1995 were made under cost-
reimbursement type contracts.
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.
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 8 of this Report for
further discussion.
The Corporation does not currently believe that Defense Department budget
cutbacks will have a material adverse effect on the profitability of the
Corporation due in part to the Corporation's long term 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 8 of this Report, and are further addressed in "Management's Discussion and
Analysis of Results of Operations and Financial Position" at page 26 and Note 15
of Notes to Consolidated Financial Statements at pages 42 and 43 of the
Corporation's 1995 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.
Employees
At December 31, 1995, the Corporation's total employment was approximately
170,600, a reduction of approximately 900 over the prior year.
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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
facilities are in regular use. The Corporation considers the present level of
fixed assets capitalized as of December 31, 1995, suitable and adequate for the
respective industry segment's operations in the current business environment.
For a further discussion of management's effort to achieve cost reduction, see
"Management's Discussion and Analysis of Results of Operations and Financial
Position" appearing in the Corporation's 1995 Annual Report to Shareowners,
especially the information contained under the heading "Cost Reduction Actions".
The square footage numbers set forth in the succeeding paragraph of this Item 2
are approximations.
At December 31, 1995, the Corporation operated (a) plants in the U.S. which
had 34 million square feet, of which 5.9 million square feet were leased; (b)
plants outside the U.S. which had 19.7 million square feet, of which 2 million
square feet were leased; (c) warehouses in the U.S. which had 4.2 million square
feet, of which 2.7 million square feet were leased; and (d) warehouses outside
the U.S. which had 5.5 million square feet, of which 3.6 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 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.
The Corporation's Pratt & Whitney unit is the subject of a Department of
Justice investigation relating to its 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
$13.9 million to the U.S. Government on December 23, 1992. The Corporation has
produced documents and employees have testified before a grand jury in the
District of Connecticut. The Corporation has filed an action with the Armed
Services Board of Contract Appeals which seeks to confirm that its accounting
treatment is correct.
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 is investigating this matter. In
addition, in April 1995, the Department of Justice filed a Civil False Claims
Act complaint against the Corporation in the United States District Court for
the Southern District of Florida, No. 95-8251, alleging misuse of $10 million of
foreign military financing funds. The complaint seeks treble damages plus a
$10,000 penalty for each false claim submitted.
A federal grand jury continues to investigate alleged violations of law in
connection with marketing and sale of helicopters and related services 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 and business associates have been
interviewed. A related civil suit filed by a former employee has been settled.
The Corporation does not believe that resolution of any of the matters
listed above will have a material adverse effect upon the Corporation's
competitive position, results of operations, cash flows, or financial position.
- 8 -
11
In February, 1996, a principal customer of United Technologies Automotive
("UTA") informed UTA that several lawsuits had been filed covering purchasers
of numerous vehicle lines of the customer. These lawsuits allege that the
ignition switch in these North American produced vehicles is defective and that
the defect could result in a vehicle fire. Plaintiffs seek injunctive relief
requiring replacement of the ignition switch in all affected vehicles,
compensatory and punitive damages and other relief. UTA supplies the ignition
switch in question. UTA is not a party to the lawsuits and disagrees with the
allegations that the ignition switch is defective. Management does not believe,
based on currently available information, that this matter will have a material
adverse effect on the Corporation.
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 has incurred and will likely continue to incur liabilities
under various state and federal statutes for the cleanup of pollutants
previously released into the environment. The Corporation believes that any
payments it may be required to make as a result of these claims will not have a
material effect upon the capital expenditures, competitive or financial
position, or results of operations 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 in relation to its
environmental liabilities. Settlements to date, which have not been material,
have been recorded upon receipt. While the litigation against the Corporation's
historic liability insurers has concluded, it is expected that the case against
the Corporation's property insurers will last several years. (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 page 26 and Note 15 of the Notes to Consolidated Financial
Statements at pages 42 and 43 of the Corporation's 1995 Annual Report to
Shareowners.)
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, 1995.
- ----- 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, 1991, and their ages, are as follows:
Other Business Age
Name Title Experience 2/1/96
Since 1/1/91
Jonathan Ayers Vice President, Principal - Morgan 39
Strategic Planning Stanley Corporate
(since 1995) Finance
Norman R. President, UT President, Electrical 53
Bodine Automotive (since Systems & Components;
1992) President, Automotive
Products Division, UT
Automotive
Eugene Buckley President, Sikorsky President, Sikorsky 65
Aircraft Corporation Aircraft Division
(since 1995)
- 9 -
12
Other Business Age
Name Title Experience 2/1/96
Since 1/1/91
Kevin Conway Vice President, Director of Taxes, 47
Taxes (since United Technologies
1995) Corporation
Mark S. Coran Executive Vice Vice President, 52
President, Controller, United
Operations, Pratt & Technologies; Vice
Whitney (since 1991) President, Group
Finance, Pratt & Whitney
Robert F. Chairman (since Chief Executive Officer; 62
Daniell 1987) President and Chief
Operating Officer
George David President and Chief President and Chief 53
Executive Officer Operating Officer;
(since 1994) Executive Vice President
and President,
Commercial/Industrial
Thomas J. Fay Senior Vice ------- 62
President,
Communications
(since 1990)
Bruno Grob President, European President, Otis France 46
&
Transcontinental
Operations
Otis Elevator (since
1992)
Karl J. Krapek President, Pratt & Chairman, President and 47
Whitney Chief
(since 1992) Executive Officer,
Carrier Corporation
John R. Lord President, Carrier President, Carrier NAO, 52
Corporation Vice President,
(since 1995) Residential Products
Group, Carrier NAO
George E. Vice President, Partner - Price 46
Minnich Controller Waterhouse
(since 1993)
William F. Paul Executive Vice Senior Vice President, 59
President (since Government Affairs
1995)
William H. Vice President, Vice President and 52
Trachsel Secretary and Deputy Deputy General Counsel
General Counsel
(since 1993)
Jean-Pierre van President, Otis 61
Rooy Elevator (since -------
1991)
Irving B. Executive Vice ------- 50
Yoskowitz President and
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.
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
See "Comparative Stock Data" appearing on page 46 of the Corporation's 1995
Annual Report to its Shareowners containing the following data relating to the
Corporation's Common Stock: principal market,
- 10 -
13
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 19 of the Corporation's 1995
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 20 through 27 of the Corporation's 1995
Annual Report to its Shareowners; such discussion and analysis is incorporated
by reference in this Report.
Item 8. Financial Statements and Supplementary Data
The 1995 and 1994 Balance Sheets, and other financial statements for the
years 1995, 1994 and 1993, together with the report thereon of Price Waterhouse
LLP dated January 24, 1996, appearing on pages 28 through 45 in the
Corporation's 1995 Annual Report to its Shareowners are incorporated by
reference in this Report.
The 1995 and 1994 Selected Quarterly Financial Data appearing on page 46 in
the Corporation's 1995 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
None.
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 7 of the Corporation's
Proxy Statement for the 1996 Annual Meeting of Shareowners. Information
regarding executive officers is contained in Part I of this Report at pages 9
and 10, and the section entitled "Compliance with Section 16(a) of the
Securities Exchange Act" at page 8 of the 1996 Proxy Statement.
Item 11. Executive Compensation
The information required by Item 11 is incorporated herein by reference from
pages 13 through 21 of the Corporation's Proxy Statement for the 1996 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 and 8 of the Corporation's Proxy Statement for the 1996 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 1996 Annual Meeting of
Shareowners.
- 11 -
14
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Page No. in
Annual Report
(a) Financial Statements, Financial Statement
Schedules and Exhibits
(1) Financial Statements (incorporated by
reference from the
1995 Annual Report to Shareowners):
Report of Independent Accountants 28
Consolidated Statement of Operations for the
Three Years 29
ended December 31, 1995
Consolidated Balance Sheet--December 31, 30
1995 and 1994
Consolidated Statement of Cash Flows for the
Three Years 31
ended December 31, 1995
Notes to Consolidated Financial 32
Statements
Selected Quarterly Financial Data 46
(Unaudited)
Page No. in
Form 10-K
(2) Financial Statement Schedule:
For the three years ended December 31, 1995:
Report of Independent Accountants on S-1
Financial Statement Schedule
II Valuation and Qualifying Accounts S-2
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: The following list of exhibits includes exhibits submitted
with this Form 10K as filed with the SEC and those
incorporated by reference to other filings.
Exhibit
Number
3.1 Restated Certificate of Incorporation *
3.2 Bylaws**
4 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.
10.1 United Technologies Corporation 1979 Long Term Incentive
Plan.*
10.2 United Technologies Corporation Annual Executive Incentive
Compensation Plan, as amended. #
10.3 United Technologies Corporation Disability Insurance
Benefits for Executive Control Group. *
10.4 United Technologies Corporation Executive Estate
Preservation Program. *
10.5 United Technologies Corporation Pension Preservation Plan. *
10.6 United Technologies Corporation Senior Executive Severance
Plan. *
- 12 -
15
Exhibit
Number
10.7 United Technologies Corporation Deferred Compensation Plan,
as amended. #
10.8 Otis Elevator Company Incentive Compensation Plan. *
10.9 United Technologies Corporation Directors Retirement Plan,
as amended. #
10.10 United Technologies Corporation Deferred Compensation Plan
for Non-Employee Directors. *
10.11 United Technologies Corporation Long Term Incentive Plan,
as amended. #
10.12 United Technologies Corporation Executive Disability,
Income Protection and Standard Separation Agreement Plan. *
10.13 United Technologies Corporation Directors' Restricted
Stock/Unit Program. *
10.14 United Technologies Corporation Board of Directors Deferred Stock
Unit Plan. #
10.15 United Technologies Corporation Pension Replacement Plan. ***
10.16 United Technologies Corporation Special Retention and
Stock Appreciation Program. ****
10.17 United Technologies Corporation Nonemployee Director Stock
Option 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,
1995 (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). #
21 Subsidiaries of the Registrant. #
24 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, Harold A. Wagner and
Jacqueline G. Wexler. #
27 Financial Data Schedule. #
Notes to exhibits:
# Submitted electronically herewith.
* Incorporated by reference to Exhibit of the same
number to United Technologies Corporation Annual
Report on Form 10K (Commission file number 1-812)
for fiscal year ended December 31, 1992.
** Incorporated by reference to Exhibit of the same
number to United Technologies Corporation Annual
Report on Form 10K (Commission file number 1-812)
for fiscal year ended December 31, 1994.
*** Incorporated by reference to Exhibit of the same
number to United Technologies Corporation Annual
Report on Form 10K (Commission file number 1-812)
for fiscal year ended December 31, 1993.
**** Incorporated by reference to Exhibit of the same
number to United Technologies Corporation Form 10Q
(Commission file number 1-812) for the quarter
ended September 30, 1995.
(b) No reports on Form 8-K were filed by the Registrant during
the fourth quarter of 1995.
- 13 -
16
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
(Registrant)
By Stephen F. Page,
Date: March 28, 1996 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 below.
Signature Title Date
/s/ GEORGE DAVID President and Chief
(George David) Executive Officer; March 28, 1996
Director
/s/ GEORGE E. MINNICH Vice President- March 28, 1996
(George E. Minnich) Controller;
Principal Accounting
Officer
/s/ STEPHEN F. PAGE Executive Vice March 28, 1996
(Stephen F. Page) President
and Chief Financial
Officer
ROBERT F. DANIELL * Chairman, Director
(Robert F. Daniell)
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 ) *By:/s/William H. Trachsel
(Pehr G. Gyllenhammar) (William H. Trachsel)
Attorney-in Fact
Date: March 28, 1996
GERALD D. HINES * Director )
(Gerald D. Hines)
CHARLES R. LEE * Director )
(Charles R. Lee)
ROBERT H. MALOTT * Director )
(Robert H. Malott)
HAROLD A. WAGNER * Director )
(Harold A. Wagner)
JACQUELINE G. WEXLER * Director )
(Jacqueline G. Wexler)
- 14 -
17
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of United Technologies Corporation
Our audits of the consolidated financial statements referred to in our
report dated January 24, 1996 appearing on page 28 of the 1995 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 Schedule listed in Item
14(a)(2) of this Form 10-K. In our opinion, the Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
Price Waterhouse LLP
Hartford, Connecticut
January 24, 1996
S-1
18
SCHEDULE II
UNITED TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Schedule II - Valuation and Qualifying Accounts
Three Years Ended December 31, 1995
(Millions of Dollars)
Allowances for Doubtful Accounts and Other Customer Financing Activity:
Balance December 31, 1992 $ 524
Provision charged to income 40
Doubtful accounts written off (net) (72)
Other adjustments (26)
Balance December 31, 1993 466
Provision charged to income 107
Doubtful accounts written off (net) (52)
Other adjustments (12)
Balance December 31, 1994 509
Provision charged to income 1
Doubtful accounts written off (net) (88)
Other adjustments 8
Balance December 31, 1995 $ 430
Future Income Tax Benefits - Valuation allowance:
Balance December 31, 1992 $ 217
Additions charged to income tax expense 130
Reductions credited to income tax expense (50)
Balance December 31, 1993 297
Additions charged to income tax expense 109
Reductions credited to income tax expense (51)
Balance December 31, 1994 355
Additions charged to income tax expense 49
Reductions credited to income tax expense (52)
Balance December 31, 1995 $ 352
19
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
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 in the Registration
Statements on Form S-8 (Nos. 33-57769, 33-45440, 33-11255, 33-26580, 33-26627,
33-28974, 33-51385, 33-58937, and 2-87322) of United Technologies Corporation
of our report dated January 24, 1996 appearing on page 28 of the 1995 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 Schedule, which appears on page S-1 of this Form
10-K.
Price Waterhouse LLP
Hartford, Connecticut
March 28, 1996
F-1