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 ____________________1994
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.)
incorporation or
organization)
United Technologies Building, Hartford, Connecticut 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, PEN 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, 1994,1995, there were 126,610,856123,160,678 shares of Common Stock
outstanding; the aggregate market value of the voting Common Stock held by non
affiliates at February 1, 19941995 was approximately $8,435,448,281.$7,851,493,222.
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 19931994 Annual Report to Shareowners, Parts I, II and IV;
and (2) United Technologies Corporation Proxy Statement for the 19941995 Annual
Meeting of Shareowners, Part III.
PAGE
UNITED TECHNOLOGIES CORPORATION
________________________________
Index to Annual Report
on Form 10-K
Year Ended December 31, 19931994
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 1917
Item 6. Selected Financial Data 1918
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Position 1918
Item 8. Financial Statements and Supplementary Data 1918
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 1918
PART III
Item 10. Directors and Executive Officers of the Registrant 1918
Item 11. Executive Compensation 1918
Item 12. Security Ownership of Certain Beneficial Owners 1918
and Management
Item 13. Certain Relationships and Related Transactions 1918
PART IV
Item 14. Exhibits, Financial Statement Schedules, and 2019
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%The Corporation's planned underwritten public
offering of the economica minority interest in itsUT Automotive segmentin early 1994 was withdrawn due
to financial market conditions. During the public through an initial public offering. See
the description of Automotive at pages 11 through 12 of this Report. In
Februarysecond quarter of 1994, the
Corporation announced an agreement to sellsold the net operating assets (excluding real property) of its
Norden Systems,
Inc., to Westinghouse Electricsubsidiary. Also in 1994, the Corporation subject to approval of the U.S.
Government.sold its equity holdings in
Westland Group plc.
Management's Discussion and Analysis of the Corporation's Results of
Operations for 1994 compared to 1993, and for 1993 compared to 1992, and for 1992 compared to 1991, and its
Financial Position at December 31, 19931994 and 1992,1993, and Selected Financial Data
for each year in the five year period ended December 31, 19931994 are set forth on
pages 2715 through 3525 of the Corporation's 19931994 Annual Report to Shareowners.
Whenever reference is made in this report to specific pages in the 19931994 Annual
Report to Shareowners, such pages are incorporated herein by reference.
Operating Units and Industry Segments
The Corporation conducts its business principally through its Otis, Carrier,
UT Automotive, Pratt & Whitney, Sikorsky, and 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--Prattbusiness--Otis, Carrier, Automotive,
Pratt & Whitney, and 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.Systems. The principal products of the operating
units reported within each of these industry segments are as follows:
Industry Segment Principal Products
Otis --Otis elevators, escalators and service
Carrier --Carrier heating, ventilating, air conditioning,
and refrigeration equipment and service
Automotive --Automotive components and systems
Pratt & Whitney --Pratt & Whitney engines, service and partsspace
propulsion
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
19911992 through 19931994 appears on pages 5142 through 5445 of the Corporation's 19931994
Annual Report to Shareowners.
_______________
*"Corporation,"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 19931994
Annual Report to Shareowners, especially the information contained therein under
the headings "Business Environment" and "Restructuring"Cost Reduction Actions."
Otis
Otis is the world's leader in the production, installation and service of
elevators. During the years 1992 through 1994, the Corporation's total
revenues* from elevators, escalators and services were as follows:
Total Revenues--
Elevators,
Year Escalators & Services
1992 $4,512 million
1993 $4,418 million
1994 $4,644 million
Included in the above amounts are service revenues of $2,666 million, $2,636
million and $2,733 million, in 1992, 1993 and 1994, respectively.
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.
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. At December 31, 1994, Otis provided
contractual maintenance to more than 790,000 units worldwide.
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 (the People's Republic of
China). These investments carry a higher level of currency, political and
economic risks.
Other Actions."Otis Segment Information
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. 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.
* For the definition of "revenues" as used in this report, see Notes to
Consolidated Summary of Business Segment Financial Data at page 45 of the
Corporation's 1994 Annual Report to Shareowners.
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In 1993 and 1994, revenues associated with operations outside of the U.S.
amounted to $3,723 million, or approximately 84 percent, and $3,966 million, or
approximately 85 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, 1994, the Otis business backlog amounted to $3,325 million
as compared to $2,812 million at December 31, 1993. Of the total business
backlog at December 31, 1994, approximately $3,006 million is expected to be
realized as sales in 1995.
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
1992 through 1994, the Corporation's total revenues from these businesses were:
Total Revenues--HVAC and Refrigeration
Year Systems, Equipment and Service
1992 $4,328 million
1993 $4,480 million
1994 $4,919 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.
In addition, 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.
Other Carrier Segment Information
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 in government regulations; 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.
In 1993 and 1994, Carrier's revenues associated with operations outside of
the U.S. amounted to $2,284 million, or approximately 51 percent, and $2,366
million, or approximately 48 percent, respectively, of total Carrier 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, 1994, the Carrier business backlog amounted to $940 million,
as compared to $780 million at December 31, 1993. Substantially all of the
business backlog at December 31, 1994 is expected to be realized as sales in
1995.
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Automotive
The Corporation's Automotive business is conducted through UT Automotive.
UT Automotive is a leading independent supplier of wire harnesses in both North
America and Europe. Also, UT Automotive 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. UT Automotive competes worldwide to sell products to automotive
manufacturers.
UT Automotive also produces other products such as interior trim (horn pads,
instrument panels, sun visors, armrests, package trays and consoles), mirrors,
acoustical padding, foam products, thermal and acoustical barriers, airbag
covers, steering wheels, electronic controls and modules, relays, interior
lighting systems, switches, terminals and connectors, power door lock
activators, and windshield wiper systems.
During the years 1992 through 1994, the Corporation's total revenues from
automotive components and systems were:
Year Total Revenues--Automotive Components
and Systems
1992 $2,370 million
1993 $2,378 million
1994 $2,683 million
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. To better service its worldwide customer base, UT Automotive
maintains over 100 facilities in the United States, Canada, Mexico, United
Kingdom, Portugal, France, Honduras, Hungary, Italy, Spain and the Philippines.
UT Automotive has also recently established two joint ventures in the People's
Republic of China.
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 UT 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 UT Automotive revenues. In 1994, sales to Ford Motor Company were $1,004
million, or approximately 59 percent of sales to the major domestic
manufacturers and approximately 37 percent of total UT Automotive revenues.
Other Automotive Segment Information
UT Automotive'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 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.
UT Automotive segment sales are made principally to automotive manufacturers
and systems suppliers. Sales are made directly to the customer or through
manufacturers' representatives.
Automotive 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 take
advantage of this trend, it is the Corporation's plan to position itself in the
first tier of suppliers while recognizing the increased responsibility
associated with providing these services. To remain competitive in this
environment, the ability to consistently deliver, on time, products of ever-
increasing quality has become a critical requirement.
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In 1993 and 1994, revenues associated with operations outside of the U.S.
(excluding revenues from certain operations in Mexico which manufacture
exclusively for the U.S. market) amounted to $743 million, or approximately 31
percent, and $939 million, or approximately 35 percent, respectively, of total
Automotive 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, 1994, the UT Automotive business backlog amounted to $847
million as compared to $706 million at December 31, 1993. Substantially all of
the business backlog at December 31, 1994 is expected to be realized as sales in
1995.
Pratt & Whitney
Pratt & Whitney's business consists almost entirely of revenues*revenues from the sale of aircraft
gas turbine engines, and spare parts, and from the overhaul and repair of engines.engines and from
space propulsion. 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$1,830 million, or approximately
2631 percent, of Pratt & Whitney revenues in 1993.1994. Sales to theThe Boeing Company,
Airbus Industrie and McDonnell Douglas Corporation, consisting primarily of
commercial aircraft jet engines, amounted to $1,218$663 million, or approximately 2111
percent, and $452$421 million, or approximately 87 percent, and $399 million, or
approximately 7 percent, respectively, of total Pratt & Whitney revenues in
1993.1994.
Large Commercial Aircraft Engines and Parts
Pratt & Whitney is one of the world's leading producers of large turbofan
(jet) engines and partsrepair services for commercial aircraft.aircraft and land-based power
generation equipment. During the years 19911992 through 1993,1994, the Corporation's
total revenues from its commercial engine business were as follows:
Year Total Revenues - Engines &
Parts
1991 $3,778 millionRepair Services
1992 $3,700 million
1993 $3,266 million
1994 $2,892 million
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As of December 31, 1993,1994, Pratt & Whitney had over 15,000 installed
commercial jet engines poweredcurrently serving approximately 6,600 commercial aircraft for approximately 725480 domestic and foreign
airlines
and other owners and operators.customers. Jet engines currently in production at Pratt & Whitney for
installation in commercial aircraft are as follows:
Year of Current Current Production Number
Commercial First Maximum Current Production NumberAircraft of
Engines
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 62,00084,000 lbs. Airbus A310-300*** 2
Airbus A300-600** 2
Airbus A330-300** 2
Boeing 747-400*** 4
Boeing 767-200/- 2
300**
Boeing 777-200** 2
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 competitivePratt & Whitney as well as Pratt & Whitneycompetitive engines.***
**** Powered by competitive as well as IAE International Aero Engines AG as well as competitive
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, 1993,1994, a total of 141,169 MD80 aircraft had been ordered,
powered by 2,338 JT8D-200 engines of which 2,228 engines had been delivered.
During 1994, Alaska Air, Korean Air and AOM ordered 9 MD80 aircraft.
At December 31, 1994, a total of 13 customers had announced firm orders for
376344 Boeing 757 aircraft powered by 752688 PW2000 engines, of which 568584 engines had
been delivered.
The PW4000 is operating in airline service today at up to 62,00068,000 pounds of
thrust and on April 29, 1994 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.a two-engine aircraft. The PW4000 engine powers current production
McDonnell Douglas MD-11, Boeing 747 and 767, and Airbus A300, A310 and A310A330
aircraft. During 1990, United Airlines1994, JAL selected the PW4000 as the launch engine on the newPW4084 for their 10 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-poweredaircraft. Singapore Airlines also ordered 44 PW4000 engines for Boeing 777.747
aircraft. In 1993,1994, new firm orders for 4598 installed PW4000 engines were
announced by sixten customers. At December 31, 1993, 671994, 51 customers had ordered a
total of 674644 aircraft powered by 1,7481,680 PW4000 engines, of which 984 engines1,142 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)("IAE"), a corporation whose shareholders
consist of Pratt & Whitney, Rolls-Royce plc of England, Japanese Aero Engines
Corporation, MTU,Motoren-und Turbinen-Union Munchen GmbH ("MTU"), and FiatAvioFiat Aviazione
Societa per Azioni of Italy, is providing the V2500 engine, to cover the range
of 18,000 to 30,000 pounds of thrust. Pratt & Whitney has a 3033 percent equity shareinterest
in IAE. At December 31, 1993,1994, 18 customers had placed firm orders for 311309 A320
and A321 (a larger capacity derivative of the A320) aircraft to be powered by
the V2500 engine. In addition, at December 31, 1993, seven1994, five customers had placed
firm orders for 10166 MD-90s, a two engine aircraft which will be powered
exclusively by the V2500.
The competitive environment encountered in introducing new airframe/In March 1991, an agreement was entered between the Corporation and MTU, a
subsidiary of Daimler-Benz AG (Daimler) providing for expanded cooperation
between the parties with respect to commercial and general aviation engine
combinations intoresearch and development, manufacturing and marketing. Pratt & Whitney/MTU
presently collaborate on the fleets of individual airlines,JT8D-200, the PW300, the PW500, PW2000, PW4084 and
the manner in whichV2500 commercial gas turbine engines. Pratt & Whitney and otherMTU have agreed to
produce a new Mid-Thrust Family Engine turbofan engine suppliers respondin the range of 16,000 to
that environment, are
discussed at pages 5 through 7 of this Report.24,000 pounds.
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Military Engines and PartsSpace Propulsion
Pratt & Whitney is one of two major suppliers to the U.S. Government of
large jet engines and jet engine parts for military aircraft. In addition,
Pratt & Whitney produces propulsion systems and solid rocket boosters for the
United States Air Force ("USAF") and the National Aeronautics and Space
Administration ("NASA"). During the years 19911992 through 1993,1994, the Corporation's
total revenues from its government engine
businessmilitary engines and space propulsion operations were as
follows:
Year Total Revenues - Engines &
Parts
1991 $2,062 millionSpace Propulsion
1992 $2,006$2,505 million
1993 $1,595$1,970 million
1994 $1,835 million
At December 31, 1993,1994, worldwide active government inventories included
approximately 16,50013,000 Pratt & Whitney jet engines were
in active military inventories of the U.S. and foreign governments.
Jet engines currently in production ataircraft engines.
Pratt & Whitney for installation oncurrently produces two military aircraft are as follows:
PAGE
4
Current Current Number of
Military Year of Maximum Production Engines per
Engine First Takeoff Aircraft in Aircraft
Designation Operational Thrust which Installed
Useengines, the 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 4and the F117. Pratt & Whitney competes with General Electric Company (GE) forhas produced successive versions of the F100
engine orders forsince 1974. F100s power McDonnell Douglas Corporation's two-engine F-15
fighter aircraft and Lockheed Corporation's one-engine F-16 fighter aircraft.
The F-15 ismost advanced version of the F100 generates approximately 29,000 pounds
takeoff thrust. Pratt & Whitney first produced bythe F117 in 1992. F117s power
McDonnell Douglas Corporation,Corporation's four-engine C-17 transport aircraft, and the F-16 is currently produced by Lockheed Corporation.
Since 1982,each
generates approximately 41,700 pounds takeoff thrust. Pratt & Whitney has
discontinued its J52-P-409 engine development program in response to U.S.
defense budget reductions.
All of Pratt & Whitney's F100 engine has been usedand F117 sales contracts are with the USAF or
with foreign governments. From time to fill approximately
one-half oftime, the U.S. Air Force'sGovernment resells F100
engines to foreign governments via the Foreign Military Sales Program.
Pratt & Whitney and General Electric Company ("GE") first competed for F-16
aircraft engine orders in 1982. Since then, the USAF has purchased
approximately equal numbers of Pratt & Whitney's F100 engines and GE's engines
for theseF-16 aircraft. The numberIn 1994, the USAF informed the Corporation that it had no
current plans to purchase additional F-16 aircraft. Presently, Pratt & Whitney
is the exclusive provider of engines which power F-15 and C-17 aircraft,
although currently the USAF is considering qualification of a GE engine for these aircraft ordered annually by the
Air Force has decreased
from 231 engines ordered in 1989F-15 aircraft. Due to 12 engines ordered in 1993, all 12 of which
have been awardeduncertainty as to GE. The Corporation has been notified byfuture U.S. defense budgets, management
lacks a reliable basis to predict how many F100s and F117s the U.S. Air
Force that no further F-16 acquisitions are planned at present.USAF will order
for delivery after 1995.
During 1993,1994, Pratt & Whitney delivered two75 F100s as follows: 28 to the USAF
and 47 to foreign governments. The 1995 F100 enginesdelivery requirements call for 1
F100 to the USAF and 80 F100s to foreign governments and in 1996, 89 F100s to
foreign governments only.
During 1994, Pratt & Whitney also entered into F100 sales contracts with the
Government of Israel and the Republic of Singapore. These contracts call for 74
F100s for delivery in 1997 and 1998. The Israeli contract grants Israel the
option to purchase an additional 15 whole or equivalent F100s through 1999.
Currently, Pratt & Whitney has no specific contractual commitments for F100
sales other than as described above.
In 1994, Pratt & Whitney delivered 37 F117s to the USAF. Pratt & Whitney is
under acontract to deliver 10 F117s to the USAF in 1995. Currently, only the USAF
uses the C-17 aircraft.
Pratt & Whitney is under 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 &
WhitneyUSAF to sell 166 F100 engines under that program. In March 1993,develop the Royal
Saudi Air Force issued a letter of intent announcingF119 engine.
That contract requires the selection of Pratt &
Whitney's F100-PW-229F119 to power its F-15 fleet, which contemplated the delivery
ofgenerate 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 12,50035,000 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 poweris the Air
Force'sonly engine currently planned for the two-
engine F-22 fighter aircraft under developmentbeing developed by the team of Lockheed Corporation and theThe
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,Company. Due to uncertainty as a result of reductions in theto future U.S. defense budget,budgets,
management cannotlacks a reliable basis to predict with certainty when, and in what quantities, production of the
F119F-22 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 tobe produced.
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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 Segmentsegment include the production of
the RL10 liquid hydrogen fuel rocket motor used for upper stage propulsion for
the National Aeronautics and Space Administration (NASA)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.
Within Pratt & Whitney Space Propulsion Operations, formed in December 1994,
the Chemical Systems Division ("CSD") 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 as well as for the Martin Marietta Titan
III commercial 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, such as shuttle booster
separation motors, the Inertial Upper Stage solid rocket motors for USAF 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
participant inqualified supplier of USAF's Minuteman III/Stage III propulsion system. CSD has
a contract from Lockheed Missiles and Space Company for the National Aero-space Plane (NASP) team with
Rockwell, Rocketdyne, McDonnell Douglasdemonstration and
Lockheedvalidation of the solid propellant rocket, which will power the U.S. Army's
Theater High Altitude Area Defense ("THAAD") ballistic missile defense system.
USBI, also within Pratt & Whitney Space Propulsion Operations, is under
contract with the
U.S. Air Force. The contractNASA for the NASP involves researchSpace Shuttle Solid Rocket Boosters and concept studiesis
responsible for the X-30 design.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.
General Aviation Engines and Parts
Pratt & Whitney Canada ("PWC") is one of the world's leading producers of
small gas turbine engines and parts for business and regional/commuter aircraft.
PWC supplies small turbine engines and parts for military aircraft and
helicopters. It also supplies auxiliary power units for large transport
aircraft. During the years 1992 through 1994, the Corporation's total revenues
from these operations were as follows:
Year Total Revenues - Engines &
Parts
1992 $1,188 million
1993 $1,081 million
1994 $1,119 million
The gas turbine engines manufactured by PWC include 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 3,190 pounds thrust at
takeoff, and the PW100 series turboprop engines which produces up to 2,750
shaft-horsepower. Typical applications are six to eighty passenger business and
regional airline aircraft, including the Beech King Air and Super King Air
series, Starship1900D airliner and the Beechjet, Cessna Citation II, Citation V
Ultra, Caravan I, de Havilland Dash 8-100, -200 and -300 series, Embraer EMB-
120, Jetstream ATP and J61, Fokker 50 and 60, Dornier DO 328,
Aerospatiale/Alenia ATR-42 and -72 aircraft, and the Bell 212/412 and Sikorsky
S-76B helicopters.
On December 31, 1994, more than 17,300 PWC powered aircraft and helicopters
were in use in approximately 160 countries and territories. During 1994, all
four PWC contenders for the Joint Primary Aircraft Training System ("JPATS")
successfully completed their flight qualification tests, two with the PT6 and
two with the JT15D.
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The PW300, a 5,000 - 6,000 pounds thrust class turbofan family, was
developed for mid-size business jets under a collaboration agreement with MTU of
Germany. The base PW305 engine was introduced into service in 1991 and
currently powers two applications: the Raytheon Hawker 1000 and Learjet Model
60. A growth version, the PW306, was selected to power the Israel Aircraft
Industries Galaxy aircraft slated for delivery in 1997.
The PW200 turboshaft engine family was developed to power light and
intermediate helicopters. The base PW206 is rated between 550 and 650 shaft-
horsepower, and it is installed in the McDonnell Douglas MD Explorer which
entered service in late 1994. It also powers the Eurocopter EC 135, currently
under development.
The PW500, a new 2,000 - 4,000 pounds thrust class turbofan family, is also
being developed in conjunction with MTU. It won two applications in 1994. The
base PW530A will power the Cessna Citation Bravo, and the growth version, the
PW545A, was selected for the Cessna Citation Excel.
The PW901A engine is used as the auxiliary power unit for the Boeing 747-400
aircraft to provide starting power and electric power, lighting and air
conditioning. More than 400 units have now been delivered.
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
PAGE
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.Rolls-Royce. (For information regarding the Corporation's
finance subsidiaries and commitments to finance or arrange financing for
commercial aircraft, see Note 54 of Notes to Financial Statements at page 43pages 32 and
33 of the Corporation's 19931994 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 prevailsHowever, 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 most commercial
aircraft today such as the Boeing 747, 757, 767 and 777, the McDonnell Douglas
MD-11, and the Airbus Industrie A300, A300-600, A310, A320, A321 and A321,A330, 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, 124, 13 and 1314 of Notes to Financial Statements at pages
4131 to 4333 and 50,40 to 42, of the Corporation's 19931994 Annual Report to Shareowners.)
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PAGE
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. Governmentand
foreign governments and, to a lesser extent, by the U. S.
Government'sU.S. and foreign governments
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 andindependent foreign representatives outside the U.S.
Export sales amounted to $2,289 million, or approximately 33 percent, and $2,031 million, or approximately 3432 percent, and
$1,934 million, or approximately 33 percent, of total Pratt & Whitney revenues
in 19921993 and 1993,1994, 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,in Canada, amounted to $1,217$1,118 million, or approximately
18 percent, and $1,118$1,219 million, or approximately 1921 percent, of total Pratt &
Whitney revenues in 19921993 and 1993,1994, respectively. Such operations are subject to
local government regulations as well as to varying political and economic risks.
At December 31, 1993,1994, the business backlog in thefor Pratt & Whitney business
amounted to
$9,484$9,517 million, including $1,600$1,951 million underof U.S. Government funded contracts and
subcontracts, with the U.S. Government, as compared to $11,627$9,715 million and $1,553$1,828 million, respectively,
at December 31, 1992.1993. Of the total Pratt & Whitney business backlog at December
31, 1993,1994, approximately $5,133$4,762 million is expected to be realized as sales in
1994.1995. 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
PAGE
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 and Hamilton Standard, Norden Systems, Chemical Systems, USBI, and
International Fuel Cells.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.
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$1,948 million, or approximately 6261 percent, of
total Flight Systems revenues in 1993.1994.
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 currentlyalso 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 theits subsidiary, 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,
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 and CV Helo medium-sized helicoptershelicopter 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 helicoptershelicopter for the U.S. Navy and Marine Corps and derivatives
for Japan;Corps; and the S-76
intermediate-sized helicopter for executive transport, and offshore oil platform
support.
In 1993, seven HH-60J JAYHAWK helicopterssupport, search and rescue, emergency medical service and other utility
operations.
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PAGE
During 1994, 142 new aircraft and 16 aircraft kits were delivered. Of these
aircraft, 115 were delivered to the U.S. Coast
Guard. OnGovernment; 7 were delivered to other
domestic customers, with the commercial side, 10 of the 11 deliveries of S-76 helicopters in
1993 were maderemaining delivered to international customers.
Although in 1992 Sikorsky was awarded a U.S. Government contract for 300
BLACK HAWK helicopters through June 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 bewere produced by Sikorsky. Of these, 40Sikorsky and have been
delivered to and accepted by Turkey with
the remainder scheduled to be delivered by June 1994.Turkey. Sikorsky currently is
negotiatingplans to negotiate a
contract for the remaining 50 helicopters that are to be co-
producedco-produced with
Turkish industry participation.
The S-92, a large cabin derivative of the Black Hawk family, is being
considered for development for commercial and military markets by an
international consortium to be led by Sikorsky.
Sikorsky has beenis teamed with Boeing Helicopter CompanyHelicopters for the Engineering
and Manufacturing Development (EMD)development of the U.S.
Army's next generation light helicopter, program, the RAH-66 Comanche. The Boeing/Boeing
Sikorsky team has beenTeam is performing under the EMD cost reimbursement contract awarded in
1991. PresentInitial requirements callcalled for a minimum of 1,292 aircraft; however, due in part to
declining defense budgets,aircraft. Based upon
the Department of Defense direction, in early 1992 called for an
extension ofJanuary 1993 the developmentArmy, Boeing and
Sikorsky restructured the initial contract to create a Demonstration Validation
Prototype Program to design and a deferral of Comanchebuild prototype aircraft. In December 1994, the
Defense Department deferred production beyond 1997. Thethe year 2000 and directed that
the program be limited to two prototypes. Sikorsky and Boeing are working with
the Army Comanche Program Office to restructure the program within funding
provisions. Since production aircraft are not addressed in the restructured
contract, the Corporation cannot predict whether the Comanche will go into
production or predict the quantity of aircraft which
PAGE
8that 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 also 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 motorsUnited Technologies Microelectronics Center designs and fabricates
microelectronics specialty circuits for the U.S. Air Forcecommercial 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.military customers.
International Fuel Cells Corporation (IFC)("IFC") develops, manufactures and
sells fuel cell systems and fuel cell electric generating power plants to
commercial, aerospace and military customers. In 1994, IFC's subsidiary ONSI
Corporation an IFC subsidiary
established with investments by Toshiba Corporationcompleted development of Japan and Ansaldo S.p.A.the cost-reduced Model C version of Italy to manufacture, sell and develop future models of stationary, packagedONSI's
200 kilowatt PC25TM fuel cell power plantsplant and commenced operation of 1,000 kilowatts or less, delivered 25a prototype
of its 200-
kilowatt PC25_ fuel cell power plants to commercial customers in 1993.that model.
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 governmentsgovernment of South Korea and Turkey with respect
to the sales discussed at page 7 of this Report)above), 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.
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PAGE
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 andindependent foreign representatives outside the U.S. Such export
sales amounted to $810 million, or approximately 20 percent, and $1,000 million, or approximately 2528 percent, and $680 million,
or approximately 21 percent, of total Flight Systems revenues in 19921993 and 1993,1994,
respectively.
At December 31, 1993,1994, the Flight Systems business backlog amounted to $4,877$3,832
million, including $3,277$2,646 million under funded contracts and subcontracts with
the U.S. Government, as compared to $5,571$4,646 million and $4,026$3,045 million,
respectively, at December 31, 1992.1993. Of the total Flight Systems business
backlog at December 31, 1993,1994, approximately $2,897$2,159 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.1995.
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 $978 million or 4.6
percent of total revenues in 1994, as compared with $1,137 million or 55.4
percent of total revenues in 1993 as compared withand $1,221 million or 65.5 percent of total
revenues in 1992 and $1,133 million or 5 percent of total revenues in
1991.1992. 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 $838 million in 1994, as compared with $918 million in 1993 as compared withand $1,012
million in 1992 and $750 million in
1991.1992.
Contracts, Environmental and Other Matters
Contracts with the U.S. 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 six5 percent of the Corporation's total sales for 19931994 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 reportReport for
further discussion.
- 12 -
PAGE
Recent peace initiatives and related changes in Eastern Europe have served
to reduce both U.S. and foreign defense spending as a whole. Management,
however, 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 35page 24 and
Note 1314 of Notes to Financial Statements at page 50pages 41 and 42 of the Corporation's
19931994 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, 1993,1994, the Corporation's total employment was approximately
168,600, a reduction171,500, an increase of approximately 9,4002,900 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, 1993,1994, 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,achieve cost reduction, see
"Management's Discussion and Analysis of Results of Operations and Financial
Position" appearing in the Corporation's 19931994 Annual Report to Shareowners,
especially the information contained under the heading "Restructuring and Other"Cost Reduction Actions".
The square footage numbers set forth in the succeeding paragraphs of this Item 2
are approximations.
- 13 -
PAGE
At December 31, 1993,1994, the Corporation operated (a) plants in the U.S. which
had 35.735.0 million square feet, of which 5.75.6 million square feet were leased; (b)
plants outside the U.S. which had 17.918.6 million square feet, of which 2.4 million
square feet were leased; (c) warehouses in the U.S. which had 6.45.5 million square
feet, of which 4.83.9 million square feet were leased; and (d) warehouses outside
the U.S. which had 5.84.9 million square feet, of which 4.13.1 million square feet
were leased.
Pratt & Whitney segmentOtis plants are located in six states, Canada,
Singapore, the Netherlandsone state, Europe, Asia, Australia, Africa and
other areas.Latin America. At December 31, 1993,1994, the U.S. plants operated by the Pratt & Whitney segmentplant had an aggregate floor areasarea
of 14.20.8 million square feet, of which none was leased, and the plants outside the
U.S. had an aggregate floor area of 6.3 million square feet, of which 0.7
million square feet were leased.
Carrier plants are located in eight states, Europe, Asia, Latin America,
Australia, the Middle East and Canada. At December 31, 1994, the U.S. plants
had an aggregate floor area of 5.4 million square feet, of which 1.7 million
square feet were leased, and the plants outside the U.S. had an aggregate floor
areasarea of 3.04.4 million square feet, of which 0.7 million square feet were leased.
Automotive plants are located in thirteen states, Canada, Honduras, Mexico,
Europe and Asia. At December 31, 1994, the U.S. plants had an aggregate floor
area of 5.4 million square feet, of which 1.2 million square feet were leased;
and the plants outside the U.S. had an aggregate floor area of 4.2 million
square feet, of which .9 million square feet were leased.
Pratt & Whitney plants are located in nine states, Canada, Singapore,
Australia, the Netherlands and other areas. At December 31, 1994, the U.S.
plants had an aggregate floor area of 15.1 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 2.9 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 teneight states, Italy, the Czech Republic
and the Federal Republic of Germany. At December 31, 1993,1994, the U.S. plants
operated by the Flight Systems segment had aggregate floor areas of 8.86.9 million
square feet, of which 1.91.6 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, and a company-ownedcompany-
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.Florida.
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.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's Pratt & Whitney unit is the Corporation was served withsubject of a Department of
Defense
Inspector General subpoena for recordsJustice investigation relating to Pratt & Whitney'sits 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 federalThe Corporation has
produced documents and employees have testified before a grand jury in the
District of ConnecticutConnecticut. The Corporation has filed an action with the Armed
Services Board of Contract Appeals which seeks to confirm that its accounting
treatment is investigating this matter.correct. 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.
- 14 -
PAGE
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 andis investigating this matter. In
addition, the Civil Division of the Department of Justice are investigatinghas indicated its
intent to pursue this matter.matter under the False Claims Act. The Department of
Justice has calculated single damages of $10 million and, under the False Claims
Act, these damages could be trebled. 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.
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.
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 is now, and 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.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.
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 asSettlements to the eventual outcomedate, which have not been material, have been recorded
upon receipt. It is expected that one or more of this litigation.these cases 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 24 and Note 14 of the Notes to
Financial Statements at pages 3441 and 3542 of the Corporation's 19931994 Annual Report
to Shareowners.)
In January 1994, UT Automotive (UTA) received a letter from the Michigan
Department of Natural Resources (MDNR)United States Environmental
Protection Agency, Region V, dated January 26, 1995, 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 betweenwater discharge permits issued under the MDNRClean Water Act
at the facility formerly owned and UTA (Consent
Judgment No. 92-1811-CET, Berrien County Circuit Court). It alleged that the
VOC emission rates establishedoperated by the permit were exceeded. UTAUT Automotive in Columbus City,
Indiana. The Corporation is discussing the allegations with MDNR.EPA. 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.operation.
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, 1993.1994.
- 15 -
PAGE
----- 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, 1989,1990, and their ages, are as follows:
PAGE
17
Other Business Age
Name Title Experience 2/1/9495
Since 1/1/8990
Norman R. President, UT President, Electrical 5152
Bodine Automotive (since Systems & Components;
1992) President, Automotive
Products Division, UT
Automotive
Eugene Buckley President, Sikorsky ------- 6364
Aircraft (since
1987)
William L. Senior Vice Vice President, Human 5152
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, TreasurerCarrier
Mark S. Coran Executive Vice Vice President, 5051
President, Controller, United
Operations, Pratt & Technologies; Vice
Whitney (since 1991) President, Group
Finance, Pratt & Whitney
Robert F. Chairman (since Chief Executive Officer; 61
Daniell 1987) President and Chief
60
Daniell 1987), Chief Operating Officer (1984-
Executive Officer 1992)
(since 1986)
George David President and Chief Executive Vice President 5152
Operating Officer and President,
(since 1992); Chief Commercial/Industrial;
Senior Vice President,
United Technologies;
President and ChiefIndustrial
Executive Officer
Otis
Elevator(since 1994)
Thomas J. Fay Senior Vice Senior Vice President, 6061
President, Corporate Affairs, Aetna
Communications Life & Casualty
(since 1990)
Frederick C. Vice President, Director, Financial 4344
Flynn, Jr. Treasurer (since Programs; Director,
1989) Business Development
William S. President, Carrier President, Carrier North 5152
Frago Corporation (since American Operations;
1992) Vice President,
Worldwide Marketing &
Product Management,
General Electric
Lighting
Bruno Grob President, European Executive Vice 44President, Otis France 45
& Transcontinental President, European &
Operations, Otis Transcontinental
Elevator (since Operations; President,
1992) Director General, Otis
France; Vice President &
Regional Manager, North
American
Operations, Otis
Elevator (since
1992)
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PAGE
18
Other Business Age
Name Title Experience 2/1/9495
Since 1/1/8990
Robert J. Senior Vice Vice President, Science 6061
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 4546
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 4445
Minnich Controller Waterhouse
(since 1993)
Stephen F. Page Executive Vice Executive Vice President 5455
President and Chief
and Chief Financial Financial Officer; ViceOfficer, Black
Officer (since 1993) President Finance &
Treasurer, Black & Decker Corporation
William F. Paul Senior Vice Senior Vice President, 5758
President, Washington Office;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, 5758
President, Operations; President,
Technical, Pratt & Manufacturing, Pratt &
Whitney (since 1991) Whitney
William H. Vice President, Vice President and 5051
Trachsel Secretary and Deputy Deputy General Counsel
General Counsel
(since 1993)
Jean-Pierre van President, Otis Executive Vice President 5960
Rooy Elevator (since and Chief Operating
1991) Officer; President,
North American
Operations; Senior Vice
President, European &
Transcontinental
Operations, Otis
Elevator
Robert A. Wolfe Executive Vice Executive Vice 56
President, President, Military and
Pratt & Whitney and Space Aero Propulsion
President,
Large Commercial
Engines (since 1994)
Irving B. Executive Vice Senior Vice President 48------- 49
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 3546 of the Corporation's 19931994
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.
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PAGE
Item 6. Selected Financial Data
See the Five-YearFive Year Summary appearing on page 2715 of the Corporation's 19931994
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 2816 through 3525 of the Corporation's 19931994
Annual Report to its Shareowners; such discussion and analysis is incorporated
by reference in this Report.
Item 8. Financial Statements and Supplementary Data
The 19931994 and 19921993 Balance Sheets, and other financial statements for the
years 1994, 1993 1992 and 1991,1992, together with the report thereon of Price Waterhouse
LLP dated January 26, 1994,1995, appearing on pages 3626 through 5445 in the
Corporation's 19931994 Annual Report to its Shareowners are incorporated by
reference in this Report.
The 19931994 and 19921993 Selected Quarterly Financial Data appearing on page 5546 in
the Corporation's 19931994 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 67 of the Corporation's
Proxy Statement for the 19941995 Annual Meeting of Shareowners. Information
regarding executive officers is contained in Part I of this Report (pagespages 16
through 18).17 and the section entitled "Certain Filings" at page 8 of the 1995
Proxy Statement.
Item 11. Executive Compensation
The information required by Item 11 is incorporated herein by reference from
pages 821 through 13, and pages 18 through 1925 of the Corporation's Proxy Statement for the 19941995 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 throughand 8 of the Corporation's Proxy Statement for the 19941995 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 19941995 Annual Meeting of
Shareowners.
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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
19931994 Annual Report to Shareowners):
Report of Independent Accountants 3626
Consolidated Statement of Operations
for the Three Years ended December 3727
31, 19931994
Consolidated Balance Sheet--December 28
31, 19931994 and 1992 381993
Consolidated Statement of Cash Flows
for the Three Years ended December 3929
31, 19931994
Consolidated Statement of Changes in
Shareowners' Equity for the Three 4030
Years ended December 31, 19931994
Notes to Financial Statements 4131
Consolidated Summary of Business 42
Segment Financial Data 51
Selected Quarterly Financial Data 5546
(Unaudited)
Page No. in
Form 10-K
(a) (2) Financial Statement Schedules:Schedule:
For the three years ended December 31,
1993:1994:
Report of Independent Accountants on
Financial Statement SchedulesSchedule S-1
V-- Property, Plant and Equipment S-2
VI-- Accumulated Depreciation and
Amortization of Property, Plant and S-3
Equipment
VIII--VIII Valuation and Qualifying Accounts S-4
IX-- Short-Term Borrowings S-5
X-- Supplementary Income Statement S-6
InformationS-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.
(a)(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) BylawsBylaws*
(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,
19931994
- 19 -
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]Plan. (i)
(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]Group. (i)
(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]Program. (i)
(v) Pension Preservation Plan [incorporated by
reference to Exhibit (10)(v) to Form 10K for
the year ended December 31, 1992]Plan. (i)
(vi) Senior Executive Severance Plan [incorporated
by reference to Exhibit (10)(vi) to Form 10K
for the year ended December 31, 1992]Plan. (i)
(vii) United Technologies Corporation Deferred
Compensation Plan [incorporated by reference
to Exhibit (10)(vii) to Form 10K for the year
ended December 31, 1992](i)
(viii) Otis Elevator Company Incentive Compensation
Plan [incorporated by reference to Exhibit
(10)(viii) to Form 10K for the year ended
December 31, 1992]Plan. (i)
(ix) Directors Retirement Plan [incorporated by
reference to Exhibit (10)(ix) to Form 10K for
the year ended December 31, 1992]Plan. (i)
(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]Directors.
(i)
(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]Plan. (i)
(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]Plan. (i)
(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]Program. (i)
(xiv) United Technologies Corporation Directors'
Stock and Deferred Stock Unit Retainer
ProgramProgram. (ii)
(xv) United Technologies Corporation Pension
Replacement PlanPlan. (ii)
(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,
19931994 (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)*
(21) Subsidiaries of the Registrant (25)*
(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.
(i) Incorporated by reference to Exhibit of the same
number to United Technologies Corporation Annual
Report or Form 10K (Commission file number 1-812) for
fiscal year ended December 31, 1992.
(ii) Incorporated by reference to Exhibit of the same
number to United Technologies Corporation Annual
Report or Form 10K (Commission file number 1-812) for
fiscal year ended December 31, 1993.
(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.
- 20 -
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
(Registrant)
By /s/ Stephen F. Page Date: March 31, 1994
Stephen F. Page,
Executive Vice President and Chief Financial Officer
Date: March 29, 1995
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.below.
Signature Title ROBERT F. DANIELL* Chairman and Chief Executive
(Robert F. Daniell) Officer; DirectorDate
/s/ GEORGE DAVID President and Chief OperatingMarch 29, 1995
(George David) Executive 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) and Chief Financial Officer
ROBERT F. DANIELL * Chairman, Director)
(Robert F. Daniell)
HOWARD H. BAKER, JR.JR * Director )
(Howard H. Baker, Jr.)
ANTONIA HANDLER CHAYES*CHAYES * Director )
(Antonia Handler Chayes)
ROBERT F. DEE*DEE * Director )
(Robert F. Dee)
CHARLES W. DUNCAN, JR.* Director )
(Charles W. Duncan, Jr.)
PEHR G. GYLLENHAMMAR*GYLLENHAMMAR * Director ) ...........By: /s/William H. Trachsel
(Pehr G. Gyllenhammar) (William H. Trachsel)
Attorney-in-fact
GERALD D. HINES*HINES * Director ) Date: March 29, 1995
(Gerald D. Hines)
CHARLES R. LEE*LEE * Director )
(Charles R. Lee)
ROBERT H. MALOTT*MALOTT * Director )
(Robert H. Malott)
HAROLD A. WAGNER * Director )
(Harold A. Wagner)
JACQUELINE G. WEXLER*WEXLER * Director )
(Jacqueline G. Wexler)
* By William H. Trachsel
(WILLIAM H. TRACHSEL, AS ATTORNEY-IN-FACT)- 21 -
PAGE
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULESSCHEDULE
To the Board of Directors
of United Technologies Corporation
Our audits of the consolidated financial statements referred to in our
report dated January 26, 19941995 appearing on page 3626 of the 19931994 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 SchedulesSchedule listed in Item
14(a)(2) of this Form 10-K. In our opinion, thesethe Financial Statement Schedules
presentSchedule
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 26, 19941995
S-1
PAGE
SCHEDULE VVIII
UNITED TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Schedule VVIII - Property, PlantValuation and EquipmentQualifying Accounts
Three Years Ended December 31, 19931994
(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, 19901991 $ 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
Provision charged to income 107
Doubtful accounts written off (net) (52)
Other adjustments (12)
Balance December 31, 1994 $ 466509
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 Ended297
Additions charged to income tax expense 109
Reductions credited to income tax expense (51)
Balance 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 borrowings1994 $ 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.355
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-6PAGES-2
PAGE
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. 33-57769,
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, 19941995 appearing
on page 3626 of the 19931994 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,Schedule,
which appears on page S-1 of this Form 10-K.
Price Waterhouse LLP
Hartford, Connecticut
March 29, 19941995
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