UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission file number 1-812
UNITED TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06 0570975
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Financial Plaza, Hartford, Connecticut 06101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 728-7000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
Common Stock ($1 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__.
At January 31, 2000, there were 474,095,813 shares of Common Stock outstanding;
the aggregate market value of the voting Common Stock held by non-affiliates at
January 31, 2000 was approximately $25,036,042,406. For purposes of this
calculation, the Registrant has assumed that its directors and executive
officers are affiliates.
List hereunder documents incorporated by reference and the Part of the Form 10-K
into which the document is incorporated: (1) Portions of the United
Technologies Corporation 1999 Annual Report to Shareowners are incorporated by
reference in Parts I, II and IV hereof; and (2) Portions of the United
Technologies Corporation Proxy Statement for the 2000 Annual Meeting of
Shareowners are incorporated by reference in Part III hereof.
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. [ ]
UNITED TECHNOLOGIES CORPORATION
_______________________________
Index to Annual Report
on Form 10-K for
Year Ended December 31, 1999
PART I Page
Item 1. Business .................................. 3
Item 2. Properties ................................ 13
Item 3. Legal Proceedings ......................... 13
Item 4. Submission of Matters to a Vote of Security
Holders ................................... 15
- ----- Executive Officers of the Registrant ...... 15
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters ............... 16
Item 6. Selected Financial Data ................... 16
Item 7. Management's Discussion and Analysis of
Results of Operations and Financial Position 17
Item 7A. Quantitative and Qualitative Disclosures About 17
Market Risk ...............................
Item 8. Financial Statements and Supplementary Data 17
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure .... 17
PART III
Item 10. Directors and Executive Officers of the
Registrant ................................ 17
Item 11. Executive Compensation .................... 17
Item 12. Security Ownership of Certain Beneficial
Owners and Management ..................... 18
Item 13. Certain Relationships and Related Transactions 18
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K ....................... 18
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Item 1. Business
United Technologies Corporation was incorporated in Delaware in 1934.
Growth is attributable to acquisitions and the internal development of existing
businesses of the Corporation.*
Management's Discussion and Analysis of the Corporation's Results of
Operations and Financial Position at December 31, 1999, with comparisons of 1999
to 1998 and 1998 to 1997, as well as Selected Financial Data for each year in
the five year period ended December 31, 1999 are set forth on pages 1 through 9
of the Corporation's 1999 Annual Report to Shareowners. Whenever reference is
made in this Form 10-K to specific pages in the 1999 Annual Report to
Shareowners, such pages are incorporated herein by reference.
Operating Segments
The Corporation conducts its business through four principal operating
segments. The Corporation's operating segments are comprised of groups of
operating companies and, in two cases, also include a division of the parent
corporation. The management of each segment or component thereof has general
operating autonomy over diversified products and services. The operating
segments and their respective principal products are as follows:
Operating Segment Principal Products
Otis --Otis elevators, escalators, automated
people movers and service.
Carrier --Carrier heating, ventilating and air
conditioning ("HVAC") systems and
equipment, transport and commercial
refrigeration equipment, aftermarket
service and components.
Pratt & Whitney --Pratt & Whitney aircraft engines, parts,
service and space propulsion.
Flight Systems --Sikorsky helicopters, parts and service.
--Hamilton Sundstrand aerospace and
industrial products, including aircraft
electrical and power distribution systems,
engine and flight controls, auxiliary power
units, environmental control systems and
propeller systems (aerospace), and air
compressors, metering devices, fluid
handling equipment and enclosed gear drives
(industrial).
On May 4, 1999, the Corporation sold its former UT Automotive unit. For
further discussion of the sale of UT Automotive, see Management's Discussion and
Analysis of the Corporation's Results of Operations at page 4 and Note 2 of
Notes to Consolidated Financial Statements on page 16 of the Corporation's 1999
Annual Report to Shareowners.
On June 10, 1999, the Corporation completed the acquisition of Sundstrand
Corporation. Sundstrand Corporation was merged with a wholly-owned subsidiary
of the Corporation, which was renamed Hamilton Sundstrand Corporation. Hamilton
Sundstrand Corporation and the former Hamilton Standard division are operated as
part of the Flight Systems segment.
Segment financial data for the years 1997 through 1999, including financial
information about foreign and domestic operations and export sales, is included
in Note 15 of Notes to Consolidated Financial Statements on pages 24 through 26
of the Corporation's 1999 Annual Report to Shareowners.
__________
* "Corporation," unless the context otherwise requires, means United
Technologies Corporation or UTC and its subsidiaries.
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Description of Business by Operating Segment
The following description of the Corporation's business by operating segment
should be read in conjunction with Management's Discussion and Analysis of
Results of Operations and Financial Position appearing in the Corporation's 1999
Annual Report to Shareowners, especially the information contained therein under
the heading "Business Environment."
Otis
Otis is the world's leader in production, installation and service in the
elevator industry, defined as elevators, escalators and automated people movers.
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, automated
people movers and shuttle systems for horizontal transportation. In addition to
new equipment, Otis provides modernization products and services to upgrade
elevators and escalators.
In December 1999, Otis completed the formation of LG Otis Elevator Company,
a company established in Korea with LG Electronics, Inc. LG Otis Elevator
Company acquired the elevator business of the Building Facilities Group of LG
Industrial Systems Co. Inc. The Corporation has an 80% equity interest in LG
Otis Elevator Company and it will be operated as part of the Otis segment.
Otis provides maintenance services for a substantial portion of the
elevators and escalators which it sells and also services elevators and
escalators of other manufacturers. Otis conducts its business principally
through various subsidiaries and affiliated companies worldwide. In some cases,
consolidated subsidiaries and affiliates have significant minority interests.
In addition, as part of its global growth strategy, Otis has made investments
and continues to invest in markets worldwide, including those in Central and
Eastern Europe (such as Russia and Ukraine) and Asia (such as the People's
Republic of China and South Korea). Otis' investments in many of these markets
carry a higher level of currency, political and economic risk than investments
in developed markets.
Otis' business and operations worldwide can be affected by changes in
economic, industrial, political and international conditions, including changes
in interest rates (which can affect demand for elevators, escalators and
services); changes in legislation and in government regulations (including
regulations relating to capital contributions, currency conversion and
repatriation of earnings); changes in technology; changes in the level of
construction activity; changes in currency exchange rates; changes in labor
costs (which can impact service and maintenance margins on installed elevators
and escalators); and competition from a large number of companies, including
other major domestic and foreign manufacturers and service providers. The
principal methods of competition are price, delivery schedule, product
performance and service. Otis' products and services are sold principally to
builders and building contractors and owners.
Revenues generated by Otis' international operations were 78 and 81 percent
of total Otis segment revenues in 1999 and 1998, respectively. At December 31,
1999, the Otis business backlog amounted to $3,782 million as compared to $3,459
million at December 31, 1998. Substantially all of the business backlog at
December 31, 1999 is expected to be realized as sales in 2000.
Carrier
Carrier is the world's largest manufacturer of heating, ventilating and air
conditioning systems and equipment. Carrier also participates in the commercial
and transport refrigeration businesses, and provides aftermarket service and
components for its products. In 1997, Carrier expanded into the U.S. commercial
refrigeration business by acquiring Ardco, Inc. and Tyler Refrigeration
Corporation, two U.S.-based manufacturers of commercial refrigeration equipment.
In August 1999, Carrier expanded its North American presence in residential and
light commercial heating and air conditioning equipment by acquiring
International Comfort Products Corporation.
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In April 1999, Carrier formed an alliance with Toshiba Corporation to
combine and coordinate certain air conditioning manufacturing and distribution
operations. Toshiba's Air Conditioning Equipment Division was transferred to
Toshiba Carrier Corporation, a company based in Japan owned 40% by Carrier and
60% by Toshiba. Carrier's existing Japanese subsidiary, Toyo Carrier, also
became part of this company. Carrier and Toshiba Carrier Corporation formed
manufacturing joint ventures in the U.K., with Carrier holding a majority
interest, and in Thailand with Carrier and Toshiba Carrier owning equal
interests. Toshiba transferred its air conditioning manufacturing operations in
both countries to these new joint ventures. Carrier also combined Toshiba's
HVAC sales organizations with Carrier's existing operations, and Carrier will
complement its current line of products by offering Toshiba branded HVAC
products globally.
The products manufactured by Carrier 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, as well as transport refrigeration and commercial refrigeration
equipment.
As part of its global growth strategy, Carrier has made investments and
continues to invest in markets worldwide, including those in Asia (such as the
People's Republic of China) and Latin America. Carrier's investments in many of
these markets carry a higher level of currency, political and economic risk than
investments in developed markets. Carrier's business and operations worldwide
can be affected by changes in economic, industrial, political, international and
climate conditions, including changes in interest rates (which can affect demand
for its products); changes in legislation and government regulations (including
those relating to refrigerants and their effect on global environmental
conditions); changes in technology; changes in the level of construction
activity; changes in currency exchange rates; changes in regulations related to
capital contributions, currency conversion and repatriation of earnings; and
competition from a large number of companies, including other major domestic and
foreign manufacturers. The principal methods of competition are price, product
performance, delivery schedule and service.
Carrier's products and services are sold principally to builders, building
contractors and owners, residential homeowners, shipping and trucking companies,
supermarkets and food service companies. Sales are made both directly to the
customer and by or through manufacturers' representatives, distributors,
dealers, individual wholesalers and retail outlets.
Revenues generated by Carrier's international operations, including U.S.
export sales, were 48 percent and 52 percent of total Carrier segment revenues
in 1999 and 1998, respectively. At December 31, 1999, the Carrier business
backlog amounted to $978 million, as compared to $1,007 million at December 31,
1998. Substantially all of the business backlog at December 31, 1999 is
expected to be realized as sales in 2000.
Pratt & Whitney and Flight Systems
The Corporation's Pratt & Whitney and Flight Systems operating segments
produce aerospace and defense products. Sales of aerospace and defense products
are subject to changes in technology; lengthy and costly development cycles; the
effects of continuing consolidation within the aerospace and defense industry;
heavy dependence on a small number of products and programs; changes in
legislation and in government procurement and other regulations and procurement
practices; procurement preferences and policies of some foreign customers which
require in-country manufacture through offset programs (where in-country
purchases and financial support projects are required as a condition to
obtaining orders) or other arrangements; substantial competition from major
domestic manufacturers and from foreign manufacturers (whose governments
sometimes provide direct and indirect research and development assistance,
marketing subsidies and other assistance for their commercial products); and
changes in economic, industrial and international conditions. In addition, the
financial performance of these two
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segments can be affected in a number of respects by the general level of
activity and performance of the commercial airline industry and the aviation
industry.
The principal methods of competition in the Corporation's aerospace and
defense businesses are price, product performance, service, delivery schedule
and other terms and conditions of sale, including fleet introductory 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 and helicopters. Fleet
introductory allowances are discounts and other financial incentives offered by
the Corporation to encourage airline and other customers to purchase engines.
Engine purchases are expected to lead to the purchase of parts and services to
support the engines. Engine selections by airlines and other operators can
therefore have a significant impact on subsequent sales of spare parts and
maintenance services.
Sales of military products are affected by defense budgets (both in the U.S.
and, to some extent, abroad), U.S. foreign policy and the presence of
competition. Military spare parts sales are also affected to some extent by the
policies of the U.S. and certain foreign governments of purchasing certain parts
from suppliers other than the original equipment manufacturers.
Pratt & Whitney
Pratt & Whitney is one of the world's leading producers of large turbofan
(jet) engines for commercial and military aircraft and small gas turbine engines
for business, regional/commuter and general aviation aircraft. Pratt & Whitney
provides overhaul and repair services and spare and replacement parts for the
engines it produces, as well as overhaul and repair services and fleet
management services for many models of commercial and military jet and gas
turbine engines. In addition, Pratt & Whitney produces liquid rocket propulsion
systems and solid rocket motors for the United States Department of Defense, the
National Aeronautics and Space Administration ("NASA") and commercial satellite
launch programs. Pratt & Whitney also produces industrial gas turbines.
Pratt & Whitney products are sold principally to aircraft manufacturers,
airlines and other aircraft operators, aircraft leasing companies and the U.S.
and foreign governments. Pratt & Whitney sales in the U.S. and Canada are made
directly to the customer and, to a limited extent, through independent
distributors. Other export sales are made with the assistance of an overseas
network of independent foreign representatives. Sales to the Boeing Company
("Boeing") and Airbus Industrie ("Airbus"), consisting primarily of sales of
commercial aircraft jet engines selected by airlines and other aircraft
operators, amounted to 30 percent of total Pratt & Whitney revenues in 1999,
before taking into account any discounts or financial incentives offered to such
airlines or operators. Pratt & Whitney's major competitors in the sale of
engines are the aircraft engine businesses of General Electric Company ("GE")
and Rolls-Royce plc.
Pratt & Whitney currently produces three families of large commercial jet
engines; the JT8D-200, the PW2000 series and the PW4000 series. Pratt &
Whitney's JT8D-200 series engines power the Boeing MD-80 aircraft. Applications
for the PW2000 series include the Boeing 757-200/PF aircraft and the Iluyshin
IL-96 aircraft. Pratt & Whitney's PW4000 engine family powers the Airbus A310-
300, A300-600 and A330-200/300 series; the Boeing 747-400, 767-200/300 and 777-
200/300 series of aircraft; and the Boeing MD-11 aircraft. Boeing's Douglas
Products Division has announced that it has phased-out the MD-80 aircraft
program with the final delivery in December 1999. Boeing has also announced
that MD-11 aircraft production will be phased-out with the final delivery in
2000.
Pratt & Whitney has entered into a Memorandum of Understanding with Airbus
to develop, certify, market and sell PW6000 series engines for installation on
the Airbus A318 aircraft under development. Pratt & Whitney currently expects
to obtain FAA certification for the PW6000 engine during the fourth
quarter of 2001. Airbus has announced that the A318 aircraft is currently
expected to enter service in the fourth quarter of 2002. Management cannot
predict with certainty when and in what quantities Pratt & Whitney will produce
PW6000 engines.
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IAE International Aero Engines AG, a Swiss corporation in which Pratt &
Whitney has a 33 percent interest, markets and supports the V2500 engine.
Applications for the V2500 engine include Airbus' A319, A320 and A321 aircraft
and Boeing's MD-90. Boeing has announced that MD-90 production will be phased
out with final deliveries during the first quarter of 2000.
In the case of many commercial aircraft today, aircraft manufacturers offer
their customers a choice of engines, giving rise to competition among engine
manufacturers at the time of the sale of aircraft. This competition is intense,
particularly where new commercial airframe/engine combinations are first
introduced to the market and into the fleets of individual airlines. Financial
incentives granted by engine suppliers, performance and operating cost
guarantees and maintenance agreements are frequently important factors in such
sales and can be substantial. (For information regarding customer financing
commitments, participation in guarantees of customer financing arrangements and
performance and operating cost guarantees, see Notes 4 and 13 of Notes to
Consolidated Financial Statements at pages 17 and 23 of the Corporation's 1999
Annual Report to Shareowners.)
In view of the global nature of the commercial aircraft industry and the
risk and cost associated with launching new engine development programs, Pratt &
Whitney has developed strategic alliances and collaboration arrangements on
commercial engine programs in which costs, revenues and risks are shared. At
December 31, 1999, the percentages of these items shared by other participants
in these alliances were approximately as follows: 24 percent of the JT8D-200
series engine program, 29 percent of the PW2000 series engine program, 14
percent of the 94 and 100 inch fan models of the PW4000, 26 percent of the
PW4084 and PW4090 models and 24 percent of the PW4098 model.
GE-P&W Engine Alliance, LLC, an alliance between GE Aircraft Engines and
Pratt & Whitney in which Pratt & Whitney has a 50 percent interest, was formed
during 1996 to develop, market and manufacture a new jet engine that is intended
to power super-jumbo aircraft. Although no aircraft manufacturer has as yet
committed to produce a super-jumbo aircraft, the GE-P&W Engine Alliance has
continued its marketing activities.
In 1999, as part of its plans to expand its range of aftermarket products
and services, Pratt & Whitney acquired Cade Industries, Inc. and the operations
of Dallas Aerospace, Inc. Cade manufactures and repairs composite component
parts for propulsion systems and airframes, and designs, manufactures and
services jet engine test facilities. Dallas Aerospace is an aftermarket
supplier of engines, engine parts, and engine management and leasing services.
Pratt & Whitney currently produces two military aircraft engines, the F100
(powering F-15 and F-16 fighter aircraft) and the F117 (powering C-17 transport
aircraft). All of Pratt & Whitney's F100 and F117 sales contracts are with the
United States Air Force ("USAF") or with foreign governments.
Pratt & Whitney is under contract with the USAF to develop the F119 engine,
the only anticipated source of propulsion for the two-engine F-22 fighter
aircraft being developed by Lockheed Martin Corporation ("Lockheed Martin") and
Boeing. The F-22 made its first flight in September 1997, powered by Pratt &
Whitney F119 engines. In addition, the Department of Defense selected two
weapon systems contractors, Boeing and Lockheed Martin, to proceed into the next
phase of the Joint Strike Fighter program development. Both companies have
selected derivatives of Pratt & Whitney's F119 engine as their engine of choice
to provide power for the Joint Strike Fighter demonstration aircraft.
Management cannot predict with certainty whether, when, and in what quantities
Pratt & Whitney will produce F119 engines.
Pratt & Whitney Space Propulsion ("SP") produces hydrogen fueled rocket
engines for commercial and U.S. Government space applications and advanced turbo
pumps for NASA's Space Shuttle program. SP, together with NPO Energomash, is
providing a new Lox-Kerosene RD-180 booster engine for two launch vehicles being
marketed by Lockheed Martin. Chemical Systems, a unit of SP, manufactures solid
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fuel propulsion systems and booster motors for commercial and civil applications
and several U.S. military launch vehicles and missiles.
Gas turbine engines manufactured by Pratt & Whitney Canada, including
various turbofan, turboprop and turboshaft engines, are used in a variety of
aircraft including six to eighty passenger class business and regional/commuter
airline aircraft, general aviation aircraft and light and medium helicopters.
Pratt & Whitney Canada also provides engine maintenance services worldwide.
Revenues from Pratt & Whitney's international operations, including U.S.
export sales, were 48 percent and 52 percent of total Pratt & Whitney segment
revenues in 1999 and 1998, respectively. Such 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, 1999, the business backlog for Pratt & Whitney amounted to
$8,256 million, including $1,394 million of U.S. Government funded contracts and
subcontracts, as compared to $8,415 million and $1,808 million, respectively, at
December 31, 1998. Of the total Pratt & Whitney business backlog at December
31, 1999, approximately $3,459 million is expected to be realized as sales in
2000. Significant elements of Pratt & Whitney's business, such as spare parts
sales for engines in service, generally have short lead times. Therefore,
backlog may not be indicative of future demand. Also, since a substantial
portion of the backlog for commercial customers is scheduled for delivery beyond
2000, changes in economic conditions may cause customers to request that firm
orders be rescheduled or canceled.
Flight Systems
The Corporation's Flight Systems business is conducted through Sikorsky
Aircraft and Hamilton Sundstrand.
Sikorsky is one of the world's leading manufacturers of military and
commercial helicopters and the primary supplier of transport helicopters to the
U.S. Army. All branches of the U.S. military operate Sikorsky helicopters.
Sikorsky also supplies helicopters to foreign governments and the worldwide
commercial market. Sikorsky produces helicopters for a variety of uses,
including passenger, utility/transport, cargo, anti-submarine warfare, search
and rescue and heavy-lift operations. In addition to sales of new helicopters,
Sikorsky's business base includes aftermarket revenue from spare parts sales,
overhaul and repair contracts and service contracts. Other major helicopter
manufacturers include Bell Helicopter Textron, Eurocopter, The Boeing Company,
Agusta, GKN Westland Helicopters, Kazan Helicopter and Rostvertol.
Current production programs at Sikorsky include the Black Hawk medium-
transport helicopter for the U.S. and foreign governments; the CH-60 Fleet
Combat Support helicopter for the U.S. Navy; the International Naval Hawk, a
derivative of the U.S. Navy's Seahawk medium-sized helicopter for multiple naval
missions; and the S-76 intermediate-sized helicopter for executive transport,
offshore oil platform support, search and rescue, emergency medical service and
other utility operations. Current production requirements for the CH-53E Super
Stallion heavy-lift helicopter ended in 1999 after the last delivery to the U.S.
Marine Corps. However, marketing efforts are continuing as there may be
opportunities for sales of these aircraft to foreign governments.
In July 1997, Sikorsky signed a multi-year contract with the U.S. Government
to deliver 108 Black Hawk family helicopters from July 1997 through June 2002.
Under the contract as it has been amended through December 1999, the purchase
commitment has been increased to 134 helicopters. As of December 31, 1999,
110 Black Hawk helicopters have been delivered under the contract. The U.S.
Government has periodically identified requirements for additional Black Hawk
family helicopters. Sikorsky is currently working with the U.S. Army to meet
some of these recently identified additional
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requirements. However, these requirements are not firm commitments and
management cannot predict with certainty whether, when and how many additional
aircraft may be purchased.
Declining Defense Department budgets make Sikorsky increasingly dependent
upon expanding its international market position. During 1999, Sikorsky signed
several contracts to sell helicopters to the Republic of Turkey, the largest of
which was a contract to sell 50 Black Hawk aircraft. Twenty-two aircraft were
delivered under these contracts with the Republic of Turkey in 1999. The
remaining aircraft will be delivered through 2001.
Sikorsky is engaged in development of the S-92 aircraft, a large cabin
derivative of the Black Hawk helicopter, for commercial and military markets. A
significant portion of the development is being carried out by companies in
Brazil, the People's Republic of China, Japan, Spain and Taiwan under
collaborative arrangements. Regulatory certification of the first S-92 is
expected in 2001. While marketing efforts for the S-92 have commenced,
management cannot predict with certainty whether, when, and in what quantities
the S-92 will be produced.
Sikorsky has a 50% interest in a joint venture with Boeing Helicopters for
the development of the U.S. Army's next generation light attack and
reconnaissance helicopter, the RAH-66 Comanche. The Boeing Sikorsky Team is
performing under a cost reimbursement contract awarded in 1991. The first two
prototype aircraft are undergoing flight testing. In addition, the team has
delivered a proposal to the U.S. Army to initiate the next phase of the program
to build 13 new production representative aircraft for testing and evaluation.
Management cannot predict with certainty whether, when, and in what quantities
the Comanche will be produced.
During 1999, Sikorsky received a developmental contract to refurbish four of
the U.S. Navy's Seahawks. There are more than 250 SH-60B, SH-60F and SH-60H
aircraft in the Navy's fleet that could also be refurbished and upgraded into
SH-60R aircraft. In addition, Sikorsky received its first contract for the
development of the Cypher, an unmanned aerial vehicle, for a U.S. Marine Corps
application. Management cannot predict with certainty whether, when and in what
quantities these aircraft will be refurbished or produced.
In 1999, Sikorsky acquired Associated Aircraft Group, an operator of
Sikorsky helicopters, for the purpose of establishing a fractional share
ownership program for S-76 helicopters.
Hamilton Sundstrand is a global producer of aerospace and industrial
products for diversified industries. Hamilton Sundstrand's principal aerospace
systems, subsystems and components include electric power generating,
distribution, management and control systems; fuel and special fluid pumps;
engine control systems; gearboxes; actuation systems; ram air turbine emergency
systems; auxiliary power units; environmental control systems; propeller
systems; torpedo propulsion systems; launch vehicle hydraulic power units; and
electronic controls and components. Hamilton Sundstrand's principal industrial
products include enclosed gear drives; flexible shaft couplings; large ring
gears; metering and specialty pumps; rotary screw industrial and portable air
compressors; pneumatic tools; dryers and filters; high-speed centrifugal pumps
and compressors and leak proof pumps.
Hamilton Sundstrand is also the prime contractor for NASA's space suit/life
support system and produces environmental control, life support, mechanical
systems and thermal control systems for international space programs.
Hamilton Sundstrand's aerospace products serve commercial, military,
regional and general aviation, as well as space and undersea customers.
Aftermarket services include spare parts, overhaul and repair and engineering
and technical support. Hamilton Sundstrand aerospace products are sold directly
to airframe manufacturers, the U.S. Government, aircraft operators and
independent distributors. Hamilton Sundstrand sales of aerospace products to
Boeing, including sales where the U.S. Government was the ultimate customer,
were 7% of Flight Systems segment sales in 1999.
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Hamilton Sundstrand's industrial products serve a group of basic industries
involved with raw material processing, bulk material handling and construction
(including mining; metal and other material processing; hydrocarbon and chemical
procession; water and waste water treatment). Hamilton Sundstrand industrial
products are sold directly to end-users, through manufacturer representatives
and distributors and through engineering contractors. Demand for Hamilton
Sundstrand's industrial products is tied closely to the level of general
economic activity because the industrial products are sold to other businesses
that utilize them in their own manufacturing processes.
Hamilton Sundstrand has competitors or potential competitors in both its
aerospace and industrial businesses. Hamilton Sundstrand believes that its
research and development, proprietary technology, and product and service
reputations have been significant in maintaining its competitive standing.
Price and delivery are also important methods of competition.
Revenues generated by the Flight Systems segment's international operations,
including export sales, were 41 percent and 40 percent of total Flight Systems
segment revenues in 1999 and 1998, respectively. Such operations are subject to
local government regulations (including regulations relating to capital
conditions, currency conversion and repatriation of earnings) as well as to
various political and economic risks.
At December 31, 1999, the Flight Systems segment business backlog amounted
to $3,930 million, including $1,011 million under funded contracts and
subcontracts with the U.S. Government, as compared to $2,013 million and $1,030
million, respectively, at December 31, 1998. Of the total Flight Systems
segment business backlog at December 31, 1999, approximately $2,629 million is
expected to be realized as sales in 2000.
Other
In July 1998, the Corporation reorganized its fuel cell business to include
fuel cell systems for transportation applications, in addition to the existing
stationary power plant industry. Oversight of this business is now provided by
UTC directly. The results are included in the "Eliminations and Other" category
for financial segment reporting in Note 15 of Notes to Consolidated Financial
Statements on pages 24 to 26 of the Corporation's 1999 Annual Report to
Shareowners.
Other Matters Relating to the Corporation's
Business as a Whole
Research and Development
To maintain its competitive position, the Corporation spends substantial
amounts of its own funds on research and development. Such expenditures, which
are charged to income as incurred, were $1,292 million or 5.4 percent of total
sales in 1999, as compared with $1,168 million or 5.1 percent of total sales in
1998 and $1,069 million or 5.1 percent of total sales in 1997. The Corporation
also performs research and development work under contracts funded by the U.S.
Government and other customers. Such contract research and development, which
is performed principally in the Pratt & Whitney segment and to a lesser extent
in the Flight Systems segment, amounted to $1,044 million in 1999, as compared
with $1,065 million in 1998 and $974 million in 1997.
Contracts, Other Risk Factors, Environmental and Other Matters
Government contracts are subject to termination for the convenience of the
Government, in which event the Corporation normally would be entitled to
reimbursement for its allowable costs incurred plus a reasonable profit. Most
of the Corporation's sales are made under fixed-price type contracts; only 5
percent of the Corporation's total sales for 1999 were made under cost-
reimbursement type contracts.
Like many defense contractors, the Corporation has received allegations from
the U.S. Government that some contract prices should be reduced because cost or
pricing data submitted in negotiation of the
- 10 -
contract prices may not have been in conformance with government regulations.
The Corporation has made voluntary refunds in those cases it believes
appropriate, has settled some allegations, and does not believe that any further
price reductions that may be required will have a material effect upon its
financial position or results of operations.
The Corporation is now, and believes that in light of the current government
contracting environment it will be, the subject of one or more government
investigations. See Item 3 - Legal Proceedings at pages 13 through 15 of this
Form 10-K for further discussion.
The diversification of the Corporation's businesses across industries and
geographically throughout the world has helped to limit in varying degrees the
effect of adverse conditions in any one industry or the economy of any country
or region on the consolidated results of the Corporation. There can be no
assurance, however, that the effect of adverse conditions in one or more
industries or regions will be limited or offset in the future.
Like other users in the U.S., the Corporation is largely dependent upon
foreign sources for certain of its raw materials requirements such as cobalt
(Africa) and chromium (Africa, Eastern and Central Europe and the countries of
the former Soviet Union). To alleviate this dependence and accompanying risk,
the Corporation has a number of on-going programs which include the development
of new suppliers; 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.
The Corporation has sought cost reductions in its purchases of certain other
materials, components, and supplies by consolidating its purchases and reducing
the number of suppliers. In some instances, the Corporation is reliant upon a
single source of supply. A disruption in deliveries from its suppliers,
therefore, could have an adverse effect on the Corporation's ability to meet its
commitments to customers. The Corporation believes that it has appropriately
balanced the risks against the costs of sustaining a greater number of
suppliers.
The Corporation does not foresee any unavailability of materials,
components, or supplies which will have any material adverse effect on its
overall business, or on any of its business segments, in the near term.
The Corporation does not anticipate that compliance with current federal,
state and local provisions relating to the protection of the environment will
have a material adverse effect upon its cash flows, competitive position,
financial position or results of operations. (Environmental matters are the
subject of certain of the Legal Proceedings described in Item 3 - Legal
Proceedings at pages 13 to 15 of this Form 10-K, and are further addressed in
Management's Discussion and Analysis of Results of Operations and Financial
Position at page 8 and Notes 1 and 14 of Notes to Consolidated Financial
Statements at pages 16 and 24 of the Corporation's 1999 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.
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 operating segments.
- 11 -
A discussion of the Corporation's efforts to modify computer systems for
the transition to the year 2000, is included in Management's Discussion and
Analysis of Results of Operations and Financial Position under the heading "Year
2000" on page 8 of the Corporation's 1999 Annual Report to Shareowners.
A discussion of the potential impact on the Corporation of the introduction
of the "euro" as a common currency of the member countries of the European
Economic and Monetary Union is included in Management's Discussion and Analysis
of Results of Operations and Financial Position under the heading "Euro
Conversion" on page 8 of the Corporation's 1999 Annual Report to Shareowners.
Cautionary Note Concerning Factors That May Affect Future Results
This report on Form 10-K contains statements which, to the extent they are
not statements of historical or present fact, constitute "forward-looking
statements" under the securities laws. From time to time, oral or written
forward-looking statements may also be included in other materials released to
the public. These forward-looking statements are intended to provide
Management's current expectations or plans for the future operating and
financial performance of the Corporation, based on assumptions currently
believed to be valid. Forward-looking statements can be identified by the use
of words such as "believe," "expect," "plans," "strategy," "prospects,"
"estimate," "project," "anticipate" and other words of similar meaning in
connection with a discussion of future operating or financial performance.
These include, among others, statements relating to:
. Future earnings and other measurements of financial performance
. Future cash flow and uses of cash
. The effect of economic downturns or growth in particular regions
. The effect of changes in the level of activity in particular industries or
markets
. The scope, nature or impact of acquisition activity
. Product developments and new business opportunities
. Restructuring costs and cost reduction efforts
. The outcome of contingencies
. The impact of Year 2000 issues
. The transition to the use of the euro as a currency.
All forward-looking statements involve risks and uncertainties that may
cause actual results to differ materially from those expressed or implied in the
forward-looking statements. This Annual Report on Form 10-K for 1999 includes
important information as to risk factors in the "Business" section under the
headings "Description of Business by Operating Segment," "Other Matters Relating
to the Corporation's Business as a Whole" and "Legal Proceedings." Additional
important information as to risk factors is included in the Corporation's 1999
Annual Report to Shareowners in the section titled "Management's Discussion and
Analysis of Results of Operations and Financial Position" under the headings
"Business Environment," "Restructuring and Other Costs," "Year 2000" and "Euro
Conversion," which is incorporated by reference in this Form 10-K. For
additional information identifying factors that may cause actual results to vary
materially from those stated in the forward-looking statements, see the
Corporation's reports on Forms 10-Q and 8-K filed with the Securities and
Exchange Commission from time to time.
Employees
At December 31, 1999, the Corporation's total employment was approximately
148,300. For discussion of the effects of the Corporation's restructuring
actions on employment, see Management's Discussion and Analysis of the
Corporation's Results of Operations at pages 4 to 6 and Note 11 to the
Consolidated Financial Statements at pages 21 to 22 of the Corporation's 1999
Annual Report to Shareowners.
- 12 -
Item 2. Properties
The Corporation's fixed assets as of December 31, 1999 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 automatic control
features and special adaptations. The plants, warehouses, machinery and
equipment in use as of December 31, 1999 are in good operating condition, are
well maintained, and substantially all are in regular use. The Corporation
considers the level of fixed assets capitalized as of December 31, 1999,
suitable and adequate for the operations of each operating segment in the
current business environment.
The following square footage numbers are approximations. At December 31,
1999, the Corporation operated (a) plants in the U.S. which had 34.6 million
square feet, of which 3.9 million square feet were leased; (b) plants outside
the U.S. which had 20.8 million square feet, of which 3.2 million square feet
were leased; (c) warehouses in the U.S. which had 6.4 million square feet, of
which 4.2 million square feet were leased; and (d) warehouses outside the U.S.
which had 6.0 million square feet, of which 3.2 million square feet were
leased.
For discussion of the effect of the Corporation's restructuring actions on
production facilities, see Management's Discussion and Analysis of the
Corporation's Results of Operations at pages 4 to 6 and Note 11 to the
Consolidated Financial Statements at pages 21 to 22 of the Corporation's 1999
Annual Report to Shareowners.
Management believes that the facilities in operation at December 31, 1999
for the production of its products are suitable and adequate for the business
conducted therein, are being appropriately utilized consistent 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
As previously reported, the Department of Defense and the Corporation are
litigating whether Pratt & Whitney's accounting practices for certain engine
parts are acceptable. The litigation, filed with the Armed Services Board of
Contract Appeals ("ASBCA"), No. 47416 et al., relates to the accounting for
engine parts produced by foreign companies under commercial engine collaboration
programs from 1984 through 1995. The Government initially claimed damages of
$260.3 million, of which $102.7 million was interest. Pratt & Whitney believes
its accounting practices are proper and has not modified them. If the
Government prevails, damages could be larger than initially claimed because
interest continues to accrue and the complaint could be amended to include the
period after 1995. In March and April 1998, the matter was tried before an
ASBCA judge. A decision is not expected for a number of months.
As previously reported, a jury in Chromalloy Gas Turbine Corporation v.
United Technologies Corporation, No. 95-CI-12541, a Texas state action, found
that Pratt & Whitney did not monopolize any relevant market but did willfully
attempt to monopolize an unspecified market. In May 1997, the court
entered a Final Judgment denying Chromalloy's request for damages, injunctive
relief and declaratory relief. In October 1998, the Texas Fourth Court of
Appeals affirmed the decision of the trial court, declining to grant injunctive
relief to Chromalloy. In November 1999, the appellate court denied Chromalloy's
motions for rehearing and rehearing en banc.
As previously reported, the Corporation has been served with a number of
qui tam complaints under the civil False Claims Act in the United States
District Court for the District of Connecticut: U.S. ex rel. Drake v. Norden
Systems, Inc. and UTC, No.394CV00963 (filed July 1997, and involving allegations
of improper accounting for fixed assets); U.S. ex rel. Capella v. UTC and Norden
Systems Inc., No. 394CV02063 (filed December 1994, and involving allegations of
improper accounting for
- 13 -
insurance costs); U.S. ex rel. Maloni v. UTC, No. 395CV02431 (filed in November
1995 and involving allegations of failing to implement an "Inspection Method
Sheet Inspection System") and U.S. ex rel. Waldron v. UTC, No. 396CV02038
(filed in October 1996 and involving allegations of underestimating the costs of
performing a cost-type development contract). The qui tam relator in each case
has claimed unspecified damages (trebled) and penalties, and the Department of
Justice in each case has declined to take over the litigation. The civil False
Claims Act provides for penalties in a civil case of up to $10,000 per false
claim submitted. The number of false claims implicated by the foregoing qui tam
complaints cannot currently be ascertained; however, if determined adversely to
the Corporation the number could result in significant penalties.
As previously reported in the Corporation's Reports on Form 10-K for 1992
and 1998 and Form 10-Q for the Third Quarter of 1993, the Corporation entered
into a Consent Decree in August of 1993 with the EPA and the Department of
Justice in Docket Number H-90-715 (JAC) in the U.S. District Court for the
District of Connecticut. Under the Consent Decree, the Corporation agreed to
adopt programs to enhance the effectiveness of its environmental management
systems, have an independent firm conduct an audit of 19 of its facilities in
New England, and pay civil penalties for any non-compliance with environmental
laws and regulations discovered during the audit. In November 1999, following
completion of the audit of these 19 facilities, the Corporation agreed to pay
$168,836 in civil fines and undertake environmental projects requiring
expenditures of approximately $500,000.
In March 1999, the Department of Justice filed a civil False Claims Act
complaint against the Corporation in the United States District Court for the
Southern District of Ohio (Western Division), No. C-3-99-093. This lawsuit,
previously reported as a proceeding contemplated by the Government, is related
to the "Fighter Engine Competition" between Pratt & Whitney's F100 engine and
GE's F110 engine, for contracts awarded by the U.S. Air Force between fiscal
years 1985 and 1990, inclusive. The Government alleges that Pratt &Whitney
inflated its estimated costs for purchased parts and withheld data that would
have revealed the overstatements. The Government seeks damages of at least $75
million (some portion of which would be trebled plus penalties of up to $10,000
per claim submitted).
The Corporation does not believe that resolution of any of the foregoing
legal matters will have a material adverse effect upon the Corporation's
competitive position, results of operations, cash flows, or financial position.
The Corporation is now, and believes that in light of the current government
contracting environment it will be, the subject of one or more government
investigations. If the Corporation or one of its business units were charged
with wrongdoing as a result of any of these investigations, the Corporation or
one of its business units could be suspended from bidding on or receiving awards
of new government contracts pending the completion of legal proceedings. If
convicted or found liable, the Corporation could be fined and debarred from new
government contracting for a period generally not to exceed three years. Any
contracts found to be tainted by fraud could be voided by the Government.
The Corporation has incurred and will likely continue to incur liabilities
under various state and federal statutes for the cleanup of pollutants
previously released into the environment. The Corporation believes that any
payments it may be required to make as a result of these claims will not have
a material effect upon the cash flows, competitive or financial position, or
results of operations of the Corporation. The Corporation has had liability
and property insurance in force over its history with a number of insurance
companies, and the Corporation has commenced litigation seeking indemnity and
defense under these insurance policies in relation to its environmental
liabilities. Settlements to date, which have not been material, have been
recorded upon receipt. While the litigation against the Corporation's historic
liability insurers has concluded, the case against the Corporation's property
insurers is continuing. (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 8 and
Notes 1 and 14 of the Notes to Consolidated Financial Statements at pages 16
and 24 of the Corporation's 1999 Annual Report to Shareowners.)
- 14 -
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, 1999.
- ----- 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, 1995, and their ages, are as follows:
Other Business Age
Name Title Experience 2/1/00
Since 1/1/95
Jonathan W. President, Carrier President, Carrier Asia 43
Ayers Corporation Pacific Operations; Vice
(effective 1/1/2000) President-Strategic
Planning, United
Technologies
Corporation; Principal-
Morgan Stanley Corporate
Finance
Ari Bousbib Vice President, Vice President, 38
Corporate Strategy Strategic Planning (1997
and Development -1999); Managing
(since 1999) Director, The Strategic
Partners Group; Partner,
Booz, Allen & Hamilton.
Dean C. Borgman President, Sikorsky Senior Vice President, 58
Aircraft (since The Boeing Company;
1998) President, McDonnell
Douglas Helicopter
Company
William L. Senior Vice 57
Bucknall, Jr. President, Human -------
Resources &
Organization
(since 1992)
John F. Senior Vice Vice President, United 56
Cassidy, Jr. President - Science Technologies Research
and Technology Center
(since 1998)
Louis Chenevert President, Pratt & Executive Vice 42
Whitney (since 1999) President-Operations,
Pratt & Whitney; Vice
President - Operations,
Pratt & Whitney Canada
George David Chairman (since President (1992-1999) 57
1997) and Chief
Executive Officer
(since 1994)
David J. Senior Vice Vice President and 45
FitzPatrick President and Chief Controller, Eastman
Financial Officer Kodak Co.; Finance
(since 1998) Director - Cadillac
Luxury Car Division,
General Motors Corp.
- 15 -
Other Business Age
Name Title Experience 2/1/00
Since 1/1/95
Ruth R. Harkin Senior Vice President and Chief 55
President, Executive Officer,
International Overseas Private
Affairs and Investment Corporation
Government
Relations, United
Technologies
Corporation and
Chair, United
Technologies
International (since
1997)
Karl J. Krapek President and Chief Executive Vice President 51
Operating Officer (1997-1999) and
(since 1999) President, Pratt &
Whitney
(1992-1999)
Ronald F. President, Hamilton Executive Vice 59
McKenna Sundstrand President, Sundstrand
Corporation (since Corporation and Chief
1999) Operating Officer,
Sundstrand Aerospace
Angelo J. Vice President, Director, Financial 46
Messina Financial Planning Planning and Analysis,
and Analysis United Technologies
(since 1998) Corporation; Vice
President, Strategic
Planning, Pratt &
Whitney; Director,
Investor Relations,
United Technologies
Corporation
Stephen F. Page Executive Vice Executive Vice President 60
President, United and Chief Financial
Technologies Officer, United
Corporation and Technologies Corporation
President and Chief
Executive Officer,
Otis Elevator
(since 1997)
Gilles A. H. Vice President - Vice President and Chief 53
Renaud Treasurer Financial Officer,
(since 1996) Carrier Corporation
William H. Senior Vice Vice President, 56
Trachsel President, General Secretary and Deputy
Counsel and General Counsel
Secretary
(since 1998)
All of the officers serve at the pleasure of the Board of Directors of
United Technologies Corporation or the subsidiary designated.
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
See Comparative Stock Data appearing on page 26 of the Corporation's 1999
Annual Report to 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 Form 10-K.
Item 6. Selected Financial Data
See the Five Year Summary appearing on page 1 of the Corporation's 1999
Annual Report to Shareowners containing the following data: revenues, net
income, basic and diluted earnings per share, cash dividends per common share,
total assets and long-term debt. All such data are incorporated by reference in
this Report. See Notes to Consolidated Financial Statements appearing on pages
15 to 26 of
- 16 -
the Corporation's 1999 Annual Report to Shareowners for a description of any
accounting changes and acquisitions or dispositions of businesses materially
affecting the comparability of the information reflected in such Five Year
Summary.
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 2 through 9 of the Corporation's 1999
Annual Report to Shareowners; such discussion and analysis is incorporated by
reference in this Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
For information concerning market risk sensitive instruments, see discussion
under the headings "Foreign Currency and Interest Rate Risk Management" in
Management's Discussion and Analysis of Results of Operations and Financial
Position on pages 7 to 8 and "Hedging Activity" at Note 1 and Notes 12 and 13 on
pages 15 to 16 and 22 to 23 of the Corporation's 1999 Annual Report to
Shareowners. Such information is incorporated by reference in this Form 10-K.
Item 8. Financial Statements and Supplementary Data
The 1999 and 1998 Consolidated Balance Sheet, and other financial statements
for the years 1999, 1998 and 1997, together with the report thereon of
PricewaterhouseCoopers LLP dated January 19, 2000, appearing on pages 10 through
14 in the Corporation's 1999 Annual Report to Shareowners are incorporated by
reference in this Form 10-K.
The 1999 and 1998 Selected Quarterly Financial Data appearing on page 26 in
the Corporation's 1999 Annual Report to Shareowners are incorporated by
reference in this Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Item 10. Directors and Executive Officers of the Registrant
The information required by Item 10 with respect to directors is
incorporated herein by reference to the section of the Corporation's Proxy
Statement for the 2000 Annual Meeting of Shareowners entitled "General
Information Concerning the Board of Directors-Nominees." Information regarding
executive officers is contained in Part I of this Form 10-K under the heading
"Executive Officers." Information concerning Section 16(a) compliance is
contained in the section of the Corporation's Proxy Statement for the 2000
Annual Meeting of Shareowners entitled "Section 16(a) Beneficial Ownership
Reporting Compliance."
Item 11. Executive Compensation
The information required by Item 11 is incorporated herein by reference to
the sections of the Corporation's Proxy Statement for the 2000 Annual Meeting of
Shareowners entitled "Report of Committee on Compensation and Executive
Development" and "Compensation of Executive Officers." 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.
- 17 -
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by Item 12 is incorporated herein by reference to
the section of the Corporation's Proxy Statement for the 2000 Annual Meeting of
Shareowners entitled "Security Ownership of Directors, Nominees and Executive
Officers."
Item 13. Certain Relationships and Related Transactions
The information required by Item 13 is incorporated herein by reference to
the section of the Corporation's Proxy Statement for the 2000 Annual Meeting of
Shareowners entitled "Compensation of Executive Officers--Certain Business
Relationships."
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Financial Statements, Financial Statement
Schedules and Exhibits
(1)Financial Statements (incorporated by Page Number
reference from the 1999 Annual Report to in Annual
Shareowners): Report
Report of Independent Accountants ......... 10
Consolidated Statement of Operations for
the Three Years ended December 31, 1999 ... 11
Consolidated Balance Sheet--December 31,
1999 and 1998 ............................. 12
Consolidated Statement of Cash Flows for
the Three Years ended December 31, 1999 ... 13
Notes to Consolidated Financial Statements 15
Selected Quarterly Financial Data
(Unaudited) ............................... 26
(2)Financial Statement Schedule For the Three Page Number
Years Ended December 31, 1999: in Form 10-K
Report of Independent Accountants on
Financial Statement Schedule .............. S-I
Schedule II Valuation and Qualifying
Accounts .................................. S-II
Consent of Independent Accountants ........ F-1
All other schedules are omitted because they are not
applicable or the required information is shown in the
financial statements or the notes thereto.
(3)Exhibits:
The following list of exhibits includes exhibits submitted
with this Form 10-K as filed with the SEC and those
incorporated by reference to other filings.
- 18 -
Exhibit Number
3(i) Restated Certificate of Incorporation, incorporated
by reference to Exhibit 3(i) to United Technologies
Corporation Quarterly Report on Form 10-Q
(Commission File number 1-812) for quarterly period
ended June 30, 1997.
3(ii) Bylaws as amended and restated effective February 8, 1999.**
4 The Corporation hereby agrees to furnish to the
Commission upon request a copy of each instrument
defining the rights of holders of long-term debt of
the Corporation and its consolidated subsidiaries
and any unconsolidated subsidiaries.
10.1 United Technologies Corporation 1979 Long Term
Incentive Plan, incorporated by reference to
Exhibit 10(i) to United Technologies Corporation
Annual Report on Form 10-K (Commission file number
1-812) for fiscal year ended December 31, 1992.
10.2 United Technologies Corporation Annual Executive
Incentive Compensation Plan, as amended.*
10.3 United Technologies Corporation Disability
Insurance Benefits for Executive Control Group,
incorporated by reference to Exhibit 10 (iii) to
United Technologies Corporation Annual Report on
Form 10-K (Commission file number 1-812) for fiscal
year ended December 31, 1992.
10.4 United Technologies Corporation Executive Estate
Preservation Program, incorporated by reference to
Exhibit 10(iv) to United Technologies Corporation
Annual Report on Form 10-K (Commission file number
1-812) for fiscal year ended December 31, 1992.
10.5 United Technologies Corporation Pension
Preservation Plan, incorporated by reference to
Exhibit 10(v) for United Technologies Corporation
Annual Report on Form 10-K (Commission file number
1-812) for fiscal year ended December 31, 1992.
10.6 United Technologies Corporation Senior Executive
Severance Plan, incorporated by reference to
Exhibit 10(vi) to United Technologies Corporation
Annual Report on Form 10-K (Commission file number
1-812) for fiscal year ended December 31, 1992.
10.7 United Technologies Corporation Deferred
Compensation Plan, as amended.*
10.8 Otis Elevator Company Incentive Compensation Plan,
incorporated by reference to Exhibit 10(viii) to
United Technologies Corporation Annual Report on
Form 10-K (Commission file number 1-812) for fiscal
year ended December 31, 1992.
- 19 -
Exhibit Number
10.9 United Technologies Corporation Directors
Retirement Plan, as amended.*
10.10 United Technologies Corporation Deferred
Compensation Plan for Non-Employee Directors,
incorporated by reference to Exhibit 10(x) to
United Technologies Corporation Annual Report on
Form 10-K (Commission file number 1-812) for fiscal
year ended December 31, 1992.
10.11 United Technologies Corporation Long Term Incentive
Plan, as amended.*
10.12 United Technologies Corporation Executive
Disability, Income Protection and Standard
Separation Agreement Plan, incorporated by
reference to Exhibit 10(xii) to United Technologies
Corporation Annual Report on Form 10-K (Commission
file number 1-812) for fiscal year ended December
31, 1992.
10.13 United Technologies Corporation Directors'
Restricted Stock/Unit Program, incorporated by
reference to Exhibit 10(xiii) to United
Technologies Corporation Annual Report on Form 10-K
(Commission file number 1-812) for fiscal year
ended December 31, 1992.
10.14 United Technologies Corporation Board of Directors
Deferred Stock Unit Plan.*
10.15 United Technologies Corporation Pension Replacement
Plan, incorporated by reference to Exhibit 10(xv)
to United Technologies Corporation Annual Report on
Form 10-K (Commission file number 1-812) for fiscal
year ended December 31, 1993.
10.16 United Technologies Corporation Special Retention
and Stock Appreciation Program, incorporated by
reference to Exhibit 10(xvi) to United Technologies
Corporation Report on Form 10-Q (Commission file
number 1-812) for quarterly period ended September
30, 1995.
10.17 United Technologies Corporation Nonemployee
Director Stock Option Plan.*
10.18 Merger Agreement, dated as of February 21, 1999,
among United Technologies Corporation, HSSail Inc.
and Sundstrand Corporation, incorporated by
reference to Exhibit 2.1 to United Technologies
Corporation Report on Form 8-K (Commission file
number 1-812) dated February 21, 1999 and filed
with the SEC on February 23, 1999.
10.19 Stock Purchase Agreement, dated as of March 16,
1999, by and between Nevada Bond Investment Corp.
II and Lear Corporation, incorporated by reference
to Exhibit 99.1 to United Technologies Corporation
Report on Form 8-K (Commission file number 1-812)
dated March 16, 1999 and filed with the SEC on
March 19, 1999.
10.20 Incentive compensation letter agreement dated
December 21, 1998 and signed April 1, 1999 between
the Corporation and C. Scott Greer, President of UT
Automotive, incorporated by reference to Exhibit
10.1 to United Technologies Corporation Report on
Form 10-Q (Commission file number 1-812) for the
Quarter ended June 30, 1999.
- 20 -
Exhibit Number
11 Statement re: Computation of Per Share Earnings.**
12 Statement re: Computation of Ratio of Earnings to
Fixed Charges.**
13 Annual Report to Shareowners for year ended
December 31, 1999 (except for the pages and
information thereof expressly incorporated by
reference in this Form 10-K, the Annual Report to
Shareowners is provided solely for the information
of the Securities and Exchange Commission and is
not to be deemed "filed" as part of this Form
10-K).**
21 Subsidiaries of the Registrant.**
23 Consent of PricewaterhouseCoopers LLP, included as
page F-1 of this Form 10-K.
24 Powers of Attorney of Antonia Handler Chayes, Jean-
Pierre Garnier, Charles R. Lee, Richard D.
McCormick, William J. Perry, Frank P. Popoff, Andre
Villeneuve, and Harold A. Wagner.**
27 Financial Data Schedule.**
27.1 Restated Prior Periods' Financial Data Schedule.**
27.2 Restated Prior Periods' Financial Data Schedule.**
Notes to Exhibits List:
* Incorporated by reference to Exhibit of the same
number to United Technologies Corporation Annual
Report on Form 10-K (Commission file number 1-
812) for fiscal year ended December 31, 1995.
** Submitted electronically herewith.
Exhibits 10.1 through 10.20 are contracts or
compensatory plans required to be filed as exhibits
pursuant to Item 14(c) of the requirements for Form
10-K reports.
(b) No reports on Form 8-K were filed by the Corporation
during the quarter ended December 31, 1999.
- 21 -
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/ David J. FitzPatrick
David J. FitzPatrick
Date: February 14, 2000 Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, on the date set forth below.
Signature Title Date
/s/George David Chairman, Director February 14, 2000
George David and Chief Executive
Officer
/s/Karl J. Krapek Director, President February 14, 2000
Karl J. Krapek and Chief Operating
Officer
/s/David J. FitzPatrick Senior Vice February 14, 2000
David J. FitzPatrick President and
Chief Financial
Officer
/s/David G. Nord Acting Controller February 14, 2000
David G. Nord
ANTONIA HANDLER CHAYES* Director )
(Antonia Handler Chayes)
*By: /s/William H. Trachsel
JEAN-PIERRE GARNIER* Director ) William H. Trachsel
(Jean-Pierre Garnier) Attorney-in-Fact
Date: February 14, 2000
(Jamie S. Gorelick) Director )
- 22 -
Signature Title
CHARLES R. LEE* Director )
(Charles R. Lee)
RICHARD D. MCCORMICK* Director )
(Richard D. McCormick)
WILLIAM J. PERRY* Director )
(William J. Perry)
*By:/s/William H. Trachsel
FRANK P. POPOFF* Director ) William H. Trachsel
(Frank P. Popoff) Attorney-in-Fact
Date: February 14, 2000
ANDRE VILLENEUVE * Director )
(Andre Villeneuve)
HAROLD A. WAGNER * Director )
(Harold A. Wagner)
(Sanford I. Weill) Director )
- 23 -
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of United Technologies Corporation
Our audits of the consolidated financial statements referred to in our
report dated January 19, 2000 appearing on page 10 of the 1999 Annual Report to
Shareowners of United Technologies Corporation (which report and consolidated
financial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the Financial Statement Schedule listed in Item
14(a)(2) of this Form 10-K. In our opinion, the Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Hartford, Connecticut
January 19, 2000
S-I
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UNITED TECHNOLOGIES CORPORATION AND SUBSIDIARIES
Schedule II - Valuation and Qualifying Accounts
Three Years Ended December 31, 1999
(Millions of Dollars)
Allowances for Doubtful Accounts and Other Customer Financing Activity:
Balance December 31, 1996 $ 384
Provision charged to income 34
Doubtful accounts written off (net) (26)
Other adjustments (11)
Balance December 31, 1997 381
Provision charged to income 67
Doubtful accounts written off (net) (32)
Other adjustments (21)
Balance December 31, 1998 395
Provision charged to income 82
Doubtful accounts written off (net) (14)
Other adjustments 56
Balance December 31, 1999 $ 519
Future Income Tax Benefits - Valuation
allowance:
Balance December 31, 1996 $ 305
Additions charged to income tax expense 61
Reductions credited to income tax expense (89)
Balance December 31, 1997 277
Additions charged to income tax expense 35
Reductions credited to income tax expense (93)
Balance December 31, 1998 219
Additions charged to income tax expense 70
Reductions credited to income tax expense (56)
Balance December 31, 1999 $ 233
S-II
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CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statements on Form S-3 (Nos. 333-89041
and 333-91959), in the Registration Statement on Form S-4 (No. 333-77991)
and in the Registration Statements on Form S-8 (Nos. 333-21853, 333-18743,
333-21851, 33-57769, 33-45440, 33-11255, 33-26580, 33-26627, 33-28974, 33-
51385, 33-58937, 2-87322, 333-77991 and 333-82911) of United Technologies
Corporation of our report dated January 19, 2000 appearing on page 10 of the
1999 Annual Report to Shareowners which is incorporated by reference in this
Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedule, which appears
on page S-I of this Form 10-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Hartford, Connecticut
February 14, 2000
F-1
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