Exhibit 99.3 INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS On February 22, 1999, the Company and Sundstrand announced the Merger Agreement. On March 16, 1999, the Company announced the Stock Purchase Agreement. The following unaudited pro forma condensed financial information has been prepared from the historical financial statements of the Company and Sundstrand adjusted to reflect the Merger using the purchase method of accounting. The unaudited pro forma condensed balance sheet has been adjusted to reflect the Disposition as though it had occurred on December 31, 1998. This adjustment assumes net cash proceeds of $2.0 billion after payment of taxes and cash transaction costs, the accrual of other transaction related expenses and the estimated gain on the sale resulting from the completion of the Disposition. The pro forma condensed statement of operations reflects UT Automotive as a discontinued operation for the years ended December 31, 1996, 1997 and 1998 and does not reflect the effects of the anticipated gain or proceeds. The unaudited pro forma condensed balance sheet has been prepared to reflect the Merger and the issuance of 0.2790 shares of Company common stock and $35 in cash for each outstanding share of Sundstrand common stock, as if the Merger occurred on December 31, 1998, and the issuance of Company stock options to Sundstrand stock option holders in exchange for Sundstrand stock options. Based on the price per share of Company common stock of $125.4375 on February 19, 1999, the last trading day prior to entering into the Merger Agreement, total consideration would be $70 per share resulting in an aggregate purchase price of approximately $3.9 billion including related transaction costs of approximately $40 million. The purchase price of Sundstrand common stock has been preliminarily allocated to tangible and intangible assets and liabilities of Sundstrand based upon estimates of their respective values. These allocations will be subsequently adjusted based upon appraisals, valuations and other studies, which will be conducted over the next several months. Final values may differ substantially from those shown herein. The unaudited pro forma condensed statement of operations combines the results of operations of the Company and Sundstrand as if the Merger occurred on January 1, 1998. The pro forma condensed financial statements should be read in conjunction with the Company's and Sundstrand's historical financial statements. The pro forma information presented is for informational purposes only and it is not necessarily indicative of future earnings or financial position or of what the earnings or financial position would have been had the Merger been completed on January 1, 1998 or as of December 31, 1998. This pro forma financial information should be read in conjunction with the historical financial statements of the Company and Sundstrand. Historical financial statements of the Company can be found in the Company's annual report on Form 10-K filed on February 16, 1999. Sundstrand's historical financial statements can be found in its annual report on Form 10-K filed on March 31, 1999. PRO FORMA FINANCIAL INFORMATION UNAUDITED PRO FORMA CONDENSED BALANCE SHEET AS OF DECEMBER 31, 1998 (IN MILLIONS OF DOLLARS) HISTORICAL ADJUSTED MERGER UNITED UNITED UT AUTOMOTIVE UNITED HISTORICAL PRO FORMA TECHNOLOGIES TECHNOLOGIES ADJUSTMENT TECHNOLOGIES SUNDSTRAND ADJUSTMENTS PRO FORMA ------------ ------------- ------------ ---------- ----------- ------------ ASSETS Cash and cash equivalents........... $ 550 $2,000 $ 2,550 $ 15 $ (889)(1) $ 1,676 Accounts and notes receivable, net................................ 3,993 (576) 3,417 381 - 3,798 Inventories and contracts in progress........................... 3,362 (171) 3,191 401 24 (3) 3,616 Other current assets................ 1,450 (68) 1,382 68 - 1,450 ------- ------ ------- ------ ------- ------- Total Current Assets................ 9,355 1,185 10,540 865 (865) 10,540 Fixed assets, net................... 4,265 (710) 3,555 527 263 (3) 4,345 Goodwill............................ 1,750 (333) 1,417 332 3,107 (5) 4,856 Other assets........................ 3,005 (59) 2,946 83 - 3,029 ------- ------ ------- ------ ------- ------- Total Assets........................ $18,375 $ 83 $18,458 $1,807 $ 2,505 $22,770 ======= ====== ======= ====== ======= ======= LIABILITIES AND SHAREOWNERS' EQUITY Short-term borrowings............... $ 512 $ (8) $ 504 $ 163 $ - $ 667 Accounts payable.................... 2,237 (377) 1,860 128 - 1,988 Accrued liabilities................. 4,886 (56) 4,830 204 40 (l) 5,074 Long-term debt currently due........ 100 (1) 99 4 - 103 ------- ------ ------- ------ ------- ------- Total Current Liabilities........... 7,735 (442) 7,293 499 40 7,832 Long-term debt...................... 1,575 (5) 1,570 295 1,031 (l)(3) 2,896 Other long-term liabilities......... 4,231 (70) 4,161 468 6 (3)(4) 4,635 Series A ESOP Convertible........... Preferred Stock.................... 836 - 836 - - 836 ESOP Deferred Compensation......... (380) - (380) - - (380) ------- ------ ------- ------ ------- ------- 456 - 456 - - 456 Shareowners' Equity: Common Stock....................... 2,708 - 2,708 203 1,059 (l)(2) 3,970 Unamortized value of restricted stock issued...................... - - - (6) 6 (2) - Treasury Stock..................... (3,117) - (3,117) (645) 1,356 (l)(2) (2,406) Retained Earnings.................. 5,411 600 6,011 1,007 (1,007)(2) 6,011 Accumulated other non-shareowner changes in equity............................ (624) - (624) (14) 14 (2) (624) ------- ------ ------- ------ ------- ------- 4,378 600 4,978 545 1,428 6,951 ------- ------ ------- ------ ------- ------- Total Liabilities and Shareowners' Equity................ $18,375 $ 83 $18,458 $1,807 $ 2,505 $22,770 ======= ====== ======= ====== ======= ======= See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements. NOTES TO UNAUDITED PRO FORMA CONDENSED BALANCE SHEET AS OF DECEMBER 31, 1998 The unaudited pro forma condensed balance sheet includes the pro forma adjustments to reflect the Disposition and the Merger as if both took place on December 31, 1998. UT Automotive Adjustment: Reflects the Disposition for net cash proceeds of approximately $2.0 billion after payment of taxes and cash transaction costs, the accrual of other transaction related expenses and the estimated gain on the sale. Merger Pro Forma Adjustments: (1) Adjustment to reflect the issuance of 15.1 million shares of Company common stock based on a common stock exchange ratio of .2790, the payment of $1.889 billion for the cash consideration paid to Sundstrand stockholders and for the cash transaction costs, and the issuance of Company stock options to Sundstrand stock option holders. The Merger Agreement provides that if the average closing price per share of Company common stock for the ten trading day period before the fifth trading day prior to the Sundstrand stockholder meeting to be held to approve and adopt the Merger Agreement and the Merger exceeds $140.68 per share, the common stock exchange ratio will be adjusted to reflect a maximum market value (based upon the average closing price of Company common stock during such period) of Company common stock to be received for each share of Sundstrand common stock of $39.25. If the common stock exchange ratio is adjusted pursuant to this provision of the Merger Agreement, the aggregate purchase price and goodwill will be increased by approximately $230 million, based on the outstanding shares of Sundstrand common stock on February 24, 1999. The adjustment assumes that the cash consideration and the cash transaction costs of $1.889 billion will be funded by the issuance of approximately $1.0 billion of medium-term and long-term debt and $889 million of cash from the Disposition. If the Disposition closes after the Merger, $889 million of the cash consideration and the cash transaction costs will be funded by the issuance of short-term debt under one or more of the Company's existing or new credit facilities. Although the cash election is not reflected in these pro forma financial statements, if the Company elects to convert the merger consideration to an all cash payment of $70 per share of Sundstrand common stock, under the terms of the Merger Agreement, additional cash consideration of $1.889 billion would be required in lieu of the issuance of shares of Company common stock. Any financing required to pay the additional cash consideration would have to be approved by the Company's Board of Directors. This cash consideration would result in additional borrowings and related interest expense. (2) Adjustment to eliminate Sundstrand equity pursuant to the Merger. (3) Adjustment to record Sundstrand assets and liabilities at their estimated fair market value. (4) Adjustment to record the tax effects related to the pro forma adjustments. (5) Adjustment to reflect the incremental goodwill resulting from the Merger. UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 (IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) HISTORICAL ADJUSTED MERGER UNITED UNITED UT AUTOMOTIVE UNITED HISTORICAL PRO FORMA TECHNOLOGIES TECHNOLOGIES ADJUSTMENT TECHNOLOGIES SUNDSTRAND ADJUSTMENTS PRO FORMA ------------ ------------- ------------ ---------- ----------- ------------ Product sales.......................... $ 20,248 $(2,900) $ 17,348 $2,005 $ (25)(D) $ 19,328 Service sales.......................... 5,439 - 5,439 - - 5,439 -------- ------- -------- ------ ------- -------- Net sales.............................. 25,687 (2,900) 22,787 2,005 (25) 24,767 Financing revenues and other income, net.......................... 28 (6) 22 10 - 32 -------- ------- -------- ------ ------- -------- 25,715 (2,906) 22,809 2,015 (25) 24,799 Cost of products sold.................. 15,815 (2,379) 13,436 1,316 60(A)(C)(D) 14,812 Cost of services sold.................. 3,461 - 3,461 - - 3,461 Research and development............... 1,315 (147) 1,168 92 - 1,260 Selling, general and administrative.... 2,957 (220) 2,737 225 - 2,962 Interest............................... 204 (7) 197 35 65(B) 297 -------- ------- -------- ------ ------- -------- 23,752 (2,753) 20,999 1,668 125 22,792 Income from continuing operations before income taxes and minority interests................... 1,963 (153) 1,810 347 (150) 2,007 Income taxes........................... 623 (55) 568 121 (32)(E) 657 Minority interests in subsidiaries' earnings............... 85 - 85 - - 85 -------- ------- -------- ------ ------- -------- Income from continuing operations...... $ 1,255 $ (98) $ 1,157 $ 226 $ (118) $ 1,265 Discontinued Operation: Income from operations of discontinued UT Automotive subsidiary (net of applicable income tax provision of $55 million)......................... - 98 98 - - 98 -------- ------- -------- ------ ------- -------- Net Income............................. $ 1,255 $ - $ 1,255 $ 226 $ (118) $ 1,363 ======== ======= ======== ====== ======= ======== Earnings Per Share of Common Stock: Continuing Operations: Basic: Average shares (thousands)........... 227,767 227,767 15,100 242,867 Earnings per share................... $ 5.36 $ 4.94 - $ 5.07 Diluted: Average shares (thousands)........... 247,380 247,380 15,800 263,180 Earnings per share................... $ 5.05 $ 4.66 - $ 4.79 Discontinued Operation: Basic: Average shares (thousands)........... 227,767 227,767 15,100 242,867 Earnings per share................... $ - $ 0.42 - $ 0.41 Diluted: Average shares (thousands)........... 247,380 247,380 15,800 263,180 Earnings per share................... $ - $ 0.39 - $ 0.37 Net Earnings Per Share: Basic: Average shares (thousands)........... 227,767 227,767 15,100 242,867 Earnings per share................... $ 5.36 $ 5.36 - $ 5.48 Diluted: Average shares (thousands)........... 247,380 247,380 15,800 263,180 Earnings per share................... $ 5.05 $ 5.05 - $ 5.16 See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements. UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) HISTORICAL ADJUSTED UNITED UT AUTOMOTIVE UNITED TECHNOLOGIES ADJUSTMENT TECHNOLOGIES -------------- ------------- -------------- Product sales..................................................... $ 18,873 $(2,927) $ 15,946 Service sales..................................................... 5,116 - 5,116 -------- ------- -------- Net sales......................................................... 23,989 (2,927) 21,062 Financing revenues and other income, net.......................... 233 (7) 226 -------- -------- 24,222 (2,934) 21,288 Cost of products sold............................................. 15,080 (2,442) 12,638 Cost of services sold............................................. 3,208 - 3,208 Research and development.......................................... 1,187 (118) 1,069 Selling, general and administrative............................... 2,820 (209) 2,611 Interest.......................................................... 191 (3) 188 -------- ------- -------- 22,486 (2,772) 19,714 Income from continuing operations before income taxes and minority interests.................................... 1,736 (162) 1,574 Income taxes...................................................... 565 (51) 514 Minority interests in subsidiaries' earnings...................... 99 (1) 98 -------- ------- -------- Income from continuing operations................................. $ 1,072 $ (110) $ 962 Discontinued Operation: Income from operations of discontinued UT Automotive subsidiary (net of applicable income tax provision of $51 million)................................... - 110 110 -------- ------- -------- Net Income........................................................ $ 1,072 $ - $ 1,072 ======== ======= ======== Earnings Per Share of Common Stock: Continuing Operations: Basic: Average shares (thousands)...................................... 234,443 234,443 Earnings per share.............................................. $ 4.44 $ 3.97 Diluted: Average shares (thousands)...................................... 253,555 253,555 Earnings per share.............................................. $ 4.21 $ 3.77 Discontinued Operation: Basic: Average shares (thousands)...................................... 234,443 234,443 Earnings per share.............................................. $ - $ 0.47 Diluted: Average shares (thousands)...................................... 253,555 253,555 Earnings per share.............................................. $ - $ 0.44 Net Earnings Per Share: Basic: Average shares (thousands)...................................... 234,443 234,443 Earnings per share.............................................. $ 4.44 $ 4.44 Diluted: Average shares (thousands)...................................... 253,555 253,555 Earnings per share.............................................. $ 4.21 $ 4.21 See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements. UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 (IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) HISTORICAL ADJUSTED UNITED UT AUTOMOTIVE UNITED TECHNOLOGIES ADJUSTMENT TECHNOLOGIES -------------- ------------- -------------- Product sales................................................... $ 17,799 $(3,086) $ 14,713 Service sales................................................... 4,989 - 4,989 -------- ------- -------- Net sales....................................................... 22,788 (3,086) 19,702 Financing revenues and other income, net........................ 263 (93) 170 -------- ------- -------- 23,051 (3,179) 19,872 Cost of products sold........................................... 14,327 (2,674) 11,653 Cost of services sold........................................... 3,088 - 3,088 Research and development........................................ 1,122 (108) 1,014 Selling, general and administrative............................. 2,796 (209) 2,587 Interest........................................................ 217 (4) 213 -------- ------- -------- 21,550 (2,995) 18,555 Income from continuing operations before income taxes and minority interests........................................ 1,501 (184) 1,317 Income taxes.................................................... 494 (64) 430 Minority interests in subsidiaries' earnings.................... 101 (2) 99 -------- ------- -------- Income from continuing operations............................... $ 906 $ (118) $ 788 Discontinued Operation: Income from operations of discontinued UT Automotive subsidiary (net of applicable income tax provision of $64 million)............................................... - 118 118 -------- ------- -------- Net Income...................................................... $ 906 $ - $ 906 ======== ======= ======== Earnings Per Share of Common Stock: Continuing Operations: Basic: Average shares (thousands).................................... 241,454 241,454 Earnings per share............................................ $ 3.63 $ 3.14 Diluted: Average shares (thousands).................................... 258,606 258,606 Earnings per share............................................ $ 3.48 $ 3.02 Discontinued Operation: Basic: Average shares (thousands).................................... 241,454 241,454 Earnings per share............................................ $ - $ 0.49 Diluted: Average shares (thousands).................................... 258,606 258,606 Earnings per share............................................ $ - $ 0.46 Net Earnings Per Share: Basic: Average shares (thousands).................................... 241,454 241,454 Earnings per share............................................ $ 3.63 $ 3.63 Diluted: Average shares (thousands).................................... 258,606 258,606 Earnings per share............................................ $ 3.48 $ 3.48 See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements. NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 The unaudited pro forma condensed statement of operations includes the pro forma adjustment to reflect UT Automotive as a discontinued operation for the years ended December 31, 1996, 1997 and 1998 and the Merger as if it took place on January 1, 1998. A. Adjustment to reflect the incremental goodwill amortization from the Merger over an estimated useful life of 40 years. If the common stock exchange ratio is adjusted, as described in Note 1 to the Pro Forma Condensed Balance Sheet, goodwill amortization would be increased by approximately $6 million. B. Reflects the interest expense incurred by the Company in connection with the Merger. Interest expense was calculated for the full year (360 days) on a pro forma basis using an interest rate of 6.5% on medium-term and long- term debt of $1.0 billion. If the Company elects to convert the merger consideration to an all cash payment of $70 per share of Sundstrand common stock, under the terms of the Merger Agreement, additional cash consideration of $1.889 billion would be required in lieu of the issuance of Company common stock. Any financing required to pay the additional cash consideration would have to be approved by the Company's Board of Directors. This consideration would result in additional borrowings and related interest expense of $109 million. C. Adjustment reflects the additional depreciation on the write-up of fixed assets to fair value over a 10 year useful life. D. Adjustment to eliminate sales and cost of sales between Sundstrand and the Company. E. Adjustment to record the tax effects related to the pro forma adjustments.