Item 1. Business
(a) General Development of Business Annual Report to Stockholders, information regarding the sale of Sundstrand Data Control Division to AlliedSignal, Inc. on pages 25, 27, 28, 36, 38 and 39, information on foreign operations and activity on pages 26-27, information regarding the restructuring of the aerospace segment on pages 26 and 36, information regarding the acquisition of the Electrical Systems Division of Westinghouse Electric Corporation on pages 26, 27, 28 and 36, information regarding the establishment of a joint venture with Labinal, Inc. on page 27, and information regarding date of incorporation on page 45.
(b) Financial Information About Annual Report to Stockholders, Industry Segments information by business segment on pages 25-26, and pages 34-35.
(c) Narrative Description of Business Annual Report to Stockholders, pages 6-29, information on foreign operations and activity on pages 26-27 and 34-35, information on unfilled orders on pages 27 and 46-47, information regarding the development of the auxiliary power unit products on page 27, information regarding environmental matters on pages 27 and 42-43, information regarding a significant customer on pages 27, 29 and 34, information regarding research and development expenditures on pages 29 and 42, information regarding contracts with or for the government on pages 29 and 43, information regarding materials and supplies, intellectual property rights and competition on page 45, and information regarding the number of employees on pages 46-47.
(d) Financial Information About Annual Report to Stockholders, Foreign and Domestic Operations information on foreign operations and Export Sales and activity on pages 26-27 and 34-35, information regarding the acquisition of the Electrical Systems Division of Westinghouse Electric Corporation on page 27, information regarding foreign and domestic operations on pages 34- 35, and information regarding foreign earnings and assets on pages 35 and 40.
Item 2.
Item 2. Properties Annual Report to Stockholders, information regarding properties on page 45.
FORM 10-K ITEM NO. INCORPORATED BY REFERENCE FROM:
Item 3.
Item 3. Legal Proceedings Annual Report to Stockholders, information regarding environmental matters on pages 27 and 42-43, information regarding certain government contracting matters on pages 29 and 43, and information regarding income tax matters on pages 29 and 40 except the sentence on page 40 which states "Jurisdiction of this matter now resides in the United States Court of Appeals for the Seventh Circuit" is deleted and replaced with "On February 22, 1994, the United States Court of Appeals for the Seventh Circuit affirmed the decision of the U.S. Tax Court. The Company intends to file a Motion for Rehearing challenging the correctness of the Court of Appeals' opinion."
Item 4.
Item 4. Submission of Matters to a Vote (Not Applicable). of Security Holders
Executive officers of the Registrant Annual Report to Stockholders, information regarding officers on page 49.
PART II.
Item 5.
Item 5. Market for the Registrant's Annual Report to Stockholders, Common Equity and Related information regarding restrictions Stockholder Matters on dividend payments on page 40, information regarding dividends on pages 43 and 46, information regarding Registrant's common stock price range on pages 43 and 46, information regarding the number of common stockholders on page 46, and information regarding exchange listings on page 50.
Item 6.
Item 6. Selected Financial Data Annual Report to Stockholders, pages 46-47, information regarding the sale of Sundstrand Data Control Division to AlliedSignal, Inc. on pages 25, 27, 28, 36, 38 and 39, information regarding the changes in accounting standards on pages 25, 26, 27, 28, 38 and 39, information regarding the restructuring of the aerospace segment on pages 26 and 36, information regarding the acquisition of the Electrical Systems Division of Westinghouse Electric Corporation on pages 26, 27, 28 and 36, and information regarding provisions for interest for asserted tax deficiencies on page 40.
Item 7.
Item 7. Management's Discussion and Annual Report to Stockholders, Analysis of Financial Condition pages 25-29. and Results of Operations
Item 8.
Item 8. Financial Statements and Annual Report to Stockholders, Supplementary Data pages 30-44 and 46-47.
Item 9.
Item 9. Changes in and Disagreements (Not Applicable). with Accountants on Accounting and Financial Disclosure
FORM 10-K ITEM NO. INCORPORATED BY REFERENCE FROM:
PART III.
Item 10.
Item 10. Directors and Executive Annual Report to Stockholders, Officers of the Registrant pages 48-49; Proxy Statement, pages 3-6.
Item 11.
Item 11. Executive Compensation Proxy Statement, information regarding Don R. O'Hare's consulting agreement with the Registrant on page 7, information under the caption "Compensation Committee Interlocks and Insider Participation" on page 10, and information under the captions "Summary Compensation Table," "Aggregated Option Exercises in Last Fiscal Year and Fiscal Year- End Option Values," "Retirement Plans" and "Employment Agreements" on pages 14-20.
Item 12.
Item 12. Security Ownership of Certain Proxy Statement, information under Beneficial Owners and Management the caption "Voting Securities" on pages 1-2, and information under the caption "Voting Securities Held by Nominees, Directors and Officers" on page 7.
Item 13.
Item 13. Certain Relationships and Proxy Statement, information under Related Transactions the caption "Loans" on page 20.
PART IV.
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements Annual Report to Stockholders, the following Consolidated Financial Statements of Registrant and subsidiaries on pages 30 through 44.
Consolidated Statement of Earnings for the years ended December 31, 1993, 1992, and 1991 Consolidated Statement of Cash Flows for the years ended December 31, 1993, 1992, and Consolidated Balance Sheet as of December 31, 1993 and 1992 Consolidated Statement of Shareholders' Equity for the years ended December 31, 1993, 1992, and 1991 Information by Business Segment for the years ended December 31, 1993, 1992, and 1991 Quarterly Results (Unaudited) for 1993 and 1992 Notes to Consolidated Financial Statements Management's Report Independent Auditor's Report
(a) 2. Financial Statement The schedules, other than the Schedules schedules relating to amounts receivable from related parties, property, plant and equipment, accumulated depreciation and short-term borrowings, have been omitted as the required information is not applicable, or not required, or because the required information is included in the Consolidated Financial Statements or Notes to Consolidated Financial Statements.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements Report of Independent Auditors (Ernst & Young) on the financial statements and related schedules of Registrant for the years ended December 31, 1993, 1992, and 1991. (a) 2. Financial Statement Schedules Schedule II - Amounts Receivable From Related Parties, for the years ended December 31, 1993, 1992, and 1991. Schedule V - Property, Plant and Equipment, for the years ended December 31, 1993, 1992, and 1991. Schedule VI - Accumulated Depreciation of Property, Plant and Equipment, for the years ended December 31, 1993, 1992 and 1991. Schedule IX - Short-term Borrowings, for the years ended December 31, 1993, 1992, and 1991. (a) 3. Exhibits (3) Articles of Incorporation and By-Laws (a) Registrant's Restated Certificate of Incorporation as effective December 19, 1991 (filed as Exhibit (3)(a) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, File No. 1-5358, and incorporated herein by reference). (b) Registrant's By-Laws, including all amendments, as effective April 21, 1992 (filed as Exhibit (19)(a) to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1992, File No. 1-5358, and incorporated herein by reference). (4) Instruments Defining the Rights of Security Holders, including Indentures (a) Credit Agreement dated as of January 28, 1993, among Registrant and eight banking institutions including Morgan Guaranty Trust Company of New York, as Agent (filed as Exhibit (4)(a) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, File No. 1-5358, and incorporated herein by reference). (b) Amended and Restated Rights Agreement dated December 4, 1987 and Amendment thereto dated March 5, 1990 (filed as Exhibit 4(a) and 4(b) to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, File No. 1-5358, and incorporated herein by reference). (c) Lease dated as of December 14, 1987, between Registrant and Greyhound Real Estate Investment Six, Inc. (filed as Exhibit (4)(f) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987, File No. 1- 5358, and incorporated herein by reference). (d) Note Agreement of Registrant dated May 15, 1991 (filed as Exhibit (19)(c) to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1991, File No. 1- 5358, and incorporated herein by reference). (e) Amendment effective December 31, 1991, to Registrant's Note Agreement dated as of May 15, 1991 (filed as Exhibit (19)(c) to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992, File No. 1-5358, and incorporated herein by reference). (f) Amendment and Restatement dated May 15, 1991, of Registrant's Note Agreement dated January 18, 1980 (filed as Exhibit (19)(d) to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1991, File No. 1-5358, and incorporated herein by reference). (g) Amendment effective December 31, 1991, to Registrant's May 15, 1991, Amended and Restated Note Agreement (filed as Exhibit (19)(d) to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992, File No. 1-5358, and incorporated herein by reference). (h) Note Agreement of Registrant dated October 31, 1991 (filed as Exhibit (4)(l) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, File No. 1-5358, and incorporated herein by reference). (i) Note Agreement of Registrant dated December 2, 1991 (filed as Exhibit (4)(m) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, File No. 1-5358, and incorporated herein by reference). (10) Material Contracts (a) Consulting Agreement dated October 1, 1989, between Registrant and Don R. O'Hare, a retired officer and a Director of Registrant (filed as Exhibit (10)(d) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-5358, and incorporated herein by reference).*
*Management contract or compensatory plan.
(b) Amendments dated August 20, 1991, and November 1, 1991, to Consulting Agreement dated October 1, 1989, between Registrant and Don R. O'Hare, a retired officer and a Director of Registrant (filed as Exhibit (10)(c) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, File No. 1-5358, and incorporated herein by reference).* (c) Amendment dated August 24, 1992, to Consulting Agreement dated October 1, 1989, between Registrant and Don R. O'Hare, a retired officer and a Director of Registrant (filed as Exhibit (19)(b) to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992, File No. 1-5358, and incorporated herein by reference).* (d) Amendment dated August 20, 1993, to Consulting Agreement dated October 1, 1989, between Registrant and Don R. O'Hare, a retired officer and a Director of Registrant.* (e) Amended and Restated Employment Agreement dated August 7, 1990, between Registrant and Harry C. Stonecipher, Registrant's Chairman of the Board, President and Chief Executive Officer (filed as Exhibit (19)(a) to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990, File No. 1-5358, and incorporated herein by reference).* (f) Agreement dated June 19, 1988, between Registrant and Paul Donovan, Registrant's Executive Vice President and Chief Financial Officer, regarding Registrant's repurchase of shares of restricted stock (filed as Exhibit (10)(h) to Registrant's Annual Report on Form 10- K for the fiscal year ended December 31, 1989, File No. 1-5358, and incorporated herein by reference).* (g) Amended and Restated Employment Agreement dated August 18, 1992, between Registrant and Robert J. Smuland, Registrant's Executive Vice President and Chief Operating Officer, Aerospace (filed as Exhibit (19)(a) to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992, File No. 1-5358, and incorporated herein by reference).* (h) Form of Employment Agreement, including amendment thereto, between Registrant and each of Paul Donovan, Registrant's Executive Vice President and Chief Financial Officer, Berger G. Wallin, Registrant's Executive Vice President and Chief Operating Officer, Industrial, Richard M. Schilling, Registrant's Vice President and General Counsel and Secretary, and DeWayne J. Fellows, Registrant's Vice President and Controller (filed as Exhibit (10)(g) to Registrant's Annual Report on Form 10- K for the fiscal year ended December 31, 1992, File No. 1-5358, and incorporated herein by reference).* (i) Employment Agreement dated March 14, 1991, between Registrant and Gary J. Hedges, Registrant's Vice President, Personnel and Public Relations (filed as Exhibit (10)(p) to Registrant's Annual Report on Form 10- K for the fiscal year ended December 31, 1990, File No. 1-5358, and incorporated herein by reference).* (j) Agreement dated November 16, 1989, between Registrant and Labinal, Inc. establishing a jointly owned sales company to market, sell and support auxiliary power units for commercial aerospace applications (filed as Exhibit (10)(s) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-5358, and incorporated herein by reference). (k) Letter of Intent dated January 22, 1993, by and between Registrant and Rockwell International Corporation setting forth Rockwell International Corporation's intent to purchase all of the assets, business and properties, subject to certain liabilities of Sundstrand Data Control Division (filed as Exhibit (10)(k) to Registrant's Annual Report for the fiscal year ended December 31, 1992, File No. 1-5358, and incorporated herein by reference).* (l) Stock, Note and Real Property Purchase Agreement dated July 14, 1993, between Registrant and AlliedSignal Inc. providing for Registrant's sale to AlliedSignal Inc. of Registrant's Data Control division (filed as Exhibit (10)(a) to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993, File No. 1-5358, and incorporated herein by reference). (m) Registrant's Stock Incentive Plan effective December 1, 1992 (filed as Exhibit (10)(l) to Registrant's Annual Report for the fiscal year ended December 31, 1992, File No. 1-5358, and incorporated herein by reference).* (n) Closing Agreement dated November 20, 1992, by and between Registrant and subsidiaries of Registrant and the Internal Revenue Service, in connection with the resolution of the intercompany pricing dispute for the years 1979 through 1988 (filed as Exhibit (10)(m) to Registrant's Annual Report for the fiscal year ended December 31, 1992, File No. 1-5358, and incorporated herein by reference).
*Management contract or compensatory plan.
(o) Registrant's 1989 Restricted Stock Plan as adopted April 20, 1989, by the stockholders of Registrant (filed as Exhibit (10)(v) to Registrant's Annual Report on Form 10- K for the fiscal year ended December 31, 1989, File No. 1-5358, and incorporated herein by reference).* (p) Registrant's 1975 Restricted Stock Plan as adopted on April 19, 1975, by the stockholders of Registrant, including all amendments through April 16, 1986 (filed as Exhibit (10)(b) to Registrant's Annual Report on Form 10- K for the fiscal year ended December 31, 1982, File No. 1-5358, and incorporated herein by reference).* (q) Registrant's 1982 Restricted Stock Plan as adopted on April 15, 1982, by the stockholders of Registrant, including all amendments through April 16, 1986 (filed as Exhibit (10)(c) to Registrant's Annual Report on Form 10- K for the fiscal year ended December 31, 1982, File No. 1-5358, and incorporated herein by reference).* (r) Text of resolution adopted by the Board of Directors of Registrant on April 17, 1986, amending Registrant's 1975 and 1982 Restricted Stock Plans (filed as Exhibit (10)(c) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1986, File No. 1-5358, and incorporated herein by reference).* (s) Text of resolution adopted by the Board of Directors of Registrant on August 7, 1990, amending Registrant's 1975, 1982, and 1989 Restricted Stock Plans (filed as Exhibit (19)(f) to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990, File No. 1-5358, and incorporated herein by reference).* (t) Text of resolution adopted by the Board of Directors of Registrant on November 30, 1989, and December 1, 1989, establishing an Officer Incentive Compensation Plan (filed as Exhibit (10)(cc) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-5358, and incorporated herein by reference).* (u) Text of resolution adopted by the Board of Directors of Registrant on February 19, 1991, amending Registrant's Officer Incentive Compensation Plan (filed as Exhibit (10)(hh) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, File No. 1-5358, and incorporated herein by reference).* (v) Text of resolution adopted by the Board of Directors of Registrant on July 16, 1989, adopting a Director Emeritus Retirement Plan and copy of such plan as effective July 20, 1989 (filed as Exhibit (10)(dd) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989, File No. 1-5358, and incorporated herein by reference).* (w) Text of resolution adopted by the Board of Directors of Registrant on October 17, 1984, establishing a 1984 Elected Officers' Loan Program (filed as Exhibit (10)(i) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1984, File No. 1-5358, and incorporated herein by reference).* (x) Text of resolution adopted by the Board of Directors of Registrant on October 15, 1991, amending the 1984 Elected Officers' Loan Program (filed as Exhibit (10)(ff) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, File No. 1-5358, and incorporated herein by reference).* (11) Computation of Fully Diluted Earnings Per Share (Unaudited) for the quarter ended December 31, 1993 and 1992, and for the year ended December 31, 1993 and 1992. (13) Annual Report to Stockholders for the year ended December 31, 1993. (21) Subsidiaries of Registrant (23) Consents of Experts and Counsel (a) Consent of Independent Auditors (Ernst & Young). (24) Powers of Attorney (99) Additional Exhibits (a) Undertakings (filed as Exhibit (28)(a) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1982, File No. 1-5358, and incorporated herein by reference).
(b) Reports on Form 8-K Form 8-K dated November 22, 1993, regarding Registrant's sale to AlliedSignal, Inc. of Registrant's Data Control division, and including pro forma financial statements and notes relating thereto.
*Management contract or compensatory plan.
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 on this 2nd day of March, 1994.
SUNDSTRAND CORPORATION (Registrant)
By /s/ Harry C. Stonecipher ------------------------------------- HARRY C. STONECIPHER CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE 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 and on the date indicated.
Harry C. Stonecipher ) Chairman of the Board, ) President and ) Chief Executive Officer ) ) Paul Donovan ) Executive Vice President ) and Chief Financial Officer ) ) DeWayne J. Fellows ) Vice President and Controller ) ) J. P. Bolduc ) Director ) ) Gerald Grinstein ) Director ) ) Charles Marshall ) March 2, 1994 Director ) ) Klaus H. Murmann ) Director ) ) Donald E. Nordlund ) Director ) ) Don R. O'Hare ) Director ) ) Thomas G. Pownall ) Director ) ) Ward Smith ) Director ) ) Robert J. Smuland ) Director )
By: /s/ Paul Donovan ---------------------------------------------------- PAUL DONOVAN, ATTORNEY-IN-FACT
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors Sundstrand Corporation
We have audited the consolidated balance sheets of Sundstrand Corporation and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1993. Our audits also included the financial statement schedules listed in the Index at Item 14(a). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sundstrand Corporation and subsidiaries at December 31, 1993 and 1992, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
As discussed in the notes to the consolidated financial statements, in 1992 the Company changed its method of accounting for postretirement benefits other than pensions.
/s/ ERNST & YOUNG
Chicago, Illinois January 27, 1994
SUNDSTRAND CORPORATION AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES
YEAR ENDED DECEMBER 31, 1993
Dollar Amounts in Thousands
SUNDSTRAND CORPORATION AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES
YEAR ENDED DECEMBER 31, 1992
Dollar Amounts in Thousands
SUNDSTRAND CORPORATION AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES
YEAR ENDED DECEMBER 31, 1991
Dollar Amounts in Thousands
SUNDSTRAND CORPORATION AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT (1)
Dollar Amounts in Millions
SUNDSTRAND CORPORATION AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT (1)
Dollar Amounts in Millions
SUNDSTRAND CORPORATION AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
Dollar Amounts in Millions