UTC Reports 6 Percent Second Quarter EPS Growth to $1.16; Raises 2007 Revenues and Earnings Estimates

HARTFORD, Conn., July 18 /PRNewswire-FirstCall/ -- United Technologies Corp. today reported second quarter 2007 earnings per share of $1.16 and net income of $1.15 billion, up 6 percent and 4 percent, respectively, over the year ago quarter. In 2006, results included gains in excess of restructuring of $0.07 per share. Cash flow from operations was $1.45 billion and, after capital expenditures of $251 million, exceeded net income.

Second quarter revenues increased 13 percent to $13.9 billion, on 10 percent organic growth with continuing strength in commercial aerospace and commercial construction markets as well as accelerating shipments at Sikorsky. Foreign currency translation accounted for three points of the revenue growth and $0.03 of earnings per share. The current period also included $0.02 per share of restructuring costs and no offsetting gains. Excluding restructuring/gains in both periods, earnings per share grew 16% year over year.

"This was yet another strong quarter for UTC," said George David, UTC's Chairman and CEO. "Organic revenue growth for the Corporation has been 7 percent or greater in each of the last four years and higher recently with 9 percent in 2006 and 10 percent year to date in 2007. Solid markets worldwide in commercial aviation and commercial construction coupled with the successes of a wide range of new UTC products are doing this, and we see these conditions continuing over the balance of the year and into 2008. Accordingly, we are raising UTC revenues guidance for the year to $53 billion from $51 billion and earnings per share guidance to a range of $4.15-4.25 from $4.05-4.20. Earnings per share growth at revised guidance is 12-15 percent.

"The single soft spot in our markets remains the North American Residential HVAC business, reflecting the continuing U.S. housing downturn. Profitability at Carrier's North American Residential business accordingly was down in the quarter. However, balance works at Carrier as at UTC overall, and strength in commercial markets worldwide and residential markets internationally drove a solid double digit increase in Carrier's operating income in the quarter. Other notable operating performance in the quarter included Sikorsky shipments of 49 large helicopters and operating income of $87 million, increasing our confidence in Sikorsky's full year guidance.

"Cash flow from operations less capital expenditures in the quarter was 104 percent of net income, reflecting primarily improved collections and customer advances. For the full year, we continue to expect cash flow from operations less capital expenditures to exceed net income, UTC's usual standard," David added.

Share repurchase in the quarter was $500 million, with year to date repurchases equaling $1 billion. Acquisition guidance remains unchanged at $2 billion for the year.

The accompanying tables include information integral to assessing the company's financial position, operating performance, and cash flow.

United Technologies Corp., based in Hartford, Connecticut, is a diversified company providing high technology products and services to the building and aerospace industries. Additional information as well as a Web cast is available on the Internet at http://www.utc.com/.

This release includes "forward-looking statements" concerning anticipated future financial performance, including expected revenues, earnings, cash flow, acquisitions and share repurchase amounts. These statements often contain words such as "expect", "anticipate", "plan", "estimate", "believe", "will", "see", "guidance" and similar terms. These matters are subject to risks and uncertainties. Important factors that could cause actual results to differ materially from those anticipated or implied in forward looking statements include the health of the global economy; strength of end market demand in building construction and in both the commercial and defense segments of the aerospace industry; fluctuation in commodity prices, interest rates, foreign currency exchange rates, and the impact of weather conditions; and company-specific factors including the availability and impact of acquisitions; the rate and ability to effectively integrate these acquired businesses; the ability to achieve cost reductions at planned levels; challenges in the design, development, production and support of advanced technologies and new products and services; delays and disruption in delivery of materials and services from suppliers; labor disputes; and the outcome of legal proceedings. The level of share repurchases may vary depending on the level of other investing activities. For information identifying other important economic, political, regulatory, legal, technological, competitive and other uncertainties, see UTC's SEC filings as submitted from time to time, including but not limited to, the information included in UTC's 10-K and 10-Q Reports under the headings "Business," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Cautionary Note Concerning Factors that May Affect Future Results," as well as the information included in UTC's Current Reports on Form 8-K.

UTC-IR Contact: John Moran (860) 728-7062 United Technologies Corporation Condensed Consolidated Statement of Operations Quarter Ended Six Months Ended June 30, June 30, (Millions, except per (Unaudited) (Unaudited) share amounts) 2007 2006 2007 2006 Revenues $13,904 $12,264 $26,182 $22,879 Cost and Expenses Cost of goods and services sold 10,129 8,775 19,125 16,425 Research and development 416 370 798 739 Selling, general and administrative 1,494 1,378 2,890 2,692 Operating Profit 1,865 1,741 3,369 3,023 Interest expense 163 155 313 297 Income before income taxes and minority interests 1,702 1,586 3,056 2,726 Income taxes (479) (415) (921) (734) Minority interests (75) (68) (168) (121) Net Income $1,148 $1,103 $1,967 $1,871 Earnings Per Share of Common Stock Basic $1.19 $1.12 $2.03 $1.90 Diluted $1.16 $1.09 $1.98 $1.85 Average Shares Basic 966 983 967 984 Diluted 990 1,009 991 1,009

As described on the following pages, consolidated results for the quarters and six months ended June 30, 2007 and 2006 include restructuring and related charges and non-recurring items.

See accompanying Notes to Condensed Consolidated Financial Statements. United Technologies Corporation Segment Revenues and Operating Profit (Millions) Quarter Ended Six Months Ended June 30, June 30, (Unaudited) (Unaudited) 2007 2006 2007 2006 Revenues Otis $2,858 $2,529 $5,586 $4,877 Carrier 4,055 3,751 7,185 6,655 UTC Fire & Security 1,349 1,167 2,595 2,279 Pratt & Whitney 3,108 2,727 5,875 5,295 Hamilton Sundstrand 1,404 1,281 2,717 2,445 Sikorsky 1,198 767 2,204 1,279 Segment Revenues 13,972 12,222 26,162 22,830 Eliminations and other (68) 42 20 49 Consolidated Revenues $13,904 $12,264 $26,182 $22,879 Operating Profit Otis $532 $472 $1,106 $911 Carrier 489 410 702 614 UTC Fire & Security 101 65 187 130 Pratt & Whitney 522 535 1,012 965 Hamilton Sundstrand 246 212 464 393 Sikorsky 87 42 160 45 Segment Operating Profit 1,977 1,736 3,631 3,058 Eliminations and other (20) 84 (83) 129 General corporate expenses (92) (79) (179) (164) Consolidated Operating Profit $1,865 $1,741 $3,369 $3,023

As described on the following pages, consolidated results for the quarters and six months ended June 30, 2007 and 2006 include restructuring and related charges and non-recurring items.

United Technologies Corporation Restructuring and Related Charges

Consolidated operating profit for the quarters and six months ended June 30, 2007 and 2006 includes restructuring and related charges as follows:

Quarter Ended Six Months Ended June 30, June 30, (Millions) (Unaudited) (Unaudited) Restructuring and Related Charges 2007 2006 2007 2006 Otis $7 $6 $5 $8 Carrier 1 25 13 32 UTC Fire & Security 4 12 6 14 Pratt & Whitney 7 11 27 23 Hamilton Sundstrand 6 9 12 17 Sikorsky - 19 (3) 19 Segment Restructuring and Related Charges 25 82 60 113 Eliminations and other - - - - General corporate expenses - - - - Consolidated Restructuring and Related Charges $25 $82 $60 $113

Consolidated results for the quarters and six months ended June 30, 2007 and 2006 include the following non-recurring items:

Q1 - 2007 -- Otis: Otis segment results include an $84 million gain from the sale of land. The Consolidated operating results include taxes related to the gain of approximately $29 million in addition to an approximately $27 million charge for the minority partner's interest in the gain. The resulting impact to consolidated net income is approximately $28 million. -- Pratt & Whitney: Approximately $40 million gain at Pratt & Whitney from a contract termination. -- Eliminations and Other: A $216 million loss recorded in connection with the European Union commission fine. -- Eliminations and Other: A $151 million gain from the sale of marketable securities.

In the first quarter, the net impact of the above items ($0.05 per share), together with $35 million of pre-tax restructuring and related charges ($0.02 per share), had a $0.07 adverse impact to earnings per share.

Q2 - 2006 -- Pratt & Whitney: Approximately $80 million pretax gain related to the settlement of a claim by the Department of Defense (DoD) regarding Pratt & Whitney's cost accounting practices for engine parts on commercial engine collaboration programs. -- Eliminations and Other: Approximately $60 million pretax interest income related to the final determination by the U.S. Congress Joint Committee on Taxation on a disputed issue in the Internal Revenue Service (IRS) examination of tax years 1994 through 1999. -- Income Taxes: Favorable income tax adjustment of approximately $35 million, related to a determination by the U.S. Congress Joint Committee on Taxation on a disputed issue in the Internal Revenue Service (IRS) examination of tax years 1994 through 1999.

In the second quarter, the net impact of the above favorable items ($0.13 per share), together with approximately $80 million of pre-tax restructuring and related charges ($0.06 per share), contributed $0.07 to earnings per share.

Q1 - 2006 -- Pratt & Whitney: Approximately $25 million gain realized on the sale of a partnership interest in an engine program at Pratt Canada. -- Eliminations and Other: Approximately $25 million gain from the sale of marketable securities. United Technologies Corporation Condensed Consolidated Balance Sheet June 30, December 31, 2007 2006 (Millions) (Unaudited) (Unaudited) Assets Cash and cash equivalents $3,292 $2,546 Accounts receivable, net 8,428 7,679 Inventories and contracts in progress, net 7,974 6,657 Other current assets 2,018 1,962 Total Current Assets 21,712 18,844 Fixed assets, net 5,875 5,725 Goodwill, net 14,610 14,146 Intangible assets, net 3,284 3,216 Other assets 5,076 5,210 Total Assets $50,557 $47,141 Liabilities and Shareowners' Equity Short-term debt $1,548 $894 Accounts payable 5,100 4,263 Accrued liabilities 10,323 10,051 Total Current Liabilities 16,971 15,208 Long-term debt 7,045 7,037 Other liabilities 6,461 6,763 Total Liabilities 30,477 29,008 Minority interest in subsidiary companies 885 836 Shareowners' Equity: Common Stock 9,986 9,395 Treasury Stock (10,343) (9,413) Retained Earnings 20,123 18,754 Accumulated other non-shareowners' changes in equity (571) (1,439) 19,195 17,297 Total Liabilities and Shareowners' Equity $50,557 $47,141 Debt Ratios: Debt to total capitalization 31% 31% Net debt to net capitalization 22% 24% United Technologies Corporation Condensed Consolidated Statement of Cash Flows Quarter Ended Six Months Ended June 30, June 30, (Millions) (Unaudited) (Unaudited) 2007 2006 2007 2006 Operating Activities Net Income $1,148 $1,103 $1,967 $1,871 Adjustments to reconcile net income to net cash flows provided by operating activities: Depreciation and amortization 277 256 555 520 Deferred income taxes and minority interest 65 88 8 120 Stock compensation cost 43 47 97 91 Changes in working capital (118) (567) (395) (741) Other, net 34 (115) (330) (74) Net Cash Provided by Operating Activities 1,449 812 1,902 1,787 Investing Activities Capital expenditures (251) (218) (459) (419) Acquisitions and disposal of businesses, net (98) (67) (208) (157) Other, net (28) (48) 130 (84) Net Cash Used in Investing Activities (377) (333) (537) (660) Financing Activities Increase in borrowings, net 308 461 594 447 Dividends paid on Common Stock (245) (249) (490) (456) Repurchase of Common Stock (500) (375) (1,000) (750) Other, net 123 126 205 238 Net Cash Used in Financing Activities (314) (37) (691) (521) Effect of foreign exchange rates 53 24 72 30 Net increase in cash and cash equivalents 811 466 746 636 Cash and cash equivalents - beginning of period 2,481 2,417 2,546 2,247 Cash and cash equivalents - end of period $3,292 $2,883 $3,292 $2,883 United Technologies Corporation Free Cash Flow Reconciliation Quarter Ended (Millions) June 30, 2007 June 30, 2006 Net income $1,148 $1,103 Depreciation and amortization 277 256 Change in working capital (118) (567) Other 142 20 Cash flow from operating activities 1,449 812 Cash flow from operating activities as a percentage of net income 126% 74% Capital expenditures (251) (218) Capital expenditures as a percentage of net income (22%) (20%) Free cash flow $1,198 $594 Free cash flow as a percentage of net income 104% 54%

Free cash flow, which represents cash flow from operations less capital expenditures, is the principal cash performance measure used by the Company. Management believes free cash flow provides a relevant measure of liquidity and a useful basis for assessing the Corporation's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of the Corporation's Common Stock and distribution of earnings to shareholders. Others that use the term free cash flow may calculate it differently. The reconciliation of net cash flow provided by operating activities prepared in accordance with Generally Accepted Accounting Principles to free cash flow is above.

United Technologies Corporation Notes to Condensed Consolidated Financial Statements (1) Debt to total capitalization equals total debt divided by total debt plus equity. Net debt to net capitalization equals total debt less cash and cash equivalents divided by total debt plus equity less cash and cash equivalents. (2) Organic growth represents the total reported increase within the Corporation's ongoing businesses less the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and significant non-recurring items. Non-recurring items that are not included in organic growth in 2007 include an $84 million gain at Otis from the sale of land (See Note 3 below), a $40 million gain at Pratt & Whitney from a contract termination, and $151 million from the sale of marketable securities, all of which were partially offset by the $216 million loss recorded in connection with the EU commission fine during the first quarter. Non-recurring revenues that are not included in organic growth in 2006 include approximately $25 million from the sale of marketable securities, approximately $80 million from the settlement of Pratt collaboration programs, and approximately $60 million of interest income related to the final ruling on the 1994 - 1999 U.S. federal tax audits. (3) Otis segment results include an $84 million gain from the sale of land. The consolidated operating results include taxes related to the gain of approximately $29 million in addition to an approximately $27 million charge for the minority partner's interest in the gain. The resulting impact to consolidated net income is approximately $28 million.