UTC Reports Third Quarter EPS From Continuing Operations of $1.37; Affirms 2012 EPS Outlook of $5.25 to $5.35 and Increases

  UTC Reports Third Quarter EPS From Continuing Operations of $1.37; Affirms
2012 EPS Outlook of $5.25 to $5.35 and Increases Restructuring to $600 Million

PR Newswire

HARTFORD, Conn., Oct. 23, 2012

HARTFORD, Conn., Oct. 23, 2012 /PRNewswire/ --United Technologies Corp.
(NYSE: UTX) today reported third quarter 2012 results. All results in this
release reflect continuing operations unless otherwise noted.

Earnings per share of $1.37 and net income attributable to common shareowners
of $1.2 billion were down 4 percent and 3 percent, respectively, over the year
ago quarter. Results for the current quarter include $0.09 per share of
restructuring costs, offset by $0.09 of favorable one-time items. Earnings
per share in the year ago quarter included $0.06 of restructuring costs,
partially offset by $0.04 per share of net favorable one-time items. Before
these items, earnings per share decreased 6 percent year over year. The
effective tax rate for the quarter was 26.6 percent. Foreign currency
translation, and hedges at Pratt & Whitney Canada, had an adverse impact of
$0.07.

The acquisition of Rolls-Royce's share of the International Aero Engines joint
venture closed on June 29 and provided $0.03 of EPS accretion in the quarter.
Net of transaction and financing costs, the acquisition of Goodrich
Corporation, which closed on July 26, did not have an impact on EPS.

"The integration of Goodrich and IAE is off to a good start with solid
underlying performance at both businesses," said Louis Chenevert, UTC Chairman
& Chief Executive Officer. "We now expect just $0.10 of EPS dilution from the
Goodrich acquisition in 2012 versus our prior estimate of $0.20." 

Sales for the quarter of $15.0 billion were 6 percent above prior year. Net
acquisitions provided 11 points of growth. Organic sales decreased 2 percent
over the year ago quarter and foreign currency translation also had an adverse
impact of 3 points.Third quarter segment operating margin at 14.2 percent
was 160 basis points lower than prior year. Adjusted for restructuring costs
and net one-time items, segment operating margin at 15.0 percent was 100 basis
points lower than prior year, including the impact from the Goodrich
acquisition. Research and development costs increased $125 million in the
quarter to $590 million, including $101 million at Goodrich. Cash flow from
operations was $1.6 billion and, less capital expenditures of $317 million,
exceeded net income attributable to common shareowners.

"We expect earnings per share of $5.25 to $5.35 for 2012. Faced with a
challenging economic environment, we are increasing our investment in
restructuring this year to $600 million, up from our prior plan of $500
million, and continue to expect net one-time gains of $600 million," Chenevert
added. "Strong cash flow is a hallmark of UTC, and we now expect free cash
flow to exceed net income for the full year."

New equipment orders at Otis were up 7 percent over the year ago third
quarter, including unfavorable foreign exchange of 4 percentage points. North
American Residential HVAC new equipment orders at UTC Climate, Controls &
Security grew 3 percent. Commercial spares orders were up 14 percent at Pratt
& Whitney's large engine business including the impact from the incremental
IAE share. Organically, commercial spares orders were down 21 percent at Pratt
& Whitney and down 6 percent at UTC Aerospace Systems.

"Due to the lack of recovery in the commercial aerospace aftermarket and
continued uncertainty in the global economy, we now expect 2012 sales of $58
billion," Chenevert added. "The portfolio transformation is substantially
complete, and we are focused on integration and execution."

As previously announced, the company does not anticipate share repurchase in
2012 due to the Goodrich transaction. UTC expects a full year effective tax
rate of 29 percent excluding one-time items, down from the prior estimate of
29.5 percent.

Earnings per share from discontinued operations were $0.19 in the quarter.
Results included $127 million of positive income tax adjustments associated
with the legacy Hamilton Sundstrand Industrials businesses.

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, including a webcast, is
available on the Internet at http://www.utc.com.

The accompanying tables include information integral to assessing the
company's financial position, operating performance, and cash flow, including
a reconciliation of differences between non-GAAP measures used in this release
and the comparable financial measures calculated in accordance with generally
accepted accounting principles in the United States.

This release includes statements that constitute "forward-looking statements"
under the securities laws. Forward-looking statements often contain words such
as "believe," "expect," "plans," "strategy," "prospects," "estimate,"
"project," "target," "anticipate," "will," "should," "see," "guidance,"
"confident" and similar terms. Forward-looking statements may include, among
other things, statements relating to future and estimated sales, earnings,
cash flow, financing plans, charges, expenditures, anticipated benefits of
acquisitions and divestitures, results of operations, uses of cash and other
measures of financial performance. All forward-looking statements involve
risks, uncertainties and assumptions that may cause actual results to differ
materially from those expressed or implied in the forward-looking statements.
Risks and uncertainties include, without limitation, the effect of economic
conditions in the markets in which we operate, including financial market
conditions, fluctuation in commodity prices, interest rates and foreign
currency exchange rates; future levels of indebtedness and capital and
research and development spending; levels of end market demand in construction
and in the aerospace industry; levels of air travel; financial difficulties of
commercial airlines; the impact of weather conditions and natural disasters;
the financial condition of our customers and suppliers; delays and disruption
in delivery of materials and services from suppliers; cost reduction efforts
and restructuring costs and savings and other consequences thereof; the scope,
nature or impact of acquisitions, dispositions, joint ventures and other
business arrangements, including integration of acquired businesses; the
timing and impact of anticipated dispositions of businesses; the timing and
amount of anticipated gains, losses, impairments and charges related to such
dispositions; the timing and impact of anticipated debt reduction following
the Goodrich acquisition; the development and production of new products and
services; the anticipated benefits of diversification and balance of
operations across product lines, regions and industries; the impact of the
negotiation of collective bargaining agreements and labor disputes; the
outcome of legal proceedings and other contingencies; future availability of
credit; pension plan assumptions and future contributions; and the effect of
changes in tax, environmental and other laws and regulations and political
conditions in countries in which we operate and other factors beyond our
control. The completion of the proposed divestitures of businesses is subject
to uncertainties, including the ability to secure disposition agreements and
regulatory approvals on acceptable terms; the satisfaction of information,
consultation, and / or negotiation obligations, if any, with employee
representatives; and satisfaction of other customary conditions. These
forward-looking statements speak only as of the date of this release and we
undertake no obligation to update or revise any forward-looking statements
after we distribute this release. For additional information identifying
factors that may cause actual results to vary materially from those stated in
the forward-looking statements, see our reports on Forms 10-K, 10-Q and 8-K
filed with the SEC from time to time, including, but not limited to, the
information included in UTC's Forms 10-K and 10-Q under the headings
"Business," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Legal Proceedings" and in the notes
to the financial statements included in UTC's Forms 10-K and 10-Q.

UTC-IR



United Technologies Corporation



Condensed Consolidated Statement of Comprehensive Income
                                       Quarter Ended       Nine Months Ended

                                       September 30,       September 30,
                                       (Unaudited)         (Unaudited)
(Millions, except per share amounts)   2012      2011      2012       2011
Net sales                              $ 15,042  $ 14,235  $ 41,265   $ 41,377
Costs and Expenses:
 Cost of products and services sold      11,003    10,338    29,867     29,958
 Research and development                590       465       1,659      1,427
 Selling, general and administrative     1,619     1,512     4,657      4,538
  Total Costs and Expenses         13,212    12,315    36,183     35,923
Other income, net                        211       231       851        547
Operating profit                         2,041     2,151     5,933      6,001
 Interest expense, net                   216       139       513        429
Income from continuing operations        1,825     2,012     5,420      5,572
before income taxes
 Income tax expense                      484       628       1,257      1,731
Income from continuing operations        1,341     1,384     4,163      3,841
Discontinued operations:
 Income from operations                  91        52        118        201
 Loss on disposal                        (26)      -         (1,197)    -
 Income tax benefit (expense)            105       (15)      256        (90)
 Income (loss) from discontinued         170       37        (823)      111
 operations
Net income                               1,511     1,421     3,340      3,952
 Less: Noncontrolling interest in        96        97        267        298
 subsidiaries' earnings
Net income attributable to common      $ 1,415   $ 1,324   $ 3,073    $ 3,654
shareowners
Comprehensive income                   $ 2,546   $ 526     $ 4,171    $ 3,968
 Less: Comprehensive income
 attributable to                         119       72        271        311

  noncontrolling interests
Comprehensive income attributable to   $ 2,427   $ 454     $ 3,900    $ 3,657
common shareowners
Net Income (Loss) Attributable to
Common Shareowners:
 From continuing operations            $ 1,247   $ 1,290   $ 3,902    $ 3,551
 From discontinued operations            168       34        (829)      103
Earnings (Loss) Per Share of Common
Stock - Basic:
 From continuing operations            $ 1.39    $ 1.45    $ 4.37     $ 3.97
 From discontinued operations            0.19      0.04      (0.93)     0.12
Earnings (Loss) Per Share of Common
Stock - Diluted:
 From continuing operations            $ 1.37    $ 1.43    $ 4.31     $ 3.91
 From discontinued operations            0.19      0.04      (0.92)     0.11

As described on the following pages, consolidated results for the quarters and
nine months ended September 30, 2012 and 2011 include restructuring costs and
non-recurring items that management believes should be considered when
evaluating the underlying financial performance.

See accompanying Notes to Condensed Consolidated Financial Statements.



United Technologies Corporation



Segment Net Sales and Operating Profit
                                        Quarter Ended       Nine Months Ended

                                        September 30,       September 30,
                                        (Unaudited)         (Unaudited)
(Millions)                              2012      2011      2012      2011
Net Sales
Otis                                    $ 3,054   $ 3,262   $ 8,851   $ 9,226
UTC Climate, Controls & Security          4,259     4,921     12,943    14,454
Pratt & Whitney                           3,574     3,081     10,073    9,230
UTC Aerospace Systems                     2,670     1,187     5,160     3,496
Sikorsky                                  1,649     1,877     4,615     5,245
Segment Sales                             15,206    14,328    41,642    41,651
Eliminations and other                    (164)     (93)      (377)     (274)
Consolidated Net Sales                  $ 15,042  $ 14,235  $ 41,265  $ 41,377
Operating Profit
Otis                                    $ 651     $ 731     $ 1,868   $ 2,104
UTC Climate, Controls & Security          632       615       1,965     1,751
Pratt & Whitney                           409       496       1,225     1,348
UTC Aerospace Systems                     271       204       680       561
Sikorsky                                  203       215       552       633
Segment Operating Profit                  2,166     2,261     6,290     6,397
Eliminations and other                    (22)      (8)       (54)      (101)
General corporate expenses                (103)     (102)     (303)     (295)
Consolidated Operating Profit           $ 2,041   $ 2,151   $ 5,933   $ 6,001
Segment Operating Profit Margin
Otis                                      21.3%     22.4%     21.1%     22.8%
UTC Climate, Controls & Security          14.8%     12.5%     15.2%     12.1%
Pratt & Whitney                           11.4%     16.1%     12.2%     14.6%
UTC Aerospace Systems                     10.1%     17.2%     13.2%     16.0%
Sikorsky                                  12.3%     11.5%     12.0%     12.1%
Consolidated Segment Operating Profit     14.2%     15.8%     15.1%     15.4%
Margin

As described on the following pages, consolidated results for the quarters and
nine months ended September 30, 2012 and 2011 include restructuring costs and
non-recurring items that management believes should be considered when
evaluating the underlying financial performance.



United Technologies Corporation



Restructuring Costs and Non-Recurring Items Included in Results of Continuing
Operations
                                          Quarter Ended      Nine Months Ended
                                          September 30,
                                                             September 30,
                                          (Unaudited)        (Unaudited)
In millions - Income (Expense)            2012     2011      2012     2011
Restructuring Costs included in
Operating Profit:
Otis                                      $ (42)   $ (41)    $ (105)  $ (47)
UTC Climate, Controls & Security            (26)     (20)      (98)     (65)
Pratt & Whitney                             (3)      (5)       (57)     (34)
UTC Aerospace Systems                       (35)     (1)       (40)     (5)
Sikorsky                                    (12)     (13)      (18)     (16)
Eliminations and other                      (10)     -         (14)     -
                                            (128)    (80)      (332)    (167)
Non-Recurring items included in
Operating Profit:
UTC Climate, Controls & Security            -        8         222      8
Pratt & Whitney                             -        41        -        41
Sikorsky                                    -        -         -        73
Eliminations and other                      34       -         24       -
                                            34       49        246      122
  Total impact on Consolidated              (94)     (31)      (86)     (45)
  Operating Profit
Non-Recurring items included in             25       -         40       -
InterestExpense, Net
  Tax effect of restructuring and           34       (4)       30       (2)
  non-recurringitems above
Non-Recurring items included in             34       17        237      17
IncomeTax Expense
  Impact on Net Income from Continuing

   Operations Attributable to
   Common Shareowners                 $ (1)    $ (18)    $ 221    $ (30)
  Impact on Diluted Earnings Per Share    $ -      $ (0.02)  $ 0.24   $ (0.03)
  fromContinuing Operations

Details of the non-recurring items for the quarters and nine months ended
September 30, 2012 and 2011 are as follows:

Quarter Ended September 30, 2012

Eliminations and other: Approximately $34 million non-cash gain recognized on
the remeasurement to fair value of our previously held shares of Goodrich
Corporation stock resulting from our acquisition of the company.

Interest Expense, Net: Approximately $25 million of favorable pre-tax
interest adjustments related to the resolution of disputes with the Appeals
Division of the IRS for the Company's 2004 - 2005 tax years.

Income Tax Expense: Approximately $34 million of favorable income tax
adjustments related to the resolution of disputes with the Appeals Division of
the IRS for the Company's 2004 - 2005 tax years.

Discontinued Operations: Approximately $127 million of favorable income tax
adjustments related to the reversal of a portion of the deferred tax liability
initially recorded during the quarter ended March 31, 2012 on the existing
difference between the expected accounting versus tax gain on the planned
disposition of legacy Hamilton Sundstrand's Industrial businesses. As a result
of the structure of the transaction that was finalized in July 2012, a portion
of the deferred tax liability cannot be recorded until the sale is finalized.

Quarter Ended June 30, 2012

UTC Climate, Controls & Security: Approximately $110 million net gain from
UTC Climate, Controls & Security's ongoing portfolio transformation. This net
gain includes approximately $142 million from the sale of a controlling
interest in its Canadian distribution business, partially offset by a $32
million loss on the disposition of its U.S. fire and security branch
operations.

Discontinued Operations:

  oApproximately $179 million pre-tax impairment charge related to inventory,
    fixed assets and goodwill, as a result of the decision to dispose of the
    UTC Power business.
  oApproximately $91 million reserve for potential remediation costs
    associated with certain components of wind turbines previously installed
    by our Clipper business.

Quarter Ended March 31, 2012

UTC Climate, Controls & Security: Approximately $112 million net gain from
UTC Climate, Controls & Security's ongoing portfolio transformation. This net
gain includes approximately $215 million from the sale of a controlling
interest in a manufacturing and distribution joint venture in Asia, partially
offset by $103 million of impairment charges related to planned business
dispositions.

Eliminations and other: An additional $10 million of reserves were
established for the export licensing compliance matters recorded in the fourth
quarter 2011.

Interest Expense, Net: Approximately $15 million of favorable pre-tax
interest adjustments related to the conclusion of the IRS's examination of the
Company's 2006 – 2008 tax years.

Income Tax Expense: Approximately $203 million of favorable income tax
adjustments related to the conclusion of the IRS's examination of the
Company's 2006 – 2008 tax years.

Discontinued Operations:

  oApproximately $360 million and $590 million of pre-tax goodwill impairment
    charges ($220 million and $410 million after tax) related to Rocketdyne
    and Clipper, respectively.
  oApproximately $235 million of unfavorable income tax adjustments related
    to the recognition of a deferred tax liability on the existing difference
    between the expected accounting versus tax gain on the planned disposition
    of legacy Hamilton Sundstrand's Industrial businesses.

Quarter Ended September 30, 2011

UTC Climate, Controls & Security:

  oApproximately $28 million net gain resulting from dispositions associated
    with UTC Climate, Controls & Security's ongoing portfolio transformation.
  oApproximately $20 million other-than-temporary impairment charge on an
    equity investment.

Pratt & Whitney: Approximately $41 million gain recognized from the sale of
an equity investment.

Income Tax Expense: Favorable tax benefit of approximately $17 million as a
result of a U.K. tax rate reduction enacted in July 2011.

Quarter Ended June 30, 2011

Sikorsky: Approximately $73 million gain recognized from the contribution of
a business into a new venture in the United Arab Emirates.

The following page provides segment net sales, operating profits and operating
profit margins as adjusted for the aforementioned restructuring costs and
non-recurring items. Management believes these adjusted results more
accurately portray the ongoing operational performance and fundamentals of the
underlying businesses. The amount and timing of restructuring costs and
non-recurring activity can vary substantially from period to period with no
assurances of comparable activity or amounts being incurred in future
periods. These amounts have therefore been adjusted out in the following
schedule in order to provide a more representative comparison of current year
operating performance to prior year performance.





United Technologies Corporation



Segment Net Sales and Operating Profit Adjusted for Restructuring Costs and
Non-Recurring Items (as reflected on the previous pages)
                          Quarter Ended                Nine Months Ended

                          September 30,                September 30,
                          (Unaudited)                  (Unaudited)
(Millions)                2012            2011         2012         2011
Net Sales
Otis                      $   3,054       $  3,262     $  8,851     $  9,226
UTC Climate, Controls         4,259          4,921        12,943       14,454
& Security
Pratt & Whitney               3,574          3,081        10,073       9,230
UTC Aerospace Systems         2,670          1,187        5,160        3,496
Sikorsky                      1,649          1,877        4,615        5,245
Segment Sales                 15,206         14,328       41,642       41,651
Eliminations and other        (164)          (93)         (377)        (274)
Consolidated Net Sales    $   15,042      $  14,235    $  41,265    $  41,377
Adjusted Operating
Profit
Otis                      $   693         $  772       $  1,973     $  2,151
UTC Climate, Controls         658            627          1,841        1,808
& Security
Pratt & Whitney               412            460          1,282        1,341
UTC Aerospace Systems         306            205          720          566
Sikorsky                      215            228          570          576
Adjusted Segment              2,284          2,292        6,386        6,442
Operating Profit
Eliminations and other        (46)           (8)          (64)         (101)
General corporate             (103)          (102)        (303)        (295)
expenses
Adjusted Consolidated     $   2,135       $  2,182     $  6,019     $  6,046
Operating Profit
Adjusted Segment
Operating Profit
Margin
Otis                          22.7%          23.7%        22.3%        23.3%
UTC Climate, Controls         15.4%          12.7%        14.2%        12.5%
& Security
Pratt & Whitney               11.5%          14.9%        12.7%        14.5%
UTC Aerospace Systems         11.5%          17.3%        14.0%        16.2%
Sikorsky                      13.0%          12.1%        12.4%        11.0%
Adjusted
Consolidated                  15.0%          16.0%        15.3%        15.5%
Segment Operating
Profit Margin



United Technologies Corporation



Condensed Consolidated Balance Sheet
                                            September 30,  December 31,
                                            2012           2011
(Millions)                                  (Unaudited)    (Unaudited)
Assets
Cash and cash equivalents                   $   6,242      $  5,960
Accounts receivable, net                        10,610        9,546
Inventories and contracts in progress, net      10,467        7,797
Assets of discontinued operations               1,884         -
Other assets, current                           2,482         2,455
         Total Current Assets                   31,685        25,758
Fixed assets, net                               8,239         6,201
Goodwill                                        27,630        17,943
Intangible assets, net                          15,146        3,918
Other assets                                    9,246         7,632
Total Assets                                $   91,946     $  61,452
Liabilities and Equity
Short-term debt                             $   5,291      $  759
Accounts payable                                6,156         5,570
Accrued liabilities                             14,600        12,287
Liabilities of discontinued operations          405           -
         Total Current Liabilities              26,452        18,616
Long-term debt                                  23,409        9,501
Other long-term liabilities                     15,761        10,157
         Total Liabilities                      65,622        38,274
Redeemable noncontrolling interest              233           358
Shareowners' Equity:
Common Stock                                    13,657        13,293
Treasury Stock                                  (19,258)      (19,410)
Retained earnings                               35,219        33,487
Accumulated other comprehensive loss            (4,663)       (5,490)
         Total Shareowners' Equity              24,955        21,880
Noncontrolling interest                         1,136         940
         Total Equity                           26,091        22,820
Total Liabilities and Equity                $   91,946     $  61,452
Debt Ratios:
Debt to total capitalization                    52%           31%
Net debt to net capitalization                  46%           16%
See accompanying Notes to Condensed Consolidated Financial Statements.



United Technologies Corporation



Condensed Consolidated Statement of Cash Flows
                                  Quarter Ended          Nine Months Ended

                                  September 30,         September 30,
                                  (Unaudited)            (Unaudited)
(Millions)                        2012        2011       2012        2011
Operating Activities of
Continuing Operations:
 Income from continuing           $ 1,341     $ 1,384    $ 4,163     $ 3,841
 operations
 Adjustments to reconcile income
 from continuing operationsto
 net cash flows provided by
 operating activities of
 continuing operations:
     Depreciation and               422         324        1,047       962
     amortization
     Deferred income tax            18          48         29          337
     provision
     Stock compensation cost        54          55         150         179
     Change in working capital      (48)        239        (149)       (552)
 Global pension contributions       (209)       (176)      (233)       (246)
 Other operating activities, net    47          33         (356)       29
     Net cash flows provided by
     operating activities           1,625       1,907      4,651       4,550
     ofcontinuing operations
Investing Activities of
Continuing Operations:
 Capital expenditures               (317)       (199)      (748)       (570)
 Acquisitions and dispositions      (15,721)    192        (15,646)    153
 of businesses, net
 Increase (decrease) in             10,505      -          (191)       8
 restricted cash, net
 Increase in collaboration          (150)       -          (1,394)     -
 intangible assets
 Other investing activities, net    (40)        21         (16)        121
     Net cash flows (used in)
     provided by investing          (5,723)     14         (17,995)    (288)
     activitiesof continuing
     operations
Financing Activities of
Continuing Operations:
 Issuance (repayment) of            14          10         10,798      (50)
 long-term debt, net
 Increase (decrease) in             4,927       (32)       4,509       1,130
 short-term borrowings, net
 Dividends paid on Common Stock     (463)       (411)      (1,288)     (1,192)
 Repurchase of Common Stock         -           (675)      -           (2,175)
 Other financing activities, net    131         (183)      (33)        (103)
     Net cash flows provided by
     (used in) financing            4,609       (1,291)    13,986      (2,390)
     activitiesof continuing
     operations
Discontinued Operations:
 Net cash provided by operating     19          52         22          28
 activities
 Net cash used in investing         (345)       (5)        (352)       (10)
 activities
 Net cash used in financing         -           (10)       -           (20)
 activities
     Net cash (used in) provided    (326)       37         (330)       (2)
     by discontinued operations
Effect of foreign exchange rate
changes on cash and                 62          (97)       25          13

 cash equivalents
     Net increase in cash and       247         570        337         1,883
     cash equivalents
Cash and cash equivalents,          6,050       5,396      5,960       4,083
beginning of period
Cash and cash equivalents, end    $ 6,297     $ 5,966    $ 6,297     $ 5,966
of period
 Less: Cash and cash equivalents    55          -          55          -
 of discontinued operations
Cash and cash equivalents of
continuing operations, end of     $ 6,242     $ 5,966    $ 6,242     $ 5,966
period
See accompanying Notes to Condensed Consolidated Financial Statements.



United Technologies Corporation



Free Cash Flow Reconciliation
                                             Quarter Ended September 30,
                                             (Unaudited)
(Millions)                                   2012               2011
Net income attributable to common            $  1,247           $ 1,290
shareowners from continuing operations
Net cash flows provided by operating         $  1,625           $ 1,907
activities of continuing operations
  Net cash flows provided by operating
  activities of continuingoperations as a
  percentage of net income attributable to             130   %          148  %
  commonshareowners from continuing
  operations
Capital expenditures                            (317)             (199)
  Capital expenditures as a percentage of
  net income attributable tocommon                    (25)  %          (15) %
  shareowners from continuing operations
Free cash flow                               $  1,308           $ 1,708
  Free cash flow as a percentage of net
  income attributable to commonshareowners            105   %          132  %
  from continuing operations
                                             Nine Months Ended September 30,
                                             (Unaudited)
(Millions)                                   2012               2011
Net income attributable to common
shareowners                                  $  3,902           $ 3,551
from continuing operations
Net cash flows provided by operating         $  4,651           $ 4,550
activities of continuing operations
  Net cash flows provided by operating
  activities of continuing operations as a
  percentage of net income attributable                119   %          128  %
  tocommonshareowners from continuing
  operations
Capital expenditures                            (748)             (570)
  Capital expenditures as a percentage of
  net income attributable tocommon                    (19)  %          (16) %
  shareowners from continuing operations
Free cash flow                               $  3,903           $ 3,980
  Free cash flow as a percentage of
  net income attributable to common                    100   %          112  %
  shareowners from continuing operations

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 sales 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.

(3)Free cash flow, which represents cash flow from operations less capital
expenditures, is the principal cash performance measure used by UTC.
Management believes free cash flow provides a relevant measure of liquidity
and a useful basis for assessing UTC's ability to fund its activities,
including the financing of acquisitions, debt service, repurchases of UTC's
common stock and distribution of earnings to shareholders. Other companies
that use the term free cash flow may calculate it differently. The
reconciliation of net cash flow provided by continuing operating activities,
prepared in accordance with generally accepted accounting principles, to free
cash flow is shown above.

(4)Prior period amounts reported within these Condensed Consolidated
Financial Statements have been revised for:

  oThe combination of the financial results of the former Carrier and UTC
    Fire & Security segments into a new segment called UTC Climate, Controls &
    Security; and
  oDiscontinued operations related to actual and planned divestiture of a
    number of non-core businesses.

Contact: John Moran
         (860) 728-7061

SOURCE United Technologies Corp.

Website: http://www.utc.com
 
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