UTC reports 15 percent second quarter EPS growth, to $1.09 per share, on 10 percent higher revenues and raises 2006 EPS guidance

Listen to the webcast (http://investors.utc.com/medialist.cfm) or dial in (800.289.0533).
Click here to download slides: www.utc.com/investors/2006_q2_earnings.pdf

HARTFORD, Conn., July 18, 2006 -– United Technologies Corp. (NYSE:UTX) today reported second quarter 2006 earnings per share of $1.09, 15 percent above the year ago period. Results in both years include gains in excess of restructuring, $0.07 per share in 2006 and $0.09 per share in 2005. Revenues for the quarter increased 10 percent to $12.3 billion, on 8 percent organic and 2 percent acquisitions related growth.

“This has been another strong quarter for UTC, with continuing higher organic growth rates reflecting good economies worldwide. Segment operating margin expanded to 14.2 percent. Aerospace demand and margin performance were exceptionally strong, offsetting a weaker quarter at Carrier where results were held back by a slower than planned production ramp of the new 13 SEER product line in its large North American Residential business,” said UTC Chairman and Chief Executive Officer George David.

“Given the quarter’s solid results, we’re raising the full year EPS outlook range to $3.55 to $3.65, on revenue expectations increased from $46 to $47 billion. As in 2005, first half 2006 gains in excess of restructuring will be offset in the next two quarters. For the year, we continue to expect restructuring costs to equal or exceed one time favorable items,” David continued.

Second quarter UTC net income increased 14 percent to $1.10 billion. Cash flow from operations was $812 million and capital expenditures $218 million. Share repurchase in the quarter was $375 million and $750 million for the first half, on track with guidance of $1.50 billion for the year.

“We fell short of UTC’s usual standard of cash flow from operations less capital expenditures in excess of net income, as a result of working capital build and non-cash gains in net income. Aerospace inventory build, driven by strong organic growth and the Sikorsky strike, along with Carrier’s seasonal working capital requirements reduced cash flow in the quarter. We anticipate significant working capital reductions over the balance of the year and full year cash flow after capital expenditures equaling or exceeding net income,” David added.

The second quarter gains were as anticipated and include favorable income tax and related interest income adjustments on settlements of U.S. federal tax audits for the 1994-1999 years. The Corporation also settled a longstanding contract accounting dispute with the Department of Defense, and second quarter results include a reversal of a reserve in excess of the settlement amount. These gains were partially offset by $82 million in restructuring costs in the quarter, and the net impact contributed $0.07 to earnings per share.

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 that provides a broad range of high technology products and support services to the building systems and aerospace industries.

This release is supplemented by presentation materials that are available on UTC’s website at www.utc.com, and includes “forward looking statements” concerning expected revenue, earnings, cash flow, share repurchases, restructuring and other matters that 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 items 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. 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.

View the financial tables in PDF format:
www.utc.com/images/pressroom/06earnings_q2/2006_q2_tables.pdf

Contact Information

Paul Jackson

United Technologies Corp.

Contact via E-mail