This summary is based on the fourth quarter fiscal 2007 earnings call conducted by United Technologies Corporation (UTX: chart) on January 23, 2008.

VP, Accounting and Finance: Gregory J. Hayes
VP, Finance: James E. Geisler
Director of Investor Relations: Ken Parks

Key Investors Issues

- Earnings per share increased to $1.08 versus 87 cents in the prior year.
- Quarterly revenue increased 15% over last year to $14.7 billion.
- For fiscal 2007, earnings per share were $4.27, on revenue of roughly $55 billion.
- In Q4, the firm completed the acquisition of Rentokil''s Initial Electronic Security Group.

Fourth Quarter Fiscal 2007 Financial Highlights

The fourth quarter earnings per share were a $1.08, less than 24% over the last year including 4 cents of restructuring and charges in excess of gains.

Last year''s fourth quarter included 5 cents of restructuring in excess of gains. The non-recurring items in the quarter were the sale of two non-core businesses generated $83 million of gains. In addition to restructuring charges, following $63 million, the firm settled the litigation matter at Carrier. Finally, the effective tax rate in the quarter was higher primarily as a result of non-U.S. tax law changes. The company had 4 cents of net gains in the third quarter results and had expected the same amount of net charges in the fourth quarter.

- Consolidated revenues for the quarter increased 15% to $14.7 billion, including organic growth of 8%.
- Free cash flow was $1.6 billion or 150% of net income. It was driven by working capital reductions, primarily inventory reductions of a little over $500 million as well as solid collections. Included in the fourth quarter results is a net 4 cents a share charge driven by non-U.S. tax law changes, restructuring and a few other one-time items

Fiscal 2007 Financial Highlights

Revenues for the year ended at under $55 billion and that''s up 14% from 2006, and the full 9% of that growth organic. It is the fourth consecutive year of solid organic growth coming on top of 9% organic growth in 2006, 7% in 2005 and 8% in 2004.

Earnings per share for the full-year were $4.27, that''s up 15% over 2006. This is also the fourth consecutive year of solid double-digit EPS growth following 19% in 2006, 18% in 2005 and 19% in 2004.

Although the company saw significant improvement of working capital throughout the year, inventory and more specifically inventory returns was disappointing. The firm can fix this through focus and by continuing to use the ACE tools in its own factories as well as at its suppliers to improve inventory velocity across the entire supply chain.

In 2007, the company returned 75% of its free cash flow to shareholders in the form of share repurchase and dividends, the second consecutive year, which it returned over $3 billion of free cash flow to shareholders.

Acquisition spending, including acquired debt, for the full-year was $2.3 billion, slightly higher than the guidance for the year. A full $1.8 billion of this spending was allocated to Fire & Security business, as the firm continues to build the scale in its newest segments.

Performance Analysis of Segments

Otis

Otis finished the year with a strong fourth quarter. Profits were up 22% on revenue growth of 17%. Revenues grew in all geographic regions including double-digit growth in Asia and North America as Otis continues to execute on a robust new equipment backlog. While revenue mix continued to shift towards new equipment, margins expanded by 60 basis points by 18.9%. Favorable foreign exchange contributed under half of the revenue and profit growth in the quarter. New equipment orders remained strong in the fourth quarter, with an increase of 20%.

For the year, Otis delivered a 15% increase in operating profit on 14% revenue growth. Margins expanded to 19%, a 20 basis point improvement as ongoing cost containment and efficiency action mitigated commodity and labor cost headwinds, continued pricing pressures and the shift in Otis revenue towards more new equipment. Favorable foreign exchange contributed approximately 40% of the revenue growth and 45% of the profit growth. Otis ended the year with a new equipment backlog 27% higher than the prior year. The robust new equipment backlog positions 2008 to be another good year for Otis, with guidance of high single digit revenue growth and profit growth of 10% or more.

Carrier

The fourth quarter operating profit increased 20% year-over-year on 14% higher revenues, translating into 30 basis points of margin expansion. As in recent quarters, strength in the building systems, international, residential and light commercial, and refrigeration businesses more than offset housing-related weakness in North America. Favorable foreign exchange contributed about six points to revenue growth and about half of the earnings growth slightly exceeding the net commodity headwind in the quarter.