This summary is based on the second quarter fiscal 2007 earnings call conducted by United Technologies Corporation (UTC: chart) on July 18, 2007.

VP - Accounting & Finance: Greg Hayes
IR: Ken Parks
VP of Finance: Jim Geisler

Key Investors Issues

- EPS were $1.16 a share compared to $1.09 a share last year.
- Net income was $1.15 billion, up from $1.1 billion a year earlier.
- Revenue was $13.9 billion, up 13.4% from the second quarter of 2006.

Second Quarter Highlights

Revenues were up 13% to $13.9 billion with organic growth at 10%.

Since 2004, annual organic revenue growth has equaled or exceeded 7%. That is a direct result from the innovative new products, strong presence in emerging markets, and robust global commercial aerospace and construction markets.

- Excluding Sikorsky, the aero businesses saw 11% organic revenue growth on continued strength from both their OEM and aftermarket businesses.

Commercial companies in aggregate grew 5% organically, led by Otis, which saw new equipment orders growth over 20%.

Foreign exchange accounted for the remainder of the growth as the second quarter year over at a $1.35 was higher than last year''s second quarter average of $1.25.

Earnings per share were $1.16, up 6% over last year and that includes uncovered restructuring charges of 2 cents per share, while second quarter of last year included a net 7 cents per share gain in excess of restructuring.

Absent the onetime gains and restructuring, earnings were up 16%.

From an earnings perspective, this was a solid quarter across the entire UTC portfolio, with all six business units develop delivering double-digit earnings growth, including restructuring and onetime items.

Pratt & Whitney and Hamilton both benefited from strong global aero markets and Sikorsky, which delivered 49 helicopters, remains on track with their recovery plan and production ramp.

- On the commercial side, Otis continued to gain market share globally while still delivering best-in-class margins.
- Fire & Security delivered another quarter of solid earnings growth and 120 basis points of margin expansion.
- Carrier had a strong quarter with earnings up 13% and 50 basis points of margin expansion.

- Balance works at UTC and balance works at Carrier, where strong performance in commercial HVAC, international residential HVAC, and the refrigeration business more than offset the weakness in the U.S. residential business, where earnings were down more than 30%.

Free cash flow was $1.2 billion, reaching 104% of net income.

- Inventory, especially within the aerospace companies, does remain in issue.
- Total inventory has increased $1.3 billion since year-end. About half of that is attributable to the normal Carrier seasonality and to FX, but the remaining issue or the remaining increase is due to the strong organic revenue growth of the aero businesses and the resulting tight aero supply chain.

Although the company remains focused on improving processes throughout the aero supply chain, realistically these higher inventory balances will continue to be a drag on cash flow as long as organic growth remains robust.

What the company is doing to offset this inventory drag is to focus on collecting cash from customers, both from receivables as well as in the form of advances.