UTC’s balanced portfolio of businesses spans a range of geographies, markets and customer relationships. In 2007, our revenues were $54.8 billion, a 14 percent increase over 2006. We believe profitability and responsibility go hand in hand and are committed to this throughout the company.

Carrier

Heating, ventilation, air conditioning and refrigeration (HVACR) systems, components, controls and services for residential, commercial, industrial and transportation applications; food service equipment.

Progress and Challenges
Carrier is the only company in the world to be a founding member of the China, India and U.S. Green Building Councils. In 1994, Carrier was the first to phase out ozone-depleting chlorofluorocarbons from air conditioning systems worldwide. Carrier pioneered the non-ozone depleting Puron system for the U.S. residential market in 1996 and has sold more than 2.5 million systems. Its commercial chiller, the Evergreen 23XRV with Foxfire technology, is the first product in its class to achieve world-class energy efficiency with a non-ozone depleting refrigerant, offering zero compromise. Carrier’s Vector 1800MT trailer refrigeration unit when compared with its previous product line, is 20 percent more fuel efficient, emits 20 percent fewer particulates in the fuel burning process and has components which are 94 percent recyclable. India’s National Energy Conservation Committee gave its top consumer goods award to Carrier India for its efforts to efficiently use and conserve energy from 2004 to 2007. China’s Ministry of Construction also recognized Carrier as one of the top 10 most influential companies for energy efficiency in China in 2007.

Since 1997, Carrier has doubled its revenue while keeping its energy consumption stable. In 2007, greenhouse gas emissions were reduced by 11 percent, far exceeding its goal. This success was partially due to decreased production caused by a slowdown in the U.S. residential market coupled with mitigation measures. In 2007, Carrier failed to meet its industrial process waste (IPW) reduction goal of 2.5 percent (on 2006 levels) because of an increase in scrap metal generated from new production lines. Carrier has an aggressive plan of site audits and process improvements to meet future goals.

Hamilton Sundstrand

Electrical power generation and distribution systems, engine accessories and control systems, flight control systems and pilot controls, propulsion systems, environmental control systems, auxiliary power units, LED lighting, and fire protection products for aircraft and military ground vehicles, prime contractor of NASA’s space suit/life support system, electrical power system and various other systems for international space programs; industrial products, including portable and stationary air compressors, high pressure pumps and metering devices.

Progress and Challenges
Nine Hamilton Sundstrand systems will allow the Boeing 787 to save up to 200,000 gallons of fuel a year, a significant fuel efficiency gain over current generation equipment. Hamilton Sundstrand is committed to aggressive 2010 targets on risk and injury reduction of no more than 2.6 recordable injuries per million hours worked or a total recordable incident rate of 0.52 and one lost workday case for every 3 million hours worked or a lost day incident rate of 0.06. Hamilton Sundstrand is working with the U.S. Occupational Safety and Health Administration (OSHA) to coordinate international safety standards in 12 countries and is participating in OSHA’s Voluntary Protection Program (VPP). Eight Hamilton Sundstrand locations have achieved VPP star status, in recognition of high safety standards, with the goal of all 20 U.S. sites attaining certification by 2010. A challenge facing Hamilton Sundstrand is the assessment of EH&S risks inherent in manufacturing operations. To better assess and control these risks, Hamilton Sundstrand has improved its Job Hazard Analysis (JHA) program with the implementation of the JHA Gold program, which focuses on assessing and managing the risks associated with high-risk work processes using 26 EH&S protocols such as explosive hazards, electrical safety and machine guarding, and implementing controls to manage such risks.

Otis

Design, manufacture, installation, service and upgrade of elevators, escalators and moving walkways for all buildings, including commercial, residential, multipurpose malls, educational institutions and urban transportation systems.

Progress and Challenges
Over the last 10 years, Otis has dramatically improved its safety performance reducing recordable and lost workday incident rates by 73 and 84 percent, respectively. Otis continues to develop and deploy best-in-class processes to achieve its goal of eliminating serious injuries and fatalities. In 2007, Otis implemented a people-based safety process coordinated by employees. This process involves employees conducting basic observations of their peers to assist them in identifying job site hazards and risks and to provide positive feedback to encourage greater safety awareness. More than 5,000 observations have been recorded identifying both safe and at-risk behaviors. In 2007, Otis made excellent progress toward its target of assisting key suppliers to meet UTC’s environment, health and safety (EH&S) expectations due in part to integrating the expectations into Otis’ existing supplier quality program. In 2007, 100 percent of Otis’ key suppliers completed self-assessments against EH&S expectations.

Pratt & Whitney

Turbofan engines for large commercial and military aircraft; turbofan and turboprop engines for regional, light jet, business, utility and military aircraft; turboshaft engines for military and commercial helicopters; gas turbine engines for industrial applications and auxiliary power units; maintenance, repair and overhaul services, including the sale of spare parts, as well as fleet management services; liquid space propulsion systems for military and commercial applications, including NASA’s space shuttle and Vision for Space Exploration.

Progress and Challenges
In 2007, Pratt & Whitney launched its Geared Turbofan (GTF) engine, which reduces fuel use, engine noise, environmental emissions and maintenance costs. The GTF has been selected to power the proposed Mitsubishi Regional Jet and the Bombardier CSeries aircraft. Pratt & Whitney Global Service Partners’ EcoPower closed-loop system cleans aircraft engines using only purified, atomized water with no detergents or solvents. EcoPower cleaning helps reduce greenhouse gas emissions from jet engines by improving their efficiency. Pratt & Whitney Canada recorded a significant reduction in air emissions. This was achieved through rigorous process improvement and the elimination of a highly volatile solvent. With partner China Eastern Airlines, Pratt & Whitney Global Service Partners began construction of a new engine overhaul facility that is designed to meet LEED Platinum green building standards. Pratt & Whitney missed its 2007 lost workday incident rate safety target of 0.24 (actual 0.41) and is incorporating measures such as safety stand downs to attain its safety targets. Pratt & Whitney’s U.S. Global Service Partners and Module Centers and Operations stopped production for 24 hours across all three shifts in the summer of 2007 to conduct an extensive safety stand down. The effort involved nearly 9,000 employees in Connecticut, Maine and Georgia, who identified and corrected more than 8,000 safety risks throughout the facilities.

Sikorsky

Military and commercial helicopters; fixed-wing aircraft; spare parts and maintenance, repair and overhaul services for helicopters and fixed-wing aircraft; civil helicopter operations.

Progress and Challenges
An upgrade of the testing processes for the S-76 helicopter transmission included new design efficiencies projected to eliminate 240 metric tons of CO2 equivalent emissions annually beginning in 2008. Sikorsky is in the design phase of a co-generation project that will further reduce its carbon footprint by approximately 9,000 metric tons annually beginning in 2009. Other air emission reductions have resulted largely from replacing solvents with aqueous systems, accounting for an 8 percent reduction in 2007. Sikorsky’s newly acquired Polish aircraft manufacturer, PZL Mielec, is the first manufacturer in Europe to use an environmentally friendly paint on production aircraft, resulting in a 41 percent reduction in paint air emissions at the site. In 2007, Sikorsky made significant improvements in workplace safety by increasing management communications, engaging all employees (including organized labor), and continued risk management. A new cooperative agreement with the National Institute for Occupational Safety and Health (NIOSH) and Teamsters Local 1150 began to study and reduce ergonomic injuries resulting in 20 percent fewer workplace accidents (measured as total recordable incident rate) in 2007 alone. Sikorsky is now working on improving how employees rate safety in their work areas. In 2007, 79 percent of employees rated this as good or very good on the biennial employee survey, up from only 42 percent in 2005. Sikorsky won’t be satisfied until all employees rate safety as very good and plans to get there by further ergonomic improvements and partnering with employees in shared efforts, including the U.S. Occupational Safety and Health Administration’s Voluntary Protection Program in the years to come.

UTC Fire & Security

Electronic security and fire safety systems, software and services; design, integration, installation and servicing of access control, intruder alarm, video surveillance, and fire detection and suppression systems; monitoring, response and security personnel services.

Progress and Challenges
UTC Fire & Security continues to improve safety, reducing its lost workday incident rate by 59 percent and total recordable incident rate by 35 percent compared with 2006, both ahead of target. Outstanding health and safety management in Chubb Australasia was recognized by the Western Australia State Government agency WorkSafe. Chubb received a Platinum Certificate, the highest recognition, marking the first time a security or fire safety company in Western Australia has been granted this honor. UTC Fire & Security increased its green product portfolio in September 2007 with the acquisition of Marioff Corporation Oy, a Finland-based global provider of water mist fire suppression systems for use in land and marine applications. With a significant percentage of employees having been with the company for less than three years, UTC Fire & Security has allocated considerable resources to train employees about UTC values and compliance, in both the existing workforce and new acquisitions. Following the recent acquisition of Initial Electronic Security Group in Europe, a team led by the UTC Fire & Security president of Europe, Middle East and Africa rolled out UTC’s Code of Ethics and provided awareness training to all managers within 90 days of acquisition. These and other initiatives, such as improvements in communications about the Code of Ethics, better controls, more comprehensive audits and the use of ACE tools, are expected to generate increased awareness and acceptance among new employees, and strengthen UTC Fire & Security’s compliance environment.

UTC Power

Fuel cell systems for on-site, transportation, space and defense applications, including the U.S. space shuttle program; combined cooling, heating and power systems for commercial and industrial applications; geothermal power systems; and climate and energy consulting services.

Progress and Challenges
UTC Power’s PureCycle system is a renewable energy generator that uses geothermal groundwater to generate electricity, re-injecting the water deep into the earth to be reheated and reused. The first unit was produced in December 2007, with field validation expected in 2008. The PureCycle geothermal power system was recognized by R&D magazine as one of the 100 most technologically significant products introduced in 2007. UTC Power continued development of its PureMotion Model 120 fuel cell used to power transit buses in the United States and Europe. The Clinton Climate Initiative chose UTC Power as an official supplier partner for fuel cell buses. UTC Power is in the final stages of development of the PureCell Model 400 fuel cell system, which will double the output and operating life of the current Model 200C system, dramatically reducing life cycle cost. UTC Power has completed the acquisition of Dome Tech, Inc., which provides climate and energy consulting services. UTC Power’s greatest challenge is communicating the value of its advanced energy systems, which provide energy security, increased efficiency and environmentally responsible alternatives.