Dear Shareowner
UTC delivered strong results in 2008 despite the economic challenges which accelerated across the world’s economies as the year progressed. As in years past, this reflected the competitiveness of the Corporation’s businesses in markets worldwide and the maturity of its operating disciplines and management team. We believe we are well positioned to continue to outperform peers in 2009.

The board increased the dividend by just over 20 percent in October. In the decade ending 2008, dividends increased more than 300 percent and paralleled earnings increases over the same period. Free cash flow again exceeded net income and liquidity remains high. We early retired $500 million of long term debt maturing in 2009 following a $1.25 billion issuance in December on attractive terms.

Revenues reached $58.7 billion, 7 percent above the prior year. Earnings grew 15 percent to $4.90 per share. Notwithstanding these exceptional results, UTC’s stock price contracted along with virtually all others in 2008. However, we outperformed peers and market averages as we have so often in the past. We anticipate continued outperformance and took advantage of price weakness to accelerate share repurchase to $3.2 billion for the year, a record for UTC.

We look ahead to 2009 with confidence despite market and economic uncertainties. Preparing for contracting markets while continuing to invest in long term product development were management’s focus throughout 2008. Restructuring costs totaled $357 million for the year and were well in excess of one time gains. Company funded research and development increased $100 million to $1.8 billion. We see unusual opportunities to field new products and believe these will vindicate management’s and investors’ confidence in building on UTC’s already leading market franchises worldwide.

Notable developments in 2008 included completion of flight test at Airbus of Pratt &Whitney’s new Geared Turbofan engine. This next generation engine promises 12 percent lower fuel consumption and more than half reductions in both nitrogen oxides and noise over engines currently in flight. Sikorsky’s X2 Technology demonstrator flew first in August and is confirming expectations of flight at speeds exceeding 250 knots while preserving a helicopter’s traditional advantages of hover and vertical flight. Both products reflect decades of development and offer exceptional promise.

Cost reduction and productivity are embedded disciplines at UTC. We manage these through our Achieving Competitive Excellence (ACE) operating system which has been deployed across UTC worldwide for more than a decade. Each of 859 management sites is assessed against standards and expectations and rated accordingly.

Forty-nine percent of sites achieved Gold and Silver status in 2008, and we remain on track to achieve our 70 percent goal by the end of 2009. Over and over again we confirm that these ACE disciplines add materially to productivity, quality, delivery and balance sheet metrics for UTC. They are a principal reason for the Corporation’s outperformance over extended periods.

We affirm our traditional commitments to the highest standards of corporate responsibility, including compliance with laws and regulations and UTC’s Code of Ethics, environmental performance, and a safe and healthy place to work. For the first time, this Annual Report combines business and financial results with those on corporate responsibility. Notable accomplishments in 2008 were continued and significant improvements in lost workday incidence and resource use generally.

The former decreased to 0.26, 16 percent improved over 2007. UTC’s carbon footprint decreased 6 percent in 2008 and exceeded the 2 percent average improvement rate over the last decade. Our current carbon footprint reduction goal is 3 percent annually through 2010. Water consumption decreased 7 percent in 2008 and cumulatively is 53 percent lower than a decade ago. These reductions are absolute and are exceptional on business volumes more than twice those 10 years ago.

The binding theme in these business and corporate responsibility results for UTC is doing more with less. It is the core operating commitment and value at this Corporation. Looking back at more than a decade’s performance, we affirm that startling gains are possible and, indeed, at rates we would not have thought possible at the outset. It’s the reason we should all be confident in a long term and bright future for the world’s economies and resource consumption rates even in times of uncertainty and anxiety generally.

The results reported throughout this Annual Report reflect the dedication and commitment of UTC’s more than 220,000 employees worldwide. On behalf of shareowners, we thank every single one for exceptional contributions. This is a truly amazing company and employees make it so.

George David, Chairman
Louis Chênevert, President and Chief Executive Officer

Visit United Technologies Corporation Annual Report 2008 Download Page

Read United Technologies Corporation 2008 Annual Report online, or you can download United Technologies Corporation Annual Report 2008 in PDF format.

United Technologies Corporation provides high technology products and services to the building systems and aerospace industries worldwide through our industry-leading businesses. In 2008, UTC revenues increased 7 percent to $58.7 billion. Cash flow from operations less capital expenditures exceeded net income. Strength in long cycle businesses and early restructuring actions offset the adverse impact of a stronger U.S. dollar and deteriorating global economy in the second half of 2008. Earnings per share grew 15 percent to $4.90 per share.

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