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UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C.

20549

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

 For the quarterly period ended March 31, 2003

  OR

  [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from____________________________to__________________________

 Commission file number 1-812 

 UNITED TECHNOLOGIES CORPORATION 

DELAWARE

06-0570975

One Financial Plaza, Hartford, Connecticut 06103

(860) 728-7000

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X . No   .

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes X . No   .

At March 31, 2003 there were 467,893,607 shares of Common Stock outstanding.

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q
Quarter Ended March 31, 2003
  Page
   
Part I - Financial Information  
   
     Item 1. Financial Statements:  
   
        Condensed Consolidated Statement of Operations for the quarters ended
             March 31, 2003 and 2002		 2       
        Condensed Consolidated Balance Sheet at March 31, 2003 and
             December 31, 2002		 3       
        Condensed Consolidated Statement of Cash Flows for the quarters 
             ended March 31, 2003 and 2002		 4       
        Notes to Condensed Consolidated Financial Statements 5       
        Report of Independent Auditors 12       
      
     Item 2. Management's Discussion and Analysis of Financial Condition
           and Results of Operations		 13       
      
     Item 3. Quantitative and Qualitative Disclosures About Market Risk 20       
      
     Item 4. Controls and Procedures 20       
   
Part II - Other Information
   
     Item 1. Legal Proceedings 22       
   
     Item 6. Exhibits and Reports on Form 8-K 23       
   
Signatures 24       
  
Certifications 25       
   
Exhibit Index 27       

"Corporation," unless the context otherwise requires, means United Technologies Corporation or UTC and its subsidiaries. 

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

Part I – Financial Information

Item 1 – Financial Statements

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)


In Millions (except per share amounts)		 Quarter Ended
March 31, 
      2003

2002
Revenues            
    Product sales

$

 4,864    

$

4,700    
    Service sales    1,789        1,621    
    Financing revenues and other income, net    49                53    
6,702        6,374    
Costs and expenses   
    Cost of products sold 3,707     3,420    
    Cost of services sold 1,159     1,065    
    Research and development 235     338    
    Selling, general and administrative 764     754    
    Interest 91            99    
5,956       5,676    
         
Income before income taxes and minority interests 746     698    
Income taxes 209     198    
Minority interests 35             33    
Net income

$

502    

$

467    

          
Earnings per share of Common Stock
    Basic

$

 1.05    

$

 .97    
    Diluted

$

 1.00    

$

 .92    
          
Dividends per share of Common Stock

$

 .245   

$

 .245   
         
Average number of shares outstanding    
    Basic 470     473    
    Diluted 501     507    

See accompanying Notes to Condensed Consolidated Financial Statements

2

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

 



In Millions

March 31,
2003

December 31,
2002
 

(Unaudited)

Assets
 
Cash and cash equivalents

$

 1,927    

$

 2,080    
Accounts receivable, net 4,343     4,277    
Inventories and contracts in progress, net 3,963     3,803    
Future income tax benefits 1,390     1,431    
Other current assets         306            244    
       Total Current Assets      11,929       11,835    
Customer financing assets         805     771    
Future income tax benefits         1,620     1,658    
Fixed assets 10,926     10,869    
       Less: Accumulated depreciation

   (6,431)   

  (6,282)   
       4,495        4,587    
Goodwill 7,004     6,981    
Other assets      3,866           3,342    
          Total Assets

$

 29,719    

$

 29,174    

Liabilities and Shareowners' Equity
 
Short-term borrowings

$

 224    

$

 197    
Accounts payable 2,291     2,095    
Accrued liabilities 5,679     5,651    
Long-term debt currently due         48           44    
       Total Current Liabilities     8,242        7,987    
 
Long-term debt 4,632     4,632    
Future pension and postretirement benefit obligations 5,086     5,088    
Other long-term liabilities 2,059     2,095    
Minority interest in subsidiary companies         594     589    
 
Series A ESOP Convertible Preferred Stock 714     718    
ESOP deferred compensation     (288)        (290)   
       426          428    
Shareowners' Equity:

    Common Stock

 5,512     5,447    
    Treasury Stock (5,151)    (4,951)   
    Retained earnings

11,192    

10,836    

    Accumulated other non-shareowners' changes
      in equity
   (2,873)   
   (2,977)   
    8,680        8,355    
          Total Liabilities and Shareowners' Equity

$

 29,719    

$

 29,174    

See accompanying Notes to Condensed Consolidated Financial Statements

3

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
In Millions Quarter Ended March 31,
2003 2002
Operating Activities:
    Net income

$

 502    

$

 467    
      Adjustments to reconcile net income to net
          cash flows provided by operating activities:
          Depreciation and amortization 180     175    
          Deferred income tax provision 104     73    
      Change in:
         Accounts receivable (51)    (171)   
         Inventories and contracts in progress (104)    (153)   
         Accounts payable and accrued liabilities 128     180    
         Other current assets (57)    (49)   
      Contributions to domestic pension plans (500)    -   
      Other, net          50            79    
         Net cash flows provided by operating activities        252          601    
 
Investing Activities:
    Capital expenditures (87)    (156)   
    Investments in businesses (18)    (118)   
    (Increase) decrease in customer financing assets, net (9)    1    
    Other, net          6          5    
      Net cash flows used in investing activities      (108)           (268)   
 
Financing Activities:
    Repayment of long-term debt (2)    (185)   
    Increase (decrease) in short-term borrowings, net          17     (139)   
    Common Stock issued under employee stock plans 43     79    
    Dividends paid on Common Stock (115)    (116)   
    Repurchase of Common Stock (201)    (100)   
    Other, net          (65)            (79)   
      Net cash flows used in financing activities        (323)          (540)   
    

  

   

  
Effect of foreign exchange rate changes on Cash
   and cash equivalents		          26    
        (14)   
              
    Net decrease in Cash and cash equivalents

(153)   

(221)   
Cash and cash equivalents, beginning of year        2,080            1,558    
Cash and cash equivalents, end of period

$

 1,927    

$

 1,337    

See accompanying Notes to Condensed Consolidated Financial Statements

4

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

    The Condensed Consolidated Financial Statements at March 31, 2003 and for the quarters ended March 31, 2003 and 2002 are unaudited, but in the opinion of management include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results reported in these Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the financial statements and notes in the Corporation's Annual Report incorporated by reference in Form 10-K for calendar year 2002. Certain reclassifications have been made to the prior year amounts to conform to the current year presentation.

Employee Benefit Plans

    During the first quarter of 2003, the Corporation made a $500 million cash contribution to its defined benefit domestic pension plans.

    The Corporation has long-term incentive plans authorizing various types of market and performance based incentive awards that may be granted to officers and employees. The Corporation applies APB Opinion 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its long-term incentive plans. The exercise price of stock options, set at the time of the grant, is not less than the fair market value per share at the date of grant. Options have a term of ten years and generally vest after three years.

    The following table illustrates the effect on net income and earnings per share as if the Black-Scholes fair value method described in Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," as amended, had been applied to the Corporation's long-term incentive plans.

    

        Quarter Ended
        March 31,
In Millions,
except per share amounts  		   

2003

   

2002
                
Net income as reported

$

 502    

$

 467    
Add: Stock-based employee compensation expense included in net income, net 
of related tax effects
-    
2    
Less: Total stock-based employee compensation
expense determined under Black-Scholes
option pricing model, net of related tax
effects		 (32)    (32)   
                 
Proforma net income $ 470     $ 437    
                 
Earnings per share:
Basic - as reported $ 1.05     $ .97    
Basic - pro forma $ 1.00     $ .92    
     

  

  

  

   
Diluted - as reported $ 1.00     $       .92    
Diluted - pro forma

$

 .94    

$

     .86    

5

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

Derivative Instruments and Hedging Activities

    The Corporation uses derivative instruments, including swaps, forward contracts and options, to manage certain foreign currency, interest rate and commodity price exposures. Derivative instruments are viewed as risk management tools by the Corporation and are not used for trading or speculative purposes. Derivatives used for hedging purposes must be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accordingly, changes in the fair value of the derivative contract must be highly correlated with changes in the fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract.

    At March 31, 2003 and 2002, the fair value of derivatives held by the Corporation, including those embedded in other contracts, was a net asset of $82 million and a net liability of $44 million, respectively. Of the amount recorded in shareowners' equity, a $29 million pre-tax gain is expected to be reclassified into sales or cost of products sold to reflect the fixed prices obtained from hedging within the next 12 months. Gains and losses recognized in earnings related to discontinuance of cash flow hedges and ineffectiveness of cash flow hedges during the quarter ended March 31, 2003 were immaterial. All open derivative contracts mature by December 2005.

Non-Shareowners' Changes in Equity

    Non-shareowners' changes in equity include all changes in equity during a period except changes resulting from investments by and distributions to shareowners. A summary of the non-shareowners' changes in equity is provided below.

           Quarter Ended March 31, 

In Millions

 2003 2002

Net Income

$

502       

$

467       

Foreign currency translation, net

83       

 (56)       

Unrealized holding loss on
  marketable equity securities, net
(2)      
      (2)       
Cash flow hedging gain, net 23        5        

$

 606        $ 414        

Inventories and Contracts in Progress

          

In Millions

 March 31,
2003		 December 31,
2002
              

Inventories consist of the following:

   Raw material

$

 770      $

740     
   Work-in-process 1,083     

1,026     
   Finished goods 2,456     

2,329     
   Contracts in progress    2,141         2,177     
   6,450     

6,272     
Less:
              

    Progress payments, secured by lien, on
      U.S. Government contracts
(151)    


(123)     
    Billings on contracts in progress    (2,336)    

   (2,346)    

   

$

 3,963      $

3,803     

6

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

Guarantees

    In December 2002, the Corporation adopted Financial Accounting Standards Board Interpretation ("FIN") No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." The Corporation adopted the disclosure requirements of the Interpretation as of December 31, 2002. Effective January 1, 2003, additional provisions of FIN 45 became effective and were adopted by the Corporation. The accounting guidelines are applicable to guarantees issued after December 31, 2002 and require that the Corporation record a liability for the fair value of such guarantees in the balance sheet.

    The Corporation extends a variety of financial, market value and product performance guarantees to third parties. There have been no material changes to guarantees outstanding since December 31, 2002.

    The changes in the carrying amount of service and product warranties and product performance guarantees for the quarter ended March 31, 2003, are as follows:

In Millions

Balance as of January 1, 2003 $

1,116      
Warranties and guarantees issued

110      
Settlements made

(113)     
Adjustments to provision

(6)     
Balance as of March 31, 2003 $

1,107      

Acquisitions, Goodwill and Other Intangible Assets

    During the first quarter of 2003, the Corporation invested $18 million in the acquisition of businesses. The assets and liabilities of the acquired businesses are recorded at fair value at the date of acquisition under the purchase method.

    The increase in goodwill of $23 million during the three months ended March 31, 2003 resulted principally from business combinations completed or finalized in the period.

    Identifiable intangible assets are recorded in "Other assets" in the Condensed Consolidated Balance Sheet and are comprised of:

March 31, 2003 December 31, 2002
In Millions Gross
Amount		 Accumulated
Amortization		 Gross
Amount

Accumulated
Amortization
Amortized intangible assets
Purchased service contracts $ 705     $ (213)     $ 684     $ (199)     
Patents and trademarks 152     (28)     152     (26)     
Other, principally customer
   relationships		 70     (20)     60       
(17)      
$ 927     $ (261)     $ 896     $   (242)      

7

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

    Amortization of intangible assets for the quarters ended March 31, 2003 and 2002 was $14 million and $10 million, respectively. Amortization of these intangible assets for 2003 to 2007 is expected to approximate $50 million per year.

Restructuring

    In January 2003, the Corporation adopted SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 provides guidance on the recognition and measurement of liabilities associated with exit or disposal activities and requires that such liabilities be recognized when incurred. This statement is effective for exit or disposal activities initiated on or after January 1, 2003 and does not impact recognition of costs under the Corporation's existing programs. Adoption of this standard may impact the timing of recognition of costs associated with future exit and disposal activities, depending upon the actions initiated.

    During 2002, the Corporation recorded pre-tax restructuring and related charges totaling $321 million. These charges related to ongoing cost reduction efforts, including workforce reductions and consolidation of manufacturing, sales and service facilities. These programs are expected to result in net workforce reductions of approximately 7,000 salaried and hourly employees, the elimination of approximately 2.0 million square feet of facilities and the disposal of assets associated with exited facilities. As of March 31, 2003, reductions of approximately 1,600 employees and approximately 800 thousand square feet remain under the programs. As of March 31, 2003, approximately $87 million of severance and related costs and $8 million of facility exit and lease termination accruals remain. The programs are expected to be completed in 2003.

    During the second half of 2001, the Corporation recorded pre-tax charges totaling $348 million associated with ongoing cost reduction efforts and to address challenging market conditions in the commercial airline industry. These programs have resulted in net workforce reductions of approximately 8,100 salaried and hourly employees, the elimination of approximately 2.1 million square feet of facilities and the disposal of assets associated with exited facilities. As of March 31, 2003, these actions are substantially complete.

    During the first quarter of 2003, the Corporation recorded charges in connection with its continuing cost reduction efforts, primarily in the Pratt & Whitney segment, that are similar in nature to those noted above. The amounts were not material to the results of any individual segment or the Corporation's consolidated financial condition, results of operations or cash flows.

Contingent Liabilities

    There has been no significant change in the Corporation's material contingencies during 2003. Summarized below, however, are the matters previously described in Notes 1 and 16 of the Notes to the Consolidated Financial Statements in the Corporation's Annual Report, incorporated by reference in Form 10-K for calendar year 2002.

Environmental

    The Corporation's operations are subject to environmental regulation by federal, state and local authorities in the United States and regulatory authorities with jurisdiction over its foreign operations.

    Environmental investigatory, remediation, operating and maintenance costs are accrued when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including existing technology, current laws and regulations and prior remediation experience. Where no amount within a range of estimates is more likely, the minimum is accrued. For sites with multiple responsible parties, the Corporation considers its likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. Liabilities with fixed or reliably determinable future cash payments are discounted. Accrued environmental liabilities are not reduced by potential insurance reimbursements. The Corporation periodically reassesses these accrued amounts. Management believes that the likelihood of incurring losses materially in excess of amounts accrued is remote.

8

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

U.S. Government

    The Corporation is now, and believes that in light of the current government contracting environment it will be, the subject of one or more government investigations. If the Corporation or one of its business units were charged with wrongdoing as a result of any of these investigations, they could be suspended from bidding on or receiving awards of new government contracts pending the completion of legal proceedings. If convicted or found liable, the Corporation could be fined and debarred from new government contracting for a period generally not to exceed three years. Any contracts found to be tainted by fraud could be voided by the government.

    The Corporation's contracts with the U.S. Government are also subject to audits. Like many defense contractors, the Corporation has received audit reports that recommend that certain contract prices should be reduced to comply with various government regulations. Some of these audit reports involve substantial amounts. The Corporation has made voluntary refunds in those cases it believes appropriate. In addition, the Corporation accrues for liabilities associated with those matters that are probable and can be reasonably estimated.

Other

    The Corporation extends performance and operating cost guarantees beyond its normal warranty and service policies for extended periods on some of its products, particularly commercial aircraft engines. Liability under such guarantees is contingent upon future product performance and durability. In addition, the Corporation incurs discretionary costs to service its products in connection with product performance issues. The Corporation has accrued its estimated liability that may result under these guarantees and for service costs which are probable and can be reasonably estimated.

    The Corporation also has other commitments and contingent liabilities related to legal proceedings and matters arising out of the normal course of business.

    The Corporation has accrued for environmental investigatory, remediation, operating and maintenance costs, performance guarantees and other litigation and claims based on management's estimate of the probable outcome of these matters. While it is possible that the outcome of these matters may differ from the recorded liability, management believes that resolution of these matters will not have a material impact on the Corporation's financial condition, results of operations or cash flows.

9

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

Earnings Per Share

Quarter Ended March 31,
In Millions (except per share amounts)

2003

2002
Net income

$

 502   

$

 467   
Less: ESOP Stock dividends     (8)       (8)  
Basic earnings 494    459   
ESOP Stock adjustment      7         7   
Diluted earnings

$

 501   

$

 466   
Average shares:
    Basic 470    473   
    Stock awards 5    8   
    ESOP Stock      26         26   
    Diluted 501    507   
Earnings per share of Common Stock:
    Basic

$

 1.05   

$

 .97   
    Diluted

$

 1.00   

$

 .92   

Segment Financial Data

    The Corporation's operations are classified into four principal segments: Otis, Carrier, Pratt & Whitney and Flight Systems. Those segments were generally determined based on the management structure of the businesses and the groupings of similar operating companies, where each management organization has general operating autonomy over diversified products and services.

    Segment financial data include the results of all majority-owned businesses, consistent with the management reporting of these businesses. For certain of these subsidiaries, minority shareholders have rights, which under the provisions of Emerging Issues Task Force ("EITF") 96-16, overcome the presumption of control. In the Corporation's consolidated results, these subsidiaries are accounted for using the equity method of accounting. The substantive participating rights granted by contract to minority shareholders that overcome the presumption of control include minority participation in the appointment, dismissal and compensation of senior management, approval of organizational structure changes, policies, annual operating and capital plans, including approval of merger and acquisition investment activities, and annual dividend plans. These and other participating rights that allow the minority shareholder to participate in decisions that occur as part of the ordinary course of business are represented through the minority shareholder's ability to block actions proposed by the majority interest. Adjustments to reconcile segment reporting to consolidated results are included in "Eliminations and other," which also includes certain small subsidiaries.

10

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

Recent Accounting Guidance

    In January 2003, FIN No. 46, "Consolidation of Variable Interest Entities" was issued. The interpretation provides guidance on consolidating variable interest entities and applies immediately to variable interests created after January 31, 2003. The guidelines of the interpretation will become applicable for the Corporation in its third quarter 2003 financial statements for variable interest entities created before February 1, 2003. The interpretation requires variable interest entities to be consolidated if the equity investment at risk is not sufficient to permit an entity to finance its activities without support from other parties or the equity investors lack certain specified characteristics.

    The adoption of FIN 46 for variable interests created after January 31, 2003 did not have a material impact on the Corporation's consolidated financial condition, results of operations or cash flows. The Corporation is continuing to review the provisions of FIN 46 to determine its impact, if any, on future reporting periods with respect to interests in variable interest entities created prior to February 1, 2003, and does not currently anticipate any material accounting or disclosure requirement under the provisions of the interpretation.

11

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

    With respect to the unaudited condensed consolidated financial information of United Technologies Corporation for the quarters ended March 31, 2003 and 2002, PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their report dated April 17, 2003, appearing below, states that they did not audit and they do not express an opinion on that unaudited condensed consolidated financial information. PricewaterhouseCoopers has not carried out any significant or additional audit tests beyond those which would have been necessary if their report had not been included. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers is not subject to the liability provisions of Section 11 of the Securities Act of 1933 ("the Act") for their report on the unaudited condensed consolidated financial information because that report is not a "report" or a "part" of a registration statement prepared or certified by PricewaterhouseCoopers within the meaning of Sections 7 and 11 of the Act.

REPORT OF INDEPENDENT AUDITORS

To the Shareowners of
  United Technologies Corporation

    We have reviewed the accompanying condensed consolidated statement of operations of United Technologies Corporation and its consolidated subsidiaries for the three-months ended March 31, 2003 and 2002, the condensed consolidated statement of cash flows for the three-months ended March 31, 2003 and 2002, and the condensed consolidated balance sheet as of March 31, 2003. This interim financial information is the responsibility of the Corporation's management.

    We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

    Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

    We previously audited in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2002, and the related consolidated statements of operations, of changes in shareowners' equity and of cash flows for the year then ended (not presented herein), and in our report dated January 16, 2003, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2002, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Hartford, Connecticut
April 17, 2003

12

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

BUSINESS ENVIRONMENT

    The Corporation's operations are classified into four principal segments: Otis, Carrier, Pratt & Whitney and Flight Systems. Otis and Carrier serve customers in the commercial and residential property industries. Carrier also serves commercial and transport refrigeration customers. Pratt & Whitney and the Flight Systems segment, which includes Hamilton Sundstrand and Sikorsky Aircraft ("Sikorsky"), primarily serve commercial and government customers in the aerospace industry.

    For discussion of the Corporation's business environment, refer to the discussion of "Business Environment" in the Management's Discussion and Analysis of Financial Condition and Results of Operations in the Corporation's Annual Report incorporated by reference in Form 10-K for calendar year 2002. The current status of significant factors impacting the Corporation's business environment in 2003 is discussed below.

    As worldwide businesses, the Corporation's operations are affected by global and regional industry, economic and political factors. The Corporation's geographic and industry diversity, as well as the diversity of its product sales and service, has helped limit the impact of any one industry or the economy of any single country on the consolidated results. Current economic conditions in the commercial airline industry, global refrigeration industries and commercial HVAC and construction markets had a negative impact on the Corporation's consolidated results and are expected to continue to present challenges to its businesses. In addition, the defense portion of the Corporation's aerospace businesses is affected by changes in market demand and the global political environment. The Corporation's participation in long-term production and development programs for the U.S. government has contributed positively to the Corporation's results in the first three months of 2003 and is expected to continue for the remainder of 2003. During the first three months of 2003, foreign currencies contributed positively to the Corporation's consolidated results, primarily driven by the strength of the euro in relation to the U.S. dollar.

    The Corporation's growth strategy contemplates acquisitions. The rate and extent to which appropriate acquisition opportunities are available and to which acquired businesses are effectively integrated and anticipated synergies or cost savings are achieved can affect the Corporation's operations and results.

    Traffic growth, load factors, worldwide profits, influenced in part by fuel prices and labor issues, and general economic activity have historically been reliable indicators for new aircraft and aftermarket orders in the aerospace industry. Spare part sales and aftermarket service trends are impacted by factors including usage, pricing, regulatory changes and retirement of older aircraft. Performance in the general aviation sector is closely tied to the overall health of the economy and is positively correlated to corporate profits. Current conditions in the airline industry include reduced flight schedules, an increased number of idle aircraft, workforce reductions and declining financial performance, including recent airline bankruptcies. Airlines and aircraft manufacturers continue to reduce supplier bases and seek lower cost packages. These conditions have resulted in decreased aerospace volume and orders in the Corporation's commercial aerospace businesses in the first quarter of 2003 and are expected to continue for the remainder of 2003. In addition, ongoing U.S. military action in Iraq has created additional uncertainty in the airline industry.

    The Corporation's products and services are regulated by strict safety and performance standards, particularly in the commercial engine business. These standards can create uncertainty regarding the profitability of commercial engine programs.

13

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

    The impact of war in Iraq, significant airline financial stress and slowed global economic growth, including the potential impact of Severe Acute Respiratory Syndrome ("SARS"), create uncertainties that could impact the Corporation's earnings outlook for the remainder of 2003.

CRITICAL ACCOUNTING ESTIMATES

    Preparation of the Corporation's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Management believes the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management's Discussion and Analysis and Note 1 to the Consolidated Financial Statements in the Corporation's Annual Report, incorporated by reference in Form 10-K for the calendar year 2002, describe the significant accounting estimates and policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ from management's estimates. There have been no significant changes in the Corporation's critical accounting estimates during the first quarter of 2003.

RESULTS OF CONTINUING OPERATIONS

    Consolidated revenues increased $328 million (5%) to $6.7 billion in the first quarter of 2003 compared to the same period in 2002. Foreign currency translation increased consolidated revenues 4% in the first quarter. The first quarter increase reflects growth at Otis, increased helicopter and aftermarket revenues at Sikorsky and increased military revenue at Pratt & Whitney. These increases were partially offset by declines in commercial spare parts volume in the aerospace businesses.

    Gross margin as a percentage of sales decreased 2.2 percentage points in the first quarter of 2003 compared to 2002. The first quarter decrease reflects lower commercial aerospace volume and the favorable impact of the first quarter 2002 commercial engine contract changes at Pratt & Whitney, partially offset by margin improvement at Otis. Gross margin in the first quarter of 2002 also reflects the benefit of an approximate $100 million settlement of environmental claims and $85 million of restructuring charges.

    Research and development spending decreased $103 million (30%) in the first quarter of 2003 compared to the same period of 2002. The first quarter decrease is primarily associated with finalization of a technology funding agreement at Pratt & Whitney Canada, costs associated with the PW6000 program recorded in the first quarter of 2002, and lower spending on Sikorsky's S-92 program which received Federal Aviation Administration type certification during the fourth quarter of 2002. As a percentage of sales, research and development was 3.5% in the first quarter of 2003, as compared to 5.3% in the same period of 2002. Research and development spending is subject to the variable nature of program development schedules and is currently expected to approximate 4% of sales in 2003.

    In addition to company funded programs, customer funded research and development was $349 million and $237 million for the quarters ended March 31, 2003 and 2002, respectively. The 2003 increase of $112 million is primarily attributable to Pratt & Whitney's military business.

    Selling, general and administrative expenses increased $10 million (1%) in the first quarter of 2003 compared to the same period of 2002. The first quarter increase reflects the impact of foreign currency translation at Otis and Sikorsky's 2002 acquisition of Derco, partially offset by the absence of $15 million of restructuring charges recorded in the first quarter of 2002. As a percentage of sales, these expenses were 11.5% and 11.9% in the first quarter of 2003 and 2002, respectively.

14

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

    Interest expense decreased $8 million (8%) in the first quarter of 2003 compared to 2002. The decrease is due primarily to lower short-term foreign borrowings in 2003, partially offset by interest associated with the issuance of $500 million of 6.10% Notes in April 2002.

    The effective income tax rate for the first quarter of 2003 was 28.0% as compared to 28.4% for the same period of 2002, reflecting the continued implementation of tax planning strategies.

    Net income and diluted earnings per share increased $35 million (7%) and $.08 (9%) for the first quarter of 2003 when compared with the same period in 2002. The favorable impact of foreign currency translation contributed five cents in diluted earnings per share during the first quarter of 2003.

Restructuring

    In January 2003, the Corporation adopted Statement of Financial Accounting Standards ("SFAS") No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 provides guidance on the recognition and measurement of liabilities associated with exit or disposal activities and requires that such liabilities be recognized when incurred. This statement is effective for exit or disposal activities initiated on or after January 1, 2003 and does not impact recognition of costs under the Corporation's existing programs.

    During 2002, the Corporation recorded pre-tax restructuring and related charges totaling $321 million. These charges related to on-going cost reduction efforts, including workforce reductions and consolidation of manufacturing, sales and service facilities. These programs are expected to result in net workforce reductions of approximately 7,000 salaried and hourly employees, the elimination of approximately 2.0 million square feet of facilities and the disposal of assets associated with exited facilities. During 2003, the Corporation has incurred pre-tax cash outflows related to the 2002 programs of approximately $61 million which were funded from cash generated from operations. Savings are expected to increase over a two-year period resulting in recurring pre-tax savings of approximately $285 million annually. As of March 31, 2003, reductions of approximately 1,600 employees and approximately 800 thousand square feet remain under the programs. As of March 31, 2003, approximately $87 million of severance and related costs and $8 million of facility exit and lease termination accruals remain. The programs are expected to be completed in 2003.

    During the second half of 2001, the Corporation recorded pre-tax charges totaling $348 million associated with ongoing cost reduction efforts and to address challenging market conditions in the commercial airline industry. These programs have resulted in net workforce reductions of approximately 8,100 salaried and hourly employees, the elimination of approximately 2.1 million square feet of facilities and the disposal of assets associated with exited facilities. During 2003, the Corporation has incurred pre-tax cash outflows related to the 2001 programs of approximately $13 million which were funded from cash generated from operations. Savings are expected to increase over a two-year period resulting in recurring pre-tax savings of approximately $300 million annually. As of March 31, 2003, these actions are substantially complete.

    During the first quarter of 2003, the Corporation recorded charges in connection with its continuing cost reduction efforts, primarily in the Pratt & Whitney segment, that are similar in nature to those noted above. The amounts were not material to the results of any individual segment or the Corporation's consolidated financial condition, results of operations or cash flows.

    The Corporation may initiate additional restructuring actions in 2003 in its ongoing efforts to reduce costs. No significant actions have been approved at this time.

15

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

Segment Review

    Revenues, operating profits and operating profit margins of the Corporation's principal segments include the results of all majority-owned subsidiaries, consistent with the management reporting of these businesses. As discussed in the Notes to the Condensed Consolidated Financial Statements for certain of these subsidiaries, minority shareholders have rights which overcome the presumption of control. In the consolidated results, these subsidiaries are accounted for using the equity method of accounting. Adjustments to reconcile segment reporting to consolidated results are included in "Eliminations and other," which also includes certain small subsidiaries. Results for the quarters ended March 31, 2003 and 2002 are as follows:


In Millions of Dollars		        Revenues  Operating
Profits		       Operating
     Profit Margin
Quarter Ended March 31, 2003 2002 2003

2002 2003 2002
  
  Otis $ 1,820   $ 1,536   $ 314   $ 234   17.3%     15.2%    
  Carrier 1,957   1,896   151   61   7.7%     3.2%    
  Pratt & Whitney 1,731   1,840   276   318   15.9%     17.3%    
  Flight Systems 1,317   1,209   187   158   14.2%     13.1%    
  Total segment 6,825   6,481   928   771   13.6%     11.9%    
  Eliminations and other (123)  (107)  (37)  83  

  General corporate expenses

-  

-  

(54)  (57) 
  Consolidated $ 6,702   $ 6,374   837  797 
  Interest expense (91)  (99) 
  Income before income taxes
    and minority interests
$
746 
$
698 

First quarter 2002 restructuring and related charges included in segment operating profit are as follows:
Otis - $16, Carrier - $74, Pratt & Whitney - $9, and Flight Systems - $5.

The Corporation recorded restructuring charges in the first quarter of 2003, primarily in the Pratt & Whitney segment, similar in nature to those noted above. The amounts were not material.

    Otis revenues increased $284 million (18%) in the first quarter of 2003 compared to the same period of 2002. Foreign currency translation increased revenues by approximately 10% during the first quarter of 2003 due primarily to the strengthening of the euro in relation to the U.S. dollar. The first quarter increase reflects growth in all regions and includes approximately six percentage points of organic growth.

    Otis operating profits increased $80 million (34%) in the first quarter of 2003 compared to the same period of 2002. Foreign currency translation increased operating profits by approximately 14% in the first quarter of 2003. The 2003 increase also reflects profit improvement in all regions and the absence of first quarter 2002 restructuring charges of $16 million.

    Carrier revenues increased $61 million (3%) in the first quarter of 2003 compared to the same period of 2002. Foreign currency translation increased revenues approximately 3% during the first quarter due primarily to the strength of the euro in relation to the U.S. dollar. The first quarter reflects higher volume in North American residential HVAC and the transport refrigeration business, largely offset by continued commercial HVAC weakness in the United States and also in Europe.

16

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

    Carrier's operating profits increased $90 million (148%) in the first quarter of 2003 compared to the same period of 2002, reflecting $74 million of restructuring costs recorded in the first quarter of 2002. Foreign currency translation increased operating profits by approximately 10% in the first quarter of 2003. The first quarter operating profit increase also reflects continued benefits from cost reduction actions and higher volume in North American residential HVAC and the transport refrigeration business, partially offset by continued weakness in commercial HVAC.

    Pratt & Whitney revenues decreased $109 million (6%) in the first quarter of 2003 compared to the same period of 2002. The first quarter decrease was due primarily to declines in commercial spare parts and lower volume at Pratt & Whitney Power Systems and Pratt & Whitney Canada, partially offset by increases in military revenue.

    Pratt & Whitney operating profits decreased $42 million (13%) in the first quarter of 2003 compared to the same period of 2002, reflecting declines in commercial spare parts and the favorable impact of commercial engine contract changes recorded in 2002. These decreases were partially offset by the profit impact of increased military revenues and lower research and development costs reflecting finalization of a technology funding agreement at Pratt & Whitney Canada and the absence of PW6000 program costs recorded in the first quarter of 2002.

    Flight Systems revenues increased $108 million (9%) in the first quarter of 2003 compared to the same period of 2002. The first quarter increase was due to increased aftermarket revenues, due in part to the acquisition of Derco in 2002, and higher helicopter sales at Sikorsky. These increases were partially offset by lower commercial aerospace volume and aftermarket sales at Hamilton Sundstrand.

    Flight Systems operating profits increased $29 million (18%) in the first quarter of 2003 compared to the same period of 2002. This increase was due primarily to higher aftermarket volume, improved aircraft program performance and lower S-92 spending at Sikorsky, partially offset by lower commercial aerospace volume at Hamilton Sundstrand.

LIQUIDITY AND FINANCIAL CONDITION

    Management assesses the Corporation's liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. Significant factors affecting the management of liquidity are cash flows generated from operating activities, capital expenditures, customer financing requirements, investments in businesses, dividends, Common Stock repurchases, adequacy of available bank lines of credit and the ability to attract long-term capital with satisfactory terms.


In Millions of Dollars		 March 31,
2003		 December 31,
2002		 March 31,
2002
                      
Cash and cash equivalents

$

 1,927      

$

 2,080      

$

 1,337      
Total debt 4,904       4,873       4,617      
Net debt (total debt less cash)    2,977          2,793          3,280      
Shareowners' equity    8,680          8,355          8,646      
Total capitalization (debt plus equity) 13,584       13,228       13,263      
Debt to total capitalization    36%          37%          35%      
Net debt to total capitalization    26%          25%          28%      

    Net cash flows provided by operating activities decreased $349 million in the first three months of 2003 compared to the corresponding period in 2002, due primarily to a $500 million cash contribution to the Corporation's domestic defined benefit pension plans, partially offset by improved working capital performance.

17

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

    Cash used in investing activities decreased $160 million in the first three months of 2003 compared with the same period of 2002, primarily due to lower capital expenditures and investments in businesses. The decrease in capital expenditures is due to a rationalization and timing of capital projects. Capital expenditures for the year 2003 are expected to approximate anticipated depreciation levels. Cash spending for investments in businesses for the first three months of 2003 was $18 million. While the Corporation has targeted acquisition activity for the full year 2003 in the $1.5 billion range, actual acquisition spending may vary depending upon the availability of appropriate acquisition opportunities. 

    Customer financing activity was a net use of cash of $9 million in the first three months of 2003 compared with a $1 million source of cash in the first three months of 2002, reflecting higher customer generated financing requirements. While the Corporation expects that 2003 customer financing activity will be a net use of funds, actual funding is subject to usage under existing customer financing commitments during the remainder of the year. The Corporation had financing and rental commitments of $1.6 billion related to commercial aircraft at March 31, 2003 and December 31, 2002. The Corporation may also arrange for third-party investors to assume a portion of its commitments. 

    Net cash flows used in financing activities decreased $217 million in the first three months of 2003 compared with the same period of 2002, due primarily to lower debt and short-term borrowing repayments as well as less Common Stock issued on fewer option exercises, partially offset by higher Common Stock repurchase activity. Under a shelf registration statement previously filed with the Commission, the Corporation can issue approximately $1.1 billion of additional debt and equity securities. 

    The Corporation repurchased $201 million of Common Stock, representing 3.4 million shares, in the first three months of 2003 under previously announced share repurchase programs. In October 2002, the Corporation announced that the Board of Directors authorized the repurchase of up to 30 million shares. The new authorization replaces the previous share repurchase authority. The Corporation has targeted total share repurchases in 2003 of approximately $700 million, however, total repurchases may vary depending upon the level of other investing activities. The share repurchase programs continue to be a use of the Corporation's cash flows and have more than offset the dilutive effect resulting from the issuance of stock and options under stock-based employee benefit programs.

    The funded status of the Corporation's pension plans is dependent upon many factors, including returns on invested assets and the level of market interest rates. The Corporation can contribute cash to these plans at its discretion and made an additional $500 million cash contribution to its domestic pension plans in January 2003. 

    The Corporation manages its worldwide cash requirements considering available funds among the many subsidiaries through which it conducts its business and the cost effectiveness with which those funds can be accessed. The repatriation of cash balances from certain of the Corporation's subsidiaries could have adverse tax consequences; however, those balances are generally available without legal restrictions to fund ordinary business operations. The Corporation has and will continue to transfer cash from those subsidiaries to the parent and to other international subsidiaries when it is cost effective to do so.

    Management believes that its existing cash position and other available sources of liquidity are sufficient to meet current and anticipated requirements for the foreseeable future. Although variations in acquisition spending could cause changes in debt to capital levels, management anticipates that the year-end 2003 debt-to-capital level will approximate prior year levels.

18

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

Recent Accounting Guidance

    In January 2003, Financial Accounting Standards Board Interpretation ("FIN") No. 46, "Consolidation of Variable Interest Entities" was issued. The interpretation provides guidance on consolidating variable interest entities and applies immediately to variable interests created after January 31, 2003. The guidelines of the interpretation will become applicable for the Corporation in its third quarter 2003 financial statements for variable interest entities created before February 1, 2003. The interpretation requires variable interest entities to be consolidated if the equity investment at risk is not sufficient to permit an entity to finance its activities without support from other parties or the equity investors lack certain specified characteristics.

    The adoption of FIN 46 for variable interests created after January 31, 2003 did not have a material impact on the Corporation's consolidated financial condition, results of operations or cash flows. The Corporation is continuing to review the provisions of FIN 46 to determine its impact, if any, on future reporting periods with respect to interests in variable interest entities created prior to February 1, 2003, and does not currently anticipate any material accounting or disclosure requirement under the provisions of the interpretation.

19

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

    Item 3. Quantitative and Qualitative Disclosures about Market Risk

    There has been no significant change in the Corporation's exposure to market risk during the first three months of 2003. For discussion of the Corporation's exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, contained in the Corporation's Annual Report incorporated by reference in Form 10-K for the calendar year 2002.

    Item 4. Controls and Procedures

    During the 90-day period prior to the filing date of this report, management, including the Corporation's Chief Executive Officer and Vice Chairman and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Corporation's disclosure controls and procedures. Based upon, and as of the date of that evaluation, the Chief Executive Officer and Vice Chairman and Chief Financial Officer concluded that the disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports the Corporation files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.

    There have been no significant changes in the Corporation's internal controls or in other factors which could significantly affect internal controls subsequent to the date the Corporation carried out its evaluation. There were no significant deficiencies or material weaknesses identified in the evaluation and, therefore, no corrective actions were taken.

20

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

    This report on Form 10-Q contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These forward-looking statements are intended to provide management's current expectations or plans for the future operating and financial performance of the Corporation, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate" and other words of similar meaning in connection with a discussion of future operating or financial performance. These include, among others, statements relating to:

  • Future earnings and other measurements of financial performance

  • Future cash flow and uses of cash

  • The effect of economic downturns or growth in particular regions

  • The effect of changes in the level of activity in particular industries or markets

  • The scope, nature or impact of acquisition activity and integration into the Corporation's businesses

  • Product developments and new business opportunities

  • Restructuring costs and savings

  • The outcome of contingencies

  • Future repurchases of Common Stock

  • Future levels of indebtedness and capital spending

  • Pension plan assumptions and future contributions.

    All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. This Quarterly Report on Form 10-Q includes important information as to risk factors in the "Notes to Condensed Consolidated Financial Statements" under the heading "Contingent Liabilities" and in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the headings "Business Environment," "Results of Continuing Operations," "Liquidity and Financial Condition" and "Critical Accounting Estimates." The Corporation's Annual Report on Form 10-K for 2002 also includes important information as to risk factors in the "Business" section under the headings "General," "Description of Business by Segment" and "Other Matters Relating to the Corporation's Business as a Whole" and in the "Legal Proceedings" section. Additional important information as to risk factors is included in the Corporation's 2002 Annual Report to Shareowners in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the headings "Business Environment," "Critical Accounting Estimates," "Environmental Matters" and "Restructuring and Other Costs." For additional information identifying factors that may cause actual results to vary materially from those stated in the forward-looking statements, see the Corporation's reports on Forms 10-Q and 8-K filed with the Securities and Exchange Commission from time to time.

21

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES 

Part II - Other Information

Item 1. Legal Proceedings

    As previously reported, the U.S. Department of Defense (DoD) and the Corporation are litigating whether Pratt & Whitney's accounting practices for certain engine parts are acceptable. The litigation, filed in 1994 with the Armed Services Board of Contract Appeals ("ASBCA"), No. 47416 et al., relates to the accounting for engine parts produced by foreign companies under commercial engine collaboration programs from 1984 through 1995. On January 15, 2003, the Court reversed the ASBCA and remanded the case to the ASBCA for further proceedings. The Corporation sought reconsideration of this decision by the Court in late February 2003. No decision has been issued.

    As previously reported, the Corporation had pending against it one qui tam complaint under the civil False Claims Act in United States District Court for the District of Connecticut: U.S. ex rel. Drake v. Norden Systems, Inc. and UTC, No. 394CV00963 (filed July 1997, and involving allegations of improper accounting for fixed assets). In February 2003, the case was dismissed. The relator has moved for reconsideration.

    As previously reported, in March 1999, the U.S. Department of Justice filed a civil False Claims Act complaint against the Corporation in United States District Court for the Southern District of Ohio (Western Division), No. C-3-99-093. This lawsuit relates to the "Fighter Engine Competition" between Pratt & Whitney's F100 engine and GE's F110 engine, for contracts awarded by the U.S. Air Force between fiscal years 1985 and 1990, inclusive. The Government alleges that Pratt & Whitney inflated its estimated costs for purchased parts and withheld data that would have revealed the overstatements. In mid-2002, the Court denied motions filed by Pratt & Whitney that could have resulted in dismissal of all or part of the Government's claims. The Corporation requested that the Court reconsider this denial. This request was denied in March 2003. Trial of this matter is anticipated in the first quarter of 2004.

    Except as noted above, there have been no material developments in legal proceedings. For a description of previously reported legal proceedings, refer to Part I, Item 3, Legal Proceedings of the Corporation's Annual Report on Form 10-K for 2002.

    The Corporation does not believe that the resolution of the foregoing legal matters will have a material adverse effect upon the Corporation's competitive position, results of operations, cash flow or financial condition.

22

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES 

 Item 6.    Exhibits and Reports on Form 8-K

    (a)  Exhibits

(12) Statement re: computation of ratio of earnings to fixed charges. *
(15) Letter re: unaudited interim financial information. *

(99)

Additional Exhibit. *

    (b)  Reports on Form 8-K

On March 5, 2003, the Corporation filed a Report on Form 8-K incorporating, under Item 5, a March 5, 2003 press release announcing that Gregory J. Hayes had been named Vice President and Controller of the Corporation and that David G. Nord had been named Vice President of Finance and Chief Financial Officer of the Corporation's Hamilton Sundstrand subsidiary.

* Submitted electronically herewith.

23

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

UNITED TECHNOLOGIES CORPORATION
     
Dated:  April 23, 2003 By: /s/ Stephen F. Page
Stephen F. Page
Vice Chairman and Chief Financial Officer
     
Dated:  April 23, 2003 By: /s/ William H. Trachsel
William H. Trachsel
Senior Vice President, General Counsel and Secretary
     
Dated:  April 23, 2003 By: /s/ David G. Nord
David G. Nord
Vice President, Controller *
* Mr. Nord continued to perform his duties as outgoing Vice President, Controller
with respect to preparation and filing of this Form 10-Q, notwithstanding his
appointment as Vice President of Finance and Chief Financial Officer
of the Corporation's Hamilton Sundstrand subsidiary on April 1, 2003.

24

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

CERTIFICATIONS

I, George David, certify that:

  1. I have reviewed this quarterly report on Form 10-Q of United Technologies Corporation;

  1. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or  omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

  1. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

  1. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

  1. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

  1. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

  1. presented in this quarterly report our conclusions about the effectives of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

  1. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

  1. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

  1. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

  1. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

    2.  

    /s/ George David
    Date: April 23,  2003 George David
    Chairman and Chief Executive Officer

25

UNITED TECHNOLOGIES CORPORATION
AND SUBSIDIARIES

CERTIFICATIONS

I, Stephen F. Page, certify that:

  1. I have reviewed this quarterly report on Form 10-Q of United Technologies Corporation;

  1. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or  omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

  1. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

  1. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

  1. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

  1. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

  1. presented in this quarterly report our conclusions about the effectives of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

  1. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

  1. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

  1. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

  1. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

    2.  

    /s/ Stephen F. Page
    Date: April 23,  2003 Stephen F. Page
    Vice Chairman and Chief Financial Officer

26

EXHIBIT INDEX

 
(12)           Statement re: computation of ratio of earnings to fixed charges. *
(15)           Letter re: unaudited interim financial information. *
 
(99)           Additional Exhibit.*

* Submitted electronically herewith.

27
ex12q103

                                                                                                                                                       Exhibit 12

UNITED TECHNOLOGIES CORPORATION
            AND SUBSIDIARIES

STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES


Quarter Ended
March 31,
In Millions of Dollars

2003

2002
                 
Fixed Charges:
Interest expense $   91      $   99     
Interest capitalized 3      4     
One-third of rents* 20      16     
                 
Total Fixed Charges $   114      $   119     
                 
Earnings:
Income before income taxes and minority interests $   746      $   698     
                 
Fixed charges per above 114      119     
Less: interest capitalized (3)     (4)    
111      115     
                
Amortization of interest capitalized 1      1     
                 
Total Earnings $   858        814     
                 
Ratio of Earnings to Fixed Charges 7.53      6.84     

* Reasonable approximation of the interest factor.

Ex 15 Q1 03

Exhibit 15

April 23, 2003

 

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Commissioners:

We are aware that our report dated April 17, 2003 on our review of interim financial information of United Technologies Corporation (the "Corporation") as of and for the period ended March 31, 2003 and included in the Corporation's quarterly report on Form 10-Q for the quarter then ended is incorporated by reference in its Registration Statements on Form S-3 (Nos. 333-51830 and 333-60276), in the Registration Statement on Form S-4 (No. 333-77991) as amended by Post-Effective Amendment No. 1 on Form S-8 (No. 333-77991-01) and in the Registration Statements on Form S-8 (Nos. 333-21853, 333-18743, 333-21851, 33-57769, 33-45440, 33-11255, 33-26580, 33-26627, 33-28974, 33-51385, 33-58937, 2-87322, 333-77817, and 333-82911).

Yours very truly,

 

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Hartford, Connecticut

Certification

Exhibit 99

Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

 

    Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of United Technologies Corporation, a Delaware corporation (the "Company"), does hereby certify that:

    The Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 (the "Form 10-Q") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: April 23, 2003 /s/ George David
George David
Chairman and Chief Executive Officer
     
Date: April 23, 2003 /s/ Stephen F. Page
Stephen F. Page
Vice Chairman and Chief Financial Officer

    A signed original of this certification has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is accompanying the Form 10-Q solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.