Fitch Affirms United Technologies Ratings at 'A+'; Outlook Stable

Business Wire, May 3, 2007

CHICAGO -- Fitch Ratings has affirmed ratings for United Technologies Corporation (UTC) as follows:

--Issuer Default Rating (IDR) at 'A+'

--Senior unsecured debt at 'A+'

--Senior unsecured bank credit facilities at 'A+'

--Commercial paper at 'F1'.

Approximately $8.3 billion of debt was outstanding as of March 31, 2007. The Rating Outlook is Stable.

The ratings consider UTC's steady operating performance, product and geographic diversification across its portfolio of industrial and aerospace businesses, leading market positions, and financial flexibility that is supported by the company's substantial discretionary cash flow and conservative debt structure. In addition, UTC's high proportion of aftermarket product and service revenues serves to mitigate cyclicality in certain markets. Demand trends remain favorable in most of UTC's global markets and in the company's key aerospace and defense end-markets. Exceptions include weaker residential sales at Carrier related to the downturn in U.S. homebuilding and the impact of a strike at Sikorsky early in 2006 from which Sikorsky expects to fully recover during 2007.

UTC's spending for acquisitions and share repurchases represents the primary rating concern. Leverage has recently declined toward historical levels after increasing modestly in 2005 following $4.6 billion of acquisitions. UTC's recent pace of acquisitions has been slower, and earnings and cash flow have benefited from continued strong performance in most of its businesses as well as from previous acquisitions. As a result, UTC had sufficient financial capacity in 2006 to fund a large amount of share repurchases while controlling its leverage. Other rating concerns include the mixed quality of Pratt & Whitney's commercial aircraft engine portfolio, integration risks related to acquisitions, and litigation risk. During the past 12 months, UTC has paid nearly $600 million in fines related to complaints of price-fixing by Otis Elevator in Europe, and the settlement of a long-running claim against Pratt & Whitney by the U.S. Dept. of Defense over cost accounting issues. Fitch considers such risks to be manageable by UTC given its substantial cash flow although they could impinge on its financial flexibility with respect to normal discretionary spending.

UTC's liquidity at March 31, 2007 included $2.5 billion of cash and $2.5 billion of committed bank facilities, offset by $1.2 billion of short-term borrowings. Scheduled maturities of long-term debt are minimal until 2009. UTC's total adjusted debt-to-EBITDAR ratio was 1.6 times (x) for the 12 months ended March 31, 2007, similar to the end of 2006 and a slight improvement from 1.8x at the end of 2005, and was within UTC's normal historical range.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure.