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"We have some reasons to feel good about ourselves, none more than the volunteerism and generosity represented in this room."



April 6, 2005

Remarks of George David, Chairman & Chief Executive Officer.

UTC Volunteer Lunch - Corporate Responsibility, Hartford, Conn.

Since we're being Webcast today, I'll begin by saying we're at the Artists Collective in Hartford's North End. The Collective is just one of many community projects with a long past and future in Hartford. Founded in 1970, it exposes students and the community to art and artists often overlooked. UTC has funded the Collective for a decade now and began by supporting their campaign for the building we are in today. Nice news is that the Collective is one of five grants we'll be making in a few minutes.

Today is when we honor UTC's volunteers, and what a day it is. May I be personal for a moment and note that this is the fourteenth such annual event, and I'm proud and happy to have spoken at every single one.

But today is also special occasion because it marks publication of UTC's first annual Corporate Responsibility Report. In a sentence, this is a companion document to the corporation's Annual Report which focuses on our business and financial results and outlook. We have always noted corporate responsibility in our Annual Report but in this and future years we're elevating our commitments and progress to the same stature in their own report.

Corporate responsibility to us means broadening our commitments beyond financial performance and working to meet the needs of all constituents. Although there are many initiatives and responsibilities under this broad umbrella, the larger categories are volunteerism and community participation, employee health and safety, the environment, employee education, and compliance with high standards of law, ethics and corporate governance.

Today's celebration will include presentation of awards to two great UTC volunteers and the five grants I mentioned earlier. But these grow out of and reflect much, much wider efforts. Although we volunteer everywhere, our largest presence is in Connecticut and today we honor the 75,000 volunteer hours devoted by 3,800 of our Connecticut employees. Some of our events and causes are well known and identified with UTC like Symphony On Ice, Special Olympics, the Greater Hartford Marathon, and FIRST Robotics, but there are lots of others, and we encourage employees always to bring new ones forward. Our rule is we're glad to provide funding as UTC to community causes but we won't do it without UTC employee participation and commitment.

A cause I've decided to get involved in personally is STRIVE, a program under SAND, and here in the North End. I have joined their Advisory Board and contribute personally. A nice aspect of doing so is the assurance and funding UTC provides. STRIVE works to get disadvantaged individuals, including felons, into the workplace. I have done what we always do, which is visit and get to know the students and program, and, in a word, I'm impressed. It's a great group with a solid record of accomplishments in the toughest area. And it fits our mold of personal involvement coupled with UTC support and all of you here today have done exactly the same.

We're a substantial funder of lots of charitable organizations, internationally and locally. Of the $17 million of UTC support worldwide, $7 million remains here in Connecticut. And the $7 million goes to 82 organizations, only five of which are up for renewal and award today.

Our largest and most visible community participation is through United Way/Combined Health Appeal. Our combined UTC and employee giving in last fall's campaign came to $7.5 million. Over a dozen years, this giving totals an amazing $65 million. Perhaps most telling, UTC's and our employees' share of total Hartford area United Way/CHA giving has jumped from 15 percent in the early 1990s to 28 percent today. There can't be a stronger statement of what we think about our obligations to the people in this community.

A second key element in corporate responsibility is commitments to environment, health and safety. We have a great record which you will see reflected in the report. I'll spare us the numbers now other than to say that most show tenfold improvements since the early 1990s. Since we have a longtime and good friend here today, Leslie Carothers, I'd like to recognize her for an exceptional part in these accomplishments. Leslie joined UTC in July 1991 as our first vice president for EH&S and organized and led the efforts that got us where we are today. Thank you, Leslie.

Beyond these tenfold improvements in our internal EH&S metrics like lost time incidence, hazardous waste generation, chemical releases to air, and energy and water consumption, we are committed to the performance of our products in service. Because almost everything we build has lives measured in decades, the consequences of good and bad performance are around for a long time. Which is why our equipment accounts for as much as 2 percent of all greenhouse gas emissions worldwide each year. But also why commercial aircraft are three times more fuel efficient than 40 years ago. Also why air conditioners are 42 percent more energy efficient than 40 years ago. Also why Carrier led its industry a year ago in adopting the new federal energy standard (SEER 13) to add another 33 percent efficiency gain on top of what's already been achieved. Also why Otis' new Gen2 product line in its regenerative configuration is 70 percent more energy efficient than a comparable elevator a decade ago. And why we're 44 percent advanced today against our 100 percent goal of eliminating from our new product designs what we call materials of concern, for example, cadmium and chromium.

UTC's Employer Scholar Program stands alone among others in supporting education for employees. We can start right away with employees in this room who include 78 having earned a total of 100 degrees under the program. In addition, there are another 123 current enrollees. Which means that about 70 percent of the UTC people here are participants. You know the program well, and it's no surprise to find volunteers helping others who are equally committed to improving themselves. I'm proud of you and nothing stronger can be said. I expect we all agree with Einstein's words: "The important thing is not to stop questioning. Curiosity has its own reason for existing."

More broadly, 16,000 UTC employees have taken degrees under the ESP since it began in 1997. A further 13,500 are currently enrolled, including 4,500 internationally. UTC's spending exceeds $60 million annually, and the cumulative total to date is over $450 million. You and we seem to like the UTC stock awards on degree attainment, with shares awarded totaling over 2 million currently valued at about $200 million.

Although highlights only, these seem to me to comprise a strong record of corporate responsibility. You'll find many more details in the report in front of you, and I hope you will take pride in these. Your company is performing well, in fact I told investors a month ago with conviction I have never seen UTC in stronger shape than today. I'm especially proud this record includes volunteerism and corporate responsibility in addition to just plain financial and business results. The former capture the spirit of a company and its employees, and every single one of you has done his or her part to create and assure our success. Lots of third party surveys confirm this, with one of the broadest based and best being Fortune's annual Most Admired survey, where we have been scored as number one in the aerospace category for the fifth year in a row now. The survey extends over 10,000 respondents including analysts, investors, executives, outside directors, and those most knowledgeable about Corporate America. Notably also, on the corporate responsibility element in the survey (one of eight categories), UTC scored first this year and also for the fifth year in a row. And, overall, our score went up this year by about 4 percent.

We have some reasons to feel good about ourselves, none more than the volunteerism and generosity represented today in this room. Emerson said the same thing: "It is one of the most beautiful compensations of this life that no man can sincerely try to help another without helping himself."

Let's turn now to recognition of two of our best volunteers and to present the five grants. Thanks for all you do.

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