United Technologies Corporation We do the BIG THINGS

1 2017 Annual Report We do the BIG THINGS . the right way Financials United Technologies provides high-technology products and services to the aerospace and commercial building industries worldwide. In 2017, UTC adjusted net sales1 were $ billion. Adjusted net sales1 Adjusted diluted earnings per common share Cash flow from operations (dollars in billions) from continuing operations1 (dollars per share) (dollars in billions). 13 14 15 16 17 13 14 15 16 17 13 14 15 16 17. Research and development2 Dividends paid per common share Debt to capital3. (dollars in billions) (dollars per share) (percent). 45 47. 41. 38 38. 13 14 15 16 17 13 14 15 16 17 13 14 15 16 17. See page 69 for additional information regarding these 1 Amounts include company- and customer-funded 2 3. The increase in the 2017 debt to capitalization ratio non-GAAP financial measures. research and development. primarily reflects additional borrowings in 2017 used to fund the discretionary contributions to our domestic defined benefit pension plans, share repurchases and other general corporate purposes.

2 Businesses in balance UTC's portfolio is balanced across customer segments, markets and geographies. Net sales by type as a percent of total net sales Net sales by geography as a percent of total net sales 13% 53%. Military aerospace & Original equipment 12%. space manufacturing Other 38%. United States 50%. Commercial &. 21%. industrial Asia Pacific 37%. Commercial 47%. aerospace Aftermarket 29%. Europe Contents United Technologies Corp. is a leader in the global building and aerospace businesses. Our company was founded by some of the world's greatest inventors. Our more than 200,000 employees continue their commitment 01 Letter to Shareowners to innovation. Our large investments in technology enable us to develop new and improved ways to keep people 03 Business Highlights safe, comfortable, productive and on the move. By combining a passion for science with precision engineering, 05 Financials we create smart, sustainable solutions that prove we can do the big THINGS the right way.

3 30 Cautionary Note Concerning Factors That May Affect Future Results Our commercial building businesses comprise Otis, the world's leading manufacturer of elevators, escalators 69 Reconciliation of Non-GAAP Measures and moving walkways; and UTC Climate, Controls & Security, a leading provider of heating, ventilating, to Corresponding GAAP Measures air-conditioning, refrigeration, fire and security systems, and building automation and controls. Our aerospace 70 Board of Directors businesses consist of Pratt & Whitney aircraft engines and UTC Aerospace Systems. We also operate a central 71 Leadership research organization that pursues Technologies for improving the performance, energy efficiency and cost of 72 Shareowner Information our products and processes. Inside Back Cover Sustainability & Recognition To learn more, visit Dear Shareowner In 2017, United Technologies demonstrated once again that we do the big THINGS the right way.

4 An innovative spirit propels our company. Our investments in purposeful innovation and our focus on execution, cost reduction and disciplined capital allocation are yielding strong results. Greg Hayes Chairman & CEO. We achieved organic growth* of 4 percent, equaling our best growth rate since 2014. Our aerospace businesses will benefit from the extraordinary increase in commercial air travel. 4%. Adjusted earnings per share* were $ , Less than 20 percent of the world's population Organic growth*. which was at the high end of our full-year has flown in an airplane but that is changing. expectations. We generated $ billion in free cash flow,* even as we invested $ billion to There are approximately 29,000 commercial aircraft in service today. That number is $ fully fund our domestic pension plan. Since projected to reach 47,000 by 2030. Pratt & Adjusted earnings per share*. 2015, we have returned more than $20 billion Whitney and UTC Aerospace Systems will be to shareowners through share repurchases and dividends the latter of which we have paid for leading providers of jet engines and aerospace systems for those aircraft.

5 $ billion 81 consecutive years. Free cash flow*. Simply stated, in an increasingly connected United Technologies ' results reflect the strength world, United Technologies enables a better of our four global businesses: Otis, Pratt & life. Our services and precision-engineered Whitney, UTC Aerospace Systems and UTC products deliver tangible value for our military, business and private aircraft industry Climate, Controls & Security. Each is a thriving customers, shareowners and society. remains strong. In 2017, we celebrated the industry leader on track to grow and gain share. 100,000th engine produced by our Pratt &. These businesses form an innovative Always inventing Whitney Canada business, which serves the global technology company that stands to Our company was founded by some of the general and business aviation aircraft and civil benefit from the world's most significant world's greatest inventors. They created and military helicopter markets.

6 These engines megatrends urbanization, digitization, a revolutionary Technologies , turned them into will drive a steady stream of aftermarket growing middle class and the expansion of sustainable businesses and launched new revenues for years to come, and the innovation commercial air travel. industries. This proud heritage inspires us to won't stop here. strive for the extraordinary every day. Urbanization is driving demand for smart Our excellence in supporting military programs buildings, mass transportation and sustainable Pratt & Whitney is transforming aviation with is unrivalled, enabling the Armed Forces Technologies that provide comfort, safety, the Geared Turbofan engine, one of the and its allies to remain mission-ready. We efficiency, and improve quality of life. Otis and cleanest, quietest, most energy-efficient provide the only fifth-generation fighter engines UTC Climate, Controls & Security meet these jet engines available today.

7 Delta Air Lines' in service today, the F119 and F135. Further needs in every corner of the world. We are selection of our GTF engine for its order for innovations are being developed, including particularly well-positioned in China, India and 100 firm A321neo aircraft in December 2017 adaptive engine technology, which will provide the Middle East, where urbanization and the underscores this. United Technologies spent for unmatched power and efficiency for sixth- middle class are growing most rapidly. more than $10 billion over two decades to generation fighters in the decades to come. develop this game-changing engine. These investments will generate revenue for years to UTC Aerospace Systems is represented on * See page 69 for additional information regarding these come as the GTF aftermarket business grows. every major aircraft program. In 2017, we non-GAAP financial measures. Pratt & Whitney's leadership in the commercial, supported the first flight of the C919, the first United Technologies Corporation 01.

8 From left to right: Robert F. Leduc President Pratt & Whitney Robert J. McDonough President UTC Climate, Controls &. Security Judith F. Marks President Otis David L. Gitlin President UTC Aerospace Systems large commercial jetliner designed and built in cloud and Internet of THINGS to design smarter, difficult technical problems, to identify and China. UTC Aerospace Systems is also growing more sustainable products that improve lives. foster disruptive technology, and to spur its aftermarket services with comprehensive Carrier created a suite of new digital solutions the next generation of innovation across digital solutions that maximize operational to monitor and enhance HVAC performance our businesses. efficiencies and benefit customers. Notably, and energy use. Our transport refrigeration we are extending our leadership in aerospace business is also utilizing the power of the IoT The best people with the largest acquisition in our history.

9 Our to monitor food safety as we move perishable At the heart of United Technologies are our proposed $30 billion acquisition of Rockwell items from farm to table. UTC Climate, employees more than 200,000 purpose- Collins will deliver tremendous value to our Controls & Security's mission is to enable driven people United by a high-performance customers and shareowners. Rockwell Collins modern life by building upon its long history culture. We commit to the highest ethical and is recognized globally for its leading-edge of developing powerful, reliable and energy- quality standards, while taking smart risks to avionics, flight controls, aircraft interior and data efficient products and services that support innovate for growth. From our research labs connectivity solutions, as well as its world-class and sustain the ever more urbanizing world. to our factory floors, each of us works to customer service. The combined businesses deliver solutions that exceed our customers'.

10 Will become Collins Aerospace Systems, an Driving growth through data expectations and contribute to a safer, cleaner, innovator that will make aircraft more intelligent Data plays an increasingly vital role in our more productive world. We share common and integrated. growth opportunities. Our products generate values while embracing our diversity. We vast amounts of data that can be deployed to represent an array of nationalities, cultures Otis is pursuing an aggressive digital benefit our customers and provide competitive and points of view, and foster an inclusive transformation to redefine its customers' advantages in the digital age. workplace. That is one of the reasons we experiences. Through a strategic agreement joined the Paradigm for Parity coalition to with Microsoft, we are developing technology To maximize the value of data, we established achieve gender parity in our senior leadership that empowers service technicians and sales a new organization, United Technologies roles by 2030.