At United Technologies, we choose to be politically active because we have a strong, vested interest in participating in the public policy debate. Every day, lawmakers make decisions that affect our business, and for this reason we support candidates for public office who embrace the broad business objectives of our company.

Federal Contributions

One important way in which we participate in the U.S. political process is by supporting candidates for federal office via the UTC PAC (an acronym for the United Technologies Corporation Federal Political Action Committee). Like virtually all of our peer companies, we offer our eligible employees an opportunity to coordinate and maximize the effect of their political efforts by contributing to the PAC, which primarily supports candidates for the U.S. Congress. UTC PAC offers employees, regardless of their political affiliations, a legal and ethical way to speak with a unified voice on issues important to our company.

UTC PAC is non-partisan. It contributes to candidates supportive of UTC’s corporate business interests and public policy goals, regardless of political party, and also to national political organizations of both major parties. Acting under a set of bylaws and established operating procedures, an 11-member Steering Committee meets monthly to review candidates and approve support. The current Steering Committee membership consists of four employees from the UTC Washington Office and one from each of our major business units - Hamilton Sundstrand, Pratt & Whitney, Carrier, UTC Fire & Security, Sikorsky, Otis and UTC Power. The Steering Committee considers the following factors in its decisions on contributions:

• the candidate's views (and voting record, in the case of incumbents) on issues critical to UTC's success;
• the presence of UTC facilities in the candidate's district;
• the congressional committees on which the legislator serves (in the case of incumbents); and
• the strength of the candidate and the impact a contribution and implied UTC endorsement might have on the race.

UTC makes no corporate contributions to federal candidates or federal political committees, since the use of operating funds for this purpose is prohibited by law. Contributions made to candidates by the UTC PAC through 2007 during the 2007-2008 election cycle are listed here; those to political organizations and leadership PACs are listed here.

State Contributions

Corporate contributions to candidates for state-level office are permissible in certain states. In 2007, UTC business units made such contributions to candidates in two states. These are listed here.

In addition, UTC operated a Connecticut State PAC through 2006 before such contributions were prohibited by a change in Connecticut law. The Connecticut State PAC was terminated at the end of 2006.

Section 527 Activity

In 2007, UTC paid a membership fees of $10,000 each to the Republican Governor’s Association (RGA) and the Democratic Governors’ Association (DGA), both “527” organizations. The RGA and the DGA have assured us that those fees would be used solely for operating expenses, with no part being used for contributions.

Policies

The basis for all of UTC’s political involvement is its Code of Ethics, which states:

“UTC will comply with all national, state and local laws regulating UTC’s participation in political affairs, including limitations on contributions to political parties, national political committees, and individual candidates.”

UTC’s Corporate Policy Manual permits the Corporation to provide financial support to state candidates, political parties and organizations as permitted by law only after approval of the UTC Senior Vice President, Government and International Affairs and the UTC Senior Vice President, General Counsel. The Corporate Policy Manual provides that such approvals are not necessary for activities of the United Technologies Political Action Committee (the “UTC PAC”).

The Charter of the Public Issues Review Committee of the Board provides that the Committee review and monitor “UTC’s conduct of its public policy and government relations activities, including activities of any political action committees.” These reviews also include state and “527” contribution activities.

The bylaws of the UTC PAC provide basic organizational material and incorporate Federal Election Commission regulations. In addition to bylaws, the UTC PAC has operating guidelines which contain, among other items, the following principles:

• PAC activities must comply with all applicable laws and regulations
• Participation is always voluntary
• The PAC does not seek, request or expect any specific benefit for its contributions to candidates
• The PAC is non-partisan and strives to support candidates whose views are supportive of UTC goals and business objectives
• The PAC Steering Committee must report contributions to PAC members
• PAC contributions are intended primarily for individuals seeking federal elective office. Contributions to leadership PACS, multi-candidate PACs and organizational or association PACs shall be made only after the most careful and deliberate consideration.