Net income increased $36 million (6%) and $63 million (6%) for the second quarter and six-month period of 2002 when compared with the same periods in 2001.  Diluted earnings per share increased $.07 (6%) and $.13 (6%) for the second quarter and six-month period of 2002 when compared with the same periods in 2001.  Both net income and diluted earnings per share for 2002 include the impact of discontinuing amortization of goodwill in accordance with SFAS 142.  Net income for the second quarter and six-month period of 2001, adjusted to exclude amounts no longer being amortized, was $641 million and $1,133 million.  Diluted earnings per share for the second quarter and six-month period of 2001, adjusted to exclude amounts no longer being amortized, were $1.26 and $2.22.

Restructuring Costs

    As described in the Notes to Condensed Consolidated Financial Statements, during the quarter ended March 31, 2002, the Corporation recorded pre-tax restructuring and related charges totaling $102 million, primarily at Carrier, associated with ongoing cost reduction efforts.  These efforts focus principally on the consolidation of manufacturing, sales and service facilities.

    The charges included accruals of $42 million for severance and related employee termination costs, $38 million for asset write-downs, largely related to the disposal of manufacturing assets and facilities that are no longer to be utilized, and $12 million for facility exit and lease termination costs.  Related charges associated with restructuring actions totaling $10 million were also recorded in the first quarter, primarily in the Carrier segment.  The charges during the first quarter were classified as $85 million recorded in cost of sales, $15 million in selling, general and administrative expenses, and $2 million in financing revenues and other income, net.

    The first quarter 2002 actions are expected to result in net workforce reductions of approximately 1,600 salaried and hourly employees, the elimination of approximately 1.2 million square feet of facilities and the disposal of assets associated with exited facilities.  During the year, the Corporation has incurred pre-tax cash outflows related to the 2002 programs of approximately $14 million, which were funded by cash generated from operations.  Savings are expected to increase over a two-year period resulting in recurring pre-tax savings of approximately $80 million annually.  As of June 30, 2002, reductions of approximately 950 employees and approximately one million square feet remain under the programs.  The programs are expected to be completed by the first quarter of 2003.

    During the second half of 2001, the Corporation recorded pre-tax charges of $348 million associated with ongoing cost reduction efforts and to address challenging market conditions in the commercial airline industry.  In the current year, the Corporation has incurred pre-tax cash outflows related to the 2001 programs of approximately $80 million, which were funded by cash generated from operations.  Recurring pre-tax savings, associated primarily with the net reduction in workforce and facility closures, are expected to increase over a two-year period to approximately $300 million annually.  As of June 30, 2002, reductions of approximately 1,800 employees and approximately 1.2 million square feet remain under the programs.  The programs are expected to be completed by the end of 2002.

    During the second quarter of 2002, approximately $27 million of severance and related costs and $5 million of facility exit and lease termination accruals were utilized under the 2001 and first quarter 2002 programs.  As of June 30, 2002, approximately $140 million of severance and related costs and $21 million of facility exit and lease termination accruals remain under the 2001 and first quarter 2002 programs.

    During the second quarter of 2002, the Corporation recorded charges similar in nature to those noted above in connection with its continuing cost reduction efforts.  The amounts were not material to the results of any individual segment or the Corporation's consolidated financial position, results of operations or cash flows. 

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    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.  Adjustments to reconcile segment reporting to consolidated results are included in "Eliminations and other," which also includes certain small subsidiaries.  Results for the quarter and six-month periods ended June 30, 2002 and 2001 are as follows:

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    Otis revenues increased $143 million (9%) and $131 million (4%) in the second quarter and six-month period of 2002 compared to the same periods of 2001 with about half of the second quarter revenue growth due to acquisitions.  On a constant currency basis, revenues increased 8% in the second quarter, reflecting the strength of the Euro in relation to the U.S. dollar, and increased 6% in the six-month period reflecting weakened Asian currencies.  The increases were led by Europe and Asia, largely reflecting the impact of recent acquisitions.  Except for South America, revenues increased in all regions due to increased service and new equipment sales.  Otis new equipment orders increased more than 20% in the quarter, about half of which was organic.

    Otis operating profits increased $40 million (18%) and $54 million (12%) in the second quarter and six-month period of 2002 compared to 2001.  On a constant currency basis, operating profit increased 16% and 13% in the second quarter and six-month period, reflecting profit improvements in all regions, except South America, primarily due to the profit impact of increased revenues and productivity improvements.

    Carrier revenues decreased $72 million (3%) and $261 million (6%) in the second quarter and six-month period of 2002 compared to 2001, reflecting continued weakness in the North American HVAC and commercial refrigeration businesses, and in Latin America.  In the second quarter of 2002, revenues increased in Asia and the transport refrigeration sector compared to second quarter of 2001. Foreign currency had a minimal impact in the second quarter.  On a constant currency basis, revenues decreased 5% in the six-month period due primarily to the strength of the U.S. dollar in relation to Asian and Latin American currencies, partially offset by the strengthening of the Euro in the second quarter of 2002.

    Carrier's operating profits increased $18 million (6%) in the second quarter and decreased $52 million (12%) in the six-month period of 2002 compared to 2001.  The second quarter increase was due primarily to cost reduction actions and the discontinuance of goodwill amortization, partially offset by the profit impact of reduced volume and the absence of a purchasing related settlement recorded in the year ago quarter.   The six-month decrease primarily reflects the first quarter 2002 restructuring charge and the profit impact of reduced volume, partially offset by the benefit of cost reduction actions and the absence of goodwill amortization.

    Pratt & Whitney revenues decreased $82 million (4%) and $120 million (3%) in the second quarter and six-month period of 2002 compared to 2001.  The decreases were primarily due to lower volume at Pratt & Whitney Power Systems and Pratt & Whitney Canada, and declines in commercial spare parts, reflecting conditions in the commercial airline industry.  These decreases were partially offset by increased military engine revenue and commercial overhaul and repair volume.  Despite the decline in commercial spare parts revenue, commercial spare parts orders in the second quarter exceeded the Corporation's expectations, down less than 10% from the second quarter of 2001.

    Pratt & Whitney operating profits decreased $18 million (5%) and $43 million (6%) in the second quarter and six-month period of 2002 compared to 2001, primarily reflecting lower volume at Pratt & Whitney Canada, commercial spare parts decline, and declines at Pratt & Whitney Power Systems, partially offset by higher military engine volume and overhaul and repair profits. The six-month decrease also reflects costs associated with the PW6000 program, partially offset by the favorable impact of commercial engine contract changes, both recorded in the first quarter of 2002.

    Flight Systems revenues increased $42 million (3%) in the second quarter and decreased $3 million in the six-month period of 2002 compared to 2001. The second quarter increase is primarily associated with increased aftermarket revenues at Sikorsky, due in part to the acquisition of Derco, and increased original equipment and military spare parts revenue at Hamilton Sundstrand. The increases were partially offset by lower helicopter shipments at Sikorsky and lower commercial spare parts volume at Hamilton Sundstrand.  The six-month decrease also reflects lower industrial volume at Hamilton Sundstrand.  Sikorsky's second quarter 2002 acquisition of Derco is expected to result in an expansion of Sikorsky's aftermarket business.

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    Flight Systems operating profits increased $13 million (7%) and $3 million (1%) in the second quarter and six-month period of 2002 compared to 2001.  Excluding the impact of the discontinuance of goodwill amortization, Flight Systems operating profit decreased $13 million (6%) and $49 million (12%) for the second quarter and six-month period of 2002 compared to 2001. The operating profit decrease reflects lower helicopter shipments at Sikorsky and lower commercial spare parts at Hamilton Sundstrand, partially offset by increased aftermarket profit at Sikorsky and the benefit of cost reduction actions at Hamilton Sundstrand.  In addition, the six-month decrease reflects higher research and development costs on the S/H-92 program and increased costs on an international Naval Hawk program at Sikorsky.

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LIQUIDITY AND FINANCIAL POSITION

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

    Net cash flows provided by operating activities increased $8 million in the first six months of 2002 compared to the corresponding period in 2001, due to improved operating performance partially offset by higher accounts receivable and inventory levels.

    Cash used in investing activities decreased $169 million in the first six months of 2002 compared with the same period of 2001, primarily due to lower customer financing requirements and capital expenditures.  The decrease in capital expenditures is due to a rationalization of capital projects, resulting in lower capital expenditures in the first half of 2002, and represents the majority of the anticipated decline in capital spending for the full year of 2002.  Cash spending for investments in businesses for the first six months of 2002 was $312 million and includes Sikorsky's second quarter acquisition of Derco and Pratt & Whitney's first quarter aerospace acquisitions as well as other smaller industry-consolidating transactions. The Corporation's rate of investment in businesses in the first half of 2002 was comparable to the same period in 2001.  Acquisition activity for the remainder of 2002 will depend upon the availability of appropriate acquisition opportunities. 

    Customer financing activity was a net use of cash of $95 million in the first six months of 2002 compared with a $159 million net use of cash in the first six months of 2001, reflecting lower customer generated financing requirements. While the Corporation expects that 2002 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 $1.4 billion related to commercial aircraft at June 30, 2002, compared to $1.6 billion at December 31, 2001.

    Net cash flows used in financing activities increased $76 million in the first six months of 2002 compared with the same period of 2001, due primarily to higher debt repayments and less Common Stock issued on fewer option exercises, partially offset by fewer repurchases of Common Stock. In April 2002, the Corporation issued $500 million of 6.10% unsubordinated, unsecured, nonconvertible notes under shelf registration statements previously filed with the Securities and Exchange Commission (the "Commission").  Under a shelf registration statement previously filed with the Commission, the Corporation can issue up to $1.1 billion of additional debt and equity securities.

    The Corporation repurchased $226 million of Common Stock, representing 3.2 million shares in the first six months of 2002 under previously announced share repurchase programs.  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.  At June 30, 2002, the Corporation was authorized to repurchase an additional 12.6 million shares, and expects total share repurchases in 2002 to approximate $600 million.

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    The funded status of the Corporation's pension plans is dependent upon many factors, including returns on invested assets.  Recent declines in the value of securities traded in equity markets have had a negative impact on the fair value of the plans' assets, which may require the Corporation to make additional contributions to the plans.  The Corporation can contribute cash to these plans at its discretion and under current authorization from the Board of Directors, the Corporation can contribute up to $500 million of Common Stock, $247 million of which was funded in the fourth quarter of 2001.

    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 uncertainties in acquisition spending could cause modest variations at times, management anticipates that the level of debt-to-capital will remain generally consistent with recent levels over the last year.

Critical Accounting Policies

    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.  Note 1 of the Notes to Consolidated Financial Statements in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2001 describes the significant accounting policies used in preparation of the Consolidated Financial Statements.  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.  The most significant areas involving management judgments and estimates are described below.  Actual results in these areas could differ from management's estimates.

Long-Term Contract Accounting

    The Corporation utilizes percentage of completion accounting on certain of its long-term contracts.  The percentage of completion method requires estimates of future revenues and costs over the full term of product delivery. 

    Losses, if any, on long-term contracts are provided for when anticipated. Loss provisions are based upon excess inventoriable manufacturing, engineering, estimated warranty and product guarantee costs over the net revenue from the products contemplated by the specific order.  The net revenue is determined based upon an estimate of the quantity, pricing and timing of future product deliveries.  Contract accounting also requires estimates of future costs over the performance period of the contract.

    Contract costs are incurred over a period of several years, and the estimation of these costs requires management judgment.  The long-term nature of these contracts, the complexity of the products, and the strict safety and performance standards under which they are regulated can affect the Corporation's ability to estimate costs precisely.  As a result, the Corporation updates its cost estimates when circumstances change and warrant a modification to a previous estimate.  Adjustments to contract loss provisions resulting from revisions to cost estimates or changes to customer contractual terms are recorded in earnings upon identification. 

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Income Taxes

    The future tax benefit arising from net deductible temporary differences and tax carryforwards is $2.4 billion at June 30, 2002 and $2.6 billion at December 31, 2001.  Management believes that the Corporation's earnings during the periods when the temporary differences become deductible will be sufficient to realize the related future income tax benefits.  For those jurisdictions where the expiration date of tax carryforwards or the projected operating results indicate that realization is not likely, a valuation allowance is provided.

    In assessing the need for a valuation allowance, the Corporation estimates future taxable income, considering the feasibility of ongoing tax planning strategies and the realizability of tax loss carryforwards.  Valuation allowances related to deferred tax assets can be impacted by changes to tax laws, changes to statutory tax rates and future taxable income levels.  In the event the Corporation were to determine that it would not be able to realize all or a portion of its deferred tax assets in the future, the Corporation would reduce such amounts through a charge to income in the period that such determination was made.  Conversely, if the Corporation were to determine that it would be able to realize its deferred tax assets in the future in excess of the net carrying amounts, the Corporation would decrease the recorded valuation allowance through an increase to income in the period that such determination was made.

Business Acquisitions

    The Corporation completed acquisitions during the first six months of 2002 of $333 million, including $21 million of debt assumed in the acquisition of businesses.  The assets and liabilities of acquired businesses are recorded under the purchase method at their estimated fair values at the dates of acquisition.  Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired companies.  The Corporation had recorded goodwill of $6.9 billion as of June 30, 2002 and $6.8 billion as of December 31, 2001.

    In accordance with SFAS 142, goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment testing using the specific guidance and criteria described in the standard.  The identification and measurement of goodwill impairment involves the estimation of the fair value of reporting units, including the related goodwill.  The estimates of fair value of reporting units are based on the best information available as of the date of the assessment, which primarily incorporate management assumptions about expected future cash flows and contemplate other valuation techniques.  Future cash flows can be affected by changes in industry or market conditions or the rate and extent to which anticipated synergies or cost savings are realized with newly acquired entities.  Although no goodwill impairment has been recorded to date, there can be no assurances that future goodwill impairments will not occur.

Product Performance

    The Corporation extends performance and operating cost guarantees beyond its normal service and warranty policies for extended periods on some of its products, particularly commercial aircraft engines.  Liability under such guarantees is based 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 accrues for such costs that are probable and can be reasonably estimated.  The costs associated with these product performance and operating cost guarantees require estimates over the full terms of the agreements, and require management to consider factors such as the extent of future maintenance requirements and the future cost of material and labor to perform the services. These cost estimates are largely based upon historical experience.

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Contracting with the Federal Government

    The Corporation's contracts with the U.S. Government are subject to government investigations and audits. Like many defense contractors, the Corporation has received audit reports, which 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.  The inherent uncertainty related to the outcome of these audit matters can result in amounts materially different from any provisions we have made with respect to their resolution.  The Corporation recorded sales to the U.S. Government of $1.1 billion and $2.0 billion in the second quarter and six-month period of 2002, respectively, compared to $800 million and $1.6 billion in the second quarter and six-month period of 2001.

Recent Accounting Guidance

    In June 2001, Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations" was issued.  The standard requires that legal obligations associated with the retirement of long-lived intangible assets be recorded at fair value when incurred and will be effective for the Corporation on January 1, 2003.  The Corporation is currently reviewing the provisions of SFAS 143 to determine the standard's impact upon adoption.

    In April 2002, SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections" was issued.  This statement provides guidance on the classification of gains and losses from the extinguishment of debt and on the accounting for certain specified lease transactions.  The adoption of this statement will not have a material impact on the Corporation's consolidated financial position, results of operations or cash flows.     

    In June 2002, SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" was issued.  This statement provides guidance on the recognition and measurement of liabilities associated with disposal activities and is effective for the Corporation on January 1, 2003.  The Corporation is currently reviewing the provisions of SFAS 146 to determine the standard's impact upon adoption. 

    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 six months of 2002.  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 2001.

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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," "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.

    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 Results of Operations and Financial Position" under the headings "Business Environment," "Results of Continuing Operations," "Restructuring," "Liquidity and Financial Position" and "Critical Accounting Policies."  The Corporation's Annual Report on Form 10-K for 2001 also includes important information as to risk factors in the "Business" section under the headings "Description of Business by Operating Segment," "Other Matters Relating to the Corporation's Business as a Whole" and "Legal Proceedings."  Additional important information as to risk factors is included in the Corporation's 2001 Annual Report to Shareowners in the section titled "Management's Discussion and Analysis of Results of Operations and Financial Position" under the headings "Business Environment" 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.

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Part II – Other Information

Item 4.    Submission of Matters to a Vote of Security Holders

The Corporation held its Annual Meeting of Shareowners on April 10, 2002.

The following individuals were nominated and elected to serve as directors:

George David, Jean-Pierre Garnier, Jamie S. Gorelick, Charles R. Lee, Richard D. McCormick, Frank P. Popoff, H. Patrick Swygert, Andre Villeneuve, H. A. Wagner and Sanford I. Weill.

The Shareowners voted as follows on the following matters:

1. Election of Directors.  The voting results for each nominee are as follows:

2. The reappointment of the Corporation's independent accountants was approved by a count of 413,375,300 votes for, 15,675,777 votes against and 7,268,002 votes abstaining.

3. A shareowner proposal concerning disclosure of political contributions was rejected by a count of 14,598,211 votes for, and 341,760,286 votes against, with 27,581,216 votes abstaining and 52,379,396 broker non-votes.

4. A shareowner proposal concerning weaponization of space was rejected by a count of 14,980,373 votes for, and 338,101,222 votes against, with 30,858,118 votes abstaining and 52,379,396 broker non-votes. 

5. A shareowner proposal concerning use of measures of human capital in connection with the awarding of performance-based executive compensation was rejected by a count of 16,070,148 votes for, and 343,285,283 votes against, with 24,584,282 votes abstaining and 52,379,396 broker non-votes.

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 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. *

    (b)    Reports on Form 8-K

  No reports on Form 8-K were filed during the quarter ended June 30, 2002.

*Submitted electronically herewith.

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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.