21Honeywell globally manages our business operations through 4 reportable operating segments. Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance.

Honeywell’s senior management evaluates segment performance based on segment profit. Each segment’s profit is measured as segment income (loss) before taxes excluding general corporate unallocated expense, interest and other financial charges, stock compensation expense, pension and other postretirement income (expense), repositioning and other charges, and other items within Other (income) expense.

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Net sales
Aerospace
Products $ 1,623 $ 2,213 $ 5,335 $ 6,462
Services 1,039 1,331 3,231 3,931
Total 2,662 3,544 8,566 10,393
Honeywell Building Technologies
Products 972 1,091 2,807 3,283
Services 333 324 956 971
Total 1,305 1,415 3,763 4,254
Performance Materials and Technologies
Products 1,803 2,129 5,510 6,437
Services 449 541 1,357 1,540
Total 2,252 2,670 6,867 7,977
Safety and Productivity Solutions
Products 1,487 1,360 4,281 4,314
Services 91 97 260 275
Total 1,578 1,457 4,541 4,589
$ 7,797 $ 9,086 $ 23,737 $ 27,213
Segment profit
Aerospace $ 617 $ 908 $ 2,082 $ 2,653
Honeywell Building Technologies 282 297 794 868
Performance Materials and Technologies 442 582 1,373 1,790
Safety and Productivity Solutions 219 195 610 598
Corporate (7) (54) (73) (202)
Total segment profit 1,553 1,928 4,786 5,707
Interest and other financial charges (101) (96) (264) (266)
Stock compensation expense(a)
(40) (37) (118) (112)
Pension ongoing income(b)
197 150 593 449
Other postretirement income(b)
13 12 40 35
Repositioning and other charges(c)
(144) (96) (486) (306)
Other(d)
(330) 106 (249) 284
Income before taxes $ 1,148 $ 1,967 $ 4,302 $ 5,791

~~(a) Amounts included in Selling, general and administrative expenses.~~

~~(b) Amounts included in Cost of products and services sold and Selling, general and administrative expenses (service costs) and Other income/expense (non-service cost components).~~

24International Inc.

~~Honeywell International Inc.~~HONEYWELL INTERNATIONAL INC.

~~Notes to Consolidated Financial Statements~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollars in tables in millions, except per share amounts)

Environmental liabilities are included in the following balance sheet accounts:


	March 31, 2021		December 31, 2020
Accrued liabilities	$	225	$	225
Other liabilities	398		435
	$	623	$	660

The Company does not currently possess sufficient information to reasonably estimate the amounts of environmental liabilities to be recorded upon future completion of studies, litigation or settlements, and neither the timing nor the amount of the ultimate costs associated with environmental matters can be determined although they could be material to our consolidated results of operations and operating cash flows in the periods recognized or paid. However, considering our past experience and existing reserves, the Company does not expect that environmental matters will have a material adverse effect on its consolidated financial position.

In conjunction with the Resideo Technologies, Inc. (Resideo) spin-off, the Company entered into an indemnification and reimbursement agreement with a Resideo subsidiary, pursuant to which Resideo’s subsidiary has an ongoing obligation to make cash payments to Honeywell in amounts equal to 90% of Honeywell’s annual net spending for environmental matters at certain sites as defined in the agreement. The amount payable to Honeywell in any given year is subject to a cap of $140 million, and the obligation will continue until the earlier of December 31, 2043, or December 31 of the third consecutive year during which the annual payment obligation is less than $25 million.

Reimbursements associated with this agreement are collected from Resideo quarterly and were $35 million in the three months ended March 31, 2021 and offset operating cash outflows incurred by the Company. As the Company incurs costs for environmental matters deemed probable and reasonably estimable related to the sites covered by the indemnification and reimbursement agreement, a corresponding receivable from Resideo for 90% of such costs is also recorded. This receivable amount recorded in the three months ended March 31, 2021 was $36 million. As of March 31, 2021, Other Current Assets and Other Assets included $140 million and $452 million, respectively, for the short-term and long-term portion of the receivable amount due from Resideo under the indemnification and reimbursement agreement.

ASBESTOS MATTERS

Honeywell is named in asbestos-related personal injury claims related to North American Refractories Company (NARCO), which was sold in 1986, and the Bendix Friction Materials (Bendix) business, which was sold in 2014.

The following tables summarize information concerning NARCO and Bendix asbestos-related balances:

ASBESTOS RELATED LIABILITIES


	Bendix		NARCO		Total
December 31, 2020	$	1,441	$	779	$	2,220
Accrual for update to estimated liability	10		8		18
Asbestos-related liability payments	(35)		(30)		(65)
March 31, 2021	$	1,416	$	757	$	2,173

INSURANCE RECOVERIES FOR ASBESTOS RELATED LIABILITIES


	Bendix		NARCO		Total
December 31, 2020	$	148	$	254	$	402
Probable insurance recoveries related to estimated liability	0		0		0
Insurance receipts for asbestos-related liabilities	(5)		(14)		(19)
Insurance receivables settlements	0		0		0
March 31, 2021	$	143	$	240	$	383

22 Honeywell International Inc.

~~(c) Amounts~~

HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollars in tables in millions, except per share amounts)

NARCO and Bendix asbestos-related balances are included in ~~Cost~~the following balance sheet accounts:


	March 31, 2021		December 31, 2020
Other current assets	$	36	$	36
Insurance recoveries for asbestos related liabilities	347		366
	$	383	$	402
Accrued liabilities	$	300	$	300
Asbestos-related liabilities	1,873		1,920
	$	2,173	$	2,220

NARCO Products – NARCO manufactured high-grade, heat-resistant, refractory products for various industries. Honeywell’s predecessor, Allied Corporation, owned NARCO from 1979 to 1986. Allied Corporation sold the NARCO business in 1986 and entered into a cross-indemnity agreement which included an obligation to indemnify the purchaser for asbestos claims. Such claims arise primarily from alleged occupational exposure to asbestos-containing refractory brick and mortar for high-temperature applications. NARCO ceased manufacturing these products in 1980 and ultimately filed for bankruptcy in January 2002, at which point in time all then current and future NARCO asbestos claims were stayed against both NARCO and Honeywell pending the reorganization of NARCO. The Company established its initial liability for NARCO asbestos claims in 2002.

NARCO emerged from bankruptcy in April 2013, at which time a federally authorized 524(g) trust was established to evaluate and resolve all existing NARCO asbestos claims (the Trust). Both Honeywell and NARCO are protected by a permanent channeling injunction barring all present and future individual actions in state or federal courts and requiring all asbestos-related claims based on exposure to NARCO asbestos-containing products to be made against the Trust. The NARCO Trust Agreement (TA) and ~~services sold, Selling, general~~the NARCO Trust Distribution Procedures (TDP) are the principal documents setting forth the structure of the Trust, establishing Honeywell’s evergreen funding obligations and ~~administrative expenses,~~the material operating rules for the Trust.

Per the TA, the Trust is eligible to receive cash dividends from Harbison-Walker International Inc. (HWI), the reorganized and ~~Other income/expense.~~renamed entity that emerged, fully operational, from the NARCO bankruptcy. The cash dividends are required to be used to pay claims which qualify for payment under the TDP (Annual Contribution Claims) until those funds are exhausted, at which point Honeywell’s funding obligation, subject to an annual cap of $145 million, is triggered. The Company is also required to fund amounts owed pursuant to settlement agreements reached during the pendency of the NARCO bankruptcy proceedings that provide for the right to submit claims to the Trust subject to qualification under the terms of the settlement agreements and TDP (Pre-Established Unliquidated Claims), as well as fund the annual operating costs of the Trust. There is no annual funding cap relative to Pre-Established Unliquidated Claims. Dividends from HWI were exhausted during the fourth quarter of 2019 and there have been no further dividends from HWI to date.

~~(d) Amounts~~The operating rules per the TDP include Honeywell’s audit rights and the ~~other components~~criteria claimants must meet for a claim to be considered valid and paid, which include adequate medical evidence of ~~Other income/expense~~the claimant’s asbestos-related condition and credible evidence of exposure to a specific NARCO asbestos-containing product. Once operational in 2014, the Trust began to receive, process and pay claims, at which point the Company began to assert its audit rights to review and monitor the claims processor’s adherence to the established requirements of the TDP. While doing so, the Company identified several issues with the way the Trust was adhering to the TDP and the Company continues to identify and dispute these matters as further claims are processed. Although the Company is attempting to resolve instances where it believes the Trust is not ~~included within other categories~~processing claims in ~~this reconciliation. Equity income/loss~~accordance with the established TDP, the Company reserves the right to seek judicial intervention should it fail to resolve the disputed issues.

Due to the bankruptcy filing in 2002, claimants were not permitted to file additional claims until the Trust became operative in 2014. As a consequence, there was a large backlog of ~~affiliated companies is included~~claims that were filed with the Trust upon becoming operative through December 31, 2017, the date by which these claims had to be filed or else be barred by the statute of limitations (subject to tolling exceptions in ~~segment profit.~~ the TDP). Therefore, the claims filing rate did not start to normalize until 2018 and thereafter. As a result, between 2002 and 2018, the Company lacked a history of sufficiently reliable claims data to derive a reasonable estimate and the Company continued to update its original NARCO asbestos liability, as appropriate, using all available information.

23 Honeywell International Inc.

HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollars in tables in millions, except per share amounts)

With three years of sufficiently reliable claims data, the Company updated its estimate of the NARCO asbestos liability utilizing claims data from January 1, 2018 through December 31, 2020. The Company utilized an asbestos liability valuation specialist to support our preparation of the NARCO asbestos liability estimates. Our estimates, which involve significant management judgment, include consideration of multiple scenarios, including a scenario adjusting for the impact of the COVID-19 pandemic on the Trust's ability to process claims during 2020. The estimate for the resolution of asserted Annual Contribution Claims and Pre-Established Unliquidated Claims uses average payment values for the relevant historical period. For unasserted claims, the estimate is based on historic and anticipated claims filing experience and payment rates, disease classifications and type of claim, and average payment values by the Trust for the relevant historical period. The Company's estimate also includes all years of epidemiological disease projection through 2059.

The liability reflects an estimate for the resolution of Annual Contribution Claims and Pre-Established Unliquidated Claims filed with the Trust, as well as for unasserted Annual Contribution Claims and Pre-Established Unliquidated Claims. The NARCO asbestos liability excludes the annual operating expenses of the Trust which are expensed as they are incurred.

The Company's NARCO related insurance receivable reflects coverage which reimburses Honeywell for portions of NARCO-related claims and defense costs. This coverage is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. Honeywell's NARCO related insurance receivable is an estimate of the probable amount of insurance that is recoverable for asbestos claims. Most of our insurance carriers remain solvent. However, select individual insurance carriers are now insolvent, which we have considered in our analysis of probable recoveries. Our judgments related to our insurance carriers and insurance coverages are reasonable and consistent with Honeywell's historical dealings and Honeywell's knowledge of any pertinent solvency issues surrounding insurers.

Bendix Products – Bendix manufactured automotive brake linings that contained chrysotile asbestos in an encapsulated form. Claimants consist largely of individuals who allege exposure to asbestos from brakes from either performing or being in the vicinity of individuals who performed brake replacements. The following tables present information regarding Bendix-related asbestos claims activity:


	Three Months Ended March 31,	Years Ended December 31,
Claims Activity	2021	2020	2019
Claims unresolved at the beginning of period	6,242	6,480	6,209
Claims filed	617	2,233	2,659
Claims resolved	(486)	(2,471)	(2,388)
Claims unresolved at the end of period	6,373	6,242	6,480


	March 31,	December 31,
Disease Distribution of Unresolved Claims	2021	2020	2019
Mesothelioma and other cancer claims	3,566	3,422	3,399
Nonmalignant claims	2,807	2,820	3,081
Total claims	6,373	6,242	6,480

Honeywell has experienced average resolution values per claim excluding legal costs as follows:


	Years Ended December 31,
	2020		2019		2018		2017		2016
	(in whole dollars)
Malignant claims	$	61,500	$	50,200	$	55,300	$	56,000	$	44,000
Nonmalignant claims	$	550	$	3,900	$	4,700	$	2,800	$	4,485

It is not possible to predict whether resolution values for Bendix-related asbestos claims will increase, decrease or stabilize in the future.

24 Honeywell International Inc.

HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollars in tables in millions, except per share amounts)

The Consolidated Financial Statements reflect an estimated liability for resolution of asserted (claims filed as of the financial statement date) and unasserted Bendix-related asbestos claims, which exclude the Company’s ongoing legal fees to defend such asbestos claims which will continue to be expensed as they are incurred.

The Company reflects the inclusion of all years of epidemiological disease projection through 2059 when estimating the liability for unasserted Bendix-related asbestos claims. Such liability for unasserted Bendix-related asbestos claims is based on historic and anticipated claims filing experience and dismissal rates, disease classifications, and resolution values in the tort system for the previous five years. The Company has valued Bendix asserted and unasserted claims using average resolution values for the previous five years. The Company updates the resolution values used to estimate the cost of Bendix asserted and unasserted claims during the fourth quarter each year.

The Company's insurance receivable corresponding to the liability for settlement of asserted and unasserted Bendix asbestos claims reflects coverage which is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. Based on our ongoing analysis of the probable insurance recovery, insurance receivables are recorded in the financial statements simultaneous with the recording of the estimated liability for the underlying asbestos claims. This determination is based on our analysis of the underlying insurance policies, our historical experience with our insurers, our ongoing review of the solvency of our insurers, judicial determinations relevant to our insurance programs, and our consideration of the impacts of any settlements reached with our insurers.

On October 31, 2018, David Kanefsky, a Honeywell shareholder, filed a putative class action complaint in the U.S. District Court for the District of New Jersey alleging violations of the Securities Exchange Act of 1934 and Rule 10b-5 related to the prior accounting for Bendix asbestos claims. An Amended Complaint was filed on December 30, 2019, and on February 7, 2020, we filed a Motion to Dismiss. On May 18, 2020, the court denied our Motion to Dismiss. We believe the claims have no merit.

GARRETT MATTER

In conjunction with the Garrett spin-off, the Company entered into a binding indemnification and reimbursement agreement (Garrett Indemnity) with a Garrett subsidiary, pursuant to which Garrett’s subsidiary has an ongoing obligation to make cash payments to Honeywell in amounts equal to (i) 90% of Honeywell’s asbestos-related liability payments primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments, including the legal costs of defending and resolving such liabilities, less (ii) 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. The amount payable to Honeywell in respect of such liabilities arising in any given year is subject to a cap of approximately Euro 150 million (equivalent to $175 million at the time the Garrett Indemnity was entered into). The obligation under the terms of the Garrett Indemnity continues until the earlier of December 31, 2048, or December 31 of the third consecutive year during which the annual obligation is less than the Euro equivalent, at the fixed exchange rate at the time the Garrett Indemnity was entered into, of $25 million.

On June 12, 2020, the Company and Garrett entered into an amendment of the Garrett Indemnity in connection with Garrett’s amendment of its 2018 credit agreement. These amendments provided Garrett with temporary financial covenant relief with respect to the total leverage and interest coverage ratios, for a period that could extend to as late as June 30, 2022. Garrett’s payments to the Company under the Garrett Indemnity were deferred to the extent Garrett is (or to the extent such payments would cause Garrett to be) out of compliance with the original financial covenants and resume to the extent Garrett is in compliance with such original financial covenants. Any deferred amounts were to be paid to the extent Garrett was in compliance with such original financial covenants and had available capacity to make such payments pursuant to the terms of the Garrett Indemnity and its current credit agreement.

In conjunction with the spin-off, Honeywell also entered into a binding tax matters agreement with Garrett and a Garrett subsidiary (the Tax Matters Agreement). The Tax Matters Agreement generally provides that Garrett is responsible and must indemnify Honeywell for all ordinary operating taxes, including income taxes, sales taxes, value-added taxes and payroll taxes, relating to Garrett for all periods, including periods prior to the spin-off, to the extent not paid prior to the spin-off date. In addition, among other items, as a result of the mandatory transition tax imposed by the U.S. Tax Cuts and Jobs Act, Garrett is required to make payments to Honeywell in the amount representing the net tax liability of Honeywell under the mandatory transition tax attributable to Garrett.

25 Honeywell International Inc.

HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollars in tables in millions, except per share amounts)

GARRETT LITIGATION AND BANKRUPTCY PROCEEDINGS

On December 2, 2019, Garrett and Garrett ASASCO Inc. filed a Summons with Notice and commenced a lawsuit in the Commercial Division of the Supreme Court of the State of New York, County of New York (the State Court), seeking to invalidate the Garrett Indemnity. Garrett sought damages and a declaratory judgment based on various claims set forth in the Summons with Notice. On January 15, 2020, Garrett filed its complaint in the action, which asserted the same claims, and on March 5, 2020, we filed a Motion to Dismiss. On June 12, 2020, given the challenges of operating in the COVID-19 environment, Honeywell and Garrett entered into a litigation status agreement pursuant to which (i) the parties agreed to make good faith efforts to limit near-term litigation spend on this matter, and (ii) the Company agreed to extend both the $2 million payment owed by Garrett to the Company on May 1, 2020 under the Garrett Indemnity and the $18 million payment owed by Garrett to the Company on April 1, 2020 under the Tax Matters Agreement until December 31, 2020 (which amounts, as previously disclosed, had been deferred to May 31, 2020). On July 17, 2020, the Company received a notice from Garrett asserting that Honeywell has caused material breaches of the Tax Matters Agreement and that the Tax Matters Agreement is unenforceable.

On September 20, 2020, Garrett and 36 of its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). On September 24, 2020, Garrett moved the existing State Court litigation against Honeywell to the Bankruptcy Court. Honeywell again moved to dismiss all of Garrett’s claims on October 13, 2020. On November 2, 2020, Garrett filed a motion seeking to establish procedures to estimate the value of Honeywell’s claims. Honeywell objected to the motion. On November 18, 2020, the Bankruptcy Court held a hearing on the motion to establish procedures with respect to Honeywell’s claims and the motion to dismiss. The Bankruptcy Court did not rule on the motion to dismiss but suggested that two weeks be set aside in February 2021 for an evidentiary hearing to establish the actual allowed amount or net amount of Honeywell’s claim against Garrett. Honeywell and Garrett agreed to proceed with the estimation of Honeywell’s claims but later agreed to suspend the estimation process pending the settlement and release of Honeywell’s claims in connection with the confirmation of a plan of reorganization as discussed below. We continue to believe we have fully complied with our obligations under the Garrett Indemnity and the Tax Matters Agreement and that both agreements are valid and enforceable.

Garrett’s operations have and are expected to continue, without interruption, throughout the bankruptcy proceedings. Garrett initially proposed to sell its business while in bankruptcy, and entered into a Share and Asset Purchase Agreement, dated as of September 20, 2020, with KPS Capital Partners, LP (the Stalking Horse Agreement) and filed proposed bidding procedures for a marketing and sale process, auction and other procedures related to the proposed sale. In October 2020, Honeywell signed a coordination agreement with Oaktree Capital Management, L.P. (Oaktree) and Centerbridge Partners, L.P. (Centerbridge), which was subsequently signed by additional equity holders that, collectively with Honeywell, Centerbridge and Oaktree, represent approximately 58% of Garrett’s outstanding common stock and noteholders representing approximately 88% of the principal amount of Garrett’s outstanding senior notes (the Coordination Agreement). The Coordination Agreement and related term sheet set forth the terms of a proposed plan of reorganization (the Initial COH Proposal).

In October 2020, the Bankruptcy Court approved the bidding procedures and the Stalking Horse Agreement (as amended), and Garrett conducted a marketing and auction process through January 8, 2021. On January 11, 2021, after further revisions to the Initial COH Proposal, Garrett determined that the revised proposal (the Final COH Proposal) was higher and better than all other proposals received and entered into a plan support agreement (the Plan Support Agreement), pursuant to which all parties agreed to pursue Bankruptcy Court confirmation of the Final COH Proposal. KPS Capital Partners, LP subsequently terminated the Stalking Horse Agreement with Garrett.

As set forth in the Plan Support Agreement, the Final COH Proposal, which will be implemented through Garrett’s chapter 11 plan (the Plan) provides that, if the Plan is confirmed by the Bankruptcy Court (scheduled Plan confirmation hearing date is April 23, 2021), Honeywell will receive from Garrett on the effective date of the Plan an initial payment of $375 million in cash and Series B Preferred Stock, which will provide for cash payments to Honeywell of approximately $35 million in 2022 and $100 million per year from 2023 to 2030 (inclusive), subject to various put and call rights set forth therein. The initial cash payment, together with the Series B Preferred Stock, would be paid/issued in full and final satisfaction of Garrett’s obligations to Honeywell under the Garrett Indemnity and the Tax Matters Agreement. Upon Garrett’s emergence from bankruptcy, both agreements would be terminated, Honeywell and Garrett would mutually release each other from the claims asserted in all pending legal actions, and all pending litigation with Garrett in connection with those agreements will be resolved. In light of these developments, the hearing scheduled to estimate Honeywell’s claims and the adversary proceeding seeking to

26 Honeywell International Inc.

HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollars in tables in millions, except per share amounts)

invalidate the Indemnity Agreement have been stayed and all related litigation suspended. If the Plan is confirmed by the Bankruptcy Court, both proceedings will be dismissed with prejudice on the effective date of the Plan.

We regularly review the aggregate carrying value of the receivable amounts due in connection with the Garrett Indemnity and the Tax Matters Agreement. Because Garrett is now a party to the Plan Support Agreement, we believe the present value of payments to Honeywell under the Plan, discounted at a rate reflective of the terms of the agreement, is an appropriate estimate of receivable amounts. As of December 31, 2020, Other Current Assets and Other Assets included $10 million and $949 million, respectively, for the short-term and long-term portion of the receivable amount due from the Garrett Indemnity and Tax Matters Agreement. During the three months ended March 31, 2021, there were no adjustments to the carrying value of the receivable.

There can be no assurance that the Plan will be confirmed by the Bankruptcy Court or that Garrett will be able to substantially consummate the restructuring transactions contemplated in the Plan. The ultimate outcome of the bankruptcy process is uncertain. Depending on the transaction and/or plan of reorganization ultimately approved and confirmed by the Bankruptcy Court, the amount collected could differ from the receivable amounts currently recorded in our financial statements. There can be no assurance that recording an additional adjustment (positive or negative) against the remaining receivable amounts in whole or in part (together with a related statement of operations charge) will not be necessary in a future period or periods. Honeywell will continue to participate in the Bankruptcy Court proceedings in order to appropriately assess and enforce our rights in this matter. Should the Plan not be confirmed in the form currently contemplated, Honeywell intends to vigorously defend its rights to collect amounts due under the Garrett Indemnity and Tax Matters Agreement with Garrett.

OTHER MATTERS

The Company is subject to a number of other lawsuits, investigations and disputes (some of which involve substantial amounts claimed) arising out of the conduct of our business, including matters relating to commercial transactions, government contracts, product liability, prior acquisitions and divestitures, employee benefit plans, intellectual property, and environmental, health and safety matters. We recognize a liability for any contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Included in these other matters is the following:

Petrobras and Unaoil – We are cooperating with certain investigations by the U.S. Department of Justice (DOJ), the Securities and Exchange Commission (SEC) and the Brazilian authorities relating to our use of third parties who previously worked for our UOP business in Brazil in relation to Petróleo Brasileiro S.A. (Petrobras). The investigations are focused on compliance with the U.S. Foreign Corrupt Practices Act and similar Brazilian laws, and involve, among other things, document production and interviews with former and current management and employees. The DOJ and the SEC are also examining a matter involving a foreign subsidiary’s prior engagement of Unaoil S.A.M. in Algeria. We are cooperating with the authorities in each of the above matters. While we cannot predict the outcome of these matters, based on the facts currently known to us, we do not anticipate that these matters will have a material adverse effect on our financial condition, results of operations, or cash flows.

Given the uncertainty inherent in litigation and investigations (including the specific matter referenced above), we do not believe it is possible to develop estimates of reasonably possible loss in excess of current accruals for these matters (other than as specifically set forth above). Considering our past experience and existing accruals, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our consolidated financial position. Because most contingencies are resolved over long periods of time, potential liabilities are subject to change due to new developments, changes in settlement strategy or the impact of evidentiary requirements, which could cause us to pay damage awards or settlements (or become subject to equitable remedies) that could have a material adverse effect on our consolidated results of operations or operating cash flows in the periods recognized or paid.

27 Honeywell International Inc.

HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollars in tables in millions, except per share amounts)

~~Note 15. Pension Benefits~~

NOTE 16. PENSION BENEFITS

Net periodic pension benefit costs for the Company's significant defined benefit plans include the following components:

U.S. Plans
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Service cost $ 25 $ 21 $ 74 $ 63
Interest cost 116 153 346 460
Expected return on plan assets (284) (279) (851) (837)
Amortization of prior service (credit) (11) (11) (32) (33)
$ (154) $ (116) $ (463) $ (347)


		Non-U.S. Plans									U.S. Plans
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Service cost	Service cost	$	6	$	4	$	17	$	16	Service cost	$	26	$	25
Interest cost	Interest cost	26		34		78		106		Interest cost	77		115
Expected return on plan assets	Expected return on plan assets	(84)		(81)		(249)		(248)		Expected return on plan assets	(305)		(284)
Amortization of prior service (credit)	Amortization of prior service (credit)	0		0		0		0		Amortization of prior service (credit)	(11)		(11)
		$	(52)	$	(43)	$	(154)	$	(126)		$	(213)	$	(155)

During the three months ended September 30, 2020, the Company did not purchase any Honeywell shares from the Honeywell U.S. Pension Plan Master Trust. During the nine months ended September 30, 2020, the Company repurchased $100 million of outstanding Honeywell shares from the Honeywell U.S. Pension Plan Master Trust. During the three and nine months ended September 30, 2019, the Company repurchased $100 million and $300 million of outstanding Honeywell shares from the Honeywell U.S. Pension Plan Master Trust.


	Non-U.S. Plans
	Three Months Ended March 31,
	2021		2020
Service cost	$	7	$	6
Interest cost	19		26
Expected return on plan assets	(87)		(84)
Amortization of prior service (credit)	0		0
	$	(61)	$	(52)

~~Note 16. Commitments and Contingencies~~NOTE 17. OTHER (INCOME) EXPENSE


	Three Months Ended March 31,
	2021		2020
Interest income	$	(19)	$	(44)
Pension ongoing income – non-service	(310)		(237)
Other postretirement income – non-service	(17)		(13)
Equity income of affiliated companies	(14)		(12)

Gain on sale of non-strategic business and assets	(90)		0
Foreign exchange	5		(12)

Other (net)	3		1
	$	(442)	$	(317)

~~Environmental Matters~~

~~Our environmental matters are described in Note 20~~ ~~Commitments and Contingencies~~ ~~of Notes to Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.~~

~~The following table summarizes information concerning our recorded liabilities for environmental costs:~~


~~December 31, 2019~~	$	~~709~~
~~Accruals for environmental matters deemed probable and reasonably estimable~~	~~127~~
~~Environmental liability payments~~	~~(166)~~
~~Other~~	~~(4)~~
~~September 30, 2020~~	$	~~666~~

NOTE 18. SEGMENT FINANCIAL DATA

Honeywell globally manages its business operations through 4 reportable operating segments. Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance.

28 Honeywell International Inc.

~~Honeywell International Inc.~~HONEYWELL INTERNATIONAL INC.

~~Notes to Consolidated Financial Statements~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(Dollars in tables in millions, except per share amounts)

~~Environmental liabilities are~~


	Three Months Ended March 31,
	2021		2020
Net sales
Aerospace
Products	$	1,515	$	2,079
Services	1,117		1,282
Total	2,632		3,361
Honeywell Building Technologies
Products	1,009		970
Services	349		311
Total	1,358		1,281
Performance Materials and Technologies
Products	1,869		1,914
Services	477		483
Total	2,346		2,397
Safety and Productivity Solutions
Products	2,016		1,342
Services	102		82
Total	2,118		1,424
	$	8,454	$	8,463
Segment profit
Aerospace	$	762	$	937
Honeywell Building Technologies	305		262
Performance Materials and Technologies	434		512
Safety and Productivity Solutions	303		178
Corporate	(29)		(41)
Total segment profit	1,775		1,848
Interest and other financial charges	(90)		(73)
Stock compensation expense(a)	(77)		(44)
Pension ongoing income(b)	276		198
Other postretirement income(b)	17		13
Repositioning and other charges(c)	(141)		(62)
Other(d)	101		55
Income before taxes	$	1,861	$	1,935

(a) Amounts included in ~~the following balance sheet accounts:~~ Selling, general and administrative expenses.

September 30, 2020 December 31, 2019
Accrued liabilities $ 222 $ 222
Other liabilities 444 487
$ 666 $ 709

~~The Company does not currently possess sufficient information to reasonably estimate the amounts~~(b) Amounts included in Cost of ~~environmental liabilities to be recorded upon future completion of studies, litigation or settlements,~~products and ~~neither the timing nor the amount of the ultimate costs associated with environmental matters can be determined although they could be material to our consolidated results of operations~~services sold and ~~operating cash flows in the periods recognized or paid. However, considering our past experience~~Selling, general and ~~existing reserves, the Company does not expect that environmental matters will have a material adverse effect on its consolidated financial position.~~

In conjunction with the Resideo Technologies, Inc. (Resideo) spin-off, the Company entered into an indemnification and reimbursement agreement with a Resideo subsidiary, pursuant to which Resideo’s subsidiary has an ongoing obligation to make cash payments to Honeywell in amounts equal to 90 percent of Honeywell’s annual net spending for environmental matters at certain sites as defined in the agreement. The amount payable to Honeywell in any given year is subject to a cap of $140 million, and the obligation will continue until the earlier of December 31, 2043, or December 31 of the third consecutive year during which the annual payment obligation is less than $25 million.

Reimbursements associated with this agreement are collected from Resideo quarterly and were $70 million in the nine months ended September 30, 2020. On July 28, 2020, the Company and Resideo agreed to a second amendment of the indemnification and reimbursement agreement to extend the payment due date to October 30, 2020 for the reimbursement amount of $35 million (originally due on April 30, 2020). The Company had previously agreed to extend the payment date for such amount to July 30, 2020. As the Company incurs costs for environmental matters deemed probable and reasonably estimable related to the sites covered by the indemnification and reimbursement agreement, a corresponding receivable from Resideo for 90 percent of such costs is also recorded. This receivable amount recorded in the nine months ended September 30, 2020 was $107 million. As of September 30, 2020, Other Current Assetsadministrative expenses (service cost component) and Other ~~Assets include $140 million and $482 million, respectively for the short-term and long-term portion of the receivable amount due from Resideo under the indemnification and reimbursement agreement.~~(income) expense (non-service cost component).

~~Asbestos Matters~~

Honeywell is named in asbestos related personal injury claims related to North American Refractories Company (NARCO), which was sold in 1986, and Bendix Friction Materials (Bendix) business, which was sold in 2014.

~~The following tables summarize information concerning NARCO and Bendix asbestos-related balances:~~

Asbestos-Related Liabilities
Bendix NARCO Total
December 31, 2019 $ 1,499 $ 858 $ 2,357
Accrual for update to estimated liability 45 14 59
Asbestos related liability payments (143) (67) (210)
September 30, 2020 $ 1,401 $ 805 $ 2,206

~~Honeywell International Inc.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollars in millions, except per share amounts)~~

Insurance Recoveries for Asbestos-Related Liabilities
Bendix NARCO Total
December 31, 2019 $ 153 $ 281 $ 434
Probable insurance recoveries related to estimated liability 0 0 0
Insurance receipts for asbestos-related liabilities (10) (7) (17)
Insurance receivables settlements 0 (1) (1)
September 30, 2020 $ 143 $ 273 $ 416

~~NARCO and Bendix asbestos-related balances are~~(c) Amounts included in Cost of products and services sold, Selling, general and administrative expenses, and Other (income) expense.

(d) Amounts include the ~~following balance sheet accounts:~~

September 30, 2020 December 31, 2019
Other current assets $ 42 $ 42
Insurance recoveries for asbestos-related liabilities 374 392
$ 416 $ 434
Accrued liabilities $ 361 $ 361
Asbestos-related liabilities 1,845 1,996
$ 2,206 $ 2,357

~~NARCO Products~~ ~~– Honeywell’s predecessor, Allied Corporation owned NARCO from 1979 to 1986. When the NARCO business was sold, Honeywell’s predecessor entered into a cross-indemnity agreement with NARCO which~~other components of Other (income) expense not included an obligation to indemnify the purchaser for asbestos claims. Such claims arise primarily from alleged occupational exposure to asbestos-containing refractory brick and mortar for high-temperature applications. NARCO ceased manufacturing these productswithin other categories in ~~1980, and the first asbestos claims were filed~~this reconciliation. Equity income of affiliated companies is included in the tort system against NARCO in 1983. Claims filings and related costs increased dramatically in the late 1990s through 2001, which led to NARCO filing for bankruptcy in January 2002. Once NARCO filed for bankruptcy, all then current and future NARCO asbestos claims were stayed against both NARCO and Honeywell pending the reorganization of NARCO.

Following the bankruptcy filing, in December 2002 Honeywell recorded a total NARCO asbestos liability of $3.2 billion, which was comprised of three components: (i) the estimated liability to settle pre-bankruptcy petition NARCO claims and certain post-petition settlements ($2.2 billion, referred to as “Pre-bankruptcy NARCO Liability”), (ii) the estimated liability related to then unasserted NARCO claims for the period 2004 through 2018 ($950 million, referred to as “NARCO Trust Liability”), and (iii) other NARCO bankruptcy-related obligations totaling $73 million.

When the NARCO Trust Liability of $950 million was established in 2002, the methodology for estimating the potential liability was based primarily on: (a) epidemiological projections of the future incidence of disease for the period 2004 through 2018, a fifteen-year period; (b) historical claims rates in the tort system for the five-year period prior to the bankruptcy filing date; and (c) anticipated NARCO Trust payment values set forth in the then current draft of the NARCO Trust Distribution Procedures. The methodology required estimating, by disease, three critical inputs: (i) likely number of claims to be asserted against the NARCO Trust in the future, (ii) percentage of those claims likely to receive payment, and (iii) payment values. The Company utilized outside asbestos liability valuation specialists to support its preparation of the NARCO Trust Liability estimate, which was based on a commonly accepted methodology used by numerous bankruptcy courts addressing 524(g) trusts.

~~Honeywell International Inc.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollars in millions, except per share amounts)~~

In 2002, when the Company first established its initial liability, NARCO asbestos claims resolution shifted from the tort system to an anticipated NARCO Trust framework, where claims would be processed in accordance with established NARCO Trust Distribution Procedures, including strict medical and exposure criteria for a plaintiff to receive compensation. The Company believed at the time that the NARCO Trust’s claims filing and resolution experience after the NARCO Trust became operational would be significantly different from pre-bankruptcy tort system experience in light of these more rigorous claims processing requirements in the NARCO Trust Distribution Procedures and Honeywell’s active oversight of claims processing and approval. Given these anticipated differences, the Company believed that a 15-year time period was the appropriate horizon for establishing a probable and reasonably estimable liability for then unasserted NARCO claims as it represented its best estimate of the time period it would take for the NARCO Trust to be approved by the Bankruptcy Court, become fully operational and generate sufficiently reliable claims data (i.e., a data set which is statistically representative) to enable the Company to update its NARCO Trust Liability.

The NARCO Trust Distribution Procedures were finalized in 2006, and the Company updated its NARCO Trust Liability to reflect the final terms and payment values. The original 15-year period (from 2004 through 2018) for unasserted claims did not change as asbestos claims filings continued to be stayed against both Honeywell and NARCO. The 2006 update resulted in a range of the estimated liability for unasserted claims of $743 million to $961 million, and the Company believed that no amount within this range was a better estimate than any other amount. In accordance with ASC 450 – Contingencies (ASC 450), the Company recorded the low end of the range of $743 million (the "2006 NARCO Trust Liability Estimate") which resulted in a reduction of $207 million in our NARCO Trust Liability.

NARCO emerged from bankruptcy on April 30, 2013, at which time a federally authorized 524(g) trust was established for the evaluation and resolution of all existing and future NARCO asbestos claims. Both Honeywell and NARCO are protected by a permanent channeling injunction barring all present and future individual actions in state or federal courts and requiring all asbestos-related claims based on exposure to NARCO asbestos-containing products to be made against the NARCO Trust.

The NARCO Trust Agreement and the NARCO Trust Distribution Procedures are the principal documents setting forth the structure of the NARCO Trust. These documents establish Honeywell’s evergreen funding obligations. Honeywell is obligated to fund NARCO asbestos claims submitted to the NARCO Trust which qualify for payment under the Trust Distribution Procedures (Annual Contribution Claims), subject to an annual cap of $145 million. However, the initial $100 million of claims processed through the NARCO Trust (the "Initial Claims Amount") will not count against the annual cap and any unused portion of the Initial Claims Amount will roll over to subsequent years until fully utilized. These documents also establish the material operating rules for the NARCO Trust, including Honeywell audit rights and the criteria claimants must meet to have a valid claim paid. These claims payment criteria include providing the NARCO Trust with adequate medical evidence of the claimant’s asbestos-related condition and credible evidence of exposure to a specific NARCO asbestos-containing product. Further, the NARCO Trust is eligible to receive cash dividends from Harbison-Walker International Inc (HWI), the reorganized and renamed entity that emerged, fully operational, from the NARCO bankruptcy. The NARCO Trust is required to use any funding received from HWI to pay Annual Contribution Claims until those funds are exhausted. It is only at this point that Honeywell’s funding obligation to the Trust is triggered. Thus, there is an unrelated primary source for funding that affects Honeywell’s funding of the NARCO Trust Liability.

Once operational, the NARCO Trust began to receive, process and pay claims that had been previously stayed pending the Trust becoming operational. As the NARCO Trust began to pay claims in 2014, the Company began to assert our on-going audit rights to review and monitor the claims processor’s adherence to the established requirements of the NARCO Trust Distribution Procedures. While doing so, the Company identified several issues with the way the Trust was implementing the NARCO Trust Distribution Procedures. In 2015, Honeywell filed suit against the NARCO Trust in Bankruptcy Court alleging breach of certain provisions of the NARCO Trust Agreement and NARCO Trust Distribution Procedures. The parties agreed to dismiss the proceeding without prejudice pursuant to an 18-month Standstill Agreement, which expired in October 2017. Notwithstanding its expiration, claims processing continues, and Honeywell continues to negotiate and attempt to resolve remaining disputed issues (that is, instances where Honeywell believes the NARCO Trust is not processing claims in accordance with established NARCO Trust Distribution Procedures). Honeywell reserves the right to seek judicial intervention should negotiations fail.

~~Honeywell International Inc.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollars in millions, except per share amounts)~~

~~After the NARCO Trust became effective in 2013, the $743 million NARCO Trust Liability was then comprised of:~~

~~(i)liability for unasserted claims; and~~

~~(ii)liability for claims asserted after the NARCO Trust became operational but not yet paid.~~

Although we know the number of claims filed with the NARCO Trust each year, the Company is not able to determine at this time the portion of the NARCO Trust Liability which represents asserted versus unasserted claims due to the lack of sufficiently reliable claims data because of the claims processing issues described previously.

Honeywell continues to maintain the 2006 NARCO Trust Liability Estimate (the $743 million accrual less payments made by Honeywell to the NARCO Trust for Annual Contribution Claims since the beginning of the fourth quarter of 2019), as there has not been sufficiently reliable claims data history to enable the Company to update that liability.

As of December 31, 2019, all cash dividends paid to the NARCO Trust by HWI had been used to pay Annual Contribution Claims. In the nine months ended September 30, 2020, Honeywell funded $54 million to the NARCO Trust for the payment of Annual Contribution Claims.

As of September 30, 2020, the Company's total NARCO asbestos liability of $805 million reflects Pre-bankruptcy NARCO Liability of $145 million and NARCO Trust Liability of $660 million (the $743 million accrual for the 2006 NARCO Trust Liability Estimate was reduced by $83 million of payments by Honeywell to the NARCO Trust for Annual Contribution Claims since HWI cash dividend funding was fully exhausted in the fourth quarter of 2019 and there have been no further dividends from HWI). Through September 30, 2020, Pre-bankruptcy NARCO Liability has been reduced by approximately $2 billion since first established in 2002, largely related to settlement payments. The remaining Pre-bankruptcy NARCO Liability principally represents estimated amounts owed pursuant to settlement agreements reached during the pendency of the NARCO bankruptcy proceedings that provide for the right to submit claims to the NARCO Trust subject to qualification under the terms of the settlement agreements and Trust Distribution Procedures. The other NARCO bankruptcy related obligations were paid in 2013 and no further liability is recorded.

Honeywell continues to evaluate the appropriateness of the 2006 NARCO Trust Liability Estimate. Despite becoming effective in 2013, the NARCO Trust has experienced delays in becoming fully operational. Violations of the Trust Distribution Procedures and the resulting disputes and challenges, a standstill pending dispute resolution, and limited claims payments, have all contributed to the lack of sufficient normalized data based on actual claims processing experience in the Trust since it became operational. As a result, Honeywell has not been able to further update the NARCO Trust Liability aside from deducting Honeywell payments to the NARCO Trust for Annual Contribution Claims. The 2006 NARCO Trust Liability Estimate continues to be appropriate because of the unresolved pending claims in the Trust, some portion of which will result in payouts in the future, and because new claims continue to be filed with the NARCO Trust. When sufficiently reliable claims data exists, the Company will update its estimate of the NARCO Trust Liability and it is possible that a material change may need to be recognized.

Our insurance receivable of $273 million as of September 30, 2020, corresponding to the estimated liability for asserted and unasserted NARCO asbestos claims, reflects coverage which reimburses Honeywell for portions of NARCO-related indemnity and defense costs and is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. Honeywell conducts analyses to estimate the probable amount of insurance that is recoverable for asbestos claims. While the substantial majority of our insurance carriers are solvent, some of our individual carriers are insolvent, which has been considered in our analysis of probable recoveries. Honeywell made judgments concerning insurance coverage that Honeywell believes are reasonable and consistent with Honeywell's historical dealings and Honeywell's knowledge of any pertinent solvency issues surrounding insurers.

~~Honeywell International Inc.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollars in millions, except per share amounts)~~

~~Bendix Products~~—Bendix manufactured automotive brake linings that contained chrysotile asbestos in an encapsulated form. Claimants consist largely of individuals who allege exposure to asbestos from brakes from either performing or being in the vicinity of individuals who performed brake replacements. The following tables present information regarding Bendix-related asbestos claims activity:

Nine Months Ended
September 30, Years Ended
December 31,
Claims Activity 2020 2019 2018
Claims unresolved at the beginning of period 6,480 6,209 6,280
Claims filed 1,621 2,659 2,430
Claims resolved (1,680) (2,388) (2,501)
Claims unresolved at the end of period 6,421 6,480 6,209

Disease Distribution of Unresolved Claims September 30, December 31,
2020 2019 2018
Mesothelioma and other cancer claims 3,404 3,399 2,949
Nonmalignant claims 3,017 3,081 3,260
Total claims 6,421 6,480 6,209

~~Honeywell has experienced average resolution values per claim excluding legal costs as follows:~~

Years Ended December 31,
2019 2018 2017 2016 2015
(in whole dollars)
Malignant claims $ 50,200 $ 55,300 $ 56,000 $ 44,000 $ 44,000
Nonmalignant claims $ 3,900 $ 4,700 $ 2,800 $ 4,485 $ 100

~~It is not possible to predict whether resolution values for Bendix-related asbestos claims will increase, decrease or stabilize in the future.~~

The Company's Consolidated Financial Statements reflect an estimated liability for resolution of asserted (claims filed as of the financial statement date) and unasserted Bendix-related asbestos claims and excludes the Company’s ongoing legal fees to defend such asbestos claims which will continue to be expensed as they are incurred. The Company has valued Bendix asserted and unasserted claims using average resolution values for the previous five years. The Company updates the resolution values used to estimate the cost of Bendix asserted and unasserted claims during the fourth quarter each year.

Honeywell reflects the inclusion of all years of epidemiological disease projection through 2059 when estimating the liability for unasserted Bendix-related asbestos claims. Such liability for unasserted Bendix-related asbestos claims is based on historic and anticipated claims filing experience and dismissal rates, disease classifications, and resolution values in the tort system for the previous five years.

The Company's insurance receivable corresponding to the liability for settlement of asserted and unasserted Bendix asbestos claims reflects coverage which is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. Based on our ongoing analysis of the probable insurance recovery, insurance receivables are recorded in the financial statements simultaneous with the recording of the estimated liability for the underlying asbestos claims. This determination is based on the Company's analysis of the underlying insurance policies, the Company's historical experience with our insurers, the Company's ongoing review of the solvency of its insurers, judicial determinations relevant to our insurance programs, and the Company's consideration of the impacts of any settlements reached with its insurers.segment profit.

Honeywell International Inc.

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollars in millions, except per share amounts)~~

~~Garrett Matter~~

In conjunction with the Garrett spin-off, the Company entered into a binding indemnification and reimbursement agreement (“Garrett Indemnity”) with a Garrett subsidiary, pursuant to which Garrett’s subsidiary has an ongoing obligation to make cash payments to Honeywell in amounts equal to (i) 90% of Honeywell’s asbestos-related liability payments primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments, including the legal costs of defending and resolving such liabilities, less (ii) 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. The amount payable to Honeywell in respect of such liabilities arising in any given year is subject to a cap of approximately Euro 150 million (equivalent to $175 million at the time the Garrett Indemnity was entered into). The obligation under the terms of the Garrett Indemnity continues until the earlier of December 31, 2048, or December 31 of the third consecutive year during which the annual obligation is less than the Euro equivalent, at the fixed exchange rate at the time the indemnification and reimbursement agreement was entered into, of $25 million.

Prior to the Garrett filing described below, on June 12, 2020, the Company and Garrett entered into an amendment of the Garrett Indemnity in connection with Garrett’s amendment of its 2018 credit agreement. These amendments provided Garrett with temporary financial covenant relief with respect to the total leverage and interest coverage ratios, for a period that could extend to as late as June 30, 2022. Garrett’s payments to the Company under the Garrett Indemnity were deferred to the extent Garrett is (or to the extent such payments would cause Garrett to be) out of compliance with the original financial covenants and resume to the extent Garrett is in compliance with such original financial covenants. Any deferred amounts were to be paid to the extent Garrett was in compliance with such original financial covenants and had available capacity to make such payments pursuant to the terms of the indemnification and reimbursement agreement and its current credit agreement.

The receivable amount recorded in connection with the Garrett Indemnity in the nine months ended September 30, 2020 was $38 million. Amounts associated with the Garrett Indemnity are scheduled under the agreement to be collected from Garrett quarterly, and because of the extension referenced above and below, such amounts were $36 million in the nine months ended September 30, 2020.

In conjunction with the spin-off, Honeywell also entered into a binding tax matters agreement with Garrett and a Garrett subsidiary (the “Tax Matters Agreement”). The Tax Matters Agreement generally provides that Garrett is responsible and must indemnify Honeywell for all ordinary operating taxes, including income taxes, sales taxes, value-added taxes ("VAT") and payroll taxes, relating to Garrett for all periods, including periods prior to the spin-off, to the extent not paid prior to the spin-off date. In addition, among other items, as a result of the mandatory transition tax imposed by the Tax Cuts and Jobs Act, Garrett is required to make payments to Honeywell in the amount representing the net tax liability of Honeywell under the mandatory transition tax attributable to Garrett.

~~Honeywell International Inc.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollars in millions, except per share amounts)~~

~~As of September 30, 2020, the Company’s receivables prior to the adjustments described herein from Garrett and/or certain of its subsidiaries were collectively as follows:~~


	~~September 30, 2020~~
~~Garrett Indemnification and Reimbursement~~	$	~~1,121~~
~~Tax Matters Agreement~~	~~273~~
~~Other Receivables, net~~	13
~~Total Reimbursement Receivables~~	$	~~1,407~~

~~Garrett Litigation and Bankruptcy Proceedings~~

On December 2, 2019, Garrett Motion Inc. and Garrett ASASCO Inc. filed a Summons with Notice and commenced a lawsuit in the Commercial Division of the Supreme Court of the State of New York, County of New York (the “State Court”), seeking to invalidate the Garrett Indemnity. Garrett seeks damages and a declaratory judgment based on various claims set forth in the Summons with Notice. On January 15, 2020, Garrett filed its complaint in the action, which asserted the same claims, and on March 5, 2020, we filed a Motion to Dismiss. To date, Garrett has not filed a response to the Motion to Dismiss. On June 12, 2020, given the challenges of operating in the COVID-19 environment, Honeywell and Garrett entered into a litigation status agreement pursuant to which (i) the parties agreed to make good faith efforts to limit near-term litigation spend on this matter, and (ii) the Company agreed to extend both the $2 million payment owed by Garrett to the Company on May 1, 2020 under the Garrett Indemnity and the $18 million payment owed by Garrett to the Company on April 1, 2020 under the Tax Matters Agreement until December 31, 2020 (which amounts, as previously disclosed, had been deferred to May 31, 2020). On July 17, 2020, the Company received a notice from Garrett asserting that Honeywell has caused material breaches of the Tax Matters Agreement and that the Tax Matters Agreement is unenforceable. On September 23, 2020, Garrett removed the existing State Court litigation against Honeywell to the Bankruptcy Court (as defined below). Honeywell moved to dismiss all of Garrett’s claims on October 13, 2020. Honeywell’s motion to dismiss is currently set for a hearing on November 18, 2020, subject to further direction from the Bankruptcy Court. Honeywell strongly believes that Garrett's allegations have no merit, nor are they material to Honeywell. We believe we have fully complied with our obligations under the indemnification and reimbursement agreement and the Tax Matters Agreement and that both agreements are valid and enforceable.

On September 20, 2020, Garrett and 36 of its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). Based on its bankruptcy filings, Garrett is proposing to sell its business while in bankruptcy, and Garrett entered into a Share and Asset Purchase Agreement, dated as of September 20, 2020 (the “Proposed Stalking Horse Bid”), with KPS Capital Partners, LP (“KPS”) and filed proposed bidding procedures for an auction and other procedures related to the proposed sale. As most recently amended, the Proposed Stalking Horse Bid contemplates a proposed purchase of Garrett’s business for $2.6 billion and includes as part of the sale certain claims and causes of action against Honeywell and others arising out of the spin-off, with details related to this aspect of its proposed sale structure to be forthcoming. Garrett also entered into a restructuring support agreement (“RSA”) with holders of approximately 61% of its outstanding senior secured debt which contemplates that Garrett will file and seek approval of a restructuring plan that implements the sale of Garrett’s business, pays Garrett’s secured creditors in full and pays at least 90% of Garrett's unsecured notes obligations from the cash from the sale, provides Garrett’s current stockholders an opportunity to co-invest up to $350 million in the purchase of common stock of a new company organized by KPS to purchase Garrett’s business on same terms as KPS, and includes as part of the sale certain claims and causes of action against Honeywell and others arising out of the spin-off, with details related to this aspect of its proposed sale structure to be forthcoming. On October 23, 2020, the Bankruptcy Court approved “stalking horse” bidding protections for KPS, including a $63 million termination fee and expense reimbursement (subject to a limit of $21 million). The Proposed Stalking Horse Bid and restructuring plan remain subject to Bankruptcy Court approval. KPS’s purchase of Garrett's business remains subject to competing bids and Bankruptcy Court approval, as well as customary regulatory approvals and other customary conditions. Garrett’s operations are expected to proceed, without interruption, during the bankruptcy proceedings.

~~Honeywell International Inc.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollars in millions, except per share amounts)~~

In October 2020, Honeywell signed a coordination agreement with Oaktree Capital Management, L.P. ("Oaktree") and Centerbridge Partners, L.P. ("Centerbridge"), which since has also been signed by equity holders representing approximately 50% of Garrett’s outstanding common stock. The coordination agreement supports a proposed plan of reorganization (the “Plan”) that would allow Honeywell to recover over time a significant portion of the receivable amounts owed to Honeywell (the “Alternative Proposal”). As currently contemplated, the Alternative Proposal provides that, if the Plan is approved, Honeywell would receive an initial payment of $275 million in cash and new series B preferred stock of reorganized Garrett. In total, the Alternative Proposal would provide for cash payments totaling $1.45 billion comprising the initial cash payment of $275 million and $1.175 billion paid over a twelve-year period ending December 31, 2034 (unless a discounted amount is paid earlier pursuant to certain put, call or acceleration provisions). These cash payments would be paid in full and final satisfaction of Garrett’s obligations to Honeywell under the indemnification and reimbursement agreement and tax matters agreement. Under the Alternative Proposal, both agreements would be terminated in connection with Bankruptcy Court confirmation of the Alternative Proposal. In addition, under the Alternative Proposal, Garrett’s secured creditors and unsecured notes obligations would be paid in full, and equity would be reinstated. The Alternative Proposal remains subject to various conditions and milestones, as well as Bankruptcy Court approval, and Garrett has not accepted the Alternative Proposal to date. There can be no assurance that a plan of reorganization incorporating the terms contemplated by the Alternative Proposal will be approved and confirmed by the Bankruptcy Court.

Garrett is early in the bankruptcy proceedings and the ultimate outcome of such proceedings is uncertain. We regularly review the aggregate carrying value of the receivable amounts due in connection with the Garrett Indemnity and the Tax Matters Agreement. Following Garrett’s bankruptcy filing, Honeywell's review has taken into account, among other things, the potential enterprise value of the Garrett business based on publicly available information, Garrett’s implied enterprise value under the Alternative Proposal (which supports our independent assessment), the possibility that there will be additional bids and/or other plan proposals that Honeywell believes should reflect the enterprise value of Garrett’s business, and the significant uncertainties associated with the potential outcomes of the Garrett bankruptcy proceedings. Based on such review, we currently believe that we will be able to recover a significant portion, but potentially not all, of the receivable amounts owed to us under the agreements with Garrett. As such, and based on the assumption that the Bankruptcy Court will approve a plan that reflects an enterprise value for Garrett that meets or exceeds Honeywell's best estimate, Honeywell has recorded an adjustment of $350 million to lower the aggregate carrying balance of the receivable amounts due in connection with the Garrett Indemnity and the Tax Matters Agreement. Honeywell recorded a corresponding, non-cash charge in our statement of operations in the third quarter of 2020 in the amount of $350 million. This amount represents the difference between the approximately $1.4 billion carrying value of the undiscounted receivables owed to Honeywell by Garrett under these agreements and the present value of amounts owed to us over the full term of these existing agreements.

The ultimate outcome of the bankruptcy process is uncertain. Depending on the transaction and/or plan of reorganization ultimately approved and confirmed by the Bankruptcy Court, the amount collected could be more or less than such reduced amount of the remaining receivable amounts recorded in our financial statements. There are currently two competing proposals, the Proposed Stalking Horse Bid and the Alternative Proposal (the "Competing Proposals") which both remain subject to modification, and it is possible that there will be additional bids and alternative proposals for plans of reorganization for Garrett. If either of the Competing Proposals is accepted and approved by the Bankruptcy Court in its current form, then there would be an additional write-down of the remaining receivables due from Garrett, with a corresponding charge to our statement of operations in the same amount. In the case of the current Proposed Stalking Horse Bid, such additional adjustment would be a significant portion of the remaining receivables due from Garrett. In the case of the Alternative Proposal, we would not expect such additional adjustment to be material. There can be no assurance that recording an additional adjustment (positive or negative) against the remaining receivable amounts in whole or in part (together with a related statement of operations charge) will not be necessary in a future period or periods. The ultimate outcome of the bankruptcy process is uncertain. Depending on the transaction and/or plan of reorganization ultimately approved and confirmed by the Bankruptcy Court, the amount collected could be more or less than such reduced amount of the remaining receivable amounts recorded in our financial statements. Honeywell will continue to monitor the Bankruptcy Court proceedings in order to appropriately assess and enforce our rights in this matter. Honeywell intends to vigorously defend its rights to collect amounts due under the Garrett Indemnity and Tax Matters Agreement with Garrett.

~~Honeywell International Inc.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollars in millions, except per share amounts)~~

~~Other Matters~~

The Company is subject to a number of other lawsuits, investigations and disputes (some of which involve substantial amounts claimed) arising out of the conduct of our business, including matters relating to commercial transactions, government contracts, product liability, prior acquisitions and divestitures, employee benefit plans, intellectual property, and environmental, health and safety matters. We recognize a liability for any contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments of outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Included in these other matters are the following:

~~Honeywell v. United Auto Workers (UAW) et. al~~—In September 2011, the UAW and certain Honeywell retirees (Plaintiffs) filed a suit in the Eastern District of Michigan (the District Court) alleging that a series of Master Collective Bargaining Agreements (MCBAs) between Honeywell and the UAW provided the retirees with rights to lifetime, vested healthcare benefits that could never be changed or reduced. Plaintiffs alleged that Honeywell had violated those vested rights by implementing express limitations (CAPS) on the amount Honeywell contributed toward healthcare coverage for the retirees. Honeywell subsequently answered the UAW’s complaint and asserted counterclaims, including for breach of implied warranty.

Between 2014 and 2015, Honeywell began enforcing the CAPS against former employees. In response, the UAW and certain of the Plaintiffs filed a motion seeking a ruling that the MCBAs do not limit Honeywell’s obligation to contribute to healthcare coverage for those retirees.

On March 29, 2018, the District Court issued its opinion resolving all pending summary judgment motions, except for Honeywell’s counterclaim for breach of implied warranty, which has since been dismissed without prejudice.

In the opinion, the District Court held that the MCBAs do not promise retirees vested, lifetime benefits that survive expiration of the MCBAs. Based on this ruling, Honeywell terminated the retirees healthcare coverage benefits altogether as of July 31, 2018. In response, the UAW filed a motion to enjoin Honeywell from completely terminating coverage as of July 31, 2018, arguing that the CAPS themselves are vested and that Honeywell must continue to provide retiree medical benefits at the capped level. On July 28, 2018, the District Court denied the UAW’s motion and entered a final judgment consistent with its March 2018 ruling. The UAW appealed this decision to the Sixth Circuit Court of Appeals.

In the March 2018 opinion, the District Court also held that Honeywell is obligated under the MCBAs to pay the “full premium” for retiree healthcare rather than the capped amount. Based on this ruling, Honeywell would be required to pay monetary damages to retirees for any past years in which Honeywell paid less than the “full premium” of their healthcare coverage. Such damages would be limited, depending on the retiree group, to a two to three-year period ending when the 2017 MCBA expired, and Honeywell would have no ongoing obligation to continue funding healthcare coverage for subsequent periods. Honeywell appealed the District Court’s ruling on this “full premium” damages issue.

On April 3, 2020, the Sixth Circuit Court of Appeals issued an opinion ruling for Honeywell in all respects. The Court of Appeals affirmed the District Court's ruling that the MCBAs do not promise retirees vested, lifetime benefits that survive expiration of the MCBAs. In addition, the Court of Appeals reversed the District Court's ruling that Honeywell was obligated under the MCBAs to pay the "full premium" for retiree healthcare, rather than the capped amount. As a result of these rulings, Honeywell is not required to pay any monetary damages to the Plaintiffs.

~~Plaintiffs sought rehearing~~ ~~en banc~~ ~~from~~the Sixth Circuit Court of Appeals, which petition was denied. Plaintiffs failed to timely appeal the Sixth Circuit's ruling to the Supreme Court of the United States. Accordingly, as of October 8, 2020, the case has now been fully resolved.

~~Honeywell International Inc.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~(Dollars in millions, except per share amounts)~~

~~Petrobras and Unaoil~~—We are cooperating with certain investigations by the U.S. Department of Justice (DOJ), the SEC and Brazilian authorities relating to our use of third parties who previously worked for our UOP business in Brazil in relation to Petróleo Brasileiro S.A. (Petrobras). The investigations are focused on compliance with the U.S. Foreign Corrupt Practices Act and similar Brazilian laws, and involve, among other things, document production and interviews with former and current management and employees. The DOJ and the SEC are also examining a matter involving a foreign subsidiary’s prior engagement of Unaoil S.A.M. in Algeria. We are cooperating with the authorities in each of the above matters. While we cannot predict the outcome of these matters, based on the facts currently known to us, we do not anticipate that these matters will have a material adverse effect on our financial condition, results of operations, or cash flows.

Given the uncertainty inherent in litigation and investigations (including the specific matters referenced above), we do not believe it is possible to develop estimates of reasonably possible loss in excess of current accruals for these matters (other than as specifically set forth above). Considering our past experience and existing accruals, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our consolidated financial position. Because most contingencies are resolved over long periods of time, potential liabilities are subject to change due to new developments, changes in settlement strategy or the impact of evidentiary requirements, which could cause us to pay damage awards or settlements (or become subject to equitable remedies) that could have a material adverse effect on our results of operations or operating cash flows in the periods recognized or paid.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~
			~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~
			~~(Dollars in millions, except per share amounts)~~

(Dollars in tables and graphs in millions)

The following Management Discussion and Analysis is intended to help the reader understand the results of operations and financial condition of Honeywell International Inc. and its consolidated subsidiaries ~~(“Honeywell”~~(Honeywell or ~~“the Company”)~~the Company) for the three months (quarter) ~~and nine months~~ ended ~~September 30, 2020.~~March 31, 2021. The financial information as of ~~September 30, 2020~~March 31, 2021 should be read in conjunction with the Consolidated Financial Statements for the year ended December 31, ~~2019~~2020 contained in our ~~2019~~2020 Annual Report on Form 10-K.

See Note 1 Basis of Presentation of Notes to Financial Statements for discussion on the estimated impact from additional reporting days resulting from our normal quarterly closing procedures. See Note 3 Acquisitions and Divestitures of Notes to Consolidated Financial Statements for a discussion of acquisition and divestiture activity during the quarter ended March 31, 2021.

COVID-19 UPDATE

~~In December 2019,~~Our business faced significant disruptions due to the COVID-19 pandemic in 2020 and the resulting global recession, causing a ~~novel strain~~slow-down in demand for many of ~~coronavirus (COVID-19) was identified in Asia. Over~~our products and services. Although many jurisdictions worldwide authorized the ~~next several~~emergency use of vaccines as a method to limit and control infections, as of March 31, 2021, the pandemic continues to impact our business as vaccination efforts continue to face challenges and new variants of the virus continue to emerge. When compared to the three months ~~COVID-19 quickly spread across the world. In~~ended March 31, 2020, the ~~World Health Organization declared COVID-19~~pandemic resulted in a ~~worldwide pandemic. As~~decline of ~~September 30, 2020,~~sales for the ~~virus continues~~Aerospace and Performance Materials and Technologies segments. Sales for the Safety and Productivity Solutions segment continue to ~~spread, infecting more than 10 million people worldwide. No vaccine is currently available.~~

~~Governments took unprecedented actions to contain the spread of COVID-19, temporarily shutting down non-essential businesses, issuing stay at home or “shelter in place” orders~~benefit from significant demand for our respiratory PPE and asking citizens to avoid all non-essential travel. In certain situations, governments closed borders and issued mandatory quarantines. Companies were asked, in many cases were required, to allow non-essential employees to work remotely. Consumer spending declined, global travel demand declined significantly,warehouse automation services, and the ~~world entered a global recession.~~

~~These events impacted~~Honeywell Building Technologies segment is showing early signs of improvement as our ~~business operations in multiple ways. In the first quarter of 2020, we quickly responded~~customers prepare to safely return to the ~~changing environment. In January 2020, we implemented policies in select countries within Asia to restrict travel~~office, school, and require employees to work from home for all roles that allow for remote work. In March 2020, we expanded this work from home policy to include our employees worldwide. We introduced appropriate safety and hygiene protocols to enable our manufacturing employees to operate safely through the pandemic. We actively monitored the changing government rules and regulations for each of our locations worldwide.

travel.

We remain cautious as many factors remain ~~unpredictable, including COVID-19 infection rates~~unpredictable. We actively monitor and ~~vaccine availability timeline.~~ respond to the changing conditions created by the pandemic, with focus on prioritizing the health and safety of our employees, dedicating resources to support our communities, and innovating to address our customers’ needs. During the three months ended March 31, 2021, we made the following commitments to our employees and communities:

•In January 2021, Honeywell, Atrium Health, Tepper Sports & Entertainment and Charlotte Motor Speedway launched a unique public-private initiative, with support from North Carolina Governor Roy Cooper, Charlotte Mayor Vi Lyles and leaders from Mecklenburg County, to optimize mass vaccination events. The partnership has fully vaccinated more than 46,000 people.

•In February 2021, we sponsored a week-long vaccination program in the Phoenix area, supported by volunteers from our Aerospace business.

•We ~~are monitoring~~announced that we will continue to pay out-of-pocket prescribed coronavirus testing costs for all employees worldwide and treatment costs incurred by employees and their dependents enrolled in Honeywell medical plans through December 31, 2021. This is an extension beyond our previously communicated end date of March 31.

We continue to monitor COVID-19 infection rates globally and acknowledge the risk of new surges in COVID-19 infections.

~~We prepared procedures~~ Please see section titled Risk Factors in our 2020 Annual Report on Form 10-K for discussion of risks associated with the ~~phased return~~COVID-19 pandemic. A discussion of ~~our employees to office sites and trained our local site leaders~~the impact of COVID-19 can also be found in the ~~appropriate safety~~Review of Business Segments section of this Management Discussion and hygiene protocols. As of September 30, 2020, all of our manufacturing sites continue to operate and, outside of India, most of our employees in Asia have returned to the workplace in some capacity. We also returned workers to select office sites within Europe and North America. In many countries, including the U.S., most of our non-manufacturing employees continue to work from home (for all roles that allow for remote work).

~~The global recession resulted in a slow-down in demand for many of the products and services that we offer. The impact on each of our businesses is outlined below:~~Analysis.

•Aerospace – The decline in global travel negatively impacted many of our customers, resulting in lower demand for our products from original equipment manufacturers (OEMs) and negatively impacted demand for our aftermarket businesses. As a result, this segment's sales and profits declined in the three months ended September 30, 2020, compared to the three months ended September 30, 2019.

•Performance Materials and Technologies – Many of our customers operate in the oil and gas industry. The decline in global travel, coupled with excessive oil and gas supply, negatively impacted many of our customers and resulted in lower demand for our products. As a result, this segment's sales and profits declined in the three months ended September 30, 2020, compared to the three months ended September 30, 2019.

3630 Honeywell International Inc.

•Honeywell Building Technologies – Our customers own or manage buildings in a variety of industries including commercial real estate, hospitality, government, healthcare, banking and education. The global recession impacted many of these industries, resulting in a reduction of discretionary spending. As a result, this segment experienced lower demand for our products, and segment sales and profits declined in the three months ended September 30, ~~2020, compared to the three months ended September 30,~~ ,~~2019.~~RESULTS OF OPERATIONS

Consolidated Financial Results

•Safety and Productivity Solutions – The global pandemic created significant demand for our respiratory personal protective equipment (PPE) driving increases in sales and profits in the three months ended September 30,~~2020, compared to the three months ended September 30, 2019.~~

Net Sales by Segment

As a result of the slowdown in demand for our products, we implemented several cost reduction programs across our enterprise. We canceled our 2020 merit increases and reduced executive and Board of Director compensation. We initiated reduced work schedules across the company and implemented permanent census reductions.

We also took several steps to secure additional liquidity. In May 2020, we completed a public Senior Notes offering, which provided $3 billion of available liquidity. In August 2020, we completed a public Senior Notes offering, which provided $3 billion of available liquidity which was used to repay the outstanding principal amount of $3.0 billion under the Term Loan Agreement. As of September 30, 2020, there are no outstanding borrowings or commitments remaining under the Term Loan Agreement. As of September 30, 2020, we held $15.0 billion of available cash and short-term investments.

~~We continue to monitor and respond to the changing conditions created by the pandemic.~~

~~Employee Health, Safety, and Economic Wellness~~

We continue to monitor the COVID-19 situation and its impacts globally. We are prioritizing the health and safety of our employees. Out of an abundance of caution for the health of our employees and to support local government initiatives to stem the spread of the virus, we implemented several precautions at various sites around the world at all times in compliance with local government requirements and Centers for Disease Control and Prevention (CDC) guidelines. These include, but are not limited to:

•~~Limiting visitor site access to business-essential purposes;~~

•~~Introducing screening checks at certain sites where permissible or mandated;~~

•~~Enabling employees to work from home wherever and whenever required or appropriate;~~

•~~Continuously updating travel guidance, according to latest developments; and~~

•~~Complying with all local health authority guidance or regulations and our own protocols, including requesting employees to comply with self-quarantine requirements whenever advisable.~~

We have taken a number of measures to support our employees during these difficult times. We extended medical benefits globally to cover out-of-pocket costs associated with testing for coronavirus, and for those on our U.S. company medical plans, we are also covering treatment costs. In Mexico, we introduced a medical benefit for employees at lower compensation levels to ensure access to private medical treatment. In the U.S., we changed our sick leave plan for non-exempt employees to make more sick time available earlier in the year if it is needed. We established a $10 million company-funded relief fund targeting employees worldwide at lower compensation levels, especially those on reduced work hours who didn’t receive high levels of income replacement from unemployment or other government assistance.

To date, Honeywell has made substantial mask donations to frontline workers across multiple regions. Honeywell funded a $2 million Small Business Innovation Fund in Charlotte to help storefront businesses with 50 or fewer employees make investments in new technologies and business models to adjust to the realities of operating in the COVID-19 environment; businesses owned by women, minorities and veterans will be prioritized. In addition, Honeywell funded the provision of approximately nine million meals and a month’s supply of hygiene kits to more than 12,500 families in India suffering hardships due to the crisis.

3731 Honeywell International Inc.

~~Our Commitment to Public Health~~Segment Profit by Segment

We produce critical worker safety gear such as face masks, gloves, goggles, safety suits, and protective footwear. We play an essential role in the health and well-being of people and economies, and our customers and communities are depending on us more than ever to deliver for them. We are committed to supporting the safety of our employees, customers and fellow citizens around the world.

We are investing in new production facilities and continue to expand existing facilities to increase production of essential PPE products. We will bring these products to market as quickly as possible. We are committed to healthcare professionals, first responders, distributors and other stakeholders in an effort to ensure our PPE products are being placed quickly and cost-effectively in the hands of those most in need.

We announced our new capacity in the U.S. to make N95 masks, with production lines added in Rhode Island and Arizona that will collectively produce 40 million masks each month to support health, safety, and response workers globally. In addition, we are expanding our non-U.S. capacity with a new mask manufacturing line in the U.K that is expected to produce 4.5 million masks each month, and a new line in India that is expected to produce 2 million masks each month. Separately, we are collaborating with Mubadala Investment Company's subsidiary, Strata Manufacturing, in the UAE to produce 30 million masks annually.

~~We have communicated the following principles to our authorized distributor network:~~

•Our expectation that, at a minimum, all of our partners will comply with all applicable laws prohibiting price gouging and apply appropriate diligence to the greatest extent possible to understand how our products are being purchased so that they are placed quickly and cost-effectively in the hands of those most in need - including first responders and medical professionals.

•~~While we do not control the prices that third parties set, we expect our partners to fairly price PPE used in the COVID-19 response effort.~~

•If we find that one of our partners is not upholding the letter or spirit of these principles, we reserve the right not to fulfill that partner’s orders and terminate our relationship with that party.

We are also investing in developing and bringing to market a wide array of new COVID-related products, including but not limited to Healthy Buildings solutions, remote operations offerings, automation technologies to help speed vaccine development, vaccine packaging solutions, an ultraviolet cleaning system for aircraft, and innovative dual-layer face covers and safety packs.

~~Plant Productivity and Safety~~

In situations where our businesses were deemed essential, we worked with local officials to determine how to safely operate our manufacturing facilities. We successfully operated these manufacturing facilities with minimal disruption in our productivity. In the second quarter of 2020, we repurposed certain manufacturing facilities to produce PPE that was in short supply around the world. As of September 30, 2020, more than 95% of our manufacturing sites were operating at normal production levels.

We continue to provide essential services and produce essential goods around the world. We employ standards such as screening checks, use of masks, face coverings and other safety equipment and social distancing practices along production lines in many of our production facilities at all times in compliance with local government requirements and CDC guidelines. We take appropriate actions including disinfecting and quarantine procedures when a suspected COVID-19 case is identified.

3832 Honeywell International Inc.

~~Customers and Suppliers~~CONSOLIDATED OPERATING RESULTS

Net Sales

~~Current global economic conditions due to COVID-19 have adversely affected and may continue to adversely affect our customers’ or suppliers’ ability to operate or obtain financing, particularly~~

The change in our airline, oil & gas, and automotive end markets. Customer or supplier bankruptcies, delays in their ability to obtain financing, or the unavailability of financing could adversely affect our cash flow or results of operations. We continue to actively monitor both supplier and customer financial health and take measures to manage our supply chain disruptions and limit our exposure.

~~See Part II, Item 1A. Risk Factors for discussion of risks associated~~net sales was attributable to the ~~COVID-19 pandemic.~~

~~Garrett Bankruptcy~~

On September 20, 2020, Garrett Motion Inc. (“Garrett”) and certain of its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”).

Garrett is still in the early stages of its bankruptcy process, and any further impacts on our financial statements remain subject to the various relief ultimately granted to Garrett and its affiliates by the Bankruptcy Court and the plan of reorganization ultimately confirmed in their bankruptcy proceedings, among other things.

~~Two competing proposals have been publicly disclosed to date (the “Competing Proposals”):~~

1.Garrett entered into a Share and Asset Purchase Agreement, dated as of September 20, 2020 (the “Proposed Stalking Horse Bid”), with KPS Capital Partners, LP (“KPS”). As most recently amended, the Proposed Stalking Horse Bid contemplates a proposed purchase of Garrett’s business for $2.6 billion and a Chapter 11 plan that implements the sale of Garrett’s business, pays Garrett’s secured creditors in full and pays 90% of Garrett’s unsecured notes obligations from the cash from the sale, provides Garrett’s current stockholders an opportunity to co-invest up to $350 million in the purchase of common stock of the a new company organized by KPS to purchase Garrett’s business on same terms as KPS, and includes as part of the sale certain claims and causes of action against Honeywell and others arising out of the spin-off, with details related to this aspect of its proposed sale structure to be forthcoming.

2.Honeywell signed a coordination agreement with Oaktree Capital Management, L.P. (“Oaktree”) and Centerbridge Partners, L.P. (“Centerbridge”), which has since been signed by equity holders representing approximately 50% of Garrett’s outstanding common stock (the "Alternative Proposal"). The coordination agreement supports a proposed plan of reorganization under which Honeywell would receive cash payments totaling $1.45 billion comprising an initial payment of $275 million and $1.175 billion paid over a twelve-year period ending December 31, 2034. These cash payments would be paid in full and final satisfaction of Garrett’s obligations under the Garrett Indemnity and Tax Matters Agreement. Under the Alternative Proposal, Garrett’s secured creditors and unsecured notes obligations would be paid in full, and equity would be reinstated.

Both of the Competing Proposals remain subject to various conditions and milestones, as well as Bankruptcy Court approval and confirmation. It is also possible that there will be additional bids and alternative proposed plans of reorganization for Garrett. There can be no assurance that either the Proposed Stalking Horse Bid (including the plan of reorganization contemplated thereby) or the Alternative Proposal will be accepted by the requisite parties and approved and confirmed by the Bankruptcy Court.

We understand based on Garrett’s public disclosures that the business fundamentals of Garrett remain strong and, in the quarter ended June 30, 2020, Garrett continued to generate positive earnings before interest, taxes, depreciation, and amortization. We believe such disclosures by Garrett management demonstrate Garrett’s ability to meet its financial obligations despite temporary adverse business conditions resulting from COVID-19, particularly in light of the financial covenant relief provided by the Credit Agreement and IRA Amendments.

~~We will continue to monitor the Bankruptcy Court proceedings in order to appropriately assess and enforce our rights in this matter.~~We intend to vigorously defend our rights to collect amounts due under the Indemnity Agreement and Tax Matters Agreement with Garrett. We continue to strongly believe that Garrett's attempts to challenge the enforceability of these agreements have no merit, that we have fully complied with our obligations thereunder, and that both agreements are valid and enforceable. The accounting adjustment and related charge described above does not impact or change our view of the strength and merits of these positions.

For additional information, see “Risk Factors – Garrett is currently subject to bankruptcy proceedings in the United States Bankruptcy Court for the Southern District of New York. The outcome of the bankruptcy proceedings is unknown and may adversely affect our results of operations and financial condition” and Note 16 to Commitments and Contingencies of Notes to Consolidated Interim Financial Statements.

following:


A.	~~Results of Operations – three and nine months ended September 30,~~Q1 2021 vs. Q1 2020 ~~compared with the three and nine months ended September 30, 2019~~
Volume	(4)	%
Price	2	%
Foreign Currency Translation	2	%
Acquisitions/Divestitures	—	%
	—	%

Net Sales
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Net sales $ 7,797 $ 9,086 $ 23,737 $ 27,213
% change compared with prior period (14) % (13) %

~~The change in net sales~~Q1 2021 compared to ~~the prior year period is attributable to the following:~~

Three Months Year to Date
Volume (16) % (14) %
Price 2 % 2 %
Foreign Currency Translation — % (1) %
(14) % (13) %

Q1 2020

A discussion of net sales by segment can be found in the Review of Business Segments section of this Management Discussion and Analysis.

Net sales is largely unchanged. The ~~unfavorable volume impact in the quarter and nine months is~~overall mix of sales between our business segments changed, driven by ~~lower~~the following:

•Lower sales ~~in certain products~~volumes across our ~~businesses~~Aerospace segment due to the impact of the global recession attributable to COVID-19,

•Offset by increased demand for our respiratory PPE and ~~volatility~~warehouse automation businesses in the ~~oil~~Safety and ~~gas industry, partially offset by the strength in respiratory PPE products, warehouse automation projects, and defense and space business.~~

Productivity Solutions segment.

The ~~unfavorable~~favorable impact of foreign currency translation in the ~~nine months~~quarter is driven by the ~~strengthening~~weakening of the U.S. Dollar against the currencies of the majority of our international markets, primarily the Euro, Chinese Renminbi, ~~Indian Rupee,~~British Pound, Australian Dollar, and Canadian ~~Dollar, Russian Ruble, and Australian~~ Dollar.

33 Honeywell International Inc.

Cost of Products and Services Sold
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Cost of products and services sold $ 5,383 $ 6,038 $ 16,193 $ 18,011
% change compared with prior period (11) % (10) %
Gross margin percentage 31.0 % 33.5 % 31.8 % 33.8 %

Cost of Products and Services Sold

Q1 2021 compared to Q1 2020

Cost of products and services sold ~~decreased in the quarter primarily~~increased due to ~~lower~~the following:

•Higher direct ~~and indirect~~ material costs of approximately ~~$220~~$170 million and $110 million and lower labor costs of approximately $370 million (both driven by lower sales volumes and other cost actions to improve productivity), partially offset by higher repositioning and other charges of approximately $20 million.

Cost of products and services sold decreased in the nine months primarily due to lower direct and indirect material costs of approximately $1,170 million and $240 million and lower labor costs of approximately $530 million (both driven by lower sales volumes and other cost actions to improve productivity), partially offset by higher repositioning and other charges of approximately $80 ~~million.~~million,

•Partially offset by lower labor costs of approximately $100 million.

Gross Margin

Q1 2021 compared to Q1 2020

Gross margin and Gross margin as a percentage of net sales decreased ~~in the quarter and nine months primarily~~ due to ~~lower sales volumes across each~~the following:

•A larger portion of our ~~businesses.~~sales was driven by our Safety and Productivity Solutions segment,

•Higher repositioning and other charges of approximately $80 million, and

•Lower gross margins in our Performance Materials and Technologies segment,

•Partially offset by gross margin expansion in our Aerospace and Honeywell Building Technologies segments.

4134 Honeywell International Inc.

Selling, General and Administrative Expenses

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Selling, general and administrative expense $ 1,103 $ 1,296 $ 3,524 $ 4,046
% of sales 14.1 % 14.3 % 14.8 % 14.9 %

Q1 2021 compared to Q1 2020

Selling, general and administrative expenses ~~decreased $193 million~~and Selling, general and administrative expenses as a percentage of net sales were largely unchanged.

•Cost savings from repositioning actions resulted in lower expenses,

•Offset by the ~~quarter~~unfavorable impact of foreign currency translation and ~~$522 million in the nine months primarily due to productivity and lower sales volume, partially offset by~~ higher ~~repositioning and other charges.~~share-based compensation expense.

Other (Income) Expense

Other (Income) Expense
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Other (income) expense $ 62 $ (311) $ (546) $ (901)


	Three Months Ended March 31,
	2021		2020
Other (income) expense	$	(442)	$	(317)

Q1 2021 compared to Q1 2020

Other ~~expense~~income increased ~~for the quarter primarily~~ due to the ~~non-cash charge associated with~~following:

•Gain on sale of the ~~reduction in carrying value to present value of reimbursement receivables due from Garrett Motion Inc. (Garrett),~~retail footwear business and higher pension income,

•Partially offset by lower interest income and lower foreign exchange ~~income, partially offset by higher pension~~ income.

35 Honeywell International Inc.

Other income decreased for the nine months primarily due to the non-cash charge associated with the reduction in carrying value to present value of reimbursement receivables due from Garrett, lower interest income and lower foreign exchange income, partially offset by higher pension income.

Tax Expense ~~(Benefit)~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Tax expense (benefit) $ 367 $ 319 $ 816 $ 1,151
Effective tax rate 32.0 % 16.2 % 19.0 % 19.9 %

Q1 2021 compared to Q1 2020

The effective tax rate increased ~~for the quarter ended September 30, 2020 compared to the quarter ended September 30, 2019~~ primarily from a ~~non-cash charge related to the reduction of the aggregate carrying value of certain receivables with no corresponding tax benefit,~~ ~~the absence of~~ tax benefits ~~related to~~realized in the ~~reduction~~prior year as a result of accrued withholding taxes on unremitted foreign earnings and decreased tax benefits for employee share based compensation. The effective tax rate decreased for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 primarily from the favorable resolution of a foreign tax matter related to the spin-off transactions, tax law changes in India and the resolution of certain U.S. tax ~~matters offset by~~ ~~a non-cash charge related to the reduction of the aggregate carrying value of certain receivables with no corresponding tax benefit,~~ ~~the absence of tax benefits related to the reduction of accrued withholding taxes on unremitted foreign earnings and decreased tax benefits for employee share based compensation.~~matters.

The effective tax rate for the three months ended ~~September 30, 2020~~March 31, 2021 was higher than the U.S. federal statutory rate of 21% primarily ~~from~~ ~~a non-cash charge related~~due to ~~the reduction of the aggregate carrying value of certain receivables with no corresponding tax benefit,~~ incremental tax reserves and ~~state~~states taxes, partially offset by ~~foreign earnings taxed at lower~~tax benefits for employee share-based compensation and the resolution of certain foreign tax ~~rates.~~ matters.

The effective tax rate for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 was lower than the U.S. federal statutory rate of 21% primarily from foreign earnings taxed at lower foreign tax rates, ~~the favorable resolution of a foreign tax matter related to the spin-off transactions,~~ tax law changes in India and the resolution of certain U.S. tax matters, partially offset by~~a non-cash charge related to the reduction of the aggregate carrying value of certain receivables with no corresponding tax benefit,~~ incremental tax reserves and state taxes.

Net Income Attributable to Honeywell

Q1 2021 compared to Q1 2020

Earnings per share of common stock–assuming dilution decreased, driven by the following:

•Higher repositioning and other charges,

•Lower segment profit,

•Higher income taxes,

•Higher share-based compensation expense and lower interest income,

•Partially offset by a gain on sale of the retail footwear business and higher pension income.

The effective tax rate for the quarter and nine months ended September 30, 2019 was lower than the U.S. federal statutory rate of 21% primarily due to the reduction of withholding taxes related to unremitted foreign earnings.

4236 Honeywell International Inc.

REVIEW OF BUSINESS SEGMENTS

~~Net Income Attributable to~~We globally manage our business operations through four segments: Aerospace, Honeywell Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions.

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Net income attributable to Honeywell $ 758 $ 1,624 $ 3,420 $ 4,581
Earnings per share of common stock – assuming dilution $ 1.07 $ 2.23 $ 4.81 $ 6.25

AEROSPACE

Earnings per share of common stock – assuming dilution decreased in the quarter primarily driven by lower segment profit, non-cash charge associated with the reduction in carrying value to present value of reimbursement receivables due from Garrett, higher repositioning and other charges and higher income taxes.


	Three Months Ended March 31,
	2021		2020		% Change
Net sales	$	2,632	$	3,361	(22)	%
Cost of products and services sold	1,656		2,199
Selling, general and administrative and other expenses	214		225
Segment profit	$	762	$	937	(19)	%

~~Earnings per share~~


	2021 vs. 2020
	Three Months Ended March 31,
Factors Contributing to Year-Over-Year Change	Sales		Segment Profit
Organic(1)	(22)	%	(19)	%
Foreign currency translation	—	%	—	%
Acquisitions, divestitures and other, net	—	%	—	%
Total % change	(22)	%	(19)	%

(1) Organic sales % change is defined as the change in net sales, excluding the impact on sales from foreign currency translation and acquisitions, net of ~~common stock – assuming dilution decreased~~divestitures. We believe this measure is useful to investors and management in ~~the nine months primarily driven by lower segment profit, non-cash charge associated with the reduction~~understanding our ongoing operations and in ~~carrying value to present value~~analysis of ~~reimbursement receivables due from Garrett, higher repositioning and other charges and lower interest income, partially offset by lower income taxes, higher pension~~ ongoing ~~income and the favorable impact of lower share count.~~operating trends.

37 Honeywell International Inc.

~~Review of Business Segments~~Q1 2021 compared to Q1 2020

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 %
Change 2020 2019 %
Change
Aerospace sales
Commercial Aviation Original Equipment $ 406 $ 772 (47) % $ 1,527 $ 2,265 (33) %
Commercial Aviation Aftermarket 774 1,452 (47) % 2,807 4,234 (34) %
Defense and Space 1,482 1,320 12 % 4,232 3,894 9 %
Total Aerospace sales 2,662 3,544 8,566 10,393
Honeywell Building Technologies sales
Buildings 1,305 1,415 (8) % 3,763 4,254 (12) %
Total Honeywell Building Technologies sales 1,305 1,415 3,763 4,254
Performance Materials and Technologies sales
UOP 461 717 (36) % 1,572 2,030 (23) %
Process Solutions 1,135 1,283 (12) % 3,379 3,818 (11) %
Advanced Materials 656 670 (2) % 1,916 2,129 (10) %
Total Performance Materials and Technologies sales 2,252 2,670 6,867 7,977
Safety and Productivity Solutions sales
Safety 599 558 7 % 1,612 1,653 (2) %
Productivity Solutions 979 899 9 % 2,929 2,936 — %
Total Safety and Productivity Solutions sales 1,578 1,457 4,541 4,589
Net sales $ 7,797 $ 9,086 $ 23,737 $ 27,213

~~Aerospace~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 %
Change 2020 2019 %
Change
Net sales $ 2,662 $ 3,544 (25) % $ 8,566 $ 10,393 (18) %
Cost of products and services sold 1,854 2,375 5,848 6,944
Selling, general and administrative and other expenses 191 261 636 796
Segment profit $ 617 $ 908 (32) % $ 2,082 $ 2,653 (22) %

2020 vs. 2019
Three Months Ended
September 30, Nine Months Ended
September 30,
Factors Contributing to Year-Over-Year Change Sales Segment
Profit Sales Segment
Profit
Organic (25) % (32) % (18) % (22) %
Foreign currency translation — % — % — % — %
Acquisitions, divestitures and other, net — % — % — % — %
Total % change (25) % (32) % (18) % (22) %

~~Aerospace sales~~Sales decreased ~~for the quarter and nine months ended September 30, 2020~~ due ~~primarily~~ to lower sales volumes as the decline in global travel and flight hours negatively impacted many of our customers, resulting in lower demand for our products from OEMs and reduced demand for our aftermarket products and services.

•Commercial Aviation Original Equipment sales decreased ~~47%~~36% (decreased ~~47%~~37% organic) in the quarter ~~and decreased 33% (decreased 32% organic) in the nine months primarily~~ due to lower demand from air transport and regional and business ~~aviation OEMs.~~

aviation.

•Commercial Aviation Aftermarket sales decreased ~~47% (decreased 47% organic) in the quarter and decreased~~ 34% (decreased 34% organic) in the ~~nine months primarily~~quarter due to lower demand in air transport and regional and business aviation.

•Defense and Space sales ~~increased 12% (increased 13%~~decreased 1% (decreased 2% organic) in the quarter ~~and increased 9% (increased 9% organic) in the nine months~~ driven by ~~growth~~lower sales volumes in ~~U.S. and~~ international defense.

~~Aerospace segment~~Segment profit decreased in the quarter ~~and nine months primarily~~ driven by lower sales ~~volume, lower sales of higher margin products and services,~~volumes partially offset by favorable pricing. Cost of products and services sold decreased in the quarter ~~and nine months~~ due to lower sales volumes.

HONEYWELL BUILDING TECHNOLOGIES


	Three Months Ended March 31,
	2021		2020		% Change
Net sales	$	1,358	$	1,281	6	%
Cost of products and services sold	789		754
Selling, general and administrative and other expenses	264		265
Segment profit	$	305	$	262	16	%


	2021 vs. 2020
	Three Months Ended March 31,
Factors Contributing to Year-Over-Year Change	Sales		Segment Profit
Organic	2	%	12	%
Foreign currency translation	4	%	4	%
Acquisitions, divestitures and other, net	—	%	—	%
Total % change	6	%	16	%

38 Honeywell International Inc.

~~Honeywell Building Technologies~~Q1 2021 compared to Q1 2020

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 % Change 2020 2019 % Change
Net sales $ 1,305 $ 1,415 (8) % $ 3,763 $ 4,254 (12) %
Cost of products and services sold 770 841 2,223 2,563
Selling, general and administrative and other expenses 253 277 746 823
Segment profit $ 282 $ 297 (5) % $ 794 $ 868 (9) %

2020 vs. 2019
Three Months Ended
September 30, Nine Months Ended
September 30,
Factors Contributing to Year-Over-Year Change Sales Segment
Profit Sales Segment
Profit
Organic (8) % (6) % (11) % (8) %
Foreign currency translation — % 1 % (1) % (1) %
Acquisitions, divestitures and other, net — % — % — % — %
Total % change (8) % (5) % (12) % (9) %

~~Honeywell Building Technologies sales decreased in the quarter ended September 30, 2020~~Sales increased due to ~~lower organic sales. Sales decreased in~~ the ~~nine months ended September 30, 2020 due to lower organic sales and the unfavorable~~favorable impact of foreign currency ~~translation. Our customers own or manage buildings~~translation and organic growth. Demand increased in ~~a variety~~the current quarter compared to the prior year as the global economy recovers from the recession resulting from the COVID-19 pandemic.

•Sales in Products increased 8% (increased 4% organic) due to the favorable impact of ~~industries including commercial real estate, hospitality, airports~~foreign currency translation, higher sales volumes and other government buildings, healthcare and education. The global recession impacted many of these industries, resulting in a reduction of discretionary spending and demand for our products and services.

pricing.

•Sales in Building ~~Technologies decreased 8%~~Solutions increased 4% (decreased 8%1% organic) ~~in the quarter primarily~~ due to ~~lower sales volumes in both Products and Building Solutions. Sales decreased 12% (decreased 11% organic) in~~ the ~~nine months primarily due to lower sales volumes in both Products and Building Solutions and the unfavorable~~favorable impact of foreign currency ~~translation.~~translation, partially offset by lower sales volumes due to the timing of projects.

~~Honeywell Building Technologies segment~~Segment profit ~~decreased in the quarter~~increased primarily due to ~~lower sales volumes, partially offset by favorable~~higher productivity, pricing and the favorable impact of foreign currency translation. ~~Segment profit decreased in the nine months~~Cost of products and services sold increased primarily due to ~~lower sales volumes and~~ the unfavorable impact of foreign currency translation, partially offset by ~~favorable pricing. Cost of products and services sold decreased in the quarter and nine months due to lower sales volumes.~~higher productivity.

PERFORMANCE MATERIALS AND TECHNOLOGIES


	Three Months Ended March 31,
	2021		2020		% Change
Net sales	$	2,346	$	2,397	(2)	%
Cost of products and services sold	1,591		1,559
Selling, general and administrative and other expenses	321		326
Segment profit	$	434	$	512	(15)	%

4639 Honeywell International Inc.

~~Performance Materials and Technologies~~


	2021 vs. 2020
	Three Months Ended March 31,
Factors Contributing to Year-Over-Year Change	Sales		Segment Profit
Organic	(6)	%	(17)	%
Foreign currency translation	3	%	3	%
Acquisitions, divestitures, and other, net	1	%	(1)	%
Total % change	(2)	%	(15)	%

Q1 2021 compared to Q1 2020

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 %
Change 2020 2019 %
Change
Net sales $ 2,252 $ 2,670 (16) % $ 6,867 $ 7,977 (14) %
Cost of products and services sold 1,523 1,742 4,572 5,121
Selling, general and administrative and other expenses 287 346 922 1,066
Segment profit $ 442 $ 582 (24) % $ 1,373 $ 1,790 (23) %

2020 vs. 2019
Three Months Ended September 30, Nine Months Ended September 30,
Factors Contributing to Year-Over-Year Change Sales Segment
Profit Sales Segment
Profit
Organic (16) % (24) % (13) % (23) %
Foreign currency translation — % — % (1) % — %
Acquisitions, divestitures, and other, net — % — % — % — %
Total % change (16) % (24) % (14) % (23) %

~~Performance Materials and Technologies sales decreased for the quarter ended September 30, 2020 primarily due to lower sales volumes.~~ Sales decreased ~~in the nine month period~~ due to lower sales volumes ~~and~~partially offset by the ~~unfavorable~~favorable impact of foreign currency translation. ~~Many of our customers operate in the oil and gas industry.~~ The decline in global travel, coupled with ~~excessive~~reduced investment in the oil and gas ~~supply,~~industry, negatively impacted many of our customers resulting in lower demand for our products and services.

•UOP sales decreased ~~36%~~11% (decreased ~~36%~~14% organic) in the quarter ~~primarily~~ due to lower ~~catalyst shipments~~demand for oil and ~~decreases in licensing~~gas products and ~~engineering driven~~services partially offset by ~~project delays. UOP~~the favorable impact of foreign currency translation.

•Process Solutions sales decreased ~~23%~~5% (decreased ~~22%~~9% organic) in the ~~nine months~~quarter driven ~~primarily~~ by ~~decreases~~delays in ~~catalyst volumes, licensing,~~automation projects and ~~engineering~~lower demand for products and services partially offset by the favorable impact of foreign currency translation.

•Advanced Materials sales ~~volumes~~increased 11% (increased 8% organic) in the quarter driven by increased demand in fluorine and specialty products and the favorable impact of foreign currency translation.

Segment profit decreased due to lower sales of higher margin products. Cost of products and services sold increased due to lower sales of higher margin products and services within UOP and the unfavorable impact of foreign currency ~~translation.~~translation, partially offset by a decrease in sales volumes.

SAFETY AND PRODUCTIVITY SOLUTIONS

40 Honeywell International Inc.

•Process Solutions sales decreased 12% (decreased 12% organic) in the quarter primarily driven by decreases in products, migration services and automation projects volumes. Process Solutions sales decreased 11% (decreased 10% organic) in the nine months driven primarily by decreases in products businesses, automation projects and migration services volumes and the unfavorable impact of foreign currency translation.

•~~Advanced Materials sales decreased 2% (decreased 4% organic) in the quarter driven primarily by decreased volumes in foam and stationary products partially offset by~~


	Three Months Ended March 31,
	2021		2020		% Change
Net sales	$	2,118	$	1,424	49	%
Cost of products and services sold	1,550		972
Selling, general and administrative and other expenses	265		274
Segment profit	$	303	$	178	70	%


	2021 vs. 2020
	Three Months Ended March 31,
Factors Contributing to Year-Over-Year Change	Sales		Segment Profit
Organic	47	%	67	%
Foreign currency translation	3	%	4	%
Acquisitions, divestitures, and other, net	(1)	%	(1)	%
Total % change	49	%	70	%

Q1 2021 compared to Q1 2020

Sales increased ~~automotive refrigerants,~~due to organic growth and the favorable impact of foreign currency translation, partially offset by a divestiture. The segment continues to benefit from increased demand for respiratory PPE and warehouse automation services. Demand increased ~~specialty products volumes. Advanced Materials sales decreased 10% (decreased 10% organic)~~across other verticals in the ~~nine months driven primarily by decreased volumes in fluorine products due to lower demand in automotive refrigerants.~~

~~Performance Materials and Technologies~~ segment ~~profit decreased~~ in the quarter ~~and nine months due~~compared to ~~operating leverage on lower sales volumes and lower sales of higher margin products, partially offset by other productivity actions. Cost of products and services sold decreased in~~ the ~~quarter and nine months primarily due~~prior year as the global economy recovers from the recession attributable to ~~lower sales volumes.~~

~~Safety and Productivity Solutions~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 %
Change 2020 2019 %
Change
Net sales $ 1,578 $ 1,457 8 % $ 4,541 $ 4,589 (1) %
Cost of products and services sold 1,113 984 3,164 3,129
Selling, general and administrative and other expenses 246 278 767 862
Segment profit $ 219 $ 195 12 % $ 610 $ 598 2 %

2020 vs. 2019
Three Months Ended
September 30, Nine Months Ended
September 30,
Factors Contributing to Year-Over-Year Change Sales Segment
Profit Sales Segment
Profit
Organic 8 % 13 % — % 4 %
Foreign currency translation — % — % (1) % (2) %
Acquisitions, divestitures, and other, net — % (1) % — % — %
Total % change 8 % 12 % (1) % 2 %

~~Safety and Productivity Solutions sales increased in~~ the quarter ended September 30, 2020 due to organic growth. The global pandemic has created significant continued demand for our respiratory PPE and additional demand for on-line shopping services, providing continued support for our warehouse automation services. Sales decreased in the nine months ended September 30, 2020 due to flat organic sales and the unfavorable impact of foreign currency translation.

COVID-19 pandemic.

•Sales in Safety and Retail increased 7%48% (increased 6%47% organic) in the quarter due to organic sales growth and the favorable impact of foreign currency ~~translation.~~translation, partially offset by a divestiture. Safety experienced a significant increase in ~~order volume~~sales volumes for respiratory PPE in the quarter due to the global pandemic, partially offset by lower demand for gas sensing and detection equipment. Sales decreased 2% (decreased 2% organic) in the nine months primarily due to lower sales in gas sensing and detection equipment, partially offset by higher sales in PPE.

COVID-19 pandemic.

•Sales in Productivity Solutions and Services increased 9%19% (increased 9%16% organic) ~~in the quarter~~ due to higher organic ~~growth~~sales volumes and the favorable impact of foreign currency translation.

•Sales in Warehouse and Workflow Solutions increased 84% (increased 84% organic) due to strong demand for our warehouse automation services.

•Sales in Advanced Sensing Technologies (formerly Sensing & Internet-of-Things) increased 6% (increased 4% organic) due to higher organic sales volumes and ~~Productivity Solutions and Services. Sales were flat (flat organic)~~the favorable impact of foreign currency translation.

Segment profit increased in the ~~nine months~~quarter primarily due to higher sales ~~in Warehouse and Workflow Solutions, offset by lower sales in Sensing and IoT and Productivity Solutions and Services.~~

~~Safety and Productivity Solutions segment profit increased in the quarter and the nine months primarily due to~~volumes, improved productivity, and favorable pricing, partially offset by higher sales of lower margin ~~products and higher costs associated with ramping up of respiratory PPE production to meet significant increase in order volume.~~products. Cost of products and services sold increased in the quarter ~~and the nine months~~ due to higher ~~organic~~ sales ~~volume, partially offset by~~volumes, higher ~~productivity.~~sales of lower margin products, and the unfavorable impact of foreign currency translation.

REPOSITIONING CHARGES

See Note 5 Repositioning and Other Charges of Notes to Consolidated Financial Statements for a discussion of our repositioning actions and related charges incurred in the three months ended March 31, 2021 and 2020. Cash spending related to our repositioning actions was $105 million in the three months ended March 31, 2021 and was funded through operating cash flows.

4841 Honeywell International Inc.

~~Repositioning and Other Charges~~LIQUIDITY AND CAPITAL RESOURCES

~~Cash spending related to our repositioning actions was $399 million~~(Dollars in ~~the nine months ended September 30, 2020 and was funded through operating cash flows.~~


B.			~~Liquidity and Capital Resources~~

tables in millions)

We continue to manage our businesses to maximize operating cash flows as the primary source of liquidity. In addition to our available cash and operating cash flows, we maintain additional sources of liquidity, including committed credit lines, short-term debt from the commercial paper market, long-term borrowings, access to the public debt and equity markets and the ability to access non-U.S. cash as a result of U.S. Tax Reform. We use cash generated through operations to invest in our existing core businesses, acquisitions, share repurchases and dividends.

~~Cash Flow Summary~~

~~Our cash flows from operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows, are summarized as follows:~~

Nine Months Ended September 30,
2020 2019
Cash provided by (used for):
Operating activities $ 3,426 $ 4,283
Investing activities (410) (122)
Financing activities 1,972 (2,491)
Effect of exchange rate changes on cash (19) (49)
Net increase (decrease) in cash and cash equivalents $ 4,969 $ 1,621

Cash provided by operating activities decreased by $857 million primarily due to lower net income of $1,161 million and an unfavorable impact from changes in other assets and liabilities of $10 million, partially offset by a favorable impact from working capital of $314 million.

Cash used for investing activities increased by $288 million primarily due to a $320 million increase in payments related to settlements of derivative contracts and $111 million increase in capital expenditures, partially offset by a net decrease in investments of $163 million.

Cash provided by financing activities increased by $4,463 million primarily due to an increase in proceeds from the issuance of long-term debt of $7,380 million and decrease in share repurchases of $1,501 million, partially offset by an increase in payments of long-term debt of $4,117 million and decrease in proceeds from issuance of common stock of $262 million.

~~Liquidity~~

Each of our businesses is focused on increasing operating cash flows through revenue growth, margin expansion and improved working capital turnover. ~~We believe that cash balances and operating cash flow will continue to be our principal source of liquidity. In addition to the available cash and operating cash flows, additional~~Additional sources of liquidity include committed credit lines, short-term debt from the commercial paper ~~markets,~~market, long-term borrowings, ~~and~~ access to the public debt and equity ~~markets. To date,~~markets, U.S. cash balances and the ~~Company has not experienced any limitations in our~~ ability to access ~~these sources~~non-U.S. cash as a result of ~~liquidity. Also, considering~~ the ~~current economic environment in which each of our businesses operate, our business strategies~~U.S. Tax Cuts and ~~our productivity initiatives, we believe that our cash balances and operating cash flows will remain our principal source of liquidity.~~Jobs Act.

CASH

We monitor the third-party depository institutions that hold our cash and cash ~~equivalents.~~equivalents on a daily basis. Our emphasis is primarily safety of principal and secondarily maximizing yield of those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one of these entities. As of ~~September 30,~~March 31, 2021 and December 31, 2020, we held ~~$15.0~~$12.7 billion and $15.2 billion, respectively, of cash and cash equivalents, ~~and~~including our short-term investments.

BORROWINGS

Consolidated total borrowings were $21.3 billion and $22.4 billion as of March 31, 2021 and December 31, 2020. In response to COVID-19, the Company took several actions during 2020 to secure liquidity in light of the uncertainty in economic conditions and the credit markets. See Note 9 Long-term Debt and Credit Agreements of Notes to Consolidated Financial Statements for a summary of the actions taken by the Company to improve its short-term and long-term liquidity position in response to COVID-19.


	March 31, 2021		December 31, 2020
Commercial paper and other short-term borrowings	$	3,568	$	3,597
Variable rate notes	1,122		1,122
Fixed rate notes	16,449		17,399
Other	188		266
Total borrowings	$	21,327	$	22,384

A source of liquidity is our ability to access the commercial paper market. Commercial paper notes are sold at a discount or premium and have a maturity of not more than 365 days from date of issuance. Borrowings under the commercial paper program are available for general corporate purposes as well as for financing acquisitions. ~~As of September 30, 2020, we had $3.5 billion of commercial paper notes outstanding.~~

We also have the following revolving credit ~~agreements:~~

agreements, which can provide financing for general corporate purposes:

•A $1.5 billion 364-Day Credit Agreement (the ~~"364-Day~~364-Day Credit ~~Agreement")~~Agreement) with a syndicate of banks, dated ~~April 10, 2020. This~~March 31, 2021. Amounts borrowed under the 364-Day Credit Agreement are required to be repaid no later than March 30, 2022, unless (i) we elect to convert all then outstanding amounts into a term loan, upon which such amounts shall be repaid in full on March 30, 2023, or (ii) the 364-Day Credit Agreement is ~~maintained for general corporate purposes.~~terminated earlier pursuant to its terms. The 364-Day Credit Agreement replaces the previously reported $1.5 billion 364-day credit agreement dated as of April ~~26, 2019,~~10, 2020 (the Prior 364-Day Agreement), which was terminated ~~on April 10, 2020.~~in accordance with its terms effective March 31, 2021. As of ~~September 30, 2020,~~March 31, 2021, there were no outstanding borrowings under our 364-Day Credit Agreement.

•A $4.0 billion Five Year Credit Agreement (the ~~"5-Year~~5-Year Credit ~~Agreement")~~Agreement) with a syndicate of banks, dated ~~April 26, 2019. This 5-Year Credit Agreement is maintained for general corporate purposes.~~March 31, 2021. Commitments under the 5-Year Credit Agreement can be increased pursuant to the terms of the 5-Year Credit Agreement to an aggregate amount not to exceed $4.5 billion. The 5-Year Credit Agreement amended and restated the previously reported $4.0 billion amended and restated five year credit agreement dated as of April 26, 2019 (the Prior 5-Year Agreement). As of ~~September 30, 2020,~~March 31, 2021, there were no outstanding borrowings under our 5-Year Credit Agreement.

42 Honeywell International Inc.

We ~~continuously~~also have a current shelf registration statement with the SEC under which we may issue additional debt securities, common stock and preferred stock that may be offered in one or more offerings on terms to be determined at the time of the offering. We anticipate that net proceeds of any offering would be used for general corporate purposes, including repayment of existing indebtedness, share repurchases, capital expenditures and acquisitions.

CREDIT RATINGS

Our ability to access the global debt capital markets and the related cost of these borrowings, is affected by the strength of our credit rating and market conditions. Our credit ratings are periodically reviewed by the major independent debt-rating agencies. As of March 31, 2021, S&P, Fitch, and Moody’s have ratings on our debt set forth in the table below:

S&P

Fitch

Moody's

Outlook

Stable

Short-term

A-1

Long-term

CASH FLOW SUMMARY

Our cash flows from operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows, are summarized as follows:


	Three Months Ended March 31,
	2021		2020
Cash provided by (used for):
Operating activities	$	978	$	939
Investing activities	(1,304)		350
Financing activities	(2,217)		(2,446)
Effect of exchange rate changes on cash	(14)		(189)
Net increase (decrease) in cash and cash equivalents	$	(2,557)	$	(1,346)

Cash provided by operating activities increased by $39 million primarily due to a favorable impact from working capital of $218 million (favorable accounts payable, accounts receivable, and inventories), partially offset by a decrease in net income of $154 million.

Cash used for investing activities increased by $1,654 million primarily due to $1,303 million in cash paid for an acquisition, a $319 million increase in investments and a $147 million decrease in receipts related to settlements of derivative contracts, partially offset by $190 million in proceeds from the sale of the retail footwear business.

Cash used for financing activities decreased by $229 million primarily due to a decrease in share repurchases of $1,101 million, partially offset by an increase of $796 million due to net repayments of long-term debt during the three months ended March 31, 2021.

CASH REQUIREMENTS AND ASSESSMENT OF CURRENT LIQUIDITY

In addition to our normal operating cash requirements, our principal future cash requirements will be to fund capital expenditures, share repurchases, dividends, strategic acquisitions and debt repayments. On February 12, 2021, the Board of Directors authorized the repurchase of up to a total of $10 billion of Honeywell common stock, which included amounts remaining under, and replaced, the previously approved share repurchase program. During the three months ended March 31, 2021, the Company repurchased common stock of $822 million. Please refer to the section titled Liquidity and Capital Resources of our 2020 Form 10-K for a discussion of our expected capital expenditures, share repurchases and dividends for 2021.

We continue to identify opportunities to improve our liquidity and working capital efficiency, which includes the extension of payment terms with our suppliers and sales of our trade receivables to unaffiliated financial institutions without recourse. The impact of these programs are not material to our overall liquidity.

43 Honeywell International Inc.

We continue to assess the relative strength of each business in our portfolio as to strategic fit, market position, profit and cash flow contribution in order to identify target investment and acquisition opportunities in order to upgrade our combined ~~portfolio and identify business units that will most benefit from increased investment.~~portfolio. We identify acquisition candidates that will further our strategic plan and strengthen our existing core businesses. We also identify ~~business units~~businesses that do not fit into our long-term strategic plan based on their market position, relative profitability or growth potential. These businesses are considered for potential divestiture, restructuring or other repositioning actions, subject to regulatory constraints.

In the nine months ended September 30, 2020, the Company repurchased $2,149 million of outstanding shares. In April 2019, the Board of Directors authorized the repurchase of up to a total of $10 billion of Honeywell common stock, which included amounts remaining under, and replaced, the previously approved share repurchase program. As of September 30, 2020, $4.8 billion remained available for additional share repurchases. Honeywell presently expects to repurchase outstanding shares from time to time to offset the dilutive impact over the long-term of employee stock-based compensation plans, including future option exercises, restricted unit vesting and matching contributions under our savings plans. Additionally, we will seek to reduce share count via share repurchases as and when attractive opportunities arise. The amount and timing of future repurchases may vary depending on market conditions and the level of operating, financing and other investing activities.

We continue to identify opportunities to improve our liquidity and negotiate payment terms with our vendors to conform to best in class industry standards. In addition, we facilitate supply chain finance ("SCF") programs with multiple third-party financial institutions. These programs enable our suppliers, at their sole discretion, to sell their receivables from the Company to these financial institutions on terms that are negotiated between the supplier and the respective financial institution. Our obligations, including the amounts due and scheduled payment dates, are not impacted by our suppliers’ decision to sell their receivables under these programs. Amounts due to our suppliers that elected to participate in the SCF programs are included in Accounts payable on the Consolidated Balance Sheet.

Based on past performance and current expectations, we believe that our operating cash flows will be sufficient to meet our future operating cash needs. Our available cash, committed credit lines and access to the public debt and equity markets provide additional sources of short-term and long-term liquidity to fund current operations, debt maturities, and future investment opportunities. ~~See Part II, Item 1A Risk Factors for discussion of risks related to the COVID-19 pandemic.~~

The Company increased the quarterly dividend rate by 3% to $0.93 per share of common stock effective with the fourth quarter 2020 dividend. We believe our strong financial position, continued investments for growth, and effective cost management strategies allow us to increase our quarterly dividend rate.

See Note 11 9 Long-term Debt and Credit Agreements of Notes to Consolidated Financial Statements for additional discussion of items impacting our liquidity.

~~C. Other Matters~~OTHER MATTERS

LITIGATION

~~Litigation~~

We are subject to a number of lawsuits, investigations and claims (some of which involve substantial amounts) arising out of the conduct of our business. See Note 16 15 Commitments and Contingencies of Notes to Consolidated Financial Statements for further discussion of environmental, asbestos and other litigation matters.

~~Critical Accounting Policies~~

CRITICAL ACCOUNTING ESTIMATES

The financial information as of ~~September 30, 2020~~March 31, 2021 should be read in conjunction with the Consolidated Financial Statements for the year ended December 31, ~~2019~~2020 contained in our ~~2019~~2020 Annual Report on Form 10-K.

For a discussion of the Company’s critical accounting ~~policies,~~estimates, see ~~Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~the section titled Critical Accounting Estimates in our ~~2019~~2020 Annual Report on Form 10-K.

RECENT ACCOUNTING PRONOUNCEMENTS

~~Recent Accounting Pronouncements~~

See Note 2 Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements for a discussion of recent accounting pronouncements.


~~Item~~ ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS			~~Quantitative and Qualitative Disclosures About Market Risks~~

For a discussion of the Company’s quantitative and qualitative disclosures about market risks, see ~~Item 7A.~~the section titled Quantitative and Qualitative Disclosures About Market Risks, in our ~~2019~~2020 Annual Report on Form 10-K. As of ~~September 30, 2020,~~March 31, 2021, there has been no material change in this ~~information~~.

information.


~~Item 4.~~			~~Controls and Procedures~~

ITEM 4. CONTROLS AND PROCEDURES

Honeywell management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that such disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure information required to be disclosed in the reports that Honeywell files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange ~~Commission~~Commission's rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer, our Chief Financial Officer, and our Controller, as appropriate, to allow timely decisions regarding required disclosure. There ~~have been~~were no changes that materially affected, or are reasonably likely to materially affect, Honeywell’s internal control over financial reporting that ~~have~~ occurred during the period covered by this Quarterly Report on Form 10-Q.

We have not experienced any material impact to our internal control over financial reporting during the COVID-19 pandemic. Most of our employees worked remotely during the period in which we prepared these financial statements due to the impact of COVID-19. We enhanced our oversight and monitoring during the close and reporting process, including investments in expanded VPN capabilities and higher scrutiny and monitoring of cybersecurity threats. Other than enhancing our oversight and monitoring processes, we did not alter or compromise our disclosure controls and procedures. We are continually monitoring and assessing the need to modify or enhance our disclosure controls to ensure disclosure controls and procedures continue to be effective.

51 Honeywell International Inc.

~~Part~~PART II. ~~Other Information~~OTHER INFORMATION


~~Item 1.~~			~~Legal Proceedings~~

			~~General Legal Matters~~

ITEM 1. LEGAL PROCEEDINGS

We are subject to a number of lawsuits, investigations and claims (some of which involve substantial amounts) arising out of the conduct of our business. See Note 16 15 Commitments and Contingencies of Notes to Consolidated Financial Statements for a discussion of environmental, asbestos and other litigation matters.


			~~Environmental Matters Involving Potential Monetary Sanctions in Excess of $100,000~~

~~None.~~

There were no matters requiring disclosure pursuant to the requirement to disclose certain environmental matters involving potential monetary sanctions in excess of $300,000.


~~Item 1A.~~			~~Risk Factors~~

ITEM 1A. RISK FACTORS

~~Other than as noted below, there~~There have been no material changes to the disclosure presented in our ~~2019~~2020 Annual Report on Form 10-K under ~~Item 1A.~~the section titled Risk Factors. For a further discussion of our Risk Factors, refer to the ~~“Risk Factors” discussion contained~~section titled Risk Factors in our ~~2019~~2020 Annual Report on Form 10-K.

The global COVID-19 coronavirus pandemic and related impacts have adversely affected and may continue to adversely affect our business, financial condition, results of operations, liquidity, and cash flow.

The global spread of the coronavirus (COVID-19) has created significant volatility, uncertainty and economic disruption that have negatively impacted our business, operations and financial results. The extent to which the COVID-19 pandemic will continue to impact our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration, scope and severity of the pandemic; governmental, business and individual decisions and actions; the impact of the pandemic on economic activity; and the extent to which we or our employees, customers, suppliers, service providers or other business partners may be prevented from conducting normal business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities. These factors could, among other things, continue to disrupt (i) the purchasing, contracting and payment behaviors of our customers and their end-users; (ii) our operations, including our manufacturing activities, the shipment of our products, and the performance of our suppliers and service providers; and (iii) our liquidity and cash flow.

~~Risks arising from the COVID-19 pandemic that have impacted and that may continue to impact our business, financial condition, results of operations and prospects include, among other things:~~

•Customer Risk. Existing and potential customers and their end-users have taken and may continue to take actions to reduce or suspend operations, reduce or delay spending, cancel contracts, or cut costs in a manner that reduces demand for our products and services. In particular, lower demand for air travel may continue to cause our customers to delay or suspend spending in connection with the manufacturing, repair, overhaul or servicing of aircraft, and there may be long-term deterioration in demand for air travel that could impact our business beyond the current COVID-19 health crisis. Customers may also continue to attempt to renegotiate contracts and obtain concessions, face financial constraints on their ability to make payments to us on a timely basis or at all, or discontinue their business operations, and we may be required to discount the pricing of our products. In addition, unfavorable customer site conditions, such as closure of or access restrictions to customer facilities, and disruptions to our customers’ third-party logistics, warehousing, inventory management and distribution services may continue to limit our ability to sell products, meet billing milestones or provide services.

•Operations Risk. The closure of our facilities, restrictions inhibiting our employees’ ability to access those facilities, and disruptions to the ability of our suppliers or service providers to deliver goods or services to us (including as a result of supplier facility closures or access restrictions, disruptions to their supply chains, and supplier liquidity or bankruptcy risk) could disrupt our ability to provide our services and solutions and result in, among other things, terminations of customer contracts and losses of revenue. Because the COVID-19 pandemic could adversely affect our near-term and long-term revenues, earnings, liquidity and

cash flows, we have begun to take and may be required to continue taking significant cost actions, including but not limited to reducing discretionary expenses (such as non-essential travel, contractors, and consultants), reducing hiring, canceling annual merit increases; reducing executive and board of director pay, reducing work schedules across the enterprise, shortening or staggering work schedules to match production with demand, and reducing staffing levels as well as increasing supplier-based productivity and enhancing spending-limit controls. However, our costs may not decrease at the same pace as revenue declines as many of our costs are less variable in nature, and we may not be able to or may not chose to significantly reduce them in an effort to remain focused on long-term outlook and growth opportunities. Remote work and increased frequency of cybersecurity attacks, including phishing and malware attempts that utilize COVID-19-related strategies, increase the risk of a material cybersecurity incident that could result in the loss of proprietary or personal data, render us more vulnerable to future cybersecurity attacks, disrupt our operations, or otherwise cause us reputational or financial harm.

•Liquidity and Cash Flow Risk. Because of the customer and operations risk described above, our business may not continue to generate sufficient cash flow from operations in the future to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may need to use existing cash balances to service our debt, and if such balances are insufficient, then we may be required to adopt one or more alternatives, such as selling assets, restructuring of existing debt, issuing new debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time.

The scope and impact of the COVID-19 pandemic is changing rapidly, additional impacts may arise, and resumption of normal business operations may be delayed or constrained by lingering effects on our suppliers, third-party service providers, and/or customers. A sustained or prolonged COVID-19 pandemic would exacerbate the negative impacts described above and below as well as other risks disclosed in our 2019 Annual Report on Form 10-K under Item 1A. Risk Factors.

~~Concentrations of credit, counterparty and market risk may adversely affect our results of operations and financial condition.~~

We maintain long-term contract relationships with many of our customers, suppliers and other counterparties. While we monitor the financial health of these counterparties, we are exposed to credit and market risks of such counterparties, including those concentrated in the same or similar industries and geographic regions. Changes in economic conditions could also lead to concerns about the creditworthiness of counterparties in the same or similar industry or geography, impacting our ability to renew our long-term contract arrangements or collect amounts due under these arrangements. Among other factors, changes in economic conditions could also result in the credit deterioration or insolvency of a significant counterparty. On September 20, 2020, Garrett and certain of its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. As a consequence, we have reduced the receivable amounts due in connection with such agreements by $350 million, which has a corresponding pre-tax and after-tax, non-cash charge to our third quarter 2020 statement of operations. We may be required to record an additional adjustment against those receivable amounts in whole or in part (together with a related statement of operations charge) in a future period or periods.

Garrett is currently subject to bankruptcy proceedings in the United States Bankruptcy Court for the Southern District of New York. We have recorded an adjustment against the receivable amounts owed to us under agreements with Garrett, and depending on developments, we may be required to record an additional adjustment in whole or in part (together with a related statement of operations charge) in a future period or periods.

In connection with the spin-off of Garrett in October 2018, we entered into an indemnification and reimbursement agreement and a tax matters agreement with Garrett and/or certain Garrett subsidiaries. As of September 30, 2020, Honeywell’s receivables due from Garrett prior to the adjustments described herein, primarily under these agreements, were collectively approximately $1.4 billion. On September 20, 2020, Garrett and certain of its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Garrett plans to sell its business while in bankruptcy, and entered into a Proposed Stalking Horse Bid with KPS, which currently contemplates a proposed purchase of Garrett’s business for $2.6 billion. Garrett also entered into a RSA which contemplates that Garrett will file and seek approval of a restructuring plan that implements the sale of Garrett’s business, pays Garrett’s secured creditors from the cash from the sale, and includes as part of the sale certain claims and causes of action against Honeywell and others arising out of the spin-off, with details related to this aspect of its proposed sale structure to be forthcoming. The Proposed Stalking Horse Bid and restructuring plan remain subject to Bankruptcy Court approval. KPS’s purchase of Garrett remains subject to competing bids and Bankruptcy Court approval, as well as customary regulatory approvals and other customary conditions.

In October 2020, we signed a coordination agreement with Oaktree and Centerbridge, which has since been signed by equity holders represented approximately 50% of Garrett’s outstanding Common Stock. The coordination agreement supports an Alternative Proposal that would allow Honeywell to recover over time a significant portion of the receivable amounts owed to us. The Alternative Proposal remains subject to various conditions and milestones, as well as Bankruptcy Court approval, and Garrett has not accepted the Alternative Proposal to date. There can be no assurance that the Alternative Proposal will be approved and confirmed by the Bankruptcy Court.

Garrett is early in the bankruptcy proceedings and the ultimate outcome of such proceedings is uncertain. We regularly review the aggregate carrying value of the receivable amounts due in connection with the indemnification and reimbursement agreement and the tax matters agreement. Following Garrett’s bankruptcy filing, our review has taken into account, among other things, the potential enterprise value of the Garrett business using publicly available information, Garrett’s implied enterprise value under the Alternative Proposal (which supports our independent assessment), the possibility that there will be additional bids and/or other plan proposals that we believe should reflect the enterprise value of Garrett’s business, and the significant uncertainties associated with the potential outcomes of the Garrett bankruptcy proceedings. Based on such review, we currently believe that we will be able to recover a significant portion, but potentially not all, of the receivable amounts owed to us under the agreements with Garrett. As such, and based on the assumption that the Bankruptcy Court will approve a plan that reflects an enterprise value for Garrett that meets or exceeds our best estimate, we have recorded an adjustment of $350 million against the receivable amounts due in connection with the indemnification and reimbursement agreement and the tax matters agreement. We also recorded a corresponding pre-tax and after-tax, non-cash charge to our statement of operations in the third quarter 2020 in the amount of $350 million. The ultimate outcome of the bankruptcy process is uncertain. As more fully described under "Garrett Bankruptcy Proceedings" above, should any of these assumptions change and depending on the transaction and/or plan of reorganization ultimately approved by the Bankruptcy Court, the amount collected could be more or less than such reduced amount of the remaining receivable amounts recorded in our financial statements. There can be no assurance that recording an additional adjustment against those receivable amounts, in whole or in part, (together with a related statement of operations charge) will not be necessary in a future period or periods.


~~Item~~ ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			~~Unregistered Sales of Equity Securities and Use of Proceeds~~

Honeywell purchased ~~1,011,000~~4,000,000 shares of its common stock, par value $1 per share, in the quarter ended ~~September 30, 2020.~~March 31, 2021. On ~~April 29, 2019,~~February 12, 2021, the Board of Directors authorized the repurchase of up to a total of $10 billion of Honeywell common stock, which included ~~amounts~~approximately $2.8 billion remaining under, and replaced, the previously approved share repurchase ~~program.~~ program, which was approved in April 2019 and authorized repurchases of up to $10 billion.

Repurchases may be made through a variety of methods, which could include open market purchases, accelerated share repurchase transactions, negotiated block transactions, 10b5-1 plans, other transactions that may be structured through investment banking institutions or privately negotiated, or a combination of the foregoing. Honeywell presently expects to repurchase outstanding shares from time to time (i) to offset the dilutive impact of employee stock-based compensation plans, including option exercises, restricted unit vesting and matching contributions under our savings plans, and (ii) to reduce share count via share repurchases as and when attractive opportunities arise. The amount and timing of future repurchases may vary depending on market conditions and the level of operating, financing and other investing activities.

As of ~~September 30, 2020, $4.8~~March 31, 2021, $9.7 billion remained available for additional share repurchases. The following table summarizes Honeywell’s purchase of its common stock for the quarter ended ~~September 30, 2020:~~March 31, 2021:

Issuer Purchases of Equity Securities
(a) (b) (c) (d)
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs (Dollars in millions)
July 2020 — $ — — $ 5,004
August 2020 400,000 $ 154.77 400,000 $ 4,942
September 2020 611,000 $ 165.53 611,000 $ 4,841


Issuer Purchases of Equity Securities
	(a)	(b)		(c)	(d)
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs (Dollars in millions)
January 1-31, 2021	2,305,713	$	203.99	2,305,713	$	2,804
February 1-28, 2021	464,368	$	204.23	464,368	$	9,920
March 1-31, 2021	1,229,919	$	208.44	1,229,919	$	9,664


~~Item 4.~~			~~Mine Safety Disclosures~~

ITEM 4. MINE SAFETY DISCLOSURES

One of our wholly-owned subsidiaries has a placer claim for and operates a chabazite ore surface mine in Arizona. Information concerning mine safety and other regulatory matters associated with this mine is required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K and is included in Exhibit 95 to this quarterly report.

45 Honeywell International Inc.


~~Item 5.~~			~~Other Information~~

ITEM 5. OTHER INFORMATION

On ~~July 28,~~November 16, 2020 and February 12, 2021, the Company entered into ~~an amendment~~amendments to the indemnification and reimbursement agreement with Resideo, ~~a copy of~~ which isare filed herewith as Exhibits 10.2 and 10.3, respectively. The amendments modified the affirmative and negative covenants set forth in Exhibit ~~10.1. See Note 16~~ ~~Commitments~~G of the indemnification and ~~Contingencies~~ ~~of Notes~~reimbursement agreement, including to ~~Consolidated Financial Statements for further discussion of such amendment.~~substantially conform the covenants with those contained in Resideo's credit agreement (as amended in connection with Resideo's debt refinancing).

5546 Honeywell International Inc.


~~Item 6.~~			~~Exhibits~~

~~EXHIBIT INDEX~~ITEM 6. EXHIBITS


Exhibit No.	Description
~~10.1~~10.1*	~~Second~~Letter agreement dated July 20, 2016, between Honeywell International Inc. and John Waldron (filed herewith)
10.2	Third Amendment, dated ~~July 28,~~November 16, 2020, to Indemnification and Reimbursement Agreement dated October 14, 2018 among Honeywell and Resideo Intermediate Holding Inc. (filed herewith)

10.2*10.3	Fourth Amendment, dated February 12, 2021, to Indemnification and Reimbursement Agreement dated October 14, 2018 among Honeywell and Resideo Intermediate Holding Inc. (filed herewith)
10.4	364-Day Credit Agreement, dated as of Marc h 31, 2021, among Honeywell International Inc., the banks, financial institutions, and other institutional lenders parties thereto, Bank of Americ a, N.A., as administrative agent, and JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association , as syndication agent s (incorporated by reference to Exhibit 10.1 to Honeywell’s Form 8-K filed on April 2 , 2021)
10.5	Amended and Restated Five Year Credit Agreement, dated as of March 31, 2021, among Honeywell International Inc., the banks, financial institutions, and other institutional lenders parties thereto, Bank of America, N.A., as administrative agent, Bank of America Europe Designated Activity Company, London Branch, as swing line agent and JPMorgan Chase Bank, N.A., and Wells Fargo Bank, National Association, as syndication agents (incorporated by reference to Exhibit 10.2 to Honeywell’s Form 8-K filed on April 2, 2021)
10.6*	2016 Stock Incentive Plan of Honeywell International Inc. and its Affiliates—Form of Restricted Unit Agreement (filed herewith)
10.7*	2016 Stock Incentive Plan of Honeywell International Inc. and its Affiliates—Form of Restricted Unit Agreement, Form 2 (filed herewith)
10.8*	2016 Stock Incentive Plan of Honeywell International Inc. and its Affiliates—Form of Stock Option Award Agreement (filed herewith)
10.9*	2016 Stock Incentive Plan of Honeywell International Inc. and its Affiliates —Form of Performance Plan Grant Agreement (filed herewith)

1810.10*	~~Deloitte & Touche LLP preferability letter related~~Honeywell Excess Benefit Plan and Honeywell Supplemental Savings Plan, as amended and restated (incorporated by reference to Exhibit 10.5 to Honeywell's Form 10-K for the ~~change in accounting principle for inventories~~year ended December 31, 2020)
10.11*	Honeywell Deferred Incentive Compensation Plan, as amended and restated (incorporated by reference to Exhibit 10.7 to Honeywell's Form 10-K for the year ended December 31, 2020)
10.12*		Amendment to Honeywell International Inc. Incentive Compensation Plan for Executive Employees, as amended and restated (incorporated by reference to Exhibit 10.69 to Honeywell's Form 10-K for the year ended December 31, 2020)
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ~~(filed~~(f urnis hed herewith)

31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ~~(filed~~ (f urnished herewith)

32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(filed herewith) Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed~~(f urnished herewith)

32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(filed~~(f urnis hed herewith)

95	Mine Safety Disclosures (filed herewith)

47 Honeywell International Inc.


Exhibit No.						Description
101.INS						The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ~~and nine months~~ ended ~~September 30, 2020,~~March 31, 2021, formatted in Inline ~~XBRL:~~XBRL (iXBRL): (i) Consolidated Statements of Cash Flows, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Balance ~~Sheet,~~Sheets, (v) Consolidated Statements of Shareowners' Equity and ~~(v)~~(vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed ~~tags.~~tags

101.SCH						~~Inline XBRL~~iXBRL Taxonomy Extension Schema (filed herewith)

101.CAL						~~Inline XBRL~~iXBRL Taxonomy Extension Calculation Linkbase (filed herewith)

101.DEF						~~Inline XBRL~~iXBRL Taxonomy Extension Definition Linkbase (filed herewith)

101.LAB						~~Inline XBRL~~iXBRL Taxonomy Extension Label Linkbase (filed herewith)

101.PRE						~~Inline XBRL~~iXBRL Taxonomy Extension Presentation Linkbase (filed herewith)

104						Cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ~~and nine months~~ ended ~~September 30, 2020,~~March 31, 2021, formatted in Inline XBRL (and contained in Exhibit 101)

The Exhibits identified ~~above~~ with an asterisk (*) are management contracts or compensatory plans or arrangements.

5648 Honeywell International Inc.

SIGNATURES

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.


	Honeywell International Inc.

Date: ~~October 30, 2020~~April 23, 2021	By:	/s/ Robert D. Mailloux
		Robert D. Mailloux Vice President and Controller (on behalf of the Registrant and as the Registrant’s Principal Accounting Officer)

5749 Honeywell International Inc.


Delaware		22-2640650
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

300 South Tryon Street		28202
Charlotte,	NC
(Address of principal executive offices)		(Zip Code)


			~~704~~(704)			627-6200
			(Registrant’s telephone number, including area code)

			Not Applicable
			(Former name, former address and former fiscal year, if changed since last report)


Large Accelerated Filer	x	Accelerated filer	☐
Non-Accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


		Page No.
~~Part I.~~PART I		Financial Information	~~Page No.~~1
	~~Item 1.~~ITEM 1	Financial Statements:	1

		Consolidated Statement of Operations (unaudited) – ~~Three and~~ ~~Nine~~Three Months Ended ~~September~~March 31, 2021 ~~30, 2020~~ and ~~2019~~2020	31

		Consolidated Statement of Comprehensive Income (unaudited) – Three ~~and~~ ~~Nine~~Months Ended ~~September~~ ~~30,~~March 31, 2021 and 2020 ~~and 2019~~	42

		Consolidated Balance Sheet (unaudited) – ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020	53

		Consolidated Statement of Cash Flows (unaudited) – ~~Nine~~Three Months Ended ~~September~~ ~~30,~~March 31, 2021 and 2020 ~~and 2019~~	64

		Consolidated Statement of Shareowners' Equity (unaudited) – Three ~~and~~ ~~Nine~~Months Ended ~~September~~ ~~30,~~March 31, 2021 and 2020 ~~and 2019~~	75

		Notes to Consolidated Financial Statements (unaudited)	86

	~~Item 2.~~ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3630

	~~Item 3.~~ITEM 3	Quantitative and Qualitative Disclosures About Market Risks	5144

	~~Item 4.~~ITEM 4	Controls and Procedures	5144

~~Part II.~~PART II		Other Information	45

	~~Item 1.~~ITEM 1	Legal Proceedings	5245

	~~Item 1A.~~ITEM 1A	Risk Factors	5245

	~~Item 2.~~ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	5545

	ITEM~~Item 4.~~ 4	Mine Safety Disclosures	5545

	~~Item 5.~~ITEM 5	Other Information	5546

	~~Item 6.~~ITEM 6	Exhibits	5647

~~Signatures~~S ignatures			5749


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(Dollars in millions)									(Dollars in millions)
Net income	Net income	$	781	$	1,648	$	3,486	$	4,640	Net income	$	1,448	$	1,606
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax									Other comprehensive income (loss), net of tax
Foreign exchange translation adjustment	Foreign exchange translation adjustment	(82)		163		(237)		177		Foreign exchange translation adjustment	214		(276)

Prior service (credit) cost recognized	Prior service (credit) cost recognized	(20)		(20)		(60)		(59)		Prior service (credit) cost recognized	(22)		(20)
Pension and other postretirement benefit adjustments	Pension and other postretirement benefit adjustments	(20)		(20)		(60)		(59)		Pension and other postretirement benefit adjustments	(22)		(20)
Changes in fair value of available for sale investments										Changes in fair value of available for sale investments	(3)		0
Cash flow hedges recognized in other comprehensive income (loss)	Cash flow hedges recognized in other comprehensive income (loss)	(54)		62		50		110		Cash flow hedges recognized in other comprehensive income (loss)	8		195
Less: Reclassification adjustment for gains (losses) included in net income	Less: Reclassification adjustment for gains (losses) included in net income	(30)		47		(8)		86		Less: Reclassification adjustment for gains (losses) included in net income	3		55
Changes in fair value of effective cash flow hedges		(24)		15		58		24
Changes in fair value of cash flow hedges										Changes in fair value of cash flow hedges	5		140
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(126)		158		(239)		142		Other comprehensive income (loss), net of tax	194		(156)
Comprehensive income	Comprehensive income	655		1,806		3,247		4,782		Comprehensive income	1,642		1,450
Less: Comprehensive income attributable to the noncontrolling interest	Less: Comprehensive income attributable to the noncontrolling interest	29		19		68		56		Less: Comprehensive income attributable to the noncontrolling interest	22		18
Comprehensive income attributable to Honeywell	Comprehensive income attributable to Honeywell	$	626	$	1,787	$	3,179	$	4,726	Comprehensive income attributable to Honeywell	$	1,620	$	1,432


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(Dollars in millions)					(Dollars in millions)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	14,036	$	9,067	Cash and cash equivalents	$	11,718	$	14,275
Short-term investments	Short-term investments	972		1,349		Short-term investments	942		945
Accounts receivable - net	Accounts receivable - net	6,878		7,493		Accounts receivable - net	6,675		6,827
Inventories	Inventories	4,705		4,421		Inventories	4,607		4,489
Other current assets	Other current assets	1,609		1,973		Other current assets	1,645		1,639
Total current assets	Total current assets	28,200		24,303		Total current assets	25,587		28,175
Investments and long-term receivables	Investments and long-term receivables	673		588		Investments and long-term receivables	746		685
Property, plant and equipment - net	Property, plant and equipment - net	5,419		5,325		Property, plant and equipment - net	5,547		5,570
Goodwill	Goodwill	15,666		15,563		Goodwill	16,981		16,058
Other intangible assets - net	Other intangible assets - net	3,494		3,734		Other intangible assets - net	3,799		3,560
Insurance recoveries for asbestos related liabilities	Insurance recoveries for asbestos related liabilities	374		392		Insurance recoveries for asbestos related liabilities	347		366
Deferred income taxes	Deferred income taxes	154		86		Deferred income taxes	762		760
Other assets	Other assets	9,479		8,688		Other assets	9,792		9,412
Total assets	Total assets	$	63,459	$	58,679	Total assets	$	63,561	$	64,586
LIABILITIES	LIABILITIES					LIABILITIES
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	5,270	$	5,730	Accounts payable	$	5,792	$	5,750
Commercial paper and other short-term borrowings	Commercial paper and other short-term borrowings	3,550		3,516		Commercial paper and other short-term borrowings	3,568		3,597
Current maturities of long-term debt	Current maturities of long-term debt	985		1,376		Current maturities of long-term debt	1,635		2,445
Accrued liabilities	Accrued liabilities	7,379		7,476		Accrued liabilities	6,955		7,405
Total current liabilities	Total current liabilities	17,184		18,098		Total current liabilities	17,950		19,197
Long-term debt	Long-term debt	17,687		11,110		Long-term debt	16,124		16,342
Deferred income taxes	Deferred income taxes	1,474		1,670		Deferred income taxes	2,309		2,113
Postretirement benefit obligations other than pensions	Postretirement benefit obligations other than pensions	309		326		Postretirement benefit obligations other than pensions	234		242
Asbestos related liabilities		1,845		1,996
Asbestos-related liabilities						Asbestos-related liabilities	1,873		1,920
Other liabilities	Other liabilities	6,640		6,766		Other liabilities	6,812		6,975
Redeemable noncontrolling interest	Redeemable noncontrolling interest	7		7		Redeemable noncontrolling interest	7		7
SHAREOWNERS’ EQUITY	SHAREOWNERS’ EQUITY					SHAREOWNERS’ EQUITY
Capital - common stock issued	Capital - common stock issued	958		958		Capital - common stock issued	958		958
- additional paid-in capital	- additional paid-in capital	7,155		6,876		- additional paid-in capital	7,505		7,292
Common stock held in treasury, at cost	Common stock held in treasury, at cost	(25,806)		(23,836)		Common stock held in treasury, at cost	(27,975)		(27,229)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3,436)		(3,197)		Accumulated other comprehensive loss	(3,184)		(3,377)
Retained earnings	Retained earnings	39,203		37,693		Retained earnings	40,682		39,905
Total Honeywell shareowners’ equity	Total Honeywell shareowners’ equity	18,074		18,494		Total Honeywell shareowners’ equity	17,986		17,549
Noncontrolling interest	Noncontrolling interest	239		212		Noncontrolling interest	266		241
Total shareowners’ equity	Total shareowners’ equity	18,313		18,706		Total shareowners’ equity	18,252		17,790
Total liabilities, redeemable noncontrolling interest and shareowners’ equity	Total liabilities, redeemable noncontrolling interest and shareowners’ equity	$	63,459	$	58,679	Total liabilities, redeemable noncontrolling interest and shareowners’ equity	$	63,561	$	64,586


	2021		2020
Contract assets - January 1	$	1,618	$	1,602
Contract assets - March 31	1,789		1,699
Change in contract assets - increase (decrease)	$	171	$	97

Contract liabilities - January 1	$	(4,033)	$	(3,501)
Contract liabilities - March 31	(3,994)		(3,506)
Change in contract liabilities - decrease (increase)	$	39	$	(5)

Net change	$	210	$	92


	March 31, 2021
Aerospace	$	9,055
Honeywell Building Technologies	6,564
Performance Materials and Technologies	7,076
Safety and Productivity Solutions	4,044
	$	26,739


	Severance Costs		Asset Impairments		Exit Costs		Total
December 31, 2019	$	555	$	0	$	96	$	651
Charges	433		11		47		491
Usage - cash	(343)		0		(56)		(399)
Usage - noncash	0		(11)		0		(11)
Foreign currency translation	9		0		0		9
Adjustments	(40)		0		(2)		(42)
September 30, 2020	$	614	$	0	$	85	$	699


	Three Months Ended September 30,				Nine Months Ended September 30,
Basic	2020		2019		2020		2019
Net income attributable to Honeywell	$	758	$	1,624	$	3,420	$	4,581
Weighted average shares outstanding	702.6		717.6		704.8		723.5
Earnings per share of common stock	$	1.08	$	2.26	$	4.85	$	6.33


	Three Months Ended September 30,				Nine Months Ended September 30,
Assuming Dilution	2020		2019		2020		2019
Net income attributable to Honeywell	$	758	$	1,624	$	3,420	$	4,581
Average Shares
Weighted average shares outstanding	702.6		717.6		704.8		723.5
Dilutive securities issuable - stock plans	7.0		9.1		6.8		9.3
Total weighted average shares outstanding	709.6		726.7		711.6		732.8
Earnings per share of common stock	$	1.07	$	2.23	$	4.81	$	6.25


	March 31, 2021		December 31, 2020
Trade	$	6,874	$	7,029
Less - Allowance for doubtful accounts	(199)		(202)
	$	6,675	$	6,827


	March 31, 2021		December 31, 2020
Raw materials	$	1,152	$	1,079
Work in process	811		798
Finished products	2,644		2,612
	$	4,607	$	4,489


	~~September 30, 2020~~
~~Aerospace~~	$	~~9,717~~
~~Honeywell Building Technologies~~	~~5,537~~
~~Performance Materials and Technologies~~	~~6,532~~
~~Safety and Productivity Solutions~~	~~3,858~~
	$	~~25,644~~


	September 30, 2020		December 31, 2019
Operating leases
Other assets	$	725	$	673
Accrued liabilities	179		171
Other liabilities	597		534
Total operating lease liabilities	$	776	$	705
Financing leases
Property, plant and equipment	$	360	$	361
Accumulated depreciation	(171)		(152)
Property, plant and equipment - net	$	189	$	209
Current maturities of long-term debt	61		59
Long-term debt	135		156
Total financing lease liabilities	$	196	$	215


	September 30, 2020		December 31, 2019

0.65% Euro notes due 2020	$	0	$	1,123
4.25% notes due 2021	800		800
1.85% notes due 2021	1,500		1,500
0.483% notes due 2022	2,500		0
2.15% notes due 2022	600		600
Floating rate notes due 2022	1,100		600
1.30% Euro notes due 2023	1,454		1,404
3.35% notes due 2023	300		300
0.00% Euro notes due 2024	582		0
2.30% notes due 2024	750		750
1.35% notes due 2025	1,250		0
2.50% notes due 2026	1,500		1,500
2.25% Euro notes due 2028	872		842
2.70% notes due 2029	750		750
1.95% notes due 2030	1,000		0
0.75% Euro notes due 2032	582		0
5.70% notes due 2036	441		441
5.70% notes due 2037	462		462
5.375% notes due 2041	417		417
3.812% notes due 2047	445		445
2.80% notes due 2050	750		0
Industrial development bond obligations, floating rate maturing at various dates through 2037	22		22
6.625% debentures due 2028	201		201
9.065% debentures due 2033	51		51
Other (including capitalized leases and debt issuance costs), 8.0% weighted average maturing at various dates through 2025	343		278
	18,672		12,486
Less: current portion	(985)		(1,376)
	$	17,687	$	11,110


	March 31, 2021		December 31, 2020

4.25% notes due 2021	$	0	$	800
1.85% notes due 2021	1,500		1,500
0.483% notes due 2022	2,500		2,500
2.15% notes due 2022	600		600
Floating rate notes due 2022	1,100		1,100
1.30% Euro notes due 2023	1,471		1,534
3.35% notes due 2023	300		300
0.00% Euro notes due 2024	589		614
2.30% notes due 2024	750		750
1.35% notes due 2025	1,250		1,250
2.50% notes due 2026	1,500		1,500
2.25% Euro notes due 2028	883		920
2.70% notes due 2029	750		750
1.95% notes due 2030	1,000		1,000
0.75% Euro notes due 2032	589		614
5.70% notes due 2036	441		441
5.70% notes due 2037	462		462
5.375% notes due 2041	417		417
3.812% notes due 2047	445		445
2.80% notes due 2050	750		750
Industrial development bond obligations, floating rate maturing at various dates through 2037	22		22
6.625% debentures due 2028	201		201
9.065% debentures due 2033	51		51
Other (including capitalized leases and debt issuance costs), 8.2% weighted average interest rate maturing at various dates through 2025	188		266
	17,759		18,787
Less-current portion	(1,635)		(2,445)
	$	16,124	$	16,342


	Notional				Fair Value Asset				Fair Value (Liability)
	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
Derivatives in Fair Value Hedging Relationships:
Interest rate swap agreements	$	3,150	$	3,950	$	100	$	194	$	0	$	0
Derivatives in Cash Flow Hedging Relationships:
Foreign currency exchange contracts	422		488		15		65		0		(58)
Derivatives in Net Investment Hedging Relationships:
Foreign currency exchange contracts	792		806		49		45		(3)		(1)
Cross currency swap agreements	1,200		1,200		0		0		(5)		(50)
Total Derivatives Designated as Hedging Instruments	5,564		6,444		164		304		(8)		(109)
Derivatives Not Designated as Hedging Instruments:
Foreign currency exchange contracts	13,403		14,829		161		92		(163)		(91)
Total Derivatives at Fair Value	$	18,967	$	21,273	$	325	$	396	$	(171)	$	(200)


Line in the Consolidated Balance Sheet of Hedged Item	Carrying Amount of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Item
Line in the Consolidated Balance Sheet of Hedged Item	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
Long-term debt	$	3,250	$	4,144	$	100	$	194


	Three Months Ended March 31, 2021
	Revenue		Cost of Products and Services Sold		SG&A		Other (Income) Expense		Interest and Other Financial Charges
	$	8,454	$	5,709	$	1,236	$	(442)	$	90
Gain or (loss) on cash flow hedges:
Foreign Currency Exchange Contracts:
Amount reclassified from accumulated other comprehensive income into income	1		1		2		0		0
Amount excluded from effectiveness testing recognized in earnings using an amortization approach	0		0		0		0		0
Gain or (loss) on fair value hedges:
Interest Rate Swap Agreements:
Hedged items	0		0		0		0		94
Derivatives designated as hedges	0		0		0		0		(94)
Gain or (loss) on net investment hedges:
Foreign Currency Exchange Contracts:
Amount excluded from effectiveness testing recognized in earnings using an amortization approach	0		0		0		0		4
Gain or (loss) on derivatives not designated as hedging instruments:
Foreign currency exchange contracts	0		0		0		60		0


	Three Months Ended March 31, 2020
	Revenue		Cost of Products and Services Sold		SG&A		Other (Income) Expense		Interest and Other Financial Charges
	$	8,463	$	5,534	$	1,238	$	(317)	$	73
Gain or (loss) on cash flow hedges:
Foreign Currency Exchange Contracts:
Amount reclassified from accumulated other comprehensive income into income	0		27		0		40		0
Amount excluded from effectiveness testing recognized in earnings using an amortization approach	0		4		0		8		0
Gain or (loss) on fair value hedges:
Interest Rate Swap Agreements:
Hedged items	0		0		0		0		(205)
Derivatives designated as hedges	0		0		0		0		205
Gain or (loss) on net investment hedges:
Foreign Currency Exchange Contracts:
Amount excluded from effectiveness testing recognized in earnings using an amortization approach	0		0		0		0		5
Gain or (loss) on derivatives not designated as hedging instruments:
Foreign currency exchange contracts	0		0		0		284		0


Derivatives Net Investment Hedging Relationships	Three Months Ended March 31,
	2021		2020
Euro-denominated long-term debt	$	150	$	124
Euro-denominated commercial paper	30		70
Cross currency swap	44		(26)
Foreign currency exchange contracts	(2)		84


	September 30, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets
Long-term receivables	$	148	$	143	$	129	$	127
Liabilities
Long-term debt and related current maturities	$	18,672	$	20,084	$	12,486	$	13,578


Line in the Consolidated Balance Sheet of Hedged Item	Carrying Amount of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Item
	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Long-term debt	$	4,180	$	3,975	$	230	$	25


	Three Months Ended September 30, 2020
	Revenue		Cost of Products Sold		Selling, General and Administrative Expenses		Other (Income) Expense		Interest and Other Financial Charges
	$	7,797	$	4,315	$	1,103	$	62	$	101
Gain or (loss) on cash flow hedges:
Foreign Currency Exchange Contracts:
Amount reclassified from accumulated other comprehensive income into income	(1)		(1)		(1)		(35)		0
Amount excluded from effectiveness testing recognized in earnings using an amortization approach	0		4		0		8		0
Gain or (loss) on fair value hedges:
Interest Rate Swap Agreements:
Hedged items	0		0		0		0		13
Derivatives designated as hedges	0		0		0		0		(13)


	Three Months Ended September 30, 2019
	Revenue		Cost of Products Sold		Selling, General and Administrative Expenses		Other (Income) Expense		Interest and Other Financial Charges
	$	9,086	$	4,775	$	1,296	$	(311)	$	96
Gain or (loss) on cash flow hedges:
Foreign Currency Exchange Contracts:
Amount reclassified from accumulated other comprehensive income into income	1		9		0		53		0
Amount excluded from effectiveness testing recognized in earnings using an amortization approach	0		6		0		9		0
Gain or (loss) on fair value hedges:
Interest Rate Swap Agreements:
Hedged items	0		0		0		0		(55)
Derivatives designated as hedges	0		0		0		0		55


	Foreign Exchange Translation Adjustment		Pension and Other Postretirement Benefits Adjustments		Changes in Fair Value of Available for Sale Investments		Changes in Fair Value of Cash Flow Hedges		Total
Balance at December 31, 2020	$	(2,780)	$	(601)	$	4	$	0	$	(3,377)
Other comprehensive income (loss) before reclassifications	216		0		(3)		8		221
Amounts reclassified from accumulated other comprehensive income	(3)		(22)		0		(3)		(28)
Net current period other comprehensive income (loss)	213		(22)		(3)		5		193
Balance at March 31, 2021	$	(2,567)	$	(623)	$	1	$	5	$	(3,184)


	Nine Months Ended September 30, 2020
	Revenue		Cost of Products Sold		Selling, General and Administrative Expenses		Other (Income) Expense	Interest and Other Financial Charges
	$	23,737	$	12,852	$	3,524	(546)	$	264
Gain or (loss) on cash flow hedges:
Foreign currency exchange contracts:
Amount reclassified from accumulated other comprehensive income into income	(2)		29		(4)		(37)	0
Amount excluded from effectiveness testing recognized in earnings using an amortization approach	0		12		0		25	0
Gain or (loss) on fair value hedges:
Interest rate swap agreements:
Hedged items	0		0		0		0	(206)
Derivatives designated as hedges	0		0		0		0	206


	Nine Months Ended September 30, 2019
	Revenue		Cost of Products Sold		Selling, General and Administrative Expenses		Other (Income) Expense		Interest and Other Financial Charges
	$	27,213	$	14,244	$	4,046	$	(901)	$	266
Gain or (loss) on cash flow hedges:
Foreign currency exchange contracts:
Amount reclassified from accumulated other comprehensive income into income	2		33		1		77		0
Amount excluded from effectiveness testing recognized in earnings using an amortization approach	0		17		0		27		0
Gain or (loss) on fair value hedges:
Interest rate swap agreements:
Hedged items	0		0		0		0		(118)
Derivatives designated as hedges	0		0		0		0		118


Balance at December 31, 2020	$	660
Accruals for environmental matters deemed probable and reasonably estimable	41
Environmental liability payments	(79)
Other	1
Balance at March 31, 2021	$	623


	Nine Months Ended September 30,	Years Ended December 31,
Claims Activity	2020	2019	2018
Claims unresolved at the beginning of period	6,480	6,209	6,280
Claims filed	1,621	2,659	2,430
Claims resolved	(1,680)	(2,388)	(2,501)
Claims unresolved at the end of period	6,421	6,480	6,209


Disease Distribution of Unresolved Claims	September 30,	December 31,
	2020	2019	2018
Mesothelioma and other cancer claims	3,404	3,399	2,949
Nonmalignant claims	3,017	3,081	3,260
Total claims	6,421	6,480	6,209


	Three Months		Year to Date
Volume	(16)	%	(14)	%
Price	2	%	2	%
Foreign Currency Translation	—	%	(1)	%

	(14)	%	(13)	%


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		% Change		2020		2019		% Change
Net sales	$	2,662	$	3,544	(25)	%	$	8,566	$	10,393	(18)	%
Cost of products and services sold	1,854		2,375				5,848		6,944
Selling, general and administrative and other expenses	191		261				636		796
Segment profit	$	617	$	908	(32)	%	$	2,082	$	2,653	(22)	%


	2020 vs. 2019
	Three Months Ended September 30,				Nine Months Ended September 30,
Factors Contributing to Year-Over-Year Change	Sales		Segment Profit		Sales		Segment Profit
Organic	(25)	%	(32)	%	(18)	%	(22)	%
Foreign currency translation	—	%	—	%	—	%	—	%
Acquisitions, divestitures and other, net	—	%	—	%	—	%	—	%
Total % change	(25)	%	(32)	%	(18)	%	(22)	%