UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

__________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _____

Commission file number 1-8974

Honeywell International Inc.

(Exact name of registrant as specified in its charter)


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

855 South Mint Street		28202
Charlotte,	North Carolina
(Address of principal executive offices)		(Zip Code)


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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $1 per share

HON

The Nasdaq Stock Market LLC

0.000% Senior Notes due 2024

HON 24A

The Nasdaq Stock Market LLC

3.500% Senior Notes due 2027

HON 27

The Nasdaq Stock Market LLC

2.250% Senior Notes due 2028

HON 28A

The Nasdaq Stock Market LLC

0.750% Senior Notes due 2032

HON 32

The Nasdaq Stock Market LLC

3.750% Senior Notes due 2032

HON 32A

The Nasdaq Stock Market LLC

4.125% Senior Notes due 2034

HON 34

The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


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

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

There were ~~665,676,749~~659,250,644 shares of Common Stock outstanding at ~~March 31,~~September 30, 2023.

TABLE OF CONTENTS


	Cautionary Statement about Forward-Looking Statements	1
	About Honeywell	2
PART I	Financial Information
ITEM 1	Financial Statements and Supplementary Data (unaudited):	3
	Consolidated Statement of Operations (unaudited) – Three and Nine Months Ended ~~March 31,~~September 30, 2023, and 2022	3
	Consolidated Statement of Comprehensive Income (unaudited) – Three and Nine Months Ended ~~March 31,~~September 30, 2023, and 2022	4
	Consolidated Balance Sheet (unaudited) – ~~March 31,~~September 30, 2023, and December 31, 2022	5
	Consolidated Statement of Cash Flows (unaudited) – ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2023, and 2022	6
	Consolidated Statement of Shareowners' Equity (unaudited) – Three and Nine Months Ended ~~March 31,~~September 30, 2023, and 2022	7

	Note 1 – Basis of Presentation	8
	Note 2 – Summary of Significant Accounting Policies	8
	Note 3 – Acquisitions and Divestitures	9
	Note 4 – Revenue Recognition and Contracts with Customers	10
	Note 5 – Repositioning and Other Charges	13
	Note 6 – Income Taxes	15
	Note 7 – Inventories	1516
	Note 8 – Long-term Debt and Credit Agreements	16
	Note 9 – Leases	17
	Note 10 – Derivative Instruments and Hedging Transactions	18
	Note 11 – Fair Value Measurements	2021
	Note 12 – Earnings Per Share	2122
	Note 13 – Accumulated Other Comprehensive Income (Loss)	2223
	Note 14 – Commitments and Contingencies	2223
	Note 15 – Pension Benefits	2627
	Note 16 – Other (Income) Expense	2728
	Note 17 – Segment Financial Data	2729
	Note 18 – Subsequent Events	2931
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3032
ITEM 3	Quantitative and Qualitative Disclosures a ~~bout~~about Market Risks	4550
ITEM 4	Controls and Procedures	4550
~~Part~~PART II	Other Information
ITEM 1	Legal Proceedings	4651
ITEM 1A	Risk Factors	4651
ITEM 2	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	4651
ITEM 4	Mine Safety Disclosures	4752
ITEM 5	Other Information	52
ITEM 6	Exhibits	4853
	Signatures	4954

TABLE OF CONTENTS

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

We describe many of the trends and other factors that drive our business and future results in the section titled Management’s Discussion and Analysis of Financial Condition and Results of Operations and in other parts of this report (including Part II, Item 1A Risk Factors). Such discussions contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Forward-looking statements are those that address activities, events, or developments that management intends, expects, projects, believes, or anticipates will or may occur in the future. They are based on management’s assumptions and assessments in light of past experience and trends, current economic and industry conditions, expected future developments, and other relevant ~~factors.~~factors, many of which are difficult to predict and outside of our control. They are not guarantees of future performance, and actual results, developments, and business decisions may differ significantly from those envisaged by our forward-looking statements. We do not undertake to update or revise any of our forward-looking statements, except as required by applicable securities law. Our forward-looking statements are also subject to material risks and uncertainties, including ongoing macroeconomic and geopolitical risks, such as lower GDP growth or recession, capital markets volatility, inflation, and certain regional conflicts, that can affect our performance in both the near- and long-term. In addition, no assurance can be given that any plan, initiative, projection, goal, commitment, expectation, or prospect set forth in this Form 10-Q can or will be achieved. These forward-looking statements should be considered in light of the information included in this report and our other filings with the Securities and Exchange Commission (SEC), including, without limitation, the Risk Factors, as well as the description of trends and other factors in Management’s Discussion and Analysis of Financial Condition and Results of Operations, set forth in this report and our 2022 Annual Report on Form 10-K. Any forward-looking plans described herein are not final and may be modified or abandoned at any time.

1 Honeywell International Inc.

TABLE OF CONTENTS

ABOUT HONEYWELL

Honeywell International Inc. (Honeywell, we, us, our, or the Company) ~~invents~~is an integrated operating company serving a broad range of industries and ~~commercializes technologies that address some~~geographies around the world. Our portfolio of the world’s most critical challenges around energy, safety, security, air travel, productivity, and global urbanization. We are a leading software-industrial company committed to introducing state of the art technology solutions to improve efficiency, productivity, sustainability, and safety in high growth businesses in broad-based, attractive industrial end markets. As a diversified technology and manufacturing company, we areis uniquely positioned to blend physical products with software to serve customers worldwide with aerospace products and services, energy efficient products and solutions for businesses, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals, and productivity, sensing, safety, and security technologies for buildings and industries. Our products and solutions enable a safer, more comfortable, and more productive world, enhancing the quality of life of people around the globe. The Honeywell brand dates back to 1906, and the Company was incorporated in Delaware in 1985.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, are available free of charge on our Investor Relations website (investor.honeywell.com) under the heading Financials (see SEC Filings) immediately after they are filed with, or furnished to, the SEC. Honeywell uses our Investor Relations website as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media. Information contained on or accessible through, including any reports available on, our website is not a part of, and is not incorporated by reference into, this Quarterly Report on Form 10-Q or any other report or document we file with the SEC. Any reference to our website in this Form 10-Q is intended to be an inactive textual reference only.

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PART I. FINANCIAL INFORMATION

The financial statements and related notes as of ~~March 31,~~September 30, 2023, should be read in conjunction with the financial statements for the year ended December 31, 2022, contained in the Company's 2022 Annual Report on Form 10-K.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

HONEYWELL INTERNATIONAL INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2023			2022			2023		2022		2023		2022
			(Dollars in millions, except per share amounts)						(Dollars in millions, except per share amounts)
Product sales	Product sales		$	6,310		$	6,132	Product sales	$	6,294	$	6,588	$	19,045	$	19,404
Service sales	Service sales		2,554			2,244		Service sales	2,918		2,363		8,177		6,876
Net sales	Net sales		8,864			8,376		Net sales	9,212		8,951		27,222		26,280
Costs, expenses and other	Costs, expenses and other							Costs, expenses and other
Cost of products sold	Cost of products sold		4,068			4,059		Cost of products sold	4,090		4,286		12,291		12,674
Cost of services sold	Cost of services sold		1,430			1,265		Cost of services sold	1,580		1,308		4,503		3,904
Total Cost of products and services sold	Total Cost of products and services sold		5,498			5,324		Total Cost of products and services sold	5,670		5,594		16,794		16,578
Research and development expenses	Research and development expenses		357			350		Research and development expenses	364		387		1,096		1,123
Selling, general and administrative expenses	Selling, general and administrative expenses		1,317			1,431		Selling, general and administrative expenses	1,252		1,228		3,831		3,965
Other (income) expense	Other (income) expense		(260)			(319)		Other (income) expense	(247)		(337)		(715)		(846)
Interest and other financial charges	Interest and other financial charges		170			85		Interest and other financial charges	206		98		563		270
Total costs, expenses and other	Total costs, expenses and other		7,082			6,871		Total costs, expenses and other	7,245		6,970		21,569		21,090
Income before taxes	Income before taxes		1,782			1,505		Income before taxes	1,967		1,981		5,653		5,190
Tax expense	Tax expense		374			371		Tax expense	452		432		1,229		1,244
Net income	Net income		1,408			1,134		Net income	1,515		1,549		4,424		3,946
Less: Net income attributable to noncontrolling interest			14			—
Less: Net income (loss) attributable to noncontrolling interest								Less: Net income (loss) attributable to noncontrolling interest	1		(3)		29		(1)
Net income attributable to Honeywell	Net income attributable to Honeywell		$	1,394		$	1,134	Net income attributable to Honeywell	$	1,514	$	1,552	$	4,395	$	3,947
Earnings per share of common stock—basic	Earnings per share of common stock—basic		$	2.09		$	1.66	Earnings per share of common stock—basic	$	2.29	$	2.30	$	6.61	$	5.81
Earnings per share of common stock—assuming dilution	Earnings per share of common stock—assuming dilution		$	2.07		$	1.64	Earnings per share of common stock—assuming dilution	$	2.27	$	2.28	$	6.56	$	5.76

The Notes to Consolidated Financial Statements are an integral part of this statement.

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HONEYWELL INTERNATIONAL INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2023			2022			2023		2022		2023		2022
			(Dollars in millions)						(Dollars in millions)
Net income	Net income		$	1,408		$	1,134	Net income	$	1,515	$	1,549	$	4,424	$	3,946
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		(58)			126		Foreign exchange translation adjustment	59		(423)		(76)		(399)

Pension and other postretirement benefit adjustments	Pension and other postretirement benefit adjustments		(12)			(17)		Pension and other postretirement benefit adjustments	(14)		(10)		(38)		(44)
Changes in fair value of available for sale investments	Changes in fair value of available for sale investments		(6)			(6)		Changes in fair value of available for sale investments	—		2		3		(7)
Cash flow hedges recognized in other comprehensive income (loss)	Cash flow hedges recognized in other comprehensive income (loss)		16			8		Cash flow hedges recognized in other comprehensive income (loss)	29		27		59		66
Less: Reclassification adjustment for gains included in net income	Less: Reclassification adjustment for gains included in net income		2			3		Less: Reclassification adjustment for gains included in net income	17		23		30		38
Changes in fair value of cash flow hedges	Changes in fair value of cash flow hedges		14			5		Changes in fair value of cash flow hedges	12		4		29		28
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax		(62)			108		Other comprehensive income (loss), net of tax	57		(427)		(82)		(422)
Comprehensive income	Comprehensive income		1,346			1,242		Comprehensive income	1,572		1,122		4,342		3,524
Less: Comprehensive income attributable to the noncontrolling interest			15			—
Less: Comprehensive income (loss) attributable to the noncontrolling interest								Less: Comprehensive income (loss) attributable to the noncontrolling interest	(2)		(17)		23		(22)
Comprehensive income attributable to Honeywell	Comprehensive income attributable to Honeywell		$	1,331		$	1,242	Comprehensive income attributable to Honeywell	$	1,574	$	1,139	$	4,319	$	3,546

The Notes to Consolidated Financial Statements are an integral part of this statement.

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HONEYWELL INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEET

(Unaudited)


		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022
		(Dollars in millions)					(Dollars in millions)
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	6,869	$	9,627	Cash and cash equivalents	$	7,770	$	9,627
Short-term investments	Short-term investments	371		483		Short-term investments	164		483
Accounts receivable, less allowances of $336 and $326, respectively		7,862		7,440
Accounts receivable, less allowances of $342 and $326, respectively						Accounts receivable, less allowances of $342 and $326, respectively	7,833		7,440
Inventories	Inventories	5,776		5,538		Inventories	6,000		5,538
Other current assets	Other current assets	1,632		1,894		Other current assets	1,553		1,894
Total current assets	Total current assets	22,510		24,982		Total current assets	23,320		24,982
Investments and long-term receivables	Investments and long-term receivables	905		945		Investments and long-term receivables	895		945
Property, plant and equipment—net	Property, plant and equipment—net	5,472		5,471		Property, plant and equipment—net	5,486		5,471
Goodwill	Goodwill	17,587		17,497		Goodwill	17,793		17,497
Other intangible assets—net	Other intangible assets—net	3,168		3,222		Other intangible assets—net	3,310		3,222
Insurance recoveries for asbestos-related liabilities	Insurance recoveries for asbestos-related liabilities	239		224		Insurance recoveries for asbestos-related liabilities	200		224
Deferred income taxes	Deferred income taxes	383		421		Deferred income taxes	377		421
Other assets	Other assets	9,619		9,513		Other assets	9,915		9,513
Total assets	Total assets	$	59,883	$	62,275	Total assets	$	61,296	$	62,275
LIABILITIES	LIABILITIES					LIABILITIES
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	6,443	$	6,329	Accounts payable	$	6,428	$	6,329
Commercial paper and other short-term borrowings	Commercial paper and other short-term borrowings	3,555		2,717		Commercial paper and other short-term borrowings	1,933		2,717
Current maturities of long-term debt	Current maturities of long-term debt	937		1,730		Current maturities of long-term debt	1,670		1,730
Accrued liabilities	Accrued liabilities	6,961		9,162		Accrued liabilities	7,196		9,162
Total current liabilities	Total current liabilities	17,896		19,938		Total current liabilities	17,227		19,938
Long-term debt	Long-term debt	14,670		15,123		Long-term debt	16,683		15,123
Deferred income taxes	Deferred income taxes	2,303		2,093		Deferred income taxes	2,225		2,093
Postretirement benefit obligations other than pensions	Postretirement benefit obligations other than pensions	137		146		Postretirement benefit obligations other than pensions	131		146
Asbestos-related liabilities	Asbestos-related liabilities	1,154		1,180		Asbestos-related liabilities	1,102		1,180
Other liabilities	Other liabilities	6,201		6,469		Other liabilities	6,146		6,469
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	8,774		8,564		—additional paid-in capital	8,905		8,564
Common stock held in treasury, at cost	Common stock held in treasury, at cost	(35,072)		(34,443)		Common stock held in treasury, at cost	(36,507)		(34,443)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3,538)		(3,475)		Accumulated other comprehensive loss	(3,551)		(3,475)
Retained earnings	Retained earnings	45,797		45,093		Retained earnings	47,426		45,093
Total Honeywell shareowners’ equity	Total Honeywell shareowners’ equity	16,919		16,697		Total Honeywell shareowners’ equity	17,231		16,697
Noncontrolling interest	Noncontrolling interest	596		622		Noncontrolling interest	544		622
Total shareowners’ equity	Total shareowners’ equity	17,515		17,319		Total shareowners’ equity	17,775		17,319
Total liabilities, redeemable noncontrolling interest and shareowners’ equity	Total liabilities, redeemable noncontrolling interest and shareowners’ equity	$	59,883	$	62,275	Total liabilities, redeemable noncontrolling interest and shareowners’ equity	$	61,296	$	62,275

The Notes to Consolidated Financial Statements are an integral part of this statement.

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HONEYWELL INTERNATIONAL INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)


		Three Months Ended March 31,					Nine Months Ended September 30,
		2023		2022			2023		2022
		(Dollars in millions)					(Dollars in millions)
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income	Net income	$	1,408	$	1,134	Net income	$	4,424	$	3,946
Less: Net income attributable to noncontrolling interest		14		—
Less: Net income (loss) attributable to noncontrolling interest						Less: Net income (loss) attributable to noncontrolling interest	29		(1)
Net income attributable to Honeywell	Net income attributable to Honeywell	1,394		1,134		Net income attributable to Honeywell	4,395		3,947
Adjustments to reconcile net income attributable to Honeywell to net cash provided by (used for) operating activities	Adjustments to reconcile net income attributable to Honeywell to net cash provided by (used for) operating activities					Adjustments to reconcile net income attributable to Honeywell to net cash provided by (used for) operating activities
Depreciation	Depreciation	161		167		Depreciation	493		494
Amortization	Amortization	122		163		Amortization	382		411

Gain on sale of non-strategic businesses and assets						Gain on sale of non-strategic businesses and assets	—		(10)
Repositioning and other charges	Repositioning and other charges	141		387		Repositioning and other charges	331		714
Net payments for repositioning and other charges	Net payments for repositioning and other charges	(41)		(108)		Net payments for repositioning and other charges	(323)		(316)
NARCO Buyout payment	NARCO Buyout payment	(1,325)		—		NARCO Buyout payment	(1,325)		—
Pension and other postretirement income	Pension and other postretirement income	(136)		(261)		Pension and other postretirement income	(410)		(778)
Pension and other postretirement benefit payments	Pension and other postretirement benefit payments	(15)		(14)		Pension and other postretirement benefit payments	(25)		(14)
Stock compensation expense	Stock compensation expense	59		60		Stock compensation expense	148		163
Deferred income taxes	Deferred income taxes	225		21		Deferred income taxes	168		208

Other	Other	(350)		(67)		Other	(554)		200
Changes in assets and liabilities, net of the effects of acquisitions and divestitures	Changes in assets and liabilities, net of the effects of acquisitions and divestitures					Changes in assets and liabilities, net of the effects of acquisitions and divestitures
Accounts receivable	Accounts receivable	(422)		(285)		Accounts receivable	(344)		(660)
Inventories	Inventories	(238)		(331)		Inventories	(448)		(390)
Other current assets	Other current assets	110		(29)		Other current assets	141		125
Accounts payable	Accounts payable	114		(199)		Accounts payable	96		(365)
Accrued liabilities	Accrued liabilities	(583)		(602)		Accrued liabilities	(340)		(821)
Net cash provided by (used for) operating activities		(784)		36
Net cash provided by operating activities						Net cash provided by operating activities	2,385		2,908
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Capital expenditures	Capital expenditures	(193)		(183)		Capital expenditures	(675)		(525)
Proceeds from disposals of property, plant and equipment	Proceeds from disposals of property, plant and equipment	11		10		Proceeds from disposals of property, plant and equipment	21		11
Increase in investments	Increase in investments	(226)		(223)		Increase in investments	(404)		(834)
Decrease in investments	Decrease in investments	386		304		Decrease in investments	808		884
Receipts from Garrett Motion Inc.	Receipts from Garrett Motion Inc.	—		197		Receipts from Garrett Motion Inc.	—		409
Receipts (payments) from settlements of derivative contracts	Receipts (payments) from settlements of derivative contracts	(7)		61		Receipts (payments) from settlements of derivative contracts	212		773
Cash paid for acquisitions, net of cash acquired	Cash paid for acquisitions, net of cash acquired	—		(176)		Cash paid for acquisitions, net of cash acquired	(716)		(178)

Net cash used for investing activities		(29)		(10)
Net cash provided by (used for) investing activities						Net cash provided by (used for) investing activities	(754)		540
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Proceeds from issuance of commercial paper and other short-term borrowings	Proceeds from issuance of commercial paper and other short-term borrowings	4,105		1,228		Proceeds from issuance of commercial paper and other short-term borrowings	10,727		5,310
Payments of commercial paper and other short-term borrowings	Payments of commercial paper and other short-term borrowings	(3,294)		(1,228)		Payments of commercial paper and other short-term borrowings	(11,484)		(5,324)
Proceeds from issuance of common stock	Proceeds from issuance of common stock	37		23		Proceeds from issuance of common stock	151		121
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	—		1		Proceeds from issuance of long-term debt	2,985		2
Payments of long-term debt	Payments of long-term debt	(1,363)		(40)		Payments of long-term debt	(1,410)		(1,818)
Repurchases of common stock	Repurchases of common stock	(699)		(1,018)		Repurchases of common stock	(2,187)		(2,827)
Cash dividends paid	Cash dividends paid	(725)		(668)		Cash dividends paid	(2,144)		(2,028)
Other	Other	(34)		(17)		Other	(65)		(45)
Net cash used for financing activities	Net cash used for financing activities	(1,973)		(1,719)		Net cash used for financing activities	(3,427)		(6,609)
Effect of foreign exchange rate changes on cash and cash equivalents	Effect of foreign exchange rate changes on cash and cash equivalents	28		15		Effect of foreign exchange rate changes on cash and cash equivalents	(61)		(349)
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	(2,758)		(1,678)		Net decrease in cash and cash equivalents	(1,857)		(3,510)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	9,627		10,959		Cash and cash equivalents at beginning of period	9,627		10,959
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	6,869	$	9,281	Cash and cash equivalents at end of period	$	7,770	$	7,449

The Notes to Consolidated Financial Statements are an integral part of this statement.

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HONEYWELL INTERNATIONAL INC.

CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY

(Unaudited)


		Three Months Ended March 31,			Three Months Ended September 30,																Nine Months Ended September 30,
			2023	2022				2023								2022									2023								2022
				Shares		$			Shares			$				Shares				$					Shares			$					Shares			$					Shares			$
				(In millions, except per share amounts)												(In millions, except per share amounts)
Common stock, par value	Common stock, par value			957.6				958			957.6					958			957.6			958					957.6			958					957.6			958					957.6			958
Additional paid-in capital	Additional paid-in capital															Additional paid-in capital
Beginning balance	Beginning balance					8,564										8,141			Beginning balance					8,866								8,397								8,564								8,141
Issued for employee savings and option plans	Issued for employee savings and option plans					151							116			Issued for employee savings and option plans					—								12								193								146
Stock-based compensation expense	Stock-based compensation expense					59							69			Stock-based compensation expense					39								51								148								173

Ending balance	Ending balance					8,774							8,326			Ending balance					8,905								8,460								8,905								8,460
Treasury stock	Treasury stock															Treasury stock
Beginning balance	Beginning balance			(290.0)		(34,443)				(272.8)			(30,462)			Beginning balance		(293.6)			(35,510)					(283.9)			(32,814)					(290.0)			(34,443)					(272.8)			(30,462)
Reacquired stock or repurchases of common stock	Reacquired stock or repurchases of common stock			(3.5)		(699)				(5.5)			(1,018)			Reacquired stock or repurchases of common stock		(5.3)			(1,011)					(2.1)			(390)					(11.3)			(2,187)					(15.1)			(2,827)
Issued for employee savings and option plans	Issued for employee savings and option plans			1.6		70				1.4			60			Issued for employee savings and option plans		0.6			14					0.7			22					3.0			123					2.6			107
Ending balance	Ending balance			(291.9)		(35,072)				(276.9)			(31,420)			Ending balance		(298.3)			(36,507)					(285.3)			(33,182)					(298.3)			(36,507)					(285.3)			(33,182)
Retained earnings	Retained earnings															Retained earnings
Beginning balance	Beginning balance					45,093							42,827			Beginning balance					46,596								43,883								45,093								42,827

Net income attributable to Honeywell	Net income attributable to Honeywell					1,394							1,134			Net income attributable to Honeywell					1,514								1,552								4,395								3,947
Dividends on common stock	Dividends on common stock					(690)							(673)			Dividends on common stock					(684)								(668)								(2,062)								(2,007)

Ending balance	Ending balance					45,797							43,288			Ending balance					47,426								44,767								47,426								44,767
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)															Accumulated other comprehensive income (loss)
Beginning balance	Beginning balance					(3,475)							(2,895)			Beginning balance					(3,611)								(2,883)								(3,475)								(2,895)
Foreign exchange translation adjustment	Foreign exchange translation adjustment					(59)							126			Foreign exchange translation adjustment					62								(409)								(70)								(378)
Pension and other postretirement benefit adjustments	Pension and other postretirement benefit adjustments					(12)							(17)			Pension and other postretirement benefit adjustments					(14)								(10)								(38)								(44)
Changes in fair value of available for sale investments	Changes in fair value of available for sale investments					(6)							(6)			Changes in fair value of available for sale investments					—								2								3								(7)
Changes in fair value of cash flow hedges	Changes in fair value of cash flow hedges					14							5			Changes in fair value of cash flow hedges					12								4								29								28
Ending balance	Ending balance					(3,538)							(2,787)			Ending balance					(3,551)								(3,296)								(3,551)								(3,296)
Noncontrolling interest	Noncontrolling interest															Noncontrolling interest
Beginning balance	Beginning balance					622							673			Beginning balance					595								649								622								673

Net income attributable to noncontrolling interest						14							—
Net income (loss) attributable to noncontrolling interest																Net income (loss) attributable to noncontrolling interest					1								(3)								29								(1)
Foreign exchange translation adjustment	Foreign exchange translation adjustment					1							—			Foreign exchange translation adjustment					(3)								(14)								(6)								(21)
Dividends paid	Dividends paid					(41)							(1)			Dividends paid					(49)								(9)								(101)								(42)
Contributions from noncontrolling interest holders	Contributions from noncontrolling interest holders					—							14			Contributions from noncontrolling interest holders					—								—								—								14
Ending balance	Ending balance					596							686			Ending balance					544								623								544								623
Total shareowners' equity	Total shareowners' equity			665.7		17,515				680.7			19,051			Total shareowners' equity		659.3			17,775					672.3			18,330					659.3			17,775					672.3			18,330
Cash dividends per share of common stock	Cash dividends per share of common stock					$	1.030							$	0.980		Cash dividends per share of common stock					$	1.03							$	0.98							$	3.09							$	2.94

The Notes to Consolidated Financial Statements are an integral part of this statement.

7 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

NOTE 1. BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments necessary to present fairly the financial position, results of operations, cash flows, and shareowners' equity of Honeywell International Inc. and its consolidated subsidiaries (Honeywell or the Company) for the periods presented. The interim results of operations and cash flows should not necessarily be taken as indicative of the entire year.

Honeywell reports its quarterly financial information using a calendar convention; the first, second, and third quarters are consistently reported as ending on March 31, June 30, and September 30, respectively. It is Honeywell's practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires Honeywell's businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on the Company's business processes. The effects of this practice are generally not significant to reported results for any quarter and only exist within a reporting year. In the event differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, Honeywell will provide appropriate disclosures. Honeywell's actual closing dates for the three and nine months ended ~~March 31,~~September 30, 2023, and 2022, were ~~April 1,~~September 30, 2023, and ~~April 2,~~October 1, 2022, respectively.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the Company are set forth in Note 1 Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements in the Company’s 2022 Annual Report on Form 10-K. The Company includes herein certain updates to those policies.

RECLASSIFICATIONS

Certain prior year amounts ~~have been~~are reclassified to conform to the current year presentation.

Historically, the Company included Company-sponsored costs and costs that relate to contracts with customers for research and development projects as a component of Cost of products and services sold on the Consolidated Statement of Operations. Effective January 1, 2023, the Company began classifying Company-sponsored costs for research and development projects as a separate financial statement line item, titled Research and development expenses, on the Consolidated Statement of Operations and recast prior period results for this reclassification. This reclassification had no impact on the Company's net income, earnings per share, cash flows, segment reporting, or financial position. The Company revised historical periods to reflect this change in presentation.

SUPPLY CHAIN FINANCING

The Company maintains agreements with third-party financial institutions that offer voluntary supply chain financing (SCF) programs to suppliers. The SCF programs enable suppliers, at their sole discretion, to sell their receivables to third-party financial institutions in order to receive payment on receivables earlier than the negotiated commercial terms between suppliers and the Company. Supplier sale of receivables to third-party financial institutions is on terms negotiated between the supplier and the respective third-party financial institution. The Company agrees on commercial terms for the goods and services procured from suppliers, including prices, quantities, and payment terms, which normally range between 60 and 120 days, regardless of whether the supplier elects to participate in the SCF programs. A suppliers’ voluntary participation in the SCF programs has no bearing on the Company's payment terms and the Company has no economic interest in a supplier’s decision to participate in the SCF programs. The Company agrees to pay participating third-party financial institutions the stated amount of confirmed invoices from suppliers on the original maturity dates of the invoices.

Amounts outstanding related to SCF programs are included in Accounts payable in the Consolidated Balance Sheet. Accounts payable included approximately ~~$1,004~~$1,076 million and $992 million as of ~~March 31,~~September 30, 2023, and December 31, 2022, respectively. The impact of these programs is not material to the Company's overall liquidity.

8 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

RECENT ACCOUNTING PRONOUNCEMENTS

The Company considers the applicability and impact of all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's Consolidated Financial Statements.

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Topic 405): Disclosure of Supplier Finance Program Obligations, to enhance the transparency of supplier finance programs. The new standard requires annual disclosure of the key terms of the program, a description of where in the financial statements amounts outstanding under the program are presented, a rollforward of such amounts, and interim disclosure of amounts outstanding as of the end of each period. The guidance does not affect recognition, measurement, or financial statement presentation of supplier finance programs. The ASU is effective on January 1, 2023, except for the rollforward, which is effective on January 1, 2024. The Company adopted this guidance on January 1, 2023, with the exception of the rollforward that will be effective beginning January 1, 2024. The adoption of this standard does not have a material impact on the Company’s Consolidated Financial Statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. This ASU should be applied prospectively to acquisitions occurring on or after the effective date of December 15, 2022, and early adoption is permitted. The Company adopted this guidance on January 1, 2022. The adoption of this standard does not have a material impact on the Company’s Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by the transition away from reference rates expected to be discontinued to alternative reference rates. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, to expand the scope of this guidance to include derivatives. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022, to December 31, 2024. The Company will apply the guidance to impacted transactions during the transition period. The adoption of this standard does not have a material impact on the Company’s Consolidated Financial Statements.

NOTE 3. ACQUISITIONS AND DIVESTITURES

ACQUISITIONS

On ~~April 22,~~August 25, 2023, the Company ~~entered into~~acquired 100% of the outstanding equity interests of SCADAfence, a provider of operational technology and Internet of Things cybersecurity solutions for monitoring large scale networks, for total consideration of $52 million, net of cash acquired. The business is included in the Performance Materials and Technologies reportable business segment. The assets and liabilities acquired with SCADAfence are included in the Consolidated Balance Sheet as of September 30, 2023, including $17 million of intangible assets and $42 million of goodwill, which is not deductible for tax purposes. The purchase ~~agreement~~accounting is subject to ~~acquire~~final adjustment, primarily for the value of intangible assets, amounts allocated to goodwill, and tax balances.

On June 30, 2023, the Company acquired 100% of the outstanding equity interests of Compressor Controls Corporation, a turbomachinery services and controls company based in the United States, for ~~estimated aggregate closing~~total cash consideration of ~~$670~~$671 million, ~~in cash.~~net of cash acquired. The business ~~will be~~is included in the Performance Materials and Technologies reportable business segment. The ~~acquisition~~assets and liabilities acquired with Compressor Controls Corporation are included in the Consolidated Balance Sheet as of September 30, 2023, including $314 million of intangible assets and $311 million allocated to goodwill, which is deductible for tax purposes. The identifiable intangible assets primarily include customer relationships amortized over an estimated life of 15 years using an excess earnings amortization method. The purchase accounting is subject to ~~customary regulatory approvals~~final adjustment, primarily for the valuation of intangible assets, amounts allocated to goodwill, and ~~is expected to close in the second half of 2023.~~tax balances.

On January 18, 2022, the Company acquired 100% of the issued and outstanding shares of US Digital Designs, Inc., a leading provider of technologies for first responders, for total consideration of $186 million. The business is included within the Honeywell Building Technologies reportable business segment. The Company finalized the evaluation for the fair value of all the assets and liabilities acquired with US Digital Designs, Inc. during the first quarter of 2023. Management recorded intangible assets of $53 million and allocated $129 million to goodwill, which is deductible for tax purposes.

~~DIVESTITURES~~

~~As of March 31, 2023, the Company had no material adjustments for divestitures completed during 2022.~~

9 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

DIVESTITURES

For the nine months ended September 30, 2023, the Company completed no divestitures.

In conjunction with the wind down of our businesses and operations in Russia (the Wind down), on September 2, 2022, the Company completed the sale of an entity domiciled in Russia in exchange for gross cash consideration of less than $1 million. The Company recognized a pre-tax gain of $10 million, which was recorded in Other (income) expense in the Consolidated Statement of Operations, driven by a favorable foreign currency cumulative translation adjustment at the time of sale. The financial results of the entity were previously included in the Performance Materials and Technologies reportable business segment.

NOTE 4. REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS

The Company has a comprehensive offering of products and services, including software and technologies, that are sold to a variety of customers in multiple end markets. See the following disaggregated revenue table and related discussions by reportable business segment for details:

Three Months Ended March 31,
2023 2022
Aerospace
Commercial Aviation Original Equipment $ 541 $ 478
Commercial Aviation Aftermarket 1,423 1,168
Defense and Space 1,147 1,103
Net Aerospace sales 3,111 2,749
Honeywell Building Technologies
Products 908 879
Building Solutions 579 550
Net Honeywell Building Technologies sales 1,487 1,429
Performance Materials and Technologies
UOP 565 480
Process Solutions 1,288 1,152
Advanced Materials 896 821
Net Performance Materials and Technologies sales 2,749 2,453
Safety and Productivity Solutions
Sensing and Safety Technologies 704 753
Productivity Solutions and Services 347 399
Warehouse and Workflow Solutions 464 592
Net Safety and Productivity Solutions sales 1,515 1,744
Corporate and All Other 2 1
Net sales $ 8,864 $ 8,376

In July 2022, the Company realigned certain business units within the Safety and Productivity Solutions reportable business segment. The Safety and Retail business unit, which included our gas detection and safety business, combined with the Advanced Sensing Technologies business unit to form the Sensing and Safety Technologies business unit. The Company recast historical periods to reflect this realignment.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Aerospace
Commercial Aviation Original Equipment	$	563	$	538	$	1,711	$	1,543
Commercial Aviation Aftermarket	1,634		1,339		4,590		3,715
Defense and Space	1,302		1,099		3,650		3,365
Net Aerospace sales	3,499		2,976		9,951		8,623
Honeywell Building Technologies
Products	894		915		2,720		2,730
Building Solutions	636		611		1,807		1,756
Net Honeywell Building Technologies sales	1,530		1,526		4,527		4,486
Performance Materials and Technologies
UOP	668		633		1,856		1,677
Process Solutions	1,316		1,141		3,898		3,472
Advanced Materials	883		946		2,723		2,718


Net Performance Materials and Technologies sales	2,867		2,720		8,477		7,867
Safety and Productivity Solutions
Sensing and Safety Technologies	675		709		2,071		2,165
Productivity Solutions and Services	304		435		994		1,328
Warehouse and Workflow Solutions	335		583		1,197		1,807
Net Safety and Productivity Solutions sales	1,314		1,727		4,262		5,300
Corporate and All Other	2		2		5		4
Net sales	$	9,212	$	8,951	$	27,222	$	26,280

Aerospace – A global supplier of products, software, and services for aircrafts that it sells to original equipment manufacturers (OEM) and other customers in a variety of end markets including: air transport, regional, business and general aviation aircraft, airlines, aircraft operators, and defense and space contractors. Aerospace products and services include auxiliary power units, propulsion engines, environmental control systems, integrated avionics, wireless connectivity services, electric power systems, engine controls, flight safety, communications, navigation hardware, data and software applications, radar and surveillance systems, aircraft lighting, management and technical services, advanced systems and instruments, satellite and space components, aircraft wheels and brakes, repair and overhaul services, and thermal systems. Aerospace also provides spare parts, repair, overhaul, ~~and~~ maintenance services (principally to aircraft operators) ~~for the aftermarket.~~, and sells licenses or intellectual property to other parties. Honeywell Forge solutions are leveraged by the Company's customers as tools to turn data into predictive maintenance and predictive analytics to enable better fleet management and make flight operations more efficient.

10 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

Honeywell Building Technologies – A global provider of products, software, solutions, and technologies that enable building owners and occupants to ensure their facilities are safe, energy efficient, sustainable, and productive. Honeywell Building Technologies products and services include advanced software applications for building control and optimization; sensors, switches, control systems, and instruments for energy management; access control; video surveillance; fire products; and installation, maintenance, and upgrades of systems. Honeywell Forge solutions enable the Company's customers to digitally manage buildings, connecting data from different assets to enable smart maintenance, improve building performance, and even protect from incoming security threats.

Performance Materials and Technologies – A global provider in developing and manufacturing high-quality performance chemicals and materials, process technologies, and automation solutions. The reportable business segment is comprised of Process Solutions, UOP, and Advanced Materials. Process Solutions provides automation control, instrumentation, advanced software, and related services for the oil and gas, refining, pulp and paper, industrial power generation, chemicals and petrochemicals, biofuels, life sciences, and metals, minerals, and mining industries. Through its smart energy products, Process Solutions enables utilities and distribution companies to deploy advanced capabilities to improve operations, reliability, and environmental sustainability. UOP provides process technology, products, including catalysts and adsorbents, equipment, and consulting services that enable customers to efficiently produce gasoline, diesel, jet fuel, petrochemicals, and renewable fuels for the petroleum refining, gas processing, petrochemical, and other industries. Advanced Materials manufactures a wide variety of high-performance products, including materials used to manufacture end products such as bullet-resistant armor, nylon, computer chips, and pharmaceutical packaging, and provides reduced and low global warming potential materials based on hydrofluoro-olefin technology. In the industrial environment, Honeywell Forge solutions enable integration and connectivity to provide a holistic view of operations and turn data into clear actions to maximize productivity and efficiency. Honeywell Forge's cybersecurity capabilities help identify risks and act on cyber-related incidents, together enabling improved operations and protecting processes, people, and assets.

Safety and Productivity Solutions – A global provider of products and software that improve productivity, workplace safety, and asset performance to customers around the globe. Sensing and Safety Technologies products include personal protective equipment (PPE), apparel, gear, and footwear; gas detection technology; custom-engineered sensors, switches, and controls for sensing and productivity solutions; and cloud-based notification and emergency messaging. Productivity Solutions and Services products and services include mobile devices and software for computing, data collection, and thermal printing; and software-based data and asset management productivity solutions. Warehouse and Workflow Solutions products and services include system design and simulation, automation solutions, performance optimization software, and lifecycle services to enable accuracy, productivity, and predictability of warehouse operations. Honeywell Forge solutions digitally automate processes to improve efficiency while reducing downtime and safety costs.

Corporate and All Other – Corporate and All Other includes revenue from Honeywell's majority-owned investment in Quantinuum. Through Quantinuum, Honeywell provides a wide range of service offerings of fully integrated quantum computing hardware and software solutions.

For a summary by disaggregated product and services sales for each reportable business segment, refer to Note 17 Segment Financial Data.

The Company recognizes revenue arising from performance obligations outlined in contracts with its customers that are satisfied at a point in time and over time. The disaggregation of the Company's revenue based off timing of recognition is as follows:


		Three Months Ended March 31,				Three Months Ended September 30,							Nine Months Ended September 30,
			2023	2022			2023				2022			2023		2022
Products, transferred point in time	Products, transferred point in time				58	%		59	%	Products, transferred point in time	57	%		61	%	58	%	60	%
Products, transferred over time	Products, transferred over time				13			14		Products, transferred over time	11			13		12		14
Net product sales	Net product sales				71			73		Net product sales	68			74		70		74
Services, transferred point in time	Services, transferred point in time				9			8		Services, transferred point in time	12			7		10		8
Services, transferred over time	Services, transferred over time				20			19		Services, transferred over time	20			19		20		18
Net service sales	Net service sales				29			27		Net service sales	32			26		30		26
Net sales	Net sales				100	%		100	%	Net sales	100	%		100	%	100	%	100	%

11 Honeywell International Inc.

TABLE OF CONTENTS

HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

CONTRACT BALANCES

The Company ~~records~~tracks progress on satisfying performance obligations under contracts with ~~customers and the~~customers. The related billings and cash collections are recorded in the Consolidated Balance Sheet in Accounts receivable—net and Other assets (unbilled receivables (contract assets) and billed receivables), and Accrued liabilities and Other liabilities (customer advances and deposits (contract liabilities)). Unbilled receivables ~~(contract assets)~~ arise when the timing of cash collected from customers differs from the timing of revenue recognition, such as when contract provisions require specific milestones to be met before a customer can be billed. Contract assets are recognized when the revenue associated with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract. Contract liabilities are recorded when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time. Contract liabilities are derecognized when revenue is recorded, either when a milestone is met triggering the contractual right to bill or when the performance obligation is satisfied.

Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period.

The following table summarizes the Company's contract assets and liabilities balances:

2023 2022
Contract assets—January 1 $ 2,294 $ 2,060
Contract assets—March 31 2,453 2,170
Change in contract assets - increase $ 159 $ 110
Contract liabilities—January 1 $ (4,583) $ (4,290)
Contract liabilities—March 31 (4,291) (4,323)
Change in contract liabilities - decrease (increase) $ 292 $ (33)
Net change $ 451 $ 77


	2023		2022
Contract assets—January 1	$	2,294	$	2,060
Contract assets—September 30	2,418		2,239
Change in contract assets—increase (decrease)	$	124	$	179

Contract liabilities—January 1	$	(4,583)	$	(4,290)
Contract liabilities—September 30	(4,081)		(4,177)
Change in contract liabilities—decrease (increase)	$	502	$	113

Net change	$	626	$	292

For the three and nine months ended ~~March 31,~~September 30, 2023, the Company recognized revenue of $333 million and $1,814 million, respectively, that was previously included in the beginning balance of contract liabilities. For the three and nine months ended September 30, 2022, the Company recognized revenue of ~~$953~~$362 million and ~~$927~~$1,633 million, respectively, that was previously included in the beginning balance of contract liabilities.

Contract assets included ~~$2,426~~$2,377 million and $2,265 million of unbilled balances under long-term contracts as of ~~March 31,~~September 30, 2023, and December 31, 2022, respectively. These amounts are billed in accordance with the terms of customer contracts to which they relate.

When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications for goods or services and not distinct from the existing contract, due to the significant integration with the original good or service provided, are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and the Company's measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at relative stand-alone selling price, they are accounted for as a new contract and performance obligation, which are recognized prospectively.

PERFORMANCE OBLIGATIONS

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When the Company's contracts with customers require highly complex integration or manufacturing services that are not separately identifiable from other promises in the contracts and, therefore, not distinct, then the entire contract is accounted for as a single performance obligation. In situations when the Company's contracts ~~includes~~include distinct goods or services that are substantially the same and have the same pattern of transfer to the customer over time, they are recognized as a series of distinct goods or services. For any contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the estimated relative stand-alone selling price of each distinct good or service in the contract. For product sales, each product sold to a customer typically represents a distinct performance obligation. In such cases, the observable stand-alone sales are used to determine the stand-alone selling price.

Performance obligations are satisfied as of a point in time or over time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract.

12 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

The following table outlines the Company's remaining performance obligations disaggregated by reportable business segment:

~~March 31,~~September 30, 2023

Aerospace

~~12,592~~13,749

Honeywell Building Technologies

~~6,836~~7,105

Performance Materials and Technologies

~~8,381~~8,331

Safety and Productivity Solutions

~~2,447~~2,164

Corporate and All Other~~(1)~~1

Total performance obligations

~~30,260~~31,352

~~(1)~~


1						The remaining performance obligations within Corporate and All Other relate to the Quantinuum business.

Performance obligations recognized as of ~~March 31,~~September 30, 2023, will be satisfied over the course of future periods. The Company's disclosure of the timing for satisfying the performance obligation is based on the requirements of contracts with customers. However, from time to time, these contracts may be subject to modifications, impacting the timing of satisfying the performance obligations. Performance obligations expected to be satisfied within one year and greater than one year are ~~61%~~59% and ~~39%~~41%, respectively.

The timing of satisfaction of the Company's performance obligations does not significantly vary from the typical timing of payment. Typical payment terms of the Company's fixed price over time contracts include progress payments based on specified events or milestones or based on project progress. For some contracts, the Company may be entitled to receive an advance payment.

The Company applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount the Company has the right to invoice for services performed.

NOTE 5. REPOSITIONING AND OTHER CHARGES

A summary of net repositioning and other charges follows:


		Three Months Ended March 31,					Three Months Ended September 30,							Nine Months Ended September 30,
			2023	2022				2023				2022			2023		2022
Severance	Severance				$	67			$	7	Severance	$	35		$	43	$	121	$	75
Asset impairments	Asset impairments				12				123		Asset impairments	16			5		37		153
Exit costs	Exit costs				24				17		Exit costs	36			20		98		78
Reserve adjustments	Reserve adjustments				(5)				(15)		Reserve adjustments	(23)			(2)		(40)		(54)
Total net repositioning charge					98				132
Total net repositioning charges											Total net repositioning charges	64			66		216		252
Asbestos-related charges, net of insurance and reimbursements	Asbestos-related charges, net of insurance and reimbursements				21				46		Asbestos-related charges, net of insurance and reimbursements	24			29		79		115
Probable and reasonably estimable environmental liabilities, net of reimbursements	Probable and reasonably estimable environmental liabilities, net of reimbursements				22				14		Probable and reasonably estimable environmental liabilities, net of reimbursements	6			3		40		19
Other charges	Other charges				—				195		Other charges	(6)			2		(4)		328
Total net repositioning and other charges	Total net repositioning and other charges				$	141			$	387	Total net repositioning and other charges	$	88		$	100	$	331	$	714

The following table summarizes the pre-tax distribution of total net repositioning and other charges by classification in the Consolidated Statement of Operations:


		Three Months Ended March 31,					Three Months Ended September 30,							Nine Months Ended September 30,
			2023	2022				2023				2022			2023		2022
Cost of products and services sold	Cost of products and services sold				$	80			$	199	Cost of products and services sold	$	57		$	85	$	200	$	429
Selling, general and administrative expenses	Selling, general and administrative expenses				65				188		Selling, general and administrative expenses	31			24		122		237
Other (income) expense	Other (income) expense				(4)				—		Other (income) expense	—			(9)		9		48
Total net repositioning and other charges	Total net repositioning and other charges				$	141			$	387	Total net repositioning and other charges	$	88		$	100	$	331	$	714

13 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

The following table summarizes the pre-tax amount of total net repositioning and other charges by reportable business segment. These amounts are excluded from segment profit as described in Note 17 Segment Financial Data:


		Three Months Ended March 31,					Three Months Ended September 30,							Nine Months Ended September 30,
			2023	2022				2023				2022			2023		2022
Aerospace	Aerospace				$	3			$	21	Aerospace	$	10		$	(2)	$	21	$	34
Honeywell Building Technologies	Honeywell Building Technologies				27				14		Honeywell Building Technologies	9			10		40		47
Performance Materials and Technologies	Performance Materials and Technologies				19				159		Performance Materials and Technologies	22			15		45		262
Safety and Productivity Solutions	Safety and Productivity Solutions				40				127		Safety and Productivity Solutions	23			55		94		197
Corporate and All Other	Corporate and All Other				52				66		Corporate and All Other	24			22		131		174
Total net repositioning and other charges	Total net repositioning and other charges				$	141			$	387	Total net repositioning and other charges	$	88		$	100	$	331	$	714

NET REPOSITIONING CHARGES

In the three months ended ~~March 31,~~September 30, 2023, the Company recognized gross repositioning charges totaling ~~$103~~$87 million, including severance costs of ~~$67~~$35 million related to workforce reductions of ~~1,797~~1,567 manufacturing and administrative positions ~~mainly~~primarily in the Company's Honeywell Building Technologies and Safety and Productivity Solutions ~~and Performance Materials and Technologies~~ reportable business segments. The workforce reductions were related to ~~our~~ productivity and ongoing functional transformation initiatives. The repositioning charges included asset impairments of ~~$12~~$16 million primarily related to the write-down of certain assets within the Company's Safety and Productivity Solutions reportable business segment and corporate function. The repositioning charges also included exit costs of $36 million related to current period costs incurred for closure obligations associated with site transitions primarily in the Company's Performance Materials and Technologies and Safety and Productivity Solutions reportable business segments. Also, $23 million of previously established reserves, primarily for severance, were returned to income due to higher than expected voluntary exits and adjustments to the scope of previously announced repositioning actions.

In the three months ended September 30, 2022, the Company recognized gross repositioning charges totaling $68 million, including severance costs of $43 million related to workforce reductions of 1,276 manufacturing and administrative positions primarily in the Company's Safety and Productivity Solutions reportable business segment. The workforce reductions were related to the Company's productivity and ongoing functional transformation initiatives. The repositioning charges included asset impairments of $5 million related to the write-down of certain manufacturing equipment. The repositioning charges also included exit costs of $20 million related to current period costs incurred for closure obligations associated with site transitions in the Company's Safety and Productivity Solutions and Aerospace reportable business segments.

In the nine months ended September 30, 2023, the Company recognized gross repositioning charges totaling $256 million, including severance costs of $121 million related to workforce reductions of 4,128 manufacturing and administrative positions primarily in the Company's Safety and Productivity Solutions and Honeywell Building Technologies reportable business segments. The workforce reductions were primarily related to productivity and ongoing functional transformation initiatives. The repositioning charges included asset impairments of $37 million related to the write-down of certain assets within ~~our~~the Company's Safety and Productivity Solutions reportable business segment. The repositioning charges also included exit costs of ~~$24~~$98 million related to current period costs incurred for closure obligations associated with site transitions across all of the Company's reportable business ~~segments.~~segments and corporate function. Also, $40 million of previously established reserves, primarily for severance, were returned to income due to higher than expected voluntary exits and adjustments to the scope of previously announced repositioning actions.

In the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company recognized gross repositioning charges totaling ~~$147~~$306 million, including asset impairments of $153 million for the write-down of certain manufacturing equipment, primarily related to closing and relocating the production of certain respiratory manufacturing from a ~~US.-based~~U.S.-based facility to a non-U.S. ~~facility.~~facility in the Company's Safety and Productivity Solutions reportable business segment. The repositioning charges included ~~asset impairments~~exit costs of ~~$123~~$78 million primarily related to ~~the write-down of certain manufacturing equipment, and exit costs of $17 million primarily for~~ current period exit costs incurred for new and previously approved repositioning projects and closure obligations associated with site transitions in the Company's Performance Materials and ~~lease obligations for equipment. These~~Technologies and Aerospace reportable business segments. The repositioning charges also included severance costs of $7$75 million related to workforce reductions of ~~1,196~~2,940 manufacturing and administrative positions across ~~all of~~ the Company's reportable business segments. The workforce reductions related to cost savings actions taken in connection with the Company's productivity and ongoing functional transformation initiatives and to site transitions to more cost-effective locations. Also, $54 million of previously established reserves, primarily for severance, were returned to income due to higher than expected voluntary exits and adjustments to the scope of previously announced repositioning actions.

14 Honeywell International Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

The following table summarizes the status of the Company's total repositioning reserves:


		Severance Costs			Asset Impairments			Exit Costs			Total				Severance Costs		Asset Impairments		Exit Costs		Total
Balance at December 31, 2022	Balance at December 31, 2022		$	235		$	—		$	74		$	309	Balance at December 31, 2022	$	235	$	—	$	74	$	309
Charges	Charges		67			12			24			103		Charges	121		37		98		256
Usage—cash	Usage—cash		(54)			—			(19)			(73)		Usage—cash	(138)		—		(80)		(218)
Usage—noncash	Usage—noncash		—			(12)			—			(12)		Usage—noncash	—		(35)		—		(35)
Foreign currency translation	Foreign currency translation		3			—			16			19		Foreign currency translation	5		—		16		21
Adjustments	Adjustments		(1)			—			(4)			(5)		Adjustments	(31)		(2)		(7)		(40)
Balance at March 31, 2023			$	250		$	—		$	91		$	341
Balance at September 30, 2023														Balance at September 30, 2023	$	192	$	—	$	101	$	293

Certain repositioning projects will recognize exit costs in future periods when the actual liability is incurred. Such exit costs incurred in the ~~three~~nine months ended ~~March 31,~~September 30, 2023, and 2022, were ~~$10~~$40 million and ~~$11~~$46 million, respectively.

OTHER CHARGES

During the nine months ended September 30, 2023, the Company recorded a fair value adjustment, within Asbestos-related charges, net of insurance and reimbursements in the table above and Other (income) expense on the Consolidated Statement of Operations, related to HWI Net Sale Proceeds (as defined in Note 11 Fair Value Measurements) and reduced the estimate by $11 million. See Note 11 Fair Value Measurements and Note 14 Commitments and Contingencies for further discussion.

During the three months ended ~~March 31,~~September 30, 2022, the Company recognized a net reduction of Other charges previously recognized of $16 million. The Other charges included costs incurred related to the Wind down of operations in Russia. The reduction of Other charges primarily related to a favorable foreign exchange revaluation on an intercompany loan with a Russian affiliate, in addition to the recovery of outstanding accounts receivable previously reserved against, recorded to Other (income) expense and Selling, general and administrative ~~expenses~~expense on the Consolidated Statement of Operations, ~~and within~~respectively. This was partially offset by the recognition of an additional expense for called guarantees recorded to Other (income) expense on the Consolidated Statement of Operations.

During the nine months ended September 30, 2022, the Company recognized $291 million of Other charges. The Other charges included costs incurred related to the initial suspension (the Suspension) and Wind down of businesses and operations in Russia. These costs impacted all reportable business segments, with the most significant impact within the Performance Materials and Technologies reportable business segment. The Other charges included costs recorded in Cost of products sold, Selling, general and administrative expenses, or Other (income) expense on the ~~table above~~Consolidated Statement of Operations. For the nine months ended September 30, 2022, Cost of products and services sold included $60 million primarily related to inventory reserves and the write-down of other assets, Selling, general and administrative included $183 million ofprimarily related to reserves against outstanding accounts receivable and contract assets, ~~and impairments~~impairment of intangible assets, the write-down of other assets, ~~due~~and employee severance, and Other (income) expense included $48 million related to foreign exchange revaluation on an intercompany loan with a Russian affiliate, impairment of property, plant and equipment, and expenses for called guarantees. For the ~~suspension of substantially all of~~nine months ended September 30, 2022, the ~~Company's sales, distribution and service activities in Russia and Belarus, sanctions, and deteriorating trade relations in Russia due~~Other charges did not include a $2 million tax valuation allowance recorded to ~~the Russia-Ukraine conflict. Based on available information to date, the Company’s estimate of potential future impairments~~Tax expense on the ~~Company's businesses in Russia would not be material with respect~~Consolidated Statement of Operations, directly attributable to the Company's ~~consolidated financial position.~~Wind down of businesses and operations in Russia.

Given the uncertainty inherent in the Company's remaining obligations related to contracts with Russian counterparties, the Company does 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). Based on available information to date, the Company’s estimate of potential future losses or other contingencies related to the wind down of ~~our~~ activities, including any guarantee payments or any litigation costs or as otherwise related to the Company's wind down in Russia, could adversely affect the Company's consolidated results of operations in the periods recognized but would not be material with respect to the Company's consolidated financial position. See Note 14 Commitments and Contingencies for a discussion of the recognition and measurement of estimate for contingencies.

14 ~~Honeywell International Inc.~~

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~~HONEYWELL INTERNATIONAL INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

NOTE 6. INCOME TAXES

The effective tax rate was ~~equal to~~higher than the U.S. federal statutory rate of 21% ~~and~~but decreased during 2023 compared to 2022 ~~primarily due to~~resulting from increased benefits ~~from~~of taxes on non-U.S. earnings ~~tax reserves,~~ and ~~the absence of restructuring~~lower repositioning related expenses, partially offset by ~~tax expense from~~other accrued ~~withholding tax related to unremitted foreign earnings and decreased benefits from employee share-based compensation.~~

~~NOTE 7. INVENTORIES~~

March 31, 2023 December 31, 2022
Raw materials $ 1,496 $ 1,407
Work in process 1,161 1,049
Finished products 3,119 3,082
Total Inventories $ 5,776 $ 5,538
taxes.

15 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

NOTE 7. INVENTORIES


	September 30, 2023		December 31, 2022
Raw materials	$	1,485	$	1,407
Work in process	1,248		1,049
Finished products	3,267		3,082
Total Inventories	$	6,000	$	5,538

NOTE 8. LONG-TERM DEBT AND CREDIT AGREEMENTS


		March 31, 2023			December 31, 2022				September 30, 2023		December 31, 2022

1.30% Euro notes due 2023	1.30% Euro notes due 2023		$	—		$	1,334	1.30% Euro notes due 2023	$	—	$	1,334
3.35% notes due 2023	3.35% notes due 2023		300			300		3.35% notes due 2023	300		300
0.00% Euro notes due 2024	0.00% Euro notes due 2024		543			534		0.00% Euro notes due 2024	527		534
2.30% notes due 2024	2.30% notes due 2024		750			750		2.30% notes due 2024	750		750
4.85% notes due 2024	4.85% notes due 2024		400			400		4.85% notes due 2024	400		400
1.35% notes due 2025	1.35% notes due 2025		1,250			1,250		1.35% notes due 2025	1,250		1,250
2.50% notes due 2026	2.50% notes due 2026		1,500			1,500		2.50% notes due 2026	1,500		1,500
1.10% notes due 2027	1.10% notes due 2027		1,000			1,000		1.10% notes due 2027	1,000		1,000
3.50% Euro notes due 2027								3.50% Euro notes due 2027	685		—
4.95% notes due 2028	4.95% notes due 2028		500			500		4.95% notes due 2028	500		500
2.25% Euro notes due 2028	2.25% Euro notes due 2028		814			800		2.25% Euro notes due 2028	790		800
4.25% notes due 2029								4.25% notes due 2029	750		—
2.70% notes due 2029	2.70% notes due 2029		750			750		2.70% notes due 2029	750		750
1.95% notes due 2030	1.95% notes due 2030		1,000			1,000		1.95% notes due 2030	1,000		1,000
1.75% notes due 2031	1.75% notes due 2031		1,500			1,500		1.75% notes due 2031	1,500		1,500
0.75% Euro notes due 2032	0.75% Euro notes due 2032		543			534		0.75% Euro notes due 2032	527		534
3.75% Euro notes due 2032								3.75% Euro notes due 2032	527		—
5.00% notes due 2033	5.00% notes due 2033		1,100			1,100		5.00% notes due 2033	1,100		1,100
4.50% notes due 2034								4.50% notes due 2034	1,000		—
4.125% Euro notes due 2034	4.125% Euro notes due 2034		1,085			1,067		4.125% Euro notes due 2034	1,054		1,067
5.70% notes due 2036	5.70% notes due 2036		441			441		5.70% notes due 2036	441		441
5.70% notes due 2037	5.70% notes due 2037		462			462		5.70% notes due 2037	462		462
5.375% notes due 2041	5.375% notes due 2041		417			417		5.375% notes due 2041	417		417
3.812% notes due 2047	3.812% notes due 2047		445			445		3.812% notes due 2047	445		445
2.80% notes due 2050	2.80% notes due 2050		750			750		2.80% notes due 2050	750		750
Industrial development bond obligations, floating rate maturing at various dates through 2037	Industrial development bond obligations, floating rate maturing at various dates through 2037		22			22		Industrial development bond obligations, floating rate maturing at various dates through 2037	22		22
6.625% debentures due 2028	6.625% debentures due 2028		201			201		6.625% debentures due 2028	201		201
9.065% debentures due 2033	9.065% debentures due 2033		51			51		9.065% debentures due 2033	51		51
Other (including capitalized leases), 8.6% weighted average interest rate maturing at various dates through 2029			232			265
Other (including capitalized leases), 7.4% weighted average interest rate maturing at various dates through 2029								Other (including capitalized leases), 7.4% weighted average interest rate maturing at various dates through 2029	228		265
Fair value of hedging instruments	Fair value of hedging instruments		(220)			(287)		Fair value of hedging instruments	(323)		(287)
Debt issuance costs	Debt issuance costs		(229)			(233)		Debt issuance costs	(251)		(233)
Total Long-term debt and current related maturities	Total Long-term debt and current related maturities		15,607			16,853		Total Long-term debt and current related maturities	18,353		16,853
Less: Current maturities of long-term debt	Less: Current maturities of long-term debt		937			1,730		Less: Current maturities of long-term debt	1,670		1,730
Total Long-term debt	Total Long-term debt		$	14,670		$	15,123	Total Long-term debt	$	16,683	$	15,123

16 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

On May 17, 2023, the Company issued $750 million 4.25% Senior Notes due 2029 and $1.0 billion 4.50% Senior Notes due 2034 (collectively, the 2023 USD Notes). The Company may redeem the 2023 USD Notes at any time, and from time to time, in whole or in part, at the Company's option at the applicable redemption price. The offering provided gross proceeds of $1.8 billion, offset by $20 million in discount and closing costs related to the offering.

On May 17, 2023, the Company issued €650 million 3.50% Senior Notes due 2027 and €500 million 3.75% Senior Notes due 2032 (collectively, the 2023 Euro Notes). The Company may redeem the 2023 Euro Notes at any time, and from time to time, in whole or in part, at the Company's option at the applicable redemption price. The offering provided gross proceeds of $1.2 billion, offset by $12 million in discount and closing costs related to the offering.

The 2023 USD Notes and 2023 Euro Notes are senior unsecured and unsubordinated obligations of the Company and rank equally with each other and with all of the Company's existing and future senior unsecured debt and senior to all of the Company's subordinated debt. The Company intends to use the proceeds from the issuances for the repayment of commercial paper and general corporate purposes.

On February 22, 2023, the Company repaid its 1.30% Euro notes due 2023.

On March 20, 2023, the Company entered into a $1.5 billion 364-day credit agreement (the 364-Day Credit Agreement) and a $4.0 billion amended and restated ~~five-year~~five-year credit agreement (the 5-Year Credit Agreement). The 364-Day Credit Agreement replaced the $1.5 billion 364-day credit agreement dated as of March 24, 2022, which was terminated in accordance with its terms effective March 20, 2023. Amounts borrowed under the 364-Day Credit Agreement are required to be repaid no later than March 18, 2024, unless (i) Honeywell elects to convert all then outstanding amounts into a term loan, upon which such amounts shall be repaid in full on March 18, 2025, or (ii) the 364-Day Credit Agreement is terminated earlier pursuant to its terms. The 5-Year Credit Agreement amended and restated the previously reported $4.0 billion amended and restated ~~five-year~~five-year credit agreement dated as of March 24, 2022. 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 364-Day Credit Agreement and 5-Year Credit Agreement are maintained for general corporate purposes.

As of ~~March 31,~~September 30, 2023, there were no outstanding borrowings under the 364-Day Credit Agreement or the 5-Year Credit Agreement.

16 ~~Honeywell International Inc.~~

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~~HONEYWELL INTERNATIONAL INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

NOTE 9. LEASES

The Company's operating and finance lease portfolio is described in Note 10 Leases of Notes to Consolidated Financial Statements in the Company's 2022 Annual Report on Form 10-K.

Supplemental cash flow information related to leases was as follows:

Three Months Ended March 31,
2023 2022
Right-of-use assets obtained in exchange for lease obligations
Operating leases $ 20 $ 47
Finance leases 31 17

~~Supplemental balance sheet information related to leases was as follows:~~

March 31, 2023 December 31, 2022
Operating leases
Other assets $ 858 $ 881
Accrued liabilities 193 192
Other liabilities 756 775
Total operating lease liabilities 949 967
Financing leases
Property, plant and equipment 388 383
Accumulated depreciation (170) (161)
Property, plant and equipment—net 218 222
Current maturities of long-term debt 80 77
Long-term debt 135 145
Total financing lease liabilities $ 215 $ 222


	Nine Months Ended September 30,
		2023	2022
Right-of-use assets obtained in exchange for lease obligations
Operating leases			$	176	$	86
Finance leases			31		43

17 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

Supplemental balance sheet information related to leases was as follows:


	September 30, 2023		December 31, 2022
Operating leases
Other assets	$	917	$	881
Accrued liabilities	193		192
Other liabilities	822		775
Total operating lease liabilities	1,015		967
Financing leases
Property, plant and equipment	393		383
Accumulated depreciation	(187)		(161)
Property, plant and equipment—net	206		222
Current maturities of long-term debt	84		77
Long-term debt	112		145
Total financing lease liabilities	$	196	$	222

NOTE 10. DERIVATIVE INSTRUMENTS AND HEDGING TRANSACTIONS

Honeywell's foreign currency, interest rate, credit, and commodity price risk management policies are described in Note 11 Derivative Instruments and Hedging Transactions of Notes to Consolidated Financial Statements in the Company's 2022 Annual Report on Form 10-K.

The following table summarizes the notional amounts and fair values of the Company’s outstanding derivatives by risk category and instrument type within the Consolidated Balance Sheet as of ~~March 31,~~September 30, 2023, and December 31, 2022:


		Notional						Fair Value Asset						Fair Value (Liability)							Notional				Fair Value Asset				Fair Value (Liability)
		March 31, 2023			December 31, 2022			March 31, 2023			December 31, 2022			March 31, 2023			December 31, 2022				September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Derivatives in fair value hedging relationships	Derivatives in fair value hedging relationships																			Derivatives in fair value hedging relationships
Interest rate swap agreements	Interest rate swap agreements		$	5,007		$	4,984		$	31		$	16		$	(251)		$	(303)	Interest rate swap agreements	$	4,967	$	4,984	$	—	$	16	$	(323)	$	(303)
Derivatives in cash flow hedging relationships	Derivatives in cash flow hedging relationships																			Derivatives in cash flow hedging relationships
Foreign currency exchange contracts	Foreign currency exchange contracts		683			866			36			19			(3)			(5)		Foreign currency exchange contracts	705		866		47		19		—		(5)
Commodity contracts	Commodity contracts		7			9			—			—			—			(1)		Commodity contracts	7		9		—		—		—		(1)
Derivatives in net investment hedging relationships	Derivatives in net investment hedging relationships																			Derivatives in net investment hedging relationships

Cross currency swap agreements	Cross currency swap agreements		4,189			3,189			44			90			(12)			—		Cross currency swap agreements	4,189		3,189		44		90		—		—
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments		9,886			9,048			111			125			(266)			(309)		Total derivatives designated as hedging instruments	9,868		9,048		91		125		(323)		(309)
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments																			Derivatives not designated as hedging instruments
Foreign currency exchange contracts	Foreign currency exchange contracts		8,454			9,679			2			74			(5)			(3)		Foreign currency exchange contracts	9,256		9,679		7		74		(22)		(3)
Total derivatives at fair value	Total derivatives at fair value		$	18,340		$	18,727		$	113		$	199		$	(271)		$	(312)	Total derivatives at fair value	$	19,124	$	18,727	$	98	$	199	$	(345)	$	(312)

All derivative assets are presented in Other current assets or Other assets. All derivative liabilities are presented in Accrued liabilities or Other liabilities.

In addition to the foreign currency derivative contracts designated as net investment hedges, certain of the Company's foreign currency denominated debt instruments are designated as net investment hedges. The carrying value of those debt instruments designated as net investment hedges, which includes the adjustment for the foreign currency transaction gain or loss on those instruments, was ~~$4,816~~$5,880 million and $3,836 million as of ~~March 31,~~September 30, 2023, and December 31, 2022, respectively.

~~The following table sets forth the amounts recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:~~

Carrying Amount of Hedged Item Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Item
March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022
Long-term debt $ 4,787 $ 4,696 $ (220) $ (287)

18 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

The following table sets forth the amounts recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:


	Carrying Amount of Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Item
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Long-term debt	$	4,644	$	4,696	$	(323)	$	(287)

The following tables summarize the location and impact to the Consolidated Statement of Operations related to derivative instruments:


		Three Months Ended March 31, 2023																			Three Months Ended September 30, 2023
		Net Sales			Cost of Products Sold			Cost of Services Sold			Selling, General and Administrative Expenses			Other (Income) Expense			Interest and Other Financial Charges				Net Sales		Cost of Products Sold		Cost of Services Sold		Selling, General and Administrative Expenses		Other (Income) Expense		Interest and Other Financial Charges
			$	8,864		$	4,068		$	1,430		$	1,317		$	(260)		$	170		$	9,212	$	4,090	$	1,580	$	1,252	$	(247)	$	206
Gain or (loss) on cash flow hedges	Gain or (loss) on cash flow hedges																			Gain or (loss) on cash flow hedges
Foreign currency exchange contracts	Foreign currency exchange contracts																			Foreign currency exchange contracts
Amount reclassified from accumulated other comprehensive income into income			1			3			1			1			—			—
Amount reclassified from accumulated other comprehensive income (loss) into income																				Amount reclassified from accumulated other comprehensive income (loss) into income	5		10		4		2		—		—

Gain or (loss) on fair value hedges	Gain or (loss) on fair value hedges																			Gain or (loss) on fair value hedges
Interest rate swap agreements	Interest rate swap agreements																			Interest rate swap agreements
Hedged items	Hedged items		—			—			—			—			—			(67)		Hedged items	—		—		—		—		—		38
Derivatives designated as hedges	Derivatives designated as hedges		—			—			—			—			—			67		Derivatives designated as hedges	—		—		—		—		—		(38)

Gain or (loss) on derivatives not designated as hedging instruments	Gain or (loss) on derivatives not designated as hedging instruments																			Gain or (loss) on derivatives not designated as hedging instruments
Foreign currency exchange contracts	Foreign currency exchange contracts		—			—			—			—			(80)			—		Foreign currency exchange contracts	—		—		—		—		212		—


		Three Months Ended March 31, 2022																			Three Months Ended September 30, 2022
		Net Sales			Cost of Products Sold			Cost of Services Sold			Selling, General and Administrative Expenses			Other (Income) Expense			Interest and Other Financial Charges				Net Sales		Cost of Products Sold		Cost of Services Sold		Selling, General and Administrative Expenses		Other (Income) Expense		Interest and Other Financial Charges
			$	8,376		$	4,059		$	1,265		$	1,431		$	(319)		$	85		$	8,951	$	4,286	$	1,308	$	1,228	$	(337)	$	98
Gain or (loss) on cash flow hedges	Gain or (loss) on cash flow hedges																			Gain or (loss) on cash flow hedges
Foreign currency exchange contracts	Foreign currency exchange contracts																			Foreign currency exchange contracts
Amount reclassified from accumulated other comprehensive income into income			1			1			—			1			—			—
Amount reclassified from accumulated other comprehensive income (loss) into income																				Amount reclassified from accumulated other comprehensive income (loss) into income	4		20		6		(2)		—		—

Gain or (loss) on fair value hedges	Gain or (loss) on fair value hedges																			Gain or (loss) on fair value hedges
Interest rate swap agreements	Interest rate swap agreements																			Interest rate swap agreements
Hedged items	Hedged items		—			—			—			—			—			137		Hedged items	—		—		—		—		—		186
Derivatives designated as hedges	Derivatives designated as hedges		—			—			—			—			—			(137)		Derivatives designated as hedges	—		—		—		—		—		(186)
Gain or (loss) on net investment hedges	Gain or (loss) on net investment hedges																			Gain or (loss) on net investment hedges
Foreign currency exchange contracts	Foreign currency exchange contracts																			Foreign currency exchange contracts
Amount excluded from effectiveness testing recognized in earnings using an amortization approach	Amount excluded from effectiveness testing recognized in earnings using an amortization approach		—			—			—			—			—			4		Amount excluded from effectiveness testing recognized in earnings using an amortization approach	—		—		—		—		—		4
Gain or (loss) on derivatives not designated as hedging instruments	Gain or (loss) on derivatives not designated as hedging instruments																			Gain or (loss) on derivatives not designated as hedging instruments
Foreign currency exchange contracts	Foreign currency exchange contracts		—			—			—			—			66			—		Foreign currency exchange contracts	—		—		—		—		402		—

19 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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


	Nine Months Ended September 30, 2023
	Net Sales		Cost of Products Sold		Cost of Services Sold		Selling, General and Administrative Expenses		Other (Income) Expense		Interest and Other Financial Charges
	$	27,222	$	12,291	$	4,503	$	3,831	$	(715)	$	563
Gain or (loss) on cash flow hedges
Foreign currency exchange contracts
Amount reclassified from accumulated other comprehensive income (loss) into income	8		19		7		6		—		—



Gain or (loss) on fair value hedges
Interest rate swap agreements
Hedged items	—		—		—		—		—		36
Derivatives designated as hedges	—		—		—		—		—		(36)



Gain or (loss) on derivatives not designated as hedging instruments
Foreign currency exchange contracts	—		—		—		—		63		—


	Nine Months Ended September 30, 2022
	Net Sales		Cost of Products Sold		Cost of Services Sold		Selling, General and Administrative Expenses		Other (Income) Expense		Interest and Other Financial Charges
	$	26,280	$	12,674	$	3,904	$	3,965	$	(846)	$	270
Gain or (loss) on cash flow hedges
Foreign currency exchange contracts
Amount reclassified from accumulated other comprehensive income (loss) into income	7		32		9		(2)		—		—

Gain or (loss) on fair value hedges
Interest rate swap agreements
Hedged items	—		—		—		—		—		354
Derivatives designated as hedges	—		—		—		—		—		(354)
Gain or (loss) on net investment hedges
Foreign currency exchange contracts
Amount excluded from effectiveness testing recognized in earnings using an amortization approach	—		—		—		—		—		11
Gain or (loss) on derivatives not designated as hedging instruments
Foreign currency exchange contracts	—		—		—		—		749		—

The following table summarizes the amounts of gain or (loss) on net investment hedges recognized in Accumulated other comprehensive income (loss):


		Three Months Ended March 31,					Three Months Ended September 30,										Nine Months Ended September 30,
			2023	2022				2023					2022					2023				2022
Euro-denominated long-term debt	Euro-denominated long-term debt					$		(49)		$	83		Euro-denominated long-term debt		$	157				$	207			$	71		$	474
Euro-denominated commercial paper	Euro-denominated commercial paper				(28)				17			Euro-denominated commercial paper		68					41				25			94
Cross currency swap agreements	Cross currency swap agreements				(57)				17			Cross currency swap agreements		69					97				(6)			177

Foreign currency exchange contracts												Foreign currency exchange contracts		—					31				—			62

1920 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

NOTE 11. FAIR VALUE MEASUREMENTS

The accounting guidance for fair value measurements and disclosures establishes a three-level fair value hierarchy:

•Level 1 - Inputs are based on quoted prices in active markets for identical assets and liabilities.

•Level 2 - Inputs are based on observable inputs other than quoted prices in active markets for identical or similar assets and liabilities.

•Level 3 - One or more inputs are unobservable and significant.

Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:


		March 31, 2023												December 31, 2022													September 30, 2023								December 31, 2022
		Level 1			Level 2			Level 3			Total			Level 1			Level 2			Level 3			Total				Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	Assets																									Assets
Foreign currency exchange contracts	Foreign currency exchange contracts		$	—		$	38		$	—		$	38		$	—		$	93		$	—		$	93	Foreign currency exchange contracts	$	—	$	54	$	—	$	54	$	—	$	93	$	—	$	93
Available for sale investments	Available for sale investments		64			428			—			492			87			559			—			646		Available for sale investments	60		213		—		273		87		559		—		646
Interest rate swap agreements	Interest rate swap agreements		—			31			—			31			—			16			—			16		Interest rate swap agreements	—		—		—		—		—		16		—		16
Cross currency swap agreements	Cross currency swap agreements		—			44			—			44			—			90			—			90		Cross currency swap agreements	—		44		—		44		—		90		—		90

Investments in equity securities	Investments in equity securities		22			32			—			54			22			32			—			54		Investments in equity securities	33		—		—		33		22		32		—		54
Right to HWI Net Sale Proceeds	Right to HWI Net Sale Proceeds		—			—			39			39			—			—			295			295		Right to HWI Net Sale Proceeds	—		—		9		9		—		—		295		295
Total assets	Total assets		$	86		$	573		$	39		$	698		$	109		$	790		$	295		$	1,194	Total assets	$	93	$	311	$	9	$	413	$	109	$	790	$	295	$	1,194
Liabilities	Liabilities																									Liabilities
Foreign currency exchange contracts	Foreign currency exchange contracts		$	—		$	8		$	—		$	8		$	—		$	8		$	—		$	8	Foreign currency exchange contracts	$	—	$	22	$	—	$	22	$	—	$	8	$	—	$	8
Interest rate swap agreements	Interest rate swap agreements		—			251			—			251			—			303			—			303		Interest rate swap agreements	—		323		—		323		—		303		—		303
Commodity contracts	Commodity contracts		—			—			—			—			—			1			—			1		Commodity contracts	—		—		—		—		—		1		—		1
Cross currency swap agreements			—			12			—			12			—			—			—			—

Total liabilities	Total liabilities		$	—		$	271		$	—		$	271		$	—		$	312		$	—		$	312	Total liabilities	$	—	$	345	$	—	$	345	$	—	$	312	$	—	$	312

The foreign currency exchange contracts, interest rate swap agreements, cross currency swap agreements, and commodity contracts are valued using broker quotations, or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are classified within level 2. The Company also holds investments in commercial paper, certificates of deposits, time deposits, and corporate debt securities that are designated as available for ~~sale, as well as investments in equity securities.~~sale. These investments are valued using published prices based on observable market data. As such, these investments are classified within level 2.

The Company holds certain available for sale investments in U.S. government securities and investments in equity securities. These investments are valued utilizing published prices based on quoted market pricing, which are classified within level 1.

The carrying value of cash and cash equivalents, trade accounts and notes receivables, payables, commercial paper, and other short-term borrowings approximates fair value.

As part of the NARCO Buyout (see Note 14 Commitments and Contingencies for definition), Honeywell holds a right to proceeds from the definitive sale agreement pursuant to which HarbisonWalker International Holdings, Inc. (HWI), the reorganized and renamed entity that emerged from the NARCO Bankruptcy, was acquired by an affiliate of Platinum Equity, LLC (HWI Sale). The right to these proceeds is considered a financial instrument. The significant input for the valuation of this right is unobservable, and as such, is classified within level 3.

The HWI Sale closed on February 16, 2023. ~~In connection with~~During the nine months ended September 30, 2023, Honeywell received $275 million of proceeds from the HWI Sale ~~Honeywell received initial cash proceeds of $256 million~~ (HWI Net Sale Proceeds)., of which $256 million was received during the first quarter of 2023 and $19 million during the second quarter of 2023. Additionally, during the second quarter of 2023, the Company recorded a fair value adjustment for the HWI Net Sale Proceeds and reduced the estimate by $11 million. The fair value of the remaining HWI Net Sale Proceeds as of ~~March 31,~~September 30, 2023, represents contingent consideration to be paid in future periods if certain conditions under the definitive sale agreement for the HWI Sale are met.

2021 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

The following table sets forth a reconciliation of beginning and ending balances of assets and liabilities that were accounted for at fair value using level 3 measurements:

~~March 31, 2023~~

~~Balance at beginning of period~~

~~295~~

~~Receipt of HWI Net Sale Proceeds~~

~~(256)~~

~~Balance at end of period~~


	Three Months Ended September 30, 2023		Nine Months Ended September 30, 2023
Balance at beginning of period	$	9	$	295


Receipt of HWI Net Sale Proceeds	—		(275)
Fair value adjustment of HWI Net Sale Proceeds	—		(11)
Balance at end of period	$	9	$	9

The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value:


		March 31, 2023						December 31, 2022							September 30, 2023				December 31, 2022
		Carrying Value			Fair Value			Carrying Value			Fair Value				Carrying Value		Fair Value		Carrying Value		Fair Value
Assets	Assets													Assets

Long-term receivables	Long-term receivables		$	221		$	177		$	229		$	183	Long-term receivables	$	231	$	176	$	229	$	183

Liabilities	Liabilities													Liabilities
Long-term debt and related current maturities	Long-term debt and related current maturities		$	15,607		$	14,706		$	16,853		$	15,856	Long-term debt and related current maturities	$	18,353	$	16,755	$	16,853	$	15,856

The Company determined the fair value of the long-term receivables by utilizing transactions in the listed markets for identical or similar assets. As such, the fair value of these receivables is considered level 2.

NOTE 12. EARNINGS PER SHARE

The details of the earnings per share calculations for the three and nine months ended ~~March 31,~~September 30, 2023, and 2022, are as follows (shares in millions):


		Three Months Ended March 31,					Three Months Ended September 30,								Nine Months Ended September 30,
Basic	Basic		2023	2022				Basic	2023				2022			2023		2022
Net income attributable to Honeywell	Net income attributable to Honeywell				$	1,394				$	1,134	Net income attributable to Honeywell	$	1,514		$	1,552	$	4,395	$	3,947
Weighted average shares outstanding	Weighted average shares outstanding				667.8					684.7		Weighted average shares outstanding	662.4			674.1		665.2		679.3
Earnings per share of common stock—basic	Earnings per share of common stock—basic				$	2.09				$	1.66	Earnings per share of common stock—basic	$	2.29		$	2.30	$	6.61	$	5.81


		Three Months Ended March 31,					Three Months Ended September 30,								Nine Months Ended September 30,
Assuming Dilution	Assuming Dilution		2023	2022				Assuming Dilution	2023				2022			2023		2022
Net income attributable to Honeywell	Net income attributable to Honeywell				$	1,394				$	1,134	Net income attributable to Honeywell	$	1,514		$	1,552	$	4,395	$	3,947
Average shares	Average shares											Average shares
Weighted average shares outstanding	Weighted average shares outstanding				667.8					684.7		Weighted average shares outstanding	662.4			674.1		665.2		679.3
Dilutive securities issuable—stock plans	Dilutive securities issuable—stock plans				5.2					6.6		Dilutive securities issuable—stock plans	4.6			5.5		5.2		6.0
Total weighted average diluted shares outstanding	Total weighted average diluted shares outstanding				673.0					691.3		Total weighted average diluted shares outstanding	667.0			679.6		670.4		685.3
Earnings per share of common stock—assuming dilution	Earnings per share of common stock—assuming dilution				$	2.07				$	1.64	Earnings per share of common stock—assuming dilution	$	2.27		$	2.28	$	6.56	$	5.76

The diluted earnings per share calculations exclude the effect of stock options when the cost to exercise an option exceeds the average market price of the common shares during the period. For the three and nine months ended ~~March 31,~~September 30, 2023, the weighted average number of stock options excluded from the computations were 4.6 million and 4.4 million, respectively. For the three and nine months ended September 30, 2022, the weighted average number of stock options excluded from the computations were 45.5 million and 33.6 million, respectively.

As of ~~March 31,~~September 30, 2023, and 2022, the total shares outstanding were ~~665.7~~659.3 million and ~~680.7~~672.3 million, respectively, and as of ~~March 31,~~September 30, 2023, and 2022, total shares issued were 957.6 million.

2122 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

NOTE 13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT


		Foreign Exchange Translation Adjustment			Pension and Other Postretirement Benefit Adjustments			Changes in Fair Value of Available for Sale Investments			Changes in Fair Value of Cash Flow Hedges			Total				Foreign Exchange Translation Adjustment		Pension and Other Postretirement Benefit Adjustments		Changes in Fair Value of Available for Sale Investments		Changes in Fair Value of Cash Flow Hedges		Total
Balance at December 31, 2022	Balance at December 31, 2022		$	(2,832)		$	(648)		$	(7)		$	12		$	(3,475)	Balance at December 31, 2022	$	(2,832)	$	(648)	$	(7)	$	12	$	(3,475)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications		(59)			—			(6)			16			(49)		Other comprehensive income (loss) before reclassifications	(70)		—		3		59		(8)
Amounts reclassified from accumulated other comprehensive income			—			(12)			—			(2)			(14)
Amounts reclassified from accumulated other comprehensive income (loss)																	Amounts reclassified from accumulated other comprehensive income (loss)	—		(38)		—		(30)		(68)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)		(59)			(12)			(6)			14			(63)		Net current period other comprehensive income (loss)	(70)		(38)		3		29		(76)
Balance at March 31, 2023			$	(2,891)		$	(660)		$	(13)		$	26		$	(3,538)
Balance at September 30, 2023																	Balance at September 30, 2023	$	(2,902)	$	(686)	$	(4)	$	41	$	(3,551)


		Foreign Exchange Translation Adjustment			Pension and Other Postretirement Benefit Adjustments			Changes in Fair Value of Available for Sale Investments			Changes in Fair Value of Cash Flow Hedges			Total				Foreign Exchange Translation Adjustment		Pension and Other Postretirement Benefit Adjustments		Changes in Fair Value of Available for Sale Investments		Changes in Fair Value of Cash Flow Hedges		Total
Balance at December 31, 2021	Balance at December 31, 2021		$	(2,478)		$	(415)		$	1		$	(3)		$	(2,895)	Balance at December 31, 2021	$	(2,478)	$	(415)	$	1	$	(3)	$	(2,895)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications		129			—			(6)			8			131		Other comprehensive income (loss) before reclassifications	(375)		—		(7)		66		(316)
Amounts reclassified from accumulated other comprehensive income			(3)			(17)			—			(3)			(23)
Amounts reclassified from accumulated other comprehensive income (loss)																	Amounts reclassified from accumulated other comprehensive income (loss)	(3)		(44)		—		(38)		(85)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)		126			(17)			(6)			5			108		Net current period other comprehensive income (loss)	(378)		(44)		(7)		28		(401)
Balance at March 31, 2022			$	(2,352)		$	(432)		$	(5)		$	2		$	(2,787)
Balance at September 30, 2022																	Balance at September 30, 2022	$	(2,856)	$	(459)	$	(6)	$	25	$	(3,296)

NOTE 14. COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL MATTERS

Honeywell's environmental matters are described in Note 19 Commitments and Contingencies of Notes to Consolidated Financial Statements in the Company's 2022 Annual Report on Form 10-K.

The following table summarizes information concerning the Company's recorded liabilities for environmental costs:


Balance at December 31, 2022	$	615
Accruals for environmental matters deemed probable and reasonably estimable	82176
Environmental liability payments	~~(24)~~(109)

Balance at ~~March 31,~~September 30, 2023	$	~~673~~682

Environmental liabilities are included in the following balance sheet accounts:


		March 31, 2023			December 31, 2022				September 30, 2023		December 31, 2022
Accrued liabilities	Accrued liabilities		$	222		$	222	Accrued liabilities	$	222	$	222
Other liabilities	Other liabilities		451			393		Other liabilities	460		393
Total environmental liabilities	Total environmental liabilities		$	673		$	615	Total environmental liabilities	$	682	$	615

2223 Honeywell International Inc.

TABLE OF CONTENTS

HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

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 the Company's consolidated results of operations and operating cash flows in the periods recognized or paid. However, considering the Company's 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 ~~was $35~~were $105 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2023, 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~~nine months ended ~~March 31,~~September 30, 2023, was ~~$59~~$136 million. As of ~~March 31,~~September 30, 2023, Other current assets and Other assets included $140 million and ~~$498~~$505 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				Bendix		NARCO		Total
December 31, 2022	December 31, 2022		$	1,291		$	1,325		$	2,616	December 31, 2022	$	1,291	$	1,325	$	2,616
Accrual for update to estimated liability	Accrual for update to estimated liability		10			3			13		Accrual for update to estimated liability	33		4		37
Change in estimated cost of future claims	Change in estimated cost of future claims		9			—			9		Change in estimated cost of future claims	26		—		26
Asbestos-related liability payments	Asbestos-related liability payments		(36)			(1)			(37)		Asbestos-related liability payments	(128)		(4)		(132)
NARCO Buyout	NARCO Buyout		—			(1,325)			(1,325)		NARCO Buyout	—		(1,325)		(1,325)
March 31, 2023			$	1,274		$	2		$	1,276
September 30, 2023											September 30, 2023	$	1,222	$	—	$	1,222

INSURANCE RECOVERIES FOR ASBESTOS-RELATED LIABILITIES


		Bendix			NARCO			Total				Bendix		NARCO		Total
December 31, 2022	December 31, 2022		$	130		$	135		$	265	December 31, 2022	$	130	$	135	$	265
Probable insurance recoveries related to estimated liability	Probable insurance recoveries related to estimated liability		6			—			6		Probable insurance recoveries related to estimated liability	7		—		7
Insurance receipts for asbestos-related liabilities	Insurance receipts for asbestos-related liabilities		(4)			(7)			(11)		Insurance receipts for asbestos-related liabilities	(10)		(21)		(31)

March 31, 2023			$	132		$	128		$	260
September 30, 2023											September 30, 2023	$	127	$	114	$	241

2324 Honeywell International Inc.

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HONEYWELL INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

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


		March 31, 2023			December 31, 2022				September 30, 2023		December 31, 2022
Other current assets	Other current assets		$	41		$	41	Other current assets	$	41	$	41
Insurance recoveries for asbestos-related liabilities	Insurance recoveries for asbestos-related liabilities		219			224		Insurance recoveries for asbestos-related liabilities	200		224
Total insurance recoveries for asbestos-related liabilities	Total insurance recoveries for asbestos-related liabilities		$	260		$	265	Total insurance recoveries for asbestos-related liabilities	$	241	$	265
Accrued liabilities	Accrued liabilities		$	122		$	1,436	Accrued liabilities	$	120	$	1,436
Asbestos-related liabilities	Asbestos-related liabilities		1,154			1,180		Asbestos-related liabilities	1,102		1,180
Total asbestos-related liabilities			$	1,276		$	2,616
Total asbestos-related liabilities1								Total asbestos-related liabilities1	$	1,222	$	2,616


1						As of December 31, 2022, Accrued liabilities included the Buyout Amount, as described and defined below, agreed upon between Honeywell and the Trust. The Buyout Amount does not represent an asbestos-related liability.

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. NARCO ceased manufacturing asbestos containing products in 1980 and 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 (Channeling Injunction). The NARCO Trust Agreement and the NARCO Trust Distribution Procedures set forth the structure and operating rules of the Trust, and established Honeywell’s evergreen funding obligations.

On November 18, 2022, Honeywell entered into a definitive agreement with the Trust and certain other parties, which was subsequently amended on November 20, 2022 (Amended Buyout Agreement).

Pursuant to the terms of the Amended Buyout Agreement, Honeywell agreed to make a one-time, lump sum payment in the amount of $1.325 billion to the Trust (Buyout Amount), subject to certain deductions as described in the Amended Buyout Agreement and in exchange for the release by the Trust of Honeywell from all further and future obligations of any kind related to the Trust and/or any claimants who were exposed to asbestos-containing products manufactured, sold, or distributed by NARCO or its predecessors (the Honeywell Obligations) (the NARCO Buyout). In accordance with the Amended Buyout Agreement, the economic rights of the Trust in respect of the net proceeds from the HWI Sale (as defined in Note 11 Fair Value Measurements) ~~inure~~inured to the benefit of Honeywell.

On December 8, 2022, the Bankruptcy Court issued an order that (A) approved the Amended Buyout Agreement, and (B) declared that the Channeling Injunction will remain in full force and effect without modification, dissolution, or termination.

On December 14, 2022, HWI (as defined in Note 11 Fair Value Measurements) entered into a definitive sale agreement for the sale of HWI to an affiliate of Platinum Equity, LLC subject to the terms set forth in the agreement.

On January 30, 2023, the Company paid the Buyout Amount to the Trust, the parties closed the transactions contemplated in the Amended Buyout Agreement, and Honeywell was released from the Honeywell Obligations. Honeywell continues to have the right to collect proceeds in connection with its NARCO asbestos-related insurance policies.

On February 16, 2023, the HWI Sale ~~closed, and on March 17, 2023, pursuant~~closed. Pursuant to ~~the terms of~~ the Amended Buyout Agreement, during the nine months ended September 30, 2023, Honeywell received ~~initial~~$275 million of proceeds from the HWI ~~Sale in the amount of $256 million.~~sale. See Note 11 Fair Value Measurements for further information on the related proceeds and remaining amount under the Amended Buyout Agreement.

For additional information, see ~~our~~the Company's Annual Report on Form 10-K, filed with the SEC on February 10, 2023, under Note 19 Commitments and Contingencies.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollars in tables 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:


		Three Months Ended March 31,		Years Ended December 31,					Nine Months Ended September 30,	Years Ended December 31,
		2023		2022		2021			2023	2022	2021
Claims unresolved at the beginning of period	Claims unresolved at the beginning of period		5,608		6,401		6,242	Claims unresolved at the beginning of period	5,608	6,401	6,242
Claims filed	Claims filed		400		2,014		2,611	Claims filed	1,335	2,014	2,611
Claims resolved	Claims resolved		(302)		(2,807)		(2,452)	Claims resolved	(1,297)	(2,807)	(2,452)
Claims unresolved at the end of period	Claims unresolved at the end of period		5,706		5,608		6,401	Claims unresolved at the end of period	5,646	5,608	6,401


		March 31,		December 31,					September 30,	December 31,
Disease Distribution of Unresolved Claims	Disease Distribution of Unresolved Claims	2023		2022		2021		Disease Distribution of Unresolved Claims	2023	2022	2021
Mesothelioma and other cancer claims	Mesothelioma and other cancer claims		3,442		3,283		3,760	Mesothelioma and other cancer claims	3,396	3,283	3,760
Nonmalignant claims	Nonmalignant claims		2,264		2,325		2,641	Nonmalignant claims	2,250	2,325	2,641
Total claims	Total claims		5,706		5,608		6,401	Total claims	5,646	5,608	6,401

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


		Years Ended December 31,																Years Ended December 31,
		2022			2021			2020			2019			2018				2022		2021		2020		2019		2018
		(in whole dollars)																(in whole dollars)
Malignant claims			$	59,200		$	56,000		$	61,500		$	50,200		$	55,300
Mesothelioma and other cancer claims																	Mesothelioma and other cancer claims	$	59,200	$	56,000	$	61,500	$	50,200	$	55,300
Nonmalignant claims	Nonmalignant claims		$	520		$	400		$	550		$	3,900		$	4,700	Nonmalignant claims	$	520	$	400	$	550	$	3,900	$	4,700

While resolution values moved higher and lower over the years for Bendix-related asbestos claims, such resolution values may continue to increase over the near term in light of recent asbestos litigation trends. It is not possible to predict whether resolution values for Bendix-related asbestos claims will increase, decrease, or stabilize in the future.

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 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 the Company's 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, historical experience with insurers, ongoing review of the solvency of insurers, judicial determinations relevant to insurance programs, and consideration of the impacts of any settlements reached with the Company's insurers.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

PETROBRAS AND UNAOIL MATTERS

On December 19, 2022, the Company reached a comprehensive resolution to the investigations by the U.S. Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and certain Brazilian authorities (Brazilian Authorities) relating to the Company's use of third parties who previously worked for the Company's UOP business in Brazil in relation to a project awarded in 2010 for Petróleo Brasileiro S.A. (Petrobras). The investigations focused on the Company’s compliance with the U.S. Foreign Corrupt Practices Act and similar Brazilian laws (UOP Matters). The comprehensive resolution also resolves DOJ and SEC investigations relating to a matter involving a foreign subsidiary’s prior contract with Unaoil S.A.M. in Algeria executed in 2011 (the Unaoil Matter).

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~~HONEYWELL INTERNATIONAL INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

In connection with the comprehensive resolution, (i) the Company agreed to pay a total equivalent of $202.7 million, which payment occurred in January 2023, to the DOJ, the SEC, and the Brazilian Authorities, collectively, in penalties, disgorgement, and prejudgment interest, (ii) the Company’s subsidiary, UOP, LLC (UOP), entered into a three-year Deferred Prosecution Agreement with the DOJ for charges related to the UOP Matters, (iii) UOP entered into leniency agreements with the Brazilian authorities related to the UOP Matter in Brazil, and (iv) the Company entered into an agreement with the SEC that resolves allegations relating to the UOP Matters and the Unaoil Matter. Pursuant to these agreements, the Company agreed to undertake certain compliance measures and compliance reporting obligations. These agreements entirely resolve the Petrobras and Unaoil investigations.

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 the Company's 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. The Company recognizes liabilities for any contingency that is probable of occurrence and reasonably estimable. The Company continually assesses the likelihood of adverse judgments or outcomes in such matters, as well as potential ranges of probable 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.

Given the uncertainty inherent in litigation and investigations, the Company does not believe it is possible to develop estimates of reasonably possible loss (or a range of possible loss) in excess of current accruals for commitment and contingency matters, including those discussed in this Note 14. Considering the Company's past experience and existing accruals, the Company does not expect the outcome of such matters, either individually or in the aggregate, to have a material adverse effect on the Company's 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 the Company to pay damage awards or settlements (or become subject to equitable remedies) that could have a material adverse effect on the Company's consolidated results of operations or operating cash flows in the periods recognized or paid.

NOTE 15. PENSION BENEFITS

Net periodic pension benefit (income) cost for the Company's significant pension plans included the following components:

U.S. Plans
Three Months Ended March 31,
2023 2022
Service cost $ 7 $ 21
Interest cost 161 95
Expected return on plan assets (278) (320)
Amortization of prior service (credit) cost (10) (10)
Net periodic benefit income $ (120) $ (214)


				Non-U.S. Plans										U.S. Plans
		Three Months Ended March 31,					Three Months Ended September 30,										Nine Months Ended September 30,
			2023	2022				2023			2022						2023				2022
Service cost	Service cost								$	5				Service cost		$	8			$	21			$	22			$	64
Interest cost	Interest cost					49			28			Interest cost		162				95				484				285
Expected return on plan assets	Expected return on plan assets				(67)					(75)			Expected return on plan assets		(277)				(320)				(833)				(961)

Amortization of prior service (credit) cost												Amortization of prior service (credit) cost		(12)				(11)				(32)				(32)
Net periodic benefit income	Net periodic benefit income				$	(15)			$	(42)		Net periodic benefit income		$	(119)			$	(215)			$	(359)			$	(644)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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


	Non-U.S. Plans
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Service cost	$	2	$	5	$	8	$	15
Interest cost	51		25		150		79
Expected return on plan assets	(70)		(67)		(206)		(213)


Net periodic benefit income	$	(17)	$	(37)	$	(48)	$	(119)

During the three and nine months ended September 30, 2023, the Company repurchased $100 million of outstanding Honeywell shares of common stock from the Honeywell U.S. Pension Plan Master Trust. The Company completed no repurchases of outstanding Honeywell shares of common stock from the Honeywell U.S. Pension Plan Master Trust during 2022.

NOTE 16. OTHER (INCOME) EXPENSE


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Interest income	$	(89)	$	(37)	$	(241)	$	(77)
Pension ongoing income—non-service	(148)		(279)		(440)		(847)
Other postretirement income—non-service	(6)		(10)		(19)		(30)
Equity income of affiliated companies	(12)		(19)		(61)		(43)

Gain on sale of non-strategic businesses and assets	—		(10)		—		(10)
Foreign exchange	—		12		20		32
Expense related to UOP Matters	—		—		—		50
Expense (benefit) related to Russia-Ukraine Conflict	—		(9)		(2)		48
Net expense related to the NARCO Buyout and HWI	—		—		11		—
Other, net	8		15		17		31
Total Other (income) expense	$	(247)	$	(337)	$	(715)	$	(846)

For more information on the Net expense related to the NARCO Buyout and HWI Sale, see Notes 5 Repositioning and Other Charges, 11 Fair Value Measurements, and 14 Commitments and Contingencies.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

~~NOTE 16. OTHER (INCOME) EXPENSE~~

Three Months Ended March 31,
2023 2022
Interest income $ (76) $ (20)
Pension ongoing income – non-service (146) (285)
Other postretirement income – non-service (6) (10)
Equity income of affiliated companies (35) (14)
Foreign exchange 2 (2)
Benefit related to Russia-Ukraine Conflict (4) —
Other, net 5 12
Total Other (income) expense $ (260) $ (319)

NOTE 17. SEGMENT FINANCIAL DATA

Honeywell globally manages its business operations through four reportable business 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.

In October 2023, the Company announced a realignment, expected to be effective in the first quarter of 2024, of its business units comprising its Performance Materials and Technologies and Safety and Productivity Solutions reportable business segments by forming two new reportable business segments: Industrial Automation and Energy and Sustainability Solutions. Industrial Automation will include Sensing and Safety Technologies, Productivity Solutions and Services, and Warehouse and Workflow Solutions, which are currently included in Safety and Productivity Solutions, in addition to Process Solutions, which is currently included in Performance Materials and Technologies. Energy and Sustainability Solutions will include UOP and Advanced Materials, which are currently included in Performance Materials and Technologies. Further, as part of the realignment, the Company will rename its Aerospace and Honeywell Building Technologies reportable business segments to Aerospace Technologies and Building Automation, respectively. Following the realignment, the Company’s reportable business segments will be Aerospace Technologies, Industrial Automation, Building Automation, and Energy and Sustainability Solutions. The realignment will not impact the Company’s historical consolidated financial position, results of operations, or cash flows. The Company expects to report its financial performance based on this realignment effective with the first quarter of 2024.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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


		Three Months Ended March 31,					Three Months Ended September 30,							Nine Months Ended September 30,
			2023	2022				2023				2022			2023		2022
Net sales	Net sales										Net sales
Aerospace	Aerospace										Aerospace
Products	Products				$	1,672			$	1,461	Products	$	1,824		$	1,586	$	5,294	$	4,621
Services	Services				1,439				1,288		Services	1,675			1,390		4,657		4,002
Net Aerospace sales	Net Aerospace sales				3,111				2,749		Net Aerospace sales	3,499			2,976		9,951		8,623
Honeywell Building Technologies	Honeywell Building Technologies										Honeywell Building Technologies
Products	Products				1,132				1,082		Products	1,172			1,169		3,463		3,430
Services	Services				355				347		Services	358			357		1,064		1,056
Net Honeywell Building Technologies sales	Net Honeywell Building Technologies sales				1,487				1,429		Net Honeywell Building Technologies sales	1,530			1,526		4,527		4,486
Performance Materials and Technologies	Performance Materials and Technologies										Performance Materials and Technologies
Products	Products				2,182				1,956		Products	2,183			2,228		6,609		6,394
Services	Services				567				497		Services	684			492		1,868		1,473
Net Performance Materials and Technologies sales	Net Performance Materials and Technologies sales				2,749				2,453		Net Performance Materials and Technologies sales	2,867			2,720		8,477		7,867
Safety and Productivity Solutions	Safety and Productivity Solutions										Safety and Productivity Solutions
Products	Products				1,324				1,633		Products	1,115			1,605		3,679		4,959
Services	Services				191				111		Services	199			122		583		341
Net Safety and Productivity Solutions sales	Net Safety and Productivity Solutions sales				1,515				1,744		Net Safety and Productivity Solutions sales	1,314			1,727		4,262		5,300
Corporate and All Other	Corporate and All Other										Corporate and All Other

Services	Services				2				1		Services	2			2		5		4
Net Corporate and All Other sales	Net Corporate and All Other sales				2				1		Net Corporate and All Other sales	2			2		5		4
Net sales	Net sales				$	8,864			$	8,376	Net sales	$	9,212		$	8,951	$	27,222	$	26,280
Segment profit	Segment profit										Segment profit
Aerospace	Aerospace				$	827			$	753	Aerospace	$	963		$	818	$	2,714	$	2,338
Honeywell Building Technologies	Honeywell Building Technologies				375				336		Honeywell Building Technologies	386			368		1,146		1,064
Performance Materials and Technologies	Performance Materials and Technologies				566				510		Performance Materials and Technologies	633			615		1,821		1,726
Safety and Productivity Solutions	Safety and Productivity Solutions				260				253		Safety and Productivity Solutions	190			271		689		755
Corporate and All Other	Corporate and All Other				(81)				(86)		Corporate and All Other	(90)			(120)		(289)		(298)
Total segment profit	Total segment profit				1,947				1,766		Total segment profit	2,082			1,952		6,081		5,585
Interest and other financial charges	Interest and other financial charges				(170)				(85)		Interest and other financial charges	(206)			(98)		(563)		(270)
Stock compensation expense(a)					(59)				(60)
Pension ongoing income(b)					130				251
Other postretirement income(b)					6				10
Repositioning and other charges(c)					(141)				(387)
Other(d)					69				10
Stock compensation expense1											Stock compensation expense1	(39)			(50)		(148)		(163)
Pension ongoing income2											Pension ongoing income2	131			247		391		748
Other postretirement income2											Other postretirement income2	6			10		19		30
Repositioning and other charges3											Repositioning and other charges3	(88)			(100)		(331)		(714)
Other4											Other4	81			20		204		(26)
Income before taxes	Income before taxes				$	1,782			$	1,505	Income before taxes	$	1,967		$	1,981	$	5,653	$	5,190

~~(a)~~1

Amounts included in Selling, general and administrative expenses.

~~(b)~~2

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

~~(c)~~3

Amounts included in Cost of products and services sold, Selling, general and administrative expenses, and Other (income) expense.

~~(d)~~4

Amounts include the other components of Other (income) expense not included within other categories in this reconciliation. Equity income of affiliated companies is included in segment profit.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

NOTE 18. SUBSEQUENT EVENTS

See Note ~~3 Acquisitions and Divestitures~~17 Segment Financial Data for information related to ~~a purchase agreement executed by~~ the ~~Company~~Company’s planned realignment of its reportable business segments announced on ~~April 22, 2023.~~

~~On April 24,~~October 10, 2023, and expected to be effective in the ~~Board~~first quarter of Directors authorized the repurchase of up to $10 billion of the Company's common stock, including approximately $2.1 billion of remaining availability under the previously announced share repurchase program authorization. The repurchase authorization does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice.2024.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in tables and graphs in ~~millions)~~millions, except per share amounts)

The following Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of Honeywell International Inc. and its consolidated subsidiaries (Honeywell, we, us, our, or the Company) for the three and nine months ended ~~March 31,~~September 30, 2023. The financial information as of ~~March 31,~~September 30, 2023, should be read in conjunction with the Consolidated Financial Statements for the year ended December 31, 2022, contained in our 2022 Annual Report on Form 10-K. See Note 3 Acquisitions and Divestitures of Notes to Consolidated Financial Statements for a discussion of acquisition and divestiture activity during the ~~three~~nine months ended ~~March 31,~~September 30, 2023.Certain prior year amounts are reclassified to conform to the current year presentation.

BUSINESS UPDATE

Historically, we included Company-sponsored costs and costs that relate to contracts with customers for research and development projects as a component of Cost of products and services sold on the Consolidated Statement of Operations. Effective January 1, 2023, we began classifying Company-sponsored costs for research and development projects as a separate financial statement line item, titled Research and development expenses, on the Consolidated Statement of Operations, and recast prior period results for this reclassification. This reclassification had no impact on net income, earnings per share, cash flows, segment reporting, or financial position. We revised historical periods to reflect this change in presentation.

In ~~July 2022, we realigned certain~~October 2023, the Company announced a realignment, expected to be effective in the first quarter of 2024, of its business units ~~within the~~comprising its Performance Materials and Technologies and Safety and Productivity Solutions reportable business ~~segment. The Safety~~segments by forming two new reportable business segments: Industrial Automation and ~~Retail business unit, which included our gas detection~~Energy and ~~safety business, combined with the Advanced Sensing Technologies business unit to form the~~Sustainability Solutions. Industrial Automation will include Sensing and Safety Technologies, Productivity Solutions and Services, and Warehouse and Workflow Solutions, which are currently included in Safety and Productivity Solutions, in addition to Process Solutions, which is currently included in Performance Materials and Technologies. Energy and Sustainability Solutions will include UOP and Advanced Materials, which are currently included in Performance Materials and Technologies. Further, as part of the realignment, the Company will rename its Aerospace and Honeywell Building Technologies reportable business ~~unit. This~~segments to Aerospace Technologies and Building Automation, respectively. Following the realignment, ~~provides opportunities~~the Company’s reportable business segments will be Aerospace Technologies, Industrial Automation, Building Automation, and Energy and Sustainability Solutions. The realignment will not impact the Company’s historical consolidated financial position, results of operations, or cash flows. The Company expects to ~~capitalize~~report its financial performance based on ~~shared synergies and core technologies resulting in greater value for our customers and~~this realignment effective with the ~~markets we serve. We recast historical periods to reflect this realignment.~~first quarter of 2024.

MACROECONOMIC CONDITIONS

We ~~continued~~continue to ~~experience supply chain constraints, inflationary cost pressures,~~monitor the impacts of ongoing macroeconomic conditions and ~~labor shortages throughout 2022. During~~geopolitical events. In the ~~first~~third quarter of 2023, material inflation ~~moderated, but~~continued to moderate. While we ~~continued~~see signs of relief in supply chains for semiconductors and logistics, we continue to experience supply chain constraints, including labor shortages in the Aerospace supply base, and inflationary cost pressures in manufacturing labor. We continue ~~with the~~to leverage previously implemented short-term and long-term mitigation ~~strategies implemented during 2022.~~strategies.

Our mitigation strategies include pricing actions, longer term planning for constrained materials, material supply tracking tools, and direct engagement with key suppliers to meet customer demand. Our relationships with primary and secondary suppliers allow us to reliably source key components and raw materials. Where we cannot procure key components or raw materials, we consider altering existing products and develop new products to satisfy customer needs. Alterations to existing products and the development of new products undergo product quality controls and engineering qualification, prior to releasing to our customers. In addition, we assist our suppliers facing manufacturing challenges by committing our own resources to their sites and facilities. We believe these mitigation strategies enable us to reduce supply risk, accelerate new product innovation, and expand our penetration in the markets we serve. Additionally, due to the strenuous quality controls and product qualification we perform on a new or altered product, we do not expect these mitigation strategies to impact product quality or reliability.

The Russia-Ukraine conflict continues to create volatility in global financial and energy markets and contribute to supply chain shortages adding to the inflationary pressures in the global economy. We actively collaborate with our suppliers to minimize impacts of supply shortages on our manufacturing capabilities and implement strategies to reduce our reliance on natural gas at critical sites in Europe.

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To date, our strategies successfully mitigated our exposure to these conditions. However, if we are not successful in sustaining these strategies, these macroeconomic conditions could have a material adverse effect on our consolidated results of operations, or operating cash flows.

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RESULTS OF OPERATIONS

Consolidated Financial Results

~~Net Sales by Segment~~

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Net Sales by Segment

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Segment Profit by Segment

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CONSOLIDATED OPERATING RESULTS

Net Sales

The change in Net sales was attributable to the following:


	~~Q1 2023 vs. Q1 2022~~
~~Volume~~		2	%
~~Price~~		6	%
~~Foreign currency translation~~		~~(2)~~	%

~~Total % change in Net sales~~		6	%

~~Q1 2023 compared with Q1 2022~~


	Q3 2023 vs. Q3 2022	Year to Date 2023 vs. 2022
Volume	(1)%	1%
Price	3%	4%
Foreign currency translation	—%	(1)%
Acquisitions, divestitures, and other, net	1%	—%
Total % change in Net sales	3%	4%

A discussion of Net sales by reportable business segment can be found in the Review of Business Segments section of this Management's Discussion and Analysis.

Q3 2023 compared with Q3 2022

Net sales increased due to the following:

•Increased pricing, and

•The acquisition of Compressor Controls Corporation during the second quarter 2023,

•Partially offset by lower sales volumes.

YTD 2023 compared with YTD 2022

Net sales increased due to the following:

•Increased pricing, and

•Higher sales volumes,

•Partially offset by the unfavorable impact of foreign currency translation, driven by the strengthening of the U.S. Dollar against the currencies ~~of the majority~~in certain of our international markets, primarily the ~~Euro,~~ Chinese Renminbi, ~~British~~Canadian Dollar, Turkish Lira, Egyptian Pound, and ~~Canadian~~Australian Dollar.

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Cost of Products and Services Sold

Q1Q3 2023 compared with Q1Q3 2022

Cost of products and services sold increased due to ~~higher~~the following:

•Higher direct and indirect material costs and higher labor ~~costs.~~costs of approximately $0.2 billion or 4%,

•Partially offset by higher productivity of approximately $0.1 billion or 2%.

YTD 2023 compared with YTD 2022

Cost of products and services sold increased due to the following:

•Higher direct and indirect material costs and higher labor costs of approximately $0.6 billion or 4%,

•Partially offset by lower sales volumes of higher margin products of approximately $0.3 billion or 2%, and lower repositioning and other charges of approximately $0.2 billion or 1%, which included prior year charges attributable to suspending and winding down our businesses and operations in Russia.

Gross Margin

Q1Q3 2023 compared with Q1Q3 2022

Gross margin increased by approximately ~~$0.3~~$0.2 billion and gross margin percentage increased ~~160~~90 basis points to ~~38.0%~~38.4% compared to ~~36.4%~~37.5% for the same period of 2022.

YTD 2023 compared with YTD 2022

Gross margin increased by approximately $0.7 billion and gross margin percentage increased 140 basis points to 38.3% compared to 36.9% for the same period of 2022.

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Research and Development Expenses

Q1Q3 2023 compared with Q1Q3 2022

Research and development expenses ~~change was~~slightly decreased.

YTD 2023 compared with YTD 2022

Research and development expenses were flat.

Selling, General and Administrative Expenses

Q1Q3 2023 compared with Q1Q3 2022

Selling, general and administrative expenses increased due to the following:

•Higher labor costs of approximately $0.1 billion or 8%,

•Partially offset by higher productivity of approximately $0.1 billion or 8%.

YTD 2023 compared to YTD 2022

Selling, general and administrative expenses decreased ~~primarily~~ due to the following:

•Lower repositioning and other charges of approximately $0.1 billion or 3%, which included prior year charges attributable to suspending ~~substantially all of~~and winding down our ~~sales, distribution,~~businesses and ~~service activities~~operations in Russia, ~~(the Suspension) during the first quarter of 2022.~~

~~Other (Income) Expense~~

Three Months Ended March 31,
2023 2022
Other (income) expense $ (260) $ (319)

~~Q1 2023 compared with Q1 2022~~

~~Other income decreased due to lower pension~~ and ~~other postretirement income.~~

•Higher productivity of approximately $0.1 billion or 3%,

•Partially offset by higher labor costs of approximately $0.1 billion or 3%.

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Other (Income) Expense


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Other (income) expense	$	(247)	$	(337)	$	(715)	$	(846)

Q3 2023 compared with Q3 2022

Other income decreased due to the following:

•Lower pension and other postretirement income.

YTD 2023 compared with YTD 2022

Other income decreased due to the following:

•Lower pension and other postretirement income of approximately $0.4 billion,

•Partially offset by higher interest income of approximately $0.2 billion and prior year charges attributable to suspending and winding down our businesses and operations in Russia and UOP Matters of approximately $0.1 billion.

Tax Expense

Q1Q3 2023 compared with Q1Q3 2022

The effective tax rate increased due to lower benefits resulting from the resolution of foreign tax matters, increased valuation allowance expense, and other accrued tax expense, partially offset by benefits of taxes on non-U.S. earnings representing an aggregate 120 basis point increase.

YTD 2023 compared with YTD 2022

The effective tax rate decreased due to benefits of taxes on non-U.S. earnings and ~~was equal~~lower repositioning related expenses, partially offset by other accrued taxes representing an aggregate 230 basis point decrease.

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Net Income Attributable to ~~the U.S. federal statutory rate~~Honeywell

Q3 2023 compared to Q3 2022

Earnings per share of ~~21%,~~common stock–assuming dilution decreased due to the following:

•~~Benefits from taxes on non-U.S.~~Lower pension and other postretirement income which impacted earnings per share by $0.14 after tax, ~~reserves,~~ and ~~the absence of restructuring related expenses, representing a 500 basis-point decrease,~~

•Higher interest expense which impacted earnings per share by $0.13 after tax,

•Partially offset by higher segment profit which impacted earnings per share by $0.15 after tax, ~~expense from accrued withholding~~higher interest income which impacted earnings per share by $0.06 after tax, ~~related to unremitted foreign~~and the favorable impact of lower share count which impacted earnings ~~and decreased benefits from employee share-based compensation, representing a 130 basis-point increase.~~per share by $0.04 after tax.

~~Net Income Attributable to Honeywell~~

Q1YTD 2023 compared to Q1YTD 2022

Earnings per share of common stock–assuming dilution increased due to the following:

•Higher segment profit which impacted earnings per share by $0.55 after tax,

•Lower repositioning and other charges, ~~due to prior year~~including charges attributable to ~~the Suspension of~~suspending and winding down our businesses and operations in Russia, which impacted earnings per share by ~~$0.34~~$0.53 after tax, ~~and~~

•Higher ~~segment profit from all of our reportable business segments~~interest income which impacted earnings per share by ~~$0.21~~$0.18 after tax,

•The favorable impact of lower share count which impacted earnings per share by $0.14 after tax, and

•Partially offset by lower pension and other postretirement income which impacted earnings per share by ~~$0.15~~$0.41 after tax, and higher interest expense which impacted earnings per share by $0.32 after tax.

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REVIEW OF BUSINESS SEGMENTS

We globally manage our business operations through four reportable business segments: Aerospace, Honeywell Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions.

AEROSPACE

Net Sales


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023		2022		% Change		2023		2022		% Change
Net sales	$	3,499	$	2,976	18	%	$	9,951	$	8,623	15	%
Cost of products and services sold	2,145		1,818				6,122		5,230

Selling, general and administrative and other expenses	391		340				1,115		1,055
Segment profit	$	963	$	818	18	%	$	2,714	$	2,338	16	%

Three Months Ended
March 31,
2023 2022 %
Change
Net sales $ 3,111 $ 2,749 13 %
Cost of products and services sold 1,936 1,634
Selling, general and administrative and other expenses 348 362
Segment profit $ 827 $ 753 10 %


	2023 vs. 2022
	Three Months Ended September 30,				Nine Months Ended September 30,
Factors Contributing to Year-Over-Year Change	Net Sales		Segment Profit		Net Sales		Segment Profit
Organic1	18	%	18	%	16	%	17	%
Foreign currency translation	—	%	—	%	(1)	%	(1)	%
Acquisitions, divestitures, and other, net	—	%	—	%	—	%	—	%
Total % change	18	%	18	%	15	%	16	%


1						Organic sales % change, presented for all of our reportable business segments, is defined as the change in Net sales, excluding the impact on sales from foreign currency translation and acquisitions, net of divestitures, for the first 12 months following the transaction date. We believe this non-GAAP measure is useful to investors and management in understanding the ongoing operations and analysis of ongoing operating trends.

2023 vs. 2022
Three Months Ended
March 31,
Factors Contributing to Year-Over-Year Change Net
Sales Segment
Profit
Organic(1)
14 % 11 %
Foreign currency translation (1) % (1) %
Acquisitions, divestitures, and other, net — % — %
Total % change 13 % 10 %

(1) Organic sales % change, presented for all of our reportable business segments, is defined as the change in Net sales, excluding the impact on sales from foreign currency translation and acquisitions, net of divestitures, for the first 12 months following the transaction date. We believe this non-GAAP measure is useful to investors and management in understanding the ongoing operations and analysis of ongoing operating trends.

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Q1Q3 2023 compared to Q1Q3 2022

Sales increased ~~$362~~$523 million due to higher organic sales of ~~$262~~$298 million in Commercial Aviation Aftermarket ~~primarily~~ driven by higher sales volumes in air transport due to an increase in flight hours ~~higher organic sales of $67 million in Commercial Aviation Original Equipment primarily driven by higher volumes in business aviation due to increased shipments,~~ and higher organic sales of ~~$50~~$202 million in Defense and Space ~~primarily~~ driven by higher sales volumes due to increased ~~pricing.~~shipments.

Segment profit increased ~~$74~~$145 million and segment margin percentage ~~decreased 80~~was flat at 27.5% compared to the same period of 2022.

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YTD 2023 compared to YTD 2022

Sales increased $1,328 million due to higher organic sales of $890 million in Commercial Aviation Aftermarket driven by higher sales volumes in air transport due to an increase in flight hours and higher organic sales of $292 million in Defense and Space driven by higher sales volumes due to increased shipments.

Segment profit increased $376 million and segment margin percentage increased 20 basis points to ~~26.6%~~27.3% compared to ~~27.4%~~27.1% for the same period of 2022.

HONEYWELL BUILDING TECHNOLOGIES

Net Sales


		Three Months Ended March 31,					Three Months Ended September 30,									Nine Months Ended September 30,
			2023	2022	% Change					2023		2022				% Change			2023			2022			% Change
Net sales	Net sales				$	1,487		$	1,429		4	%	Net sales	$	1,530		$	1,526		—	%		$	4,527		$	4,486	1	%
Cost of products and services sold	Cost of products and services sold				792			786					Cost of products and services sold	829			835						2,430			2,447

Selling, general and administrative and other expenses	Selling, general and administrative and other expenses				320			307					Selling, general and administrative and other expenses	315			323						951			975
Segment profit	Segment profit				$	375		$	336		12	%	Segment profit	$	386		$	368		5	%		$	1,146		$	1,064	8	%


				2023 vs. 2022								2023 vs. 2022
		Three Months Ended March 31,				Three Months Ended September 30,								Nine Months Ended September 30,
Factors Contributing to Year-Over-Year Change	Factors Contributing to Year-Over-Year Change		Net Sales	Segment Profit			Factors Contributing to Year-Over-Year Change	Net Sales				Segment Profit			Net Sales		Segment Profit
Organic	Organic				9	%			17	%	Organic	—	%		3	%	3	%	9	%
Foreign currency translation	Foreign currency translation				(5)	%			(6)	%	Foreign currency translation	—	%		2	%	(2)	%	(1)	%
Acquisitions, divestitures, and other, net	Acquisitions, divestitures, and other, net				—	%			1	%	Acquisitions, divestitures, and other, net	—	%		—	%	—	%	—	%
Total % change	Total % change				4	%			12	%	Total % change	—	%		5	%	1	%	8	%

Q3 2023 compared to Q3 2022

Sales were flat due to higher organic sales of $27 million in Building Solutions driven by increased pricing in building projects and services, offset by lower organic sales of $27 million in Products driven by lower sales volumes.

Segment profit increased $18 million and segment margin percentage increased 110 basis points to 25.2% compared to 24.1% for the same period of 2022.

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Q1YTD 2023 compared to Q1YTD 2022

Sales increased ~~$58~~$41 million due to higher organic sales ~~of $72~~of $111 million in Building Solutions ~~primarily~~ driven by ~~higher sales volumes~~increased pricing in building projects and services and higher organic sales of ~~$60~~$25 million in Products ~~primarily~~ driven by increased pricing, partially offset by the unfavorable impact of foreign currency translation of ~~$75~~$97 million.

Segment profit increased ~~$39~~$82 million and segment margin percentage increased ~~170~~160 basis points to ~~25.2%~~25.3% compared to ~~23.5%~~23.7% for the same period of 2022.

PERFORMANCE MATERIALS AND TECHNOLOGIES

Net Sales


		Three Months Ended March 31,					Three Months Ended September 30,									Nine Months Ended September 30,
			2023	2022	% Change					2023		2022				% Change			2023			2022			% Change
Net sales	Net sales				$	2,749		$	2,453		12	%	Net sales	$	2,867		$	2,720		5	%		$	8,477		$	7,867	8	%
Cost of products and services sold	Cost of products and services sold				1,731			1,516					Cost of products and services sold	1,787			1,694						5,314			4,860

Selling, general and administrative and other expenses	Selling, general and administrative and other expenses				452			427					Selling, general and administrative and other expenses	447			411						1,342			1,281
Segment profit	Segment profit				$	566		$	510		11	%	Segment profit	$	633		$	615		3	%		$	1,821		$	1,726	6	%


				2023 vs. 2022								2023 vs. 2022
		Three Months Ended March 31,				Three Months Ended September 30,								Nine Months Ended September 30,
Factors Contributing to Year-Over-Year Change	Factors Contributing to Year-Over-Year Change		Net Sales	Segment Profit			Factors Contributing to Year-Over-Year Change	Net Sales				Segment Profit			Net Sales		Segment Profit
Organic	Organic				15	%			14	%	Organic	3	%		1	%	8	%	6	%
Foreign currency translation	Foreign currency translation				(3)	%			(3)	%	Foreign currency translation	1	%		1	%	(1)	%	(1)	%
Acquisitions, divestitures, and other, net	Acquisitions, divestitures, and other, net				—	%			—	%	Acquisitions, divestitures, and other, net	1	%		1	%	1	%	1	%
Total % change	Total % change				12	%			11	%	Total % change	5	%		3	%	8	%	6	%

Q3 2023 compared to Q3 2022

Sales increased $147 million due to higher organic sales of $127 million in Process Solutions driven by increased demand in projects and lifecycle solutions and services and higher organic sales of $37 million in UOP driven by increased pricing, partially offset by lower organic sales of $71 million in Advanced Materials driven by lower sales volumes.

Segment profit increased $18 million and segment margin percentage decreased 50 basis points to 22.1% compared to 22.6% for the same period of 2022.

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Q1YTD 2023 compared to Q1YTD 2022

Sales increased ~~$296~~$610 million due to higher organic sales of ~~$178~~$435 million in Process Solutions ~~primarily~~ driven by increased demand in projects and ~~smart energy, higher organic sales of $97 million in Advanced Materials primarily driven by increased pricing,~~lifecycle solutions and services and higher organic sales of ~~$89~~$187 million in UOP ~~primarily~~ driven by growth in gas processing and refining catalyst shipments, partially offset by the unfavorable impact of foreign currency translation of $68 million.

Segment profit increased ~~$56~~$95 million and segment margin percentage decreased 2040 basis points to ~~20.6%~~21.5% compared to ~~20.8%~~21.9% for the same period of 2022.

SAFETY AND PRODUCTIVITY SOLUTIONS

Net Sales


		Three Months Ended March 31,					Three Months Ended September 30,									Nine Months Ended September 30,
			2023	2022	% Change					2023		2022				% Change			2023			2022			% Change
Net sales	Net sales				$	1,515		$	1,744		(13)	%	Net sales	$	1,314		$	1,727		(24)	%		$	4,262		$	5,300	(20)	%
Cost of products and services sold	Cost of products and services sold				943			1,151					Cost of products and services sold	827			1,134						2,661			3,519

Selling, general and administrative and other expenses	Selling, general and administrative and other expenses				312			340					Selling, general and administrative and other expenses	297			322						912			1,026
Segment profit	Segment profit				$	260		$	253		3	%	Segment profit	$	190		$	271		(30)	%		$	689		$	755	(9)	%


				2023 vs. 2022								2023 vs. 2022
		Three Months Ended March 31,				Three Months Ended September 30,								Nine Months Ended September 30,
Factors Contributing to Year-Over-Year Change	Factors Contributing to Year-Over-Year Change		Net Sales	Segment Profit			Factors Contributing to Year-Over-Year Change	Net Sales				Segment Profit			Net Sales		Segment Profit
Organic	Organic				(11)	%			6	%	Organic	(25)	%		(31)	%	(19)	%	(8)	%
Foreign currency translation	Foreign currency translation				(2)	%			(3)	%	Foreign currency translation	1	%		1	%	(1)	%	(1)	%
Acquisitions, divestitures, and other, net	Acquisitions, divestitures, and other, net				—	%			—	%	Acquisitions, divestitures, and other, net	—	%		—	%	—	%	—	%
Total % change	Total % change				(13)	%			3	%	Total % change	(24)	%		(30)	%	(20)	%	(9)	%

Q3 2023 compared to Q3 2022

Sales decreased $413 million due to lower organic sales of $250 million in Warehouse and Workflow Solutions driven by lower demand for projects and lower organic sales of $136 million in Productivity Solutions and Services driven by lower demand for products.

Segment profit decreased $81 million and segment margin percentage decreased 120 basis points to 14.5% compared to 15.7% for the same period in 2022.

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Q1YTD 2023 compared to Q1YTD 2022

Sales decreased ~~$229~~$1,038 million due to lower organic sales of ~~$127~~$610 million in Warehouse and Workflow Solutions ~~primarily~~ driven by lower demand for projects and lower organic sales of ~~$44~~$329 million in Productivity Solutions and Services ~~primarily driven by lower demand, and lower organic sales of $29 million in Sensing and Safety Technologies primarily~~ driven by lower demand for ~~personal protective equipment, and the unfavorable impact of foreign currency translation of $29 million.~~products.

Segment profit ~~increased $7~~decreased $66 million and segment margin percentage increased ~~270~~200 basis points to ~~17.2%~~16.2% compared to ~~14.5%~~14.2% for the same period in 2022.

CORPORATE AND ALL OTHER

Corporate and All Other primarily includes unallocated corporate costs, interest expense on holding-company debt, and the controlling majority-owned interest in Quantinuum. Corporate and All Other is not a separate reportable business segment as segment reporting criteria is not met. The Company continues to monitor the activities in Corporate and All Other to determine the need for further reportable business segment disaggregation.

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~~nine months ended ~~March 31,~~September 30, 2023, and 2022. Cash spending related to our repositioning actions was ~~$73~~$218 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2023, and was funded through operating cash flows.

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LIQUIDITY AND CAPITAL RESOURCES

(Dollars in tables in millions)

We manage our businesses to maximize operating cash flows as the primary source of liquidity. Each of our businesses is focused on increasing operating cash flows through revenue growth, margin expansion, and improved working capital turnover. Additional sources of liquidity include ~~committed credit lines, short-term debt from the commercial paper market, long-term borrowings, access to the public debt and equity markets,~~ U.S. cash balances, and the ability to access non-U.S. cash ~~balances.~~balances, short-term debt from the commercial paper market, long-term borrowings, committed credit lines, and access to the public debt and equity markets.

CASH

As of September 30, 2023, and December 31, 2022, we held $7.9 billion and $10.1 billion, respectively, of cash and cash equivalents, including our short-term investments. We monitor the third-party depository institutions that hold our cash and cash 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 counterparty. ~~As of March 31, 2023, and December 31, 2022, we held $7.2 billion and $10.1 billion, respectively, of cash and cash equivalents, including our short-term investments.~~

As of ~~March 31,~~September 30, 2023, $5.4 billion of the Company’s cash, cash equivalents, and short-term investments were held by ~~non-US~~non-U.S. subsidiaries. We do not have material amounts related to any jurisdiction subject to currency control restrictions that impact our ability to access and repatriate such amounts. Under current laws, we do not expect taxes on repatriation or restrictions on amounts held outside of the U.S. to have a material effect on our overall liquidity.

~~BORROWINGS~~

~~We leverage a variety of debt instruments to manage our overall borrowing costs. As of March 31, 2023, and December 31, 2022, our total borrowings were $19.2 billion and $19.6 billion, respectively.~~

March 31, 2023 December 31, 2022
Commercial paper and other short-term borrowings $ 3,555 $ 2,717
Variable rate notes 22 22
Fixed rate notes 15,802 17,086
Other 232 265
Fair value of hedging instruments (220) (287)
Debt issuance costs
(229) (233)
Total borrowings $ 19,162 $ 19,570

A primary source of liquidity is our ability to access the corporate bond markets. Through these markets, we issue a variety of long-term fixed rate notes, in a variety of currencies, to manage our overall funding costs.

Another primary 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.

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

•A $1.5 billion 364-day credit agreement (the 364-Day Credit Agreement) with a syndicate of banks, dated as of March 20, 2023. Amounts borrowed under the 364-Day Credit Agreement are required to be repaid no later than March 18, 2024, 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 18, 2025, or (ii) the 364-Day Credit Agreement is terminated earlier pursuant to its terms. The 364-Day Credit Agreement replaced the previously reported $1.5 billion 364-day credit agreement dated as of March 24, 2022, which was terminated in accordance with its terms effective March 20, 2023. As of March 31, 2023, there were no outstanding borrowings under our 364-Day Credit Agreement.

•A $4.0 billion five-year credit agreement (the 5-Year Credit Agreement) with a syndicate of banks, dated as of March 20, 2023. 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 March 24, 2022. As of March 31, 2023, there were no outstanding borrowings under our 5-Year Credit Agreement.

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~~TABLE OF CONTENTS~~

We also have a current shelf registration statement filed with the Securities and Exchange Commission (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, 2023, S&P Global Inc. (S&P), Fitch Ratings Inc. (Fitch), and Moody’s Investor Service (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,										Nine Months Ended September 30,
		2023			2022			Variance				2023		2022		Variance
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period		$	9,627		$	10,959		$	(1,332)	Cash and cash equivalents at beginning of period	$	9,627	$	10,959	$	(1,332)

Operating activities	Operating activities										Operating activities
Net income attributable to Honeywell	Net income attributable to Honeywell		1,394			1,134			260		Net income attributable to Honeywell	4,395		3,947		448
Noncash adjustments	Noncash adjustments		572			537			35		Noncash adjustments	1,112		1,202		(90)
Changes in working capital	Changes in working capital		(546)			(815)			269		Changes in working capital	(696)		(1,415)		719
NARCO Buyout payment											NARCO Buyout payment	(1,325)		—		(1,325)
Other operating activities	Other operating activities		(2,204)			(820)			(1,384)		Other operating activities	(1,101)		(826)		(275)
Net cash provided by (used for) operating activities			(784)			36			(820)
Net cash used for investing activities			(29)			(10)			(19)
Net cash provided by operating activities											Net cash provided by operating activities	2,385		2,908		(523)
Net cash provided by (used for) investing activities											Net cash provided by (used for) investing activities	(754)		540		(1,294)
Net cash used for financing activities	Net cash used for financing activities		(1,973)			(1,719)			(254)		Net cash used for financing activities	(3,427)		(6,609)		3,182
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents		28			15			13		Effect of exchange rate changes on cash and cash equivalents	(61)		(349)		288
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents		$	(2,758)		(1,678)			(1,080)		Net decrease in cash and cash equivalents	(1,857)		(3,510)		1,653
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period		$	6,869		$	9,281		$	(2,412)	Cash and cash equivalents at end of period	$	7,770	$	7,449	$	321

Cash related to operating activities decreased by ~~$820~~$523 million ~~primarily~~ driven by ~~a decrease in cash from other operating activities, due to~~ the payment pursuant to the North American Refractories Company (NARCO) Amended Buyout Agreement and payment for the settlement of UOP ~~Matters,~~Matters. This was partially offset by cash generated from operations, which included a favorable impact of working capital and the HWI Net Sale Proceeds. The ~~decrease in cash from other operating activities was further offset by the~~ favorable impact of working capital was driven by a ~~$313~~$461 million increase in Accounts ~~Payable, primarily~~payable, due to increased material receipts and lower ~~disbursements.~~disbursements, and a $316 million decrease in Accounts receivable, due to higher cash receipts. See Note 14 Commitments and Contingencies of Notes to the Consolidated Financial Statements for additional information on the NARCO Amended Buyout Agreement, HWI Net Sale Proceeds, and UOP Matters.

Cash related to investing activities decreased by ~~$19~~$1,294 million ~~primarily~~ due to a ~~$176~~$561 million decrease in cash receipts from settlements of derivative contracts related to foreign exchange risk management activities, $538 million increase in cash paid for acquisitions, and ~~$79 million net decrease in investments, partially offset by $197~~$409 million cash receipts from Garrett Motion Inc. (Garrett) in 2022, ~~and $68~~partially offset by $354 million net decrease in investments, as maturing short-term investments were moved into cash ~~receipts from settlements of derivative contracts.~~deposits.

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Cash related to financing activities ~~decreased~~increased by ~~$254~~$3,182 million ~~primarily~~ due to a ~~$1,323~~$2,983 million increase in proceeds from the issuance of long-term debt, $640 million decrease in repurchases of common stock, and $408 million decrease in payments of long-term debt, partially offset by ~~an $811~~$743 million ~~increase~~decrease in net proceeds from the issuance of commercial paper and ~~other short-term borrowings and $319~~$116 million ~~decrease~~increase in ~~repurchases of common stock.~~

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cash dividends paid.

CASH REQUIREMENTS AND ASSESSMENT OF CURRENT LIQUIDITY

In addition to our normal operating cash requirements, we expect our principal future cash requirements will be to fund capital expenditures, share repurchases, dividends, strategic acquisitions, and debt repayments. On April 24, 2023, the Board of Directors authorized the repurchase of up to $10 billion of Honeywell common stock, including approximately $2.1 billion of remaining availability under the previously announced $10 billion share repurchase authorization. During the ~~three~~nine months ended ~~March 31,~~September 30, 2023, we repurchased common stock of ~~$699~~$2,187 million. Refer to the section titled Liquidity and Capital Resources of our 2022 Form 10-K for a discussion of our expected capital expenditures, share repurchases, and dividends for 2023.

We ~~continue to identify~~continually seek opportunities to improve our liquidity and working capital efficiency, which includes the extension of payment terms with our suppliers and ~~sales~~transfer of our trade receivables to unaffiliated financial institutions ~~without recourse.~~on a true sale basis. The impact of these programs is not material to our overall liquidity.

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. We identify acquisition candidates that will further our strategic plan and strengthen our existing core businesses. We also identify 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 early 2023, we made payments of approximately $1.5 billion in connection with the NARCO Buyout and UOP Matters. ~~During 2023, and pursuant~~Pursuant to the NARCO Amended Buyout Agreement, we are entitled to receive ~~approximately $295 million~~proceeds related to the HWI Sale. ~~On March 17,~~During the nine months ended September 30, 2023, we received ~~initial~~ proceeds from the HWI Sale in the amount of ~~$256~~$275 million. These payments and receipts have not materially impacted our liquidity position. See Note 11 Fair Value Measurements of Notes to Consolidated Financial Statements for additional discussion related to the fair value of future proceeds from the HWI Sale.

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 Note 8 Long-term Debt and Credit Agreements of Notes to Consolidated Financial Statements for additional discussion of items impacting our liquidity.

BORROWINGS

We leverage a variety of debt instruments to manage our overall borrowing costs. As of September 30, 2023, and December 31, 2022, our total borrowings were $20.3 billion and $19.6 billion, respectively.


	September 30, 2023		December 31, 2022
Commercial paper	$	1,931	$	2,715
Variable rate notes	22		22
Fixed rate notes	18,677		17,086
Other	230		267
Fair value of hedging instruments	(323)		(287)
Debt issuance costs	(251)		(233)
Total borrowings	$	20,286	$	19,570

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We also have the following revolving credit agreements:

•A $1.5 billion 364-day credit agreement (the 364-Day Credit Agreement) with a syndicate of banks, dated as of March 20, 2023. Amounts borrowed under the 364-Day Credit Agreement are required to be repaid no later than March 18, 2024, 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 18, 2025, or (ii) the 364-Day Credit Agreement is terminated earlier pursuant to its terms. The 364-Day Credit Agreement replaced the previously reported $1.5 billion 364-day credit agreement dated as of March 24, 2022, which was terminated in accordance with its terms effective March 20, 2023. As of September 30, 2023, there were no outstanding borrowings under our 364-Day Credit Agreement.

•A $4.0 billion five-year credit agreement (the 5-Year Credit Agreement) with a syndicate of banks, dated as of March 20, 2023. 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 March 24, 2022. As of September 30, 2023, there were no outstanding borrowings under our 5-Year Credit Agreement.

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 September 30, 2023, S&P Global Inc. (S&P), Fitch Ratings Inc. (Fitch), and Moody’s Investor Service (Moody's) have ratings on our debt set forth in the table below:

S&P

Fitch

Moody's

Outlook

Stable

Positive

Short-term

A-1

Long-term

On September 20, 2023, Moody's affirmed all credit ratings of the Company and revised their credit rating outlook from stable to positive.

OTHER MATTERS

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 14 Commitments and Contingencies of Notes to Consolidated Financial Statements for further discussion of environmental, asbestos, and other litigation matters.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to our Critical Accounting Estimates presented in our 2022 Annual Report on Form 10-K. For a discussion of the Company’s Critical Accounting Estimates, see the section titled Critical Accounting Estimates in our 2022 Annual Report on Form 10-K.

RECENT ACCOUNTING PRONOUNCEMENTS

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

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

For a discussion of the Company’s quantitative and qualitative disclosures about market risks, see the section titled Quantitative and Qualitative Disclosures About Market Risks in our 2022 Annual Report on Form 10-K. As of ~~March 31,~~September 30, 2023, there has been no material change in this information.

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 SEC'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 were no changes that materially affected, or are reasonably likely to materially affect, Honeywell’s internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q.

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PART II. OTHER INFORMATION

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 a discussion of environmental, asbestos, and other litigation matters in Note 14 Commitments and Contingencies of Notes to Consolidated Financial Statements.

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

There have been no material changes to our Risk Factors presented in our 2022 Annual Report on Form 10-K under the section titled Risk Factors. For further discussion of our Risk Factors, refer to the section titled Risk Factors in our 2022 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

On April 24, 2023, the Board of Directors authorized the repurchase of up to $10 billion of Honeywell common stock, including approximately $2.1 billion of remaining availability under the previously announced $10 billion share repurchase authorization. The repurchase authorization does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice.

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.

During the quarter ended ~~March 31,~~September 30, 2023, Honeywell purchased ~~3,532,183~~5,267,030 shares of its common stock, par value $1 per share. As of ~~March 31,~~September 30, 2023, ~~$2.2~~$8.6 billion remained available for additional share repurchases. The following table summarizes our purchases of Honeywell's common stock for the quarter ended ~~March 31,~~September 30, 2023:

Issuer Purchases of Equity Securities
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, 2023 602,153 $ 209.23 602,153 $ 2,780
February 1-28, 2023 601,075 $ 202.94 601,075 $ 2,658
March 1-31, 2023 2,328,955 $ 193.84 2,328,955 $ 2,206


Issuer Purchases of Equity Securities

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 1-31, 2023	733,713	$207.14	733,713	$9,490
August 1-31, 2023	2,631,818	$189.40	2,631,818	$8,992
September 1-30, 2023	1,901,499	$189.30	1,901,499	$8,632

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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.

ITEM 5. OTHER INFORMATION

EQUITY TRADING PLAN ELECTIONS

Certain executive officers and directors of the Company may execute purchases and sales of the Company's common stock through Rule 10b5-1 and non-Rule 10b5-1 equity trading plans.

During the three months ended September 30, 2023, none of our executive officers or directors adopted, terminated, or modified a Rule 10b5-1 equity trading plan, or adopted, terminated, or modified any "non-Rule 10b5-1 trading arrangement" (as defined in Item 408(c) of Regulation S-K).

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ITEM 6. EXHIBITS


Exhibit No.						Description
~~10.1~~						364-Day Credit Agreement, dated as of March 20, 2023, among Honeywell International Inc., the banks, financial institutions, and other institutional lenders parties thereto, Bank of America, N.A., as administrative agent, and JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association, as syndication agents (incorporated by reference to Exhibit 10.1 to Honeywell's Form 8-K filed March 21, 2023)
~~10.2~~						Amended and Restated Five-Year Credit Agreement, dated as of March 20, 2023, among Honeywell International Inc., the banks, financial institutions, and other institutional lenders parties thereto, Bank of America, N.A., as administrative agent and as swing line agent, and JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association, as syndication agents (incorporated by reference of Exhibit 10.2 of Honeywell's Form 8-K filed March 21, 2023)
10.3*						~~Letter Agreement dated March 13, 2023, from Honeywell International Inc. to Darius Adamczyk (incorporated by reference to Exhibit 10.1 to Honeywell’s Form 8-K filed March 14, 2023)~~
10.4*						~~Offer Letter dated March 13, 2023, from Honeywell International Inc. to Vimal Kapur (incorporated by reference to Exhibit 10.2 to Honeywell’s Form 8-K filed March 14, 2023)~~
31.1						Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2						Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed 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 (furnished 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 (furnished herewith)
95						Mine Safety Disclosures (filed herewith)
101.INS						Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH						Inline XBRL Taxonomy Extension Schema (filed herewith)
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith)
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase (filed herewith)
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith)
104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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

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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: ~~April 27,~~October 26, 2023	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)

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