Honeywell International (HON) 8-K Results of Operations and Financial Condition

Honeywell     

N e w s R e l e a s e

Contacts:
Media	Investor Relations
Robert C. Ferris	Nicholas Noviello
(973) 455-3388	(973) 455-2222
rob.ferris@honeywell.com	nicholas.noviello@honeywell.com

HONEYWELL REPORTS FIRST QUARTER SALES UP 11% TO $8.0
BILLION; EARNINGS UP 27% TO 66 CENTS PER SHARE;
FREE CASH FLOW OF $458 MILLION

Company Increases 2007 Sales, EPS and Free Cash Flow Guidance

     MORRIS TOWNSHIP, N.J., April 20, 2007 -- Honeywell (NYSE: HON) today announced first quarter 2007 sales increased 11% to $8.0 billion from $7.2 billion in 2006, driven by 9% organic sales growth. Earnings were up 27% to $0.66 per share, versus $0.52 per share in the prior year. Cash flow from operations was $578 million versus $239 million in the first quarter of 2006 and free cash flow (cash flow from operations less capital expenditures) was $458 million, compared to $117 million last year. The company repurchased more than 25 million shares of stock in the quarter, reducing its average fully diluted share count to 802 million shares.

     “Honeywell had a terrific start to 2007 with strong sales, double-digit earnings growth and higher free cash flow,” said Honeywell Chairman and CEO Dave Cote. “Our great positions in good industries and global presence helped drive organic growth in each of our businesses. While we are maintaining a conservative view of global growth this year, we are increasing our full-year financial guidance to reflect strong first quarter performance and continued confidence in our businesses for the remainder of 2007.”

     Honeywell is increasing its previously stated 2007 sales guidance by $700 million to $33.5 billion, its earnings per share range by 15 cents to $3.00 - - 3.10 and free cash flow range by $100 million to $2.6 - 2.8 billion (cash flow from operations of $3.4 - 3.6 billion).

- MORE -

Q1 Results - 2

First-Quarter Segment Highlights

Aerospace

• Sales were up 8%, compared with the first quarter of 2006, driven by 9% growth inCommercial and 6% growth in Defense and Space sales. Commercial sales reflectedgrowth of 10% in original equipment and 9% in aftermarket spares and services.
• Segment margins were 17.6%, compared with 16.7% a year ago, driven by volumegrowth, price and productivity gains, which more than offset the negative impact frominflation.
• Honeywell was selected by the U.S. Army to refurbish medium-sized tactical vehicles inKuwait (five and eight ton tankers, cargo vehicles and wreckers) as part of the TheaterProvided Equipment Refurbishment program. The program is expected to generate salesof up to $125 million over four years.
• Honeywell’s Military Airborne Collision Avoidance System - Formation Rendezvous(MILACAS-FR) has been certified by the FAA for use on all military aircraft. Thecompany is currently producing 180 MILACAS-FR systems for Boeing’s entire C-17fleet under a contract valued at $20 million.
• Honeywell’s 131-9A Auxiliary Power Unit (APU) has been selected by Skybus Airlinesfor its fleet of 65 new Airbus A319 aircraft. The company will also provide an IntegratedService Solutions support program for the assets and APU maintenance throughout theterm of the 12-year, $37 million agreement.

Automation and Control Solutions

• Sales were up 18%, compared with the first quarter of 2006, driven by organic salesgrowth of 12% (9% in the Products and 18% in the Solutions businesses) and the netimpact of acquisitions and divestitures of 6%.
• Segment margins were 9.8% compared with 9.3% a year ago, due to volume growth andproductivity savings, which more than offset the negative impacts of inflation, sales mixand the dilutive impact of acquisitions.
• Honeywell Life Safety recorded over $4 million of contract wins in the quarter related tocontinued non-residential construction growth and business expansion in emergingregions.
• Building Solutions announced a $28 million contract by the U.S. General ServicesAdministration (GSA) to upgrade building systems and reduce energy costs at the newFood and Drug Administration headquarters in Silver Spring, MD. The upgrades areexpected to help the GSA cut energy costs by $3 million per year while improvingcomfort for building occupants.
• Process Solutions announced a $7 million contract to implement an Experion® ProcessKnowledge System at a new chemical plant operated by Kuwait Paraxylene ProductionCompany to reduce installation and maintenance costs while boosting the plant’sperformance.

- MORE -

Q1 Results - 3

Transportation Systems

• Sales were up 10%, compared with the first quarter of 2006, driven by increased lightvehicle Turbo Technologies sales, the positive impact of foreign exchange and highersales of aftermarket products, which were partially offset by an expected decline in TurboTechnologies commercial vehicle sales in North America.
• Segment margins were 13.0%, flat to last year, due to pricing actions and productivitysavings, which were offset by inflation and increased spending for new product launches.
• Turbo Technologies won programs on four new passenger vehicle diesel platforms andone gasoline platform estimated to be worth approximately $300 million in annualrevenues at full production. The programs represent platforms in Europe, Asia and theUnited States. The first of these platforms is expected to launch in 2008.
• Consumer Products Group launched Blink, an innovative new line of products designedfor quick interior car clean-up. Initial acceptance by retailers has been positive and at fulllaunch the Blink product line will be available in 30,000 outlets throughout the U.S.,including Wal-Mart.

Specialty Materials

• Sales were up 4% compared with the first quarter of 2006, driven by stronger thananticipated performance on UOP projects, which were partially offset by lowerrefrigerant sales.
• Segment margins were 16.0% compared with 14.1% a year ago, due to favorable salesmix, price and productivity actions, which more than offset the negative impact ofinflation.
• Specialty Materials and DuPont signed an agreement to accelerate development andcommercialization of next generation, low global warming refrigerants for theautomotive air conditioning industry.
• UOP commissioned its 200th CCR Platforming™ process unit, a significant milestonefor refining process technology. Located in the Hainan Province of China, the unit willenable Sinopec, the region’s largest producer and supplier of oil and petrochemicalproducts to supply clean fuel and chemical feedstocks throughout China.

     Honeywell will discuss its results during its investor conference call today starting at 8:00 a.m. EDT. To participate, please dial (706) 643-7681 a few minutes before the 8:00 a.m. start. Please mention to the operator that you are dialing in for Honeywell’s investor conference call. The live webcast of the investor call will be available through the “Investor Relations” section of the company’s Website (http://www.honeywell.com/investor). Investors can access a replay of the investor call starting at 11:00 a.m. EDT, April 20, until midnight, April 27, by dialing (706) 645-9291. The access code is 3774642.

Honeywell International is a $33 billion diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; and specialty materials. Based in Morris Township, N.J., Honeywell’s shares are traded on the New York, London and Chicago Stock Exchanges. It is one of the 30 stocks that make up the Dow Jones Industrial Average and is also a component of the Standard & Poor’s 500 Index. For additional information, please visitwww.honeywell.com.

- MORE -

Q1 Results - 4

This release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements are based on management’s assumptions and assessments in light of past experience and trends, current conditions, expected future developments and other relevant factors. They are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by our forward-looking statements. Our forward-looking statements are also subject to risks and uncertainties, which can affect our performance in both the near- and long-term. We identify the principal risks and uncertainties that affect our performance in our Form 10-K and other filings with the Securities and Exchange Commission.

# # #

Q1 Results - 5

Honeywell International Inc.
Consolidated Statement of Operations (Unaudited)
(In millions except per share amounts)

	Three Months Ended March 31,
	2007				2006
Product sales	$	6,450			$	5,806
Service sales		1,591				1,435
Net sales		8,041				7,241
Costs, expenses and other
Cost of products sold		5,010		(A)		4,566		(A)
Cost of services sold		1,140		(A)		1,034		(A)
		6,150				5,600
Selling, general and administrative expenses		1,089		(A)		1,002		(A)
Other (income) expense		(11	)			(25	)
Interest and other financial charges		97				89
		7,325				6,666
Income from continuing operations before taxes		716				575
Tax expense		190				144
Income from continuing operations		526				431
Income from discontinued operations, net of taxes		-				5
Net income	$	526			$	436
Earnings per share of common stock - basic:
Income from continuing operations	$	0.66			$	0.51
Income from discontinued operations		-				0.01
Net income	$	0.66			$	0.52
Earnings per share of common stock - assuming dilution:
Income from continuing operations	$	0.66			$	0.51
Income from discontinued operations		-				0.01
Net income	$	0.66			$	0.52
Weighted average number of shares outstanding-basic		795				830
Weighted average number of shares outstanding -
assuming dilution		802				836

(A) Cost of products and services sold and selling, general and administrative expenses include amounts for repositioning and other charges, pension and other post-retirement expense, and stock option expense.

Q1 Results - 6

Honeywell International Inc.

Segment Data (Unaudited)

(Dollars in millions)

Net Sales	Three Months Ended March 31,
	2007			2006
Aerospace	$	2,840		$	2,629
Automation and Control Solutions		2,801			2,365
Specialty Materials		1,199			1,152
Transportation Systems		1,201			1,095
Corporate		-			-
Total	$	8,041		$	7,241
Reconciliation of Segment Profit to Income From Continuing Operations Before Taxes
Segment Profit	Three Months Ended March 31,
	2007			2006
Aerospace	$	500		$	440
Automation and Control Solutions		274			221
Specialty Materials		192			162
Transportation Systems		156			142
Corporate		(43	)		(45	)
Total Segment Profit		1,079			920
Other income/ (expense)		11			25
Interest and other financial charges		(97	)		(89	)
Stock option expense (A)		(24	)		(25	)
Pension and other postretirement expense (A)		(74	)		(126	)
Repositioning and other charges (A)		(179	)		(130	)
Income from continuing operations before taxes	$	716		$	575

(A) Amounts included in cost of products and services sold and selling, general and administrative expenses.

Q1 Results - 7

Honeywell International Inc.
Consolidated Balance Sheet (Unaudited)
(Dollars in millions)

	March 31,		December 31,
	2007		2006
ASSETS
Current assets:
Cash and cash equivalents	$	1,378	$	1,224
Accounts, notes and other receivables		5,873		5,740
Inventories		3,749		3,588
Deferred income taxes		1,197		1,215
Other current assets		433		470
Assets held for disposal		66		67
Total current assets		12,696		12,304
Investments and long-term receivables		405		382
Property, plant and equipment - net		4,710		4,797
Goodwill		8,400		8,403
Other intangible assets - net		1,223		1,247
Insurance recoveries for asbestos related liabilities		1,104		1,100
Deferred income taxes		1,002		1,075
Prepaid pension benefit cost		733		695
Other assets		940		938
Total assets	$	31,213	$	30,941
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Accounts payable	$	3,582	$	3,518
Short-term borrowings		65		62
Commercial paper		997		669
Current maturities of long-term debt		227		423
Accrued liabilities		5,493		5,455
Liabilities related to assets held for disposal		10		8
Total current liabilities		10,374		10,135
Long-term debt		4,704		3,909
Deferred income taxes		367		352
Postretirement benefit obligations other than pensions		2,085		2,090
Asbestos related liabilities		1,249		1,262
Other liabilities		3,271		3,473
Shareowners' equity		9,163		9,720
Total liabilities and shareowners' equity	$	31,213	$	30,941

Q1 Results - 8

Honeywell International Inc.
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)

	Three Months Ended
	March 31,
	2007			2006
Cash flows from operating activities:
Net income	$	526		$	436
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization		200			188
Repositioning and other charges		179			130
Net (payments) receipts for repositioning and other charges		(132	)		7
Pension and other postretirement expense		74			126
Pension and other postretirement benefit payments		(45	)		(115	)
Stock option expense		24			25
Deferred income taxes		17			56
Excess tax benefits from share based payment arrangements		(8	)		-
Other		6			(57	)
Changes in assets and liabilities, net of the effects of
acquisitions and divestitures:
Accounts, notes and other receivables		(136	)		(147	)
Inventories		(161	)		(183	)
Other current assets		36			(11	)
Accounts payable		65			10
Accrued liabilities		(67	)		(226	)
Net cash provided by operating activities		578			239
Cash flows from investing activities:
Expenditures for property, plant and equipment		(120	)		(122	)
Proceeds from disposals of property, plant and equipment		33			37
Cash paid for acquisitions, net of cash acquired		(13	)		(56	)
Proceeds from sales of businesses, net of fees paid		9			475
Net cash (used for)/ provided by investing activities		(91	)		334
Cash flows from financing activities:
Net increase/(decrease) in commercial paper		328			(637	)
Net increase/(decrease) in short-term borrowings		3			(180	)
Payment of debt assumed with acquisitions		-			(209	)
Proceeds from issuance of common stock		119			174
Proceeds from issuance of long-term debt		988			1,239
Payments of long-term debt		(398	)		(237	)
Excess tax benefits from share based payment arrangements		8			-
Repurchases of common stock		(1,186	)		(325	)
Cash dividends paid on common stock		(199	)		(189	)
Net cash (used for) financing activities		(337	)		(364	)
Effect of foreign exchange rate changes on cash and cash equivalents		4			(1	)
Net increase in cash and cash equivalents		154			208
Cash and cash equivalents at beginning of period		1,224			1,234
Cash and cash equivalents at end of period	$	1,378		$	1,442

Q1 Results - 9

Honeywell International Inc.
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited)
(Dollars in millions)

	Three Months Ended
	March 31,
	2007			2006
Cash provided by operating activities	$	578		$	239
Expenditures for property, plant and equipment		(120	)		(122	)
Free cash flow	$	458		$	117

We define free cash flow as cash provided by operating activities, less cash expenditures for property, plant and equipment.

We believe that this metric is useful to investors and management as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, and to pay dividends, repurchase stock, or repay debt obligations prior to their maturities. This metric can also be used to evaluate our ability to generate cash flow from business operations and the impact that this cash flow has on our liquidity.