Honeywell Third Quarter Sales Up 10% to $8.7 Billion; Earnings Per Share Up 23% to $0.81

MORRIS TOWNSHIP, N.J., Oct. 19 /PRNewswire-FirstCall/ -- Honeywell (NYSE:HON) today announced that third quarter 2007 sales increased 10% to $8.7 billion, driven by 9% organic sales growth. Earnings were $0.81 per share versus $0.66 last year, an increase of 23%. Cash flow from operations was $910 million versus $796 million last year, and free cash flow (cash flow from operations less capital expenditures) was up 16% to $736 million versus $634 million in the third quarter of 2006.

"We had strong organic sales growth in each of our businesses in the third quarter," said Honeywell Chairman and Chief Executive Officer Dave Cote. "Great positions in good industries are driving Honeywell's consistent performance and global growth. Customers are confident in Honeywell's differentiated technologies and we continue to win important new multi-year contracts. We believe that the company is well positioned for continued growth and we remain confident in our business outlook."

Honeywell raised its 2007 sales guidance by $300 million to $34.2 billion, an increase of approximately 9% from 2006. The company also raised its earnings per share and free cash flow guidance to the high end of previously- stated ranges. Honeywell is forecasting 2007 earnings per share of $3.14 - 3.16, an increase of approximately 25% over the prior year, and 2007 free cash flow guidance of $3.0 billion (cash flow from operations of $3.8 billion), more than 20% over 2006.

    Segment Highlights

    Aerospace

    -- Sales were up 9%, compared with the third quarter of 2006, driven by 9%
       growth in Commercial and 8% growth in Defense and Space sales.
       Commercial sales reflected growth of 8% in original equipment and 10%
       in aftermarket spares and services.  Defense and Space sales included
       the positive impact of the Dimensions International acquisition.
    -- Segment profit grew 12% while segment margin increased by 50 bps to
       18.1% driven by volume growth, price, and productivity gains, which
       more than offset the negative impact from inflation.
    -- Honeywell was selected by Airbus to provide the Extended Mechanical
       System Perimeter (EMSP) system for the A350 XWB aircraft.  With a
       potential total program value of up to $16 billion, this is the largest
       systems single-source contract ever awarded by Airbus.  The EMSP system
       includes a range of Honeywell's mechanical product offerings, including
       the HGT1700 auxiliary power unit, environmental and cabin pressure
       control systems, supplemental cooling, ventilation and fans, bleed air
       systems, and wing anti-ice systems.
    -- Defense and Space signed a $370 million Secondary Power Logistics
       Solution contract to provide logistics service and depot maintenance
       support to the U.S. Air Force.
    -- Honeywell received Federal Aviation Administration authorization for
       its Runway Awareness and Advisory System (RAAS) for all large cabin
       Gulfstream aircraft equipped with the PlaneView(R) flight deck
       featuring Honeywell's Primus Epic(R) architecture.  RAAS will be an
       option for Gulfstream G450 and G550 aircraft in 2007.

    Automation and Control Solutions

    -- Sales were up 12%, compared with the third quarter of 2006, driven by
       9% growth in the Products businesses and 19% growth in the Solutions
       businesses.
    -- Segment profit grew 13% while segment margin increased by 10 bps to
       11.7% due to volume growth and productivity savings, which more than
       offset the negative impact of inflation and sales mix.
    -- Building Solutions was awarded an $11.6 million, 12-year contract to
       implement a comprehensive energy efficiency program for the Denver
       Housing Authority. The program will help the housing authority improve
       its facilities and reduce its impact on the environment while saving
       approximately $1.8 million in utility costs per year.
    -- Process Solutions announced a $7 million contract to supply a process
       automation system to TOTAL's Lindsey Oil Refinery in North
       Lincolnshire, U.K. The business will integrate and centralize the
       various control and monitoring systems used in a single process
       automation system, providing plant operators with full view and control
       over the refinery's operations.
    -- Environmental and Combustion Controls (ECC) announced a definitive
       agreement to establish a joint venture with Lonon, a leading Chinese
       wiring devices and lighting business based in Guangdong Zhongshan,
       China.

    Transportation Systems

    -- Sales were up 10% compared with the third quarter of 2006, driven by
       increased sales in our Turbo business and the favorable impact of
       foreign exchange.
    -- Segment profit was down 4% while segment margin decreased 150 bps to
       10.1% due to material inflation, operational issues in the Consumer
       Products Group, and investments in product development, including the
       support of key turbo program wins, which more than offset increased
       productivity, increased prices, and lower warranty expense.
    -- Turbo Technologies won four turbo diesel programs estimated at
       approximately $100 million in annual revenues at full production.
       These vehicles will be introduced in Brazil, Europe, and the U.S.  The
       first of these programs is expected to launch in 2008.
    -- Consumer Products Group launched Xtreme Sport(TM), a new line of
       premium spark plugs for the growing small engine segment such as ATVs,
       motorcycles, boats, and snowmobiles, and Xtreme Start(TM), a separate
       product line for lawn care equipment.  The new plugs feature improved
       ignitability for faster fuel combustion and quicker starts.

    Specialty Materials

    -- Sales were up 6% compared with the third quarter of 2006, driven by
       strong UOP sales, which were partially offset by lower sales at
       Fluorine Products due to continued weak demand in the U.S. housing
       market and the impact of scheduled plant maintenance at Resins &
       Chemicals.
    -- Segment profit grew 43% while segment margin increased by 340 bps to
       13.0% primarily due to increased UOP sales volume and productivity
       savings.
    -- UOP's ADS-37 adsorbent was used by KP Chemical Corp. to reload its
       Parex Process unit in Ulsan, South Korea. KP will use the adsorbents to
       significantly increase its capacity to produce para-xylene, a key
       component in making soft drink and water bottles. KP Chemical is the
       15th Parex operator to use the ADS-37 adsorbents since UOP introduced
       it in 2004.
    -- Fluorine Products signed a multi-year agreement with Hisense Kelon, a
       leading home appliance manufacturer based in Guangdong Province, China,
       and extended an agreement with Whirlpool Corp., a leading global
       manufacturer and marketer of major home appliances, to supply
       Enovate(R) blowing agent used in energy-efficient rigid polyurethane
       foam to insulate refrigerators.

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 webcast starting at 11:00 a.m. EDT, October 19, until midnight EDT, October 26, by dialing (706) 645-9291. The access code is 15179046.

Honeywell International is a $34 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 visit www.honeywell.com.

This release contains certain statements that may be deemed "forward- looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. The forward-looking statements included in this release are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors affecting our operations, markets, products, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements.

     Contacts:
     Media                                   Investor Relations
     Robert C. Ferris                        Murray Grainger
     (973) 455-3388                          (973) 455-2222
     rob.ferris@honeywell.com                murray.grainger@honeywell.com



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



                                   Three Months Ended     Nine Months Ended
                                     September 30,          September 30,
                                   -----------------      -----------------
                                     2007     2006         2007      2006
                                   -------  --------     --------  --------
    Product sales                   $7,008   $6,334      $20,330   $18,521
    Service sales                    1,727    1,618        4,984     4,570
                                   -------  --------      -------  --------
    Net sales                        8,735    7,952       25,314    23,091
                                   -------  --------      -------  --------

    Costs, expenses and other
    Cost of products sold (A)        5,450   4,973        15,778    14,470
    Cost of services sold (A)        1,196   1,138         3,509     3,268
                                   -------  --------      -------  --------
                                     6,646   6,111        19,287    17,738
    Selling, general and
     administrative expenses (A)     1,144   1,037         3,360     3,125
    Other (income) expense             (16)    (27)          (47)      (69)
    Interest and other financial
     charges                           124      97           331       280
                                   -------  --------      -------  --------
                                     7,898   7,218        22,931    21,074
                                   -------  --------      -------  --------
    Income from continuing
     operations before taxes           837     734         2,383     2,017
    Tax expense                        219     193           628       524
                                   -------  --------      -------  --------
    Income from continuing
     operations                        618     541         1,755     1,493
    Income from discontinued
     operations, net of taxes            -       -             -         5
                                   -------  -------       ------- - -------
    Net income                        $618    $541        $1,755    $1,498
                                   =======  =======       =======  ========
    Earnings per share of common
     stock - basic:
     Income from continuing
      operations                     $0.83   $0.66         $2.28     $1.81
     Income from discontinued
      operations                         -       -             -      0.01
                                   -------  --------      -------  --------
     Net income                      $0.83   $0.66         $2.28     $1.82
                                   =======  =======       =======  ========
    Earnings per share of common
     stock - assuming dilution:
     Income from continuing
      operations                     $0.81   $0.66         $2.25     $1.80
     Income from discontinued
      operations                         -       -             -      0.01
                                   -------  --------      -------  --------
     Net income                      $0.81   $0.66         $2.25     $1.81
                                   =======  ========      =======  ========
    Weighted average number of
     shares outstanding-basic          748     817           770       824
                                   =======  =======       =======  ========
    Weighted average number of
     shares outstanding -
     assuming dilution                 758     821           780       829
                                   =======  =======       =======  ========

    (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 benefits
    expense, and stock option expense.



                           Honeywell International Inc.
                            Segment Data (Unaudited)
                              (Dollars in millions)



                                  Three Months Ended      Nine Months Ended
                                    September 30,           September 30,
                                  ------------------      -----------------
    Net Sales                       2007      2006           2007    2006
    ---------                     -------   --------      --------  -------
    Aerospace                      $3,102   $2,854         $8,969   $8,169

    Automation and Control
     Solutions                      3,196    2,844          9,036    7,975

    Specialty Materials             1,211    1,143          3,626    3,548

    Transportation Systems          1,226    1,111          3,683    3,399

    Corporate                           -        -              -        -
                                  -------   --------      -------- --------
      Total                        $8,735   $7,952        $25,314  $23,091
                                  =======   ========      ======== ========



          Reconciliation of Segment Profit to Income From Continuing
                           Operations Before Taxes


                                    Three Months Ended    Nine Months Ended
                                      September 30,         September 30,
                                  ------------------      -----------------
    Segment Profit                   2007     2006          2007     2006
    --------------                -------   --------      --------  -------
    Aerospace                       $560      $501         $1,583   $1,354

    Automation and Control
     Solutions                       373       330            980      838

    Specialty Materials              157       110            524      489

    Transportation Systems           124       129            437      436

    Corporate                        (47)      (41)          (144)    (134)
                                  -------   --------      --------  -------
      Total Segment Profit         1,167     1,029          3,380    2,983

    Other income (expense)            16        27             47       69
    Interest and other financial
     charges                        (124)      (97)          (331)    (280)
    Stock option expense (A)         (13)      (20)           (54)     (61)
    Pension and other
     postretirement expense (A)     (105)     (100)          (251)    (344)
    Repositioning and other
     charges (A)                    (104)     (105)          (408)    (350)
                                  -------   --------      --------  -------
     Income from continuing
      operations before taxes       $837      $734         $2,383   $2,017
                                  =======   ========      ========  =======

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



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

                                      September 30,               December 31,
                                          2007                        2006
                                      ------------                ------------
       ASSETS
       Current assets:
           Cash and cash equivalents     $1,787                      $1,224
           Accounts, notes and other
            receivables                   6,461                       5,740
           Inventories                    3,919                       3,588
           Deferred income taxes          1,127                       1,215
           Other current assets             362                         537
                                      ------------                ------------
              Total current assets       13,656                      12,304

       Investments and long-term
        receivables                         526                         382
       Property, plant and
        equipment - net                   4,770                       4,797
       Goodwill                           8,784                       8,403
       Other intangible assets - net      1,336                       1,247
       Insurance recoveries for asbestos
        related liabilities               1,111                       1,100
       Deferred income taxes                997                       1,075
       Prepaid pension benefit cost         772                         695
       Other assets                         950                         938
                                      ------------                ------------
              Total assets              $32,902                     $30,941
                                      ============                ============

       LIABILITIES AND SHAREOWNERS' EQUITY
       Current liabilities:
           Accounts payable              $3,812                      $3,518
           Short-term borrowings             70                          62
           Commercial paper               1,977                         669
           Current maturities of long-
            term debt                       415                         423
           Accrued liabilities            5,818                       5,463
                                      ------------                ------------
             Total current liabilities   12,092                      10,135

       Long-term debt                     5,391                       3,909
       Deferred income taxes                484                         352
       Postretirement benefit obligations
        other than pensions               2,092                       2,090
       Asbestos related liabilities       1,146                       1,262
       Other liabilities                  3,442                       3,473
       Shareowners' equity                8,255                       9,720
                                      ------------                ------------
              Total liabilities and
               shareowners' equity      $32,902                     $30,941
                                      ============                ============



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


                                       Three Months Ended    Nine Months Ended
                                           September 30,       September 30,
                                       ------------------    -----------------
                                          2007     2006         2007     2006
                                       --------   -------    --------   ------
       Cash flows from operating
        activities:
           Net income                     $618     $541       $1,755   $1,498
           Adjustments to reconcile net
            income to net cash provided
            by operating activities:
               Depreciation and
                amortization               207      190         620       596
               Repositioning and other
                charges                    104      105         408       350
               Net (payments) for
                repositioning and other
                charges                   (182)    (181)       (355)     (335)
               Pension and other
                postretirement expense     105      100         251       344
               Pension and other
                postretirement benefit
                payments                   (58)     (80)       (166)     (258)
               Stock option expense         13       20          54        61
               Deferred income taxes       (28)     297         169       423
               Excess tax benefits from
                share based payment
                arrangements               (17)       -         (68)        -
               Other                       128        7         154         2
               Changes in assets and
                liabilities, net of the
                effects of acquisitions
                and divestitures:
                  Accounts, notes and
                   other receivables      (251)    (302)       (603)     (545)
                  Inventories              (88)     (57)       (290)     (265)
                  Other current assets       -      (48)         36        (6)
                  Accounts payable         130      137         273       215
                  Accrued liabilities      229       67         233      (110)
                                       --------   -------    --------   ------
       Net cash provided by operating
        activities                        910      796        2,471     1,970
                                       --------   -------    --------   ------
       Cash flows from investing
        activities:
           Expenditures for property,
            plant and equipment          (174)    (162)        (457)     (433)
           Proceeds from disposals of
            property, plant and equipment   5        1           87        45
           Increase in investments        (20)       -          (20)        -
           Cash paid for acquisitions,
            net of cash acquired         (458)     (15)        (566)     (623)
           Proceeds from sales of
            businesses, net of fees paid   (1)       3           51       579
                                       --------   -------    --------   ------
       Net cash (used for) investing
        activities                       (648)    (173)        (905)     (432)
                                       --------   -------    --------   ------
       Cash flows from financing
        activities:
           Net increase/(decrease) in
            commercial paper             (614)    (279)       1,299      (385)
           Net increase/(decrease) in
            short-term borrowings           4       (5)           4      (215)
           Payment of debt assumed with
            acquisitions                  (40)       -          (40)     (346)
           Proceeds from issuance of
            common stock                   93       39          517       278
           Proceeds from issuance of
            long-term debt                897        -        1,885     1,239
           Payments of long-term debt      (8)     (18)        (415)     (371)
           Excess tax benefits from share
            based payment arrangements     17        -           68         -
           Repurchases of common stock   (296)    (192)      (3,783)   (1,020)
           Cash dividends paid on common
            stock                        (188)    (184)        (580)     (560)
                                       --------  -------     --------   ------
       Net cash (used for) financing
        activities                       (135)    (639)      (1,045)   (1,380)
                                       --------  -------     --------  -------
       Effect of foreign exchange rate
        changes on cash and cash
        equivalents                        27        7           42        23
                                       --------  -------     --------   ------
       Net increase/(decrease) in cash
        and cash equivalents              154       (9)         563       181
       Cash and cash equivalents at
        beginning of period             1,633    1,424        1,224     1,234
                                       -------- --------     --------  -------
       Cash and cash equivalents at
        end of period                  $1,787    $1,415       $1,787   $1,415
                                       ========  =======     ========  =======



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




                                   Three Months Ended       Nine Months Ended
                                      September 30,           September 30,
                                   ------------------       -----------------
                                      2007    2006            2007      2006
                                   --------  --------       -------   -------
      Cash provided by
       operating activities           $910    $796           $2,471    $1,970

      Expenditures for property,
       plant and equipment            (174)   (162)            (457)     (433)
                                   --------  --------       -------   --------
      Free cash flow                  $736    $634           $2,014    $1,537
                                   ========  ========       =======   ========


      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.

Source: Honeywell

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