Honeywell Reports 2007 Full Year Sales Up 10% to $34.6 Billion; Earnings Per Share Up 25% to $3.16

MORRIS TOWNSHIP, N.J., Jan. 24 /PRNewswire-FirstCall/ -- Honeywell (NYSE:HON) today announced full-year 2007 sales increased 10% to $34.6 billion from $31.4 billion in 2006. Earnings per share were up 25% to $3.16 versus $2.52 in the prior year. Cash flow from operations increased 22% to $3.9 billion versus $3.2 billion in 2006, and free cash flow (cash flow from operations less capital expenditures) was up 27% to $3.1 billion versus $2.5 billion in the prior year.

Fourth quarter sales were up 12% to $9.3 billion versus $8.3 billion in 2006. Earnings per share increased 26% to $0.91 versus $0.72 in the prior year fourth quarter. Cash flow from operations was up 16% to $1.4 billion versus $1.2 billion in the prior year, and free cash flow was up approximately 20% to $1.1 billion versus $0.9 billion in the fourth quarter of 2006.

"2007 was another terrific year for Honeywell," said Honeywell Chairman and Chief Executive Officer Dave Cote. "Our great positions in good industries, together with favorable macro trends, drove growth across each of our four business segments in 2007. The year's highlights included major contract wins, more than $1 billion in acquisitions, and approximately $4 billion in share repurchases, all driving shareowner value."

"While we anticipate softer global economic conditions in 2008, we remain confident in Honeywell's ability to outperform," added Cote. "We will continue to invest in innovation, expand globally, and execute on productivity initiatives to drive double digit earnings per share growth and higher free cash flow in 2008."

    Segment Highlights

    Aerospace
    ---------
    * Sales were up 11%, compared with the fourth quarter of 2006, driven by
      12% growth in Commercial and 9% growth in Defense and Space sales.
      Commercial sales reflected growth of 15% 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 14%, while segment margin increased by 60 bps to
      18.8%, driven by productivity gains, price, and volume growth, which
      more than offset the negative impact from inflation.
    * Honeywell signed a $1 billion contract with AirTran Airways to supply
      avionics on new aircraft and provide maintenance on AirTran's entire
      fleet through 2030.  AirTran selected Honeywell's full avionics
      portfolio, including Enhanced Ground Proximity Warning System, Airborne
      Collision Avoidance System, Weather Radar with Forward-Looking Windshear
      Detection, Flight Data Recorder and Cockpit Voice Recorders, for up to
      150 new Boeing 737s. Honeywell will also provide maintenance services
      for all of its equipment on AirTran's entire fleet -- up to 250 aircraft
      -- including avionics, lighting, mechanical components, Auxiliary Power
      Units, and wheels and brakes.  This is the largest commercial
      aftermarket services contract ever awarded to Honeywell Aerospace.
    * Honeywell has been selected to provide its Runway Awareness and Advisory
      System to Emirates Airlines to assist its pilots with increased
      situational awareness during taxi, takeoff, and landing.  Honeywell's
      system helps prevent runway incursions as airports are becoming
      increasingly more crowded.  In addition to Emirates, the system has also
      been installed on Air France, Alaska Airlines, Fed Ex, Thai Airways,
      Malaysia Airlines, and Lufthansa Airlines.
    * Honeywell received Technical Standard Order approval for Synthetic
      Vision from the Federal Aviation Administration.  Synthetic Vision
      utilizes a digitized database of worldwide terrain and obstacles to
      provide pilots with a 3-dimensional, real-time view of terrain and
      obstacles on an aircraft's primary display in any weather condition.
      The first application for this technology will be for Gulfstream
      aircraft.

    Automation and Control Solutions
    --------------------------------
    * Sales were up 13%, compared with the fourth quarter of 2006, driven by
      9% growth in the Products businesses and 20% growth in the Solutions
      businesses.
    * Segment profit grew 10%, while segment margin decreased by 20 bps to
      12.4%, due to volume growth and productivity savings, which were more
      than offset by the negative impact of inflation, ERP implementation
      costs, and sales mix.
    * Building Solutions announced a $4 million project with Arnot Ogden
      Medical Center in Elmira, N.Y., to install renewable energy technology,
      including the installation of a wood chip-fired boiler and an upgrade of
      the facility's infrastructure, which will provide nearly 60% of the
      energy consumed by the center's Main Medical Center.  The business also
      won a $5 million energy performance project with Fort Jackson, Columbia,
      S.C., to provide a variety of energy conservation measures to ensure
      that the 10-million-square-foot Fort's building control systems are
      running at peak efficiency.
    * Process Solutions introduced OneWireless(TM) Equipment Health
      Monitoring (EHM), the latest addition to Honeywell's portfolio of
      industrial wireless solutions. OneWireless EHM will wirelessly transmit
      performance information from the field to the plant control room,
      helping reduce equipment failures and lower maintenance costs.
    * Honeywell announced a project with Shell Perdido in Louisiana for 59
      Excel Optima Shortrange detectors and accessories for their Fire and
      Emergency Equipment Systems project. The project will help Shell
      standardize all offshore oil and gas production platforms in the Gulf of
      Mexico region.

    Transportation Systems
    ----------------------
    * Sales were up 11% compared with the fourth quarter of 2006, driven by
      the favorable impact of foreign exchange and pricing actions.
    * Segment profit was up 6% as a result of the net benefit from price and
      productivity actions, while segment margin decreased 60 bps to 11.0% due
      to investments in new products and inflation.
    * Turbo Technologies won two programs estimated at approximately $95
      million in annual revenues at full production.  The programs include
      commercial diesel and passenger vehicle gasoline engines and will both
      be launched in Europe beginning in 2009.
    * Consumer Products Group announced that Wal-Mart will add its premium
      spark plug, Autolite(R) Double Platinum, at 2,400 Wal-Mart stores in
      2008.

    Specialty Materials
    -------------------
    * Sales were up 14% compared with the fourth quarter of 2006, driven by
      growth in all businesses, particularly in UOP and Resins & Chemicals.
    * Segment profit grew 70%, while segment margin increased by 350 bps to
      10.8%, primarily due to increased prices and productivity savings.
    * Honeywell's Enovate(R) blowing agent is helping insulate walls in
      China's National Stadium, host to the 2008 Olympic Games.  The
      technology will help the stadium meet strict energy efficiency and
      environmental guidelines that are required by government construction
      authorities and the international Olympic Committee.  The stadium is the
      first major public building in China to incorporate Enovate.
    * UOP's Ecofining technology was selected by Galp Energia, Portugal's
      largest refiner, to produce diesel fuel from vegetable oils.  Galp
      Energia will process 6,500 barrels of vegetable oils per day, supplying
      European refineries with a high-cetane "green" diesel fuel to help meet
      increased demand for high-quality, clean fuels, and biofuels. Green
      diesel is produced from renewable resources and generates lower
      emissions than either biodiesel or traditional petroleum-based diesel.
      It can be used as a drop in replacement fuel in current diesel engines
      without modifications.  In addition, Newfoundland & Labrador Refining
      Corp. selected UOP to supply technology, basic engineering services, and
      equipment for the first new fuel refinery to be built in North America
      since 1984.

Honeywell will discuss its results during its investor conference call today starting at 8:00 a.m. EST. 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 conference call from 11:00 a.m. EST, January 25, until midnight, February 1, by dialing (706) 645-9291. The access code is 29135611.

Honeywell International is a $36 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    Twelve Months
                                              Ended            Ended
                                           December 31,     December 31,
                                           ------------    -------------
                                           2007    2006    2007     2006
                                           ----    ----    ----     ----

         Product sales                    $7,475  $6,644  $27,805  $25,165
         Service sales                     1,800   1,632    6,784    6,202
                                           -----   -----   ------   ------
         Net sales                         9,275   8,276   34,589   31,367
                                           -----   -----   ------   ------

         Costs, expenses and other
         Cost of products sold (A)         5,851   5,179   21,629   19,649
         Cost of services sold (A)         1,162   1,179    4,671    4,447
                                           -----   -----   ------   ------
                                           7,013   6,358   26,300   24,096
         Selling, general and
          administrative expenses (A)      1,205   1,085    4,565    4,210
         Other (income) expense               (6)    (42)     (53)    (111)
         Interest and other financial
          charges                            125      94      456      374
                                           -----   -----   ------   ------
                                           8,337   7,495   31,268   28,569
                                           -----   -----   ------   ------

         Income from continuing
          operations before taxes            938     781    3,321    2,798
         Tax expense                         249     196      877      720
                                           -----   -----    -----    -----
         Income from continuing
          operations                         689     585    2,444    2,078
         Income from discontinued
          operations, net of taxes           -       -        -          5
                                           -----   -----    -----    -----
         Net income                         $689    $585   $2,444   $2,083
                                           =====   =====   ======   ======

         Earnings per share of common
          stock - basic:
             Income from continuing
              operations                   $0.92   $0.72    $3.20    $2.53
             Income from discontinued
              operations                     -       -        -       0.01
                                           -----   -----    -----    -----
             Net income                    $0.92   $0.72    $3.20    $2.54
                                           =====   =====   ======   ======

         Earnings per share of common
          stock - assuming dilution:
             Income from continuing
              operations                   $0.91   $0.72    $3.16    $2.51
             Income from discontinued
              operations                     -       -        -       0.01
                                           -----   -----    -----    -----
             Net income                    $0.91   $0.72    $3.16    $2.52
                                           =====   =====   ======   ======

         Weighted average number of
          shares outstanding-basic           747     811      765      821
                                            =====   =====   ======   ======
         Weighted average number of
          shares outstanding -
             assuming dilution               758     817      774      826
                                            =====   =====   ======   ======

    (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    Twelve Months
                                              Ended            Ended
                                           December 31,     December 31,
                                           ------------    -------------
                                           2007    2006    2007     2006
       Net Sales                           ----    ----    ----     ----

       Aerospace                          $3,267  $2,955  $12,236  $11,124

       Automation and Control Solutions    3,442   3,045   12,478   11,020

       Specialty Materials                 1,240   1,083    4,866    4,631

       Transportation Systems              1,326   1,193    5,009    4,592

       Corporate                             -       -        -        -
                                           -----   -----    -----    -----

            Total                         $9,275  $8,276  $34,589  $31,367
                                          ======  ======   ======   ======


          Reconciliation of Segment Profit to Income From Continuing
                           Operations Before Taxes

                                            Three Months    Twelve Months
                                               Ended            Ended
                                            December 31,     December 31,
                                            ------------    -------------
                                            2007    2006    2007     2006
       Segment Profit                       ----    ----    ----     ----

       Aerospace                            $614    $538   $2,197   $1,892

       Automation and Control Solutions      425     385    1,405    1,223

       Specialty Materials                   134      79      658      568

       Transportation Systems                146     138      583      574

       Corporate                             (45)    (43)    (189)    (177)
                                            -----   -----    -----    -----


            Total Segment Profit           1,274   1,097    4,654    4,080

       Other income (expense)                  6      42       53      111
       Interest and other financial
        charges                             (125)    (94)    (456)    (374)
       Stock option expense (A)              (11)    (16)     (65)     (77)
       Pension and other postretirement
        expense (A)                          (71)   (115)    (322)    (459)
       Repositioning and other charges
        (A)                                 (135)   (133)    (543)    (483)
                                           ------  ------   ------   ------
            Income from continuing
             operations before taxes        $938    $781    $3,321   $2,798
                                           ======  ======   ======   ======

     (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)

                                         December 31,            December 31,
                                            2007                    2006
                                         ------------            -----------
       ASSETS
       Current assets:
           Cash and cash equivalents       $1,829                  $1,224
           Accounts, notes and other
            receivables                     6,387                   5,740
           Inventories                      3,861                   3,588
           Deferred income taxes            1,241                   1,215
           Other current assets               367                     537
                                           ------                  ------
              Total current assets         13,685                  12,304

       Investments and long-term
        receivables                           500                     382
       Property, plant and equipment -
        net                                 4,985                   4,797
       Goodwill                             9,175                   8,403
       Other intangible assets - net        1,498                   1,247
       Insurance recoveries for asbestos
        related liabilities                 1,086                   1,100
       Deferred income taxes                  611                   1,075
       Prepaid pension benefit cost         1,444                     695
       Other assets                           984                     938
                                          -------                 -------
              Total assets                $33,968                 $30,941
                                          =======                 =======

       LIABILITIES AND SHAREOWNERS'
        EQUITY
       Current liabilities:
           Accounts payable                $3,962                  $3,518
           Short-term borrowings               64                      62
           Commercial paper                 1,756                     669
           Current maturities of long-
            term debt                         418                     423
           Accrued liabilities              5,741                   5,463
                                          -------                 -------
              Total current liabilities    11,941                  10,135

       Long-term debt                       5,419                   3,909
       Deferred income taxes                  795                     352
       Postretirement benefit obligations
        other than pensions                 2,016                   2,090
       Asbestos related liabilities         1,405                   1,262
       Other liabilities                    3,010                   3,473
       Shareowners' equity                  9,382                   9,720
                                          -------                 -------
              Total liabilities and
               shareowners' equity        $33,968                 $30,941
                                          =======                 =======



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



                                            Three Months      Twelve Months
                                               Ended              Ended
                                            December 31,       December 31,
                                            ------------      -------------
                                            2007    2006      2007     2006
                                            ----    ----      ----     ----
    Cash flows from operating activities:
           Net income                        $689     $585   $2,444   $2,083
           Adjustments to reconcile net
            income to net cash provided
            by operating activities:
               Depreciation and
                amortization                  217      198      837      794
               Repositioning and other
                charges                       135      133      543      483
               Net (payments) for
                repositioning and other
                charges                      (149)    (224)    (504)    (559)
               Pension and other
                postretirement expense         71      115      322      459
               Pension and other
                postretirement benefit
                payments                     (134)     (95)    (300)    (353)
               Stock option expense            11       16       65       77
               Deferred income taxes          163       27      332      450
               Excess tax benefits from
                share based payment
                arrangements                  (18)     (31)     (86)     (31)
               Other                            7       18      161       20
               Changes in assets and
                liabilities, net of the
                effects of
                acquisitions and
                divestitures:
                  Accounts, notes and
                   other receivables          136      (28)    (467)    (573)
                  Inventories                 107      137     (183)    (128)
                  Other current assets        (19)      (5)      17      (11)
                  Accounts payable            124      301      397      516
                  Accrued liabilities         100       94      333      (16)
                                           ------- -------  -------   -------

       Net cash provided by operating
        activities                          1,440    1,241    3,911    3,211
                                           -------  -------  -------  -------

       Cash flows from investing
        activities:
           Expenditures for property,
            plant and equipment              (310)    (300)    (767)    (733)
           Proceeds from disposals of
            property, plant and equipment      11       42       98       87
           Increase in investments              -        -      (20)       -
           Decrease in investments              6        -        6        -
           Cash paid for acquisitions,
            net of cash acquired             (584)     (10)  (1,150)    (633)
           Proceeds from sales of
            businesses, net of fees paid        -       86       51      665
                                            ------- -------  -------   -------

       Net cash (used for) investing
        activities                           (877)    (182)  (1,782)    (614)
                                            ------- -------  -------   -------


       Cash flows from financing
        activities:
           Net increase/(decrease) in
            commercial paper                 (221)     299    1,078      (86)
           Net decrease in short-term
            borrowings                         (7)      (9)      (3)    (224)
           Payment of debt assumed with
            acquisitions                        -        -      (40)    (346)
           Proceeds from issuance of
            common stock                       86      118      603      396
           Proceeds from issuance of
            long-term debt                      -        -    1,885    1,239
           Payments of long-term debt         (15)    (648)    (430)  (1,019)
           Excess tax benefits from share
            based payment arrangements         18       31       86       31
           Repurchases of common stock       (203)    (876)  (3,986)  (1,896)
           Cash dividends paid on common
            stock                            (187)    (184)    (767)    (744)
                                            ------- -------  -------   -------

       Net cash (used for) financing
        activities                           (529)  (1,269)  (1,574)  (2,649)
                                            ------- -------   -------  -------


       Effect of foreign exchange rate
        changes on cash and cash
        equivalents                             8       19       50       42
                                            ------  ------   ------   ------


       Net increase/(decrease) in cash
        and cash equivalents                   42     (191)     605      (10)
       Cash and cash equivalents at
        beginning of period                 1,787    1,415    1,224    1,234
                                            ------  ------   ------   ------

       Cash and cash equivalents at end
        of period                          $1,829   $1,224   $1,829   $1,224
                                           ======   ======   ======   ======



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


                                            Three Months      Twelve Months
                                               Ended              Ended
                                            December 31,       December 31,
                                            ------------      -------------
                                            2007    2006      2007     2006
                                            ----    ----      ----     ----

      Cash provided by operating
       activities                          $1,440   $1,241   $3,911   $3,211

      Expenditures for property, plant
       and equipment                         (310)    (300)    (767)    (733)
                                           -------  -------  -------  -------


      Free cash flow                       $1,130     $941   $3,144   $2,478
                                           =======  =======  =======  =======



      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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