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Honeywell Reports Second Quarter 2014 Sales Up 6% To $10.3 Billion; EPS Of $1.38 Per Share; Raising 2014 EPS Guidance

Companies mentioned in this article: Honeywell

MORRIS TOWNSHIP, N.J., July 18, 2014 /PRNewswire/ -- Honeywell (NYSE: HON) today announced its results for the second quarter of 2014:


    Total Honeywell
    ---------------

    ($ Millions, except Earnings Per Share)               2Q 2013       2Q 2014        Change
                                                          -------       -------        ------

    Sales                                                         9,693         10,253               6%


    Segment Margin                                                16.1%         16.7%          60 bps

    Operating Income Margin                                       14.3%         15.4%  110 bps


    Earnings Per Share                                            $1.28          $1.38               8%

    Earnings Per Share (At 26.5% Tax Rate)                        $1.22          $1.37              12%


    Cash Flow from Operations                                     1,256          1,341               7%

    Free Cash Flow *                                              1,060          1,112               5%


    * Cash Flow from Operations Less Capital Expenditures

"Honeywell had another terrific quarter and a very good first half of 2014," said Honeywell Chairman and CEO Dave Cote. "Strong execution across our businesses and continued momentum across the portfolio helped us to deliver stronger than expected earnings. We saw 6% sales growth and margin expansion in every business as our key growth and productivity initiatives continue to make a difference. Our short-cycle businesses, particularly Energy, Safety and Security, and Turbo Technologies, are benefiting from improving end markets, new product introductions, and geographic expansion, while our long-cycle businesses are growing robust backlogs supported by favorable macro trends and strong win rates. Our recently announced closing of the sale of Friction Materials was a significant step in our effort to align the Honeywell portfolio around Great Positions in Good Industries. We believe that our portfolio is well positioned for continued growth. As a result of our first half performance, we are raising the low end of our 2014 proforma EPS guidance by $0.05 with the expectation of improved organic growth and continued margin expansion in the second half of the year."

The company is updating its full-year 2014 guidance and now expects:


    Full-Year Guidance
    ------------------

                                           2014            2014         Change

                               Prior Guidance   Revised
                                                Guidance(3)          vs. 2013
                                 -------------- -----------          --------

    Sales                        $40.3 - $40.7B $40.2 - $40.4B            3% - 4%


    Segment Margin                16.6% - 16.9% 16.8% - 17.0%    50 - 70 bps

    Operating Income Margin(1)    15.2% - 15.5% 15.4% - 15.6%   120 - 140 bps


    Earnings Per Share(1)         $5.40 - $5.55  $5.45 - $5.55          10% - 12%


    Free Cash Flow(2)              $3.8 - $4.0B   $3.8 - $4.0B               ~15%

    1.               Proforma, V% /bps Exclude Pension
                     Mark-to-Market Adjustment

    2.               Cash Flow from Operations Less
                     Capital Expenditures

    3.               Reflects Absence Of (~$300M)
                     Friction Materials Sales in 2H
                     2014

On July 14, Honeywell announced that it will realign its Transportation Systems business segment with its Aerospace business segment to better take advantage of the engineering and technology similarities and the shared business models between these two business segments. Under the realigned segment reporting structure, the Company will have three business segments: Aerospace, Automation and Control Solutions, and Performance Materials and Technologies. This realignment has no impact on the Company's historical consolidated financial position, results of operations or cash flows. Effective with the reporting of third quarter 2014 results, the Company will report its financial performance based on the inclusion of Transportation Systems in Aerospace. To provide historical information on a basis consistent with its new reporting structure, the Company will make available during the third quarter of 2014 certain historical segment results recast to conform to the new reporting structure. The recasted financial information will not represent a restatement of previously issued financial statements.

Second Quarter Segment Performance


    Aerospace
    ---------

    ($ Millions)   2Q 2013       2Q 2014        % Change
                   -------       -------        --------

    Sales                  2,997          2,991             ~Flat

    Segment Profit           583            592                2%

    Segment Margin         19.5%         19.8%           30 bps

    --  Sales were approximately flat compared with the second quarter of 2013
        driven by 1% Commercial sales growth, offset by a (1%) decline in
        Defense & Space. Commercial OE sales were approximately flat in the
        quarter reflecting continued growth in OE build rates, offset by higher
        BGA OEM payments and engine shipment timing. Commercial Aftermarket
        growth of 1% was driven by an increase in spares sales, partially offset
        by fewer maintenance events. Defense & Space sales declined (1%) as a
        result of lower sales to the U.S. government, partially offset by strong
        international growth.
    --  Segment profit was up 2%, and segment margins expanded 30 bps to 19.8%,
        driven by commercial excellence and productivity net of inflation,
        partially offset by BGA OEM payments, higher OE mix, and continued
        investments for growth.




    Automation and Control Solutions
       --------------------------------

    ($ Millions)                        2Q 2013       2Q 2014        % Change
                                        -------       -------        --------

    Sales                                       3,270          3,607               10%

    Segment Profit                                467            533               14%

    Segment Margin                              14.3%         14.8%           50 bps

    --  Sales were up 10% reported, 3% organic, compared with the second quarter
        of 2013, primarily driven by the favorable impact of acquisitions net of
        divestitures and growth in Energy, Safety, and Security, particularly
        Environmental and Combustion Controls and Honeywell Scanning & Mobility.
        ACS benefitted from strength in U.S. residential end markets and new
        product introductions, as well as continued growth in fire, gas, and the
        Americas Distribution business.
    --  Segment profit was up 14% and segment margins expanded 50 bps to 14.8%
        driven by commercial excellence, productivity net of inflation, and
        higher volume, partially offset by the dilutive impact of acquisitions
        and continued investments for growth.




    Performance Materials and Technologies
       --------------------------------------

    ($ Millions)                              2Q 2013       2Q 2014        % Change
                                              -------       -------        --------

    Sales                                             2,479          2,636                6%

    Segment Profit                                      438            475                8%

    Segment Margin                                    17.7%         18.0%           30 bps

    --  Sales were up 6% compared with the second quarter of 2013, driven by UOP
        catalyst and gas processing growth and higher sales in Advanced
        Materials, particularly Fluorine Products.
    --  Segment profit was up 8% and segment margins increased 30 bps to 18.0%,
        driven by productivity net of inflation and higher volume, partially
        offset by price/raw headwinds in Resins & Chemicals, unfavorable UOP
        catalyst shipment mix versus the prior year, and continued investments
        for growth.

    Transportation Systems
    ----------------------

    ($ Millions)           2Q 2013       2Q 2014        % Change
                           -------       -------        --------

    Sales                            947          1,019                 8%

    Segment Profit                   126            167                33%

    Segment Margin                 13.3%         16.4%           310 bps

    --  Sales were up 8% reported, 4% organic, compared with the second quarter
        of 2013, driven by continued growth from new platform launches, higher
        global automotive production, and increased commercial vehicle demand in
        Europe.
    --  Segment profit was up 33% and segment margins increased 310 bps to 16.4%
        primarily driven by strong Turbo productivity and volume leverage, and
        operational improvements.

Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT. To participate, please dial (800) 862-9098 (domestic) or (785) 424-1051 (international) a few minutes before the 9:30 a.m. EDT start. Please mention to the operator that you are dialing in for Honeywell's second quarter 2014 investor conference call or provide the conference code HONQ214. The live webcast of the investor call as well as related presentation materials 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 12:00 p.m. EDT, July 18, until 11:59 p.m. EDT, July 25, by dialing (800) 757-4768 (domestic) or (402) 220-7227 (international).

Honeywell (www.honeywell.com) is a Fortune 100 diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes, and industry; turbochargers; and performance materials. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London, and Chicago Stock Exchanges. For more news and information on Honeywell, please visit www.honeywellnow.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 economic and industry 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. 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.


    Contacts:

    Media                    Investor Relations

    Robert C. Ferris         Elena Doom

    (973) 455-3388           (973) 455-2222

    rob.ferris@honeywell.com elena.doom@honeywell.com


                                                                                                                                Honeywell International Inc

                                                                                                                     Consolidated Statement of Operations (Unaudited)
                                                                                                                      -----------------------------------------------

                                                                                                                      (Dollars in millions, except per share amounts)


                                                                                                                             Three Months Ended                           Six Months Ended

                                                                                                                                  June 30,                                    June 30,
                                                                                                                                  --------                                    --------

                                                                                                                                                  2014                                       2013                                      2014    2013
                                                                                                                                                  ----                                       ----                                      ----    ----


    Product sales                                                                                                                               $8,278                                     $7,744                                   $16,123 $15,218

    Service sales                                                                                                                                1,975                                      1,949                                     3,809   3,803
                                                                                                                                                 -----                                      -----                                     -----   -----

    Net sales                                                                                                                                   10,253                                      9,693                                    19,932  19,021
                                                                                                                                                ------                                      -----                                    ------  ------


    Costs, expenses and other

        Cost of products sold  (A)                                                                                                               6,047                                      5,750                                    11,826  11,317

        Cost of services sold  (A)                                                                                                               1,249                                      1,277                                     2,437   2,493
                                                                                                                                                 -----                                      -----                                     -----   -----

                                                                                                                                                 7,296                                      7,027                                    14,263  13,810

        Selling, general and administrative expenses (A)                                                                                         1,375                                      1,281                                     2,714   2,510

        Other (income) expense                                                                                                                    (21)                                      (24)                                    (138)   (52)

        Interest and other financial charges                                                                                                        80                                         80                                       159     164
                                                                                                                                                   ---                                        ---                                       ---     ---

                                                                                                                                                 8,730                                      8,364                                    16,998  16,432
                                                                                                                                                 -----                                      -----                                    ------  ------


    Income before taxes                                                                                                                          1,523                                      1,329                                     2,934   2,589

    Tax expense                                                                                                                                    397                                        307                                       772     598
                                                                                                                                                   ---                                        ---                                       ---     ---


    Net income                                                                                                                                   1,126                                      1,022                                     2,162   1,991


    Less: Net income attributable to the noncontrolling interest                                                                                    27                                          1                                        46       4
                                                                                                                                                   ---                                        ---                                       ---     ---


    Net income attributable to Honeywell                                                                                                        $1,099                                     $1,021                                    $2,116  $1,987
                                                                                                                                                ======                                     ======                                    ======  ======


    Earnings per share of common stock - basic                                                                                                   $1.40                                      $1.30                                     $2.70   $2.53
                                                                                                                                                 =====                                      =====                                     =====   =====


    Earnings per share of common stock - assuming dilution                                                                                       $1.38                                      $1.28                                     $2.66   $2.49
                                                                                                                                                 =====                                      =====                                     =====   =====


    Weighted average number of shares outstanding-basic                                                                                          784.5                                      787.6                                     784.7   786.7
                                                                                                                                                 =====                                      =====                                     =====   =====


    Weighted average number of shares outstanding - assuming dilution                                                                            795.4                                      798.1                                     795.9   797.6
                                                                                                                                                 =====                                      =====                                     =====   =====



    (A) Cost of products and services sold and selling, general and administrative expenses include amounts for repositioning and other charges, pension and other postretirement (income) expense, and stock compensation expense.


                                                                         Honeywell International Inc

                                                                          Segment Data (Unaudited)
                                                                           -----------------------

                                                                            (Dollars in millions)


                                                            Three Months Ended                       Six Months Ended

                                                                 June 30,                                June 30,
                                                                 --------                                --------

    Net Sales                                                                    2014                                   2013    2014     2013
    ---------                                                                    ----                                   ----    ----     ----


    Aerospace                                                                  $2,991                                 $2,997  $5,849   $5,908


    Automation and Control Solutions                                            3,607                                  3,270   6,969    6,349


    Performance Materials and Technologies                                      2,636                                  2,479   5,102    4,903


    Transportation Systems                                                      1,019                                    947   2,012    1,861


         Total                                                                $10,253                                 $9,693 $19,932  $19,021
                                                                              =======                                 ====== =======  =======



    Reconciliation of Segment Profit to Income Before Taxes
    -------------------------------------------------------


                                                            Three Months Ended                       Six Months Ended

                                                                 June 30,                                June 30,
                                                                 --------                                --------

    Segment Profit                                                               2014                                   2013    2014     2013
    --------------                                                               ----                                   ----    ----     ----


    Aerospace                                                                    $592                                   $583  $1,141   $1,134


    Automation and Control Solutions                                              533                                    467   1,004      890


    Performance Materials and Technologies                                        475                                    438     948      912


    Transportation Systems                                                        167                                    126     321      237


    Corporate                                                                    (58)                                  (55)  (109)   (106)
                                                                                  ---                                    ---    ----     ----


         Total segment profit                                                   1,709                                  1,559   3,305    3,067


    Other income (expense) (A)                                                     10                                     13     121       32

    Interest and other financial charges                                         (80)                                  (80)  (159)   (164)

    Stock compensation expense (B)                                               (50)                                  (37)  (102)    (91)

    Pension ongoing income (B)                                                     64                                     25     125       46

    Other postretirement income (expense) (B)                                    (13)                                    20    (25)     (2)

    Repositioning and other charges (B)                                         (117)                                 (171)  (331)   (299)
                                                                                 ----                                   ----    ----     ----


    Income before taxes                                                        $1,523                                 $1,329  $2,934   $2,589
                                                                               ======                                 ======  ======   ======


    (A) Equity income (loss) of affiliated companies is included in
        segment profit.


    (B) 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)


                                                                                June 30, December 31,

                                                                                2014             2013
                                                                                ----             ----


    ASSETS

    Current assets:

        Cash and cash equivalents                                 $6,582         $6,422

        Accounts, notes and other
         receivables                                                          8,350            7,929

        Inventories                                                           4,511            4,293

        Deferred income taxes                                                   803              849

        Investments and other current
         assets                                                               2,207            1,671

                                     Total current assets                       22,453           21,164


    Investments and long-term
     receivables                                                                488              393

    Property, plant and equipment -
     net                                                                      5,316            5,278

    Goodwill                                                                 13,049           13,046

    Other intangible assets - net                                             2,378            2,514

    Insurance recoveries for asbestos
     related liabilities                                                        432              595

    Deferred income taxes                                                       176              368

    Other assets                                                              2,304            2,077
                                                                              -----            -----


                                     Total assets                              $46,596          $45,435



    LIABILITIES AND SHAREOWNERS'
     EQUITY

    Current liabilities:

        Accounts payable                                          $5,276         $5,174

        Short-term borrowings                                                    96               97

        Commercial paper                                                      2,249            1,299

        Current maturities of long-term
         debt                                                                    60              632

        Accrued liabilities                                                   6,643            6,979

                                     Total current liabilities                  14,324           14,181


    Long-term debt                                                            6,839            6,801

    Deferred income taxes                                                       795              804

    Postretirement benefit
     obligations other than pensions                                            978            1,019

    Asbestos related liabilities                                              1,146            1,150

    Other liabilities                                                         3,508            3,734

    Redeemable noncontrolling
     interest                                                                   189              167

    Shareowners' equity                                                      18,817           17,579
                                                                             ------           ------


                                      Total liabilities, redeemable
                                      noncontrolling interest and
                                      shareowners' equity                      $46,596          $45,435


                                                                                       Honeywell International Inc

                                                                             Consolidated Statement of Cash Flows (Unaudited)
                                                                              -----------------------------------------------

                                                                                          (Dollars in millions)


                                                                                                                       Three Months Ended    Six Months Ended

                                                                                                                            June 30,             June 30,
                                                                                                                            --------             --------

                                                                                                                                        2014                  2013      2014     2013
                                                                                                                                        ----                  ----      ----     ----

    Cash flows from operating activities:

        Net income                                                                                                                    $1,126                $1,022    $2,162   $1,991

        Less: Net income attributable to the noncontrolling interest                                                                      27                     1        46        4
                                                                                                                                         ---                   ---       ---      ---

        Net income attributable to Honeywell                                                                                           1,099                 1,021     2,116    1,987

        Adjustments to reconcile net income attributable to Honeywell to net

        cash provided  by operating activities:

            Depreciation and amortization                                                                                                233                   247       471      495

            Loss on sale of non-strategic businesses and assets                                                                           10                     -       10        -

            Gain on sale of available for sale investments                                                                                 -                    -    (105)       -

            Repositioning and other charges                                                                                              117                   171       331      299

            Net payments for repositioning and other charges                                                                             (9)                (199)    (134)   (297)

            Pension and other postretirement income                                                                                     (51)                 (45)    (100)    (44)

            Pension and other postretirement benefit payments                                                                           (49)                 (42)     (85)   (213)

            Stock compensation expense                                                                                                    50                    37       102       91

            Deferred income taxes                                                                                                         66                   158        68      185

            Excess tax benefits from share based payment arrangements                                                                   (19)                 (57)     (49)    (81)

            Other                                                                                                                         91                 (101)       67    (134)

            Changes in assets and liabilities, net of the effects of

            acquisitions and divestitures:

               Accounts, notes and other receivables                                                                                   (271)                 (53)    (425)   (195)

               Inventories                                                                                                             (107)                   15     (222)    (36)

               Other current assets                                                                                                    (104)                 (14)      132        4

               Accounts payable                                                                                                          141                   265       100     (30)

               Accrued liabilities                                                                                                       144                 (147)    (248)   (434)

    Net cash provided by operating activities                                                                                          1,341                 1,256     2,029    1,597
                                                                                                                                       -----                 -----     -----    -----


    Cash flows from investing activities:

        Expenditures for property, plant and equipment                                                                                 (229)                (196)    (421)   (344)

        Proceeds from disposals of property, plant and equipment                                                                           4                     6        11        6

        Increase in investments                                                                                                      (1,093)                (286)  (1,724)   (460)

        Decrease in investments                                                                                                          533                   210       943      376

        Cash paid for acquisitions, net of cash acquired                                                                                 (2)                (338)      (2)   (460)

        Proceeds from sales of businesses, net of fees paid                                                                                1                     -        1        -

        Other                                                                                                                           (74)                   52      (13)      19

    Net cash used for investing activities                                                                                             (860)                (552)  (1,205)   (863)
                                                                                                                                        ----                  ----    ------     ----


    Cash flows from financing activities:

        Net (decrease) increase in commercial paper                                                                                    (150)                    -      950      800

        Net increase (decrease) in short-term borrowings                                                                                   4                    13       (6)      21

        Proceeds from issuance of common stock                                                                                            69                   139       161      303

        Proceeds from issuance of long-term debt                                                                                          20                     6        45       13

        Payments of long-term debt                                                                                                       (4)                  (1)    (606)   (601)

        Excess tax benefits from share based payment arrangements                                                                         19                    57        49       81

        Repurchases of common stock                                                                                                    (231)                (463)    (551)   (602)

        Cash dividends paid                                                                                                            (373)                (343)    (736)   (665)

    Net cash used for financing activities                                                                                             (646)                (592)    (694)   (650)
                                                                                                                                        ----                  ----      ----     ----


    Effect of foreign exchange rate changes on cash and cash equivalents                                                                  75                 (102)       30    (169)
                                                                                                                                         ---                  ----       ---     ----

    Net (decrease) increase in cash and cash equivalents                                                                                (90)                   10       160     (85)

    Cash and cash equivalents at beginning of period                                                                                   6,672                 4,539     6,422    4,634

    Cash and cash equivalents at end of period                                                                                        $6,582                $4,549    $6,582   $4,549
                                                                                                                                      ======                ======    ======   ======


                                                      Honeywell International Inc

                         Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited)
                          ------------------------------------------------------------------------------------

                                                         (Dollars in millions)



                                                                                                                Three Months Ended

                                                                                                                   June 30,
                                                                                                                   --------

                                                                                                                      2014                       2013
                                                                                                                      ----                       ----


    Cash provided by operating activities                                                                           $1,341                     $1,256

    Expenditures for property, plant and equipment                                                                   (229)                     (196)
                                                                                                                      ----                       ----


    Free cash flow                                                                                                  $1,112                     $1,060
                                                                                                                    ======                     ======



    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.


                                              Honeywell International Inc

                Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit
                                        and Operating Income Margins (Unaudited)
                --------------------------------------------------------------------------------------

                                                 (Dollars in millions)



                                                         Three Months Ended

                                                              June 30,
                                                              --------

                                                                          2014                             2013
                                                                          ----                             ----


    Segment Profit                                                      $1,709                           $1,559


    Stock compensation expense (A)                                        (50)                            (37)

    Repositioning and other (A, B)                                       (128)                           (182)

    Pension ongoing income (A)                                              64                               25

    Other postretirement income
     (expense) (A)                                                        (13)                              20
                                                                           ---                              ---


    Operating Income                                                    $1,582                           $1,385


    Segment Profit                                                      $1,709                           $1,559

    ÷ Sales                                                            $10,253                           $9,693

    Segment Profit Margin %                                            16.7%                           16.1%
                                                                          ====                             ====


    Operating Income                                                    $1,582                           $1,385

    ÷ Sales                                                            $10,253                           $9,693

    Operating Income Margin %                                          15.4%                           14.3%
                                                                          ====                             ====


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

    (B)               Includes repositioning, asbestos,
                      environmental expenses and equity
                      income adjustment.


    We believe these measures are useful to
     investors and management in understanding our
     ongoing operations and in analysis of ongoing
     operating trends.


                                        Honeywell International Inc

                              Calculation of EPS at 26.5% Tax Rate (Unaudited)
                              -----------------------------------------------

                              (Dollars in millions, except per share amounts)




                                                     Three Months
                                                        Ended

                                                      June 30,
                                                      --------

                                                               2014              2013
                                                               ----              ----


    Income before
     taxes                                                   $1,523            $1,329


    Taxes at 26.5%                                            404               352
                                                                ---               ---


    Net income at
     26.5% tax rate                                          $1,119              $977


    Less: Net income
     attributable to
     the
     noncontrolling
     interest                                                    27                 1
                                                                ---               ---


    Net income
     attributable to
     Honeywell at
     26.5% tax rate                                          $1,092              $976
                                                             ======              ====


    Weighted average
     number of
     shares
     outstanding -
     assuming
     dilution                                                 795.4             798.1
                                                              =====             =====


    EPS at 26.5% tax
     rate                                                     $1.37             $1.22
                                                              =====             =====


    We believe EPS adjusted to expected full-year tax rate at 26.5%
     is a measure that is useful to investors and management in
     understanding our ongoing operations and in analysis of ongoing
     operating trends.


                                                Honeywell International Inc

                   Reconciliation of Segment Profit to Operating Income Excluding Pension Mark-to-Market
                                                       Adjustment and
                   -------------------------------------------------------------------------------------

                   Calculation of Segment Profit and Operating Income Margins Excluding Pension Mark-to-
                                               Market Adjustment (Unaudited)
                   -------------------------------------------------------------------------------------

                                                   (Dollars in millions)


                                                     Twelve Months Ended

                                                         December 31,
                                                         ------------

                                                                    2013
                                                                    ----


    Segment Profit                                                                            $6,351


    Stock compensation expense (A)                                                             (170)

    Repositioning and other (A, B)                                                             (699)

    Pension ongoing income (A)                                                                    90

    Pension mark-to-market
     adjustment (A)                                                                             (51)

    Other postretirement expense
     (A)                                                                                        (20)
                                                                                                 ---


    Operating Income                                                                          $5,501

    Pension mark-to-market
     adjustment (A)                                                                            $(51)
                                                                                                ----

    Operating Income excluding
     pension mark-to-market
     adjustment                                                                               $5,552
                                                                                              ======


    Segment Profit                                                                            $6,351

    ÷ Sales                                                                                  $39,055

    Segment Profit Margin %                                                                  16.3%
                                                                                                ====


    Operating Income                                                                          $5,501

    ÷ Sales                                                                                  $39,055
                                                                                             -------

    Operating Income Margin %                                                                14.1%
                                                                                                ====


    Operating Income excluding
     pension mark-to-market
     adjustment                                                                               $5,552

    ÷ Sales                                                                                  $39,055

    Operating Income Margin
     excluding pension mark-to-
     market adjustment %                                                                     14.2%
                                                                                                ====


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

                                                      Includes
                                                       repositioning,
                                                       asbestos,
                                                       environmental
                                                       expenses and
                                                       equity income
    (B)                                                adjustment.


    We believe these measures are useful to
     investors and management in understanding our
     ongoing operations and in analysis of ongoing
     operating trends.


                          Honeywell International Inc

         Reconciliation of Segment Profit to Operating Income Excluding
                      Pension Mark-to-Market Adjustment and
         --------------------------------------------------------------

           Calculation of Segment Profit and Operating Income Margins
             Excluding Pension Mark-to-Market Adjustment (Unaudited)
           ----------------------------------------------------------

                           (Dollars in billions)




                                                        2014 Guidance
                                                        -------------


    Segment Profit                                               $6.7 - 6.9


    Stock compensation expense (A)                          ~(0.2)

    Repositioning and other (A, B)                          ~(0.6)

    Pension ongoing income (A)                               ~0.2

    Pension mark-to-market adjustment (A)                    TBD

    Other postretirement expense (A)                        ~(0.1)
                                                            -----


    Operating Income                                             $6.1 - 6.3

    Pension mark-to-market adjustment (A)                    TBD

    Operating Income excluding pension mark-
     to-market adjustment                                        $6.1 - 6.3
                                                                 ==========


    Segment Profit                                               $6.7 - 6.9

    ÷ Sales                                                    $40.2 - 40.4
                                                               ------------

    Segment Profit Margin %                                 16.8% - 17.0%
                                                               ============


    Operating Income                                             $6.1 - 6.3

    ÷ Sales                                                    $40.2 - 40.4
                                                               ------------

    Operating Income Margin %                               15.4% - 15.6%
                                                               ============


    Operating Income excluding pension mark-
     to-market adjustment                                        $6.1 - 6.3

    ÷ Sales                                                    $40.2 - 40.4
                                                               ------------

    Operating Income Margin excluding pension
     mark-to-market adjustment %                            15.4% - 15.6%
                                                               ============


    (A) Included in cost of products and services sold and selling,
     general and administrative expenses.
    (B) Includes repositioning, asbestos, environmental expenses and
     equity income adjustment.



    We believe these measures are useful to investors and management in
     understanding our ongoing operations and in analysis of ongoing
     operating trends.


                                                                                Honeywell International Inc

                                                   Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited)
                                                    ------------------------------------------------------------------------------------

                                                                                   (Dollars in millions)




                                                                                                                     Twelve Months Ended

                                                                                                                         December 31,

                                                                                                                                    2013
                                                                                                                                    ----


    Cash provided by operating activities                                                                                                                    $4,335


    Expenditures for property, plant and equipment                                                                                                            (947)
                                                                                                                                                               ----


                                                                                                                                                             $3,388
                                                                                                                                                             ======



    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.


                                                                               Honeywell International Inc

                                   Reconciliation of Earnings Per Share to Earnings Per Share, Excluding Pension Mark-to-Market Adjustment (Unaudited)
                                    ------------------------------------------------------------------------------------------------------------------


                                                                                                                                             Twelve Months Ended

                                                                                                                                                December 31,
                                                                                                                                                ------------

                                                                                                                                                                 2013
                                                                                                                                                                 ----


    EPS                                                                                                                                                       $4.92


    Pension mark-to-market adjustment                                                                                                                          0.05
                                                                                                                                                               ----


    EPS, excluding pension mark-to-market adjustment                                                                                                          $4.97
                                                                                                                                                              =====


    We believe EPS, excluding pension mark-to-market adjustment is a measure that is useful to investors and management in understanding our ongoing
     operations and in analysis of ongoing operating trends.


    EPS utilizes weighted average shares outstanding - assuming dilution of 797.3 million. Mark-to-market uses a blended tax rate of 25.5%.

SOURCE Honeywell