Item 8.

Finaneial Statementsand SupplementaryData

HONEYWELL INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Years Ended December 31,
2006
-2005
-2004
(Dollars in millions;
except per share amounts)

Productsales
Servicesales
Netsales
Costs, expenses and other
Cost of products sold.. .. .. .. .. .. . .. . . .. .. .. . .. .. .. .. . .. .. . ..

$25,165 $22,257 $20,400

6,202
5,395
5,193
31,36727,65225,593

Cost of services sold

19,649
4,447

17,681
3,843

17,071
3,681

Selling, general and administrative expenses. . . . . . . . . . . . . . . . . .

24,096
4,210

21,524
3,707

20,752
3,316

Other(income)/expense

(111)

(231)

(429)

Interest and other financial charges.. .. .. .. .. .. .. .. . .. .. .. .. ..

374

356

331

Income from continuing operations before taxes. . ... . .. . .. . . . . . . . .

Taxexpense
Income from continuing operations
Income from discontinued operations, net of taxes. . . . . . . . . . . . . . . . .
Cumulative effect of accounting change, net of taxes. . . . . . . . . . . . . .

28,569
2,798
720
2,078
5
-

Netincome
Earnings (loss) per share of common stock-basic:
Income from continuing operations
...
Income from discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of accounting change. . . . . . . . . . . . . . . . . . . . . . .
Netincome
Earnings (loss) per share of common stock-assuming dilution:
Income from continuing operations
Income from discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of accounting change. . . . . . . . . . . . . . . . . . . . . . .
Netincome

25,356
2,296
732
1,564
95
(21)

$2,083

$1,638

2.53
0.01
-

2.54

2.51
0.01
-

2.52

$1,246

1.85 $
0.11
(0.03)

1.45
-

1.45

1.84 $
0.11
(0.03)

1.45

1.93

1.92

The Notes to Financial S.tatements are an integral part of this statement.

45

23,970
1,623
377
1,246
-

HONEYWELL INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEET
December 31,
2006
-

2005
-

(Dollars in millions)

ASSETS
Currentassets:
Cash and cash equivalents..............................................
Accounts,

notes

and other

receivables

...................................

Deferred income taxes ..................................................

Other current assets ....................................................
Assets held for disposal.................................................
Total current assets...............................................
Investments and long-term receivables .....................................
Property, plant and equipment-net........................................
Goodwill.

Other
Insurance
Deferred
Prepaid
Other

intangible

assets-net...............................................

recoveries
income
pension

for
taxes

asbestos

related

liabilities

. . . . . . . . . . . . . . . . . .

....................................................

benefit

cost

..............................................

assets..............................................................

Totalassets

$ 1,224
5,740
3,588
1,215
470
67

$ 1 ,234
5,017
3,401
1,243
542
525

12,304
382
4,797
8,403
1,247
1,100
1,075
695
938

11 ,962
370
4,658
7,660
1,173
1,302
730
2,716

$30,941

1,062
$31,633

$ 3,518
62
669
423
5,455
8

$ 2,886
275
754
995
5,359
161

10,135
3,909
352
2,090
1,262
3,473

10,430
3,082
334
1,786
1,549
3,690

958
3,845

958
3,626

(6,339)

(5,027)

LIABILITIES
Current liabilities:

Short-term

borrowings...................................................

Commercial paper ......................................................

Current maturities of long-term debt
Accrued liabilities .......................................................
Liabilities related to assets held for disposal.............................
Total current .liabilities............................................
Long-term debt ...........................................................
Deferred income taxes ....................................................
Postretirement benefit obligations other than pensions
Asbestos related liabilities .................................................
Other liabilities............................................................

..........

C.ONTINGENCIES
SHAREOWNERS'

EQUITY

Capital-common stock-Authorized 2,000,000,000 shares (par value

$1 per share):
-issued 957,599,900 shares
-additional paid-in capital
Common stock held in treasury, at cost:
2006-157,008,412 shares; 2005-128,116,854 shares
Accumulated other comprehensive income (loss)
Retained earnings
Total shareowners' equity
Total liabilities and shareowners' equity

(1,307)

(25)

12,563
9,720
$30,941

11,230
10,762
$31,633

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

46

HONEYWELL INTERNATIONAL INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended December 31,
2006
-

2005
-

2004
-

(Dollars in millions)

Cash flows from operating activities:

Netincome
Adjustments to reconcile net income to net cash provided by operating
activities:
Cumulative effect of accounting change. . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization
HepOSltlonmgandothercharges
Payments of repositioning and other charges. . . . . . . . . . . . . . . . . . . . .
Pension and other postretirement expense
Pension and other postretirement benefit payments. . . . . . . . . . . . . . .
Stockoptionexpense
Deferredincometaxes
Excess tax benefits from share based payment arrangements. . . . .

$2,083
794
480
(559)
459
(353)
77
450
(31)

Other. . . .. . . . .. . . .. . .. .. .. .. .. .. .. .. . .. .. .. . .. .. .. . .. . . .. . . . . . .
Changes in assets and liabilities, net of the effects of acquisitions
and divestitures:
Accounts, notes and other receivables. . . . . . . . . . . . . . . . . . . . . . .

20

..................

(573)
(128)
(11)
516
~)~
3,211

Cash flows from investing

activities:
Expenditures for property, plant and equipment.
......................
Proceeds from disposals of property, plant and equipment. . . . . . . . . . . . .

(733)
87

Inventories.................................................
Other current assets ........................................
Accounts payable...........................................
Accrued

liabilities

...........................................

Net cash provided

by operating

activities.

Proceeds from investments ..........................................

Increase in investments .............................................
Cash paid for acquisitions, net of cash acquired. . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of businesses, net of fees paid. . . . . . . . . . . . . . . . . .
Net cash (used for) investing activities... . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
.
Net (decrease)/increase in commercial paper
Net (decrease)/increase in short-term borrowings
Payment of debt assumed with acquisitions...........................
Proceeds from issuance of common stock............................
Proceeds from issuance of long-term debt............................
Paymentsof long-term debt .........................................
Excess tax benefits from share based payment arrangements. . . . . . . . .
Repurchases of common stock ......................................
Cash dividends paid on common stock...............................
Net cash (used for) financing activities. . . . . . . . . . . . . . . . . . . . .
Effect of foreign exchange rate changes on cash and cash equivalents. . . . .
Net (decrease)/increase in cash and cash equivalents... . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period. . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of period..............................

(633)
665

~)

$1,638

$1,246

21
653
412
(1,008)
561
(199)
42
-

614
775
(863)
628
(247)
201
-

(56)

(358)

(94)
37
61
181

(470)
(84)
(77)
408
480

2,442
(684)
71
285

2,253

(2,679)
997

(629)
38
80
(115)
(384)
426

(2,010)

(584)

220
534
(86)
100
(121)
(224)
(346)
(702)
74
396
167
1,239
(29)
(1,019)
(982)
31
(724)
(1,896) (1,133)
(643)
(744)
(700)
(2,649) (2,716) (1,223)
42 ~)
190
636
(10) (2,352)
- 1,234
3,586 - 2,950
$1,224 $1,234 $3,586

HONEYWELL

INTERNATIONAL

INC.

CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY

Common
Stock Issued
Shares
--

Balance at December 31, 2003

""

957.6

Amount

$958

Accumulated
Other
Comprehensive
Income
Shares
Amount
(Loss)
-(In millions, except per share amounts)
$ (189)
$3,486
(95.3)
$(3,655)
Common Stock
Held in Treasury

Additional
Paid-in
Capital

Netincome""""",.,.""",..

Foreign exchange translation

adjustments.....................
Minimum pension liability adjustment
Change in fair value of effective cash
flow hedges ....................

Retained
Earnings

Total
Shareowners'
Equity

$ 9,689
1,246

$10,289
1,246

351
(15)

351
(15)

~)

(9)

Other Comprehensive Income (Loss)

Common stock issued for employee
savings and option plans (including
related tax benefits of $19) .......
Repurchases of common stock. . . . . .
Cash dividends on common stock

1,573
79

7.5
(20.1)

162

241

(699)

(699)

($O.75pershare)................
Balance

at December

31,

2004

....

957.6

958

3,574

--

.3

(107.6)

138

(4,185)

10,292

10,777

1,638

1,638

Netincome.......................
Foreign

exchange

translation

adjustments.....................
Minimum
pension
liability
Other

Comprehensive

Common
savings
related

(147)
(16)

adjustment

Income

of common

stock.

1,475

at December

31, 2005

50

. . . . .

Cash dividends on common stock

($O.825pershare)...............
Otherownerchanges..............
Balance

(147)
~)

(Loss)

stock issued for employee

and option plans (including
tax benefits
of $17) .. . . . . .

Repurchases

(643)
16

(643)

Other owner changes..............

9.7
(30.6)

283
(1,133)

333
(1,133)
(700)

....

957.6

---

958

3,626

.4

(128.1)

(5,027)

~)

11,230

10,762

2,083

2,083

Netincome.......................
Foreign exchange translation
adjustments.....................
Change in fair value of effective cash
flow hedges ....................
Minimum pension liability adjustment
Other Comprehensive Income (Loss)
Pension and other postretirement
benefits (including related tax
benefitsof$912)................
Common stock issued for employee
savings and option plans (including
related tax benefits of $31) .. . . . . .
Stock based compensation expense. .
Reclassification to equity of
obligations settled in stock. . . . . . . .
Repurchases of common stock. . . . . .
Dividends on common stock
($O.9075pershare)..............

Otherownerchanges..............
Balance at December 31, 2006 ....

(700)
10

233

233

(3)
196

(3)
196
2,509

(1,708)

29
77

16.2

(1,708)

573

602
77

(1,896)

(1,896)

112

112

(45.4)

(750)

957.6

--

$958

$3,845
--

.3

(157.0)

11
$(6,339)

$(1,307)

$12,563

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

48

(750)
12
$ 9,720