Statements and Supplementary DataHONEYWELL INTERNATIONAL INC.

CONSOLIDATED STATEMENT OF OPERATIONS

Item 8. Finaneial

Productsales $25,165 $22,257 $20,400Servicesales 6,202 5,395 5,193Netsales 31,36727,65225,593Costs, expenses and other

Cost of products sold.. .. .. .. .. .. . .. . . .. .. .. . .. .. .. .. . .. .. . .. 19,649 17,681 17,071Cost of services sold 4,447 3,843 3,681

24,096 21,524 20,752Selling, general and administrative expenses. . . . . . . . . . . . . . . . . . 4,210 3,707 3,316Other(income)/expense (111) (231) (429)Interest and other financial charges.. .. .. .. .. .. .. .. . .. .. .. .. .. 374 356 331

28,569 25,356 23,970Income from continuing operations before taxes. . ... . .. . .. . . . . . . . . 2,798 2,296 1,623Taxexpense 720 732 377Income from continuing operations 2,078 1,564 1,246Income from discontinued operations, net of taxes. . . . . . . . . . . . . . . . . 5 95 -Cumulative effect of accounting change, net of taxes. . . . . . . . . . . . . . - (21 ) -Netincome $2,083 $1,638 $1,246Earnings (loss) per share of common stock-basic:

Income from continuing operations ... $ 2.53 $ 1.85 $ 1.45Income from discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . . 0.01 0.11Cumulative effect of accounting change. . . . . . . . . . . . . . . . . . . . . . . - (0.03) -Netincome $ 2.54 $ 1.93 $ 1.45

Earnings (loss) per share of common stock-assuming dilution:Income from continuing operations $ 2.51 $ 1.84 $ 1.45Income from discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . . 0.01 0.11Cumulative effect of accounting change. . . . . . . . . . . . . . . . . . . . . . . - (0.03)Netincome $ 2.52 $ 1.92

The Notes to Financial S.

Years Ended December 31,2006 2005 2004- - -

(Dollars in millions;except per share amounts)

statement.are an integral part of this

45

tatements

ASSETSCurrent assets:

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 intangible assets-net...............................................Insurance recoveries for asbestos related liabilities . . . . . . . . . . . . . . . . . .

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

Prepaid pension benefit cost ..............................................

Other assets..............................................................

Totalassets $30,941LIABILITIESCurrent liabilities:

Short-term borrowings...................................................Commercial paper ......................................................Current maturities of long-term debtAccrued 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.ONTINGENCIESSHAREOWNERS' EQUITYCapital-common stock-Authorized 2,000,000,000 shares (par value

$1 per share):-issued 957,599,900 shares 958 958-additional paid-in capital 3,845 3,626

Common stock held in treasury, at cost:2006-157,008,412 shares; 2005-128,116,854 shares (6,339) (5,027)

Accumulated other comprehensive income (loss) (1,307) (25)Retained earnings 12,563 11,230

Total shareowners' equity 9,720 10,762Total liabilities and shareowners' equity $30,941 $31,633

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

HONEYWELL INTERNATIONAL INC.CONSOLIDATED BALANCE SHEET

December 31,2006 2005- -

(Dollars in millions)

$ 1,2245,7403,5881,215

47067

$ 1 ,2345,0173,4011,243

542525

11 ,962370

4,6587,6601,1731,302

7302,716

12,304382

4,7978,4031,2471,1001,075

695938 1,062

$31,633

$ 2,886275754995

5,359161

$ 3,51862

669423

5,4558

10,1353,909

3522,0901,2623,473

10,4303,082

3341,7861,5493,690

46

CONSOLIDATED STATEMENT OF CASH FLOWSYears Ended December 31,

Cash flows from operating activities:Netincome $2,083 $1,638 $1,246Adjustments to reconcile net income to net cash provided by operating

activities:Cumulative effect of accounting change. . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -Depreciation and amortization 794 653 614HepOSltlonmgandothercharges 480 412 775Payments of repositioning and other charges. . . . . . . . . . . . . . . . . . . . . (559) (1,008) (863)Pension and other postretirement expense 459 561 628Pension and other postretirement benefit payments. . . . . . . . . . . . . . . (353) (199) (247)Stockoptionexpense 77 - -Deferredincometaxes 450 42 201Excess tax benefits from share based payment arrangements. . . . . (31) - -Other. . . .. . . . .. . . .. . .. .. .. .. .. .. .. .. . .. .. .. . .. .. .. . .. . . .. . . . . . . 20 (56) (358)Changes in assets and liabilities, net of the effects of acquisitions

and divestitures:Accounts, notes and other receivables. . . . . . . . . . . . . . . . . . . . . . .Inventories .................................................Other current assets ........................................Accounts payable...........................................Accrued liabilities ...........................................

Net cash provided by operating activities. . . . . . . . . . . . . . . . . . .Cash flows from investing activities:

Expenditures for property, plant and equipment. . . . . . . . . . . . . . . . . . . . . . .Proceeds from disposals of property, plant and equipment. . . . . . . . . . . . .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 paperNet (decrease)/increase in short-term borrowingsPayment of debt assumed with acquisitions...........................Proceeds from issuance of common stock............................Proceeds from issuance of long-term debt............................Payments of 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..............................

HONEYWELL INTERNATIONAL INC.

2006 2005 2004- - -

(Dollars in millions)

(470)(84)(77)408480

2,253

(629)3880

(115)(384)426

(573) (94)(128) 37(11) 61516 181

~)~3,211 2,442

(733)87

(633)665

~)

(86)(224)(346)396

1,239(1,019)

31(1,896)

(744)(2,649)

(684)71

285

(2,679)997

(2,010) (584)534100

(702)167

220(121 )

.

74

(982) (29)(1,133)

(700)(2,716)

~)(2,352)

- 3,586 -

(724)(643)

(1,223)42 190(10)

1,234636

2,950$1,224 $1,234 $3,586

HONEYWELL INTERNATIONAL INC.CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY

Balance at December 31, 2003 ""Netincome""""",.,.""",..

Foreign exchange translationadjustments.....................

Minimum pension liability adjustmentChange in fair value of effective cash

flow hedges ....................Other Comprehensive Income (Loss)Common stock issued for employee

savings and option plans (includingrelated tax benefits of $19) .......

Repurchases of common stock. . . . . .Cash dividends on common stock

($O.75pershare)................Other owner changes..............Balance at December 31, 2004 ....

Netincome.......................Foreign exchange translation

adjustments.....................Minimum pension liability adjustmentOther Comprehensive Income (Loss)Common stock issued for employee

savings and option plans (includingrelated tax benefits of $17) .. . . . . .

Repurchases of common stock. . . . . .Cash dividends on common stock

($O.825pershare)...............Otherownerchanges..............Balance at December 31, 2005 ....Netincome.......................Foreign exchange translation

adjustments.....................Change in fair value of effective cash

flow hedges ....................Minimum pension liability adjustmentOther Comprehensive Income (Loss)Pension and other postretirement

benefits (including related taxbenefitsof$912)................

Common stock issued for employeesavings and option plans (includingrelated 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 ....

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

AccumulatedOther

ComprehensiveIncome(Loss)

share amounts)$ (189)

CommonStock Issued

Shares Amount--

Common StockHeld in Treasury

Shares Amount--

(In millions, except per(95.3) $(3,655)

TotalShareowners'

Equity

$10,2891,246

~)1,573

(643)16

10,7771,638

(147)~)

1,475

233

(3)196

2,509

60277

(750)12

$ 9,720

AdditionalPaid-inCapital

RetainedEarnings

$ 9,6891,246

(643)

10,2921,638

(700) (700)10

- -

11,230 10,7622,083 2,083

(750)

$12,563

$958 $3,486957.6

957.6

351(15)

351(15)

(9)

79

93,574

7.5(20.1)

162

(699)241

(699)

.3 7--

(107.6) (4,185)-

958

958

$958

-

138

(147)(16)

~)

233

(3)196

50 9.7(30.6)

283(1,133)

333(1,133)

2 .4 8---

3,626 (128.1) (5,027)-

957.6

(1,708) (1,708)

57316.22977

112 112(1,896)(45.4) (1,896)

1 .3--

$3,845 (157.0)--

11

$(6,339)-

957.6-

$(1,307)

48