Honeywell Gabelli & Company 12th Annual Aircraft Supplier Symposium Presentation

Gabelli Asset ManagementAircraft Supplier Conference

New York, NYSeptember 7, 2006

Dave Anderson, Senior V.P. and CFO

2 Gabelli Conference – September 7, 2006

This report contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements are based on management’s assumptions and assessments in light of past experience and trends, current conditions, expected future developments and other relevant factors. They are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by our forward-looking statements. Our forward-looking statements are also subject to risks and uncertainties, which can affect our performance in both the near- and long-term. 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.

Forward Looking Statements


• Building Performance Track Record

• Businesses Well Positioned

• Aerospace – Positive Long Term Outlook

• 2006 – On Track For Record Performance

The New Honeywell


Honeywell Benchmarks

Quantitative Qualitative

Value Drivers

Disciplined Capital Allocation

Portfolio For Growth

Setting/Meeting Expectations

World Class Leadership Team

Continuous Improvement

+5% Organic Sales Growth

Margin Expansion

Double Digit EPS Growth

100% Cash Conversion

Expanding ROI


0%

5%

10%

15%

2003 2004 2005 2006E

-

0.50

1.00

1.50

2.00

2.50

3.00

2003 2004 2005 2006E-

5

10

15

20

25

30

35

2003 2004 2005 2006E

-

0.5

1.0

1.5

2.0

2.5

2003 2004 2005 2006E

Building Track Record Of Results

2003 – 2006 FinancialsSales

ROI

EPS

Free Cash Flow

10% CAGR 18% CAGR

14% CAGR

(1) ROI calculated as NIBI (net income plus after-tax interest) divided by Invested Capital (2 point average of the sum of the book value of equity and total debt).

($B)

($B)

($)

(1)

+3.0 Points


$0.25

$0.50

$0.75

$1.00

2003 2004 2005 2006E

-

100

200

300

400

500

600

700

800

900

2003 2004 2005 2006E0.00

1.00

2.00

Cash Deployment

• Process Completely Redesigned– 39 Acquisitions / 21 Divestitures – Over $3.0B Cash Deployed

• 36 acquisitions ahead of HON model

• Repurchases Total $2.7B Last 2 Years– $1.1B in 2005– $0.8B through 2Q 2006

• Shares Outstanding Reduced by 5%– From 862M to 819M Shares

Business Investment Dividends

Acquisitions Repurchases

Disciplined And Balanced

Capex ($M) Reinvestment

Div

iden

d/Sh

are

Dividend Yield ~ 2.4%

$.9075

$.825$.75$.75


Automation & Control

Specialty Materials

Aerospace

Transportation

35%

15%

35%

15%

Portfolio Overview

* Pie Chart calculated using 2006E Sales

$31B In Sales In 2006


-

2.0

4.0

6.0

8.0

10.0

12.0

2003 2004 2005 2006E

Automation And Control Solutions – $11.0B

Momentum Building In Strengthened Portfolio

Macro Trends

Safety and Security Concerns

Energy Efficiency – Homes/Buildings

Technology Content Increasing

Global Infrastructure Needs

Honeywell Position

Strong Channels / Brands

Upgraded Technology / Sales & Marketing

Significant Installed Base

Expanded Geographic Scope

Homes Industrial

Buildings

Sales14% CAGR

($B)Verticals


-

1.0

2.0

3.0

4.0

5.0

2003 2004 2005 2006E

Transportation Systems – $4.5B

Technology Leader In Long-term Growth Segment

Macro Trends

Tougher Emissions RegulationsNeed for Fuel Economy / EfficiencyGrowth in Turbo BoostingIncreased Auto Ownership in Emerging Regions

Honeywell Position

Technology Leadership / DifferentiationGlobal PresenceProductivity / Cost FocusChannel / Brand Leadership

Asia11%

Europe47%

Americas42%

Sales

7% CAGR($B)

Global Mix


-0.51.01.52.02.53.03.54.04.55.0

2003 2004 2005 2006E

Specialty Materials – $4.5B

Transformed To Strong, Differentiated Positions

Macro Trends

Strong Growth in Energy Demand / Refining NeedsIncreased Environmental RegulationsSafety and SecurityEnergy Efficiency

Honeywell Position

Established Leader in Process, Catalyst, Adsorbent TechnologiesHFC Leader Serving HVAC IndustrySpectra Fiber Armor Applications2/3 Resins and Chemicals Insulated from Raws

Fluorines$0.9B

UOP $1.4B

Resins & Chemicals

$1.1B

Specialty Products

$1.1B

Sales12% CAGR

($B)Segments


Aerospace – $11.0B

-

2.0

4.0

6.0

8.0

10.0

12.0

2003 2004 2005 2006E

Strong Franchise With Great Future

Macro TrendsIncreasing Commercial Air TravelCapacity / Efficiency Needs Drive OEM BuildsSafety Continues as Top ConcernDefense Budget Stable / Shrinking

Honeywell PositionSignificant Installed BaseTremendous Breadth / Depth of Technologies and Products Customer Focused and Cost EffectiveBroad Based Defense Supplier

Sales8% CAGR

($B)Product Mix

Electronics 45%

Mechanical 55%


Aerospace OutlookAir Transport

&Regional

Drivers/Priorities

ElectronicsMechanical

Business & General Aviation

ElectronicsMechanical

Composition

Defense & Space

Services Aircraft

MissilesSpace

Surface

• MRO / Spares• Narrow Body• Safety Systems

• Avionics• Engines• Aftermarket

• Helicopters• Total Logistics• Precision Strike

Broad Portfolio In Growing Segments

2006E Sales $4.2B $2.4B $4.4B


Air Transport & Regional

• Successful Launch A380, 787

• New Narrow Bodies- 737-RS- Airbus NSR

• A350XWB

• Preserve / Grow Aftermarket (MRO, spares)- Flying Hours +5%

• Safety Mandates

Strategic Priorities

0

200

400

600

800

1,000

1,20020

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

0

5,000

10,000

15,000

20,000

25,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

AC D

eliv

erie

sFl

eet i

nclu

ding

Car

go A

C

Deliveries: Strong Near Term Growth

Sustained Growth: +4% CAGR 2006-2016

Delivery Growth, New Business Opportunities,Aftermarket Momentum


Business & General Aviation

HON Well Positioned In High Growth Segments

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Con

stan

t 200

5 ($

M)

History Forecast

V-LightLight

Light-Med

Medium

Med-Lrg

Large

Long Range

Ultra Long Range

$156B in New Deliveries

Prim

us E

pic™

Ape

x

HTF

70

00TF

E73

1

Major HON products

Eng. Avionics

(Honeywell’s 14th Annual Industry Outlook, November 2005)

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

AM (excluding mandates): Rapid expansion (7% CAGR)

• New Platforms• Aftermarket Growth

- Maintain industry leading aftermarket service programs

• Safety Mandates• Civil Helos



Defense & SpaceComprehensive Product &

Service OfferingsIncluding:

Propulsion SystemsEngine Systems and AccessoriesLanding SystemsPower SystemsAvionics & ElectronicsServicesSpace Systems

Installed Base: 25,000+ Vehicles Worldwide*

Surface Vehicles10+ platforms

Platform Breadth

Wide Range of CustomersMissile Systems

40+ systems

* Excludes missiles & missile systems

Aircraft60+ platforms

Helicopters20+ platforms

Space 40+ programs

Strong Installed Base, Diversified Platforms,Products And Customers

8th Largest Defense Supplier


QDR And FY07 Budget Requests Match Strengths

US Defense Budgets

• Global War on Terror- Helicopters- Total Logistics

• Precision Strike- Navigation- Sensors

• Information Superiority- FCS- UAV

• International Growth


MILPERS

O&M

Procurement

RDT&EOther

Supplem entals

0

100

200

300

400

500

600

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Cur

rent

Yea

r ($B

)

Source: National Defense Est. (Greenbook). Honeywell supplemental estimates.

CAGR00-05 06-11

Without Supplementals 5% 4%With Supplementals 9% -1%


($M) 1H05 1H06Sales $13,477 $15,139

Segment Profit $1,595 $1,954- Margin % 11.8% 12.9%

EPS, Reported $0.78 $1.15

EPS, Adjusted (1) $0.93 $1.19

Free Cash Flow $604 $903

• 47% Growth

• 28% Growth

• Up 50%

1H Financials

Strong Financial Performance

• 23% Growth

(1) Reflects 1H05 tax charge for cash repatriation ($0.18) and Income from Discontinued Operations ($0.03), as well as 1H06 FAS 123R stock option expense ($0.04)

• 12% Growth7% Acq./Div.5% Organic

• +110 bps


($B) 2005 2006E V’05

Sales $27.6 ~$31.0 12%Ex. Acquisitions/Divestitures 6%

Segment Profit $3.4 ~$4.1 22%- Margin % 12.2% ~13.4% 120 bps

EPS, Reported $1.92 $2.48 - 2.53 29 - 32%

Free Cash Flow $1.8 $2.1 - 2.3 20 - 31%Conversion 107% +100%

2006 Financial Summary

Significant Growth On All Fronts


Honeywell Summary

• Macro Trends Support Business Growth

• Organic Growth and Margin Expansion Focus

• ACS – Global Expansion, New Products / Customers

• TS – Program Wins, New Markets / Technologies

• SM – UOP, Strong Cycle

• AERO – Program Wins, Breadth / Depth of Technologies

• Strong Financial Performance and Cash Generation



AppendixReconciliation of non-GAAP Measures

to GAAP Measures


($M ) 2003 2004Cash Provided by Operating Activities $2,199 $2,253Expenditures for Property, Plant and Equipment (655) (629)Free Cash Flow 1,544 1,624

Cash Provided by Operating Activities $2,199 $2,253Net Income 1,289 1,246Operating Cash Flow Conversion % 171% 181%

Free Cash Flow $1,544 $1,624Net Income 1,289 1,246Free Cash Flow Conversion % 120% 130%

÷

÷

Reconciliation of Free Cash Flow to Cash Provided by Operating Activities and Calculation of Cash Flow Conversion


($M ) 1H05 1H06Sales $13,477 $15,139Cost of Products and Services Sold (10,585) (11,627)Selling, General and Administrative Expenses (1,789) (2,088)

Operating Income $1,103 $1,424

FAS 123R, Stock Option Expense $0 $41Repositioning and Other Charges 210 245Pension and OPEB Expense 282 244

Segment Profit $1,595 $1,954

Operating Income $1,103 $1,424Sales $13,477 $15,139Operating Income Margin % 8.2% 9.4%

Segment Profit $1,595 $1,954Sales $13,477 $15,139Segment Profit Margin % 11.8% 12.9%

Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margin

(1)

(1)

(1) Included in costs of products and services sold and selling, general and administrative expenses

÷

÷

(1)


($M ) 1H05 1H06Cash Provided by Operating Activities $898 $1,174Expenditures for Property, Plant and Equipment (294) (271)Free Cash Flow 604 903

Cash Provided by Operating Activities $898 $1,174Net Income 660 957Operating Cash Flow Conversion % 136% 123%

Free Cash Flow $604 $903Net Income 660 957Free Cash Flow Conversion % 92% 94%

÷

÷



($B) 2005 2006ESales $27.6 $31.0Cost of Products and Services Sold (21.5) (23.9)Selling, General and Administrative Expenses (3.7) (4.0)

Operating Income $2.4 $3.1

FAS 123R, Stock Option Expense 0.0 0.1Repositioning and Other Charges 0.4 0.4Pension and OPEB Expense 0.6 0.5

Segment Profit $3.4 $4.1

Operating Income $2.4 $3.1Sales $27.6 $31.0Operating Income Margin % 8.7% 10.0%

Segment Profit $3.4 $4.1Sales $27.6 $31.0Segment Profit Margin % 12.2% 13.4%

Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margin

(1)

(1)

÷

÷

(1)

(1) Included in costs of products and services sold and selling, general and administrative expenses


($M) 2005 2006ECash Provided by Operating Activities $2,442 $2,900 - 3,100Expenditures for Property, Plant and Equipment (684) (800)Free Cash Flow $1,758 $2,100 - 2,300

Cash Provided by Operating Activities $2,442 $2,900 - 3,100Net Income $1,638 $2,050 - 2,100Operating Cash Flow Conversion % 149% +135%

Free Cash Flow $1,758 $2,100 - 2,300Net Income $1,638 $2,050 - 2,100Free Cash Flow Conversion % 107% +100%

÷

÷


Economy & Finance

Honeywell Gabelli & Company 12th Annual Aircraft Supplier Symposium Presentation