UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                              ---------------------

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2001

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from ______ to ______

                          Commission file number 1-8974

                          Honeywell International Inc.
- -----------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                Delaware                                  22-2640650
    --------------------------------                 ------------------
     (State or other jurisdiction of                  (I.R.S. Employer
     incorporation or organization)                  Identification No.)

            101 Columbia Road
              P.O. Box 4000
         Morristown, New Jersey                           07962-2497
- ---------------------------------------               --------------
  (Address of principal executive offices)               (Zip Code)

                                  (973)455-2000
- -----------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
- -----------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

        YES   X                                NO
            -----                                 -----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                                        Outstanding at
Class of Common Stock                                    June 30, 2001
- ---------------------                               ----------------------
    $1 par value                                      811,615,947 shares

                          Honeywell International Inc.

                                      Index

                                                                                               Page No.
                                                                                               --------
                                                                                            
Part I.  - Financial Information

         Item 1. Financial Statements:

                 Consolidated Balance Sheet - June 30, 2001 and December 31, 2000                 3

                 Consolidated Statement of Income - Three and Six Months Ended
                   June 30, 2001 and 2000                                                         4

                 Consolidated Statement of Cash Flows - Six Months Ended June 30,
                   2001 and 2000                                                                  5

                 Notes to Financial Statements                                                    6

                 Report of Independent Accountants                                               17

         Item 2. Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                                      18

         Item 3. Quantitative and Qualitative Disclosures About Market Risk                      24

Part II. - Other Information

         Item 1. Legal Proceedings                                                               24

         Item 5. Other Information                                                               24

         Item 6. Exhibits and Reports on Form 8-K                                                25

Signatures                                                                                       26

- ------------

       This report contains certain statements that may be deemed
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934. All statements, other than statements of historical fact,
that address activities, events or developments that we or our management
intends, expects, projects, believes or anticipates will or may occur in the
future are forward-looking statements. Such statements are based upon certain
assumptions and assessments made by our management in light of their experience
and their perception of historical trends, current conditions, expected future
developments and other factors they believe to be appropriate. The
forward-looking statements included in this report 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.

                                       2

ITEM 1.                     FINANCIAL STATEMENTS

                          Honeywell International Inc.
                           Consolidated Balance Sheet
                                   (Unaudited)

                                                              June 30,          December 31,
                                                                2001               2000
                                                           --------------       -----------
                                                                   (Dollars in millions)
                                                                          
ASSETS
Current assets:
  Cash and cash equivalents                                    $ 1,230            $ 1,196
  Accounts and notes receivable                                  4,122              4,623
  Inventories                                                    3,740              3,734
  Other current assets                                           1,224              1,108
                                                               -------            -------
   Total current assets                                         10,316             10,661

Investments and long-term receivables                              606                748
Property, plant and equipment - net                              5,111              5,230
Goodwill and other intangible
  assets - net                                                   5,874              5,898
Other assets                                                     3,028              2,638
                                                               -------            -------

   Total assets                                                $24,935            $25,175
                                                               =======            =======

LIABILITIES
Current liabilities:
  Accounts payable                                             $ 2,130            $ 2,364
  Short-term borrowings                                            364                110
  Commercial paper                                               1,168              1,192
  Current maturities of long-term debt                             405                380
  Accrued liabilities                                            3,579              3,168
                                                               -------            -------
   Total current liabilities                                     7,646              7,214

Long-term debt                                                   3,503              3,941
Deferred income taxes                                            1,065              1,173
Postretirement benefit obligations
  other than pensions                                            1,885              1,887
Other liabilities                                                1,316              1,253

SHAREOWNERS' EQUITY
Capital - common stock issued                                      958                958
        - additional paid-in capital                             2,930              2,782
Common stock held in treasury, at cost                          (4,281)            (4,296)
Accumulated other nonowner changes                                (866)              (729)
Retained earnings                                               10,779             10,992
                                                               -------            -------
   Total shareowners' equity                                     9,520              9,707
                                                               -------            -------

   Total liabilities and shareowners' equity                   $24,935            $25,175
                                                               =======            =======

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

                                       3

                          Honeywell International Inc.
                        Consolidated Statement of Income
                                   (Unaudited)

                                                               Three Months Ended             Six Months Ended
                                                                    June 30,                      June 30,
                                                               ------------------           ---------------------
                                                               2001          2000           2001             2000
                                                               ----          ----           ----             ----
                                                                                (Dollars in millions,
                                                                             except per share amounts)
                                                                                                
Net sales                                                     $6,066        $6,309         $12,010          $12,353
                                                              ------        ------         -------          -------
Costs, expenses and other
  Cost of goods sold                                           5,067         4,671          10,040            9,121
  Selling, general and administrative
    expenses                                                     837           763           1,605            1,521
  (Gain) on sale of non-strategic
    businesses                                                     -          (112)              -             (112)
  Equity in (income) loss of affiliated
    companies                                                     85           (14)            188              (18)
  Other (income) expense                                         (14)           (3)            (18)             (13)
  Interest and other financial charges                           103           129             214              240
                                                              ------        ------          ------           ------
                                                               6,078         5,434          12,029           10,739
                                                              ------        ------          ------           ------

Income (loss) before taxes on income                             (12)          875             (19)           1,614
Taxes (benefit) on income                                        (62)          258            (110)             491
                                                              ------        ------          ------           ------

Net income                                                    $   50        $  617         $    91          $ 1,123
                                                              ======        =======        =======          =======

Earnings per share of common
  stock - basic                                               $ 0.06        $ 0.77         $  0.11          $  1.41
                                                              ======        ======         =======          =======

Earnings per share of common
  stock - assuming dilution                                   $ 0.06        $ 0.76         $  0.11          $  1.39
                                                              ======        ======         =======          =======

Cash dividends per share of
  common stock                                                $.1875        $.1875         $ .3750          $ .3750
                                                              ======        ======         =======          =======

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

                                       4

                          Honeywell International Inc.
                      Consolidated Statement of Cash Flows
                                   (Unaudited)

                                                               Six Months Ended
                                                                   June 30,
                                                            ---------------------
                                                               2001        2000
                                                            ---------    --------
                                                            (Dollars in millions)
                                                                  
Cash flows from operating activities:
  Net income                                                 $    91    $ 1,123
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    (Gain) on sale of non-strategic businesses                  --         (112)
    Repositioning and other charges                            1,247         96
    Depreciation and amortization                                477        529
    Undistributed earnings of equity affiliates                   17         20
    Deferred income taxes                                       (265)        39
    Net taxes paid on sales of businesses                        (12)       (62)
    Other                                                       (455)      (356)
    Changes in assets and liabilities, net of the effects
     of acquisitions and divestitures:
       Accounts and notes receivable                             393         98
       Inventories                                               (61)        (3)
       Other current assets                                       48        (61)
       Accounts payable                                         (218)        31
       Accrued liabilities                                      (485)      (504)
                                                             -------    -------
Net cash provided by operating activities                        777        838
                                                             -------    -------

Cash flows from investing activities:
   Expenditures for property, plant and equipment               (385)      (355)
   Proceeds from disposals of property, plant and
    equipment                                                     45         61
   (Increase) in investments                                     --          (2)
   Cash paid for acquisitions                                   (110)    (2,466)
   Proceeds from sales of businesses                             --         296
   (Increase) in short-term investments                          --         (16)
                                                             -------    -------
Net cash (used for) investing activities                        (450)    (2,482)
                                                             -------    -------

Cash flows from financing activities:
   Net (decrease) increase in commercial paper                   (24)        74
   Net increase (decrease) in short-term borrowings              253       (145)
   Proceeds from issuance of common stock                         62         81
   Proceeds from issuance of long-term debt                     --        1,051
   Payments of long-term debt                                   (401)      (151)
   Repurchases of common stock                                   (30)      --
   Cash dividends on common stock                               (153)      (298)
                                                             -------    -------
Net cash (used for) provided by financing activities            (293)       612
                                                             -------    -------

Net increase (decrease) in cash and cash equivalents              34     (1,032)
Cash and cash equivalents at beginning of year                 1,196      1,991
                                                             -------    -------
Cash and cash equivalents at end of period                   $ 1,230    $   959
                                                             =======    =======

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

                                       5

                          Honeywell International Inc.
                          Notes to Financial Statements
                                   (Unaudited)
                 (Dollars in millions except per share amounts)

NOTE 1. In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments, consisting only of normal
adjustments, necessary to present fairly the financial position of Honeywell
International Inc. and its consolidated subsidiaries at June 30, 2001 and the
results of operations for the three and six months ended June 30, 2001 and 2000
and cash flows for the six months ended June 30, 2001 and 2000. The results of
operations for the three- and six-month periods ended June 30, 2001 should not
necessarily be taken as indicative of the results of operations that may be
expected for the entire year 2001.

         The financial information as of June 30, 2001 should be read in
conjunction with the financial statements contained in our Annual Report on Form
10-K for 2000.

NOTE 2. Accounts and notes receivable consist of the following:

                                                     June 30,       December 31,
                                                       2001             2000
                                                     --------       -----------
                                                               
        Trade                                          $3,613          $3,967
        Other                                             621             755
                                                       ------          ------
                                                        4,234           4,722
        Less - Allowance for doubtful
               accounts and refunds                      (112)            (99)
                                                       ------          ------
                                                       $4,122          $4,623
                                                       ======          ======

NOTE 3. Inventories consist of the following:

                                                     June 30,        December 31,
                                                       2001              2000
                                                     --------        -----------
                                                              
        Raw materials                                  $1,174          $1,262
        Work in process                                   915             809
        Finished products                               1,827           1,797
                                                       ------           -----
                                                        3,916           3,868
        Less - Progress payments                          (38)             (5)
               Reduction to LIFO cost basis              (138)           (129)
                                                       ------          ------
                                                       $3,740          $3,734
                                                       ======          ======

NOTE 4. Total nonowner changes in shareowners' equity consist of the following:

                                                 Three Months Ended          Six Months Ended
                                                      June 30,                   June 30,
                                              -----------------------      --------------------
                                                2001           2000          2001         2000
                                                ----           ----          ----         ----
                                                                             
Net income                                      $ 50           $ 617         $ 91        $1,123
Foreign exchange translation
   adjustments                                   (59)           (133)        (133)         (159)
Derivatives qualifying as
   hedges                                        --              --            (4)          --
Unrealized holding gains on
   securities available for sale                 --               12          --              2
                                                ----           -----         ----         -----
                                                $ (9)          $ 496         $(46)        $ 966
                                                ====           =====         ====         =====

                                       6

NOTE 5.  Segment financial data follows:

                                                 Three Months Ended            Six Months Ended
                                                      June 30,                      June 30,
                                               ----------------------        --------------------
                                                 2001          2000           2001           2000
                                                 ----          ----           ----           ----
                                                                              
Net sales
- ---------
Aerospace Solutions                             $2,532        $2,454         $ 4,943        $ 4,850
Automation & Control                             1,781         1,880           3,529          3,580
Performance Materials                              875         1,061           1,788          2,086
Power & Transportation
  Products                                         866           895           1,726          1,799
Corporate                                           12            19              24             38
                                                ------        ------          ------         ------
                                                $6,066        $6,309         $12,010        $12,353
                                                ======        ======         =======        =======

Segment profit
- --------------
Aerospace Solutions                              $ 504         $ 546         $   955        $ 1,039
Automation & Control                               186           275             374            465
Performance Materials                               38           107              76            202
Power & Transportation
  Products                                          63            82             113            170
Corporate                                          (56)          (39)            (85)           (69)
                                                 -----         -----         -------          -----
  Total Segment Profit                             735           971           1,433          1,807
                                                 -----         -----         -------          -----
Gain on sale of non-
  strategic businesses                             --            112            --              112
Equity in income (loss)
  of affiliated companies                           (7)           14             (15)            18
Other income                                        14             3              23             13
Interest and other
  financial charges                               (103)         (129)           (214)          (240)
Cumulative effect of
  accounting change                                --            --                1           --
Repositioning and other
  charges                                         (651)          (96)         (1,247)           (96)
                                                 -----         -----         -------        -------
  Income (loss) before taxes
    on income                                    $ (12)        $ 875         $   (19)       $ 1,614
                                                 =====         =====         =======        =======

                                       7

NOTE 6. The details of the earnings per share calculations for the three- and
six-month periods ended June 30, 2001 and 2000 follow:

                                                          Three Months                              Six Months
                                               ------------------------------------    -------------------------------------
                                                                           Per                                      Per
                                                             Average      Share                      Average       Share
                                                 Income      Shares       Amount         Income      Shares        Amount
                                                 ------      ------       ------         ------      ------        ------
                                                                                                 
2001
Earnings per share of
  common stock - basic                             $50        811.4       $0.06           $91         810.4        $0.11
Dilutive securities issuable
  in connection with stock
  plans                                                         5.3                                     5.5
                                                   ---        -----        ----           ---         -----         ----
Earnings per share of common
  stock - assuming dilution                        $50        816.7       $0.06           $91         815.9        $0.11
                                                   ===        =====        ====           ===         =====         ====

                                                          Three Months                              Six Months
                                               ------------------------------------    -------------------------------------
                                                                           Per                                      Per
                                                             Average      Share                      Average       Share
                                                 Income      Shares       Amount         Income      Shares       Amount
                                                 ------      ------       ------         ------      ------        ------
                                                                                                 
2000
Earnings per share of
  common stock - basic                            $617        799.8       $0.77          $1,123       798.2        $1.41
Dilutive securities issuable
  in connection with stock
  plans                                                        10.7                                    10.5
                                                 -----         ----        ----          -----         ----        -----
Earnings per share of common
  stock - assuming dilution                       $617        810.5       $0.76          $1,123       808.7        $1.39
                                                  ====        =====        ====          ======       =====        =====

The diluted earnings per share calculation excludes the effect of stock options
when the options' exercise prices exceed the average market price of the common
shares during the period. For the three- and six-month periods ended June 30,
2001, the number of stock options not included in the computations were 15.4 and
15.5 million, respectively. For the three- and six-month periods ended June 30,
2000, the number of stock options not included in the computations were 13.0 and
13.1 million, respectively. These stock options were outstanding at the end of
each of the respective periods.

NOTE 7. On October 22, 2000, Honeywell and General Electric Company (GE) entered
into an Agreement and Plan of Merger (Merger Agreement) providing for a business
combination between Honeywell and GE. On July 3, 2001, the European Commission
issued its decision prohibiting the proposed merger. Approval by the European
Commission was a condition for completion of the merger. Honeywell and GE have
given their consent that each may engage in certain activities prior to any
termination of the Merger Agreement without violating its terms. The consent
covers employment-related issues, acquisitions or dispositions of businesses and
the issuance or acquisition of securities. The consent otherwise preserves the
parties' rights under the Merger Agreement.

                                       8

         Under the terms of the Merger Agreement, a wholly-owned subsidiary of
GE was to be merged with and into Honeywell, and Honeywell would become a
wholly-owned subsidiary of GE and each issued and outstanding share of common
stock of Honeywell would have been converted into the right to receive 1.055
shares of common stock of GE, with fractional shares paid in cash. The Merger
Agreement provides for payment of a $1.35 billion termination fee by Honeywell
under certain circumstances. In connection with the execution of the Merger
Agreement, Honeywell and GE entered into a stock option agreement pursuant to
which Honeywell granted to GE an option to purchase up to 19.9 percent of
Honeywell's outstanding shares of common stock. The option is exercisable in the
same circumstances under which Honeywell is required to pay to GE the $1.35
billion termination fee.

NOTE 8. Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended (SFAS No. 133), was
adopted by Honeywell as of January 1, 2001. SFAS No. 133 requires all
derivatives to be recorded on the balance sheet as assets or liabilities,
measured at fair value. For derivatives designated as hedging the value of
assets or liabilities, the changes in the fair values of both the derivatives
and the hedged items are recorded in current earnings. For derivatives
designated as cash flow hedges, the effective portion of the changes in fair
value of the derivatives are recorded in other nonowner changes and subsequently
recognized in earnings when the hedged items impact income. Changes in the fair
value of derivatives not designated as hedges and the ineffective portion of
cash flow hedges are recorded in current earnings.

         As a result of our global operating and financing activities, we are
exposed to market risks from changes in interest and foreign currency exchange
rates, which may adversely affect our operating results and financial position.
As discussed more fully in Note 18 of our 2000 Annual Report on Form 10-K, we
minimize our risks from interest and foreign currency exchange rate fluctuations
through our normal operating and financing activities and, when deemed
appropriate, through the use of derivative financial instruments. The January 1,
2001 accounting change described above affected only the pattern and timing of
non-cash accounting recognition.

         The adoption of SFAS No. 133 as of January 1, 2001 resulted in a
cumulative effect adjustment of $1 million of income that is included in other
(income) expense. Additionally, this accounting change did not significantly
impact operating results for the three- and six-month periods ended June 30,
2001 and is not expected to significantly impact future operating results.

NOTE 9. In the second quarter of 2001, we recognized a repositioning charge of
$151 million for the impairment of three manufacturing facilities and related
workforce reductions in our Performance Materials business segment. The
repositioning charge also included workforce reductions principally in our
Aerospace Electronic Systems, Home & Building Control and Transportation and
Power Systems businesses. The announced workforce reductions consisted of
approximately 1,700 manufacturing and administrative positions which are
expected to be substantially completed by December 31, 2001. The components of
the charge included severance costs of $54 million, asset impairments of $84
million and other exit costs of $13 million. Also, $28 million of accruals
established in prior periods, principally for severance, were returned to income
in the second quarter of 2001 due to higher than expected voluntary attrition in
the Aerospace Solutions, Performance Materials and Corporate reportable
segments.

         In the first quarter of 2001, we recognized a repositioning charge of
$297 million for the costs of actions designed to reduce our cost structure and
improve

                                       9

our future profitability. These actions consisted of announced global workforce
reductions of approximately 6,500 manufacturing and administrative positions
across all of our reportable segments which are expected to be substantially
completed by December 31, 2001. The repositioning charge also included asset
impairments and other exit costs related to plant closures and the
rationalization of manufacturing capacity and infrastructure principally in our
Performance Polymers & Chemicals, Electronic Materials, Transportation and Power
Systems and Automotive Consumer Products Group businesses. The components of the
charge included severance costs of $259 million, asset impairments of $24
million and other exit costs of $14 million.

         As disclosed in our 2000 Annual Report on Form 10-K, we recognized
repositioning charges totaling $338 million in 2000 ($96 million were recognized
in the three- and six-month periods ended June 30, 2000). The components of the
charges included severance costs of $157 million, asset impairments of $141
million and other exit costs of $40 million. The workforce reductions consisted
of approximately 2,800 manufacturing and administrative positions and are
substantially complete. Also, $46 million of accruals established in 1999,
principally for severance, were returned to income in 2000 due to higher than
expected voluntary employee attrition resulting in reduced severance
liabilities.

         The following table summarizes the status of our total repositioning
costs.

                                      Severance           Asset          Exit
                                        Costs          Impairments       Costs          Total
                                        -----          -----------       -----          -----
                                                                            
Balance at December 31, 2000             $236             $  -            $80           $316
2001 charges                              313               108            27            448
2001 usage                               (155)             (108)          (18)          (281)
Adjustments                               (27)               -             (1)           (28)
                                         ----             -----           ---           ----
Balance at June 30, 2001                 $367              $ -            $88           $455
                                         ====              ===            ===           ====

         In the second quarter of 2001, we recognized other charges consisting
of $42 million of transaction expenses related to the proposed merger with GE,
customer and employee claims and loss contracts of $140 million, probable and
reasonably estimable legal and environmental claims of $162 million, and $167
million of other write-offs principally related to tangible and intangible asset
impairments, including receivables and inventory. We also recognized a charge of
$17 million related to an other than temporary decline in value of an equity
investment.

          In the first quarter of 2001, we recognized other charges consisting
of customer claims and settlements of contracts and contingent liabilities of
$148 million and write-offs of customer receivables and inventories of $50
million. We also recognized charges of $95 million related to an other than
temporary decline in value of an equity investment and an equity investee's loss
contract. We also redeemed our $200 million 5 3/4% dealer remarketable
securities due 2011, resulting in a loss of $6 million.

                                       10

         The following table summarizes the pretax impact of repositioning and
other charges by reportable business segment:

                                                                Periods Ended June 30,
                                               --------------------------------------------------------
                                                     Three Months                   Six Months
                                               -------------------------    ---------------------------
                                                  2001           2000           2001            2000
                                                  ----           ----           ----            ----
                                                                                    
Aerospace Solutions                               $ 72           $  -         $  152            $  -
Automation & Control                               195             17            468              17
Performance Materials                              126             74            210              74
Power & Transportation
  Products                                          33              5            127               5
Corporate                                          225              -            290               -
                                                  -----          ----         ------           -----
                                                  $651           $ 96         $1,247            $ 96
                                                  =====          ====         ======           =====

         The following table summarizes the pretax distribution of repositioning
and other charges by income statement classification.

                                                               Periods Ended June 30,
                                               --------------------------------------------------------
                                                     Three Months                 Six Months
                                               -------------------------    ---------------------------
                                                  2001           2000           2001            2000
                                                  ----           ----           ----            ----
                                                                                    
Cost of goods sold                                $508            $96         $  982             $96
Selling, general and
   administrative expense                           65              -             86               -
Equity in (income) loss of
   affiliated companies                             78              -            173               -
Other (income) expense                               -              -              6               -
                                                 -----           ----         ------             ---
                                                  $651            $96         $1,247             $96
                                                 =====           ====         ======             ===

NOTE 10. LITTON LITIGATION - On March 13, 1990, Litton Systems, Inc. (Litton)
filed a legal action against Honeywell Inc. (former Honeywell) in U.S. District
Court, Central District of California, Los Angeles (the trial court) with claims
that were subsequently split into two separate cases. One alleges patent
infringement under federal law for using an ion-beam process to coat mirrors
incorporated in the former Honeywell's ring laser gyroscopes, and tortious
interference under state law for interfering with Litton's prospective advantage
with customers and contractual relationships with an inventor and his company,
Ojai Research, Inc. The other case alleges monopolization and attempted
monopolization under federal antitrust laws by the former Honeywell in the sale
of inertial reference systems containing ring laser gyroscopes into the
commercial aircraft market. The former Honeywell generally denied Litton's
allegations in both cases. In the patent/tort case, the former Honeywell also
contested the validity as well as the infringement of the patent, alleging,
among other things, that the patent had been obtained by Litton's inequitable
conduct before the United States Patent and Trademark Office.

         Patent/Tort Case - U.S. District Court Judge Mariana Pfaelzer presided
over a three-month patent infringement and tortious interference trial in 1993.
On August 31, 1993, a jury returned a verdict in favor of Litton, awarding
damages against the former Honeywell in the amount of $1.2 billion on three
claims. The former Honeywell filed post-trial motions contesting the verdict and
damage award. On January 9, 1995, the trial court set them all aside, ruling,
among other things, that the Litton patent was invalid due to obviousness,
unenforceable because of Litton's inequitable conduct before the Patent and
Trademark Office, and in any case, not infringed by the former Honeywell's
current process. It further ruled that Litton's state tort claims were not
supported by sufficient evidence. The trial court also held that if its rulings
concerning liability were vacated or

                                       11

reversed on appeal, the former Honeywell should at least be granted a new trial
on the issue of damages because the jury's award was inconsistent with the clear
weight of the evidence and based upon a speculative damage study.

         The trial court's rulings were appealed to the U.S. Court of Appeals
for the Federal Circuit, and on July 3, 1996, in a two to one split decision, a
three judge panel of that court reversed the trial court's rulings of patent
invalidity, unenforceability and non-infringement, and also found the former
Honeywell to have violated California law by intentionally interfering with
Litton's consultant contracts and customer prospects. However, the panel upheld
two trial court rulings favorable to the former Honeywell, namely that the
former Honeywell was entitled to a new trial for damages on all claims, and also
to a grant of intervening patent rights which are to be defined and quantified
by the trial court. After unsuccessfully requesting a rehearing of the panel's
decision by the full Federal Circuit appellate court, the former Honeywell filed
a petition with the U.S. Supreme Court on November 26, 1996, seeking review of
the panel's decision. In the interim, Litton filed a motion and briefs with the
trial court seeking injunctive relief against the former Honeywell's commercial
ring laser gyroscope sales. After the former Honeywell and certain aircraft
manufacturers filed briefs and made oral arguments opposing the injunction, the
trial court denied Litton's motion on public interest grounds on December 23,
1996, and then scheduled the patent/tort damages retrial for May 6, 1997.

         On March 17, 1997, the U.S. Supreme Court granted the former
Honeywell's petition for review and vacated the July 3, 1996 Federal Circuit
panel decision. The case was remanded to the Federal Circuit panel for
reconsideration in light of a recent decision by the U.S. Supreme Court in the
Warner-Jenkinson vs. Hilton Davis case, which refined the law concerning patent
infringement under the doctrine of equivalents. On March 21, 1997, Litton filed
a notice of appeal to the Federal Circuit of the trial court's December 23, 1996
decision to deny injunctive relief, but the Federal Circuit stayed any briefing
or consideration of that matter until such time as it completed its
reconsideration of liability issues ordered by the U.S. Supreme Court.

         The liability issues were argued before the same three-judge Federal
Circuit panel on September 30, 1997. On April 7, 1998, the panel issued its
decision: (i) affirming the trial court's ruling that the former Honeywell's
hollow cathode and RF ion-beam processes do not literally infringe the asserted
claims of Litton's '849 reissue patent (Litton's patent); (ii) vacating the
trial court's ruling that the former Honeywell's RF ion-beam process does not
infringe the asserted claims of Litton's patent under the doctrine of
equivalents, but also vacating the jury's verdict on that issue and remanding
that issue to the trial court for further proceedings in accordance with the
Warner-Jenkinson decision; (iii) vacating the jury's verdict that the former
Honeywell's hollow cathode process infringes the asserted claims of Litton's
patent under the doctrine of equivalents and remanding that issue to the trial
court for further proceedings; (iv) reversing the trial court's ruling with
respect to the torts of intentional interference with contractual relations and
intentional interference with prospective economic advantage, but also vacating
the jury's verdict on that issue, and remanding the issue to the trial court for
further proceedings in accordance with California state law; (v) affirming the
trial court's grant of a new trial to the former Honeywell on damages for all
claims, if necessary; (vi) affirming the trial court's order granting
intervening rights to the former Honeywell in the patent claim; (vii) reversing
the trial court's ruling that the asserted claims of Litton's patent were
invalid due to obviousness and reinstating the jury's verdict on that issue; and
(viii) reversing the trial court's determination that Litton had obtained
Litton's patent through inequitable conduct.

                                       12

      Litton's request for a rehearing of the panel's decision by the full
Federal Circuit court was denied and its appeal of the denial of an injunction
was dismissed. The case was remanded to the trial court for further legal and
perhaps factual review. The parties filed motions with the trial court to
dispose of the remanded issues as matters of law, which were argued before the
trial court on July 26, 1999. On September 23, 1999, the trial court issued
dispositive rulings in the case, granting the former Honeywell's Motion for
Judgment as a Matter of Law and Summary Judgment on the patent claims on various
grounds; granting the former Honeywell's Motion for Judgment as a Matter of Law
on the state law claims on the grounds of insufficient evidence; and denying
Litton's Motion for Partial Summary Judgment. The trial court entered a final
judgment in Honeywell's favor on January 31, 2000, and Litton filed a timely
notice of appeal from that judgment with the U.S. Court of Appeals for the
Federal Circuit.

         On February 5, 2001, a three judge panel of the Federal Circuit court
affirmed the trial court's rulings granting the former Honeywell's Motion for
Judgment as a Matter of Law and Summary Judgment on the patent claims, agreeing
that the former Honeywell did not infringe. On the state law claims, the panel
vacated the jury's verdict in favor of Litton, reversed the trial court's grant
of judgment as a matter of law for the former Honeywell, and remanded the case
to the trial court for further proceedings under state law to resolve certain
factual issues that it held should have been submitted to the jury. Litton has
sought review of this decision by the U.S. Supreme Court.

         When preparing for the patent/tort damages retrial that was scheduled
for May 1997, Litton had submitted a revised damage study to the trial court,
seeking damages as high as $1.9 billion. We do not expect that in the absence of
any patent infringement Litton will be able to prove any tortious conduct by the
former Honeywell under state law that interfered with Litton's contracts or
business prospects. We believe that it is reasonably possible that no damages
will ultimately be awarded to Litton.

         Although it is not possible at this time to predict whether Litton's
appeal to the U.S. Supreme Court will succeed, potential does remain for an
adverse outcome which could be material to our financial position or results of
operations. We believe however, that any potential award of damages for an
adverse judgment of infringement or interference should be based upon a
reasonable royalty reflecting the value of the ion-beam coating process, and
further that such an award would not be material to our financial position or
results of operations. As a result of the uncertainty regarding the outcome of
this matter, no provision has been made in our financial statements with respect
to this contingent liability.

         Antitrust Case - Preparations for, and conduct of, the trial in the
antitrust case have generally followed the completion of comparable proceedings
in the patent/tort case. The antitrust trial did not begin until November 20,
1995. Judge Pfaelzer also presided over the trial, but it was held before a
different jury. At the close of evidence and before jury deliberations began,
the trial court dismissed, for failure of proof, Litton's contentions that the
former Honeywell had illegally monopolized and attempted to monopolize by: (i)
engaging in below-cost predatory pricing; (ii) tying and bundling product
offerings under packaged pricing; (iii) misrepresenting its products and
disparaging Litton products; and (iv) acquiring the Sperry Avionics business in
1986.

         On February 2, 1996, the case was submitted to the jury on the
remaining allegations that the former Honeywell had illegally monopolized and
attempted to monopolize by: (i) entering into certain long-term exclusive
dealing and penalty arrangements with aircraft manufacturers and airlines to
exclude Litton from the

                                       13

commercial aircraft market, and (ii) failing to provide Litton with access to
proprietary software used in the cockpits of certain business jets.

         On February 29, 1996, the jury returned a $234 million single damages
verdict against the former Honeywell for illegal monopolization, which verdict
would have been automatically trebled. On March 1, 1996, the jury indicated that
it was unable to reach a verdict on damages for the attempt to monopolize claim,
and a mistrial was declared as to that claim.

         The former Honeywell subsequently filed a motion for judgment as a
matter of law and a motion for a new trial, contending, among other things, that
the jury's partial verdict should be overturned because the former Honeywell was
prejudiced at trial, and Litton failed to prove essential elements of liability
or submit competent evidence to support its speculative, all-or-nothing $298.5
million damage claim. Litton filed motions for entry of judgment and injunctive
relief. On July 24, 1996, the trial court denied the former Honeywell's
alternative motions for judgment as a matter of law or a complete new trial, but
concluded that Litton's damage study was seriously flawed and granted the former
Honeywell a retrial on damages only. The court also denied Litton's two motions.
At that time, Judge Pfaelzer was expected to conduct the retrial of antitrust
damages sometime following the retrial of patent/tort damages. However, after
the U.S. Supreme Court remanded the patent/tort case to the Federal Circuit in
March 1997, Litton moved to have the trial court expeditiously schedule the
antitrust damages retrial. In September 1997, the trial court rejected that
motion, indicating that it wished to know the outcome of the current patent/tort
appeal before scheduling retrials of any type.

         Following the April 7, 1998 Federal Circuit panel decision in the
patent/tort case, Litton again petitioned the trial court to schedule the
retrial of antitrust damages. The trial court tentatively scheduled the trial to
commence in the fourth quarter of 1998, and reopened limited discovery and other
pretrial preparations. Litton then filed another antitrust damage claim of
nearly $300 million.

         The damages only retrial began October 29, 1998 before Judge Pfaelzer
and a new jury. On December 9, 1998, the jury returned verdicts against the
former Honeywell totaling $250 million, $220 million of which is in favor of
Litton and $30 million of which is in favor of its sister corporation, Litton
Systems, Canada, Limited.

         On January 27, 1999, the court vacated its prior mistrial ruling with
respect to the attempt to monopolize claim and entered a treble damages judgment
in the total amount of $750 million for actual and attempted monopolization. The
former Honeywell filed appropriate post-judgment motions with the trial court
and Litton filed motions seeking to add substantial attorney's fees and costs to
the judgment. A hearing on the post-judgment motions was held before the trial
court on May 20, 1999. On September 24, 1999, the trial court issued rulings
denying the former Honeywell's Motion for Judgment as a Matter of Law and Motion
for New Trial and Remittitur as they related to Litton Systems Inc., but
granting the former Honeywell's Motion for Judgment as a Matter of Law as it
relates to Litton Systems, Canada, Limited. The net effect of these rulings was
to reduce the existing judgment against the former Honeywell of $750 million to
$660 million, plus attorney fees and costs of approximately $35 million. Both
parties have appealed the judgment, as to both liability and damages, to the
U.S. Court of Appeals for the Ninth Circuit. Execution of the trial court's
judgment is stayed pending resolution of the former Honeywell's post-judgment
motions and the disposition of any appeals filed by the parties.

                                       14

         We expect to obtain substantial relief from the current adverse
judgment in the antitrust case by an appeal to the Ninth Circuit, based upon
sound substantive and procedural legal grounds. We believe that there was no
factual or legal basis for the magnitude of the jury's award in the damages
retrial and that, as was the case in the first trial, the jury's award should be
overturned. We also believe there are serious questions concerning the identity
and nature of the business arrangements and conduct which were found by the
first antitrust jury in 1996 to be anti-competitive and damaging to Litton, and
the verdict of liability should be overturned as a matter of law.

         Although it is not possible at this time to predict the result of the
appeals, potential remains for an adverse outcome which could be material to our
financial position or results of operations. As a result of the uncertainty
regarding the outcome of this matter, no provision has been made in our
financial statements with respect to this contingent liability. We also believe
that it would be inappropriate for Litton to obtain recovery of the same
damages, e.g. losses it suffered due to the former Honeywell's sales of ring
laser gyroscope-based inertial systems to OEMs and airline customers, under
multiple legal theories, claims, and cases, and that eventually any duplicative
recovery would be eliminated from the antitrust and patent/tort cases.

         SHAREOWNER LITIGATION - Honeywell and seven of its current and former
officers were named as defendants in several purported class action lawsuits
filed in the United States District Court for the District of New Jersey (the
Securities Law Complaints). The Securities Law Complaints principally allege
that the defendants violated federal securities laws by purportedly making false
and misleading statements and by failing to disclose material information
concerning Honeywell's financial performance, thereby allegedly causing the
value of Honeywell's stock to be artificially inflated. The purported class
period for which damages are sought is December 20, 1999 to June 19, 2000.

         In addition, Honeywell, seven of its current and former officers and
its Board of Directors have been named as defendants in a purported shareowner
derivative action which was filed on November 27, 2000 in the United States
District Court for the District of New Jersey (the Derivative Complaint). The
Derivative Complaint alleges a single claim for breach of fiduciary duty based
on nearly identical allegations to those set forth in the Securities Law
Complaints.

         We believe that there is no factual or legal basis for the allegations
in the Securities Law Complaints and the Derivative Complaint. Although it is
not possible at this time to predict the result of these cases, we expect to
prevail. However, an adverse outcome could be material to our financial position
or results of operations. As a result of the uncertainty regarding the outcome
of this matter, no provision has been made in our financial statements with
respect to this contingent liability.

         ENVIRONMENTAL MATTERS - We are subject to various federal, state and
local government requirements relating to the protection of employee health and
safety and the environment. We believe that, as a general matter, our policies,
practices and procedures are properly designed to prevent unreasonable risk of
environmental damage and personal injury to our employees and employees of our
customers and that our handling, manufacture, use and disposal of hazardous or
toxic substances are in accord with environmental laws and regulations. However,
mainly because of past operations and operations of predecessor companies, we,
like other companies engaged in similar businesses, have incurred remedial
response and voluntary cleanup costs for site contamination and are a party to
lawsuits and claims associated with environmental matters, including past
production of products containing asbestos and other toxic substances.
Additional lawsuits, claims and

                                       15

costs involving environmental matters are likely to continue to arise in the
future.

         With respect to environmental matters involving site contamination, we
continually conduct studies, individually at our owned sites, and jointly as a
member of industry groups at non-owned sites, to determine the feasibility of
various remedial techniques to address environmental matters. With respect to
environmental matters involving the production of products containing asbestos
and other toxic substances, we believe that the costs of defending and resolving
such matters will be largely covered by insurance, subject to deductibles,
exclusions, retentions and policy limits. It is our policy to record appropriate
liabilities for environmental matters when environmental assessments are made or
remedial efforts or damage claim payments are probable and the costs can be
reasonably estimated. With respect to site contamination, the timing of these
accruals is generally no later than the completion of feasibility studies. We
expect that we will be able to fund expenditures for these matters from
operating cash flow. The timing of cash expenditures depends on a number of
factors, including the timing of litigation and settlements of personal injury
and property damage claims, insurance recoveries, regulatory approval of cleanup
projects, remedial techniques to be utilized and agreements with other parties.

         A charge against pretax earnings of $162 million for legal and
environmental claims is included in the charge for the three-month period ended
June 30, 2001 described in Note 9 on page 9 of this Form 10-Q. Although we do
not currently possess sufficient information to reasonably estimate the amounts
of liabilities to be recorded upon future completion of studies, litigation or
settlements, and neither the timing nor the amount of the ultimate costs
associated with environmental matters can be determined, they could be material
to our consolidated results of operations. However, considering our past
experience, insurance coverage and reserves, we do not expect that these matters
will have a material adverse effect on our consolidated financial position.

                                       16

                        Report of Independent Accountants

To the Board of Directors and Shareowners
of Honeywell International Inc.

We have reviewed the accompanying consolidated balance sheet of Honeywell
International Inc. and its subsidiaries as of June 30, 2001, and the related
consolidated statements of income for each of the three-month and six-month
periods ended June 30, 2001 and 2000 and the consolidated statements of cash
flows for the six-month periods ended June 30, 2001 and 2000. These financial
statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated interim financial statements for them
to be in conformity with accounting principles generally accepted in the United
States of America.

We previously audited in accordance with auditing standards generally accepted
in the United States of America, the consolidated balance sheet as of December
31, 2000, and the related consolidated statements of income, of shareowners'
equity, and of cash flows for the year then ended (not presented herein), and in
our report dated February 9, 2001, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying consolidated balance sheet information as of December 31, 2000,
is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.

PricewaterhouseCoopers LLP
Florham Park, NJ
August 7, 2001

                                       17

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

A. RESULTS OF OPERATIONS - SECOND QUARTER 2001 COMPARED WITH SECOND QUARTER 2000

         Net sales in the second quarter of 2001 were $6,066 million, a decrease
of $243 million, or 4 percent compared with the second quarter of 2000. The
decrease in sales is attributable to the following:

         Acquisitions                           - %
         Divestitures                          (2)
         Volume/price                           -
         Foreign exchange                      (2)
                                              ---
                                               (4)%
                                              ===

         Segment profit in the second quarter of 2001 was $735 million, a
decrease of $236 million, or 24 percent compared with the second quarter of
2000. Segment profit margin for the second quarter of 2001 was 12.1 percent
compared with 15.4 percent for the second quarter of 2000. The decrease in
segment profit in the second quarter of 2001 was principally the result of a
substantial decline in segment profit for the Automation & Control, Performance
Materials and Power & Transportation Products segments. The Aerospace Solutions
segment and Corporate also had lower segment profit. Segment profit is discussed
in detail by segment in the Review of Business Segments section below.

         (Gain) on sale of non-strategic businesses of $112 million in the
second quarter of 2000 represents the pretax gain on the government-mandated
divestiture of the former Honeywell's TCAS product line in connection with the
merger of AlliedSignal and Honeywell Inc. in December 1999.

         Equity in (income) loss of affiliated companies was a loss of $85
million in the second quarter of 2001 compared with income of $14 million in the
second quarter of 2000. The second quarter of 2001 included a charge of $78
million related to an other than temporary decline in value of an equity
investment, impairment of an equity investee's manufacturing facility and an
equity investee's severance charges. Excluding this charge, equity in (income)
loss of affiliated companies was a loss of $7 million in the second quarter of
2001 compared with income of $14 million in the second quarter of 2000. The
decrease of $21 million in equity income was due mainly to lower earnings from
joint ventures in our Performance Polymers & Chemicals and Home & Building
Control businesses.

         Other (income) expense, $14 million of income in the second quarter of
2001, increased by $11 million compared with the second quarter of 2000 due
principally to lower minority interest expense.

         Interest and other financial charges of $103 million in the second
quarter of 2001 decreased by $26 million, or 20 percent compared with the second
quarter of 2000 due principally to lower average debt outstanding and lower
average interest rates in the current period.

         The effective tax rate in both the second quarter of 2001 and 2000
includes the impact of repositioning and other charges, while the effective tax
rate in the second quarter of 2000 also includes the impact of the gain on the
disposition of the TCAS product line of the former Honeywell. Excluding the
impact of these items in both periods, the effective tax rate was 29.6
percent in both the second quarter of 2001 and 2000.

                                       18

         Net income of $50 million, or $0.06 per share, in the second quarter of
2001 compared with net income of $617 million, or $0.76 per share, in the second
quarter of 2000. Adjusted for repositioning and other charges, net income in the
second quarter of 2001 was $400 million, or $0.49 per share, higher than
reported. Adjusted for repositioning and other charges and the gain on the
disposition of the TCAS product line of the former Honeywell, net income in the
second quarter of 2000 was $12 million, or $0.01 per share, lower than reported.
Net income in the second quarter of 2001 decreased by 26 percent compared with
the second quarter of 2000 if both periods are adjusted for these items.

Review of Business Segments

         Aerospace Solutions sales of $2,532 million in the second quarter of
2001 increased by $78 million, or 3 percent compared with the second quarter of
2000. The increase principally relates to significantly higher sales of avionics
original equipment to air transport manufacturers and regional and business jet
customers. Sales to the aftermarket also increased slightly due principally to
higher sales of avionics products.

         Aerospace Solutions segment profit of $504 million in the second
quarter of 2001 decreased by $42 million, or 8 percent compared with the second
quarter of 2000. The decrease relates principally to higher sales of
lower-margin original equipment products, higher postretirement benefit costs
and engineering and development costs related to new products.

         Automation & Control sales of $1,781 million in the second quarter of
2001 decreased by $99 million, or 5 percent compared with the second quarter of
2000. This decrease includes the negative impact of foreign exchange of
approximately 3 percent. Sales for our Home & Building Control business
decreased slightly as both our products and solutions & services businesses had
lower sales due principally to weakness in key end-markets partially offset by
improved sales for our fire and security products business. Sales for our
Industrial Control business decreased moderately due principally to the impact
of prior year divestitures.

         Automation & Control segment profit of $186 million in the second
quarter of 2001 was lower by $89 million, or 32 percent compared with the second
quarter of 2000. Segment profit for both our Home & Building Control and
Industrial Control businesses decreased substantially due to lower sales and
prior year divestitures partially offset by lower costs due to workforce
reductions.

         Performance Materials sales of $875 million in the second quarter of
2001 decreased by $186 million, or 18 percent compared with the second quarter
of 2000. Electronic Materials sales declined substantially due to weakness in
the semiconductor and telecommunications markets, including the effects of a
broad inventory correction, and prior year divestitures. Sales decreased
significantly in our Performance Polymers & Chemicals business due principally
to lower volumes in our fibers, plastics and nylon businesses driven by weakness
in the automotive end-markets.

         Performance Materials segment profit of $38 million in the second
quarter of 2001 was lower by $69 million, or 64 percent compared with the second
quarter of 2000. The decrease results primarily from continued high energy and
raw material costs, lower sales volumes and price declines in certain
Performance Polymers & Chemicals businesses.

                                       19

         Power & Transportation Products sales of $866 million in the second
quarter of 2001 decreased by $29 million, or 3 percent compared with the second
quarter of 2000. Excluding the negative impact of foreign exchange, sales
increased 1 percent. Sales were significantly higher for our Turbocharging
Systems business as strong demand continues in the European diesel-powered
passenger car market. This increase was offset by lower sales for our Commercial
Vehicle Systems business due to the ongoing decline in heavy-duty truck builds
in North America. Sales for our Friction Materials and Consumer Products Group
businesses also declined due to weakness in automotive end-markets.

         Power & Transportation Products segment profit of $63 million in the
second quarter of 2001 decreased by $19 million, or 23 percent compared with the
second quarter of 2000 due principally to lower sales in our Commercial Vehicle
Systems, Friction Materials and Consumer Products Group businesses.

B. RESULTS OF OPERATIONS - SIX MONTHS 2001 COMPARED WITH SIX MONTHS 2000

         Net sales in the first six months of 2001 were $12,010 million, a
decrease of $343 million, or 3 percent compared with the first six months of
2000. The decrease in sales is attributable to the following:

         Acquisitions                           1 %
         Divestitures                          (2)
         Volume/price                           -
         Foreign exchange                      (2)
                                              ---
                                               (3)%
                                              ===

         Segment profit in the first six months of 2001 was $1,433 million, a
decrease of $374 million, or 21 percent compared with the first six months of
2000. Segment profit margin for the first six months of 2001 was 11.9 percent
compared with 14.6 percent for the first six months of 2000. The decrease in
segment profit in the first six months of 2001 was principally the result of a
substantial decline in segment profit for the Performance Materials, Automation
& Control and Power & Transportation Products segments. The Aerospace Solutions
segment also had lower segment profit. Segment profit is discussed in detail by
segment in the Review of Business Segments section below.

         (Gain) on sale of non-strategic businesses of $112 million in the first
six months of 2000 represents the pretax gain on the government-mandated
divestiture of the former Honeywell's TCAS product line in connection with the
merger of AlliedSignal and Honeywell Inc. in December 1999.

         Equity in (income) loss of affiliated companies was a loss of $188
million in the first six months of 2001 compared with income of $18 million in
the first six months of 2000. The first six months of 2001 included charges of
$173 million related to an other than temporary decline in value of an equity
investment, impairment of an equity investee's manufacturing facility and an
equity investee's loss contract and severance charges. Excluding these charges,
equity in (income) loss of affiliated companies was a loss of $15 million in the
first six months of 2001 compared with income of $18 million in the first six
months of 2000. The decrease of $33 million in equity income was due mainly to
lower earnings from joint ventures in our Performance Polymers & Chemicals and
Home & Building Control businesses.

         Other (income) expense, $18 million of income in the first six months
of 2001, increased by $5 million compared with the first six months of 2000. The
first six months of 2001 included a net provision of $5 million consisting of a
$6

                                       20

million charge related to the redemption of our $200 million 5 3/4% dealer
remarketable securities and a $1 million benefit recognized upon the adoption of
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended. Excluding this net provision,
other (income) expense was $23 million of income in the first six months of
2001, an increase of $10 million compared with the first six months of 2000 due
principally to lower minority interest expense.

         Interest and other financial charges of $214 million in the first six
months of 2001 decreased by $26 million, or 11 percent compared with the first
six months of 2000 due principally to lower average debt outstanding and lower
average interest rates in the current period.

         The effective tax rate in both the first six months of 2001 and 2000
includes the impact of repositioning and other charges, while the effective tax
rate in the first six months of 2000 also includes the impact of the gain on
the disposition of the TCAS product line of the former Honeywell. Excluding the
impact of these items in both periods, the effective tax rate was 29.5 percent
in the first six months of 2001 compared with 30.5 percent in the first six
months of 2000. The decrease in the effective tax rate relates principally to
incremental tax synergies associated with the AlliedSignal and Honeywell Inc.
merger in December 1999 and favorable tax audit results.

         Net income of $91 million, or $0.11 per share, in the first six months
of 2001 compared with net income of $1,123 million, or $1.39 per share, in the
first six months of 2000. Adjusted for repositioning and other charges, net
income in the first six months of 2001 was $774 million, or $0.95 per share,
higher than reported. Adjusted for repositioning and other charges and the gain
on the disposition of the TCAS product line of the former Honeywell, net income
in the first six months of 2000 was $12 million, or $0.02 per share, lower than
reported. Net income in the first six months of 2001 decreased by 22 percent
compared with the first six months of 2000 if both periods are adjusted for
these items.

Review of Business Segments

         Aerospace Solutions sales of 4,943 million in the first six months of
2001 increased by $93 million, or 2 percent compared with the first six months
of 2000. Sales of avionics original equipment to air transport manufacturers and
regional and business jet customers increased significantly. Sales to the
aftermarket, particularly the military, were slightly higher. This increase was
partially offset by the effects of prior year government-mandated divestitures
in connection with the merger of AlliedSignal and Honeywell Inc.

         Aerospace Solutions segment profit of $955 million in the first six
months of 2001 decreased by $84 million, or 8 percent compared with the first
six months of 2000. The decrease relates principally to higher sales of
lower-margin original equipment products, higher postretirement benefit costs,
engineering and development costs related to new products, and
government-mandated divestitures.

         Automation & Control sales of $3,529 million in the first six months of
2001 decreased by $51 million, or 1 percent compared with the first six months
of 2000. This decrease includes the negative impact of foreign exchange of
approximately 3 percent. Sales for our Industrial Control business decreased
moderately, as sales in both our industrial automation & control and sensing and
control businesses were lower due to weakness in key end-markets. Sales for our
Home & Building Control business were slightly higher due to our acquisition of
Pittway in the prior year.

                                       21

         Automation & Control segment profit of $374 million in the first six
months of 2001 was lower by $91 million, or 20 percent compared with the first
six months of 2000. Segment profit for both our Home & Building Control and
Industrial Control businesses decreased significantly due to lower sales volume
and price decreases in certain product lines and prior year divestitures
partially offset by lower costs due to workforce reductions.

         Performance Materials sales of $1,788 million in the first six months
of 2001 decreased by $298 million, or 14 percent compared with the first six
months of 2000. Electronic Materials sales declined substantially due to prior
year divestitures and lower sales volumes due to weakness in the semiconductor
and telecommunications markets. Sales were moderately lower in our Performance
Polymers & Chemicals business due principally to lower volumes in businesses
impacted by weakness in the automotive end-markets.

         Performance Materials segment profit of $76 million in the first six
months of 2001 was lower by $126 million, or 62 percent compared with the first
six months of 2000. The decrease results primarily from our Performance Polymers
& Chemicals businesses due to lower sales volumes and higher energy and raw
material costs.

         Power & Transportation Products sales of $1,726 million in the first
six months of 2001 decreased by $73 million, or 4 percent compared with the
first six months of 2000. Excluding the negative impact of foreign exchange,
sales were flat. Sales were significantly higher for our Turbocharging Systems
business due to continued strong demand in Europe. This increase was offset by
lower sales for our Commercial Vehicle Systems business due to decreased
heavy-duty truck builds in North America and lower sales for our Friction
Materials and Consumer Products Group businesses due to weakness in automotive
end-markets.

         Power & Transportation Products segment profit of $113 million in the
first six months of 2001 decreased by $57 million, or 34 percent compared
with the first six months of 2000. The decrease principally reflects lower sales
in our Commercial Vehicle Systems, Friction Materials and Consumer Products
Group businesses.

C. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

         Total assets at June 30, 2001 were $24,935 million, a decrease of $240
million, or 1 percent from December 31, 2000.

         Cash provided by operating activities of $777 million during the first
six months of 2001 decreased by $61 million compared with the first six months
of 2000 due principally to decreased earnings and higher spending for
repositioning actions.

         Cash used for investing activities of $450 million during the first six
months of 2001 decreased by $2,032 million compared with the first six months of
2000 due principally to the acquisition of Pittway in the prior year.

         We continuously assess the relative strength of each business in our
portfolio as to strategic fit, market position and profit contribution in order
to upgrade our combined portfolio and identify operating units that will most
benefit from increased investment. We identify acquisition candidates that will
further our strategic plan and strengthen our existing core businesses. We also
identify operating units that do not fit into our long-term strategic plan based
on their market position, relative profitability or growth potential. These

                                       22

operating units are considered for potential divestiture, restructuring or other
repositioning action subject to regulatory constraints.

         Cash used for financing activities of $293 million during the first six
months of 2001 increased by $905 million compared with the first six months of
2000 due principally to the issuance of $1 billion of 7.50% Notes in February
2000. Total debt of $5,440 million at June 30, 2001 was $183 million, or 3
percent lower than at December 31, 2000. The increase in cash used for financing
activities was partially offset by lower dividend payments in the current period
as payment of the normal second quarter dividend was deferred until the third
quarter in connection with the proposed merger with GE.

Repositioning Charges

         In the second quarter of 2001, we recognized a repositioning charge of
$151 million for the impairment of three manufacturing facilities and related
workforce reductions in our Performance Materials business segment. The
repositioning charge also included workforce reductions principally in our
Aerospace Electronic Systems, Home & Building Control and Transportation and
Power Systems businesses. The announced workforce reductions consisted of
approximately 1,700 manufacturing and administrative positions which are
expected to be substantially completed by December 31, 2001. The components of
the charge included severance costs of $54 million, asset impairments of $84
million and other exit costs of $13 million. Also, $28 million of accruals
established in prior periods, principally for severance, were returned to income
in the second quarter of 2001 due to higher than expected voluntary attrition in
the Aerospace Solutions, Performance Materials and Corporate reportable
segments. The net pretax impact of the repositioning charge by reportable
segment was as follows: Performance Materials - $96 million; Corporate - $22
million; Automation & Control - $8 million; Power & Transportation Products - $3
million; and Aerospace Solutions - ($6) million.

         In the first quarter of 2001, we recognized a repositioning charge of
$297 million for the cost of actions designed to reduce our cost structure and
improve our future profitability. These actions consisted of announced global
workforce reductions of approximately 6,500 manufacturing and administrative
positions across all of our reportable segments which are expected to be
substantially completed by December 31, 2001. The repositioning charge also
included asset impairments and other exit costs related to plant closures and
the rationalization of manufacturing capacity and infrastructure principally in
our Performance Polymers & Chemicals, Electronic Materials, Transportation and
Power Systems and Automotive Consumer Products Group businesses. The components
of the charge included severance costs of $259 million, asset impairments of $24
million and other exit costs of $14 million. The pretax impact of the
repositioning charge by reportable segment was as follows: Automation & Control
- - $132 million; Aerospace Solutions - $64 million; Performance Materials - $44
million; Power & Transportation Products - $37 million; and Corporate - $20
million.

         As disclosed in our 2000 Annual Report on Form 10-K, we recognized
repositioning charges totaling $338 million in 2000 ($96 million were recognized
in the three- and six-month periods ended June 30, 2000). The components of the
charges included severance costs of $157 million, asset impairments of $141
million and other exit costs of $40 million. The workforce reductions consisted
of approximately 2,800 manufacturing and administrative positions and are
substantially complete. Also, $46 million of accruals established in 1999,
principally for severance, were returned to income in 2000 due to higher than
expected voluntary employee attrition resulting in reduced severance
liabilities.

                                       23

         We expect that the repositioning actions committed to in 2001 will
generate pretax savings in excess of $300 million in 2001 and $550 million in
2002. Cash expenditures for severance and other exit costs necessary to execute
these actions will exceed $300 million and will be incurred principally in 2001.
Cash spending for severance and other exit costs for 2001 and 2000 repositioning
actions were $173 million for the six months ended June 30, 2001 and were funded
principally through operating cash flows.

D. OTHER MATTERS

         In July 2001, The Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141, "Business Combinations" (SFAS No.
141), and Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" (SFAS No. 142). SFAS No. 141 requires that all business
combinations initiated after June 30, 2001 be accounted for using the purchase
method only and that certain acquired intangible assets in a business
combination be recognized as assets apart from goodwill. SFAS No. 142 requires
that ratable amortization of goodwill be replaced with periodic tests of
goodwill's impairment and that intangible assets other than goodwill be
amortized over their useful lives. The amortization provisions of SFAS No. 142
apply to goodwill and intangible assets acquired after June 30, 2001. With
respect to goodwill and intangible assets acquired prior to July 1, 2001, we are
required to adopt SFAS No. 142 effective January 1, 2002. We are currently
evaluating the effect that the adoption of the provisions of SFAS No. 142,
effective January 1, 2002, will have on our results of operations and financial
position.

Report of Independent Accountants

         The "Report of Independent Accountants'" included herein is not a
"report" or "part of a Registration Statement" prepared or certified by an
independent accountant within the meanings of Section 7 and 11 of the Securities
Act of 1933, and the accountants' Section 11 liability does not extend to such
report.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         See our 2000 Annual Report on Form 10-K (Item 7A). At June 30, 2001,
there has been no material change in this information.

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         See Note 10 on page 11 of this Form 10-Q.

ITEM 5.  OTHER INFORMATION

         We set December 7, 2001 as the date for our 2001 Annual Shareowner
Meeting, to be held at 10:00 a.m. at our headquarters in Morris Township, New
Jersey. Shareowners of record at the close of business on October 19, 2001 will
be entitled to vote at the 2001 Annual Meeting.

         To be considered for inclusion in our proxy materials for the 2001
Annual Meeting pursuant to Rule 14a-8 of the Securities and Exchange Commission
(SEC),

                                       24

shareowner proposals must be received a reasonable time before we begin to print
and mail our proxy materials. We set the deadline for receipt of such proposals
as the close of business on September 7, 2001. Proposals submitted thereafter
will be opposed as not timely filed.

         Shareowners intending to present a proposal for consideration at the
2001 Annual Meeting outside the processes of SEC Rule 14a-8 must notify us on or
before the close of business on September 7, 2001. Otherwise the proposal will
be considered untimely under our by-laws. In addition, our proxies will have
discretionary voting authority on any vote with respect to such proposal, if
presented at the meeting, without including information regarding the proposal
in our proxy materials.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits. The following exhibits are filed with this
         Form 10-Q:

                
          10.21    Agreement dated as of July 3, 2001 between Honeywell and
                   Lawrence A. Bossidy

          10.22    Early Retirement Agreement dated as of July 3, 2001 between
                   Honeywell and Michael R. Bonsignore

          15       Independent Accountants' Acknowledgment Letter
                   as to the incorporation of their report relating
                   to unaudited interim financial statements

     (b) Reports on Form 8-K. There were no reports on Form 8-K filed during
         the three months ended June 30, 2001.

                                       25

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                              Honeywell International Inc.

Date: August 13, 2001                     By: /s/ John J. Tus
                                              ---------------------
                                              John J. Tus
                                              Vice President and Controller
                                              (on behalf of the Registrant
                                              and as the Registrant's
                                              Principal Accounting Officer)

                                       26

                                  EXHIBIT INDEX

Exhibit Number               Description
- --------------               -----------
                        
       2                   Omitted (Inapplicable)

       3                   Omitted (Inapplicable)

       4                   Omitted (Inapplicable)

      10.21*               Agreement dated as of July 3, 2001
                           between Honeywell and Lawrence A.
                           Bossidy

      10.22*               Early Retirement Agreement dated as
                           of July 3, 2001 between Honeywell and
                           Michael R. Bonsignore

      11                   Omitted (Inapplicable)

      15                   Independent Accountants'
                           Acknowledgment Letter as to
                           the incorporation of their
                           report relating to unaudited
                           interim financial statements

      18                   Omitted (Inapplicable)

      19                   Omitted (Inapplicable)

      22                   Omitted (Inapplicable)

      23                   Omitted (Inapplicable)

      24                   Omitted (Inapplicable)

      99                   Omitted (Inapplicable)

- ----------------
         The Exhibits identified above with an asterisk (*) are management
contracts or compensatory plans or arrangements.

                                       27

                                                                   Exhibit 10.21

                                    AGREEMENT

         AGREEMENT, dated as of July 3, 2001 between Honeywell International
Inc., a Delaware corporation (the "Corporation"), and Lawrence A. Bossidy (the
"Executive").

         WHEREAS, the Corporation has requested and Executive has agreed to
return to employment with the Corporation;

         WHEREAS, Executive and the Corporation wish to substantially replicate
the terms and conditions of Executive's prior employment, except as described
below.

         NOW, THEREFORE, in consideration of the execution and delivery of these
presents, the mutual promises contained herein and other good and valuable
consideration, the parties hereto hereby agree as follows:

Section 1. Term and Capacity of Employment

         (a) The Corporation and Executive agree that Executive shall be
employed by the Corporation from July 3, 2001 through June 30, 2002 under the
terms set forth in this Agreement. Executive, for so long as he is elected a
member of and Chairman of the Board of Directors of the Corporation, shall
perform the duties of that office. Executive shall also continue as the Chief
Executive Officer of the Corporation and shall serve in that capacity through
the term of this Agreement at the pleasure of the Board of Directors of the
Corporation.

         (b) During the term of his employment under this Agreement, Executive
shall have the powers, responsibilities and authorities of Chief Executive
Officer and Chairman of the Board of Directors of the Corporation as established
by custom and practice on the date first set forth herein.

         (c) During the term of his employment under this Agreement, Executive
shall during reasonable business hours perform his duties hereunder (reasonable
sick leave and vacations excepted) and shall not during such term, without the
consent of the Board of Directors, engage, directly or indirectly, in any other
business for compensation or profit except that he may, with the approval of the
Board of Directors of the Corporation, serve as a director of any other
corporation which, on the advice of counsel for the Corporation, is not
considered to be in competition with the Corporation for purposes of the
antitrust laws, and he may receive compensation therefor.

Section 2. Compensation

         (a) As compensation for Executive's services under this Agreement, the
Corporation shall, commencing as of July 3, 2001, pay Executive a salary at the
rate of $2,000,000 per year, payable in bi-weekly installments.

         (b) As further compensation, Executive shall be eligible for awards
under the Honeywell International Inc. Incentive Compensation Plan for Executive
Employees (the "Incentive Plan") (and any plan which is a successor to that
plan) with a target bonus opportunity of at least 100 percent of salary.

         (c) As further compensation, Executive shall be eligible to receive
stock options under the 1993 Stock Plan for Employees of Honeywell International
Inc. and its Affiliates (the "Stock Plan") at such time as stock options are
granted to Senior Executives of the Corporation in such amounts as determined by
the Board of Directors of the Corporation.

Section 3. Life Insurance and Long-Term Disability Benefits

         The Corporation shall provide basic life insurance coverage for the
benefit of Executive in the amount of two times Executive's base salary.
Executive shall not be eligible for long-term disability benefits.

Section 4. Retirement Benefits

         (a) Executive's retirement benefit payments, as provided in accordance
with Section 4 of Executive's Agreement with the Corporation dated May 6, 1994,
as amended as of May 12, 1997 (the "Prior Agreement") shall be suspended during
the term of this Agreement; provided however that in the event that Executive's
employment with the Corporation is terminated by reason of death, the
Corporation will pay a survivor benefit to Executive's spouse in accordance with
Section 4(b) of the Prior Agreement.

         (b) As of the [first day of the month] following termination of this
Agreement, retirement benefit payments to Executive shall resume. Such benefits
shall be determined in accordance with the terms of Section 4 of Executive's
Prior Agreement, provided, however, that "final average compensation" shall mean
the average of Executive's highest three years' total compensation, and that,
notwithstanding any provision of Section 4 of the Prior Agreement to the
contrary, a "year" shall mean a calendar year with respect to periods of
employment covered by the Prior Agreement, and shall mean the highest paid 12
consecutive month period (or pro-rata portion thereof in the event that
Executive terminates his employment prior to expiration of this Agreement) with
respect to Executive's period of employment after July 3, 2001; and further
provided that such retirement benefit payments shall be offset by any retirement
benefit payments already made to Executive.

Section 5. Early Termination

         In the event of the termination of Executive's employment by the
Corporation prior to expiration of this Agreement, the Corporation shall
continue to provide Executive with compensation, benefits and other compensation
arrangements described herein for the balance of the outstanding term of this
Agreement.

Section 6. Participation in Other Benefit Plans and Compensation Arrangements

         While employed by the Corporation during the term of this Agreement,
Executive shall be entitled to participate in each of the Corporation's plans
for the benefit of its salaried employees and in all other compensation
arrangements or programs which are or may hereafter be made available to the
senior executives of the Corporation, other than Severance Plans or
tax-qualified defined benefit pension plans sponsored by the Corporation. It is
anticipated that Executive will incur expenses necessary to the discharge of his
duties hereunder, and the Corporation shall reimburse Executive for those
expenses, in accordance with its established policies and such other
arrangements as may be approved by the Corporation from time to time.

Section 7. Resolution of Disputes

         Any disputes arising under or in connection with this Agreement shall,
at the election of Executive, be resolved by arbitration, to be held in
Manhattan, in accordance with the rules and procedures of the American
Arbitration Association. All costs, fees and expenses of any arbitration in
connection with this Agreement that results in any decision requiring the

Corporation to make a payment to Executive shall be borne by, and be the
obligation of, the Corporation.

Section 8. Survivorship

         The respective rights and obligations of the parties hereunder shall
survive any termination of Executive's employment to the extent necessary to
effect the intended preservation of such rights and obligations.

Section 9. Entire Agreement, Governing Law

         (a) This Agreement embodies the entire agreement of the parties hereto,
and it may be modified only by an agreement in writing signed by both parties.

         (b) This Agreement shall be interpreted and governed by the laws of the
State of New York without reference to principles of conflict of laws.

Section 10. Undertaking by Corporation in Case of Sale or Liquidation of Assets

         The Corporation agrees that, in the event of the sale or liquidation of
all or substantially all of the assets of the Corporation, it shall take
whatever action it legally can in order to cause the assignee or transferee of
such assets expressly to assume the liabilities, obligations and duties of the
Corporation hereunder.

Section 11. Post-Retirement Services

         Upon the earlier to occur of Executive's termination of employment by
the Corporation or expiration of this Agreement, the Corporation agrees to
provide Executive with such Post-retirement services, facilities and other
arrangements as were provided to Executive prior to his re-employment by the
Corporation in accordance with Section 11 of his Prior Agreement, for the
remainder of his life (and with respect to financial and tax planning services,
for the remainder of his spouse's life).

         IN WITNESS WHEREOF, Honeywell International Inc. has caused this
Agreement to be signed in its corporate name by one of its directors and its
corporate seal to be hereunto affixed and to be attested by its General Counsel,
and Lawrence A. Bossidy has hereunto set his hand, all as of the date and year
first above written.

[Corporate Seal]                         Honeywell International Inc.

Attest:

/s/ Peter M. Kreindler                   By: /s/ Robert P. Luciano
- ----------------------                   -------------------------
General Counsel                          Robert P. Luciano
                                         Director and Chairman of the
                                         Management Development and
                                         Compensation Committee

                                         /s/ Lawrence A. Bossidy
                                         -----------------------
                                         Lawrence A. Bossidy

                         1993 Stock Plan for Executives
               of Honeywell International Inc. and its Affiliates

                                OPTION AGREEMENT

         OPTION AGREEMENT made in Morris Township, New Jersey, as of the 3rd day
of July 2001 between Honeywell International Inc., a Delaware corporation (the
"Corporation") and LAWRENCE A. BOSSIDY, a regular full-time Executive of the
Corporation or of a subsidiary of the Corporation (the "Executive").

         1. The Corporation has this day granted to the Executive the option
(the "Option") to purchase all or any part of an aggregate of 500,000 shares of
its common stock (the "Common Stock") under the 1993 Stock Plan for Executives
of Honeywell International Inc. and its Affiliates (the "Stock Plan"), subject
to the provisions of this Agreement. The Executive hereby accepts the grant and
agrees to be bound by the terms and conditions of this Agreement with respect
thereto, and acknowledges that awards under the Stock Plan are made at the sole
discretion of the Corporation and are not considered part of any contract of
employment with the Corporation or of the Executive's normal or expected
compensation or benefits package (except as otherwise expressly provided in a
written agreement between the Executive and the Corporation).

         2. The purchase price of the shares of Common Stock covered by the
Option shall be $36.27 per share.

         3. The Option must be exercised prior to the close of the New York
Stock Exchange ("NYSE") July 16, 2006; provided, however, if the NYSE is not
open for business on the date specified herein, such Option shall expire at the
close of the NYSE's next business day.

         4. The Option is a non-qualified Option for federal income tax
purposes.

         5. The Option shall become 100% vested and exercisable on July 16,
2002.

         6. Exercise of the Option is subject to the conditions that to the
extent required at the time of exercise (a) the shares of Common Stock covered
by the Option shall be duly listed, upon official notice of issuance, upon the
New York Stock Exchange, and (b) a Registration Statement under the Securities
Act of 1933 with respect to such shares shall be effective.

         7. The Option shall not be transferable by the Executive otherwise than
by will or the laws of descent and distribution, or by transfer to a member or
members of the Executive's immediate family as provided in paragraph 14 of the
Plan, and the Option may be exercised during the lifetime of the Executive only
by the Executive or by the Executive's guardian or legal representative or by an
immediate family member transferee.

         8. Nothing in this Agreement or the Stock Plan shall confer upon the
Executive any right to continue in the employ of the Corporation, any of its
subsidiaries or any parent or interfere in any way with the right of the
Corporation, any such subsidiary or parent to terminate such employment at any
time.

         9. The Executive understands that in order to comply with applicable
law or to properly administer the Corporation or its agents may hold and process
personal data of the Executive including the Executive's home address,
employment status, hire date, and termination date. The Executive expressly
consents to the use of such data by the Corporation (or its agents) and to any
transfer of such data outside the country in which the Executive performs
services or resides.

         10. Subject to the terms and conditions of this Agreement, the Option
may be exercised by contacting the Honeywell Stock Option Service Center,
managed by Salomon Smith Barney, at 1-888-723-3391 or 1-212-615-7876.

         11. The Corporation shall have the right, prior to the issuance of any
shares or the payment of cash in connection with the exercise of the Option, to
withhold or require payment by the Executive of any amounts necessary to satisfy
applicable tax requirements.

         12. Except as otherwise provided in this Agreement, the exercise of the
Option is subject to the provisions of the Stock Plan, as the Stock Plan may be
amended from time to time, and any rules and regulations which may be prescribed
thereunder, provided that, unless otherwise required by law, no amendment may,
without the consent of the Executive, adversely affect the rights of the
Executive under this Agreement. A copy of the Stock Plan, as in effect on the
date hereof, and the current prospectus have been delivered to the Executive,
receipt of which is hereby acknowledged by the Executive.

         13. The Executive has read and understands the Corporation's policy,
and is aware of and understands the Executive's obligations under federal
securities laws, in respect of trading in the Corporation's securities. The
Executive agrees not to use Salomon Smith Barney's "cashless exercise" program
(or any successor program) at any time when the Executive possesses material
nonpublic information with respect to the Corporation.

         14. The Corporation and the Executive agree that the validity,
performance, interpretation and other incidents of this Agreement shall be
governed by the law of the State of Delaware.

         IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
duly executed by its Chairman of the Management Development and Compensation
Committee, and the Executive has duly executed this Agreement, all as of the day
and year first above written.

                                                  Honeywell International Inc.

/s/ Lawrence A. Bossidy                       By: /s/ Robert A. Luciano
- -----------------------                           ----------------------------
Lawrence A. Bossidy                               Robert R. Luciano
                                                  Director and Chairman of the
                                                  Management Development and
                                                  Compensation Committee

                                                                   Exhibit 10.22

                           EARLY RETIREMENT AGREEMENT

         EARLY RETIREMENT AGREEMENT (this "Agreement"), dated as of July 3,
2001, by and between Honeywell International, Inc., a Delaware corporation (the
"Company"), and Michael R. Bonsignore ("Executive").

         WHEREAS, Executive has expressed his intention to retire from
employment with the Company and, in connection with his retirement, the Company
and Executive have determined to settle all of their respective rights and
obligations in respect of his Employment Agreement (as defined below) and other
matters pertaining to Executive's services with the Company;

         NOW, THEREFORE, in consideration of their mutual promises, the Company
and Executive agree as follows:

         1. Retirement and Resignation. Effective as of the date hereof (the
"Effective Date"), the Executive shall retire from active employment and hereby
resigns, effective as of the Effective Date, (i) as Chairman of the Board of
Directors and Chief Executive Officer of the Company and (ii) from employment
with and as a member of the Board of Directors of the Company and each of its
subsidiaries and affiliates.

         2. Provision of Consulting Services. During the period beginning on the
Effective Date and continuing until the second anniversary of the Effective Date
(the "Consulting Period"), the Executive shall provide consulting services
commensurate with his status and experience with respect to matters related to
strategic acquisitions as shall be reasonably requested from time to time by the
Chairman of the Board of Directors of the Company. The Executive shall provide
consulting services to Company as needed and when reasonably requested, provided
that, without his prior consent, Executive shall not be required to devote more
than 50 hours in any calendar month to the performance of any consulting
services hereunder. The Executive shall determine the time and location at which
he shall perform such services, subject to the right of the Company to
reasonably request by advance written notice that such services be performed at
a specific time and at a specific location. The Executive shall honor any such
request unless he has a conflicting business commitment that would preclude him
from performing such services at the time and/or place requested by the Company,
and in such circumstances shall make reasonable efforts to arrange a mutually
satisfactory alternative. The Company shall use its reasonable best efforts not
to require the performance of consulting services in any manner that
unreasonably interferes with any other business activity of the Executive.

         3. Cancellation of the Employment Agreement. The Executive and the
Company are parties to an Employment Agreement (the "Employment

                                       1

Agreement"), dated and effective as of December 1, 1999. The term of the
Employment Agreement would have expired December 31, 2004. The Employment
Agreement is hereby canceled and the parties shall have no further obligations
to each other thereunder except as specifically provided in this Agreement.

         4. Unpaid Accrued Benefits. The Company shall promptly pay to the
Executive any portion of the Executive's base salary, and accrued but unused
vacation, through the Effective Date that has not yet been paid. The Executive
shall receive second quarter 2001 dividends with respect to his Restricted Units
(as defined in the Employment Agreement). In addition, Executive shall be paid,
at the time annual cash bonuses are paid to other senior executive officers of
the Company in accordance with the Company's Incentive Compensation Plan for
Executive Employees, a prorated annual cash bonus in an amount equal to the
product of (i) the annual cash bonus that would have been payable to Executive
for 2001 under such plan had Executive not terminated his employment with the
Company based solely on the Company's performance factor (and without regard to
any other adjustment permitted under such plan) times (ii) a fraction, the
numerator of which is the number of days during 2001 prior to and including the
date of Executive's retirement in accordance with Section 1, and the denominator
of which is 365. The Company shall also pay or provide to the Executive all
compensation and benefits due and payable to the Executive, or as to which the
Executive has vested rights (including, without limitation, rights as a retiree
of the Company based on his age and service), in accordance with the terms and
conditions of the Company's compensation and benefit plans, programs or
arrangements as in effect immediately prior to the Effective Date (except as
otherwise expressly provided in the Agreement).

         5. Retirement Benefits.

         (a) Separation Payment. Executive shall be entitled to a separation
payment (the "Separation Payment") in an amount equal to three times the sum of
his annual base salary, as in effect immediately prior to the Effective Date,
plus his Minimum Target Bonus (as defined in the Employment Agreement). The
Separation Payment shall be paid in one lump-sum payment on January 2, 2002 (the
sum of Executive's annual base salary and Minimum Target Bonus is hereafter
referred to as his "Annual Cash Compensation").

         (b) SERP Benefit.

                  (i) Subject to the terms and conditions set forth herein, the
         Executive shall receive a supplemental retirement benefit (the "SERP
         Benefit"), in the form of an unreduced 100% joint and survivor annuity
         for his life and that of his current spouse, with the annual benefit
         equal to (1) the product of (A) 70% times (B) the Executive's Annual
         Cash Compensation reduced by (2) the actuarial equivalent value of the
         aggregate annual vested benefit (expressed as a life annuity commencing
         on the third anniversary of the date hereof) payable to the Executive
         under the terms of

                                       2

         any and all "defined benefit plans" (as defined in Section 3(35) of the
         Employee Retirement Income Security Act of 1974, as amended), including
         any excess benefit or supplemental retirement plans or agreements,
         whether or not heretofore funded, maintained by the Company or any of
         its subsidiaries or affiliates. The actuarial present value of the SERP
         Benefit shall be paid to the Executive (or, if he shall not survive, to
         his spouse, if then living, or otherwise to his estate) in one lump sum
         on January 2, 2002. The lump sum amount shall be calculated in
         accordance with Section 4.3 of the Company's Supplemental Executive
         Retirement Program for Executives in Career Band 6 and Above, but
         applying the discount rate (5.78%) applicable thereunder for lump sum
         payments to be paid on the Effective Date.

                  (ii) Notwithstanding anything in Section 4(b)(i) to the
         contrary, if the Company publicly announces that (x) it has entered
         into a definitive agreement which, if consummated, would result in a
         change in the ownership or effective control of the Company or in the
         ownership of a substantial portion of the assets of the Company, or (y)
         it has adopted a plan of reorganization or similar plan, which, if
         consummated, - would result in the distribution of a substantial
         portion of the value of the Company's assets to its shareholders, the
         Executive may, by written notice to the Company prior to the date that
         is 30 days after the date on which such announcement is made, elect to
         receive the SERP Benefit on the date such transaction or such
         reorganization is consummated. The Company shall use its reasonable
         best efforts to provide written notice to the Executive of such
         announcement within five business days of the date on which such
         announcement is made.

                  (iii) The Executive has heretofore executed a Promissory Note
         (the "Promissory Note"), dated January 2, 2001, in favor of the
         Company. The loan evidenced by the Promissory Note was made by the
         Company to the Executive to partially offset the Executive's income tax
         liability resulting from the Company's funding of a portion of the SERP
         Benefit in 2000. The Executive agrees to pay to the Company, within 60
         days following the commencement of the payment of the SERP Benefit (the
         date on which the Executive makes such payment, the "Loan Repayment
         Date"), the then principal amount outstanding under the Promissory
         Note. Any interest accrued under the Promissory Note as of the
         Effective Date is hereby forgiven and, from and after the Effective
         Date, no interest shall accrue in respect of any unpaid principal. On
         the Loan Repayment Date, the Company shall pay to the Executive an
         amount equal to the interest on $464,000 (which amount represents the
         income tax liability paid by the Executive in excess of the amount
         loaned by the Company) at a rate of 6% per annum compounded
         semi-annually on June 30 and December 31, for the period beginning on
         April 15, 2001 and ending on the Loan Repayment Date (such amount the
         "Interest Payment"). The Company shall also pay to the Executive an
         additional amount or amounts as a gross-up for any income tax liability
         incurred by the

                                       3

         Executive as a result of the operation of this Section 4(b)(iii)
         (including any income recognized by reason of the gross-up obligation
         set forth in this sentence) or the deemed income recognition to the
         Executive under Section 7872 of the Code in respect of the period after
         the Effective Date during which the Promissory Note remains outstanding
         and no interest is accrued in respect thereof.

         (c) Retirement Perquisites. From and after the Effective Date and
continuing during his lifetime, the Company agrees to provide the Executive with
facilities, services and other arrangements substantially comparable to those
provided to him during his service as Chief Executive Officer, including office
and clerical support, executive transportation and other security services,
financial and tax planning services, continued access to certain other general
facilities and services and reimbursements for properly documented expenses, if
any, incurred on behalf of the Company and at the request of his successor, but
excluding the use of Company-owned aircraft for personal travel.

         (d) Benefits Continuation. For the three year period beginning on the
Effective Date, the Company shall also provide the Executive and his eligible
dependents, if applicable; all benefits (other than participation in any defined
benefit pension plan or any plan providing short-term or long-term disability
benefits or business travel accident insurance) that would otherwise have been
made available to the Executive under the terms of the Company's compensation
and benefit plans, programs or arrangements had the Executive remained employed
as a senior officer until the third anniversary of the Effective Date. Without
limiting the generality of the forgoing, until the third anniversary of the
Effective Date, the Executive shall be entitled to a continuation of (x) any
relocation benefit the Executive is receiving as of the Effective Date in
connection with his relocation from Minneapolis, Minnesota to the New Jersey/New
York area and (y) coverage under the Executive Life Insurance policy as in
effect on the Effective Date.

         (e) Treatment of Equity Awards. All of the Executive's outstanding
equity awards shall be treated in accordance with the terms of the plan and
agreements evidencing such equity awards, including, without limitation, the
Employment Agreement; provided, however, that the Performance Option (as defined
in the Employment Agreement) and the Restricted Units shall be canceled as of
the Effective Date, and the Executive shall have no right to receive any payment
in respect of such Performance Option or Restricted Units except as specifically
provided in this agreement.

         (f) Tax Indemnity. Notwithstanding anything in this Agreement to the
contrary, the provisions of Section 5(d) of the Employment Agreement shall
remain in full force and effect as though incorporated herein and made a part
hereof.

                                       4

         (g) Deferred Salary and Incentive Compensation. The Executive's
participation in the deferred incentive and deferred salary program shall end as
of the Effective Date; provided, however, that previously deferred compensation
shall be paid in accordance with the Executive's election. The Executive shall
continue to earn the 11% rate on his bonus and salary deferrals made prior to
the Effective Date.

         (h) No Mitigation. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced, regardless of whether the Executive obtains other
employment.

         6. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies and
their respective businesses that the Executive obtained during the Executive's
employment by the Company or any of its affiliated companies and that is not
public knowledge (other than as a result of the Executive's violation of this
Section 6) ("Confidential Information"). The Executive shall not communicate,
divulge or disseminate Confidential Information at any time, except with the
prior written consent of the Company or as otherwise required by law or legal
process.

         7. Competition; Solicitation. For two years after the Effective Date,
the Executive will not, without the written consent of the Board of Directors,
directly or indirectly, (i) knowingly engage or be interested in (as owner,
partner, stockholder, employee, director, officer, agent, consultant or
otherwise), with or without compensation, any business which is in competition
with any line of business actively being conducted on the Effective Date by the
Company or any of its subsidiaries, and (ii) hire any person who was employed by
the Company or any of its subsidiaries or affiliates (other than persons
employed in a clerical or other nonprofessional position) within the six-month
period preceding the date of such hiring, or solicit, entice, persuade or induce
any person or entity doing business with the Company and its subsidiaries and
affiliates, to terminate such relationship or to refrain from extending or
renewing the same. Nothing herein, however, will prohibit the Executive from
acquiring or holding not more than one percent of any class of publicly traded
securities of any such business; provided that such securities entitle the
Executive to no more than one percent of the total outstanding votes entitled to
be cast by security holders of such business in matters on which such security
holders are entitled to vote.

         8. Cooperation and Nondisclosure. Each of the Executive and the Company
agree to cooperate fully with the other party hereto in any matters that have
given or may give rise to a legal claim against such other party and of which
the Executive or the Company, as the case may be, is knowledgeable. This
requires the Executive or the Company, as the case may be, without limitation,
to (1) make himself or itself available upon reasonable request to provide
information and assistance

                                       5

to the other party on such matters without additional compensation, except for
out of pocket costs, provided however that reasonable compensation shall be
provided as mutually agreed, if such assistance requires a significant amount of
time, (2) maintain the confidentiality of all privileged or confidential
information of the other party, including without limitation attorney-client
privileged communications and attorney work product, unless disclosure is
expressly authorized by the other party, and (3) notify the other party promptly
of any requests to the Executive or the Company, as the case may be, for
information related to any pending or potential legal claim or litigation
involving the other party, reviewing any such request with the Executive or a
designated representative of the Company, as the case may be, prior to
disclosing any such information, and permitting the Executive or a
representative of the Company, as the case may be, to be present during any
communication of such information. To the extent that the Executive is required
to provide assistance to the Company on such matters, the Company will provide
appropriate legal counsel for the Executive.

         9. Non-Disparagement. The Executive agrees not to make disparaging or
derogatory comments about, or to otherwise disparage, demean or impugn the
reputation of the Company, its officers, directors, employees, or consultants or
their respective families, and the Company agrees not to make disparaging or
derogatory comments about, or to otherwise disparage, demean or impugn the
reputation of the Executive or his family.

         10. Release.

         (a) Additional Consideration. The Company offers the Executive the
benefits provided under Section 4 hereof (collectively, the "Retirement
Benefits") in exchange and consideration for the Executive's entering into this
Agreement. By signing this Agreement, Executive agrees that (i) the Separation
Payment is in full payment of all benefits to which he may be entitled under any
current or former severance pay plans or policies or agreements sponsored by the
Company or any of its subsidiaries or affiliates, (ii) at least a substantial
portion of such Retirement Benefits (the "Additional Consideration") is in
addition to any other benefit to which he may otherwise be entitled under any
current or former sponsored, insurance, savings, employee stock ownership,
disability, early retirement, pension or other benefit plans or policies of the
Company or any of its subsidiaries or affiliates and (iii) the Additional
Consideration is a valuable benefit to which he is not otherwise entitled.

         (b) Executive's Release. In exchange for the Additional Consideration,
Executive hereby waives and hereby releases, knowingly and willingly, the
Company, its subsidiaries, affiliates, successors and predecessors and its
employees, agents, directors and officers, past and present (collectively, the
"Company Releasees"), from the Released Claims (as defined herein). The
Executive acknowledges and understands that, except as expressly provided
herein, this paragraph is intended to prevent him from making any claims against
the Company

                                       6

Releasees regarding any Released Claim. In exchange for the Additional
Consideration, the Executive agrees and covenants not to sue and not to bring an
action of any kind against the Company Releasees before any court or other forum
related to the Released Claims. If the Executive breaches the terms of this
Section 10(b) by bringing an action seeking personal relief for himself against
the Company, he agrees to pay the Company's attorneys' fees it incurs in
defending against such suit.

         (c) Definition of Released Claims. For purposes of this Section 10, the
term "Released Claims" means any and all claims of any nature whatsoever
Executive may have arising out of his employment and/or the termination of his
employment with the Company, known or unknown, including but not limited to any
claims he may have under federal, state or local employment, labor, or
anti-discrimination laws, statutes and case law. Released Claims specifically
include claims arising under the federal Age Discrimination in Employment Act,
the Employee Retirement Income Security Act ("ERISA"), any New Jersey
employment, labor, or anti-discrimination law, statute or case law and any and
all other applicable state, county or local statutes, ordinances or regulations
including claims for attorneys' fees. Notwithstanding the forgoing, this release
does not apply to, and the term Released Claims does not include, (i) claims for
benefits under benefit plans (other than any plan providing severance or other
termination benefits) sponsored or maintained by the Company or any of its
subsidiaries or affiliates, whether or not subject to ERISA, (ii) claims arising
out of obligations expressly undertaken in this Agreement, and (iii) claims
arising out of any act or omission occurring after the date of this Agreement.

         (d) Company's Release. In consideration of the Company's execution and
performance under this Agreement, the Company hereby waives and releases the
Executive from and agrees to defend and indemnify to the fullest extent
permitted under applicable law the Executive against, all claims, actions,
liabilities, damages, costs, and expenses (including attorneys' fees) arising
from his performance of duties, in good faith, in the normal course of business
and within the proper scope of his employment duties and responsibilities during
his period of employment with the Company. Notwithstanding the forgoing, (i) the
Company will not provide the indemnity to the Executive with respect to any
settlement he may enter into with any claimant unless all of the terms of such
settlement have previously been approved in writing by the Company, and (ii) the
Company will not reimburse the Executive for the costs and expense (including
attorneys' fees) of any claim, counterclaim, or cross-claim brought by the
Executive or on his behalf unless approved in writing by the Company. It is
expressly understood that, as a condition of the Company's agreement to
indemnify the Executive, the Executive agrees to cooperate fully with the
investigation, defense and settlement of any pending or future claims or actions
brought against the Company.

         11. Dispute Resolution; Attorneys' Fees. All disputes arising under or
related to the employment or retirement of the Executive or the provisions of
this Agreement shall be settled by arbitration under

                                       7

the rules of the American Arbitration Association then in effect, such
arbitration to be held in Morristown, New Jersey, as the sole and exclusive
remedy of either party and judgment on any arbitration award may be entered in
any court of competent jurisdiction. The Company agrees to pay, as incurred, to
the fullest extent permitted by law, all legal fees and expenses that the
Executive may reasonably incur as a result of any contest (regardless of the
outcome) by the Company, the Executive or others of the validity or
enforceability of or liability under, or otherwise involving, any provision of
this Agreement, together with interest on any delayed payment at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Code. The Company
shall also pay all reasonable legal fees and expenses incurred by the Executive
in connection with the preparation and negotiation of this Agreement.

         12. Successors.

         (a) This Agreement is personal to the Executive and, without the prior
written consent of the Company, shall not be assignable by the Executive (except
that Executive's rights to all or any portion the Retirement Benefits payable
hereunder may transfer upon his death in the manner provided herein or by will
or pursuant to the laws of descent and distribution). This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal representatives.

         (b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.

         (c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, the "Company" shall mean
both the Company as defined above and any such successor that assumes and agrees
to perform this Agreement, by operation of law or otherwise.

         13. Miscellaneous.

         (a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

         (b) All notices and other communications under this Agreement shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

                                       8

         If to the Executive:

                  -----------------------------
                  -----------------------------
                  -----------------------------

         If to the Company:

                  Honeywell International, Inc.
                  101 Columbia Road
                  Morristown, NJ 07962
                  Attention:  General Counsel

or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 13. Notices and communications
shall be effective when actually received by the addressee.

         (c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.

         (d) Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.

         (e) The Executive's or the Company's failure to insist upon strict
compliance with any provisions of, or to assert, any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.

         (f) The rights and benefits of the Executive under this Agreement may
not be anticipated, assigned, alienated or subject to attachment, garnishment,
levy, execution or other legal or equitable process except as required by law.
Any attempt by the Executive to anticipate, alienate, assign, sell, transfer,
pledge, encumber or charge the same shall be void. Payments hereunder shall not
be considered assets of the Executive in the event of insolvency or bankruptcy.

         (g) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.

         (h) Executive acknowledges and certifies that he:

         o        has read and understands all of the terms of this Agreement
                  and does not rely on any representation or statement, written
                  or oral, not set forth in this Agreement;

                                       9

         o        has had a reasonable period of time to consider this
                  Agreement;

         o        is signing this Agreement knowingly and voluntarily;

         o        has been advised in writing to consult with an attorney before
                  signing this Agreement;

         o        was provided with the right to consider the terms of this
                  Agreement for 21 days and, by executing this Agreement, waives
                  any and all rights to the balance of the 21 day review period;
                  and

         o        has the right to revoke this Agreement within seven days after
                  executing this Agreement, by providing written notice of
                  revocation to the Secretary of the Company. If the Executive
                  revokes this Agreement during this seven-day period, it shall
                  become null and void in its entirety and the Employment
                  Agreement shall be deemed to continue in full force and effect
                  as though this Agreement had never been executed.

         IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of its Board, the Company has caused this
Agreement to be executed in its name on its behalf, all as of the day and year
first above written.

                                                Honeywell International, Inc.

         [Seal]

         Attest:

         /s/ Peter M. Kreindler                 By: /s/ Robert P. Luciano
         ----------------------                     ---------------------
         Peter M. Kreindler                            Robert P. Luciano
                                                       Director and Chairman
                                                       of the Management
                                                       Development and
                                                       Compensation Committee

                                           /s/ Michael R. Bonsignore
                                           -------------------------
                                           Michael R. Bonsignore

                                       10

                                                                      Exhibit 15

August 13, 2001

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Commissioners:

We are aware that our report dated August 7, 2001 on our review of interim
financial information of Honeywell International Inc. (the "Company") as of and
for the period ended June 30, 2001 and included in the Company's quarterly
report on Form 10-Q for the quarter then ended is incorporated by reference in
the Company's Registration Statements on Forms S-8 (Nos. 33-09896, 33-51455,
33-55410, 33-58347, 333-57509, 333-57515, 333-57517, 333-57519, 333-83511,
333-88141, 333-31370, 333-34764, 333-49280, 333-57866, 333-57868 and 333-57870),
on Forms S-3 (Nos. 33-14071, 33-55425, 333-22355, 333-49455, 333-68847,
333-74075, 333-34760 and 333-45466) and on Form S-4 (No. 333-82049) and in
General Electric Company's Registration Statement on Form S-4, dated December 4,
2000.

Very truly yours,

PricewaterhouseCoopers LLP