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, 2003
                                                 -------------
                                       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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). 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, 2003
- --------------------                                          ------------------
    $1 par value                                              860,054,513 shares

                          Honeywell International Inc.

                                      Index

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

   Item 1. Financial Statements:

      Consolidated Balance Sheet - June 30, 2003 and December 31,
         2002                                                               3

      Consolidated Statement of Operations - Three and Six Months
         Ended June 30, 2003 and 2002                                       4

      Consolidated Statement of Cash Flows - Six Months Ended
         June 30, 2003 and 2002                                             5

      Notes to Financial Statements                                         6

      Report of Independent Auditors                                       20

   Item 2. Management's Discussion and Analysis of Financial
      Condition and Results of Operations                                  21

   Item 3. Quantitative and Qualitative Disclosures About
      Market Risk                                                          32

   Item 4. Controls and Procedures                                         32

Part II. - Other Information

   Item 1. Legal Proceedings                                               32

   Item 6. Exhibits and Reports on Form 8-K                                38

Signatures                                                                 39

- ----------
     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

                          PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

                          Honeywell International Inc.
                           Consolidated Balance Sheet
                                   (Unaudited)

                                                  June 30,   December 31,
                                                    2003         2002
                                                  --------   ------------
                                                   (Dollars in millions)
                                                         
ASSETS
Current assets:
   Cash and cash equivalents                      $ 2,626      $ 2,021
   Accounts, notes and other receivables            3,353        3,264
   Inventories                                      3,055        2,953
   Deferred income taxes                            1,592        1,296
   Other current assets                               490          661
                                                  -------      -------
      Total current assets                         11,116       10,195

Investments and long-term receivables                 649          624
Property, plant and equipment - net                 4,222        4,055
Goodwill                                            5,717        5,698
Other intangible assets - net                       1,087        1,074
Insurance recoveries for asbestos
   related liabilities                              1,370        1,636
Deferred income taxes                                 303          533
Prepaid pension benefit cost                        2,775        2,675
Other assets                                        1,294        1,069
                                                  -------      -------

      Total assets                                $28,533      $27,559
                                                  =======      =======

LIABILITIES
Current liabilities:
   Accounts payable                               $ 2,093      $ 1,912
   Short-term borrowings                              147           60
   Commercial paper                                   188          201
   Current maturities of long-term debt                53          109
   Accrued liabilities                              4,168        4,292
                                                  -------      -------
      Total current liabilities                     6,649        6,574

Long-term debt                                      5,042        4,719
Deferred income taxes                                 512          419
Postretirement benefit obligations
   other than pensions                              1,685        1,684
Asbestos related liabilities                        2,394        2,700
Other liabilities                                   2,512        2,538

SHAREOWNERS' EQUITY
Capital - common stock issued                         958          958
        - additional paid-in capital                3,443        3,409
Common stock held in treasury, at cost             (3,674)      (3,783)
Accumulated other nonowner changes                   (689)      (1,109)
Retained earnings                                   9,701        9,450
                                                  -------      -------
      Total shareowners' equity                     9,739        8,925
                                                  -------      -------

      Total liabilities and shareowners' equity   $28,533      $27,559
                                                  =======      =======

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

                                       3

                          Honeywell International Inc.
                      Consolidated Statement of Operations
                                   (Unaudited)

                                          Three Months Ended    Six Months Ended
                                               June 30,             June 30,
                                          ------------------   -----------------
                                            2003     2002        2003      2002
                                           ------   ------     -------   -------
                                                   (Dollars in millions,
                                                 except per share amounts)
                                                             
Net sales                                  $5,749   $5,651     $11,148   $10,850
                                           ------   ------     -------   -------
Costs, expenses and other
   Cost of goods sold                       4,514    4,431       8,754     8,504
   Selling, general and administrative
      expenses                                762      660       1,465     1,277
   (Gain) loss on sale of non-strategic
      businesses                              (31)     166         (31)       41
   Business impairment charges                 --       --          --        43
   Equity in (income) loss of
      affiliated companies                     (6)      (3)         (4)      (10)
   Other (income) expense                     (24)      (6)        (27)      (22)
   Interest and other financial charges        87       88         171       175
                                           ------   ------     -------   -------
                                            5,302    5,336      10,328    10,008
                                           ------   ------     -------   -------

Income before taxes and cumulative
   effect of accounting change                447      315         820       842
Tax expense (benefit)                         128     (144)        227         7
                                           ------   ------     -------   -------

Income before cumulative effect of
   accounting change                          319      459         593       835
Cumulative effect of accounting change         --       --         (20)       --
                                           ------   ------     -------   -------

Net income                                 $  319   $  459     $   573   $   835
                                           ======   ======     =======   =======

Earnings per share of common stock -
   basic:
   Income before cumulative effect of
      accounting change                    $ 0.37   $ 0.56     $  0.69   $  1.02
   Cumulative effect of accounting
      change                                   --       --       (0.02)       --
                                           ------   ------     -------   -------
   Net income                              $ 0.37   $ 0.56     $  0.67   $  1.02
                                           ======   ======     =======   =======

Earnings per share of common stock -
   assuming dilution:
   Income before cumulative effect of
      accounting change                    $ 0.37   $ 0.56     $  0.69   $  1.02
   Cumulative effect of accounting
      change                                   --       --       (0.02)       --
                                           ------   ------     -------   -------
   Net income                              $ 0.37   $ 0.56     $  0.67   $  1.02
                                           ======   ======     =======   =======

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,
                                                              ---------------------
                                                                 2003      2002
                                                                ------    ------
                                                              (Dollars in millions)
                                                                    
Cash flows from operating activities:
   Net income                                                   $  573    $  835
   Adjustments to reconcile net income to net cash provided
      by operating activities:
      Cumulative effect of accounting change                        31        --
      (Gain) loss on sale of non-strategic businesses              (31)       41
      Repositioning and other charges                               34       190
      Business impairment charges                                   --        43
      Insurance receipts for asbestos related liabilities          477        55
      Asbestos related liability payments                         (388)      (50)
      Depreciation                                                 290       340
      Undistributed earnings of equity affiliates                   (4)      (23)
      Deferred income taxes                                        134        35
      Pension contributions - U.S. plans                          (170)       --
      Other                                                         65      (251)
      Changes in assets and liabilities, net of the effects
         of acquisitions and divestitures:
         Accounts, notes and other receivables                     (80)      (77)
         Inventories                                               (95)       42
         Other current assets                                       18       (26)
         Accounts payable                                          175        (8)
         Accrued liabilities                                        (3)      (19)
                                                                ------    ------
Net cash provided by operating activities                        1,026     1,127
                                                                ------    ------

Cash flows from investing activities:
   Expenditures for property, plant and equipment                 (276)     (299)
   Proceeds from disposals of property, plant and
      equipment                                                     --        21
   Cash paid for acquisitions                                     (122)      (19)
   Proceeds from sales of businesses                                90       186
   Decrease in short-term investments                               --         7
                                                                ------    ------
Net cash (used for) investing activities                          (308)     (104)
                                                                ------    ------

Cash flows from financing activities:
   Net increase (decrease) in commercial paper                     (13)      237
   Net increase (decrease) in short-term borrowings                 78       (62)
   Proceeds from issuance of common stock                           31        34
   Payments of long-term debt                                      (70)     (382)
   Cash dividends on common stock                                 (322)     (306)
                                                                ------    ------
Net cash (used for) financing activities                          (296)     (479)
                                                                ------    ------

Effect of foreign exchange rate changes on cash and cash
   equivalents                                                     183        39
                                                                ------    ------

Net increase in cash and cash equivalents                          605       583
Cash and cash equivalents at beginning of year                   2,021     1,393
                                                                ------    ------
Cash and cash equivalents at end of period                      $2,626    $1,976
                                                                ======    ======

    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, 2003 and the
results of operations for the three and six months ended June 30, 2003 and 2002
and cash flows for the six months ended June 30, 2003 and 2002. The results of
operations for the three- and six-month periods ended June 30, 2003 should not
necessarily be taken as indicative of the results of operations that may be
expected for the entire year 2003. Certain prior year amounts have been
reclassified to conform with the current year presentation.

     The financial information as of June 30, 2003 should be read in conjunction
with the financial statements contained in our Annual Report on Form 10-K for
2002.

NOTE 2. In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 143, "Accounting for Asset
Retirement Obligations" (SFAS No. 143). SFAS No. 143 requires recognition of the
fair value of obligations associated with the retirement of tangible long-lived
assets when there is a legal obligation to incur such costs. Upon initial
recognition of a liability the cost is capitalized as part of the related
long-lived asset and depreciated over the corresponding asset's useful life.
SFAS No. 143 primarily impacts our accounting for costs associated with the
future retirement of nuclear fuel conversion facilities in our Specialty
Materials reportable segment. Upon adoption on January 1, 2003, we recorded an
increase in property, plant and equipment, net of $16 million and recognized an
asset retirement obligation of $47 million. This resulted in the recognition of
a non-cash charge of $31 million ($20 million after-tax, or $0.02 per share)
that is reported as a cumulative effect of an accounting change. This accounting
change is not expected to have a material impact on future results of
operations. Pro forma effects for the three- and six-month periods ended June
30, 2002, assuming adoption of SFAS No. 143 as of January 1, 2002, were not
material to net income or per share amounts.

     In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities" (FIN 46). FIN 46 provides guidance on
consolidation of variable interest entities and applies immediately to variable
interests created after January 31, 2003. FIN 46 will become applicable
effective July 1, 2003 for variable interest entities created before February 1,
2003. We do not expect that the adoption of FIN 46 will have a material effect
on our consolidated results of operations and financial position.

     In November 2002, the Emerging Issues Task Force (EITF) reached a consensus
on EITF Issue No. 00-21, "Accounting for Revenue Arrangements with Multiple
Deliverables." EITF Issue No. 00-21 provides guidance on when and how to
separate elements of an arrangement that may involve the delivery or performance
of multiple products, services and rights to use assets into separate units of
accounting. The guidance in the consensus is effective for revenue arrangements
entered into in fiscal periods beginning after June 15, 2003. We will adopt EITF
Issue No. 00-21 prospectively in the quarter beginning July 1, 2003. We do not
expect that the adoption of EITF Issue No. 00-21 will have a material effect on
our consolidated results of operations and financial position.

     In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN 45), which requires us to recognize a

                                       6

liability for the fair value of an obligation assumed by issuing a guarantee.
FIN 45 became effective for guarantees issued or modified on or after January 1,
2003, and did not have a material effect on our consolidated financial position
as of June 30, 2003 or our consolidated results of operations for the three and
six months ended June 30, 2003. As disclosed in Note 21 to our consolidated
financial statements in our 2002 Annual Report on Form 10-K, we have issued or
are a party to certain direct and indirect guarantees. At June 30, 2003, except
for the fact that we no longer guarantee the debt of Bendix Commercial Vehicle
Systems of $172 million, there has been no material change to these guarantees.

     The following table summarizes information concerning our recorded
obligations for product warranties and product performance guarantees:

                                                          Six Months Ended
                                                           June 30, 2003
                                                          ----------------
                                                             
Beginning of period                                             $217
Accruals for warranties/guarantees issued during period          104
Adjustments of pre-existing warranties/guarantees                 11
Settlement of warranty/guarantee claims                          (80)
                                                                ----
End of period                                                   $252
                                                                ====

NOTE 3. We account for our fixed stock option plans under Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB No. 25).
Under APB No. 25, there is generally no compensation cost recognized for our
fixed stock option plans, because the options granted under these plans have an
exercise price equal to the market value of the underlying stock at the grant
date. Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS No. 123) allows, but does not require, companies
to record compensation cost for fixed stock option plans using a fair value
based method. As permitted by SFAS No. 123, we elected to continue to account
for compensation cost for our fixed stock option plans using the intrinsic value
based method under APB No. 25. The following table sets forth pro forma
information as if compensation cost had been determined consistent with the
requirements of SFAS No. 123.

                                             Three Months Ended   Six Months Ended
                                                  June 30,            June 30,
                                             ------------------   ----------------
                                                2003    2002        2003    2002
                                               -----   -----       -----   -----
                                                               
Net income, as reported                        $ 319   $ 459       $ 573   $ 835
Deduct: Total stock-based employee
   compensation cost determined under fair
   value method for fixed stock option
   plans, net of related tax effects             (12)    (16)        (25)    (32)
                                               -----   -----       -----   -----
Pro forma net income                           $ 307   $ 443       $ 548   $ 803
                                               =====   =====       =====   =====

Earnings per share of common stock:
   Basic - as reported                         $0.37   $0.56       $0.67   $1.02
                                               =====   =====       =====   =====
   Basic - pro forma                           $0.36   $0.54       $0.64   $0.98
                                               =====   =====       =====   =====

Earnings per share of common stock:
   Assuming dilution - as reported             $0.37   $0.56       $0.67   $1.02
                                               =====   =====       =====   =====
   Assuming dilution - pro forma               $0.36   $0.54       $0.64   $0.98
                                               =====   =====       =====   =====

                                       7

                                                                   Three Months Ended   Six Months Ended
                                                                        June 30,            June 30,
                                                                   ------------------   ----------------
                                                                      2003    2002        2003    2002
                                                                     -----   ------      -----   ------
                                                                                     
The following sets forth fair value per share information,
   including related assumptions, used to determine compensation
   cost consistent with the requirements of SFAS No. 123:

Weighted average fair value per share of
   options granted during the period
   (estimated on grant date using
   Black-Scholes option-pricing model)                               $8.12   $14.24      $8.80   $12.79

Assumptions:
   Historical dividend yield                                           2.2%     1.9%       2.0%     1.9%
   Historical volatility                                              46.9%    43.9%      46.7%    43.7%
   Risk-free rate of return                                            2.9%     4.4%       2.9%     4.2%
   Expected life (years)                                               5.0      5.0        5.0      5.0

NOTE 4. Accounts, notes and other receivables consist of the following:

                                                       June 30,   December 31,
                                                         2003         2002
                                                       --------   ------------
                                                               
Trade                                                   $3,110       $3,064
Other                                                      405          347
                                                        ------       ------
                                                         3,515        3,411
Less - Allowance for doubtful
          accounts                                        (162)        (147)
                                                        ------       ------
                                                        $3,353       $3,264
                                                        ======       ======

NOTE 5. Inventories consist of the following:

                                                       June 30,   December 31,
                                                         2003         2002
                                                       --------   ------------
                                                               
Raw materials                                           $1,050       $  936
Work in process                                            840          804
Finished products                                        1,301        1,361
                                                        ------       ------
                                                         3,191        3,101
Less - Progress payments                                   (16)         (28)
       Reduction to LIFO cost basis                       (120)        (120)
                                                        ------       ------
                                                        $3,055       $2,953
                                                        ======       ======

                                       8

NOTE 6. The change in the carrying amount of goodwill for the six months ended
June 30, 2003 by reportable segment is as follows:

                                                                          Currency
                                                                         Translation
                         Dec. 31, 2002   Acquisitions   (Divestitures)    Adjustment   June 30, 2003
                         -------------   ------------   --------------   -----------   -------------
                                                                            
Aerospace                    $1,644           $--            $ --            $ 7           $1,651
Automation and
   Control Solutions          2,678            63              --             11            2,752
Specialty Materials             849             5             (80)            12              786
Transportation Systems          527            --              --              1              528
                             ------           ---            ----            ---           ------
                             $5,698           $68            $(80)           $31           $5,717
                             ======           ===            ====            ===           ======

Intangible assets are comprised of:

                                          June 30, 2003                     December 31, 2002
                              ----------------------------------   ----------------------------------
                                Gross                     Net       Gross                       Net
                              Carrying   Accumulated    Carrying   Carrying    Accumulated   Carrying
                               Amount    Amortization    Amount     Amount    Amortization    Amount
                              --------   ------------   --------   --------   ------------   --------
                                                                            
Intangible assets with
   determinable lives:
   Investments in Aerospace
      customer incentives      $  814        $(122)      $  692     $  769        $(107)      $  662
   Patents and trademarks         409         (289)         120        411         (286)         125
   Other                          417         (179)         238        433         (183)         250
                               ------        -----       ------     ------        -----       ------
                                1,640         (590)       1,050      1,613         (576)       1,037
Trademark with indefinite
   life                            46           (9)          37         46           (9)          37
                               ------        -----       ------     ------        -----       ------
                               $1,686        $(599)      $1,087     $1,659        $(585)      $1,074
                               ======        =====       ======     ======        =====       ======

     Amortization expense related to intangible assets was $31 and $29 million
for the six months ended June 30, 2003 and 2002, respectively. Amortization
expense related to intangible assets for 2003 to 2007 is expected to approximate
$60 million each year.

     We completed our goodwill and intangible assets impairment testing for our
reporting units as of March 31, 2003 and determined that there was no impairment
as of that date.

NOTE 7. Total nonowner changes in shareowners' equity consist of the following:

                                          Three Months Ended   Six Months Ended
                                               June 30,            June 30,
                                          ------------------   ----------------
                                              2003   2002        2003    2002
                                              ----   ----        ----   ------
                                                            
Net income                                    $319   $459        $573   $  835
Foreign exchange translation
   adjustments                                 270    242         363      246
Change in fair value of effective
   cash flow hedges                             29    (23)         57      (19)
                                              ----   ----        ----   ------
                                              $618   $678        $993   $1,062
                                              ====   ====        ====   ======

                                       9

NOTE 8.  Segment financial data follows:

                                           Three Months Ended    Six Months Ended
                                                June 30,             June 30,
                                           ------------------   -----------------
                                              2003     2002       2003      2002
                                             ------   ------    -------   -------
                                                              
Net Sales
Aerospace                                    $2,161   $2,204    $ 4,223   $ 4,293
Automation and Control Solutions              1,837    1,758      3,554     3,367
Specialty Materials                             823      870      1,600     1,628
Transportation Systems                          925      805      1,765     1,531
Corporate                                         3       14          6        31
                                             ------   ------    -------   -------
                                             $5,749   $5,651    $11,148   $10,850
                                             ======   ======    =======   =======

Segment Profit
Aerospace                                    $  224   $  364    $   442   $   671
Automation and Control Solutions                177      220        362       427
Specialty Materials                              28       34         38        42
Transportation Systems                          112      104        187       177
Corporate                                       (34)     (35)       (66)      (71)
                                             ------   ------    -------   -------
   Total segment profit                         507      687        963     1,246
                                             ------   ------    -------   -------
Gain (loss) on sale of non-strategic
   businesses                                    31     (166)        31       (41)
Business impairment charges                      --       --         --       (43)
Equity in income of affiliated companies          6        3          4        10
Other income                                     24        6         27        22
Interest and other financial charges            (87)     (88)      (171)     (175)
Repositioning and other charges included
   in cost of goods sold and selling,
   general and administrative expenses          (34)    (127)       (34)     (177)
                                             ------   ------    -------   -------

   Income before taxes and cumulative
      effect of accounting change            $  447   $  315    $   820   $   842
                                             ======   ======    =======   =======

                                       10

NOTE 9. The details of the earnings per share calculations for the three- and
six-month periods ended June 30, 2003 and 2002 follow:

                                     Three Months 2003            Six Months 2003
                                 -------------------------   -------------------------
                                                      Per                         Per
                                          Average    Share            Average    Share
                                 Income    Shares   Amount   Income    Shares   Amount
                                 ------   -------   ------   ------   -------   ------
                                                               
Income Before Cumulative
   Effect of Accounting Change
Earnings per share of common
   stock - basic                  $319     859.9     $0.37    $593     858.4     $0.69
Dilutive securities issuable
   in connection with stock
   plans                                     1.0                         0.8
                                  ----     -----     -----    ----     -----     -----
Earnings per share of common
   stock - assuming dilution      $319     860.9     $0.37    $593     859.2     $0.69
                                  ====     =====     =====    ====     =====     =====

Net Income
Earnings per share of common
   stock - basic                  $319     859.9     $0.37    $573     858.4     $0.67
Dilutive securities issuable
   in connection with stock
   plans                                     1.0                         0.8
                                  ----     -----     -----    ----     -----     -----
Earnings per share of common
   stock - assuming dilution      $319     860.9     $0.37    $573     859.2     $0.67
                                  ====     =====     =====    ====     =====     =====

                                     Three Months 2002            Six Months 2002
                                 -------------------------   -------------------------
                                                      Per                         Per
                                          Average    Share            Average    Share
                                 Income    Shares   Amount   Income    Shares   Amount
                                 ------   -------   ------   ------   -------   ------
                                                               
Net Income
Earnings per share of common
   stock - basic                  $459     819.4     $0.56    $835     818.2     $1.02
Dilutive securities issuable
   in connection with stock
   plans                                     3.9                         3.5
                                  ----     -----     -----    ----     -----     -----
Earnings per share of common
   stock - assuming dilution      $459     823.3     $0.56    $835     821.7     $1.02
                                  ====     =====     =====    ====     =====     =====

     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, 2003, the number of stock options not included in the computations were 43.7
and 44.3 million, respectively. For the three- and six-month periods ended June
30, 2002, the number of stock options not included in the computations were 22.4
and 24.7 million, respectively. These stock options were outstanding at the end
of each of the respective periods.

                                       11

NOTE 10. A summary of repositioning, business impairment and other charges
follows:

                                       Three Months Ended   Six Months Ended
                                             June 30,           June 30,
                                       ------------------   ----------------
                                           2003   2002        2003   2002
                                           ----   ----        ----   ----
                                                         
Severance                                  $ 22   $ 32        $ 22   $ 73
Asset impairments                            --     57          --     68
Exit costs                                    3     10           3     23
Reserve adjustments                         (23)   (31)        (23)   (43)
                                           ----   ----        ----   ----
   Total net repositioning charge             2     68           2    121
                                           ----   ----        ----   ----

Probable and resonably estimable
   environmental liabilities                 32     --          32     --
Business impairment charges                  --     --          --     43
Customer claims and settlements
   of contract liabilities                   --     29          --     29
Write-offs of receivables,
   inventories and other assets              --     40          --     40
                                           ----   ----        ----   ----

   Total net repositioning, business
      impairment and other charges         $ 34   $137        $ 34   $233
                                           ====   ====        ====   ====

     The following table summarizes the pretax distribution of total net
repositioning, business impairment and other charges by income statement
classification:

                                        Three Months Ended   Six Months Ended
                                             June 30,            June 30,
                                        ------------------   ----------------
                                            2003   2002         2003   2002
                                            ----   ----         ----   ----
                                                           
Cost of goods sold                           $29   $127          $29   $173
Selling, general and administrative
   expenses                                    5     --            5      4
Business impairment charges                   --     --           --     43
Equity in (income) loss of affiliated
   companies                                  --     10           --     13
                                             ---   ----          ---   ----
                                             $34   $137          $34   $233
                                             ===   ====          ===   ====

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

                                   Three Months Ended   Six Months Ended
                                        June 30,            June 30,
                                   ------------------   ----------------
                                       2003   2002         2003   2002
                                       ----   ----         ----   ----
                                                      
Aerospace                              $(2)   $  6         $(2)   $  6
Automation and Control Solutions        (8)     22          (8)     61
Specialty Materials                      7     107           7     132
Transportation Systems                  --       2          --      30
Corporate                               37      --          37       4
                                       ---    ----         ---    ----
                                       $34    $137         $34    $233
                                       ===    ====         ===    ====

     In the second quarter of 2003, we recognized a charge of $25 million mainly
for severance costs related to workforce reductions of 448 manufacturing and
administrative positions principally in our Specialty Materials and Aerospace
reportable segments. Also, $23 million of previously established accruals,
mainly for severance, were returned to income in the second quarter of 2003, due
to fewer employee separations than originally anticipated associated with
certain 2002

                                       12

repositioning actions, resulting in reduced severance liabilities in our
Automation and Control Solutions, Aerospace and Specialty Materials reportable
segments.

     As disclosed in our 2002 Annual Report on Form 10-K, we recognized
repositioning charges totaling $453 million in 2002 ($99 and $164 million were
recognized in the three- and six-month periods ended June 30, 2002). The
components of the charges included severance costs of $270 million, asset
impairments of $121 million and other exit costs of $62 million. Severance costs
were related to announced workforce reductions of approximately 8,100
manufacturing and administrative positions across all of our reportable segments
and our UOP process technology joint venture, of which approximately 5,200
positions have been eliminated as of June 30, 2003. These actions are expected
to be substantially completed by December 31, 2003. Also, $76 million of
previously established severance accruals were returned to income in 2002, due
to fewer employee separations than originally anticipated and higher than
expected voluntary employee attrition resulting in reduced severance liabilities
in our Aerospace, Automation and Control Solutions and Specialty Materials
reportable segments.

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

                               Severance      Asset       Exit
                                 Costs     Impairments   Costs   Total
                               ---------   -----------   -----   -----
                                                     
Balance at December 31, 2002     $325          $--       $ 81    $406
2003 charges                       22           --          3      25
2003 usage                        (78)          --        (15)    (93)
Adjustments                       (20)          --         (3)    (23)
                                 ----          ---       ----    ----

Balance at June 30, 2003         $249          $--       $ 66    $315
                                 ====          ===       ====    ====

     In the second quarter of 2003, we recognized other charges of $32 million
for legacy environmental matters deemed probable and reasonably estimable in the
second quarter of 2003 including the matter entitled Interfaith Community
Organization, et al. v. Honeywell International Inc., et al. as discussed in
Note 12.

     In the second quarter of 2002, we recognized other charges consisting of
customer claims and settlements of contract liabilities of $29 million and
write-offs of receivables, inventories and other assets of $40 million. Such
charges related mainly to our Advanced Circuits business which was sold in the
fourth quarter of 2002, bankruptcy of a customer in our Aerospace reportable
segment, and customer claims in our Industry Solutions business.

     In the first quarter of 2002, we recognized an impairment charge of $27
million related to the write-down of property, plant and equipment of our
Friction Materials business, which is classified as assets held for disposal in
Other Current Assets (a plan of disposal of Friction Materials was adopted in
2001; in January 2003, we entered into a letter of intent to sell this business
to Federal-Mogul Corp. - See Note 12). In the first quarter of 2002, we also
recognized an asset impairment charge of $16 million related to the planned
shutdown of a chemical manufacturing facility in our Specialty Materials
reportable segment.

NOTE 11. In May 2003, we completed the sale of Specialty Materials' Engineering
Plastics (Engineering Plastics) business to BASF in exchange for BASF's nylon
fiber business and $90 million in cash. This transaction is not expected to have
a material impact on Specialty Materials' sales or segment profit in 2003. The
sale of Engineering Plastics resulted in a pretax gain of $31 million, after-tax
$9 million, including the tax benefits associated with prior capital losses.

     In June 2002, we sold Specialty Materials' Pharmaceutical Fine Chemicals
(PFC) and Automation and Control's Consumer Products (Consumer Products)
businesses for proceeds of approximately $105 million, mainly cash, resulting in
a pretax loss

                                       13

of $166 million (after-tax gain of $98 million). The businesses sold had a
higher deductible tax basis than book basis which resulted in an after-tax gain.
In March 2002, we completed the disposition of our Bendix Commercial Vehicle
Systems (BCVS) business for approximately $350 million in cash and investment
securities resulting in a pretax gain of $125 million. In January 2002, we had
reached an agreement with Knorr-Bremse AG (Knorr) to transfer control of our
global interests in BCVS to Knorr.

NOTE 12. COMMITMENTS AND CONTINGENCIES

     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. On January 15, 2002, the
District Court dismissed the consolidated complaint against four of Honeywell's
current and former officers. The Court has granted plaintiffs' motion for class
certification defining the purported class as all purchasers of Honeywell stock
between December 20, 1999 and June 19, 2000.

     The parties participated in a two day settlement mediation in April 2003 in
an attempt to resolve the cases without resort to a trial. The mediation proved
unsuccessful in resolving the cases. Discovery in the cases, which had been
stayed pending completion of the mediation, has resumed.

     We continue to believe that the allegations in the Securities Law
Complaints are without merit. Although it is not possible at this time to
predict the outcome of these cases, we expect to prevail. However, an adverse
outcome could be material to our consolidated 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.

     ERISA Class Action Lawsuit - In April 2003, Honeywell and several of its
current and former officers were named as defendants in a purported class action
lawsuit filed in the United States District Court for the District of New
Jersey. The complaint principally alleges that the defendants breached their
fiduciary duties to participants in the Honeywell Savings and Ownership Plan
(the "Savings Plan") by purportedly making false and misleading statements,
failing to disclose material information concerning Honeywell's financial
performance, and failing to diversify the Savings Plan's assets and monitor the
prudence of Honeywell stock as a Savings Plan investment. In July 2003, an
amended complaint making similar allegations and naming several current and
former officers and directors as defendants was filed in the same district. No
answers have been filed and discovery has not commenced. Although it is not
possible at this time to predict the outcome of this litigation, we believe that
the allegations in these complaints are without merit and we expect to prevail.
An adverse litigation outcome could, however, be material to our consolidated
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,

                                       14

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 toxic substances. Additional lawsuits, claims
and 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. 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 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, regulatory approval of cleanup projects, remedial
techniques to be utilized and agreements with other parties.

     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 and existing reserves, we do not expect that
these matters will have a material adverse effect on our consolidated financial
position.

     In the matter entitled Interfaith Community Organization, et al. v.
Honeywell International Inc., et al., the United States District Court for the
District of New Jersey held in May 2003 that a predecessor Honeywell site
located in Jersey City, New Jersey constituted an imminent and substantial
endangerment and ordered Honeywell to conduct the excavation and transport for
offsite disposal of approximately one million tons of chromium residue present
at the site. Honeywell strongly disagrees with the court's determinations and
has appealed the court's decision. Honeywell is also seeking a stay of aspects
of the court's order. The site at issue is one of twenty-one sites located in
Jersey City, New Jersey which are the subject of an Administrative Consent Order
(ACO) entered into with the New Jersey Department of Environmental Protection
(NJDEP) in 1993. Under the ACO, Honeywell agreed to study and remediate these
sites in accordance with NJDEP's directions, provided that the total costs of
such studies and remediation does not exceed $60 million. Honeywell has
cooperated with the NJDEP under the ACO and believes that decisions regarding
site cleanups should be made by NJDEP under the ACO. We are confident that
proceeding under the ACO will ensure a safe remediation and allow the property
to be placed back into productive use much faster and at a cost significantly
less than the remedies required by the court's order. We have not developed a
remedial action plan for the excavation and offsite disposal directed under the
court's order and therefore are unable to estimate the cost of such actions. At
trial, plaintiff's expert testified that the excavation and offsite disposal
cost might be $400 million. However, there are significant variables in the
implementation of the court's order and depending on the method of
implementation chosen, the estimate could increase or decrease. Provisions have
been previously made in our financial statements as to remedial costs
consistent with the ACO and during the three months ended June 30, 2003 we
provided for additional costs which are likely to be incurred during the
pendency of our appeal, which provisions do not assume excavation and offsite
removal of chromium from the site. There are alternative outcomes and remedies
beyond the scope of the ACO that could result from the remanding, reversal or
replacement of the Court's decision and order. At this time, we can neither
identify a probable alternative outcome

                                       15

nor reasonably estimate the cost of an alternative remedy. Although we expect
the court's decision and order to be remanded, reversed or replaced, should the
remedies prescribed in the court's decision and order ultimately be upheld, such
outcome could have a material adverse impact on our consolidated results of
operations or operating cash flows in the periods recognized or paid.

     Asbestos Matters - Like many other industrial companies, Honeywell is a
defendant in personal injury actions related to asbestos. We did not mine or
produce asbestos, nor did we make or sell insulation products or other
construction materials that have been identified as the primary cause of
asbestos related disease in the vast majority of claimants. Rather, we made
several products that contained small amounts of asbestos.

     Honeywell's Bendix Friction Materials business manufactured automotive
brake pads that included asbestos in an encapsulated form. There is a group of
potential claimants consisting largely of professional brake mechanics. From
1981 through June 30, 2003, we have resolved over 62,000 Bendix claims at an
average indemnity cost per claim of approximately two thousand six hundred
dollars. Through the second quarter of 2002, Honeywell had no out-of-pocket
costs for these cases since its insurance deductible was satisfied many years
ago. Beginning with claim payments made in the third quarter of 2002, Honeywell
began advancing indemnity and defense claim costs which amounted to
approximately $50 million in payments in the six months ended June 30, 2003. A
substantial portion of this amount is expected to be reimbursed by insurance.
There are currently approximately 69,000 claims pending.

     On January 30, 2003, Honeywell and Federal-Mogul Corp. (Federal-Mogul)
entered into a letter of intent (LOI) pursuant to which Federal-Mogul would
acquire Honeywell's automotive Bendix Friction Materials (Bendix) business, with
the exception of certain U.S. based assets. In exchange, Honeywell would receive
a permanent channeling injunction shielding it from all current and future
personal injury asbestos liabilities related to Honeywell's Bendix business.

     Federal-Mogul, its U.S. subsidiaries and certain of its United Kingdom
subsidiaries voluntarily filed for financial restructuring under Chapter 11 of
the U.S. Bankruptcy Code in October 2001. Federal-Mogul will seek to establish
one or more trusts under Section 524(g) of the U.S. Bankruptcy Code as part of
its reorganization plan, including a trust for the benefit of Bendix asbestos
claimants. The reorganization plan to be submitted to the Bankruptcy Court for
approval will contemplate that the U.S. Bankruptcy Court in Delaware would issue
an injunction in favor of Honeywell that would channel to the Bendix 524(g)
trust all present and future asbestos claims relating to Honeywell's Bendix
business. The 524(g) trust created for the benefit of the Bendix claimants would
receive the rights to proceeds from Honeywell's Bendix related insurance
policies and would make these proceeds available to the Bendix claimants.
Honeywell would have no obligation to contribute any additional amounts toward
the settlement or resolution of Bendix related asbestos claims.

     In the fourth quarter of 2002, we recorded a charge of $167 million
consisting of a $131 million reserve for the sale of Bendix to Federal-Mogul,
our estimate of asbestos related liability net of insurance recoveries and costs
to complete the anticipated transaction with Federal-Mogul. Completion of the
transaction contemplated by the LOI is subject to the negotiation of definitive
agreements, the confirmation of Federal-Mogul's plan of reorganization by the
Bankruptcy Court, the issuance of a final, non-appealable 524(g) channeling
injunction permanently enjoining any Bendix related asbestos claims against
Honeywell, and the receipt of all required governmental approvals. We do not
believe that completion of such transaction would have a material adverse impact
on our consolidated results of operations or financial position.

                                       16

     There can be no assurance, however, that the transaction contemplated by
the LOI will be completed. Honeywell presently has approximately $1.9 billion
(excluding coverage previously available from Equitas; see discussion below) of
insurance coverage remaining with respect to Bendix related asbestos claims.
Although it is impossible to predict the outcome of pending or future claims,
in light of our potential exposure, our prior experience in resolving these
claims, and our insurance coverage, we do not believe that the Bendix related
asbestos claims will have a material adverse effect on our consolidated
financial position.

     Another source of claims is refractory products (high temperature bricks
and cement) sold largely to the steel industry in the East and Midwest by North
American Refractories Company (NARCO), a business we owned from 1979 to 1986.
Less than 2 percent of NARCO's products contained asbestos.

     When we sold the NARCO business in 1986, we agreed to indemnify NARCO with
respect to personal injury claims for products that had been discontinued prior
to the sale (as defined in the sale agreement). NARCO retained all liability for
all other claims. NARCO had resolved approximately 176,000 claims through
January 4, 2002, the date NARCO filed for reorganization under Chapter 11 of the
U.S. Bankruptcy Code, at an average cost per claim of two thousand two hundred
dollars. Of those claims, 43 percent were dismissed on the ground that there was
insufficient evidence that NARCO was responsible for the claimant's asbestos
exposure. As of the date of NARCO's bankruptcy filing, there were approximately
116,000 remaining claims pending against NARCO, including approximately 7
percent in which Honeywell was also named as a defendant. Since 1983, Honeywell
and our insurers have contributed to the defense and settlement costs associated
with NARCO claims. We have approximately $1.5 billion (excluding coverage
previously available from Equitas; see discussion below) of insurance remaining
that can be specifically allocated to NARCO related liability.

     As a result of the NARCO bankruptcy filing, all of the claims pending
against NARCO are automatically stayed pending the reorganization of NARCO. In
addition, because the claims pending against Honeywell necessarily will impact
the liabilities of NARCO, because the insurance policies held by Honeywell are
essential to a successful NARCO reorganization, and because Honeywell has
offered to commit the value of those policies to the reorganization, the
bankruptcy court has temporarily enjoined any claims against Honeywell, current
or future, related to NARCO. Although the stay has been extended sixteen times
since January 4, 2002, there is no assurance that such stay will remain in
effect. In connection with NARCO's bankruptcy filing, we paid NARCO's parent
company $40 million and agreed to provide NARCO with up to $20 million in
financing. We also agreed to pay $20 million to NARCO's parent company upon the
filing of a plan of reorganization for NARCO acceptable to Honeywell, and to pay
NARCO's parent company $40 million, and to forgive any outstanding NARCO
indebtedness, upon the confirmation and consummation of such a plan.

     As a result of ongoing negotiations with counsel representing NARCO related
asbestos claimants regarding settlement of all pending and potential NARCO
related asbestos claims against Honeywell, we have reached definitive agreements
or agreements in principle with approximately 236,000 claimants, which
represents approximately 90 percent of the approximately 260,000 current
claimants who are now expected to file a claim as part of the NARCO
reorganization process. We are also in discussions with the NARCO Committee of
Asbestos Creditors on Trust Distribution Procedures for NARCO. We believe that,
as part of the NARCO plan of reorganization, a trust will be established
pursuant to these Trust Distribution Procedures for the benefit of all asbestos
claimants, current and future. If the trust is put in place and approved by the
court as fair and equitable, Honeywell as well as NARCO will be entitled to a
permanent channeling injunction barring all present and future individual
actions in state or federal courts and requiring all asbestos related claims
based on exposure to NARCO products to be made against the federally-supervised
trust. As part of its ongoing settlement

                                       17

negotiations, Honeywell is seeking to cap its annual contributions to the
trust with respect to future claims at a level that would not have a material
impact on Honeywell's operating cash flows. Given the substantial progress of
negotiations between Honeywell and NARCO related asbestos claimants and
between Honeywell and the Committee of Asbestos Creditors during the fourth
quarter of 2002, Honeywell developed an estimated liability for settlement of
pending and future asbestos claims.

     During the fourth quarter of 2002, Honeywell recorded a charge of $1.4
billion for NARCO related asbestos litigation charges, net of insurance
recoveries. This charge consists of the estimated liability to settle current
asbestos related claims, the estimated liability related to future asbestos
related claims through 2018 and obligations to NARCO's parent, net of insurance
recoveries of $1.8 billion.

     The estimated liability for current claims is based on terms and
conditions, including evidentiary requirements, in definitive agreements or
agreements in principle with approximately 90 percent of current claimants. Once
finalized, settlement payments with respect to current claims are expected to be
made over approximately a four-year period.

     The liability for future claims estimates the probable value of future
asbestos related bodily injury claims asserted against NARCO over a 15 year
period and obligations to NARCO's parent as discussed above. In light of the
uncertainties inherent in making long-term projections we do not believe that we
have a reasonable basis for estimating asbestos claims beyond 2018 under
Statement of Financial Accounting Standard No. 5 "Accounting for Contingencies."
Honeywell retained the expert services of Hamilton, Rabinovitz and Alschuler,
Inc. (HR&A) to project the probable number and value, including trust claim
handling costs, of asbestos related future liabilities. The methodology used to
estimate the liability for future claims has been commonly accepted by numerous
courts and is the same methodology that is utilized by an expert who is
routinely retained by the asbestos claimants committee in asbestos related
bankruptcies. The valuation methodology includes an analysis of the population
likely to have been exposed to asbestos containing products, epidemiological
studies to estimate the number of people likely to develop asbestos related
diseases, NARCO claims filing history and the pending inventory of NARCO
asbestos related claims.

     Honeywell has substantial insurance that reimburses it for portions of the
costs incurred to settle NARCO related claims and court judgments as well as
defense costs. This coverage is provided by a large number of insurance policies
written by dozens of insurance companies in both the domestic insurance market
and the London excess market. At June 30, 2003, a significant portion of this
coverage is with London-based insurance companies under a coverage-in-place
agreement. See below for discussion of separate Equitas settlement.
Coverage-in-place agreements are settlement agreements between policyholders and
the insurers specifying the terms and conditions under which coverage will be
applied as claims are presented for payment. These agreements govern such things
as what events will be deemed to trigger coverage, how liability for a claim
will be allocated among insurers and what procedures the policyholder must
follow in order to obligate the insurer to pay claims. We conducted an analysis
to determine the amount of insurance that we estimate is probable that we will
recover in relation to payment of current and projected future claims. While the
substantial majority of our insurance carriers are solvent, some of our
individual carriers are insolvent, which has been considered in our analysis of
probable recoveries. Some of our insurance carriers have challenged our right to
enter into settlement agreements resolving all NARCO related asbestos claims
against Honeywell. However, we believe there is no factual or legal basis for
such challenges and we believe that it is probable that we will prevail in the
resolution of, or in any litigation that is brought regarding these disputes and
as of June 30, 2003, we have recognized approximately $550 million in probable
insurance recoveries from these carriers. We made judgments concerning insurance

                                       18

coverage that we believe are reasonable and consistent with our historical
dealings with our insurers, our knowledge of any pertinent solvency issues
surrounding insurers and various judicial determinations relevant to our
insurance programs. Based on our analysis, we recorded insurance recoveries that
are deemed probable through 2018 of $1.8 billion. A portion of this insurance
has been received, primarily from Equitas, as discussed below.

     During the six months ended June 30, 2003, we made asbestos related
payments of $388 million, including legal fees. During the six months ended June
30, 2003, we received $477 million in insurance reimbursements including $472
million in cash received from Equitas related to a comprehensive policy buy-back
settlement of all insurance claims by Honeywell against Equitas. The settlement
resolves all claims by Honeywell against Equitas arising from asbestos claims
related to NARCO and Bendix. The coverage amounts discussed above for NARCO and
Bendix do not include coverage previously available from Equitas.

     Projecting future events is subject to many uncertainties that could cause
the NARCO related asbestos liabilities to be higher or lower than those
projected and recorded. There is no assurance that ongoing settlement
negotiations will be successfully completed, that a plan of reorganization will
be proposed or confirmed, that insurance recoveries will be timely or whether
there will be any NARCO related asbestos claims beyond 2018. Given the inherent
uncertainty in predicting future events, we plan to review our estimates
periodically, and update them based on our experience and other relevant
factors. Similarly we will reevaluate our projections concerning our probable
insurance recoveries in light of any changes to the projected liability or other
developments that may impact insurance recoveries.

          NARCO and Bendix asbestos related balances are included in the
following balance sheet accounts:

                                                        June 30,   December 31,
                                                          2003         2002
                                                        --------   ------------
                                                                
Other current assets                                     $  170       $  320
Insurance recoveries for asbestos related liabilities     1,370        1,636
                                                         ------       ------
                                                         $1,540       $1,956
                                                         ======       ======

Accrued liabilities                                      $  727       $  741
Asbestos related liabilities                              2,394        2,700
                                                         ------       ------
                                                         $3,121       $3,441
                                                         ======       ======

                                       19

                        Report of Independent Auditors

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, 2003, and the related
consolidated statement of operations for each of the three-month and six-month
periods ended June 30, 2003 and 2002 and the consolidated statement of cash
flows for the six-month periods ended June 30, 2003 and 2002. 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 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, 2002, and the related consolidated statements of operations, of shareowners'
equity, and of cash flows for the year then ended (not presented herein), and in
our report dated February 6, 2003, 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, 2002,
is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Florham Park, NJ
August 8, 2003

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

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

                                       20

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

A. RESULTS OF OPERATIONS - SECOND QUARTER 2003 COMPARED WITH SECOND QUARTER 2002

     Net sales in the second quarter of 2003 were $5,749 million, an increase of
$98 million, or 2 percent compared with the second quarter of 2002. The increase
in sales is attributable to the following:

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

     A discussion of net sales by reportable segment can be found in the Review
of Business Segments section below.

     Cost of goods sold of $4,514 million in the second quarter of 2003
increased by $83 million, or 2 percent compared with the second quarter of 2002.
This increase resulted from a $181 million increase due primarily to the
unfavorable impact of foreign exchange, a decrease in sales of higher-margin
products and services, primarily in our Aerospace and Automation and Control
Solutions reportable segments, and higher pension, product development and other
expenses. This increase was partially offset by a decrease of $98 million in
repositioning and other charges.

     Selling, general and administrative expenses of $762 million in the second
quarter of 2003 increased by $102 million, or 15 percent compared with the
second quarter of 2002 due mainly to higher pension and other employee benefit
costs and the unfavorable impact of foreign exchange.

     Pension expense was $44 million in the second quarter of 2003 compared with
pension income of $39 million in the second quarter of 2002. The increase of $83
million in pension expense in the second quarter of 2003 compared with the
second quarter of 2002 was due principally to a reduction in 2003 in the assumed
rate of return on plan assets from 10 to 9 percent, a decrease in the
market-related value of our pension plan assets during the period 2000 to 2002
and the systematic recognition of higher net losses. These losses resulted
mainly from actual pension plan asset returns below the assumed rate of return
during the period 2000 to 2002.

     Gain on sale of non-strategic businesses of $31 million in the second
quarter of 2003 represents the pretax gain on the disposition of Specialty
Materials' Engineering Plastics (Engineering Plastics) business. Loss on sale of
non-strategic businesses of $166 million in the second quarter of 2002
represented the pretax loss on the dispositions of Specialty Materials'
Pharmaceutical Fine Chemicals (PFC) and Automation and Control's Consumer
Products (Consumer Products) businesses.

     Equity in (income) loss of affiliated companies was income of $6 million in
the second quarter of 2003 compared with income of $3 million in the second
quarter of 2002. The increase of $3 million in equity income in the second
quarter of 2003 compared with the second quarter of 2002 was due mainly to the
inclusion of a charge of $10 million in the prior year's quarter for severance
actions by our UOP process technology (UOP) joint venture partially offset by
income of $7 million resulting from exiting a joint venture in our Aerospace
reportable segment also in the prior year's quarter.

                                       21

     Other (income) expense, $24 million of income in the second quarter of
2003, compared with $6 million of income in the second quarter of 2002. The
increase of $18 million in other income in the second quarter of 2003 compared
with the second quarter of 2002 was due mainly to a gain of $20 million related
to the settlement of a patent infringement lawsuit.

     Interest and other financial charges of $87 million in the second quarter
of 2003 was basically flat compared with the second quarter of 2002.

     Tax expense was $128 million in the second quarter of 2003 resulting in an
effective tax rate of 28.6 percent which was lower than the statutory tax rate
of 35 percent principally due to tax benefits on export sales, favorable tax
audit settlements and foreign tax planning strategies. Tax (benefit) was ($144)
million in the second quarter of 2002 resulting from the impact of repositioning
and other charges and the loss on the dispositions of our PFC and Consumer
Products businesses. The businesses sold had a higher deductible tax basis than
book basis which resulted in a tax benefit.

     Net income was $319 million, or $0.37 per share, in the second quarter of
2003 compared with net income of $459 million, or $0.56 per share, in the second
quarter of 2002. The decrease of $0.19 per share in the second quarter of 2003
compared with the second quarter of 2002 was primarily due to higher pension
expense, including the impact of dilution from the prior year contribution of
Honeywell common stock to our U.S. pension plans, lower sales of higher margin
products and services, principally in our Aerospace and Automation and Control
Solutions reportable segments and higher product development and other expenses.

                                       22

Review of Business Segments

                                                            Three Months Ended
                                                                 June 30,
                                                            ------------------
                                                              2003     2002
                                                             ------   ------
                                                                
Net Sales
Aerospace                                                    $2,161   $2,204
Automation and Control Solutions                              1,837    1,758
Specialty Materials                                             823      870
Transportation Systems                                          925      805
Corporate                                                         3       14
                                                             ------   ------
                                                             $5,749   $5,651
                                                             ======   ======

Segment Profit
Aerospace                                                    $  224   $  364
Automation and Control Solutions                                177      220
Specialty Materials                                              28       34
Transportation Systems                                          112      104
Corporate                                                       (34)     (35)
                                                             ------   ------
   Total segment profit                                         507      687
                                                             ------   ------
Gain (loss) on sale of non-strategic businesses                  31     (166)
Equity in income of affiliated companies                          6        3
Other income                                                     24        6
Interest and other financial charges                            (87)     (88)
Repositioning and other charges included in cost of goods
   sold and selling, general and administrative expenses        (34)    (127)
                                                             ------   ------
   Income before taxes and cumulative effect
      of accounting change                                   $  447   $  315
                                                             ======   ======

     Aerospace sales of $2,161 million in the second quarter of 2003 decreased
by $43 million, or 2 percent compared with the second quarter of 2002 due to
continued weakness in sales to our commercial original equipment (OE) and
aftermarket customers. Sales to our air transport OE customers decreased by 18
percent reflecting scheduled production declines by our OE customers (primarily
Boeing and Airbus) due to reduced aircraft orders by commercial airlines. The
airline industry continues to be negatively impacted by general weakness in the
economy and the financial difficulties being encountered by certain major
carriers. Sales to our business and general aviation OE customers also decreased
by 18 percent reflecting a decline in projected deliveries of business jet
airplanes due to weakness in fractional demand and corporate profitability.
Sales to our commercial air transport aftermarket customers were lower by 5
percent as a decline in sales of commercial spare parts of 16 percent due to
lower discretionary spending by the airlines was partially offset by higher
sales of repair and overhaul services of 7 percent. Sales to our regional
transport aftermarket customers declined by 15 percent due to weak market
conditions. The decrease in Aerospace sales in the second quarter of 2003
compared with the second quarter of 2002 was partially offset by an increase in
sales to our defense and space customers, with aftermarket sales up by 11
percent and OE sales higher by 5 percent, resulting principally from increased
military activity and growth in precision guidance and spare parts. Sales to our
business and general aviation aftermarket customers improved by 7 percent
largely due to strong repair and overhaul activity and higher sales of spare
parts.

     Aerospace segment profit of $224 million in the second quarter of 2003
decreased by $140 million, or 38 percent compared with the second quarter of
2002 due mainly to lower sales of commercial original equipment and
higher-margin

                                       23

commercial aftermarket spare parts as well as higher pension, research,
development and engineering and other expenses.

     Automation and Control Solutions sales of $1,837 million in the second
quarter of 2003 increased by $79 million, or 4 percent compared with the second
quarter of 2002 due to the favorable effects of foreign exchange of 6 percent
and acquisitions, net of the prior year disposition of our Consumer Products
business, of 3 percent, partially offset by the impact of lower prices of 1
percent and lower volumes of 4 percent. Sales increased by 8 percent for our
Automation and Control Products business as the effects of acquisitions, mainly
Invensys Sensor Systems, foreign exchange and strong sales of fire solutions
products more than offset the impact of the prior year disposition of our
Consumer Products business and general weakness in the economy. Sales for our
Service business increased by 1 percent as the favorable impact from foreign
exchange was partially offset by lower volumes due to continued softness in
capital spending as well as commercial and residential construction. Sales for
our Industry Solutions business were flat.

     Automation and Control Solutions segment profit of $177 million in the
second quarter of 2003 decreased by $43 million, or 20 percent compared with the
second quarter of 2002 due mainly to higher pension expense, the decline in
higher-margin energy-retrofit and discretionary spot sales in our Service
business, and increased research and development and other expenses, mainly in
our Automation and Control Products and Service businesses, respectively.

     Specialty Materials sales of $823 million in the second quarter of 2003
decreased by $47 million, or 5 percent compared with the second quarter of 2002
due largely to the impact from the prior year divestitures of our Advanced
Circuits and PFC businesses. The favorable impact of foreign exchange of 3
percent was offset by lower volumes mainly in our Nylon Systems, Performance
Products and Fluorines businesses.

     Specialty Materials segment profit of $28 million in the second quarter of
2003 decreased by $6 million, or 18 percent compared with the second quarter of
2002. This decrease mainly resulted from higher raw material costs (principally
natural gas) and higher pension expense, partially offset by the impact of the
prior year write-down of property, plant and equipment in several businesses,
divestitures of non-strategic businesses and the benefits of cost actions.

     Transportation Systems sales of $925 million in the second quarter of 2003
increased by $120 million, or 15 percent compared with the second quarter of
2002 due mainly to the favorable impact of foreign exchange of 11 percent and
volume growth at our Garrett Engine Boosting Systems business. Sales at our
Garrett Engine Boosting Systems business increased by 31 percent due to volume
growth of 16 percent as worldwide demand for our turbochargers continued to be
strong, and the favorable impact of foreign exchange of 15 percent.

     Transportation Systems segment profit of $112 million in the second quarter
of 2003 increased by $8 million, or 8 percent compared with the second quarter
of 2002 due mainly to the effect of higher sales in our Garrett Engine Boosting
Systems business partially offset by higher pension, new product development and
introduction, facility relocations and other expenses.

                                       24

B. RESULTS OF OPERATIONS - SIX MONTHS 2003 COMPARED WITH SIX MONTHS 2002

     Net sales in the first six months of 2003 were $11,148 million, an increase
of $298 million, or 3 percent compared with the first six months of 2002. The
increase in sales is attributable to the following:

                
Acquisitions        2%
Divestitures       (2)
Price              --
Volume             (1)
Foreign exchange    4
                   --
                    3%
                   ==

     A discussion of net sales by reportable segment can be found in the Review
of Business Segments section below.

     Cost of goods sold of $8,754 million in the first six months of 2003
increased by $250 million, or 3 percent compared with the first six months of
2002. This increase resulted from a $394 million increase due primarily to the
unfavorable impact of foreign exchange, a decrease in sales of higher-margin
products and services, primarily in our Aerospace and Automation and Control
Solutions reportable segments, and higher pension, product development and other
expenses. This increase was partially offset by a decrease of $144 million in
repositioning and other charges.

     Selling, general and administrative expenses of $1,465 million in the first
six months of 2003 increased by $188 million, or 15 percent compared with the
first six months of 2002 due mainly to higher pension and other employee benefit
costs and the unfavorable impact of foreign exchange.

     Pension expense was $88 million in the first six months of 2003 compared
with pension income of $78 million in the first six months of 2002. The increase
of $166 million in pension expense in the first six months of 2003 compared with
the first six months of 2002 was due principally to a reduction in 2003 in the
assumed rate of return on plan assets from 10 to 9 percent, a decrease in the
market-related value of our pension plan assets during the period 2000 to 2002
and the systematic recognition of higher net losses. These losses resulted
mainly from actual pension plan asset returns below the assumed rate of return
during the period 2000 to 2002.

     Gain on sale of non-strategic businesses of $31 million in the first six
months of 2003 represents the pretax gain on the disposition of our Engineering
Plastics business. Loss on sale of non-strategic businesses of net $41 million
in the first six months of 2002 represented the pretax loss on the dispositions
of our PFC and Consumer Products businesses of $166 million partially offset by
the pretax gain on the disposition of our Bendix Commercial Vehicle Systems
(BCVS) business of $125 million.

     Business impairment charges of $43 million in the first six months of 2002
related to the write-down of property, plant and equipment in our Friction
Materials business and the planned shutdown of a manufacturing facility in our
Specialty Materials reportable segment. See the repositioning, business
impairment and other charges section of this MD&A for further details.

     Equity in (income) loss of affiliated companies was income of $4 million in
the first six months of 2003 compared with income of $10 million in the first
six months of 2002. The decrease of $6 million in equity income in the first six
months of 2003 compared with the first six months of 2002 was due mainly to the
inclusion of a charge of $13 million in the prior year's first six months for

                                       25

severance actions by our UOP joint venture partially offset by income of $15
million resulting from exiting joint ventures in our Aerospace and
Transportation Systems reportable segments also in the prior year's first
six months.

     Other (income) expense, $27 million of income in the first six months of
2003, compared with $22 million of income in the first six months of 2002. The
increase of $5 million in other income in the first six months of 2003 compared
with the first six months of 2002 was due mainly to a gain of $20 million
related to the settlement of a patent infringement lawsuit partially offset by a
decrease in benefits from foreign exchange hedging resulting from the weakness
in the U.S. dollar.

     Interest and other financial charges of $171 million in the first six
months of 2003 decreased by $4 million, or 2 percent compared with the first six
months of 2002 due mainly to lower interest rates in the current period.

     Tax expense was $227 million in the first six months of 2003 resulting in
an effective tax rate of 27.7 percent which was lower than the statutory tax
rate of 35 percent principally due to tax benefits on export sales, favorable
tax audit settlements and foreign tax planning strategies. Tax expense was $7
million in the first six months of 2002 resulting in an effective tax rate of
0.8 percent. This includes the tax benefit of 25.7 percentage points related to
repositioning, business impairment and other charges, the gain on the sale of
our BCVS business, and the loss on the dispositions of our PFC and Consumer
Products businesseses. The PFC and Consumer Products businesses had a higher
deductible tax basis than book basis basis which resulted in a tax benefit.

     Net income was $573 million, or $0.67 per share, in the first six months of
2003 compared with net income of $835 million, or $1.02 per share, in the first
six months of 2002. The decrease of $0.35 per share in the first six months of
2003 compared with the first six months of 2002 was primarily due to higher
pension expense, including the impact of dilution from the prior year
contribution of Honeywell common stock to our U.S. pension plans, lower sales
of higher margin products and services, principally in our Aerospace and
Automation and Control Solutions reportable segments, higher product
development and other expenses and the cumulative effect of a change in
accounting related to our adoption of SFAS No. 143 on January 1, 2003.

                                       26

Review of Business Segments

                                                             Six Months Ended
                                                                 June 30,
                                                            -----------------
                                                              2003      2002
                                                            -------   -------
                                                                
Net Sales
Aerospace                                                   $ 4,223   $ 4,293
Automation and Control Solutions                              3,554     3,367
Specialty Materials                                           1,600     1,628
Transportation Systems                                        1,765     1,531
Corporate                                                         6        31
                                                            -------   -------
                                                            $11,148   $10,850
                                                            =======   =======
Segment Profit
Aerospace                                                   $   442   $   671
Automation and Control Solutions                                362       427
Specialty Materials                                              38        42
Transportation Systems                                          187       177
Corporate                                                       (66)      (71)
                                                            -------   -------
   Total segment profit                                         963     1,246
                                                            -------   -------
Gain (loss) on sale of non-strategic businesses                  31       (41)
Business impairment charges                                      --       (43)
Equity in income of affiliated companies                          4        10
Other income                                                     27        22
Interest and other financial charges                           (171)     (175)
Repositioning and other charges included in cost of goods
   sold and selling, general and administrative expenses        (34)     (177)
                                                            -------   -------
   Income before taxes and cumulative effect
      of accounting change                                  $   820   $   842
                                                            =======   =======

     Aerospace sales of $4,223 million in the first six months of 2003 decreased
by $70 million, or 2 percent compared with the first six months of 2002 due to
continued weakness in sales to our commercial original equipment (OE) and
aftermarket customers. Sales to our air transport OE customers declined by 22
percent reflecting dramatically lower projected deliveries by our OE customers
(primarily Boeing and Airbus) due to reduced aircraft orders by commercial
airlines. The airline industry continues to be negatively impacted by general
weakness in the economy and the financial difficulties being encountered by
certain major carriers. Sales to our business and general aviation OE customers
decreased by 25 percent reflecting a decline in projected deliveries of business
jet airplanes due to weakness in fractional demand and corporate profitability.
Sales to our commercial air transport and regional aftermarket customers were
lower by 1 and 12 percent, respectively, mainly due to weakness in sales of
spare parts. The decrease in Aerospace sales in the first six months of 2003
compared with the first six months of 2002 was partially offset by an increase
in sales to our defense and space customers, with aftermarket sales up by 14
percent and OE sales higher by 6 percent, resulting principally from increased
military activity and growth in precision guidance and spare parts. Sales to our
business and general aviation aftermarket customers were higher by 8 percent
largely due to increases in repair and overhaul activity. We currently expect
full year 2003 sales to our air transport and business and general aviation OE
customers to decline by 15 and 21 percent, respectively, compared with the prior
year due to reduced aircraft orders. We currently expect that sales to our
commercial aftermarket customers will be down by 3 percent for the full year
2003 compared with the prior year due mainly to the financial difficulties being
experienced by the airlines and reduced flying hours.

                                       27

     Aerospace segment profit of $442 million in the first six months of 2003
decreased by $229 million, or 34 percent compared with the first six months of
2002 due mainly to lower sales of commercial original equipment and
higher-margin commercial aftermarket spare parts as well as higher pension,
research, development and engineering and other expenses.

     Automation and Control Solutions sales of $3,554 million in the first six
months of 2003 increased by $187 million, or 6 percent compared with the first
six months of 2002 due to the favorable effects of foreign exchange of 6 percent
and acquisitions, net of the prior year disposition of our Consumer Products
business, of 3 percent, partially offset by the impact of lower prices of 1
percent and lower volumes of 2 percent. Sales increased by 8 percent for our
Automation and Control Products business as the effects of foreign exchange and
prior year acquisitions, mainly Invensys Sensor Systems, more than offset the
impact of the prior year disposition of our Consumer Products business and lower
volumes. Sales for our Industry Solutions business increased by 6 percent due to
the favorable impact of foreign exchange. Sales for our Service business
increased by 1 percent as the favorable impact from foreign exchange was largely
offset by a decline in volumes due to softness in capital spending as well as
commercial and residential construction.

     Automation and Control Solutions segment profit of $362 million in the
first six months of 2003 decreased by $65 million, or 15 percent compared with
the first six months of 2002 due mainly to higher pension expense, the decline
in higher-margin energy-retrofit and discretionary spot sales in our Service
business, and increased research and development and other expenses, mainly in
our Automation and Control Products and Service businesses, respectively.

     Specialty Materials sales of $1,600 million in the first six months of 2003
decreased by $28 million, or 2 percent compared with the first six months of
2002 due to the impact of the prior year divestitures of our Advanced Circuits
and PFC businesses of 7 percent and lower prices of 1 percent partially offset
by the favorable impact of foreign exchange of 4 percent and higher volumes of 2
percent.

     Specialty Materials segment profit of $38 million in the first six months
of 2003 decreased by $4 million, or 10 percent compared with the first six
months of 2002. This decrease mainly resulted from higher raw material costs
(principally natural gas) and higher pension expense, partially offset by the
impact of the prior year write-down of property, plant and equipment in several
businesses, divestitures of non-strategic businesses and the benefits of cost
actions.

     Transportation Systems sales of $1,765 million in the first six months of
2003 increased by $234 million, or 15 percent compared with the first six months
of 2002 due mainly to the favorable impact of foreign exchange of 10 percent and
volume growth. This increase resulted mainly from a 30 percent increase in sales
for our Garrett Engine Boosting Systems business due to volume growth of 17
percent as worldwide demand for our turbochargers continued to be strong, and
the favorable impact of foreign exchange of 13 percent.

     Transportation Systems segment profit of $187 million in the first six
months of 2003 increased by $10 million, or 6 percent compared with the first
six months of 2002 as the effect of higher sales in our Garrett Engine Boosting
Systems business was partially offset by higher pension, new product development
and introduction, facility relocations and other expenses.

                                       28

C.   FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     Total assets at June 30, 2003 were $28,533 million, an increase of $974
million, or 4 percent from December 31, 2002 mainly due to an increase in cash
of $605 million. See details in Consolidated Statement of Cash Flows. The
increase in total assets also resulted from foreign currency translation due
primarily to the strengthing of the Euro in relation to the U.S. dollar.

     Cash provided by operating activities of $1,026 million during the first
six months of 2003 decreased by $101 million compared with the first six months
of 2002 mainly due to lower earnings and a voluntary contibution to our U.S.
defined benefit pension plans partially offset by lower spending for severance
and an increase in net insurance receipts for asbestos related liabilities.

     We made asbestos related payments of $388 million, including legal fees, in
the first six months of 2003 and expect to make additional asbestos related
payments of approximately $215 million during the remainder of 2003. This
estimate is based on our experience in the first six months of 2003 regarding
the timing of submissions of required evidential data by plantiffs firms. We had
$477 million of asbestos related insurance recoveries during the first six
months of 2003, including the buyout of the NARCO and Bendix Equitas insurance
policies in April 2003. We previously anticipated receiving the Equitas payments
primarily during the period 2003 through 2007. We expect to receive
approximately $90 million in asbestos related insurance recoveries during the
remainder of 2003. These cash flow projections are consistent with our existing
asbestos reserves. See Note 12 of Notes to Financial Statements for further
details.

     Cash used for investing activities of $308 million during the first six
months of 2003 increased by $204 million compared with the first six months of
2002 due mainly to an increase in spending for acquisitions of $103 million and
lower proceeds from sales of businesses of $96 million. The increase in spending
for acquisitions in the current period mainly relates to the acquisitions of a
fire controls and detection technology business and a sensor business by our
Automation and Control Solutions reportable segment and a nylon films business
by our Specialty Materials reportable segment. The first six months of 2003
included the proceeds from our disposition of our Engineering Plastics business
of $90 million, whereas the first six months of 2002 included the proceeds from
the dispositions of our BCVS, PFC and Consumer Products businesses of $186
million. This increase in cash used for investing activities was partially
offset by lower capital spending of $23 million mainly reflecting the completion
in 2002 of a major plant in our Fluorines business. Our total capital spending
for the full year 2003 is projected to be approximately $650 million.

     We continuously assess the relative strength of each business in our
portfolio as to strategic fit, market position, profit and cash flow
contribution in order to upgrade our combined portfolio and identify business
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 business units that do not fit into our long-term
strategic plan based on their market position, relative profitability or growth
potential. These business units are considered for potential divestiture,
restructuring or other repositioning actions subject to regulatory constraints.

     Cash used for financing activities of $296 million during the first six
months of 2003 decreased by $183 million compared with the first six months of
2002 due mainly to a decrease in scheduled repayments of long-term debt in the
current period partially offset by lower net borrowings of short-term debt.
Total debt of $5,430 million at June 30, 2003 was $341 million, or 7 percent
higher than at December 31, 2002 principally reflecting the assumption of $268

                                       29

million of debt associated with the purchase of assets under leases qualifying
as variable interest entities and higher short-term borrowings.

Repositioning, Business Impairment and Other Charges

     A summary of repositioning, business impairment and other charges follows:

                                       Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                       ------------------   ----------------
                                          2003   2002         2003   2002
                                          ----   ----         ----   ----
                                                         
Severance                                 $ 22   $ 32         $ 22   $ 73
Asset impairments                           --     57           --     68
Exit costs                                   3     10            3     23
Reserve adjustments                        (23)   (31)         (23)   (43)
                                          ----   ----         ----   ----
   Total net repositioning charge            2     68            2    121
                                          ----   ----         ----   ----
Probable and reasonably estimable
   environmental liabilities                32     --           32     --
Business impairment charges                 --     --           --     43
Customer claims and settlements
   of contract liabilities                  --     29           --     29
Write-offs of receivables,
   inventories and other assets             --     40           --     40
                                          ----   ----         ----   ----
   Total net repositioning, business
      impairment and other charges        $ 34   $137         $ 34   $233
                                          ====   ====         ====   ====

     The following table summarizes the pretax distribution of total net
repositioning, business impairment and other charges by income statement
classification:

                                       Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                       ------------------   ----------------
                                          2003   2002         2003   2002
                                          ----   ----         ----   ----
                                                         
Cost of goods sold                         $29   $127          $29   $173
Selling, general and administrative
   expenses                                  5     --            5      4
Business impairment charges                 --     --           --     43
Equity in (income) loss of
   affiliated companies                     --     10           --     13
                                           ---   ----          ---   ----
                                           $34   $137          $34   $233
                                           ===   ====          ===   ====

     In the second quarter of 2003, we recognized a charge of $25 million mainly
for severance costs related to workforce reductions of 448 manufacturing and
administrative positions mainly in our Specialty Materials and Aerospace
reportable segments. Also, $23 million of previously established accruals,
mainly for severance, were returned to income in the second quarter of 2003, due
to fewer employee separations than originally anticipated associated with
certain 2002 repositioning actions, resulting in reduced severance liabilities
in our Automation and Control Solutions, Aerospace and Specialty Materials
reportable segments.

     As disclosed in our 2002 Annual Report on Form 10-K, we recognized
repositioning charges totaling $453 million in 2002 ($99 and $164 million were
recognized in the three- and six-month periods ended June 30, 2002). The
components of the charges included severance costs of $270 million, asset
impairments of $121 million and other exit costs of $62 million. Severance costs
were related to announced workforce reductions of approximately 8,100
manufacturing and administrative positions across all of our reportable segments
and our UOP process technology joint venture, of which approximately 5,200
positions have been eliminated as of June 30, 2003. These actions are expected
to be substantially

                                       30

completed by December 31, 2003. Also, $76 million of previously established
severance accruals were returned to income in 2002, due to fewer employee
separations than originally anticipated and higher than expected voluntary
employee attrition resulting in reduced severance liabilities in our Aerospace,
Automation and Control Solutions and Specialty Materials reportable segments.

     These repositioning actions are expected to generate incremental pretax
savings of approximately $400 million in 2003 compared with 2002 principally
from planned workforce reductions and facility consolidations. Cash expenditures
for severance and other exit costs necessary to execute these actions were $93
million in the six months ended June 30, 2003 and were funded through operating
cash flows. Cash spending for severance and other exit costs necessary to
execute the 2003 and remaining 2002 repositioning actions will approximate $300
million in 2003 and will be funded mainly though operating cash flows.

     In the second quarter of 2003, we recognized other charges of $32 million
for legacy environmental matters deemed probable and reasonably estimable in the
second quarter of 2003 including the matter entitled Interfaith Community
Organization, et al. v. Honeywell International Inc., et al. as discussed in
Note 12 of Notes to Financial Statements.

     In the second quarter of 2002, we recognized other charges consisting of
customer claims and settlements of contract liabilities of $29 million and
write-offs of receivables, inventories and other assets of $40 million. Such
charges related mainly to our Advanced Circuits business which was sold in the
fourth quarter of 2002, bankruptcy of a customer in our Aerospace reportable
segment, and customer claims in our Industry Solutions business.

     In the first quarter of 2002, we recognized an impairment charge of $27
million related to the write-down of property, plant and equipment of our
Friction Materials business, which is classified as assets held for disposal in
Other Current Assets (a plan of disposal of Friction Materials was adopted in
2001; in January 2003, we entered into a letter of intent to sell this business
to Federal-Mogul Corp. - See Note 12 of Notes to Financial Statements). In the
first quarter of 2002, we also recognized an asset impairment charge of $16
million related to the planned shutdown of a chemical manufacturing facility
in our Specialty Materials reportable segment.

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

                                   Three Months Ended   Six Months Ended
                                        June 30,             June 30,
                                   ------------------   ----------------
                                       2003   2002         2003   2002
                                       ----   ----         ----   ----
                                                      
Aerospace                               $(2)  $  6         $(2)   $  6
Automation and Control Solutions         (8)    22          (8)     61
Specialty Materials                       7    107           7     132
Transportation Systems                   --      2          --      30
Corporate                                37     --          37       4
                                        ---   ----         ---    ----
                                        $34   $137         $34    $233
                                        ===   ====         ===    ====

                                       31

D.   OTHER MATTERS

Critical Accounting Policies

     As disclosed in the Defined Benefit Pension Plans section of our Critical
Accounting Policies in Management's Discussion and Analysis of Financial
Condition and Results of Operations of our 2002 Annual Report on Form 10-K, the
key assumptions in determining pension expense are our expected return on plan
assets and the discount rate. Assuming our pension fund assets earn a 9 percent
rate of return in the year ending December 31, 2003, the discount rate decreases
to 6.25 percent at December 31, 2003 (assumed rate based on current market
conditions), and there are no additional plan contributions beyond the $170
million contributed in April 2003, pension expense would increase by
approximately $0.30 per share for the year ending December 31, 2004. Such
increase in pension expense in 2004 compared with 2003 would be principally due
to a decrease in the market-related value of pension plan assets and the
systematic recognition of unrecognized net losses mainly resulting from actual
pension plan asset retuns below the asssumed rate of return during the period
2000 to 2002, as well as lower interest rates.

     Future pension plan contributions are dependent upon actual plan asset
returns and interest rates. Assuming that actual plan returns are consistent
with our assumed plan return rate of 9 percent in 2003 and beyond, and the
discount rate is 6.25 percent, we would not be required to make any
contributions in 2003 or 2004.

Recent Accounting Pronouncements

     See Note 2 of Notes to Financial Statements for a discussion of recent
accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     See our 2002 Annual Report on Form 10-K (Item 7A). At June 30, 2003, there
has been no material change in this information.

ITEM 4. CONTROLS AND PROCEDURES

     Honeywell management, including the Chief Executive Officer and Chief
Financial Officer, conducted an evaluation of the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
Quarterly Report on Form 10-Q. Based upon that evaluation, the Chief Executive
Officer and the Chief Financial Officer concluded that such disclosure controls
and procedures were effective as of the end of the period covered by this
Quarterly Report on Form 10-Q in alerting them on a timely basis to material
information relating to Honeywell required to be included in Honeywell's
periodic filings under the Exchange Act. There have been no changes that have
materially affected, or are reasonably likely to materially affect, Honeywell's
internal control over financial reporting that have occurred during the period
covered by this Quarterly Report on Form 10-Q.

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     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

                                       32

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. On January 15, 2002,
the District Court dismissed the consolidated complaint against four of
Honeywell's current and former officers. The Court has granted plaintiffs'
motion for class certification defining the purported class as all purchasers
of Honeywell stock between December 20, 1999 and June 19, 2000.

     The parties participated in a two day settlement mediation in April 2003 in
an attempt to resolve the cases without resort to a trial. The mediation proved
unsuccessful in resolving the cases. Discovery in the cases, which had been
stayed pending completion of the mediation, has resumed.

     We continue to believe that the allegations in the Securities Law
Complaints are without merit. Although it is not possible at this time to
predict the outcome of these cases, we expect to prevail. However, an adverse
outcome could be material to our consolidated 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.

     ERISA Class Action Lawsuit - In April 2003, Honeywell and several of its
current and former officers were named as defendants in a purported class action
lawsuit filed in the United States District Court for the District of New
Jersey. The complaint principally alleges that the defendants breached their
fiduciary duties to participants in the Honeywell Savings and Ownership Plan
(the "Savings Plan") by purportedly making false and misleading statements,
failing to disclose material information concerning Honeywell's financial
performance, and failing to diversify the Savings Plan's assets and monitor the
prudence of Honeywell stock as a Savings Plan investment. In July 2003, an
amended complaint making similar allegations and naming several current and
former officers and directors as defendants was filed in the same district. No
answers have been filed and discovery has not commenced. Although it is not
possible at this time to predict the outcome of this litigation, we believe that
the allegations in these complaints are without merit and we expect to prevail.
An adverse litigation outcome could, however, be material to our consolidated
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 toxic substances. Additional lawsuits, claims
and 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. It is our policy
to record appropriate liabilities for environmental matters when environmental

                                       33

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 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, regulatory approval of cleanup projects, remedial
techniques to be utilized and agreements with other parties.

     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 and existing reserves, we do not expect that
these matters will have a material adverse effect on our consolidated financial
position.

          In the matter entitled Interfaith Community Organization, et al. v.
Honeywell International Inc., et al., the United States District Court for the
District of New Jersey held in May 2003 that a predecessor Honeywell site
located in Jersey City, New Jersey constituted an imminent and substantial
endangerment and ordered Honeywell to conduct the excavation and transport for
offsite disposal of approximately one million tons of chromium residue present
at the site. Honeywell strongly disagrees with the court's determinations and
has appealed the court's decision. Honeywell is also seeking a stay of aspects
of the court's order. The site at issue is one of twenty-one sites located in
Jersey City, New Jersey which are the subject of an Administrative Consent Order
(ACO) entered into with the New Jersey Department of Environmental Protection
(NJDEP) in 1993. Uner the ACO, Honeywell agreed to study and remediate these
sites in accordance with NJDEP's directions, provided that the total cost of
such studies and remediation does not exceed $60 million. Honeywell has
cooperated with the NJDEP under the ACO and believes that decisions regarding
site cleanups should be made by NJDEP under the ACO. We are confident that
proceeding under the ACO will ensure a safe remediation and allow the property
to be placed back into productive use much faster and at a cost significantly
less than the remedies required by the court's order. We have not developed a
remedial action plan for the excavation and offsite disposal directed under the
court's order and therefore are unable to estimate the cost of such actions. At
trial, plaintiff's expert testified that the excavation and offsite disposal
cost might be $400 million. However, there are significant variables in the
implementation of the court's order and depending on the method of
implementation chosen, the estimate could increase or decrease. Provisions have
been previously made in our financial statements as to remedial costs
consistent with the ACO and during the three months ended June 30, 2003 we
provided for additional costs which are likely to be incurred during the
pendency of our appeal, which provisions do not assume excavation and offsite
removal of chromium from the site. There are alternative outcomes and remedies
beyond the scope of the ACO that could result from the remanding, reversal or
replacement of the Court's decision and order. At this time, we can neither
identify a probable alternative outcome nor reasonably estimate the cost of an
alternative remedy. Although we expect the court's decision and order to be
remanded, reversed or replaced, should the remedies prescribed in the court's
decision and order ultimately be upheld, such outcome could have a material
adverse impact on our consolidated results of operations or operating cash
flows in the periods recognized or paid.

     Asbestos Matters - Like many other industrial companies, Honeywell is a
defendant in personal injury actions related to asbestos. We did not mine or
produce asbestos, nor did we make or sell insulation products or other
construction materials that have been identified as the primary cause of
asbestos related disease in the vast majority of claimants. Rather, we made
several products that contained small amounts of asbestos.

                                       34

     Honeywell's Bendix Friction Materials business manufactured automotive
brake pads that included asbestos in an encapsulated form. There is a group of
potential claimants consisting largely of professional brake mechanics. From
1981 through June 30, 2003, we have resolved over 62,000 Bendix claims at an
average indemnity cost per claim of approximately two thousand six hundred
dollars. Through the second quarter of 2002, Honeywell had no out-of-pocket
costs for these cases since its insurance deductible was satisfied many years
ago. Beginning with claim payments made in the third quarter of 2002, Honeywell
began advancing indemnity and defense claim costs which amounted to
approximately $50 million in payments in the six months ended June 30, 2003. A
substantial portion of this amount is expected to be reimbursed by insurance.
There are currently approximately 69,000 claims pending.

     On January 30, 2003, Honeywell and Federal-Mogul Corp. (Federal-Mogul)
entered into a letter of intent (LOI) pursuant to which Federal-Mogul would
acquire Honeywell's automotive Bendix Friction Materials (Bendix) business, with
the exception of certain U.S. based assets. In exchange, Honeywell would receive
a permanent channeling injunction shielding it from all current and future
personal injury asbestos liabilities related to Honeywell's Bendix business.

     Federal-Mogul, its U.S. subsidiaries and certain of its United Kingdom
subsidiaries voluntarily filed for financial restructuring under Chapter 11 of
the U.S. Bankruptcy Code in October 2001. Federal-Mogul will seek to establish
one or more trusts under Section 524(g) of the U.S. Bankruptcy Code as part of
its reorganization plan, including a trust for the benefit of Bendix asbestos
claimants. The reorganization plan to be submitted to the Bankruptcy Court for
approval will contemplate that the U.S. Bankruptcy Court in Delaware would issue
an injunction in favor of Honeywell that would channel to the Bendix 524(g)
trust all present and future asbestos claims relating to Honeywell's Bendix
business. The 524(g) trust created for the benefit of the Bendix claimants would
receive the rights to proceeds from Honeywell's Bendix related insurance
policies and would make these proceeds available to the Bendix claimants.
Honeywell would have no obligation to contribute any additional amounts toward
the settlement or resolution of Bendix related asbestos claims.

     In the fourth quarter of 2002, we recorded a charge of $167 million
consisting of a $131 million reserve for the sale of Bendix to Federal-Mogul,
our estimate of asbestos related liability net of insurance recoveries and costs
to complete the anticipated transaction with Federal-Mogul. Completion of the
transaction contemplated by the LOI is subject to the negotiation of definitive
agreements, the confirmation of Federal-Mogul's plan of reorganization by the
Bankruptcy Court, the issuance of a final, non-appealable 524(g) channeling
injunction permanently enjoining any Bendix related asbestos claims against
Honeywell, and the receipt of all required governmental approvals. We do not
believe that completion of such transaction would have a material adverse impact
on our consolidated results of operations or financial position.

     There can be no assurance, however, that the transaction contemplated by
the LOI will be completed. Honeywell presently has approximately $1.9 billion
(excluding coverage previously available from Equitas; see discussion below)
of insurance coverage remaining with respect to Bendix related asbestos claims.
Although it is impossible to predict the outcome of pending or future claims,
in light of our potential exposure, our prior experience in resolving these
claims, and our insurance coverage, we do not believe that the Bendix related
asbestos claims will have a material adverse effect on our consolidated
financial position.

     Another source of claims is refractory products (high temperature bricks
and cement) sold largely to the steel industry in the East and Midwest by North
American Refractories Company (NARCO), a business we owned from 1979 to 1986.
Less than 2 percent of NARCO's products contained asbestos.

                                       35

     When we sold the NARCO business in 1986, we agreed to indemnify NARCO with
respect to personal injury claims for products that had been discontinued prior
to the sale (as defined in the sale agreement). NARCO retained all liability for
all other claims. NARCO had resolved approximately 176,000 claims through
January 4, 2002, the date NARCO filed for reorganization under Chapter 11 of the
U.S. Bankruptcy Code, at an average cost per claim of two thousand two hundred
dollars. Of those claims, 43 percent were dismissed on the ground that there was
insufficient evidence that NARCO was responsible for the claimant's asbestos
exposure. As of the date of NARCO's bankruptcy filing, there were approximately
116,000 remaining claims pending against NARCO, including approximately 7
percent in which Honeywell was also named as a defendant. Since 1983, Honeywell
and our insurers have contributed to the defense and settlement costs associated
with NARCO claims. We have approximately $1.5 billion (excluding coverage
previously available from Equitas; see discussion below) of insurance remaining
that can be specifically allocated to NARCO related liability.

     As a result of the NARCO bankruptcy filing, all of the claims pending
against NARCO are automatically stayed pending the reorganization of NARCO. In
addition, because the claims pending against Honeywell necessarily will impact
the liabilities of NARCO, because the insurance policies held by Honeywell are
essential to a successful NARCO reorganization, and because Honeywell has
offered to commit the value of those policies to the reorganization, the
bankruptcy court has temporarily enjoined any claims against Honeywell, current
or future, related to NARCO. Although the stay has been extended sixteen times
since January 4, 2002, there is no assurance that such stay will remain in
effect. In connection with NARCO's bankruptcy filing, we paid NARCO's parent
company $40 million and agreed to provide NARCO with up to $20 million in
financing. We also agreed to pay $20 million to NARCO's parent company upon the
filing of a plan of reorganization for NARCO acceptable to Honeywell, and to pay
NARCO's parent company $40 million, and to forgive any outstanding NARCO
indebtedness, upon the confirmation and consummation of such a plan.

     As a result of ongoing negotiations with counsel representing NARCO related
asbestos claimants regarding settlement of all pending and potential NARCO
related asbestos claims against Honeywell, we have reached definitive agreements
or agreements in principle with approximately 236,000 claimants, which
represents approximately 90 percent of the approximately 260,000 current
claimants who are now expected to file a claim as part of the NARCO
reorganization process. We are also in discussions with the NARCO Committee of
Asbestos Creditors on Trust Distribution Procedures for NARCO. We believe that,
as part of the NARCO plan of reorganization, a trust will be established
pursuant to these Trust Distribution Procedures for the benefit of all asbestos
claimants, current and future. If the trust is put in place and approved by the
court as fair and equitable, Honeywell as well as NARCO will be entitled to a
permanent channeling injunction barring all present and future individual
actions in state or federal courts and requiring all asbestos related claims
based on exposure to NARCO products to be made against the federally-supervised
trust. As part of its ongoing settlement negotiations, Honeywell is seeking to
cap its annual contributions to the trust with respect to future claims at a
level that would not have a material impact on Honeywell's operating cash flows.
Given the substantial progress of negotiations between Honeywell and NARCO
related asbestos claimants and between Honeywell and the Committee of Asbestos
Creditors during the fourth quarter of 2002, Honeywell developed an estimated
liability for settlement of pending and future asbestos claims.

     During the fourth quarter of 2002, Honeywell recorded a charge of $1.4
billion for NARCO related asbestos litigation charges, net of insurance
recoveries. This charge consists of the estimated liability to settle current
asbestos related claims, the estimated liability related to future asbestos
related claims through 2018 and obligations to NARCO's parent, net of insurance
recoveries of $1.8 billion.

                                       36

     The estimated liability for current claims is based on terms and
conditions, including evidentiary requirements, in definitive agreements or
agreements in principle with approximately 90 percent of current claimants. Once
finalized, settlement payments with respect to current claims are expected to be
made over approximately a four-year period.

     The liability for future claims estimates the probable value of future
asbestos related bodily injury claims asserted against NARCO over a 15 year
period and obligations to NARCO's parent as discussed above. In light of the
uncertainties inherent in making long-term projections we do not believe that we
have a reasonable basis for estimating asbestos claims beyond 2018 under
Statement of Financial Accounting Standard No. 5 "Accounting for Contingencies."
Honeywell retained the expert services of Hamilton, Rabinovitz and Alschuler,
Inc. (HR&A) to project the probable number and value, including trust claim
handling costs, of asbestos related future liabilities. The methodology used to
estimate the liability for future claims has been commonly accepted by numerous
courts and is the same methodology that is utilized by an expert who is
routinely retained by the asbestos claimants committee in asbestos related
bankruptcies. The valuation methodology includes an analysis of the population
likely to have been exposed to asbestos containing products, epidemiological
studies to estimate the number of people likely to develop asbestos related
diseases, NARCO claims filing history and the pending inventory of NARCO
asbestos related claims.

     Honeywell has substantial insurance that reimburses it for portions of the
costs incurred to settle NARCO related claims and court judgments as well as
defense costs. This coverage is provided by a large number of insurance policies
written by dozens of insurance companies in both the domestic insurance market
and the London excess market. At June 30, 2003, a significant portion of this
coverage is with London-based insurance companies under a coverage-in-place
agreement. See below for discussion of separate Equitas settlement.
Coverage-in-place agreements are settlement agreements between policyholders and
the insurers specifying the terms and conditions under which coverage will be
applied as claims are presented for payment. These agreements govern such things
as what events will be deemed to trigger coverage, how liability for a claim
will be allocated among insurers and what procedures the policyholder must
follow in order to obligate the insurer to pay claims. We conducted an analysis
to determine the amount of insurance that we estimate is probable that we will
recover in relation to payment of current and projected future claims. While the
substantial majority of our insurance carriers are solvent, some of our
individual carriers are insolvent, which has been considered in our analysis of
probable recoveries. Some of our insurance carriers have challenged our right to
enter into settlement agreements resolving all NARCO related asbestos claims
against Honeywell. However, we believe there is no factual or legal basis for
such challenges and we believe that it is probable that we will prevail in the
resolution of, or in any litigation that is brought regarding these disputes and
as of June 30, 2003, we have recognized approximately $550 million in probable
insurance recoveries from these carriers. We made judgments concerning insurance
coverage that we believe are reasonable and consistent with our historical
dealings with our insurers, our knowledge of any pertinent solvency issues
surrounding insurers and various judicial determinations relevant to our
insurance programs. Based on our analysis, we recorded insurance recoveries that
are deemed probable through 2018 of $1.8 billion. A portion of this insurance
has been received, primarily from Equitas, as discussed below.

     During the six months ended June 30, 2003, we made asbestos related
payments of $388 million, including legal fees. During the six months ended June
30, 2003, we received $477 million in insurance reimbursements including $472
million in cash received from Equitas related to a comprehensive policy buy-back
settlement of all insurance claims by Honeywell against Equitas. The settlement
resolves all claims by Honeywell against Equitas arising from asbestos claims
related to NARCO and

                                       37

Bendix. The coverage amounts discussed above for NARCO and Bendix do not
include coverage previously available from Equitas.

     Projecting future events is subject to many uncertainties that could cause
the NARCO related asbestos liabilities to be higher or lower than those
projected and recorded. There is no assurance that ongoing settlement
negotiations will be successfully completed, that a plan of reorganization will
be proposed or confirmed, that insurance recoveries will be timely or whether
there will be any NARCO related asbestos claims beyond 2018. Given the inherent
uncertainty in predicting future events, we plan to review our estimates
periodically, and update them based on our experience and other relevant
factors. Similarly we will reevaluate our projections concerning our probable
insurance recoveries in light of any changes to the projected liability or other
developments that may impact insurance recoveries.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits. See the Exhibit Index on page 40 of this Quarterly Report on
          Form 10-Q.

     (b)  Reports on Form 8-K. The following reports on Form 8-K were filed
          during the three months ended June 30, 2003.

          1.   On April 17, 2003, a report was filed which furnished, under Item
               12, a press release reporting our earnings for the first quarter
               of 2003.

                                       38

                                   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 8, 2003                         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)

                                       39

                                  EXHIBIT INDEX

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

     3              Omitted (Inapplicable)

     4              Omitted (Inapplicable)

     10.2*          Deferred Compensation Plan for Non-Employee Directors of
                    Honeywell International Inc., as amended and restated (filed
                    herewith)

     10.3*          Stock Plan for Non-Employee Directors of AlliedSignal Inc.,
                    as amended (incorporated by reference to Exhibit C to
                    Honeywell's Proxy Statement, dated March 10, 1994, filed
                    pursuant to Rule 14a-6 of the Securities and Exchange Act of
                    1934) and Supplement I dated as of March 1, 1999, Supplement
                    II dated as of February 28, 2002, and Supplement III dated as
                    of May 30, 2003 (filed herewith)

     10.6*          Supplemental Non-Qualified Savings Plan for Highly
                    Compensated Employees of Honeywell International Inc. and
                    its Subsidiaries, as amended and restated (filed herewith)

     10.8*          Salary and Incentive Award Deferral Plan for Selected
                    Employees of Honeywell International Inc. and its
                    Affiliates, as amended and restated (filed herewith)

     10.25*         2003 Stock Incentive Plan of Honeywell International Inc.
                    and its Affiliates (incorporated by reference to Exhibit A
                    to Honeywell's Proxy Statement dated March 17, 2003, filed
                    pursuant to Rule 14a-6 of the Securities and Exchange Act of
                    1934)

     10.26*         Letter between David J. Anderson and Honeywell International
                    Inc. dated June 12, 2003 (filed herewith)

     11             Computation of Per Share Earnings**

     12             Computation of Ratio of Earnings to Fixed Charges (filed
                    herewith)

     15             Independent Auditors' Acknowledgment Letter as to the
                    incorporation of their report relating to unaudited interim
                    financial statements (filed herewith)

     18             Omitted (Inapplicable)

     19             Omitted (Inapplicable)

     22             Omitted (Inapplicable)

                                       40

                            EXHIBIT INDEX (continued)

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

     24             Omitted (Inapplicable)

     31.1           Certification of Principal Executive Officer Pursuant to
                    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
                    herewith)

     31.2           Certification of Principal Financial Officer Pursuant to
                    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
                    herewith)

     32.1           Certification of Principal Executive Officer Pursuant to 18
                    U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002 (filed herewith)

     32.2           Certification of Principal Financial Officer Pursuant to 18
                    U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002 (filed herewith)

     99             Omitted (Inapplicable)

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

**   Data required by Statement of Financial Accounting Standards No. 128,
     "Earnings per Share", is provided in Note 9 to the condensed consolidated
     financial statements in this report.

                                       41

                                                                    EXHIBIT 10.2

              Deferred Compensation Plan for Non-Employee Directors
                         of Honeywell International Inc.
                (As Amended and Restated Effective May 30, 2003)

1.  Eligibility

               Each member of the Board of Directors (the "Board") of Honeywell
International Inc. (the "Corporation") who is not an employee of the Corporation
or any of its subsidiaries (a "Director") is eligible to participate in the
Deferred Compensation Plan for Non-Employee Directors of Honeywell International
Inc. (the "Plan").

2.  Definitions

               (a) Committee. The Corporate Governance Committee of the Board or
any successor.

               (b) Common Stock. The publicly traded common stock of the
Corporation or any successor.

               (c) Compensation. All amounts payable for services as a Director,
including amounts payable for services as a member or chairman of a committee of
the Board.

               (d) Elective Deferrals. Compensation deferred by a Director under
the Plan after December 31, 1996 (other than Non-Elective Deferrals and Lump-Sum
Compensation, as defined below).

               (e) Lump-Sum Compensation. A one-time lump-sum amount for each
Director serving on December 31, 1996 who elected such amount in satisfaction of
any benefits under the Retirement Plan for Non-Employee Directors of
AlliedSignal Inc. (the "Retirement Plan"), which amount is automatically
deferred under the Plan.

               (f) Non-Elective Deferrals. Effective January 1 of each year
after 2003, $60,000 of annual Compensation for Directors not eligible for a
benefit under the Retirement Plan, which amount is automatically deferred under
the Plan, provided, however, that (i) with respect to each Director who is a
member of the Board on January 1, 2003, a one-time amount equal to $20,000 of
annual Compensation for each such Director who is a member of the Board on July
1,

                                       2

2003 shall be automatically deferred under the Plan effective as of July 1,
2003, and (ii) with respect to each Director who first became a member of the
Board during 2003, a one-time amount equal to the product of (x) $60,000 and (y)
the ratio of full months of service as a Board member in 2003 to twelve (12)
shall be automatically deferred under the Plan effective as of the date that
such Director's term begins.

               (g) Pre-1997 Elective Deferrals. Compensation deferred by a
Director under the Plan prior to January 1, 1997.

               (h) Retirement. As used in the Plan, the term "retirement" or
"retire" shall include any termination of a Director's Board service except, in
the case of Lump-Sum Compensation, any termination which the Board determines to
have resulted from gross cause. "Gross cause" means fraud, misappropriation or
intentional misconduct damaging to the property or business of the Corporation
or any of its subsidiaries, or commission of a crime.

               (i) Secretary. The Secretary of the Corporation.

3.  Investment Options

               Amounts deferred under the Plan shall be invested as described
below.

               (a) Pre-1997 Elective Deferrals. These amounts have been credited
to a deferred compensation account (the "Director's Account") either (i) in cash
with interest as described in paragraphs 5(b) and (c) below or (ii) in shares of
Common Stock, as elected by the Director, and will remain in the form elected
until paid out.

               (b) Elective Deferrals. A Director may elect to have these
amounts credited to the Director's Account in cash (i) with interest as
described in paragraph 5(c) below or (ii) which is valued as if invested in one
or more of the funds available for investments by participants in the Honeywell
Savings and Ownership Plan I as described in paragraph 5(g) below. All such
amounts will be paid out in cash.

               (c) Non-Elective Deferrals. These amounts will be credited to the
Director's Account on January 1 of each year in the form of equivalent shares of
Common Stock, calculated based on the mean between the highest and lowest sales
prices of the Common Stock as reported on the New York Stock Exchange Composite
Tape for the immediately preceding December 31 (or, if there were no sales on
such day, for the last preceding day on which there were sales) and valued as
described in paragraph 5(f) below. For any person who becomes a

                                       3

Director after January 1, a pro rata portion of the annual amount based on the
number of days remaining in the calendar year will be credited to the Director's
Account on the Director's first day of service in the form of equivalent shares
of Common Stock, calculated based on such mean for the first day of service (or,
if there were no sales on such day, for the last preceding day on which there
were sales). All such amounts will be paid out in cash after retirement from the
Board.

               (d) Lump-Sum Compensation. This amount will be credited to the
Director's Account, effective January 1, 1997, either (i) 100% in the form of
equivalent shares of Common Stock, calculated based on the mean between the
highest and lowest sales prices of the Common Stock as reported on the New York
Stock Exchange Composite Tape for December 31, 1996 and valued as described in
paragraph 5(f) below, or (ii) 50% in the form of equivalent shares of Common
Stock, calculated and valued as described in (i), and 50% in cash with interest
at the rate of 10% per annum, as elected by the Director prior to January 1,
1997. All such amounts will be paid out in cash after retirement from the Board.

4.  Participation

               (a)  Elective Deferrals.

                   (i) Time of Election. Prior to the beginning of any calendar
         year, each Director who is not then participating in the Plan (other
         than by virtue of Non-Elective Deferrals and/or Lump-Sum Compensation)
         may elect to participate in the Plan by directing that all or any part
         of the Director's Compensation which otherwise would have been payable
         currently for services as a Director during such calendar year shall be
         credited to the Director's Account as Elective Deferrals. Any person
         who shall become a Director during any calendar year may elect, within
         thirty (30) days following the date the Director's term begins, to
         defer payment of all or any part of the Director's Compensation for the
         remainder of such calendar year.

                   (ii) Form and Duration of Election. An election to make
         Elective Deferrals shall be made by written notice executed by the
         Director and filed with the Secretary. Such election shall continue in
         effect for succeeding calendar years unless the Director terminates
         such election by written notice filed with the Secretary. Any such
         termination shall become effective as of the end of the calendar year
         in which such notice is given and only with respect to Compensation
         payable for services as a Director thereafter. Amounts credited to the
         Director's Account prior to the effective

                                       4

         date of termination shall not be affected by such termination and shall
         be distributed only in accordance with the terms of the Plan.

                  (iii) Adjustment of Future Deferrals. Prior to the beginning
         of any calendar year, a Director participating in the Plan may file
         another written notice with the Secretary electing to change the amount
         of Elective Deferrals to be credited to the Director's Account for
         services as a Director commencing with such calendar year. Amounts
         credited to the Director's Account prior to the effective date of such
         change shall not be affected by such change and shall be distributed
         only in accordance with the terms of the Plan.

                  (iv) Adjustment of Investment Options. A Director may elect to
         change the investment options with respect to those portions of the
         Director's Account applicable to Elective Deferrals which are valued as
         if invested in one or more of the funds available for investments by
         participants in the Honeywell Savings and Ownership Plan I. Any such
         election to reallocate amounts among the investment funds shall be made
         by written notice executed by the Director and filed with the
         Secretary, may be made no more often than once each calendar quarter
         during the 30-day period beginning on the third business day following
         an earnings release by the Corporation, and shall be effective on the
         first business day following receipt by the Secretary.

               (b) Non-Elective Deferrals. No participation election is required
for Non-Elective Deferrals since the crediting of such amounts to the Director's
Account will be automatic.

               (c) Lump-Sum Compensation. No participation election is required
for Lump-Sum Compensation since the crediting of such amounts to the Director's
Account, in accordance with the irrevocable investment option elected by the
Director prior to January 1, 1997, will be automatic.

5.  The Director's Account

               (a) All Compensation which a Director has elected to defer under
the Plan shall be credited to the Director's Account consistent with the
Director's investment options, as described in paragraph 3. All credits shall be
made as unfunded book entries and the Director shall not have any interest in
any amounts credited to the Director's Account until distributed in accordance
with the Plan.

                                       5

               (b) Amounts credited to the Director's Account in cash for
services as a Director during 1993 or any prior calendar year shall accrue
amounts equivalent to interest commencing on the date such amounts would
otherwise have been paid, at a rate per annum for each calendar quarter fixed by
the Treasurer of the Corporation at the commencement of such calendar quarter
based upon the sum of (i) the average quoted rate for three-month U.S. Treasury
Bills for the last full week of the preceding calendar quarter, and (ii) a rate
per annum of three percent.

               (c) Amounts credited to the Director's Account in cash for
services as a Director during 1994 or any subsequent calendar year, other than
cash amounts referred to in Paragraph 5(g), Lump-Sum Compensation and
Non-Elective Deferrals, shall accrue amounts equivalent to interest commencing
on the date such amounts would otherwise have been paid, at the same rates per
annum as those fixed for deferrals with respect to the relevant calendar years
under the AlliedSignal Inc. Incentive Compensation Plan for Executive Employees,
as amended from time to time.

               (d) Amounts credited to the Director's Account in cash as a
result of the conversion of shares or equivalent shares to cash pursuant to
paragraph 7(a) shall accrue amounts equivalent to interest commencing on the
date of such conversion, at the higher of the two rates provided under
paragraphs 5(b) and (c), regardless of the calendar year or years to which the
underlying deferral of shares or equivalent shares relates. The determination of
which rate is higher shall be made each calendar quarter and, for purposes of
such determination, the rate provided under paragraph 5(c) for cash amounts
deferred with respect to the then current calendar year shall be compared to the
rate provided under paragraph 5(b) for the then current calendar quarter.

               (e) Amounts determined pursuant to this paragraph 5 shall be
compounded at the end of each calendar quarter and credited to the Director's
Account. Amounts credited to the Director's Account in cash shall continue to
accrue amounts equivalent to interest in accordance with paragraphs 5(b), (c) or
(d) until distributed in accordance with the Plan.

               (f) Amounts credited to the Director's Account in shares or
equivalent shares of Common Stock shall accrue amounts equivalent to cash or
stock dividends as declared by the Board. For Pre-1997 Elective Deferrals, such
equivalent amounts shall continue to accrue amounts equivalent to interest or
dividends. For Non-Elective Deferrals and Lump-Sum Compensation, such equivalent
amounts shall be credited to the Director's Account as if reinvested in Common
Stock. Amounts credited to the Director's Account in equivalent shares of Common
Stock shall be valued on the same basis as investments by

                                       6

participants in the Honeywell Common Stock Fund under the Honeywell Savings and
Ownership Plan I, as indicated in paragraph 5(g).

               (g) Amounts credited to the Director's Account in cash but which
are valued as if invested in one or more of the funds available for investment
by participants in the Honeywell Savings and Ownership Plan I shall be valued on
the same basis as investments by participants in such funds (excluding any
charge for expenses and, with respect to the Honeywell Common Stock Fund,
excluding any liquidity reserves and assuming reinvestment of dividend
equivalents).

6.  Distribution from Accounts

               (a) Form of Election.

                   (i) Pre-1997 Elective Deferrals. The aggregate amount of
         Pre-1997 Elective Deferrals credited to a Director's Account shall be
         distributed in accordance with the Director's distribution election in
         effect at the time such amounts were credited to the Director's
         Account, as modified (A) effective January 1, 1997 by a Director's
         special one-time election to take advantage of the Federal Source Tax
         Law (4 U.S.C. 'SS'114), or (B) effective January 1, 2002, by any
         Director's election filed pursuant to paragraphs 6(d) and (e) and
         otherwise consistent with the form and timing restrictions established
         from time to time by the Committee and consistent with those set forth
         in below. If no distribution election was in effect, such amounts shall
         be paid on the first business day of the calendar year immediately
         following the year in which the Director ceases to be a Director.

                   (ii) Elective Deferrals. At the time a Director makes a
         participation election pursuant to paragraph 4(a), the Director shall
         also file with the Secretary a written election with respect to the
         distribution of the aggregate amount credited to the Director's Account
         pursuant to such participation election. A Director may elect to
         receive such amount in one lump-sum payment or in a number of
         approximately equal installments (provided the payout period does not
         exceed 15 years). The Director may also elect to have the lump-sum
         payment or the first installment paid (A) on the first business day of
         the calendar year immediately following the year in which the Director
         ceases to be a Director, (B) on the first business day of such calendar
         year as the Director may elect, or (C) as soon as practicable following
         the Director's death. Except in the case of the Director's death, in
         which event paragraph 8 shall govern, subsequent installments shall be
         paid on the first business day of each succeeding installment period
         until the entire amount credited to the Director's Account shall have
         been paid.

                                       7

         Absent such an election, except in the case of death, the amount of
         Elective Deferrals in the Director's Account shall be paid on the
         first business day of the calendar year immediately following the year
         in which the Director ceases to be a Director.

                   (iii) Lump-Sum Compensation. The aggregate amount credited to
         a Director's Account as Lump-Sum Compensation shall be distributed in
         accordance with the distribution election filed by the Director with
         the Secretary prior to January 1, 1997 or in accordance with any
         distribution election filed by the Director under paragraph 6(d) or
         (e). Such distribution election shall have included an election to
         receive such amount in one lump-sum payment or in a number of
         approximately equal installments (provided the payout period does not
         exceed 15 years), and an election to have the lump-sum payment or the
         first installment paid (A) on the first business day of the calendar
         year immediately following the year in which the Director ceases to be
         a Director, (B) on the first business day of a calendar year which is
         such number of years following retirement as the Director may elect, or
         (C) as soon as practicable following the Director's death. Except in
         the case of the Director's death, in which event paragraph 8 shall
         govern, subsequent installments shall be paid on the first business day
         of each succeeding installment period until the entire amount credited
         to the Director's Account shall have been paid. Absent such an
         election, except in the case of death, the amount of Lump-Sum
         Compensation in the Director's Account shall be paid on the first
         business day of the calendar year immediately following the year in
         which the Director ceases to be a Director.

                   (iv) Non-Elective Deferrals. Although no participation
         election is required for Non-Elective Deferrals, each Director prior to
         the beginning of any calendar year may file with the Secretary a
         written election with respect to the distribution of the aggregate
         amount of Non-Elective Deferrals credited to the Director's Account for
         the next calendar year. Any person who shall become a Director during
         any calendar year may file with the Secretary before the Director's
         term begins a written election with respect to the distribution of the
         aggregate amount of Non-Elective Deferrals credited to the Director's
         Account for the remainder of such calendar year. Any such election
         shall continue in effect for Non-Elective Deferrals credited to the
         Director's Account in succeeding calendar years, unless the Director
         files a new written election prior to the beginning of any calendar
         year. A Director may elect to receive such amount in one lump-sum
         payment or in a number of approximately equal installments (provided
         the payout period does not exceed 15 years). The Director may also
         elect to have the lump-sum payment or the first installment paid (A) on
         the first

                                       8

         business day of the calendar year immediately following the year in
         which the Director ceases to be a Director of the Corporation, (B) on
         the first business day of a calendar year which is such number of years
         following retirement as the Director may elect, or (C) as soon as
         practicable following the Director's death. Except in the case of the
         Director's death, in which event paragraph 8 shall govern, subsequent
         installments shall be paid on the first business day of each succeeding
         installment period until the entire amount credited to the Director's
         Account shall have been paid. Absent such an election, except in the
         case of death, the amount of Non-Elective Deferrals credited to the
         Director's Account shall be paid on the first business day of the
         calendar year immediately following the year in which the Director
         ceases to be a Director.

               (b) Adjustment of Method of Distribution of Future Deferrals.
Whether or not a Director has filed a notice pursuant to paragraph 4(a)(iii)
electing to change the amount of Elective Deferrals to be credited to the
Director's Account, a Director participating in the Plan may, prior to the
beginning of any calendar year, file another written notice with the Secretary
electing to change the method of distribution of the aggregate amount of
Elective Deferrals credited to the Director's Account for services as a Director
commencing with such calendar year. Amounts credited to the Director's Account
prior to the effective date of such change shall not be affected by such change.

               (c) Aggregate Amounts. References to the aggregate amounts
credited to the Director's Account include accrued amounts equivalent to
interest and dividends.

               (d) Changes to Distribution Elections. Notwithstanding the
preceding provisions of this paragraph 6, a Director may file a new distribution
election with the Secretary with respect to amounts previously credited to the
Director's Account (other than with respect to such amounts that are currently
payable to the Director in the form of installments). Any new election shall be
for a form of payment consistent with the respective payment provisions of
paragraph 6(a). The Committee shall reserve the right to accept or reject any
such distribution election request by the Director and any such election shall
be subject to such restrictions and limitations as the Committee shall determine
in its sole discretion, provided that any new distribution election shall
generally be required to be filed with the Secretary at least twelve (12) months
prior to any scheduled payment date.

               If all or a portion of a Director's Account is determined to be
includible in the Director's gross income and subject to income tax at any time
prior to the time such Account would otherwise be paid, the Director's Account
or that portion

                                       9

of the Director's Account shall be distributed to the Director without regard to
any provision of the Plan to the contrary. For this purpose, an amount is
determined to be includible in the Director's gross income upon the earliest of:
(i) a final determination by the Internal Revenue Service addressed to the
Director which is not appealed, (ii) a final determination by the United States
Tax Court or any other federal court affirming an IRS determination, or (iii) an
opinion addressed to the Committee by the tax counsel for the Committee that, by
reason of the Code, Treasury Regulations, published Internal Revenue Service
rulings, court decisions or other substantial precedent, the amount is subject
to federal income tax prior to payment.

               (e) Accelerated Distribution Election. Notwithstanding the
preceding provisions of this paragraph 6, a Director may request an immediate
withdrawal of all or a portion of such Director's Account at any time, provided,
however, that such a request and distribution shall be subject to a penalty and
such other restrictions or conditions as may be established by the Committee
from time to time, including a restriction that amounts described in paragraph
6(a)(iii) and (iv) shall not be subject to withdrawal prior to the date that the
Director ceases to be a Director of the Corporation for any reason. Effective
January 1, 2002, the penalty shall be six percent (6%) of the amount requested
to be distributed, provided, however, that with respect to amounts credited to
the Director's Account in cash as determined under paragraph 5(b), (c) and (d),
the penalty shall be the difference between (i) six percent (6%), and (ii) fifty
percent (50%) of the amount, if any, by which ten percent (10%) exceeds the
interest rate on 10-year U.S. Treasury Bonds on the first business day of the
calendar quarter during which the withdrawal request is made.

7.  Change in Control

               (a) Conversion of Shares. Notwithstanding anything to the
contrary in the Plan, shares of Common Stock and equivalent shares of Common
Stock credited to a Director's Account shall be converted to cash, as soon as
practicable following a Change in Control but in no event later than 90 days
after the Change in Control, in an amount equal to the total number of shares or
equivalent shares of Common Stock, and fractional interests thereof, credited to
the Director's Account, multiplied by the Multiplication Factor. "Multiplication
Factor" shall mean (A) in the case of an acquisition of Common Stock described
in paragraph 7(d)(i), the Acquisition Price per Share, (B) in the event of the
occurrence of an Offer as defined in paragraph 7(d)(ii), the Offer Price per
Share, (C) in the case of an event described in paragraph 7(d)(iii), the Merger
Price per Share, or (D) in the case of a change in the composition of the Board
as described in paragraph 7(d)(iv), the highest Fair Market Value per Share of
the Common Stock for any day during (i) the ninety-day period ending on or
within 89

                                       10

days following the date of the Change in Control which the Committee, in its
sole discretion, shall select prior to the Change in Control, or (ii) if the
Committee shall not have selected a ninety-day period pursuant to clause (i) of
this sentence prior to the Change in Control, the ninety-day period ending on
the 45th day following the date of the Change in Control. "Acquisition Price per
Share" shall mean the greater of (A) the highest price per share stated on the
Schedule 13D or any amendment thereto filed by the holder of 30% or more of the
Corporation's voting power which gives rise to the Change in Control, and (B)
the highest Fair Market Value per Share of Common Stock during the ninety-day
period ending on the date the Change in Control occurs. "Offer Price per Share"
shall mean the greater of (A) the highest price per share of Common Stock paid
in any Offer, which Offer is in effect at any time during the ninety-day period
ending on the date on which the Change in Control occurs, or (B) the highest
Fair Market Value per Share of Common Stock during such ninety-day period. Any
securities or property which are part or all of the consideration paid for
shares of Common Stock in the Offer shall be valued in determining the Offer
Price per Share at the higher of (A) the valuation placed on such securities or
property by the corporation, person or other entity making such Offer or (B) the
valuation placed on such securities or property by the Committee. "Merger Price
per Share" shall mean the greater of (A) the fixed or formula price for the
acquisition of shares of Common Stock occurring pursuant to such event described
in paragraph 7(d)(iii) if such fixed or formula price is determinable on the
date on which the Change in Control occurs, and (B) the highest Fair Market
Value per Share of Common Stock during the ninety-day period ending on the date
on which the Change in Control occurs. Any securities or property which are part
or all of the consideration paid for shares of Common Stock pursuant to such
event shall be valued in determining the Merger Price per Share at the higher of
(A) the valuation placed on such securities or property by the corporation,
person or other entity which is a party with the Corporation to an event
described in paragraph 7(d)(iii), or (B) the valuation placed on such securities
or property by the Committee. For purposes of this paragraph (7)(a), "Fair
Market Value per Share of Common Stock" for any day shall be the mean between
the highest and lowest sales prices of Common Stock as reported on the New York
Stock Exchange Composite Tape for such day.

               (b) Interest Equivalents. Notwithstanding anything to the
contrary in the Plan, in the event of a Change in Control (i) the Plan may not
be amended to reduce the formulas contained in paragraph 5 which determine the
rate at which amounts equivalent to interest accrue with respect to cash amounts
credited to a Director's Account, including cash amounts attributable to the
conversion of shares or equivalent shares in a Director's Account pursuant to
paragraph 7(a), and (ii) the Plan Administrator referred to in paragraph 10(c)
shall fix rates under the formulas contained in paragraph 5 in lieu of the
Treasurer of the Corporation.

                                       11

               (c) Payment on a Change in Control. In the event of a Change in
Control, the aggregate amount credited to the Director's Account under the Plan
shall be paid in one lump-sum payment as soon as practicable following the
Change in Control but in no event more than 90 days after the Change in Control,
provided, however, that any election with respect to Pre-1997 Elective Deferrals
in which a Director did not elect a lump-sum payment on a Change in Control
shall remain in effect. A Director may elect a method of distribution of his
Account upon a Change in of Control that is different than the method described
in the preceding sentence (provided such method of distribution would be a form
of payment permitted under paragraph 6(a)). Any such election shall be made at a
time prior to a Change in Control as specified by the Committee and shall be
subject to such restrictions and limitations as the Committee shall determine
from time to time.

               (d) Definition of Change in Control. For purposes of the Plan, a
Change in Control is deemed to occur at the time (i) when any entity, person or
group (other than the Corporation, any subsidiary or any savings, pension or
other benefit plan for the benefit of employees of the Corporation or its
subsidiaries) which theretofore beneficially owned less than 30% of the Common
Stock then outstanding acquires shares of Common Stock in a transaction or
series of transactions that results in such entity, person or group directly or
indirectly owning beneficially 30% or more of the outstanding Common Stock, (ii)
of the purchase of shares of Common Stock pursuant to a tender offer or exchange
offer (other than an offer by the Corporation) for all, or any part of, the
Common Stock ("Offer"), (iii) of a merger in which the Corporation will not
survive as an independent, publicly owned corporation, a consolidation, or a
sale, exchange or other disposition of all or substantially all of the
Corporation's assets, (iv) of a substantial change in the composition of the
Board during any period of two consecutive years such that individuals who at
the beginning of such period were members of the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the stockholders of the Corporation, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period, or (v) of any transaction or
other event which the Committee, in its discretion, determines to be a Change in
Control for purposes of the Plan.

8.  Distribution on Death

               If a Director should die before all amounts credited to the
Director's Account shall have been paid in accordance with the Director's prior
elections, the balance in such Account (including all unpaid installments if
installment payments had been elected by the Director under paragraph 6) shall
be paid as

                                       12

soon as practicable following the Director's death to the beneficiary designated
in writing by the Director and filed with the Secretary of the Corporation. The
payable balance shall be paid to the estate of the Director if (a) no such
designation has been made or (b) the designated beneficiary shall have
predeceased the Director and no further designation has been made. A Director
may change the designated beneficiary at any time during the Director's lifetime
by filing a subsequent designation in writing with the Secretary of the
Corporation.

9.  Payment in the Event of Hardship

               Upon receipt of a request from a Director or a Director's
designated beneficiary, delivered in writing to the Secretary, the Committee may
cause the Corporation to accelerate payment promptly of all or any part of the
unpaid balance credited to the Director's Account (other than amounts credited
as Lump-Sum Compensation and Non-Elective Deferrals) if it finds in its sole
discretion that continued deferral of such amount would result in hardship to
the Director or the person otherwise entitled to receive it. For this purpose,
"hardship" means an unanticipated financial emergency that is caused by an event
beyond the control of the Director or other person entitled to receive payment
and that would result in severe financial hardship to such person if
acceleration of payment were not permitted.

10.  Miscellaneous

               (a) The right of a Director to receive any amount credited to the
Director's Account shall not be transferable or assignable by the Director,
except by will or by the laws of descent and distribution. To the extent that
any person acquires a right to receive any amount credited to a Director's
Account hereunder, such right shall be no greater than that of an unsecured
general creditor of the Corporation. Except as expressly provided herein, any
person having an interest in any amount credited to a Director's Account under
the Plan shall not be entitled to payment until the date the amount is due and
payable. No person shall be entitled to anticipate any payment by assignment,
alienation, sale, pledge, encumbrance or transfer in any form or manner prior to
actual or constructive receipt thereof.

               (b) The Corporation shall not be required to reserve or otherwise
set aside funds or shares of Common Stock for the payment of its obligations
hereunder. With respect to Pre-1997 Elective Deferrals, the Corporation shall
make available as and when required a sufficient number of shares of Common
Stock to meet the needs of the Plan. To the extent that registration of such
shares under the Securities Act of 1933 shall be required prior to their resale,
the Corporation undertakes to either file a registration statement relating to
such

                                       13

shares or include such shares in another registration statement to be filed
within a reasonable time.

               (c) Prior to a Change in Control, the Committee shall interpret
the Plan and make all determinations deemed necessary or desirable for the
Plan's implementation. The determination of the Committee shall be conclusive.
The Committee may obtain such advice or assistance as it deems appropriate from
persons not serving on the Committee. The Senior Vice President responsible for
Human Resources or other appropriate officer of the Corporation shall, prior to
any Change in Control, name as Plan Administrator any person or entity
(including, without limitation, a bank or trust company). Following a Change in
Control, the Plan Administrator shall interpret the Plan and make all
determinations deemed necessary or desirable for the Plan's implementation. The
determination of the Plan Administrator shall be conclusive. The Corporation
shall provide the Plan Administrator with such records and information as are
necessary for the proper administration of the Plan. The Plan Administrator
shall rely on such records and other information as the Plan Administrator shall
in its judgment deem necessary or appropriate in determining the eligibility of
a Director and the amount payable to a Director under the Plan.

               (d) The Board may at any time amend or terminate the Plan
provided that no amendment or termination shall impair the rights of a Director
with respect to amounts then credited to the Director's Account.

               (e) Each Director participating in the Plan will receive a
statement at least quarterly indicating the amounts credited to the Director's
Account as of the end of the preceding calendar quarter.

               (f) If adjustments are made to outstanding shares of Common Stock
as a result of stock dividends, split-ups, recapitalizations, mergers,
consolidations and the like, an appropriate adjustment will also be made in the
number of shares or equivalent shares of Common Stock credited to the Director's
Account.

                                                                    EXHIBIT 10.3

                                 Supplement I to
                    Stock Plan for Non-Employee Directors of
                                AlliedSignal Inc.

         As a result of the September 15, 1997 two-for-one split of the
Company's Common Stock, the following adjustments were made to the Stock Plan
for Non-Employee Directors of AlliedSignal Inc. (the "Plan") in accordance with
Section 11 of the Plan, effective September 15, 1997 (references are to sections
of the Plan):

                      *                *                 *

3.       Eligibility and Grants

         The references in the second and third sentences to 1,500 Restricted
Shares were adjusted to 3,000 Restricted Shares, the reference in the third
sentence to 3,000 Restricted Shares was adjusted to 6,000 Restricted Shares, and
the reference in the fourth sentence to 1,000 shares was adjusted to 2,000
shares.

4.       Shares Available

         The reference to 225,000 shares was adjusted to 450,000 shares.

Dated as of March 1, 1999

                                Supplement II to
                    Stock Plan for Non-Employee Directors of
                          Honeywell International Inc.

         WHEREAS, Honeywell International Inc. (formerly AlliedSignal Inc. and
hereinafter, the "Corporation") has adopted the Stock Plan for Non-Employee
Directors of Honeywell International Inc., as amended effective April 25, 1994
(the "Plan"); and

         WHEREAS, pursuant to Section 12 of the Plan, the Board of Directors of
the Corporation has the right to amend the Plan; and

         WHEREAS, the Board of Directors of the Corporation has delegated its
authority to amend the Plan to the Governance Committee of the Board of
Directors of the Corporation, which deems it advisable to amend the Plan;

         NOW, THEREFORE, the Plan is hereby amended as follows:

1.       Section 1 of the Plan shall be amended to provide that references in
         the Plan to the "Company" are references to Honeywell International
         Inc., rather than references to AlliedSignal Inc.

2.       Section 9(c) of the Plan shall be amended by adding a new sentence to
         read as follows:

         "Notwithstanding the preceding sentence, in the event a Participant
         ceases to be a non-employee director of the Company for involuntary
         reasons other than disability, death, or retirement (other than on
         account of a failure to be elected as a non-employee director by the
         shareholders of the Company following nomination by the Board prior to
         a Change in Control as described in Section 14), the Participant's
         Options may be exercised, to the extent the Participant was entitled to
         do so at termination of the Participant's directorship, for a period of
         three years after such termination, but in no case later than the date
         on which the Option terminates."

3. A new Section 14 shall be added to the Plan, as follows:

         "14.  Change in Control

                    (a) Notwithstanding anything to the contrary in the Plan or
                  an award agreement issued under the Plan, upon the occurrence
                  of a Change in Control (as defined below), each Options issued
                  under the Plan shall become fully vested and exercisable and
                  all restrictions shall lapse with respect to each Restricted
                  Share issued under the Plan. In the event that the service of
                  an eligible director on the Board terminates for any reason
                  following the occurrence of a Change in Control, such
                  termination of service shall be treated as a retirement for
                  purposes of Section 9(b) of the Plan.

                  (b) For purposes of the Plan, Change in Control shall mean
                  means (i) the purchase of the Common Stock pursuant to a
                  tender offer or exchange offer (other than an offer by the
                  Company) for all, or any part of, the outstanding Common
                  Stock, (ii) an acquisition of Common Stock by any entity
                  person or group (other than the Company or any subsidiary of
                  the Company or any savings, pension or other benefit plan for
                  the benefit of employees of the Company or its subsidiaries)
                  which theretofore beneficially owned less than 30% of the
                  Common Stock then outstanding which results in such entity,
                  person or group directly or indirectly beneficially owning 30%
                  or more of the outstanding Common Stock, (iii) a merger in
                  which the Company will not survive as an independent publicly
                  owned corporation, a consolidation, or a sale, exchange or
                  other disposition of all or substantially all of the Company's
                  assets, or (iv) a substantial change in the composition of the
                  Board of Directors during any period of two consecutive years
                  such that individuals who at the beginning of such period were
                  members of the Board of Directors cease for any reason to
                  constitute at least a majority thereof, unless the election,
                  or nomination for election by the Company's shareowners, of
                  each new director was approved by a vote of at least
                  two-thirds of the directors then still in office who were
                  directors at the beginning of the period."

Dated as of February 28, 2002

                                Supplement III to
                    Stock Plan for Non-Employee Directors of
                          Honeywell International Inc.

         Pursuant to Section 12 of the Stock Plan for Non-Employee Directors of
Honeywell International Inc. (the "Corporation"), as amended effective February
8, 2002 (the "Plan"), and in accordance with a resolution adopted by the Board
of Directors of the Corporation (upon the recommendation of its Corporate
Governance Committee) on May 30, 2003, Section 3 of the Plan is hereby amended
by substituting "5,000 shares" in the fourth sentence thereof for "2,000
shares."

Dated as of May 30, 2003

                                                                    EXHIBIT 10.6

         SUPPLEMENTAL NON-QUALIFIED SAVINGS PLAN FOR HIGHLY COMPENSATED
         EMPLOYEES OF HONEYWELL INTERNATIONAL INC. AND ITS SUBSIDIARIES
                            (Career Band 6 and above)
                  (As Amended and Restated as of April 3, 2002)

1. Eligibility
   -----------

         Those highly compensated employees ("HCEs") of Honeywell International
Inc. (the "Corporation") and its subsidiaries within the meaning of Section
414(q) of the Internal Revenue Code of 1986 (the "Code") in Career Band 6 and
above who are eligible to participate in any of the qualified (as determined
under Code Section 401(a)) savings plans maintained by the Corporation or its
subsidiaries, other than any such plan maintained by Pittway Corporation and its
affiliates or by Honeywell Inc. prior to April 1, 2000, (the "Qualified Savings
Plans") are eligible to participate in the Supplemental Non-Qualified Savings
Plan for Highly Compensated Employees of Honeywell International Inc. and its
Subsidiaries (Career Band 6 and above) (the "Plan").

2. Definitions
   -----------

         Capitalized terms not otherwise defined in the Plan have the respective
meanings set forth in the applicable Qualified Savings Plans.

3. Participation
   -------------

         (a) Time and Form of Election. Any eligible employee may become a
participant in the Plan (a "Participant") as of the beginning of the next
available pay period, by executing a written or electronic notice of election to
participate and filing such notice with the Plan Administrator (as defined in
Section 10(a)) prior to the beginning of such pay period. Such notice may direct
that a portion (determined in accordance with paragraph 4(a)) of the base annual
salary exclusive of shift differentials, overtime or other premium pay, bonus,
incentive or other extra compensation, but inclusive of severance pay (unless
otherwise specifically excluded by the severance pay plan) or salary deferred
under this Plan or otherwise ("Base Annual Salary"), which would have been
payable to such Participant during such pay period and succeeding pay periods,
in lieu of such payment, be credited to a deferred compensation account
maintained under the Plan as an unfunded book entry stated as a cash balance
(the "Participant's Account"). Amounts so credited to the Participant's Account
shall constitute "Participant Deferred Contributions." A Participant's election
to direct that a portion of his or her Base Annual Salary be credited to the
Participant's Account shall continue in effect until the Participant terminates
such election, the Participant is no longer an HCE or the Participant is no
longer eligible to contribute to the Qualified Savings Plans. Any such
termination shall be effective only with respect to the Participant's Base
Annual Salary payable after the end of the pay period in which one of the events
in the preceding sentence occurs. Amounts credited to the Participant's Account
prior to the effective date of the termination of the election shall not be

affected and shall be distributed only in accordance with the terms of the Plan
and Participant's distribution election thereunder.

         (b) Change or Resumption of Amount Deferred. A Participant may elect at
any time to modify the amount of Base Annual Salary to be credited to the
Participant's Account under the Plan, which modification shall be effective for
the next available pay period following his or her election. Amounts credited to
the Participant's Account prior to the effective date of such change shall not
be affected by such change and shall be distributed only in accordance with the
terms of the Plan.

4. Contributions to Participants' Accounts
   ---------------------------------------

         (a) Participant Deferred Contributions. Unless the Plan Administrator
shall have established a lesser amount, a Participant may elect to defer an
aggregate amount equal to the difference between (i) a full percentage of such
Participant's Base Annual Salary from 1% to the maximum percentage permitted
under the Qualified Savings Plans and Code Section 415(c)(1)(B) for Before-Tax
Contributions by an individual who is not an HCE and who is eligible to
participate in the Qualified Savings Plans, without regard to any other
limitations which may apply under the Code and without regard to any After-Tax
Contributions which might be made under the Qualified Savings Plans, and (ii)
the full amount of Before-Tax Contributions made by such Participant under the
Qualified Savings Plans; provided, however, that a Participant who elects to
defer any amount hereunder shall be required to make the maximum Before-Tax
Contributions permissible under the Qualified Savings Plans for the applicable
Plan Year (after giving effect to deferrals under the Plan or otherwise).

         (b) Plan Employer Contributions. There shall be credited to the
Participant's Account employer contributions under the Plan ("Plan Employer
Contributions") in an aggregate amount equal to (i) minus (ii), where (i) is 50%
(for participants entitled to a 50% Employer Contribution in the Qualified
Savings Plans) or 100% (for participants entitled to a 100% Employer
Contribution in the Qualified Savings Plans) of the lesser of (x) 8% of the
Participant's Base Annual Salary, or (y) the sum of the Participant's
Participant Contributions under the Qualified Savings Plans and Participant
Deferred Contributions under the Plan, expressed as a percentage of Base Annual
Salary, and (ii) is the total amount of Employer Contributions made with respect
to the Participant under the Qualified Savings Plans; provided, however, that in
no event shall the combined Plan Employer Contributions and Employer
Contributions made with respect to the Participant exceed 8% of the
Participant's Base Annual Salary, and provided, further, that Plan Employer
Contributions shall not be made with respect to a Participant during any period
of suspension of Employer Contributions with respect to such Participant under
the terms of the Qualified Savings Plans, whether or not such Participant
continues to make Participant Contributions under the Qualified Savings Plans
during the period of such suspension. Notwithstanding the preceding sentence,
there shall be credited to the Participant's Account an amount equal to the
product of (i) the number of whole shares of common stock of Honeywell
International Inc. ("Common Stock") credited to such Participant's Account under
Section 5(b) on December 29, 2000, and (ii) $0.08 (such product rounded to the
nearest full dollar). The amount determined under the preceding sentence shall
be credited to the Participant's Account as Plan Employer Contributions in
accordance with Section 5(a) and shall be credited to such Account no later than
December 31, 2000.

         (c) Vesting. Participant Deferred Contributions, Plan Employer
Contributions (collectively "Total Contribution Amounts") and all amounts
accrued with respect to Total

                                      -2-

Contribution Amounts in accordance  with Section 5, shall be vested at the time
such amounts are credited to the Participant's Account.

         (d) All Contributions Prorated. Total Contribution Amounts shall be
credited to a Participant's Account each pay period.

5. The Participant's Account
   -------------------------

         (a) Crediting of Participant's Accounts. Participant Deferred
Contributions shall be credited to the Participant's Account under the Plan as
unfunded book entries stated as cash balances. Participant Deferred
Contributions credited to the Participant's Account prior to January 1, 1994 or
after the Participant has terminated employment shall accrue amounts (to be
posted each Valuation Date) equivalent to interest, compounded daily, at a rate
based upon the cost to the Corporation of borrowing at a fixed rate for a
15-year term. Such rate shall be determined annually by the Chief Financial
Officer of the Corporation in consultation with the Treasurer of the
Corporation. Participant Deferred Contributions credited to the Participant's
Account on or after January 1, 1994, but before a Participant terminates
employment, shall accrue amounts (to be posted each Valuation Date) equivalent
to interest, compounded daily, at a rate determined annually by the Management
Development and Compensation Committee (the "Committee") of the Board of
Directors (the "Board") of the Corporation. The rate established in the
preceding sentence shall not exceed the greater of (i) 10%, or (ii) 200% of the
10-year U.S. Treasury Bond rate at the time of determination and, once
established for a calendar year, shall remain in effect with respect to all
Participant Deferred Contributions credited to the Participant's Account during
such calendar year until such amounts are distributed. Plan Employer
Contributions shall be credited to the Participant's Account under the Plan as
unfunded book entries stated as shares of Common Stock (including fractional
shares). The number of shares of Common Stock credited to a Participant's
Account shall be determined by dividing the equivalent cash amount (as
determined under Section 4(b)) by the closing price of Common Stock on the day
that such Plan Employer Contributions are credited to the Participant's Account.
Amounts equivalent to the dividends that would have been payable in respect of
the Common Stock shall be credited to the Participant's Account as if reinvested
in Common Stock, with the number of shares credited determined by dividing the
equivalent cash dividend amount by the closing price of Common Stock on the date
the dividends would have been payable. Amounts credited to the Participant's
Account shall accrue amounts equivalent to interest and dividends, as the case
may be, until distributed in accordance with the Plan.

         (b) Transition Rule for Plan Employer Contributions. The balance of
each Participant's Account attributable to Plan Employer Contributions,
determined as of the close of business on the day prior to the effective date of
the amendment and restatement of the Plan and adjusted to reflect all gains,
losses and dividends that have been credited to such Participant's Account
through the day prior to such effective date, shall be converted into the
equivalent number of shares of Common Stock by dividing such balance by the
closing price of Common Stock on the trading date next preceding such effective
date. Such amount shall be an unfunded book entry only and shall (i) thereafter
be credited with equivalent dividend amounts in accordance with Section 5(a),
and (ii) be distributed in accordance with Section 6(a)(ii).

6. Distribution from Accounts
   --------------------------

         (a) Form of Election.

                                      -3-

         (i) Participant Deferred Contributions. At the time a Participant makes
an election pursuant to Section 3(a), the Participant shall also make an
election with respect to the distribution of the aggregate amount of the
Participant Deferred Contributions, plus earnings credited thereon pursuant to
Section 5 (collectively the "Participant Deferred Contribution Amounts"),
credited to the Participant's Account pursuant to such election. A Participant
may elect to receive such amount in one lump-sum payment or in a number of
annual installments (up to fifteen installments). The lump-sum payment or the
first installment shall be paid in cash as soon as practicable during the month
of January of such future calendar year as the Participant may designate or, if
the Participant so elects, as soon as practicable during the month of January of
the calendar year immediately following the later of the year in which the
Participant last contributed to the Plan or the year in which the Participant
terminates employment with the Corporation or any of its subsidiaries (whether
by reason of Retirement or otherwise). Except as otherwise provided in Section
8, subsequent installments shall be paid in cash as soon as practicable during
the month of January of each succeeding calendar year until the entire amount of
the Participant Deferred Contribution Amounts shall have been paid. The amount
of each installment shall be determined by multiplying the balance of the
Participant Deferred Contribution Amounts each year by a fraction, the numerator
of which is one and the denominator of which is (A) the number of installments
elected, reduced by (B) one for each annual installment previously received.

         (ii) Plan Employer Contributions. The distribution election made
pursuant to subsection (i) above shall also apply to the timing of the
distribution of the aggregate number of shares of Common Stock representing the
Plan Employer Contributions plus reinvested dividends pursuant to Section 5
(collectively the "Plan Employer Contribution Amounts") credited to the
Participant's Account pursuant to Section 5. Except to the extent otherwise
provided with respect to fractional shares, all distributions of Plan Employer
Contribution Amounts shall be made in Common Stock. A Participant may elect to
receive such Plan Employer Contribution Amounts in one lump-sum payment or in a
number of annual installments (up to fifteen installments). The lump-sum payment
or the first installment shall be paid as soon as practicable during the month
of January of such future calendar year as the Participant may designate, or, if
the Participant so elects, as soon as practicable during the month of January of
the calendar year immediately following the later of the year in which the
Participant last contributed to the Plan or the year in which the Participant
terminates employment with the Corporation or any of its subsidiaries (whether
by reason of Retirement or otherwise). Except as otherwise provided in Section
8, subsequent installments shall be paid as soon as practicable during the month
of January of each succeeding calendar year until the entire amount of the Plan
Employer Contribution Amounts shall have been paid. The amount of each
installment shall be determined by (A) multiplying the balance of the Plan
Employer Contribution Amounts on the last Valuation Date of each year by a
fraction, the numerator of which is one and the denominator of which is (x) the
number of installments elected, reduced by (y) one for each annual installment
previously received, and (B) rounding the result down to the next whole share of
Common Stock; provided, however, the amount of the last installment shall be
determined without regard to the rounding requirement of the preceding portion
of this sentence. Any fractional shares of Common Stock shall be paid in an
equivalent cash amount, as determined using the closing price of Common Stock on
the trading date next preceding the distribution date.

         (b) Adjustment of Method of Distribution. Prior to the beginning of any
calendar year, a Participant may elect to change the timing and method of
distribution of the Participant Deferred Contribution Amounts and Plan Employer
Contribution Amounts credited to the

                                      -4-

Participant's Account commencing with such calendar year. Participant Deferred
Contribution Amounts and Plan Employer Contribution Amounts credited to the
Participant's Account prior to the effective date of such change (the "Prior
Balance"), and all amounts thereafter accrued with respect to the Prior Balance,
shall not be affected by such change and, except as otherwise provided in this
Section 6 or as determined by the Plan Administrator pursuant to Section 8,
shall be distributed only in accordance with the election in effect at the time
such Prior Balance was credited to the Participant's Account.

         (c)(i) Distribution Default for Participant Deferred Contribution
Amounts. Any Participant Deferred Contribution Amounts credited to a
Participant's Account which are not covered by a timely distribution election
under subsections (a) and (b) above shall be distributed to the Participant in
one lump-sum cash payment as soon as practicable during the month of January of
the calendar year immediately following the later of the year in which the
Participant last contributed to the Plan or the year in which the Participant
terminates his employment with the Corporation or any of its subsidiaries
(whether by reason of Retirement or otherwise); provided, however, if the
Participant has made an election pursuant to Sections 9(a)(i) or 9(a)(ii), the
lump sum payment shall be made within the 90-day period following a Change in
Control, as defined in Section 9(c).

         (c)(ii) Distribution Default for Plan Employer Contribution Amounts.
Any Plan Employer Contribution Amounts credited to a Participant's Account which
are not covered by a timely distribution election under subsections (a) and (b)
above shall be distributed to the Participant in Common Stock as soon as
practicable during the month of January of the calendar year immediately
following the later of the year in which the Participant last contributed to the
Plan or the year in which the Participant terminates his employment with the
Corporation or any of it subsidiaries (whether by reason of Retirement or
otherwise); provided, however, if the Participant has made an election pursuant
to Sections 9(a)(i) or (ii), the distribution shall be made within the 90-day
period following a Change in Control, as defined in Section 9(c). Any fractional
shares of Common Stock shall be paid in an equivalent cash amount, as determined
using the closing price of Common Stock on the trading date next preceding the
distribution date.

         (d) Changing Prior Distribution Elections. The Plan Administrator may
from time to time allow Participants to request new elections with respect to
the distribution of a Participant's Prior Balance under the Plan (other than any
portion of such Prior Balance for which distributions have already commenced).
The Plan Administrator shall reserve the right to accept or reject any such
request at any time and such election shall be subject to such restrictions and
limitations as the Plan Administrator shall determine in its sole discretion,
provided that any new election shall generally be required to be made at least
twelve (12) months prior to any scheduled payment date. The Plan Administrator
may also allow a Participant to request an immediate distribution of all or a
portion of such Participant's Prior Balance (including any portion of such Prior
Balance for which distributions have already commenced) and any Deferred
Contribution Amounts and Plan Employer Contribution Amounts credited to the
Participant's Account immediately prior to such request. Any such immediate
distribution shall be subject to a penalty equal to six percent (6%) of the
amount requested to be distributed and shall be subject to the approval of the
Plan Administrator and such other restrictions or conditions as may be
established by the Plan Administrator from time to time.

         (e) Special Distribution Provision. Notwithstanding any provision in
this Plan to the contrary, if all or a portion of a Participant's Account is
determined to be includible in the Participant's gross income and subject to
income tax at any time prior to the time such Account

                                      -5-

would otherwise be paid, the Participant's Account or that portion of the
Participant's Account shall be distributed to the Participant. For this purpose,
an amount is determined to be includible in the Participant's gross income upon
the earliest of: (i) a final determination by the Internal Revenue Service
addressed to the Participant which is not appealed, (ii) a final determination
by the United States Tax Court or any other federal court affirming an IRS
determination, or (iii) an opinion addressed to the Corporation by the tax
counsel for the Corporation that, by reason of the Code, Treasury Regulations,
published Internal Revenue Service rulings, court decisions or other substantial
precedent, the amount is subject to federal income tax prior to payment.

7. Distribution on Death
   ---------------------

         (a) Participant Deferred Contribution Amounts. If a Participant should
die before all Participant Deferred Contribution Amounts credited to the
Participant's Account have been paid in accordance with the election referred to
in Sections 6(a) or 6(b), the balance of the Participant Deferred Contribution
Amounts in such Participant's Account shall be paid in cash as soon as
practicable following the Participant's death to the beneficiary designated in
writing by the Participant and filed with the Plan Administrator; provided,
however, if the Participant has made an election pursuant to Sections 9(a)(i) or
9(a)(ii), such amount shall be paid within the 90-day period following a Change
in Control, as defined in Section 9(c). If (i) no beneficiary designation has
been made, or (ii) the designated beneficiary shall have predeceased the
Participant and no further designation has been made, then such balance shall be
paid to the estate of the Participant. A Participant may change the designated
beneficiary at any time during the Participant's lifetime by filing a subsequent
designation in writing with the Plan Administrator.

         (b) Plan Employer Contribution Amounts. If a Participant should die
before all Plan Employer Contribution Amounts credited to the Participant's
Account have been paid in accordance with the election referred to in Sections
6(a) or 6(b), the balance of the Plan Employer Contribution Amounts in such
Participant's Account shall be paid in Common Stock as soon as practicable
following the Participant's death to the beneficiary designated in writing by
the Participant and filed with the Plan Administrator; provided, however, if the
Participant has made an election pursuant to Sections 9(a)(i) or 9(a)(ii), such
amount shall be paid within the 90-day period following a Change in Control, as
defined in Section 9(c). If (i) no such beneficiary designation has been made,
or (ii) the designated beneficiary shall have predeceased the Participant and no
further designation has been made, then such balance shall be paid to the estate
of the Participant. A Participant may change the designated beneficiary at any
time during the Participant's lifetime by filing a subsequent designation in
writing with the Plan Administrator. Any fractional shares of Common Stock shall
be paid in an equivalent cash amount, as determined using the closing price of
Common Stock on the trading date next preceding the distribution date.

8. Payment in the Event of Hardship
   --------------------------------

         Upon receipt of a request from a Participant, delivered in writing to
the Plan Administrator along with a Certificate of Unavailability of Resources
form, the Plan Administrator, or his designee, may cause the Corporation to
accelerate (or require the subsidiary of the Corporation which employs or
employed the Participant to accelerate) payment of all or any part of the amount
credited to the Participant's Account, including accrued amounts, if it finds in
its sole discretion that payment of such amounts in accordance with the
Participant's prior election under Sections 6(a) or 6(b) would result in severe
financial hardship to the Participant, and such hardship is the result of an
unforeseeable emergency caused by

                                      -6-

circumstances beyond the control of the Participant. Acceleration of payment may
not be made under this Section 8 to the extent that such hardship is or may be
relieved (a) through reimbursement or compensation by insurance or otherwise,
(b) by liquidation of the Participant's assets, to the extent the liquidation of
assets would not itself cause severe financial hardship, or (c) by cessation of
deferrals under this Plan or any tax-qualified savings plan of the Corporation
or its subsidiaries. Any distribution of Participant Deferred Contribution
Amounts pursuant to this Section 8 shall be made in cash, while any distribution
of Plan Employer Contribution Amounts pursuant to this Section 8 shall be made
in Common Stock. Any fractional shares of Common Stock shall be paid in an
equivalent cash amount, as determined using the closing price of Common Stock on
the trading date next preceding the distribution date.

9. Change in Control
   -----------------

         (a)(i) Initial Lump-Sum Payment Election. Notwithstanding any election
made pursuant to Section 6, any person who becomes eligible to participate in
the Plan may file a written election with the Plan Administrator at the time the
individual makes an election to participate pursuant to Section 3(a) to have the
aggregate amount credited to the Participant's Account (commencing with the date
on which such written election is filed) paid in one-lump sum payment as soon as
practicable following a Change in Control, but in no event later than 90 days
after such Change in Control. Any distribution of Participant Deferred
Contribution Amounts pursuant to this Section 9 shall be made in cash, while any
distribution of Plan Employer Contribution Amounts pursuant to this Section 9
shall be made in Common Stock (or the common stock of any successor corporation
issued in exchange for, or with respect to, Common Stock incident to the Change
in Control). Any fractional shares of Common Stock (or the common stock of any
successor corporation issued in exchange for, or with respect to, Common Stock
incident to the Change in Control) shall be paid in an equivalent cash amount.

         (a)(ii) Subsequent Lump-Sum Payment Election. A Participant who did not
make an election pursuant to Section 9(a)(i) or who has revoked, pursuant to
Section 9(a)(iii), an election previously made under Section 9(a)(i) or this
Section 9(a)(ii) may, prior to the earlier of a Change in Control or the
beginning of the calendar year in which the election is to take effect, elect to
have the aggregate amount credited to the Participant's Account for all calendar
years commencing with the first calendar year beginning after the date the
election is made, paid in one lump-sum payment as soon as practicable following
a Change in Control, but in no event later than 90 days after such Change in
Control. Amounts credited to the Participant's Account prior to the effective
date of the election made pursuant to this Section 9(a)(ii) shall not be
affected by such election and shall be distributed following a Change in Control
in accordance with any prior election in effect under Sections 9(a)(i) or
9(a)(ii).

         (a)(iii) Revocation of Prior Change in Control Payment Elections. A
Participant may, prior to a Change in Control, file an election revoking any
election made pursuant to Sections 9(a)(i) or 9(a)(ii) or file a new lump sum
payment election under this Section 9 with respect to amounts previously
credited to the Participant's Account. Any such revocation or new election shall
be made at the time specified by the Plan Administrator and shall be subject to
such restrictions and limitations as the Plan Administrator shall determine from
time to time.

         (b) Interest Equivalents. Notwithstanding anything to the contrary in
the Plan, after a Change in Control, the Plan may not provide, or be amended to
provide, interest accruals with respect to Participant Deferred Contributions at
rates lower than the rates in effect under Section 5 immediately prior to the
Change in Control.

                                      -7-

         (c) Definition of Change in Control. For purposes of the Plan, a Change
in Control is deemed to occur at the time (i) when any entity, person or group
(other than the Corporation, any subsidiary or any savings, pension or other
benefit plan for the benefit of employees of the Corporation or its
subsidiaries) which therefore beneficially owned less than 30% of the common
stock then outstanding acquires shares of Common Stock in a transaction or
series of transactions that results in such entity, person or group directly or
indirectly owning beneficially 30% or more of the outstanding Common Stock, (ii)
of the purchase of shares of Common Stock pursuant to a tender offer or exchange
offer (other than an offer by the Corporation) for all, or any part of, the
Common Stock, (iii) of a merger in which the Corporation will not survive as an
independent, publicly owned corporation, a consolidation, or a sale, exchange or
other disposition of all or substantially all of the Corporation's assets, (iv)
of a substantial change in the composition of the Board during any period of two
consecutive years such that individuals who at the beginning of such period were
members of the Board cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the stockholders
of the Corporation, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period, or (v) of any transaction or other event which the
Corporate Governance Committee of the Board, in its discretion, determines to be
a Change in Control for purposes of the Plan.

10. Administration
    --------------

         (a) Plan Administrator. The Plan Administrator and "named fiduciary"
for purposes of ERISA shall be the Senior Vice President-Human Resources and
Communications of the Corporation (or the person acting in such capacity in the
event such position is abolished, restructured or renamed). The Plan
Administrator shall have the authority to appoint one or more other named
fiduciaries of the Plan and to designate persons, other than named fiduciaries,
to carry out fiduciary responsibilities under the Plan, pursuant to Section
405(c)(1)(B) of ERISA. Any person acting on behalf of the Plan Administrator
shall serve without additional compensation. The Plan Administrator shall keep
or cause to be kept such records and shall prepare or cause to be prepared such
returns or reports as may be required by law or necessary for the proper
administration of the Plan.

         (b) Powers and Duties of Plan Administrator. The Plan Administrator
shall have the full discretionary power and authority to construe and interpret
the Plan (including, without limitation, supplying omissions from, correcting
deficiencies in, or resolving inconsistencies or ambiguities in, the language of
the Plan); to determine all questions of fact arising under the Plan, including
questions as to eligibility for and the amount of benefits; to establish such
rules and regulations (consistent with the terms of the Plan) as it deems
necessary or appropriate for administration of the Plan; to delegate
responsibilities to others to assist it in administering the Plan; to retain
attorneys, consultants, accountants or other persons (who may be employees of
the Corporation and its subsidiaries) to render advice and assistance as it
shall determine to be necessary to effect the proper discharge of any duty for
which it is responsible; and to perform all other acts it believes reasonable
and proper in connection with the administration of the Plan. The Plan
Administrator shall be entitled to rely on the records of the Corporation and
its subsidiaries in determining any Participant's entitlement to and the amount
of benefits payable under the Plan. Any determination of the Plan Administrator,
including interpretations of the Plan and determinations of questions of fact,
shall be final and binding on all parties.

         (c) Indemnification. To the extent permitted by law, the Corporation
shall indemnify the Plan Administrator from all claims for liability, loss, or
damage (including payment of

                                      -8-

expenses in connection with defense against such claims) arising from any act or
failure to act in connection with the Plan.

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

11. Claims Procedures and Appeals
    -----------------------------

         (a) Any request or claim for Plan benefits must be made in writing and
shall be deemed to be filed by a Participant when a written request is made by
the claimant or the claimant's authorized representative which is reasonably
calculated to bring the claim to the attention of the Plan Administrator.

         (b) The Plan Administrator shall provide notice in writing to any
Participant when a claim for benefits under the Plan has been denied in whole or
in part. Such notice shall be provided within 90 days of the receipt by the Plan
Administrator of the Participant's claim or, if special circumstances require,
and the Participant is so notified in writing, within 180 days of the receipt by
the Plan Administrator of the Participant's claim. The notice shall be written
in a manner calculated to be understood by the claimant and shall:

                  (i) set forth the specific reasons for the denial of benefits;

                  (ii) contain specific references to Plan provisions relative
to the denial;

                  (iii) describe any material and information, if any, necessary
for the claim for benefits to be allowed, that had been requested, but not
received by the Plan Administrator; and

                  (iv) advise the Participant that any appeal of the Plan
Administrator's adverse determination must be made in writing to the Plan
Administrator within 60 days after receipt of the initial denial notification,
and must set forth the facts upon which the appeal is based.

         (c) If notice of the denial of a claim is not furnished within the time
periods set forth above, the claim shall be deemed denied and the claimant shall
be permitted to proceed to the review procedures set forth below. If the
Participant fails to appeal the Plan Administrator's denial of benefits in
writing and within 60 days after receipt by the claimant of written notification
of denial of the claim (or within 60 days after a deemed denial of the claim),
the Plan Administrator's determination shall become final and conclusive.

         (d) If the Participant appeals the Plan Administrator's denial of
benefits in a timely fashion, the Plan Administrator shall re-examine all issues
relevant to the original denial of benefits. Any such claimant, or his or her
duly authorized representative, may review any pertinent documents, as
determined by the Plan Administrator, and submit in writing any issues or
comments to be addressed on appeal.

         (e) The Plan Administrator shall advise the Participant and such
individual's representative of its decision, which shall be written in a manner
calculated to be understood by the claimant, and include specific references to
the pertinent Plan provisions on which the decision is based. Such response
shall be made within 60 days of receipt of the written appeal, unless special
circumstances require an extension of such 60-day period for not more than an
additional 60 days. Where such extension is necessary, the claimant shall be
given written

                                      -9-

notice of the delay. If the decision on review is not furnished within the time
set forth above, the claim shall be deemed denied on review.

         (f) Any dispute, controversy, or claim arising out of or relating to
any Plan benefit, including, without limitation, any dispute, controversy or
claim as to whether the decision of the Plan Administrator respecting the
benefits under this Plan or interpretation of this Plan is arbitrary and
capricious, that is not settled in accordance with the procedures outlined in
this Section 11, shall be settled by final and binding arbitration in accordance
with the American Arbitration Association Employment Dispute Resolution or other
applicable Rules. Before resorting to arbitration, an aggrieved Participant must
first follow the review procedure outlined in this Section of the Plan. If there
is still a dispute after the procedures in this Section have been exhausted, the
Participant must request arbitration in writing within six (6) months after the
Plan Administrator issues, or is deemed to have issued, its determination under
subparagraph (e) above.

                  The arbitrator shall be selected by mutual agreement of the
parties, if possible. If the parties fail to reach agreement upon appointment of
an arbitrator within 30 days following receipt by one party of the other party's
notice of desire to arbitrate, the arbitrator shall be selected from a panel or
panels of persons submitted by the American Arbitration Association (the "AAA").
The selection process shall be that which is set forth in the AAA Employment
Dispute Resolution Rules, except that, if the parties fail to select an
arbitrator from one or more panels, AAA shall not have the power to make an
appointment but shall continue to submit additional panels until an arbitrator
has been selected.

                  All fees and expenses of the arbitration, including a
transcript if requested, will be borne by the Corporation. The arbitrator shall
have no power to amend, add to or subtract from this Plan. The award shall be
admissible in any court or agency action seeking to enforce or render
unenforceable this Plan or any portion thereof. Any action to enforce or vacate
the arbitrator's award shall be governed by the Federal Arbitration Act if
applicable.

12. Miscellaneous
    -------------

         (a) Anti-Alienation. The right of a Participant to receive any amount
credited to the Participant's Account shall not be transferable or assignable by
the Participant, except by will or by the laws of descent and distribution. To
the extent that any person acquires a right to receive any amount credited to a
Participant's Account hereunder, such right shall be no greater than that of an
unsecured general creditor of the Corporation. Except as expressly provided
herein, any person having an interest in any amount credited to a Participant's
Account under the Plan shall not be entitled to payment until the date the
amount is due and payable. No person shall be entitled to anticipate any payment
by assignment, pledge or transfer in any form or manner prior to actual or
constructive receipt thereof.

         (b) Unsecured General Creditor. Neither the Corporation nor any of its
subsidiaries shall be required to reserve or otherwise set aside funds, Common
Stock or other assets for the payment of its obligations hereunder. However, the
Corporation or any subsidiary may, in its sole discretion, establish funds for
payment of its obligations hereunder. Any such funds shall remain assets of the
Corporation or such subsidiary, as the case may be, and subject to the claims of
its general creditors. Such funds, if any, shall not be deemed to be assets of
the Plan. The Plan is intended to be unfunded for tax purposes and for purposes
of Title I of the Employee Retirement Income Security Act of 1974, as amended.

                                      -10-

         (c) Withholding. The Corporation shall withhold from any distribution
made from Participant Deferred Contribution Amounts the amount necessary to
satisfy applicable federal, state and local tax withholding requirements. With
respect to distributions of Plan Employer Contribution Amounts, the delivery of
the shares of Common Stock shall be delayed until the Participant makes
arrangements, pursuant to procedures to be adopted by the Plan Administrator, to
satisfy the applicable federal, state and local tax withholding requirements.

         (d) Termination and Amendment. The Corporation may at any time amend or
terminate the Plan. Notwithstanding the foregoing, the Plan may not, without the
consent of an affected Participant, be amended in any manner which would (i)
adversely affect such Participant's rights and expectations with respect to
Deferred Amounts credited to such Participant's Account immediately prior to
such amendment (including, but not limited to, any amendment which would
adversely affect the rights or features applicable to, or any of the components
that are taken into account in determining, the Deferred Amount of any
Participant hereunder) or, (ii) with respect to any Participant whose employment
terminates either during a Potential Change in Control Period or within two
years following a Change in Control under circumstances entitling such
Participant to severance benefits under the Corporation's Severance Plan for
Corporate Staff Employees or Part II of the Corporation's Severance Plan for
Senior Executives, adversely affect such Participant's rights and expectations
with respect to amounts that would otherwise have been credited to such
Participant's Account as a result of the election of such Participant to defer
the receipt of severance payments pursuant to such plan. For purposes of the
preceding sentence, a "Potential Change in Control Period" shall commence when:
(A) the Corporation enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control; (B) the Corporation or any
person or group publicly announces an intention to take or to consider taking
actions which, if consummated, would constitute a Change in Control; (C) any
person or group (other than the Corporation, any subsidiary or any savings,
pension or other benefit plan for the benefit of employees of the Corporation or
its subsidiaries) becomes the beneficial owner, directly or indirectly, of
securities of the Corporation representing 15% or more of either the then
outstanding shares of common stock of the Corporation or the combined voting
power of the Corporation's then outstanding securities (not including in the
securities beneficially owned by such person or group any securities acquired
directly from the Corporation or its affiliates); or (D) the Board adopts a
resolution to the effect that, for purposes of the Plan, a Potential Change in
Control Period has commenced. The Potential Change in Control Period shall
continue until the earlier of (I) a Change in Control or (II) the adoption by
the Board of a resolution stating that, for purposes of the Plan, the Potential
Change in Control Period has expired.

         (e) Benefit Statements. Each Participant will receive periodic
statements (not less frequently than annually) regarding the Participant's
Account. Each such statement shall indicate the amount of the balances credited
to the Participant's Account as of the end of the period covered by such
statement.

         (f) Legal Interpretation. This Plan and its provisions shall be
construed in accordance with the laws of the State of Delaware to the extent
such Delaware law is not inconsistent with the provisions of ERISA. The text of
this Plan shall, to the extent permitted by law, govern the determination of the
rights and obligations created or referred to herein. Headings to the Sections,
paragraphs and subparagraphs are for reference purposes only and do not limit or
extend the meaning of any of the Plan's provisions.

         (g) Employment. The adoption and maintenance of this Plan shall not be
deemed to constitute a contract between the Corporation or its subsidiaries and
any employee or to be a

                                      -11-

consideration for or condition of employment of any person. No provision of the
Plan shall be deemed to give any employee the right to continue in the employ of
the Corporation or its subsidiaries or to interfere with the right of the
Corporation or its subsidiaries to discharge any employee at any time without
regard to the effect which such discharge might have upon the employee's
participation in the Plan or benefits under it.

         (h) Fiduciary Capacities. Any person or group of persons may serve in
more than one fiduciary capacity with respect to the Plan. For purposes of this
Section 12(h), the term "fiduciary" shall have the same meaning as in ERISA.

         (i) Participants Subject to Section 16. Notwithstanding anything herein
to the contrary, if any request, election or other action under the Plan
affecting a Participant subject to Section 16 of the Securities Exchange Act of
1934 should require the approval of the Committee to exempt such request,
election or other action from potential liability under Section 16, then the
approval of the Committee shall be obtained in lieu of the approval of the Plan
Administrator.

                                      -12-

                                                                    EXHIBIT 10.8

                    Salary and Incentive Award Deferral Plan
                                       for
           Selected Employees of Honeywell International Inc. and its
                                   Affiliates

                                                            Amended and Restated
                                                             as of April 3, 2002

                                      -2-

1.       Eligibility

         Those employees of Honeywell International Inc. (the "Corporation") and
its affiliates who are designated by the Management Development and Compensation
Committee (the "Committee") shall be eligible to participate in this
supplemental non-qualified Salary and Incentive Award Deferral Plan for Selected
Employees of Honeywell International Inc. and its Affiliates (the "Plan").

2.       Participation

         An eligible employee may become a participant in the Plan (a
"Participant") by filing a timely written deferral election with the
Corporation. Such election shall request that a portion of the compensation
elements described in paragraph 3(a) and paragraph 3(b) be credited to an
unfunded deferred compensation account maintained for the Participant under the
Plan (the "Participant Account" or "Account"). A Participant's direction, if
accepted by the Corporation, shall become effective for the pay period or
payment date in the next succeeding calendar year (or for a newly eligible
Participant, for the next succeeding pay period or payment date after the
receipt of the direction by the Corporation), and shall continue in effect until
the Participant terminates such direction, effective as of the end of the
calendar year, or is no longer eligible to be a Participant. Any modification of
Participant's direction shall be effective only with respect to compensation
payable with respect to pay periods in the calendar year next following the date
such direction is received by the Corporation.

3.       Contributions to Participant Accounts

         (a) Base Annual Salary. A Participant in Career Band 6 and above (or a
Participant who occupies a position equivalent thereto) may, prior to the
beginning of any calendar year (and with respect to a newly eligible
Participant, within thirty days after first becoming so eligible) elect to defer
an aggregate amount of base annual salary otherwise payable in such subsequent
calendar year (or with respect to a newly eligible Participant, in the remainder
of the calendar year), exclusive of any bonus or any other compensation or
allowance paid or payable by the Corporation or its affiliates (the "Base Annual
Salary"). The amount deferred under this paragraph 3(a) shall not be greater
than fifty percent (50%) of the Participant's Base Annual Salary for such pay
period.

         (b) Incentive Awards. A Participant may, to the extent that the
Honeywell International Inc. Incentive Compensation Plan For Executive Employees
(the "Incentive Plan") (or any successor plan) permits deferrals of an incentive
award (the "Incentive Award") payable thereunder, elect to defer an amount not
greater than one hundred percent of such Incentive Award. Any amount so deferred
shall be deemed to be deferred under this Plan but shall, to the extent the
provisions of the Incentive Plan are not inconsistent with this Plan, otherwise
be subject to the terms of the Incentive Plan. Any deferral of an Incentive
Award shall be made by filing an appropriate deferral election with the
Corporation not later than the date established by the Corporation from time to
time.

                                      -3-

         (c) Deferral Amounts. All amounts determined under this paragraph 3
which are the subject of a written deferral election (the "Deferral Amounts")
shall, in accordance with the relevant Participant direction, be credited to a
Participant Account maintained under the Plan on the same day the Base Annual
Salary or Incentive Award would otherwise have been payable.

4.       Deferral Requirements

         Amounts may be deferred under this Plan for a minimum period of three
years or such shorter period as may be approved by the Committee. Except as
otherwise provided in paragraphs 9 or 10 or as approved by Committee, no amount
shall be withdrawn from a Participant Account prior to the earlier of: three
years following the last day of the calendar year in which the Deferral Amounts
were earned; the date the Participant reaches normal retirement age and is
eligible to receive a benefit under a pension plan of the Corporation or one of
its affiliates; the date of Participant's death; or the date the Participant
ceases to be employed by the Corporation or any of its affiliates.
Notwithstanding the preceding provisions of this Section 4, a Participant may
request an immediate withdrawal of all or a portion of such Participant's
Account prior to any date described above or prior to the date the Account has
been completely withdrawn, provided that such a request and withdrawal shall be
subject to the approval of the Corporation and such penalties, restrictions or
conditions as may be established by the Corporation from time to time. The
penalty shall be a percentage of the amount requested to be withdrawn,
calculated as the difference between (a) 6%, and (b) 50% of the amount, if any,
by which 10% exceeds the interest rate on 10-year U.S. Treasury Bonds on the
first business day of the calendar quarter during which the withdrawal request
is made.

5.       Interest Equivalents

         Deferral Amounts shall accrue additional amounts equivalent to interest
("Interest Equivalents"), compounded daily, from the date the Deferral Amount is
credited to the Account to the date of distribution. A single rate for
calculating Interest Equivalents shall be established by the Committee, in its
sole discretion, for all Deferral Amounts credited to Participant Accounts in
each calendar year. The rate established by the Committee shall not exceed the
greater of (i) 10% or (ii) 200% of the 10-year U.S. Treasury Bond rate at the
time of determination. Such Interest Equivalents, once established for a
calendar year, shall remain in effect with respect to Deferral Amounts credited
to Participant Accounts during the calendar year until the Deferral Amounts are
distributed.

         The rate of notional interest established by the Committee shall be set
forth on Schedule A attached hereto and made a part hereof. Any portion of such
rate designated as the "Contingent Rate" shall become nonforfeitable only if the
Participant is still employed by the Corporation or any affiliate at the end of
the third full calendar year following the calendar year in which the Deferral
Amount relates, provided, however, in the event a Participant terminates
employment with the Corporation or an affiliate prior to such date for reasons
other than gross cause, the Committee shall treat such portion as nonforfeitable
in the event the Participant's employment with the Corporation or Affiliate is
involuntarily terminated (including a termination for "good reason" under any
applicable severance plan of the Corporation or affiliate) or is

                                      -4-

terminated for such reasons as the Committee may determine from time to time in
its sole discretion. Notwithstanding the preceding sentence, in the event a
Participant withdraws any portion of the Deferral Amount prior to the end of the
third full calendar year following the calendar year to which the Deferral
Amount relates, the amount of Contingent Rate interest credited with respect to
such Deferred Amount at the time of withdrawal shall remain credited to such
Account subject to the provisions of the preceding sentence but shall not be
credited with any Interest Equivalents after such date ("Frozen Contingent
Interest"). The rate established by the Committee and set forth on Schedule A
shall remain in effect until superceded by action of the Committee and amendment
of such Schedule A.

         Notwithstanding anything in the Plan to the contrary, from and after
the occurrence of a Change in Control, the rate at which Deferral Amounts accrue
Interest Equivalents may not be decreased.

6.       Participant Accounts

         All amounts credited to a Participant's Account pursuant to paragraphs
3 and 4 shall be unfunded general obligations of the Corporation, and no
Participant shall have any claim to or security interest in any asset of the
Corporation on account thereof.

7.       Distribution from Accounts

         At the time a Participant makes an election pursuant to paragraph 3,
the Participant shall also make an election with respect to the distribution of
the Deferral Amounts and Interest Equivalents accrued thereon which are credited
to the Participant's Account pursuant to such election. A Participant may elect
to receive such distribution in one lump-sum payment or in a number of
approximately equal annual payments (provided the payment period may not include
more than fifteen such installments). The lump-sum or the first installment
shall be paid as soon as practicable during the month of January of the calendar
year designated by the Participant. Except as otherwise provided in paragraphs
8, 9 and 10, all installment payments following the initial installment payment
shall be paid in cash as soon as practicable during the month of January of each
succeeding calendar year until the entire amount in the Account shall have been
paid. Notwithstanding the foregoing, in the event a Participant's employment
with the Company is terminated either voluntarily (other than on account of
retirement as defined in the qualified pension plan in which the Participant
participates or for "good reason" under any applicable severance plan of the
Company) or for "gross cause" (as defined in the AlliedSignal Inc. Severance
Plan for Senior Executives), the nonforfeitable portion of such Participant's
Deferred Amounts for performance years beginning after 1997 for amounts deferred
under paragraph 3(b) or after 1998 for amount deferred under paragraph 3(a)
(including the vested portion of any applicable notional interest credited
thereto) shall be distributed in a lump sum as soon as practicable in January of
the calendar year following such termination of employment. Any Frozen
Contingent Interest credited to the Participant's Account shall be payable to
the Participant in one lump sum after the date the Frozen Contingent Interest
becomes nonforfeitable pursuant to Paragraph 5.

                  The Corporation may from time to time allow Participants to
request new elections with respect to the distribution of all Deferral Amounts
and Interest Equivalents

                                      -5-

accrued thereon that are credited to such Participant under the Plan (other than
any such amounts currently payable to a Participant). The Corporation shall
reserve the right to accept or reject any such request at any time and such
election shall be subject to such restrictions and limitations as the
Corporation shall determine in its sole discretion, provided that any new
election shall generally be required to be made at least twelve (12) months
prior to any scheduled payment date.

         Notwithstanding any provision in this Plan to the contrary, if all or a
portion of a Participant's Account is determined to be includible in the
Participant's gross income and subject to income tax at any time prior to the
time such Account would otherwise be paid, the Participant's Account or that
portion of the Participant's Account shall be distributed to the Participant.
For this purpose, an amount is determined to be includible in the Participant's
gross income upon the earliest of: (i) a final determination by the Internal
Revenue Service addressed to the Participant which is not appealed, (ii) a final
determination by the United States Tax Court or any other federal court
affirming an IRS determination, or (iii) an opinion addressed to the Corporation
by the tax counsel for the Corporation that, by reason of the Code, Treasury
Regulations, published Internal Revenue Service rulings, court decisions or
other substantial precedent, the amount is subject to federal income tax prior
to payment.

8.       Distribution on Death

         If a Participant should die before all amounts credited to the
Participant's Account have been distributed, the balance in the Account shall be
paid as soon as practical thereafter to the beneficiary designated in writing by
the Participant. Payment to a beneficiary pursuant to a designation by a
Participant shall be made in one lump sum to the designated beneficiary as soon
as practicable following the death of the Participant. Such beneficiary
designations shall be effective when received by the Corporation, and shall
remain in effect until rescinded or modified by the Participant by an
appropriate written direction. If no beneficiary is properly designated by the
Participant or if the designated beneficiary shall have predeceased the
Participant, such balance in the Account shall be paid to the estate of the
Participant.

9.       Payment in the Event of Hardship

         Upon receipt of a request from a Participant, delivered in writing to
the Corporation along with a Certificate of Unavailability of Other Resources
form, the Committee, the Senior Vice President - Human Resources and
Communications, or his designee, may cause the Corporation to accelerate (or
require the subsidiary of the Corporation which employs or employed the
Participant to accelerate) payment of all or any part of the Deferral Amount and
Interest Equivalents credited to the Participant's Account, if it finds in its
sole discretion that payment of such amounts in accordance with the
Participant's prior election under paragraph 3 would result in severe financial
hardship to the Participant and such hardship is the result of an unforeseeable
emergency caused by circumstances beyond the control of the Participant.
Acceleration of payment may not be made under this paragraph 9 to the extent
that such hardship is or may be relieved (i) through reimbursement or
compensation by insurance or otherwise, (ii) by liquidation of the Participant's
assets, to the extent the liquidation of assets would not itself cause severe
financial hardship or (iii) by cessation of deferrals under this Plan or any
tax-qualified savings plan of the Corporation.

                                      -6-

10.      Change in Control

         (a) Initial Lump Sum Election. Notwithstanding any election made
pursuant to paragraph 7, a Participant may file a written election with the
Corporation to have the Deferral Amounts and Interest Equivalents accrued
thereon which are credited thereafter to the Participant's Account paid in one
lump-sum payment as soon as practicable following a Change in Control, but in no
event later than 90 days after such Change in Control. The Interest Equivalents
on any Deferred Amount payable pursuant to this paragraph 10(a) shall include
the "Contingent Rate" credited to such Deferred Amount without regard to whether
such amount has become nonforfeitable as provided in paragraph 5 at the time
payment is made under this paragraph 10(a).

         (b) Revocation of Lump-Sum Election. A Participant may revoke an
election made pursuant to paragraph 10(a) (including an election not to be paid
in one lump sum upon a Change in Control) by filing an appropriate written
notice with the Corporation. A revocation notice filed pursuant to this
paragraph 10(b) shall be subject to such terms and conditions as the Corporation
shall establish and shall be effective with respect to any or all of the
Participant's Deferral Amounts and Interest Equivalents accrued thereon which
are credited to such Participant under the Plan. Any such election shall be
subject to such restrictions and limitations as the Corporation shall determine
in its sole discretion.

         (c) Limitation on Elections. Any election made pursuant to paragraph
10(a) or 10(b) shall not be effective unless filed with the Corporation at least
90 days prior to a Change in Control.

         (d) Definition of Change in Control. For purposes of the Plan, a Change
in Control is deemed to occur at the time (i) when an entity, person or group
(other than the Corporation, any subsidiary or savings, pension or other benefit
plan for the benefit of employees of the Corporation or its subsidiaries) which
theretofore beneficially owned less than 30% of the Corporation's common stock
(the "Common Stock") then outstanding, acquires shares of Common Stock in a
transaction or a series of transactions that results in such entity, person or
group directly or indirectly owning beneficially 30% or more of the outstanding
Common Stock, (ii) of the purchase of Common Stock pursuant to a tender offer or
exchange offer (other than an offer by the Corporation) for all, or any part of,
the Common Stock (iii) of a merger in which the Corporation will not survive as
an independent, publicly owned corporation, a consolidation, a sale, exchange or
other disposition of all or substantially all of the Corporation's assets, (iv)
of a substantial change in the composition of the Board during any period of two
consecutive years such that individuals who at the beginning of such period were
members of the Board cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the shareowners
of the Corporation, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period, or (v) of any transaction or other event which the
Committee, in its sole discretion, determines to be a Change in Control for
purposes of the Plan.

                                      -7-

11.      Miscellaneous

         (a) No Alienation of Benefits. Except insofar as may otherwise be
required by law, no amount payable at any time under the Plan shall be subject
in any manner to alienation by anticipation, sale, transfer, assignment,
bankruptcy, pledge, attachment, charge, or encumbrance of any kind nor in any
manner be subject to the debts or liabilities of any person and any attempt to
so alienate or subject any such amount, whether presently or thereafter payable,
shall be void. If any person shall attempt to, or shall alienate, sell,
transfer, assign, pledge, attach, charge, or otherwise encumber any amount
payable under the Plan, or any part thereof, or if by reason of such person's
bankruptcy or other event happening at any such time such amount would be made
subject to the person's debts or liabilities or would otherwise not be enjoyed
by that person, then the Corporation, if it so elects, may direct that such
amount be withheld and that same or any part thereof be paid or applied to or
for the benefit of such person, the person's spouse, children or other
dependents, or any of them, in such manner and proportion as the Corporation may
deem proper.

         (b) No Right or Interest in Corporation's Assets. Neither the
Corporation nor any of its Affiliates shall be required to reserve or otherwise
set aside funds for the payment of obligations arising under this Plan. The
Corporation may, in its sole discretion, establish funds, segregate assets or
take such other action as it shall determine necessary or appropriate to secure
the payment of its obligations arising under this Plan. This Plan is intended to
be unfunded for tax purposes and for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended. Nothing contained herein,
and no action taken pursuant to the provisions of this Plan shall create or be
construed to create a trust of any kind, or a fiduciary relationship between the
Corporation and any Participant or any other person. To the extent that any
person acquires a right to receive payments under this Plan, such right shall be
no greater than the right of an unsecured creditor of the Corporation.

         (c) Administration. The Corporation shall have sole discretion and
authority to administer the Plan, including the authority to interpret its
terms, promulgate regulations thereunder, determine eligibility to participate
in the Plan and make any finding of fact which may be necessary to determine the
obligation of the Plan with respect to the payment of benefits.

         (d) Amendment. The Corporation may amend, modify or terminate the Plan
at any time, or from time to time; provided, however, that no change to the Plan
shall impair the right of any Participant with respect to amounts then credited
to an Account; and further provided that during a Potential Change in Control
Period (as defined in Section 11(h) hereof) and from and after the occurrence of
a Change in Control, the Plan may not, without the consent of the Participant,
be amended in any manner which would adversely affect such Participant's rights
and expectations with respect to Deferred Amounts credited to such Participant's
Account immediately prior to such amendment.

         (e) Accounting. Each Participant shall receive periodic statements (not
less frequently than annually) setting forth the cumulative Deferral Amounts and
Interest Equivalents credited to, and any distributions from, the Participant's
Account.

                                      -8-

         (f) Facility of Payments. If the Corporation shall find that any person
to whom any amount is payable under the plan is unable to care for his or her
affairs because of illness or accident, or is a minor, or has died, then any
payment due the person or the person's estate (unless a prior claim therefore
has been made by a duly appointed legal representative), may, if the Corporation
so elects in its sole discretion, be paid to the person's spouse, a child, a
relative, an institution having custody of such person, or any other person
deemed by the Corporation to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge of
the liability of the Corporation and the Plan therefore.

         (g) Governing Law. The Plan is intended to constitute an unfunded
deferred compensation arrangement for a select group of management or highly
compensated personnel and all rights thereunder shall be governed by and
construed in accordance with the laws of New York.

         (h) Potential Change in Control Period. A "Potential Change in Control
Period" shall commence when: (i) the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) the Corporation or any person or group publicly announces an intention to
take or to consider taking actions which, if consummated, would result in a
Change in Control; (iii) any person or group (other than the Corporation, any
subsidiary or any savings, pension or other benefit plan for the benefit of
employees of the Corporation or its subsidiaries) becomes the beneficial owner,
directly or indirectly, of securities of the Corporation representing 15% or
more of either the then outstanding shares of common stock of the Corporation or
the combined voting power of the Corporation's then outstanding securities (not
including in the securities beneficially owned by such person or group any
securities acquired directly from the Corporation or its affiliates); or (iv)
the Board adopts a resolution to the effect that, for purposes of the Plan, a
Potential Change in Control Period has commenced. The Potential Change in
Control Period shall continue until the earlier of (A) a Change in Control, or
(B) the adoption by the Board of a resolution stating that, for purposes of the
Plan, the Potential Change in Control Period has expired.

                                      -9-

                                   SCHEDULE A

                             Notional Interest Rate

                  Deferred Incentive Awards (Band 6 and Above)

Year Award Earned             Vested Rate          Contingent Rate         Total Rate
- -----------------             -----------          ---------------         ----------
                                                                  
1975 - 1992               Treasury bills +              N/A              Treasury bills +
                                   3%*                                        3%*

1993 - 1997                       10%                   N/A                  10%

1998 - 2000                        8%                    3%                  11%

2001 +                             7%                    3%                  10%

*/Three-month Treasury bill average rate for the immediately preceding calendar
quarter as reported by the Federal Reserve Bank; rate changes each calendar
quarter.

                  Deferred Incentive Awards (Band 5 and Below)

Year Award Earned             Vested Rate          Contingent Rate         Total Rate
- -----------------             -----------          ---------------         ----------
                                                                  
1975 - 1997               Treasury bills +              N/A              Treasury bills +
                                  3%*                                         3%*

1998 +                            6%                     3%                   9%

*/Three-month Treasury bill average rate for the immediately preceding calendar
quarter as reported by the Federal Reserve Bank; rate changes each calendar
quarter.

                       Deferred Salary (Band 6 and Above)

Year Salary Earned            Vested Rate          Contingent Rate         Total Rate
- ------------------            -----------          ---------------         ----------
                                                                  
1994 - 1998                      10%                    N/A                  10%

1999 - 2001                       8%                     3%                  11%

2002 +                            7%                     3%                  10%

                                                                       Honeywell
- --------------------------------------------------------------------------------
David M. Cote                  Honeywell
Chairman and Chief             101 Columbia Road
Executive Officer              Morristown, NJ 07962
                               973-455-6768

                                                                   EXHIBIT 10.26

June 12, 2003

Mr. David J. Anderson
25 Mead Street
New Canaan, CT 06840

Dear Dave:

I am pleased to confirm our offer to you to join Honeywell International as
Senior Vice President and Chief Financial Officer reporting to me. In this
position, you will be elected an Executive Officer (Band 7) of the Company at
the first Board of Directors' meeting following your acceptance. Please note
that the terms and conditions of this offer are subject to approval of the
Management Development and Compensation Committee of our Board of Directors.

Dave, we have put together a terrific compensation package that ensures the
financial security for you and your family both today and for the future. The
details of the offer are outlined below:

I. COMPENSATION
- ---------------

Base Salary: Your annual base salary will be $700,000 (paid biweekly). Base
salary reviews occur annually on March 31 and adjustments are based on your
performance, company performance and market conditions.

Annual Incentive Bonus: Your target bonus opportunity will be 100% of your
annual cash base salary earnings during the year. Bonuses, which can range above
or below the target, are awarded based on company and individual performance
against specific financial and non-financial objectives. Your 2003 bonus will be
guaranteed at a minimum of $700,000 as long as you are actively employed at the
time the payment is made. Bonus payments are typically made in the first
quarter.

Long Term Incentive Award: You are eligible for an annual stock option grant
that will be determined by your performance and potential. Stock option awards
are typically made in the first quarter. You will receive a 2003 Growth Plan
award under our new 2-year LTIP program of 15,000 units, granted on the latter
of your start date or the next Management Development and Compensation Committee
meeting. A plan description will be sent to you.

Mr. David J. Anderson
Page 2 of 6

Make-Whole Awards:

     o    A Make-whole cash payment to replace the value of your 2001 ITT LTIP
          in the amount of $848,000 will be required to be paid at your
          retirement. Similarly, a Make-whole payment for the 2002 ITT LTIP in
          the amount of $1,129,600 that would have been paid in January 2005,
          will be deferred until retirement.

     o    In the event that you are required to forfeit your vested ITT options
          prior to exercising them, we will pay you $2,260,000 in July 2003. If
          you are allowed to keep the proceeds from the exercise of your vested
          ITT stock options, we will provide stock price protection at the time
          of exercise up to a 10% decline in stock price as measured by the
          average 30 day closing price through June 11, 2003, in the form of a
          stock option grant valued at $634,200, that will vest in one-year.
          Additionally, if ITT allows you to keep the proceeds, we will provide
          to you a $250,000 lump sum cash bonus.

These payments are subject to applicable tax withholding and are not considered
compensation under any Honeywell Benefit Plan.

You will also be granted on the latter of your start date or the next Management
Development and Compensation Committee meeting the following Make-Whole equity
awards:

     o    62,000 Stock Options, vesting 20% on the first, second, third, fourth
          and fifth anniversaries of the grant date, respectively.

     o    75,000 Restricted Units, which will be payable 1/3 each on the third,
          fourth and fifth anniversaries of the grant date, respectively. In the
          event that you are involuntarily terminated for cause, as defined in
          the Stock Plan, these units would be forfeited.

Sign-On Awards:

Also to be granted on the latter of your start date or the next Board meeting
the following Sign-On equity awards:

     o    100,000 Stock Options, vesting 40%, 30% and 30% on the first, second
          and third anniversaries of the grant date, respectively.

     o    100,000 Performance Accelerated Stock Options. These options will vest
          40%, 30% and 30% on the fourth, fifth and sixth anniversaries of the
          grant date, respectively, or sooner if the following performance
          measures are met on the following anniversary dates:

          o    40% if during any 20 consecutive day trading period after the
               grant date, Honeywell stock closes 25% above the grant price;

          o    30% if during any 20 consecutive day trading period after the
               grant date, Honeywell stock closes 50% above the grant price;

Mr. David J. Anderson
Page 3 of 6

          o    30% if during any 20 consecutive day trading period after the
               grant date, Honeywell stock closes 75% above the grant price.

     o    75,000 Restricted Units, that will vest 1/3 each on the fourth, fifth
          and sixth anniversaries of the grant date, respectively.

1)   All exercises of equity awards will be governed by Honeywell's Stock
     Ownership guidelines.

2)   All grants of Stock Options, Restricted Units and Growth Plan Units are
     subject to the terms and conditions of the 2003 Stock Plan.

3)   You will have the opportunity to elect to receive or defer the quarterly
     dividends associated with the Restricted Units.

II. BENEFITS
- ------------

Relocation: You are eligible for our Executive Relocation Policy for your move
from Birmingham which includes two months base salary ($116,667 grossed-up) as
your miscellaneous allowance. For information or to initiate your relocation
benefit, please contact Lee Vogt at 973-455-2666.

Pension: You will be eligible for an enhanced retirement benefit through a
combination of Honeywell's qualified retirement plan and a special non-qualified
pension enhancement that will provide:

          If you retire on or after age 56, a monthly benefit commencing at
          retirement equal to the benefit provided under the Honeywell
          International Inc. Supplemental Executive Retirement Plan for
          Executives in Career Band 6 and Above. Honeywell will credit your
          years of service with both ITT and Honeywell as Service under the plan
          for all plan purposes.

No enhancement will be available in the event of retirement or termination prior
to age 56.

Plus,

          If you retire on or after age 60, a benefit for your lifetime in the
          amount of $125,000 annually. In the event that you are terminated by
          the company, other than for cause, after completing at least two years
          of service with Honeywell, payment will commence as of January 1,
          2010. In the event of change of control, payment will commence as of
          January 1, 2010, regardless of the number of years of service
          completed by you as of the date of the change in control. If you
          retire on or after age 62, this lifetime benefit will be in the amount
          of $175,000 annually.

Savings Plan: Upon employment, you are eligible to participate in Honeywell's
Savings Plan without a Company matching contribution. After one year, the
Company matches fifty cents ($.50) on any dollar of your savings, up to 8% of
your base salary. The

Mr. David J. Anderson
Page 4 of 6

Company's match increases to one dollar ($1.00) for each one dollar ($1.00) of
your savings after five (5) years of matching participation in the Honeywell's
Savings Plan.

The Company's contribution is fully vested after three (3) years of service at
Honeywell.

The Savings Plan provides several attractive investment opportunities and has a
401(k) feature. Your current savings in a qualified 401(k) plan can be rolled
over to our plan. Employees are permitted to borrow from their savings account.

In addition, we have a Non-Qualified Supplemental Savings Plan ("SSP") that is
designed to assist highly paid employees whose contributions or compensation
taken into account under our tax qualified savings plan is limited by federal
tax law. The current interest rate for amounts you contribute to the plan is
10%. Your contributions are matched by notional shares of Honeywell stock.
Please note that the SSP is unfunded and is subject to the claims of Honeywell's
general creditors.

Salary and Incentive Compensation Deferrals: You may defer up to 50% of your
base salary and 100% of your bonus. The interest rate for amounts deferred in
2003 is 10%, if you remain with Honeywell for 3 years from the end of the
calendar year in which the deferral was made, or 7% if your employment
terminates sooner.

Medical and Dental Plans: Medical and Dental Plans provide competitive and
comprehensive coverage on a subsidized basis. Coverage begins on the first day
of employment.

Short Term Disability (STD): A benefit of up to 26 weeks base salary will be
provided.

Long Term Disability (LTD): The plan provides 60% of your base salary and
incentive compensation target up to a maximum of $30,000 per month. This plan is
contributory.

Vacation: You will be eligible for four (4) weeks' vacation.

Life Insurance:

     o    Group Life will be provided on a non-contributory basis in an amount
          equal to one and one-half times your base salary. Additionally, Group
          Universal Life is available; equal to eight (8) times base salary (up
          to a maximum of $5.0 million) and is contributory at an attractive
          group basis. Group Universal Life amounts over $250,000 are subject to
          evidence of good health.

     o    Accidental Death and Dismemberment insurance is provided by the
          company at 1.5x base salary and on a contributory basis a benefit up
          to the maximum of eight (8) times your base salary (up to a maximum if
          $2.0M).

     o    Business Travel Accident insurance is provided on a non-contributory
          basis, and provides a death benefit in the case of a business-related
          accident, of up to five (5) times your annual base salary.

Mr. David J. Anderson
Page 5 of 6

Other Executive Benefits:

     o    Flexible Perquisite Allowance: You will be eligible for a quarterly
          payment of $12,500 (an annual benefit of $50,000), which is designed
          to pay for, but is not limited to, expenses such as a car, and
          financial and estate planning assistance. This allowance is not
          considered eligible compensation for Honeywell's Benefit Plans and is
          treated as taxable income subsequent to tax withholding. This plan is
          currently under review and subject to change. In the event that the
          plan changes, you will be eligible for the same benefits available to
          other Executive Officers of the company.

     o    Executive Travel - As an Executive Officer of the Company, you are
          eligible to fly first-class or on corporate aircraft.

     o    Excess Liability Insurance: You will receive Excess Liability
          Insurance of $10,000,000 per occurrence.

     o    Senior Executive Severance: The Company will provide 36 months of
          continued base salary, annual incentive bonus at the target bonus
          opportunity then in effect, and certain benefits, in the event of your
          involuntary termination for other than gross cause.

     o    Golf Membership: You will be eligible to use Honeywell's corporate
          golf membership at Fiddler's Elbow Country Club. Details of the
          membership and the terms of use will be provided in the near future.

As required for all new employees, this offer is subject to certification of
suitability for your proposed employment which will include screening for
illegal substance abuse, satisfactory reference checks and background
investigation, verification of documentation required in compliance with the
Immigration Reform and Control Act of 1986, and your signing the Company's
Agreement Relating to Intellectual Property and Confidential Information.

PRIOR TO YOUR STARTING DATE
- ---------------------------

Upon your acceptance, please schedule your pre-employment drug-screening test.
To determine a location nearest you, refer to the website "questdiagnostic.com"
(click Patient Service Center and then click Drug Screen Collection) or you can
call Quest Diagnostic at 1-800-877-7484. (Bring with you the attached "Forensic
Drug Testing Custody and Control Form"). This testing should be done at least
three working days prior to your starting date to allow sufficient time to
obtain the results.

Once you have formally accepted your offer of employment with the company, login
to Honeywell's Pre-Employment Tool Kit Portal at
http://www.honeywell.com/newhire. Enter Username: candidate and Password:
nh35honey (Username and Password are case sensitive) and then click on FORMS to
complete your paperwork.

Mr. David J. Anderson
Page 6 of 6

Forms submission works best when using the Internet Explorer browser version 5.0
or above. Enter the email address where indicated on the screen, HR/STAFFING:
lucy.fitze@honeywell.com and be sure to enter your return email address to
receive a copy of your forms for your records.

Other sections you should review before your first day are About Honeywell, Our
Businesses, Orientation, and Benefits. The Checklist will help you keep track of
your new employee "to do" list, and Frequently Asked Questions are provided for
your reference. Once you begin work at Honeywell, please complete the Feedback
Survey to tell us how to make the new employee experience even more valuable for
future employees.

Dave, I very much look forward to working with you. Your experience and
background will be a major asset to our Company, and we look forward to having
you join the Leadership team. We have a lot to do as we position Honeywell for
growth and we intend to work hard and have lots of fun doing it. We want you as
part of this team.

Personal regards,

/s/ David M. Cote

Read and Accepted: /s/ David J. Anderson
                   ---------------------
                         Signature

Date: June 12, 2003
      -------------

cc:    T. Weidenkopf
       B. Marcotte
       A. Versfeld

                                                                      Exhibit 12

                          HONEYWELL INTERNATIONAL INC.
               COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                        Six Months Ended June 30, 2003
                             (Dollars in millions)

                                                                        
Determination of Earnings:
Income before taxes .....................................................     $  820
Add (Deduct):
   Amortization of capitalized interest .................................         12
   Fixed charges ........................................................        217
   Equity income, net of distributions ..................................         (4)
                                                                              ------
      Total earnings, as defined ........................................     $1,045
                                                                              ======

Fixed Charges:
Rents(a) ................................................................     $   46
Interest and other financial charges ....................................        171
                                                                              ------
                                                                                 217
Capitalized interest ....................................................          5
                                                                              ------
      Total fixed charges ...............................................     $  222
                                                                              ======
Ratio of earnings to fixed charges ......................................       4.71
                                                                              ======

- ----------
(a) Denotes the equivalent of an appropriate portion of rentals representative
    of the interest factor on all rentals other than for capitalized leases.

                                                                      Exhibit 15

August 8, 2003

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

Commissioners:

We are aware that our report dated August 8, 2003 on our review of interim
financial information of Honeywell International Inc. (the "Company") as of and
for the period ended June 30, 2003 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,
333-34764, 333-49280, 333-57866, 333-57868, 333-91582, 333-91736 and
333-105065), on Forms S-3 (Nos. 33-14071, 33-55425, 333-22355, 333-49455,
333-68847, 333-74075, 333-34760, 333-86874 and 333-101455) and on Form S-4 (No.
333-82049).

Very truly yours,

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

                                                                    EXHIBIT 31.1

                            CERTIFICATION PURSUANT TO
                                   SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

I, David M. Cote, Chief Executive Officer, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Honeywell
     International Inc;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)   designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this report is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     c)   disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's fourth fiscal quarter in
          the case of an annual report) that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     a)   all significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.

Date: August 8, 2003                              By: /s/ David M. Cote
                                                      --------------------------
                                                      David M. Cote
                                                      Chief Executive Officer

                                                                    EXHIBIT 31.2

                            CERTIFICATION PURSUANT TO
                                   SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

I, David J. Anderson, Chief Financial Officer, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Honeywell
     International Inc;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)   designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this report is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     c)   disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's fourth fiscal quarter in
          the case of an annual report) that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent functions):

     a)   all significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.

Date: August 8, 2003                              By: /s/ David J. Anderson
                                                      --------------------------
                                                      David J. Anderson
                                                      Chief Financial Officer

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Honeywell International Inc. (the
Company) on Form 10-Q for the period ending June 30, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the Report), I, David M.
Cote, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.

By: /s/ David M. Cote
    -----------------------
    David M. Cote
    Chief Executive Officer
    August 8, 2003

                                                                    Exhibit 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Honeywell International Inc. (the
Company) on Form 10-Q for the period ending June 30, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the Report), I, David J.
Anderson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.

By: /s/ David J. Anderson
    -----------------------
    David J. Anderson
    Chief Financial Officer
    August 8, 2003