Murray Grainger - Vice President, Investor Relations Dave Cote - Chairman and Chief Executive Officer Dave Anderson - Senior Vice President and Chief Financial Officer

John Inch - Merrill Lynch Shannon O'Callaghan – Barclay’s Capital Jeff Sprague – Citi Howard Rubel - Jefferies Scott Davis – Morgan Stanley Nigel Coe – Deutsche Bank

Welcome to the Honeywell third quarter conference call. (Operator Instructions) At this time for opening remarks and introductions I would like to turn the conference over to Murray Grainger.

With me here today are Chairman and CEO, Dave Cote and Senior Vice President and CFO, Dave Anderson. This call and webcast including any non-GAAP reconciliations are available on our website www.Honeywell.com/Investor. Note that elements of this presentation contain forward looking statements that are based on our best view of the world and of our businesses as we see them today. Those elements can change, and we would ask that you interpret them in that light. This morning we will review our financial results for the third quarter our expectations for the remainder of the year and some initial color on 2009 and of course allow time for your questions. With that I’ll turn the call over to Dave Cote.

Despite tougher economic conditions I’m pleased to report another quarter with strong results for Honeywell. We continue to build on our multi-year track record of delivering consistent performance with organic sales growth in the quarter again supporting double digit earnings growth. Over the past five years we’ve consistently outperformed in earnings growth and we’re confident that we can continue to outperform despite a moderating top line environment. With 20% EPS growth this quarter on a 6% sales increase we’ve added to that track record. Importantly the quality of our earnings remains high with year to date cash flow conversion just below our annual target of 100% of net income. Our long cycle businesses as well as those lines of macro trends like oil and gas, energy efficiency, defense and space, and life safety continued to perform well. This strength more than offsets continued softness in our residential and industrial sensing end markets as well as global flight hours where growth is decelerating as anticipated. We are actively monitoring short cycle trends and are taking proactive cost actions including utilizing the $417 million after tax gain from the sale of our consumable solutions business to reposition our company for continued out performance. We believe we’ll continue to outperform for several reasons. As a company Honeywell is well positioned to perform in this environment. Great positions in good industries is more than a catch phrase. We’ve positioned ourselves to participate strongly in robust macro trends like safety, security, oil and gas, energy efficiency, and defense and space that comprise about half of our portfolio. We’ve improved our business diversity so we’re not totally dependent on one area. The balance between long and short cycle businesses is about 45/55 non-US sales in excess of 50% of total, a huge installed base that goes across a number of our businesses, developing new industries like gas detection and personal protection equipment and the balance between products and services. All of this helps to create a more robust enterprise. Our investments in key initiatives like the Honeywell Operating System, functional transformation, velocity product development and our acquisitions process are showing strong results and they’ll continue to do so in the future. Our conservative planning ensures that we always plan for a tougher market than we’re likely to see. So we have our costs in line and invest smartly. Our strategic planning, operating plan follow up and management resource review or MRR all strongly reinforce making commitments today while investing for the future. A good example is the restructuring we’ve done over the last couple of years. These investments have been a hit to earnings during the good years but they make us even better prepared for the tough years. We continue to implement a disciplined approach to free cash flow generation and to capital deployment. We’re now a terrific cash generator and very different from the company we were when we generated only $1.5 billion annually in free cash flow and paid over 40% of that in dividends. We’ve taken that big cash improvement and reduced our share count by 15%, increased our dividend 10% a year for four years, and by the way, even with those increases less than a quarter of our cash flow today is paid in dividends. And, completed outstanding acquisitions using our rigorous new acquisitions process to ensure they pay. We received more than $900 million in cash proceeds from the divestiture of our Consumable Solutions business to BE Aerospace, a great deal for Honeywell. We’ve been able to utilize this gain to support repositioning and other cost saving actions in the quarter. In the near term our capital deployment focus will be on strengthening our balance sheet and ensuring good liquidity as we enter weaker economic conditions. Finally, everyone says it but it’s especially true for us and that’s the focus on having the best people organized the right way and motivated. It’s tough to measure but the effect is clearly there. We have a superb leadership team and have business leaders who don’t just give a good presentation but actually know how to get it done and stay focused. While we enter this period of difficult economic times we are well prepared and are focused on the execution necessary for us to outperform in this environment. With that let me turn it over to Dave.

Let’s go to slide four entitled Financial Summary, let me take you through the highlights of our results before we go into more details. As Dave said, we’ve recognized the gain on the sale of the Consumables Solutions business to BE Aero in the quarter and of course we’ve used this opportunity to take a number of actions that are going to benefit future periods and I’m going to detail those in a few minutes. The reported numbers on slide four include the impact of both the CS gain as well as the repositioning and other actions that we took in the quarter. On a reported basis starting with sales up 6% including a net 3% benefit from acquisitions and divestitures, a 2% benefit from foreign currency translation and there was also as you can see a 1% negative impact as part of the one time actions we took in the quarter at Aerospace. Therefore total constant currency organic growth in the quarter was 2%. I’ll explain that Aerospace item in just a moment in a little more detail. Segment profit you can see in the quarter at $1.2 billion, margins how were down on a reported basis however if you exclude one time impacts and I’ll take you on a walk of that in an upcoming slide. Third quarter margins really on an operating basis were 13.9%. Net income was up 16% in the quarter with higher taxes resulting from the CS sale being more than offset by lower below the line expenses. We repurchased 20 million shares in the quarter so lower share count helped drive earnings per share up 20% to $0.97 in the quarter. Finally, free cash flow of $556 million was down from the prior year primarily due to approximately $200 million of incremental cash tax payments in the quarter. As Dave indicated nine month year to date free cash flow conversion is just below our target of 100%. We feel confident in our ability to achieve the approximately $3.2 billion of free cash flow for the year at the mid point of the guidance we provided to your previously. By the way, working capital, speaking of cash, working capital was again a good story in the quarter with turns improving for the total company. In summary, another good quarter overall so let’s now go to slide number five and let me take you through a little bit more detail in terms of the Walk starting at the top in terms of the reported $0.97 down to an adjusted EPS number which strips out the impact of both the CS gain as well as the repositioning and other actions we took in the quarter. You can see that the adjusted $0.97 at the bottom of the page compares to the guidance that we gave you for the quarter of $0.94 to $0.96. Now starting at the top and just working down again we completed the sale for $1.05 billion in July. We recognized the gain on that sale of $623 million or $0.56 net of $0.06 in the incremental taxes above our typical tax run rate of 26.5%. If you look at the next three lines we outline the actions we took in the quarter. We recognized $65 million or approximately $0.06 reflecting the realignment of contract milestones within the development schedule for business jet platforms. As you know we won content on a number of new BG&A platforms within Aero over the last 12 months. The $65 million reflects the accrual of payments due to the OEs partially offset their pre-production costs. These accruals were originally forecast for 2009, importantly there’s no cash impact to this accounting recognition in 2008. From a reporting perspective the $65 million is a reduction to both Aero sales as well as their segment profit in the quarter. I’ll talk a little bit more about that when we look at the true underlying operating performance for Aerospace when we come to the segment review in just a moment. The second item in terms of actions in the quarter we took the opportunity to execute $233 million or approximately $0.23 primarily related to repositioning actions. It represents $163 million of severance related expenses and about $70 million for facility closures and other costs. Importantly the projects are going to deliver cost improvements in our manufacturing and engineering operations as well as support the rationalization of our global real estate footprint. Again, as Dave said earlier these are ongoing themes that we’ve been underwriting over the last five years. These actions, in addition to the more than $450 million of repositioning actions that we’ve taken now give us the much more tailwind as we face increasingly tougher global economic environments. Finally, we’ve recognized $269 million not including ongoing $40 million in the quarter of environmental expense. If you look at the environmental line it’s actually $309 million for the quarter, $269 million of that is included in this analysis. This $269 million primarily relates to remediation at the Syracuse, New York sight as well as Jersey City, Legacy sight. Syracuse we were able to reach resolution on the technical remediation design plan as well as estimate costs for remedial actions on adjacent sights. In Jersey City we were able to update our cost estimates for the remediation of several key sights. Again, these actions, these accruals have no cash impact beyond what we’ve provided for you previously in terms of our ’08 guidance. Importantly, no incremental cash impact for 2009. They should reduce, this is very important, should reduce our environmental expense, which as you know has had a run rate of about $220 million. We spent about $220 to $225 million in 2007. We were on track for about that rate in 2008. These accruals will reduce that normal run rate by approximately $40 to $60 million annually. By the way, we’re also going to see some of that benefit flow through and you see modest benefit of that flowing through in the third quarter and we anticipate seeing some of that benefit in addition in the fourth quarter ’08. In aggregate we expect these actions, the Aero platforms, the repositioning and the environment to provide an annual benefit in the range of $0.10 EPS to $0.20 with approximately $0.10 in ’09 and reaching our full run rate savings in ’10 and beyond. Now let’s turn to some operational details for the quarter and also the margin performance on slide number six. This is what I mentioned earlier in terms of really stripping away, if you will, or looking at the true underlying operating performance without the impact of the one time items. In addition to the CS gain there were several other items in the quarter that are impacting the results. First, as you can see on slide six is the Aerospace milestone accruals, again a headwind of about 60 basis points. Another headwind was our formula pricing agreement of special materials. This is of course a good news story because we saw sales growth in special materials due to the formula pricing pass through of higher raw material costs such as sulfur, natural gas and phenol. As a result there’s a one for one impact on our sales and costs. While positive in terms of projecting our operating income dollars it’s obviously dilutive in terms of segment margin for both specialty materials and Honeywell overall. Again, this had an impact of about 20 basis points to our margin rate in the quarter. Acquisitions were also a headwind approximately 30 basis points primarily related to acquisition accounting and one time integration costs mostly associated with Norcross and Metrologic at ACS. By the way, just as a side note, we’re very pleased with those acquisitions and Dave and I have had reviews with the operating teams recently and those transactions are coming out of the box very well in 2008. Finally, the hurricane impact, it’s something that’s made a lot of headlines. We haven’t really spoken about it but to just give you an update both Gustav and Ike had unfavorable impacts of our plant operations mostly within specialty materials as well as logistics in the gulf in the quarter. The most significant impact was in Orange, Texas with the shut down of a specialty materials facility. We expect continued impact in that facility in the fourth quarter of ’08. We’re in the initial stages of assessing the overall impact for our potential insurance recoveries and we’ll be able to update you in the fourth quarter as we complete the year in terms of both the final impacts of those hurricanes as well as the potential recoveries. In all 140 basis points of impact which translates to an adjusted margin rate of 13.9%. Obviously strong performance and we’re very pleased about and compares by the way favorably with the third quarter of last year the reported 13.4% last year. Let’s now go to the cash deployment slide. This is something I think that’s very timely given the interest in capital allocation and liquidity. As we look at our capital allocation we had inflows of $2.1 billion, the cash proceeds from Consumable Solutions as well as our free cash flow from operations. We had outflows of $2 billion mostly to fund share repurchases and acquisitions. In the near term and particularly as we enter this period of economic uncertainty number one we feel good as Dave said about our liquidity. We plan to reduce short term debt balances to increase the financial strength of our balance sheet. As we stated in the past we’re going to continue to invest in our businesses and look prudently to invest in strategic acquisitions. However, we think it makes sense to focus on capital structure and access to the liquidity over the short term. Just as an update, I know there’s been a lot of questions about this, a lot of interest in this, just a couple updates while were on the subject of liquidity and access to capital markets. We’ve had no issues to date rolling Commercial Paper. In ’09 we expect free cash flow less dividends to more than offset the current maturities of our long term debt and in addition you should know, I think you know this from our filings, we’ve got $3.8 million of committed credit facilities. Now before we talk about our individual businesses and how they performed let me spend a few minutes on slide eight just updating you on what we’re seeing across the portfolio more broadly as well as just outline some of the actions that we’re taking in preparation for what we all anticipate and are seeing in terms of slower growth environment. As you can see we’ve got there what we’re seeing and also what we’re doing. Under What We Are Seeing, we’re seeing of course as Dave said continued strength across our Aerospace OE, Defense and Space, ACS Solutions and UOP businesses. Due to their long cycle characteristics we have good visibility into these markets, the trends remain overall positive, they contribute roughly just under 50% of our sales and income and they provide a stable and predictable earnings platform as we enter a period of uncertain economic conditions. Next, we really have not, surprisingly, seen no recovery and we expect none in the select residential and industrial markets. We updated you on that over the last 12 months, over the last four quarters or so really no news there. We are seeing, as anticipated, some deceleration in the growth of global flying hours for both air transport and regional. As we expected we saw some slowing in the third quarter. We expect the four quarter exit rate that is in the November, December time period for global flying hours to be somewhere in the 0% to 1% growth. We would expect that to translate into around 4% global flying hours growth for the full year 2008. Finally, we’re actively monitoring short cycle trends particularly in our OE products business at turbo and ACS and also in the after market for business jets. Clearly the European passenger vehicles turn business saw difficulties in the quarter. We’re going to give you more specifics as we review transportation systems in just a moment. Importantly we’re planning for an even tougher environment in the fourth quarter for passenger vehicle turbo. For ACS we continue to pulse our channels to customers for those markets. A good example I can share with you we had this discussion with our business leadership the other day is in our environmental combustion control business ECC within the ACS we had a discussion on how their business is performing in its various channels. Our retail channel for ECC continues to perform very well as demand for energy efficient products remains robust. It’s amazing just even anecdotally what you’re seeing in terms of from retailers in terms of positive response they’re getting to our energy efficient products. In the trade channel, this is very interesting; we saw strong trends in ECC through mid September followed by significant declines for the remainder of the month versus the prior year. In other words a real tail off in the later part of September. However, in the first half of October we’ve seen robust double digit increases again and our customers are telling us the demand remains high. Obviously we’re tracking this very closely. Finally, for business jets we continue to see relatively stable activity for larger jets where we play most predominantly. We’re tracking business jet utilization as well as used jet inventory closely for signs of comparable broader weakness. The bottom line is its unclear how some of these trends will develop over the short term. As Dave said, for purposes of our planning and our guidance for the fourth quarter which I’m going to take you through in some detail in a moment we believe we’re taking more conservative view. Now let’s turn to some of the actions that we’ve implemented as we prepare for slowing environment, the later part of this same slide. First of course is our focus on fixed costs. This is not a new theme. We have had a relentless focus on the management as you know of census and facilities related costs which comprise the majority of our fixed costs. At this time we have hiring freezes in place. We continue to focus on keeping developed regions flat while still increasing sales. We’re managing our global real estate portfolio through continued group top rationalization. Obviously the third quarter opportunity that presented itself with the CS gain gives us significant additional capacity. We’re managing that portfolio with proactive lease and rental agreement renegotiations as we speak. Our business leaders are redoubling their efforts to reduce spending that’s not directly related to serving customers, supporting the advancement of our technologies or the continued improvement of our operating facilities. Each of our CFOs is actively tracking and reporting all indirect, all of these indirect spending activities. They are aggressively, with the leadership teams in our businesses, aggressively managing these costs with an emphasis on reducing all non-essential, non-customer related spending. By the way, the trend there, we track if very closely, has been positive. It’s been contributing to that operating margin expansion I mentioned earlier. Third, we’re reassessing CapEx, reprioritizing all new programs through this year and the end of next year. Our focus of course is on the long term health of our franchise so were going to continue to invest in attractive projects in safety and environmental related projects. However, as we face a tougher economic environment we’re making sure that our spending and our prioritization positions are firmly grounded. Finally, as I said earlier, we’re focused on managing our liquidity in this uncertain environment. We’re monitoring our portfolio. We’re taking decisive actions to prepare for more difficult economic environment. With that let’s now go through Aerospace and the other businesses starting with Aero on slide number nine. Importantly, there’s a little asterisk there beside the Aero title at the top of the slide. We’re excluding the business jet accruals that we detailed earlier as well as the impact from acquisitions and divestitures to give you really a true organic performance for Aero in the quarter. You can see segment sales were up 5% organically. Segment profit was up 5%, margins up 10 basis points to 18.4%. Some highlights regarding Aero, total commercial sales were up 7% organically in the quarter, continued strong demand on the OE side of the business, some softening in the after market. Again, that largely anticipated in terms of what we saw in the after market. Commercial OE sales were up 11% driven by continuing strong demand by OE customers, ATR OE sales were up 7%, BGA sales were up 15%. We continue as you know, to win content on new OE platforms and of course very, very pleased to announce this quarter the contract win on the Gulfstream G250 with engines and APUs representing approximately $4 billion win for Honeywell. Terrific accomplishment by the team. Commercial after market sales up 4% in the quarter, ATR after markets sales were up 5% greater than the global flying hours which were up 2.8% by the way in the third quarter as anticipated and by the way, to my earlier comment consistent with the approximately 4% growth we envision for total global flying hours for the full year ’08. The important thing, of course, is we continue to benefit from our technology and our offerings particularly in safety and fuel efficiency. That’s supporting our growth in the after market. A great example is the recent FAA decision mandating all US registered air transport aircraft built after ’92 to install the nitrogen generation systems to reduce risk of fuel tank flammability. This is an $800 million opportunity for Honeywell, there’s over 2,500 aircraft in the existing fleet requiring retrofit over the next nine years. On the business jet side, after market sales were up 3%. This reflects not only just continued underlying growth in the market that we’ve seen but also our successful penetration of new products particularly in avionics. Again, the majority of our content is on larger business jet platforms which continue to do well. We are seeing clear signs of reduced activity in the after market suppliers for smaller jets as well as for older jets in the fleet. We’ll need to continue to monitor these trends as well as the ongoing trend for larger jets. Defense and space sales were up 2% in the quarter driven by surface systems. Tiger was an important contributor there as well as space with the Orion program. On the margin side for Aero volume growth price and productivity more than offset inflation in the quarter. Overall another very good quarter for Aero which also included importantly increased R&D investment as we ramp up the development of attractive future programs including the Airbus 350, Embraer as well as the FAA mandated nitrogen generation system. Now let’s go to ACS, slide number 10. ACS also had a strong overall quarter. Sales were up 15%. Our products businesses, by the way, you can see the contribution for both acquisitions and foreign currency to that growth. We did have continued organic growth for ACS in the quarter. Our products businesses were up 19% on a reported basis driven primarily by benefits from Norcross and Metrologic. Organic growth for products up 2% with continued strength. We saw strength in China and the Middle East partially offset by lower growth in select US and European markets. New product introductions continue to support us. Again an example I sighted earlier ECC continues to help us in terms of offsetting both North American and European residential markets and continue to amazingly enough still see good growth in both those regions in residential. Our life safety business remains robust with organic growth in North America, Europe and Asia. The solutions business very positive for the quarter up 10% in the quarter. We had both strong orders growth, in fact orders for solutions up 18%. In the process business obviously the focus on oil and gas and refining and petrochemical segments was particularly strong. We had double digit order growth there. The building solutions continues to see strong growth in North America with particularly strong interest as well as order activity for energy efficiency projects. By the way, our service backlog also grew in the quarter reflecting continued strength on the retrofit side. When you adjust for acquisitions and foreign exchange overall ACS sales were up low single digits in North America, down low single digits in Europe but up strong double digits in the emerging regions where we continue to see overall strong. ACS profit was up 15%, margins were flat reported but importantly up 70 basis points excluding the impact of acquisitions very strong operational performance. That 70 basis points again of diluted impact of acquisitions to ACS margins is the 20 basis points that I mentioned earlier in terms of dilutive impact on its overall margins in the quarter. Turning now to slide 11, Transportation Systems, TS had a difficult quarter. Turbo was down 9% you can see their total sales were down 6%. Turbo was down 9%, we saw sharply as I said earlier sharply lower vehicle production rates in Europe. US OEs also had a difficult quarter as you know. We saw continued consumer shift towards lower displacement engines in Europe. We also saw the impact of the CO2 taxation and gas engines growing as a percent as Europe experienced high diesel prices at the pump. New platform launches will be continued to push out we believe as OE struggled with lower sales of their current inventories. However, our content on future platforms continues to grow and we had a $2 billion win over $2 billion of wins in the quarter and that’s clearly going to benefit future periods. That together with macro drivers such as energy efficiency, lower emissions standards we believe are going to continue to grow the turbo business longer term but obviously near term we’ve seen some real headwinds. In CPG, Consumer Products, they were down 4%. Again we faced headwinds in the US automotive market aftermarket. Volumes were down in car care and filtration as high gas prices and economic concerns continue to weigh on consumer confidence. Friction sales grew 3% primarily due to the impact of foreign exchange and pricing actions. Turbos segment profit was down 18%, margins were down 130 basis points to 8.8% due to lower volumes primarily in turbo. Obviously when we talk about TS and the turbo volume data it really speaks to the importance of the balance and the diversity we have in our portfolio. Specialty materials, sales were up 9% driven primarily by pricing actions in resins and chemicals as well as Fluorine. At UOP sales were down as anticipated due to the timing of catalyst sales which were down more than 40% in the quarter. You’ll recall the large shipment of catalyst that we had in the first half of this year. In fact, catalyst sales you’ll recall in the first half of ’08 were up almost 50% compared to the same period last year. Overall UOP continues to experience strong demand for its proprietary products and technologies and backlog continue to grow at the business and outpace sales. Resins and chemicals were up 52% in the quarter driven by capro sales as well as the impact of higher raw material pricing, higher raw material costs and it’s flow through as I mentioned earlier in terms of formula pricing. Fluorine products were up 18% primarily due to favorable pricing actions and higher volumes. As we discussed earlier both formula pricing, the impact of the hurricanes were dilutive to the FM margins in the quarter and if we exclude these impacts margins would have been up more than 300 basis point. I think it’s actually more like 200 basis points in the quarter, strong operational performance. With that background having reviewed the four businesses let’s take a look at the outlook for the remainder of the year, talk about the fourth quarter and the full year. I’m now on slide number 13. We’re experienced good momentum across our businesses obviously to date with sales and EPS up a very healthy 10% and 24% respectively. How we’re planning as we both said conservatively as enter the fourth quarter we expect sales in the fourth quarter to be up approximately 2% over the prior year. Obviously part of that too is now the change in foreign currency translation that we’re seeing as we see the dollar strengthening against major currencies. We expect EPS in the fourth quarter to be up 7% to 11% in the range of $0.97 to $1.01. Quickly, Aero sales we expect to be up around $3.3 billion up around 2% on a reported basis with organic growth led by Commercial OE and Defense offset by some slower growth in global flying hours and lower maintenance events at business jets. For ACS for the fourth quarter revenues are expected around $3.7 billion up 8%. We expect continued solutions growth based on orders and service backlog offset by continued slower growth in select product end markets. As I said growth in those select product end markets but slower growth. At Transportation Systems sales of approximately $1 billion down more than 20% reflecting as we said the continuing challenging conditions primarily in European passenger vehicle for turbo. Finally, at SM we anticipate sales of $1.3 billion up 9% driven by formula pricing but also continuation of lower licensing revenues impacting UOP mix and again that’s just reflecting the timing in the first half versus the second half of the year for UOP. Due to the repositioning actions that we implemented in the third quarter we’ll also have some favorability in terms of the effective tax rate in the fourth quarter that will give us on a full year basis essentially flat with prior year ETR of around 26.5%. That lower effective tax rate in the quarter should give us in the range of $30 to $40 million of additional repositioning capacity. So we would expect to leverage that also in the fourth quarter to benefit again ’09, ’10 and beyond. The outlook that we see for the remainder of the year and for the full year is in line we think with our planning assumptions for the fourth quarter. However, we still expect to drive healthy earnings growth despite weaker economic conditions. Now before we go to Q&A I’d like to just spend a few minutes on slide 14 summarizing our preliminary views for ’09. As a reminder, we’ll come back to you on December 9th to go through a build up of ’09 including assumptions and financial guidance for each of our businesses. Now we just want to provide sort of a macro summary, share some of the initial views on the outlook. The themes are really consistent I think with what we talked about for the third quarter, the outlook for the fourth quarter. I don’t think you’ll be surprised by anything here. Overall of course we expect a slower growth environment for the global economy with both developed and developing regions being impacted. We’re planning for recessionary conditions in the US and Europe. We expect growth to slow in developing markets including India and China, although growth in these regions will still be relatively strong and the opportunities there for us continue to remain significant. As we build the plan for ’09 we’ll project a conservative top line as has been our practice. We’ll continue to align our cost base accordingly. Our process as you know for planning is very rigorous includes detailed top down assessments and scenario analysis followed by detailed bottom up plans including contingencies across all of our businesses. We’re going to continue to remain very disciplined in capital allocation. We’re going to invest obviously in our businesses to support future growth but near term of course again we’ll reduce debt balances to further strengthen our balance sheet. We feel prudent obviously in this environment to ensure the continuation of our strong liquidity and our A2A, A2 long term credit rating. Finally in ’09 we expect continued benefit from the any repositioning and productivity actions we’ve taken. We’ve been proactively repositioning our businesses. We’ve implemented over $450 million in cost actions since ’06. Now with the incremental $567 million of actions in the third quarter we’re having to lock in additional benefits for ’09 and beyond. These actions coupled with functional transformation will continue to drive standardized work and improved service and enable us to achieve margin expansion in this environment. On the business side we expect that Aero will continue to perform in an environment of increasing commercial OE build and increased defense spending in ’09. With more than 7,000 aircraft still in the backlog we expect multiple years of delivery growth for ATR for air transport as well as for business jets. As you know, our recent MBA Double A business aviation outlook survey forecasted the delivery will peak in ’09 at 1,300 to 1,400 new aircraft. In the after market we expect the global flight hour growth will decline from ’08 levels and be flat to modestly positive year over year. ACS should see continued global opportunity grow through we expect softness in select product end markets such as residential and industrial, that’s not going to change. Our solutions businesses should remain strong. We’ve got robust order backlogs, the benefit of technology and innovation as well as favorable energy trends. In Transportation we see another difficult year ahead in ’09. The long term demand for energy efficient vehicles is there, that’s going to remain robust however near term the growth will remain challenged while global automotive OE take unprecedented headwinds. Finally, Specialty Materials we continue to see strong demand for UOP proprietary products and solutions. However, slowing global economy will impact demand for pf products such as capital lactane and Imodium sulfate within our resins and chemicals and our fluorine’s business. Overall we see a more challenging general economic environment in ’09 but we remain confident in our businesses, our leadership team and the track record that we’ve built here at Honeywell. We’ve made significant investments obviously over the last six years in product developments, sales and manufacturing capabilities, the global expansion all of which we believe are going to make us well positioned to outperform in this slower growth scenario. We’re looking forward to taking you through more details on December 9th and share with you more highlights in each of our businesses and the overall outlook for HON. With that, Murray, let’s turn it over to Q&A.

Please open up the line for questions.

(Operator Instructions) Your first question comes from John Inch - Merrill Lynch. John Inch - Merrill Lynch: All in based on the trajectory of that you are seeing with these puts and takes how are you feeling about being able to hold earnings per share kind of flattish next year or even perhaps grow it.

It’s really premature to comment on earnings per share outlook. I think what you’ve seen in terms of our third quarter performance, the outlook for the fourth quarter, the actions that we continue to take, the investments we continue to make we’re obviously confident that we’re going to continue to outperform in the environment. We’ll take you through the details of that on December 9th.

Typically what we do in terms of doing anything for forecasting the next year we always do it in December. It seems like every third quarter we get asked and we always saw we’re going to do it in December. At the end of the day I think it’s important to recognize how different the company is and the caliber of the portfolio we have now and how it’s run. I would take all of those into consideration and we’ll talk to you more about it in December like we always do. John Inch - Merrill Lynch: Can I ask about B&GA accruals adjustments we’re not really familiar with this accounting why does this hit the revenues, why are you doing this now and what platforms is this affecting?

As we’ve said, the wins that we’ve had most significantly the Embraer and Gulfstream wins, it’s not exclusive to that those are obviously large new platform wins. Typically come with contractual agreements that when we achieve certain milestones we support the OEs in terms of their pre-production costs. What we’ve been able to do here is basically through the renegotiation and restructuring of those contracts is achieve those milestones earlier and therefore be able to accrue those expenses and the way it works is those payments are a one for one deduct from the bottom line and the top line. We’re able to accrue for those early as I said with no cash impact in 2008. Importantly, those milestones related to these platform wins are really multi-year. We have in terms of our agreements we have ’08, ’09, ’10, ’11. What we’ve been able to do is not only be able to recognize earlier some of these milestones and therefore make the accruals. The other thing that’s enabled us to do is really smooth out on a multi-year basis. That’s another positive we’ll talk a little more about that in December but that’s another positive for us, when you look at the year over year impacts of these milestones. John Inch - Merrill Lynch: When you guys gave the $0.94 to $0.96 guidance obviously that did not have the impact of the Consumable Solution gain with the offsetting charges. If you hadn’t had those, you would have been planning for quarterly charges for repositioning in other anyway. What would those have been in the quarter if there’s any way to figure that out if you actually hadn’t had the gain, what would your normalized run rate have been for those charges, would you have estimated in the third quarter?

I have to disagree with how you just said that because you’re presupposing that a number of this stuff would have existed anyway. John Inch - Merrill Lynch: I know you pulled a bunch of stuff forward. I’m just trying.

I think the way to look at is we took the opportunity with this gain to position ourselves better for next year. My view, the answer is zero.

We had repositioning expenses, you’ll recall to near today of about $165 million. By the way, that was well ahead of our typical run rate. What we did was really took advantage of that very strong operating performance that we had in the first half of the year. The repositioning that we would have done in the later part of the year was really dependent upon obviously underlying operating performance as well as the quality of projects that present themselves and where we have gains. The answer is TBD and it always will be that way. Clearly we benefited in the first half of the year in terms of the actions that we took, that actions that we would have taken in the second half were TBD. We’re obviously been working on the Consumable Solutions transaction for a while. We’ve had a lot of time to thoughtfully review each of these items and to evaluate it in terms of both the immediate benefits as well as longer term benefits to the company. All of those things enter into balance and into the mix.

Your next question comes from Shannon O'Callaghan – Barclay’s Capital. Shannon O'Callaghan – Barclay’s Capital: Just a further question on the restructuring expense, given the deteriorating economy we’re getting a lot of companies announcing big restructuring programs to back out all of a sudden. You’re one of the only ones that’s really gotten ahead of this. I guess the question is, you called out an incremental $30 to $40 million for restructuring during the fourth quarter to offset some tax benefit but given how much you already done what’s left to do in terms of I wouldn’t expect I guess a big called out restructuring program from you guys. Is there really a lot more to book after you do this incremental piece in the fourth quarter?

We don’t anticipate anything major. You said it right, what we’ve tried to do from the beginning here is recognize that even when times are good it doesn’t always last that way. At some point you run into more difficult times and the time to prepare for those difficult times is when times are good. You’ve seen us during the last three or four years really taking advantage of some of those better times, better FX and saying okay how do we use that to better position ourselves for when times get tougher. We took this gain as being the same opportunity. No, we don’t expect anything major here. Shannon O'Callaghan – Barclay’s Capital: On the comments around the actions taken in 3Q and the $0.10 benefit to next year, can you help me understand that a little more because you said the actions in environmental would give you what looks like about a $0.05 benefit next year. I think you’re talking about the pull forward of the BG&A leading to a $0.06 benefit next year because you took it this year instead. That’s already got us $0.11 without any repositioning. Can you walk through the components of the $0.10 and is there something built in there I’m missing?

I think you’re pretty close. We’ve got obviously the benefit of the environmental that we mentioned. In my response earlier to the question on the BG&A accruals what I said is we’ve been able to call it level out now the anticipated milestones and payments and therefore the accruals or expense recognition it will have for those items. When you look at the ’08, ’09 it’s not that full amount that we took it’s a portion of that because there would have been some payments in ’09. What we’ve been able to do is to make those more even on the year over year basis so that the sum total of the environmental, the BG&A accrual and just a small amount on the repositioning. The repositioning gives us some benefit but not much in ’09 because as you know there’s pay as you go costs that are on the front end of those that don’t get taken through the repositioning that will actually flow through the P&L’s of the businesses or here at corporate depending upon where the action is being taken. The sum total is around $0.10. Shannon O'Callaghan – Barclay’s Capital: On Transportation obviously the auto business generally in Europe in particular has fallen off very rapidly in terms of getting at, you’ve got the platform investments, and I imagine a portion of the restructuring that’s applied into turbo. How fast can you catch up with what’s going on in that industry with the idea of we’ve seen margins take a pretty good hit here we were hoping they would be actually up this quarter and obviously they’re down a good chunk. Do you feel like you can get at that cost fast enough to prevent further sharp declines in the Transportation margin?

No, I’d say at the end of the day we’d have to expect that Transportation will struggle in the fourth quarter and next year. We’ll get at the costs as quickly as we can. It’s not always easy as you know. It’s one of those things that I think Dave said it pretty well early on. Is it’s one of those things that we manage in the mix of the company and it’s why we like to have a lot of bets in a lot of places and have a good broad diverse set of opportunities ahead of us. That’s why we’ve actively worked the portfolio over the last four or five years to have that right blend of long cycle, short cycle, the global, the US, building on an install base wherever we can have it, putting ourselves in the better position in other industries. This is one that’s going to be one of the down side items. We’ll be able to manage that just like we always do and at the same time this is one of those where with the wins that we’ve had the technology that we have when you come out into the ’10, ‘11, ’12 the numbers that are going to come out of this are going to be terrific. Its part of what we manage in total and yes, this is one of those where the industry is not so good fourth quarter and next year. Although I think the fourth quarter hit will be greater because there’s an inventory correction that’s going on right now. Does that make sense?

Your next question comes from Jeff Sprague – Citi. Jeff Sprague – Citi: I want to get my arms a little bit more around just the headwind issue your prior answer was pretty clear on what we just saw in Q3. I’m just thinking about the other stuff going on if we think about the $160 million pay as you go in the first half then another $40 million in Q4. That’s $0.20 that goes away if you don’t repeat any of that. My question is will there be some underlying normal pay as you go as we get into ’09 how would that compare with what you’re actually spending in ’08 and what about he payback from the pay as you go that you’ve done, is that separate and apart from what we just heard about in that $0.10 or is there kind of another stream of benefits coming through?

What I said is that when we book the repositioning there are also expenses that don’t qualify under the accounting definition of repositioning that are pay as you go expenses that are born by the businesses. As a result when we look at the payback on repositioning we include those items. It’s not always evident to you but we include those pay as you go costs in the calculation of payback. For 2009 the point I was making earlier is that for 2009 there will be some pay as you go costs that will impact the payback of the actions that we’re taking, the repositioning actions we’re taking the third quarter. The point I think you’re making is that for the repositioning the $165 million in the first half and the $30 to $40 million we anticipate taking in the fourth quarter that could actually represent tail wind for us if we don’t do repositioning in ’09 so there are round numbers $200 million of pick up that we would have in ’09 compared to ’08 if we decided because of the significant actions that we’ve been able to take in ’08 that we would have that benefit. You’re exactly right. That will figure into our math into our overall calculus as we develop our ’09 guidance. Jeff Sprague – Citi: The other big math question is pension for ’09. Can you ground us a little bit on kind of the puts and takes? Clearly it looks like you’re going to have some discount rate benefit, you’re going to have return on asset headwind, how do you think all that shakes out if we were to lock it in today or give us some sense of how to think of the sensitivity.

What we’ll do, I’ll come back and give you a little more color on this. What we’ll do is as is in past practice in our guidance call in December we’ll show you what we think is a relevant range of discount rate and return on plan assets so you can kind of pick your spot if you will on the intercept of those two in terms of building your models and doing your analysis for ’09. Obviously those numbers won’t be fully baked until we actually get to the end of the year. In fact, I think under the new pension legislation until January 15th we won’t know the interest rate the way it works today. We’ll give you that in the December 9th call. Obviously, we saw your note on pension which was I think well done is for anybody with a defined benefit plan these are challenging times given the fall off in terms of the global equity markets. For us, we’re just going to continue to monitor that situation and then include our best judgment towards the end of the year to what we think the impact will be for 2009. The good news is that whether you look on the income/expense side, if you look at it on the funding side is we began the year from a position of strength. When you look at it in terms of the year over year if we were just to freeze frame as of September 30th the reality is it would have both modest impacts to us whether P&L or from a funding standpoint in terms of ’09. The conditions have deteriorated since September 30th and who knows what’s going to happen to conditions between now and the end of the year we’ve seen such volatility in terms of markets. I prefer, in terms of giving you any precise numbers just to wait until we get to December 9th, show you that matrix and go through the details at that time.

We’re well aware of the issue and it’s one of those things that we manage as we think about how to have the company outperform in good times and bad. You’ve got stuff that’s working for you and you’ve got stuff that isn’t and that’s one of the ones that’s not for anybody right now. Jeff Sprague – Citi: Surprising not even a mention of the Boeing strike obviously it didn’t have much of an impact in Q3 but what impact did it have, it must have been a little bit of a tweak on the top line and what do you think about?

It’s not a big deal.

I think you saw a little bit just in terms of the top line of Aero in the third quarter. It’s also; we’ve got an assumption that it will impact us through a portion of the fourth quarter. If it continues beyond let’s say the middle of the quarter through the end of the year then that would have further, if you will, drag on Aero’s revenues not a significant impact in terms of Aero’s bottom line. It’s within the range of, included in the range of what we provided you in terms of the outlook.

Your next question comes from Howard Rubel – Jefferies. Howard Rubel - Jefferies: A follow up on some of your accrual comments, all of this sounds like you’re pushing a bunch of cash flow into next year in terms of requirements and then also might you touch on asbestos, it look like that continues to be pushed in a positive way. If we’re thinking about where your cash flow is going to end for this year don’t you have a couple of downers for next year and how might you offset them?

We’ve got both downers and uppers. Clearly starting from the very top cash flow in terms of net income we’ll be again getting into the details of what we’re going to see in terms of year over year improvement of working capital gains, CapEx amounts, cash taxes, asbestos, and all those things obviously the ones you mentioned are going to play into cash flow outlook. Just as we mentioned earlier regarding the question regarding EPS we’re not going to foreshadow at this point our cash flow for 2009. That being said, you know our focus, our goal is on 100% cash conversion, free cash flow to net income. We’re very focused on that committed to that; we’ll continue to work that. We’ll give you the details of that. Regarding asbestos you’re right, what we’ve seen is continued push out particularly one of the big variables for us, one of the binary items is the funding of the 524G Trust. We continue to see a push out on the timing of that. Again we’ll have more color on that, more insight on that when we talk in December. That’s an item that could impact 2009 at this time we’re still evaluating that and we’ll give you our best judgment in December.

As a leadership team though I would add all of us are always very focused on cash generation. It’s one of those things that we’ve tagged from the beginning and we’ve always as a leadership team looked at it as what provides flexibility. That flexibility means a lot to us where we’ve become a very good cash generator and we intend to stay that way. Howard Rubel - Jefferies: These are times that we haven’t seen in a quite a while in terms of either goods market volatility.

Never for me, I don’t know how old you are but never for me. Howard Rubel - Jefferies: We’re getting close in age. In terms of what are you asking, you talked about some of the things that you’re asking your executives to do but are you putting in flex plans, it is important I think for all of us to believe that you have the ability to show up earnings in these difficult times and how do you manage the difference between insuring the franchise stays strong and also make the earnings numbers because they’re not always the same thing.

One of the things that we’ve always done a pretty good job of and we actually try to explain it this way to all our folks is trying to always the business is always to trying to achieve two competing things at the same time. Whether it’s how do you have low inventory and good delivery, how do you have empowerment of people and still have good controls. It’s a management concept that we drive across the company. Along with that concept is how do you manage for the long term and the short term. You have to do both. That’s why you saw us during the good times making sure that we were investing strongly for the future not just in repositioning but in new products and I think Dave’s ECC example was a good one. Always looking at it as how do you make sure that you’re going to be able to deliver not just this quarter, not just this year but this quarter two years from now, three years from now. It’s I think just one of the tricks of business leadership, business management and we’ll do that in these tougher times just like we did in the good times. It’s just one of those things you have to manage. Now maybe it means if you had a program that you liked and you’re going to invest the plan was to invest $100 maybe you only invest $85 because you’ll stretch it out some and the markets gotten stretched out. It’s one of those things that you manage, I think as a well led enterprise and that’s what we’ll do next year also.

Your next question comes from Scott Davis – Morgan Stanley. Scott Davis – Morgan Stanley: You’re covering cyclical names I guess for almost 20 years I hear the word inventory correction and makes me want to run away. Obviously with TS that’s not a surprise given what’s happening but are we starting to see anything like that in ACS, any of the other businesses where material costs are following and customers maybe heavy on inventory right now?

No, just to be clear, what you end up with is TS of course; our Transportation is just a lot more volatile and will be more volatile on the up side too. It’s more volatile now on this correction and I think Dave was pointing this out earlier on an ECC we did see that in the later part of September there were orders had reduced a bit because of the inventory correction that distributors were trying to go through. It came flying back in October because of the demand. No, we’re not, we’re seeing it in autos that’s true but no place else. Scott Davis – Morgan Stanley: I wanted to talk a little bit out UOP because that’s a business that I think for most of us is really tough to forecast and when it was JV was incredibly volatile and very cyclical. You did note on slide 14 that you’re seeing strong demand as an outlook for ’09 and given oil prices falling and lowering of CapEx levels by some of the big players out there what gives you that confidence and also how much visibility do you have is it such a thing that you really can see into ’09 or is this more of a two, three month visibility business?

The visibility into the long cycle businesses is pretty good. That’s why we feel comfortable enough with it. Then when you look at the portfolio within that and process solutions, some of the oil and gas driven businesses a lot of that is driven by national oil companies where the money is actually still pretty good. Financing is already in place so yes actually we feel pretty comfortable. Scott Davis – Morgan Stanley: I’m going to stick on that theme a little bit. What’s different this time? I understand there’s more dirty oil versus sour versus sweet, whatever you want to call it. Why is this business wholly owned under Honeywell’s substantial less cyclical than it was under the JV format is there something you’ve done is there a business mix shift that’s occurred?

There’s both an external and internal aspect of that. On the external side there’s still a world wide shortage and oil companies, gas companies know this and yes the shortage has been meliorated a bit by the upcoming reduction in the overall global economy. It’s going to come back. Oil and gas companies particularly the national ones know that. You don’t adjust based upon a quarterly results in that industry because these are very long term investments they make and they’re smart enough to know that these times as difficult as they are will end, demand will come back and that they need to be prepared for it so we don’t see a lot of change there. To your point, on the internal side yes it is a different business. Quite honestly when it was a JV nobody paid much attention to it because there wasn’t much you could do to impact it. It was more narrowly focused as an enterprise. If you take a look at how much broader their portfolio is today and the applications that they have we expect it to be a much less cyclical business than it was when we acquired it and it’s been one of the things that we worked on from the beginning. We recognized early on this could be more cyclical and one of the things we needed to do was make sure that we branched out and diversified it further just like we talked about with the total company. Yes, it is a different business. I those two together make it just a different business than it was.

Your next question comes from Nigel Coe – Deutsche Bank. Nigel Coe – Deutsche Bank: The pay as you go expenses within the segments you haven’t talked about that a whole lot in the past could you maybe quantify that and could they fall off as well next year?

The pay as you go expenses are a percent of what our total repositioning is it probably runs anywhere in the neighborhood of 10% to 20% of the total repositioning. In terms of next year they will increase next year because of the actions that we’re taking, the accruals that we’ll take this year. As the actual projects are implemented those pay as you go costs will be flow through the P&L’s of the respective units. That’s something that we always manage, we always anticipate. Nigel Coe – Deutsche Bank: On the free cash flow I know you bought back a bit in those stock this quarter you’ve got another $1 billion free cash flow in 4Q plus dividends from where you’re sitting right now how do you use that cash?

As I mentioned earlier, the near term focus really is on bringing down our Commercial Paper balances, reducing our overall debt balances, we think that’s a smart thing to do. We obviously benefited from the strong cash from operations as well as the proceeds from CS that’s enabled us to buy back stock through the first nine months this year. For the fourth quarter, for the foreseeable future that’s really our focus. Nigel Coe – Deutsche Bank: Did you buy back the stock at end quarter and given what happened in the fair market since that point would you reduce CP more practically in 3Q rather than buy back stock?

I wish we bought at $30 instead $45 but yes.

It’s rear viewing yourself about in this environment. The fundamental fact is that if you look at our cash flow to valuation it’s just incredible. None of us could have ever anticipated it this low. It’s certainly not supported by the fundamentals and is about one half of our historic average in terms of the trading where we’ve seen if you will cash on cash. We think it was a smart move and we’ll continue, as I said earlier and as Dave said earlier continue to be very disciplined in terms of our capital allocation that’s helping us and the generation and the deployment. Nigel Coe – Deutsche Bank: You talked about the ECC volatility do you think that could have been caused by some of the tight conditions in the credit markets causing some weird behavior through this are you seeing any of that weird behavior?

Anecdotally as we discussed with the business I mentioned we spent some time really trying to understand given ECC’s breadth and the multiple channels and geographies that they do business in. If you really try to understand sort of the July, August, and then September phenomenon particularly as I mentioned the trade channel in the September phenomenon interestingly enough they attributed some of that behavior on the part of their customers and part of the distribution trade to that very issue was concerns about credit liquidity. In fact what they found was it wasn’t an issue for them predominantly this is just some generalizing now and that’s what created as Dave said some of the snap back because what they saw was real demand on the part of their customers for product and they needed to replenish. It’s really good news story, its an interesting slice if you will into what’s going on in the world today and it’s also interesting in terms of sort of underlying, underscoring the monitoring we’re doing in terms of our businesses because they’re really holding up well. By the way, we’re seeing in addition to strong orders we’re seeing strong revenues October to date out of ECC as well. New products are helping a lot.

I think it’s important when we think about Honeywell we’re not just a collection of businesses as we were talking earlier and we really are a different company than we were during the last tough times. We’re a company that you can count on to deliver in both good times and bad. While we’re surprised by the extent of these tough times as anybody has to be I can’t say we were surprised that they came. They always do and we’ve been preparing for that using these good times to get ready not knowing when it’s going to happen but knowing for sure they always come. We’ve done a couple things. We have the balanced portfolio, we have this great position, good industry really does make a difference and creates a much more robust enterprise and you saw us talk around that a number of times whether a specific businesses or how we see the businesses together. That diversity of industry global long short cycle really does create a more robust enterprise. We’ve also got a leadership team that knows how to make it happen. As we’re fond of saying the trick is in the doing. While these are clearly more difficult economic times it does provide us with the opportunity to show you what we can do. That is to outperform in good times and bad times and I’m not trying to come across as arrogant about this but at the end of the day we have been trying to prepare for this for a while and it’s our job to show you next year and in this fourth quarter what we can do and we intend to do that.

Thank you Dave and thanks for joining us.

This does conclude today’s conference we thank you for your participation.