Elena Doom – Vice President of Investor Relations David Cote – Chairman, Chief Executive Officer Tom Szlosek – Chief Financial Officer, Senior Vice President

Jeff Sprague - Vertical Research Partners Scott Davis – Barclays Steven Winoker - Sanford Bernstein Steve Tusa – JPMorgan Nigel Coe - Morgan Stanley Howard Rubel – Jefferies Peter Arment - Sterne Agee Shannon O'Callaghan – Nomura

Good day, ladies and gentlemen, and welcome to Honeywell's first quarter 2014 earnings conference call. At this time, all participants have been placed in a listen only mode and the floor will be open for your questions following the presentation. (Operator Instructions). As a reminder, this conference call is being recorded. Now I would like to introduce your host for today's conference, Elena Doom, Vice President of Investor Relations.

Thank you, Tony. Good morning and welcome to our first quarter 2014 earnings conference call. With me today are Chairman and CEO, Dave Cote and Senior Vice President and CFO, Tom Szlosek. This call and webcast including any non-GAAP reconciliations are available on our website at honeywell.com/investor. Note that elements of today's presentation do 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. We do identify the principal risks and uncertainties that affect our performance in our Form 10-K and other SEC filings. This morning we will review our financial results for the first quarter and review our outlook for the second quarter and full year and finally we will save time for your questions. So with that, I will turn the call over to Dave Cote.

Thanks, Elena. Good morning, everyone. I'm sure you've seen by now, Honeywell delivered another good quarter to kick off 2014. EPS of $1.28 increased 10% year-over-year when normalizing for tax, so another quarter of double-digit EPS growth, with earnings coming in above the high-end of our guidance range. This was driven in large part by our strong execution and higher sales conversion, all while maintaining our seed planting investments in the future. Our enablers and key process initiatives are driving meaningful results throughout the portfolio. An important driver of our productivity continues to be the savings we're seeing from previously funded restructuring actions. With that in mind, we've been able to proactively fund restructuring and other actions by fully deploying the approximate $0.10 gain from the sale of B/E Aerospace shares in the first quarter, just like we did in the fourth quarter of last year. I'd also point out that the company funded an incremental $10 million of restructuring actions in the quarter from operations. So, in total, $0.11 of restructuring and other actions. The projects funded in the first quarter alone are estimated to yield full run rate savings of about $70 million over the next couple of years. We're being proactive about keeping that restructuring pipeline full and we think these actions position us well for further market expansion over the next five years. Margin, EPS and cash flow were all strong in the quarter in spite of slightly slower top line growth, primarily related to timing in PMT and lower defense and space sales. Sales in the quarter of $9.7 billion were up 4% reported and 1% organic. However, if you exclude D&S where the headwinds are well known, organic sales for the total company were up about 3%. We talked a lot about great positions in good industries and our diversity of opportunity which once again benefited us in the quarter. We saw a good momentum exiting the quarter in our short-cycle businesses, while our long-cycle businesses maintained healthy backlog. We're also seeing pockets of recovery in below peak end markets. Transportation systems, for example, continues its healthy pace of recovery, and while weather may have been a factor in some areas, these challenges were mostly offset by weather related areas of opportunity. For example, ECC enjoyed strong double-digit sales growth in combustion and heating controls. The order momentum we're seeing out of our long cycle businesses and short cycle also positions us well for our expected acceleration of organic growth in the second quarter and second half of the year. Geography is also part of our diversity of opportunity. In the U.S., we continue to see good growth excluding the D&S headwinds I mentioned. We're encouraged by continued stabilization in Europe and even more excited about the growth we saw in China, India and the Middle East. It's worth nothing that each of our SBGs grew double-digits organically in China in the quarter. So, both our short and long cycle businesses are delivering on our high growth reaching strategies. Innovation and investments in new product and technologies are also driving value across the portfolio. We unveiled the Honeywell User Experience or HUE back in March and we couldn't be more excited about what this will mean for Honeywell. We recently opened a HUE design studio in Shanghai with other design studios set to open globally. We're focused on how we can drive significant change and improve the experience for the user, installer and maintainer. With all that being said, we remain cautiously optimistic on the macro economy and with the strength in the first quarter, we're confident in our revised full year outlook for pro forma EPS, raising the low end by $0.05, making our new range $5.40 to $5.55, up 9% to 12% versus prior year. Our outlook on free cash flow has also improved based on the strong performance we saw in the first quarter. As Tom will detail in a moment, we are now reporting free cash flow without adjustments for cash pension, NARCO payments and one-time items. So, the guidance range remains the same, but it's reflective of the first quarter performance and importantly without adjustments. In summary, we've got a lot of momentum across the portfolio, which we highlighted in our March Investor Day, with roadmap for future growth and profitability as part of our new five-year target going out to 2018. Innovation and execution, our seed planting for the future, Great Positions in Good Industries, and the power of One Honeywell will continue to differentiate us, allowing us to deliver on these targets and continuing to outperform. So with that I'll turn it over to Tom.

Thanks, Dave and good morning. On Slide 4, let me walk you through the financial results for the first quarter. Sales of 9.7 billion were up approximately 4% on a reported basis and up 1% on an organic basis. The total sales are right in the middle range we communicated early March of 9.6 billion to 9.8 billion and the organic growth rate was slightly lower than expectation due to timing in aerospace and PMT. As Dave mentioned, excluding defense and space, which is expected to stabilize this year, our organic sales were up 3%. Regionally organic sales were up 1% in the US and EMEA with Europe showing resilience, continued resilience despite some large customer project ramp downs. China grew 14% on an organic basis, with double digit organic growth in each of the business. As we will detail later, we are anticipating organic sales growth to accelerate as the year progresses. Segment profit increased 6% in the quarter with margins expanding 30 basis points to 16.5% or up 50 basis points excluding the dilutive impact of M&A. We had guided to 30 to 50 basis points improvement in the margin rate excluding M&A, so the 50 basis points is on the high end of our expectation. We saw margin expansion three out of the four businesses, productivity continues to be a key driver across the portfolio, offsetting inflation and continued investments for growth. In PMT we did experience some temporary margin contraction because of expected headwinds around unfavourable petrochemical catalyst shipment mix and pricing headwinds in R22 in resins and chemicals. Still PMT closed at 21% segment margin was our highest margin business in the quarter and we continue to have lot of confidence in our ability to expand margin going forward. Below segment profit, I wanted to comment on two items, the first is the gains we experienced from the additional B/E Aero shares and second, the tax rate. On B/E Aero which I will further detail in a minute, the gain was more than offset than restructuring and other charges resulting in a $0.01 unfavorable impact on EPS. The B/E aero gain is not included in our operating margin but the restructuring and other charges are, so operating margins expanded 10 basis points in the quarter compared to the segment margin expansion of 30 basis points. The tax rate of 26.6% was in line with expectation and represent a $0.06 headwind compared to 2013. Earnings per share of $1.28 was a penny higher than where we guided even after we funded incremental $0.01 of additional restructuring action. There are a couple of things to mention on free cash flow, first it was really strong, up 2.5 times 2013 amounts, the improvement came equally from better working capital performance and lower cash contribution to foreign pension plan. Second, we are simplifying how we define free cash flow as Dave mentioned. It’s just free cash flow from operations – just cash flow from operation less capital expenditures, no more adjusting for pension or NARCO. We did this the same way for both 2013 and 2014 so the numbers are comparable and the growth is real. Slide 5 provides a more detailed view of the gain deployment actions in the quarter. As you can see the $0.10 per share gain from the 1.5 million BE aero shares sold in the first quarter was exceeded by funding the restructuring actions and other proactive environmental remedy. So in total an $0.11 headwind to earnings from restructuring activities offset by the B/E aero gain of $0.10, so a net $0.01 headwind to earnings. Restructuring -- repositioning and restructuring represent the majority of the gain deployment, just as you heard in January these actions are intended to proactively realign our businesses for growth and higher asset efficiency and will provide us with meaningful margin and earnings tailwind in future periods. We’re expecting these projects to yield approximately $70 million of run rate savings in future years and each individual project has an excellent ROI. We will continue to maintain a steady pipeline of future projects to fund should the opportunity arise. This as you know continues to be a key element of Honeywell playbook as restructuring funds the exit cost requirements from our key process initiatives and integration activities. A smaller portion of the gain was used to fund incremental environmental charges. This relates to certain remediation project that we believe seeking proactive remedies with the regulators will lead to lower expenses and more cost stability over the long term. Overall these actions position the company well for future earnings growth and as a reminder following the sale of 2.6 million B/E Aero shares in the fourth quarter of last year and the 1.5 million in the first quarter, we still have roughly 1.9 million shares remaining and continue to have a very favorable view of the company. Now let’s take a look at the four business segments. Starting on Slide 6, aerospace sales were down 2% which is in line with our guidance. However excluding the impact of the expected defense and space decline, aero sales were up a solid 3%. Segment margin was up 30 basis points which was actually a bit better than our expectation. From a sales perspective, commercial OE sales were up 1% reflecting strong air transport and business aircraft shipment. We had particularly strong 737 and 787 OE growth and broad strength across business aircraft portfolio. Regional jet sales were lower reflecting lower volume and free of charge shipment. Commercial aftermarket sales were up 4% in the quarter with double-digits spares growth in both ATR and BGA, partially offset by lower R&O revenues, a reflection of fewer maintenance events and timing. The 14% spares growth was driven by the recovery in the US and China and we highlighted this as a challenge in the first quarter of 2013, as well by the continued robust RMU sale in BGA, RMU is repairs modifications and upgrade. Defense and space sales were down 8% which we expect to be the low point from a sales perspective for the year, most of the decline was planned with known program ramp downs and anticipated lower government services and defense aftermarket revenue. On segment profit, the aero team was able to more than offset the impact from the lower sales, to drive the segment margin up 30 basis points, through commercial excellence, productivity net of inflation and favorable aftermarket mix. On Page 7, we are looking at ACS prior to the shift of HPS to PMT. We expect to file an 8K in the second quarter to reflect this change and we will update our historical numbers. However we are perfectly clear when we shared the guidance for Q2 and the rest of the year which I will review in a few minutes, we will do that on the new reporting structure. The ACS organic sales were up 2% and reported sales up 8% both in line with our expectations, the difference of course reflects the growth from M&A in particular Intermec and RAE Systems acquisition. Segment margin was up 40 basis points almost twice our expectation. ESS sales, so the products business, were up 2% with ECC and life safety showing particularly strong growth and more than offsetting the expected declines in scanning and mobility resulting from the ramp down of certain programs. Without this scanning and mobility dilution, ESS sales would have been up 5% with some favorable contribution from weather impacting ECC. We experienced higher U.S. residential sales including on the retail side, modest improvements in Asia and Europe and continued HGR growth in China and India. The Intermec acquisition continues to go well. We're exceeding what were challenging expectations on the pace of integration and on performance. Also the business continues to win a large number of orders that are expected to result in further 2014 growth. Process dilution sales were up 3% on an organic basis in the quarter, with continued good growth in high-margin areas like services and advanced solutions more than offsetting the impact of large project completions. Orders growth also continues to be healthy and backlog is growing, which Darius and the PMT team will see the benefit of in the future. Building solutions sales were essentially flat on an organic basis. We are encouraged by our building solutions orders and the project backlog growth, both showing mid-single digit growth on an organic basis. And we're also experiencing similar growth in the services backlog, not a trend yet, but certainly encouraging development as we look for the rest of the year. ACS margins expanded 40 basis points to 14.2% in the quarter and were up 70 basis points excluding dilutions from M&A. ACS continues to benefit from driving commercial excellence, volume leverage and productivity while at the same time investing for the future. Moving to Page 8, Performance Materials and Technologies, PMT sales were up 2%, in line with our expectations and driven by 9% growth in UOP, offset by 4% declines in Advanced Materials. Although PMT margins contracted 100 basis points, the result was better than our expectations, and at 20.8% PMT was again our highest margin business in the quarter. On sales, UOP experienced significant growth in catalyst volume and gas processing, offset by an unfavorable mix in catalyst shipments and lower process technology licensing sales, resulting from timing and challenging comps. As you know, we are in the midst of adding UOP capacity particularly on the catalyst side, which will help the business to better service $2.4 billion backlog. Advanced Material sales were down 4%. We experienced volume increases in most of the Advanced Materials portfolio, despite the tempering effect of the difficult weather. However, this volume growth was more than offset by unfavorable pricing in fluorine products and resins and chemicals. We do expect the pricing challenges to moderate in the second quarter and throughout the year, as we lap prior year declines. The decline in the segment margin was principally driven by unfavorable catalyst mix in UOP, the price raw challenges in Advanced Materials and contemporary spike in raw material costs due to weather, partially offset by productivity net of inflation. On Slide 9, you can see transportation systems had a very strong quarter with sales up 9%, that's 7% without the benefit of foreign exchange and segment margin up 340 basis points. On the sale side, the increase was principally volume-related. We experienced strong turbo volume growth in our three biggest regions: Europe, North America and China. The Europe growth was strong in both light and commercial vehicle segments. We continue to benefit from improving global industry macros on vehicle production, also from regulations and gas penetration. We continue to benefit from a strong win rate, with turbo unit sales from new product launches doubling from 2013 levels. As the year progresses and we begin to lap stronger periods from 2013, we do expect some moderation in the growth rate. The segment margin improvements to 15.5% reflects the strong productivity and volume leverage in turbo, and the benefits from restructuring and other operational improvement. We continue to work on the Friction Materials divestiture and expect a closure sometime in the second half of 2014. I'm now on Page 10 with a preview of the second quarter. We're expecting sales of $10 billion to $10.2 billion which would be up between 3% and 5% on a reported basis or approximately 3% on an organic basis. We're using a euro rate of roughly 1.35 for the second quarter. Segment margins are expected to be up in the range of 50 to 70 basis points, excluding the dilutive impact of M&A, EPS of $1.32 to $1.36 will be up 8% to 11% at our normalized 26.5% effective tax rate. On the segment, aero sales growth is expected to be in between minus 1% and plus 1% in the quarter with low single-digit commercial growth offset by moderating Defense and Space declines. On commercial OE, we're still seeing healthy demand for air transport deliveries which is helping offset the continued drag from lower regional aircraft sales. In commercial aftermarket, we're expecting ATR spares growth to be about in line with flight hours in the quarter, as well as continued BGA RMU strength. As for margins, we expect some headwinds primarily due to higher mechanical OE sales in both ATR and BGA and a higher proportion of ATR revenue in the quarter, resulting in flattish overall margin growth. For ACS, as I indicated earlier, we're providing guidance based upon the new reporting structure. Sales are expected to be up between 8% and 10% or approximately 3% on an organic basis. The reported sales growth is largely driven by the Intermec acquisition and an acceleration of organic growth in ESS, particularly security and scanning and mobility, and also BSD. Modest improvements in non-resi projects are expected to favorably impact ECC, life safety and security, and high-growth region sales look to continue their positive trend. The two consecutive quarters of long-cycle orders and backlog growth in building solutions is encouraging and should enable strong sales growth in the second half. ACS margins are expected to be up again in the second quarter approximately 50 basis points or 100 basis points excluding the dilutive impact of M&A. PMT, including process solutions in both years is expecting sales increase between 3% and 5% in the second quarter driven by double-digit increases in UOP and to low-to-mid-single-digit growth in HPS and Advanced Materials. In UOP, we foresee another strong quarter of increased catalyst and gas processing sales growth, while in Advanced Materials; we anticipate broad sales growth across the portfolio, including improved production levels in Resins & Chemicals and our normal seasonal ramp-up in fluorine products. The PMT leadership is encouraged by the momentum in the orders and the backlog increases in HPS. PMT segment margins, however, are expected to be up slightly versus the prior year, based on the mix of shipments within UOP offset by moderating pricing pressures in Advanced Materials. In transportation systems, the strong performance is expected to continue, although tampered slightly from Q1 by the more challenging comp. Sales look to grow between 5% and 7% driven by new platform launches, continued turbo gas penetration and flat or slightly better EU light vehicle production rate year-over-year. Segment margins will be similar to first quarter levels and up approximately 200 basis points, primarily driven by higher volumes in turbo and continued productivity gains. On Page 11, we're profiling the organic sales growth for the year. We're expecting full year growth of 3% on an organic basis, so there's some modest acceleration from the Q1 growth rate of 1%. We want to explain the key drivers. The page shows the first half versus second half organic growth rates for 2013 as well as what we expect for 2014. The first thing to notice is that the first half growth for 2014 is stronger than 2013. We saw that in this first quarter as 1% organic growth although tepid was greater than the first quarter of 2013 where we saw a decline of 1%. Second, the slope of the line is similar each year, 2013 we went from 0% in the first half to 3% in the second half, and 2014 we go from 2% in the first half, to an expected 4% in the second half. Thirdly, the notations on the top of the 2014 bar show the expected organic growth rate excluding Defense and Space which would be roughly 3% in the first half of 2014 accelerating to approximately 4% in the second half of the year. That happens because of the factors mentioned on the right side of the page. In Aero, Defense and Space declined significantly moderate. Also commercial OE is expected to improve slightly largely driven by the absence of the prior year's large fourth quarter BGA OE payment. In ACS, we anticipate scanning and mobility returning to growth after lapping the program wind downs I discussed earlier and also layering on new business wins. The macro environment is also expected to modestly improve which continues residential strength and improving non-residential markets benefiting ESS. And as highlighted earlier in the last couple of quarters, have seen a nice lift in building solutions backlog, which is expected to result in stronger sales growth rate in the second half. In PMT, the pick-up in the second half was driven primarily by better Process Solutions and Advanced Materials growth, partially offset by tougher comps in UOP. UOP organic sales grew 17% in the fourth quarter of 2013. The Process Solutions backlog of projects and services continues to grow nicely, which like Building Solutions is expected to result in better second half sales growth. And as mentioned earlier, Advanced Materials pricing headwinds are expected to moderate in the second quarter and back half of the year, and we are also expecting a boost from higher volumes and higher sulfate [ph] sales in fluorine products. Finally in Transportation, while the outlook remains very strong, the comps become gradually more challenging as we progress through the year. So, while we're expecting the growth in the second half in TS, it's expected to be at a slower pace than the first. I'm now on Slide 12, where we provide an outlook of segment performance for the year. Again, this guidance reflects the realignment of our Process Solutions business in the PMT from ACS. So, let me explain the set-up here. The left-hand side of the slide represents the guidance we provided in March and it's based on the old reporting structure. The right half reflects our current guidance. On a total Honeywell-basis, if you look at the bottom-line, the segment guidance for the year is not changed. However, there are some minor changes to the segment that you should be aware of. Aerospace sales remain roughly in-line with the guidance, but reflecting the slower R&O growth in the first quarter, and slightly lower margins impacted by volume leverage on that lower sales growth. ACS and PMT now reflect a shift of Process Solutions for the full year. Organic sales are expected to improve in the second half of the year from both businesses. We have also provided updated margins profile which show continued expansion in both ACS and PMT. The Transportation System guidance reflects the first quarter top line strength and strong margin expansion. We're now expecting TS margins to approximate 15% or more in 2014. So small puts and takes, but as I said, no change to total Honeywell sales and margin outlook. Moving to Slide 13, we have an update on our full year guidance, which is very similar to what we shared at the March Investor Day except for two things. One, we're raising our full year pro forma EPS guidance at the low end by $0.05 resulting in a new range of $5.40 to $5.55, which is up 9% to 12% versus 2013. This reflects our first quarter performance and the confidence we have in our outlook. Second, we're raising our free cash flow guidance by approximately $300 million to reflect the strength we saw in working capital in the first quarter, and lower foreign cash pension contribution. To be clear, the $3.8 billion to $4 billion range looks the same as what we showed you previously in March, but that range was based on the prior definition of free cash flow, which excluded several non-operating items. So with those changes, we continue to expect sales in the range of $40.3 billion to $40.7 billion, which is up 3% to 4% on a reported basis and 3% on an organic basis. Our sales range reflect euro at $1.30 for the second half of the year, so a little bit of headwind there. We also continue to expect segment margins between 16.6% and 16.9% which will be up 30 to 60 basis points from 2013 or 50 to 80 basis points excluding the M&A impact. So, as Dave said earlier, still a very balanced outlook for the year but taking into account the good start we saw in the first quarter. On Page 14, I have a brief wrap-up. In markets that continue to be somewhat challenged, we're off to another good start to the year. We exceeded our expectations on most fronts including margins, earnings and free cash flow while at the same time continuing to invest for future growth and productivity. We raised our earnings and cash guidance to reflect a strong first quarter as well as our expectations for growth acceleration in the second half. We intend to continue our outperformance by leveraging our balanced portfolio, which as you know is strategically aligned with the favorable macro trend. These include energy efficiency, clean energy generation, safety and security, and urbanization combined with a growing middle class and customer productivity all of which remain intact. So, with that Elena let's go to Q&A.

Thanks Tom. Tony, we will now open up the line for our first question.

(Operator Instructions) Our first question is coming from Jeff Sprague with Vertical Research Partners. Please go ahead. Jeff Sprague - Vertical Research Partners: Could we drill in a little bit more on the building-related trends in ACS? Tom, you gave us some color there. But just on BSD, I'm curious if there is some geographic color you can shed on what's going on in the firming there, and if there is some color you can shed on energy retrofit versus new construction?

Yes. I’d say the growth in orders in HPS was high-single digits for the quarter on an organic basis. And that came across very strong in the Americas. Europe was also very good and Asia was a little bit smaller for us, was a little bit down, but in the Americas we’re seeing really good wins in energy, smart grid solutions as well and services, our service bank continues to grow so – across the board pretty good result there on orders perspective and again as we said this is the second quarter where we’re seeing that momentum, so hopefully bodes well for the second half. Jeff Sprague - Vertical Research Partners: And then when you look at ESS and what’s going on there in particular, and environmental controls, can you elaborate a little bit more on how the quarter played out? It sounds like it was a pretty strong heating-driven quarter. Does that then fall off as we get into the second quarter?

No, I think – the trend I mean, ECC was very strong, Jeff, in the quarter, mid-to-high single-digits on a growth perspective. Americas was very strong in combustion as well, so both homes and combustion. But the trends will probably be mid-single-digits growth over the course of the year if the conditions kind of stay where they are. So we're encouraged by it.

We also have the new products, Jeff, that we've been introducing and that's helping. Jeff Sprague - Vertical Research Partners: Can you elaborate a little bit on the call you are making on the euro? So you are just expecting a dollar-euro fade here as we get into the back half of the year? And if that doesn't happen, what kind of hedge that is to your second-half earnings outlook?

Yeah. I mean, as we said, we're using $1.35 for the second quarter and $1.30 for the second half. I mean we've closed the rate, obviously, to the second quarter and starting to feel more confident of that. We're not trying to be economists or forecasters here; I think it's just more conservatism that we're including. The impact on the second half would not be very significant.

Yeah, the average in the second half of last year on the euro, Jeff, I think it was $1.33, roughly $1.34 in that range for second half. So, a little bit of headwind but remember that was the midpoint of our revenue outlook for the second half. Jeff Sprague - Vertical Research Partners: Roughly speaking, euro spend [ph] is an EPS spend [ph] on a full-year basis. Is that about right?

Roughly. Yeah, a little less than that but it’s both and that’s assuming that euro is isolated. Jeff Sprague - Vertical Research Partners: Right. Right. Okay. Thank you very much.

Thank you. Our next question is coming from Scott Davis with Barclays. Please go ahead. Scott Davis – Barclays: I don't think you mentioned particularly Dave. I don't think you mentioned anything about the management changes, and pretty substantial really. Maybe the question really is, because I don't think we have half hour to talk here, but the question is, what do you expect to get better? What's the messaging I guess in the share volume and changes you made, and there are changes in mandates, I mean I was just hoping up to that.

Yeah, I don't think you're going to get lot more from me than what we already talked about, because we try to explain it first time through. I'd say the reason I didn't bring it up is, I kind of viewed it as history and we already went through that, but at the end of the day, the whole point is, just we've got really good people coming up and we need to make sure that we provide opportunities for them to grow, and at the same time, we've got this five year plan that we submitted to that has some pretty big themes that we want to make sure that we drive. So M&A, high growth regions, software focus, QE, and as far as HOS goals and as I look at those, I want to make sure we develop them as a company and this gives us an opportunity with the vice chairs that really make sure that happens, and that we can deliver on that five-year plan, but it's really pretty much what I said, Scott, in the announcement we sent out. Scott Davis – Barclays: And not to nitpick, but Defense down 8, I think was a little bit worse than what we had expected. I mean, can you give us a sense of how that transitions through the year? Particularly, when it flattens out and becomes a net neutral? I mean, assuming by 1Q of '15, it's going to be an easy comp, but how are you thinking about the next three quarters?

The decline, Scott, we start to see them in the second quarter and we will actually probably be flattish in the second half, so for the year we are expecting to be in line with low single-digit decline for the year. Elena Doom : We have an easier comp right in the third quarter of this year, so likely to see us an excellent increase in D&S revenue in the third quarter, given the 11% decline in 3Q of 2013. Scott Davis – Barclays: And then just a quick one on HPS, can you give us a sense of the order book in that business and how the forward outlook books?

I’d say, if you look at it from a book to bill ratio pretty strong and from a pure growth percentage we were also mid single digits for the quarter.

The long-cycle projects, the bigger project's up a little bit more than that; more in the high single-digits.

Our next question is coming from Steven Winoker with Sanford Bernstein. Steven Winoker - Sanford Bernstein: First question, Tom, particularly what kind of visibility do you have beyond the next BEA sales of that 1.9 million shares to get to additional one-time gains in pipeline that can fun restructuring on a continued -- repositioning on the continued basis, in other words you have made a lot of ambitious goal in that net five-year plan that’s going to require a lot of ongoing repositioning over that five years and we’re seeing it now been, do you have a lot of confidence and visibility into the offset there?

Obviously the BEA for the last couple years and some of the other transactions in the last couple years have been a nice catalyst for restructuring but even without those – we’ve through operations been able to generate sufficient capacity and that’s the point of a lot of what we have done as well. So that's what I look to and in terms of how we set our plan we do try to incorporate capacity for that on an ongoing basis, now it’s not going to be hundreds of millions of dollars every quarter but we are very mindful of it. Steven Winoker - Sanford Bernstein: And in the same way that you moved on cash now that you are reporting on a cleaner basis without the adjustments, is there some thought for doing the same thing on restructuring or other items, or not really?

Well I am not exactly clear what’s not clean about the restructuring. Elena Doom : That was reported in our GAAP earnings, Steve. Steven Winoker - Sanford Bernstein: No, I just meant some of your peers choose to just treat the operating earnings all in, that's all? David Cote : That’s the point I'd like you to make much more strongly, Steve in all your comments, I have always felt for 10, 12 years we've always included everything and talked about it that way and you allow greater license with some others when it comes to what’s in what's out, we don’t do that. Steven Winoker - Sanford Bernstein: And then finally on the book to bill you talked about it just now and I guess in HPS, on the entirety of the long cycle businesses across Honeywell. Could you give us that number?

It’s actually been nice, aero has been above one and as I said on HPS, also pretty strong.

The backlog, Steve, is up just about 1% on a year-over-year basis in the quarter.

Our next question is coming from Steve Tusa of JPMorgan. Steve Tusa – JPMorgan: Can you just give us the – I guess you talked about the – can you give us the prior guidance or at least PMT new guidance on the prior basis? Is there any change to that up 4%, up 10% – up 4% in revenues and up 10% in margin, up 10 basis points in margin? Elena Doom : For the full year you're saying or the second quarter? Steve Tusa – JPMorgan: Yeah, for the full year. Elena Doom : I think in terms of the PMT's full year sales outlook, it would have been roughly $50 million lessened from the revenue, and margins would have been about 50 basis points less than what we're showing on the current outlook. Steve Tusa – JPMorgan: So the fact that I guess, you are kind of tweaking that down but then moving – so I guess moving HPS in there, I mean HPS margins then must be going up a lot? Tom Szlosek : It is an ongoing improvement at HPS. Steve Tusa – JPMorgan: But I mean I'm getting, I guess I'm getting – I'm getting something, it's like more than 100 basis points – to have that margin go down like that for PMT, but have the combined segment go up 50 basis points, I mean that's a huge increase in HPS, I think limited, I mean there is not that much volume growth there, right? Tom Szlosek : It's low to mid-single digits. So, again, you're right,

It's certainly better in the second half. Steve Tusa – JPMorgan: Is that a mix dynamic, is that more software coming through or something, or just blocking and tackling? Tom Szlosek : I mean over the last couple of years, as you know in HPS, there has been focus on driving operational improvements in the business. I mean the business is up 200 basis points in the last two years through the end of December, and you are still seeing some continued restructuring actions that are directed to that business. They've also done a nice job of driving growth in services and software sides. So, advanced solutions, so the mix of their revenue has been pretty good as well, so it's a combination of both operational improvements and the portfolio and what they've been emphasizing. David Cote : At the end of the day, Steve, your premise is right, take a look at overall PMT, that first quarter struggle continues on a bit during the course of the year, so we expect it's not going to be as good as what we had said initially. And one of the offsets to that is going to be process solutions performance, and what areas we've been able to achieve there, and it's across the broad, it's better growth, better cost performance, better organization. I'm really intrigued with what I see going on in that business and where we should take it. Steve Tusa – JPMorgan: Can you take it more into instrumentation? David Cote : I would say, you're going to see us continuing to drive our software capability because that's a big part of where we differentiate ourselves is just to on a breaks off [ph] on the software side netted value there. Steve Tusa – JPMorgan: And then Dave, any change in the way you view the Advanced Materials business? I mean, you've combined HPS and UOP now clearly like a very attractive play on this whole global petrochem scenes out there. We kind of continue to talk about flooring pricing as a headwind, things that probably most multi-industry companies don't talk about. Is there any kind of change on the portfolio view especially in the context of the liquidity and high valuations out there? And quite frankly, the multiple for you guys remains with a discount. Any thought around how core that business is over the long-term? David Cote : I would say the fun is the same and that's -- it is still core. One of the things that – getting back to the diversity of opportunity, I like having a lot of that’s out there so that there is never one thing that really [indiscernible] me, but there is also never any one thing that really takes the whole thing take off. I think it just creates more sustainability, which means that to have all the moving pieces moving in the same positive direction at the same time or negative direction is unlikely. So, what we're seeing right now in particularly resins and chemicals and in fluorine there's a couple of unique aspects that are causing them to not perform as well as we might like. But at the same time, I know those things are going to be changing. So if I take resins and chemicals, when I take a look at the competitive positioning, it is still the lowest cost producer in the world, and that includes being able to land products in China cheaper than the Chinese can manufacture it domestically. So, we've got an advantage there and I think what you'll probably see is capacity elsewhere in the industry coming out over time and moving our pricing dynamic up. I think with the fluorine, it's largely driven by patents, and when you have something come off-patents, well, pricing has to get hit; that's what you're seeing now. However, we have new patents coming in with the HFO stuff and that's gearing up now. As a result of that, we're going to see some really nice performance out of the fluorines business over the next few years. So, I would kind of liken it more to, we've got this unusual dynamic going on in both of these businesses that's going to be turning over the next year or so and we'll benefit from it. So they're still good businesses. It's just you can't have every business performing at the same time, it just doesn't work.

Thank you. Our next question is coming from Nigel Coe with Morgan Stanley. Nigel Coe - Morgan Stanley: So, just wanted to dig into the ACS PMT potential synergies there. You've been talking about the go-to-market potential there for a while now, we have implementation [ph]. So I'm wondering Dave, do we – should we expect there to be more integration opportunities to businesses going forward, or is it basically the same as before just they now happen to be in a same segment? David Cote : Probably somewhere in between. We've got to wait for Darius to finish his work there on what he thinks. But at the end of the day there is stuff that is common, and say, 60% of the customers that HPS has and the same UOP has, if you take a look at who they deal with, it should be about the same. The technology, there should be even greater overlap than there is, because UOP is developing processes and HPS is developing the controls that manage the process, and while we've done some of that already, there should be more opportunity there. On the other side you have UOP, which is more obviously of a chemical business, and some on the mechanical side when it comes to how to run those chemicals. And you've got HPS, which is largely a software business, and that's not going to change. I have a tough time seeing the chemical guys running the software engineering or vice versa. So, as to where I see, I think it's going to be somewhere in between and I'm waiting for Darius to finish his review on what he thinks makes the most sense here. Nigel Coe - Morgan Stanley: No that makes sense. And then, switching to TS, 15.5% OM, I think is the best you've ever done in the quarter, given that there have been some changes in the portfolio over that time frame, but 15.5 really stood out to me, and within that number, is friction still losing money or is it back to breakeven? David Cote : It's nearing breakeven. It was probably a third of the overall margin improvement for the quarter for Transportation Systems. Nigel Coe - Morgan Stanley: And then another quick one. The free cash flow guidance, just to clarify that, that includes the cash taxes on [indiscernible]? Tom Szlosek : Yes, it does.

Thank you. Our next question is coming from Howard Rubel with Jefferies. Howard Rubel – Jefferies: I have one ACS question and then one on another item. First, on ACS, we've been seeing – David Cote : By the way, Howard, hi. Howard Rubel : Hello Dave, and in fact you know, this new management structure eliminates confusion between you and the CFO now. So I appreciate that. In any event, Dave, good morning. With respect to U.S. housing, it's been a little sloppy on the starts and I know that's small relative to your business. Have you seen anything there that's an indication of pent-up demand or some change in the overall market? Tom Szlosek : I don't think – when you look at our revenues in ACS, Howard, we don't have a precise way of determining where every product ends up whether it's the commercial setting or residential setting, but with that said, there are very strong verticals within ACS in the last couple of quarters. I'd point to the retail sales in particular for ECC, that have been a strong indication. Consumers are in fact very interested in energy-related products, thermostats and other things when it comes [ph]. Howard Rubel – Jefferies: And then to follow-up on another subject, you've used a lot of the discretionary gains to go after environmental so that you're reducing the long-term obligations there. Could you just address for a moment Dave, what you've done so that the entire process or the enterprise has gone after eliminating legacy liabilities, so that the result is that you don't have to find – well, use gains to fund prior liabilities but in fact can use them to, I'll call it advance the enterprise? David Cote : Well, I look at both as advancing the enterprise, but to your point, one of them is eliminating a negative as opposed to accentuating a positive. As you know, I started this effort 12 years ago now and thinking that – my first job was given that if you take a look at all of our products and all the stuff we do around the world, we're basically on the side of the angels with everything we do, whether it's energy efficiency, clean energy generation, safety, security, all those macro trends are good things for the world, yet we had the legacy liability that was just uncomfortable and very inconsistent with our message. I also felt that all this stuff cost you more over time and that our previous strategy of just waiting till we lost in core was not a good one, and we're prepared to do this proactively. Well, we are at a point now where we can actually see the end of the road on this. To the extent we can accelerate meeting that ends of the road; well, I'm all in favor of it. I'd say we're not too far away now, Howard, from being at that point where we've been able to accelerate along these issues, make it less expensive to get done, because either our remediation is a quicker, more effective or we're able to resolve it faster and I can see that within our five-year plan horizon which is a nice place to be. Howard Rubel – Jefferies: I mean, is there any way to quantify it? I mean it could be $50 million, $100 million a year in potential cost avoidance down the road? David Cote : Yeah, my view is it's more on the – I'll try not to be too bullish yet until I actually know. But I see that's the right kind of range to think about it, Howard.

Thank you. Our next question is coming from Peter Arment with Sterne Agee. Peter Arment - Sterne Agee: My question is really on the security [ph] kind of your first half guidance in aerospace versus the second half. I'm surprised that second half isn't showing up stronger given just kind of the overlay with 2% growth you're showing. You've got OE growth aftermarket, I think it's flight hours growth, so at least mid-single digits. So I'm just wondering given that defense is probably going to be closer to flat in the second half, at least that's what it seems like given you're 8% down this quarter, what am I missing? I guess, is it just conservatism at this point given the sense, or is there something else? Tom Szlosek : No, I don’t think you're missing anything. On the defense side, as Elena said, we'll get a nice bump in the third quarter because of the comps that we had last year. Overall, the second half is – will be what you see there, but for the year, we're still going to be down in defense. In terms of first half to second half, the R&O timing that we saw in the first quarter, we're going to start seeing that starting, so that's going to help us quite a bit in the second half. I mentioned the BGAs. So, I think the 2% that we're showing for the full year is a full reflection of all the equipment deck that we've got. Elena Doom : Peter, I'm going to add, we also have some launch contributions factored into the second half outlook for BGA OE. Its' not significant, but obviously that does impact the – it's currently scheduled for the third quarter, which would be, obviously, a drag on revenues. Peter Arment - Sterne Agee: And then just quickly on just – on the aftermarket trends in general, are you seeing any differences from a geography standpoint? I mean, it seems China was up 14%, but that seems to be a very volatile number. I remember two years ago it was up 40% one quarter. So, what are you seeing in general there? Elena Doom : In terms of the aftermarket? Peter Arment - Sterne Agee: Yeah, just from a geography standpoint, any differences that you can call out? Elena Doom : Yeah, well, you recall in the fourth quarter the U.S. saw high double-digit spare growth. We continue to see that in the first quarter for this year in terms of the ATR spares. Europe, call it, relatively muted growth and China obviously is a big comp but versus an easier comp in the first quarter of last year. David Cote : I think Peter, I dropped) you in the past on flight hours versus how spares orders go? Peter Arment - Sterne Agee: I'm sorry Dave, can you repeat that? David Cote : I think I've drawn my little chart for you in the past showing how flight hours grow at a relatively stable rate, but spares ordering around those flight hours vary significantly. Peter Arment - Sterne Agee: Yes you have, yeah, correct. David Cote : If I take a look at China that more of what you're seeing, the 40% a few years ago was a pre-buy given the tightening, what you saw after that was the tightening, now what you're seeing is catchup. At some point it’s coming back [ph]

Our next question is coming from Shannon O'Callaghan with Nomura. Shannon O'Callaghan – Nomura: Just maybe a little follow-up on the commercial aero piece, in terms of the OE sales growth, I mean, in the quarter, can you give us the spilt kind of AT regional BGA and how that flows as you're talking about the second half OE acceleration? Elena Doom : So, Shannon, on the ATR OE component of it and this is [indiscernible] what we talked about in the December outlook call and again in the fourth quarter earnings release, but you are seeing very strong growth on the air transport side offset by declines in regional jet sales. Also we have some free-of-charge systems that again we're expensing or recognizing as we're incurring them. Those continue – that's the outlook really for the duration of this year. So the fundamentals don't change, more in flat. So, that's core growth and I guess you would maybe likely expect to see where we're just plugging in the air transport component of it, but the regional piece is obviously putting a drag on our overall sales. Tom Szlosek : I'd add on the BGA side, the first quarter growth that you saw, we'll continue to throughout the course of the year, so a mid-single digit growth on BGA when we look for the year. Shannon O'Callaghan – Nomura: When does the regional kind of pressure ease? Elena Doom : We're hoping that that certainly gets better in 2015, but largely dependent upon the overall market. Shannon O'Callaghan – Nomura: Just on free cash flow, definitely applaud the changed definition, so thanks for that. I was just wondering if you have the kind of updated numbers for this year of what you've built in for NARCO pension and the cash taxes in the appendix you have them for sort of what they were in '13, do you have those numbers of what you've baked in for '14? Elena Doom : In terms of the big bucket, Shannon, I'll just walk through a few of them. On cash pensions, we're now attracting zero in 2014 for cash pension and that's versus the previous estimate of about $100 million before contributions. On the NARCO component of it, we were previously excluding the establishment payments for NARCO, which were roughly, call it $200 million pre-tax and that's still the expectation, but we've just now embedded that in for free cash flow forecast. Shannon O'Callaghan – Nomura: And obviously you've got to wait I guess until the – well no, you would know the cash taxes right, so what about the available for sale piece, what's that? Tom Szlosek : You're talking about on the BU [ph] share? Shannon O'Callaghan – Nomura: Yeah, yeah, because you're baking that in now too right? Tom Szlosek : Yeah, the first quarter impact was included in the Q1 free cash flow. Shannon O'Callaghan – Nomura: Okay, right. So, that's already baked in and there's no more. Elena Doom : Yeah. Elena Doom : All right, Tony, we'll now conclude today's call. I want to turn it over to Dave Cote for any final remarks. David Cote : All right, thanks guys. Well, we've had a nice start to the year, and as a result we feel confident in raising total year guidance for both earnings per share and cash flow, outperforming in the short-term, while seed planting for the long-term continues to be an important dynamic for us. We intend to not just outperform this year, but also over the next five years. So, thank you for listening and I hope all of you have a marvellous Easter weekend. See you.

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day.