Elena Doom - VP of IR David M. Cote - Chairman and CEO Tom Szlosek - SVP and CFO

Scott Davis - Barclays Steven Winoker - Sanford Bernstein Steve Tusa - JPMorgan Jeff Sprague - Vertical Research Partners Howard Rubel - Jefferies John Inch - Deutsche Bank Christopher Glynn - Oppenheimer & Co. Andrew Obin - Bank of America Merrill Lynch

Good day, ladies and gentlemen, and welcome to Honeywell's Second 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. I would now like to introduce your host for today's conference, Elena Doom, Vice President of Investor Relations.

Good morning. Thank you, Leo. Welcome to Honeywell’s second quarter 2014 earnings conference call. Here with me today are Chairman and CEO, Dave Cote; and Senior Vice President and CFO, Tom Szlosek. This call and webcast including our 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 second quarter, then review our outlook for the second half and the rest of the year and then leave time of course for your questions. So with that, I’ll turn the call over to Dave Cote. David M. Cote: Thanks, Elena. As I’m sure you’ve seen by now, Honeywell had another terrific quarter and a very good first half 2014. EPS of $1.38 increased 12% 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. We saw strong execution across the portfolio with margin expansion in each of our four businesses. We’re continuing to benefit from our enablers and keep process initiatives that are delivering growth and productivity benefits and we’re achieving this while continuing to invest for the future, planting the seeds that will drive our performance and achievements of our new five-year plan. In the quarter, we were encouraged to see that our organic sales growth accelerated to 3%. We saw continued improvement in our short cycle order rates quarter progress with steady growth in ESS, a return to growth in advanced materials especially in flooring products and a continued healthy pace of recovery in Transportation Systems. Our robust long-cycle backlog which stands at 15.7 billion, up 4% from the end of last year, continues to support a favorable outlook with record orders for UOP and a continued uptick in new process solutions orders. We’ve also seen a moderation of the sales declines in Defense and Space that we saw earlier in the year. Speaking of D&S, I’m encouraged to see that the headwinds are nearly behind us. We’re expecting growth in D&S in the third quarter. In fact, we had 9% international growth in this last quarter. And early indications point to a modest increase next year. We recently celebrated the sentential anniversary of innovation and leadership in the Aerospace and the oil and gas industries, two examples of where we have great positions and good industries. Honeywell Aerospace has been a pioneer in aviation for the last 100 years offering products and services that can be found on virtually every aircraft worldwide. We’ve led the way from the beginning with firsts, like the first autopilot, the first truly automatic flight management system and the first trans-Atlantic biofuel flight. And we have differentiated through disruptive technologies across our electrical and mechanical portfolios as well as our push at the global connectivity as you’ve seen with recent partnership announcements with Inmarsat and AT&T. In oil and gas where our UOP business created the first conversion technology for upgrading crude oil jumpstarting the modern oil refining industry, we’re a driving force for innovation for the global petroleum and natural gas industries. Today, our leadership continues with new process technologies designed to get more valuable products from every barrel of oil, convert coal and natural gas into plastics and convert biofeed stocks such as algae into renewable fuels. We not only saw double-digit sales growth this quarter in UOP but record orders in backlogs, so the future continues to be promising. Another innovation I’d like to point out is our new Lyric thermostat designed for how people really live today. Using the location of your smartphone, the geofencing feature automatically turns the thermostat into energy saving mode when a home is empty. It senses when you’re coming home and heats or cools the house to your preferred temperature. It’s just another example of how the Honeywell user experience or HUE, depending upon how you want to pronounce it, enables us to move quickly to develop exciting new products that are easy to use, easy to maintain, easy to install and exceed customer needs. ECC has seen continued good growth to the retail channel and that’s up 40% in the second quarter. We think the portfolio is well positioned, aligned to favorable macro trends and there is significant runway to grow. We remain confident in our outlook for this year. As a result of our first half performance, we are raising the low end of our guidance again by $0.05, giving us a new pro forma EPS guidance range $5.45 to $5.55 or up 10% to 12% for the year. The closing of the sale of Friction Materials was a significant step in positioning our existing portfolio for continued outperformance. We also realigned the Transportation Systems business segment into Aerospace to better take advantage of the engineering and technology similarities and the shared operating practices with two businesses. Under the realigned segment reporting structure, the parts of Friction we’re keeping will remain under Transportation Systems reported within Aerospace. We just concluded our strategic planning reviews with our businesses and in these all-day sessions, each of our businesses presents their five-year strategic plan. While we’re not expecting much help from the macro environment, I can tell you that each business has a strong roadmap for the 2018 targets we laid out for you back in March. The growth opportunities and new product pipeline are quite impressive. We approached the finished line of our previous five-year targets confident in the strong foundation in place for continued outperformance. We have great positions in good industries. We’re investing both organically and inorganically to grow faster than the markets we serve and we’ll stay the course on seed planting and continuous improvement initiatives. We’re going to stay flexible and deliver on 2014 and beyond. 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 second quarter. Sales of 10.3 billion were up approximately 6% on a reported basis. That’s 3% organically. It came in just above the high-end of our guidance range. As we highlighted previously, the low first quarter organic growth was a bit of an anomaly with declines in Defense and Space and scanning mobility driving roughly two points of top line decline in the first quarter. As we signaled, these headwinds have dissipated. The contributions in 2Q from the businesses were broad-based with each SPG sales growth at or above the guidance we had communicated. Regionally, organic sales were up 2% in the U.S. despite the drag from defense and space; 5% in Europe, Middle East and Africa and 10% in China. In China we saw a good growth in our short-cycle businesses namely ESS and Transportation Systems in addition to continued long-cycle growth particularly in UOP and process solutions. Once again, our quality of earnings was strong with most of the improvement coming from segment profit which increased 10% in the quarter. Segment margins expanded 60 basis points to 16.7%. That’s 70 basis points excluding the dilutive impact of M&A and 20 basis points higher than the top end of our guidance. We had profit growth and margin expansion in all four businesses, so really a balanced contribution across the portfolio. It’s also notable that the better-than-expected performance from Intermec reduced the segment margin dilution from M&A in the quarter. Overall, we continue to see significant benefits from our productivity initiatives and proactive restructuring actions while continuing to invest for growth. Items below segment profit were mostly as anticipated. You’ll recall that in the second quarter of 2013, you’ll recognize an OPEB curtailment gain of $42 million which was more than offset at the time by restructuring actions, so really no year-over-year net impact. In the second quarter of 2014, we funded 14 million of restructuring projects bringing the total for the year to approximately 100 million. On a reported basis, the tax rate of 26.1% in the quarter represented a $0.06 headwind compared to the second quarter of 2013 and about a $0.01 tailwind relative to our guidance. EPS was $0.38, $0.02 above the high end of our guidance range; $0.01 was from operations and $0.01 came from the better tax rate I mentioned. EPS increased 8% on a reported basis or 12% when you normalize for the income tax rate. This was again driven by the 10% increase in segment profit, slightly more favorable below the line items and a minor benefit from lower share count. Finally on free cash flow, approximately 1.1 billion in the quarter, 5% higher than 2013 and 101% conversion despite a 17% increase in CapEx and higher cash taxes. Year-to-date, free cash flow was up 28% through the first half. Moving to Slide 5, we’re looking at Aerospace. Now this is prior to the realignment of Transportation Systems and Aerospace. We’ll adopt that change in the third quarter. You’ll also see us file an 8-K in the third quarter reflect this change on our historical reporting. So when it comes all the forward-looking guidance that I’ll touch on later, we do reflect the new reporting structure. So Aerospace sales were flat in the quarter which is in line with our guidance with 1% commercial sales growth offset by 1% decline in Defense and Space. Despite the challenging top line, segment margin was up 30 basis points driven by commercial excellence and productivity, net of inflation, partially offset by BGA OEM payments, a higher mix of OE content and investments in growth programs. The flat commercial OE sales reflect strong growth in large air transport driven by OE build rates offset by lower regional jet sales, engine shipment timing and higher BGA OEM payments. Now as a reminder, we have won significant content on a number of new OE platforms, and have and will continue to incur upfront costs as a result. These costs are fully contemplated in the five-year planning we have shared with you and are accounting for these costs is very conservative compared to the industry. The Aerospace business model is fully intact and these wins coupled with the exciting new technology offerings in aero give us full confidence that the growth will accelerate over the five years in our plan. Commercial aftermarket sales up 1% in the quarter with continued strong spares growth in both ATR and BGA. This strength was offset by lower R&O revenues, a reflection of fewer maintenance events and timing, particularly in business aviation. Aftermarket backlog levels in R&O along with robust spares demand underpinned an acceleration of aftermarket growth in 3Q. Defense and Space sales were down 1% but a nice improvement from the 8% decline in the first quarter. U.S. defense aftermarket and government services declined significantly moderated from first quarter levels and growth in international markets, which Dave referenced earlier, helped to offset those declines. Defense and Space is tracking to a 3% decline for the full year. On Slide 6 we’re looking at ACS results for the second quarter. ACS sales were up 10% on a reported basis and 3% on an organic basis, in line with our expectations. The difference in the two rates principally reflects the contributions of Intermec. Looking at the businesses, ESS sales, so the products businesses, were up 4% organic with ECC and scanning and mobility showing particularly strong growth. ECC continues to benefit from strong residential end markets and new product introductions particularly in the retail channel. Dave talked about Lyric and overall the thermostat category is performing very well for us. As for scanning and mobility, following the ramp-down of certain large programs in Q1, it returned a strong organic growth in the second quarter. New wins which ramped over the course of the year are driving sustained growth. Intermec also continues to perform very well, supplementing the growth we’re seeing out of the core HSM business. Our fire, safety and gas businesses have shown continued strength as well. On a regional basis, penetration of high growth regions remains a big driver of growth in ESS, as we saw strong double-digit growth in both China and the Middle East. Moving to Building Solutions and Distribution, sales were up 2% with strength in the Americas distribution business offsetting pockets of weakness in Building Solutions, specifically the U.S. energy retrofit business. We are encouraged, however, as Building Solutions project and services backlog continues to grow. I’d like to take a minute to comment on what we’re seeing in the commercial building sector. We’ve seen modest improvement from the first quarter to the second quarter in the ESS products business as a service sector primarily ECC and fire, safety. We are anticipating further improvements in the second half. In the Americas energy business, as I said, orders have been delayed due to financing and municipal contract holdup. While the projects can be lumpy, we are seeing bid activity heating up, especially in the Middle East and China and energy efficient projects globally. This along with the easing of year-over-year comps gives us confidence that our commercial building related sales will modestly accelerate in the second half. Moving to ACS margins, expansion of 50 basis points to 14.8% in the quarter, up 80 basis points including M&A. ACS continues to benefit from productivity net of inflation, commercial excellence as well as higher volume while also continuing to invest for future growth. Moving to Slide 7, Performance Materials and Technologies, PMT sales were 2.6 billion, up 6% organic and we’re above the high-end of our guidance, driven primarily by stronger than expected results in UOP. UOP sales increased 17% in the quarter, driven by increased catalysts and gas processing sales reflecting continued strong refining, petrochemical and gas markets. UOP had a record quarter for both orders and backlog which currently stands at 2.6 billion. We saw a continuation of orders for [transient] (ph) gas processing particularly with Thomas Russell. So continued benefit in UOP from oil and gas investments occurring globally. In process solutions, sales were flat on an organic basis primarily driven by a couple of large projects completed in the prior period, offsetting growth across the remainder of the portfolio and high margin areas like services and advanced software solutions. Process solutions orders growth accelerated in the quarter, up approximately 7% organic and as we will preview, modest sales acceleration is expected in the second half of the year. Advanced Material Sales increased 5% in the quarter. We saw volume increases across the businesses with particular strength in flooring products, driven by new global warming molecule offering. These volume increases were partially offset by unfavorable pricing particularly in Resins and Chemicals as we’ve been signaling. We expect these pricing headwinds to moderate in the second half of the year. Segment margins for PMT were up 30 basis points to 18% consistent with our expectation, driven by productivity net of inflation and higher volume partially offset by price, raw headwinds and Resins and Chemicals, unfavorable UOP catalyst shipment mix and continued investments for growth. On Slide 8 you can see Transportation Systems which again to remind you includes Friction Materials for the second quarter. TS had another strong quarter with sales up 8%, that’s 4% without foreign exchange and segment margin expansion of 310 basis points. The sales increase was primarily driven by turbo volume growth across our three largest regions; Europe, North America and China. In each of these regions, our volume growth outpaced auto production. The growth we’re seeing in Europe was strong in both the light and commercial vehicle segments. We’ve benefited from an uptick in European commercial vehicle demand primarily driven by the Euro 6 regulation shift in the region. Outside of Europe, both North America and China saw strong volume increases in light vehicles both diesel and gas, which more than offset lower commercial vehicle volume sales in those regions. In North America specifically, commercial off-highway sales remained soft consistent with trends in mining and agriculture segments. Overall, we continue to benefit from improving global industrial macros on vehicle production, regulation, turbo penetration and our strong win rates. As we begin to lap the strong second half performance in 2013, however, we do expect some moderation in these growth rates beginning in 4Q 2014. The segment margin improvement to 16.4% reflects the strong productivity and a volume leverage in turbo and the benefits from restructuring and other operational improvements. With the closing of the Friction Materials divestiture behind us, let’s now turn to Slide 9 and walk through our guidance for the third quarter under our new reporting structure. We’re expecting sales of 9.9 billion to 10.1 billion which will be up 3% to 5% reported or 3% to 4% on an organic basis. Segment margins are expected to be up approximately 50 basis points and earnings per share is expected to be in the range of $1.37 to $1.42, up 10% to 15% from the prior year. For Aerospace, as I indicated earlier, we are providing guidance under the new reporting structure with Transportation Systems included. Sales growth on a reported basis is expected to be flat to down 2% in the quarter, reflecting the year-over-year absence of Friction Materials sales in the quarter. On an organic basis or in other words without the Friction business, sales are expected to be up approximately 2% to 3% with growth across the portfolio; Commercial, Defense and Space and Transportation Systems. In Commercial, OE sales are expected to be approximately flat year-over-year with continued growth in ATR offsetting declines in BGA similar to the second quarter. However, we are expecting acceleration in aftermarket growth in the quarter, up low single digit driven by continued spares strength and higher airline maintenance event. We’re also expecting to see a return to growth in Defense and Space, as Dave indicated, up low to mid single digits where international programs continue to drive growth. In Transportation Systems, we’re expecting mid single digit organic sales growth in the quarter and as for margins we expect an increase of approximately 150 basis points with significant contributions from both the Aerospace and TS businesses. For ACS, sales are expected to be up between 8% and 10% or 3% to 4% on an organic basis. And as a reminder, we closed Intermec in the third quarter of 2013, so this will be the last quarter of M&A impact from that transaction. Organically, we expect continued mid single digit growth in ESS and improvement in BSD. Our short-cycle orders have been trending up at ESS and the backlog is growing in Building Solutions. Both trends bode well for our third quarter outlook. ACS margins are expected to be up approximately 20 basis points or approximately 40 basis points excluding the dilutive impact from M&A. ACS continues to ramp their investment for growth in new products as well as adding speed on the street as we continue to further penetrate high growth regions. In PMT, sales are expected to increase between 4% and 6% in the third quarter. In UOP we foresee another quarter of increased catalyst growth, however, similar to the first half, product mix in Q3 will result in a headwind for UOP margins. As a reminder, UOP sales can be lumpy quarter-to-quarter based on the timing of product and as such we are forecasting a sales decline of approximately 10% in the fourth quarter for UOP against a much more challenging comp. However, our outlook for the year remains intact for mid single digit growth in UOP and with the record orders in backlog we experienced in Q2, we expect strong growth to continue over our five-year plan. In HPS, after several quarters in a row of strong orders growth, we’re expecting to see sales accelerate in the back half of the year carrying into 2015 with continued strong margin expansion. The increased orders growth will really start to show in the fourth quarter as we’re expecting high single digit sales growth for HPS. In Advanced Materials, we anticipate another quarter of broad sales growth across the portfolio including improved production levels in Resins and Chemicals and increased sales of global warming products and flooring products. Overall, TMT segment margins are expected to be up slightly versus the prior year, reflecting similar trends that we explained for Q2 with the exception that pricing pressures in Advanced Materials are expected to moderate. Let me move to Slide 10 where I’d like to take a moment to refresh our 2014 segment outlook. This guidance reflects the realignment of Transportation Systems and Aerospace as well the transition of process solutions into PMT that occurred in 2Q. Let me explain the setup here. The left half represents the guidance we provided in April, so with process solutions already in PMT but prior to the sale of Friction Materials and prior to the movement of TS. The right side reflects our current outlook including the Friction Materials divestiture and the realignment of Transportation Systems in Aero. At the bottom of the page you can see our new sales guidance which reflects the absence of approximately 300 million Friction Materials sales in the second half and our increased segment margins guidance for the year driven by our strong first half performance and the margin accretion we will experience from the absence of Friction Materials sales in the second half. There are some comparable dynamics to be aware of as you think about the full year. First, in Aerospace with the inclusion of Transportation Systems, we’re expecting 4Q sales to be down low single digit on a reported basis but up about 1% to 2% on an organic basis driven primarily by the timing of OE shipments in our air transport business. However, you can see the significant margin expansion we’re expecting this year with contributions from both Aerospace and Transportation Systems businesses. Also, as I referenced, we expect a decline in 4Q sales in UOP, all timing and comp related. And I want to reiterate that we anticipate another year of good growth in 2015 from UOP given of the significant multiyear backlog we’re building in it. There are some minor puts and takes but no real changes to ACS or PMT from their prior outlooks with continued margin expansion in both businesses. Turning to the next slide, Slide 11, you can see the basis for the 3Q, 4Q and raised full year guidance. Full year sales are now expected to be 40.2 billion to 40.4 billion, reflecting first half performance and a modest organic sales acceleration in the second half. Estimated full year sales are lower at the midpoint from our previous guidance reflecting the absence of approximately 300 million of Friction Materials sales in the second half. So on an organic basis, we continue to expect about 3% growth for the full year. Although acceleration is expected in the second half, most notably in Defense and Space, process solutions and Advanced Materials, we will see tougher comps in the fourth quarter, specifically in UOP and Aerospace as I mentioned. As you’ll recall, we saw strong acceleration in organic growth at the end of 2013 with growth of 5% in the fourth quarter of last year. On segment margin, we’ve increased our full year guidance and now expect 16.8% to 17%, up about 60 basis points at the midpoint versus last year. On EPS, we’re raising the bottom end of our pro forma guidance by $0.05 taking the new range $5.45 to $5.55 or increase to 10% to 12% versus the prior year. We are planning for a 26.5% tax rate in 3Q with 4Q just slightly higher to get to our full planning assumption of 26.5%. So, overall, we feel like we’re executing well and delivering on the high end of our 2014 commitment. I’m now on Slide 12 and before wrapping up, I want to give you an update on our new five-year plan of 2018. On a total Honeywell basis, the targets are identical with those we shared at the March Investor Day. However, the individual components now reflect our new business segment reporting structure. So even with the Friction Materials divestiture, the overall Honeywell targets are identical to those originally communicated. We’re continuing to target a 4% to 6% organic sales CAGR and segment margin in the range of 18.5% to 20% by 2018, which is 220 to 370 basis points improvement from 2013; strong earnings growth which you come to expect from Honeywell. On the left side of the page, you can see the previous outlook by business based on our old reporting structure. Moving to the right side of the page, our current targets now reflect the combined Aerospace and Transportation Systems businesses, less Friction Materials, as well as HPS transitioned to PMT. So minor puts and takes but overall very consistent with what you’ve heard in March and a significant contribution across the portfolio. As Dave continues to emphasize the growth and margin story, it doesn’t end in 2018. Each of our businesses still has significant runway based on the continued evolution of our internal processes, global growth and execution and the value we add for the customer through innovation and the Honeywell user experience, so even more to come. Let me finish on Slide 13. The second quarter results put us another step closer to delivering on the high expectations for 2014 we laid out in December. The pace of acceleration in organic growth over the course of the quarter gives us confidence in our second half outlook where we expect a modest uptick in organic growth and a continuation of strong productivity. We’re going to keep investing for our future focused on our new five-year plan, innovation and new product introductions which are the lifeblood of our growth remain a key priority, as well as the investments we’re making to further penetrate high growth regions. We feel confident that our balance portfolio mix, alignment to favorable macro trends and focused cost discipline will enable us to continue to outperform and we’re focused on executing sustainable restructuring productivity actions including delivering on the strong restructuring project pipeline we’ve already fund. So with that, Elena, let’s go to Q&A.

Thanks, Tom. Leo will now take our first question.

The floor is now open for questions. (Operator Instructions). Our first question is coming from Scott Davis of Barclays. Scott Davis - Barclays: Hi. Good morning, guys. David M. Cote: Hi. Scott Davis - Barclays: You didn’t really talk much about M&A in the release, right, I’d say not at all, but Roger Fradin now has had a couple of months in the role. I mean, can you give us a sense of how he’s progressing as far as pipeline and changing the M&A process and your confidence in being able to do deals in the next 12 months?

Yes, Scott, I’m happy to answer that. As you know, historically, our approach to M&A has been really a bottoms-up process from the businesses. So each business has resources, it has an action plan to maintain a robust portfolio of M&A targets and that’s what you’re seeing generate the deals that are done over here. And as you alluded to, did the appointment of Roger into the Vice Chairman’s role and one of the things Dave tends to do was to focus with our M&A team on the pipeline and that portfolio. So we’ve kind of gotten a top sound focus from Roger in addition to the process that we’ve had in our history. So, what you’ve got is you’ve got two ways of looking at it and when you look across the portfolio, we are seeing quite a bit of interest as a result of this process. As you know, we’re quite active in looking at potential deals in Aerospace, ACS and in PMT and I think that activity will continue. David M. Cote: For what it’s worth, Scott, Tom has also said he enjoys having Roger report to him on that. Scott Davis - Barclays: Well, good luck. We’ll be watching closely on that. But, guys, can you give us a better sense – I mean I’ve struggled to understand this business for a lot of years and I’m talking about UOP and kind of the quarter-by-quarter variability. I mean it’s a fantastic business but I have no idea how you forecast or how you – you’re really having in confidence one quarter to the next in that regard. But how does a business like that have such a strong quarter without there being an inventory build or some sort of – something going on at the customer level that may come back and bite you in the tail in a quarter or two? I mean I just don’t understand it I guess. David M. Cote: I’ll answer first and turn it over to Tom, but I’d say on an annual basis it’s pretty forecastable. They don’t have a lot of inventory to have to fool with in the first place. A lot of this is a technology sale. I mean there is some inventory but not a huge amount. It’s between quarters that can be more variable but even that variability is generally forecastable. It’s just that you can end up with lumpiness when it comes to one quarter versus another, but we generally have a pretty good handle on what’s going out the door.

Yes, I think Dave hit it on the head, Scott. It is quite lumpy but because of the long-cycle nature of it and we referenced the backlog earlier. I mean we had a record backlog 2.6 billion, up double digit from last year and we have good insight into what’s going to happen quarter-over-quarter and that backlog dissipates and will end up in our P&L over a fairly short timeframe, a year and a half to two years. So, we do feel like we have a good track on forecasting that. Scott Davis - Barclays: Okay. And last just quickly. Guys, we used to think about – in TS we used to think about turbo as being one of those businesses that was kind of 600 basis points over to auto SAR, maybe a little bit better in some quarters, maybe a little bit worst. But has that changed at all? I mean is there a different thought process in how that grows versus auto SAR globally?

Well, we do end up with a regional mix difference that can impact us, because we’ve got a strong position in Euro diesel and that was one of the things that really helped us with that industry bottoming out this year, so all the wins finally started to show up as opposed to mitigating the decline we were seeing in Euro auto. But overall, yes, it’s going to continue to grow well for a long time. David M. Cote: Yes, I mean I guess what I’d say is that I reemphasize that the growth profile that we’ve got going, I mean it’s in all of our big regions; I mean in North America both on the diesel and gas side with strong double digit growth, China’s strong double digit growth on both diesel and gas as well and Europe’s doing pretty well as well and the commercial vehicle side in Europe particularly is very strong. Scott Davis - Barclays: But that’s 600 basis points above SAR, I mean is that changed or are you punting on the answer?

Scott, I would say that you’re seeing light vehicle production in the quarter was flat and so for turbo we had organic growth of 5%, so 500 basis points was within that range. Scott Davis - Barclays: Okay, good. That’s what I really wanted to know. Thanks guys. Good quarter and thanks. Good luck. David M. Cote: Thanks, Scott.

Our next question comes from Steven Winoker of Sanford Bernstein. Steven Winoker - Sanford Bernstein: Hi. Thanks and good morning, everybody. David M. Cote: Hi, Steve. Steven Winoker - Sanford Bernstein: Dave, just an initial question on that turbo move and transport to Aero, how much is cost a part of that or should I say how much cost reduction are you expecting from de-layering? Is there any in there in addition to the technology justification? David M. Cote: No, not really. In fact, our turbo business is pretty lean already and I’m hoping when we reference operating practices in the release, I’m hoping for more leanness to transfer into the Aero business looking at turbo as a model. Steven Winoker - Sanford Bernstein: Okay. So the rationale here is sort of subscale in existing – separate reporting segment now. Obviously the technology is always overlapped but you could have gotten that otherwise and maybe some practice opportunities here. Is that how I should think about it? David M. Cote: I might modify that a bit. I agree on size. Subscale, I don’t know whether I’d call it that. Including that industry their scale is quite good. On the technology side, it’s one thing to tell two businesses that, hey, would you guys cooperate but I could say over 12 years there’s been an evolution there. It used to be the Aero business wanted to charge the turbo business $200,000 per person for cooperation. Yes, you might remember those days. Things have changed a lot and we’ve progressed to the point where we co-locate engineers, as I’ve mentioned in the past. That being said, you still get a different dynamic when you put the businesses together. We’re putting them together in a way that allows us to get much further advantage on that technology benefit that we have with Aero technology because turbo is just a derivation of a jet engine and we’re the only guys who have that. We want to take further advantage of it, but I’m also hoping for a lot more of those lean practices to transition into Aero, because the Aerospace industry is, let’s say, right with opportunity when it comes to running more leanly than it does today. And while I’m pretty proud of what we’ve been able to do, where we’ve been able to get to it, at the end of the day I think there is still one hell of a lot more opportunity there for us and this is a good way to have best practices in-house that they can be looking at. Steven Winoker - Sanford Bernstein: Okay. And speaking of moving organizationally to drive better financial results, HPS within PMT now, but just maybe talk about the projects that are completed? It’s down 1% flat organic, but again this sort of North American build out that suggest that they’re very, very early stages. What are you seeing there? Any hopes that we should anticipate a ramp up soon?

Steve, like we said, first of all there is a lot of excitement around the combination of those two businesses and we do think that marketwise it’s going to enable us to better serve the common customer base that’s there. I think you’re referring specifically to HPS. I mean the second quarter orders were very strong, up 7% on an organic basis and that’s another quarter of pretty good growth for them on the order side. As I said, that hasn’t factored into our full year guidance, UOP as well. As I said, both orders and backlog are strong. Talked about the lumpiness, but the same trajectory. Both of those businesses [really fits] (ph). And unlike the TS1 that Dave said, I do hope we get a little bit of productivity out of that combination as well. Steven Winoker - Sanford Bernstein: Okay. And just lastly, you mentioned you just wrapped up the STRAP process. Again, just remind me, what macro assumptions did you give the business, the STUs to use for the five-year plan in terms of top line base growth?

I think we used the global insights, GDP forecast like 3%... Steven Winoker - Sanford Bernstein: Okay.

About 3% to 3.5% is kind of the assumption globally. David M. Cote: I mean a lot different than what we said back in March just because I don’t think that much has changed since that time.

I think the FX, we assume at about 30. Steven Winoker - Sanford Bernstein: Okay, great. Thank you. I’ll hand it off. David M. Cote: Thanks, Steve.

Our next question comes from Steve Tusa of JPMorgan. Steve Tusa - JPMorgan: Hi. Good morning. David M. Cote: Hi, Steve. Steve Tusa - JPMorgan: How bad is UOP going to be in the fourth quarter? David M. Cote: What an interesting way to put it. I don’t know whether I would say it is bad, I would say it’s all contemplated within our fourth quarter guidance which you can see churned up pretty well for the year. I don’t know Tom if there’s anything else you want to add there?

No, I mean full year UOP will be 5% as I said, down 8% in the fourth quarter. First quarter was 9%, the past quarter was 17%. We’ll see mid single digits in the third quarter and probably 8% to 10% down in the fourth quarter. But full year we remain on track and again that order and backlog should be very strong. Steve Tusa - JPMorgan: Yes, I don’t think there is an issue with trend of the business, I’m just trying to kind of reconcile the 3% organic growth you did this quarter and the only thing that really seems to be getting worst just on lumpiness or a quarterly basis, whatever is in the math, would be UOP. I mean everything actually seems to be looking better like accelerating and so I’m just kind of like the 3% organic even with UOP which is dramatic with 8% is a pretty big number. So I’m just trying to reconcile that 3% you did this quarter versus why with things getting better, why that should be 3% in the fourth quarter?

I think we also mentioned that we do have other softer comps, in particular Aerospace for OE and also the Transportation Systems relative to both were up mid teens in the fourth quarter of 2013. Steve Tusa - JPMorgan: Right. But I mean you didn’t really grow in commercial Aero this quarter, so are you going to be done in commercial Aero in the fourth quarter?

Our ATR OE growth this quarter was [over 6] (ph). Steve Tusa - JPMorgan: Okay. So there was – the jet stuff kind of offset that, okay. David M. Cote: Your thesis, Steve, is not – the way you’re talking about it seems reasonable. Steve Tusa - JPMorgan: Right, okay. And then I guess I’m just going to ask this every quarter and this quarter was particularly interesting because DuPont preannounced negatively and I got a flood of emails about R-22 pricing. I don’t really get chemicals – the question is around chemicals pricing for a lot of the other companies that I follow and with the re-segmentation you just did, you kind of went to a little less disclosure which I don’t particularly view as a good thing. Is this the final kind of iteration of outside of acquisitions of what the portfolio looks like or could we maybe breakout the more process kind of oil and gas related businesses and maybe again kind of at some point evaluate this chemical business as a part of the Honeywell portfolio? David M. Cote: I would say in terms of our organization, I kind of like it just the way it is now. Steve Tusa - JPMorgan: Okay, so no change. David M. Cote: No. Steve Tusa - JPMorgan: Okay, thanks. David M. Cote: If it was you couldn’t expect me to say anything anyway, Steve, so… Steve Tusa - JPMorgan: It’s my job to ask the question. Thanks. David M. Cote: All right.

Our next question comes from Jeff Sprague of Vertical Research. Jeff Sprague - Vertical Research Partners: Thank you. Good morning, folks. David M. Cote: Hi, Jeff. Jeff Sprague - Vertical Research Partners: Hi. How is it going? Could we get a little more color on the commercial building for U.S. specifically? The color Tom gave I think it was global and helpful but I’m going to lay the land on U.S. specifically if you have it?

Yes, I would say Jeff the growth in the products business that are serving commercial buildings are reasonable, I mean mid single digits in the second quarter. I expect that to continue for the remainder of the year if not accelerate a little bit more modestly. In terms of the pure building solutions business, the business in the U.S. was tempered a bit by the energy business. We have a couple of really large projects completed since 2013 that tempered the sale. In terms of the orders broke there, it’s flat globally but on the Americas side it’s been picking up to mid to high single digits. Jeff Sprague - Vertical Research Partners: Mid to high single digit U.S. energy retrofit but global flat on orders?

Yes. Jeff Sprague - Vertical Research Partners: Okay. Thank you. And I was just wondering, Dave, if you could address Europe a little bit more specifically? I think the plus 5 was in an EMEA comment. That was kind of core Europe actually doing and was running a slowdown in Europe in the quarter in June that you noticed? David M. Cote: Overall, what kind of interesting is our Europe orders have actually done okay as you’ve been hearing us say for the last two or three quarters. So I’m a little surprised actually given that the overall economy doesn’t perform all that well and we don’t have a lot of expectation to the economy to perform all that well over the, say, next two or three years. That being said, our orders were okay there. Jeff Sprague - Vertical Research Partners: And just one final one from me and I’ll move on, perhaps too granular for this call, but are you seeing any signs of kind of toppiness, pressure in the commercial helicopter market? David M. Cote: No, I don’t think so. We actually think that’s going to be a pretty good market for a while. Jeff Sprague - Vertical Research Partners: Yes. Just some cautionary comments out of Eurocopter this week and Farm Bureau and some toppiness at [Bell] (ph) also. Maybe it’s just some noise in the quarter… David M. Cote: I’m not sure what their expectation was either but I’d say overall we still think that’s a growth market. Jeff Sprague - Vertical Research Partners: Great. Thank you, guys. Take care. David M. Cote: You’re welcome.

Our next question comes from Howard Rubel of Jefferies. Howard Rubel - Jefferies: Good morning. David M. Cote: Hi, Howard. Howard Rubel - Jefferies: How are you? David M. Cote: Good. Howard Rubel - Jefferies: Number look nice. David M. Cote: Thank you. Howard Rubel - Jefferies: A couple of things. You never stop pushing excellence and while Friction Materials is the last obvious divestiture, how do you think about keeping the guys at the back of the line equal with the people outperforming at the front? David M. Cote: Well, that’s something we pay a lot of attention to all the time and in several different ways. One of the things we’ll be doing that more in the future is through this HOS Gold effort that you’ve heard us talk about and as especially as we go through the planning or what we call STRAP exercise, we spent a lot of time looking at that. And I can’t say that we look at it with threatened to fail if they don’t kind of come up to par, but at the end of the day I’d say I’m really encouraged by the upside I see across the portfolio and the implementation of HOS Gold and the ability to raise sales growth and margin rates everywhere. Howard Rubel - Jefferies: And then kind of staying with that theme, you’re spending a lot of money on new products and you highlighted a couple of them in ACS. Can you sort of talk about, are you getting the productivity you want and are there – how do you think about maybe – how much of this is contributing to organic growth as opposed to just the normal economy?

Sorry, to products or productivity, Howard? Howard Rubel - Jefferies: Well, I guess I’ll mix them both. I mean one is the productivity associated with new product development and then second is how is that contributing to the organic growth, Tom?

First off, if you look at it in pure financial metrics, we’re not decelerating at all on investment with new product. For example, if you look at R&D investments it’s not – that’s not per se generating productivity, but when you look at productivity across direct materials and our people costs, I would say that has been as strong as it has been in the last couple of years which is the way I look at it. Howard Rubel - Jefferies: And then last, Intermec, looks like you’re getting the top line you expected. How would you evaluate where you are in terms of the integration process and when do we really see its profitability normalize with the rest of the business units?

Yes, I’d say, Howard, the way we look at that one is a year ago everybody – when we closed the deal it was a business that was not very profitable at all and you fast forward to now and if you look at what we’ve done just to look at the multiple that we pay in Intermec today and you would say we’re at 17, 18 times multiple. And you factor in synergies it’s gotten and that are in place, we’re down to sub 5 type multiples. It kind of gives you an idea that we feel like we’ve been successful. So when you look at the plan itself, when you look at both revenues and the income and the cash, all of those metrics were performing a lot better than the plans. John and his team with Scanning and Mobility as well as the Intermec have really have done a nice job integrating those two businesses. Howard Rubel - Jefferies: Thank you very much. David M. Cote: You’re welcome.

Our next question comes from John Inch of Deutsche Bank. John Inch - Deutsche Bank: Thank you. Good morning, everyone. David M. Cote: Hi, John. John Inch - Deutsche Bank: Good morning. So how did your businesses – I realize it’s not a huge exposure but how did your businesses fair in Latin America and the (indiscernible) does market weakness in Latin America, Dave Cote, maybe provide you an opportunity perhaps with respect to capital and deployment or step up some investment spending there or something like that? David M. Cote: We continue to do very well with everything south of the Rio Grande and you look at the big ones; Mexico and Brazil, we continue to do well there. Mexico, we’ve got about 14,000 employees. In Brazil we’ve got about 1,000 and our sales have been quite good there. In terms of investing, I still think that there are places where you think about it before you do it. It’s not a no-brainer. But overall those have been very good markets for us. John Inch - Deutsche Bank: Your Brazilian business is up in the quarter? David M. Cote: Yes. John Inch - Deutsche Bank: Defense and Space, were there any pockets of Defense and Space or expectations of Defense and Space pockets like within the framework of that business that you expect to actually get better over the course of the year? And I’m curious kind of how if anything has changed with respect to how you were seeing this business, how are you’re going to manage it? I’m assuming it kind of gets managed down over time, but maybe not?

Yes, John, the way I think of the Defense and Space business is it has two pieces of products business where we’re dealing with the U.S. government and/or the prime contractors. And then there’s the service business that’s largely unrelated to the Aerospace industry and that’s where we’re seeing the most pressure. Thankfully it’s a lower margin business, but that’s where the top line for Defense and Space are the most pronounced for us. We’re now approaching periods where we’re going to start lapping comps, so that pressure will subside. The other thing we’ve got going on there is the international side. If you’ve read the paper this morning, I mean unfortunately those things happen but that tends to bode well for military budgets outside of the U.S. and so we’re seeing an uptick, as Dave referenced, in sales in the international side of Defense and Space. So you got some balancing dynamics going there. I think they’ll net to the positive as we head into the second half of the year. David M. Cote: The other thing to recognize, John, is as we’ve said before, Defense is really more of a sales channel for us. It’s not like we have – while the jet engine might be unique to a certain defense application, at the end of the day it’s still coming out of a jet engine factory that also produced in commercial. John Inch - Deutsche Bank: Right, and all incremental. Maybe one more. Global markets, Dave Cote, kind of do not begin to show more signs of life. I realize you’re outperforming today but let’s call it over the course of the coming year. Does that cause you to perhaps modify or even accelerate aspects of your operating framework to hit or totally exceed your five-year targets? David M. Cote: Well, as you know, I’ve been one the guys who has generally been more negative on the global outlook for the last four years and so far it has been a pretty good call. So I’d say the way we’ve forecasted this year and the way we’ve looked at our five-year plan is pretty consistent with that. I never counted on much and so far it has been a good call. So I feel pretty good about where we are and what we’re saying. John Inch - Deutsche Bank: Thank you very much. David M. Cote: You’re welcome.

Our next question comes from Christopher Glynn of Oppenheimer. Christopher Glynn - Oppenheimer & Co.: Thanks. Good morning. David M. Cote: Hi, Chris. Christopher Glynn - Oppenheimer & Co.: Hi there. David M. Cote: Your brother-in-law Tom says hi. Christopher Glynn - Oppenheimer & Co.: Thanks for passing that along. I got a text from him last night.

I guess this is going to be an easy question. Christopher Glynn - Oppenheimer & Co.: We’ll see. So I wanted to follow-up on the M&A and part of Roger’s job now I think is the opportunity to look at sourcing larger deals and we see the Intermec integration was pretty rapid fire with the benefits. So, I’m wondering are you just starting to develop the pipeline for larger deals or is that something that’s already kind of established?

There’s been a conservative effort to find larger deals with Roger joining in that area. I do think that he has the tendency and the license and idea of looking across Honeywell and trying to identify opportunities that might touch on more than one business or that might be an adjacent to the three business segments that we have. That might lead you to think there is larger deals in the making. But I would say that’s not the primary objective. The primary objective is to augment those existing portfolios and find good growth ideas that are in industries alike. David M. Cote: I’d add, Chris, that while we did an okay job on origination, as Roger started to get into this around the company looking at it within the businesses, across the businesses and adjacencies that might make sense, he’s really invigorating the overall kind of origination process. But I think it’s going to give us a lot more ideas to work with than what we’ve had in the past. And you’ve heard us talk about many times that we have and want even more of a robust pipeline. If the more ideas you have, the more stuff you can go after, the more opportunities it gives you and it also allows you to be more selective. You can end up being I’d say in a much better position to negotiate if you have nine other good deals that you can’t do so that you don’t do something silly when it comes to pricing. Christopher Glynn - Oppenheimer & Co.: Right. Well, we haven’t seen that be a problem, so I think our bias then would be more to higher frequency of deals in your accelerated capital allocation rather than seeing something larger. David M. Cote: Well, I guess it depends how you define larger but I would say – you have heard me say many times we never say never on any of this because it’s going to depend upon the construct of the deal. But whatever we do I can promise you we’ll be consistent with the financial and operating discipline model that we’ve talked about in the past and we’ll have strong cost synergies that come out of it consistent with Tom’s point of Intermec because that certainly is one of the things that I think has helped define our track record. Christopher Glynn - Oppenheimer & Co.: Great. Thanks, guys.

Leo, we have time for just one more question.

Very good. We’ll take a question from Andrew Obin of Bank of America. Andrew Obin - Bank of America Merrill Lynch: Yes, good morning. Just a little bit more color on UOP and HPS. Could you just comment more on petchem demand by region because we’re hearing mix commentary this earnings season?

UOP by region? Andrew Obin - Bank of America Merrill Lynch: Yes, and HPS as it seems that some pieces of oil and gas and petchem industry are moving in different directions. Just trying to get what you guys are seeing.

It’s really broad based I think if you move across all the regions. I mean oil and gas has been particularly strong in the U.S., the Middle East, China in particular. Anything, Tom, you could add there?

Yes, I would say the Middle East has been outstanding for both UOP and HPS and China’s [lending] (ph) those were very good. But it’s not like the U.S. is… Andrew Obin - Bank of America Merrill Lynch: And just a question on Aerospace, you sort of noted that RMU’s growth is moderating and I think you guys were positive. Can you just talk about what’s happening there and any sort of broader trends that are taking place?

Well, I think on RMUs the sales levels are very strong. It’s just that we had such an uptick in the early and middle part of 2013 and really into '14 that we’re starting to lap through that are really strong, but we’re sustaining the level of new product development there and the offerings, they’re going on to those platforms particularly on BGA side particularly as it relates to software. Andrew Obin - Bank of America Merrill Lynch: Thanks a lot.

Well, thank you for your participation today. I do want to turn the call over to Dave Cote for any final comments. David M. Cote: Well, we’re quite pleased with our second quarter results and our outlook for the year and I think it’s a good reflection of our expectations for ourselves over the next five years. We have a great portfolio to grow with, our process initiatives continue to progress and our culture provides sustainability as we evolve and continue the seed planting. We’re building on a great base and with the addition of our drive for HOS Gold, software including CMMI level 5 and HUE, we see a lot of good things to come from Honeywell. Thanks.

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