Page 1 of 148
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`Arkema Exhibit 1082
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`

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`Letter to Share-owners
`Transportation Systems
`Board of Directors
`
`Automation and Control Solutions
`Aerospace
`Specialty Materials
`Honeywell Hometown Solutions.
`People and Performance
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`Page 2 of 148
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`

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`Page 3 of 148
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`

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`GREAT posmous Ill soon IHIIIISTIIIES a
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`Page 4 of 148
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`

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`REFINING TECHNOLOGIES
`
`UOP developed 31 of the 36 major refining technologies
`used by the industry today and has 2,600 active
`patents. Our intellectual property allows oil refiners and
`gas producers to maximize yield, produce cleaner fuels
`and improve efficiency. Today, 60 percent of the world’s
`gasoline is made using UOP technology.
`
`ENERGY PERFORMANCE
`
`Reducing energy consumption is a top priority for
`homeowners and building operators. Honeywell’s
`energy efficiency solutions range from temperature
`and humidity controls to infrastructure upgrades.
`They pay for themselves by lowering home energy
`bills by up to 33 percent and building operating costs
`by up to 20 percent.
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`3
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`GREAT POSITIONS IN GOOD INDUSTRIES
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`Page 5 of 148
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`

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`FLAT PANEL
`DISPLAYS
`
`Honeywell is addressing the two most critical challenges
`facing the $70 billion flat panel components industry:
`power consumption and picture quality. Our technologies
`decrease cost by 10 percent while improving brightness
`by 5 percent and color uniformity by 15 percent.
`
`HELICOPTERS
`
`Now customized for rotary-wing performance,
`Honeywell’s Enhanced Ground Proximity
`Warning System (EGPWS) helps prevent
`collisions with terrain and man-made obstacles.
`With a database offering complete global
`coverage and more than 500 million flying
`hours of operation, EGPWS is credited with
`more than 40 saves.
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`GREAT POSITIONS IN GOOD INDUSTRIES
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`4
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`Page 6 of 148
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`

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`‘
`‘ 9, technolciéy. We x -’ '
`in thi§J. arket. and we §i!T9'nglhened ou
`V 2007 p§ $14 billion automati
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`identification and data collection market with the
`
`acquisition of Hand Held Products, Inc.
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`Page 7 of 148
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`Strategic acquisitions havmadsitioned Honeywell as
`a global leader in the $1.8 billion hazardous gas ‘
`detection market. Today, we haveleading brands,
`an international customer
`
`distribution channels.
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`
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`Page-V8 of 148
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`

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`TURBOCHARGERS
`
`Honeywell turbo diesels deliver remarkable fuel efficiency
`and reduce CO2 emissions by up to 30 percent compared
`to equivalent gasoline engines. Automotive manufacturers
`and drivers around the world are responding positively to
`the high performance and lower emissions of turbo diesel
`and gasoline engines.
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`7
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`GREAT POSITIONS IN GOOD INDUSTRIES
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`Page 9 of 148
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`

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`Page 10 of 148
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`

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`TO OUR SHAREOWNERS
`
`Pictured on opposite page
`(from left to right)
`SENIOR MANAGEMENT
`
`PETER M. KREINDLER
`Senior Vice President and
`General Counsel
`
`NANCE K. DICCIANI
`President and
`Chief Executive Officer
`Specialty Materials
`
`ROBERT GILLETTE
`President and
`Chief Executive Officer
`Aerospace
`
`MARK JAMES
`Senior Vice President
`Human Resources and
`Communications
`
`SHANE TEDJARATI
`President
`Honeywell China
`
`DAVID M. COTE
`Chairman and
`Chief Executive Officer
`
`ADRIANE M. BROWN
`President and
`Chief Executive Officer
`Transportation Systems
`
`DAVID J. ANDERSON
`Senior Vice President and
`Chief Financial Officer
`
`LARRY E. KITTELBERGER
`Senior Vice President
`Technology and Operations
`
`RHONDA GERMANY
`Vice President
`Strategy and Business
`Development
`
`ROGER FRADIN
`President and
`Chief Executive Officer
`Automation and
`Control Solutions
`
`We had another wonderful year … and there are more to come.
`The financials were terrific and the stock market is beginning to notice
`our continued outperformance of the industry. Honeywell was the number
`one performer in the Dow Jones Industrial Average (DJIA). While the DJIA
`was up 6%, and the S&P 500 was up 4%, we were up 36%! And that
`performance built on a great base given that in the previous four years we
`significantly outperformed the indices coming in with 107% total shareowner
`return versus the S&P 500 at 73% and the DJIA at 49%. Not bad … not bad
`at all … and it feels good … for all of us.
`PERFORMANCE During the year, we increased sales by 10% to
`$34.6 billion, increased earnings per share by 25% to $3.16 per share, and
`increased free cash flow (cash flow from operations less capital expenditures)
`by nearly $700 million to $3.1 billion. On top of that, we increased the dividend
`for the fourth consecutive year by 10% (up 47% over the last four years),
`repurchased $4 billion of our shares, and completed $1.2 billion in acquisitions,
`further building our growth platforms. Our acquisition process works incred bly
`well … it’s disciplined, we don’t overpay, and we integrate companies very
`well. Over the last five years we’ve spent about $5 billion on value-building
`acquisitions and received more than $2 billion in dispositions of value-depleting
`businesses. Both have made us stronger … providing upside and limiting
`downside. Our share repurchase program has also been highly successful.
`While many announced share buybacks merely hold shares constant, the
`$7.8 billion we’ve spent over the last five years has reduced our share count
`13% from a high of 863 million to 747 million today.
`We have been, and will continue to be, highly disciplined in our
`cash deployment. It starts with being a good cash generator … and that’s
`improved a lot … and will continue to do so. Four years ago, we generated
`$1.5 billion in free cash flow and paid about $650 million in dividends,
`leaving about $900 million for deployment. In 2007, while free cash flow
`has a bit more than doubled to $3.1 billion, the amount available for further
`value deployment has increased more than two and a half times to $2.4
`billion. The dividend, while up 47% on a per share basis, will increase only
`27% in outflow because of our extensive repurchases. That creates a lot of
`opportunity for us to outperform … in good times and in tough times.
`PERFORMANCE CONTINUES Continued growth in earnings and
`free cash flow will occur because of (1) the strength of our businesses, (2)
`our constant focus on process improvements through the Five Initiatives,
`and (3) management depth and One Honeywell. We’ve talked about this a
`lot in the past. They are working … and we’ll continue with them. There is
`still a lot of upside to be gleaned in Honeywell.
`The strength of our business starts with having great positions in good
`industries. A simple but incredibly important concept. We’ve acquired only
`in areas where we could make a difference (and didn’t overpay); divested
`where it was a bad industry or a bad position (and sometimes both); and
`invested greatly in new products, services, and geographies to further
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`9
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`GREAT POSITIONS IN GOOD INDUSTRIES
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`Page 11 of 148
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`strengthen an already strong portfolio. We now have a nice blend of long-
`cycle/short—cycle businesses with about 50% outside the U.S., up from
`around 40% a few years ago. We are getting stronger in every business
`and geography every year. The change is apparent in every business.
`The Aerospace reorganization implemented a couple years ago
`reduced structure and considerably improved our customer focus and new
`product drive. Customer responsiveness shows not just in the process
`(like reducing 272 customer contact phone numbers to two and upgrading
`our talent base) but in customer surveys. A great example is the recent
`AIN survey (Aviation international News) identifying Honeywell as the turbofan
`engine manufacturer with the highest percentage change in customer
`support improvements during 2007 for the HTF7000 engine. That customer
`service (and a great product portfolio) has been a direct contributor to
`major wins like (1) the $16 billion Airbus A350
`Xtra Wide—Body. (2) the AirTran $1 billion
`aftermarket contract (our largest commercial
`aftermarket services win ever). and (3)
`displacing a competitor's APU (auxiliary power
`unit) on 196 aircraft in the US Airways‘ fleet.
`Macro trends provide a great tailwind to our
`Aerospace business with increasing commercial
`travel as the world becomes wealthier and
`
`SALES
`Percentage
`
`
`
`2003
`
`2004
`
`2005
`
`start—up airlines make air travel more affordable.
`There is growing demand for avionics upgrades
`as the need for better runway safety and
`modernized air traffic control systems are
`recognized. With more than 15.000 business
`jets in use today
`an increase of about 40%
`since 2001
`the growth in this segment is
`robust in both new aircraft and demand for
`
`I Outside the u.s.
`I Inside the u.s.
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`GREAT POSITIONS IN GOOD INDUSTRIES -
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`Page 12 of 148
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`avionics retrofits and spare parts. Over the next 5 years. we expect another
`6,000 aircraft to enter service. with the market shifting from 60% in the US.
`in 2001 to 60% outside of the US.
`
`Automation and Control Solutions (ACS) continues to gain share
`and organic margin rate increased in every business largely because of
`global expansion and a super—invigorated focus on new products that
`was initiated about four years ago. Additionally, they have become an
`acquisition machine
`looking at hundreds of possibilities to garner the
`few we have completed. From identification (adding to existing positions
`like Novar and finding great adjacencies like gas detection with
`Zellweger/First Technology and imaging with Hand Held Products)
`through valuation, due diligence. and integration
`ACS excels. ACS
`has established a wonderful platform with extensive "seed—planting" so we
`don't just grow this year or the next
`but into the future. The rejuvenation
`has been especially acute in our Solutions business and required a lot
`of investment and effort. It was worth it because now we are growing this
`segment rapidly and while some might point to the lower margin rate, we
`would point to the 20% ROI (return on investment — ratio of net income
`before interest expense to cash deployed in the businesses) and say it's a
`smart place to focus. Global macro trends for energy efficiency. increased
`concerns about security and safety. and mid-market products in emerging
`economies all provide a great foundation for growth.product/services prod-
`
`

`
`Transportation Systems (TS) has undergone two rebuilding years
`as we've invested to support the launch of our considerable new
`product/platform wins in Turbo Technologies. We experienced an
`unexpected fall—off in our Consumer Products Group (CPG) largely
`because of reduced demand caused by high gasoline prices and
`operational challenges. The turbo launches kick in during the second
`half of 2008 and continue at an increasing rate
`through 2011. During the last two years we have won
`about two—thirds of worldwide orders for turbos. Even
`
`The strength of our business starts with
`
`having great positions in good ustriesi
`
`if auto sales decline, we should see increasing sales
`in T8 because of increased turbo penetration and
`platform wins. The global macro trend for auto fuel
`efficiency and the need to reduce emissions is driving A Simple bUt lnCredlb|Y important COFICGPL
`both dieselization and turbo gasoline growth, providing
`a slipstream for TS growth. Being a strong, high—performing, multi—industry
`company gives us the foundation to support these magnificent growth
`prospects while still delivering big for the company.
`Specialty Materials (SM) has seen the greatest portfolio retooling of
`all our businesses. We divested a lot, reduced structure, invested in our
`
`RESEARCH & DEVELOPMENT
`SPEND
`'” M”"°”S
`
`products, and acquired UOP... all good. The retooling shows up especially
`well in our Resins and Chemicals business (formerly called Nylon) where
`the inability to recover raw material costs caused incredible deterioration
`in financial performance during the low point in a cycle. Today, through
`divestitures we reduced exposure by a fourth and in the remainder we
`have two—thirds of it covered through a complete raw material pass—through
`contract. Plus, we now have a terrific new fertilizer product in Sulf—N® 26
`it reopens the ammonium nitrate market by combining it with ammonium
`sulfate to significantly lower explosion potential. UOP markets (primarily
`long cycle) continue strong with backlog up 41% from last year, and UOP
`also developed the Ecofining” process (a process technology to produce
`green diesel). Ecofining creates real, drop—in diesel fuel from plants (soy,
`corn, jatropha, and eventually cellulosic and algae)
`and is not to be
`confused with biodiesel which requires blending with real diesel fuel
`because of its corrosive effects on pipelines, fuel pumps, and engines.
`The first green diesel refinery is being built by Eni S.p.A. and starts up in
`2009. Macro trends for greener energy, more
`refinery capacity, the ability to process heavier
`crude oil, and the need for non—ozone depleting
`Coolants like HFCs portend a great SM future.
`PROCESSES The benefit of a great
`business portfolio gets expanded with our
`process focus in the Five Initiatives. Processes
`in every part of the company
`businesses and
`functions
`are getting better every day and
`have a lot of room to get better still
`that's all
`good. Growth, Productivity, Cash, People, and
`our Enablers
`it's a winner.
`
`
`
`2003
`
`2004
`
`2005
`
`2006
`
`2007
`
`At our two—day SLM (Senior Leadership
`
`Meeting) comprising our top 300 leaders, we
`concentrated almost exclusively on our new
`
`I Totai spend
`-+- Percentage of Total Revenue
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`Page 13 of 148
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`:: I GREAT POSITIONS IN GOOD INDUSTRIES
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`We have come a long way and we're in
`
`a great place to get better and better
`
`we still have a lot of runway left. We
`
`product/services process from Voice of the Customer through launch and
`sales realization. It
`is
`exciting! What we've done pales next to what's
`coming. More and better products and services
`and faster and better
`processes to deliver them Velocity Product Development”’' works.
`The Honeywell Operating System (HOS) has now been initiated in
`50% of our manufacturing cost base
`that's initiated, not done. We‘ve
`taken this slowly because, done right, it's a 20-year competitive advantage
`and we want it right. The immediate benefits in quality, delivery, safety,
`cost, and inventory are certainly nice. But the big benefit is that it's a
`sustainable platform for improvement. No longer do plants do well or poorly
`solely based on the caliber of the plant manager. That's not to say the plant
`manager isn't important
`the leader always makes a big difference
`but it does mean that improvements stay improved,
`and everyone in the plant plays a substantial role
`and that is a big deal.
`Functional Transformation (FT) is basically HOS
`for administrative functions. The same concepts
`standardized work, one robust process instead of
`a multitude determined by business whims, and
`mechanization
`all designed to deliver better
`service at lower cost. We're only halfway through
`this
`and that means more upside to come.
`PEOPLE People make all the difference. It's always been true and
`is certainly true at Honeywell. We spend a lot of time ensuring we have
`the best
`and that we all work together as One Honeywell. Our Twelve
`Behaviors; a single, company-wide, completely automated appraisal form;
`candid feedback; three in—depth reviews of top talent annually; financial
`rewards based on performance
`all make a difference. Many companies
`have similar documented processes of course
`but the trick is in "the
`doing.“ Our focus is on the doing. A good example is that no one goes into
`our top 200 positions in the company unless interviewed by our company
`Human Resource leader and me
`even if they are an internal candidate
`we've known for a long time. It reinforces to the candidate the significance
`of the job, provides quality control, and helps imprint key messages. An
`easy thing to "document" in a process but time consuming to do well
`and worth every minute. We have a great leadership team and a motivated
`global workforce of 122,000 employees
`that's an advantage.
`SUMMARY Our pride undoubtedly shows in this letter. We have come
`a long way and we're in a great place to get better and better. As well as
`we've done, we still have a lot of runway left. We know it and we know what
`we have to do. That's a good thing
`a very good thing
`for our investors
`and for our 122,000 employees who make it happen for our customers
`every day.
`
`know it and we know what we have to do.
`
`6%
`
`David M. Cote
`Chairman and Chief Executive Officer
`
`GREAT POSITIONS IN GOOD INDUSTRIES I
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`Page 14 of 148
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`Honeywell has built a strong five—year track record of financial RESULTS.
`
`SALES & EARNINGS PER SHARE
`In Billions and Dollars Per Share
`
`FREE CASH FLOW
`In Billions
`
`$314
`$34.6
` $27.7
`
`$23.1
`
`2003
`
`$25.6
`
`2004
`
`2005
`
`2006
`
`2007
`
`2003
`
`2004
`
`2005
`
`2006
`
`2007
`
`$31
`
`I Sales 11% CAGR since 2003
`I EPS 20% CAGR since 2003
`
`I FCF 19% CAGR since 2003
`
`Disciplined and balanced CASH deployment is building shareowner value.
`
`DIVIDENDS
`In Dollars Per Share
`
`CASH DEPLOYMENT 2003-2007
`In Billions
`
`$1.10
`
`$16.3
`
`Strategic Acquisitions
`
`$7.8
`
`Share Repurc hases
`
`Dividends
`
`$3.5
`
`$5.0
`
`2003 2004 2005
`
`2006 2007 2008
`
`I 10% increase in dividend rate
`for the fourth consecutive year
`
`I Returned to Shareholders
`III Reinvested
`
`Common GLOBAL PROCESSES enable efficiencies, faster cycle times, higher quality and greater
`
`customer satisfaction.
`
`TYPICAL HONEYWELL
`OPERATING SYSTEMS (HOS)
`IMPROVEMENTS
`
`_
`Quality Improvement .
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`up to
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`. 20% 1
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`FUNCTIONAL COSTS/PERCENTAGE
`OF SALES
`In Billions
`
`$2.15
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`On~Time Delivery .
`
`Cost Reduction .
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`Inventory Reduction .
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`Safety Improvement
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`. .1590 1
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`. .3090 T
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`2005
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`2007
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`2010E
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`Page 15 of 148
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`I Functional Cost Spend
`—-0- Percentage of Sales
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`13 I GREAT POSITIONS IN GOOD INDUSTRIES
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`

`
`I nrmm m
`r'r"""'i‘ vjpl
`‘Technology is at our core. Ker"d§b'ace
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`-~ us IN GOOD INDUSTRIES n
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`Page 16 of 148
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`AEROSPACE
`
`SALES AND SEGMENT PROFIT
`In Millions
`
`$12,236
`
`
`
`$10,496
`
`2005
`
`I Sales
`—-o- Segment Profit
`
`2007
`
`Honeywell Aerospace‘s transformation continues to deliver higher customer
`satisfaction, improved innovation and lower operational costs. Our three
`businesses — Air Transport and Regional (AT&Fl); Business and General
`Aviation; and Defense and Space — are in better positions today to anticipate
`customers‘ needs faster and more strategically.
`Today's aircraft manufacturers are looking for
`equipment suppliers that can transition to system
`integrators. In 2007, our AT&R business secured
`the largest single—source systems contract ever
`awarded by Airbus, valued at $16 billion over the
`projected 20- to 25-year life of the program. The
`contract will provide major mechanical systems
`for the new A350 XWB (Xtra Wide—Body) aircraft.
`Airline industry customers continue to outsource
`aftermarket services to reduce operational
`costs and increase aircraft availability; this is
`demonstrated by AT&R's record $490 million,
`20-year contract with Northwest Airlines to provide
`repair and overhaul services for its fleet.
`Technologies that support the soldier in the
`field and logistical support to expedite the repair
`and replacement of equipment damaged during
`wartime operations are driving growth in our Defense and Space business. For
`example, the U.S. Navy deployed our Micro Air Vehicles in Iraq to keep American
`troops safer by identifying improvised explosive devices from overhead, and
`our synthetic vision technology will be integrated into Black Hawk helicopter
`cockpits to enhance pilot situational awareness during take—offs and landings
`in desert terrain. The U.S. Army selected Honeywell to refurbish its tactical
`vehicles in Kuwait. Honeywell also acquired defense logistics leader Dimensions
`International to further support the Department of Defense's efforts to reconstitute
`billions of dollars worth of worn military equipment and address reset challenges.
`The outlook for our avionics, cabin systems and aftermarket services in
`Business and General Aviation remains strong, with orders from business jet
`manufacturers increasing at a record pace worldwide and global business jet
`deliveries expected to exceed 1,300 in 2008, up 30 percent from a year ago.
`For general aviation, we introduced a next—generation line of retrofit avionics to
`help modernize the cockpit. The Apex Edge Series features a multifunction
`display and a primary flight display that integrate multiple devices into one
`screen and upgrade instruments from analog to digital.
`With heightened focus on safety and security, demand for our Runway
`Awareness and Advisory System (RAAS), Enhanced Ground Proximity Warning
`System (EGPWS) and Integrated Primary Flight Display (IPFD) products is
`expected to grow. Honeywell Aerospace will also continue to be a key player
`in the modernization of international air traffic management systems to improve
`flight scheduling, reduce flight delays and lower fuel costs.
`
`In 2007, Honeywell opened one of the world's most advanced systems integration laboratories in
`Mexicali, Mexico, to develop technologies for the aerospace and defense industries. This facility
`will test and integrate technologies to reduce fuel consumption and increase aircraft reliability.
`
`15
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`Page 17 of 148
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`AUTOMATION AND
`
`CONTROL SOLUTIONS
`
`Automation and Control Solutions (ACS) develops and delivers products
`and integrated solutions that improve energy efficiency, industrial productivity
`and safety while enhancing convenience and control. Our diversification across
`geographies, sales channels. differentiated technologies and vertical markets
`helped drive 11 percent organic sales growth in 2007.
`Velocity Product Development“ is being deployed throughout our businesses,
`reducing cycle times and helping us to release more than 300 new products in
`2007, up 46 percent from 2006. Our gas detection business introduced a new
`carbon monoxide detector two months ahead of schedule, and our security business
`shortened time between product prototyping and
`market release by 23 percent. a significant advantage
`in our seasonal—se|ling programs. We conducted more
`than 40 innovation workshops in 2007, filling the
`pipeline with new product ideas for years to come.
`ACS completed eight acquisitions in 2007.
`adding more than $650 million in annualized sales.
`These deals expanded our global footprint and
`business in high—grovvth segments, such as video
`analytics, low—voltage electronics, commercial lighting,
`industrial combustion controls and alarm management
`solutions. In China. we opened an engineering center
`in Chongqing and broke ground on a global design
`center and manufacturing site in Nanjing, expanding
`our 24/7 global engineering network.
`ACS revenues in 2007 included more than $450
`
`SALES AND SEGMENT PROFIT
`In Millions
`
`$12,478
`
`$11020
`
`
`
`2005
`
`2000
`
`2007
`
`I Sales
`--o-- Segment Profit
`
`million in energy savings performance contracts,
`power purchase agreements and utility solutions, helping customers like the
`US. Food and Drug Administration and the Department of Public Works in
`Queensland. Australia, to lower energy consumption and reduce greenhouse
`gas emissions. We were also selected to work with the New Jersey Clean
`Energy Program“, one of the largest energy conservation programs in the U.S.
`In our Solutions business, the scope of Integrated Main Automation Contractor
`projects increased by 20 percent at new and existing facilities across a number
`of industries, including oil and gas, power and life sciences. Honeywell launched
`new security products. such as SmartP|us® Convergence, and established strategic
`relationships with technology leaders, such as Novell, lmprivata and Activldentity,
`positioning us as a leader in the convergence of physical security and IT systems.
`A portfolio of proven technologies, worldwide brand recognition and
`strength across the home. commercial and industrial sectors puts ACS in
`a great position to maintain our leadership and drive sustainable growth in
`the $160 billion marketplace we serve.
`
`The acquisition of Enraf, a leading provider of mission-critical measurement and control
`solutions for the exploration. production and transportation of energy products. strengthened
`Honeywell's position in the oil and gas sector and provided entry into the fast—growing marine
`transport industry.
`
`GREAT POSITIONS IN GOOD INDUSTRIES
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`

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`Commitments. It is about being re
`c;ustomers' nééds, then invgsting
`
`j_‘-'i’
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`Page 19 of 148
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`"Honeywell does more than push technological boundaries —
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`we surpass them and set the pace for innovation in the
`transportation sector. Our customers know this and value our
`winning combination of global scale, local respofisiyeness
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`
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`- d advanced technologies.”
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`N President and Chief Executive Officer
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`A Page 20 of 148
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`TRANSPORTATION
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`SYSTEMS
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`Robust growth in turbocharging technologies continues as the
`automotive industry seeks to improve fuel efficiency and reduce emissions
`while maintaining vehicle performance. Global engine boosting is expected
`to grow at a rate three times that of the automotive market. and Honeywell
`is well positioned to capture much of that growth.
`In 2007. Honeywell was awarded 11 major contracts with combined
`annual revenues at maturity in excess of $1 billion, adding to our win rate
`of about two—thirds of worldwide orders during the last two years.
`The passenger vehicle segment continues to forecast strong growth
`as turbo diesel vehicles are introduced in the U.S., India and China.
`
`SALES AND SEGMENT PROFIT
`"‘ M””°"5
`
`Additionally, rising concerns about global warming and associated CO2
`reduction targets in many regions are driving growth in the gasoline turbo
`segment as automakers increasingly use turbocharging to boost smaller,
`more fuel—efficient engines.
`More stringent emissions regulations are supporting turbo technology
`growth in the commercial vehicle segment. Turbo diesel engines attract
`consumers with increased fuel economy.
`durability and towing ability, and represent a
`growing portion of the light pickup truck segment.
`Using our Velocity Product Developmentm
`process. Honeywell Turbo Technologies reduced
`cycle time by 10 percent on new product
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`$4.592
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`$5 009
`'
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`$4505
`
`2005
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`I Sales
`"‘ Se9”‘°'“ P'°"‘
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` introductions in 2007. We also introduced a new
`
`$583
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`2006
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`2007
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`design method that uses advanced simulation
`tools to analyze the lifetime reliability of our
`products. Turbo Technologies deployed the
`Honeywell Operating System (HOS) at eight
`sites. representing about three—fourths of
`our turbocharger manufacturing cost base.
`HOS is a standardized process to maximize
`operational performance and drive continuous
`improvements in safety, quality and delivery
`at our manufacturing facilities.
`Global expansion continues to be a priority for our Consumer Products
`Group (CPG). particularly in China. where vehicle registration is rising more
`than 20 percent per year. CPG continues to build on its leading brands —
`Autolite®. FRAM®. Ho|ts® and Prestone® — through product extensions.
`Helping our customers compete in a marketplace that will require
`improved fuel efficiency and emissions controls — while continuing to
`deliver high—pen‘ormance vehicles that are fun to drive — will power our
`growth into the future.
`
`India is on the verge of a turbo revolution. with boosted vehicles growing at a 22 percent
`compounded growth rate over the next five years. Since opening our Pune plant. Honeywell
`has built a strong local supplier network and engineering capability. uniquely positioning the
`company to support India's diesel boom.
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`19
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`GREAT POSITIONS IN GOOD INDUSTRIES
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`Page 21 of 148
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`SPECIALTY MATERIALS
`
`Specialty Materials‘ growth is driven by megatrends: the need for clean.
`efficient and sustainable energy; accelerated growth of consumer electronics;
`and global demand for improved safety and security. Our high—performance
`materials make buildings architecturally stronger and more energy efficient,
`protect products and documents from counterfeiting. and enhance microchip
`performance. Designing products to customer requirements helped us
`generate 6 percent organic sales growth and a 13.5 percent segment margin
`increase in 2007. with 20 percent of sales across the Specialty Materials‘
`portfolio from products introduced in the past five years.
`With increasing world energy consumption. our UOP business had
`strong growth, with more than 150 wins at refineries, petrochemical and gas
`processing plants around the world. UOP also introduced a process that
`improves refiners‘ ability to process clean gasoline from heavier crude oil.
`optimizing available energy resources and expanding production.
`UOP also commercialized a new technology
`to convert biofeedstocks, such as vegetable oils
`and greases. into high—cetane, green diesel fuel.
`which can be used as a drop—in replacement
`fuel in today's diesel engines without
`modifications. UOP and Honeywell Aerospace
`partnered to convert biofeedstocks to military
`jet fuels, with new technology that is expected
`to help achieve 90 percent energy efficiency
`for maximum conversion of feed to fuel.
`
`SALES AND SEGMENT PROFIT
`In Millions
`
`$4 631
`
`$4856
`
`
`
`Our Fluorine Products business signed
`multi—year agreements with Hisense Kelon.
`the largest appliance manufacturer in China,
`and Whirlpool Corp.. one of the world's most
`recognizable brands, to supply Enovate®
`blowing agent used in energy—efficient,
`closed—ce|l insulation in refrigerators. With
`DuPont, we are developing next—generation.
`low—g|oba|—warming—potential (GWP) refrigerants for the automotive air
`conditioning industry. We are also independently designing a low—GWP
`solution to address European regulations for one—component foam used
`to seal windows and doors.
`
`I Sales
`"' Segment P'°“‘
`
`By listening and responding quickly to our customers, we will
`continue to strengthen our position in existing markets and drive growth
`in adjacent ones.
`
`Asia-Pacific is the fastest-growing market for semiconductors. To help meet customer demand
`in this reg ion, our Chonburi. Thailand, facility makes thermal management materials that handle
`the massive heat flux generated by increasingly smaller, more powerful microchips.
`
`GREAT POSITIONS IN GOOD INDUSTRIES
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`20
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`Page 22 of 148
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`“Because wg real _V
`differentiate our prou s an
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`Pge 23 of 148
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`HONEYWELL
`HOMETOWN
`SOLUTIONS
`
`“We apply the same rigor and business
`tools we use in the workplace to build
`programs that deliver results we can
`quantify … enhancing lives one student,
`one teacher, one classroom, one home,
`one family at a time.”
`
`THOMAS BUCKMASTER
`President HONEYWELL HOMETOWN SOLUTIONS
`
`HOUSING AND SHELTER
`In partnership with Rebuilding Together®,
`more than 4,000 Honeywell volunteers
`have helped improve living conditions
`for low-income, elderly and disabled
`individuals in more than 160 homes and
`community centers.
`
`GREAT POSITIONS IN GOOD INDUSTRIES
`
`22
`
`HUMANITARIAN RELIEF
`The Honeywell Humanitarian Relief
`Fund delivers immediate assistance
`to Honeywell families and communities
`to aid recovery and rebuilding efforts
`following natural disasters, such as the
`cyclone in Oman and the hurricanes
`along the U.S. Gulf Coast.
`
`
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`Page 24 of 148
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`SCIENCE AND MATH EDUCATION
`From middle schools to universities,
`our programs are designed to inspire
`the next generation of engineers,
`scientists and technologists
`by bringing science and math
`education to life in the classroom.
`
`FAMILY SAFETY AND SECURITY
`Our programs have taught 13
`million students in the U.S., Canada
`and China potentially life-saving
`lessons to help prevent abduction
`and common childhood accidents.
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`GREAT POSITIONS IN GOOD INDUSTRIES
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`Page 25 of 148
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`GREAT POSITIONS IN GOOD INDUSTRIES
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`24 I
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`Page 26 of 148
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`

`
`BOARD OF DIRECTORS
`
`DAVID M. COTE
`Chairman and
`Chief Executive Officer
`Honeywell International Inc.
`Age: 55; elected in 2002
`
`LORD CLIVE R. HOLLICK3, 4
`Partner
`Kohlberg Kravis Roberts & Co.
`(private equity firm)
`Age: 62; elected in 2003
`
`GORDON M. BETHUNE2, 3
`Chairman of the Board
`Aloha Airgroup, Inc.
`(a privately held
`Honolulu-based airline)
`Age: 66; elected in 1999
`
`JAMES J. HOWARD1, 4
`Chairman Emeritus
`Xcel Energy Inc.
`(energy company)
`Age: 72; elected in 1999
`
`JAIME CHICO PARDO2, 4
`Chairman of the Board
`Telefonos de Mexico S.A. de
`C.V. (TELMEX)
`(telecommunications)
`Age: 58; elected in 1999
`
`IVAN G. SEIDENBERG2, 3
`Chairman and
`Chief Executive Officer
`Verizon Communications Inc.
`(telecommunications and
`information services provider)
`Age: 61; elected in 1995
`
`D. SCOTT DAVIS1, 4
`