SecProbe.io

CORRESP
1
filename1.htm

   c54528_corresp.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

August 8, 2008

Linda Cvrkel

Branch Chief

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

	RE:

Honeywell International Inc.

Form 10-K for the year ended December 31, 2007

Filed February 15, 2008

File No. 001-08974

Dear Ms. Cvrkel,

This letter provides Honeywell International Inc.’s (Honeywell) response to your letter to David J. Anderson dated July 29, 2008, setting forth the Staff’s comments on the above referenced 10-K,
our Definitive Proxy Statement on Schedule 14A and Form 10-Q for the Quarter ended June 30, 2008. The numbered paragraphs below correspond to the numbered paragraphs in your letter.

Form 10-K for the year ended December 31, 2007

Part I, page 1

Item 1A. Risk Factors, page 10

1.

Staff’s Comment: In future filings, please remove the references in your first paragraph that you discuss some, but not all of the significant
risk factors or revise to clarify that you have discussed all known material risks.

Our Response: We will address the Staff’s Comment in future filings by revising the first paragraph to read: “Our business, operating
results, cash flows and financial condition are subject to the risks and uncertainties set forth below, any of which could cause actual results to vary materially from recent results or from our anticipated future results.”

1

Definitive Proxy Statement on Schedule 14A

Annual Incentive Bonus, page 25

2.

Staff’s Comment: We note your disclosure on page 26 that the EPS component of the annual incentive bonus pool is subject to adjustment based on the company's relative EPS growth
performance versus a 33-company peer group. In future filings please identify the companies in this peer group and disclose the degree to which the Management Development and Compensation Committee considered such companies comparable to you. Refer
to Item 402(b)(2)(xiv) of Regulation S-K.

Our Response: For the sake of brevity, we did not include the individual companies which make up the subgroups of the S&P 500 Index listed in our proxy statement as their
identities are publicly available. We will list these companies in future filings.

The subgroups of the S&P 500 Index ( a common reference
point for large companies) referenced in our proxy statement reflect a broader
representation of the industries in which our segments participate than the smaller
 Peer Group (as defined in our proxy statement) used to assess market conditions
for general executive compensation purposes. Accordingly, the Management and
Development and Compensation Committee believes that these subgroups are a more
relevant  comparator group for purposes of the “peer EPS growth adjustment” discussed
in our proxy statement as they provide a more accurate indicator of the relative
performance of the Company vs. peers in each of the key industries relevant to
the  Company and peer multi-industry conglomerates, and thus reflects the Company’s
competitive position, as well as the impact of general economic and specific
industry conditions relevant to the Company’s segments. The Committee does
not consider metrics regarding the individual companies in this expanded peer
group other than relative EPS growth. We will expand our discussion of the use
of the expanded peer group for purposes of the peer EPS growth adjustment in
future filings.

Stock Options, page 31

3.

Staff’s Comment: We note that your Chief Executive Officer, Mr. David Cote, is eligible for annual equity awards based on a target value of 230% of the sum of his current base
salary and annual incentive bonus target. In future filings, please disclose all performance targets that must be achieved in order for Mr. Cote to earn annual option grants. Please include qualitative and quantitative disclosure regarding the
determination of targets and targets actually reached. Please note that qualitative goals generally need to be presented to conform to the requirements of Item 402(b)(2)(v) of Regulation S-K. To the extent you believe that disclosure of the targets
is not required because it would result in competitive

2

  harm such that the targets could
        be excluded under Instruction 4 to Item 402(b) of Regulation S-K, please
        provide us with a detailed explanation for such conclusion. Please also
        note that to the extent that you have an appropriate basis for omitting
        the specific targets, you must discuss how difficult it would be for
        the named executive officers or how likely it will be for you to achieve
        the undisclosed target levels or other factors. General statements regarding
        the level of difficulty, or ease, associated with achieving performance
        goals either corporately or individually are not sufficient.

     Our Response: There
        are no specific performance targets that must be achieved in order for
        Mr. Cote to earn annual option grants. As stated in our proxy statement, “in
        February 2007, the [Management Development and Compensation] Committee
        granted Mr. Cote options to acquire 700,000 shares in recognition of
        his leadership in driving consistent, sustained improvement in financial
        and operational performance.” Details regarding the improvement
        in the Company’s performance during the 2003-2007 period were contained
        in the charts on page 21 of our proxy statement, while details regarding
        Mr. Cote’s 2007 performance were set forth on page 28 of our proxy
        statement. In future filings, we will state that the Committee does not
        set specific targets or identify particular weightings in making its
    determination of how many options to grant to Mr. Cote.

  Statement of Shareowners’ Equity,
    page 50

4.

Staff’s Comment: We note the presentation of a reclassification to equity of obligations settled in stock as an increase to APIC on the statement of shareowners' equity. Please
explain to us the nature of the obligations that were settled in stock and tell us how you valued the stock issued for these obligations.

Our Response: This reclassification consisted of restricted stock units (RSUs) issued to employees and employer matching contributions due to employees under a supplemental savings
plan (SSP), previously classified as liabilities. These obligations will be settled through the issuance of stock. In determining the appropriateness of equity classification of our RSUs we have considered the guidance in SFAS 123R, specifically
paragraphs 28-35. We also considered the guidance of SFAS 150 and EITF 00-19 in determining the classification of both the RSUs and SSP matching contributions. These awards are valued at their grant date fair value.

We considered the quantitative and qualitative impact of this change in classification. The following table summarizes the quantitative impacts of the reclassification:

3

                         (in
          millions)

    Liability

    Equity

    Reclassify RSU liability

    85

    (85
    )

    Reclassify SSP- employer
        match

    27

    (27
    )

                                       Total
          Reclassification

    112

    (112
    )

    Consolidated - 12/31/2006

       Other long
        term liabilities

    3,473

    3.2
    %

       Total liabilities

    21,221

    0.5
    %

       Additional
        paid in capital

    3,845

    2.9
    %

       Total equity

    9,720

    1.2
    %

    Percentages shown represent
    the reclassification as a percent of the noted balance sheet caption.

  Additionally, we considered qualitative
        factors such as i) the change in classification has no impact on our
        results of operations, ii) we do not have any financial debt covenants
        (e.g. a leverage ratio that would be impacted) and iii) there was no
        impact to any other regulatory requirements.

     Based on this analysis, we determined
        this reclassification to be wholly immaterial to our financial statements.
        We reviewed this with the Audit Committee of the Board of Directors and
        our independent registered accountants, who are in agreement with our
    conclusions.

  Notes to the Financial Statements- General

5.

Staff’s Comment: We note from your disclosure in Note 8 that you have recorded an allowance for doubtful accounts. In light of the significance of your accounts receivable
balance to total assets as of December 31, 2007 and 2006, please revise the notes to the financial statements in future filings to include a description of the accounting policies and methodology used to estimate the allowance for doubtful accounts,
the policy for charging off uncollectible loans and trade receivables, and the policy for determining past due or delinquency status (i.e., whether past due status is based on how recently payments have been received or contractual terms). See
paragraphs 13a-c of SOP 01-6.

  Our Response: We
      will revise our disclosure in future filings, beginning with our Form 10-K
    for the year ending December 31, 2008, to include the following:

  Allowance for Doubtful Accounts -
      We maintain allowances for doubtful accounts for estimated losses as a
      result of the inability of customers to make required payments. We estimate
      anticipated losses from doubtful accounts based on days past due, as measured
      from the contractual due date; collection history; and changes in circumstances
      or economic conditions. Receivables are written-off against the allowance
      for doubtful accounts when they are determined uncollectible. Such determination
      includes analysis and consideration of the particular conditions of the
    account, including time intervals since last collection,

4

  success of outside collection agencies activity,
    solvency of customer and any bankruptcy proceedings.

  Note 1. Summary of Significant Accounting
    Policies- Aerospace Sales Incentives, page 53

6.

Staff’s Comment: We note your disclosure that you provide sales incentives to commercial aircraft manufacturers and airlines including free or deeply discounted products, credits
for future purchases of product and up front cash payments and you expense these costs as provided. Please tell us in further detail how your accounting treatment of these costs complies with EITF 01-09. As part of your response, please tell us the
amount of upfront cash incentives expensed for the year ended December 31, 2007 and 2006 and tell us the total amount of sales incentives expensed for the year ended December 31, 2007 and 2006. As part of your response you should explain why your
reflection of upfront cash incentives as an "expense" in your financial statements,
rather than as a reduction of revenue is appropriate and in accordance with the guidance in
EITF 01-09.

Our Response: Beginning in the first quarter of 2006, we changed our accounting policy for sales incentives to commercial aircraft manufacturers. As of the date of this policy change,
we recognize these incentives as they are incurred. We reference prior correspondence with the Staff on this change in accounting policy, including a letter dated November 18, 2005 from Corporate Finance addressing our Form 10-K for the year ended
December 31, 2004 and our Form 10-Q for the quarterly period ended September 30, 2005, and our related response on December 15, 2005, as well as subsequent comments regarding our aerospace customer incentives in a letter dated December 27, 2005 and
our responses on January 27, 2006 and February 14, 2006. The Company confirms that its accounting for sales incentives continues to be fully compliant and consistent with the conclusions reached with the Division of Corporate Finance and the Office
of the Chief Accountant during the first quarter of 2006.

  In accordance with the guidance in EITF 01-09,
      incentives in the form of cash consideration are considered a reduction
      of our selling prices and thus are classified as a reduction to revenue.
      The cost associated with incentives that are in the form of free or deeply
      discounted product are recorded as cost of sales with revenue recognized
      for the discounted price, if any, charged to the customer. Our disclosure
      on page 53, summarizes both types of incentives as being “expensed
      as provided” but does not provided further detail on their income
      statement classification. We will revise our disclosure in future filings
    as follows (marked to show changes from the above referenced disclosure):

  Aerospace Sales Incentives—The
        Company provides sales incentives to commercial aircraft manufacturers
        and airlines in connection with their selection of our aircraft equipment,
        predominately wheel and braking system hardware and auxiliary power units,
        for installation on commercial aircraft. These incentives principally
        consist of free or deeply discounted products but also include credits
        for future purchases of product and upfront
    cash payments. These costs are

5

         expensed as provided
            recognized in the period incurred as cost of products sold
            or as a reduction to sales, as appropriate.
            For aircraft manufacturers, incentives are recorded when the products
            are delivered; for airlines, incentives are recorded when the associated
    aircraft are delivered by the aircraft manufacturer to the airline.

  For the years ended December 31,
      2007 and 2006, we recognized approximately $18 million and $21 million,
      respectively, of sales incentives as a reduction to revenue and approximately
    $81 million and $60 million, respectively, as cost of goods sold.

  Note 3. Repositioning and Other
    Charges, page 60

7.

Staff’s Comment: We note from your disclosure that in 2007 you recognized repositioning charges totaling $209 million for severance, asset impairments and exit costs. Please
revise future filings to include disclosure of the total amount expected to be incurred in connection with the activity, the amount incurred in the period, and the cumulative amount incurred to date for each major type of cost associated with the
repositioning activities. Also, for each reportable segment, your disclosure should include the total amount of costs expected to be incurred in connection with the activity, the amount incurred in the period, and the cumulative amount incurred to
date, net of any adjustments to the liability with an explanation of the reason(s) therefore. See paragraph 20 of SFAS No. 146.

Our Response: There were only immaterial costs associated with exit or disposal activities where the costs were required to be recognized in future periods in which the liability was
incurred.

  Beginning with our Form 10-K for
      the year ending December 31, 2008, we will provide additional disclosure
      for costs associated with exit or disposal activities which we are not
      able to recognize until the period in which the liability is incurred.
      This additional disclosure will include a description of the repositioning
      projects which include exit or disposal costs to be incurred in future
      periods and a description of the nature of these exit or disposal costs
      (e.g. relocation, product certification and requalification , employee
      training and travel). These costs will be summarized in the following tabular
    format:

  The following table summarizes by segment, expected,
      incurred and remaining exit and disposal costs related to 2008 repositioning
      actions which we were not able to recognize at the time the actions were
    initiated:

    Automation

    and Control

    Specialty

    Transportation

    Aerospace

    Solutions

    Materials