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United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
__________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _____
Commission file number 1-8974
Honeywell International Inc.
(Exact name of registrant as specified in its charter)
Delaware22-2640650
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
300 South Tryon Street28202
Charlotte,NC
(Address of principal executive offices)(Zip Code)
(704)627-6200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1 per share*HONThe New York Stock Exchange
1.300% Senior Notes due 2023HON 23AThe New York Stock Exchange
0.000% Senior Notes due 2024HON 24AThe New York Stock Exchange
2.250% Senior Notes due 2028HON 28AThe New York Stock Exchange
0.750% Senior Notes due 2032HON 32The New York Stock Exchange
* The common stock is also listed on the London Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x  No o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerxAccelerated filer
Non-Accelerated filerSmaller reporting company
  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No x
There were 694,555,603 shares of Common Stock outstanding at March 31, 2021.








TABLE OF CONTENTS

Page No.
ITEM 4
 
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
We describe many of the trends and other factors that drive our business and future results in the section titled Management’s Discussion and Analysis of Financial Condition and Results of Operations and in other parts of this report (including Part II, Item 1A Risk Factors). Such discussions contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Forward-looking statements are those that address activities, events or developments that management intends, expects, projects, believes or anticipates will or may occur in the future. They are based on management’s assumptions and assessments in light of past experience and trends, current economic and industry conditions, expected future developments and other relevant factors. They are not guarantees of future performance, and actual results, developments and business decisions may differ significantly from those envisaged by our forward-looking statements. We do not undertake to update or revise any of our forward-looking statements. Our forward-looking statements are also subject to risks and uncertainties, including the impact of the coronavirus pandemic (COVID-19), that can affect our performance in both the near- and long-term. These forward-looking statements should be considered in light of the information included in this report and our other filings with the Securities and Exchange Commission, including, without limitation, the Risk Factors, as well as the description of trends and other factors in Management’s Discussion and Analysis of Financial Condition and Results of Operations, set forth in this report and our 2020 Annual Report on Form 10-K.











PART I. FINANCIAL INFORMATION 
The financial statements and related footnotes as of March 31, 2021 should be read in conjunction with the financial statements for the year ended December 31, 2020 contained in our 2020 Annual Report on Form 10-K. 

ITEM 1. FINANCIAL STATEMENTS
HONEYWELL INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
 Three Months Ended March 31,
 20212020
 (Dollars in millions, except per share amounts)
Product sales$6,409 $6,305 
Service sales2,045 2,158 
Net sales8,454 8,463 
Costs, expenses and other
Cost of products sold4,551 4,374 
Cost of services sold1,158 1,160 
 5,709 5,534 
Selling, general and administrative expenses1,236 1,238 
Other (income) expense(442)(317)
Interest and other financial charges90 73 
 6,593 6,528 
Income before taxes1,861 1,935 
Tax expense (benefit)413 329 
Net income1,448 1,606 
Less: Net income attributable to the noncontrolling interest
21 25 
Net income attributable to Honeywell$1,427 $1,581 
Earnings per share of common stock - basic$2.05 $2.23 
Earnings per share of common stock - assuming dilution$2.03 $2.21 
 
The Notes to Consolidated Financial Statements are an integral part of this statement.
1 Honeywell International Inc.








HONEYWELL INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended March 31,
 20212020
 (Dollars in millions)
Net income$1,448 $1,606 
Other comprehensive income (loss), net of tax
Foreign exchange translation adjustment214 (276)
Prior service (credit) cost recognized(22)(20)
Pension and other postretirement benefit adjustments(22)(20)
Changes in fair value of available for sale investments(3) 
Cash flow hedges recognized in other comprehensive income (loss)8 195 
Less: Reclassification adjustment for gains (losses) included in net income3 55 
Changes in fair value of cash flow hedges5 140 
Other comprehensive income (loss), net of tax194 (156)
Comprehensive income1,642 1,450 
Less: Comprehensive income attributable to the noncontrolling interest22 18 
Comprehensive income attributable to Honeywell$1,620 $1,432 
 
The Notes to Consolidated Financial Statements are an integral part of this statement.
2 Honeywell International Inc.








HONEYWELL INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
 March 31, 2021December 31, 2020
 (Dollars in millions)
ASSETS 
Current assets:  
Cash and cash equivalents$11,718 $14,275 
Short-term investments942 945 
Accounts receivable - net6,675 6,827 
Inventories4,607 4,489 
Other current assets1,645 1,639 
Total current assets25,587 28,175 
Investments and long-term receivables746 685 
Property, plant and equipment - net5,547 5,570 
Goodwill16,981 16,058 
Other intangible assets - net3,799 3,560 
Insurance recoveries for asbestos related liabilities347 366 
Deferred income taxes762 760 
Other assets9,792 9,412 
Total assets$63,561 $64,586 
LIABILITIES
Current liabilities:
Accounts payable$5,792 $5,750 
Commercial paper and other short-term borrowings3,568 3,597 
Current maturities of long-term debt1,635 2,445 
Accrued liabilities6,955 7,405 
Total current liabilities17,950 19,197 
Long-term debt16,124 16,342 
Deferred income taxes2,309 2,113 
Postretirement benefit obligations other than pensions234 242 
Asbestos-related liabilities1,873 1,920 
Other liabilities6,812 6,975 
Redeemable noncontrolling interest7 7 
SHAREOWNERS’ EQUITY
Capital - common stock issued958 958 
 - additional paid-in capital7,505 7,292 
Common stock held in treasury, at cost(27,975)(27,229)
Accumulated other comprehensive loss(3,184)(3,377)
Retained earnings40,682 39,905 
Total Honeywell shareowners’ equity17,986 17,549 
Noncontrolling interest266 241 
Total shareowners’ equity18,252 17,790 
Total liabilities, redeemable noncontrolling interest and shareowners’ equity$63,561 $64,586 
 
The Notes to Consolidated Financial Statements are an integral part of this statement.
3 Honeywell International Inc.








HONEYWELL INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 Three Months Ended March 31,
 20212020
 (Dollars in millions)
Cash flows from operating activities:  
Net income$1,448 $1,606 
Less: Net income attributable to the noncontrolling interest21 25 
Net income attributable to Honeywell1,427 1,581 
Adjustments to reconcile net income attributable to Honeywell to net cash provided by operating activities:
Depreciation171 153 
Amortization170 90 
Gain on sale of non-strategic businesses and assets(90) 
Repositioning and other charges141 62 
Net payments for repositioning and other charges(195)(111)
Pension and other postretirement income(293)(212)
Pension and other postretirement benefit payments(14)(14)
Stock compensation expense77 44 
Deferred income taxes63 (58)
Other(96)(179)
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:
Accounts receivable143 41 
Inventories(158)(163)
Other current assets(66)166 
Accounts payable57 (54)
Accrued liabilities(359)(407)
Net cash provided by (used for) operating activities978 939 
Cash flows from investing activities:
Expenditures for property, plant and equipment(221)(139)
Proceeds from disposals of property, plant and equipment14 7 
Increase in investments(736)(648)
Decrease in investments612 843 
Receipts (payments) from settlements of derivative contracts140 287 
Cash paid for acquisitions, net of cash acquired(1,303) 
Proceeds from sales of businesses, net of fees paid190  
Net cash provided by (used for) investing activities(1,304)350 
Cash flows from financing activities:
Proceeds from issuance of commercial paper and other short-term borrowings1,268 3,455 
Payments of commercial paper and other short-term borrowings(1,266)(3,373)
Proceeds from issuance of common stock67 66 
Proceeds from issuance of long-term debt23 1,127 
Payments of long-term debt(817)(1,125)
Repurchases of common stock(822)(1,923)
Cash dividends paid(640)(635)
Other(30)(38)
Net cash provided by (used for) financing activities(2,217)(2,446)
Effect of foreign exchange rate changes on cash and cash equivalents(14)(189)
Net increase (decrease) in cash and cash equivalents(2,557)(1,346)
Cash and cash equivalents at beginning of period14,275 9,067 
Cash and cash equivalents at end of period$11,718 $7,721 
 
The Notes to Consolidated Financial Statements are an integral part of this statement.
4 Honeywell International Inc.








HONEYWELL INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY
(Unaudited)
 Three Months Ended March 31,
20212020
Shares$Shares$
 (In millions, except per share amounts)
Common stock, par value957.6 958 957.6 958 
Additional paid-in capital
Beginning balance7,292 6,876 
   Issued for employee savings and option plans136 127 
   Stock-based compensation expense 77 44 
Ending balance7,505 7,047 
Treasury stock
Beginning balance(260.8)(27,229)(246.5)(23,836)
   Reacquired stock or repurchases of common stock(4.0)(822)(11.7)(1,923)
   Issued for employee savings and option plans1.8 76 2.4 116 
Ending balance(263.0)(27,975)(255.8)(25,643)
Retained earnings
Beginning balance39,905 37,693 
   Net income attributable to Honeywell1,427 1,581 
   Dividends on common stock(650)(639)
Ending balance40,682 38,635 
Accumulated other comprehensive income (loss)
Beginning balance(3,377)(3,197)
   Foreign exchange translation adjustment213 (276)
   Pension and other postretirement benefit adjustments(22)(20)
   Changes in fair value of available for sale investments(3) 
   Changes in fair value of cash flow hedges5 140 
Ending balance(3,184)(3,353)
Noncontrolling interest
Beginning balance241 212 
   Acquisitions, divestitures, and other  (6)
   Net income attributable to noncontrolling interest21 25 
   Foreign exchange translation adjustment1 (7)
   Dividends paid(1)(3)
   Contributions from noncontrolling interest holders4  
Ending balance266 221 
Total shareowners' equity694.6 18,252 701.8 17,865 
Cash dividends per share of common stock$0.930 $0.900 

The Notes to Consolidated Financial Statements are an integral part of this statement.
5 Honeywell International Inc.


HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in tables in millions, except per share amounts)



NOTE 1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of Honeywell International Inc. and its consolidated subsidiaries (Honeywell or the Company) at March 31, 2021 and December 31, 2020, the cash flows for the three months ended March 31, 2021 and March 31, 2020, the results of operations for the three months ended March 31, 2021 and March 31, 2020 and the shareowners' equity for the three months ended March 31, 2021 and March 31, 2020. The results of operations for the three months ended March 31, 2021 and cash flows for the three months ended March 31, 2021 should not necessarily be taken as indicative of the entire year.
Honeywell reports its quarterly financial information using a calendar convention; the first, second and third quarters are consistently reported as ending on March 31, June 30 and September 30. It has been Honeywell's practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires Honeywell's businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on our business processes. The effects of this practice are generally not significant to reported results for any quarter and only exist within a reporting year. In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, Honeywell will provide appropriate disclosures. Honeywell's actual closing dates for the three months ended March 31, 2021 and March 31, 2020 were April 3, 2021 and March 28, 2020. We estimate that our sales in the first quarter of 2021 compared to the first quarter of 2020 include an approximate 3 percent benefit from additional reporting days in the current year period resulting from our normal quarterly closing procedures.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Company are set forth in Note 1 to the Company's Consolidated Financial Statements contained in the Company’s 2020 Annual Report on Form 10-K. The Company includes herein certain updates to those policies.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current year presentation.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company considers the applicability and impact of all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our Consolidated Financial Statements.
In December 2019, the FASB issued an ASU to simplify the accounting for income taxes. The standard’s amendments include changes in various subtopics of accounting for income taxes including, but not limited to, accounting for “hybrid” tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, intraperiod tax allocation exception to incremental approach, ownership changes in investments, interim-period accounting for enacted changes in tax law, and year-to-date loss limitation in interim-period tax accounting. Effective January 1, 2021, the Company adopted this standard. The adoption of this standard did not have a material impact on the Company's Consolidated Financial Statements.
In March 2020, the FASB issued guidance that provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by the transition away from reference rates expected to be discontinued to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements. The Company does not expect the adoption of this standard to have a material impact on the Company’s Consolidated Financial Statements.
6 Honeywell International Inc.


HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)
(Dollars in tables in millions, except per share amounts)
NOTE 3. ACQUISITIONS AND DIVESTITURES
On February 12, 2021, the Company acquired 100% of the shares outstanding of Sparta Systems, a leading provider of enterprise quality management software for the life sciences industry, for $1,303 million. Sparta Systems is expected to further strengthen the Company's leadership in industrial automation, digital transformation solutions, and enterprise performance management software. The business is included within the Performance Materials and Technologies segment. The assets and liabilities acquired with Sparta Systems are included in the Consolidated Balance Sheet as of March 31, 2021, including $371 million of intangible assets and $1,036 million allocated to goodwill, which is non-deductible for tax purposes. The purchase accounting is subject to final adjustment, primarily for the valuation of intangible assets, amounts allocated to goodwill, tax balances, and certain pre-acquisition contingencies.
On March 15, 2021, the Company completed the sale of its retail footwear business in exchange for gross cash consideration of $230 million. The Company recognized a pre-tax gain of $90 million, which was recorded in Other (income) expense. The retail footwear business was previously included in the Safety and Productivity Solutions segment.
Please refer to Note 2 Acquisitions and Divestitures of Notes to Consolidated Financial Statements in our 2020 Annual Report on Form 10-K for additional information regarding prior year.
NOTE 4. REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS
Honeywell generates revenue from a comprehensive offering of products and services, including software and technologies, that are sold to a variety of customers in multiple end markets. See the following table and related discussions by operating segment for details.
 Three Months Ended March 31,
20212020
Aerospace
Commercial Aviation Original Equipment$431 $675 
Commercial Aviation Aftermarket910 1,385 
Defense and Space1,291 1,301 
2,632 3,361 
Honeywell Building Technologies
Products798 741 
Building Solutions560 540 
1,358 1,281 
Performance Materials and Technologies
UOP527 594 
Process Solutions1,096 1,151 
Advanced Materials723 652 
2,346 2,397 
Safety and Productivity Solutions
Safety and Retail743 502 
Productivity Solutions and Services343 287 
Warehouse and Workflow Solutions844 458 
Advanced Sensing Technologies (formerly Sensing & Internet-of-Things)188 177 
2,118 1,424 
Net sales$8,454 $8,463 
 
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HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)
(Dollars in tables in millions, except per share amounts)
Aerospace – A global supplier of products, software and services for aircrafts that it sells to original equipment manufacturers (OEM) and other customers in a variety of end markets including: air transport, regional, business and general aviation aircraft, airlines, aircraft operators and defense and space contractors. Aerospace products and services include auxiliary power units, propulsion engines, environmental control systems, integrated avionics, wireless connectivity services, electric power systems, engine controls, flight safety, communications, navigation hardware, data and software applications, radar and surveillance systems, aircraft lighting, management and technical services, advanced systems and instruments, satellite and space components, aircraft wheels and brakes, repair and overhaul services and thermal systems. Aerospace also provides spare parts, repair, overhaul and maintenance services (principally to aircraft operators) for the aftermarket. Honeywell Forge solutions are leveraged by our customers as tools to turn data into predictive maintenance and predictive analytics to enable better fleet management and make flight operations more efficient.
Honeywell Building Technologies – A global provider of products, software, solutions and technologies that enable building owners and occupants to ensure their facilities are safe, energy efficient, sustainable and productive. Honeywell Building Technologies products and services include advanced software applications for building control and optimization; sensors, switches, control systems and instruments for energy management; access control; video surveillance; fire products; remote patient monitoring systems; and installation, maintenance and upgrades of systems. Honeywell Forge solutions enable our customers to digitally manage buildings, connecting data from different assets to enable smart maintenance, improve building performance and protect from incoming security threats.
Performance Materials and Technologies – A global provider in developing and manufacturing high-quality performance chemicals and materials, process technologies and automation solutions. The segment is comprised of Process Solutions, UOP and Advanced Materials. Process Solutions provides automation control, instrumentation, advanced software and related services for the oil and gas, refining, pulp and paper, industrial power generation, chemicals and petrochemicals, biofuels, life sciences, and metals, minerals and mining industries. Through its smart energy products, Process Solutions enables utilities and distribution companies to deploy advanced capabilities to improve operations, reliability and environmental sustainability. UOP provides process technology, products, including catalysts and adsorbents, equipment, and consulting services that enable customers to efficiently produce gasoline, diesel, jet fuel, petrochemicals and renewable fuels for the petroleum refining, gas processing, petrochemical, and other industries. Advanced Materials manufactures a wide variety of high-performance products, including materials used to manufacture end products such as bullet-resistant armor, nylon, computer chips and pharmaceutical packaging, and provides reduced and low global-warming-potential materials based on hydrofluoro-olefin technology. In the industrial environment, Honeywell Forge solutions enable integration and connectivity to provide a holistic view of operations and turn data into clear actions to maximize productivity and efficiency. Honeywell Forge's cybersecurity capabilities help identify risks and act on cyber-related incidents, together enabling improved operations and protecting processes, people and assets.
Safety and Productivity Solutions – A global provider of products and software that improve productivity, workplace safety and asset performance to customers around the globe. Safety products include personal protective equipment (PPE), apparel, gear, and footwear designed for work, play and outdoor activities; gas detection technology; and cloud-based notification and emergency messaging. Productivity Solutions products and services include mobile devices and software for computing, data collection and thermal printing; supply chain and warehouse automation equipment, software and solutions; custom-engineered sensors, switches and controls for sensing and productivity solutions; and software-based data and asset management productivity solutions. Honeywell Forge solutions digitally automate processes to improve efficiency while reducing downtime and safety costs.
For a summary by disaggregated product and services sales for each segment, refer to Note 18 Segment Financial Data. 
8 Honeywell International Inc.


HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)
(Dollars in tables in millions, except per share amounts)
The Company recognizes revenue from performance obligations to customers that are satisfied at a point in time and over time. The disaggregation of the Company's revenue based off timing of recognition is as follows:
Three Months Ended March 31,
20212020
Products, transferred point in time58 %61 %
Products, transferred over time18 14 
Net product sales76 75 
Services, transferred point in time7 9 
Services, transferred over time17 16 
Net service sales24 25 
Net sales100 %100 %
CONTRACT BALANCES
The Company records progress on satisfying performance obligations to customers, and the related billings and cash collections, on the Consolidated Balance Sheet in Accounts receivable - net and Other assets (unbilled receivables (contract assets) and billed receivables) and Accrued liabilities and Other liabilities (customer advances and deposits (contract liabilities)). Unbilled receivables (contract assets) arise when the timing of cash collected from customers differs from the timing of revenue recognition, such as when contract provisions require specific milestones to be met before a customer can be billed. Unbilled receivable balance increases when the revenue associated with the contract is recognized prior to billing and decreases when billed in accordance with the terms of the contract. Contract liabilities increase when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time. Contract liabilities decrease when revenue is recorded, either when a milestone is met triggering the contractual right to bill or when the performance obligation is satisfied. 
Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period.
The following table summarizes the Company's contract assets and liabilities balances: 
 20212020
Contract assets - January 1$1,618 $1,602 
Contract assets - March 311,789 1,699 
Change in contract assets - increase (decrease)$171 $97 
 
Contract liabilities - January 1$(4,033)$(3,501)
Contract liabilities - March 31(3,994)(3,506)
Change in contract liabilities - decrease (increase)$39 $(5)
 
Net change$210 $92 
The net change for the three months ended March 31, 2021 and 2020 was primarily driven by the recognition of revenue as performance obligations were satisfied prior to billing exceeding receipt of advance payments from customers.
For the three months ended March 31, 2021 and 2020, the Company recognized revenue of $1,120 million and $888 million that was previously included in the beginning balance of contract liabilities.
When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original good or service provided, are accounted for as if they were part of that
9 Honeywell International Inc.


HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)
(Dollars in tables in millions, except per share amounts)
existing contract. The effect of a contract modification on the transaction price, and the Company's measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at relative stand-alone selling price, they are accounted for as a new contract and performance obligation, which are recognized prospectively. 
PERFORMANCE OBLIGATIONS
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is defined as the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When the Company's contracts with customers require highly complex integration or manufacturing services that are not separately identifiable from other promises in the contracts and, therefore, not distinct, then the entire contract is accounted for as a single performance obligation. In situations when the Company's contract includes distinct goods or services that are substantially the same and have the same pattern of transfer to the customer over time, they are recognized as a series of distinct goods or services. For any contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the estimated relative standalone selling price of each distinct good or service in the contract. For product sales, each product sold to a customer typically represents a distinct performance obligation. In such cases, the observable standalone sales are used to determine the standalone selling price.
Performance obligations are satisfied as of a point in time or over time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract.
The following table outlines the Company's remaining performance obligations disaggregated by segment: 
 March 31, 2021
Aerospace$9,055 
Honeywell Building Technologies6,564 
Performance Materials and Technologies7,076 
Safety and Productivity Solutions4,044 
 $26,739 
 
Performance obligations recognized as of March 31, 2021 will be satisfied over the course of future periods. The Company's disclosure of the timing for satisfying the performance obligation is based on the requirements of contracts with customers. However, from time to time, these contracts may be subject to modifications, impacting the timing of satisfying the performance obligations. Performance obligations expected to be satisfied within one year and greater than one year are 55% and 45%, respectively. 
The timing of satisfaction of the Company's performance obligations does not significantly vary from the typical timing of payment. Typical payment terms of the Company's fixed-price over time contracts include progress payments based on specified events or milestones, or based on project progress. For some contracts we may be entitled to receive an advance payment. 
The Company applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which we recognize revenue in proportion to the amount we have the right to invoice for services performed.

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HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)
(Dollars in tables in millions, except per share amounts)
NOTE 5. REPOSITIONING AND OTHER CHARGES  
A summary of repositioning and other charges follows:
Three Months Ended March 31,
 20212020
Severance$28 $66 
Asset impairments42 2 
Exit costs49 15 
Reserve adjustments1 (13)
Total net repositioning charge120 70 
Asbestos related litigation charges, net of insurance and reimbursements21 11 
Probable and reasonably estimable environmental liabilities, net of reimbursements5 8 
Other(5)(27)
Total net repositioning and other charges$141 $62 

The following table summarizes the pretax distribution of total net repositioning and other charges by classification:
 Three Months Ended March 31,
 20212020
Cost of products and services sold$98 $20 
Selling, general and administrative expenses43 42 
 $141 $62 

The following table summarizes the pretax impact of total net repositioning and other charges by segment:
Three Months Ended March 31,
 20212020
Aerospace$48 $11 
Honeywell Building Technologies5 25 
Performance Materials and Technologies5 21 
Safety and Productivity Solutions37 6 
Corporate46 (1)
 $141 $62 

In the three months ended March 31, 2021, we recognized gross repositioning charges totaling $119 million including severance costs of $28 million related to workforce reductions of 1,021 manufacturing and administrative positions mainly in our Aerospace and Safety and Productivity Solutions segments. The workforce reductions were primarily related to site transitions, mainly in Aerospace, to more cost-effective locations and to our productivity and ongoing functional transformation initiatives. The repositioning charge included asset impairments of $42 million primarily related to the write-down of certain manufacturing and other equipment due to their planned disposition. The repositioning charge included exit costs of $49 million primarily for closure obligations associated with site transitions, lease exit obligations for certain equipment in Corporate and current period exit costs incurred for previously approved repositioning projects.
In the three months ended March 31, 2020, we recognized gross repositioning charges totaling $83 million including severance costs of $66 million related to workforce reductions of 2,124 manufacturing and administrative positions across our segments. The workforce reductions were primarily related to our productivity and ongoing functional transformation initiatives.
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HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)
(Dollars in tables in millions, except per share amounts)
The following table summarizes the status of the Company's total repositioning reserves:
Severance
Costs
Asset
Impairments
Exit
Costs
Total
Balance at December 31, 2020
$527 $ $74 $601 
Charges28 42 49 119 
Usage - cash(84) (21)(105)
Usage - noncash (42) (42)
Foreign currency translation(3) (2)(5)
Adjustments1   1 
Balance at March 31, 2021
$469 $ $100 $569 
Certain repositioning projects will recognize exit costs in future periods when the actual liability is incurred. Such exit costs incurred in the three months ended March 31, 2021 and 2020 were $10 million and $11 million, respectively.
NOTE 6. INCOME TAXES
The effective tax rate increased for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily from tax benefits realized in the prior year as a result of tax law changes in India and the resolution of certain U.S. tax matters. Other changes to the tax rate include tax benefits for employee share-based compensation and the resolution of certain foreign tax matters in the current year.
The effective tax rate for the three months ended March 31, 2021 was higher than the U.S. federal statutory rate of 21% primarily due to incremental tax reserves and states taxes, partially offset by tax benefits for employee share based compensation and the resolution of certain foreign tax matters.
NOTE 7. ACCOUNTS RECEIVABLE - NET
 
March 31, 2021December 31, 2020
Trade$6,874 $7,029 
Less - Allowance for doubtful accounts(199)(202)
 $6,675 $6,827 
Trade receivables include $1,750 million and $1,589 million of unbilled balances under long-term contracts as of March 31, 2021 and December 31, 2020. These amounts are billed in accordance with the terms of the customer contracts to which they relate. 
NOTE 8. INVENTORIES
 March 31, 2021December 31, 2020
Raw materials$1,152 $1,079 
Work in process811 798 
Finished products2,644 2,612 
 $4,607 $4,489 

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HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)
(Dollars in tables in millions, except per share amounts)
NOTE 9. LONG-TERM DEBT AND CREDIT AGREEMENTS
 March 31, 2021December 31, 2020
4.25% notes due 2021
$ $800 
1.85% notes due 2021
1,500 1,500 
0.483% notes due 2022
2,500 2,500 
2.15% notes due 2022
600 600 
Floating rate notes due 2022
1,100 1,100 
1.30% Euro notes due 2023
1,471 1,534 
3.35% notes due 2023
300 300 
0.00% Euro notes due 2024
589 614 
2.30% notes due 2024
750 750 
1.35% notes due 2025
1,250 1,250 
2.50% notes due 2026
1,500 1,500 
2.25% Euro notes due 2028
883 920 
2.70% notes due 2029
750 750 
1.95% notes due 2030
1,000 1,000 
0.75% Euro notes due 2032
589 614 
5.70% notes due 2036
441 441 
5.70% notes due 2037
462 462 
5.375% notes due 2041
417 417 
3.812% notes due 2047
445 445 
2.80% notes due 2050
750 750 
Industrial development bond obligations, floating rate maturing at various dates through 2037
22 22 
6.625% debentures due 2028
201 201 
9.065% debentures due 2033
51 51 
Other (including capitalized leases and debt issuance costs), 8.2% weighted average interest rate maturing at various dates through 2025
188 266 
 17,759 18,787 
Less-current portion
(1,635)(2,445)
 $16,124 $16,342 
On August 19, 2020, the Company issued $2.5 billion 0.483% Senior Notes due 2022 and $500 million Floating Rate Senior Notes due 2022 (collectively, the 2022 Callable Notes). The $500 million Floating Rate Senior Notes due 2022 were issued at a variable interest rate equal to the three-month LIBOR plus the applicable margin of 0.23%. The Company may redeem the 2022 fixed rate notes at any time, in whole or in part, at the Company's option. The Company may redeem the 2022 floating rate notes at any time, in whole or in part, on or after August 19, 2021. The offering provided gross proceeds of $3.0 billion, offset by $10 million in discount and closing costs related to the offering. The Company used the proceeds of the offering to repay $3.0 billion of borrowings under the Term Loan Agreement (defined below). 
On May 18, 2020, the Company issued $1.25 billion 1.35% Senior Notes due 2025, $1.0 billion 1.95% Senior Notes due 2030, and $750 million 2.80% Senior Notes due 2050 (collectively, the 2020 Notes) to replace and, accordingly, permanently reduce $3.0 billion of undrawn commitments under the Term Loan Agreement, referenced below. The Company may redeem the 2020 Notes at any time, in whole or in part, at the Company's option. The offering provided gross proceeds of $3.0 billion, offset by $27 million in discount and closing costs related to the offering.
13 Honeywell International Inc.


HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)
(Dollars in tables in millions, except per share amounts)
On March 10, 2020, the Company issued €500 million 0.00% Senior Notes due 2024 and €500 million 0.75% Senior Notes due 2032 (collectively, the 2020 Euro Notes). The offering provided gross proceeds of $1.1 billion, offset by $9 million in discount and closing costs related to the offering.
The 2022 Callable Notes, 2020 Notes, and 2020 Euro Notes are senior unsecured and unsubordinated obligations of the Company and rank equally with each other and with all of the Company's existing and future senior unsecured debt and senior to all of the Company's subordinated debt.
On March 1, 2021, the Company paid its 4.25% notes due 2021.
On February 21, 2020, the Company paid its 0.65% Euro notes due 2020.
On March 31, 2021, the Company entered into a $4.0 billion Amended and Restated Five Year Credit Agreement (the 5-Year Credit Agreement) with a syndicate of banks. The 5-Year Credit Agreement is maintained for general corporate purposes. Commitments under the 5-Year Credit Agreement can be increased pursuant to the terms of the 5-Year Credit Agreement to an aggregate amount not to exceed $4.5 billion. The 5-Year Credit Agreement amended and restated the previously reported $4.0 billion amended and restated five year credit agreement dated as of April 26, 2019 (the Prior 5-Year Agreement).
On March 31, 2021, the Company entered into a $1.5 billion 364-Day Credit Agreement (the 364-Day Credit Agreement) with a syndicate of banks. Amounts borrowed under the 364-Day Credit Agreement are required to be repaid no later than March 30, 2022, unless (i) Honeywell elects to convert all then outstanding amounts into a term loan, upon which such amounts shall be repaid in full on March 30, 2023, or (ii) the 364-Day Credit Agreement is terminated earlier pursuant to its terms. The 364-Day Credit Agreement is maintained for general corporate purposes and replaces the previously reported $1.5 billion 364-day credit agreement dated as of April 10, 2020 (the Prior 364-Day Agreement), which was terminated in accordance with its terms effective March 31, 2021.
On March 26, 2020, the Company entered into a Delayed Draw Term Loan Agreement (the Term Loan Agreement) with a syndicate of banks. The Term Loan Agreement provided for a two-year, delayed draw term loan facility in the aggregate principal amount of $6.0 billion. Effective May 22, 2020, the Company permanently reduced the undrawn commitments under the Term Loan Agreement by an aggregate amount of $3.0 billion. On June 24, 2020, the Company drew on the remaining $3.0 billion of commitments under the Term Loan Agreement at a variable interest rate equal to the one-month LIBOR plus the applicable margin of 1.25%. The draw provided gross proceeds of $3.0 billion, offset by $7 million in closing costs related to the borrowing. On August 20, 2020 the Company prepaid the outstanding principal amount of $3.0 billion, using the proceeds from the offering of the 2022 Callable Notes. As of August 21, 2020, there were no borrowings outstanding or commitments remaining under the Term Loan Agreement.
As of March 31, 2021, there were no outstanding borrowings under the 5-Year Credit Agreement or the 364-Day Credit Agreement.

14 Honeywell International Inc.


HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)
(Dollars in tables in millions, except per share amounts)
NOTE 10. LEASES
The Company's operating and finance lease portfolio is described in Note 11 Leases of Notes to Consolidated Financial Statements in our 2020 Annual Report on Form 10-K.
Supplemental cash flow information related to leases was as follows:
Three Months Ended March 31,
20212020
Net right-of-use assets obtained in exchange for lease obligations:
Operating leases
$33 $68 
Finance leases
3 3 

Supplemental balance sheet information related to leases was as follows:
March 31, 2021December 31, 2020
Operating leases
Other assets$774 $773 
Accrued liabilities187 187 
Other liabilities640 641 
Total operating lease liabilities$827 $828 
Finance leases
Property, plant and equipment$351 $357 
Accumulated depreciation(185)(180)
Property, plant and equipment - net$166 $177 
Current maturities of long-term debt59 60 
Long-term debt114 124 
Total finance lease liabilities$173 $184 








15 Honeywell International Inc.


HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)
(Dollars in tables in millions, except per share amounts)
NOTE 11. DERIVATIVE INSTRUMENTS AND HEDGING TRANSACTIONS
Our credit, market, foreign currency and interest rate risk management policies are described in Note 12 Derivative Instruments and Hedging Transactions of Notes to Consolidated Financial Statements in our 2020 Annual Report on Form 10-K. All derivative assets are presented in Other current assets or Other assets. All derivative liabilities are presented in Accrued liabilities or Other liabilities.
The following table summarizes the notional amounts and fair values of the Company’s outstanding derivatives by risk category and instrument type within the Consolidated Balance Sheet as of March 31, 2021 and December 31, 2020:
NotionalFair Value AssetFair Value (Liability)
March 31, 2021December 31, 2020March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Derivatives in Fair Value Hedging Relationships:   
Interest rate swap agreements$3,150 $3,950 $100 $194 $ $ 
Derivatives in Cash Flow Hedging Relationships:
Foreign currency exchange contracts422 488 15 65  (58)
Derivatives in Net Investment Hedging Relationships:
Foreign currency exchange contracts792 806 49 45 (3)(1)
Cross currency swap agreements1,200 1,200   (5)(50)
Total Derivatives Designated as Hedging Instruments5,564 6,444 164 304 (8)(109)
Derivatives Not Designated as Hedging Instruments: