business & general aviation -...

Business & General Aviation

Investor MeetingNovember 9, 2005

2 Business & General Aviation Investor Meeting – November 9, 2005

These materials contain certain statements that may be deemed “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. The forward-looking statements included in these materials are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors affecting our operations, markets, products, services and prices. Such forward-looking statements are not guarantees of future performance, andactual results, developments and business decisions may differ from those envisaged by such forward-looking statements.

Forward Looking Statements


Agenda

• Introduction• Who We Are and What We Do:

- Products- Organization

• Business Aviation Market Outlook• Market and Product Strategy • Advanced Technology• Summary• NBAA Booth Tour• Dinner


• 117,000 employees in nearly 100 countries

• A Fortune 75 company – $27.6 billion in sales in 2005

• One of 30 select companies in the DJIA

Honeywell Today

34%16%

16%12%15%

7%

Automation & Control

Specialty Materials Transportation

Defense & Space

Air Transport & Regional


Products and Organization


Aerospace


$1.8BIn

2005ESales

$4.2BIn

2005ESales

Air Transport & Regional Defense & Space

$4.5BIn

2005ESales

OE 45%AM 55%

2003 2004 2005E

Global MixGlobal Mix

Sales GrowthSales Growth

-9%22%

27%

Business & General Aviation Sales CAGR 25%

1%11%

88%AmericasEurope/

Middle EastOther


Honeywell Products In Business Aviation

Integrated AvionicsFlight Management Systems

Cockpit DisplaysSafety and Terrain Systems

Lighting Systems

Cabin Management/Entertainment Systems


Mechanical Systems

Diversified Product Offering

Platforms • Bombardier Challenger 300, Learjet 40, Learjet 45• Dassault Falcon 900EX, 50EX • Raytheon Hawker 800XP

G0123-3

Mechanical ~ 55% of Sales

• Gulfstream G150, G350, G450, G550• Cessna Citation X, Citation VII • Bell 407

Turbofan Engines (jet) • HTF 7000• TFE 731• CFE 738

APUs • 336-100/150• RE-220• RE-200• RE-100

Turboshaft Engines (Helo) • HTS 900• HTS 800

Turboprop Engines • TPE 331

Environmental Control Systems • Cabin Pressure• Heat Exchange • Air Compression

Engine and Mechanical Components• Fuel systems • Valves • Hydromechanical


Avionics and Electronic Systems

Diversified Product Offering

Platforms • Bombardier Global Express, Global 5000, Challenger 604• Dassault Falcon 900EX, 2000 EX • Raytheon Hawker Horizon, Hawker 800XP

Avionics and Electronics ~ 45% of Sales

• Gulfstream G350, G450, G550• Cessna Sovereign, Citation X, Citation XLS • Pilatus

Integrated Avionics Systems• Primus Epic • Primus 2000 • Primus 1000

Safety And Surv. Products • EGPWS (Terrain

Awareness)• TCAS (Traffic) • RAAS (Runway

Awareness) • Weather Radar

Communications • Navigation Radios • Communications Radios• Flight Recorders

Flight Management Systems

Display Systems

Flight Controls • Autopilots • Fly By Wire Systems

Cabin Management/ Entertainment • Ovation E-series • Satcomm (e.g. TV) • Moving Maps

Lighting Systems• Exterior • Interior


Production, Sales and Support

Global Sales, Support, Production, Development

Americas

• 15 Production Facilities

• 22 HON Repair and Overhaul Facilities

• 15 Engineering and Development Centers

• 170 Sales, Direct Customer/Technical Support Professionals

Americas

• 15 Production Facilities

• 22 HON Repair and Overhaul Facilities

• 15 Engineering and Development Centers

• 170 Sales, Direct Customer/Technical Support Professionals

EMEA• 3 Production Facilities• 6 HON Repair and Overhaul

Facilities• 4 Engineering and Development

Centers • 38 Sales, Direct Customer/Technical

Support Professionals

EMEA• 3 Production Facilities• 6 HON Repair and Overhaul

Facilities• 4 Engineering and Development



Asia Pacific

• 4 Production Facilities• 7 HON Repair and Overhaul Facilities • 3 Engineering and Development



Asia Pacific

• 4 Production Facilities• 7 HON Repair and Overhaul Facilities • 3 Engineering and Development



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KEY:Avionics/ElectronicEngine/MechanicalOther MechanicalR&D/Key Support Locations

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Direct contact point

What APU upgrades are available to

increase power?

Greater Simplicity for Complex CustomersCustomer Interaction - BeforeCustomer Interaction - Before

Falcon 900EXQuestions

Faster, Simpler, More Accountable

Avionics AftermarketBRGA (Avionics)

Air Frame Sys.

Engine Systems(ESS)

Propulsion

I’m interested in RAAS.

Where do I Turn?

Customer Interaction - BGACustomer Interaction - BGA

Aerospace Electronics Systems (AES)

Aftermarket Services Engine Sys. Accessories

Dealers/ Operators

Helicopter/GA OEMs

Gulfstream

Dassault

Cessna

Bombardier Raytheon

What MSP options do I have for my

fleet?

Falcon 900EX Questions

Service Centers

Business Aviation Market OutlookPublished by Honeywell


Business Aviation Forecast Methodology

Primary Market Research (telephone survey with >1,400

representative operators, ~17% of

total population)

Econometric model (based on historical

economic/industry correlations)

Honeywell internal workshop to consider external factors

(e.g. supply chain bottlenecks)

OEM production input based on Honeywell

position as a supplier on virtually all aircraft

models

Annual Outlook Released at NBAA

(14th Year)

Forecast Developed Using Several Inputs


Historical Industry Outlook Accuracy

14 Year Track Record

0

200

400

600

800

1000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Airc

raft

Del

iver

ies

Prior Year OutlookCurrent Year OutlookActual Deliveries

Post WarRevision

(April ‘03)

Accurate within 6%


World Fleet Growing@ 5.1% since 1995

World Fleet GrowingWorld Fleet Growing@ 5.1% since 1995@ 5.1% since 1995

World Operator Base Expanding@ 4.9% since 1995

World Operator Base ExpandingWorld Operator Base Expanding@ 4.9% since 1995@ 4.9% since 1995

World Fleet Count (thru 9/05 13,175 Jets)

World Operator Count (thru 10/05 8,323 Jet Operators)

World Business Jet Fleet and Operator Base

Over 13,000 Jets And 8,000 Operators


0

200

400

600

800

1000

1200

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Airc

raft

History Forecast

V-Light

Light

Light-Med

Medium

Medium-Large

Large

LR

ULRLong Range

2005 Industry Outlook for Executive Turbofan Deliveries

9,900 New Aircraft Deliveries From 2005-2015

2005-15 CAGR 3.4%


$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Con

stan

t $20

05 (M

)

History Forecast

V-LightLight

Light-MedMedium

Med-Lrg

Large

Long Range

Ultra Long Range

2005 Industry Outlook for Executive Turbofan Deliveries

$156B In New Aircraft Deliveries From 2005-2015

2005-15 CAGR 3.2%


Forecast Results: 5 Year Industry Jet Demand

N. America60%

Asia Pacific & Rest of World

7%Europe

15%

Latin America14%

Middle East4%

New Turbofan Aircraft Only - Excludes Fractionals

3,500 3,500 -- 3,600 Aircraft Forecast for 20053,600 Aircraft Forecast for 2005--09; 09; Fractionals add additional ~525Fractionals add additional ~525--575 575

North America Majority…Demand Growing Faster In Other Regions

Market and Product Strategy


2X+

2X+

0

1,000

2,000

3,000

4,000

5,000

Entry Light Lt-Med Medium Med-Lrg Large LongRange

Very LongRange

Business Aviation Growth

Honeywell Aligned With Aircraft Growth Areas

Airc

raft

Sale

s Va

lue

( 200

4 $M

) Avg. 2005-2014Avg. 1995-2004Areas of greatest $ opportunity

TFE731

Primus EPICPrimus 1000

HTF7000

Avionics

Engines

Business Jet Segment Evolution

Highest Growth In Larger Aircraft Where Honeywell Has Leading Products


Integrated Avionics - Primus EPIC

• Embraer 170/175/190/195• Gulfstream G350, G450, G550 • Dassault F7X, 900EX, 900DX, 2000EX• Cessna Sovereign• Agusta AB139• Raytheon Hawker Horizon• Sino Swearingen SJ30-2

Foundation For Future Success

388

974

1855

Forecast Number of Primus EPIC Aircraft

• Center Of All Cockpit Information Processing– Safety/Communication/Navigation– Software Upgradeable – Prognostics/Diagnostics

• Engineering Familiarity– Utilize Current Architecture for Future Applications– Ease In Certification

• Cost Improvement – Software Development Scale Benefits – Reduction Of Module Count Leveraging Integration/Commonality

In Service Success, Achievements

Platform for Future Success

2005

2007

2010


Unique Features

• Fully assembled propulsion system

• 90% of maintenance on wing/site

• Up to 5% lower fuel consumption

• Lower noise levels

• 50% fewer parts than TFE 731

• Service Centers around globe

HTF 7000 Entry into Service

Number of Engines in Service

Dispatchability Rate (Percent)

Hours Flown (thousands)

Number of in-flight shutdowns

HTF 7000 Well Positioned For Future Platforms

62

99.9

110

0

HTF 7000 Performance on Bombardier Challenger 300 Fleet (Entry into Service – Jan 2004)

Reliability very high


Honeywell Delivery Outlook – Helicopters

24%24%

49%49%

20%

SegmentShare of

Deliveries

Approximately 5,800 Deliveries 2005-2015

7%7%

2005-09 ~2600+ a/c

Light Single-Engine

Light Twin-Engine

Intermediate Twin-Engine

0

100

200

300

400

500

600

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Helic

opte

r Un

its

Heavy-Lift

History Forecast

2010-14 ~ 2600 a/c2005-09 ~ 2600 a/c

11 Year Delivery Outlook – Civil Turbine Powered Helicopters


... Resulting in Opportunities for Continued Honeywell Success

Top Areas for Desired Improvement Cited by Operators (interviewed 10% of fleet)…

• Retrofits/Mods/Upgrades (RMUs)– Safety

• Cockpit Safety/Reliability – CDS/R• Runway/Airport Safety – RAAS• Synthetic Vision System – SVS

– Reliability/Cost of Ownership • APU, Engine upgrades • Software upgrades for Primus EPIC

– Passenger Comfort• Cabin Data and Entertainment Systems• Better weather detection

• Operator Service Programs– Better Cost of Ownership

• Engines, Avionics, APUs

Aftermarket Needs

Safety

Increased reliability/up-time

Maint & Operating Costs

Passenger Comfort

Weighting (%)

Meeting Operator Needs In Aftermarket

39

31

18

12

0 20 40 60

RMUs - Significant Sales

Opportunity


CDS/R Creates “EPIC Like” RetrofitCDS/R• Cockpit displays upgrade- from CRT to

LCD displays• Upgrade cost < 10% of hull value for

many aircraft

Benefits• Reliability

– Displays 3x+ improvement • Safety

– Situational awareness improvements – Better displays of terrain/weather/position

– Charts and maps– Weather (accuracy, timeliness)

• Maintenance and Operating Costs– Improved resale value

Customer Interest Growing• Planning for Variety of Platforms (~6) • Key Aftermarket Partner participation

From This

To This

Retrofit Allows Operators To Stay Current In Cockpit


RAAS – Improving Operator Safety RAAS• Runway Awareness and Advisory System• Software upgrade to Enhanced Ground

Proximity Warning System (EGPWS)• Provides verbal advisory messages on runway

information

Benefits • Reduced likelihood of accidents during taxi,

takeoff and landing• Every day a runway incursion occurs • Every 3 days a runway collision is “barely

avoided”• RAAS addresses primary causes

Customer Interest Growing• Installed on nearly 600 jets today with strong

growth forecast

Safety – Core Customer Need


Additional Software Upgrades

Improving Operator Reliability, Safety And Comfort

FANS (Future Air Navigation System)• Provides Operator More Efficient Flight

Plans And Routes• Benefits

– Cost - Fuel Usage– Passenger Comfort - Reduced Flight Times

FMS (Flight Management Systems)• Primary Flight Processing Center For

Communication/Navigation• Benefits

– Reliability – Improved Flight Planning – Functionality – Better Data Accuracy

RNP (Required Navigation Performance)• Allows For Reduced Horizontal Separation

Between Aircraft• Benefits (Similar To RVSM)

– Reliability - Improved Air Space Utilization– Safety - Better Situational Awareness

85-125%125-200%

2004 Percent of Capacity

Shorter Routes


Aftermarket Service ProgramsSatisfaction

(5=max)Enrollment

(%)

TFEEngine

HTFEngine

Avionics

APUs

4.4

N/A (warranty)

4.6

4.4

74%

90+%

10%

25%

Opportunity For Honeywell Value Added Services

Operator Benefits

•Controls costs •Enhances aircraft resale value• Improves reliability / Service level for operators

Maintenance Service ProtectionAvionics Protection Plan

Advanced Technology


Partnership with Government Agencies Enables Continuous Technology Pipeline

Key Technology Drivers

Phase I Phase II

IHPTET VAATE

Low CostFuel EconomyHigh Power DensityEnvironmentally Friendly

Fuel Efficiency

1985 2005 2017

Phase I Phase II Phase IIIPhase III

PowerDensity

AffordableCapability

-20% -30% -40%

+40% +80% +120%

JTAGG I JTAGG II

JTAGG III

SHFE

AATE

FATE

3X 4X 5X

CompletePlanned

2XSTF

IHPTET

VAATE

ASTEVNERT

S&T


ReducedNoise

High Value Technologies Pave the Way to Future Products Low Cost/Durability

Fuel Economy ReducedEmissions

High PowerDensity

+ +


-30-25-20-15-10-50

Noi

se (E

PN

dB)

TFE731 HTF7000 Hon NextEngine Goals

Technology Key to Achieving Noise Goals

Noise Reduction Goal: 30 EPNdB below Stage 3

Noise Reduction Goals Meet Communities Demands

Novel Acoustic

Treatment• Light weight materials• Low cost manufacturing

Advanced Nozzles

• High mixing efficiency• Low cost and weight

Analytical Tools

•Multi-microphoneSignal Processing

•Computational Aero acoustics

•Quiet High Speed Fan


Committed to Cleaner Air

Lowering Emissions Supports “Green” Goal

0

20

40

60

80

100

Rel

ativ

e N

Ox

Em

issi

ons

TFE731-60 (< 6000 lbs)

HTF7000 Hon NextEngine Goal

Low Emissions Design

• Lower Emissions• Improved

Operability

55% Emissions Reduction Goal

High Durability Combustor

• Lower Maintenance Cost

• Extended life

Advanced Fuel/Air Mixer

• Improved fuelatomization

• Lower emissions• Low smoke


Summary

Honeywell Strategic Focus

Growth In Larger AircraftGrowth In Larger Aircraft

Safety Key Aftermarket NeedSafety Key Aftermarket Need

Market Outlook

• Market Growing Over Long Term; Lots of Opportunity

• Major Products Well Positioned for High Growth OEM Segments

• Building on Aftermarket Success

• Developing Long-term Technology Leadership

Engines Well Positioned

Build On Primus Epic Success

Service, Retrofits and Upgrades

Honeywell Well Positioned In A Great Business

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