Arbitrator Rules in Favor of Honeywell in Dispute with Sunoco

MORRIS TOWNSHIP, N.J.--Sept. 23, 2005--Honeywell announced today that it has received a favorable arbitration ruling in a proceeding against Sunoco Inc. for breach of a supply agreement. Hearings on this matter were held in May and June 2005.

The arbitrator found that Sunoco breached the supply agreement by overcharging Honeywell for phenol produced at Sunoco's Frankford, Pennsylvania plant beginning in June 2003 through the end of 2004. The arbitrator awarded Honeywell damages for overcharges totaling $65.5 million during this period. Sunoco filed a complaint yesterday in federal district court seeking to vacate the award and Honeywell will counterclaim to confirm the award. Honeywell is confident that the arbitration award is final and binding under the terms of the contract and applicable law, and expects to prevail in this action. The company expects to recognize this award in the third quarter.

Honeywell also announced that it is maintaining its previously stated earnings guidance for the third quarter of $0.52 - $0.54 per share.

The arbitrator also awarded Honeywell damages for overcharges in January through April 2005 totaling $11.2 million. The award of this additional amount has been suspended and therefore not recognized pending resolution of an action that Sunoco has brought in federal district court seeking to challenge the arbitrator's authority to award damages for 2005.

The arbitrator has also found that Sunoco has been in continuing breach of the agreement and has indicated that an additional amount will be awarded to Honeywell for damages since April 2005. The arbitrator's authority to award these damages is also being challenged by Sunoco in its federal district court action.

A separate arbitration hearing to determine prospective pricing under the supply agreement is scheduled for April 2006.

Honeywell International is a $26 billion diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; and specialty materials. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London, Chicago and Pacific Stock Exchanges. It is one of the 30 stocks that make up the Dow Jones Industrial Average and is also a component of the Standard & Poor's 500 Index. For additional information, please visit www.honeywell.com.