Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

HONEYWELL AEROSPACE INC.

CONDENSED COMBINED STATEMENTS OF OPERATIONS (Unaudited)

(Dollars in millions)


	Three Months Ended				Six Months Ended
	June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
Product sales	$	2,611	$	2,425	$	5,033	$	4,658
Service sales	1,911		1,864		3,841		3,705
Net sales	4,522		4,289		8,874		8,363
Costs, expenses and other
Cost of products sold	1,988		1,837		3,820		3,472
Cost of services sold	953		888		1,843		1,804
Total cost of products and services sold	2,941		2,725		5,663		5,276
Research and development expenses	183		167		370		334
Selling, general and administrative expenses	722		383		1,286		748
Other expense, net	98		14		148		72
Interest and other financial charges	200		—		229		—
Total costs, expenses and other	4,144		3,289		7,696		6,430
Income before taxes	378		1,000		1,178		1,933
Income tax expense	122		148		280		295
Net income	256		852		898		1,638
Less: Net income attributable to noncontrolling interests	10		8		18		17
Net income attributable to Aerospace	$	246	$	844	$	880	$	1,621

The Notes to the Condensed Combined Financial Statements are an integral part of this statement.


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HONEYWELL AEROSPACE INC.

CONDENSED COMBINED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(Dollars in millions)


	Three Months Ended				Six Months Ended
	June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
Net income	$	256	$	852	$	898	$	1,638
Other comprehensive income (loss), net of tax
Foreign exchange translation adjustment	(38)		55		(47)		81

Changes in fair value of cash flow hedges	(1)		2		47		3
Total other comprehensive income (loss), net of tax	(39)		57		—		84
Comprehensive income	217		909		898		1,722
Less: Comprehensive income attributable to noncontrolling interests	10		8		18		17
Comprehensive income attributable to Aerospace	$	207	$	901	880		$	1,705

The Notes to the Condensed Combined Financial Statements are an integral part of this statement.


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HONEYWELL AEROSPACE INC.

CONDENSED COMBINED BALANCE SHEETS (Unaudited)

(Dollars in millions)


	June 27, 2026		December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	1,057	$	213
Accounts receivable, less allowances of $40 and $33, respectively	2,462		2,156
Inventories	4,466		4,311
Current contract assets	1,412		1,366
Other current assets	446		344
Total current assets	9,843		8,390
Property, plant and equipment, net	2,250		2,101
Goodwill	3,014		3,025
Other intangible assets, net	2,200		2,177
Deferred tax assets	381		412
Other assets	1,683		1,580
Total assets	$	19,371	$	17,685
LIABILITIES
Current liabilities:
Accounts payable	$	2,793	$	2,883
Current contract liabilities	1,595		1,589
Accrued liabilities	2,063		2,105
Total current liabilities	6,451		6,577
Long-term debt	15,849		4
Contract liabilities	1,107		1,091
Other liabilities	1,587		1,517
Total liabilities	24,994		9,189
EQUITY



Net Parent investment	(5,487)		8,609
Accumulated other comprehensive loss	(210)		(210)
Total (deficit) equity attributable to Aerospace	(5,697)		8,399
Noncontrolling interests	74		97
Total (deficit) equity	(5,623)		8,496
Total liabilities and (deficit) equity	$	19,371	$	17,685

The Notes to the Condensed Combined Financial Statements are an integral part of this statement.


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HONEYWELL AEROSPACE INC.

CONDENSED COMBINED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars in millions)


	Six Months Ended
	June 27, 2026		June 28, 2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	898	$	1,638
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	145		134
Amortization	88		78
Stock compensation expense	61		46
Deferred income taxes	36		(129)
Other	(54)		23
Changes in assets and liabilities
Accounts receivable	(365)		(211)
Inventories	(165)		(267)
Contract assets	(48)		(27)
Other assets	(85)		38
Accounts payable	(133)		(70)
Contract liabilities	29		(81)
Other liabilities	(61)		(147)
Net cash provided by operating activities	346		1,025
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(260)		(234)
Increase in investments, net	(5)		(1)
Amounts advanced for related party loans receivable	(7)		(7)
Payments received from related party loans receivable	51		—
Net cash used for investing activities	(221)		(242)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt	15,843		—
Net transfers to Parent	(15,087)		(602)
Other	(12)		(25)
Net cash provided by (used for) financing activities	744		(627)
Effect of foreign exchange rate changes on cash and cash equivalents	(25)		19
Net increase in cash and cash equivalents	844		175
Cash and cash equivalents at beginning of period	213		244
Cash and cash equivalents at end of period	$	1,057	$	419

The Notes to the Condensed Combined Financial Statements are an integral part of this statement.


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HONEYWELL AEROSPACE INC.

CONDENSED COMBINED STATEMENTS OF EQUITY (Unaudited)

(Dollars in millions)


	Net Parent Investment		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity (Deficit)
Balance as of March 29, 2025	$	9,868	$	(285)	$	99	$	9,682
Net income	844		—		8		852
Foreign exchange translation adjustment	—		55		—		55

Changes in fair value of cash flow hedges	—		2		—		2
Dividends to noncontrolling interests	—		—		(14)		(14)
Net transfers to Parent	(599)		—		—		(599)
Balance as of June 28, 2025	$	10,113	$	(228)	$	93	$	9,978

Balance as of March 28, 2026	$	(5,447)	$	(171)	$	104	$	(5,514)
Net income	246		—		10		256
Foreign exchange translation adjustment	—		(38)		—		(38)

Changes in fair value of cash flow hedges	—		(1)		—		(1)
Dividends to noncontrolling interests	—		—		(40)		(40)
Net transfers to Parent	(286)		—		—		(286)
Balance as of June 27, 2026	$	(5,487)	$	(210)	$	74	$	(5,623)



Balance as of December 31, 2024	$	9,048	$	(312)	$	92	$	8,828
Net income	1,621		—		17		1,638
Foreign exchange translation adjustment	—		81		—		81

Changes in fair value of cash flow hedges	—		3		—		3
Dividends to noncontrolling interests	—		—		(16)		(16)
Net transfers to Parent	(556)		—		—		(556)
Balance as of June 28, 2025	$	10,113	$	(228)	$	93	$	9,978

Balance as of December 31, 2025	$	8,609	$	(210)	$	97	$	8,496
Net income	880		—		18		898
Foreign exchange translation adjustment	—		(47)		—		(47)

Changes in fair value of cash flow hedges	—		47		—		47
Dividends to noncontrolling interests	—		—		(41)		(41)
Net transfers to Parent	(14,976)		—		—		(14,976)
Balance as of June 27, 2026	$	(5,487)	$	(210)	$	74	$	(5,623)

The Notes to the Condensed Combined Financial Statements are an integral part of this statement.


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HONEYWELL AEROSPACE INC.

NOTES TO THE CONDENSED COMBINED FINANCIAL STATEMENTS (Unaudited)

(Dollars in tables in millions)

Note 1**. Organization and Basis of Presentation**

Organization

Honeywell Aerospace Inc. (“Aerospace”, the “Company”, or the “Business”) was a former carve-out business of Honeywell International Inc., which is now known as Honeywell Technologies (“Honeywell” or “Parent”). Honeywell Aerospace Inc. was organized on February 6, 2026, for the purpose of receiving, pursuant to a reorganization, all of the assets of the Aerospace Business. On June 29, 2026 (the “Distribution Date”), Honeywell completed the previously announced spin-off of the Aerospace Business (the “Spin-off”). The Spin-off is intended to be a tax-free pro-rata distribution (the “Distribution”) of all of the Company's outstanding common shares to holders of record of Honeywell's common shares as of the close of business on June 15, 2026 (the “Record Date”), at which time each holder of Honeywell's common shares received one Aerospace common share for every two Honeywell common shares held as of the close of business on the Record Date, resulting in the Distribution of 316,939,750 of the Company's common shares. As a result of the Distribution, the Company became an independent publicly traded company. The Company’s common stock is listed under the symbol “HONA” on The Nasdaq Stock Market LLC (“Nasdaq”). Refer to Note 17. Subsequent Events for additional information on the Spin-off and related transactions.

Basis of Presentation

For the periods presented in these unaudited Condensed Combined Financial Statements, the Company operated as Honeywell’s Aerospace Business; consequently, separate financial statements have not historically been prepared for the Company. These unaudited Condensed Combined Financial Statements were derived from the consolidated financial statements and accounting records of Honeywell. These unaudited Condensed Combined Financial Statements do not purport to reflect what the results of operations, comprehensive income, financial position, or cash flows would have been had the Company operated as an independent entity during the periods presented.

These unaudited Condensed Combined Financial Statements were prepared on a standalone basis in accordance with accounting principles generally accepted in the United States of America (“GAAP”) pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments (consisting of normal, recurring adjustments, unless otherwise disclosed) necessary for a fair statement of the condensed combined results of operations, financial position, and cash flows for each period presented.

The combined results for the interim periods are not necessarily indicative of results to be expected for the full year. The Combined Balance Sheet as of December 31, 2025 was derived from audited financial statements but does not include all disclosures required by GAAP. These financial statements should be read in conjunction with the financial statements and notes included in the Company’s audited Combined Financial Statements for the year ended December 31, 2025, included in the Company’s final information statement, dated as of June 15, 2026 (the “Information Statement”), which was furnished as Exhibit 99.1 to the Company's Current Report on Form 8-K filed with the SEC on June 15, 2026.

The unaudited Condensed Combined Financial Statements include certain assets and liabilities that have historically been held at the Honeywell corporate level but are specifically identifiable or otherwise attributable to the Company. Honeywell used a centralized approach to cash management and financing of its operations. Accordingly, a substantial portion of the Company's cash accounts were regularly cleared to the Parent at Honeywell's discretion and Honeywell funded the Company's operating and investing activities as needed. Transfers of cash between Honeywell and the Company were included within Net transfers to Parent on the Condensed Combined Statements of Cash Flows and the Condensed Combined Statements


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of Equity. The Cash and cash equivalents held by Honeywell at the corporate level were not specifically identifiable to the Company and therefore were not attributed for any of the periods presented. Other than the notes issued by the Company, Honeywell third party debt and the related interest expense are not attributed to the Company for any of the periods presented as the Company is not the legal obligor of such borrowings and Honeywell’s borrowings were not directly attributable to the Business.

Honeywell provided certain services, such as legal, accounting, technology, human resources, and other infrastructure support, on behalf of the Company. The unaudited Condensed Combined Financial Statements include all revenues and costs directly attributable to the Company and an allocation of expenses related to certain Honeywell corporate functions (refer to Note 3. Related Party Transactions). These expenses are allocated to the Company based on a proportion of Net sales. The Company and Honeywell consider allocations of these costs to be a reasonable reflection of the benefits received by the Company. However, the financial information presented in these unaudited Condensed Combined Financial Statements may not reflect the condensed combined financial position, operating results, and cash flows of the Company had the Company been a separate standalone entity during the periods presented. Actual costs that would have been incurred if the Company had been a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. The Company considers the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefits received by the Company during the periods presented.

All intracompany transactions and balances within the Company have been eliminated. Transactions between Honeywell and the Company that were not cash settled are included within Net Parent investment. The total net effect of the settlement of these intercompany transactions is reflected in the Condensed Combined Statements of Cash Flows as a financing activity and in the Condensed Combined Balance Sheets as Net Parent investment. Transactions between the Company and other businesses of Honeywell are considered related party transactions. Refer to Note 3. Related Party Transactions for more information.

The Company's fiscal year begins on January 1 and ends on December 31. The Company’s practice is to establish interim quarterly closing dates using a predetermined fiscal calendar, which requires the Company’s businesses to close its books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on the Company's business processes. The Company’s closing dates for the second quarter of 2026 and 2025 were June 27, 2026 and June 28, 2025, respectively.

Note 2. Summary of Significant Accounting Policies

The significant accounting policies of the Company are set forth in Note 2. Summary of Significant Accounting Policies within the Company’s Combined Financial Statements as of December 31, 2025 and 2024, and for the years ended December 31, 2025, 2024, and 2023, which can be found in the Information Statement. The Company includes herein certain updates to those policies.

Accounts Receivable Factoring

For the three and six months ended June 27, 2026, the Company sold $151 million and $344 million, respectively, of trade accounts receivable, of which the related fees are insignificant. For the three and six months ended June 28, 2025, the Company had no sales of trade accounts receivable.

Supply Chain Financing

Amounts outstanding related to supply chain financing programs are included in Accounts payable in the Condensed Combined Balance Sheets. Accounts payable related to supply chain financing programs included approximately $453 million and $521 million as of June 27, 2026 and December 31, 2025, respectively.


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Recent Accounting Pronouncements

The Company considers the applicability and impact of all Accounting Standards Updates (“ASU”) 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 a minimal impact on the Company’s Condensed Combined Statements of Operations, Condensed Combined Balance Sheets, and Condensed Combined Statements of Cash Flows.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires companies to disclose additional information about the types of expenses in commonly presented expense captions. The new standard requires tabular disclosure of specified natural expenses in certain expense captions, a qualitative description of amounts that are not separately disaggregated, and disclosure of the Company's definition and total amount of selling expenses. The ASU should be applied prospectively for annual reporting periods beginning after December 15, 2026, with retrospective application and early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Condensed Combined Financial Statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software costs by removing all references to prescriptive and sequential software development stages. The new standard requires entities to consider whether significant development uncertainty has been resolved before starting to capitalize software costs and aligns disclosure requirements with ASC 360, Property, Plant, and Equipment. The ASU is effective for annual and interim reporting periods beginning after December 15, 2027, and can be applied prospectively, retrospectively, or using a modified prospective transition method, with early adoption permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Condensed Combined Financial Statements.

Note 3. Related Party Transactions

Related Party Sales and Purchases

For all periods presented, the Company had no material related party sales and purchase transactions that required disclosure.

Related Party Loans and Related Party Payables

Related party debt due from and due to Honeywell or its affiliates are recorded in Accounts receivable and Accrued liabilities in the Condensed Combined Balance Sheets, respectively. Related party loans receivable of $44 million and related party loans payable of $16 million are reflected in the Condensed Combined Balance Sheets as of December 31, 2025. No related party loans receivable or payable were outstanding as of June 27, 2026. The interest income and expense related to the loan activity is recorded in Other expense, net, in the Condensed Combined Statements of Operations.

Related party payables are recorded in Accounts payable in the Condensed Combined Balance Sheets. Related party payables of $52 million and $2 million is reflected in the Condensed Combined Balance Sheets as of June 27, 2026 and December 31, 2025, respectively.

Distribution to Honeywell

On March 16, 2026, the Company completed the private note offering of $16.0 billion of senior unsecured notes (collectively the “Initial Notes”). Net proceeds of $15.1 billion from the Initial Notes were distributed to Honeywell in connection with the Spin-off. The distribution was reflected in the Condensed Combined Statements of Cash Flows as a financing activity and in the Condensed Combined Balance Sheets as Net Parent investment. Refer to Note 9. Debt and Credit Agreements and Note 17 . Subsequent Events for further details.


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Corporate Allocations

The Condensed Combined Financial Statements reflect allocations of certain expenses from Honeywell including, but not limited to, legal, accounting, information technology, human resources, and other infrastructure support. The cost of these services has been allocated to the Company on the basis of the proportion of Net sales. The Company and Honeywell consider the allocations to be a reasonable reflection of the benefits received by the Company. Allocations for management costs and corporate support services provided to the Company totaled $146 million and $294 million for the three and six months ended June 27, 2026, respectively, and totaled $160 million and $311 million for the three and six months ended June 28, 2025, respectively, and such amounts are included within Cost of products and services sold, Research and development expenses, and Selling, general and administrative expenses in the Condensed Combined Statements of Operations.

Cash Management and Net Parent Investment

For the periods prior to the Spin-off, including those presented in these Condensed Combined Financial Statements, Honeywell used a centralized approach for the purpose of cash management and financing of its operations. The Company’s excess cash in participating bank accounts was transferred to Honeywell daily, and Honeywell funded the Company’s operating and investing activities as needed. Honeywell operates a centralized non-interest-bearing cash pool in the U.S. and regional interest-bearing cash pools outside of the U.S. The total net effect of the settlement of these intercompany transactions is reflected in the Condensed Combined Statements of Cash Flows as a financing activity and in the Condensed Combined Balance Sheets as Net Parent investment.

Derivatives and Hedging

Honeywell centrally hedged its exposure to changes in foreign exchange rates principally with forward contracts. The Company monitors its collective foreign currency exposure and enters into foreign currency exchange contracts, when necessary, to minimize the impact of changes in foreign currency exchange rates. For the periods prior to the Spin-off, certain contracts were specifically designated to and entered into on behalf of the Company with Honeywell as a counterparty. As of June 27, 2026 and December 31, 2025, the net derivative liability position for the Company was not material.

Parent Company Credit Support

Prior to the Spin-off, Honeywell provided the Company with Parent credit support in certain jurisdictions. To support the Company in selling products and services globally, Honeywell often entered into contracts on behalf of the Company or issued Parent guarantees. Honeywell provided similar credit support for some non-customer related activities of the Company, including Parent guarantees for environmental remediation of certain sites (refer to Note 15. Commitments and Contingencies for further details). There are no instances under the Company’s existing customer contracts requiring payments or performance under Parent company guarantees.

Note 4. Revenue Recognition from Contracts with Customers

The following table presents a disaggregation of revenue by end market:


	Three Months Ended				Six Months Ended
	June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
Commercial Original Equipment	$	679	$	640	$	1,336	$	1,272
Commercial Aftermarket	2,026		1,881		3,997		3,738
Defense and Space	1,817		1,768		3,541		3,353
Net sales	$	4,522	$	4,289	$	8,874	$	8,363


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The Company recognizes revenue arising from performance obligations outlined in contracts with its customers that are satisfied at a point in time and over time. The disaggregation of the Company's revenue based on timing of recognition is as follows:


	Three Months Ended				Six Months Ended
	June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
Products, transferred point in time	49	%	47	%	48	%	48	%
Products, transferred over time	9		10		8		8
Net product sales	58		57		56		56
Services, transferred point in time	2		2		3		3
Services, transferred over time	40		41		41		41
Net service sales	42		43		44		44
Net sales	100	%	100	%	100	%	100	%

Contract Assets and Liabilities

Contract assets reflect the recognition of revenue from the satisfaction of performance obligations in advance of customer billings. Contract liabilities are recorded when customers are billed in accordance with the contract prior to the recognition of revenue. Contract balances are classified as assets or liabilities on a contract-by-contract basis and are recorded in the Condensed Combined Balance Sheets within Current contract assets, Other assets, Current contract liabilities, and Contract liabilities.

The following table summarizes the Company’s contract assets and liabilities balances:


	2026
Contract assets - January 1	$	1,373
Contract assets - June 27	1,418
Change in Contract assets - increase	45
Contract liabilities - January 1	(2,680)
Contract liabilities - June 27	(2,702)
Change in Contract liabilities - (increase)	(22)
Net change	$	23

	2025
Contract assets - January 1	$	1,219
Contract assets - June 28	1,251
Change in Contract assets - increase	32
Contract liabilities - January 1	(2,401)
Contract liabilities - June 28	(2,331)
Change in Contract liabilities - decrease	70
Net change	$	102

For three and six months ended June 27, 2026, the Company recognized revenue of $236 million and $669 million, respectively, that was previously included in the beginning balance of contract liabilities. For three and six months ended June 28, 2025, the Company recognized revenue of $210 million and $611 million, respectively, that was previously included in the beginning balance of contract liabilities.


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Remaining Performance Obligations

As of June 27, 2026, the Company’s remaining performance obligations, which is the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied, was approximately $18.2 billion. Remaining performance obligations exclude transaction price associated with revenue which is recognized on a right to invoice basis for certain long-term contracts. Performance obligations expected to be satisfied within one year and greater than one year are 58% and 42%, respectively.

Note 5. Other Expense, Net

Other expense, net consists of the following:


	Three Months Ended				Six Months Ended
	June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
Environmental expenses	$	18	$	22	$	37	$	93
Transaction costs1	74		15		109		15
Equity income of affiliated companies	(6)		(6)		(12)		(11)
Other expense (income), net	12		(17)		14		(25)
Total Other expense, net	$	98	$	14	$	148	$	72

1.Transaction costs consist of professional advisory services fees related to the Spin-off. For the three and six months ended June 27, 2026, the Company recognized $329 million and $522 million of transaction costs, of which, $255 million and $413 million, respectively, is recognized within Selling, general and administrative expenses. For the three and six months ended June 28, 2025, the Company recognized $17 million of transaction costs, of which, $2 million is recognized within Selling, general and administrative expenses.

Note 6. Income Taxes

The effective tax rate was 32.3% for the three months ended June 27, 2026, and 23.8% for the six months ended June 27, 2026. The effective tax rate was higher than the U.S. federal statutory rate of 21% and increased during 2026 compared to 2025 primarily due to $77 million and $93 million of incremental tax expense related to nondeductible transaction costs and frictional tax costs recognized during the three and six months ended June 27, 2026, respectively, in advance of the Spin-off. Refer to Note 17. Subsequent Events for additional information on the Spin-off and related Tax Matters Agreement.

Note 7. Inventories


	June 27, 2026		December 31, 2025
Raw materials	$	1,265	$	1,092
Finished products and work in process	3,201		3,219
Total Inventories	$	4,466	$	4,311


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Note 8. Other Intangible Assets, Net

Other intangible assets, net is comprised of the following:


	June 27, 2026						December 31, 2025
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Other intangible assets, net
Customer relationships	$	1,282	$	(159)	$	1,123	$	1,285	$	(129)	$	1,156
Capitalized software	1,382		(718)		664		1,324		(734)		590
Customer-related intangible assets	342		(74)		268		342		(66)		276
Patents and technology	348		(231)		117		344		(227)		117
Trademarks	37		(31)		6		37		(27)		10
Other intangible assets	65		(43)		22		67		(39)		28
Total Other intangible assets, net	$	3,456	$	(1,256)	$	2,200	$	3,399	$	(1,222)	$	2,177

Amortization expense related to intangible assets was $45 million and $88 million for the three and six months ended June 27, 2026, and $40 million and $78 million for the three and six months ended June 28, 2025, respectively.

Note 9. Debt and Credit Agreements


	June 27, 2026		December 31, 2025
3.90% Senior Notes due 2028	$	1,250	$	—
4.00% Senior Notes due 2029	1,250		—
Compounded SOFR plus 0.63% Senior Notes due 2029	500		—
4.30% Senior Notes due 2031	2,000		—
4.60% Senior Notes due 2033	1,750		—
4.95% Senior Notes due 2036	3,250		—
5.622% Senior Notes due 2046	1,000		—
5.732% Senior Notes due 2056	3,500		—
5.852% Senior Notes due 2066	1,500		—
Other	6		9
Debt issuance costs	(153)		—
Total Long-term debt and current related maturities	15,853		9
Less: Current maturities of long-term debt	4		5
Total Long-term debt	$	15,849	$	4

Senior Unsecured Notes

On March 16, 2026, and in connection with the Spin-off, the Company issued an aggregate of $16.0 billion principal amount of the Initial Notes in nine series with maturity dates ranging from 2028 through 2066. Upon issuance, the Initial Notes became guaranteed on a senior unsecured basis by Honeywell. Following the completion of the Spin-off, Honeywell was automatically and unconditionally released and discharged from all obligations under these guarantees.

The Company distributed the Initial Notes due 2046, 2056, and 2066 (with an aggregate principal amount of $6.0 billion) and $9.1 billion of cash proceeds from the remaining series of Initial Notes to Honeywell as


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partial consideration for the contribution of assets by Honeywell to the Company in connection with the distribution and retained the balance of the cash proceeds from the remaining Initial Notes issued.

Interest on the fixed rate notes are payable on March 16 and September 16 of each year until maturity, with the first interest payment due on September 16, 2026. Interest on the floating rate notes are payable on March 16, June 16, September 16, and December 16 of each year, with the first interest payment made on June 16, 2026.

The schedule of principal payments on long-term debt, excluding debt issuance costs, is as follows:


	June 27, 2026
2027	$	4
2028	1,251
2029	1,751
2030	—
2031	2,000
Thereafter	11,000
Total Long-term debt	$	16,006

The estimated fair value of the Company’s long-term debt was approximately $15.9 billion as of June 27, 2026, compared to a carrying value of $16.0 billion. The Company determined the fair value of the long-term debt by utilizing transactions in listed markets for identical or similar liabilities. As such, the fair value of the long-term debt is classified as Level 2.

Revolving Credit Facilities

On March 6, 2026, the Company entered into a $1.0 billion 364-day credit agreement (the “364-Day Credit Agreement”). Amounts borrowed under the 364-Day Credit Agreement are due no later than March 5, 2027, unless (i) the Company elects to convert all then outstanding amounts into a term loan, upon which such amounts shall be repaid in full on March 5, 2028, or (ii) the 364-Day Credit Agreement is terminated earlier pursuant to its terms.

On March 6, 2026, the Company entered into a $3.0 billion five-year credit agreement (the “Five-Year Credit Agreement”). The 364-Day Credit Agreement and Five-Year Credit Agreement (together, the “Revolving Credit Facilities”) are maintained for general corporate purposes. Any amounts borrowed under the Five-Year Credit Agreement are required to be repaid no later than March 6, 2031, unless such date is extended pursuant to the terms of the Five-Year Credit Agreement.

U.S. dollar advances under the Revolving Credit Facilities bear interest at a rate of either (i) term SOFR plus an applicable margin that varies from 0.75% to 1.25% per annum based on the Company’s public debt rating for its long-term senior unsecured debt or, in the event SOFR is unavailable, (ii) a base rate, plus an applicable margin 100 basis points less than the applicable margin for term SOFR advances (but not less than zero). Advances in alternative currencies will bear interest at rates based on the applicable benchmark rate for such currency, plus the margin applicable to term SOFR advances.

The Company is also required to pay a commitment fee on unused commitments at a rate per annum based on the Company’s public debt rating.

The Company may voluntarily prepay borrowings under the Revolving Credit Facilities without premium or penalty, subject to customary “breakage” costs. The Company may also reduce the commitments under either of the Revolving Credit Facilities, in whole or in part, in each case, subject to certain minimum amounts.

The Revolving Credit Facilities do not restrict the Company’s ability to pay dividends, nor do they contain financial covenants. They also contain customary representations and warranties, affirmative and negative


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covenants and events of default for investment grade borrowers and financings of this type. Except for certain affirmative covenants, the affirmative and negative covenants contained in the Revolving Credit Facilities are applicable only after revolving credit commitments are available to be drawn thereunder.

The revolving credit commitments under the Revolving Credit Facilities became available upon consummation of the Spin-off, subject to certain conditions customary for facilities of this type.

Note 10. Leases

Supplemental cash flow information related to leases was as follows:


	Six Months Ended
	June 27, 2026		June 28, 2025


Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	49	$	47

Supplemental balance sheet information related to leases was as follows:


	June 27, 2026		December 31, 2025
Operating leases
Other assets	$	278	$	254

Accrued liabilities	37		35
Other liabilities	259		236
Total operating lease liabilities	$	296	$	271

Note 11. Accrued Liabilities


	June 27, 2026		December 31, 2025
Customer-related liabilities	$	315	$	712
Real estate, VAT, and other tax liabilities	478		301
Compensation, benefits, and other employee-related liabilities	349		302
Supplier-related liabilities	260		250
Accrued interest	218		—
Environmental liabilities	149		174
Warranty reserves	116		109
Operating lease liabilities	37		35
Other	141		222
Total Accrued liabilities	$	2,063	$	2,105

Note 12. Stock-Based Compensation Plans

Honeywell maintains stock-based compensation plans under which it grants stock options and restricted stock units to certain management level employees, including certain employees of the Company. The Condensed Combined Statements of Operations reflect an allocation of these expenses on a specific identification basis for employees who exclusively supported the Company or, when specific identification is not practicable, a proportional cost allocation method primarily based on revenue, depending on the nature of the services. The amounts presented are not necessarily indicative of future awards and do not necessarily reflect the costs that the Company would have incurred as an independent company for the periods presented.


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For the three months ended June 27, 2026 and June 28, 2025, the Company recognized $36 million and $22 million of stock-based compensation costs within Selling, general and administrative expenses in the Condensed Combined Statements of Operations, respectively, of which $15 million and $10 million related to compensation costs for direct employees of the Company, respectively, and $21 million and $12 million related to compensation costs allocated from Honeywell, respectively. For the six months ended June 27, 2026 and June 28, 2025, the Company recognized $61 million and $46 million of stock-based compensation costs within Selling, general and administrative expenses in the Condensed Combined Statements of Operations, respectively, of which $29 million and $21 million related to compensation costs for direct employees of the Company, respectively, and $32 million and $25 million related to compensation costs allocated from Honeywell, respectively. Refer to Note 3. Related Party Transactions for further details.

Note 13. Accumulated Other Comprehensive Loss

Changes in Accumulated Other Comprehensive Loss by Component


	Foreign Exchange Translation Adjustment		Pension Adjustments		Changes in Fair Value of Cash Flow Hedges		Total
Balance at December 31, 2025	$	(222)	$	12	$	—	$	(210)
Other comprehensive income (loss) before reclassifications	(47)		—		48		1
Amounts reclassified from accumulated other comprehensive loss	—		—		(1)		(1)
Net current period other comprehensive income (loss)	(47)		—		47		—
Balance at June 27, 2026	$	(269)	$	12	$	47	$	(210)


	Foreign Exchange Translation Adjustment		Pension Adjustments		Changes in Fair Value of Cash Flow Hedges		Total
Balance at December 31, 2024	$	(312)	$	1	$	(1)	$	(312)
Other comprehensive income before reclassifications	81		—		3		84
Amounts reclassified from accumulated other comprehensive loss	—		—		—		—
Net current period other comprehensive income	81		—		3		84
Balance at June 28, 2025	$	(231)	$	1	$	2	$	(228)

Note 14. Postretirement Benefit Plans

Honeywell Sponsored Pension Plans

Prior to the Spin-off, certain employees of the Company participated in U.S. pension plans sponsored by Honeywell. For the purposes of the Condensed Combined Financial Statements, the Company accounts for these plans as multiemployer plans as they are not sponsored by the Company. Therefore, the related assets and liabilities are not reflected in the Condensed Combined Balance Sheets. For the three months ended June 27, 2026 and June 28, 2025, the expenses associated with these pension plans were not material to the Condensed Combined Financial Statements.

Following the Spin-off, the Company sponsors a defined benefit pension plan for these U.S. employees, with benefit obligations and corresponding assets transferred from the Honeywell plans in which these employees participated. Subsequent to the Spin-off, the Company accounts for this plan as a single


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employer plan as it is sponsored by the Company. Therefore, the related assets and liabilities will be reflected in the Consolidated Balance Sheets beginning in the third quarter of 2026.

Company Sponsored Pension and Postretirement Benefit Plans

The Company sponsors a number of unfunded non-U.S. defined benefit pension plans. The largest plans are closed to new participants. The plans use a December 31 measurement date consistent with the Company’s fiscal year. As of June 27, 2026 and December 31, 2025, these pension plans were not material to the Condensed Combined Financial Statements.

Note 15. Commitments and Contingencies

Environmental Matters

The Company is subject to various federal, state, local, and foreign government requirements relating to the protection of the environment. Liabilities for environmental matters are recorded when remedial efforts or damage claim payments are probable and the costs can be reasonably estimated. Such liabilities are based on the Company’s estimate of the undiscounted future costs required to complete the remedial work or resolve matters. There can sometimes be a range of reasonable estimates, and in these cases, the Company uses the amount within the range that is its best estimate. If no amount within the range appears to be a better estimate than any other, it uses the amount that is the low end of such range. We regularly assess the amount of our accruals as remediation efforts progress, or as additional technical, regulatory, or legal information becomes available (including as a result of emerging abilities to analyze relevant data), or to align with industry norms (including as a result of our separation). This ongoing review may result in periodic adjustments to our accruals for environmental liabilities (including as a result of known or unknown liabilities becoming both probable and estimable).

The following table summarizes information concerning the Company’s recorded liabilities:



Balance at December 31, 2025	$	823
Changes to accruals for environmental matters deemed probable and reasonably estimable:
Related to current or former Company sites, recorded in Costs of products and services sold	5
Unrelated to current or former Company sites, recorded in Other expense, net	37
Environmental liability payments, net	(37)
Balance at June 27, 2026	$	828

Environmental liabilities are included in the following balance sheet accounts:


	June 27, 2026		December 31, 2025
Accrued liabilities	$	149	$	174
Other liabilities	679		649
Total environmental liabilities	$	828	$	823

In addition to the amounts accrued above, the Company has estimated that additional losses from environmental matters are reasonably possible. These reasonably possible losses, if they were to be incurred, could result in the Company's aggregate environmental liability being approximately two to three times higher than the currently recorded accruals, with potential payments extending beyond two decades. The Company's ultimate exposure may differ materially from current estimates, and it is possible that environmental liabilities could be material to the Company’s combined results of operations and operating


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cash flows in the periods recognized or paid. Further, the Company’s ongoing review of its environmental liabilities could result in changes to its accruals that could be material in the near term.

Litigation Matters

Flexjet v. Honeywell International Inc.

Flexjet, LLC (“Flexjet”) provides private jet services to customers. Aerospace maintains aircraft engine maintenance service contracts with Flexjet. During the COVID-19 pandemic, a customer dispute arose over delayed engine deliveries and specified engine enrollments under these maintenance service contracts. In 2021, Honeywell notified Flexjet that it was invoking force majeure provisions in response to the pandemic. On March 1, 2023, Flexjet brought suit against Honeywell, alleging breach of the parties’ aircraft engine maintenance service agreement (the “MSA”), seeking liquidated damages for delayed engine repairs, and claiming that its liquidated damages continue to accrue monthly related to engines awaiting repair. Additionally, two third-party aircraft repair and services companies, Duncan Aviation, Inc. (“Duncan”) and StandardAero Business Aviation Services, LLC (“StandardAero”) each sued Flexjet for amounts allegedly owed for services provided, and Flexjet filed third-party complaints in those cases on January 10, 2025 and June 10, 2025, respectively, purporting to join the Company as a third-party defendant.

The Company recorded accruals in accordance with ASC 450, Contingencies, with respect to the Flexjet-related matters, which accruals as of December 31, 2024 were not material. In December 2025, Honeywell announced it was in ongoing settlement negotiations with Flexjet and the other parties to the litigation matters.

On January 16, 2026, Honeywell completed a comprehensive settlement relating to its lawsuit with Flexjet. As part of this comprehensive settlement, Honeywell entered into settlement agreements with Duncan, StandardAero, and Flexjet. As of January 21, 2026, each of these cases have been dismissed. These settlements resolve all legal disputes among the parties arising out of the alleged breach of the MSA.

In connection with these settlements, the Company paid $59 million in December 2025 associated with the Duncan and StandardAero settlements. The Company paid $375 million in the first quarter of 2026 associated with a settlement payment to Flexjet.

Contemporaneous with Honeywell’s entry into the settlement agreement with Flexjet, Flexjet and Honeywell amended the MSA to extend the term through 2035.

Other Matters

The Company is subject to a number of other lawsuits, investigations, and claims (some of which involve large dollar amounts) arising out of the conduct of its business operations, including matters relating to commercial transactions, the integration of emerging technologies (such as, but not limited to, artificial intelligence and machine learning), employment, intellectual property, legal, and environmental, health, and safety matters. The Company recognizes liabilities for any contingency that is probable of occurrence and reasonably estimable. The Company routinely assesses the likelihood of adverse judgments or outcomes in such matters, as well as potential ranges of probable losses (taking into consideration the likelihood of any insurance recoveries), based on a careful analysis of each matter, and if appropriate, with the assistance of outside legal counsel and other experts.

Given the uncertainty inherent in litigation and investigations, the Company cannot predict when or how these matters will be resolved and does not believe it is possible to develop estimates of reasonably possible losses (or a range of possible losses) in excess of current accruals for commitment and contingency matters. Considering the Company's past experience and existing accruals as of the date of these financial statements, the Company does not expect the outcome of such matters, either individually or in the aggregate, to have a material adverse effect on the Company's combined financial position. Because most contingencies are resolved over long periods of time, potential liabilities are subject to change due to new developments (including new discovery of facts, changes in legislation, and outcomes of similar cases


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through the judicial system) or changes in assumptions or changes in settlement strategy or the impact of evidentiary requirements, any of which could cause or require the Company to pay damage awards or settlements (or become subject to equitable remedies) that could have a material adverse effect on the Company’s combined results of operations or operating cash flows in the periods recognized or paid.

Note 16. Segment Financial Data

The Company manages its global business operations through three operating segments, each of which also qualifies as a reportable segment. Segment information is consistent with how the President and Chief Executive Officer of Aerospace, who is the Chief Operating Decision Maker (“CODM”), reviews the Company’s business, makes investing and resource allocation decisions, and assesses operating performance.

Segment profit and Segment adjusted EBIT are measures of segment profitability used by the CODM, and Segment profit is the measure most consistent with amounts included in the Condensed Combined Financial Statements. The CODM evaluates segment performance based on Segment profit, by comparing budget-to-actual and period-over-period results. Each Segment’s profit excludes taxes, interest, amortization of acquisition-related intangibles, stock compensation expense, environmental expense, pension income (expense), repositioning and other charges, transaction costs, expenses associated with the Honeywell trademark license, and other items within Other expense, net. Transaction costs consist of professional advisory services fees related to the Spin-off.

The Company does not report asset information by segment for internal or external reporting purposes as the Company’s CODM does not assess performance, make strategic decisions, or allocate resources based on assets.

The below table summarizes information about significant segment net sales and expenses and other segment items, for each historical period:


	Three Months Ended June 27, 2026
	Electronic Solutions		Engines & Power Systems		Control Systems		Corporate and All Other		Total Honeywell Aerospace
Net sales	$	1,774	$	1,406	$	1,342			$	4,522
Less
Cost of products and services sold1	1,047		1,075		816
Other segment items2	268		157		137
Total segment profit	$	459	$	174	$	389	$	(27)	$	995

Depreciation and amortization	$	36	$	35	$	29	$	—	$	100

1.Amounts exclude acquisition-related intangibles amortization, repositioning charges, and environmental expenses.

2.For each reportable segment, the other segment items category includes corporate allocations, equity income of affiliated companies, Selling, general and administrative, and Research and development expenses.


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	Three Months Ended June 28, 2025
	Electronic Solutions		Engines & Power Systems		Control Systems		Corporate and All Other		Total Honeywell Aerospace
Net sales	$	1,645	$	1,390	$	1,254			$	4,289
Less
Cost of products and services sold1	915		1,004		789
Other segment items2	255		130		104
Total segment profit	$	475	$	256	$	361	$	(26)	$	1,066

Depreciation and amortization	$	34	$	32	$	27	$	—	$	93

1.Amounts exclude acquisition-related intangibles amortization, repositioning charges, and environmental expenses.


	Six Months Ended June 27, 2026
	Electronic Solutions		Engines & Power Systems		Control Systems		Corporate and All Other		Total Honeywell Aerospace
Net sales	$	3,515	$	2,826	$	2,533			$	8,874
Less
Cost of products and services sold1	2,006		2,072		1,560
Other segment items2	540		299		257
Total segment profit	$	969	$	455	$	716	$	(50)	$	2,090

Depreciation and amortization	$	67	$	68	$	54	$	—	$	189

1.Amounts exclude acquisition-related intangibles amortization, repositioning charges, and environmental expenses.


	Six Months Ended June 28, 2025
	Electronic Solutions		Engines & Power Systems		Control Systems		Corporate and All Other		Total Honeywell Aerospace
Net sales	$	3,195	$	2,664	$	2,504			$	8,363
Less
Cost of products and services sold1	1,811		1,949		1,482
Other segment items2	499		266		214
Total segment profit	$	885	$	449	$	808	$	(36)	$	2,106

Depreciation and amortization	$	68	$	61	$	49	$	—	$	178

1.Amounts exclude acquisition-related intangibles amortization, repositioning charges, and environmental expenses.


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A reconciliation of Segment profit to Income before taxes is as follows:


	Three Months Ended				Six Months Ended
	June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
Electronic Solutions	$	459	$	475	$	969	$	885
Engines & Power Systems	174		256		455		449
Control Systems	389		361		716		808
Corporate and All Other	(27)		(26)		(50)		(36)
Total segment profit	995		1,066		2,090		2,106
Amortization of acquisition-related intangibles1	(22)		(17)		(44)		(34)
Stock compensation expense2	(36)		(22)		(61)		(46)
Transaction costs3	(329)		(17)		(522)		(17)
Environmental expenses4	(20)		(24)		(42)		(105)
Interest and other financial charges	(200)		—		(229)		—
Other, net5	(10)		14		(14)		29
Income before taxes	$	378	$	1,000	$	1,178	$	1,933

1.Amounts included in Cost of products and services sold and Selling, general and administrative expenses.

2.Amounts included in Selling, general and administrative expenses.

3.Amounts included in Selling, general and administrative expenses and Other expense, net.

4.Amounts included in Cost of products and services sold and Other expense, net.

5.Amounts include pension income (expense), repositioning charges, and other expenses.

Note 17**. Subsequent Events**

Completion of Spin-Off from Honeywell

On June 29, 2026, the Spin-off was completed through a pro-rata distribution of all of the Company’s issued and outstanding common shares to Honeywell’s shareholders of record as of the close of business on the Record Date, at which time each holder of Honeywell’s common shares received one Aerospace common share for every two Honeywell common shares held as of the Record Date, resulting in the Distribution of 316,939,750 shares of the Company’s common shares to Honeywell shareholders. Upon completion of the Distribution, the Company commenced “regular way” trading as an independent public company under the ticker symbol “HONA” on Nasdaq.

In connection with the Spin-off, the Company and Honeywell entered into definitive agreements which set forth the terms and conditions of the Spin-off and provide a framework for the Company’s relationship with Honeywell following the Spin-off as follows:

The Separation and Distribution Agreement sets forth, among other things, the Company’s agreements with Honeywell regarding the principal actions to be taken in connection with the Spin-off. It also sets forth other agreements that govern certain aspects of the Company’s ongoing relationship with Honeywell following the Distribution.
The Transition Services Agreement governs certain transitional services to be provided by Honeywell to the Company on an interim, transitional basis. The services, including, but not limited to global real estate support, information technology support, finance administration support, and human resources support, will be provided for a limited time, generally for no longer than two years following the Distribution Date, and will be provided for specified fees, which are generally based on the cost of services provided.
The Tax Matters Agreement governs the Company’s and Honeywell’s respective rights, responsibilities, and obligations with respect to tax liabilities and benefits, tax attributes, the


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preparation and filing of tax returns, the control of audits and other tax proceedings, and other matters regarding taxes. The Tax Matters Agreement provides special rules that allocate tax liabilities in the event the share distribution or certain related transactions fail to qualify for their intended tax consequences.

The Employee Matters Agreement addresses employment and employee compensation and benefits matters. The Employee Matters Agreement addresses the allocation and treatment of assets and liabilities relating to employees and compensation and benefit plans and programs in which the Company’s employees participated prior to the Spin-off.
The Intellectual Property License Agreement governs the terms by which each of the Company and Honeywell, and their respective affiliates, grant and receive perpetual non-exclusive licenses to and from each other in respect of certain patents and other intellectual property rights owned by the licensing party or its group, excluding rights in trademarks and certain other intellectual property rights that may be addressed in separate agreements between the parties or their respective affiliates.
The Trademark License Agreement provides the Company a license to use “Honeywell Aerospace” and certain other trademarks in its operation of the Aerospace business, including in the names of Honeywell Aerospace and certain of its subsidiaries, subject to certain restrictions. The agreement includes exclusivity terms with respect to the use of “Honeywell Aerospace” and certain other uses, subject to certain exceptions, including exceptions permitting the Company to continue to market and sell products and services under the “Honeywell” mark. The Trademark License Agreement includes customary quality control provisions to protect and preserve the goodwill associated with “Honeywell” and the other licensed marks. In exchange, the Company will pay Honeywell an aggregate amount of $1,125 million over a period of less than five years, with an initial payment of $18.75 million due within five days of the Distribution date followed by 59 equal monthly payments of $18.75 million. Costs associated with the Honeywell trademark license are expensed as incurred.

Commercial Paper Program

On June 29, 2026, the Company entered into a commercial paper program to issue unsecured commercial paper notes up to $4.0 billion, with maturities up to 397 days. Commercial paper notes are sold at par less a discount representing an interest factor, or if interest bearing, at par.

Debt Exchange

On July 6, 2026, the Company filed a Registration Statement on Form S-4 (“Registration Statement”) which included an offer to exchange (the “Exchange Offer”) each series of the Initial Notes for registered notes of like principal (“New Notes” and, together with the Initial Notes, “Notes”). The Initial Notes were originally issued on March 16, 2026, in a private offering in connection with the Spin-off. The terms of the New Notes are identical in all material respects to the terms of the Initial Notes of corresponding series, except that the New Notes are registered under the Securities Act of 1933, will not contain restrictions on transfer or provisions relating to additional interest, and will not entitle their holders to registration rights. The SEC declared the Registration Statement effective on July 13, 2026. The Company expects the Exchange Offer to close in the third quarter of 2026.

Share Repurchase Authorization

On July 23, 2026, the Company’s Board of Directors authorized a share repurchase program under which the Company may repurchase up to $3.5 billion of the Company’s outstanding common stock. The program has no fixed expiration date and may be modified, suspended, or discontinued at any time at the discretion of the Board. As of the date of this filing, no repurchases have been made under the program.


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