EX-99 2 c52107_ex99.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing
     
News Release    
 
Contacts:    
Media   Investor Relations
Robert C. Ferris   Murray Grainger
(973) 455-3388   (973) 455-2222
rob.ferris@honeywell.com   murray.grainger@honeywell.com

HONEYWELL REPORTS 2007 FULL YEAR SALES UP 10%TO $34.6
BILLION; EARNINGS PER SHARE UP 25% TO $3.16

Fourth Quarter Sales Up 12% to $9.3 Billion; EPS Up 26% to $0.91

          MORRIS TOWNSHIP, N.J., January 25, 2008 -- Honeywell (NYSE: HON) today announced full-year 2007 sales increased 10% to $34.6 billion from $31.4 billion in 2006. Earnings per share were up 25% to $3.16 versus $2.52 in the prior year. Cash flow from operations increased 22% to $3.9 billion versus $3.2 billion in 2006, and free cash flow (cash flow from operations less capital expenditures) was up 27% to $3.1 billion versus $2.5 billion in the prior year.

          Fourth quarter sales were up 12% to $9.3 billion versus $8.3 billion in 2006. Earnings per share increased 26% to $0.91 versus $0.72 in the prior year fourth quarter. Cash flow from operations was up 16% to $1.4 billion versus $1.2 billion in the prior year, and free cash flow was up approximately 20% to $1.1 billion versus $0.9 billion in the fourth quarter of 2006.

          “2007 was another terrific year for Honeywell,” said Honeywell Chairman and Chief Executive Officer Dave Cote. “Our great positions in good industries, together with favorable macro trends, drove growth across each of our four business segments in 2007. The year’s highlights included major contract wins, more than $1 billion in acquisitions, and approximately $4 billion in share repurchases, all driving shareowner value.”

          “While we anticipate softer global economic conditions in 2008, we remain confident in Honeywell’s ability to outperform,” added Cote. “We will continue to invest in innovation, expand globally, and execute on productivity initiatives to drive double digit earnings per share growth and higher free cash flow in 2008.”

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Q4 Results - 2
Segment Highlights

Aerospace

  • Sales were up 11%, compared with the fourth quarter of 2006, driven by 12% growth in Commercial and 9% growth in Defense and Space sales. Commercial sales reflected growth of 15% in original equipment and 10% in aftermarket spares and services. Defense and Space sales included the positive impact of the Dimensions International acquisition.

  • Segment profit grew 14%, while segment margin increased by 60 bps to 18.8%, driven by productivity gains, price, and volume growth, which more than offset the negative impact from inflation.

  • Honeywell signed a $1 billion contract with AirTran Airways to supply avionics on new aircraft and provide maintenance on AirTran’s entire fleet through 2030. AirTran selected Honeywell’s full avionics portfolio, including Enhanced Ground Proximity Warning System, Airborne Collision Avoidance System, Weather Radar with Forward-Looking Windshear Detection, Flight Data Recorder and Cockpit Voice Recorders, for up to 150 new Boeing 737s. Honeywell will also provide maintenance services for all of its equipment on AirTran’s entire fleet – up to 250 aircraft – including avionics, lighting, mechanical components, Auxiliary Power Units, and wheels and brakes. This is the largest commercial aftermarket services contract ever awarded to Honeywell Aerospace.

  • Honeywell has been selected to provide its Runway Awareness and Advisory System to Emirates Airlines to assist its pilots with increased situational awareness during taxi, takeoff, and landing. Honeywell’s system helps prevent runway incursions as airports are becoming increasingly more crowded. In addition to Emirates, the system has also been installed on Air France, Alaska Airlines, Fed Ex, Thai Airways, Malaysia Airlines, and Lufthansa Airlines.

  • Honeywell received Technical Standard Order approval for Synthetic Vision from the Federal Aviation Administration. Synthetic Vision utilizes a digitized database of worldwide terrain and obstacles to provide pilots with a 3-dimensional, real-time view of terrain and obstacles on an aircraft’s primary display in any weather condition. The first application for this technology will be for Gulfstream aircraft.

Automation and Control Solutions

  • Sales were up 13%, compared with the fourth quarter of 2006, driven by 9% growth in the Products businesses and 20% growth in the Solutions businesses.

  • Segment profit grew 10%, while segment margin decreased by 20 bps to 12.4%, due to volume growth and productivity savings, which were more than offset by the negative impact of inflation, ERP implementation costs, and sales mix

  • Building Solutions announced a $4 million project with Arnot Ogden Medical Center in Elmira, N.Y., to install renewable energy technology, including the installation of a wood chip-fired boiler and an upgrade of the facility's infrastructure, which will provide nearly 60% of the energy consumed by the center's Main Medical Center. The business also won a $5 million energy performance project with Fort Jackson, Columbia, S.C., to provide a variety of energy conservation measures to ensure that the 10-million-square-foot Fort's building control systems are running at peak efficiency.

  • Process Solutions introduced OneWireless™ Equipment Health Monitoring (EHM), the latest addition to Honeywell’s portfolio of industrial wireless solutions. OneWireless EHM will wirelessly transmit performance information from the field to the plant control room, helping reduce equipment failures and lower maintenance costs.

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Q4 Results - 3

  • Honeywell announced a project with Shell Perdido in Louisiana for 59 Excel Optima Short range detectors and accessories for their Fire and Emergency Equipment Systems project. The project will help Shell standardize all offshore oil and gas production platforms in the Gulf of Mexico region.

Transportation Systems

  • Sales were up 11% compared with the fourth quarter of 2006, driven by the favorable impact of foreign exchange and pricing actions.

  • Segment profit was up 6% as a result of the net benefit from price and productivity actions, while segment margin decreased 60 bps to 11.0% due to investments in new products and inflation.

  • Turbo Technologies won two programs estimated at approximately $95 million in annual revenues at full production. The programs include commercial diesel and passenger vehicle gasoline engines and will both be launched in Europe beginning in 2009.

  • Consumer Products Group announced that Wal-Mart will add its premium spark plug, Autolite® Double Platinum, at 2,400 Wal-Mart stores in 2008.

Specialty Materials

  • Sales were up 14% compared with the fourth quarter of 2006, driven by growth in all businesses, particularly in UOP and Resins & Chemicals.

  • Segment profit grew 70%, while segment margin increased by 350 bps to 10.8%, primarily due to increased prices and productivity savings.

  • Honeywell's Enovate® blowing agent is helping insulate walls in China’s National Stadium, host to the 2008 Olympic Games. The technology will help the stadium meet strict energy efficiency and environmental guidelines that are required by government construction authorities and the international Olympic Committee. The stadium is the first major public building in China to incorporate Enovate.

  • UOP’s Ecofining technology was selected by Galp Energia, Portugal’s largest refiner, to produce diesel fuel from vegetable oils. Galp Energia will process 6,500 barrels of vegetable oils per day, supplying European refineries with a high-cetane “green” diesel fuel to help meet increased demand for high-quality, clean fuels, and biofuels. Green diesel is produced from renewable resources and generates lower emissions than either biodiesel or traditional petroleum-based diesel. It can be used as a drop in replacement fuel in current diesel engines without modifications. In addition, Newfoundland & Labrador Refining Corp. selected UOP to supply technology, basic engineering services, and equipment for the first new fuel refinery to be built in North America since 1984.

          Honeywell will discuss its results during its investor conference call today starting at 8:00 a.m. EST. To participate, please dial (706) 643-7681 a few minutes before the 8:00 a.m. start. Please mention to the operator that you are dialing in for Honeywell's investor conference call. The live webcast of the investor call will be available through the “Investor Relations” section of the company's Website (http://www.honeywell.com/investor). Investors can access a replay of the conference call from 11:00 a.m. EST, January 25, until midnight, February 1, by dialing (706) 645-9291. The access code is 29135611.

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Q4 Results - 4

Honeywell International is a $36 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 and Chicago 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.

This release contains 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 this release 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, and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements.

#   #   #


Q4 Results - 5

Honeywell International Inc.
Consolidated Statement of Operations (Unaudited)
(In millions except per share amounts)

 

   
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
   
December 31,
 
   
2007
   
2006
   
2007
   
2006
 
 
Product sales  
$
7,475    
$
  6,644    
$
27,805     $ 25,165  
Service sales     1,800       1,632       6,784       6,202  
Net sales     9,275       8,276       34,589       31,367  
Costs, expenses and other                                  
Cost of products sold (A)     5,851       5,179       21,629       19,649  
Cost of services sold (A)     1,162       1,179       4,671       4,447  
      7,013       6,358       26,300       24,096  
Selling, general and administrative expenses (A)     1,205       1,085       4,565       4,210  
Other (income) expense     (6 )       (42 )     (53 )     (111
)
Interest and other financial charges     125         94       456       374  
      8,337       7,495       31,268       28,569  
Income from continuing operations before taxes     938         781       3,321       2,798  
Tax expense     249         196       877       720  
Income from continuing operations     689         585       2,444       2,078  
Income from discontinued operations, net of taxes    
-
     
-
   
-
      5  
Net income  
$
689    
$
  585    
$
2,444    
$
2,083  
 
Earnings per share of common stock - basic:  
               
           
   Income from continuing operations  
$
0.92    
$
  0.72    
$
3.20     $ 2.53  
   Income from discontinued operations    
-
       
-
     
-
      0.01  
   Net income  
$
0.92    
$
  0.72    
$  .
3.20     $ 2.54  
 
Earnings per share of common stock - assuming dilution:  
     
       
           
   Income from continuing operations  
$
0.91    
$
  0.72    
$
3.16     $ 2.51  
   Income from discontinued operations    
-
       
-
   
-
      0.01  
   Net income  
$
0.91    
$
  0.72    
$ 
3.16     $ 2.52  
 
Weighted average number of shares outstanding-basic     747         811       765       821  
 
Weighted average number of shares outstanding -                                  
   assuming dilution     758         817       774       826  

 

(A) Cost of products and services sold and selling, general and administrative expenses include amounts for repositioning and other charges, pension and other post-retirement benefits expense, and stock option expense.

 


Q4 Results - 6

Honeywell International Inc.
Segment Data (Unaudited)
(Dollars in millions)

 

   
Three Months Ended
Twelve Months Ended
 
   
December 31,
December 31,
 
Net Sales  
2007
2006
2007
2006
 
Aerospace  
$
3,267     $ 2,955    
$
12,236     $ 11,124  
Automation and Control Solutions  
3,442       3,045     12,478       11,020  
Specialty Materials  
1,240       1,083       4,866       4,631  
Transportation Systems  
1,326       1,193       5,009       4,592  
Corporate    
-
     
-
      -       -  
     Total
 
$
9,275     $ 8,276    
$
34,589     $ 31,367  
 
Reconciliation of Segment Profit to Income From Continuing Operations Before Taxes
           
 
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
   
December 31,
 
Segment Profit  
2007
2006
2007
2006
 
Aerospace  
$
614     $ 538     $ 2,197     $ 1,892  
Automation and Control Solutions  
425       385       1,405       1,223  
Specialty Materials  
134       79       658       568  
Transportation Systems  
146       138       583       574  
Corporate     (45 )     (43 )     (189 )     (177
)
     Total Segment Profit  
1,274       1,097       4,654       4,080  
Other income (expense)  
6       42       53       111  
Interest and other financial charges  
(125 )     (94 )     (456 )     (374
)
Stock option expense (A)  
(11 )     (16 )     (65 )     (77
)
Pension and other postretirement expense (A)  
(71 )     (115 )     (322 )     (459
)
Repositioning and other charges (A)     (135 )     (133 )     (543 )     (483
)
     Income from continuing operations before taxes  
$
938     $ 781     $ 3,321     $ 2,798  

      (A) Amounts included in cost of products and services sold and selling, general and administrative expenses.

 


Q4 Results - 7

Honeywell International Inc.
Consolidated Balance Sheet (Unaudited)
(Dollars in millions)

 

   
December 31,
December 31,
   
2007
2006
 
ASSETS            
Current assets:            
   Cash and cash equivalents   $ 1,829   $ 1,224
   Accounts, notes and other receivables     6,387     5,740
   Inventories     3,861     3,588
   Deferred income taxes     1,241     1,215
   Other current assets     367     537
                     Total current assets     13,685     12,304
 
Investments and long-term receivables     500     382
Property, plant and equipment - net     4,985     4,797
Goodwill     9,175     8,403
Other intangible assets - net     1,498     1,247
Insurance recoveries for asbestos related liabilities     1,086     1,100
Deferred income taxes     611     1,075
Prepaid pension benefit cost     1,444     695
Other assets     984     938
                     Total assets   $ 33,968   $ 30,941
 
LIABILITIES AND SHAREOWNERS' EQUITY            
Current liabilities:            
   Accounts payable   $ 3,962   $ 3,518
   Short-term borrowings     64     62
   Commercial paper     1,756     669
   Current maturities of long-term debt     418     423
   Accrued liabilities     5,741     5,463
                     Total current liabilities     11,941     10,135
 
Long-term debt     5,419     3,909
Deferred income taxes     795     352
Postretirement benefit obligations other than pensions     2,016     2,090
Asbestos related liabilities     1,405     1,262
Other liabilities     3,010     3,473
Shareowners' equity     9,382     9,720
                     Total liabilities and shareowners' equity   $ 33,968   $ 30,941

 


Q4 Results - 8

Honeywell International Inc.
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)

 

   
Three Months Ended
 
Twelve Months Ended
 
   
December 31,
 
December 31,
 
     
2007
 
2006
 
2007
 
2006
 
Cash flows from operating activities:                                
   Net income  
$
689    
$
585    
$
2,444    
$
2,083  
   Adjustments to reconcile net income to net cash provided                                
   by operating activities:                                
       Depreciation and amortization     217       198       837       794  
       Repositioning and other charges     135       133       543       483  
       Net (payments) for repositioning and other charges     (149 )     (224 )     (504 )     (559 )
       Pension and other postretirement expense     71       115       322       459  
       Pension and other postretirement benefit payments     (134 )     (95 )     (300 )     (353 )
       Stock option expense     11       16       65       77  
       Deferred income taxes     163       27       332       450  
       Excess tax benefits from share based payment arrangements     (18 )     (31 )     (86 )     (31 )
       Other     7       18       161       20  
       Changes in assets and liabilities, net of the effects of                                
       acquisitions and divestitures:                                
           Accounts, notes and other receivables     136       (28 )     (467 )     (573 )
           Inventories     107       137       (183 )     (128 )
           Other current assets     (19 )     (5 )     17       (11 )
           Accounts payable     124       301       397       516  
           Accrued liabilities     100       94       333       (16 )
Net cash provided by operating activities     1,440       1,241       3,911       3,211  
 
Cash flows from investing activities:                                
   Expenditures for property, plant and equipment     (310 )     (300 )     (767 )     (733 )
   Proceeds from disposals of property, plant and equipment     11       42       98       87  
   Increase in investments    
-
     
-
      (20 )    
-
 
   Decrease in investments     6      
-
      6      
-
 
   Cash paid for acquisitions, net of cash acquired     (584 )     (10 )     (1,150 )     (633 )
   Proceeds from sales of businesses, net of fees paid    
-
      86       51       665  
Net cash (used for) investing activities     (877 )     (182 )     (1,782 )     (614 )
 
Cash flows from financing activities:                                
   Net increase/(decrease) in commercial paper     (221 )     299       1,078       (86 )
   Net decrease in short-term borrowings     (7 )     (9 )     (3 )     (224 )
   Payment of debt assumed with acquisitions    
-
-
      (40 )     (346 )
   Proceeds from issuance of common stock     86       118       603       396  
   Proceeds from issuance of long-term debt    
-
     
-
      1,885       1,239  
   Payments of long-term debt     (15 )     (648 )     (430 )     (1,019 )
   Excess tax benefits from share based payment arrangements     18       31       86       31  
   Repurchases of common stock     (203 )     (876 )     (3,986 )     (1,896 )
   Cash dividends paid on common stock     (187 )     (184 )     (767 )     (744 )
Net cash (used for) financing activities     (529 )     (1,269 )     (1,574 )     (2,649 )
 
Effect of foreign exchange rate changes on cash and cash equivalents     8       19       50       42  
 
Net increase/(decrease) in cash and cash equivalents     42       (191 )     605       (10 )
Cash and cash equivalents at beginning of period     1,787       1,415       1,224       1,234  
Cash and cash equivalents at end of period  
$
1,829    
$
1,224    
$
1,829    
$
1,224  

 


Q4 Results - 9

Honeywell International Inc.
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited)
(Dollars in millions)

 

   
Three Months Ended
 
Twelve Months Ended
 
   
December 31,
 
December 31,
 
   
2007
2006
2007
2006
 
Cash provided by operating activities   $ 1,440     $ 1,241     $ 3,911     $ 3,211  
Expenditures for property, plant and equipment     (310 )     (300 )     (767 )     (733
)
Free cash flow   $ 1,130     $ 941     $ 3,144     $ 2,478  

We define free cash flow as cash provided by operating activities, less cash expenditures for property, plant and equipment.

We believe that this metric is useful to investors and management as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, and to pay dividends, repurchase stock, or repay debt obligations prior to their maturities. This metric can also be used to evaluate our ability to generate cash flow from business operations and the impact that this cash flow has on our liquidity.