Company Delivers Fourth Quarter EPS Growth of 7% Despite Tough
Economic Environment MORRIS TOWNSHIP, N.J., Jan. 30
/PRNewswire-FirstCall/ -- Honeywell (NYSE: HON) today announced
full-year 2008 sales increased 6% to $36.6 billion from $34.6
billion in 2007. Earnings per share were up 19% to $3.76 versus
$3.16 in the prior year. Cash flow from operations was $3.8 billion
and free cash flow (cash flow from operations less capital
expenditures), excluding cash taxes relating to the sale of the
Consumables Solutions (CS) business, was $3.1 billion. Free cash
flow conversion (free cash flow divided by net income) was 110% of
net income for the full-year, excluding the CS taxes. Fourth
quarter sales were $8.7 billion versus $9.3 billion in 2007.
Earnings per share were $0.97 versus $0.91 in the prior year fourth
quarter. Cash flow from operations was $1.3 billion and excluding
CS taxes, free cash flow was $1.1 billion. Fourth quarter free cash
flow conversion was 155% of net income, excluding the CS taxes.
"Having great positions in good industries combined with strong
execution drove Honeywell's performance and growth in a tough 2008
economic environment," said Honeywell Chairman and Chief Executive
Officer Dave Cote. "Our key initiatives, including the Honeywell
Operating System, Velocity Product Development and Functional
Transformation, are working, and we're a much stronger company
today because of their ongoing global implementation. In 2008, we
were awarded large multi-year contracts and continued to be a
strong cash generator. We also made acquisitions to bolster our
portfolio, completed meaningful share repurchases, and increased
the dividend rate." "2009 will be a more challenging year,"
concluded Cote. "However, the actions we've taken over the past
several years will benefit us in this economic downturn and have
made Honeywell a more efficient, innovative, and productive
company. We are well positioned and confident in our ability to
outperform in 2009 and over the long-term." Honeywell also
reaffirmed its previously stated 2009 earnings per share guidance
of $3.20-3.55. Fourth Quarter Segment Highlights Aerospace -- Sales
declined 1%, compared with the fourth quarter of 2007, as a result
of a net decrease from acquisitions and divestitures (primarily the
sale of the Consumables Solutions business), partially offset by
strong sales to Business and General Aviation Original Equipment
customers. Sales, excluding the impact of acquisitions and
divestitures, were up 2%. -- Segment profit grew 1%, while segment
margin increased by 40 bps to 19.2%, driven by sales mix, partially
offset by inflation. -- Honeywell was selected to provide main
engine propulsion, Auxiliary Power Unit, environmental system and
cabin pressurization equipment and aircraft lighting for the new
Gulfstream G250 business aircraft in an agreement valued at more
than $4 billion over the life of the program (including
aftermarket). -- Honeywell received a $65 million production
contract for its Micro Air Vehicle, known as the T-Hawk(TM), from
the U.S. military. Deliveries of 90 systems will begin in the
second quarter of 2009 and conclude in December 2009. The
autonomous vehicle, weighing 17 pounds and measuring 14 inches in
diameter, can fly to inspect hazardous areas for threats without
exposing warfighters to enemy fire. -- Honeywell was awarded a $52
million contract to deliver F124-GA-200 engines to Alenia
Aermacchi, a Finmeccanica Company, for the production of the
Advanced Jet Trainer M-346. The design and durability of this
engine delivers unrivaled performance over other aircraft engines,
enabling it to maintain specified thrust levels for a longer period
of time. Automation and Control Solutions -- Sales were up 3%,
compared with the fourth quarter of 2007, with net growth from
acquisitions and divestitures, offset by the unfavorable impact of
foreign exchange. -- Segment profit grew 12%, while segment margin
increased by 110 bps to 13.4%, driven by increased productivity,
partially offset by inflation. -- Building Solutions was awarded an
Indefinite Delivery Indefinite Quantity Energy Savings Performance
Contract (ESPC) by the U.S. Department of Energy, which allows
Honeywell to implement up to $5 billion of energy efficiency,
renewable energy and water conservation projects at federally owned
buildings and facilities globally over the next 10 years. --
Process Solutions announced an $11 million contract to provide
process control hardware and software to Nuon's Magnum plant, a
1,300 megawatt combined-cycle power station under construction in
Eemshaven, Netherlands. The Magnum plant will use Honeywell's
Experion(R) Process Knowledge System to monitor and control the
state-of-the-art power station and Honeywell's Safety Manager
system to establish safety practices such as process and emergency
shutdowns, equipment protection, and fire and gas monitoring. --
Honeywell signed Public-Private Partnership (P3) contracts for 18
new schools in Alberta, Canada and a new hospital in Woodstock,
Ontario. The projects include the design and installation of
building automation, security, and life safety systems and
management of the performance and maintenance of the facilities
over the course of the 30-year contracts. Transportation Systems --
Sales declined 35% compared with the fourth quarter of 2007, due to
lower volumes and the unfavorable impact of foreign exchange. --
Segment profit was down 96% primarily due to volume declines and
inflation. -- Turbo Technologies was awarded contracts expected to
total more than $90 million over the life of the programs. The
programs awarded were for both passenger and commercial vehicle
platforms using Honeywell's performance-enhancing,
emission-compliant technologies including the latest Variable
Nozzle Turbine (VNT) technology. The applications range from 1.7L
passenger vehicle engines to large 7L commercial vehicle engines on
models in Europe and Japan. Specialty Materials -- Sales declined
12% compared with the fourth quarter of 2007, due to lower volumes
and the unfavorable impact of foreign exchange. -- Segment profit
was down 16% due to volume declines and inflation. -- UOP's process
technology helped develop second-generation biofuels used by Air
New Zealand, Japan Airlines and Continental Airlines, which each
successfully completed demonstration flights using this new
alternative fuel. -- Advanced Fibers and Composites announced that
its high-strength Spectra fiber is now being used in industrial
slings for offshore oil and gas exploration and has also expanded
its line of Spectra Shield II ballistic material for body and
vehicle armor. Honeywell will discuss its results during its
investor conference call today starting at 8:00 a.m. EST. To
participate, please dial (719) 325-4755 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 30, until
midnight, February 6, by dialing (719) 457-0820. The access code is
3381490. Honeywell International is a $37 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. For additional information, please visit
http://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 economic and industry 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. Contacts: Media
Investor Relations Robert C. Ferris Murray Grainger (973) 455-3388
(973) 455-2222 Honeywell International Inc. Consolidated Statement
of Operations (Unaudited)
------------------------------------------------ (In millions
except per share amounts) Three Months Twelve Months Ended Ended
December 31, December 31, ------------ ------------ 2008 2007 2008
2007 ---- ---- ---- ---- Product sales $6,849 $7,475 $29,212
$27,805 Service sales 1,863 1,800 7,344 6,784 ----- ----- -----
----- Net sales 8,712 9,275 36,556 34,589 ----- ----- ------ ------
Costs, expenses and other Cost of products sold (A) 5,294 5,851
23,043 21,629 Cost of services sold (A) 1,229 1,162 4,951 4,671
----- ----- ----- ----- 6,523 7,013 27,994 26,300 Selling, general
and administrative expenses (A) 1,179 1,205 5,033 4,565 Other
(income) expense (12) (6) (728) (53) Interest and other financial
charges 114 125 456 456 --- --- --- --- 7,804 8,337 32,755 31,268
----- ----- ------ ------ Income before taxes 908 938 3,801 3,321
Tax expense 201 249 1,009 877 --- --- ----- --- Net income $707
$689 $2,792 $2,444 ==== ==== ====== ====== Earnings per share of
common stock - basic $0.97 $0.92 $3.79 $3.20 ===== ===== =====
===== Earnings per share of common stock - assuming dilution $0.97
$0.91 $3.76 $3.16 ===== ===== ===== ===== Weighted average number
of shares outstanding - basic 729 747 737 765 === === === ===
Weighted average number of shares outstanding - assuming dilution
730 758 744 774 === === === === (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 expense, and stock compensation expense. Honeywell
International Inc. Segment Data (Unaudited)
------------------------- (Dollars in millions) Three Months Twelve
Months Ended Ended December 31, December 31, ------------
------------ Net Sales 2008 2007 2008 2007 --------- ---- ---- ----
---- Aerospace $3,229 $3,267 $12,650 $12,236 Automation and Control
Solutions 3,534 3,442 14,018 12,478 Specialty Materials 1,086 1,240
5,266 4,866 Transportation Systems 863 1,326 4,622 5,009 Corporate
- - - - --- --- --- --- Total $8,712 $9,275 $36,556 $34,589 ======
====== ======= ======= Reconciliation of Segment Profit to Income
Before Taxes
------------------------------------------------------- Three
Months Twelve Months Ended Ended December 31, December 31,
------------ ------------ Segment Profit 2008 2007 2008 2007
-------------- ---- ---- ---- ---- Aerospace $619 $614 $2,300
$2,197 Automation and Control Solutions 474 425 1,622 1,405
Specialty Materials 112 134 721 658 Transportation Systems 6 146
406 583 Corporate (51) (45) (204) (189) --- --- ---- ---- Total
Segment Profit 1,160 1,274 4,845 4,654 Other income/ (expense) (A)
(2) 6 665 53 Interest and other financial charges (114) (125) (456)
(456) Stock compensation expense (B), (C) (21) (11) (128) (65)
Pension and other postretirement expense (B) (24) (71) (113) (322)
Repositioning and other charges (B) (91) (135) (1,012) (543) ---
---- ------ ---- Income before taxes $908 $938 $3,801 $3,321 ====
==== ====== ====== (A) Equity income/(loss) of affiliated companies
is included in Segment Profit, on a prospective basis, commencing
January 1, 2008. Other income/(expense) as presented above includes
equity income/(loss) of affiliated companies of $3 and $10 million
for the three and twelve months ended December 31, 2007,
respectively. (B) Amounts included in cost of products and services
sold and selling, general and administrative expenses. (C) Costs
associated with restricted stock units ("RSU") are excluded from
Segment Profit, on a prospective basis, commencing January 1, 2008.
Stock compensation expense, including RSU expense, totaled $17 and
$112 million for the three and twelve months ended December 31,
2007, respectively. Stock option expense is included for all
periods presented. Honeywell International Inc. Consolidated
Balance Sheet (Unaudited) --------------------------------------
(Dollars in millions) December 31, December 31, 2008 2007 ---- ----
ASSETS Current assets: Cash and cash equivalents $2,065 $1,829
Accounts, notes and other receivables 6,129 6,387 Inventories 3,848
3,861 Deferred income taxes 922 1,241 Other current assets 299 367
--- --- Total current assets 13,263 13,685 Investments and
long-term receivables 670 500 Property, plant and equipment - net
4,934 4,985 Goodwill 10,185 9,175 Other intangible assets - net
2,267 1,498 Insurance recoveries for asbestos related liabilities
1,029 1,086 Deferred income taxes 2,135 637 Prepaid pension benefit
cost 62 1,256 Other assets 945 983 --- --- Total assets $35,490
$33,805 ======= ======= LIABILITIES AND SHAREOWNERS' EQUITY Current
liabilities: Accounts payable $3,773 $3,962 Short-term borrowings
56 64 Commercial paper 1,431 1,756 Current maturities of long-term
debt 1,023 418 Accrued liabilities 6,006 5,741 ----- ----- Total
current liabilities 12,289 11,941 Long-term debt 5,865 5,419
Deferred income taxes 698 734 Postretirement benefit obligations
other than pensions 1,799 2,025 Asbestos related liabilities 1,538
1,405 Other liabilities 6,114 3,059 Shareowners' equity 7,187 9,222
----- ----- Total liabilities and shareowners' equity $35,490
$33,805 ======= ======= Honeywell International Inc. Consolidated
Statement of Cash Flows (Unaudited)
------------------------------------------------- (Dollars in
millions) Three Months Twelve Months Ended Ended December 31,
December 31, ------------ ------------ 2008 2007 2008 2007 ----
---- ---- ---- Cash flows from operating activities: Net income
$707 $689 $2,792 $2,444 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 210 217 903 837 Gain on sale of non-strategic
businesses and assets - 2 (635) (19) Repositioning and other
charges 92 135 1,013 543 Net payments for repositioning and other
charges (209) (149) (446) (504) Pension and other postretirement
expense 24 71 113 322 Pension and other postretirement benefit
payments (61) (134) (214) (300) Stock compensation expense 21 11
128 65 Deferred income taxes (133) 163 115 332 Excess tax benefits
from share based payment arrangements - (18) (21) (86) Other 53 5
81 180 Changes in assets and liabilities, net of the effects of
acquisitions and divestitures: Accounts, notes and other
receivables 857 136 392 (467) Inventories 232 107 (161) (183) Other
current assets 29 (19) 25 17 Accounts payable (362) 124 (152) 397
Accrued liabilities (201) 100 (142) 333 ---- --- ---- --- Net cash
provided by operating activities 1,259 1,440 3,791 3,911 -----
----- ----- ----- Cash flows from investing activities:
Expenditures for property, plant and equipment (332) (310) (884)
(767) Proceeds from disposals of property, plant and equipment 1 11
53 98 Increase in investments (2) - (6) (20) Decrease in
investments 4 6 18 6 Cash paid for acquisitions, net of cash
acquired (73) (584) (2,181) (1,150) Proceeds from sales of
businesses, net of fees paid (12) - 909 51 Other 61 - 68 - -- -- --
-- Net cash used for investing activities (353) (877) (2,023)
(1,782) ---- ---- ------ ------ Cash flows from financing
activities: Net (decrease) increase in commercial paper (784) (221)
(325) 1,078 Net decrease in short-term borrowings (23) (7) (1) (3)
Payment of debt assumed with acquisitions - - - (40) Proceeds from
issuance of common stock 4 86 146 603 Proceeds from issuance of
long- term debt - - 1,487 1,885 Payments of long-term debt (3) (15)
(428) (430) Excess tax benefits from share based payment
arrangements - 18 21 86 Repurchases of common stock - (203) (1,459)
(3,986) Cash dividends paid on common stock (201) (187) (811) (767)
---- ---- ---- ---- Net cash used for financing activities (1,007)
(529) (1,370) (1,574) ------ ---- ------ ------ Effect of foreign
exchange rate changes on cash and cash equivalents (126) 8 (162) 50
---- - ---- -- Net (decrease) increase in cash and cash equivalents
(227) 42 236 605 Cash and cash equivalents at beginning of period
2,292 1,787 1,829 1,224 ----- ----- ----- ----- Cash and cash
equivalents at end of period $2,065 $1,829 $2,065 $1,829 ======
====== ====== ====== Honeywell International Inc. Reconciliation of
Cash Provided by Operating Activities to
---------------------------------------------------------- Free
Cash Flow (Unaudited) -------------------------- (Dollars in
millions) Three Months Twelve Months Ended Ended December 31,
December 31, ------------ ------------ 2008 2007 2008 2007 ----
---- ---- ---- Cash provided by operating activities $1,259 $1,440
$3,791 $3,911 Expenditures for property, plant and equipment (332)
(310) (884) (767) ---- ---- ---- ---- Free cash flow 927 1,130
2,907 3,144 --- ----- ----- ----- Cash taxes relating to the sale
of the Consumables Solutions business 166 - 166 - --- - --- - Free
cash flow excluding cash taxes relating to the sale of the
Consumables Solutions business $1,093 $1,130 $3,073 $3,144 ======
====== ====== ====== We define free cash flow as cash provided by
operating activities, less cash expenditures for property, plant
and equipment. We believe that free cash flow and free cash flow,
less cash taxes related to the sale of the Consumables Solutions
business, are useful to investors and management as measures 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. These metrics 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.
DATASOURCE: Honeywell CONTACT: Media, Robert C. Ferris,
+1-973-455-3388, , or investor relations, Murray Grainger,
+1-973-455-2222, , both of Honeywell Web Site:
http://www.honeywell.com/
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