Honeywell International
Honeywell 2004 Earnings Per Share $1.68; Cash from Operations $2.3 Billion;
Fourth-Quarter Earnings Per Share $0.49 and Cash from Operations $766 Million;
2005 Earnings Per Share Range Increased to $1.95-$2.05
Honeywell (NYSE: HON) today announced 2004 full-year earnings of $1.68 per
share, in line with prior guidance and up 9% versus 2003. Sales of $25.6 billion
were up 11% compared to 2003, resulting from organic growth in all four
operating segments. Full-year cash flow from operations was $2.3 billion and
free cash flow (cash flow from operations less capital expenditures) was $1.6
billion.
Fourth-quarter earnings were $0.49 per share, in line with prior guidance and up
4% versus 2003. Sales of $6.6 billion were up 7% from 2003, including the impact
of fewer reporting days in the fourth quarter versus prior year. Free cash flow
was $540 million.
"In 2004, Honeywell experienced strong organic growth in each of its operating
segments; exceeded its sales, earnings and cash targets; and executed on key
acquisitions and divestitures," said Honeywell Chairman and Chief Executive
Officer Dave Cote. "We announced a 10% increase in our dividend, our first
increase in five years, and moved to bolster our Automation and Control
Solutions business with our announced offer to acquire the shares of Novar plc.
Overall, 2004 was a year of significant progress across the company."
"In the fourth quarter, we continued to experience improvements in our end
markets and results from our investments in growth initiatives," continued Cote.
"Aerospace won new contracts on Boeing's 7E7 Dreamliner, continued to grow its
strong defense business and benefited from another quarter of increased global
flying hours. Automation and Control Solutions continued to experience orders
growth in both Building and Process Solutions, with key installation, energy
retrofit and overseas contract wins. In Transportation Systems, Turbo
Technologies recorded its tenth consecutive quarter of double-digit sales
growth. Specialty Materials continued to grow its core portfolio and completed
the divestiture of its non-core Performance Fibers business."
Honeywell increased its 2005 EPS range to $1.95-$2.05, in light of strong order
rates, as well as lower than anticipated 2005 non-cash pension expense.
Honeywell will review its results during its investor webcast at 8:00 a.m. EST
today. The webcast and related presentation materials will be available at
www.honeywell.com/investor.
Fourth-Quarter Segment Highlights
Sales comparisons set forth below include the impact of fewer reporting days in
the 2004 fourth quarter versus prior year.
Aerospace
-- Sales were up 7%, compared with the fourth quarter of 2003, as a result
of 10% growth in Commercial and 4% growth in Defense and Space sales.
-- Segment margins were 16.9%, compared with 15.9% a year ago, due to
strong volume and productivity gains.
-- Honeywell's Astreon(TM) light emitting diode systems were selected for
flight critical exterior lighting on Boeing's 7E7 Dreamliner. This is
Honeywell's fourth award on the 7E7, bringing the total potential
program value to in excess of $2.6 billion.
-- The Department of Defense awarded Honeywell a $40 million contract to
develop an Organic Air Vehicle for extended range operation in adverse
weather to provide battlefield and/or area surveillance and
reconnaissance.
Automation and Control Solutions
-- Sales were up 4%, compared with the fourth quarter of 2003, as a result
of organic growth and favorable foreign currency exchange, offset by the
impact of the second quarter divestiture of Security Monitoring.
-- Segment margins were 12.1%, compared with 12.3% a year ago, reflecting
favorable volume conversion, more than offset by continued investment
and the impact of the divestiture of Security Monitoring.
-- Honeywell acquired majority ownership in its Tata Honeywell joint
venture in Pune, India, providing a platform for growth in the region.
-- Building Solutions established a new standard in seaport safety and
security to meet U.S. Department of Homeland Security requirements and
was awarded over $7 million in contracts to install digital surveillance
systems for the Ports of San Juan, Puerto Rico, and Mobile, Alabama.
-- Process Solutions was awarded a $60 million contract for an automation
project at Naftec Spa's refinery in Arzew, Algeria.
Transportation Systems
-- Sales were up 13%, compared with the fourth quarter of 2003, primarily
due to continued strong demand for our proprietary Turbo technologies.
-- Segment margins were 12.8%, compared with 13.2% a year ago, due to
increased raw material prices, partially offset by strong volume
conversion.
-- Turbo Technologies was selected by Daewoo Motors of South Korea to
provide its latest generation VNT(TM) turbo technology for Daewoo's
2.0-liter diesel.
-- Consumer Products Group continued to introduce new, high-value products
with its rollout of FRAM(R) High Mileage oil filters.
Specialty Materials
-- Sales were up 9%, compared with the fourth quarter of 2003, as a result
of continued growth in core businesses and improved pricing.
-- Segment margins were 5.4%, compared with 4.7% a year ago, due to
increases in price and core volume, partially offset by higher raw
material costs in non-core businesses.
-- Honeywell acquired sole ownership of its GEM Microelectronics Materials
joint venture, which provides ultra-high purity straight, wet-etch and
cleaning chemistries to the semiconductor industry.
-- Specialty Materials continued to execute on its portfolio repositioning,
and completed the divestiture of its Performance Fibers business.
Honeywell International is a $26 billion diversified technology and
manufacturing leader, serving customers worldwide with aerospace products and
services; control technologies for buildings, homes and industry; automotive
products; turbochargers; and specialty materials. Based in Morris Township,
N.J., Honeywell's shares are traded on the New York, London, Chicago and Pacific
Stock Exchanges. It is one of the 30 stocks that make up the Dow Jones
Industrial Average and is also a component of the Standard & Poor's 500 Index.
For additional information, please visit www.honeywell.com.
This release contains forward-looking statements as defined in Section 21E of
the Securities Exchange Act of 1934, including statements about future business
operations, financial performance and market conditions. Such forward-looking
statements involve risks and uncertainties inherent in business forecasts as
further described in our filings under the Securities Exchange Act.
Honeywell International Inc.
Consolidated Statement of Operations (Unaudited)
------------------------------------------------
(In millions except per share amounts)
Three Months Ended
December 31,
------------------
2004 2003
------- -------
Net sales $6,640 $6,187
------- -------
Costs, expenses and other
Cost of goods sold 5,180 (A) 4,972 (C)
Selling, general and administrative expenses 865 (A) 756 (C)
(Gain) loss on sale of non-strategic
businesses 15 (B) 2 (D)
Equity in (income) loss of affiliated
companies (34) (27)
Other (income) expense (14)(A) 35
Interest and other financial charges 84 82
------- -------
6,096 5,820
------- -------
Income before taxes 544 367
Tax expense (benefit) 125 (40)
------- -------
Net income $419 $407
======= =======
Earnings per share of common stock - basic $0.49 $0.47
======= =======
Earnings per share of common stock - assuming
dilution $0.49 $0.47
======= =======
Weighted average number of shares outstanding-
basic 854 864
======= =======
Weighted average number of shares outstanding -
assuming dilution 857 866
======= =======
(A) Cost of goods sold, selling, general and administrative expenses
and other (income) expense include provisions of $77, $16 and $5
million, respectively, for environmental, litigation, business
impairment, net repositioning and other charges. The total net
pretax charges were $98 million (after-tax $61 million, or $0.07
per share).
(B) Represents the pretax loss on the sale of our Performance Fibers
business, and adjustments related to businesses sold in prior
periods (after-tax $3 million, with no effect on earnings per
share).
(C) Cost of goods sold and selling, general and administrative
expenses include provisions (credits) of $217 and ($3) million
respectively, for environmental, net repositioning and other
charges. Total net pretax charges were $214 million (after-tax
$19 million, or $0.02 per share). The after-tax charge includes a
tax benefit associated with the redesignation of our Friction
Materials business from held for sale to held and used.
(D) Represents adjustments to sales of non-strategic businesses in the
third quarter of 2003 (after-tax loss $2 million, with no effect
on earnings per share).
Honeywell International Inc.
Consolidated Statement of Operations (Unaudited)
------------------------------------------------
(In millions except per share amounts)
Twelve Months Ended
December 31,
-----------------------
2004 2003
-------- --------
Net sales $25,601 $23,103
-------- --------
Costs, expenses and other
Cost of goods sold 20,425 (A) 18,235 (D)
Selling, general and administrative
expenses 3,316 (A) 2,950 (D)
(Gain) loss on sale of non-strategic
businesses (255)(B) (38)(E)
Equity in (income) loss of affiliated
companies (82)(A) (38)(D)
Other (income) expense (92)(A)(C) 19 (F)
Interest and other financial charges 331 335
-------- --------
23,643 21,463
-------- --------
Income before taxes and cumulative effect
of accounting change 1,958 1,640
Tax expense 511 296
-------- --------
Income before cumulative effect of
accounting change 1,447 1,344
Cumulative effect of accounting change - (20)(G)
-------- --------
Net income $1,447 $1,324
======== ========
Earnings per share of common stock - basic:
Income before cumulative effect of
accounting change $1.68 $1.56
Cumulative effect of accounting change - (0.02)(G)
-------- --------
Net income $1.68 $1.54
======== ========
Earnings per share of common stock -
assuming dilution:
Income before cumulative effect of
accounting change $1.68 $1.56
Cumulative effect of accounting change - (0.02)(G)
-------- --------
Net income $1.68 $1.54
======== ========
Weighted average number of shares
outstanding-basic 859 861
======== ========
Weighted average number of shares
outstanding -
assuming dilution 862 862
======== ========
(A) Cost of goods sold, selling, general and administrative expenses,
equity in (income) loss of affiliated companies and other (income)
expense include provisions of $461, $25, $6 and $5 million,
respectively, for environmental, litigation, business impairment,
net repositioning and other charges. Total net pretax charges were
$497 million (after-tax $310 million, or $0.36 per share).
(B) Represents the pretax gains on the sales of our VCSEL Optical
Products and Security Monitoring businesses, the pretax loss on
the sale of our Performance Fibers business, and adjustments
related to businesses sold in prior periods (after-tax $144
million, or $0.17 per share).
(C) Includes a gain of $27 million (after-tax $17 million, or $0.02
per share) related to the settlement of a patent infringement
lawsuit.
(D) Cost of goods sold, selling, general and administrative expenses
and equity in (income) loss of affiliated companies include
provisions of $272, $4 and $2 million, respectively, for
environmental, net repositioning and other charges. Total net
pretax charges were $278 million (after-tax $41 million, or $0.05
per share). The after-tax charge includes tax benefits from the
redesignation of our Friction Materials business from held for
sale to held and used and a tax settlement related to a prior year
asset impairment.
(E) Represents the pretax gain on the sale of our Engineering Plastics
and several other non-strategic businesses (after-tax $4 million,
with no effect on earnings per share). The after-tax gain includes
tax benefits associated with prior capital losses.
(F) Includes a gain of $20 million (after-tax $15 million, or $0.02
per share) related to the settlement of a patent infringement
lawsuit.
(G) Effective January 1, 2003, we adopted Statement of Financial
Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations" (SFAS No. 143). SFAS No. 143 requires recognition of
the fair value of obligations associated with the retirement of
tangible long- lived assets when there is a legal obligation to
incur such costs. This adoption resulted in an after-tax
cumulative effect expense adjustment of $20 million, or $0.02 per
share.
Honeywell International Inc.
Segment Data (Unaudited)
------------------------
(Dollars in millions)
Net Sales Periods Ended December 31,
--------- ---------------------------------
Three Months Twelve Months
--------------- -----------------
2004 2003 2004 2003
------- ------- -------- --------
Aerospace $2,523 $2,359 $9,748 $8,813
Automation and Control Solutions 2,122 2,035 8,031 7,464
Specialty Materials 864 792 3,497 3,169
Transportation Systems 1,130 1,000 4,323 3,650
Corporate 1 1 2 7
------- ------- -------- --------
Total $6,640 $6,187 $25,601 $23,103
======= ======= ======== ========
Segment Profit Periods Ended December 31,
-------------- ---------------------------------
Three Months Twelve Months
--------------- -----------------
2004 2003 2004 2003
------- ------- -------- --------
Aerospace $426 $374 $1,479 $1,221
Automation and Control Solutions 257 251 894 843
Specialty Materials 47 37 184 136
Transportation Systems 145 132 575 461
Corporate (41) (43) (158) (142)
------- ------- -------- --------
Total Segment Profit 834 751 2,974 2,519
Gain (loss) on sale of non-strategic
businesses (15) (2) 255 38
Equity in income of affiliated
companies 34 27 82 38
Other income (expense) 14 (35) 92 (19)
Interest and other financial charges (84) (82) (331) (335)
Pension and other postretirement
benefits (expense) (A) (146) (78) (628) (325)
Repositioning, environmental,
litigation, business
impairment and other charges (A) (93) (214) (486) (276)
------- ------- -------- --------
Income before taxes and
cumulative effect
of accounting change $544 $367 $1,958 $1,640
======= ======= ======== ========
(A) Amounts included in cost of goods sold and selling, general and
administrative expenses.
Honeywell International Inc.
Consolidated Balance Sheet (Unaudited)
--------------------------------------
(Dollars in millions)
December December
31, 31,
2004 2003
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $3,701 $2,950
Accounts, notes and other receivables 4,243 3,643
Inventories 3,160 3,040
Deferred income taxes 1,238 1,526
Other current assets 542 465
-------- --------
Total current assets 12,884 11,624
Investments and long-term receivables 427 569
Property, plant and equipment - net 4,331 4,295
Goodwill 6,013 5,789
Other intangible assets - net 1,241 1,098
Insurance recoveries for asbestos related
liabilities 1,412 1,317
Deferred income taxes 598 342
Prepaid pension benefit cost 2,985 3,173
Other assets 1,105 1,107
-------- --------
Total assets $30,996 $29,314
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Accounts payable $2,564 $2,240
Short-term borrowings 28 152
Commercial paper 220 -
Current maturities of long-term debt 956 47
Accrued liabilities 4,901 4,314
-------- --------
Total current liabilities 8,669 6,753
Long-term debt 4,069 4,961
Deferred income taxes 444 316
Postretirement benefit obligations other than
pensions 1,713 1,683
Asbestos related liabilities 2,006 2,279
Other liabilities 2,677 2,593
Shareowners' equity 11,418 10,729
-------- --------
Total liabilities and shareowners' equity $30,996 $29,314
======== ========
Certain prior year amounts have been reclassified to conform with the
current year presentation.
Honeywell International Inc.
Consolidated Statement of Cash Flows (Unaudited)
------------------------------------------------
(Dollars in millions)
Three Months Twelve Months
Ended Ended
December 31, December 31,
---------------- ----------------
2004 2003 2004 2003
-------- ------- -------- -------
Cash flows from operating
activities:
Net income $419 $407 $1,447 $1,324
Adjustments to reconcile net
income to net cash provided
by operating activities:
Cumulative effect of
accounting change - - - 20
(Gain) loss on sale of non-
strategic businesses 15 2 (255) (38)
Repositioning,
environmental, litigation
and business
impairment charges 98 214 497 278
Severance and exit cost
payments (41) (53) (164) (200)
Environmental and non-
asbestos litigation
payments (142) (32) (273) (91)
Asbestos related liability
payments (94) (90) (518) (557)
Insurance receipts for
asbestos related
liabilities 6 187 67 664
Depreciation and
amortization 156 176 650 661
Undistributed earnings of
equity affiliates (22) (27) (75) (38)
Deferred income taxes 183 (11) 335 344
Pension and other
postretirement benefits
expense 146 78 628 325
Pension contributions - U.S.
Plans (30) (500) (40) (670)
Other postretirement benefit
payments (55) (60) (207) (203)
Other (19) 119 (121) (16)
Changes in assets and
liabilities, net of the
effects of
acquisitions and
divestitures:
Accounts, notes and
other receivables (152) (164) (470) (236)
Inventories (42) 101 (84) 118
Other current assets (78) 1 (77) (20)
Accounts payable 222 122 408 240
Accrued liabilities 196 33 505 294
-------- ------- -------- -------
Net cash provided by operating
activities 766 503 2,253 2,199
-------- ------- -------- -------
Cash flows from investing
activities:
Expenditures for property, plant
and equipment (226) (248) (629) (655)
Proceeds from disposals of
property, plant and equipment 26 24 38 37
Decrease in investments - - 80 -
Cash paid for acquisitions (164) (75) (384) (199)
Proceeds from sales of
businesses 35 - 426 137
-------- ------- -------- -------
Net cash (used for) investing
activities (329) (299) (469) (680)
-------- ------- -------- -------
Cash flows from financing
activities:
Net increase (decrease) in
commercial paper 200 - 220 (201)
Net increase (decrease) in
short-term borrowings 5 - (121) 81
Proceeds from issuance of common
stock 12 15 74 54
Payments of long-term debt (6) (66) (29) (147)
Repurchases of common stock (382) (37) (724) (37)
Cash dividends on common stock (160) (162) (643) (645)
-------- ------- -------- -------
Net cash (used for) financing
activities (331) (250) (1,223) (895)
-------- ------- -------- -------
Effect of foreign exchange rate
changes on cash and cash
equivalents 162 126 190 305
-------- ------- -------- -------
Net increase in cash and cash
equivalents 268 80 751 929
Cash and cash equivalents at
beginning of period 3,433 2,870 2,950 2,021
-------- ------- -------- -------
Cash and cash equivalents at end of
period $3,701 $2,950 $3,701 $2,950
======== ======= ======== =======
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,
------------- ---------------
2004 2003 2004 2003
------- ----- ------- -------
Cash provided by operating activities $766 $503 $2,253 $2,199
Expenditures for property, plant and
equipment (226) (248) (629) (655)
------- ----- ------- -------
Free cash flow $540 $255 $1,624 $1,544
======= ===== ======= =======
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.
CONTACT: Honeywell
Media
Robert C. Ferris, 973-455-3388
rob.ferris@honeywell.com
or
Investor Relations
Nicholas Noviello, 973-455-2222
nicholas.noviello@honeywell.com
Honeywell (LSE:HON)
Historical Stock Chart
From Jun 2024 to Jul 2024
Honeywell (LSE:HON)
Historical Stock Chart
From Jul 2023 to Jul 2024
