Exhibit 99
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Honeywell
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NEWS RELEASE
Contact:
Media Investors
Xxxx Xxxxxxxxx Xxx Xxxxxxxxx
000-000-0000 000-000-0000
xxxxxxx.xxxxxxxxx@xxxxxxxxx.xxx xxx.xxxxxxxxx@xxxxxxxxx.xxx
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HONEYWELL'S FIRST-QUARTER EARNINGS PER SHARE
ARE 32 CENTS BEFORE REQUIRED IMPLEMENTATION
OF NEW ACCOUNTING STANDARD
FIRST-QUARTER REVENUES ARE UP 4% TO $5.4 BILLION;
CASH FLOW FROM OPERATIONS ROSE 17% TO $473 MILLION;
FREE CASH FLOW GAINED 43% TO $368 MILLION
XXXXXX TOWNSHIP, N.J., April 17, 2003 -- Honeywell (NYSE: HON) today
said the company's first-quarter earnings per share before the cumulative effect
of the required implementation of Statement of Financial Accounting Standards
No. 143 (SFAS 143) were 32 cents per share, in line with prior earnings
guidance.
Earnings per share after the required implementation of SFAS 143 were
30 cents, compared with 46 cents in the first quarter of 2002. The difference
in earnings per share was due to:
- nine cents from higher pension expense, including the effect of
dilution from the prior year contribution of shares to the
company's pension plans;
- two cents from the cumulative effect of the required
implementation of SFAS 143;
- two cents from lower equity income, primarily due to the sale of
Commercial Vehicle Braking Systems at the end of the first
quarter of 2002, and the gain on that sale, less repositioning
and other charges;
- two cents from lower volume in higher margin businesses in this
quarter; and
- one cent from spending on growth programs, product
launches, and facility relocations.
First-quarter revenues were $5.4 billion, up 4% compared with the first
quarter of 2002 due to favorable foreign exchange resulting from the effect of a
weaker U.S. dollar. Organic growth was flat and the impact of acquisitions was
offset by divestitures. Year-over-year, revenues increased in three of
Honeywell's four operating segments as Transportation and Power Systems (TPS)
rose 16%, Automation and Control Solutions was up 7%, and Specialty Materials
gained 3%. Revenues in Aerospace declined 1%.
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2-results
Organic growth in Defense & Space, Turbochargers, Industry Solutions,
Electronic Materials and Fluorines, and the revenues from the acquisitions of
Invensys Sensor Systems and Ultrak's closed-circuit television business were
offset by declines in Commercial Aerospace and ACS Service as well as the
dispositions of Advanced Circuits, Pharmaceutical Fine Chemicals and ACS'
Consumer Products business.
Free cash flow in the quarter was $368 million, up 43% compared with
$258 million in the same period last year. Cash flow from operations was $473
million, up 17% compared with $405 million in the year-ago period.
In the first quarter, segment profit margins were 8.4% compared with
10.8% in the same period last year. The increase in pension costs accounted for
1.7 percentage points of the margin decline, while the remainder was due to
lower volume in higher margin businesses and spending on growth programs,
product launches and facility relocations.
"We continue to address the critical issues facing the company and
relentlessly drive our growth processes across the entire organization," said
Honeywell Chairman and Chief Executive Officer Xxxxx Xxxx. "Despite a
challenging economic environment, several of our businesses achieved solid
volume increases in the quarter. We had another strong quarter of cash
generation, with our cash conversion over 100%.
"We continued to strengthen our portfolio in core growth areas by
integrating our Invensys Sensor Systems and Ultrak's closed-circuit television
acquisitions, and completing the acquisitions of Gamewell, a world leader in
fire controls and fire detection technology, and Xxxxxxxx, a leading supplier of
pressure, force and wireless sensors.
"We also entered into definitive agreements to sell our Engineering
Plastics business to BASF for $90 million in cash plus BASF's Nylon Fibers
business. Completion of this transaction will allow us to create a fully
integrated nylon business with the scale and synergies to make it a more
valuable asset with the flexibility to serve the needs of its customers, while
at the same time exiting a non-core compounding business.
"Taken as a whole," Xx. Xxxx added, "these actions will create a
stronger, better positioned and more flexible Honeywell."
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3-results
First-Quarter Segment Highlights
Aerospace - Revenues were down 1%, compared with the 2002 first
quarter. Strong sales in Defense & Space, and Business and General Aviation
aftermarket were more than offset by declines in Commercial Aerospace as many
commercial airline customers struggle financially and business jet manufacturers
have reduced their delivery forecasts. Segment margins were 10.6%, down from
14.7%, due to an increase in pension costs and continued decline in the sales of
higher margin commercial spares.
Aerospace's Runway Awareness and Advisory System, a new technology that
advises pilots of potential ground-based collisions, was demonstrated to more
than 150 pilots from airlines, corporate flight departments and the Federal
Aviation Administration (FAA). The company anticipates FAA certification later
this year. Aerospace was also selected to provide digital fire control for all
mortar systems in the U.S. Army, a contract with a potential value of $250
million over the next five years. The U.S. Army's Consolidated Fire Control for
Mortars represents the Army's desire for commonality across an entire line of
mortar weapons systems.
Automation and Control Solutions - Revenues were up 7%, compared with
the first quarter of 2002 due to acquisitions and favorable foreign exchange.
Organic growth in Industry Solutions as well as the acquisitions of Invensys
Sensor Systems and Ultrak's closed-circuit television business were more than
offset by the disposition of Consumer Products as well as lower sales in ACS
Service due to softness in capital spending as well as commercial and
residential construction. Segment margins were 10.8%, compared with 12.9% in the
first quarter of 2002, driven by increased pension costs and a decline in higher
margin sales in ACS Service.
During the first quarter, Industry Solutions announced it had eclipsed
the $200 million mark in total orders for its Experion PKS'TM', the
next-generation business, process and asset management system introduced in
April 2002. Deliveries of the system began as scheduled in February 2003. The
successful rollout of Experion PKS continued as Industry Solutions announced
several key competitive wins in the quarter, including ConocoPhillips, Shin-Etsu
and Wintershall Noordzee. Experion PKS automates, controls and monitors
manufacturing operations, boosting capacity and cost-effectiveness for our
customers.
Specialty Materials - Revenues were up 3%, compared with the first
quarter of 2002. Sales increases in all businesses were partially offset by the
disposition of Advanced Circuits and Pharmaceutical Fine Chemicals. Fluorine
Products was up 12% organically on strong sales of non-ozone depleting
hydrofluorocarbons as a result of conversions to next-generation refrigerants
and foam-blowing agents. Segment margins were 1.3%, compared with 1.1% in the
prior year.
During the quarter, Fluorines solidified its position as the premier
supplier of environmentally safer fluorocarbons by launching Enovate'TM' 3000
(HFC-245fa), the leading non-ozone depleting replacement for rigid-insulating
foams, and beginning commercial operation at its new facility for HFC-125, one
of the key components of all major non-ozone depleting refrigerants.
Specialty Materials also announced it agreed to sell its Engineering
Plastics unit to BASF for $90 million in cash plus BASF's Nylon Fiber business.
The transaction was part of Specialty Materials' plan to rationalize its
business by improving current financial performance and long-term growth
prospects.
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4-results
Transportation and Power Systems - Revenues increased 16% year-over-
year driven by six points of organic growth and ten points of favorable foreign
exchange. Sales continued to be strong in turbochargers, particularly in Asia
and North America; and in Prestone'r' products. Segment margins were 8.9%,
down from 10.1% a year ago, reflecting increased pension costs, spending on new
programs and facility relocations.
In the first quarter, TPS' Xxxxxxx Engine Boosting Systems unit ramped
up production of its Advanced Variable Nozzle Turbine (AVNT) turbocharger for
commercial vehicles. AVNT takes the pioneering variable geometry turbocharger
technology that Xxxxxxx provides for passenger cars and applies it to the truck
market so commercial vehicle makers are able to meet increasingly stringent
emissions requirements.
On Jan. 1, 2003, Honeywell adopted SFAS No. 143, "Accounting for Asset
Retirement Obligations," which 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. As a result of the
implementation of SFAS 143, the company recorded a $20 million after-tax
non-cash charge, or two cents per share.
Honeywell will discuss its 2003 first-quarter results during its
investor webcast beginning at 8:30 am ET today. The webcast and related
presentation materials will be available at xxx.xxxxxxxxx.xxx/xxxxxxxx.
Honeywell is a diversified technology and manufacturing leader, serving
customers worldwide with aerospace products and services; control technologies
for buildings, homes and industry; turbochargers; automotive products; specialty
chemicals; fibers; and electronic and advanced materials. Based in Xxxxxx
Township, N.J., Honeywell is one of 30 stocks that make up the Dow Xxxxx
Industrial Average and is a component of the Standard & Poor's 500 Index. Its
shares are traded on the New York Stock Exchange under the symbol HON, as well
as on the London, Chicago and Pacific Stock Exchanges. For more information
about Honeywell, visit xxx.xxxxxxxxx.xxx.
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.
# # #
5-results
Honeywell International Inc.
Consolidated Statement of Operations (Unaudited)
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(In millions except per share amounts)
Three Months Ended March 31,
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2003 2002
----------------- ------------------
Net sales $ 5,399 $ 5,199
----------------- ------------------
Costs, expenses and other
Cost of goods sold 4,240 4,073 (B)
Selling, general and administrative expenses 703 617 (B)
(Gain) on sale of non-strategic businesses - (125)(C)
Business impairment charges - 43 (B)
Equity in (income) loss of affiliated companies 2 (7)(B)
Other (income) expense (3) (16)
Interest and other financial charges 84 87
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5,026 4,672
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Income before taxes and cumulative effect of accounting change 373 527
Tax expense 99 151
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Income before cumulative effect of accounting change 274 376
Cumulative effect of accounting change (20)(A) -
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Net income $ 254 $ 376
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Earnings per share of common stock - basic:
Income before cumulative effect of accounting change $ 0.32 $ 0.46
Cumulative effect of accounting change (0.02)(A) -
----------------- ------------------
Net income $ 0.30 $ 0.46
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Earnings per share of common stock - assuming dilution:
Income before cumulative effect of accounting change $ 0.32 $ 0.46
Cumulative effect of accounting change (0.02)(A) -
----------------- ------------------
Net income $ 0.30 $ 0.46
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Weighted average number of shares outstanding - basic 857 817
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Weighted average number of shares outstanding -
assuming dilution 858 820
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(A) 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 adjustment of
expense of $20 million, or $0.02 per share.
(B) Cost of goods sold and selling, general and administrative expenses
include provisions of $46 and $4 million, respectively, for net
repositioning charges. Equity in (income) loss of affiliated companies
includes a charge of $3 million principally for severance actions by an
investee. Including business impairment charges, total net pretax
charges were $96 million (after-tax $69 million, or $0.08 per share).
(C) Represents the pretax gain on the disposition of our Bendix Commercial
Vehicle Systems business (after-tax $79 million, or $0.09 per share).
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6-results
Honeywell International Inc.
Segment Data (Unaudited)
(Dollars in millions)
Net Sales Three Months Ended March 31,
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2003 2002
---------------- ---------------
Aerospace $ 2,062 $ 2,089
Automation and Control Solutions 1,717 1,609
Specialty Materials 777 758
Transportation and Power Systems 840 726
Corporate 3 17
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Total $ 5,399 $ 5,199
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Segment Profit Three Months Ended March 31,
-------------- ----------------------------
2003 2002
---------------- ---------------
Aerospace $ 218 $ 307
Automation and Control Solutions 185 207
Specialty Materials 10 8
Transportation and Power Systems 75 73
Corporate (32) (36)
---------------- ---------------
Total Segment Profit 456 559
Gain on sale of non-strategic businesses - 125
Business impairment charges - (43)
Equity in income (loss) of affiliated companies (2) 7
Other income 3 16
Interest and other financial charges (84) (87)
Repositioning charges included in cost of goods sold
and selling, general and administrative expenses - (50)
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Income before taxes and cumulative effect
of accounting change $ 373 $ 527
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7-results
Honeywell International Inc.
Consolidated Balance Sheet (Unaudited)
(Dollars in millions)
March 31, December 31,
2003 2002
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ASSETS
Current assets:
Cash and cash equivalents $ 2,290 $ 2,021
Accounts, notes and other receivables 3,297 3,264
Inventories 3,049 2,953
Deferred income taxes 1,297 1,296
Other current assets 887 661
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Total current assets 10,820 10,195
Investments and long-term receivables 626 624
Property, plant and equipment - net 4,080 4,055
Goodwill - net 5,752 5,698
Other intangible assets - net 1,080 1,074
Insurance recoveries for asbestos related liabilities 1,360 1,636
Deferred income taxes 511 533
Prepaid pension benefit cost 2,646 2,675
Other assets 1,086 1,069
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Total assets $27,961 $27,559
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LIABILITIES & SHAREOWNERS' EQUITY
Current liabilities:
Accounts payable $ 2,023 $ 1,912
Short-term borrowings 58 60
Commercial paper 378 201
Current maturities of long-term debt 47 109
Accrued liabilities 4,383 4,292
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Total current liabilities 6,889 6,574
Long-term debt 4,721 4,719
Deferred income taxes 416 419
Postretirement benefit obligations other than pensions 1,688 1,684
Asbestos related liabilities 2,490 2,700
Other liabilities 2,533 2,538
Shareowners' equity 9,224 8,925
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Total liabilities and shareowners' equity $27,961 $27,559
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8-results
Honeywell International Inc.
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
Three Months Ended
March 31,
------------------------------------
2003 2002
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Cash flows from operating activities:
Net income $ 254 $ 376
Adjustments to reconcile net income to net cash provided
by operating activities:
Cumulative effect of accounting change 31 -
(Gain) on sale of non-strategic businesses - (125)
Repositioning charges - 53
Business impairment charges - 43
Insurance receipts for asbestos related liabilities 2 20
Asbestos related liability payments (31) (8)
Depreciation 142 176
Undistributed earnings of equity affiliates 2 (10)
Deferred income taxes 49 121
Other (25) (136)
Changes in assets and liabilities, net of the effects of
acquisitions and divestitures:
Accounts, notes and other receivables (29) 170
Inventories (90) (9)
Other current assets 42 6
Accounts payable 110 (48)
Accrued liabilities 16 (224)
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Net cash provided by operating activities 473 405
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Cash flows from investing activities:
Expenditures for property, plant and equipment (105) (147)
Proceeds from disposals of property, plant and equipment - 8
Cash paid for acquisitions (90) (16)
Proceeds from sales of businesses - 96
Decrease in short-term investments - 7
--------------- ---------------
Net cash (used for) investing activities (195) (52)
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Cash flows from financing activities:
Net increase in commercial paper 177 237
Net (decrease) in short-term borrowings (2) (60)
Proceeds from issuance of common stock 24 22
Payments of long-term debt (47) (200)
Cash dividends on common stock (161) (153)
--------------- ---------------
Net cash (used for) financing activities (9) (154)
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Net increase in cash and cash equivalents 269 199
Cash and cash equivalents at beginning of period 2,021 1,393
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Cash and cash equivalents at end of period $ 2,290 $ 1,592
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9-results
Honeywell International Inc.
Reconciliation of Cash Provided by Operating Activities
to Free Cash Flow (Unaudited)
(Dollars in Millions)
Three Months Ended
March 31,
----------------------------------------
2003 2002
----------------- ------------------
Cash provided by operating activities $ 473 $ 405
Expenditures for property, plant and equipment (105) (147)
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Free cash flow $ 368 $ 258
================= ==================
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 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. 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.
