as sediment remedial plans which are presently under review by the court.
The above-referenced site is the most significant of the twenty-one sites located in Hudson County, New Jersey that are the subject of an Administrative Consent Order (ACO) entered into with the New Jersey Department of Environmental Protection (NJDEP) in 1993. Remedial investigations and activities consistent with the ACO have been conducted and are underway at the other sites (the “Honeywell ACO Sites”). We have recorded reserves for the Honeywell ACO Sites where appropriate under the accounting policy described above.
On May 3, 2005, NJDEP filed a lawsuit in New Jersey Superior Court against Honeywell and two other companies seeking declaratory and injunctive relief, unspecified damages, and the reimbursement of unspecified total costs relating to sites in New Jersey allegedly contaminated with chrome ore processing residue. The claims against Honeywell relate to the activities of a predecessor company which ceased its New Jersey manufacturing operations in the mid-1950’s. Honeywell and the two other companies have agreed to settle this litigation with NJDEP, subject to court approval. Under the settlement, Honeywell would pay $5 million of NJDEP’s past costs, as well as accept sole responsibility to remediate 24 of the 53 “Publicly Funded Sites” (i.e., those sites for which none of the three companies had previously accepted responsibility). Honeywell would also bear 50% of the costs at another 10 Publicly Funded Sites. We have recorded reserves for the Publicly Funded Sites where appropriate under the accounting policy described above.
Lawsuits were previously filed against Honeywell and other landowners by Jersey City and two of its municipal utility authorities, and separately by a citizens group seeking, the cleanup of chromium residue at several of the Honeywell ACO Sites under the federal Resource Conservation and Recovery Act (RCRA). Honeywell, Jersey City, the municipal utility authorities and the citizens group have agreed to settle these claims, which settlement is subject to Court approval, and classification by Jersey City of these and other related sites as an area in need of redevelopment and approval of the related redevelopment plan and agreement. As part of this settlement, Honeywell has also agreed to release claims it may have had against Jersey City and its municipal utility authorities for contamination of river sediments and for the remediation of chrome residue at the Publicly Funded Sites that are sewer lines. The remedial actions contemplated by this settlement are consistent with our recorded reserves.
Dundalk Marine Terminal, Baltimore—Chrome residue from legacy chrome plant operations in Baltimore was deposited as fill at the Dundalk Marine Terminal (“DMT”), which is owned and operated by the Maryland Port Administration (“MPA”). Honeywell and the MPA have been sharing costs to investigate and mitigate related environmental issues, and have entered into a cost sharing agreement under which Honeywell will bear a 77 percent share of the costs of developing and implementing permanent remedies for the DMT facility. The investigative phase (which began in April 2006) is expected to take a total of approximately 36 months, after which the appropriate remedies will be identified and chosen. We have negotiated a Consent Decree with the MPA and Maryland Department of the Environment (“MDE”) with respect to the investigation and remediation of the DMT facility. The Consent Decree is being challenged in federal court by BUILD, a Baltimore community group, together with a local church and two individuals (collectively “BUILD”). In October 2007, the Court dismissed BUILD’s state law claims with prejudice and dismissed BUILD’s RCRA claims regarding neighborhoods near the DMT facility without prejudice. BUILD has since sent notice letters indicating that they intend to re-file these latter claims, which we will continue to oppose. The Court has scheduled a hearing in the second quarter of 2008 on the Company’s motion to dismiss BUILD’s remaining claims on the grounds that MDE is diligently prosecuting the investigation and remediation of the DMT. We do not believe that this matter will have a material adverse impact on our consolidated financial position or operating cash flows. Given the scope and complexity of this project, it is
possible that the cost of remediation, when determinable, could have a material adverse impact on our results of operations in the periods recognized.
Onondaga Lake, Syracuse, NY—A predecessor company to Honeywell operated a chemical plant which is alleged to have contributed mercury and other contaminants to the Lake. In July 2005, the New York State Department of Environmental Conservation (the DEC) issued its Record of Decision with respect to remediation of industrial contamination in the Lake. In October 2006, Honeywell entered into a Consent Decree with the State of New York to implement the remedy set forth in the Record of Decision. In January 2007, the Consent Decree was approved by the United States District Court for the Northern District of New York.
The Record of Decision calls for a combined dredging/capping remedy generally in line with the approach recommended in the Feasibility Study submitted by Honeywell in May 2004. Based on currently available information and analysis performed by our engineering consultants, we have accrued for our estimated cost of implementing the remedy set forth in the Record of Decision. Our estimating process considered a range of possible outcomes and the amounts recorded reflect our best estimate at this time. Given the scope and complexity of this project, it is possible that actual costs could exceed estimated costs by an amount that could have a material adverse impact on our consolidated results of operations and operating cash flows in the periods recognized or paid. At this time, however, we cannot identify any legal, regulatory or technical reason to conclude that a specific alternative outcome is more probable than the outcome for which we have made provisions in our financial statements. The DEC’s aggregate cost estimate, which is higher than the amount reserved, is based on the high end of the range of potential costs for major elements of the Record of Decision and includes a contingency. The actual cost of the Record of Decision will depend upon, among other things, the resolution of certain technical issues during the design phase of the remediation. We do not believe that this matter will have a material adverse impact on our consolidated financial position. In December 2006, the United States Fish and Wildlife Service published notice of its intent to pursue natural resource damages related to the site. It is not possible to predict the outcome or timing of its assessments, which are typically lengthy processes lasting several years, or the amounts of or responsibility for these damages.
Asbestos Matters
Like many other industrial companies, Honeywell is a defendant in personal injury actions related to asbestos. We did not mine or produce asbestos, nor did we make or sell insulation products or other construction materials that have been identified as the primary cause of asbestos related disease in the vast majority of claimants. Products containing asbestos previously manufactured by Honeywell or by previously owned subsidiaries primarily fall into two general categories: refractory products and friction products.
Refractory Products —Honeywell owned North American Refractories Company (NARCO) from 1979 to 1986. NARCO produced refractory products (high temperature bricks and cement) that were sold largely to the steel industry in the East and Midwest. Less than 2 percent of NARCO’S products contained asbestos.
When we sold the NARCO business in 1986, we agreed to indemnify NARCO with respect to personal injury claims for products that had been discontinued prior to the sale (as defined in the sale agreement). NARCO retained all liability for all other claims. On January 4, 2002, NARCO filed for reorganization under Chapter 11 of the U.S Bankruptcy Code.
As a result of the NARCO bankruptcy filing, all of the claims pending against NARCO are automatically stayed pending the reorganization of NARCO. In addition, the bankruptcy court enjoined both the filing and prosecution of NARCO-related asbestos claims against Honeywell. The stay has remained in effect continuously since January 4, 2002. In connection with NARCO’s bankruptcy filing, we paid NARCO’s parent company $40 million and agreed to provide NARCO with up to
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$20 million in financing. We also agreed to pay $20 million to NARCO’s parent company upon the filing of a plan of reorganization for NARCO acceptable to Honeywell (which amount was paid in December 2005 following the filing of NARCO’s Third Amended Plan of Reorganization), and to pay NARCO’s parent company $40 million, and to forgive any outstanding NARCO indebtedness to Honeywell, upon the effective date of the plan of reorganization.
We believe that, as part of NARCO plan of reorganization, a trust will be established for the benefit of all asbestos claimants, current and future, pursuant to Trust Distribution Procedures negotiated with the NARCO Asbestos Claimants Committee and the Court-appointed legal representative for future asbestos claimants. If the trust is put in place and approved by the Court as fair and equitable, Honeywell as well as NARCO will be entitled to a permanent channeling injunction barring all present and future individual actions in state or federal courts and requiring all asbestos related claims based on exposure to NARCO products to be made against the federally-supervised trust. Honeywell has reached agreement with the representative for future NARCO claimants and the Asbestos Claimants Committee to cap its annual contributions to the trust with respect to future claims at a level that would not have a material impact on Honeywell’s operating cash flows.
In November 2007, the Bankruptcy Court entered an amended order confirming the NARCO Plan without modification and approving the 524(g) trust and channeling injunction in favor of NARCO and Honeywell. In December 2007, certain insurers filed an appeal from the Bankruptcy Court’s amended confirmation order. This appeal is pending in the United States District Court for the Western District of Pennsylvania. No assurances can be given as to the time frame or outcome of this appeal. We expect that the stay enjoining litigation against NARCO and Honeywell to remain in effect during the pendency of these proceedings.
Our consolidated financial statements reflect an estimated liability for settlement of pending and future NARCO-related asbestos claims as of March 31, 2008 and December 31, 2007 of $1.1 billion. The estimated liability for pending claims is based on terms and conditions, including evidentiary requirements, in definitive agreements with approximately 260,000 current claimants, and an estimate of the unsettled claims pending as of the time NARCO filed for bankruptcy protection. Substantially all settlement payments with respect to current claims have been made. Approximately $95 million of payments due pursuant to these settlements is due only upon establishment of the NARCO trust.
The estimated liability for future claims represents the estimated value of future asbestos related bodily injury claims expected to be asserted against NARCO through 2018 and the aforementioned obligations to NARCO’s parent. In light of the uncertainties inherent in making long-term projections we do not believe that we have a reasonable basis for estimating asbestos claims beyond 2018 under SFAS No. 5, “Accounting for Contingencies”. The estimate is based upon the disease criteria and payment values contained in the NARCO Trust Distribution Procedures negotiated with the NARCO Asbestos Claimants Committee and the NARCO future claimants’ representative. Honeywell projected the probable number and value, including trust claim handling costs, of asbestos related future liabilities based upon experience of asbestos claims filing rates in the tort system and in certain operating asbestos trusts, and the claims experience in those forums. The valuation methodology also includes an analysis of the population likely to have been exposed to asbestos containing products, epidemiological studies to estimate the number of people likely to develop asbestos related diseases, NARCO claims filing history, the pending inventory of NARCO asbestos related claims and payment rates expected to be established by the NARCO trust. This methodology used to estimate the liability for future claims has been commonly accepted by numerous courts and is the same methodology that is utilized by an expert who is routinely retained by the asbestos claimants committee in asbestos related bankruptcies.
As of March 31, 2008 and December 31, 2007, our consolidated financial statements reflect an insurance receivable corresponding to the liability for
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settlement of pending and future NARCO-related asbestos claims of $936 and $939 million, respectively. This coverage reimburses Honeywell for portions of the costs incurred to settle NARCO related claims and court judgments as well as defense costs and is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. At March 31, 2008, a significant portion of this coverage is with insurance companies with whom we have agreements to pay full policy limits based on corresponding Honeywell claims costs. We conduct analyses to determine the amount of insurance that we estimate is probable of recovery in relation to payment of current and estimated future claims. While the substantial majority of our insurance carriers are solvent, some of our individual carriers are insolvent, which has been considered in our analysis of probable recoveries. We made judgments concerning insurance coverage that we believe are reasonable and consistent with our historical dealings with our insurers, our knowledge of any pertinent solvency issues surrounding insurers and various judicial determinations relevant to our insurance programs.
In the second quarter of 2006, Travelers Casualty and Insurance Company (“Travelers”) filed a lawsuit against Honeywell and other insurance carriers in the Supreme Court of New York, County of New York, disputing obligations for NARCO-related asbestos claims under high excess insurance coverage issued by Travelers and other insurance carriers. Approximately $340 million of coverage under these policies is included in our NARCO-related insurance receivable at March 31, 2008. Honeywell believes it is entitled to the coverage at issue and has filed counterclaims in the Superior Court of New Jersey seeking, among other things, declaratory relief with respect to this coverage. In the third quarter of 2007, Honeywell prevailed in the New York action on a critical choice of law issue concerning the appropriate method of allocating NARCO-related asbestos liabilities to triggered policies. The Court’s ruling is subject to appeal. While Honeywell expects to prevail in this matter, an adverse outcome could have a material impact on our results of operations in the period recognized but would not be material to our consolidated financial position or operating cash flows.
Projecting future events is subject to many uncertainties that could cause the NARCO related asbestos liabilities or assets to be higher or lower than those projected and recorded. There is no assurance that the plan of reorganization will become final, that insurance recoveries will be timely or whether there will be any NARCO related asbestos claims beyond 2018. Given the inherent uncertainty in predicting future events, we review our estimates periodically, and update them based on our experience and other relevant factors. Similarly we will reevaluate our projections concerning our probable insurance recoveries in light of any changes to the projected liability or other developments that may impact insurance recoveries.
Friction Products— Honeywell’s Bendix friction materials (Bendix) business manufactured automotive brake parts that contained chrysotile asbestos in an encapsulated form. There is a group of existing and potential claimants consisting largely of individuals who allege exposure to asbestos from brakes from either performing or being in the vicinity of individuals who performed brake replacements.
From 1981 through March 31, 2008, we have resolved approximately 114,000 Bendix related asbestos claims. Trials covering 126 plaintiffs resulted in 125 favorable verdicts and one mistrial. Trials covering ten individuals resulted in adverse verdicts; however, two of these verdicts were reversed on appeal, five are or shortly will be on appeal, and the remaining three claims were settled. The following tables present information regarding Bendix related asbestos claims activity:
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| | | Three Months Ended | | | Year Ended | |
| | | March 31, 2008 | | | December 31, | |
| | |
| | |
| |
| | | | | | |
| | | | | | 2007 | | | 2006 | |
| | | | | |
| | |
| |
| Claims Activity | | | | | | | | | |
| Claims Unresolved at the beginningof period | | 51,658 | | | 57,108 | | | 79,502 | |
| Claims Filed during the period | | 962 | | | 2,771 | | | 4,391 | |
| Claims Resolved during the period | | (668 | ) | | (8,221 | ) | | (26,785 | ) |
| | |
| | |
| | |
| |
| Claims Unresolved at the end of period | | 51,952 | | | 51,658 | | | 57,108 | |
| | |
| | |
| | |
| |
| |
| Disease Distribution of Unresolved Claims | | | | | December 31, | |
| | | | |
| |
| | | March 31, 2008 | | | 2007 | | | 2006 | |
| | |
| | |
| | |
| |
| Mesothelioma and Other Cancer Claims | | 5,218 | | | 5,011 | | | 4,843 | |
| Other Claims | | 46,734 | | | 46,647 | | | 52,265 | |
| | |
| | |
| | |
| |
| Total Claims | | 51,952 | | | 51,658 | | | 57,108 | |
| | |
| | |
| | |
| |
Approximately 45 percent of the approximately 52,000 pending claims at March 31, 2008 are on the inactive, deferred, or similar dockets established in some jurisdictions for claimants who allege minimal or no impairment. The approximately 52,000 pending claims also include claims filed in jurisdictions such as Texas, Virginia, and Mississippi that historically allowed for consolidated filings. In these jurisdictions, plaintiffs were permitted to file complaints against a predetermined master list of defendants, regardless of whether they have claims against each individual defendant. Many of these plaintiffs may not actually intend to assert claims against Honeywell. Based on state rules and prior experience in these jurisdictions, we anticipate that many of these claims will ultimately be dismissed. During 2006 approximately 16,000 cases were dismissed. More than 85 percent of these dismissals occurred in Mississippi as a result of judicial rulings relating to non-resident filings and venue. We continue to experience dismissals in this jurisdiction.
Honeywell has experienced average resolution values per claim excluding legal costs as follows:
| | | | Years Ended December 31, |
| | | |
|
| | | | 2007 | | 2006 | | | 2005 |
| | | |
| |
| | |
|
| | | | | | | | (in whole dollars) | | | | |
| Malignant claims | | | $ | 33,000 | | $ | 33,000 | | | $ | 58,000 |
| Nonmalignant claims | | | $ | 500 | | $ | 250 | | | $ | 600 |
It is not possible to predict whether resolution values for Bendix related asbestos claims will increase, decrease or stabilize in the future.
Our consolidated financial statements reflect an estimated liability for resolution of pending and future Bendix related asbestos claims of $533 and $517 million at March 31, 2008 and December 31, 2007, respectively. The estimated liability for future claims represents the estimated value of future asbestos related bodily injury claims expected to be asserted against Bendix over the next five years. In light of the uncertainties inherent in making long-term projections, as well as certain factors unique to friction product asbestos claims, we do not believe that we have a reasonable basis for estimating asbestos claims beyond the next five years under SFAS No. 5, “Accounting for Contingencies”. The estimate is based upon Bendix historical experience in the tort system for the three years ended December 31, 2007 with respect to claims filing and resolution values. The methodology used to estimate the liability for future claims has been commonly accepted by numerous courts. It is similar to that used to estimate the future NARCO related asbestos claims liability.
Honeywell currently has approximately $1.9 billion of insurance coverage remaining with respect to pending and potential future Bendix related asbestos claims, of which $122 and $197 million are reflected as receivables in our
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consolidated balance sheet at March 31, 2008 and December 31, 2007, respectively. This coverage is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. Insurance receivables are recorded in the financial statements simultaneous with the recording of the liability for the estimated value of the underlying asbestos claims. The amount of the insurance receivable recorded is based on our ongoing analysis of the insurance that we estimate is probable of recovery. This determination is based on our analysis of the underlying insurance policies, our historical experience with our insurers, our ongoing review of the solvency of our insurers, our interpretation of judicial determinations relevant to our insurance programs, and our consideration of the impacts of any settlements reached with our insurers. Insurance receivables are also recorded when structured insurance settlements provide for future fixed payment streams that are not contingent upon future claims or other events. Such amounts are recorded at the net present value of the fixed payment stream.
On a cumulative historical basis, Honeywell has recorded insurance receivables equal to approximately 50 percent of the value of the underlying asbestos claims recorded. However, because there are gaps in our coverage due to insurance company insolvencies, certain uninsured periods, and insurance settlements, this rate is expected to decline for any future Bendix related asbestos liabilities that may be recorded. Future recoverability rates may also be impacted by numerous other factors, such as future insurance settlements, insolvencies and judicial determinations relevant to our coverage program, which are difficult to predict. Assuming continued defense and indemnity spending at current levels, we estimate that the cumulative recoverability rate could decline over the next five years to approximately 40 percent.
Honeywell believes it has sufficient insurance coverage and reserves to cover all pending Bendix related asbestos claims and Bendix related asbestos claims estimated to be filed within the next five years. Although it is impossible to predict the outcome of either pending or future Bendix related asbestos claims, we do not believe that such claims would have a material adverse effect on our consolidated financial position in light of our insurance coverage and our prior experience in resolving such claims. If the rate and types of claims filed, the average resolution value of such claims and the period of time over which claim settlements are paid (collectively, the “Variable Claims Factors”) do not substantially change, Honeywell would not expect future Bendix related asbestos claims to have a material adverse effect on our results of operations or operating cash flows in any fiscal year. No assurances can be given, however, that the Variable Claims Factors will not change.
Refractory and Friction Products – the following tables summarize information concerning NARCO and Bendix asbestos related balances:
Asbestos Related Liabilities
| | | Three Months Ended | |
| | | March 31, 2008 | |
| | |
| |
| | | Bendix | | | NARCO | | | Total | |
| | |
| | |
| | |
| |
| Beginning of period | | $ | 517 | | | $ | 1,138 | | | $ | 1,655 | |
| Accrual for update to estimated liability | | | 36 | | | | — | | | | 36 | |
| Asbestos related liability payments | | | (20 | ) | | | (2 | ) | | | (22 | ) |
| | |
|
| | |
|
| | |
|
| |
| End of period | | $ | 533 | | | $ | 1,136 | | | $ | 1,669 | |
| | |
|
| | |
|
| | |
|
| |
| | | | | | | | | | | | | |
| |
| Insurance Recoveries for Asbestos Related Liabilities | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | March 31, 2008 | |
| | |
| |
| | | Bendix | | | NARCO | | | Total | |
| | |
| | |
| | |
| |
| | | | | | | | | | |
| Beginning of period | | $ | 197 | | | $ | 939 | | | $ | 1,136 | |
| Probable insurance recoveries related toestimated liability | | | 8 | | | | — | | | | 8 | |
| Insurance receipts for asbestos related liabilities | | | (82 | ) | | | (3 | ) | | | (85 | ) |
| Other | | | (1 | ) | | | — | | | | (1 | ) |
| | |
|
| | |
|
| | |
|
| |
| End of period | | $ | 122 | | | $ | 936 | | | $ | 1,058 | |
| | |
|
| | |
|
| | |
|
| |
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NARCO and Bendix asbestos related balances are included in the following balance sheet accounts:
| | | March 31, | | December 31, |
| | | 2008 | | 2007 |
| Other current assets | | $ | 51 | | $ | 50 |
| Insurance recoveries for asbestos related liabilities | | | 1,007 | | | 1,086 |
| | |
|
| |
|
|
| | | $ | 1,058 | | $ | 1,136 |
| | |
|
| |
|
|
| |
| Accrued liabilities | | $ | 250 | | $ | 250 |
| Asbestos related liabilities | | | 1,419 | | | 1,405 |
| | |
|
| |
|
|
| | | $ | 1,669 | | $ | 1,655 |
| | |
|
| |
|
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Other Matters
We are subject to a number of other lawsuits, investigations and disputes (some of which involve substantial amounts claimed) arising out of the conduct of our business, including matters relating to commercial transactions, government contracts, product liability, prior acquisitions and divestitures, employee benefit plans, intellectual property, and health and safety matters. We recognize a liability for any contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments of outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Included in these other matters are the following:
Allen, et al. v. Honeywell Retirement Earnings Plan – Pursuant to a settlement approved by the U.S. District Court for the District of Arizona in February 2008, 18 of 21 claims alleged by plaintiffs in this class action lawsuit were dismissed with prejudice in exchange for approximately $35 million and the maximum aggregate liability for the remaining three claims (alleging that Honeywell impermissibly reduced the pension benefits of certain employees of a predecessor entity when the plan was amended in 1983 and failed to calculate benefits in accordance with the terms of the plan) was capped at $500 million. Any amounts payable, including the settlement amount, will be paid from the Company’s pension plan. We continue to expect to prevail on the remaining claims in light of applicable law and our substantial affirmative defenses, which have not yet been considered by the Court. Accordingly, we do not believe that a liability is probable of occurrence and reasonably estimable with respect to these claims and we have not recorded a provision for the remaining claims in our financial statements.
Automotive Latch Systems Limited vs. Honeywell International Inc. - Plaintiff alleges breach of a joint development agreement under which the parties sought to develop, produce and sell a universal door latch assembly for automotive applications. Plaintiff seeks “lost chance” damages of up to GBP 352 million. Trial commenced in April 2008 in the High Court of Justice, Queens Bench in London. A ruling is not expected until the second half of 2008. We believe plaintiff’s claims are without merit and expect to prevail in this matter.
Quick Lube – On March 31, 2008, S&E Quick Lube, a filter distributor, filed suit in U.S. District Court for the District of Connecticut alleging that twelve filter manufacturers, including Honeywell, engaged in a conspiracy to fix prices, rig bids and allocate U.S. customers for aftermarket automotive filters. This suit is a purported class action on behalf of direct purchasers of filters from the defendants. Related actions have been filed by other plaintiffs. We intend to vigorously defend the claims raised in this action.
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Gyros - In March 2008, the U.S. Department of State advised Honeywell that it is reviewing Honeywell’s compliance with applicable U.S. export controls in connection with the Company’s export of its GG1320 gyros and related inertial navigation systems under State and Commerce Department licenses. Honeywell is cooperating with the State Department’s review. It is not possible at this time to predict the outcome of this review or what action, if any, the State Department may take at the conclusion of its review.
Given the uncertainty inherent in litigation and investigations (including the specific matters referenced above), we do not believe it is possible to develop estimates of reasonably possible loss in excess of current accruals for these matters. Considering our past experience and existing accruals, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our consolidated financial position. Because most contingencies are resolved over long periods of time, potential liabilities are subject to change due to new developments, changes in settlement strategy or the impact of evidentiary requirements, which could cause us to pay damage awards or settlements (or become subject to equitable remedies) that could have a material adverse effect on our results of operations or operating cash flows in the periods recognized or paid.
NOTE 14. Subsequent Event
In April 2008, the Company entered into a definitive agreement to acquire Safety Products Holding, Inc. (“Safety Products”). Safety Products, through its subsidiary Norcross Safety Products L.L.C., is a leading manufacturer of personal protective equipment and will be integrated into our Automation and Control Solutions segment. Completion of this acquisition is subject to regulatory approval. The purchase price is expected to be approximately $1.2 billion.
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareowners of Honeywell International Inc.:
We have reviewed the accompanying consolidated balance sheetof Honeywell International Inc. and its subsidiaries as of March 31, 2008, and the related consolidated statement of operations for each of the three-month periods ended March 31, 2008 and 2007 and the consolidated statement of cash flows for the three-month periods ended March 31, 2008 and 2007. These interim financial statements are the responsibility of the Company’s management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We previously audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2007, and the related consolidated statements of operations, of shareowners' equity and of cash flows for the year then ended (not presented herein), and in our report dated February 14, 2008, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2007, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.
PricewaterhouseCoopers LLP
Florham Park, New Jersey
April 18, 2008
___________________________
The “Report of Independent Registered Public Accounting Firm” included above is not a “report” or “part of a Registration Statement” prepared or certified by an independent accountant within the meanings of Sections 7 and 11 of the Securities Act of 1933, and the accountants’ Section 11 liability does not extend to such report.
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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF |
| | FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) |
| | (Dollars in millions, except per share amounts) |
The following MD&A is intended to help the reader understand the results of operations and financial condition of Honeywell International Inc. (“Honeywell”) for the first quarter ended March 31, 2008. The financial information as of March 31, 2008 should be read in conjunction with the financial statements for the year ended December 31, 2007 contained in our Form 10-K filed on February 15, 2008.
| A. | | RESULTS OF OPERATIONS – THREE MONTHS ENDED MARCH 31, 2008 COMPARED WITH THREE |
| | | MONTHS ENDED MARCH 31, 2007 |
Net Sales
| | | Three Months Ended |
| | | March 31, |
| | |
| | | 2008 | | | 2007 |
| | |
| | |
|
| Net sales | | $ | 8,895 | | | $ | 8,041 |
| % change compared with prior period | | 11 | % | | |
The increase in net sales in the first quarter of 2008 compared with the first quarter of 2007 is attributable to the following:
| Price | | 2 | % |
| Volume | | 3 | |
| Foreign Exchange | | 3 | |
| Acquisitions/Divestitures | | 3 | |
| |
|
|
| | | 11 | % |
| | |
|
A discussion of net sales by segment can be found in the Review of Business Segments section of this MD&A.
Cost of Products and Services Sold
| | | Three Months Ended | |
| | | March 31, | |
| | | |
| | | 2008 | | 2007 |
| | |
| |
|
| Cost of products and services sold | | $6,672 | | | $6,150 | |
| Gross Margin percentage | | 25.0 | % | | 23.5 | % |
Gross margin percentage increased by 1.5 percentage points in the first quarter of 2008 compared with the first quarter of 2007 primarily due to higher margins in our Automation and Control Solutions, Aerospace and Specialty Materials segments and lower pension and other postretirement expense, partially offset by lower margins in our Transportation Systems segment.
For further discussion of segment results see “Review of Business Segments”.
Selling, General and Administrative Expenses
| | | | Three Months Ended | |
| | | | March 31, | |
| | | | |
| | | | 2008 | | 2007 |
| | | |
| |
|
| Selling, general and administrativeexpenses | | | $1,255 | | | $1,089 | |
| Percent of sales | | | 14.1 | % | | 13.5 | % |
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Selling, general and administrative expenses as a percentage of sales increased by 0.6 percentage points in the first quarter of 2008 compared with the first quarter of 2007 primarily due to higher general and administrative costs in our Automation and Control Solutions segment (primarily due to acquisitions and inflation), partially offset by productivity savings in our Specialty Materials segment.
Other (Income) Expense
| | | | Three Months Ended | |
| | | | March 31, | |
| | |
| |
| | | | |
| | | | 2008 | | | | 2007 | |
| | |
|
| | |
|
| |
| Equity (income)/loss of affiliatedcompanies | | $ | (16 | ) | | $ | 2 | |
| Interest income | | | (25 | ) | | | (19 | ) |
| Foreign exchange | | | 11 | | | | 5 | |
| Other (net) | | | 8 | | | | 1 | |
| | |
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| | |
|
| |
| | | $ | (22 | ) | | $ | (11 | ) |
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| |
Other income increased by $11 million in the first quarter of 2008 compared with the first quarter of 2007 primarily due to higher income from equity method investments (mainly in our Specialty Materials segment) and increased interest income (primarily due to higher cash balances), partially offset by higher foreign exchange losses and a loss on the sale of an insurance related receivable.
Interest and Other Financial Charges
| | | Three Months Ended |
| | | March 31, |
| |
|
| | | 2008 | | | 2007 | |
| | |
| | |
| |
| Interest and other financial charges | | $ | 115 | | | $ | 97 | |
| % change compared with prior period | | 19 | % | | | | |
Interest and other financial charges increased in the first quarter 2008 compared with the first quarter of 2007, primarily due to higher debt balances, partially offset by lower borrowing costs.
28
Tax Expense
| | | Three Months Ended |
| | | March 31, |
| | |
|
| | | | |
| | | 2008 | | 2007 |
| | |
| |
|
| Tax expense | | $ | 232 | | | $ | 190 | |
| Effective tax rate | | | 26.5 | % | | | 26.5 | % |
The effective tax rate in the first quarter of 2008 was the same as the first quarter of 2007.
The effective tax rate was lower than the statutory rate of 35 percent due in part to the increase in foreign earnings and the benefits from the domestic manufacturing deduction and tax planning strategies.
Net Income
| | | Three Months Ended |
| | | March 31, |
| | |
|
| | | |
| | | 2008 | | 2007 |
| | |
| |
|
| Net income | | $ | 643 | | $ | 526 |
| Earnings per share of common stock –assuming dilution | | $ | 0.85 | | $ | 0.66 |
Earnings per share of common stock – assuming dilution increased by $0.19 per share in the first quarter of 2008 compared with the first quarter of 2007 primarily due to increased segment profit, and a reduction in the number of shares outstanding due to the Company’s stock repurchase program.
29
Review of Business Segments
| | | Three Months Ended | |
| | | March 31, | |
| |
|
|
| |
| | | 2008 | | | 2007 | |
| | |
| | |
| |
| Net Sales | | | | | | | | |
| Aerospace | | $ | 3,030 | | | $ | 2,840 | |
| Automation and Control Solutions | | | 3,180 | | | | 2,801 | |
| Specialty Materials | | | 1,409 | | | | 1,199 | |
| Transportation Systems | | | 1,276 | | | | 1,201 | |
| Corporate | | | — | | | | — | |
| | |
| | |
| |
| | | $ | 8,895 | | | $ | 8,041 | |
| | |
| | |
| |
| |
| |
| Segment Profit | | | | | | | | |
| Aerospace | | $ | 563 | | | $ | 500 | |
| Automation and Control Solutions | | | 328 | | | | 274 | |
| Specialty Materials | | | 265 | | | | 192 | |
| Transportation Systems | | | 149 | | | | 156 | |
| Corporate | | | (56 | ) | | | (43 | ) |
| | |
| | |
| |
| Total Segment Profit | | | 1,249 | | | | 1,079 | |
| | |
| | |
| |
| |
| Other income (expense) (A) | | | 6 | | | | 11 | |
| Interest and other financial charges | | | (115 | ) | | | (97 | ) |
| Stock compensation expense (B), (C) | | | (41 | ) | | | (24 | ) |
| Pension and other postretirement expense (B) | | | (27 | ) | | | (74 | ) |
| Repositioning and other charges (B) | | | (197 | ) | | | (179 | ) |
| | |
| | |
| |
| Income from continuing opperations before taxes | | $ | 875 | | | $ | 716 | |
| | |
| | |
| |
| (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 ($2) million for the three months ended March 31, 2007. See Note 11 of Notes to Financial Statements. |
| |
| (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 $39 million for the three months ended March 31, 2007. Stock option expense is included for all periods presented. See Note 11 of Notes to Financial Statements. |
| |
30
Aerospace
| | | Three Months Ended |
| | | March 31, |
| | |
|
| | | |
| | | | 2008 | | | | 2007 |
| | |
|
| | |
|
|
| Net sales | | $ | 3,030 | | | $ | 2,840 |
| % change compared with prior period | | | 7 | % | | | |
| Segment profit | | $ | 563 | | | $ | 500 |
| % change compared with prior period | | | 13 | % | | | |
Aerospace sales by major customer end-markets for the first quarter ended March 31, 2008 and 2007 were as follows:
| | | Three Months Ended | |
| | | March 31, | |
| | |
| |
| | | % of | | | | |
| | | Aerospace | | | % Changes | |
| | | Sales | | | in Sales | |
| | |
| | |
| |
| | | | | | 2008 | |
| | | | | | | | | Versus | |
| Customer End-Markets | | 2008 | | | 2007 | | | 2007 | |
| | |
| | |
| | |
| |
| Commercial: | | | | | | | | | |
| Air transport and regionaloriginal equipment | | 17 | % | | 16 | % | | 11 | % |
| Air transport and regionalaftermarket | | 22 | | | 23 | | | 6 | |
| Business and general aviationoriginal equipment | | 11 | | | 11 | | | 3 | |
| Business and general aviationaftermarket | | 10 | | | 10 | | | 11 | |
| Defense and Space | | 40 | | | 40 | | | 5 | |
| | |
| | |
| | | | |
| | | | | | | | | |
| Total | | 100 | % | | 100 | % | | 7 | % |
| | |
| | |
| | | | |
Aerospace sales increased by 7 percent in the first quarter of 2008 compared with the first quarter of 2007. Details regarding the increase in sales by customer end-markets are as follows:
Air transport and regional original equipment (OE) sales increased by 11percent driven by increased deliveries to our air transport customers dueto higher aircraft production rates at major OE manufacturers.
Air transport and regional aftermarket sales increased by 6 percentprimarily as a result of increased volume and price of spare parts andincreased maintenance activity relating to an approximate 7 percentincrease in global flying hours.
Business and general aviation OE sales increased by 3 percent due tocontinued strong demand in the business jet end-market as evidenced by anincrease in new business jet deliveries, new platform launches and highdemand in the fractional ownership and charter markets, partially offsetby the impact of delayed supplier deliveries.
Business and general aviation aftermarket sales increased by 11 percentprimarily due to increased revenue under maintenance service agreements,higher engine utilization and higher sales of spare parts.
Defense and space sales increased by 5 percent, primarily due to thepositive impact of the acquisition of Dimensions International, highersales of certain surface systems and an increase in government fundedengineering relating to the Orion (CEV) program and classified space
31
programs, partially offset by reduced spares demand due to defense program completions.
Aerospace segment profit increased by 13 percent in the first quarter of 2008 compared with the first quarter of 2007 due primarily to increased prices and productivity and sales volume growth partially offset by inflation.
Automation and Control Solutions
| | | Three Months Ended |
| | | March 31, |
| | |
|
| | | |
| | | | 2008 | | | | 2007 |
| | |
|
| | |
|
|
| Net sales | | $ | 3,180 | | | $ | 2,801 |
| % change compared with prior period | | | 14 | % | | | |
| Segment profit | | $ | 328 | | | $ | 274 |
| % change compared with prior period | | | 20 | % | | | |
Automation and Control Solutions (“ACS”) sales increased by 14 percent in the first quarter of 2008 compared with the first quarter of 2007, including net growth from acquisitions and divestitures of 6 percent and 5 percent favorable impact of foreign exchange. This increase reflects sales growth in all regions.
Sales in our Products businesses grew by 14 percent, including (i) thepositive impact of the Hand Held Products Inc. and Maxon Corporationacquisitions, (ii) the favorable impact of foreign exchange and (iii)continued strong demand for our life safety products.
Sales in our Solutions businesses increased by 14 percent driven by (i)the favorable impact of foreign exchange, (ii) volume growth, driven bycontinued orders growth and strong conversion to sales from our ordersbacklog and (iii) the positive impact of the Enraf Holding B.V.acquisition.
ACS segment profit increased by 20 percent in the first quarter of 2008 compared with the first quarter of 2007. This increase is due principally to productivity savings and the favorable impact of foreign exchange, partially offset by inflation.
Specialty Materials
| | | Three Months Ended |
| | | March 31, |
| |
|
|
| | | 2008 | | | 2007 |
| | |
|
| | |
|
|
| Net sales | | $ | 1,409 | | | $ | 1,199 |
| % change compared with prior period | | | 18 | % | | | |
| Segment profit | | $ | 265 | | | $ | 192 |
| % change compared with prior period | | | 38 | % | | | |
Specialty Materials sales increased by 18 percent in the first quarter of 2008 compared with the first quarter of 2007 driven by (i) a 23 percent increase in our UOP business as a result of higher volume in its products business principally due to continued strength in the refining and petrochemical industries, and (ii) a 24 percent increase in our Resins and Chemicals business due to increased pricing, volume, and improved plant performance.
Specialty Materials segment profit increased by 38 percent in the first quarter of 2008 compared with the first quarter of 2007. This increase is due principally to increased UOP sales as a result of the factors discussed above and growth in Fluorine Products sales due to increased refrigerant pricing and volume.
32
Additionally, the effects of increased pricing (including benefits from formula based pricing arrangements) and productivity gains more than offset raw material (most significantly sulfur) and other inflation.
Transportation Systems
| | | Three Months Ended |
| | | March 31, |
| | | |
| | |
|
| | | |
| | | | 2008 | | | | 2007 |
| | |
|
| | |
|
|
| Net sales | | $ | 1,276 | | | $ | 1,201 |
| % change compared with prior period | | | 6 | % | | | |
| Segment profit | | $ | 149 | | | $ | 156 |
| % change compared with prior period | | | (4 | %) | | | |
Transportation Systems sales increased by 6 percent in the first quarter of 2008 compared with the first quarter of 2007, primarily due to the favorable impact of foreign exchange and increased sales in our Turbo Technologies business.
Turbo Technologies sales increased by 12 percent primarily due tocontinued favorable impact of foreign exchange, higher volume sales andincreased pricing to commercial engine manufacturers, partially offset bylower sales to European light vehicle manufacturers.
Consumer Products Group (“CPG”) sales decreased by 3 percent primarilydue to lower sales of automotive aftermarket products, partially offsetby the favorable impact of foreign exchange (most significantly in ourFriction Materials business) and higher prices (primarily to pass throughethylene glycol cost increases).
Transportation Systems segment profit decreased by 4 percent in the first quarter of 2008 compared with the first quarter of 2007 due to CPG volume declines, as discussed above, the impact of commodity inflation and investments in product development to support future Turbo platforms. These factors were partially offset by increased productivity in our Turbo business and the favorable impact of foreign exchange.
33
Repositioning and Other Charges
See Note 3 of Notes to Financial Statements for a discussion of repositioning and other charges incurred in the three months ended March 31, 2008 and 2007. Our repositioning actions are expected to generate incremental pretax savings of approximately $110 million in 2008 compared with 2007 principally from planned workforce reductions. Cash expenditures for severance and other exit costs necessary to execute these actions were $22 million in the first three months of 2008 and were funded through operating cash flows. Cash expenditures for severance and other costs necessary to execute the remaining actions will approximate $125 million in 2008 and will be funded through operating cash flows.
B.LIQUIDITY AND CAPITAL RESOURCES
Cash Flow Summary
Our cash flows from operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows for the three months ended March 31, 2008 and 2007, are summarized as follows:
| | | 2008 | | | 2007 | |
| | |
| | |
| |
| Cash provided by (used for): | | | | | | | | |
| Operating activities | | $ | 721 | | | $ | 578 | |
| |
| Investing activities | | | (189 | ) | | | (91 | ) |
| |
| Financing activities | | | (188 | ) | | | (337 | ) |
| Effect of exchange rate changes on cash | | | 61 | | | | 4 | |
| | |
| | |
| |
| Net increase in cash and cash equivalents | | $ | 405 | | | $ | 154 | |
| | |
| | |
| |
Cash provided by operating activities increased by $143 million during the first three months of 2008 compared with the first three months of 2007 primarily due to increased earnings, receipts from the sale of insurance receivables of $82 million, increased deferred income tax expense of $91 million, partially offset by an increase in working capital of $146 million (higher accounts and other receivables, higher inventory, partially offset by higher accounts payable).
Cash used for investing activities increased by $98 million during the first three months of 2008 compared with the first three months of 2007 due primarily to a $42 million increase in cash paid for acquisitions, increased expenditures for property, plant, and equipment of $30 million, and lower proceeds from disposals of property, plant and equipment of $21 million.
Cash used for financing activities decreased by $149 million during the first three months of 2008 compared with the first three months of 2007 primarily due to a decrease in repurchases of common stock of $745 million partially offset by a decrease in net proceeds from debt (including commercial paper) of $522 million and a decrease in proceeds from issuance of common stock primarily related to stock option exercises of $68 million.
34
Liquidity
The Company continues to manage its businesses to maximize operating cash flows as the primary source of liquidity. In addition to our available cash and operating cash flows, additional sources of liquidity include committed credit lines, short-term debt from the commercial paper market, long-term borrowings, access to the public debt and equity markets as well as the ability to sell trade accounts receivables. We continue to balance our cash and financing uses through investment in our existing core businesses, acquisition activity, share repurchases and dividends.
We continuously assess the relative strength of each business in our portfolio as to strategic fit, market position, profit and cash flow contribution in order to upgrade our combined portfolio and identify business units that will most benefit from increased investment. We identify acquisition candidates that will further our strategic plan and strengthen our existing core businesses. We also identify business units that do not fit into our long-term strategic plan based on their market position, relative profitability or growth potential. These business units are considered for potential divestiture, restructuring or other repositioning actions subject to regulatory constraints.
In February 2008, the Company issued $600 million 4.25% Senior Notes due 2013 and $900 million 5.30% Senior Notes due 2018 (collectively, the “Senior Notes”). The Senior Notes are senior unsecured and unsubordinated obligations of Honeywell and rank equally with all of Honeywell’s existing and future senior unsecured debt and senior to all of Honeywell’s subordinated debt. The offering resulted in gross proceeds of $1.5 billion, offset by $13 million in discount and issuance costs. Proceeds from the Senior Notes were used to repay outstanding commercial paper.
In April 2008, the Company entered into a definitive agreement to acquire Safety Products Holding, Inc. (“Safety Products”). Safety Products, through its subsidiary Norcross Safety Products L.L.C., is a leading manufacturer of personal protective equipment and will be integrated into our Automation and Control Solutions segment. Completion of this acquisition, which is subject to regulatory approval, is expected to close in the second quarter of 2008. The purchase price is expected to be approximately $1.2 billion, which we anticipate funding using a combination of available cash and commercial paper.
C.OTHER MATTERS
Litigation
We are subject to a number of lawsuits, investigations and claims (some of which involve substantial amounts) arising out of the conduct of our business. See a discussion of environmental, asbestos and other litigation matters in Note 13 of Notes to Financial Statements.
Critical Accounting Policies
The financial information as of March 31, 2008 should be read in conjunction with the financial statements for the year ended December 31, 2007 contained in our Form 10-K filed on February 15, 2008.
For a discussion of the Company’s critical accounting policies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K filed on February 15, 2008.
35
Recent Accounting Pronouncements
See Note 2 of Notes to Financial Statements for a discussion of recent accounting pronouncements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See our 2007 Annual Report on Form 10-K (Item 7A). As of March 31, 2008, there has been no material change in this information.
ITEM 4. CONTROLS AND PROCEDURES
Honeywell management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that such disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on From 10-Q to ensure information required to be disclosed in the reports that Honeywell files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms. There have been no changes that have materially affected, or are reasonably likely to materially affect, Honeywell’s internal control over financial reporting that have occurred during the period covered by this Quarterly Report on Form 10-Q.
36
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
General Legal Matters
We are subject to a number of lawsuits, investigations and claims (some of which involve substantial amounts) arising out of the conduct of our business. See a discussion of environmental, asbestos and other litigation matters in Note 13 of Notes to Financial Statements.
Environmental Matters Involving Potential Monetary Sanctions in Excess of $100,000
Although we cannot predict the outcome of the matters described below, we believe that sufficient provisions have been made in our financial statements for these matters. We do not believe that the matters described below will have a material adverse effect on our consolidated financial position, results of operations or operating cash flows.
Honeywell is a defendant in a lawsuit filed by the Arizona Attorney General’s office on behalf of the Arizona Department of Environmental Quality (ADEQ). The complaint alleges failure to make required disclosures, as well as unrelated environmental violations. ADEQ’s most significant allegations have been dismissed with prejudice and that dismissal has been appealed. The state has voluntarily dismissed its remaining claims without prejudice pending the resolution of the appeal. In February 2007, ADEQ demanded penalties for alleged violations by Honeywell of the state’s underground storage tank regulations at the Company’s aircraft engines plant in Phoenix, Arizona. ADEQ subsequently added claims relating to other alleged environmental violations at the aircraft engines plant. Honeywell and ADEQ have reached a settlement in principle that would resolve all of the above allegations in return for payment by Honeywell of $5 million in penalties and a $1 million donation to the Western Governor’s Associations Climate Initiative Program. This settlement is being reviewed by the Arizona Attorney General.
Honeywell received Notices of Violation from the Maricopa County Air Quality Department with respect to various air permitting compliance matters at facilities located in Maricopa County, Arizona. Honeywell believes it has taken appropriate corrective and preventive actions to address the concerns raised by the County. Negotiations regarding penalties are ongoing.
37
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The following table summarizes Honeywell’s purchases of its common stock, par value $1 per share, for the three months ended March 31, 2008:
| Issuer Purchases of Equity Securities |
| | | (a) | | (b) | | (c) | | (d) |
| | | | | | | Total Number | | Approximate Dollar |
| | | | | | | of Shares | | Value of Shares that |
| | | Total | | | | Purchased as | | May Yet be Purchased |
| | | Number of | | Average | | Part of Publicly | | Under Plans or |
| | | Shares | | Price Paid | | Announced Plans | | Programs |
| Period | | Purchased | | per Share | | or Programs | | (Dollars in millions) |
| |
| |
| |
| |
|
| January 2008 | | 3,000,000 | | $61.38 | | 3,000,000 | | $2,538 |
| February 2008 | | 3,000,000 | | $59.35 | | 3,000,000 | | $2,360 |
| March 2008 | | 1,400,000 | | $56.02 | | 1,400,000 | | $2,282 |
Honeywell intends to repurchase outstanding shares from time to time in the open market primarily using cash flow generated by operations. The amount and timing of repurchases may vary depending on market conditions and the level of other investing activity.
| ITEM 6. | | EXHIBITS |
| | | |
| | (a) | Exhibits. See the Exhibit Index on page 40 of this Quarterly Report on Form 10-Q. |
| | | |
| | | |
| |
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | Honeywell International Inc. |
| |
| Date:April 18, 2008 | | By: | | /s/ Talia M. Griep | |
| | | | |
| |
| | | | | Talia M. Griep |
| | | | | Vice President and Controller |
| | | | | (on behalf of the Registrant |
| | | | | and as the Registrant’s |
| | | | | Principal Accounting Officer) |
39
EXHIBIT INDEX
| Exhibit Number | | Description |
| | | |
| 2 | | Omitted (Inapplicable) |
| |
| 3 | | Omitted (Inapplicable) |
| |
| 4 | | Omitted (Inapplicable) |
| |
| 10.1 | | Stock Purchase Agreement dated April 3, 2008 by and among Honeywell International Inc., Safety Products Holdings, Inc., the selling shareholders party thereto, and Odyssey Investment Services, L.L.C. (incorporated by reference to Exhibit 10.1 to Honeywell’s Form 8-K filed April 7, 2008) |
| |
| 11 | | Computation of Per Share Earnings (1) |
| |
| 12 | | Computation of Ratio of Earnings to Fixed Charges (filed herewith) |
| |
| 15 | | Independent Accountants’ Acknowledgment Letter as to the incorporation of their report relating to unaudited interim financial statements (filed herewith) |
| |
| 18 | | Omitted (Inapplicable) |
| |
| 19 | | Omitted (Inapplicable) |
| |
| 22 | | Omitted (Inapplicable) |
| |
| 23 | | Omitted (Inapplicable) |
| |
| 24 | | Omitted (Inapplicable) |
| |
| 31.1 | | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
| |
| 31.2 | | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
| |
| 32.1 | | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
| |
| 32.2 | | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
| |
| 99 | | Omitted (Inapplicable) |
| |
| (1) | Data required by Statement of Financial Accounting Standards No. 128, “Earnings per Share”, is provided in Note 5 to the consolidated financial statements in this report. |
40
