[HONEYWELL LOGO]
Exhibit 99
News Release
Contacts:
Media Investor Relations
Robert C. Ferris Nicholas Noviello
(973) 455-3388 (973) 455-2222
rob.ferris@honeywell.com nicholas.noviello@honeywell.com
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
MORRIS TOWNSHIP, N.J., January 28, 2005 -- 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
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Q4-Year End Earnings
Page 2
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. ET 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
o 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.
o Segment margins were 16.9%, compared with 15.9% a year ago, due to
strong volume and productivity gains.
o 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.
o 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
o 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.
o 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.
o Honeywell acquired majority ownership in its Tata Honeywell joint
venture in Pune, India, providing a platform for growth in the
region.
o 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.
o Process Solutions was awarded a $60 million contract for an
automation project at Naftec Spa's refinery in Arzew, Algeria.
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Q4-Year End Earnings
Page 3
Transportation Systems
o Sales were up 13%, compared with the fourth quarter of 2003,
primarily due to continued strong demand for our proprietary Turbo
technologies.
o Segment margins were 12.8%, compared with 13.2% a year ago, due to
increased raw material prices partially offset by strong volume
conversion.
o Turbo Technologies was selected by Daewoo Motors of South Korea to
provide its latest generation VNT turbo technology for Daewoo's
2.0-liter diesel.
o Consumer Products Group continued to introduce new, high value
products with its rollout of FRAM'r' High Mileage oil filters.
Specialty Materials
o Sales were up 9%, compared with the fourth quarter of 2003, as a
result of continued growth in core businesses and improved pricing.
o 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.
o 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.
o 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.
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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.
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4-results
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).
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5-results
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
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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.
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6-results
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 Profits 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.
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7-results
Honeywell International Inc.
Consolidated Balance Sheet (Unaudited)
(Dollars in millions)
December 31, December 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
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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.
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8-results
Honeywell International Inc.
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in millions)
Three Months Ended Twelve Months 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
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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 Twelve Months 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.