Honeywell Reports Second Quarter Comparable EPS Growth of 15 Percent with Strong Cash Flow.MINNEAPOLIS--(BUSINESS WIRE)--July 21, 1999-- Honeywell In 1927, the Minneapolis Honeywell Regulator Company was formed as a merger of Alfred Butz' temperature control company (1885) and Mark Honeywell's water heater company (1906). In 1957, Honeywell, along with Ratheon, introduced one of the first computers in the U.S., the Datamatic 1000. Inc. (NYSE NYSE See: New York Stock Exchange : HON) today reported earnings per share of $1.09 in the second quarter of 1999, an increase of 15 percent over comparable earnings per share of $0.95 in the second quarter of 1998. Reported earnings per share of $0.98 in the second quarter of 1998 included a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. gain of $0.03 on the sale of assets.(a) "Honeywell has delivered strong cash flow and its 18th consecutive quarter of double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. earnings per share growth," said Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. R. Bonsignore, Honeywell's Chairman and Chief Executive Officer. "Our approach for transforming the Home and Building Control business into a strong value creator Creator may refer to:
adj. 1. Concerned exclusively with costs and profits: bottom-line issues. 2. Ruthlessly realistic; pragmatic: a bottom-line political strategy. growth in the second quarter. The company is strategically positioned for success that should be further enhanced by the financial strength resulting from our combination with AlliedSignal." Honeywell generated free cash flow of $214 million in the quarter, an 89 percent increase over the second quarter of 1998. Orders rose 5 percent driven by Home and Building Control, Industrial Control and Commercial Avionics. Sales rose 5 percent in the quarter to $2.14 billion. On a comparable basis, operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: increased 60 basis points to 11.8 percent, and controlled working capital rates improved 40 basis points in the quarter. Second quarter results were led by an across-the-board strong performance from Home and Building Control with sales up 9 percent, while earnings grew 28 percent. Increased market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" , new product success, and acquisitions spurred growth in the Products business, while the services and the security sectors continued to show solid growth. Space and Aviation Control earnings grew on higher margin rates and 5 percent revenue growth and higher margin rates. Industrial Control revenues grew modestly at 1 percent, while earnings decreased due to sluggish end market conditions in refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar and pulp and paper and an unfavorable mix of project revenues. Second Quarter Strategic Highlights During the quarter, Honeywell and AlliedSignal announced their intention to merge See mail merge and concatenate. , creating a leading global supplier of products and services. Shareholders from both companies are scheduled to vote on the merger at separate meetings on September September: see month. 1. The merger is also subject to regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals. Home and Building Control has improved its financial performance by exiting low margin market segments, reducing operating cost, introducing new products and differentiated dif·fer·en·ti·ate v. dif·fer·en·ti·at·ed, dif·fer·en·ti·at·ing, dif·fer·en·ti·ates v.tr. 1. To constitute the distinction between: solutions, and making strategic acquisitions such as the second quarter agreement to purchase C&K Systems. C&K is a global supplier of residential and commercial security products with revenues of $100 million. The acquisition is expected to close in September. Control Products continued to expand its residential controls market share through the PerfectClimate building contractor building contractor n → contratista m/f de obras building contractor n → entrepreneur m (en bâtiment) building contractor program, while Consumer Products revenues grew strongly in the quarter. In early April, Solutions and Services signed a two-year agreement for continuous, remote performance and condition monitoring Condition monitoring is the process of monitoring a parameter of condition in machinery, such that a significant change is indicative of a developing failure. It is a major component of predictive maintenance. of AlliedSignal's Turbogenerator beta production units. This agreement gives Honeywell first-mover advantage First-mover advantage is the advantage gained by the initial occupant of a market segment. This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able to match. for remote condition monitoring in the growing distributed power generation market. Industrial Control's PlantScape(TM), the industry's only true hybrid control system An industrial control system based on both proprietary and open standards. See PAS and DCS. , continued to expand its market leadership during the quarter with a $36 million contract for the Honeywell/Giasa consortium at the Petroleos Mexicanos Cantarell oil and gas extraction extraction /ex·trac·tion/ (eks-trak´shun) 1. the process or act of pulling or drawing out. 2. the preparation of an extract. facility in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , and with an order to automate To turn a set of manual steps into an operation that goes by itself. See automation. Alliance Pipeline's $3.3 billion pipeline project in Calgary Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . Since its introduction in 1997, PlantScape systems have enjoyed brisk Brisk as a proper name may refer to:
During the quarter, Honeywell's technical leadership and commitment to e-business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. was recognized by PCWeek magazine, which ranked the company among the top five innovators innovators people who will try new things. early innovators important figures in the farming or client community because they are the leaders in the introduction of new techniques and management systems. in employing internet technology. This was further demonstrated as Honeywell Hi-Spec Solutions launched MyPlant.com(R) (www.myplant.com), its new web-based community of interest for process industry customers and suppliers. MyPlant.com provides customers easy access to a broad range of Honeywell and third-party process industry solutions, including Hi-Spec's web-based software delivery site SolutionsNow!. The recent Paris Air Show The Paris Air Show (Salon International de l'Aéronautique et de l'Espace, Paris-Le Bourget) is an international trade fair for the aerospace business. It is held at Le Bourget airport near Paris, France every odd year, alternating both with the Farnborough International included several positive announcements for Honeywell's Space and Aviation Control business. Embraer announced more than $7 billion in firm and option orders for its ERJ-170 and 190 regional jets, which are both fitted with Honeywell's Primus Epic epic, long, exalted narrative poem, usually on a serious subject, centered on a heroic figure. The earliest epics, known as primary, or original, epics, were shaped from the legends of an age when a nation was conquering and expanding; such is the foundation of the (TM) integrated avionics. Raytheon Raytheon Company (NYSE: RTN) is a major American defense contractor and industrial corporation with core manufacturing concentrations in defense systems and defense and commercial electronics. also announced firm and option orders for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 100 Honeywell-equipped Hawker Horizon business jets. Honeywell was also awarded an engineering, manufacturing, and development contract to retrofit ret·ro·fit v. ret·ro·fit·ted or ret·ro·fit, ret·ro·fit·ting, ret·ro·fits v.tr. 1. To provide (a jet, automobile, computer, or factory, for example) with parts, devices, or equipment not in commercial off-the-shelf Commercial off-the-shelf (COTS) is a term for software or hardware, generally technology or computer products, that are ready-made and available for sale, lease, or license to the general public. display technology into the U.S. Air Force C-17 Globemaster Globemaster is the name of three separate airlifters, produced by Douglas Aircraft Company or its successors:
The quarter saw the successful first flight of the Federal Express MD-10 freighter airplane airplane, aeroplane, or aircraft, heavier-than-air vehicle, mechanically driven and fitted with fixed wings that support it in flight through the dynamic action of the air. , utilizing the advanced Honeywell flight deck (1) The part of a magnetic tape unit that holds and moves the tape reels. The term may refer to any equipment that serves as a physical framework for electronic or mechanical devices. See rack. See also DEC. complete with CAT IIIb CAT IIIB Instrument Landing Category IIIB Flight Conditions automatic landing capability. The Federal Express flight test program is the largest commercial flight deck upgrade program ever undertaken. Federal Express will upgrade 79 aircraft with the new flight deck and has options for 40 more aircraft. This MD-10 retrofit program will generate revenues likely to exceed $100 million. (a) The one time gain in the second quarter of 1998 was related to the sale of the Honeywell-Measurex headquarters building in Cupertino Cu·per·ti·no A city of western California west of San Jose. It has an electronics industry. Population: 50,000. , CA, for a pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern gain of $5.6 million, or $0.03 per share. This release may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. about future business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets , financial performance, and market conditions. Such statements are subject to certain risks, uncertainties and other factors - including changing economic conditions, international trade and monetary factors which can affect the company's businesses and cause actual results to differ materially from those contained in any forward-looking statements. These factors are described in the company's annual and quarterly reports on Forms 10-K and 10-Q. Copies of such reports may be obtained from the company or reviewed on the SEC's EDGAR Edgar or Eadgar (both: ĕd`gər), 943?–975, king of the English (959–75), son of Edmund, king of Wessex. In 957 the Mercians and Northumbrians rebelled against Edgar's brother Edwy and chose Edgar as their king. system at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . Honeywell is the world's leading provider of control technologies for buildings, homes, industry, space and aviation. The company employs 57,000 people in 95 countries, and had 1998 sales of $8.4 billion. -0-
HONEYWELL INC. AND SUBSIDIARIES
INCOME STATEMENT (Unaudited)
(Dollars in Millions Except Per Share Amounts)
SECOND QUARTER
July 4, July 5,
1999 1998
Sales $2,139.6 $2,035.2 5.1%
Costs and Expenses
Cost of sales 1,467.2 1,383.0
Research and development 112.9 118.4
Selling, general
and administrative 327.3 325.8 (1)
Interest - net 27.3 26.0
Equity income (4.6) (5.8)
------ --------
Total Costs and Expenses 1,930.1 1,847.4
--------- ---------
Income before Income Taxes 209.5 187.8
Provision for Income Taxes 69.2 62.0
---------- ----------
Net Income $ 140.3 $ 125.8 11.5%
Basic Earnings per Common Share $ 1.11 $ 1.00 11.0%
Average Common Shares Outstanding 126,715,587 126,112,084
Diluted Earnings per Common Share $ 1.09 $ 0.98 11.2%
Average Common and Dilutive
Shares Outstanding 128,986,872 128,093,164
(1) 1998 includes a one-time gain of $5.6, or $0.03 per diluted
share, related to the sale of assets.
HONEYWELL INC. AND SUBSIDIARIES
INCOME STATEMENT (Unaudited)
(Dollars in Millions Except Per Share Amounts)
SIX MONTHS ENDED
July 4, July 5,
1999 1998
Sales $4,125.7 $3,958.5 4.2%
Costs and Expenses
Cost of sales 2,833.2 2,709.8
Research and development 229.8 231.8
Selling, general
and administrative 645.4 640.6 (1)
Interest - net 53.3 50.2
Equity income (3.0) (5.5)
----- -----
Total Costs and Expenses 3,758.7 3,626.9
--------- ---------
Income before Income Taxes 367.0 331.6
Provision for Income Taxes 121.2 109.5
----------- -----------
Net Income $ 245.8 $ 222.1 10.7%
Basic Earnings
per Common Share $ 1.94 $ 1.76 10.2%
Average Common
Shares Outstanding 126,480,406 126,152,209
Diluted Earnings per
Common Share $ 1.92 $ 1.73 11.0%
Average Common and Dilutive
Shares Outstanding 128,342,264 128,065,830
(1) 1998 includes a one-time gain of $5.6, or $0.03 per diluted
share, related to the sale of assets.
HONEYWELL INC. AND SUBSIDIARIES
SALES AND OPERATING PROFIT BY SEGMENT
(Unaudited)
(Dollars in Millions)
SECOND QUARTER
July 4, July 5,
1999 1998
Sales
Home and Building Control $ 855.3 $ 788.0
Industrial Control 645.5 637.1
Space and Aviation Control 619.4 590.2
Other 19.4 19.9
--------- ----------
Total Sales 2,139.6 2,035.2
----------------------------------------------------------------------
Operating Profit
Home and Building Control 88.3 69.1
Industrial Control 72.5 84.5 (1)
Space and Aviation Control 88.9 78.7
Other 2.3 1.7
--------- -----------
Total Operating Profit 252.0 234.0 (1)
Interest expense (29.0) (29.8)
Equity income 4.6 5.8
General corporate expense (18.1) (22.2)
--------- ----------
Income before Income Taxes $ 209.5 $ 187.8 (1)
(1) 1998 includes a one-time gain of $5.6, or $0.03 per diluted
share, related to the sale of assets.
HONEYWELL INC. AND SUBSIDIARIES
SALES AND OPERATING PROFIT BY SEGMENT
(Unaudited)
(Dollars in Millions)
SIX MONTHS ENDED
July 4, July 5,
1999 1998
Sales
Home and Building Control $1,661.0 $1,566.7
Industrial Control 1,229.4 1,217.7
Space and Aviation Control 1,200.4 1,137.6
Other 34.9 36.5
--------- ----------
Total Sales 4,125.7 3,958.5
----------------------------------------------------------------------
Operating Profit
Home and Building Control 148.5 125.9
Industrial Control 132.8 144.9 (1)
Space and Aviation Control 172.2 149.0
Other 4.8 5.0
--------- -----------
Total Operating Profit 458.3 424.8 (1)
Interest expense (57.9) (56.2)
Equity income 2.9 5.5
General corporate expense (36.3) (42.5)
--------- ----------
Income before Income Taxes $ 367.0 $ 331.6 (1)
(1) 1998 includes a one-time gain of $5.6, or $0.03 per diluted
share, related to the sale of assets.
HONEYWELL INC. AND SUBSIDIARIES
STATEMENT OF FINANCIAL POSITION (Unaudited)
(Dollars in Millions)
July 4, December 31,
1999 1998
ASSETS
Current Assets
Cash and cash equivalents $ 147.9 $ 306.0
Short-term investments 7.6 7.2
Receivables (less allowance for
doubtful accounts:
1999, $40.3; 1998, $41.1) 1,809.8 1,906.7
Inventories (less progress billing
on uncomplete contracts:
1999, $31.5; 1998, $43.5) 1,162.2 1,116.0
Deferred income taxes 283.1 285.9
---------- ----------
Total Current Assets 3,410.6 3,621.8
Investments and Advances 279.3 269.9
Property, Plant and Equipment
Property, plant and equipment 3,383.9 3,355.8
Less accumulated depreciation 2,084.5 2,097.4
------- ---------
1,299.4 1,258.4
Other Assets
Long-term receivables (less allowance
for doubtful accounts:
1999, $0.5; 1998, $1.8) 27.0 34.0
Goodwill 981.1 952.2
Intangible assets 329.0 343.0
Deferred income taxes 19.2 18.9
Other 725.8 672.2
---------- ----------
Total Assets $7,071.4 $7,170.4
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Short-term debt $ 209.0 $ 178.9
Accounts payable 622.0 676.6
Customer advances 361.3 340.2
Accrued income taxes 236.6 334.4
Deferred income taxes 13.9 18.0
Other accrued liabilities 799.6 904.6
---------- ----------
Total Current Liabilities 2,242.4 2,452.7
Long-Term Debt 1,223.8 1,299.3
Deferred Income Taxes 51.4 66.2
Other Liabilities 597.2 566.7
---------- ----------
Total Liabilities 4,114.8 4,384.9
--------- ---------
Shareowners' Equity
Common stock - $1.50 par value
Authorized - 1999 375,000,000 shares
- 1998 250,000,000 shares 281.1
Issued - 1999 - 187,407,152 shares 281.3
- 1998 - 187,536,597 shares
Additional paid-in-capital 775.8 697.6
Retained earnings 4,008.0 3,835.9
Treasury stock - 1999 - 59,933,883 shares (2,023.6)
- 1998 - 61,206,715 shares (2,005.5)
Other comprehensive income (84.7) (23.8)
--------- -----------
Total Shareowners' Equity 2,956.6 2,785.5
--------- ---------
Total Liabilities and Shareowners' Equity $7,071.4 $7,170.4
HONEYWELL INC. AND SUBSIDIARIES
STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in Millions)
SIX MONTHS ENDED
July 4, July 5,
1999 1998
Cash Flows from Operating Activities
Net income $245.8 $222.1
Adjustments to reconcile net income to
net cash flows from
operating activities:
Depreciation 126.0 122.8
Amortization of intangibles 43.5 37.7
Deferred income taxes (4.0) (0.1)
Equity income, net of dividends received (2.0) (4.7)
Gain on sale of assets (1.7) (6.5)
Contributions to employee stock plans 32.9 32.6
Decrease in receivables 95.2 114.8
Increase in inventories (45.8) (134.6)
Decrease in accounts payable (46.8) (72.6)
Increase in customer advances 25.2 51.2
Decrease in accrued income taxes and interest (98.7) (50.7)
Decrease in accrued liabilities (106.6) (91.9)
Other noncurrent items - net (8.4) (70.4)
---------- ---------
Net Cash Flows from Operating Activities 254.6 149.7
---------- ---------
Cash Flows from Investing Activities
Proceeds from sale of assets 11.6 56.3
Proceeds from sale of discontinued business - 29.0
Capital expenditures (182.4) (162.9)
Investment in acquisitions,
net of cash acquired (107.8) (131.8)
Decrease (increase) in short-term investments 4.6 (0.8)
Other - net (12.5) (5.3)
----------- ----------
Net Cash Flows from Investing Activities (286.5) (215.5)
----------- ----------
Cash Flows from Financing Activities
Decrease in short-term debt (38.2) (36.3)
Proceeds from issuance of long-term debt 4.4 252.0
Repayment of long-term debt (43.6) (67.2)
Purchase of treasury stock (51.8) (118.6)
Proceeds from exercise of stock options 80.0 38.0
Dividends paid (73.8) (70.9)
----------- -----------
Net Cash Flows from Financing Activities (123.0) (3.0)
----------- -----------
Effect of Exchange Rate Changes on Cash (3.2) (2.4)
---------- -----------
Decrease in Cash and Cash Equivalents (158.1) (71.2)
Cash and Cash Equivalents at Beginning of Year 306.0 134.3
---------- -----------
Cash and Cash Equivalents at End of Period $147.9 $63.1
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