0000930413-14-004351.txt : 20141017 0000930413-14-004351.hdr.sgml : 20141017 20141017070949 ACCESSION NUMBER: 0000930413-14-004351 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20141017 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20141017 DATE AS OF CHANGE: 20141017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HONEYWELL INTERNATIONAL INC CENTRAL INDEX KEY: 0000773840 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 222640650 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08974 FILM NUMBER: 141160677 BUSINESS ADDRESS: STREET 1: 101 COLUMBIA RD STREET 2: PO BOX 4000 CITY: MORRISTOWN STATE: NJ ZIP: 07962 BUSINESS PHONE: 9734552000 MAIL ADDRESS: STREET 1: 101 COLUMBIA RD P O BOX 4000 CITY: MORRISTOWN STATE: NJ ZIP: 07962 FORMER COMPANY: FORMER CONFORMED NAME: ALLIEDSIGNAL INC DATE OF NAME CHANGE: 19940929 8-K 1 c78977_8k.htm
 

 

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

 

 

Form 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT – October 17, 2014
(Date of earliest event reported)

 

honeywell international inc.
(Exact name of Registrant as specified in its Charter)

 

DELAWARE
(State or other jurisdiction
of incorporation)		 1-8974
(Commission File Number)		 22-2640650
(I.R.S. Employer
Identification Number)

 

101 COLUMBIA ROAD, P.O. BOX 4000, MORRISTOWN, NEW JERSEY 07962-2497
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (973) 455-2000

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

£ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
£ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
£ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
£ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 

On October 17, 2014, Honeywell International Inc. (the “Company”) issued a press release announcing its third quarter 2014 earnings, which is furnished herewith as Exhibit 99. The information furnished pursuant to this Item 2.02, including Exhibit 99, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

 

(d) Exhibit 99 Honeywell International Inc. Earnings Press Release dated October 17, 2014
 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date:  October 17, 2014 HONEYWELL INTERNATIONAL INC.
       
  By: /s/ Jeffrey N. Neuman  
  Jeffrey N. Neuman  
  Vice President, Corporate Secretary and
Deputy General Counsel
 
 EX-99 2 c78977_ex99.htm

Exhibit 99

 

 

 

News Release

Contacts:

Media

Investor Relations

Robert C. Ferris

Elena Doom

(973) 455-3388

(973) 455-2222

rob.ferris@honeywell.com

elena.doom@honeywell.com

 

 

HONEYWELL REPORTS THIRD QUARTER 2014

SALES UP 5% TO $10.1 BILLION; EPS OF $1.47 PER SHARE;

RAISING 2014 EPS GUIDANCE

 

·Organic Sales Growth 5%; Strong Execution Across The Portfolio
·EPS Up 19% Reported, Up 14% Using Normalized Tax Rate
·Raising Low-End Proforma EPS Guidance To $5.50 - $5.55, From $5.45 - $5.55

 

MORRIS TOWNSHIP, N.J., October 17, 2014 -- Honeywell (NYSE: HON) today announced its results for the third quarter of 2014:

 

Total Honeywell      
($ Millions, except Earnings Per Share) 3Q 2013 3Q 2014 Change
Sales         9,647 10,108 5%
Segment Margin 16.7% 17.4% 70 bps
Operating Income Margin 15.2% 16.2% 100 bps
Earnings Per Share $1.24 $1.47 19%
Earnings Per Share (At 26.5% Tax Rate) $1.25 $1.43 14%
Cash Flow from Operations 1,070 1,233 15%
Free Cash Flow * 867 974 12%
       
* Cash Flow from Operations Less Capital Expenditures
 

“Organic sales growth and a double-digit earnings increase highlighted Honeywell’s strong third quarter,” said Honeywell Chairman and CEO Dave Cote.  “The continued integration and maturation of the Honeywell Operating System throughout our global portfolio is helping to drive sales, margin, earnings, and cash flow higher, and plenty of runway remains.  We are committed to our ongoing seed planting investments to bolster our great positions in good industries and continuous process improvements to mitigate ongoing global macroeconomic uncertainties.  We are raising the low-end of our 2014 proforma EPS outlook by $0.05 to $5.50-5.55 (up 11%-12%), which brings us to the high-end of the initial guidance we provided almost a year ago.  Looking ahead to 2015, we’re once again planning for a slow growth macro environment, but expect to continue delivering strong earnings growth.  We’re confident that Honeywell will continue to

 

- MORE -

 

 

Q3’14 Results - 2

outperform now and over the long-term driven by a relentless focus on new products and technologies, continued penetration of high-growth regions, and sustained implementation of our key process initiatives.”

 

 

The company is updating its full-year 2014 guidance and now expects:

 

2014 Full-Year Guidance      
      Change
  Prior Guidance Revised Guidance vs. 2013  
Sales  $40.2 - $40.4B  $40.3 - $40.4B 3% - 4%
Segment Margin 16.8% - 17.0% ~17.0% ~70 bps
Operating Income Margin1 15.4% - 15.6% ~15.6% ~140 bps
Earnings Per Share1 $5.45 - $5.55 $5.50 - $5.55 11% - 12%
Free Cash Flow2  $3.8 - $4.0B  ~$3.9B ~15%
             
1.Proforma, V% / bps Exclude Pension Mark-to-Market Adjustment
2.Cash Flow from Operations Less Capital Expenditures

 

Third Quarter Segment Performance

Aerospace      
($ Millions) 3Q 2013 3Q 2014 % Change
Sales          3,889 3,895 ~Flat
Segment Profit 730 790 8%
Segment Margin 18.8% 20.3% 150 bps

 

·Sales for the third quarter were up 3% organically, driven by growth across the portfolio, but were approximately flat on a reported basis due to the Friction Materials divestiture.  Commercial OE sales were up 5% reflecting continued strong OE build rates, as well as an increase in Business and General Aviation (BGA) engine shipments.  Commercial Aftermarket sales increased 2% driven by strong Air Transport and Regional (ATR) spares growth, partially offset by a decline in RMU (Retrofit, Modifications, and Upgrades) sales in BGA and lower repair and overhaul activities.  Defense & Space sales grew 3% as a result of strong international growth and stabilization in U.S. government sales. Transportation Systems sales were down (10%) reported, primarily reflecting the Friction Materials divestiture, and up 4% organically driven by new platform launches, higher turbo gas penetration globally, and increased commercial vehicle demand in Europe, partially offset by moderating EU light vehicle production.
·Segment profit was up 8%, and segment margins expanded 150 bps to 20.3%, driven by productivity net of inflation, commercial excellence, and the favorable impact of the Friction Materials divestiture.

 

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Q3’14 Results - 3

 

 

 

Automation and Control Solutions

      
($ Millions) 3Q 2013 3Q 2014 % Change
Sales          3,375          3,671 9%
Segment Profit 523 583 11%
Segment Margin 15.5% 15.9% 40 bps

 

·Sales were up 9% reported, 4% organically, compared with the third quarter of 2013, primarily driven by the favorable impact of the Intermec acquisition and strong organic growth across Energy, Safety, and Security (ESS), particularly in Scanning & Mobility, Industrial Safety, Security, and Fire. Building Solutions & Distribution (BSD) saw continued strength in the Americas Distribution business.
·Segment profit was up 11% and segment margins expanded 40 bps to 15.9% driven by higher volume, commercial excellence, and productivity net of inflation, partially offset by the dilutive impact of the Intermec acquisition.

 

Performance Materials and Technologies

      
($ Millions) 3Q 2013 3Q 2014 % Change
Sales          2,383 2,542 7%
Segment Profit 413 444 8%
Segment Margin 17.3% 17.5% 20 bps

 

·Sales were up 7% on both an organic and reported basis compared with the third quarter of 2013, driven by UOP catalyst and gas processing growth, an acceleration of sales growth in Process Solutions, and higher sales across Advanced Materials, particularly Fluorine Products.
·Segment profit was up 8% and segment margins increased 20 bps to 17.5%, driven by higher volume and productivity net of inflation, partially offset by price/raws headwinds in Resins & Chemicals and continued investments for growth.

 

 

Honeywell will discuss its results during its investor conference call today starting at 9:30 a.m. EDT. To participate, please dial (800) 862-9098 (domestic) or (785) 424-1051 (international) a few minutes before the 9:30 a.m. EDT start. Please mention to the operator that you are dialing in for Honeywell’s third quarter 2014 investor conference call or provide the conference code HONQ314. The live webcast of the investor call as well as related presentation materials will be available through the “Investor Relations” section of the company’s Website (http://www.honeywell.com/investor). Investors can access a replay of the conference call from 12:00 p.m. EDT, October 17, until 11:59 p.m.

EDT, October 24, by dialing (800) 723-5154 (domestic) or (402) 220-2661 (international).

 

Honeywell (www.honeywell.com) is a Fortune 100 diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes, and industry; turbochargers; and  performance materials.  For more news and information on Honeywell, please visit www.honeywellnow.com.

 

- MORE -

 

 

Q3’14 Results - 4

This release contains certain statements that may be deemed “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, that address activities, events or developments that we or our management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current economic and industry conditions, expected future developments and other factors they believe to be appropriate. The forward-looking statements included in this release are also subject to a number of material risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors affecting our operations, markets, products, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results, developments and business decisions may differ from those envisaged by such forward-looking statements. We identify the principal risks and uncertainties that affect our performance in our Form 10-K and other filings with the Securities and Exchange Commission.

 

# # #

 

 

Q3’14 Results - 5

 

Honeywell International Inc.

Consolidated Statement of Operations (Unaudited)

(Dollars in millions, except per share amounts)

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2014   2013   2014   2013 
                     
Product sales  $8,090   $7,693   $24,213   $22,911 
Service sales   2,018    1,954    5,827    5,757 
Net sales   10,108    9,647    30,040    28,668 
                     
Costs, expenses and other                    
Cost of products sold (A)   5,860    5,722    17,686    17,039 
Cost of services sold (A)   1,268    1,220    3,705    3,713 
    7,128    6,942    21,391    20,752 
Selling, general and administrative expenses (A)   1,344    1,242    4,058    3,752 
Other (income) expense   (21)   (1)   (159)   (53)
Interest and other financial charges   77    80    236    244 
    8,528    8,263    25,526    24,695 
                     
Income before taxes   1,580    1,384    4,514    3,973 
Tax expense   388    377    1,160    975 
                     
Net income   1,192    1,007    3,354    2,998 
                     
Less: Net income attributable to the noncontrolling interest   25    17    71    21 
                     
Net income attributable to Honeywell  $1,167   $990   $3,283   $2,977 
                     
Earnings per share of common stock - basic  $1.49   $1.26   $4.18   $3.78 
                     
Earnings per share of common stock - assuming dilution  $1.47   $1.24   $4.13   $3.73 
                     
Weighted average number of shares outstanding-basic   784.5    786.3    784.6    786.6 
                     
Weighted average number of shares outstanding - assuming dilution   795.0    797.1    795.6    797.5 

 

(A) Cost of products and services sold and selling, general and administrative expenses include amounts for repositioning and other charges, pension and other postretirement (income) expense, and stock compensation expense.

 

Q3’14 Results - 6

 

Honeywell International Inc.

Segment Data (Unaudited)

(Dollars in millions)

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
Net Sales  2014   2013   2014   2013 
                     
Aerospace  $3,895   $3,889   $11,756   $11,658 
                     
Automation and Control Solutions   3,671    3,375    10,640    9,724 
                     
Performance Materials and Technologies   2,542    2,383    7,644    7,286 
Total  $10,108   $9,647   $30,040   $28,668 

 

Reconciliation of Segment Profit to Income Before Taxes

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
Segment Profit  2014   2013   2014   2013 
                     
Aerospace  $790   $730   $2,252   $2,101 
                     
Automation and Control Solutions   583    523    1,587    1,413 
                     
Performance Materials and Technologies   444    413    1,392    1,325 
                     
Corporate   (58)   (51)   (167)   (157)
                     
Total segment profit   1,759    1,615    5,064    4,682 
                     
Other income (expense) (A)   11    (10)   132    22 
Interest and other financial charges   (77)   (80)   (236)   (244)
Stock compensation expense (B)   (41)   (38)   (143)   (129)
Pension ongoing income (B)   62    22    187    68 
Other postretirement expense (B)   (12)   (5)   (37)   (7)
Repositioning and other charges (B)   (122)   (120)   (453)   (419)
                     
Income before taxes  $1,580   $1,384   $4,514   $3,973 

 

(A) Equity income (loss) of affiliated companies is included in segment profit.

 

(B) Amounts included in cost of products and services sold and selling, general and administrative expenses.

 

Q3’14 Results - 7

 

Honeywell International Inc.

Consolidated Balance Sheet (Unaudited)

(Dollars in millions)

 

   September 30,   December 31, 
   2014   2013 
           
ASSETS          
Current assets:          
Cash and cash equivalents  $6,428   $6,422 
Accounts, notes and other receivables   8,315    7,929 
Inventories   4,485    4,293 
Deferred income taxes   794    849 
Investments and other current assets   2,336    1,671 
Total current assets   22,358    21,164 
           
Investments and long-term receivables   447    393 
Property, plant and equipment - net   5,189    5,278 
Goodwill   12,923    13,046 
Other intangible assets - net   2,288    2,514 
Insurance recoveries for asbestos related liabilities   466    595 
Deferred income taxes   195    368 
Other assets   2,315    2,077 
           
Total assets  $46,181   $45,435 
           
LIABILITIES AND SHAREOWNERS’ EQUITY          
Current liabilities:          
Accounts payable  $5,212   $5,174 
Short-term borrowings   91    97 
Commercial paper   1,849    1,299 
Current maturities of long-term debt   189    632 
Accrued liabilities   6,606    6,979 
Total current liabilities   13,947    14,181 
           
Long-term debt   6,760    6,801 
Deferred income taxes   891    804 
Postretirement benefit obligations other than pensions   955    1,019 
Asbestos related liabilities   1,131    1,150 
Other liabilities   3,230    3,734 
Redeemable noncontrolling interest   204    167 
Shareowners’ equity   19,063    17,579 
           
Total liabilities, redeemable noncontrolling interest and shareowners’ equity  $46,181   $45,435 
 

Q3’14 Results - 8

 

Honeywell International Inc.

Consolidated Statement of Cash Flows (Unaudited)

(Dollars in millions)

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2014   2013   2014   2013 
Cash flows from operating activities:                    
Net income  $1,192   $1,007   $3,354   $2,998 
Less: Net income attributable to the noncontrolling interest   25    17    71    21 
Net income attributable to Honeywell   1,167    990    3,283    2,977 
Adjustments to reconcile net income attributable to Honeywell to net cash provided by operating activities:                    
Depreciation and amortization   227    245    698    740 
Loss on sale of non-strategic businesses and assets   1    —    11    — 
Gain on sale of available for sale investments   —    —    (105)   — 
Repositioning and other charges   122    120    453    419 
Net payments for repositioning and other charges   (167)   (220)   (301)   (517)
Pension and other postretirement income   (50)   (17)   (150)   (61)
Pension and other postretirement benefit payments   (38)   (40)   (123)   (253)
Stock compensation expense   41    38    143    129 
Deferred income taxes   187    72    255    257 
Excess tax benefits from share based payment arrangements   (22)   (20)   (71)   (101)
Other   (274)   169    (207)   35 
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:                    
Accounts, notes and other receivables   (104)   (187)   (529)   (382)
Inventories   (57)   (58)   (279)   (94)
Other current assets   49    (32)   181    (28)
Accounts payable   54    (2)   154    (32)
Accrued liabilities   97    12    (151)   (422)
Net cash provided by operating activities   1,233    1,070    3,262    2,667 
                     
Cash flows from investing activities:                    
Expenditures for property, plant and equipment   (259)   (203)   (680)   (547)
Proceeds from disposals of property, plant and equipment   1    1    12    7 
Increase in investments   (1,415)   (243)   (3,139)   (703)
Decrease in investments   1,181    272    2,124    648 
Cash paid for acquisitions, net of cash acquired   (2)   (603)   (4)   (1,063)
Proceeds from sales of businesses, net of fees paid   156    —    157    — 
Other   (96)   85    (109)   104 
Net cash used for investing activities   (434)   (691)   (1,639)   (1,554)
                     
Cash flows from financing activities:                    
Net (decrease) increase in commercial paper   (400)   899    550    1,699 
Net increase (decrease) in short-term borrowings   1    (3)   (5)   18 
Proceeds from issuance of common stock   45    59    206    362 
Proceeds from issuance of long-term debt   34    14    79    27 
Payments of long-term debt   (1)   (3)   (607)   (604)
Excess tax benefits from share based payment arrangements   22    20    71    101 
Repurchases of common stock   (138)   (167)   (689)   (769)
Cash dividends paid   (365)   (330)   (1,101)   (995)
Other   (7)   28    (7)   28 
Net cash (used for) provided by financing activities   (809)   517    (1,503)   (133)
                     
Effect of foreign exchange rate changes on cash and cash equivalents   (144)   54    (114)   (115)
Net (decrease) increase in cash and cash equivalents   (154)   950    6    865 
Cash and cash equivalents at beginning of period   6,582    4,549    6,422    4,634 
Cash and cash equivalents at end of period  $6,428   $5,499   $6,428   $5,499 
 

Q3’14 Results - 9

 

Honeywell International Inc.
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited)

(Dollars in millions)

 

   Three Months Ended
September 30,		 
   2014   2013 
Cash provided by operating activities  $1,233   $1,070 
Expenditures for property, plant and equipment   (259)   (203)
           
Free cash flow  $974   $867 

 

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.

 

Q3’14 Results - 10

 

Honeywell International Inc.
Reconciliation of Segment Profit to Operating Income and Calculation of Segment Profit and Operating Income Margins (Unaudited)
(Dollars in millions)

 

   Three Months Ended
September 30,		 
   2014   2013 
Segment Profit  $1,759   $1,615 
           
Stock compensation expense (A)   (41)   (38)
Repositioning and other (A, B)   (132)   (131)
Pension ongoing income (A)   62    22 
Other postretirement expense (A)   (12)   (5)
           
Operating Income  $1,636   $1,463 
           
Segment Profit  $1,759   $1,615 
÷ Sales  $10,108   $9,647 
Segment Profit Margin %   17.4%   16.7%
           
Operating Income  $1,636   $1,463 
÷ Sales  $10,108   $9,647 
Operating Income Margin %   16.2%   15.2%

 

(A) Included in cost of products and services sold and selling, general and administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and equity income adjustment.

 

We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

 

Q3’14 Results - 11

 

Honeywell International Inc.
Calculation of EPS at 26.5% Tax Rate (Unaudited)
(Dollars in millions, except per share amounts)

 

   Three Months Ended
September 30,		 
   2014   2013 
         
Income before taxes  $1,580   $1,384 
           
Taxes at 26.5%   419    367 
           
Net income at 26.5% tax rate  $1,161   $1,017 
           
Less: Net income attributable to the noncontrolling interest   25    17 
           
Net income attributable to Honeywell at 26.5% tax rate  $1,136   $1,000 
           
Weighted average number of shares outstanding - assuming dilution   795.0    797.1 
           
EPS at 26.5% tax rate  $1.43   $1.25 

 

We believe EPS adjusted to expected full-year tax rate at 26.5% is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

 

Q3’14 Results - 12

 

Honeywell International Inc.
Reconciliation of Segment Profit to Operating Income Excluding Pension Mark-to-Market Adjustment and
Calculation of Segment Profit and Operating Income Margins Excluding Pension Mark-to-Market Adjustment (Unaudited)
(Dollars in millions)

 

   Twelve Months Ended
December 31,		 
   2013 
Segment Profit  $6,351 
      
Stock compensation expense (A)   (170)
Repositioning and other (A, B)   (699)
Pension ongoing income (A)   90 
Pension mark-to-market adjustment (A)   (51)
Other postretirement expense (A)   (20)
      
Operating Income  $5,501 
Pension mark-to-market adjustment (A)   (51)
Operating Income excluding pension mark-to-market adjustment  $5,552 
      
Segment Profit  $6,351 
÷ Sales  $39,055 
Segment Profit Margin %   16.3%
      
Operating Income  $5,501 
÷ Sales  $39,055 
Operating Income Margin %   14.1%
      
Operating Income excluding pension mark-to-market adjustment  $5,552 
÷ Sales  $39,055 
Operating Income Margin excluding pension mark-to-market adjustment %   14.2%

 

(A) Included in cost of products and services sold and selling, general and administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and equity income adjustment.

 

We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

 

Q3’14 Results - 13

 

Honeywell International Inc.
Reconciliation of Segment Profit to Operating Income Excluding Pension Mark-to-Market Adjustment and
Calculation of Segment Profit and Operating Income Margins Excluding Pension Mark-to-Market Adjustment (Unaudited)
(Dollars in billions)

 

     2014 Guidance 
Segment Profit   $6.8 - 6.9 
      
Stock compensation expense (A)   ~(0.2)
Repositioning and other (A, B)   ~(0.6)
Pension ongoing income (A)   ~0.2 
Pension mark-to-market adjustment (A)   TBD 
Other postretirement expense (A)   ~(0.1)
      
Operating Income   $6.2 - 6.3 
Pension mark-to-market adjustment (A)   TBD 
Operating Income excluding pension mark-to-market adjustment   $6.2 - 6.3 
      
Segment Profit   $6.8 - 6.9  
÷ Sales   $40.3 - 40.4  
Segment Profit Margin %   ~17.0%
      
Operating Income   $6.2 - 6.3  
÷ Sales   $40.3 - 40.4  
Operating Income Margin %   ~15.6%
      
Operating Income excluding pension mark-to-market adjustment   $6.2 - 6.3  
÷ Sales   $40.3 - 40.4  
Operating Income Margin excluding pension mark-to-market adjustment %   ~15.6%

 

(A) Included in cost of products and services sold and selling, general and administrative expenses.
(B) Includes repositioning, asbestos, environmental expenses and equity income adjustment.

 

We believe these measures are useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

 

Q3’14 Results - 14

 

Honeywell International Inc.
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow (Unaudited)
(Dollars in millions)

 

   Twelve Months Ended
December 31,		 
   2013 
Cash provided by operating activities  $4,335 
      
Expenditures for property, plant and equipment   (947)
      
Free cash flow  $3,388 

 

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.

 

Q3’14 Results - 15

 

Honeywell International Inc.
Reconciliation of Earnings Per Share to Earnings Per Share, Excluding Pension Mark-to-Market Adjustment (Unaudited)

 

  Twelve Months Ended
December 31,		 
   2013 
EPS  $4.92 
      
Pension mark-to-market adjustment   0.05 
      
EPS, excluding pension mark-to-market adjustment  $4.97 

 

We believe EPS, excluding pension mark-to-market adjustment is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.

 

EPS utilizes weighted average shares outstanding - assuming dilution of 797.3 million. Mark-to-market uses a blended tax rate of 25.5%.

 
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