================================================================================
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 24, 2001
(Date of earliest event reported)
HONEYWELL INTERNATIONAL INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 1-8974 22-2640650
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) 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
================================================================================
ITEM 5. OTHER EVENTS.
Honeywell published its third quarter 2001 financial results on October
24, 2001. Honeywell reported free cash flow of $353 million, and stated that the
events of September 11 had resulted in an abrupt and unprecedented decline in
the aviation industry. In response, Honeywell has accelerated its cost-reduction
actions and further accelerated efforts to improve performance. Census
reductions are expected to total 15,800 by the end of the year. Honeywell's
income statements for the three- and nine-month periods ended September 30, as
well as the results of its business segments, are set forth below:
2
Honeywell International Inc.
Consolidated Statement of Income (Unaudited)
--------------------------------------------
(In millions except per share amounts)
Three Months Ended September 30
-------------------------------
2001 2000
---------------------------- -----------------------------
Reported Adjusted (B) Reported Adjusted (D)
------------ ----------- ------------ ------------
Net sales $ 5,789 $ 5,789 $ 6,216 $ 6,216
------------ ----------- ------------ ------------
Costs, expenses and other
Cost of goods sold 5,368 (A) 4,452 4,845 (C) 4,484
Selling, general and administrative expenses 803 (A) 738 791 791
Equity in (income) loss of affiliated companies 17 (A) (10) 68 (C) (31)
Other (income) expense - - (35) (35)
Interest and other financial charges 99 99 125 125
------------ ----------- ------------ ------------
6,287 5,279 5,794 5,334
------------ ----------- ------------ ------------
Income (loss) before taxes on income (498) 510 422 882
Taxes (benefit) on income (190) 150 140 269
------------ ----------- ------------ ------------
Net income (loss) $ (308) $ 360 $ 282 $ 613
============ =========== ============ ============
Earnings (loss) per share of common stock-basic $ (0.38) $ 0.44 $ 0.35 $ 0.76
============ =========== ============ ============
Earnings (loss) per share of common stock -
assuming dilution (E) $ (0.38) $ 0.44 $ 0.35 $ 0.76
============ =========== ============ ============
Weighted average number of shares outstanding-basic 813 813 801 801
============ =========== ============ ============
Weighted average number of shares outstanding -
assuming dilution (E) 813 816 806 806
============ =========== ============ ============
(A) Cost of goods sold, selling, general and administrative expenses, and
equity in (income) loss of affiliated companies include provisions of $916,
$65 and $27 million, respectively, for repositioning and other charges.
Total net pretax charges were $1,008 million (after-tax $668 million, or
$0.82 per share) which includes $537 million of net repositioning charges,
$181 million of probable and reasonably estimable legal and environmental
claims, $145 million of write-downs of fixed capital, goodwill and other
identifiable intangible assets of our Friction Materials business, $106
million of write-offs principally related to asset impairments, including
receivables and inventory, and $39 million of loss contracts.
(B) Excludes the impact from the items in (A) above.
(C) Cost of goods sold and equity in (income) loss of affiliated companies
include provisions of $361 and $99 million, respectively, for repositioning
and other charges. Total net pretax charges were $460 million (after-tax
$331 million, or $0.41 per share) which includes $86 million of net
repositioning charges, $245 million of write-downs of fixed capital,
goodwill and other identifiable intangible assets of our Friction Materials
business, $99 million for costs associated with closing an affiliate's
chemical manufacturing operations, and $30 million of write-offs
principally related to asset impairments, including inventory.
(D) Excludes the impact from the items in (C) above.
(E) Dilutive securities issuable in connection with stock plans have been
excluded from the calculation of reported loss per share because their
effect would reduce the loss per share.
3
Honeywell International Inc.
Consolidated Statement of Incomce (Unaudited)
---------------------------------------------
(In millions except per share amounts)
Nine Months Ended September 30
------------------------------
2001 2000
---------------------------- ----------------------------
Reported Adjusted (B) Reported Adjusted (E)
------------ ----------- ------------ -----------
Net sales $17,799 $ 17,799 $18,569 $ 18,569
------------ ----------- ------------ -----------
Costs, expenses and other
Cost of goods sold 15,408 (A) 13,510 13,966 (C) 13,509
Selling, general and administrative expenses 2,408 (A) 2,257 2,312 2,312
(Gain) on sale of non-strategic businesses - - (112)(D) -
Equity in (income) loss of affiliated companies 205 (A) 5 50 (C) (49)
Other (income) expense (18)(A) (23) (48) (48)
Interest and other financial charges 313 313 365 365
------------ ----------- ------------ -----------
18,316 16,062 16,533 16,089
------------ ----------- ------------ -----------
Income (loss) before taxes on income (517) 1,737 2,036 2,480
Taxes (benefit) on income (300) 512 631 756
------------ ----------- ------------ -----------
Net income (loss) $ (217) $ 1,225 $ 1,405 $ 1,724
============ =========== ============ ===========
Earnings (loss) per share of common stock-basic $ (0.27) $ 1.51 $ 1.76 $ 2.16
============ =========== ============ ===========
Earnings (loss) per share of common stock -
assuming dilution (F) $ (0.27) $ 1.50 $ 1.74 $ 2.14
============ =========== ============ ===========
Weighted average number of shares outstanding-basic 811 811 799 799
============ =========== ============ ===========
Weighted average number of shares outstanding -
assuming dilution (F) 811 816 808 808
============ =========== ============ ===========
(A) Cost of goods sold, selling, general and administrative expenses, and
equity in (income) loss of affiliated companies include provisions of
$1,898, $151 and $200 million, respectively, for repositioning and other
charges. Other (income) expense includes a net provision of $5 million,
consisting of $6 million for a charge related to the early extinguishment
of debt, offset by a $1 million credit recognized upon the adoption of
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended (SFAS No. 133),
effective for Honeywell as of January 1, 2001. Total net pretax charges,
including the impact of adopting SFAS No. 133, were $2,254 million
(after-tax $1,442 million, or $1.78 per share).
(B) Excludes the impact from the items in (A) above.
(C) Cost of goods sold and equity in (income) loss of affiliated companies
include provisions of $457 and $99 million, respectively, for repositioning
and other charges. Total net pretax charges were $556 million (after-tax
$390 million, or $0.49 per share).
(D) Represents the pretax gain on the sale of the former Honeywell Inc. TCAS
product line of $112 million (after-tax $71 million, or $0.09 per share).
(E) Excludes the impact from the items in (C) and (D) above.
(F) Dilutive securities issuable in connection with stock plans have been
excluded from the calculation of reported loss per share because their
effect would reduce the loss per share.
4
Honeywell International Inc.
Segment Data
------------
(Dollars in Millions)
Nets Sale Periods Ended September 30
--------- --------------------------
Three Months Nine Months
------------------------------ --------------------------------
2001 2000 2001 2000
----------- ----------- ------------ -----------
Aerospace $2,372 $2,458 $7,315 $7,308
Automation and Control Solutions 1,780 1,861 5,309 5,441
Specialty Materials 775 1,014 2,563 3,100
Transportation and Power Systems 851 866 2,577 2,665
Corporate 11 17 35 55
----------- ----------- ------------ -----------
Total $5,789 $6,216 $17,799 $18,569
=========== =========== ============ ===========
Segment Profit Periods Ended September 30
-------------- --------------------------
Three Months Nine Months
------------------------------ --------------------------------
2001 2000 2001 2000
----------- ----------- ------------ -----------
Aerospace $ 393 $ 565 $ 1,348 $1,604
Automation and Control Solutions 192 277 566 742
Specialty Materials (19) 98 57 300
Transportation and Power Systems 65 41 178 211
Corporate (32) (40) (117) (109)
----------- ----------- ------------ -----------
Total Segment Profit 599 941 2,032 2,748
Gain on sale of non-strategic businesses - - - 112
Equity in income (loss) of affiliated companies 10 31 (5) 49
Other income - 35 23 48
Interest and other financial charges (99) (125) (313) (365)
Repositioning and other charges (1,008) (460) (2,254) (556)
----------- ----------- ------------ -----------
Income (loss) before taxes on income $ (498) $ 422 $ (517) $2,036
=========== =========== ============ ===========
5
The following table sets forth the historical ratios of earnings to
fixed charges of Honeywell for the periods indicated:
Nine Months Ended
September 30, Year Ended December 31,
------------------- ----------------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
0.26(d) 5.73(c) 5.24(b) 6.74(a) 8.05 7.20 6.65
The ratio of earnings to fixed charges is generally computed by
dividing the sum of net income, income taxes and fixed charges (net of
capitalized interest) less undistributed equity income by fixed charges. Fixed
charges represent gross interest and amortization of debt discount and expense
and the interest factor of all rentals, consisting of an appropriate interest
factor on operating leases.
(a) Included in earnings for 1999 were merger, repositioning and other
charges, a gain on the sale of our Laminate Systems business and a gain
on the sale of our investment in AMP Incorporated common stock resulting
in a net pretax charge of $913 million. Excluding such charge, the ratio
of earnings to fixed charges would have been 9.12.
(b) Included in earnings for 2000 were repositioning, environmental and other
charges and asset impairments, and a gain on the sale of the TCAS product
line of Honeywell Inc. resulting in a net pretax charge $854 million.
Excluding such charge, the ratio of earnings to fixed charges would have
been 6.66.
(c) Included in earnings for the nine months 2000 were repositioning and
other charges and asset impairments, and a gain on the sale of the TCAS
product line of Honeywell Inc. resulting in a net pretax charge $444
million. Excluding such charge, the ratio of earnings to fixed charges
would have been 6.72.
(d) Included in earnings for the nine months 2001 were repositioning and
other charges, asset impairments and legal and environmental claims
resulting in a net pretax charge $2,254 million. Excluding such charge,
the ratio of earnings to fixed charges would have been 5.86.
As at September 30, 2001, Honeywell had (in millions):
Cash and cash equivalents $ 1,324
Total Assets 25,332
Short-term borrowings and commercial paper 1,556
Current maturities of long-term debt 408
Long-term debt 3,519
Total debt 5,483
Total shareowners' equity 9,252
6
SIGNATURE
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 hereunto duly authorized.
Date: October 24, 2001 Honeywell International Inc.
By /s/ Victor P. Patrick
--------------------------------
Victor P. Patrick
Vice President, Secretary and
Deputy General Counsel
7