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Last updated on April 17, 2014 at 1:21 EDT

Honeywell Reports Full Year Sales Up 3% to $37.7 Billion; Proforma Earnings Per Share Up 11% to $4.48 Per Share; Reported Earnings Per Share of $3.69

January 25, 2013

MORRIS TOWNSHIP, N.J., Jan. 25, 2013 /PRNewswire/ — Honeywell (NYSE: HON) today announced its results for the fourth quarter and full year 2012:

    Total Honeywell
    ---------------
    ($ Millions, except Earnings Per Share)                                                                FY 2011         FY 2012         Change
                                                                                                           -------         -------         ------
    Sales                                                                                                          36,529          37,665               3%

    Segment Margin                                                                                                   14.7%           15.6%         90 bps
    Operating Income Margin(1)                                                                                       12.0%           13.6%        160 bps

    Earnings Per Share (Reported)                                                                                   $2.61           $3.69              41%
    Earnings Per Share (Proforma) 1                                                                                 $4.05           $4.48              11%

    Cash Flow from Operations                                                                                       2,833           3,517              24%
    Free Cash Flow(2)                                                                                               3,780           3,672             (3%)

                                                                                                           4Q 2011         4Q 2012         Change
                                                                                                           -------         -------         ------
    Sales                                                                                                           9,473           9,581               1%

    Segment Margin                                                                                                   15.1%           15.6%         50 bps
    Operating Income Margin(1)                                                                                       12.9%           13.9%        100 bps

    Earnings Per Share (Reported)                                                                                  ($0.40)          $0.32             N/A
    Earnings Per Share (Proforma) 1                                                                                 $1.05           $1.10               5%

    Cash Flow from Operations                                                                                       1,477           1,349             (9%)
    Free Cash Flow(2)                                                                                               1,417           1,311             (7%)

    1. Proforma, V%/bps Exclude Any Pension Mark-to-Market Adjustment
    2. Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior to Cash Pension Contributions

“Honeywell had another year of terrific performance in 2012,” said Honeywell Chairman and CEO Dave Cote. “In a weak global economy, we grew sales 3% and earnings by 11%, while expanding margins to record levels and continuing to generate strong cash flow. We outperformed while also continuing to invest in seed planting initiatives like new products and services, global growth, cost competitiveness, and strengthening our key processes — Honeywell Operating System, Velocity Product Development(TM), and Functional Transformation. Our balanced mix of long- and short-cycle businesses and expansion in high growth regions has offset lower demand in some of our short-cycle businesses, European weakness, and foreign exchange headwinds. We’ve also maintained a strong long-cycle backlog, now a record $15.8 billion, with new platform wins across many of our businesses last year. These positive trends, combined with our great positions in good industries, conservative planning, and the continued evolution of our internal processes will help Honeywell drive sales, margin growth, cash generation, and EPS outperformance in 2013 and over the long-term.”

The company is also reaffirming its full-year 2013 sales and EPS guidance:

    Full Year Guidance
    ------------------
                                                       2013     Change
                               Current Guidance                vs. 2012
                               ----------------                --------
    Sales                                    $39.0 - $39.5B              4 - 5%

    Segment Margin                             15.8 - 16.1% 20 - 50 bps
    Operating Income Margin(1)                 14.2 - 14.5% 60 - 90 bps

    Earnings Per Share(1)                     $4.75 - $4.95             6 - 11%

    Free Cash Flow(2)               ~$3.7B                      ~Flat

1. Proforma, V% / bps Exclude Any Pension Mark-to-Market Adjustment

2. Free Cash Flow (Cash Flow from Operations Less Capital Expenditures) Prior to Any NARCO Related Payments and Cash Pension Contributions

Segment Performance

    Aerospace
    ---------
    ($ Millions)   FY 2011         FY 2012         % Change
                   -------         -------         --------
    Sales                  11,475          12,040                 5%
    Segment Profit          2,023           2,279                13%
    Segment Margin           17.6%           18.9%          130 bps

                   4Q 2011         4Q 2012         % Change
                   -------         -------         --------
    Sales                   3,047           3,020               (1%)
    Segment Profit            573             601                 5%
    Segment Margin           18.8%           19.9%          110 bps

  • Sales were down (1%) compared with the fourth quarter of 2011 driven by a (6%) decline in Defense and Space, partially offset by a 3% increase in our commercial end markets. Commercial original equipment (OE) sales were up 5% driven by increased production rates at our major OE customers. Commercial aftermarket sales were up 3% driven by higher maintenance activity.
  • Segment profit was up 5%, and segment margins expanded 110 bps to 19.9%, primarily due to commercial excellence, productivity net of inflation, and lower BGA OE payments, partially offset by investments for growth.
    Automation and Control Solutions
    --------------------------------
    ($ Millions)                     FY 2011         FY 2012         % Change
                                     -------         -------         --------
    Sales                                    15,535          15,880                 2%
    Segment Profit                            2,083           2,232                 7%
    Segment Margin                             13.4%           14.1%           70 bps

    ($ Millions)                     4Q 2011         4Q 2012         % Change
                                     -------         -------         --------
    Sales                                     4,051           4,172                 3%
    Segment Profit                              584             645                10%
    Segment Margin                             14.4%           15.5%          110 bps

  • Sales were up 3% compared with the fourth quarter of 2011 as volume growth and the favorable impact of acquisitions, net of divestitures was partially offset by foreign exchange headwinds. Energy, Safety, and Security was up 4% organically due to acceleration of growth in Environmental and Combustion Controls and continued growth in Scanning & Mobility and Security. Process Solutions and Building Solutions and Distribution grew at a slower rate, reflecting a more challenging capital investment environment.
  • Segment profit was up 10% and segment margins were up 110 bps to 15.5% driven by commercial excellence and strong productivity net of inflation and other investments for growth, including the favorable impact of previously completed restructuring actions.
    Performance Materials and Technologies
    --------------------------------------
    ($ Millions)                           FY 2011        FY 2012        % Change
                                           -------        -------        --------
    Sales                                          5,659          6,184                   9%
    Segment Profit                                 1,042          1,154                  11%
    Segment Margin                                  18.4%          18.7%             30 bps

    ($ Millions)                           4Q 2011        4Q 2012        % Change
                                           -------        -------        --------
    Sales                                          1,430          1,545                   8%
    Segment Profit                                   223            210                 (6%)
    Segment Margin                                  15.6%          13.6%          (200 bps)
  • Sales were up 8% reported, 2% organic, compared with the fourth quarter of 2011, resulting from the Thomas Russell acquisition in UOP, partially offset by lower volume of petrochemical and refining catalysts. Advanced Materials sales were up 5% driven by new products and applications, partially offset by challenging end market conditions.
  • Segment profit declined (6%) and segment margins contracted (200 bps) to 13.6% in the fourth quarter primarily due to lower catalyst sales in UOP, unfavorable price/raws spread in Resins and Chemicals and challenging end market conditions, partially offset by productivity net of labor inflation and investments for growth.
    Transportation Systems
    ----------------------
    ($ Millions)           FY 2011        FY 2012        % Change
                           -------        -------        --------
    Sales                          3,859          3,561                 (8%)
    Segment Profit                   485            432                (11%)
    Segment Margin                  12.6%          12.1%           (50 bps)

    ($ Millions)           4Q 2011        4Q 2012        % Change
                           -------        -------        --------
    Sales                            944            844                (11%)
    Segment Profit                   117             94                (20%)
    Segment Margin                  12.4%          11.1%          (130 bps)
  • Sales were down (11%), down (8%) organic, compared with the fourth quarter of 2011, driven by lower European light vehicle production and aftermarket sales, partially offset by new platform launches and higher gas turbo penetration, primarily in the U.S. and China.
  • Segment profit was down (20%) in the fourth quarter and segment margins decreased (130 bps) to 11.1% primarily driven by lower sales volumes and price, unfavorable foreign exchange, and ongoing projects to drive operational improvement in the Friction Materials business, partially offset by productivity benefits.

Honeywell will discuss its results during its investor conference call today starting at 9:00 a.m. EST. To participate on the conference call, please dial (800) 862-9098 (domestic) or (785) 424-1051 (international) a few minutes before the 9:00 a.m. EST start. Please mention to the operator that you are dialing in for Honeywell’s fourth quarter 2012 earnings call or provide the conference code, HONQ412. You can hear a replay of the conference call from 12:00 p.m. EST, January 25, until 11:59 p.m. EST, February 1, by dialing (800) 374-1216 (domestic) or (402) 220-0681 (international).

A real-time audio webcast of the presentation can be accessed at http://www.honeywell.com/investor, where related materials will be posted prior to the presentation. The presentation materials will be in Adobe Acrobat format. A replay of the webcast will be available following the presentation at the same link listed above for 30 days.

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; automotive products; turbochargers; and performance materials. Based in Morris Township, N.J., Honeywell’s shares are traded on the New York, London, and Chicago Stock Exchanges. For more news and information on Honeywell, please visit www.honeywellnow.com.

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.

    Contacts:
    Media                    Investor Relations
    Robert C. Ferris         Elena Doom
    (973) 455-3388           (973) 455-2222
    rob.ferris@honeywell.com elena.doom@honeywell.com
                                                                                                                         Honeywell International Inc
                                                                                                              Consolidated Statement of Operations (Unaudited)
                                                                                                               -----------------------------------------------
                                                                                                                   (In millions, except per share amounts)

                                                                                                                                           Three Months Ended               Twelve Months Ended
                                                                                                                                              December 31,                     December 31,
                                                                                                                                              ------------                     ------------
                                                                                                                                                           2012                             2011                                2012       2011
                                                                                                                                                           ----                             ----                                ----       ----

    Product sales                                                                                                                                      $7,628                           $7,478                             $29,812    $28,745
    Service sales                                                                                                                                       1,953                            1,995                               7,853      7,784
                                                                                                                                                        -----                            -----                               -----      -----
    Net sales                                                                                                                                           9,581                            9,473                              37,665     36,529
                                                                                                                                                        -----                            -----                              ------     ------

    Costs, expenses and other
          Cost of products sold (A)                                                                                                                     6,302                            6,862                              22,929     23,220
          Cost of services sold (A)                                                                                                                     1,379                            1,573                               5,362      5,336
                                                                                                                                                        -----                            -----                               -----      -----
                                                                                                                                                        7,681                            8,435                              28,291     28,556
          Selling, general and administrative expenses (A)                                                                                              1,523                            1,616                               5,218      5,399
          Other (income) expense                                                                                                                          (16)                             (12)                                (70)       (84)
          Interest and other financial charges                                                                                                             87                               91                                 351        376
                                                                                                                                                          ---                              ---                                 ---        ---
                                                                                                                                                        9,275                           10,130                              33,790     34,247
                                                                                                                                                        -----                           ------                              ------     ------

    Income (loss) from continuing operations before taxes                                                                                                 306                             (657)                              3,875      2,282
    Tax expense (benefit)                                                                                                                                  51                             (350)                                944        417
                                                                                                                                                          ---                             ----                                 ---        ---

    Income (loss) from continuing operations after taxes                                                                                                  255                             (307)                              2,931      1,865

    Income from discontinued operations after taxes                                                                                                         -                                -                                   -        209
                                                                                                                                                          ---                              ---                                 ---        ---

    Net income (loss)                                                                                                                                     255                             (307)                              2,931      2,074

    Less: Net income attributable to the noncontrolling interest                                                                                            4                                3                                   5          7
                                                                                                                                                          ---                              ---                                 ---        ---

    Net income (loss) attributable to Honeywell                                                                                                          $251                            $(310)                             $2,926     $2,067
                                                                                                                                                         ====                            =====                              ======     ======

    Amounts attributable to Honeywell:
             Income (loss) from continuing operations less net income
             attributable to the noncontrolling interest                                                                                                  251                             (310)                              2,926      1,858
             Income from discontinued operations                                                                                                            -                                -                                   -        209
             Net income (loss) attributable to Honeywell                                                                                                 $251                            $(310)                             $2,926     $2,067
                                                                                                                                                         ====

    Earnings per share of common stock - basic:
      Income (loss) from continuing operations                                                                                                           0.32                            (0.40)                               3.74       2.38
      Income from discontinued operations                                                                                                                   -                                -                                   -       0.27
      Net income (loss) attributable to Honeywell                                                                                                       $0.32                           $(0.40)                              $3.74      $2.65
                                                                                                                                                        =====                           ======                               =====      =====

    Earnings per share of common stock - assuming dilution:
      Income (loss) from continuing operations                                                                                                           0.32                            (0.40)                               3.69       2.35
      Income from discontinued operations                                                                                                                   -                                -                                   -       0.26
      Net income (loss) attributable to Honeywell                                                                                                       $0.32                           $(0.40)                              $3.69      $2.61
                                                                                                                                                        =====                           ======                               =====      =====

    Weighted average number of shares outstanding-basic                                                                                                 787.2                            774.7                               782.4      780.8
                                                                                                                                                        =====                            =====                               =====      =====

    Weighted average number of shares outstanding -
        assuming dilution                                                                                                                               796.4                            784.3                               791.9      791.6
                                                                                                                                                        =====                            =====                               =====      =====

    (A) Cost of products and services sold and selling, general and administrative expenses include amounts for repositioning and other charges, pension and other postretirement expense, and stock compensation expense.
    (B) Below is a reconciliation of Earnings per share to Earnings per share, excluding mark-to-market pension expense. We believe this measure is useful to investors and management in understanding our ongoing operations and in
     analysis of ongoing operating trends.

                                                                                                                                         Three Months Ended               Twelve Months Ended
                                                                                                                                            December 31,                     December 31,
                                                                                                                                            ------------                     ------------
                                                                                                                                                      2012(1)                          2011(1)                             2012(1)    2011(1)
                                                                                                                                                       ------                           ------                              ------     ------

             Earnings per share of common stock - assuming dilution                                                                                     $0.32                           $(0.40)                              $3.69      $2.61
             Mark-to-market pension expense                                                                                                              0.78                             1.45                                0.79       1.44
                                                                                                                                                         ----

             Earnings per share of common stock - assuming dilution,
             excluding mark-to-market pension expense                                                                                                   $1.10                            $1.05                               $4.48      $4.05
                                                                                                                                                        =====

              1- EPS utilizes weighted average shares outstanding and the effective tax rate for the period.
              Mark-to-market uses a blended tax rate of 35.0% and 36.9% for 2012 and 2011, respectively

                                                                                Honeywell International Inc
                                                                                  Segment Data (Unaudited)
                                                                                  -----------------------
                                                                                   (Dollars in millions)

                                             Three Months Ended                  Twelve Months Ended
                                                December 31,                        December 31,
                                                ------------                        ------------
    Net Sales                                                 2012                                 2011                                2012     2011
    ---------                                                 ----                                 ----                                ----     ----

    Aerospace                                               $3,020                               $3,047                             $12,040  $11,475

    Automation and
     Control Solutions                                       4,172                                4,051                              15,880   15,535

    Performance
     Materials and
     Technologies                                            1,545                                1,430                               6,184    5,659

    Transportation
     Systems                                                   844                                  944                               3,561    3,859

    Corporate                                                    -                                    1                                   -        1
                                                               ---                                  ---                                 ---      ---

         Total                                              $9,581                               $9,473                             $37,665  $36,529
                                                            ======                               ======                             =======  =======

                                                 Reconciliation of Segment Profit to Income From Continuing Operations Before Taxes
                                                 ----------------------------------------------------------------------------------

                                             Three Months Ended                  Twelve Months Ended
                                                December 31,                        December 31,
                                                ------------                        ------------
    Segment Profit                                            2012                                 2011                                2012     2011
    --------------                                            ----                                 ----                                ----     ----

    Aerospace                                                 $601                                 $573                              $2,279   $2,023

    Automation and
     Control Solutions                                         645                                  584                               2,232    2,083

    Performance
     Materials and
     Technologies                                              210                                  223                               1,154    1,042

    Transportation
     Systems                                                    94                                  117                                 432      485

    Corporate                                                  (54)                                 (68)                               (218)    (276)
                                                               ---                                  ---                                ----     ----

         Total Segment Profit                                1,496                                1,429                               5,879    5,357

    Other income
     (expense) (A)                                               7                                   (3)                                 25       33
    Interest and other
     financial charges                                         (87)                                 (91)                               (351)    (376)
    Stock compensation
     expense (B)                                               (39)                                 (39)                               (170)    (168)
    Pension ongoing
     expense (B)                                                (7)                                 (22)                                (36)    (105)
    Pension mark-to-
     market expense (B)                                       (957)                              (1,802)                               (957)  (1,802)
    Other postretirement
     income/(expense)
     (B)                                                       (20)                                 (23)                                (72)      86
    Repositioning and
     other charges (B)                                         (87)                                (106)                               (443)    (743)
                                                               ---                                 ----                                ----     ----

    Income (loss) from
     continuing
     operations before
     taxes                                                    $306                                $(657)                             $3,875   $2,282
                                                              ====                                =====                              ======   ======

        (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.

                                                     Honeywell International Inc
                                                Consolidated Balance Sheet (Unaudited)
                                                -------------------------------------
                                                        (Dollars in millions)

                                                                              December 31, December 31,
                                                                                                   2012           2011
                                                                                                   ----           ----

    ASSETS
    Current assets:
        Cash and cash equivalents                                                   $4,634              $3,698
        Accounts, notes and other receivables                                                     7,429          7,228
        Inventories                                                                               4,235          4,264
        Deferred income taxes                                                                       669            460
        Investments and other current assets                                                        631            484
                                                                                                    ---            ---
                                         Total current assets                                    17,598         16,134

    Investments and long-term receivables                                                           623            494
    Property, plant and equipment - net                                                           5,001          4,804
    Goodwill                                                                                     12,425         11,858
    Other intangible assets - net                                                                 2,449          2,477
    Insurance recoveries for asbestos related
     liabilities                                                                                    663            709
    Deferred income taxes                                                                         1,889          2,132
    Other assets                                                                                  1,205          1,200
                                                                                                  -----          -----

                                         Total assets                                           $41,853        $39,808

    LIABILITIES AND SHAREOWNERS' EQUITY
    Current liabilities:
        Accounts payable                                                            $4,736              $4,738
        Short-term borrowings                                                                        76             60
        Commercial paper                                                                            400            599
        Current maturities of long-term debt                                                        625             15
        Accrued liabilities                                                                       7,208          6,863
                                                                                                  -----          -----
                                         Total current liabilities                               13,045         12,275

    Long-term debt                                                                                6,395          6,881
    Deferred income taxes                                                                           628            676
    Postretirement benefit obligations other
     than pensions                                                                                1,365          1,417
    Asbestos related liabilities                                                                  1,292          1,499
    Other liabilities                                                                             5,913          6,158
    Redeemable noncontrolling interest                                                              150              -
    Shareowners' equity                                                                          13,065         10,902
                                                                                                 ------         ------

                                          Total liabilities, redeemable
                                          noncontrolling interest and
                                          shareowners' equity                                   $41,853        $39,808
                                                                                              Honeywell International Inc
                                                                                    Consolidated Statement of Cash Flows (Unaudited)
                                                                                    -----------------------------------------------
                                                                                                 (Dollars in millions)

                                                                                                                                Three Months Ended    Twelve Months Ended
                                                                                                                                   December 31,           December 31,
                                                                                                                                   ------------           ------------
                                                                                                                                                2012                   2011    2012    2011
                                                                                                                                                ----                   ----    ----    ----
    Cash flows from operating activities:
        Net income (loss) attributable to Honeywell                                                                                             $251                  $(310) $2,926  $2,067
        Adjustments to reconcile net income (loss) attributable to Honeywell to net
        cash provided  by operating activities:
            Depreciation and amortization                                                                                                        245                    253     926     957
            Gain on sale of non-strategic businesses and assets                                                                                   (2)                    (9)     (5)   (362)
            Repositioning and other charges                                                                                                       87                    106     443     743
            Net payments for repositioning and other charges                                                                                    (151)                  (133)   (503)   (468)
            Pension and other postretirement expense                                                                                             984                  1,847   1,065   1,823
            Pension and other postretirement benefit payments                                                                                   (295)                  (315) (1,183) (1,883)
            Stock compensation expense                                                                                                            39                     39     170     168
            Deferred income taxes                                                                                                               (235)                  (528)     84    (331)
            Excess tax benefits from share based payment arrangements                                                                            (28)                   (11)    (56)    (42)
            Other                                                                                                                                 69                    233     108     289
            Changes in assets and liabilities, net of the effects of
            acquisitions and divestitures:
               Accounts, notes and other receivables                                                                                              41                    117    (119)   (316)
               Inventories                                                                                                                        78                    130      25    (310)
               Other current assets                                                                                                               (1)                    78     (78)     25
               Accounts payable                                                                                                                  207                    162     (13)    527
               Accrued liabilities                                                                                                                60                   (182)   (273)    (54)
    Net cash provided by operating activities                                                                                                  1,349                  1,477   3,517   2,833
                                                                                                                                               -----                  -----   -----   -----

    Cash flows from investing activities:
        Expenditures for property, plant and equipment                                                                                          (298)                  (332)   (884)   (798)
        Proceeds from disposals of property, plant and equipment                                                                                   3                      3       5       6
        Increase in investments                                                                                                                 (220)                   (58)   (702)   (380)
        Decrease in investments                                                                                                                  272                     66     559     354
        Cash paid for acquisitions, net of cash acquired                                                                                        (376)                  (346)   (438)   (973)
        Proceeds from sales of businesses, net of fees paid                                                                                        3                    (14)     21   1,156
        Other                                                                                                                                     53                    (43)     11      24
    Net cash used for investing activities                                                                                                      (563)                  (724) (1,428)   (611)
                                                                                                                                                ----                   ----  ------    ----

    Cash flows from financing activities:
        Net (decrease)/increase in commercial paper                                                                                             (499)                  (101)   (199)    300
        Net increase/(decrease) in short-term borrowings                                                                                           3                      2      22      (2)
        Payment of debt assumed with acquisitions                                                                                                  -                    (33)      -     (33)
        Proceeds from issuance of common stock                                                                                                   163                     72     342     304
        Proceeds from issuance of long-term debt                                                                                                  16                      1     102   1,390
        Payments of long-term debt                                                                                                                (1)                  (500)     (1)   (939)
        Excess tax benefits from share based payment arrangements                                                                                 28                     11      56      42
        Repurchases of common stock                                                                                                             (317)                   (76)   (317) (1,085)
        Cash dividends paid                                                                                                                     (331)                  (295) (1,211) (1,091)
    Net cash used for financing activities                                                                                                      (938)                  (919) (1,206) (1,114)
                                                                                                                                                ----                   ----  ------  ------

    Effect of foreign exchange rate changes on cash and cash equivalents                                                                          26                    (21)     53     (60)
                                                                                                                                                 ---                    ---     ---     ---
    Net (decrease)/increase in cash and cash equivalents                                                                                        (126)                  (187)    936   1,048
    Cash and cash equivalents at beginning of period                                                                                           4,760                  3,885   3,698   2,650
    Cash and cash equivalents at end of period                                                                                                $4,634                 $3,698  $4,634  $3,698
                                                                                                                                              ======                 ======  ======  ======
                                                                                  Honeywell International Inc
                                   Reconciliation of Cash Provided by Operating Activities to Free Cash Flow, Prior to Cash Pension Contributions (Unaudited)
                                   -------------------------------------------------------------------------------------------------------------------------
                                                                                     (Dollars in millions)

                                                   Three Months Ended                  Twelve Months Ended
                                                      December 31,                        December 31,
                                                      ------------                        ------------
                                                                     2012                               2011                                    2012               2011
                                                                     ----                               ----                                    ----               ----

    Cash provided by
     operating activities                                          $1,349                             $1,477                                  $3,517             $2,833

    Expenditures for
     property, plant and
     equipment                                                       (298)                              (332)                                   (884)              (798)
                                                                     ----                               ----                                    ----               ----

    Free cash flow                                                 $1,051                             $1,145                                  $2,633             $2,035

    Cash pension
     contributions                                                    260                                272                                   1,039              1,745
                                                                      ---                                ---                                   -----              -----

    Free cash flow, prior to
     cash pension
     contributions                                                 $1,311                             $1,417                                  $3,672             $3,780
                                                                   ======                             ======                                  ======             ======

    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, repay debt obligations prior to their maturities, or make cash pension contributions. 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.
                                                                                                    Honeywell International Inc.
                   Reconciliation of Segment Profit to Operating Income Excluding Pension Mark-to-Market Adjustment and Calculation of Segment Profit and Operating Income Margin Excluding Pension Mark-to-Market Adjustment
                                                                                                                   (Unaudited)
                   ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              (Dollars in millions)

                                                          Three Months Ended                         Twelve Months Ended
                                                             December 31,                               December 31,
                                                             ------------                               ------------
                                                                              2012                                      2011                                        2012                                      2011
                                                                              ----                                      ----                                        ----                                      ----

    Segment Profit                                                          $1,496                                    $1,429                                      $5,879                                    $5,357

    Stock compensation expense (A)                                             (39)                                      (39)                                       (170)                                     (168)
    Repositioning and other (A, B)                                             (96)                                     (121)                                       (488)                                     (794)
    Pension ongoing expense (A)                                                 (7)                                      (22)                                        (36)                                     (105)
    Pension mark-to-market adjustment (A)                                     (957)                                   (1,802)                                       (957)                                   (1,802)
    Other postretirement income/(expense) (A)                                  (20)                                      (23)                                        (72)                                       86
                                                                               ---                                       ---                                         ---                                       ---

    Operating Income (Loss)                                                   $377                                     $(578)                                     $4,156                                    $2,574
    Pension mark-to-market adjustment (A)                                    $(957)                                  $(1,802)                                      $(957)                                  $(1,802)
                                                                             -----                                   -------                                       -----                                   -------
    Operating Income excluding pension mark-to-
     market adjustment                                                      $1,334                                    $1,224                                      $5,113                                    $4,376

    Segment Profit                                                          $1,496                                    $1,429                                      $5,879                                    $5,357
    ÷ Sales                                                                 $9,581                                    $9,473                                     $37,665                                   $36,529
    Segment Profit Margin %                                                  15.6%                                     15.1%                                       15.6%                                     14.7%
                                                                              ====                                      ====                                        ====                                      ====

    Operating Income (Loss)                                                   $377                                     $(578)                                     $4,156                                    $2,574
    ÷ Sales                                                                 $9,581                                    $9,473                                     $37,665                                   $36,529
    Operating Income (Loss) Margin %                                          3.9%                                    (6.1%)                                       11.0%                                      7.0%
                                                                               ===                                     =====                                        ====                                       ===

    Operating Income excluding pension mark-to-
     market adjustment                                                      $1,334                                    $1,224                                      $5,113                                    $4,376
    ÷ Sales                                                                 $9,581                                    $9,473                                     $37,665                                   $36,529
    Operating Income Margin excluding pension
     mark-to-market adjustment %                                             13.9%                                     12.9%                                       13.6%                                     12.0%
                                                                              ====                                      ====                                        ====                                      ====

    (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.

SOURCE Honeywell


Source: PR Newswire