Is this filing from Honeywell International (HON), and what company does it describe?

No. The document is AlliedSignal Inc.'s 10-K for fiscal 1995, filed February 27, 1996. AlliedSignal later merged with Honeywell and adopted the Honeywell name in 1999. The information here applies to AlliedSignal and should not be read as a Honeywell International filing.

What drove the earnings growth in 1995?

Net income rose to $875 million from $759 million. Engineered Materials and Aerospace drove most of the gain. Engineered Materials adjusted net income rose 22%, helped by polymer pricing and volume. Aerospace net income rose 17%, helped by the Lycoming engine acquisition, commercial avionics such as TCAS, and auxiliary power unit sales. Automotive's adjusted income was essentially flat, and reported results were weighed down by the ABS exit charge.

What risks did management flag?

Several risks were flagged. The U.S. defense budget was expected to keep declining, which could stretch, curtail or cancel some military programs. Automotive faced ABS losses, reduced margins on light-vehicle braking, and exposure to the outcome of talks on its light-vehicle braking business. Environmental liabilities were $454 million, and remedial spending was expected to rise to about $90 million in 1996. About 39% of U.S. and Canadian unionized employees had contracts expiring in 1996. The company also disclosed a Goodrich patent suit in which the Federal Circuit affirmed a ruling in its favor.

How is the balance sheet and cash position?

Total debt was $2,010 million, and long-term debt was $1,366 million. Total debt was 33.7% of total capital, down from 34.1%. Cash and equivalents were $540 million, and the current ratio was 1.3x. Management said 1996 capital spending of about $765 million would be funded from internally generated cash. Credit facilities totaled $750 million and supported commercial paper, with $58 million outstanding at year-end.

What are the dividend and share repurchase plans?

The board raised the quarterly dividend 15%, from $0.195 to $0.225 per share, effective in the first quarter of 1996. Full-year 1995 dividends were $0.78 per share. The company repurchased 5.5 million shares for $239 million in 1995, mainly to meet employee benefit plan and dividend reinvestment needs. About 8.1 million shares remained authorized for repurchase at year-end.

HON 10-K FY1995 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed February 27, 1996. Cited figures are marked; the original filing is the authoritative source.

Important note: the filing provided is the Form 10-K of AlliedSignal Inc. (Commission file 1-8974, Morristown, NJ), filed February 27, 1996 for fiscal 1995.

It is not a Honeywell International filing. AlliedSignal took the Honeywell name only after its 1999 merger with Honeywell Inc., so this analysis covers AlliedSignal. Investors checking HON should verify the filing source.

AlliedSignal reported record 1995 results. Net sales rose 12% to $14,346 million^a, and net income rose 15% to $875 million, or $3.09 per share. Income from operations was $1,260 million, a 9% increase, or 13% excluding nonrecurring items.

Return on average shareowners' equity was 26.7%, and operating cash flow was $1,216 million^b. Growth came mainly from Engineered Materials and Aerospace. Engineered Materials net income rose to $473 million, including a $71 million gain on exiting the HDPE joint venture, and adjusted net income was $402 million, up 22%.

Aerospace net income rose 17% to $303 million^c on $5,084 million of sales, supported by commercial avionics, TCAS and the Lycoming engine acquisition. Automotive was the weak spot. Reported net income was $146 million after a $115 million pretax charge to exit the light-vehicle anti-lock braking (ABS) business.

Adjusted net income was flat at $217 million^d. The balance sheet improved, with long-term debt falling to 25.6% of total capital from 30.4%. Management plans 1996 capital spending of about $765 million, funded internally, and raised the quarterly dividend 15% to $0.225.

02—Key points

Key Highlights

Record 1995 net sales of $14,346 million (+12%), including acquisition contributions of $760 million and volume gains in Engineered Materials and Aerospace.
Net income of $875 million, or $3.09 per share (+15%). Return on average shareowners' equity was 26.7%, and return on sales after tax was 6.1%.
Aerospace sales of $5,084 million (+10%) and net income of $303 million (+17%). Backlog was $4,523 million, of which about $3,010 million was expected to be filled in 1996.
Automotive reported net income of $146 million after a $115 million pretax charge to exit the light-vehicle ABS business. Adjusted net income was $217 million, roughly flat year over year.
Engineered Materials net income of $473 million, or $402 million adjusted (+22%), driven by polymers, laminates and performance materials. Acquisitions included Riedel-de Haen (about $250 million in sales) and Hopewell polyester.
Balance sheet strengthened: long-term debt was $1,366 million, or 25.6% of total capital, down from 30.4%. Total assets rose to $12,465 million, and operating cash flow was $1,216 million.
Shareholder returns: the quarterly dividend was raised 15% to $0.225 per share, effective Q1 1996, and 5.5 million shares were repurchased for $239 million. Capital expenditures were $746 million in 1995, with about $765 million projected for 1996.

03—Questions

Frequently Asked Questions

Is this filing from Honeywell International (HON), and what company does it describe?
No. The document is AlliedSignal Inc.'s 10-K for fiscal 1995, filed February 27, 1996. AlliedSignal later merged with Honeywell and adopted the Honeywell name in 1999. The information here applies to AlliedSignal and should not be read as a Honeywell International filing.
What drove the earnings growth in 1995?
Net income rose to $875 million from $759 million. Engineered Materials and Aerospace drove most of the gain. Engineered Materials adjusted net income rose 22%, helped by polymer pricing and volume. Aerospace net income rose 17%, helped by the Lycoming engine acquisition, commercial avionics such as TCAS, and auxiliary power unit sales. Automotive's adjusted income was essentially flat, and reported results were weighed down by the ABS exit charge.
What risks did management flag?
Several risks were flagged. The U.S. defense budget was expected to keep declining, which could stretch, curtail or cancel some military programs. Automotive faced ABS losses, reduced margins on light-vehicle braking, and exposure to the outcome of talks on its light-vehicle braking business. Environmental liabilities were $454 million, and remedial spending was expected to rise to about $90 million in 1996. About 39% of U.S. and Canadian unionized employees had contracts expiring in 1996. The company also disclosed a Goodrich patent suit in which the Federal Circuit affirmed a ruling in its favor.
How is the balance sheet and cash position?
Total debt was $2,010 million, and long-term debt was $1,366 million. Total debt was 33.7% of total capital, down from 34.1%. Cash and equivalents were $540 million, and the current ratio was 1.3x. Management said 1996 capital spending of about $765 million would be funded from internally generated cash. Credit facilities totaled $750 million and supported commercial paper, with $58 million outstanding at year-end.
What are the dividend and share repurchase plans?
The board raised the quarterly dividend 15%, from $0.195 to $0.225 per share, effective in the first quarter of 1996. Full-year 1995 dividends were $0.78 per share. The company repurchased 5.5 million shares for $239 million in 1995, mainly to meet employee benefit plan and dividend reinvestment needs. About 8.1 million shares remained authorized for repurchase at year-end.

04—Continue

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