8-KOther Events

HONEYWELL INTERNATIONAL INC 8-K Report (Jan 31, 2003)

Filed January 31, 2003For Securities:HONHONIV

Summary

Honeywell International Inc. (HON) reported its 2002 financial results on January 31, 2003. The company announced ongoing earnings per share (EPS) of $2.00 for the full year, aligning with prior guidance, though reported a net loss per share of $0.27 due to significant charges. Revenues for 2002 were $22.3 billion, a 6% decrease from 2001, impacted by declines in commercial aerospace and divestitures. Despite revenue challenges, Honeywell achieved a record $2.0 billion in free cash flow, a 40% increase year-over-year, driven by aggressive cost actions and productivity initiatives. The fourth quarter of 2002 saw ongoing EPS of $0.50, with a reported loss per share of $1.78. This substantial reported loss was primarily attributed to a $1.9 billion after-tax charge encompassing asbestos-related claims, asset write-downs, and repositioning costs. For 2003, Honeywell projects ongoing EPS to be in the range of $1.60 to $1.70, which includes a $0.36 negative impact from increased pension expense. The company anticipates continued strong cash generation and cost productivity, with revenues expected to be flat year-over-year at approximately $22.2 billion.

Key Highlights

  • 1Full-year 2002 ongoing earnings per share (EPS) were $2.00, in line with guidance.
  • 2Reported a net loss per share of $0.27 for the full year 2002, compared to a loss of $0.12 in 2001, due to significant charges.
  • 3Full-year 2002 revenues were $22.3 billion, down 6% from $23.7 billion in 2001.
  • 4Achieved a record $2.0 billion in free cash flow for 2002, a 40% increase from $1.4 billion in 2001.
  • 5Fourth-quarter 2002 results included a substantial after-tax charge of $1.9 billion related to asbestos claims, asset write-downs, and repositioning.
  • 6Provided a 2003 outlook expecting ongoing EPS between $1.60 and $1.70, impacted by a $0.36 per share increase in pension expense.
  • 7Anticipates 2003 revenues to be approximately $22.2 billion, flat compared to 2002.

Frequently Asked Questions

The reported loss per share of $0.27 for the full year 2002, and particularly the $1.78 loss per share in the fourth quarter, was primarily driven by a significant $1.9 billion after-tax charge. This charge covered costs associated with potential asbestos-related claims, asset write-downs in specific business units (Specialty Materials, Friction Materials, and Automation & Control Solutions), and repositioning activities. These one-time or non-recurring charges masked the company's ongoing operational performance.

Honeywell's total revenues for 2002 were $22.3 billion, representing a 6% decline from $23.7 billion in 2001. The primary drivers for this decrease were declines in the company's commercial aerospace units and the divestiture of its Commercial Vehicle Braking Systems business. Conversely, revenues saw growth in the Defense & Space, Security & Fire Solutions, Turbochargers, and Electronic Materials units.

Honeywell reported a record $2.0 billion in free cash flow for 2002, a significant 40% increase from $1.4 billion in 2001. Free cash flow is a key metric used by management to assess cash generated from operations after accounting for capital expenditures. It represents funds available for debt repayment, dividends, share repurchases, or strategic investments, indicating strong operational efficiency and financial flexibility despite revenue headwinds.

For 2003, Honeywell expects ongoing earnings per share to range between $1.60 and $1.70. This guidance includes a notable year-over-year negative impact of $0.36 per share due to increased pension expense. The company projects revenues to be around $22.2 billion, essentially flat compared to 2002, and anticipates continued strong cash generation and cost productivity.