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 (Date of earliest event reported): July 16, 1996
Honeywell Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-971 41-0415010
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
Honeywell Plaza
Minneapolis, Minnesota 55408
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(Address of principal executive offices)
Registrant's telephone number, including area code: (612) 951-1000
Not Applicable
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(Former name or former address, if changed since last report)
Item 5. OTHER EVENTS.
On July 16, 1996, the Registrant issued a News Release reporting on the
results of its operations for the fiscal quarter ended June 30, 1996, a copy
of which is filed herewith as Exhibit 99(i).
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
99(i) Honeywell Inc. News Release dated July 16, 1996.
SIGNATURES
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.
HONEYWELL INC.
By: /s/ Edward D. Grayson
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Edward D. Grayson
Vice President and
General Counsel
Date: July 17, 1996
INDEX TO EXHIBITS
EXHIBIT NO.
99(i) Honeywell Inc. News Release dated July 16, 1996.
For Immediate Release
From: Lynda Nordeen
Honeywell Inc.
Honeywell Plaza
Minneapolis, MN 55408
(612) 951-0070
HONEYWELL REPORTS RECORD SECOND-QUARTER
EARNINGS PER SHARE UP 22 PERCENT
$83 Million, or 66 Cents Per Share
MINNEAPOLIS, JULY 16, 1996 _ Honeywell Inc. (NYSE: HON) today reported a
record net income of $83.3 million, or 66 cents per share in the second quarter
of 1996, compared with $68.9 million, or 54 cents per share, in the same period
last year. Earnings per share increased 22 percent over year-earlier results.
For the second quarter ended June 30 sales rose to $1.77 billion, up 7
percent compared with $1.66 billion a year ago. Operating profit was $164.9
million, up 12 percent compared with $146.9 million in the 1995 second quarter.
Orders for the quarter increased 10 percent compared with 1995.
`Our record second quarter results were driven by strength in Industrial
Automation and Control and continued bottom line improvements in our Space and
Aviation business,' said Michael R. Bonsignore, Honeywell chairman and chief
executive officer.
`These results demonstrate the success of our market strategies and cost-
reduction initiatives, which enabled us to deliver solid growth and continued
margin expansion,' said Bonsignore.
At the end of the second quarter, Honeywell's ratio of debt to total
capital was 33 percent, which is at the low end of the company's 30 to 40
percent target range.
The company's board of directors today authorized management to increase
its annual dividend 4 percent to $1.08 per share, from $1.04 per share. The
company also declared a regular quarterly dividend at the new rate of 27 cents
per share, payable Sept. 16, 1996, to shareholders of record at the close of
business Aug. 30, 1996.
`Today's dividend action is consistent with the company's goal of
delivering first-quartile total shareholder return among our peers through a
combination of earnings growth and shareholder payout in the form of share
repurchases and dividends,' Bonsignore said.
The company repurchased $26 million of stock, or 500,000 shares during the
quarter, and in the first half of 1996 repurchased 1.9 million shares, or $99
million in stock. Honeywell had 126.6 million shares outstanding at the end of
the second quarter.
Second-Quarter Business Unit Results
Home and Building Control. Operating profit was $51.2 million, compared to
$49.1 million in the year-earlier quarter. Sales rose 8 percent to $782.7
million, from $726.6 million in the 1995 second quarter. Orders for Home and
Building Control increased 8 percent from year-earlier levels.
During the quarter, Home and Building Control formed alliances with two
U.S.-based energy suppliers to expand its performance contracting offering for
building control customers. The alliances with CNG Energy Services Corp.,
Pittsburgh, and U.S. Energy Partners, Inc. (USE), Houston, enhance Honeywell's
offering and capabilities in the energy retrofit business. Also during the
quarter, Honeywell acquired Hamburg-based Nord-Alarm and its subsidiaries, a
fire and security installation and maintenance company. The acquisition
positions Honeywell as a total solution supplier for integrated building
management systems in Central Europe.
In addition, the business continued to expand its district heating base
with four key contract wins in Russia. Under the agreement, Honeywell will
provide monitoring and control systems to improve productivity, save energy,
reduce air pollution and provide better temperature control for residents in
Vladimir, Tver and Murmansk.
Industrial Control. Operating profit was $66.6 million, a 16 percent
increase, compared with $57.5 million a year earlier. Sales in the second
quarter were $554.3 million, up 12 percent from $495.7 million last year.
Industrial Control orders in the quarter were up 7 percent, driven by Industrial
Automation and Control orders in North America.
During the quarter, Industrial Automation and Control introduced the
TotalPlant-Registered Trademark- Solution System, (TPS-TM-) the first
industrial automation system designed to unify business and control information
throughout a plant or mill. The new system, which takes full advantage of the
power of Microsoft's Windows NT operating system, enables users to improve
productivity and profitability and more easily meet or exceed environmental
regulations.
Also during the quarter, the business acquired the assets of Canada-based
In-Line Measurements Inc. to expand its TotalPlant-Registered Trademark-
capabilities and offerings in the pulp and paper industry. Sensing and Control
introduced a unique miniature flow-through pressure sensor that measures
pressure in medical, environmental and industrial applications. The business
was also selected as Dow Chemical's exclusive global supplier for solenoid
valves to be used on Dow's automated valve packages.
Space and Aviation Control. Operating profit was $44.4 million, up 23
percent from $36 million in the second quarter of 1995. Sales were $399.2
million, compared to $394.3 million a year earlier. Orders for the quarter were
up 17 percent.
During the quarter, the business was selected by British Airways, the
world's largest international passenger airline, to supply Traffic Alert and
Collision Avoidance Systems (TCAS) and Mode S transponders for its European
fleet of approximately 120 aircraft.
In addition, the military business won an add-on contract for more than $22
million in modifications to the 1994 Tri-Services Embedded Global Positioning
System/Inertial Navigation System (EGI) program. This award is part of a
continuing program for the U.S. Air Force, Navy and Army to upgrade existing
aircraft with state-of-the-art guidance and navigation equipment.
On July 3, the U.S. Court of Appeals for the Federal Circuit in a split
decision by a three-judge panel reversed a U.S. District Court decision to
invalidate a patent held by Litton Systems Inc., and to dismiss certain related
tort claims based on state law. These claims relate to Litton's and Honeywell's
processes for coating mirrors used in ring laser gyroscopes. The panel did,
however, unanimously uphold the District Court's ruling, which granted Honeywell
a new trial on damages, thus setting aside an Aug. 31, 1993, jury verdict of
$1.2 billion against Honeywell.
The company will pursue all appellate remedies, including the Federal
Circuit and, if necessary, the Supreme Court. `The decision represents another
step in the long-standing dispute between Litton and Honeywell,' said Edward D.
Grayson, Honeywell vice president and general counsel. `This case will conclude
only when all legal avenues have been exhausted. While we are very disappointed
that the Court found any infringement on Honeywell's part, we are gratified that
Litton's attempt to reinstate the jury's damages verdict failed,' said Grayson.
Six-Month Summary. In the first half of 1996, Honeywell's net income was
$148.4 million, up 20 percent from $123.6 million a year earlier. Sales were
$3.39 billion, compared with $3.13 billion last year. Earnings per share were
$1.17, up 21 percent from 97 cents in the 1995 first half.
Honeywell is a global controls company focused on creating value through
technology that enhances comfort, improves productivity, saves energy, protects
the environment and increases safety. The company serves customers worldwide in
the homes and buildings, industrial, and aviation and space markets. Honeywell
employs 53,000 people in 95 countries and had 1995 sales of $6.7 billion.
- -Registered Trademark-TotalPlant is a registered trademark of Honeywell Inc.
All other product and brand names shown above are trademarks of their respective
owners.
HONEYWELL INC. AND SUBSIDIARIES
INCOME STATEMENT (Unaudited)
(Dollars in Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
SECOND QUARTER
-------------------
1996 1995
--------- ---------
<S> <C> <C> <C>
SALES $1,771.6 $1,655.6 7.0%
COSTS AND EXPENSES
Cost of sales 1,222.6 1,137.8
Research and development 82.5 83.4
Selling, general and administrative 330.0 317.5
Interest - net 18.7 18.3
Equity income (8.3) (5.7)
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1,645.5 1,551.3
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INCOME BEFORE INCOME TAXES 126.1 104.3
PROVISION FOR INCOME TAXES 42.8 35.4
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NET INCOME $ 83.3 68.9 20.9%
EARNINGS PER COMMON SHARE $ 0.66 $ 0.54 22.2%
</TABLE>
HONEYWELL INC. AND SUBSIDIARIES
INCOME STATEMENT (Unaudited)
(Dollars in Millions Except Per Share Amounts)
<TABLE>
<CAPTION>
SIX MONTHS
-----------------------
1996 1995
--------- ---------
<S> <C> <C> <C>
SALES $3,391.1 $3,134.3 8.2%
COSTS AND EXPENSES
Cost of sales 2,331.6 2,151.0
Research and development 167.6 162.2
Selling, general and administrative 639.3 605.4
Interest - net 35.8 35.6
Equity income (8.0) (7.1)
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3,166.3 2,947.1
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INCOME BEFORE INCOME TAXES 224.8 187.2
PROVISION FOR INCOME TAXES 76.4 63.6
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NET INCOME $ 148.4 $ 123.6 20.1%
EARNINGS PER COMMON SHARE $ 1.17 $ 0.97 20.6%
AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 126,738,415 127,196,122
</TABLE>
HONEYWELL INC. AND SUBSIDIARIES
SALES AND OPERATING PROFIT BY SEGMENT (Unaudited)
(Dollars in Millions)
<TABLE>
<CAPTION>
SECOND QUARTER
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1996 1995
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<S> <C> <C>
SALES
Home and Building Control $ 782.7 $ 726.6
Industrial Control 554.3 495.7
Space and Aviation Control 399.2 394.3
Other 35.4 39.0
$1,771.6 $1,655.6
- --------------------------------------------------------------
OPERATING PROFIT
Home and Building Control $ 51.2 $ 49.1
Industrial Control 66.6 57.5
Space and Aviation Control 44.4 36.0
Other 2.7 4.3
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Total operating profit 164.9 146.9
Interest expense (19.3) (22.4)
Equity income 8.3 5.7
General corporate expense (27.8) (25.9)
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Income before income taxes $ 126.1 $ 104.3
</TABLE>
HONEYWELL INC. AND SUBSIDIARIES
SALES AND OPERATING PROFIT BY SEGMENT (Unaudited)
(Dollars in Millions)
<TABLE>
<CAPTION>
SIX MONTHS
-----------------------
1996 1995
--------- ----------
<S> <C> <C>
SALES
Home and Building Control $1,475.7 $1,369.7
Industrial Control 1,056.2 951.9
Space and Aviation Control 797.5 747.4
Other 61.7 65.3
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$3,391.1 $3,134.3
- --------------------------------------------------------------
OPERATING PROFIT
Home and Building Control $ 105.0 $ 99.0
Industrial Control 116.6 105.5
Space and Aviation Control 83.5 62.3
Other 3.6 4.5
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Total operating profit 308.7 271.3
Interest expense (40.2) (43.2)
Equity income 8.0 7.1
General corporate expense (51.7) (48.0)
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Income before income taxes $ 224.8 $ 187.2
</TABLE>
HONEYWELL INC. AND SUBSIDIARIES
STATEMENT OF FINANCIAL POSITION (Unaudited)
(Dollars in Millions)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
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<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 94.4 $ 291.6
Short-term investments 8.9 9.0
Receivables (less allowance for
doubtful accounts: 1996, $33.3;
1995, $34.5) 1,437.2 1,477.3
Inventories (less progress billing
on uncompleted contracts:1996, $49.0;
1995, $56.4) 912.3 794.4
Deferred income taxes 196.0 194.6
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2,648.8 2,766.9
Investments and Advances 238.2 244.8
Property, Plant and Equipment
Property, plant and equipment 2,960.7 2,857.1
Less accumulated depreciation 1,827.6 1,758.2
1,133.1 1,098.9
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Other Assets
Long-term receivables (less allowance
for doubtful accounts:
1996, $0.7; 1995, $0.7) 23.2 46.8
Intangible assets 835.4 624.2
Deferred income taxes 71.4 71.8
Other 217.2 206.8
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Total Assets $5,167.3 $5,060.2
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 315.5 $ 312.4
Accounts payable 466.6 491.5
Customer advances 169.5 158.2
Accrued income taxes 254.1 274.8
Deferred income taxes 18.8 20.4
Other accrued liabilities 705.3 765.2
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1,929.8 2,022.5
Long-Term Debt 674.5 481.0
Deferred Income Taxes 49.3 39.2
Other Liabilities 487.1 477.4
Stockholders' Equity
Common stock - $1.50 par value
Authorized - 250,00,000 shares
Issued - 1996 - 187,931,129 shares 281.9
- 1995 - 188,126,704 shares 282.2
Additional paid-in-capital 498.0 481.3
Retained earnings 2,888.5 2,805.8
Treasury stock - 1996 - 61,364,797 shares (1,721.2)
- 1995 - 61,306,251 shares (1,650.2)
Accumulated foreign currency translation 98.9 140.9
Pension liability adjustment (19.5) (19.9)
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2,026.6 2,040.1
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Total Liabilities and Stockholders' Equity $5,167.3 $5,060.2
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</TABLE>
HONEYWELL INC. AND SUBSIDIARIES
STATEMENT OF CASH FLOW (Unaudited)
(Dollars in Millions)
<TABLE>
<CAPTION>
Six Months
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1996 1995
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<S> <C> <C>
Cash Flows from Operating Activities
Net income $ 148.4 $ 123.6
Adjustments to reconcile net income to
net cash flows from operating activities:
Depreciation 112.0 118.8
Amortization of intangibles 24.5 28.2
Deferred income taxes 1.7 14.9
Equity income, net of dividends received (6.6) (7.1)
(Gain) loss on sale of assets (4.1) 1.7
Contributions to employee stock plans 20.3 15.9
Decrease in receivables 86.0 18.1
Increase in inventories (78.7) (56.2)
Decrease in accounts payable (52.3) (31.1)
Decrease in accrued income taxes and interest (25.3) (32.3)
Other changes in working capital, excluding
short-term investments and short-term debt (61.0) (23.5)
Other noncurrent items - net 6.1 (20.1)
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Net cash flows from operating activities 171.0 150.9
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Cash Flows from Investing Activities
Proceeds from sale of assets 39.2 11.1
Capital expenditures (144.5) (115.6)
Investment in acquisitions, net of cash acquired (316.6) (31.4)
Increase in short-term investments (2.4)
Other - net (2.0) 0.4
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Net cash flows from investing activities (423.9) (137.9)
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Cash Flows from Financing Activities
Net increase (decrease)in short-term debt 1.8 (54.2)
Proceeds from issuance of long-term debt 299.8 123.0
Repayment of long-term debt (104.0) (10.4)
Purchase of treasury stock (98.9) (58.7)
Proceeds from exercise of stock options 28.5 31.4
Dividends paid (66.0) (63.8)
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Net cash flows from financing activities 61.2 (32.7)
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Effect of Exchange Rate Changes on Cash (5.5) 10.5
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Decrease in Cash and Cash Equivalents (197.2) (9.2)
Cash and Cash Equivalents at Beginning of Year 291.6 267.4
---------- -----------
Cash and Cash Equivalents at End of Six Months $ 94.4 $ 258.2
</TABLE>
