Honeywell 2004 Annual Report Download - page 88

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
(d) bankruptcy; and (e) defaults upon obligations under Employee Retirement Income Security Act. Additionally, each of the banks
has the right to terminate its commitment to lend additional funds or issue additional letters of credit under the credit agreements if any
person or group acquires beneficial ownership of 30 percent or more of our voting stock, or, during any 12-month period, individuals
who were directors of Honeywell at the beginning of the period cease to constitute a majority of the Board of Directors (the Board).
Loans under the $1.3 billion Five-Year Credit Agreement are required to be repaid no later than November 26, 2008. Loans under
the $1 billion Five-Year Credit Agreement are required to be repaid no later than October 22, 2009. We have agreed to pay a facility
fee of 0.08 percent per annum on the aggregate commitment for both Five-Year Credit Agreements.
Interest on borrowings under both Five-Year Credit Agreements would be determined, at Honeywell's option, by (a) an auction
bidding procedure; (b) the highest of the floating base rate publicly announced by Citibank, N.A., 0.5 percent above the average CD
rate, or 0.5 percent above the Federal funds rate; or (c) the Eurocurrency rate plus 0.22 percent (applicable margin).
The facility fee, the applicable margin over the Eurocurrency rate on both Five-Year Credit Agreements and the letter of credit
issuance fee in both Five-Year Credit Agreements, are subject to change, based upon a grid determined by our long-term debt ratings.
Neither credit agreement is subject to termination based upon a decrease in our debt ratings or a material adverse change.
Note 16—Lease Commitments
Future minimum lease payments under operating leases having initial or remaining noncancellable lease terms in excess of one
year are as follows:
At December 31,
2004
2005 $ 289
2006 216
2007 153
2008 122
2009 75
Thereafter 173
$ 1,028
We have entered into agreements to lease land, equipment and buildings. Principally all our operating leases have initial terms of
up to 25 years, and some contain renewal options subject to customary conditions. At any time during the terms of some of our leases,
we may at our option purchase the leased assets for amounts that approximate fair value. We do not expect that any of our
commitments under the lease agreements will have a material adverse effect on our consolidated results of operations, financial
position or liquidity.
Rent expense was $321, $314 and $274 million in 2004, 2003 and 2002, respectively.
Note 17—Financial Instruments
As a result of our global operating and financing activities, we are exposed to market risks from changes in interest and foreign
currency exchange rates and commodity prices, which may adversely affect our operating results and financial position. We minimize
our risks from interest and foreign currency exchange rate and commodity price fluctuations through our normal operating and
financing activities and, when deemed appropriate, through the use of derivative financial instruments.
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