Honeywell 2006 Annual Report Download - page 50

We also sell interests in designated pools of trade accounts receivables to third parties. The sold receivables were over-
collateralized by $171 million at December 31, 2006 and we retain a subordinated interest in the pool of receivables representing that
over-collateralization as well as an undivided interest in the balance of the receivables pools. New receivables are sold under the
agreement as previously sold receivables are collected. The retained interests in the receivables are reflected at the amounts expected
to be collected by us, and such carrying value approximates the fair value of our retained interests. The sold receivables were $500
million at both December 31, 2006 and 2005.
In addition to our normal operating cash requirements, our principal future cash requirements will be to fund capital expenditures,
debt repayments, dividends, employee benefit obligations, environmental remediation costs, asbestos claims, severance and exit costs
related to repositioning actions, share repurchases and any strategic acquisitions.
Specifically, we expect our primary cash requirements in 2007 to be as follows:
• Capital expenditures—we expect to spend approximately $800 million for capital expenditures in 2007 primarily for growth,
replacement, production capacity expansion, cost reduction and maintenance.
• Debt repayments—there are $423 million of scheduled long-term debt maturities in 2007. We expect to refinance
substantially all of these maturities in the debt capital markets during 2007.
• Share repurchases—We intend to continue to repurchase outstanding shares from time to time in the open market using cash
generated from operations. In February 2007, the Board of Directors authorized the repurchase of shares of up to $3 billion of
Honeywell common stock. Honeywell intends to repurchase outstanding shares from time to time in the open market using
cash flow generated by operations. The amount and timing of repurchases may vary depending on market conditions and the
level of other investing activities.
• Dividends—we expect to pay approximately $800 million in dividends on our common stock in 2007, reflecting the 10
percent increase in the dividend rate announced by Honeywell's Board of Directors in December 2006.
• Asbestos claims—we expect our cash spending for asbestos claims and our cash receipts for related insurance recoveries to
be approximately $557 and $157 million, respectively, in 2007. See Asbestos Matters in Note 21 to the financial statements
for further discussion.
• Pension contributions—assuming that actual pension plan returns are consistent with our expected rate of return of 9 percent
in 2007 and beyond and that interest rates remain constant, we would not be required to make any contributions to our U.S.
pension plans to satisfy minimum statutory funding requirements for the foreseeable future. However, we expect to make
voluntary contributions of approximately $52 million to our U.S. pension plans in 2007 for government contracting purposes.
We also expect to make contributions to our non-U.S. plans of approximately $155 million in 2007. See Note 22 to the
financial statements for further discussion of pension contributions.
• Repositioning actions—we expect that cash spending for severance and other exit costs necessary to execute the remaining
repositioning actions will approximate $125 million in 2007.
• Environmental remediation costs—we expect to spend approximately $250 million in 2007 for remedial response and
voluntary clean-up costs. See Environmental Matters in Note 21 to the financial statements for additional information.
We continuously assess the relative strength of each business in our portfolio as to strategic fit, market position, profit and cash
flow contribution in order to upgrade our combined portfolio and identify business units that will most benefit from increased
investment. We identify acquisition candidates that will further our strategic plan and strengthen our existing core businesses. We also
identify businesses that do not fit into our long-term strategic plan based on their market position, relative profitability or growth
potential. These businesses are considered for potential divestiture, restructuring or other repositioning actions subject to regulatory
constraints. In 2006, we realized $665 million in cash proceeds from sales of non-strategic businesses.
Based on past performance and current expectations, we believe that our operating cash flows will be sufficient to meet our future
cash needs. Our available cash, committed credit lines, access to the
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