Honeywell 2007 Annual Report Download - page 53

increased net proceeds from debt of $258 million, and increased proceeds from issuance of common stock
primarily related to stock option exercises of $229 million, offset by increase in repurchases of common stock of
$763 million and increased dividend payments.
Liquidity
Each of our businesses is focused on implementing strategies to improve working capital turnover in 2008 to
increase operating cash flows. Considering the current economic environment in which each of our businesses
operate and our business plans and strategies, including our focus on growth, cost reduction and productivity
initiatives, we believe that our cash balances and operating cash flows will remain our principal source of liquidity.
In addition to our available cash and operating cash flows, additional sources of liquidity include committed credit
lines, short term debt from the commercial paper markets, long-term borrowings, and access to the public debt
and equity markets, as well as our ability to sell trade accounts receivables.
A source of liquidity is our ability to issue short-term debt in the commercial paper market. Commercial paper
notes are sold at a discount and have a maturity of not more than 270 days from date of issuance. Borrowings
under the commercial paper program are available for general corporate purposes as well as for financing
potential acquisitions. There was $1,756 million of commercial paper outstanding at December 31, 2007.
Our ability to access the commercial paper market, and the related cost of these borrowings, is affected by
the strength of our credit ratings and our $3.0 billion of committed bank revolving credit facilities (Revolving Credit
Facilities). Our credit ratings are periodically reviewed by the major independent debt-rating agencies. In 2007,
Standard and Poor's, Fitch's and Moody's Rating Services affirmed their corporate ratings on our long-term debt
of A and A+ and A2 respectively, and short-term debt of A-1, F1 and P-1 respectively, and maintained
Honeywell's ratings outlook as "stable".
In March 2007, the Company issued $400 million of 5.30% Senior Notes due 2017 and $600 million 5.70%
Senior Notes due 2037 (collectively, the "Notes"). The Notes are senior unsecured and unsubordinated
obligations of Honeywell and rank equally with all of Honeywell's existing and future senior unsecured debt and
senior to all Honeywell's subordinated debt. The offering resulted in gross proceeds of $1 billion, offset by $12
million in discount and issuance costs. Proceeds from the Notes were used to repay commercial paper and debt.
In May 2007 Honeywell entered into a $2.8 billion Amended and Restated Five-Year Credit Agreement
("Credit Agreement") with a syndicate of banks. Commitments under the Credit Agreement can be increased
pursuant to the terms of the Credit Agreement to an aggregated amount not to exceed $3.5 billion. This credit
facility contains a $700 million sub-limit for the issuance of letters of credit. The Credit Agreement is maintained
for general corporate purposes, including support for the issuance of commercial paper and replaces the
previous $2.3 billion five year credit agreement dated April 27, 2006 ("Prior Agreement"). At December 31, 2007,
there were no borrowings or letters of credit issued under the credit facility. The Credit Agreement does not
restrict Honeywell's ability to pay dividends, nor does it contain financial covenants.
In July 2007, the Company issued $500 million Floating Rate Senior Notes due 2009 and $400 million
5.625% Senior Notes due 2012 (collectively, the "Senior Notes"). The Senior Notes are senior unsecured and
unsubordinated obligations of Honeywell and rank equally with all of Honeywell's existing and future senior
unsecured debt and senior to all Honeywell's subordinated debt. The offering resulted in gross proceeds of $900
million, offset by $3 million in discount and issuance costs. Proceeds from the Senior Notes were used to repay
commercial paper.
We also have a current shelf registration statement filed with the Securities and Exchange Commission
under which we may issue additional debt securities, common stock and preferred stock that may be offered in
one or more offerings on terms to be determined at the time of the offering. Net proceeds of any offering would
be used for general corporate purposes, including repayment of existing indebtedness, capital expenditures and
acquisitions.
We also sell interests in designated pools of trade accounts receivables to third parties. The sold receivables
were over-collateralized by $101 million at December 31, 2007 and we retain a
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