Honeywell 2008 Annual Report Download - page 52

LIQUIDITY AND CAPITAL RESOURCES
The Company continues to manage its businesses to maximize operating cash flows as the primary 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 market, long-term borrowings, and access to
the public debt and equity markets, as well as the ability to sell trade accounts receivables. We continue to
balance our cash and financing uses through investment in our existing core businesses, acquisition activity,
share repurchases and dividends.
Cash Flow Summary
Our cash flows from operating, investing and financing activities, as reflected in the Consolidated Statement
of Cash Flows for the years ended December 31, 2008, 2007 and 2006 are summarized as follows:
2008 2007 2006
(Dollars in millions)
Cash provided by (used for):
Operating activities $ 3,791 $ 3,911 $ 3,211
Investing activities (2,023) (1,782) (614)
Financing activities (1,370) (1,574) (2,649)
Effect of exchange rate changes on cash (162) 50 42
Net increase/(decrease) in cash and cash equivalents $ 236 $ 605 $ (10)
2008 compared with 2007
Cash provided by operating activities decreased by $120 million during 2008 compared with 2007 primarily
due to a decrease in accrued liabilities of $475 million (decreased advances from customers and deferred
income) and higher cash tax payments of $336 million (most significantly due to the sale of the Consumables
Solutions business) partially offset by increased earnings, lower cash payments for asbestos of $121 million, and
a decrease in working capital (lower accounts and other receivable offset by higher accounts payable).
Cash used for investing activities increased by $241 million during 2008 compared with 2007 due primarily to
higher spending for acquisitions partially offset by higher proceeds from sales of businesses. In 2008, cash paid
for acquisitions, net of cash acquired was $2,181 million primarily for Safety Products Holding, Inc. (Norcross)
and Metrologic Instruments, Inc. compared to $1,150 million in 2007, primarily for our acquisitions of Dimensions
International, Enraf Holding B.V., Hand Held Products, Inc, and Maxon Corporation. Cash proceeds from
divestitures were $909 million in 2008, compared to $51 million in 2007 primarily due to the sale of Consumables
Solutions.
Cash used for financing activities decreased by $204 million during 2008 compared with 2007 primarily due
to a $2,527 million decrease in repurchases of common stock partially offset by decreases in net proceeds from
debt (including commercial paper) of $1,797 million and a decrease in proceeds from issuance of common stock
primarily related to stock option exercises of $457 million.
2007 compared with 2006
Cash provided by operating activities increased by $700 million during 2007 compared with 2006 primarily
due to increased earnings, an increase in accrued liabilities of $349 million (primarily compensation, benefits and
other employee related accruals, as well as customer advances and deferred income), a $55 million decrease in
repositioning payments partially offset by decreased deferred income tax expense of $118 million and increased
working capital usage of $68 million (accounts and other receivables, inventory and accounts payable).
Cash used for investing activities increased by $1,168 million during 2007 compared with 2006 due primarily
to higher spending for acquisitions, and lower proceeds from sales of businesses. In 2007, cash paid for
acquisitions, net of cash acquired was $1,150 million primarily for Dimensions International, Enraf Holding B.V.,
Hand Held Products, Inc, and Maxon Corporation, compared to $633
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