Honeywell 2008 Annual Report Download - page 53

million in 2006, primarily for our acquisitions of First Technologies and Gardiner Groupe. Sale proceeds from
divestitures was $51 million in the 2007, compared to $665 million in 2006 primarily due to the sale of Indalex in
February 2006 for $425 million, First Technology Safety & Analysis business (FTSA) for $93 million in May 2006
and the sale of First Technology Automotive Business in December 2006 for $90 million.
Cash used for financing activities decreased by $1,075 million during 2007 compared with 2006 primarily due
to a $2,620 million increase in net proceeds from debt (including commercial paper and short term borrowings), a
$306 million reduction in cash used for payment of debt assumed with acquisitions, and an increase in proceeds
from issuance of common stock primarily related to stock option exercises of $207 million; partially offset by
increases in repurchases of common stock of $2,090 million.
Liquidity
Each of our businesses is focused on implementing strategies to improve working capital turnover in 2009 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 $1,431 million of commercial paper outstanding at December 31, 2008.
Our ability to access the commercial paper market, and the related cost of these borrowings, is affected by
the strength of our credit rating and market conditions. Our credit ratings are periodically reviewed by the major
independent debt-rating agencies. As of December 31, 2008, Standard and Poor's, Fitch's, and Moody's Rating
Services have ratings on our long-term debt of A and A and A2 respectively, and short-term debt of A-1, F1 and
P1 respectively, and maintained Honeywell's ratings outlook as "stable". In 2009, we will support our credit rating
through debt repayments. To date, the company has not experienced any limitations in our ability to access these
sources of liquidity. We maintain $3.8 billion of committed bank revolving credit facilities in support of our
commercial paper program, $2.8 billion of which is secured through mid-May 2012.
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, 2008,
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 February 2008, the Company issued $600 million 4.25% Senior Notes due 2013 and $900 million 5.30%
Senior Notes due 2018 (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 of Honeywell's subordinated debt. The offering resulted in gross proceeds of
$1.5 billion, offset by $13 million in discount and issuance costs. Proceeds from the Senior Notes were used to
repay outstanding 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
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