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HONEYWELL INTERNATIONAL INC (HON)
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 02/12/2010
Filed Period 12/31/2009

Table of contents

  • Page 1
    HONEYWELL INTERNATIONAL INC (HON) 10-K Annual report pursuant to section 13 and 15(d) Filed on 02/12/2010 Filed Period 12/31/2009

  • Page 2
    ...New Jersey (Address of principal executive offices) Registrant's telephone number, including area code (973) 455-2000 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Common Stock, par value $1 per share* 9 /2% Debentures due June 1, 2016 1 22-2640650 (I.R.S. Employer...

  • Page 3
    ... The aggregate market value of the voting stock held by nonaffiliates of the Registrant was approximately $23.2 billion at June 30, 2009. There were 764,552,212 shares of Common Stock outstanding at January 31, 2010. Documents Incorporated by Reference Part III: Proxy Statement for Annual Meeting of...

  • Page 4
    ... Controls and Procedures Other Information Directors and Executive Officers of the Registrant Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions Principal Accounting Fees and Services...

  • Page 5
    ..., automotive products, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals, and energy efficient products and solutions for homes, business and transportation. Honeywell was incorporated in Delaware in 1985. We maintain an internet website at...

  • Page 6
    ... Classes Major Products/Services Major Customers/Uses Key Competitors Auxiliary power units (APUs) Airborne auxiliary power units Jet fuel starters Secondary power systems Ground power units Repair, overhaul and spare parts Air management systems: Air conditioning Bleed air Cabin pressure...

  • Page 7
    Wireless network transceivers Weather information network Navigation database information Cabin management systems Vibration detection and monitoring Mission management systems Tactical data management systems 2

  • Page 8
    ... Boeing Computer Sciences Dyncorp ITT Lockheed Martin Raytheon SAIC The Washington Group United Space Alliance Dunlop Standard Aerospace Goodrich K&F Industries Messier-BugattiN ASCO Landing systems Wheels and brakes Wheel and brake repair and overhaul services Automation and Control Solutions

  • Page 9
    ...and process automation and building solutions and services for homes, buildings and industrial facilities. Product/Service Classes Major Products/Services Major Customers/Uses Key Competitors Environmental and combustion controls; sensing controls Heating, ventilating and air conditioning controls...

  • Page 10
    Product/Service Classes Major Products/Services Major Customers/Uses Key Competitors burners, boilers and furnaces Environmental and combustion controls; sensing controls (continued) Consumer household products including humidifiers and thermostats Electrical devices ands witches Water controls ...

  • Page 11
    ... integration solutions Building information services Airport lighting and systems, visual docking guidance systems Building managers and owners Contractors, architects and developers Consulting engineers Security directors Plant managers Utilities Large global corporations Public school systems...

  • Page 12
    ... processing technologies, catalysts, adsorbents, equipment and services, fluorine products, specialty films and additives, advanced fibers and composites, intermediates, specialty chemicals, electronic materials and chemicals. Product/Service Classes Major Products/Services Major Customers/Uses Key...

  • Page 13
    ... PVC lubricant systems Processing aids Luminescent pigments Coatings and inks PVC pipe, siding & profiles Plastics Reflective coatings Safety & security applications Semiconductors Photovoltaics BASF Clariant Eastman Electronic chemicals Ultra high-purity HF Inorganic acids Hi-purity solvents...

  • Page 14
    .../Uses Key Competitors Catalysts, adsorbents and Specialties Catalysts Molecular sieves Adsorbents Customer catalyst manufacturing Technology licensing and engineering design of process units and systems Engineered products Proprietary equipment Training and development of technical personnel Gas...

  • Page 15
    .... In addition, our sales to commercial aftermarket customers of aerospace products and services were 10, 11 and 11 percent of our total sales in 2009, 2008 and 2007, respectively. Our Aerospace results of operations can be impacted by various industry and economic conditions. See "Item 1A...

  • Page 16
    ...the U.S. are in Europe, with less significant operations in Canada, Mexico and Asia. Approximately 2 percent of total 2009 sales of Automation and Control Solutions products were exports of U.S. manufactured products. Foreign manufactured products and performance of services accounted for 57 percent...

  • Page 17
    ..., in 2009 certain large long-term fixed supplier price agreements expired, primarily relating to components used by our Aerospace business, which in the aggregate, subjected us to higher volatility in certain component costs. We will continue to attempt to offset raw material cost increases with...

  • Page 18
    ... sales, product, design and development costs in Automation and Control Solutions and Specialty Materials as well as expenditures on the development of turbocharging systems for new platforms, partially offset by lower R&D expense in Aerospace primarily due to major program completions. The increase...

  • Page 19
    ... future on the Company's business or markets that it serves, nor on its results of operations, capital expenditures or financial position. We will continue to monitor emerging developments in this area. Further information, including the current status of significant environmental matters and the...

  • Page 20
    ... pandemic health issues could dramatically reduce both the demand for air travel and our Aerospace aftermarket sales and margins. The operating results of our Automation and Control Solutions (ACS) segment, which generated 41 percent of our consolidated revenues in 2009, are impacted by the level of...

  • Page 21
    ...Transportation Systems (nickel, steel, other metals and ethylene glycol) and Aerospace (nickel, titanium and other metals) segments. Our inability to offset material price inflation through increased prices to customers, formula or long-term fixed price contracts with suppliers, productivity actions...

  • Page 22
    .... Our strategy calls for increasing sales to and operations in overseas markets, including developing markets such as Mexico, China, India, the Middle East and Eastern Europe. In 2009, 51 percent of our total sales (including products manufactured in the U.S. and in international locations) were...

  • Page 23
    A change in the level of U.S. Government defense and space funding or the mix of programs to which such funding is allocated could adversely impact sales of Aerospace's defense and space-related product and services. Sales of our defense and space-related products and services are largely dependent ...

  • Page 24
    ... and government procurement practices can impact Aerospace sales, research and development expenditures, operating costs and profitability. The demand for and cost of providing Automation and Control Solutions products, services and solutions can be impacted by fire, security, safety, health care...

  • Page 25
    ... relating to employee health and retiree health benefits are significant. In recent years, we have experienced significant increases in certain of these costs, largely as a result of economic factors beyond our control, in particular, ongoing increases in health care costs well in excess of the rate...

  • Page 26
    ..., FL Phoenix, AZ (leased) San Diego, CA (leased) Northford, CT Freeport, IL St. Charles, IL (leased) Golden Valley, MN Aerospace South Bend, IN Olathe, KS Minneapolis, MN (partially leased) Plymouth, MN Rocky Mount, NC Albuquerque, NM Urbana, OH Automation and Control Solutions Skaneateles Falls...

  • Page 27
    ...AL Des Plaines, IL Metropolis, IL Baton Rouge, LA Shanghai, China Conde, France Glinde, Germany Waterford, Ireland Specialty Materials Geismar, LA Shreveport, LA Pottsville, PA Orange, TX Chesterfield, VA Transportation Systems Atessa, Italy Kodama, Japan Ansan, Korea (leased) Colonial Heights, VA...

  • Page 28
    ... 2009. President of Air Transport and Regional from July 2005 to March 2007. Vice President and General Manager Aviation Aftermarket Services from July 2004 to July 2005. President and Chief Executive Officer Specialty Materials since March 2008. President of Environmental and Combustion Controls...

  • Page 29
    ... Data." The number of record holders of our common stock at December 31, 2009 was 64,617. Honeywell did not purchase any of its common stock, par value $1 per share, for the year ending December 31, 2009. Under the Company's previously reported $3.0 billion share repurchase program, $1.3 billion...

  • Page 30
    ... and distinct range of non-aerospace businesses conducted by Honeywell and their contribution to our overall segment profits. The annual changes for the five-year period shown in the graph are based on the assumption that $100 had been invested in Honeywell stock and each index on December 31, 2004...

  • Page 31
    ...) 2005 Results of Operations Net sales Net income attributable to Honeywell Per Common Share Earnings from continuing operations: Basic Assuming dilution Dividends Financial Position at Year-End Property, plant and equipment-net Total assets Short-term debt Long-term debt Total debt Shareowners...

  • Page 32
    Volume Foreign Exchange Acquisitions/Divestitures Price (14 )% (2 ) 1 - (15 )% -% 1 3 2 6% A discussion of net sales by segment can be found in the Review of Business Segments section of this MD&A. 22

  • Page 33
    ... and Specialty Materials segments, primarily due to lower sales volume, partially offset by (i) lower pension and other post retirement benefits expense, (ii) higher margins in our Automation and Controls Solutions segment of 0.8 of a percentage point mainly resulting from productivity savings, and...

  • Page 34
    ... due to a higher gain on sale of non-strategic businesses and assets representing the sale of our Consumables Solutions business and higher income from equity method investments (mainly in our Specialty Material segment). Interest and Other Financial Charges 2009 2008 2007 (Dollars in millions...

  • Page 35
    ... growth rates (U.S., Europe and emerging regions) and industry conditions on demand in our key end markets; • Overall sales mix, in particular the mix of Aerospace original equipment and aftermarket sales and the mix of Automation and Control Solutions (ACS) products and services sales; • The...

  • Page 36

  • Page 37
    ... incurred for asbestos and environmental matters, pension and other post-retirement expenses and our tax expense. Review of Business Segments 2009 2008 (Dollars in millions) 2007 Net Sales Aerospace Automation and Control Solutions Specialty Materials Transportation Systems Corporate $ 10,763...

  • Page 38
    ... and surveillance systems, aircraft lighting, management and technical services, advanced systems and instruments, aircraft wheels and brakes and repair and overhaul services. Aerospace sells its products to original equipment (OE) manufacturers in the air transport, regional, business and general...

  • Page 39

  • Page 40
    ... production rates and platform mix, and the impact of divesting our Consumables Solutions business, partially offset by a 12 percent increase in the fourth quarter of 2009 mainly due to the absence of a strike at a major OEM in the fourth quarter of 2008. • Air transport and regional aftermarket...

  • Page 41

  • Page 42
    ... actions and lower incentive compensation), the positive impact of cost savings initiatives and increased prices. 2008 compared with 2007 Aerospace sales increased by 3 percent in 2008. Details regarding the net increase in sales by customer end-markets are as follows: • Air transport and regional...

  • Page 43
    ... automation and control solutions for industrial plants, including advanced software and automation systems that integrate, control and monitor complex processes in many types of industrial settings as well as equipment that controls, measures and analyzes natural gas production and transportation...

  • Page 44

  • Page 45
    ... Instruments, Hand Held Products Inc and Maxon Corporation, (ii) continued strong demand for life safety products, particularly fire systems and sensors and (iii) increased sales of our environmental and combustion products, driven by new products and demand for energy efficient controls, including...

  • Page 46
    31

  • Page 47
    ... refining, gas processing technology, petrochemical and other industries. Specialty Materials' product portfolio includes fluorocarbons, caprolactam, ammonium sulfate for fertilizer, specialty films, advanced fibers, customized research chemicals and intermediates, electronic materials and chemicals...

  • Page 48

  • Page 49
    ... systems; car care products including anti-freeze (Prestone(R)), filters (Fram(R)), spark plugs (Autolite(R)), and cleaners, waxes and additives (Holts(R)); and brake hard parts and other friction materials (Bendix(R) and Jurid(R)). Transportation Systems sells its products to original equipment...

  • Page 50
    ... in the first nine months of 2009. • Turbo Technologies sales decreased by 34 percent primarily due to lower sales volumes to both our commercial and light vehicle engine manufacturing customers and the negative impact of foreign exchange. Diesel penetration rates in Western Europe declined in the...

  • Page 51
    34

  • Page 52
    ...• Increasing plant productivity to address capacity challenges generated by volatility in product demand and OEM inventory levels; • Aligning cost structure with current economic outlook, and successful execution of repositioning actions; • Aligning development efforts and costs with new turbo...

  • Page 53
    ...Specialty Materials Net repositioning charge Business impairment charges Probable and reasonably estimable environmental liabilities $ 9 - - 9 $ 37 - 5 $ 42 $ 5 9 - $ $ 14 Years Ended December 31, 2009 2008 2007 (Dollars in millions) Transportation Systems Net repositioning charge Asbestos...

  • Page 54
    ... in expenditures for property, plant, and equipment, partially offset by a $908 million decrease in proceeds from sales of businesses (most significantly the divestiture of Consumables Solutions in 2008). Cash used for financing activities increased by $782 million during 2009 compared with 2008...

  • Page 55
    ... RMG Group (RMG Regel + Messtechnik GmbH), a natural gas measuring and control products, services and integrated solutions company which will be integrated into our Automation and Control Solutions segment. The purchase price, net of cash acquired, was approximately $416 million and was funded using...

  • Page 56
    ...-we expect to pay approximately $940 million in dividends on our common stock in 2010, reflecting a 4 percent increase in the number of shares outstanding. • Asbestos claims-we expect our cash spending for asbestos claims and our cash receipts for related insurance recoveries to be approximately...

  • Page 57
    ... 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...

  • Page 58
    the definitive agreements or agreements in principle and pursuant to Trust Distribution Procedures. Bendix payments are based on our estimate of pending and future 40

  • Page 59
    ... financial statements. The table also excludes our pension and other postretirement benefits (OPEB) obligations. During 2010, we plan to make additional voluntary contributions of Honeywell common stock to our U.S. plans to improve the funded status of our plans. We also expect to make contributions...

  • Page 60

  • Page 61
    ...parties, technology and information related to individual sites, we do not believe it is possible to develop an estimate of the range of reasonably possible environmental loss in excess of our recorded liabilities. We expect to fund expenditures for these matters from operating cash flow. The timing...

  • Page 62
    ...) December 31, 2009 Interest Rate Sensitive Instruments Long-term debt (including current maturities) Interest rate swap agreements Foreign Exchange Rate Sensitive Instruments Foreign currency exchange contracts(2) Commodity Price Sensitive Instruments Forward commodity contracts(3) December 31...

  • Page 63
    ... and friction products). We recognize a liability for any asbestos related contingency that is probable of occurrence and reasonably estimable. Regarding North American Refractories Company (NARCO) asbestos related claims, we accrue for pending claims based on terms and conditions, including...

  • Page 64

  • Page 65
    ... of insurance recoveries for asbestos related liabilities. Defined Benefit Pension Plans-We maintain defined benefit pension plans covering a majority of our employees and retirees. For financial reporting purposes, net periodic pension expense is calculated based upon a number of actuarial...

  • Page 66
    ... performance of the equity markets. During 2010, we plan to make additional voluntary contributions of Honeywell common stock to our U.S. plans to improve the funded status of our plans. Beyond 2010, minimum statutory funding requirements for our U.S. pension plans may become significant. However...

  • Page 67
    ...fair value of our reporting units is estimated utilizing a discounted cash flow approach utilizing cash flow forecasts in our five year strategic and annual operating plans adjusted for terminal value assumptions. This impairment test involves the use of accounting estimates and assumptions, changes...

  • Page 68
    ... sales using the percentage-of-completion method for long-term contracts in our Automation and Control Solutions, Aerospace and Specialty Materials segments. These long-term contracts are measured on the cost-tocost basis for engineering-type contracts and the units-of-delivery basis for production...

  • Page 69
    Item 7A. Quantitative and Qualitative Disclosures About Market Risk Information relating to market risk is included in Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations under the caption "Financial Instruments". 49

  • Page 70
    ... and Supplementary Data HONEYWELL INTERNATIONAL INC. CONSOLIDATED STATEMENT OF OPERATIONS 2009 Years Ended December 31, 2008 2007 (Dollars in millions, except per share amounts) Product sales Service sales Net sales Costs, expenses and other Cost of products sold Cost of services sold Selling...

  • Page 71
    ... Current liabilities: Accounts payable Short-term borrowings Commercial paper Current maturities of long-term debt Accrued liabilities Total current liabilities Long-term debt Deferred income taxes Postretirement benefit obligations other than pensions Asbestos related liabilities Other liabilities...

  • Page 72
    The Notes to Financial Statements are an integral part of this statement. 51

  • Page 73
    ... from issuance of long-term debt Payments of long-term debt Excess tax benefits from share based payment arrangements Repurchases of common stock Cash dividends paid Net cash used for financing activities Effect of foreign exchange rate changes on cash and cash equivalents Net increase in cash and...

  • Page 74
    Cash and cash equivalents at end of period $ 2,801 $ 2,065 $ 1,829 The Notes to Financial Statements are an integral part of this statement. 52

  • Page 75
    HONEYWELL INTERNATIONAL INC. CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY 2009 Shares $ Years Ended December 31, 2008 Shares $ (in millions) Common stock, par value Additional paid-in capital Beginning balance Issued for employee savings and option plans Contributed to pension plans Stock-based ...

  • Page 76
    ... income Foreign exchange translation adjustment Pensions and other post retirement benefit adjustments Changes in fair value of available for sale investments Changes in fair value of effective cash flow hedges Total comprehensive income Comprehensive income attributable to non controlling interest...

  • Page 77
    ...Cash and Cash Equivalents-Cash and cash equivalents include cash on hand and on deposit and highly liquid, temporary cash investments with an original maturity of three months or less. Inventories-Inventories are valued at the lower of cost or market using the first-in, first-out or the average cost...

  • Page 78
    ... as services are rendered. Sales under long-term contracts in the Aerospace and Automation and Control Solutions segments are recorded on a percentage-of-completion method measured on the cost-to-cost basis for engineering-type contracts and the units-of-delivery basis for production-type contracts...

  • Page 79
    ... non-U.S. defined benefit pension plans covering the majority of our employees and retirees. We also sponsor postretirement benefit plans that provide health care benefits and life insurance coverage to eligible retirees. For our U.S. defined benefit pension plans we use the market-related value of...

  • Page 80
    HONEYWELL INTERNATIONAL INC. NOTES TO FINANCIAL STATEMENTS-(Continued) (Dollars in millions, except per share amounts) environments, inventories and property, plant and equipment, including related expenses, are remeasured at the exchange rate in effect on the date the assets were acquired, while ...

  • Page 81
    ...uncertain tax positions by $33 million, largely related to a reduction in state income tax matters, partially offset by a net increase for federal and international tax reserves. Earnings Per Share-Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted...

  • Page 82
    ... changes described above. In April 2009, the FASB issued a staff position amending and clarifying the new business combination standard to address application issues associated with initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities...

  • Page 83
    ...in these years are discussed below. In August 2009, the Company completed the acquisition of the RMG Group (RMG Regel + Messtechnik GmbH), a natural gas measuring and control products, services and integrated solutions company, for a purchase price of approximately $416 million, net of cash acquired...

  • Page 84
    ... Solutions segment and were not material to the consolidated financial statements. In July 2008, the Company completed the sale of its Consumables Solutions business to B/E Aerospace (B/ E) for $1.05 billion, consisting of approximately $901 million in cash and six million shares of B/E common stock...

  • Page 85
    ... were not material to the consolidated financial statements. In December 2007, the Company, specifically the Automation and Control Solutions segment, completed the acquisition of Hand Held Products, Inc. a privately held automatic identification and data collection company, for a purchase price of...

  • Page 86
    ... table summarizes the pretax impact of total net repositioning and other charges by segment. Years Ended December 31, 2009 2008 2007 Aerospace Automation and Control Solutions Specialty Materials Transportation Systems Corporate $ 31 70 9 173 195 $ 478 $ 84 164 42 233 489 $ 37 127 14 119 246...

  • Page 87
    63

  • Page 88
    ... and Control Solutions, Transportation Systems and Aerospace segments. The workforce reductions were primarily related to the adverse market conditions experienced by many of our businesses, cost savings actions taken in connection with our ongoing functional transformation initiative, the planned...

  • Page 89
    (1) relates to businesses divested during 2009 included in Gain on Sale of Non-Strategic Businesses and Assets see Note 4, Other (Income) Expense. 64

  • Page 90
    HONEYWELL INTERNATIONAL INC. NOTES TO FINANCIAL STATEMENTS-(Continued) (Dollars in millions, except per share amounts) Certain repositioning projects in our Aerospace, Automation and Control Solutions and Transportation Systems segments included exit or disposal activities, the costs related to ...

  • Page 91
    ... was estimated using a combination of a market and income approaches utilizing observable market data for comparable businesses and discounted cash flow modeling. Our non-controlling interest, classified within Investments and long-term receivables on our Balance Sheet will be accounted for under...

  • Page 92
    HONEYWELL INTERNATIONAL INC. NOTES TO FINANCIAL STATEMENTS-(Continued) (Dollars in millions, except per share amounts) Tax expense Years Ended December 31, 2009 2008 2007 United States Foreign $ 528 261 $ 789 $ 696 313 $ 542 335 $ 877 $ 1,009 Years Ended December 31, 2009 2008 2007 Tax ...

  • Page 93
    ...effective tax rate increased by 0.1 of a percentage point in 2009 compared with 2008 due principally to a decreased impact from the settlement of audits, partially offset by increased benefits from (i) U.S. manufacturing incentives, (ii) U.S. tax credits and (iii) employee stock ownership plan (ESOP...

  • Page 94
    HONEYWELL INTERNATIONAL INC. NOTES TO FINANCIAL STATEMENTS-(Continued) (Dollars in millions, except per share amounts) December 31, 2009 2008 Property, plant and equipment basis differences Postretirement benefits other than pensions and post employment benefits Investment and other asset basis ...

  • Page 95
    HONEYWELL INTERNATIONAL INC. NOTES TO FINANCIAL STATEMENTS-(Continued) (Dollars in millions, except per share amounts) 2009 2008 2007 Change in unrecognized tax benefits: Balance at beginning of year Gross increases related to current period tax positions Gross increases related to prior periods ...

  • Page 96
    and 2007 respectively. Accrued interest and penalties were $150 million, $137 million and $118 million, as of December 31, 2009, 2008, and 2007, respectively. 69

  • Page 97
    ... average market price of the common shares during the period. In 2009, 2008 and 2007, the number of stock options not included in the computation were 33,962,053, 17,825,720 and 8,599,620, respectively. These stock options were outstanding at the end of each of the respective years. Note 8-Accounts...

  • Page 98
    70

  • Page 99
    ..., except per share amounts) program costs being recognized as Interest and other financial charges in the Consolidated Statement of Operations on a prospective basis. Note 9-Inventories December 31, 2009 2008 Raw materials Work in process Finished products Less- Progress payments Reduction to LIFO...

  • Page 100
    71

  • Page 101
    HONEYWELL INTERNATIONAL INC. NOTES TO FINANCIAL STATEMENTS-(Continued) (Dollars in millions, except per share amounts) Depreciation expense was $707, $702 and $675 million in 2009... 2009 Acquisitions Divestitures Aerospace Automation and Control Solutions Specialty Materials Transportation Systems...

  • Page 102
    ... December 31, 2009 2008 Compensation, benefit and other employee related Customer advances and deferred income Income taxes Environmental costs Asbestos related liabilities Product warranties and performance guarantees Repositioning Other taxes (payroll, sales, VAT etc.) Insurance Accrued interest...

  • Page 103

  • Page 104
    ...letter of credit issuance fee, are subject to change, based upon a grid determined by our long term debt ratings. The credit agreement is not subject to termination based upon a decrease in our debt ratings or a material adverse change. In February 2009, the Company issued $600 million 3.875% Senior...

  • Page 105
    ... currency exchange rates and commodity prices and restrict the use of derivative financial instruments to hedging activities. We continually monitor the creditworthiness of our customers to which we grant credit terms in the normal course of business. The terms and conditions of our credit sales are...

  • Page 106
    ... Management-Our exposure to market risk for commodity prices can result in changes in our cost of production. We primarily mitigate our exposure to commodity price risk through the use of long-term, fixed-price contracts with our suppliers and formula price agreements with suppliers and customers...

  • Page 107
    ... as available for sale and are valued using market transactions in over-the-counter markets. As such, these investments are classified within level 2. The carrying value of cash and cash equivalents, trade accounts and notes receivables, payables, commercial paper and short-term borrowings contained...

  • Page 108
    ... were less than $1 million in 2009 and are located in cost of products sold. Foreign currency exchange contracts in cash flow hedge relationships qualify as critical matched terms hedge relationships and as a result have no ineffectiveness. Interest rate swap agreements are designated as hedge...

  • Page 109

  • Page 110
    ...redemption of common stock. Under the Company's previously reported $3.0 billion share repurchase program, $1.3 billion remained available as of December 31, 2009 for additional share repurchases. The amount and timing of repurchases may vary depending on market conditions and the level of operating...

  • Page 111
    We are authorized to issue up to 40,000,000 shares of preferred stock, without par value, and can determine the number of shares of each series, and the rights, preferences and limitations of each series. At December 31, 2009, there was no preferred stock outstanding. 79

  • Page 112
    ... exchange translation adjustment Pensions and other post retirement benefit adjustments Change in fair value of available for sale investments Change in fair value of effective cash flow hedges $ 468 (4,966 ) 61 8 $ 209 (3,945 ) (51 ) (22 ) $ (4,429 ) Note 20-Stock-Based Compensation Plans...

  • Page 113
    ... of Honeywell International Inc. (the Directors Plan) 500,000 shares of Honeywell common stock may be awarded. Stock Options-The exercise price, term and other conditions applicable to each option granted under our stock plans are generally determined by the Management Development and Compensation...

  • Page 114
    ... share information, including related weighted-average assumptions, used to determine compensation cost: 2009 Years Ended December 31, 2008 2007 Weighted average fair value per share of options granted during the year(1) Assumptions: Expected annual dividend yield Expected volatility Risk-free rate...

  • Page 115
    Outstanding at December 31, 2009 Vested and expected to vest at December 31, 2009(1) Exercisable at December 31, 2009 40,910,373 38,189,089 27,427,023 $ 38.58 $ 38.82 $ 38.85 (1) The expected to vest options are the result of applying the pre-vesting forfeiture rate assumption to total ...

  • Page 116
    HONEYWELL INTERNATIONAL INC. NOTES TO FINANCIAL STATEMENTS-(Continued) (Dollars in millions, except per share amounts) The following table summarizes information about stock options outstanding and exercisable at December 31, 2009: Range of exercise prices Number Outstanding Options Outstanding ...

  • Page 117
    ... one share of common stock for each unit when the units vest. RSUs are issued to certain key employees at fair market value at the date of grant as compensation. RSUs typically become fully vested over periods ranging from three to seven years and are payable in Honeywell common stock upon vesting...

  • Page 118

  • Page 119
    ...a predecessor Honeywell site located in Jersey City, New Jersey, known as Study Area 7 was completed in January 2010. We have also received approval of the United States District Court for the District of New Jersey for the implementation of related groundwater and sediment remedial actions, and are...

  • Page 120
    ... for the Publicly Funded Sites where appropriate under the accounting policy described above. We have entered into court-approved settlements of litigation filed in federal court against Honeywell and other landowners seeking the cleanup of chrome residue at groups of properties known as Study Areas...

  • Page 121
    ... in millions, except per share amounts) Asbestos Matters Like many other industrial companies, Honeywell is a defendant in personal injury actions related to asbestos. We did not mine or produce asbestos, nor did we make or sell insulation products or other construction materials that have been...

  • Page 122
    ... a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. At December 31, 2009, a significant portion of this coverage is with insurance companies with whom we have agreements to pay full policy limits based on...

  • Page 123
    ... our probable insurance recoveries in light of any changes to the projected liability or other developments that may impact insurance recoveries. Friction Products-Honeywell's Bendix friction materials (Bendix) business manufactured automotive brake parts that contained chrysotile asbestos in an...

  • Page 124
    ... pending or future Bendix related asbestos claims, we do not believe that such claims would have a material adverse effect on our consolidated financial position in light of our insurance coverage and our prior experience in resolving such claims. If the rate and types of claims filed, the average...

  • Page 125
    HONEYWELL INTERNATIONAL INC. NOTES TO FINANCIAL STATEMENTS-(Continued) (Dollars in millions, except per share amounts) Refractory and Friction Products-The following tables summarize information concerning NARCO and Bendix asbestos related balances: Asbestos Related Liabilities Year Ended December ...

  • Page 126
    ... United States and Canada. The U.S cases have been consolidated into a single multi-district litigation in the Northern District of Illinois. We intend to vigorously defend the claims raised in these actions. The Antitrust Division of the Department of Justice notified Honeywell on January 21, 2010...

  • Page 127
    ... estimated. In the normal course of business we issue product warranties and product performance guarantees. We accrue for the estimated cost of product warranties and performance guarantees based on contract terms and historical experience at the time of sale. Adjustments to initial obligations for...

  • Page 128
    We sponsor both funded and unfunded U.S. and non-U.S. defined benefit pension plans covering the majority of our employees and retirees. Pension benefits for substantially all U.S. employees are 92

  • Page 129
    ... plans that provide health care benefits and life insurance coverage to eligible retirees. Our retiree medical plans mainly cover U.S. employees who retire with pension eligibility for hospital, professional and other medical services. All non-union hourly and salaried employees joining Honeywell...

  • Page 130
    ..., assets and funded status associated with our significant pension and other postretirement benefit plans at December 31, 2009 and 2008. Other Postretirement Benefits 2009 2008 Pension Benefits 2009 2008 Change in benefit obligation: Benefit obligation at beginning of year Service cost Interest...

  • Page 131
    94

  • Page 132
    HONEYWELL INTERNATIONAL INC. NOTES TO FINANCIAL STATEMENTS-(Continued) (Dollars in millions, except per share amounts) Amounts recognized in Accumulated Other Comprehensive (Income) Loss associated with our significant pension and other postretirement benefit plans at December 31, 2009 and 2008 are...

  • Page 133
    ... net loss and prior service cost for pension benefits that will be amortized from accumulated other comprehensive (income) loss into net periodic benefit cost in 2010 are expected to be $706 and $20 million, respectively. The estimated net loss and prior service (credit) for other postretirement...

  • Page 134
    ... 31, 2009 and 2008, respectively. Our asset investment strategy focuses on maintaining a diversified portfolio using various asset classes in order to achieve our long-term investment objectives on a risk adjusted basis. Our actual invested positions in various securities change over time based on...

  • Page 135
    ..., to our U.S. defined benefit pension plans primarily to improve the funded status of our plans. At December 31, 2009 and 2008, the fair value of our pension plans assets invested in Honeywell common stock was $1.1 billion and $204 million, respectively. During 2010, we plan to make additional...

  • Page 136

  • Page 137
    ... for employers that sponsor postretirement health care plans that provide prescription drug coverage that is at least actuarially equivalent to that offered by Medicare Part D. The impact of the Act reduced other postretirement benefits expense by approximately $11, $21 and $25 million in 2009, 2008...

  • Page 138
    ...• Aerospace is organized by customer end-market (Air Transport and Regional, Business and General Aviation and Defense and Space) and provides products and services which include auxiliary power units; propulsion engines; environmental control systems; engine controls; repair and overhaul services...

  • Page 139
    HONEYWELL INTERNATIONAL INC. NOTES TO FINANCIAL STATEMENTS-(Continued) (Dollars in millions, except per share amounts) Years Ended December 31, 2008 2007 2009 Net sales Aerospace Automation and Control Solutions Specialty Materials Transportation Systems Corporate $ 10,763 12,611 4,144 3,389 1 $ ...

  • Page 140

  • Page 141
    ...the year ended December 31, 2007. Stock option expense is included for all periods presented. Note 24-Geographic Areas-Financial Data Net Sales(1) Years Ended December 31, 2009 2008 2007 Long-lived Assets(2) Years Ended December 31, 2009 2008 2007 United States Europe Other International $ 18,742...

  • Page 142
    101

  • Page 143
    ...per share amounts) Note 25-Supplemental Cash Flow Information Years Ended December 31, 2009 2008 2007 Payments for repositioning and other charges: Severance and exit cost payments Environmental payments Proceeds from sale of insurance receivable Insurance receipts for asbestos related liabilities...

  • Page 144
    ...statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to...

  • Page 145
    ... because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of Honeywell's internal control over financial reporting as of December 31, 2009. In making this assessment, management used the criteria set...

  • Page 146
    ... that term is defined in applicable SEC Rules and NYSE listing standards. Honeywell's Code of Business Conduct is available, free of charge, on our website under the heading "Investor Relations" (see "Corporate Governance"), or by writing to Honeywell, 101 Columbia Road, Morris Township, New Jersey...

  • Page 147
    ...% of the payment related to these growth plan units was paid in 2009 and the remaining 50% will be paid in 2010, subject to active employment on the payment dates. Because the number of future shares that may be distributed to employees participating in the Honeywell Global Stock Plan is unknown, no...

  • Page 148
    (3) The number of shares that may be issued under the 2006 Stock Incentive Plan as of December 31, 2009 is 30,000,541 which includes the following additional shares under the 2006 Stock Incentive Plan (or any Prior Plan as defined in the 2006 Stock Incentive Plan) that may again be available for 106

  • Page 149
    ... International Technologies Employees Share Ownership Plan (Ireland), the Honeywell Measurex (Ireland) Limited Group Employee Profit Sharing Scheme and the Honeywell Ireland Software Employees Share Ownership Plan, allow eligible Irish employees to contribute specified percentages of base pay, bonus...

  • Page 150
    ... for employee benefit plans of Honeywell intended to meet the requirements of Section 401(a) of the Internal Revenue Code and a small number of foreign employee benefit plans that are similar to such Section 401(a) plans. Item 13. Certain Relationships and Related Transactions Information relating...

  • Page 151
    ... 31, 2009 and 2008 Consolidated Statement of Cash Flows for the years ended December 31, 2009, 2008 and 2007 Consolidated Statement of Shareowners' Equity for the years ended December 31, 2009, 2008 and 2007 Notes to Financial Statements Report of Independent Registered Public Accounting Firm...

  • Page 152
    ...by the undersigned, thereunto duly authorized. HONEYWELL INTERNATIONAL INC. February 12, 2010 By: /s/ Kathleen A. Winters Kathleen A. Winters Vice President and Controller Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following...

  • Page 153
    ..., as amended and restated (incorporated by reference to Exhibit 10.5 to Honeywell's Form 10-K for the year ended December 31, 2008) Supplemental Non-Qualified Savings Plan for Highly Compensated Employees of Honeywell International Inc. and its Subsidiaries, as amended and restated (incorporated by...

  • Page 154
    ..., 2003) Honeywell International Inc. Severance Plan for Corporate Staff Employees (Involuntary Termination Following a Change in Control), as amended and restated (incorporated by reference to Exhibit 10.16 to Honeywell's Form 10-K for the year ended December 31, 2008) Employment Agreement dated as...

  • Page 155
    ...) 2006 Stock Incentive Plan of Honeywell International Inc. and Its Affiliates Form of Performance Share Agreement (incorporated by reference to Exhibit 10.30 to Honeywell's Form 10-K for the year ended December 31, 2006) 2006 Stock Plan for Non-Employee Directors of Honeywell International Inc., as...

  • Page 156
    ... Global Markets Inc. and J.P. Morgan Securities Inc., as joint lead arrangers and co- book managers (incorporated by reference to Exhibit 10.1 to Honeywell's 8-K filed May 18, 2007) Purchase and Sale Agreement between Catalysts, Adsorbents and Process Systems, Inc., and Honeywell Specialty Materials...

  • Page 157
    HONEYWELL INTERNATIONAL INC SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS Three Years Ended December 31, 2009 (In millions) Allowance for Doubtful Accounts: Balance December 31, 2006 Provision charged to income Deductions from reserves Balance December 31, 2007 Provision charged to income ...

  • Page 158
    ...by the Management Development and Compensation Committee of the Board of Directors on December 11, 2009, the Honeywell International Inc. Severance Plan for Senior Executives (Amended and Restated, effective as of January 1, 2009) is hereby amended effective January 1, 2010 by replacing paragraph 20...

  • Page 159
    ... as eligible pay earned in 2009 and paid in 2010. This amendment shall be subject to the following conditions: (a)an eligible participant is a participant who, on March 15, 2010, is earning a pension benefit under the Honeywell Retirement Earnings Plan and is employed by the Company in Band 5, 6 or...

  • Page 160
    ..."Company") by the Management Development and Compensation Committee of the Board of Directors on December 11, 2009, the Honeywell International Inc. Supplemental Executive Retirement Plan for Executives in Career Bands 6 and Above shall be amended effective January 1, 2010 to include as eligible pay...

  • Page 161
    ... officers of Honeywell International Inc. (the "Company") by the Management Development and Compensation Committee of the Board of Directors on December 11, 2009, the Honeywell Supplemental Defined Benefit Retirement Plan shall be amended effective January 1, 2010 to include as eligible pay for an...

  • Page 162
    ... to the authority granted to proper officers of Honeywell International Inc. (the "Company") by the Management Development and Compensation Committee of the Board of Directors on December 11, 2009, and in accordance with an agreement made between the Company and Mr. David M. Cote to amend the...

  • Page 163
    ... ownership to another person or entity as permitted by the Policy. Honeywell shall have no rights with respect to the Policy." HONEYWELL INTERNATIONAL INC. /s/ Mark James Mark James Senior Vice President - Human Resources and Communications DAVID M. COTE /s/ David M. Cote Dated: February 2, 2010

  • Page 164
    ... as eligible pay earned in 2009 and paid in 2010. This amendment shall be subject to the following conditions: (a) an eligible participant is a participant who, on March 15, 2010, is earning a pension benefit under the Honeywell Retirement Earnings Plan and is employed by the Company in Band 5, 6 or...

  • Page 165
    ...the end of your employment with Honeywell. Notwithstanding the preceding sentence, your annual bonus for 2009 shall be the greater of (a) the incentive compensation received under the terms of the Honeywell International Inc. Incentive Compensation Plan for Executive Employees (ICP') in 2009 (earned...

  • Page 166
    EXHIBIT 12 HONEYWELL INTERNATIONAL INC. STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 2009 2008 2007 2006 2005 Determination of Earnings: Income from continuing operation before taxes Add (Deduct): Amortization of capitalized interest Fixed charges Equity income, net of ...

  • Page 167
    ... S.a.r.l. Honeywell Specialty Chemicals Seelze GmbH Honeywell spol s.r.o. (Czech Republic) Honeywell Technical Services S.r.l. Honeywell Technologies Sarl Honeywell Technology Solutions Inc. Honeywell Turbocharging Systems Japan Inc. Honeywell UK Limited Life Safety Distribution AG Maxon Corporation...

  • Page 168
    EXHIBIT 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the ...Honeywell International Inc. of our report dated February 11, 2010 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting...

  • Page 169
    ...and stead in any and all capacities, (i) (ii) (iii) to sign the Company's Annual Report on Form 10-K under the Securities Exchange Act of 1934 for the year ended December 31, 2009, to sign any amendment to the Annual Report referred to in (i) above, and to file the documents described in (i) and (ii...

  • Page 170
    ... or other benefit plans of the Company, its affiliates or any predecessor thereof, including the Honeywell Savings and Ownership Plan, the Honeywell Puerto Rico Savings and Ownership Plan, the Honeywell Supplemental Savings Plan, the 1993 Stock Plan for Employees of Honeywell International Inc. and...

  • Page 171
    Exhibit 24 This Power of Attorney may be signed in any number of counterparts, each of which shall be an ...Clive R. Hollick Clive R. Hollick, Director Dated: December 11, 2009 /s/ Kevin Burke Kevin Burke, Director Dated: February 5, 2010 /s/ George Paz George Paz, Director /s/ Bradley T. Sheares ...

  • Page 172
    ...00 per share ("Common Stock"), including shares of Common Stock to be offered under the Dividend Reinvestment and Share Purchase Plan of the Company and any plan which is a successor to such plan; (iii) shares of the Company's preferred stock, without par value; and (iv) such other securities of the...

  • Page 173
    Exhibit 24 This Power of Attorney may be signed in any number of counterparts, each of which shall be an ...Clive R. Hollick Clive R. Hollick, Director Dated: December 11, 2009 /s/ Kevin Burke Kevin Burke, Director Dated: February 5, 2010 /s/ George Paz George Paz, Director /s/ Bradley T. Sheares ...

  • Page 174
    ...00 per share ("Common Stock"), including shares of Common Stock to be offered under the Dividend Reinvestment and Share Purchase Plan of the Company and any plan which is a successor to such plan; (iii) shares of the Company's preferred stock, without par value; and (iv) such other securities of the...

  • Page 175
    ...and stead in any and all capacities, (i) (ii) (iii) to sign the Company's Annual Report on Form 10-K under the Securities Exchange Act of 1934 for the year ended December 31, 2009, to sign any amendment to the Annual Report referred to in (i) above, and to file the documents described in (i) and (ii...

  • Page 176
    ... or other benefit plans of the Company, its affiliates or any predecessor thereof, including the Honeywell Savings and Ownership Plan, the Honeywell Puerto Rico Savings and Ownership Plan, the Honeywell Supplemental Savings Plan, the 1993 Stock Plan for Employees of Honeywell International Inc. and...

  • Page 177
    ... the registrant's ability to record, process, summarize and report financial information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ David M. Cote David M. Cote...

  • Page 178
    ... report financial information; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ David J. Anderson David J. Anderson Chief Financial Officer Date: February 12, 2010

  • Page 179
    ... THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Honeywell International Inc. (the Company) on Form 10-K for the year ending December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, David M. Cote, Chief Executive Officer of the...

  • Page 180
    ...-OXLEY ACT OF 2002 In connection with the Annual Report of Honeywell International Inc. (the Company) on Form 10-K for the period ending December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, David J. Anderson, Chief Financial Officer of the...