Honeywell 2009 Annual Report Download - page 55

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.
Liquidity
Each of our businesses is focused on implementing strategies to improve working capital turnover in 2010 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 365 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 $298 million of commercial paper outstanding at December 31, 2009.
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, 2009, Standard and Poor's (S&P) Fitch and Moody's 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.
S&P and Moody's have maintained Honeywell's ratings outlook as "stable". Fitch's rating outlook is "negative". In
2010, 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 $2.8 billion of committed bank revolving
credit facilities in support of our commercial paper program, 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, At December 31, 2009,
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 2009, the Company issued $600 million 3.875% Senior Notes due 2014 and $900 million 5.00%
Senior Notes due 2019 (collectively, the "2009 Senior Notes"). The 2009 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 $12 million in discount and issuance costs. Proceeds from the Senior Notes were used to
repay outstanding commercial paper.
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 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 available cash.
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.
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