Honeywell 2012 Annual Report Download - page 54

We monitor the third-party depository institutions that hold our cash and cash equivalents on a
daily basis. Our emphasis is primarily on safety of principal and secondarily on maximizing yield on
those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure
to any one of these entities.
Global economic conditions or a tightening of credit markets could adversely affect our customers’
or suppliers’ ability to obtain financing, particularly in our long-cycle businesses and airline, automotive
and refining/petrochemical end markets. Customer or supplier bankruptcies, delays in their ability to
obtain financing, or the unavailability of financing could adversely affect our cash flow or results of
operations. To date we have not experienced material impacts from customer or supplier bankruptcy or
liquidity issues. We continue to monitor and take measures to limit our exposure.
In February 2011, the Board of Directors authorized the repurchase of up to a total of $3 billion of
Honeywell common stock. During 2012, the Company repurchased $317 million of outstanding shares
to offset the dilutive impact of employee stock based compensation plans, including future option
exercises, restricted unit vesting and matching contributions under our savings plans (see Part II, Item
5 for share repurchases in the fourth quarter of 2012).
On October 22, 2012, the Company acquired a 70 percent controlling interest in Thomas Russell
Co., a privately-held leading provider of technology and equipment for natural gas processing and
treating, for approximately $525 million ($368 million, net of cash). Thomas Russell Co.’s results of
operations have been consolidated into the Performance Materials and Technologies segment, with
the noncontrolling interest portion reflected in net income attributable to the noncontrolling interest in
the Consolidated Statement of Operations. During the calendar year 2016, Honeywell has the right to
acquire and the noncontrolling shareholder has the right to sell to Honeywell the remaining 30 percent
interest at a price based on a multiple of Thomas Russell Co.’s average annual operating income from
2013 to 2015, subject to a predetermined cap and floor. Additionally, Honeywell has the right to acquire
the remaining 30 percent interest for a fixed price equivalent to the cap at any time on or before
December 31, 2015. See Note 21 Redeemable Noncontrolling Interest.
In December 2012, the Company entered into a definitive agreement to acquire Intermec, Inc.
(Intermec) a leading provider of mobile computing, radio frequency identification solutions (RFID) and
bar code, label and receipt printers for use in warehousing, supply chain, field service and
manufacturing environments for $10 per share in cash, or an aggregate purchase price of
approximately $600 million, net of cash acquired. Intermec is a U.S. public company which operates
globally and had reported 2011 revenues of approximately $850 million. The transaction is expected to
close by the end of the second quarter of 2013, pending Intermec shareholder approval and following
customary regulatory reviews. The acquisition is expected to be funded with available cash and the
issuance of commercial paper. Intermec will be integrated into our Automation and Control Solutions
segment.
During 2012, the Company made cash contributions of $1,039 million principally to improve the
funded status of our pension plans.
In addition to our normal operating cash requirements, our principal future cash requirements will
be to fund capital expenditures, dividends, strategic acquisitions, share repurchases, employee benefit
obligations, environmental remediation costs, asbestos claims, severance and exit costs related to
repositioning actions and debt repayments.
Specifically, we expect our primary cash requirements in 2013 to be as follows:
•Capital expenditures—we expect to spend approximately $1.2 billion for capital expenditures in
2013 primarily for growth, production and capacity expansion, cost reduction, maintenance, and
replacement.
•Share repurchases—under the Company’s previously reported $3 billion share repurchase
program, $1.6 billion remained available as of December 31, 2012 for additional share
repurchases. Honeywell presently expects to repurchase outstanding shares from time to time
during 2013 to offset the dilutive impact of employee stock based compensation plans, including
future option exercises, restricted unit vesting and matching contributions under our savings
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