Honeywell 2012 Annual Report Download - page 93

Additionally, each of the banks has the right to terminate its commitment to lend additional funds or
issue letters of credit under the agreement if any person or group acquires beneficial ownership of 30
percent or more of our voting stock, or, during any 12-month period, individuals who were directors of
Honeywell at the beginning of the period cease to constitute a majority of the Board of Directors.
The Credit Agreement has substantially the same material terms and conditions as the Prior
Agreement with an improvement in pricing and an extension of maturity. Loans under the Credit
Agreement are required to be repaid no later than April 2, 2017, unless such date is extended pursuant
to the terms of the Credit Agreement. We have agreed to pay a facility fee of 0.08 percent per annum
on the aggregate commitment.
Revolving credit borrowings under the Credit Agreement would bear interest, at Honeywell’s
option, (A) (1) at a rate equal to the highest of (a) the floating base rate publicly announced by
Citibank, N.A., (b) 0.5 percent above the Federal funds rate or (c) LIBOR plus 1.00 percent, plus (2) a
margin based on Honeywell’s credit default swap mid-rate spread and subject to a floor and a cap as
set forth in the Credit Agreement (the “Applicable Margin”) minus 1.00 percent, provided such margin
shall not be less than zero; or (B) at a rate equal to LIBOR plus the Applicable Margin; or (C) by a
competitive bidding procedure.
The facility fee and the 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 2011, the Company issued $800 million 4.25 percent Senior Notes due 2021 and
$600 million 5.375 percent Senior Notes due 2041 (collectively, the “Notes”). The 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 $1,400 million, offset by $19 million in discount and closing costs
related to the offering.
In the first quarter of 2011, the Company repurchased the entire outstanding principal amount of
its $400 million 5.625 percent Notes due 2012 via a cash tender offer and a subsequent optional
redemption. The cost relating to the early redemption of the Notes, including the “make-whole
premium”, was $29 million.
In the fourth quarter of 2011, the Company repaid $500 million of its 6.125 percent notes. The
repayment was funded with cash provided by operating activities.
As a source of liquidity, we sell interests in designated pools of trade accounts receivables to third
parties. As of December 31, 2012 and December 31, 2011, none of the receivables in the designated
pools had been sold to third parties. When we sell receivables, they are over-collateralized and we
retain a subordinated interest in the pool of receivables representing that over-collateralization as well
as an undivided interest in the balance of the receivables pools. The terms of the trade accounts
receivable program permit the repurchase of receivables from the third parties at our discretion,
providing us with an additional source of revolving credit. As a result, program receivables remain on
the Company’s balance sheet with a corresponding amount recorded as Short-term borrowings.
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HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)