Attached files
| file | filename |
|---|---|
| 8-K - HONEYWELL INTERNATIONAL INC | c91901_8k.htm |
Exhibit 99
CONSOLIDATED BALANCE SHEETS
| June 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||
| As Reported | Adjustment | As Revised | As Reported | Adjustment | As Revised | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 8,082 | $ | – | $ | 8,082 | $ | 7,059 | $ | – | $ | 7,059 | ||||||||||||
| Short–term investments | 1,768 | – | 1,768 | 3,758 | – | 3,758 | ||||||||||||||||||
| Accounts receivable – net | 8,600 | – | 8,600 | 8,866 | – | 8,866 | ||||||||||||||||||
| Inventories | 4,792 | – | 4,792 | 4,613 | – | 4,613 | ||||||||||||||||||
| Other current assets | 1,537 | – | 1,537 | 1,706 | – | 1,706 | ||||||||||||||||||
| Total current assets | 24,779 | – | 24,779 | 26,002 | – | 26,002 | ||||||||||||||||||
| Investments and long–term receivables | 897 | – | 897 | 667 | – | 667 | ||||||||||||||||||
| Property, plant and equipment – net | 5,968 | – | 5,968 | 5,926 | – | 5,926 | ||||||||||||||||||
| Goodwill | 18,137 | – | 18,137 | 18,277 | – | 18,277 | ||||||||||||||||||
| Other intangible assets – net | 4,261 | – | 4,261 | 4,496 | – | 4,496 | ||||||||||||||||||
| Insurance recoveries for asbestos related liabilities | 409 | 65 | 474 | 411 | 68 | 479 | ||||||||||||||||||
| Deferred income taxes | 355 | – | 355 | 236 | 15 | 251 | ||||||||||||||||||
| Other assets | 5,054 | – | 5,054 | 3,372 | – | 3,372 | ||||||||||||||||||
| Total assets | $ | 59,860 | $ | 65 | $ | 59,925 | $ | 59,387 | $ | 83 | $ | 59,470 | ||||||||||||
| LIABILITIES | ||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||
| Accounts payable | $ | 6,808 | $ | – | $ | 6,808 | $ | 6,584 | $ | – | $ | 6,584 | ||||||||||||
| Commercial paper and other short–term borrowings | 4,447 | – | 4,447 | 3,958 | – | 3,958 | ||||||||||||||||||
| Current maturities of long–term debt | 133 | – | 133 | 1,351 | – | 1,351 | ||||||||||||||||||
| Accrued liabilities | 6,630 | – | 6,630 | 6,968 | – | 6,968 | ||||||||||||||||||
| Total current liabilities | 18,018 | – | 18,018 | 18,861 | – | 18,861 | ||||||||||||||||||
| Long–term debt | 12,504 | – | 12,504 | 12,573 | – | 12,573 | ||||||||||||||||||
| Deferred income taxes | 2,751 | (245 | ) | 2,506 | 2,894 | (230 | ) | 2,664 | ||||||||||||||||
| Postretirement benefit obligations other than pensions | 497 | – | 497 | 512 | – | 512 | ||||||||||||||||||
| Asbestos related liabilities | 1,178 | 1,083 | 2,261 | 1,173 | 1,087 | 2,260 | ||||||||||||||||||
| Other liabilities | 7,134 | – | 7,134 | 5,930 | – | 5,930 | ||||||||||||||||||
| Redeemable noncontrolling interest | 5 | – | 5 | 5 | – | 5 | ||||||||||||||||||
| SHAREOWNERS’ EQUITY | ||||||||||||||||||||||||
| Capital – common stock issued | 958 | – | 958 | 958 | – | 958 | ||||||||||||||||||
| – additional paid–in capital | 6,317 | – | 6,317 | 6,212 | – | 6,212 | ||||||||||||||||||
| Common stock held in treasury, at cost | (17,557 | ) | – | (17,557 | ) | (15,914 | ) | – | (15,914 | ) | ||||||||||||||
| Accumulated other comprehensive loss | (2,222 | ) | – | (2,222 | ) | (2,235 | ) | – | (2,235 | ) | ||||||||||||||
| Retained earnings | 30,104 | (773 | ) | 29,331 | 28,255 | (774 | ) | 27,481 | ||||||||||||||||
| Total Honeywell shareowners’ equity | 17,600 | (773 | ) | 16,827 | 17,276 | (774 | ) | 16,502 | ||||||||||||||||
| Noncontrolling interest | 173 | – | 173 | 163 | – | 163 | ||||||||||||||||||
| Total shareowners’ equity | 17,773 | (773 | ) | 17,000 | 17,439 | (774 | ) | 16,665 | ||||||||||||||||
| Total liabilities, redeemable noncontrolling interest and shareowners’ equity | $ | 59,860 | $ | 65 | $ | 59,925 | $ | 59,387 | $ | 83 | $ | 59,470 | ||||||||||||
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Selected Financial Data
The details of the selected financial data revisions for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 are as follows:
| Years Ended December 31, | ||||||||||||||||||||
| (Dollars in millions, except per share amounts) | ||||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
| As Reported | ||||||||||||||||||||
| Net income attributable to Honeywell | $ | 1,655 | $ | 4,809 | $ | 4,768 | $ | 4,239 | $ | 3,924 | ||||||||||
| Earnings per share of common stock—basic | $ | 2.17 | $ | 6.29 | $ | 6.11 | $ | 5.40 | $ | 4.99 | ||||||||||
| Earnings per share of common stock—assuming dilution | $ | 2.14 | $ | 6.20 | $ | 6.04 | $ | 5.33 | $ | 4.92 | ||||||||||
| As Revised | ||||||||||||||||||||
| Net income attributable to Honeywell | $ | 1,545 | $ | 4,812 | $ | 4,771 | $ | 4,262 | $ | 3,922 | ||||||||||
| Earnings per share of common stock—basic | $ | 2.03 | $ | 6.30 | $ | 6.12 | $ | 5.43 | $ | 4.99 | ||||||||||
| Earnings per share of common stock—assuming dilution | $ | 2.00 | $ | 6.21 | $ | 6.04 | $ | 5.36 | $ | 4.92 | ||||||||||
There was no impact to net sales or to cash flows from operating, investing or financing activities as a result of the revisions for the years ended December 31, 2017, 2016, 2015, 2014 and 2013.
Unaudited Quarterly Financial Information
The details of the unaudited quarterly financial information revisions for the quarters of 2018, 2017 and 2016 are as follows:
| Three Months Ended | ||||||||||||||||||||||||||||||||
| June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | September 30, 2016 | June 30, 2016 | March 31, 2016 | |||||||||||||||||||||||
| (Dollars in millions, except per share amounts) | ||||||||||||||||||||||||||||||||
| As Reported | ||||||||||||||||||||||||||||||||
| Net income (loss) attributable to Honeywell | $ | 1,267 | $ | 1,438 | $ | (2,411 | ) | $ | 1,348 | $ | 1,392 | $ | 1,326 | $ | 1,034 | $ | 1,240 | $ | 1,319 | $ | 1,216 | |||||||||||
| Earnings (loss) per share of common stock—basic | $ | 1.70 | $ | 1.92 | $ | (3.18 | ) | $ | 1.77 | $ | 1.82 | $ | 1.74 | $ | 1.36 | $ | 1.62 | $ | 1.73 | $ | 1.58 | |||||||||||
| Earnings (loss) per share of common stock—assuming dilution | $ | 1.68 | $ | 1.89 | $ | (3.18 | ) | $ | 1.75 | $ | 1.80 | $ | 1.71 | $ | 1.34 | $ | 1.60 | $ | 1.70 | $ | 1.56 | |||||||||||
| As Revised | ||||||||||||||||||||||||||||||||
| Net income (loss) attributable to Honeywell | $ | 1,267 | $ | 1,439 | $ | (2,519 | ) | $ | 1,345 | $ | 1,391 | $ | 1,328 | $ | 1,029 | $ | 1,250 | $ | 1,318 | $ | 1,215 | |||||||||||
| Earnings (loss) per share of common stock—basic | $ | 1.70 | $ | 1.92 | $ | (3.32 | ) | $ | 1.76 | $ | 1.82 | $ | 1.74 | $ | 1.35 | $ | 1.64 | $ | 1.73 | $ | 1.58 | |||||||||||
| Earnings (loss) per share of common stock—assuming dilution | $ | 1.68 | $ | 1.89 | $ | (3.32 | ) | $ | 1.74 | $ | 1.80 | $ | 1.72 | $ | 1.33 | $ | 1.61 | $ | 1.70 | $ | 1.56 | |||||||||||
There was no impact to net sales or to cash flows from operating, investing or financing activities as a result of the revisions in the three months ended March 31 and June 30, 2018 or the three months ended March 31, June 30, September 30 and December 31, 2017 and 2016.
2
The following information presents certain illustrative disclosures regarding the Company’s revised Bendix-related asbestos claims liability information which will be reflected in the Company’s future filings.
Asbestos Matters
The Company has revised its method for reasonably estimating its liability for unasserted Bendix asbestos-related claims by considering the epidemiological projections through 2059 of future incidence of Bendix asbestos-related disease. Using this method, the Company’s Bendix asbestos-related liability is estimated to be $1,693 million as of June 30, 2018. This is $1,083 million higher than the Company’s prior estimation which applied a five-year horizon when estimating the liability for unasserted Bendix asbestos-related claims. The Bendix asbestos-related insurance assets are estimated to be $187 million as of June 30, 2018, which is $65 million higher than the Company’s prior estimate.
The following tables summarize information concerning Bendix asbestos related balances:
Asbestos Related Liabilities
| Bendix | ||||||||||||
| (in millions) | ||||||||||||
| As Reported |
Adjustment | As Revised | ||||||||||
| December 31, 2017 | $ | 616 | $ | 1,087 | $ | 1,703 | ||||||
| Accrual for update to estimated liability | 92 | (4 | ) | 88 | ||||||||
| Asbestos related liability payments | (98 | ) | – | (98 | ) | |||||||
| June 30, 2018 | $ | 610 | $ | 1,083 | $ | 1,693 | ||||||
| Insurance Recoveries for Asbestos Related Liabilities | ||||||||||||
| Bendix | ||||||||||||
| (in millions) | ||||||||||||
| As Reported |
Adjustment | As Revised | ||||||||||
| December 31, 2017 | $ | 123 | $ | 68 | $ | 191 | ||||||
| Probable insurance recoveries related to estimated liability | 12 | (3 | ) | 9 | ||||||||
| Insurance receipts for asbestos related liabilities | (13 | ) | – | (13 | ) | |||||||
| June 30, 2018 | $ | 122 | $ | 65 | $ | 187 | ||||||
| Bendix Products— The following tables present information regarding Bendix related asbestos claims activity, which did not change due to the Company’s revision: | ||||||||||||
| Six Months Ended June 30, |
Years Ended December 31, |
|||||||||||
| 2018 | 2017 | 2016 | ||||||||||
| Claims Activity | ||||||||||||
| Claims unresolved at the beginning of period | 6,280 | 7,724 | 7,779 | |||||||||
| Claims filed | 1,210 | 2,645 | 2,830 | |||||||||
| Claims resolved | (1,377 | ) | (4,089 | ) | (2,885 | ) | ||||||
| Claims unresolved at the end of period | 6,113 | 6,280 | 7,724 | |||||||||
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| June 30, | December 31, | |||||||||||
| 2018 | 2017 | 2016 | ||||||||||
| Disease Distribution of Unresolved Claims | ||||||||||||
| Mesothelioma and other cancer claims | 2,876 | 3,062 | 3,490 | |||||||||
| Nonmalignant claims | 3,237 | 3,218 | 4,234 | |||||||||
| Total claims | 6,113 | 6,280 | 7,724 | |||||||||
Honeywell has experienced average resolution values per claim excluding legal costs as follows:
| Years Ended December 31, | ||||||||||||||||||||
| 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
| (in whole dollars) | ||||||||||||||||||||
| Malignant claims | $ | 56,000 | $ | 44,000 | $ | 44,000 | $ | 53,500 | $ | 51,000 | ||||||||||
| Nonmalignant claims | $ | 2,800 | $ | 4,485 | $ | 100 | $ | 120 | $ | 850 | ||||||||||
It is not possible to predict whether resolution values for Bendix-related asbestos claims will increase, decrease or stabilize in the future.
Our consolidated financial statements reflect an estimated liability for resolution of pending (claims actually filed as of the financial statement date) and unasserted Bendix-related asbestos claims. We have valued Bendix pending and unasserted claims using average resolution values for the previous five years. We update the resolution values used to estimate the cost of Bendix pending and unasserted claims during the fourth quarter of each year.
Honeywell now reflects the inclusion of all years through 2059 rather than a subset of future years when estimating the liability for unasserted Bendix-related asbestos claims. Such estimated cost of unasserted Bendix-related asbestos claims is based on historic claims filing experience and dismissal rates, disease classifications, and resolution values in the tort system for the previous five years.
Our insurance receivable corresponding to the liability for settlement of pending and unasserted Bendix-related asbestos claims reflects coverage which is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. Based on our ongoing analysis of the probable insurance recovery, insurance receivables are recorded in our Consolidated Financial Statements simultaneous with the recording of the estimated liability for the underlying asbestos claims. This determination is based on our analysis of the underlying insurance policies, our historical experience with our insurers, our ongoing review of the solvency of our insurers, judicial determinations relevant to insurance programs, and our consideration of the impacts of any settlements reached with our insurers.
4
NARCO and Bendix asbestos related balances are included in the following balance sheet accounts:
| June 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
| As Reported | Adjustment | As Revised | As Reported | Adjustment | As Revised | |||||||||||||||||||
| (Dollars in millions) | (Dollars in millions) | |||||||||||||||||||||||
| Other current assets | $ | 24 | $ | — | $ | 24 | $ | 24 | $ | — | $ | 24 | ||||||||||||
| Insurance recoveries for asbestos related liabilities | 409 | 65 | 474 | 411 | 68 | 479 | ||||||||||||||||||
| $ | 433 | $ | 65 | $ | 498 | $ | 435 | $ | 68 | $ | 503 | |||||||||||||
| Accrued liabilities | $ | 350 | $ | — | $ | 350 | $ | 350 | $ | — | $ | 350 | ||||||||||||
| Asbestos related liabilities | 1,178 | 1,083 | 2,261 | 1,173 | 1,087 | 2,260 | ||||||||||||||||||
| $ | 1,528 | $ | 1,083 | $ | 2,611 | $ | 1,523 | $ | 1,087 | $ | 2,610 | |||||||||||||
The following information presents a revision to the non-gaap reconciliation as it was previously reported in the Company’s press release dated January 26, 2018.
Reconciliation of Earnings Per Share to Earnings Per Share, Excluding Pension Mark-to-Market Expense, Separation Costs and Impacts from 4Q17 U.S. Tax Legislation Charge (Unaudited)
| Twelve Months Ended December 31, 2017(a) |
Twelve Months Ended December 31, 2017(a) |
|||||||
| As Reported | As Revised | |||||||
| Earnings per share of common stock - assuming dilution (EPS) | $ | 2.14 | $ | 2.00 | ||||
| Pension mark-to-market expense | 0.09 | 0.09 | ||||||
| Separation costs | 0.02 | 0.02 | ||||||
| Impacts from 4Q17 U.S. tax legislation charge | 4.86 | 5.04 | ||||||
| EPS, excluding pension mark-to-market expense, separation costs, and impacts from 4Q17 U.S. tax legislation charge | $ | 7.11 | $ | 7.15 | ||||
| (a) | Utilizes weighted average shares of approximately 772.1 million for full year. Pension mark-to-market expense uses a blended tax rate of 23%. |
We believe earnings per share, excluding pension mark-to-market expense, separation costs and impacts from 4Q17 U.S. tax legislation charge is a measure that is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.
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