SEC Filing | Honeywell International Inc.

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________________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT -- DECEMBER 1, 1999 (DATE OF EARLIEST EVENT REPORTED) ------------------- HONEYWELL INTERNATIONAL INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ------------------- DELAWARE 1-8974 22-2640650 (STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER OF INCORPORATION) IDENTIFICATION NUMBER) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (973) 455-2000 ________________________________________________________________________________

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Businesses Acquired. Included in the Current Report on Form 8-K of Honeywell International Inc. filed on December 3, 1999. (b) Pro Forma Financial Information. UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION On December 1, 1999 after the close of trading on the New York Stock Exchange, AlliedSignal Inc. and Honeywell Inc. consummated a merger pursuant to an Agreement and Plan of Merger dated as of June 4, 1999. Under the merger agreement, a wholly owned subsidiary of AlliedSignal merged with and into Honeywell. As a result of the merger, Honeywell has become a wholly owned subsidiary of AlliedSignal. AlliedSignal changed its name to Honeywell International Inc. at the effective time of the merger pursuant to the merger agreement. Under the merger agreement, each issued and outstanding share of Honeywell common stock was converted into the right to receive 1.875 shares of Honeywell International common stock, with fractional shares paid in cash. Former Honeywell shareowners were entitled to receive approximately 241 million shares of Honeywell International common stock in exchange for their shares of Honeywell common stock they held at the effective time of the merger. In addition, outstanding former Honeywell employee stock options were converted at the same exchange factor into options to purchase approximately 10 million shares of Honeywell International common stock. The following unaudited pro forma combined condensed financial statements combine the historical consolidated balance sheets and statements of income of AlliedSignal and Honeywell giving effect to the merger using the pooling of interests method of accounting for a business combination. Under this method of accounting, AlliedSignal and Honeywell are treated as if they had always been combined for accounting and financial reporting purposes. We derived this information from the audited consolidated financial statements of AlliedSignal for the years ended December 31, 1998, 1997 and 1996 and the unaudited consolidated financial statements of AlliedSignal for the nine months ended September 30, 1999 and 1998, and from the audited consolidated financial statements of Honeywell for the years ended December 31, 1998, 1997 and 1996 and the unaudited consolidated financial statements of Honeywell for the nine months ended October 3, 1999 and October 4, 1998. The information is only a summary and you should read it in conjunction with our historical financial statements and related notes contained in the annual reports, quarterly reports and other information that we have filed with the SEC. The unaudited pro forma combined condensed statements of income for the years ended December 31, 1998, 1997 and 1996 and the first nine months of 1999 and 1998 assume the merger was effected on January 1, 1996. The unaudited pro forma combined condensed balance sheet gives effect to the merger as if it had occurred at the end of the combined company's third quarter of 1999. The accounting policies of Honeywell and AlliedSignal are substantially comparable. Consequently, we did not make adjustments to the unaudited pro forma combined condensed financial statements to conform the accounting policies of the two companies. The unaudited pro forma combined condensed financial information is for illustrative purposes only. The companies may have performed differently had they always been combined. You should not rely on the pro forma combined condensed financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that Honeywell International will experience after the merger. 2

UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET HISTORICAL -------------------------------------- ALLIEDSIGNAL HONEYWELL PRO FORMA PRO FORMA SEPTEMBER 30, 1999 OCTOBER 3, 1999 ADJUSTMENTS(1) COMBINED ------------------ --------------- -------------- -------- (IN MILLIONS) ASSETS Current assets: Cash and cash equivalents..... $ 981 $ 144 $ $ 1,125 Accounts and notes receivable.................. 1,984 1,860 3,844 Inventories................... 2,326 1,155 3,481 Other current assets.......... 576 292 868 ------- ------ ------- ------- Total current assets...... 5,867 3,451 9,318 Investments and long-term receivables..................... 436 323 759 Property, plant and equipment..... 9,317 3,488 12,805 Accumulated depreciation and amortization.................... (4,965) (2,155) (7,120) Goodwill -- net................... 3,094 1,028 4,122 Other assets...................... 1,204 1,124 2,328 ------- ------ ------- ------- Total assets.................. $14,953 $7,259 $-- $22,212 ------- ------ ------- ------- ------- ------ ------- ------- LIABILITIES Current liabilities: Accounts payable.............. $ 1,273 $ 640 $ $ 1,913 Short-term borrowings......... 58 26 84 Commercial paper.............. 1,513 -- 1,513 Current maturities of long-term debt.............. 195 109 304 Accrued liabilities........... 1,745 1,458 135 (5) 3,338 ------- ------ ------- ------- Total current liabilities............. 4,784 2,233 135 7,152 Long-term debt.................... 1,287 1,193 2,480 Deferred income taxes............. 802 56 858 Postretirement benefit obligations other than pensions............. 1,664 319 1,983 Other liabilities................. 993 294 1,287 SHAREOWNERS' EQUITY Capital -- common stock issued.... 716 281 (41)(6) 956 -- additional paid-in capital.................... 3,323 816 (1,986)(6) 2,153 Common stock held in treasury, at cost............................ (4,265) (2,027) 2,027 (6) (4,265) Accumulated other nonowner changes......................... (270) (43) (313) Retained earnings................. 5,919 4,137 (135)(5) 9,921 ------- ------ ------- ------- Total shareowners' equity.................. 5,423 3,164 (135) 8,452 ------- ------ ------- ------- Total liabilities and shareowners' equity......... $14,953 $7,259 $-- $22,212 ------- ------ ------- ------- ------- ------ ------- ------- See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements 3

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR THE FIRST NINE MONTHS OF 1999 HISTORICAL ------------------------------------- ALLIEDSIGNAL HONEYWELL NINE MONTHS ENDED NINE MONTHS ENDED PRO SEPTEMBER 30, OCTOBER 3, PRO FORMA FORMA 1999 1999 ADJUSTMENTS(1) COMBINED ---- ---- -------------- -------- (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Net sales....................... $11,252 $6,324 $ $17,576 ------- ------ ------- Costs, expenses and other: Cost of goods sold.......... 8,730 4,661 13,391 Selling, general and administrative expenses... 1,171 972 2,143 Gain on sale of non-strategic businesses................ (106) -- (106) Equity in income of affiliated companies...... (12) (2) (14) Other (income) expense...... (287) (8) (295) Interest and other financial charges................... 107 85 192 ------- ------ -------- ------- 9,603 5,708 15,311 ------- ------ -------- ------- Income before taxes on income... 1,649 616 2,265 Taxes on income................. 528 203 731 ------- ------ -------- ------- Net income...................... $ 1,121 $ 413 $-- $ 1,534 ------- ------ -------- ------- ------- ------ -------- ------- Earnings per share of common stock -- basic................ $ 2.03 $ 3.25 $ 1.94(3) Earnings per share of common stock -- assuming dilution.... 1.98 3.20 1.90(3) Weighted average number of shares outstanding -- basic... 553 127 791(3) Weighted average number of shares outstanding -- assuming dilution...................... 566 129 808(3) Cash dividends per share of common stock.................. 0.51 0.87 0.51(3) See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements 4

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR THE FIRST NINE MONTHS OF 1998 HISTORICAL ------------------------------------- ALLIEDSIGNAL HONEYWELL NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, OCTOBER 4, PRO FORMA PRO FORMA 1998 1998 ADJUSTMENTS(1) COMBINED ---- ---- -------------- -------- (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Net sales....................... $11,256 $6,078 $ $17,334 ------- ------ ------- Cost, expenses and other: Cost of goods sold.......... 8,596 4,474 13,070 Selling, general and administrative expenses... 1,200 985 2,185 Equity in income of affiliated companies...... (82) (5) (87) Other (income) expense...... 9 (8) 1 Interest and other financial charges................... 104 83 187 ------- ------ ------ ------- 9,827 5,529 15,356 ------- ------ ------ ------- Income before taxes on income... 1,429 549 1,978 Taxes on income................. 450 181 631 ------- ------ ------ ------- Net income...................... $ 979 $ 368 $-- $ 1,347 ------- ------ ------ ------- ------- ------ ------ ------- Earnings per share of common stock -- basic................ $ 1.74 $ 2.91 $ 1.69(3) Earnings per share of common stock -- assuming dilution.... 1.70 2.87 1.65(3) Weighted average number of shares outstanding -- basic... 562 126 798(3) Weighted average number of shares outstanding -- assuming dilution...................... 576 128 816(3) Cash dividends per share of common stock.................. 0.45 0.84 0.45(3) See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements 5

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1998 HISTORICAL PRO ------------------------ PRO FORMA FORMA ALLIEDSIGNAL HONEYWELL ADJUSTMENTS(1) COMBINED ------------ --------- -------------- -------- (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Net sales..................................... $15,128 $8,427 $ $23,555 ------- ------ ------- Costs, expenses and other: Cost of goods sold........................ 11,476 6,213 17,689 Selling, general and administrative expenses................................ 1,690 1,318 3,008 Equity in income of affiliated companies............................... (150) (12) (162) Other (income) expense.................... 7 (34) (27) Interest and other financial charges...... 162 113 275 ------- ------ ------ ------- 13,185 7,598 20,783 ------- ------ ------ ------- Income before taxes on income................. 1,943 829 2,772 Taxes on income............................... 612 257 869 ------- ------ ------ ------- Net income.................................... $ 1,331 $ 572 $-- $ 1,903 ------- ------ ------ ------- ------- ------ ------ ------- Earnings per share of common stock -- basic... $ 2.37 $ 4.54 $ 2.38(3) Earnings per share of common stock -- assuming dilution.................................... 2.32 4.48 2.34(3) Weighted average number of shares outstanding -- basic........................ 562 126 798(3) Weighted average number of shares outstanding -- assuming dilution............ 574 128 814(3) Cash dividends per share of common stock...... 0.60 1.13 0.60(3) See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements 6

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997 HISTORICAL PRO ------------------------ PRO FORMA FORMA ALLIEDSIGNAL HONEYWELL ADJUSTMENTS(1) COMBINED ------------ --------- -------------- -------- (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Net sales..................................... $14,472 $8,027 $ $22,499 ------- ------ ------- Costs, expenses and other: Cost of goods sold........................ 11,481 5,963 17,444 Selling, general and administrative expenses................................ 1,581 1,359 2,940 Gain on sale of non-strategic businesses.............................. (226) (77) (303) Equity in income of affiliated companies............................... (178) (13) (191) Other (income) expense.................... (77) (10) (87) Interest and other financial charges...... 175 102 277 ------- ------ ------ ------- 12,756 7,324 20,080 ------- ------ ------ ------- Income before taxes on income................. 1,716 703 2,419 Taxes on income............................... 546 232 778 ------- ------ ------ ------- Net income.................................... $ 1,170 $ 471 $-- $ 1,641 ------- ------ ------ ------- ------- ------ ------ ------- Earnings per share of common stock -- basic... $ 2.07 $ 3.71 $ 2.04(3) Earnings per share of common stock -- assuming dilution.................................... 2.02 3.65 2.00(3) Weighted average number of shares outstanding -- basic........................ 565 127 803(3) Weighted average number of shares outstanding -- assuming dilution............ 580 129 822(3) Cash dividends per share of common stock...... 0.52 1.09 0.52(3) See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements 7

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1996 HISTORICAL PRO ------------------------ PRO FORMA FORMA ALLIEDSIGNAL HONEYWELL ADJUSTMENTS(1) COMBINED ------------ --------- -------------- -------- (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Net sales..................................... $13,971 $7,312 $ $21,283 ------- ------ ------- Costs, expenses and other: Cost of goods sold........................ 11,606 5,329 16,935 Selling, general and administrative expenses................................ 1,511 1,313 2,824 Gain on sale of non-strategic businesses.............................. (655) -- (655) Equity in income of affiliated companies............................... (143) (13) (156) Other (income) expense.................... (87) (8) (95) Interest and other financial charges...... 186 81 267 ------- ------ ------ ------- 12,418 6,702 19,120 ------- ------ ------ ------- Income before taxes on income................. 1,553 610 2,163 Taxes on income............................... 533 207 740 ------- ------ ------ ------- Net income.................................... $ 1,020 $ 403 $-- $ 1,423 ------- ------ ------ ------- ------- ------ ------ ------- Earnings per share of common stock -- basic... $ 1.80 $ 3.18 $ 1.77(3) Earnings per share of common stock -- assuming dilution.................................... 1.76 3.11 1.73(3) Weighted average number of shares outstanding -- basic........................ 566 127 804(3) Weighted average number of shares outstanding -- assuming dilution............ 580 130 824(3) Cash dividends per share of common stock...... 0.45 1.06 0.45(3) See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements 8

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS Note 1. Basis of Presentation The unaudited pro forma combined condensed statements of income are based on the audited consolidated statements of income of AlliedSignal for the years ended December 31, 1998, 1997 and 1996 and the unaudited consolidated statements of income of AlliedSignal for the nine months ended September 30, 1999 and 1998, and the audited consolidated income statements of Honeywell for the years ended December 31, 1998, 1997 and 1996, and the unaudited consolidated income statements of Honeywell for the nine months ended October 3, 1999 and October 4, 1998. No pro forma adjustments were necessary in preparing the unaudited pro forma combined condensed statements of income. The unaudited pro forma combined condensed balance sheet is based on the unaudited consolidated balance sheet of AlliedSignal as of September 30, 1999 and on the unaudited consolidated statement of financial position of Honeywell as of October 3, 1999. AlliedSignal's and Honeywell's respective consolidated financial statements were prepared in conformity with generally accepted accounting principles and required management of AlliedSignal and Honeywell, as applicable, to make estimates and assumptions that affected the reported amounts in the financial statements and related disclosures in the accompanying notes. In our opinion, the unaudited pro forma combined condensed financial statements include all adjustments necessary to present fairly the results of the periods presented. Actual results could differ materially from these estimates. Note 2. Accounting Principles and Financial Statement Classifications The accounting policies of AlliedSignal and Honeywell were substantially comparable. Consequently, we did not make adjustments to the unaudited pro forma combined condensed financial statements to conform the accounting policies of the combining companies. We have reclassified certain items in the historical financial statements of AlliedSignal and Honeywell to conform to the presentation expected to be used by Honeywell International. Note 3. Pro Forma Earnings Per Share and Dividends Per Share The 'pro forma combined earnings per share of common stock -- basic' is based on net income and the weighted average number of outstanding common shares. 'Earnings per share of common stock -- assuming dilution' is based on net income and the weighted average number of outstanding common shares and the dilutive effect of stock options and restricted stock units. The weighted average number of outstanding common shares has been adjusted to reflect the exchange ratio of 1.875 shares of Honeywell International common stock for each share of Honeywell common stock. The pro forma combined dividends per share reflect the dividends paid by AlliedSignal. Note 4. Intercompany Transactions There were no significant transactions between AlliedSignal and Honeywell during any of the periods presented. Note 5. Merger-Related and Integration-Related Expenses We estimate that merger-related transaction and period expenses, consisting of investment banking and legal fees, former Honeywell deferred compensation vested upon change of control and other direct merger-related expenses incurred in the fourth quarter of 1999 are approximately $135 million. We have reflected these fees and expenses as an increase to accrued liabilities and a reduction in retained earnings in the unaudited pro forma combined condensed balance sheet 9

as of the end of the third quarter of 1999. We have not reflected this charge in the unaudited pro forma combined condensed statements of income or in the pro forma combined per share data. Upon completion of the merger between AlliedSignal and Honeywell on December 1, 1999, we recognized a pretax charge of $642 million for the cost of actions designed to improve our combined competitiveness and productivity and improve future profitability. The merger-related actions included the elimination of redundant corporate offices and functional administrative overhead; elimination of redundant and excess facilities and workforce in our combined aerospace businesses; adoption of six sigma productivity initiatives at the former Honeywell businesses; and the transition to a global shared services model. The components of the charge included severance costs of $342 million, asset impairments of $108 million, other exit costs of $57 million, as well as the merger-related transaction and period expenses of $135 million described in the preceeding paragraph. Except for the $135 million of merger-related transaction and period expenses, the unaudited pro forma combined condensed financial statements reflect neither the impact of these charges nor the benefits from the expected cost savings or revenue enhancements. Note 6. Other Pro Forma Adjustments We have made pro forma adjustments to the unaudited pro forma combined condensed balance sheet to reflect the cancellation of Honeywell common stock accounted for as treasury stock and the assumed issuance of approximately 240 million shares of Honeywell International common stock in exchange for all of the shares of Honeywell common stock outstanding as of the balance sheet date. (c) Exhibits. Included in the Current Report on Form 8-K of Honeywell International Inc. filed on December 3, 1999. 10

SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. HONEYWELL INTERNATIONAL INC. By: /s/ RICHARD J. DIEMER, JR. .................................. RICHARD J. DIEMER, JR. VICE PRESIDENT AND CONTROLLER Date: February 14, 2000 11