Honeywell 2014 Annual Report Download - page 35

During 2014, the Company repurchased $924 million of outstanding shares to offset the dilutive
impact of employee stock based compensation plans, including option exercises, restricted unit vesting
and matching contributions under our savings plans. In December 2013, the Board of Directors
authorized the repurchase of up to a total of $5 billion of Honeywell common stock, $4.1 billion
remained available as of December 31, 2014 for additional share repurchases.
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 2015 to be as follows:
•Capital expenditures—we expect to spend approximately $1.3 billion for capital expenditures in
2015 primarily for growth, production and capacity expansion, cost reduction, maintenance, and
replacement.
•Share repurchases—under the Company’s share repurchase program, $4.1 billion is available
as of December 31, 2014 for additional share repurchases. Honeywell presently expects to
repurchase outstanding shares from time to time to offset the dilutive impact of employee stock-
based compensation plans, including option exercises, restricted unit vesting and matching
contributions under our savings plans. The amount and timing of future repurchases may vary
depending on market conditions and our level of operating, financing and other investing
activities.
•Dividends—we increased our dividend rate by 15% to $.5175 per share of common stock
effective with the fourth quarter 2014 dividend. The Company intends to continue to pay
quarterly dividends in 2015.
•Asbestos claims—we expect our cash spending for asbestos claims and our cash receipts for
related insurance recoveries to be approximately $350 million and $30 million, respectively, in
2015.
•Pension contributions—in 2015, we are not required to make contributions to our U.S. pension
plans. We plan to make contributions of cash and/or marketable securities of approximately
$140 million ($109 million of marketable securities were contributed in January 2015) to our non-
U.S. plans to satisfy regulatory funding standards. The timing and amount of contributions to
both our U.S. and non-U.S. plans may be impacted by a number of factors, including the funded
status of the plans.
•Repositioning actions—we expect that cash spending for severance and other exit costs
necessary to execute repositioning actions will approximate $150 million in 2015.
•Environmental remediation costs—we expect to spend approximately $275 million in 2015 for
remedial response and voluntary clean-up costs.
We continuously assess the relative strength of each business in our portfolio as to strategic fit,
market position, profit and cash flow contribution in order to upgrade our combined portfolio and
identify business units that will most benefit from increased investment. We identify acquisition
candidates that will further our strategic plan and strengthen our existing core businesses. We also
identify businesses that do not fit into our long-term strategic plan based on their market position,
relative profitability or growth potential. These businesses are considered for potential divestiture,
restructuring or other repositioning actions subject to regulatory constraints. In 2014 and 2013, we
realized $160 million and $3 million, respectively, in cash proceeds from sales of non-strategic
businesses.
Based on past performance and current expectations, we believe that our operating cash flows will
be sufficient to meet our future operating cash needs. Our available cash, committed credit lines,
access to the public debt and equity markets, provide additional sources of short-term and long-term
liquidity to fund current operations, debt maturities, and future investment opportunities.
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