Morris Township, NJ, Jan. 31--Honeywell had revenues in the fourth quarter of $5.9 billion, flat versus the same period in 2001. Ongoing earnings per share were $0.50, compared with of $0.55 in the fourth quarter of 2001. Segment profit margins were 10.7%, compared with 12.2% in 2001. Fourth-quarter results reflect the increase in research and development expenditures in the company's Aerospace business as well as the impact of lower pension income and continued declines in commercial aerospace original equipment. Free cash flow in the quarter was $546 million, compared with $626 million in the previous year's quarter.
In the quarter, Honeywell undertook a number of actions to improve its cost structure and address the economic realities of the marketplace. This resulted in the company taking an after tax charge of about $1.9 billion, or $2.28 per share, to cover costs associated with the potential resolution of asbestos related claims; asset write downs in its specialty materials, friction materials and automation & control solutions businesses; and repositioning and other actions. The charge was net of a gain of $18 million, or $0.02 per share, on the sale of Honeywell's advanced circuits business. The reported per-share loss for the fourth quarter was $1.78, compared with reported earnings per share of $0.14 in the same period a year ago.
For the year, ongoing earnings per share were $2.00, in line with the company's previous guidance. Ongoing earnings per share for 2001 were $2.05. Reported loss per share in 2002 was $0.27, compared with a reported loss per share of $0.12 the year before. Reported results from both years include the effects of charges and divestitures of non-strategic businesses.
"This past year was a challenging one," said Honeywell chairman and CEO Dave Cote. "Despite the difficult economic environment, our aggressive cost actions and productivity initiatives enabled us to generate record free cash flow and hold ongoing earnings essentially flat on 6% lower revenues. Further, we took decisive action throughout the year to ensure a firm foundation for growth and performance in all of our businesses."
Full year revenues were $22.3 billion, down 6% from $23.7 billion in 2001 as a result of declines primarily in the company's commercial aerospace units as well as the divestiture of its Commercial Vehicle Braking Systems business. Revenues increased in the Defense & Space, Security & Fire Solutions, Turbochargers and Electronic Materials units. Segment profit margins were 11.3%, down from 11.6% the year before.
In 2002, Honeywell generated a record $2.0 billion in free cash flow, up 40% from $1.4 billion a year ago. The company delivered $1.2 billion in cost productivity.
The firm expects its 2003 earnings per share to range from $1.60 to $1.70, reflecting the year-over-year negative impact of $0.36 per share due to pension expense. The company expects revenues of about $22.2 billion in the current year, flat compared with last year, and sees continued strong cash generation and cost productivity.
