Honeywell Reports Profit in 2003, Sees Growth Ahead

MORRIS TOWNSHIP, N.J.

Honeywell says it earned $1.3 billion in 2003 and has an
eye on more growth in 2004, with the expectation of new
product introductions in its security division. The
company’s $23.1 billion in revenues for the year got a
boost from the $7.5 billion in revenue supplied by
Honeywell’s Automation and Control Solutions (ACS)
business, which includes electronic security products.

“2003 was a year of significant progress,” says Honeywell
Chairman and CEO Dave Cote. “The downturn in commercial
construction has slowed and our fire and security
businesses continue to perform well.”

The company’s net gain, announced Jan. 29, is a bounce back
from 2002, when Honeywell had a net loss of $220 million
for the year. Honeywell made several acquisitions in the
past year, including the pick-ups of security companies
Silent Witness and FutureSmart. Honeywell CFO Dave Anderson
says Honeywell will have a continued investment in growth
and hinted that the company plans further acquisitions in
the next year. Anderson says, however, not to expect any
large acquisitions. “I’d prefer to do things small in
nature, but you never say never. We prefer small
acquisitions.”

Honeywell reiterated that it is still planning the sale of
its security monitoring business, but did not elaborate
further. Despite the pending loss of that $160 million
business, ACS President and CEO Roger Fradin says that
overall, 2003 was a year of large growth for his division
and he sees 2004 being no different. “One of the key ways
you grow is you don’t shrink. Security is our sweet spot
across the board,” Fradin says. “Even in the face of the
declining construction business, our fire products still
had a 10 percent growth (in 2003).”

Of the $7.5 billion in revenue produced by the ACS
division – an increase over the $7 billion in 2002 revenue –
$2.1 billion came from security and fire products. However,
ACS’ net profit of $843 million was a two-percent drop from
2002. ACS is Honeywell’s second-largest source of revenue
behind Aerospace.

Fradin says there will be “lots of new products coming” in
2004 from Honeywell, including new high-end digital cameras
and expansion in the company’s offerings for CCTV, DVR,
access control and integrated systems. Part of that growth
will include the continued phasing out of the ADEMCO and
IntelliSense names in favor of Honeywell Security.

Fradin also says the company plans to introduce in 2004 a
new gas detection product line that will serve as an early
warning smoke detector. “This will innovate the market,”
Fradin says.

Honeywell also reported its fourth quarter figures for 2003
on Jan. 29, which were in sharp contrast to the $1.5
billion loss Honeywell sustained in its 2002 fourth
quarter. In the same period of 2003, Honeywell earned a
$407 million profit, powered by a $251 million gain by ACS.
The ACS division had an 8-percent increase in revenue in
the 2003 fourth quarter compared to 2002.

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