This is a column of general information available to Honeywell International employees via the Intranet. Our thanks to H/AREA Member Maurice Monti who monitors the Intranet and provides information for this column.
Message From Mike
Dear Colleague:
Late today, the European Commission (EC) informally notified us that it would request additional time to complete its regulatory review of the proposed acquisition of Honeywell by General Electric (GE). We expect the EC to issue a public statement on Thursday announcing that, as a result of some concerns raised by competitors in Europe, it will proceed to a phase-two review. A phase-two review would require us to operate as an independent company for as much as another four months.
While we are certainly disappointed, the decision was not a surprise. We had hoped to alleviate any concerns from the marketplace with our filing earlier this month, but this is a very large and complex combination. It's fairly common that deals of this size get reviewed over a longer period of time so that regulators can be sure that all issues have been properly analyzed. You'll recall that the AlliedSignal/Honeywell merger also went to the second-request phase before being approved. The U.S. Department of Justice (DOJ) review continues to go smoothly.
We are still confident that there are no insurmountable antitrust obstacles, and now expect the deal to close sometime in June.
I'd like to remind everyone of the corporate goals we set for 2001: Delight our Customers; Deliver on our Commitments; and Successfully Integrate with GE. We have committed considerable resources to the integration over the last several months and will complete all integration plans. At the same time, it's critical that we not lose focus on the fundamentals of running Honeywell as an independent company. I've asked the Honeywell Leadership Council (HLC) to step-up contact with customers to be sure that we're meeting their needs. We will also make tough decisions that drive growth and productivity so that we deliver our financial targets. Look for communications from your business leader over the next few days that re-emphasize our operational priorities.
If you have questions, please continue to access UpWords, the answer and comment system, at: http://my.honeywell.com/acquisition. We'll continue to inform you of major developments as quickly as we can.
Mike Bonsignore
Chairman and CEO
Message From Mike
Dear Colleagues:
I've been asked often over the last two months what the future holds for the new Honeywell. Countless customer contacts, briefings with investment analysts and discussions with employees continue to underscore my belief that we will become one of the most successful and admired companies in the world. And yet, that future is not guaranteed. We have considerable work to do to realize our full potential.
There are two critical challenges we must tackle simultaneously. The first is to exceed $250 million in cost savings from the merger this year and achieve more than $750 million over the next three years. Our business performance will be enhanced as these savings fall to the bottom line. We talked a lot about this during the integration process. The second is to deliver on our expectation of 15% to 20% earnings per share (EPS) growth on a sustained basis. It's clear that we won't deliver that kind of performance unless we make serious inroads to drive revenue growth. And "business as usual" will not be enough to get the job done.
Over 250 of our top leaders, representing every business unit, function and geographic region, recently gathered in Carlsbad, California to devote their collective energy to this sales growth challenge. The meetings marked the launch of an initiative called Accelerating the Growth Imperative, a focused and rapid effort across the company over the next two quarters to jump-start internal or "organic" growth.
The Imperative team is led by Lucia Quinn, Corporate Vice President of Strategic Marketing, and comprises members from the business units, regions and Corporate, as well as consultants from Mercer Management, led by Adrian Slywotzky, author of "The Profit Zone." The team is chartered with deepening our understanding of customer priorities, as well as emerging and competitive issues. They will examine our current business designs to assess their future growth potential, and take a hard look at changes the future will demand of our business design portfolio. The team will also recommend where to allocate our investment dollars to take full advantage of the most promising - both new and existing - growth opportunities. We expect to uncover exciting new ventures that cut across business units, as well as breakthrough areas within business units.
The Accelerating the Growth Imperative initiative will conclude in early June, and set the stage for the review of our business strategies in July. We will keep you updated as the process unfolds. In the meantime, we are establishing ourselves as the Amazon.com or Yahoo of the industrial business world. Over the last several weeks, we made headlines with three major E-Business announcements.
First, we formed a business alliance with Microsoft for myplant.com and laid out a strategy to begin charging for services. Second, we signed-up i2, the technology leader, and United Technologies, a key competitor as partners in a new e-hub called myaircraft.com. And third, we announced plans to build a third e-hub, myfacilities.com, around our global leadership in solutions for the home and commercial buildings. These will be the three primary near-term e-hub projects for our company.
In being first to move to the virtual world of business to business with meaningful products, services and information, we are finding new customers and adding significant new value for existing ones. E-Business will become a critical engine for growth in the months and years ahead.
I encourage every employee to get familiar with the Internet and web technology so that you understand the revolution that is taking place in business today and can take advantage of all that it has to offer. Each of us will be impacted in some way, at work and at home, so let's be prepared.
We stand on the threshold of an exciting new century for Honeywell. The only impediment to our quest for greatness is our ability to grow the top line. We must have a shared vision, make some tough decisions, act swiftly, and adapt well to change in order to secure that future. With your continued support and perseverance, it will be an exciting journey.
Mike Bonsignore
Chief Executive Officer
Dear Colleague:
This last week has been a tough one for our stock. We've dropped more than 10 points from where we were at the time our merger closed in early December.
I know that many of you own Honeywell shares through direct purchase, option grants and/or participation in our Savings Plans.
Naturally, we're disappointed because we feel that the decline is unjustified. While some of that can be attributed to the overall market decline, analysts tell us that they are looking for us to demonstrate solid revenue growth and good quality earnings. While we generally met expectations with our fourth quarter results, revenue growth was just 1% and the quality of our earnings was less than anticipated.
I want to assure you that we are very confident in our ability to meet or even exceed first quarter financial expectations. In fact, we have raised our cash flow target. The best thing we can do is not get distracted by the daily fluctuations of the market. Let's keep focused on delighting our customers and aggressively pursuing growth opportunities. When we're successful the market will reward us with a higher stock price and world-class earnings multiple.
Mike Bosignore
Chief Executive Officer
MERGER INTEGRATION NEWS
With clearance from the U.S. Department of Justice (DOJ), many of you have asked, "what's next?" The last major milestone is similar clearance from the European Commission (EC). At that point, we would be able to complete the merger and become one company. Once we received the EC clearance, here's how we currently believe events should unfold.
The official closing date is expected to be three to five business days after EC approval. This permits the stock exchanges to coordinate changes that will occur when the merger closes. The stock of Honeywell International is expected to trade under the symbol "ALD" for a few weeks after the closing of the merger to prevent confusion while trades of old Honeywell shares are being settled under the symbol "HON." Trading in old Honeywell shares will end when the merger closes. The U.S. Securities and Exchange Commission (SEC) has asked that we allow time to close out transactions related to stock in the current Honeywell, which currently trades as "HON." Once the processing is completed, the new Honeywell International will take on the "HON" symbol.
Each of the Integration Teams will begin implementing its detailed plans as soon as the merger has closed. Our stated objective is to complete as much of the integration and transition within three months of the close, though many of the more complex areas may take more time.
Your Feedback
We have received many comments, suggestions and questions through the UpWords system since the merger was announced in June. Some have been quite helpful as our many teams engaged in planning. Some have been words of encouragement. And others have been critical. Each of them, however, has been considered and forwarded to the appropriate person(s) and/or addressed in Integration News.
The following questions were either received this past week or can now be answered:
Q. Have you chosen a name for the new employee magazine yet? If so, who won the contest?
A. Yes, Larry Bossidy and Mike Bonsignore have approved the team's recommendation. The new employee magazine will be named "Performance" to reflect the character we believe will exist in the new company. We want to be known as the company that delivers on its commitments. Whether achieving tough goals, serving a customer, improving an internal process or helping with a community activity, we want to perform at the highest level.
The selection team, made up of employees from both companies, whittled down a list of several hundred suggestions to six strong possibilities. After careful consideration of each, they selected another name that, they felt, better described a primary aspiration for the new company. Many employee entries were names of newsletters already being published in one of the two companies. And while many people suggested combining Honeywell's "World" and AlliedSignal's "Vision" into "WorldVision," the team felt it conjured up an image of the global charity organization of the same name. To be fair, everyone's name was put into a hat and one winner from each company was drawn. Instead of just one, we will award two $200 prizes. We're pleased to announce that Richard Nielsen of Honeywell's Satellite Systems operation in Glendale, Arizona, and Thomas Foster of AlliedSignal's Performance Polymers site in Hopewell, Virginia were the lucky winners.
We appreciate the great response and the wonderful creativity. The first issue of Performance magazine will be published shortly after the close.
Q. I have my checking and savings accounts at the employee credit union located in the building where I work. How will the merger impact the credit union?
A. The merger will not impact your credit union account. It is important to remember that while a credit union does provide financial services to a select employee group, it is an independent, federally regulated financial institution, organized under strict regulatory laws that are monitored and enforced by the National Credit Union Administration, an agency of the U.S. Government.
In many instances, for the convenience of its employee members, a credit union is located within a company facility. However, they may also operate other branch facilities for the convenience of their members who are non-employees (i.e., family members or relatives of employees). As long as you maintain your membership with the credit union, your banking relationship should remain unchanged. Once you become a member of a credit union, you are always a member of that credit union no matter where you may live or work.
Q. I am attending college classes and would like to know what the new company's policy will be in regard to tuition reimbursement? Will it be a standard policy across the company or will business units make those decisions?
A. Mike Bonsignore supports the commitment of 40 hours of learning each year for every employee. He believes that investing in people's continued development will ensure that Honeywell remains progressive and that we keep talented people.
A generous tuition reimbursement program is an important part of that commitment. While we still have not finalized the details, it will certainly be standard across the new company with allowances for regional/geographic differences. You must first have a discussion with your supervisor about skills you need for your current job or for future career development. To be eligible for company funding, you and your supervisor must come to an agreement, with help from your human resources professional, before engaging in any coursework. When more detailed information is available, we will communicate it in Integration News.
Q. Why aren't we getting more news about what's happening in Aerospace?
A. We understand that this has been a difficult time for many Aerospace employees. There is little we can communicate beyond what we already have because, unlike the rest of the company, Aerospace has essentially not been part of the detailed Integration planning process. As you know, the areas where we have most overlap, and are therefore under the greatest scrutiny, are Aerospace-related. We have not engaged in any planning that would cause problems with the DOJ and the EC. Once the EC gives its clearance, we will initiate an accelerated integration effort to understand the opportunities and plan the details of how our two companies' Aerospace operations will be combined effectively.
Q. Following the merger, will it be possible to apply for jobs throughout the new company and, if so, will these jobs be posted on the web site?
A. Plans are underway to have a posting system with all appropriate "open" positions throughout the new company. The most senior-level and hourly jobs at union sites will not be part of the system. A web site is under development and is expected to be up and running when the merger is completed.
The posting system is one of several ways you can be considered for a job. You can also be recommended by your leader or Human Resources professional, identified during the Management Resource Review (MRR) - an annual process that evaluates organization strength and creates opportunity for continued development - and as part of a "slate" of high-potential diverse employees.
For organization charts and other merger information, please visit the merger integration web site at http://aswww.allied.com/honeywell.
Both companies expect to announce third quarter earnings this week that meet our expectations and our commitment to investors. These results were possible because you kept focused on meeting customer needs and achieving our aggressive goals. You continue to put us in a very favorable position for a smooth transition to the new Honeywell. We plan to have the same high standard in implementing our merger integration plans.
Ray Stark, Bill Hjerpe; Co-Integration Leaders