Honeywell 2002 Annual Report Download - page 222

Contractual Obligations and Probable Asbestos Payments
Following is a summary of our contractual obligations and probable asbestos
payments at December 31, 2002:
Payments by Period
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2004- 2006-
(Dollars in millions) Total 2003 2005 2007 Thereafter
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Long-term debt, including
capitalized leases(1) ... $ 4,828 $ 109 $ 955 $1,255 $2,509
Minimum operating lease
payments ................ 1,374 310 469 264 331
Purchase obligations(2) .... 2,605 708 853 366 678
Probable asbestos related
liability payments(3) ... 3,310 610 1,175 656 869
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12,117 1,737 3,452 2,541 4,387
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Asbestos insurance
recoveries(4) ........... (1,956) (277) (941) (421) (317)
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$10,161 $1,460 $2,511 $2,120 $4,070
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(1) Assumes all long-term debt is outstanding until scheduled maturity.
(2) Purchase obligations are entered into with various vendors in the normal
course of business and are consistent with our expected requirements.
(3) These amounts are estimates of probable asbestos related cash payments
based on the terms and conditions, including evidentiary requirements,
specified in the definitive agreements or agreements in principle and
pursuant to Trust Distribution Procedures. Projecting future events is
subject to many uncertainties that could cause the NARCO related asbestos
liabilities to be higher or lower than those projected and recorded. There
is no assurance that ongoing settlement negotiations will be successfully
completed, that a plan of reorganization will be proposed or confirmed,
that insurance recoveries will be timely or whether there will be any NARCO
related asbestos claims beyond 2018. See Asbestos Matters in Note 21 of
Notes to Financial Statements.
(4) These amounts represent probable insurance recoveries through 2018. See
Asbestos Matters in Note 21 of Notes to Financial Statements.
Off-Balance Sheet Arrangements
Following is a summary of our off-balance sheet arrangements:
Guarantees
We have issued or are a party to the following direct and indirect guarantees at
December 31, 2002:
Maximum
Potential
Future
(Dollars in millions) Payments
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Operating lease residual values ........ $340
Other third parties' financing ......... 181
Unconsolidated affiliates' financing ... 37
Customer and vendor financing .......... 29
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$587
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In connection with our disposition of BCVS we guaranteed $172 million of its
debt (included in other third parties' financing). Any payment we might make
under this guarantee is recoverable from the acquirer of BCVS, whose payment is
backed by a letter of credit issued by a commercial bank.
At December 31, 2002, no amounts were recorded related to these guarantees. We
do not expect that these guarantees will have a material adverse effect on our
consolidated results of operations, financial position or liquidity.
In connection with the disposition of certain businesses and facilities we have
indemnified the purchasers for the expected cost of remediation of environmental
contamination, if any, existing on the date of disposition. Such expected costs
are accrued when environmental assessments are made or remedial efforts are