Honeywell 2002 Annual Report Download - page 270

insurance programs. Based on our analysis, we recorded insurance recoveries that
are deemed probable through 2018 of $1.8 billion.
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. Given the inherent uncertainty in
predicting future events, we plan to review our estimates periodically, and
update them based on our experience and other relevant factors. Similarly we
will reevaluate our projections concerning our probable insurance recoveries in
light of any changes to the projected liability or other developments that may
impact insurance recoveries.
NARCO and Bendix asbestos related balances are included in the following balance
sheet accounts:
December 31,
-------------
2002 2001
------------------------------------------------------------
Other current assets ....................... $ 320 $180
Insurance recoveries for asbestos related
liabilities ............................. 1,636 --
------------------------------------------------------------
$1,956 $180
============================================================
Accrued liabilities ........................ $ 741 $182
Asbestos related liabilities ............... 2,700 --
------------------------------------------------------------
$3,441 $182
============================================================
Warranties and Guarantees
We have issued or are a party to the following direct and indirect guarantees at
December 31, 2002:
Maximum
Potential
Future
Payments
---------------------------------------------------
Operating lease residual values ....... $340
Other third parties' financing ........ 181
Unconsolidated affiliates' financing .. 37
Customer and vendor financing ......... 29
---------------------------------------------------
$587
===================================================
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
probable and the costs can be reasonably estimated.
In the normal course of business we issue product warranties and product
performance guarantees. We accrue for the estimated cost of product warranties
and performance guarantees based on contract terms and historical experience at
the time of sale. Adjustments to initial obligations for warranties and
guarantees are made as changes in the obligations become reasonably estimable.
The following table summarizes information concerning our recorded obligations
for product warranties and product performance guarantees:
December 31,
------------------
2002 2001 2000
-----------------------------------------------------------------
Beginning of year .......................... $217 $198 $187
Accruals for warranties/guarantees issued