Honeywell 2003 Annual Report Download - page 358

Payments by Period
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(Dollars in Millions) Total 2004 2005-2006 2007-2008 Thereafter
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Long-term debt, including capitalized leases (1) ... $ 5,008 $ 47 $1,883 $ 758 $2,320
Minimum operating lease payments ................... 1,042 274 351 209 208
Purchase obligations (2) ........................... 2,644 629 786 288 941
Environmental liability payments ................... 593 90 200 200 103
Asbestos related liability payments (3) ............ 3,009 730 1,110 372 797
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12,296 1,770 4,330 1,827 4,369
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Asbestos insurance recoveries (4) .................. (1,447) (130) (310) (91) (916)
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$10,849 $1,640 $4,020 $1,736 $3,453
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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 asbestos related cash payments for NARCO and
Bendix. NARCO estimated payments are based on the terms and conditions,
including evidentiary requirements, specified in the definitive agreements
or agreements in principle and pursuant to Trust Distribution Procedures.
Bendix payments are based on our estimate of pending claims. Projecting
future events is subject to many uncertainties that could cause asbestos
liabilities to be higher or lower than those projected and recorded. There
is no assurance that NARCO or Bendix insurance recoveries will be timely,
that a NARCO plan of reorganization will be proposed or confirmed, 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.
The table excludes our pension and other postretirement benefits (OPEB)
obligations. We made voluntary contributions of $670 and $830 million ($700
million in Honeywell common stock and $130 million in cash) to our U.S. pension
plans in 2003 and 2002, respectively. Future plan contributions are dependent
upon actual plan asset returns and interest rates. Assuming that actual plan
asset returns are consistent with our expected plan return of 9 percent in 2004
and beyond, and that interest rates remain constant, we would not be required to
make any contributions to our U.S. pension plans for the foreseeable future.
Payments due under our OPEB plans are not required to be funded in advance, but
are paid as medical costs are incurred by covered retiree populations, and are
principally dependent upon the future cost of retiree medical benefits under our
plans. We expect our OPEB payments to approximate $210 million in 2004. See Note
22 of Notes to Financial Statements for further discussion of our pension and
OPEB plans.
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, 2003:
Maximum
Potential
Future
(Dollars in Millions) Payments
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Operating lease residual values .................................... $ 73
Other third parties' financing ..................................... 5
Unconsolidated affiliates' financing ............................... 38
Customer and vendor financing ...................................... 24
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$140
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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