Honeywell 2003 Annual Report Download - page 359

probable and the costs can be reasonably estimated.
Retained Interests in Factored Pools of Trade Accounts Receivables
As a source of liquidity, we sell interests in designated pools of trade
accounts receivables to third parties. The sold receivables ($500 million
at December 31, 2003) are over-collateralized and we retain a subordinated
interest in the pool of receivables representing that over-collateralization
as well as an undivided interest in the balance of the receivables pools.
The over-collateralization provides credit support to the purchasers of the
receivable interest by limiting their losses in the event that a portion of
the receivables sold becomes uncollectible. At December 31, 2003, our retained
subordinated and undivided interests at risk were $174 and $321 million,
respectively. Based on the underlying credit quality of the receivables placed
into the designated pools of receivables being sold, we do not expect that any
losses related to our retained interests at risk will have a material adverse
effect on our consolidated results of operations, financial position or
liquidity.
Environmental Matters
We are subject to various federal, state and local government requirements
relating to the protection of the environment. We believe that, as a general
matter, our policies, practices and procedures are properly designed to prevent
unreasonable risk of environmental damage and personal injury and that our
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