Honeywell 2003 Annual Report Download - page 381

million in 2002 principally related to the write-down of property, plant and
equipment held and used in our Nylon System, Performance Fibers and Metglas
Specialty Materials businesses, as well as an Automation and Control Solutions
communication business. We also recognized impairment charges of $92 million
related principally to the write-down of property, plant and equipment of our
Friction Materials business, which was classified as assets held for disposal in
Other Current Assets as of December 31, 2002 (a plan of disposal of Friction
Materials was adopted in 2001; in January 2003, we entered into a letter of
intent to sell this business to Federal-Mogul Corp. We formally ended
negotiations to sell our Friction Materials business to Federal-Mogul Corp. and
reclassified the business from held for sale to held and used as of December 31,
2003--see Note 21). In 2002, we recognized asbestos related litigation charges
of $1,548 million principally related to costs associated with the potential
resolution of asbestos claims of NARCO (see Note 21). In 2002, we also
recognized other charges consisting of customer claims and settlements of
contract liabilities of $152 million and write-offs of receivables, inventories
and other assets of $60 million. These other charges related mainly to our
Advanced Circuits business, bankruptcy of a customer in our Aerospace reportable
segment, and customer claims in our Aerospace and Automation and Control
Solutions reportable segments. Additionally, we recognized other charges
consisting of other probable and reasonably estimable environmental liabilities
of $30 million and write-offs related to an other than temporary decline in the
value of certain equity investments of $15 million.
In 2001, we recognized other charges consisting of a settlement of the Litton
Systems, Inc. litigation for $440 million, other probable and reasonably
estimable legal and environmental liabilities of $249 million (see Note 21),
asbestos related litigation charges of $159 million (see Note 21), customer
claims and settlements of contract liabilities of $310 million and write-offs of
receivables, inventories and other assets of $335 million. Our Friction
Materials business was designated as held for disposal, and we recognized an
impairment charge of $145 million related to the write-down of property, plant
and equipment, goodwill and other identifiable intangible assets to their fair
value less costs to sell. We recognized charges of $112 million related to an
other than temporary decline in the value of an equity investment and an equity
investee's loss contract, and a $100 million charge for write-off of
investments, including inventory, related to a regional jet engine contract
cancellation. We also recognized $42 million of transaction expenses related to
the proposed merger with General Electric and redeemed our $200 million 5 3/4%
dealer remarketable securities due 2011, resulting in a loss of $6 million.
NOTE 4--GAIN (LOSS) ON SALE OF NON-STRATEGIC BUSINESSES
The following is a summary of non-strategic businesses sold:
Year Ended
December 31, 2003
-------------------------
Pretax After-tax
(Dollars in Millions) Gain (Loss) Gain (Loss)
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Specialty Materials--Engineering Plastics, Rudolstadt
and Metglas ........................................ $25 $(5)
Aerospace--Honeywell Aerospace Defense Services ....... 13 9
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$38 $ 4
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In 2003, we realized proceeds of approximately $137 million in cash on the sales
of these businesses. The sales of these businesses did not materially impact net
sales and segment profit in 2003 compared with 2002. The after-tax loss on the
sale of our Specialty Materials' businesses resulted mainly from tax benefits
associated with prior capital losses.
Year Ended
December 31, 2002
-------------------------
Pretax After-tax
(Dollars in Millions) Gain (Loss) Gain (Loss)
-----------------------------------------------------------------------------------
Automation and Control Solutions--Consumer Products ... $(131) $(10)
Specialty Materials--Advanced Circuits ................ (83) 18
Specialty Materials--Pharmaceutical Fine Chemicals
(PFC) .............................................. (35) 108
Transportation Systems--Bendix Commercial Vehicle
Systems (BCVS) ..................................... 125 79
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$(124) $195
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In 2002, we realized proceeds of approximately $435 million in cash and