Honeywell 2004 Annual Report Download - page 101

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
an additional asbestos accrual was recorded to reflect our current estimate of the asbestos exposure, net of expected insurance
coverage.
Honeywell believes it has sufficient insurance coverage and reserves to cover all pending Bendix related asbestos claims.
Although it is impossible to predict the outcome of pending claims or to reasonably estimate losses which could arise from future
Bendix related asbestos claims, we do not believe that such claims would have a material adverse effect on our consolidated financial
position in light of our insurance coverage and our prior experience in resolving such claims. If the rate and types of claims filed, the
average indemnity cost of such claims and the period of time over which claim settlements are paid (collectively, the “Variable Claims
Factors”) do not substantially change, Honeywell would not expect future Bendix related asbestos claims to have a material adverse
effect on our results of operations or operating cash flows in any fiscal year. No assurances can be given, however, that the Variable
Claims Factors will not substantially change.
NARCO and Bendix asbestos related balances are included in the following balance sheet accounts:
December 31,
2004 2003
Other current assets $ 150 $ 130
Insurance recoveries for asbestos related liabilities 1,412 1,317
$1,562 $1,447
Accrued liabilities $ 744 $ 730
Asbestos related liabilities 2,006 2,279
$2,750 $3,009
During 2004, we paid $518 million in indemnity and defense costs related to NARCO and Bendix claims. Additionally, we
recognized charges totaling $76 million primarily for Bendix related asbestos claims filed and defense costs incurred during 2004, net
of probable insurance recoveries. The charges include an update of expected resolution values for pending Bendix claims and are net
of an additional $47 million of NARCO insurance deemed probable of recovery.
We are monitoring proposals for federal asbestos legislation pending in the United States Congress. Due to the uncertainty
surrounding the proposed legislation, it is not possible at this point in time to determine what impact such legislation would have on
the NARCO bankruptcy strategy or our asbestos liabilities and related insurance recoveries.
Warranties and Guarantees—We have issued or are a party to the following direct and indirect guarantees at December 31, 2004:
Maximum
Potential
Future
Payments
Operating lease residual values $ 47
Other third parties' financing 4
Unconsolidated affiliates' financing 7
Customer and vendor financing 35
$ 93
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
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