Honeywell 2004 Annual Report Download - page 221

insurance programs. Based on our analysis, at June 30, 2004 we had amounts
receivable from our insurers of approximately $300 million representing probable
reimbursements associated with our liability for pending claims as well as
amounts due to us for previously settled and paid claims related to the
estimated liabilities for pending claims.
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.
Refractory and Friction Products -- NARCO and Bendix asbestos
related balances are included in the following balance sheet accounts:
June 30, December 31,
2004 2003
---- ----
Other current assets $ 145 $ 130
Insurance recoveries for asbestos related liabilities 1,401 1,317
----- -----
$1,546 $1,447
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Accrued liabilities $ 756 $ 730
----- -----
Asbestos related liabilities 2,096 2,279
----- -----
$2,852 $3,009
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During the first six months of 2004, we paid $323 million in
indemnity and defense costs related to NARCO and Bendix claims. Additionally, we
recognized a charge of $9 million for Bendix related asbestos claims filed and
defense costs incurred during the second quarter of 2004 including an update of
expected resolution values with respect to claims pending as of June 30, 2004.
The charge is net of probable Bendix related insurance recoveries and 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.
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