Honeywell 2004 Annual Report Download - page 47

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. The assets were reclassified from held for sale to held and used as of December 31, 2003 following the cessation of
negotiations to sell our Friction Materials business to Federal-Mogul Corp. At that time, no adjustment to the carrying value of
Friction Materials' assets was required based on a current reassessment of the fair value of those assets. Such reassessment of the fair
value of the property, plant and equipment was performed using discounted estimated future cash flows of the business. The fair value
approximated the written-down held for sale value and was also less than the carrying amount of the property, plant and equipment
prior to being classified as held for sale, adjusted for depreciation expense that would have otherwise been recognized had these assets
been classified as held and used (see Note 21 of Notes to Financial Statements in “Item 8. Financial Statements and Supplementary
Data” for further discussion). 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 of Notes to Financial Statements in “Item 8.
Financial Statements and Supplementary Data” for further discussion). 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.
The following tables provide details of the pretax impact of total net repositioning and other charges by reportable segment.
Aerospace
2004 2003 2002
(Dollars in millions)
Net repositioning charge $ 5 $ 10 $ 15
Customer claims and settlements of contract liabilities (10) — 99
Write-offs of receivables, inventories and other assets — — 21
Investment impairment charges — — 11
$ (5) $ 10 $ 146
Automation and Control Solutions
2004 2003 2002
(Dollars in millions)
Net repositioning charge $ 15 $ (22) $ 131
Other probable and reasonably estimable legal and environmental liabilities 13 — —
Business impairment charges — — 22
Customer claims and settlements of contract liabilities — — 42
Write-offs of receivables, inventories and other assets — — 17
$ 28 $ (22) $ 212
33