Honeywell 2004 Annual Report Download - page 53

(3) These amounts are estimates of asbestos related cash payments for NARCO and Bendix. NARCO estimated payments are based
on the terms and conditions, including evidentiary requirements, specified in the definitive agreements or agreements in principle
and pursuant to Trust Distribution Procedures. Bendix payments are based on our estimate of pending claims. Projecting future
events is subject to many uncertainties that could cause asbestos liabilities to be higher or lower than those projected and
recorded. There is no assurance that NARCO or Bendix insurance recoveries will be timely, that a NARCO plan of
reorganization will be proposed or confirmed, or whether there will be any NARCO related asbestos claims beyond 2018. See
Asbestos Matters in Note 21 of Notes to Financial Statements in “Item 8. Financial Statements and Supplementary Data”.
(4) These amounts represent probable insurance recoveries through 2018. See Asbestos Matters in Note 21 of Notes to Financial
Statements in “Item 8. Financial Statements and Supplementary Data.”
The table excludes our pension and other postretirement benefits (OPEB) obligations. We made voluntary contributions of $40,
$670 and $830 million to our U.S. pension plans in 2004, 2003 and 2002, respectively. Future plan contributions are dependent upon
actual plan asset returns and interest rates. Assuming that actual plan asset returns are consistent with our expected plan return of 9
percent in 2005 and beyond, and that interest rates remain constant, we would not be required to make any contributions to our U.S.
pension plans for the foreseeable future. Payments due under our OPEB plans are not required to be funded in advance, but are paid as
medical costs are incurred by covered retiree populations, and are principally dependent upon the future cost of retiree medical
benefits under our plans. We expect our OPEB payments to approximate $208 million in 2005. See Note 22 of Notes to Financial
Statements in “Item 8. Financial Statements and Supplementary Data” for further discussion of our pension and OPEB plans.
Off-Balance Sheet Arrangements
Following is a summary of our off-balance sheet arrangements:
Guarantees—We have issued or are a party to the following direct and indirect guarantees at December 31, 2004:
Maximum
Potential
Future
Payments
(Dollars
in millions)
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 date of disposition. Such expected costs are accrued when
environmental assessments are made or remedial efforts are 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, 2004) 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
38