Honeywell 2005 Annual Report Download - page 100

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
Note 21—Commitments and Contingencies
Environmental Matters
We are subject to various federal, state, local and foreign government requirements relating to the protection of the environment.
We believe that, as a general matter, our policies, practices and procedures are properly designed to prevent unreasonable risk of
environmental damage and personal injury and that our handling, manufacture, use and disposal of hazardous or toxic substances are
in accord with environmental and safety laws and regulations. However, mainly because of past operations and operations of
predecessor companies, we, like other companies engaged in similar businesses, have incurred remedial response and voluntary
cleanup costs for site contamination and are a party to lawsuits and claims associated with environmental and safety matters, including
past production of products containing toxic substances. Additional lawsuits, claims and costs involving environmental matters are
likely to continue to arise in the future.
With respect to environmental matters involving site contamination, we continually conduct studies, individually or jointly with
other potentially responsible parties, to determine the feasibility of various remedial techniques to address environmental matters. It is
our policy to record appropriate liabilities for environmental matters when remedial efforts or damage claim payments are probable
and the costs can be reasonably estimated. Such liabilities are based on our best estimate of the undiscounted future costs required to
complete the remedial work. The recorded liabilities are adjusted periodically as remediation efforts progress or as additional technical
or legal information becomes available. Given the uncertainties regarding the status of laws, regulations, enforcement policies, the
impact of other potentially responsible parties, technology and information related to individual sites, we do not believe it is possible
to develop an estimate of the range of reasonably possible environmental loss in excess of our accruals. We expect to fund
expenditures for these matters from operating cash flow. The timing of cash expenditures depends on a number of factors, including
the timing of litigation and settlements of remediation liability, personal injury and property damage claims, regulatory approval of
cleanup projects, remedial techniques to be utilized and agreements with other parties. The following table summarizes information
concerning our recorded undiscounted liabilities for environmental costs:
Years Ended
December 31,
2005 2004 2003
Beginning of year $ 895 $ 593 $435
Accruals for environmental matters deemed probable and reasonably estimable 186 536 235
Environmental liability payments (247) (248) (77)
Other adjustments(1) 45 14 —
End of year $ 879 $ 895 $593
(1) In 2005, $45 million principally relates to reclassification of the carrying value of land to property, plant and equipment with a
corresponding increase to environmental liabilities.
Environmental liabilities are included in the following balance sheet accounts:
December 31,
2005 2004
Accrued liabilities $237 $267
Other liabilities 642 628
$879 $895
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