Honeywell 2005 Annual Report Download - page 108

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
(footnotes continued from previous page)
(2) In 2004, $47 million related to additional probable insurance recoveries identified in the second quarter of 2004 based on our
ongoing evaluation of the enforceability of our rights under the various insurance policies. In 2003, $155 million related to
additional probable insurance recoveries recognized in connection with the accrual for asbestos liabilities recorded upon the
termination of the transaction to sell our Friction Materials business.
NARCO and Bendix asbestos related balances are included in the following balance sheet accounts:
December 31,
2005 2004
Other current assets $ 171 $ 150
Insurance recoveries for asbestos related liabilities 1,302 1,412
$1,473 $1,562
Accrued liabilities $ 520 $ 744
Asbestos related liabilities 1,549 2,006
$2,069 $2,750
We are monitoring proposals for federal asbestos legislation pending in the United States Congress. Due to the uncertainty as to
whether proposed legislation will be adopted and as to the terms of any adopted legislation, it is not possible at this point in time to
determine what impact such legislation would have on our asbestos liabilities and related insurance recoveries.
Other Matters
Breed Technologies Inc. v. AlliedSignal—The plaintiff alleges fraud in connection with AlliedSignal's (a predecessor to the
Company) October 1997 sale of its safety restraints business to Breed and seeks compensatory damages of up to $375 million and
punitive damages. The trial commenced in January 2006 in Florida state court. We believe plaintiff's claims are without merit and
expect to prevail in this matter. Accordingly, we do not believe that a liability is probable of occurrence and reasonably estimable and
have not recorded a provision for this matter in our financial statements. Given the uncertainty inherent in litigation, it is not possible
to estimate the range of possible loss that might result from an adverse resolution of this matter.
Allen, et. al. v. Honeywell Retirement Earnings Plan—This represents a purported class action lawsuit in which plaintiffs seek
unspecified damages relating to allegations that, among other things, Honeywell impermissibly reduced the pension benefits of
employees of Garrett Corporation (a predecessor entity) when the plan was amended in 1983 and failed to calculate certain benefits in
accordance with the terms of the plan. In the third quarter of 2005, the U.S. District Court for the District of Arizona ruled in favor of
the plaintiffs on these claims and in favor of Honeywell on virtually all other claims. We strongly disagree with, and intend to appeal,
the Court's adverse ruling. No class has yet been certified by the Court in this matter. In light of the merits of our arguments on appeal
and substantial affirmative defenses which have not yet been considered by the Court, we continue to expect to prevail in this matter.
Accordingly, we do not believe that a liability is probable of occurrence and reasonably estimable and have not recorded a provision
for this matter in our financial statements. Given the uncertainty inherent in litigation, it is not possible to estimate the range of
possible loss that might result from an adverse resolution of this matter.
Although we expect to prevail in the Breed and Allen matters discussed above, an adverse outcome in either matter could have a
material adverse effect on our results of operations or operating
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