Honeywell 2005 Annual Report Download - page 110

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
Years Ended December 31,
2005 2004 2003
Beginning of year $ 299 $ 275 $ 217
Accruals for warranties/guarantees issued during the year 203 236 215
Adjustment of pre-existing warranties/guarantees 17 1 35
Settlement of warranty/guarantee claims (172) (213) (192)
End of year $ 347 $ 299 $ 275
Product warranties and product performance guarantees are included in the following balance sheet accounts:
December 31,
2005 2004
Accrued liabilities $322 $270
Other liabilities 25 29
$347 $299
Note 22—Pension and Other Postretirement Benefits
We sponsor both funded and unfunded U.S. and non-U.S. defined benefit pension plans covering the majority of our employees
and retirees. Pension benefits for substantially all U.S. employees are provided through non-contributory, qualified and non-qualified
defined benefit pension plans. U.S. defined benefit pension plans comprise 79 percent of our projected benefit obligation. Non-U.S.
employees, who are not U.S. citizens, are covered by various retirement benefit arrangements, some of which are considered to be
defined benefit pension plans for accounting purposes. Non-U.S. defined benefit pension plans comprise 21 percent of our projected
benefit obligation.
We also sponsor postretirement benefit plans that provide health care benefits and life insurance coverage to eligible retirees. Our
retiree medical plans mainly cover U.S. employees who retire with pension eligibility for hospital, professional and other medical
services. All non-union hourly and salaried employees joining Honeywell after January 1, 2000 are not eligible to participate in our
retiree medical and life insurance plans. Most of the U.S. retiree medical plans require deductibles and copayments, and virtually all
are integrated with Medicare. Retiree contributions are generally required based on coverage type, plan and Medicare eligibility.
Honeywell has limited its subsidy of its retiree medical plans to a fixed-dollar amount for substantially all future retirees and for
almost half of its current retirees. This cap of retiree medical benefits under our plans limits our exposure to the impact of future health
care cost increases. The retiree medical and life insurance plans are not funded. Claims and expenses are paid from our operating cash
flow.
82