Honeywell 2005 Annual Report Download - page 237

on our consolidated results of operations and operating cash flows in the periods recognized or paid.
In accordance with a 1992 consent decree with the State of New York, Honeywell is studying environmental conditions in and around Onondaga Lake
(the Lake) in Syracuse, New York. The purpose of the study is to identify, evaluate and propose remedial measures that can be taken to remedy historic
industrial contamination in the Lake. A predecessor company to Honeywell operated a chemical plant which is alleged to have contributed mercury and other
contaminants to the Lake. In July 2005, the New York State Department of Environmental Conservation (the DEC) issued its Record of Decision with respect
to remediation of industrial contamination in the Lake.
The Record of Decision calls for a combined dredging/capping remedy generally in line with the approach recommended in the Feasibility Study
submitted by Honeywell in May 2004 (the May 2004 Feasibility Study). Although the Record of Decision calls for additional remediation in certain parts of
the Lake, it would not require the most extensive dredging alternatives described in the May 2004 Feasibility Study. The DEC's aggregate cost estimate is
based on the high end of the range of potential costs for major elements of the Record of Decision and includes a contingency. The actual cost of the Record
of Decision will depend upon, among other things, the resolution of certain technical issues during the design phase of the remediation.
Based on currently available information and analysis performed by our engineering consultants, we have accrued for our estimated cost of
implementing the remedy set forth in the Record of Decision. Our estimating process considered a range of possible outcomes and amounts recorded reflect
our best estimate at this time. We do not believe that this matter will have a material adverse impact on our consolidated financial position. Given the scope
and complexity of this project, it is possible that actual costs could exceed estimated costs by an amount that could have a material adverse impact on our
consolidated results of operations and operating cash flows in the periods recognized or paid. At this time, however, we cannot identify any legal, regulatory
or technical reason to conclude that a specific alternative outcome is more probable than the outcome for which we have made provisions in our financial
statements.
Asbestos Matters – Like many other industrial companies, Honeywell is a defendant in personal injury actions related to asbestos. We did not mine or
produce asbestos, nor did we make or sell insulation products or other construction materials that have been identified as the primary cause of asbestos related
disease in the vast majority of claimants. Products containing asbestos previously manufactured by Honeywell or by previously owned subsidiaries primarily
fall into two general categories; refractory products and friction products.
Refractory Products – Honeywell owned North American Refractories Company (NARCO) from 1979 to 1986. NARCO produced refractory products
(high temperature bricks and cement) which were sold largely to the steel industry in the East and Midwest. Less than 2 percent of NARCO's products
contained asbestos.
When we sold the NARCO business in 1986, we agreed to indemnify NARCO with respect to personal injury claims for products that had been
discontinued prior to the sale (as defined in the sale agreement). NARCO retained all liability for all other claims. NARCO had resolved approximately
176,000 claims through January 4, 2002, the date NARCO filed for
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