Honeywell 2005 Annual Report Download - page 48

Our 2005 repositioning actions are expected to generate incremental pretax savings of approximately $170 million in 2006
compared with 2005 principally from planned workforce reductions. Cash expenditures for severance and other exit costs necessary to
execute our repositioning actions were $171, $164 and $200 million in 2005, 2004 and 2003, respectively. Such expenditures for
severance and other exit costs have been funded principally through operating cash flows. Cash expenditures for severance and other
exit costs necessary to execute the remaining actions will approximate $125 million in 2006 and will be funded principally through
operating cash flows.
In 2005, we recognized a charge of $186 million for environmental liabilities deemed probable and reasonably estimable. We
recognized asbestos related litigation charges, net of insurance, of $10 million which are discussed in detail in Note 21 of Notes to
Financial Statements in “Item 8. Financial Statements and Supplementary Data”. We recognized a credit of $67 million in connection
with an arbitration award for overcharges by a supplier of phenol to our Specialty Materials business from June 2003 through the end
of 2004. The arbitrator has also awarded Honeywell an additional $31 million of damages for overcharges in 2005, which has not been
recognized as the overcharges for the years 2005 forward are subject to a separate arbitration scheduled for April 2006. The existing
arbitration awards for 2003 to 2005 are subject to approval in federal court. We recognized impairment charges of $23 million related
to the write-down of property, plant and equipment held and used in our Research and Life Sciences business and the write-down of
property, plant and equipment held for sale in our Resins and Chemicals business, both in our Specialty Materials reportable segment.
We also recognized other charges of $18 million principally related to the modification of a lease agreement for the Corporate
headquarters facility ($10 million) and for various legal settlements ($7 million).
In 2004, we recognized a charge of $536 million for probable and reasonably estimable environmental liabilities primarily related
to the denial of our appeal of the matter entitled Interfaith Community Organization, et. al. v. Honeywell International Inc., et al., and
estimated liabilities for remediation of environmental conditions in and around Onondaga Lake in Syracuse, New York. Both of these
environmental matters are discussed in further detail in Note 21 of Notes to Financial Statements in “Item 8. Financial Statements and
Supplementary Data.” We recognized asbestos related litigation charges, net of insurance, of $76 million which are discussed in detail
in Note 21 of Notes to Financial Statements in “Item 8. Financial Statements and Supplementary Data”. We recognized an impairment
charge of $42 million in the second quarter of 2004 related principally to the write-down of property, plant and equipment of our
Performance Fibers business in our Specialty Materials reportable segment. This business was sold in December 2004. We also
recognized other charges of $33 million consisting of $29 million for various legal settlements including property damage claims in
our Automation and Control Solutions reportable segment, $14 million for the write-off of receivables, inventories and other assets net
of a reversal of a reserve of $10 million established in the prior year for a contract settlement.
In 2003, we recognized a charge of $235 million for probable and reasonably estimable environmental liabilities mainly related to
the matter entitled Interfaith Community Organization, et al. v. Honeywell International Inc., et al. and for remediation of
environmental conditions in and around Onondaga Lake in Syracuse, New York, both as discussed in Note 21 of Notes to Financial
Statements in “Item 8. Financial Statements and Supplementary Data.” We also recognized other charges of $30 million consisting of
$26 million for various legal settlements and $4 million in our Specialty Materials reportable segment including a loss on sale of an
investment owned by an equity investee.
The following tables provide details of the pretax impact of total net repositioning and other charges by reportable segment.
Aerospace
2005 2004 2003
(Dollars in millions)
Net repositioning charge $ 96 $ 5 $ 10
Other — (10) —
$ 96 $ (5) $ 10
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