Honeywell 2005 Annual Report Download - page 55

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events is subject to many uncertainties that could cause asbestos liabilities to be higher or lower than those projected and
recorded. See Asbestos Matters in Note 21 of Notes to Financial Statements in “Item 8. Financial Statements and Supplementary
Data”.
(4) These amounts represent probable insurance recoveries through 2018. See Asbestos Matters in Note 21 of Notes to Financial
Statements in “Item 8. Financial Statements and Supplementary Data.”
The table excludes our pension and other postretirement benefits (OPEB) obligations. We made voluntary contributions of $40 and
$670 million to our U.S. pension plans in 2004 and 2003, respectively. Future plan contributions are dependent upon actual plan asset
returns and interest rates. Assuming that actual plan asset returns are consistent with our expected plan return of 9 percent in 2006 and
beyond, and that interest rates remain constant, we would not be required to make any contributions to our U.S. pension plans to
satisfy minimum statutory funding requirements for the foreseeable future. We expect to make voluntary contributions of
approximately $45 million to our U.S. plans in 2006. We expect to make contributions to our non-U.S. plans of approximately $150
million in 2006. Payments due under our OPEB plans are not required to be funded in advance, but are paid as medical costs are
incurred by covered retiree populations, and are principally dependent upon the future cost of retiree medical benefits under our plans.
We expect our OPEB payments to approximate $186 million in 2006 including the benefit of approximately $19 million from the
Medicare prescription subsidy. See Note 22 of Notes to Financial Statements in “Item 8. Financial Statements and Supplementary
Data” for further discussion of our pension and OPEB plans.
Off-Balance Sheet Arrangements
Following is a summary of our off-balance sheet arrangements:
Guarantees—We have issued or are a party to the following direct and indirect guarantees at December 31, 2005:
Maximum
Potential
Future
Payments
(Dollars
in millions)
Operating lease residual values $ 37
Other third parties' financing 11
Unconsolidated affiliates' financing 25
Customer financing 34
$ 107
We do not expect that these guarantees will have a material adverse effect on our consolidated results of operations, financial
position or liquidity.
In connection with the disposition of certain businesses and facilities we have indemnified the purchasers for the expected cost of
remediation of environmental contamination, if any, existing on the date of disposition. Such expected costs are accrued when
environmental assessments are made or remedial efforts are probable and the costs can be reasonably estimated.
Retained Interests in Factored Pools of Trade Accounts Receivables—As a source of liquidity, we sell interests in designated
pools of trade accounts receivables to third parties. The sold receivables ($500 million at December 31, 2005) are over-collateralized
and we retain a subordinated interest in the pool of receivables representing that over-collateralization as well as an undivided interest
in the balance of the receivables pools. The over-collateralization provides credit support to the purchasers of the receivable interest by
limiting their losses in the event that a portion of the receivables sold becomes uncollectible. At December 31, 2005, our retained
subordinated and undivided interests at risk were $178 and $573 million, respectively. Based on the underlying credit quality of the
receivables placed into the designated pools of receivables being sold, we do not expect
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