Honeywell 2005 Annual Report Download - page 78

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
The following table summarizes the status of our total repositioning costs.
Severance
Costs Asset Impairments Exit Costs Total
Balance at December 31, 2002 $ 325 $ — $ 81 $ 406
2003 charges 69 6 7 82
2003 usage (166) (6) (34) (206)
Adjustments (57) — (12) (69)
Balance at December 31, 2003 171 — 42 213
2004 charges 85 21 10 116
2004 usage (138) (21) (26) (185)
Adjustments (21) — (7) (28)
Balance at December 31, 2004 97 — 19 116
2005 charges 248 5 14 267
2005 usage (156) (5) (15) (176)
Adjustments (21) — (4) (25)
Balance at December 31, 2005 $ 168 $ — $ 14 $ 182
In 2005, we recognized a charge of $186 million for environmental liabilities deemed probable and reasonably estimable during
the year. We recognized asbestos related litigation charges, net of insurance, of $10 million which are discussed in detail in Note 21.
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. We recognized asbestos related litigation charges, net of insurance, of
$76 million which are discussed in detail in Note 21. 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. We also recognized
other charges of $30 million consisting of $26 million for various legal settlements and $4 million in our
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