Honeywell 2006 Annual Report Download - page 103

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
are a party to lawsuits and claims associated with environmental and safety matters, including past production of products containing
toxic substances. Additional lawsuits, claims and costs involving environmental matters are likely to continue to arise in the future.
With respect to environmental matters involving site contamination, we continually conduct studies, individually or jointly with other
potentially responsible parties, to determine the feasibility of various remedial techniques to address environmental matters. It is our
policy to record appropriate liabilities for environmental matters when remedial efforts or damage claim payments are probable and
the costs can be reasonably estimated. Such liabilities are based on our best estimate of the undiscounted future costs required to
complete the remedial work. The recorded liabilities are adjusted periodically as remediation efforts progress or as additional technical
or legal information becomes available. Given the uncertainties regarding the status of laws, regulations, enforcement policies, the
impact of other potentially responsible parties, technology and information related to individual sites, we do not believe it is possible
to develop an estimate of the range of reasonably possible environmental loss in excess of our accruals. We expect to fund
expenditures for these matters from operating cash flow. The timing of cash expenditures depends on a number of factors, including
the timing of remedial investigations and feasibility studies, the timing of litigation and settlements of remediation liability, personal
injury and property damage claims, regulatory approval of cleanup projects, remedial techniques to be utilized and agreements with
other parties. The following table summarizes information concerning our recorded liabilities for environmental costs:
Years Ended
December 31,
2006 2005 2004
Beginning of year $ 879 $ 895 $ 593
Accruals for environmental matters deemed probable and reasonably estimable 218 186 536
Environmental liability payments (264) (247) (248)
Other adjustments(1) (2) 45 14
End of year $ 831 $ 879 $ 895
(1) In 2005, $45 million principally relates to reclassification of the carrying value of land to property, plant and equipment with a
corresponding increase to environmental liabilities.
Environmental liabilities are included in the following balance sheet accounts:
December 31,
2006 2005
Accrued liabilities $251 $237
Other liabilities 580 642
$831 $879
Although we do not currently possess sufficient information to reasonably estimate the amounts of liabilities to be recorded upon
future completion of studies, litigation or settlements, and neither the timing nor the amount of the ultimate costs associated with
environmental matters can be determined, they could be material to our consolidated results of operations or operating cash flows in
the periods recognized or paid. However, considering our past experience and existing reserves, we do not expect that these
environmental matters will have a material adverse effect on our consolidated financial position.
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