Honeywell 2006 Annual Report Download - page 111

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
levels, we estimate that the cumulative recoverability rate could decline over the next five years to approximately 40 percent.
Honeywell believes it has sufficient insurance coverage and reserves to cover all pending Bendix related asbestos claims and
Bendix related asbestos claims estimated to be filed within the next five years. Although it is impossible to predict the outcome of
either pending or future Bendix related asbestos claims, we do not believe that such claims would have a material adverse effect on
our consolidated financial position in light of our insurance coverage and our prior experience in resolving such claims. If the rate and
types of claims filed, the average resolution value of such claims and the period of time over which claim settlements are paid
(collectively, the “Variable Claims Factors”) do not substantially change, Honeywell would not expect future Bendix related asbestos
claims to have a material adverse effect on our results of operations or operating cash flows in any fiscal year. No assurances can be
given, however, that the Variable Claims Factors will not change.
Refractory and Friction Products—The following tables summarize information concerning NARCO and Bendix asbestos related
balances:
Asbestos Related Liabilities
Year Ended December 31, 2006 Year Ended December 31, 2005 Year Ended December 31, 2004
Bendix NARCO Total Bendix NARCO Total Bendix NARCO Total
Beginning of year $ 287 $ 1,782 $ 2,069 $ 355 $ 2,395 $ 2,750 $ 249 $ 2,760 $ 3,009
Accrual for claims filed and defense costs incurred 125 — 125 170 — 170 186 — 186
Accrual for estimated cost of future claims 335 — 335 — — — — — —
Reduction in estimated cost of future claims — (207) (207) — — — — — —
Asbestos related liability payments (103) (316) (419) (153) (597) (750) (153) (365) (518)
Settlement with plaintiff firms of certain pending
asbestos claims(1) — 32 32 — (21) (21) — — —
Update of expected resolution values for pending
claims (118) — (118) (85) — (85) 73 — 73
Other 2 — 2 — 5 5 — — —
End of year $ 528 $ 1,291 $ 1,819 $ 287 $ 1,782 $ 2,069 $ 355 $ 2,395 $ 2,750
(1) In 2006, charge of $32 million reflects a settlement of certain pending asbestos claims. In 2005, consists of a charge of $52 million
to reflect a settlement of certain pending asbestos claims during the year and a credit of $73 million related to a re-estimation of
asbestos reserves in connection with an additional settlement.
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