Honeywell 2006 Annual Report Download - page 114

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
of Environmental Quality (LADEQ) to resolve alleged civil environmental violations at our Baton Rouge and Geismar, Louisiana
facilities that, in part, overlap with the subject of the federal investigation.
Brunswick, GA—Honeywell has reached settlements with Glynn County, Georgia and with a group of private individuals who
own or owned properties near the Allied Chemical (a predecessor company) chlor-alkali plant, in Brunswick, Georgia in various
related cases. The plaintiffs had alleged that mercury and PCB discharges from the plant devalued their property, and caused them loss
of use and enjoyment of that property. They were seeking compensatory, injunctive and punitive damages. The settlement with Glynn
County was for $25 million and that amount has been paid. The settlement with the private property owners was also for $25 million
and the money has been placed into the plaintiffs' attorney trust account pending confirmation that none of the private landowners
have opted out of the settlement and allocation of the proceeds among the parties by a special master appointed by the court.
Honeywell and the private landowners will ask the court to confirm the settlement as final in a hearing set for April 6, 2007.
Allen, et, al. v. Honeywell Retirement Earnings Plan—This represents a class action lawsuit in which plaintiffs seek unspecified
damages relating to allegations that, among other things, Honeywell impermissibly reduced the pension benefits of employees of
Garrett Corporation (a predecessor entity) when the plan was amended in 1983 and failed to calculate certain benefits in accordance
with the terms of the plan. In the third quarter of 2005, the U.S. District Court for the District of Arizona ruled in favor of the plaintiffs
on these claims and in favor of Honeywell on virtually all other claims. We strongly disagree with, and intend to appeal, the Court's
adverse ruling. A class was certified by the Court in September 2006. In light of the merits of our arguments on appeal and our
substantial affirmative defenses which have not yet been considered by the Court, we continue to expect to prevail in this matter.
Accordingly, we do not believe that a liability is probable of occurrence and reasonably estimable and have not recorded a provision
for this matter in our financial statements. Given the uncertainty inherent in litigation and the wide range of potential remedies, it is
not possible to estimate the range of possible loss that might result from an adverse resolution of this matter. Although we expect to
prevail in this matter, an adverse outcome could have a material adverse effect on our results of operations or operating cash flows in
the periods recognized or paid. We do not believe that an adverse outcome in this matter would have a material adverse effect on our
consolidated financial position.
We are subject to a number of other lawsuits, investigations and disputes (some of which involve substantial amounts claimed)
arising out of the conduct of our business, including matters relating to commercial transactions, government contracts, product
liability, prior acquisitions and divestitures, employee benefit plans, and health and safety matters. We recognize a liability for any
contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments of
outcomes in these matters, as well as potential ranges of probable losses (taking into consideration any insurance recoveries), based on
a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts.
Given the uncertainty inherent in litigation, we do not believe it is possible to develop estimates of the range of reasonably
possible loss in excess of current accruals for these matters. Considering our past experience and existing accruals, we do not expect
the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our consolidated financial
position. Because most contingencies are resolved over long periods of time, potential liabilities are subject to change due to new
developments, changes in settlement strategy or the impact of evidentiary requirements, which could cause us to pay damage awards
or settlements (or become subject to equitable remedies) that could have a material adverse effect on our results of operations or
operating cash flows in the periods recognized or paid.
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