Honeywell 2006 Annual Report Download - page 115

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
Warranties and Guarantees—We have issued or are a party to the following direct and indirect guarantees at December 31, 2006:
Maximum
Potential
Future
Payments
Operating lease residual values $ 38
Other third parties' financing 6
Unconsolidated affiliates' financing 9
Customer financing 22
$ 75
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.
In the normal course of business we issue product warranties and product performance guarantees. We accrue for the estimated
cost of product warranties and performance guarantees based on contract terms and historical experience at the time of sale.
Adjustments to initial obligations for warranties and guarantees are made as changes in the obligations become reasonably estimable.
The following table summarizes information concerning our recorded obligations for product warranties and product performance
guarantees:
Years Ended December 31,
2006 2005 2004
Beginning of year $ 347 $ 299 $ 275
Accruals for warranties/guarantees issued during the year 268 203 236
Adjustment of pre-existing warranties/guarantees (22) 17 1
Settlement of warranty/guarantee claims (230) (172) (213)
End of year $ 363 $ 347 $ 299
Product warranties and product performance guarantees are included in the following balance sheet accounts:
December 31,
2006 2005
Accrued liabilities $347 $322
Other liabilities 16 25
$363 $347
Note 22—Pension and Other Postretirement Benefits
We sponsor both funded and unfunded U.S. and non-U.S. defined benefit pension plans covering the majority of our employees
and retirees. Pension benefits for substantially all U.S. employees are provided through non-contributory, qualified and non-qualified
defined benefit pension plans. U.S. defined benefit pension plans comprise 74 percent of our projected benefit obligation. Non-U.S.
employees, who are not U.S. citizens, are covered by various retirement benefit arrangements, some of which are considered to be
defined benefit pension plans for accounting purposes. Non-U.S. defined benefit pension plans comprise 26 percent of our projected
benefit obligation.
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