Honeywell 2007 Annual Report Download - page 124

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HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
there are gaps in our coverage due to insurance company insolvencies, certain uninsured periods, and insurance
settlements, this rate is expected to decline for any future Bendix related asbestos liabilities that may be
recorded. Future recoverability rates may also be impacted by numerous other factors, such as future insurance
settlements, insolvencies and judicial determinations relevant to our coverage program, which are difficult to
predict. Assuming continued defense and indemnity spending at current 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, 2007 Year Ended December 31, 2006 Year Ended December 31, 2005
Bendix NARCO Total Bendix NARCO Total Bendix NARCO
Beginning of year $ 528 $ 1,291 $ 1,819 $ 287 $ 1,782 $ 2,069 $ 355 $ 2,395
Accrual for pending claims and
defense costs incurred 122 — 122 125 — 125 170 —
Accrual for estimated cost of future
claims — — — 335 — 335 — —
Reduction in estimated cost of future
claims (8) — (8 ) — (207 ) (207 ) — —
Asbestos related liability payments (115 ) (153 ) (268 ) (103 ) (316 ) (419 ) (153 ) (597 )
Settlement with plaintiff firms of certain
pending asbestos claims(1) — — — — 32 32 — (21 )
Update of expected resolution values
for pending claims (10 ) — (10) (118) — (118 ) (85 ) —
Other — — — 2 — 2 — 5
End of year $ 517 $ 1,138 $ 1,655 $ 528 $ 1,291 $ 1,819 $ 287 $ 1,782
(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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