Honeywell 2007 Annual Report Download - page 97
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HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
Trade Accounts Receivable includes $946 and $808 million of unbilled balances under long-term contracts
as of December 31, 2007 and 2006, respectively. These amounts are billed in accordance with the terms of the
customer contracts to which they relate.
We sell interests in designated pools of trade accounts receivables to third parties. The sold receivables are
over-collateralized by $101 million at December 31, 2007 and we retain a subordinated interest in the pool of
receivables representing that over-collateralization as well as an undivided interest in the balance of the
receivables pools. New receivables are sold under the agreement as previously sold receivables are collected.
Losses are recognized when our interest in the receivables are sold. The retained interests in the receivables are
shown at the amounts expected to be collected by us, and such carrying value approximates the fair value of our
retained interests. We are compensated for our services in the collection and administration of the receivables.
December 31,
2007 2006
Designated pools of trade receivables $ 1,322 $ 1,250
Interest sold to third parties (500) (500)
Retained interest $ 822 $ 750
Losses on sales of receivables were $29, $27 and $18 million in 2007, 2006 and 2005, respectively. No
credit losses were incurred during those years.
Note 9—Inventories
December 31,
2007 2006
Raw materials $ 1,692 $ 1,625
Work in process 870 808
Finished products 1,501 1,342
4,063 3,775
Less—
Progress payments (3) (17)
Reduction to LIFO cost basis (199) (170)
$ 3,861 $ 3,588
Inventories valued at LIFO amounted to $247 and $205 million at December 31, 2007 and 2006,
respectively. Had such LIFO inventories been valued at current costs, their carrying values would have been
approximately $199 and $170 million higher at December 31, 2007 and 2006, respectively.
Note 10—Investments and Long-Term Receivables
December 31,
2007 2006
Investments $ 40 $ 49
Long-term trade and other receivables 223 206
Long-term financing receivables 237 127
$ 500 $ 382
Long-Term Trade and Other Receivables includes $63 and $68 million of unbilled balances under long-term
contracts as of December 31, 2007 and 2006, respectively. These amounts are billed in accordance with the
terms of the customer contracts to which they relate.