Honeywell 2008 Annual Report Download - page 121

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
consolidated financial position or operating cash flows. Given the scope and complexity of this project, it is
possible that the cost of remediation, when determinable, could have a material adverse impact on our results of
operations in the periods recognized.
Onondaga Lake, Syracuse, NY—A predecessor company to Honeywell operated a chemical plant which is
alleged to have contributed mercury and other contaminants to the Lake. In July 2005, the New York State
Department of Environmental Conservation (the DEC) issued its Record of Decision (ROD) with respect to
remediation of industrial contamination in the Lake. In January 2007, a Consent Decree was approved by the
United States District Court for the Northern District of New York for the implementation of the combined
dredging/capping remedy set forth in the ROD. We have accrued for our estimated cost of implementing the
remedy set forth in the ROD based on current available information and analysis performed by our engineering
consultants.
In December 2006, the United States Fish and Wildlife Service published notice of its intent to pursue natural
resource damages related to the site. It is not possible to predict the outcome or timing of its assessments, which
are typically lengthy processes lasting several years, or the amounts of or responsibility for these damages.
Honeywell is also conducting remedial investigations and activities at other sites in Syracuse, New York. We
have recorded reserves for these investigations and activities where appropriate under the accounting policy
described above.
Asbestos Matters
Like many other industrial companies, Honeywell is a defendant in personal injury actions related to
asbestos. We did not mine or produce asbestos, nor did we make or sell insulation products or other construction
materials that have been identified as the primary cause of asbestos related disease in the vast majority of
claimants. Products containing asbestos previously manufactured by Honeywell or by previously owned
subsidiaries primarily fall into two general categories: refractory products and friction products.
Refractory Products—Honeywell owned North American Refractories Company (NARCO) from 1979 to
1986. NARCO produced refractory products (high temperature bricks and cement) that were sold largely to the
steel industry in the East and Midwest. Less than 2 percent of NARCO'S products contained asbestos.
When we sold the NARCO business in 1986, we agreed to indemnify NARCO with respect to personal injury
claims for products that had been discontinued prior to the sale (as defined in the sale agreement). NARCO
retained all liability for all other claims. On January 4, 2002, NARCO filed for reorganization under Chapter 11 of
the U.S. Bankruptcy Code.
As a result of the NARCO bankruptcy filing, all of the claims pending against NARCO are automatically
stayed pending the reorganization of NARCO. In addition, the bankruptcy court enjoined both the filing and
prosecution of NARCO-related asbestos claims against Honeywell. The stay has remained in effect continuously
since January 4, 2002. In connection with NARCO's bankruptcy filing, we paid NARCO's parent company $40
million and agreed to provide NARCO with up to $20 million in financing. We also agreed to pay $20 million to
NARCO's parent company upon the filing of a plan of reorganization for NARCO acceptable to Honeywell (which
amount was paid in December 2005 following the filing of NARCO's Third Amended Plan of Reorganization), and
to pay NARCO's parent company $40 million, and to forgive any outstanding NARCO indebtedness to
Honeywell, upon the effective date of the plan of reorganization.
We believe that, as part of the NARCO plan of reorganization, a trust will be established for the benefit of all
asbestos claimants, current and future, pursuant to Trust Distribution Procedures negotiated with the NARCO
Asbestos Claimants Committee and the Court-appointed legal representative for future asbestos claimants. If the
trust is put in place and approved by the Court
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