Honeywell 2008 Annual Report Download - page 129

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
licenses. In December 2008, the U.S. Department of State notified Honeywell that it had completed its review of
this matter without imposition of fines or penalties.
Given the uncertainty inherent in litigation and investigations (including the specific matters referenced
above), we do not believe it is possible to develop estimates 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.
Warranties and Guarantees—We have issued or are a party to the following direct and indirect guarantees
at December 31, 2008:
Maximum
Potential
Future
Payments
Operating lease residual values $ 39
Other third parties' financing 4
Unconsolidated affiliates' financing 3
Customer financing 16
$ 62
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,
2008 2007 2006
Beginning of year $ 396 $ 363 $ 347
Accruals for warranties/guarantees issued during the year 242 233 268
Adjustment of pre-existing warranties/guarantees (34) 3 (22)
Settlement of warranty/guarantee claims (187) (203) (230)
End of year $ 417 $ 396 $ 363
Product warranties and product performance guarantees are included in the following balance sheet
accounts:
2008 2007
Accrued liabilities $ 385 $ 380
Other liabilities 32 16
$ 417 $ 396