Honeywell 2009 Annual Report Download - page 61

corresponding amount recorded as Short-term borrowings in the Consolidated Balance Sheet. These short-term
borrowings were repaid as of December 31, 2009.
Environmental Matters
We are subject to various federal, state, local and foreign government requirements relating to the protection
of the environment. We believe that, as a general matter, our policies, practices and procedures are properly
designed to prevent unreasonable risk of environmental damage and personal injury and that our handling,
manufacture, use and disposal of hazardous substances are in accordance with environmental and safety laws
and regulations. However, mainly because of past operations and operations of predecessor companies, we, like
other companies engaged in similar businesses, have incurred remedial response and voluntary cleanup costs
for site contamination and are a party to lawsuits and claims associated with environmental and safety matters,
including past production of products containing hazardous substances. Additional lawsuits, claims and costs
involving environmental matters are likely to continue to arise in the future.
With respect to environmental matters involving site contamination, we continually conduct studies,
individually or jointly, with other potentially responsible parties, to determine the feasibility of various remedial
techniques to address environmental matters. It is our policy (see Note 1 to the financial statements) to record
appropriate liabilities for environmental matters when remedial efforts or damage claim payments are probable
and the costs can be reasonably estimated. Such liabilities are based on our best estimate of the undiscounted
future costs required to complete the remedial work. The recorded liabilities are adjusted periodically as
remediation efforts progress or as additional technical or legal information becomes available. Given the
uncertainties regarding the status of laws, regulations, enforcement policies, the impact of other potentially
responsible parties, technology and information related to individual sites, we do not believe it is possible to
develop an estimate of the range of reasonably possible environmental loss in excess of our recorded liabilities.
We expect to fund expenditures for these matters from operating cash flow. The timing of cash expenditures
depends on a number of factors, including the timing of litigation and settlements of remediation liability, personal
injury and property damage claims, regulatory approval of cleanup projects, execution timeframe of projects,
remedial techniques to be utilized and agreements with other parties.
Remedial response and voluntary cleanup payments were $318, $320 and $267 million in 2009, 2008 and
2007, respectively, and are currently estimated to be approximately $285 million in 2010. We expect to fund such
expenditures from operating cash flow.
Remedial response and voluntary cleanup costs charged against pretax earnings were $151, $466 and $230
million in 2009, 2008 and 2007, respectively. At December 31, 2009 and 2008, the recorded liabilities for
environmental matters was $779 and $946 million, respectively. In addition, in 2009 and 2008 we incurred
operating costs for ongoing businesses of approximately $73 and $69 million, respectively, relating to compliance
with environmental regulations.
Although we do not currently possess sufficient information to reasonably estimate the amounts of liabilities
to be recorded upon future completion of studies, litigation or settlements, and neither the timing nor the amount
of the ultimate costs associated with environmental matters can be determined, they could be material to our
consolidated results of operations or operating cash flows in the periods recognized or paid. However,
considering our past experience and existing reserves, we do not expect that environmental matters will have a
material adverse effect on our consolidated financial position.
See Note 21 to the financial statements for a discussion of our commitments and contingencies, including
those related to environmental matters and toxic tort litigation.
Financial Instruments
As a result of our global operating and financing activities, we are exposed to market risks from changes in
interest and foreign currency exchange rates and commodity prices, which may adversely affect our operating
results and financial position. We minimize our risks from interest and foreign currency exchange rate and
commodity price fluctuations through our normal operating and financing activities and, when deemed
appropriate, through the use of derivative financial instruments. We do
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