Honeywell 2012 Annual Report Download - page 111

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Warranties and Guarantees—We have issued or are a party to the following direct and indirect
guarantees at December 31, 2012:
Maximum Potential
Future Payments
Operating lease residual values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $51
Other third parties’ financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Unconsolidated affiliates’ financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Customer financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
$77
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:
2012 2011 2010
Years Ended
December 31,
Beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 402 $ 415 $ 407
Accruals for warranties/guarantees issued during the year . . . . . . . . . 196 197 214
Adjustment of pre-existing warranties/guarantees. . . . . . . . . . . . . . . . . . (20) (2) (13)
Settlement of warranty/guarantee claims . . . . . . . . . . . . . . . . . . . . . . . . . . (171) (208) (193)
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 407 $ 402 $ 415
Product warranties and product performance guarantees are included in the following balance
sheet accounts:
2012 2011
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $375 $367
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 35
$407 $402
102
HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)