Honeywell 2015 Annual Report Download - page 30

based on a 10% weakening of the U.S. Dollar versus local currency exchange rates across all maturities at December 31,
2015 and 2014.
See Note 14 Financial Instruments and Fair Value Measures of Notes to Financial Statements for further discussion on
the agreements.
CRITICAL ACCOUNTING POLICIES
The preparation of our consolidated financial statements in accordance with generally accepted accounting principles is
based on the selection and application of accounting policies that require us to make significant estimates and assumptions
about the effects of matters that are inherently uncertain. We consider the accounting policies discussed below to be critical
to the understanding of our financial statements. Actual results could differ from our estimates and assumptions, and any
such differences could be material to our consolidated financial statements.
Contingent Liabilities—We are subject to a number of lawsuits, investigations and claims (some of which involve
substantial dollar amounts) that arise out of the conduct of our global business operations or those of previously owned
entities, including matters relating to commercial transactions, government contracts, product liability (including asbestos),
prior acquisitions and divestitures, employee benefit plans, intellectual property, and environmental, health and safety
matters. We continually assess the likelihood of any adverse judgments or outcomes to our contingencies, as well as
potential amounts or ranges of probable losses, and recognize a liability, if any, for these contingencies based on a careful
analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Such analysis includes
making judgments concerning matters such as the costs associated with environmental matters, the outcome of
negotiations, the number and cost of pending and future asbestos claims, and the impact of evidentiary requirements.
Because most contingencies are resolved over long periods of time, liabilities may change in the future due to new
developments (including new discovery of facts, changes in legislation and outcomes of similar cases through the judicial
system), changes in assumptions or changes in our settlement strategy. See Note 19 Commitments and Contingencies of
Notes to Financial Statements for a discussion of
27
Face or
Notional
Amount
Carrying
Value(1)
Fair
Value(1)
Estimated
Increase
(Decrease)
in Fair
Value(2)
December 31, 2015
Interest Rate Sensitive Instruments
Long-term debt (including current maturities)
$
6,131
$
(6,131
)
$
(6,721
)
$
(407
)
Interest rate swap agreements
1,100
92
92
(59
)
Foreign Exchange Rate Sensitive Instruments
Foreign currency exchange contracts(3)
10,538
11
11
(153
)
December 31, 2014
Interest Rate Sensitive Instruments
Long-term debt (including current maturities)
$
6,985
$
(6,985
)
$
(7,817
)
$
(478
)
Interest rate swap agreements
1,100
93
93
(69
)
Foreign Exchange Rate Sensitive Instruments
Foreign currency exchange contracts(3)
7,291
10
10
86
(1)
Asset or (liability).
(2)
A hypothetical immediate one percentage point decrease in interest rates across all maturities and a potential change
in fair value of foreign exchange rate sensitive instruments based on a 10% strengthening of the U.S. dollar versus
local currency exchange rates across all maturities will result in a change in fair value equal to the inverse of the
amount disclosed in the table.
(3)
Changes in the fair value of foreign currency exchange contracts are offset by changes in the fair value or cash flows
of underlying hedged foreign currency transactions.