Honeywell 2013 Annual Report Download - page 102

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2013 2012
December 31,
Assets:
Foreign currency exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20 $ 52
Available for sale investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 826 518
Interest rate swap agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 146
Forward commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1
Liabilities:
Foreign currency exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27 $ 32
Interest rate swap agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 —
Forward commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1
The foreign currency exchange contracts, interest rate swap agreements, and forward commodity
contracts are valued using broker quotations, or market transactions in either the listed or over-the-
counter markets. As such, these derivative instruments are classified within level 2. The Company
holds investments in marketable equity securities that are designated as available for sale and are
valued using quoted market prices. As such, these investments are classified within level 1. The
Company also holds investments in commercial paper, certificates of deposits, and time deposits that
are designated as available for sale and are valued using market transactions in over-the-counter
markets. As such, these investments are classified within level 2.
The carrying value of cash and cash equivalents, trade accounts and notes receivables, payables,
commercial paper and short-term borrowings contained in the Consolidated Balance Sheet
approximates fair value. The following table sets forth the Company’s financial assets and liabilities
that were not carried at fair value:
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
December 31, 2013 December 31, 2012
Assets
Long-term receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250 $ 245 $ 199 $ 200
Liabilities
Long-term debt and related current maturities. . . . . . . . . . . $7,433 $8,066 $7,020 $8,152
The Company determined the fair value of the long term receivables by discounting based upon
the terms of the receivable and counterparty details including credit quality. As such, the fair value of
these receivables is considered level 2. The Company determined the fair value of the long-term debt
and related current maturities utilizing transactions in the listed markets for identical or similar liabilities.
As such, the fair value of the long-term debt and related current maturities is considered level 2 as
well.
At December 31, 2013, the Company had nonfinancial assets, principally property, plant and
equipment, with a net book value of $244 million, which were accounted for at fair value on a
nonrecurring basis. These assets were tested for impairment and based on the fair value of these
assets the Company recognized losses of $72 million in the year ended December 31, 2013, primarily
in connection with our repositioning actions (see Note 3 Repositioning and Other Charges) and the
pending divestiture of the Friction Materials business within our Transportation Systems segment. At
December 31, 2012, the Company had nonfinancial assets, principally property, plant and equipment
and intangible assets, with a net book value of $22 million, which were accounted for at fair value on a
nonrecurring basis. These assets were tested for impairment and based on the fair value of these
assets the Company recognized losses of $22 million in the year ended December 31, 2012, primarily
in connection with our repositioning actions (see Note 3 Repositioning and Other Charges). The
Company has determined that the fair value measurements of these nonfinancial assets are level 3 in
the fair value hierarchy. The Company utilizes the market, income or cost approaches or a combination
90
HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)