8-KRegulation FDExhibits & Filings

HONEYWELL INTERNATIONAL INC 8-K Report, Regulation FD Disclosure (Aug 23, 2018)

Filed August 23, 2018For Securities:HONHONIV

Summary

Honeywell International Inc. (HON) has filed an 8-K report detailing revisions to its accounting for legacy Bendix asbestos liabilities. Following discussions with the SEC Staff regarding the accounting for unasserted asbestos claims related to its Transportation Systems business spin-off (Garrett Motion Inc.), Honeywell revised its accrual methodology. Previously, the company applied a five-year time horizon for estimating these liabilities; the new approach extends this to the full term of epidemiological projections through 2059. While this revision is considered immaterial to prior period financial statements, it is expected to have an immaterial positive impact on Honeywell's full-year 2018 earnings per share, with no material impact on operating income, net sales, segment margin, or operating cash flow.

Key Highlights

  • 1Honeywell is revising its accounting for legacy Bendix asbestos-related liabilities.
  • 2The SEC Staff raised comments regarding the accounting for unasserted asbestos claims, applicable to both Garrett Motion Inc. and Honeywell.
  • 3The company will now accrue for unasserted asbestos claims over the full term of epidemiological projections (through 2059), instead of a previous five-year horizon.
  • 4This accounting change is deemed immaterial to prior period financial statements but will be reflected in future filings.
  • 5An immaterial positive impact on full-year 2018 EPS is anticipated.
  • 6There is no material impact expected on operating income, net sales, segment margin, or operating cash flow.
  • 7The company concluded no change is required for its NARCO-related asbestos liability estimate.

Frequently Asked Questions

This 8-K filing is primarily to disclose that Honeywell is revising its accounting for legacy Bendix asbestos-related liabilities due to comments from the SEC Staff regarding the estimation of unasserted claims. This revision is being made in conjunction with the planned spin-off of its Transportation Systems business, Garrett Motion Inc.

Previously, Honeywell used a five-year time horizon to estimate accruals for unasserted Bendix asbestos claims. The revised accounting will extend this estimation period to the full term of epidemiological projections, through 2059, to better reflect the long-term nature of these liabilities and improve comparability with peers.

The company has assessed the revision as immaterial to prior financial statements. However, it is expected to have an immaterial positive impact on Honeywell's full-year 2018 earnings per share. Operating income, net sales, segment margin, and operating cash flow are not expected to be materially impacted.

No, Honeywell received a comment from the SEC Staff regarding its NARCO-related asbestos liability estimate but has concluded its review and determined that no change to that specific estimate is required for any previously reported period.