Summary
Honeywell International Inc. (HON) filed an 8-K on October 19, 2018, to report significant accounting revisions impacting its historical financial statements. The company corrected its accounting for legacy Bendix asbestos-related liabilities, extending the accrual period for unasserted claims from five years to the full epidemiological projection through 2059. This change has been applied retrospectively, meaning previously issued financial statements have been revised. Additionally, Honeywell adopted new accounting guidance for the presentation of net periodic pension costs effective January 1, 2018. While service cost components remain within Cost of products and service sold and SG&A expenses, other components like interest costs and assumed return on plan assets are now reported in Other (income) expense. Prior year amounts have been reclassified for comparability. Investors should refer to Exhibit 99 accompanying this filing for the precise impact of these revisions on the company's balance sheets and statements of operations.
Key Highlights
- 1Company corrected accounting for legacy Bendix asbestos-related liabilities, extending accrual period for unasserted claims to 2059 from previous five-year horizon.
- 2The accounting revision for asbestos liabilities has been applied retrospectively, requiring restatement of previously issued financial statements.
- 3Honeywell adopted new accounting guidance for presentation of net periodic pension costs effective January 1, 2018.
- 4Under the new pension accounting, service cost component remains in Cost of Products and Service Sold and SG&A.
- 5Other components of net benefit costs (primarily interest and return on plan assets) for pensions are now recorded in Other (income) expense.
- 6Prior year pension expense amounts have been reclassified for better comparability with the new presentation.
- 7Exhibit 99, filed with the 8-K, provides detailed historical financial statements reflecting these revisions.