Honeywell 2013 Annual Report Download - page 103

Download and view the complete annual report

Please find page 103 of the 2013 Honeywell annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 146

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146

of these valuation techniques for its non-recurring level 3 fair value measures. Inputs to such measures
include observable market data obtained from independent sources such as broker quotes and recent
market transactions for similar assets. It is the Company’s policy to maximize the use of observable
inputs in the measurement of fair value or non-recurring level 3 measurements. To the extent
observable inputs are not available the Company utilizes unobservable inputs based upon the
assumptions market participants would use in valuing the asset. Examples of utilized unobservable
inputs are future cash flows, long term growth rates and applicable discount rates.
We enter into transactions that are subject to arrangements designed to provide for netting of
offsetting obligations in the event of the insolvency or default of a counterparty. However, we have not
elected to offset multiple contracts with a single counterparty, therefore the fair value of the derivative
instruments in a loss position is not offset against the fair value of derivative instruments in a gain
position. The derivatives utilized for risk management purposes as detailed above are included on the
Consolidated Balance Sheet and impacted the Statement of Operations as follows:
Fair value of derivatives classified as assets consist of the following:
Designated as a Hedge Balance Sheet Classification 2013 2012
December 31,
Foreign currency exchange contracts . . . . . . . . . Accounts, notes, and other receivables . . . . . . . $16 $ 37
Interest rate swap agreements . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 146
Forward commodity contracts . . . . . . . . . . . . . . . . Accounts, notes, and other receivables . . . . . . . — 1
Not Designated as a Hedge Balance Sheet Classification 2013 2012
December 31,
Foreign currency exchange contracts . . . . . . . . . Accounts, notes, and other receivables . . . . . . . $4 $15
Fair value of derivatives classified as liabilities consist of the following:
Designated as a Hedge Balance Sheet Classification 2013 2012
December 31,
Foreign currency exchange contracts . . . . . . . . . Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23 $29
Interest rate swap agreements . . . . . . . . . . . . . . . Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 —
Forward commodity contracts . . . . . . . . . . . . . . . . Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1
Not Designated as a Hedge Balance Sheet Classification 2013 2012
December 31,
Foreign currency exchange contracts . . . . . . . . . Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4 $3
Gains (losses) recognized in other comprehensive income (effective portions) consist of the
following:
Designated Cash Flow Hedge 2013 2012
Years Ended
December 31,
Foreign currency exchange contracts . . $(37) $31
Forward commodity contracts . . . . . . . . . (1) (8)
Gains (losses) reclassified from AOCI to income consist of the following:
Designated Cash Flow Hedge Income Statement Location 2013 2012
Years Ended
December 31,
Foreign currency exchange contracts . . . . . . . . . Product sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (7) $ (7)
Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . (4) 23
Sales & general administrative . . . . . . . . . . . . . . . (11) (12)
Forward commodity contracts . . . . . . . . . . . . . . . . Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . $ (1) $(17)
91
HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)