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HONEYWELL INTERNATIONAL INC - Annual Report: 2023 (Form 10-K)

Other ()()Net cash used for financing activities()()()Effect of foreign exchange rate changes on cash and cash equivalents ()()Net decrease in cash and cash equivalents()()()Cash and cash equivalents at beginning of period   Cash and cash equivalents at end of period$ $ $ 


The Notes to Consolidated Financial Statements are an integral part of this statement.

57    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF SHAREOWNERS’ EQUITY
 Years Ended December 31,
202320222021
Shares$Shares$Shares$
 (In millions, except per share amounts)
Common stock, par value      
Additional paid-in capital
Beginning balance   
Issued for employee savings and option plans   
Stock compensation expense   
Impact of Quantinuum contribution
   
Ending balance   
Treasury stock
Beginning balance()()()()()()
Reacquired stock or repurchases of common stock()()()()()()
Issued for employee savings and option plans      
Ending balance()()()()()()
Retained earnings
Beginning balance   
Net income attributable to Honeywell   
Dividends on common stock()()()
Ending balance   
Accumulated other comprehensive income (loss)
Beginning balance()()()
Foreign exchange translation adjustment()() 
Pension and other postretirement benefit adjustments()() 
Changes in fair value of available for sale investments ()()
Changes in fair value of cash flow hedges  ()
Ending balance()()()
Noncontrolling interest
Beginning balance   
Acquisitions, divestitures, and other()  
Net income attributable to noncontrolling interest   
Foreign exchange translation adjustment()()()
Dividends paid()()()
Contributions from noncontrolling interest holders   
Ending balance   
Total shareowners’ equity      
Cash dividends per share of common stock$ $ $ 




The Notes to Consolidated Financial Statements are an integral part of this statement.

58    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in millions, except per share amounts)
NOTE 1.
59    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
million, $ million, and $ million for the years ended December 31, 2023, 2022, and 2021, respectively. Costs related to contracts with customers for customer-sponsored research and development projects are included as a contract cost and included in Cost of products and services sold when revenue from such contracts is recognized, consistent with the Company's sales recognition policies. This revenue was $ million, $ million, and $ million for the years ended December 31, 2023, 2022, and 2021, respectively.
to years for buildings and improvements and to years for machinery and equipment. Recognition of the fair value of obligations associated with the retirement of tangible long-lived assets is required when there is a legal obligation to incur such costs. Upon initial recognition of a liability, the cost is capitalized as part of the related long-lived asset and depreciated over the corresponding asset’s useful life.
60    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
to years. years. Costs incurred during the preliminary and post-implementation stages are expensed as incurred. Development costs for software held for sale are capitalized once a project has reached the point of technological feasibility. Completed projects are amortized after reaching the point of general availability using the straight-line method based on the expected useful life, not to exceed 7 years. At each balance sheet date, or earlier if an indicator of an impairment exists, the Company evaluates the recoverability of unamortized capitalized software costs based on estimated future undiscounted revenues net of estimated related costs over the remaining amortization period. Capitalized software held for internal use and held for sale is included in Other assets in the Consolidated Balance Sheet.
61    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
Amounts outstanding related to SCF programs are included in Accounts payable in the Consolidated Balance Sheet. Accounts payable included approximately $ million and $ million as of December 31, 2023, and 2022, respectively. The impact of these programs is not material to the Company's overall liquidity.
62    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
billion and $ billion as of December 31, 2023, and 2022, respectively. The amounts recognized as Cost of products and services sold were approximately $ billion for the year ended December 31, 2023, and $ billion and $ billion for 2022 and 2021, respectively.
Revenues for the Company's mechanical service programs are recognized as performance obligations that are satisfied over time, with recognition reflecting a series of distinct services using the output method.
The terms of a contract or the historical business practice can give rise to variable consideration due to, but not limited to, cash-based incentives, rebates, performance awards, or credits. The Company estimates variable consideration at the most likely amount the Company will receive from customers. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved. The Company's estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company's anticipated performance and all information (historical, current and forecasted) that is reasonably available to the Company.
63    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
NOTE 2.
 billion. The transaction is subject to regulatory review and approval and customary closing conditions. The transaction is expected to close by the end of the third quarter of 2024 and the business will be reported within the Honeywell Building Technologies reportable business segment.
On August 25, 2023, the Company acquired % of the outstanding equity interests of SCADAfence, a provider of operational technology and Internet of Things cybersecurity solutions for monitoring large scale networks, for total consideration of $ million, net of cash acquired. The business is included in the Performance Materials and Technologies reportable business segment. The assets and liabilities acquired with SCADAfence are included in the Consolidated Balance Sheet as of December 31, 2023, including $ million of intangible assets and $ million of goodwill, which is not deductible for tax purposes. The purchase accounting is subject to final adjustment, primarily for the value of intangible assets, amounts allocated to goodwill, and tax balances.
On June 30, 2023, the Company acquired % of the outstanding equity interests of Compressor Controls Corporation, a turbomachinery services and controls company based in the United States, for total cash consideration of $ million, net of cash acquired. The business is included in the Performance Materials and Technologies reportable business segment. The assets and liabilities acquired with Compressor Controls Corporation are included in the Consolidated Balance Sheet as of December 31, 2023, including $ million of intangible assets and $ million allocated to goodwill, which is deductible for tax purposes. The identifiable intangible assets primarily include customer relationships amortized over an estimated life of years using an excess earnings amortization method. The purchase accounting is subject to final adjustment, primarily for the valuation of intangible assets, amounts allocated to goodwill, and tax balances.
On January 18, 2022, the Company acquired % of the issued and outstanding shares of US Digital Designs, Inc., a leading provider of technologies for first responders, for total consideration of $ million. The business is included within the Honeywell Building Technologies reportable business segment. The Company finalized the evaluation for the fair value of all the assets and liabilities acquired with US Digital Designs, Inc. during the first quarter of 2023. Management recorded intangible assets of $ million and allocated $ million to goodwill, which is deductible for tax purposes.
64    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
% ownership interest in Cambridge Quantum Computing. As part of the business combination, Honeywell contributed an additional $ million of cash and is the controlling majority-owner of Quantinuum, with an overall % ownership in the business. Assets and liabilities of Quantinuum are consolidated by Honeywell and included in the Consolidated Balance Sheet. The business is included within Corporate and All Other, which is not a reportable business segment. Upon close of the transaction, Honeywell recorded a non-cash adjustment of $ million in Additional paid-in capital in the Consolidated Balance Sheet as the contribution of ownership interest in Honeywell Quantum Solutions and Cambridge Quantum Computing for the formation of Quantinuum. In addition, Honeywell recognized a gain of $ million related to the fair value remeasurement of Honeywell's existing % ownership interest in Cambridge Quantum Computing, which was recorded in Other (income) expense in the Consolidated Statement of Operations. At close of the transaction, the fair value of Cambridge Quantum Computing's noncontrolling interest in Quantinuum was $ million. In December 2021, Cambridge Quantum Computing contributed cash of $ million to Quantinuum, increasing their noncontrolling interest and decreasing Honeywell's additional paid-in capital. In the fourth quarter of 2022, the Company completed its evaluation of the fair value of all the assets and liabilities acquired. Management recorded intangible assets of $ million and allocated $ million to goodwill, which is non-deductible for tax purposes.
On February 12, 2021, the Company acquired % of the shares outstanding of Sparta Systems, a leading provider of enterprise quality management software for the life sciences industry, for $ million. The business is included within the Performance Materials and Technologies reportable business segment. The assets and liabilities acquired with Sparta Systems are included in the Consolidated Balance Sheet as of December 31, 2021, including $ million of intangible assets and $ million allocated to goodwill, which is non-deductible for tax purposes.
DIVESTITURES
During 2023, there were no significant divestitures individually or in the aggregate.
In conjunction with the wind down of the Company's businesses and operations in Russia (the Wind down), during 2022 the Company completed the sale of entities domiciled in Russia in exchange for gross cash consideration of less than $ million. The Company recognized a pre-tax gain of $ million, which was recorded in Other (income) expense in the Consolidated Statement of Operations, driven by favorable foreign currency cumulative translation adjustment positions in the entities at the time of sale. The financial results of the entities were previously included in the Performance Materials and Technologies, Honeywell Building Technologies, and Safety and Productivity Solutions reportable business segments.
On March 15, 2021, the Company completed the sale of its retail footwear business in exchange for gross cash consideration of $ million. The Company recognized a pre-tax gain of $ million for the twelve months ended December 31, 2021, which was recorded in Other (income) expense. The retail footwear business was previously included in the Safety and Productivity Solutions reportable business segment.
65    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
NOTE 3.
 $ $ Commercial Aviation Aftermarket   Defense and Space   Net Aerospace sales   Honeywell Building TechnologiesProducts   Building Solutions   Net Honeywell Building Technologies sales   Performance Materials and TechnologiesUOP   Process Solutions   Advanced Materials   Net Performance Materials and Technologies sales   Safety and Productivity SolutionsSensing and Safety Technologies   Productivity Solutions and Services   Warehouse and Workflow Solutions   Net Safety and Productivity Solutions sales   Corporate and All Other   Net sales$ $ $ 
In July 2022, the Company realigned certain business units within the Safety and Productivity Solutions reportable business segment. The Safety and Retail business unit, which included the gas detection and safety business, combined with the Advanced Sensing Technologies business unit to form the Sensing and Safety Technologies business unit. The Company recast historical periods to reflect this realignment.
66    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
The Company recognizes revenue arising from performance obligations outlined in contracts with its customers that are satisfied at a point in time and over time.
 % % %Products, transferred over time   Net product sales   Services, transferred point in time   Services, transferred over time   Net service sales   Net sales % % %
CONTRACT BALANCES
Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period.
67    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ Contract assets—December 31  Change in contract assets—increase (decrease)() Contract liabilities—January 1()()Contract liabilities—December 31()()Change in contract liabilities—decrease (increase) ()Net change$()$()
For the years ended December 31, 2023, and 2022, the Company recognized revenue of $ million and $ million, respectively, that was previously included in the beginning balance of contract liabilities.
Contract assets included $ million and $ million of unbilled balances under long-term contracts as of December 31, 2023, and 2022, respectively. These amounts are billed in accordance with the terms of customer contracts to which they relate.
When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications for goods or services and not distinct from the existing contract, due to the significant integration with the original good or service provided, are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and the Company's measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at relative stand-alone selling price, they are accounted for as a new contract and performance obligation, which are recognized prospectively.
PERFORMANCE OBLIGATIONS
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When the Company's contracts with customers require highly complex integration or manufacturing services that are not separately identifiable from other promises in the contracts and, therefore, not distinct, then the entire contract is accounted for as a single performance obligation. In situations when the Company's contracts include distinct goods or services that are substantially the same and have the same pattern of transfer to the customer over time, they are recognized as a series of distinct goods or services. For any contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the estimated relative stand-alone selling price of each distinct good or service in the contract. For product sales, each product sold to a customer typically represents a distinct performance obligation. In such cases, the observable stand-alone sales are used to determine the stand-alone selling price.
Performance obligations are satisfied as of a point in time or over time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract.
 Honeywell Building Technologies Performance Materials and Technologies Safety and Productivity Solutions 
Corporate and All Other1
 
Total performance obligations2
$ 
1
The remaining performance obligations within Corporate and All Other relate to the Quantinuum business.
2
Effective March 31, 2022, performance obligations exclude contracts with customers related to Russia as collectability is not reasonably assured.
68    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
% and %, respectively.
The timing of satisfaction of the Company's performance obligations does not significantly vary from the typical timing of payment. Typical payment terms of the Company's fixed price over time contracts include progress payments based on specified events or milestones or based on project progress. For some contracts, the Company may be entitled to receive an advance payment.
The Company applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount the Company has the right to invoice for services performed.
NOTE 4.
 $ $ Asset impairments   Exit costs   Reserve adjustments()()()Total net repositioning charges   Asbestos-related charges, net of insurance and reimbursements   Probable and reasonably estimable environmental liabilities, net of reimbursements   Other charges()  Total net repositioning and other charges$ $ $  $ $ Selling, general and administrative expenses   Other (income) expense   Total net repositioning and other charges$ $ $  $ $ Honeywell Building Technologies   Performance Materials and Technologies   Safety and Productivity Solutions   Corporate and All Other   Total net repositioning and other charges$ $ $ 

69    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
million, including severance costs of $ million related to workforce reductions of manufacturing and administrative positions mainly in the Company's Honeywell Building Technologies and Safety and Productivity Solutions reportable business segments. The workforce reductions related to productivity and ongoing functional transformation initiatives. The repositioning charges included asset impairments of $ million related to the write-down of certain assets within the Company's Safety and Productivity Solutions reportable business segment and corporate function. The repositioning charges included exit costs of $ million related to current period costs incurred for closure obligations associated with site transitions in the Company's Performance Materials and Technologies and Safety and Productivity Solutions reportable business segments. Also, $ million of previously established reserves, primarily for severance, were returned to income due to higher-than-expected voluntary exits and adjustments to the scope of previously announced repositioning actions.
In 2022, the Company recognized repositioning charges totaling $ million, including severance costs of $ million related to workforce reductions of manufacturing and administrative positions mainly in the Company's Safety and Productivity Solutions reportable business segment. The workforce reductions related to our productivity and ongoing functional transformation initiatives. The repositioning charges included asset impairments of $ million related to the write-down of certain manufacturing and other equipment, primarily related to closing and relocating the production of certain respiratory manufacturing from a U.S.-based facility to a non-U.S. facility in the Company's Safety and Productivity Solutions reportable business segment. The repositioning charges included exit costs of $ million related to current period costs incurred for closure obligations associated with site transitions in the Company's Performance Materials and Technologies and Aerospace reportable business segments. Also, $ million of previously established reserves, primarily for severance, were returned to income due to higher than expected voluntary exits and adjustments to the scope of previously announced repositioning actions.
In 2021, the Company recognized repositioning charges totaling $ million, including severance costs of $ million related to workforce reductions of manufacturing and administrative positions mainly in the Company's Safety and Productivity Solutions and Aerospace reportable business segments. The workforce reductions were primarily related to the realignment of a product line in the Company's Safety and Productivity Solutions reportable business segment, site transitions, mainly in the Aerospace reportable business segment, to more cost-effective locations, and the Company's productivity and ongoing functional transformation initiatives. The repositioning charges included asset impairments of $ million primarily related to the write-down of certain manufacturing and other equipment. The repositioning charges included exit costs of $ million primarily for current period exit costs incurred for previously approved repositioning projects, closure obligations associated with site transitions, and lease obligations for equipment. Also, $ million of previously established reserves, primarily for severance, were returned to income due to adjustments to the scope of previously announced repositioning actions.
70    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ Charges    Usage—cash() ()()Usage—noncash () ()Divestitures    Adjustments() ()()Foreign currency translation() ()()Balance at December 31, 2021    Charges    Usage—cash() ()()Usage—noncash ()()()Divestitures    Adjustments()()()()Foreign currency translation  ()()Balance at December 31, 2022    Charges    Usage—cash() ()()Usage—noncash () ()Divestitures ()()()Adjustments()()()()Foreign currency translation    Balance at December 31, 2023$ $ $ $ 
Certain repositioning projects will recognize exit costs in future periods when the actual liability is incurred. Such exit costs incurred in 2023, 2022, and 2021 were $ million, $ million, and $ million, respectively.
OTHER CHARGES
In 2022, the Company recognized $ million of Other charges related to the initial suspension and the wind down of our business and operations in Russia. These costs impacted all reportable business segments, with the most significant impact within the Performance Materials and Technologies reportable business segment. The Other charges include costs recorded in Cost of products sold, Selling, general and administrative expenses, or Other (income) expense in the Consolidated Statement of Operations. Cost of products and services sold includes $ million primarily related to inventory reserves and the write-down of other assets, Selling, general and administrative includes $ million primarily related to reserves against outstanding accounts receivable and contract assets, impairment of intangible assets, the write-down of other assets, and employee severance, and Other (income) expense includes $ million related to foreign exchange revaluation on an intercompany loan with a Russian affiliate, impairment of property, plant and equipment, and expenses for called guarantees. Directly attributable to our wind down of businesses and operations in Russia, but excluded from Other charges, is a $ million tax valuation allowance recorded to Tax expense in the Consolidated Statement of Operations.
Given the uncertainty inherent in the Company's remaining obligations related to contracts with Russian counterparties, the Company does not believe it is possible to develop estimates of reasonably possible loss in excess of current accruals for these matters (other than as specifically set forth above). Based on available information to date, the Company’s estimate of potential future losses or other contingencies related to suspension and wind down activities, including any guarantee payments or any litigation costs or as otherwise related to the Company's wind down in Russia, could adversely affect the Company's consolidated results of operations in the periods recognized but would not be material with respect to the Company's consolidated financial position. See Note 19 Commitments and Contingencies for a discussion of the recognition and measurement of estimate for contingencies.
71    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 million and $ million, respectively,
NOTE 5.
 $ $ Non-U.S.   Total Income before taxes$ $ $ 
TAX EXPENSE (BENEFIT)
 $ $ U.S. State   Non-U.S.   Total current tax expense (benefit)   DeferredU.S. Federal () U.S. State () Non-U.S.  ()Total deferred tax expense (benefit) () 
Total Tax expense
$ $ $ 
72    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 % % %
Taxes on non-U.S. earnings1,2,3
()()()
U.S. state income taxes1
   Reserves for tax contingencies   Employee share-based payments()()()
80    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ Accrued liabilities  Other liabilities  Total operating lease liabilities$ $ Finance leasesProperty, plant and equipment$ $ Accumulated depreciation()()Property, plant and equipment—net$ $ Current maturities of long-term debt$ $ Long-term debt  Total finance lease liabilities$ $ Weighted average remaining lease termOperating leases years yearsFinance leases years yearsWeighted average discount rateOperating leases % %Finance leases % % $ 2025  2026  2027  2028  Thereafter  Total lease payments  Less: Interest  Total maturities of lease liabilities$ $ 
81    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
NOTE 11.
 million and $ million, respectively, to exchange foreign currencies, principally the U.S. Dollar, Euro, Canadian Dollar, British Pound, Mexican Peso, Chinese Renminbi, and Indian Rupee.
The Company also designates certain foreign currency debt and derivative contracts as hedges against portions of its net investment in foreign operations. Gains or losses of the foreign currency debt and derivative contracts designated as net investment hedges are recorded in the same manner as foreign currency translation adjustments.
INTEREST RATE RISK MANAGEMENT
Financial instruments, including derivatives, expose the Company to market risk related to changes in interest rates. The Company uses a combination of financial instruments, including long-term, medium-term, and short-term financing, variable-rate commercial paper, and interest rate swaps to convert the interest rate mix of the Company's total debt portfolio and related overall cost of borrowing.
CREDIT RISK MANAGEMENT
The Company continues to monitor the creditworthiness of its counterparties to mitigate the risk of nonperformance. Financial instruments, including derivatives, expose the Company to counterparty credit risk. In addition, the Company grants credit terms to its customers in the normal course of business. The terms and conditions of the Company's credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer. The Company's sales are not materially dependent on a single customer or a small group of customers.
COMMODITY PRICE RISK MANAGEMENT
The Company's operations subject the Company to risk related to the price volatility of certain commodities. To mitigate the commodity price risk associated with the Company's operations, the Company may enter into commodity derivative instruments. In both 2023 and 2022, the Company entered into various contracts to mitigate commodity price volatility. The Company elected to apply hedge accounting to these contracts.
82    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ $()$()Derivatives in cash flow hedging relationshipsForeign currency exchange contracts    ()()Commodity contracts    ()()Derivatives in net investment hedging relationshipsCross currency swap agreements    () Total derivatives designated as hedging instruments    ()()Derivatives not designated as hedging instrumentsForeign currency exchange contracts    ()()Total derivatives at fair value$ $ $ $ $()$()
All Derivative assets are presented in Other current assets or Other assets. All Derivative liabilities are presented in Accrued liabilities or Other liabilities.
In addition to the foreign currency derivative contracts designated as net investment hedges, certain of the Company's foreign currency denominated debt instruments are designated as net investment hedges. The carrying value of those debt instruments designated as net investment hedges, which includes the adjustment for the foreign currency transaction gain or loss on those instruments, was $ million and $ million as of December 31, 2023, and 2022, respectively.
Interest rate swap agreements are designated as hedge relationships with gains or losses on the derivative recognized in Interest and other financial charges offsetting the gains and losses on the underlying debt being hedged. Gains and losses on interest rate swap agreements recognized in earnings were $ million of income, $ million of expense, and $ million of expense for the years ended December 31, 2023, 2022, and 2021, respectively. Gains and losses are fully offset by losses and gains on the underlying debt being hedged.
 $ $()$()
83    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ $()$ Gain or (loss) on cash flow hedgesForeign currency exchange contractsAmount reclassified from accumulated other comprehensive income (loss) into income      Gain or (loss) on fair value hedgesInterest rate swap agreementsHedged items     ()Derivatives designated as hedges      Gain or (loss) on derivatives not designated as hedging instrumentsForeign currency exchange contracts    () 
 Year Ended December 31, 2022
Net SalesCost of
Products Sold
Cost of
Services Sold
Selling, General and
Administrative Expenses
Other
(Income) Expense
Interest and Other
Financial Charges
$ $ $ $ $()$ 
Gain or (loss) on cash flow hedges
Foreign currency exchange contracts
Amount reclassified from accumulated other comprehensive income (loss) into income   ()  
Commodity Contracts
Amount reclassified from accumulated other comprehensive income (loss) into income ()    
Gain or (loss) on fair value hedges
Interest rate swap agreements
Hedged items      
Derivatives designated as hedges     ()
Gain or (loss) on net investment hedges
Foreign currency exchange contracts
Amount excluded from effectiveness testing recognized in earnings using an amortization approach      
Gain or (loss) on derivatives not designated as hedging instruments
Foreign currency exchange contracts      
84    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ $()$ Gain or (loss) on cash flow hedgesForeign currency exchange contractsAmount reclassified from accumulated other comprehensive income (loss) into income                          $ 
The Company values foreign currency exchange contracts, interest rate swap agreements, cross currency swap agreements, and commodity contracts 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 also holds investments in commercial paper, certificates of deposits, time deposits, and corporate debt securities that are designated as available for sale. These investments are valued using published prices based on observable market data. As such, these investments are classified within level 2.
The Company holds certain available for sale investments in U.S. government securities and investments in equity securities. The Company values these investments utilizing published prices based on quoted market pricing, which are classified within level 1.
The carrying value of cash and cash equivalents, trade accounts and notes receivables, payables, commercial paper, and other short-term borrowings contained in the Consolidated Balance Sheet approximates fair value.
As part of the NARCO Buyout (see Note 19 Commitments and Contingencies for definition), Honeywell holds a right to proceeds from the definitive sale agreement pursuant to which HarbisonWalker International Holdings, Inc. (HWI), the reorganized and renamed entity that emerged from the NARCO Bankruptcy, was acquired by an affiliate of Platinum Equity, LLC (HWI Sale). The right to these proceeds is considered a financial instrument. The significant input for the valuation of this right is unobservable, and as such, is classified within level 3.
The HWI Sale closed on February 16, 2023. During the twelve months ended December 31, 2023, Honeywell received $ million of proceeds from the HWI Sale (HWI Net Sale Proceeds), of which $ million was received during the first quarter of 2023 and $ million during the second quarter of 2023. Additionally, during the second quarter of 2023, the Company recorded a fair value adjustment for the HWI Net Sale Proceeds and reduced the estimate by $ million. The fair value of the remaining HWI Net Sale Proceeds as of December 31, 2023, represents contingent consideration to be paid in future periods if certain conditions under the definitive sale agreement for the HWI Sale are met.
 $ Recognition of right to HWI Net Sale Proceeds  Receipt of HWI Net Sale Proceeds() Fair value adjustment of HWI Net Sale Proceeds() Balance at end of period$ $ 
86    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ LiabilitiesLong-term debt and related current maturities    
The Company determined the fair value of the long-term receivables by utilizing transactions in the listed markets for identical or similar assets. As such, the fair value of these receivables is considered level 2.
NOTE 13.
 $ Compensation, benefit and other employee related  Repositioning  Asbestos-related liabilities  Income taxes  Other taxes  Environmental costs  Operating lease liabilities  Product warranties and performance guarantees  Insurance  Accrued interest  NARCO Buyout accrual  Other (primarily operating expenses)  Total Accrued liabilities$ $ 
87    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
NOTE 14.
 $ Pension and other employee related  Deferred income  Operating lease liabilities  Environmental costs  Insurance  Product warranties and performance guarantees  Asset retirement obligations  Other  Total Other liabilities$ $ 
NOTE 15.
and shares of Honeywell common stock available for future grants under terms of the 2016 Plan and 2016 Directors Plan, respectively.
STOCK OPTIONS
The exercise price, term, and other conditions applicable to each option granted under the Company's stock plans are generally determined by the Management Development and Compensation Committee of the Board of Directors. The exercise price of stock options is set on the grant date and may not be less than the fair market value per share of the Company's stock on that date. The fair value is recognized as an expense over the employee’s requisite service period (generally the vesting period of the award). Options generally vest over a period and expire after .
The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on implied volatilities from traded options on our common stock and historical volatility of the Company's common stock. The Company used a Monte Carlo simulation model to derive an expected term which represents an estimate of the time options are expected to remain outstanding. Such model uses historical data to estimate option exercise activity and post-vest termination behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. treasury yield curve in effect at the time of grant.
 $ $ Future income tax benefit recognized   
88    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ AssumptionsExpected annual dividend yield % % %Expected volatility % % %Risk-free rate of return % % %Expected option term (years)
1Estimated on date of grant using Black-Scholes option-pricing model.
 $ Granted  Exercised() Lapsed or canceled() Outstanding at December 31, 2021  Granted  Exercised() Lapsed or canceled() Outstanding at December 31, 2022  Granted  Exercised() Lapsed or canceled() Outstanding at December 31, 2023 $ 
Vested and expected to vest at December 31, 20231
 $ Exercisable at December 31, 2023 $ 
1
Represents the sum of vested options of million and expected to vest options of million. Expected to vest options are derived by applying the pre-vesting forfeiture rate assumption to total outstanding unvested options of million.
89    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
–$ $ $  $ $ 
$–$
      
$–$
      
$–$
      
$–$
       $ $  $ $ 
1Average remaining contractual life in years.
There were and options exercisable at weighted average exercise prices of $ and $ at December 31, 2022, and 2021, respectively.
 $ $ Tax benefit realized   
1Represents the amount by which the stock price exceeded the exercise price of the options on the date of exercise.
At December 31, 2023, there was $ million of total unrecognized compensation cost related to non-vested stock option awards which is expected to be recognized over a weighted average period of years. The total fair value of options vested for the years ended December 31, 2023, 2022, and 2021 was $ million, $ million, and $ million, respectively.
RESTRICTED STOCK UNITS
Restricted stock unit (RSU) awards entitle the holder to receive share of common stock for each unit when the units vest. RSUs are issued to certain key employees and directors as compensation at fair market value at the date of grant. RSUs generally become fully vested over periods ranging from three to and are payable in Honeywell common stock upon vesting. Certain RSU awards are performance-based and awarded to eligible employees which entitle the grantee to receive shares of common stock if specified Company performance goals are achieved during the performance period and if the grantee remains employed through the vesting period.
90    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ Granted  Vested() Forfeited() Non-vested at December 31, 2021  Granted  Vested() Forfeited() Non-vested at December 31, 2022  Granted  Vested() Forfeited() Non-vested at December 31, 2023 $ 
As of December 31, 2023, there was approximately $ million of total unrecognized compensation cost related to non-vested RSUs granted under the Company's stock plans which is expected to be recognized over a weighted average period of years.
 $ $ Future income tax benefit recognized   
NOTE 16.
 $ $ Weighted average shares outstanding   Earnings per share of common stock—basic$ $ $  $ $ Average sharesWeighted average shares outstanding   Dilutive securities issuable—stock plans   Total weighted average diluted shares outstanding   Earnings per share of common stock—assuming dilution$ $ $ 
91    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
million, million, and million, respectively. These stock options were outstanding at the end of each of the respective periods.
As of December 31, 2023, and 2022, the total shares outstanding were  million and million, respectively, and as of December 31, 2023, and 2022, total shares issued were million.
NOTE 17.
)$ $()Pension and other postretirement benefit adjustments() ()Changes in fair value of available for sale investments   Changes in fair value of cash flow hedges () Total net current period other comprehensive income (loss)$()$ $()Year Ended December 31, 2022Foreign exchange translation adjustment$()$ $()Pension and other postretirement benefit adjustments() ()Changes in fair value of available for sale investments() ()Changes in fair value of cash flow hedges    Total net current period other comprehensive income (loss)$()$ $()Year Ended December 31, 2021Foreign exchange translation adjustment$ $ $ Pension and other postretirement benefit adjustments () Changes in fair value of available for sale investments() ()Changes in fair value of cash flow hedges() ()Total net current period other comprehensive income (loss)$ $()$ )$()Pension and other postretirement benefit adjustments()()Fair value adjustments of available for sale investments()()Fair value adjustments of cash flow hedges  Total Accumulated other comprehensive income (loss)$()$()
92    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
)$()$ $ $()Other comprehensive income (loss) before reclassifications  ()  Amounts reclassified from accumulated other comprehensive income (loss)()() ()()Net current period other comprehensive income (loss)  ()() Balance at December 31, 2021()() ()()Other comprehensive income (loss) before reclassifications()()() ()Amounts reclassified from accumulated other comprehensive income (loss)()  () Net current period other comprehensive income (loss)()()() ()Balance at December 31, 2022()()() ()Other comprehensive income (loss) before reclassifications()()  ()Amounts reclassified from accumulated other comprehensive income (loss)   () Net current period other comprehensive income (loss)()()  ()Balance at December 31, 2023$()$()$()$ $() $ $ $ $ $ $ Prior service (credit) recognized    () ()Losses (gains) on cash flow hedges()()()()  ()Losses (gains) on excluded component of net investment hedges       Total before tax$()$()$()$()$ $ $ 
Tax (expense) benefit
 Total reclassifications for the period, net of tax$ 
93    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ $ $ $ Prior service (credit) recognized    () ()Losses (gains) on cash flow hedges()()()   ()Losses (gains) on excluded component of net investment hedges     ()()Total before tax$()$()$()$ $ $()$ 
Tax (expense) benefit
()Total reclassifications for the period, net of tax$ 
 Year Ended December 31, 2021
Affected Line in the Consolidated Statement of Operations
Net Sales
Cost of
Products Sold
Cost of
Services Sold
Selling, General and
Administrative Expenses
Other
(Income) Expense
Interest and Other
 Financial Charges
Total
Amortization of pension and other postretirement benefit items      
Actuarial losses recognized$ $ $ $ $ $ $ 
Prior service (credit) recognized    () ()
Losses (gains) on cash flow hedges()()()()  ()
Losses (gains) on excluded component of net investment hedges     ()()
Total before tax$()$()$()$()$()$()$()
Tax (expense) benefit
 
Total reclassifications for the period, net of tax$()
NOTE 18.
shares of common stock, with a par value of $. Common shareowners are entitled to receive such dividends as may be declared by the Board of Directors, are entitled to vote per share, and are entitled, in the event of liquidation, to share ratably in all the assets of the Company which are available for distribution to the common shareowners. Common shareowners do not have preemptive or conversion rights. Shares of common stock issued and outstanding or held in treasury are not liable to further calls or assessments. There are no restrictions on the Company relative to dividends or the repurchase or redemption of common stock.
On April 24, 2023, the Board of Directors authorized the repurchase of up to a total of $ billion of Honeywell common stock, including approximately $ billion of remaining availability under the previously announced $ billion share repurchase authorization. Approximately $ billion and $ billion remained available as of December 31, 2023, and 2022, respectively, for additional share repurchases.
Honeywell repurchased approximately million and million shares of its common stock during the years ended December 31, 2023, and 2022, for $ billion and $ billion, respectively.
The Company is authorized to issue up to shares of preferred stock, without par value, and can determine the number of shares of each series, and the rights, preferences, and limitations of each series. At December 31, 2023, there was preferred stock outstanding.
94    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
NOTE 19.
 $ $ Accruals for environmental matters deemed probable and reasonably estimable   Environmental liability payments()()()Other   End of year$ $ $  $ Other liabilities  Total environmental liabilities$ $ 
The Company does not currently possess sufficient information to reasonably estimate the amounts of environmental liabilities to be recorded upon future completion of studies, litigation, or settlements, and neither the timing nor the amount of the ultimate costs associated with environmental matters can be determined, although they could be material to the Company's consolidated results of operations and operating cash flows in the periods recognized or paid. However, considering the Company's past experience and existing reserves, the Company does not expect that environmental matters will have a material adverse effect on its consolidated financial position.
In conjunction with the Resideo spin-off, the Company entered into an indemnification and reimbursement agreement with a Resideo subsidiary, pursuant to which Resideo’s subsidiary has an ongoing obligation to make cash payments to Honeywell in amounts equal to % of Honeywell’s annual net spending for environmental matters at certain sites as defined in the agreement. The amount payable to Honeywell in any given year is subject to a cap of $ million, and the obligation will continue until the earlier of December 31, 2043, or December 31 of the third consecutive year during which the annual payment obligation is less than $ million.
95    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
million in both 2023 and 2022 and offset operating cash outflows incurred by the Company. As the Company incurs costs for environmental matters deemed probable and reasonably estimable related to the sites covered by the indemnification and reimbursement agreement, a corresponding receivable from Resideo for % of such costs is also recorded. This receivable amount recorded in 2023 and 2022 was $ million and $ million, respectively. As of December 31, 2023, Other current assets and Other assets included $ million and $ million, respectively, for the short-term and long-term portion of the receivable amount due from Resideo under the indemnification and reimbursement agreement. As of December 31, 2022, Other current assets and Other assets included $ million and $ million, respectively, for the short-term and long-term portion of the receivable amount due from Resideo under the indemnification and reimbursement agreement.
ASBESTOS MATTERS
Honeywell is named in asbestos-related personal injury claims related to NARCO, which was sold in 1986, and the Bendix Friction Materials (Bendix) business, which was sold in 2014.
The following tables summarize information concerning NARCO and Bendix asbestos-related balances:
ASBESTOS-RELATED LIABILITIES
 $ $ $ $ $ $ $ $ Accrual for update to estimated liability    ()()   Change in estimated cost of future claims         Update of expected resolution values for pending claims         Asbestos-related liability payments()()()()()()()()()NARCO Buyout  ()()      End of year$ $ $ $ $ $ $ $ $ 
INSURANCE RECOVERIES FOR ASBESTOS-RELATED LIABILITIES
 $ $ $ $ $ $ $ $ Probable insurance recoveries related to estimated liability         Insurance receipts for asbestos-related liabilities()()()()()()()()()Insurance receivables settlements and write-offs ()() ()()   End of year$ $ $ $ $ $ $ $ $ 
96    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ Insurance recoveries for asbestos-related liabilities  Total insurance recoveries for asbestos-related liabilities$ $ Accrued liabilities$ $ Asbestos-related liabilities  
Total asbestos-related liabilities1
$ $ 
1
As of December 31, 2022, Accrued liabilities included the Buyout Amount, as described and defined below, agreed upon between Honeywell and the Trust. The Buyout Amount does not represent an asbestos-related liability.
NARCO Products – NARCO manufactured high-grade, heat-resistant, refractory products for various industries. Honeywell’s predecessor, Allied Corporation, owned NARCO from 1979 to 1986. Allied Corporation sold the NARCO business in 1986 and entered into a cross-indemnity agreement which included an obligation to indemnify the purchaser for asbestos claims, arising primarily from alleged occupational exposure to asbestos-containing refractory brick and mortar for high-temperature applications. NARCO ceased manufacturing these products in 1980 and filed for bankruptcy in January 2002, at which point in time all then current and future NARCO asbestos claims were stayed against both NARCO and Honeywell pending the reorganization of NARCO. The Company established its initial liability for NARCO asbestos claims in 2002.
NARCO emerged from bankruptcy in April 2013, at which time a federally authorized 524(g) trust was established to evaluate and resolve all existing NARCO asbestos claims (the Trust). Both Honeywell and NARCO are protected by a permanent channeling injunction barring all present and future individual actions in state or federal courts and requiring all asbestos-related claims based on exposure to NARCO asbestos-containing products to be made against the Trust (Channeling Injunction). The NARCO Trust Agreement (TA) and the NARCO Trust Distribution Procedures (TDP) set forth the structure and operating rules of the Trust, and established Honeywell’s evergreen funding obligations.
The operating rules per the TDP define criteria claimants must meet for a claim to be considered valid and paid. Once operational in 2014, the Trust began to receive, process, and pay claims. In September 2021, Honeywell filed suit against the Trust in the United States Bankruptcy Court for the Western District of Pennsylvania (Bankruptcy Court) alleging that the Trust breached its duties in managing the Trust, including breaches of certain provisions of the TA and TDP. Honeywell's lawsuit sought appropriate relief preventing the Trust from continuing these practices. The Trust also filed suit against Honeywell, alleging Honeywell breached its obligations under the Trust's governing documents. Honeywell moved to dismiss the Trust’s suit, and on December 15, 2021, the Bankruptcy Court granted Honeywell’s motion to dismiss subject to granting the Trust leave to file an amended complaint. On December 28, 2021, the Trust filed an answer with counterclaims in response to Honeywell’s complaint and in lieu of filing an amended complaint. The Bankruptcy Court conducted a trial on these matters during May 2022; following the trial, the Company and the Trust began discussing a potential settlement of Honeywell’s remaining obligations to the Trust.
On November 18, 2022, Honeywell entered into a definitive agreement (Buyout Agreement) with the Trust, and on November 20, 2022, in exchange for the NARCO Trust Advisory Committee (TAC) and Lawrence Fitzpatrick, in his capacity as the NARCO Asbestos Future Claimants Representative (FCR), becoming parties to the Buyout Agreement, Honeywell, the Trust, the TAC, and the FCR entered into an Amended and Restated Buyout Agreement (Amended Buyout Agreement).
Pursuant to the terms of the Amended Buyout Agreement, Honeywell agreed to make a one-time, lump sum payment in the amount of $ billion to the Trust (Buyout Amount), subject to certain deductions as described in the Amended Buyout Agreement and in exchange for the release by the Trust of Honeywell from all further and future obligations of any kind related to the Trust and/or any claimants who were exposed to asbestos-containing products manufactured, sold, or distributed by NARCO or its predecessors, including Honeywell’s ongoing evergreen obligation to fund (i) claims against the Trust, which comprise Honeywell’s NARCO asbestos-related claims liability, and (ii) the Trust’s annual operating expenses, which are expensed as incurred, including its legal fees (which operating expenses, for reference, were approximately $ million in 2022) (such evergreen obligations referred to in (i) and (ii), Honeywell Obligations) (the NARCO Buyout).
On December 8, 2022, the Bankruptcy Court issued an order that (A) approved the Amended Buyout Agreement, and (B) declared that the NARCO Channeling Injunction (which bars all past, present, and future individual actions in state or federal courts based on exposure to NARCO asbestos-containing products and requires all such claims to be made against the Trust) will remain in full force and effect without modification, dissolution, or termination (Order).
97    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 million from the Consolidated Balance Sheet and recognized a charge of $ billion in the Consolidated Statement of Operations and accrued a corresponding liability in the Consolidated Balance Sheet for the Buyout Amount. In addition, the Company recognized a benefit of $ million in the Consolidated Statement of Operations and corresponding asset in Other current assets in the Consolidated Balance Sheet for Honeywell's rights to the proceeds from the HWI Sale. The benefit of $ million offset the charge for the Buyout Amount.
On February 16, 2023, the HWI Sale closed. Pursuant to the Amended Buyout Agreement, during 2023, Honeywell received $ million of proceeds from the HWI sale. See Note 12 Fair Value Measurements for further information on the related proceeds and remaining amount under the Amended Buyout Agreement.
Bendix Products – Bendix manufactured automotive brake linings that contained chrysotile asbestos in an encapsulated form. Claimants consist largely of individuals who allege exposure to asbestos from brakes from either performing or being in the vicinity of individuals who performed brake replacements.
  Claims filed  Claims resolved()()Claims unresolved at the end of year    Nonmalignant claims  Total claims   $ $ $ $ Nonmalignant claims     
The Consolidated Financial Statements reflect an estimated liability for resolution of asserted (claims filed as of the financial statement date) and unasserted Bendix-related asbestos claims, which exclude the Company’s ongoing legal fees to defend such asbestos claims which will continue to be expensed as they are incurred.
The Company reflects the inclusion of all years of epidemiological disease projection through 2059 when estimating the liability for unasserted Bendix-related asbestos claims. Such liability for unasserted Bendix-related asbestos claims is based on historic and anticipated claims filing experience and dismissal rates, disease classifications, and average resolution values in the tort system over a defined look-back period. The Company historically valued Bendix asserted and unasserted claims using a five-year look-back period. The Company reviews the valuation assumptions and average resolution values used to estimate the cost of Bendix asserted and unasserted claims during the fourth quarter each year.
98    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 million expense and corresponding adjustment to its estimated liability for Bendix asbestos-related claims. This amount includes $ million attributable primarily to shortening the look-back period to the two most recent years, and to a lesser extent to increasing expected resolution values for a subset of asserted claims to adjust for higher claim values in that subset than in the modelled two-year data set.
The Company's insurance receivable corresponding to the liability for settlement of asserted and unasserted Bendix asbestos claims reflects coverage which is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. Based on the Company's ongoing analysis of the probable insurance recovery, insurance receivables are recorded in the financial statements simultaneous with the recording of the estimated liability for the underlying asbestos claims. This determination is based on the Company's analysis of the underlying insurance policies, historical experience with insurers, ongoing review of the solvency of insurers, judicial determinations relevant to insurance programs, and consideration of the impacts of any settlements reached with the Company's insurers.
On October 31, 2018, David Kanefsky (Plaintiff), a Honeywell shareholder, filed a putative class action complaint in the U.S. District Court for the District of New Jersey (the Court) alleging violations of the Securities Exchange Act of 1934 and Rule 10b-5 related to the prior accounting for Bendix asbestos claims. An Amended Complaint was filed on December 30, 2019, and on February 7, 2020, the Company filed a Motion to Dismiss. On May 18, 2020, the Court denied the Motion to Dismiss. On December 7, 2021, the parties filed a Stipulation of Settlement (Settlement Agreement) and Plaintiff filed a motion for preliminary approval of the Settlement Agreement, which included payment by Honeywell of $ million to settle the claims in dispute. On January 18, 2022, the Court approved the motion for preliminary approval of the Settlement Agreement. On May 3, 2022, the Court entered a final judgment and order approving the Settlement Agreement and dismissed the action. Honeywell continues to believe the claims lacked merit and has denied wrongdoing as well as any liability for the claims made against Honeywell in the action.
GARRETT LITIGATION AND BANKRUPTCY PROCEEDINGS
In conjunction with the Garrett spin-off, the Company entered into a binding indemnification and reimbursement agreement (Garrett Indemnity) and a binding tax matters agreement (Tax Matters Agreement) with Garrett and a Garrett subsidiary. On December 2, 2019, Garrett and Garrett ASASCO Inc. filed a Summons with Notice and commenced a lawsuit in the Commercial Division of the Supreme Court of the State of New York, County of New York (the State Court), seeking to invalidate the Garrett Indemnity. Garrett sought damages and a declaratory judgment based on various claims set forth in the Summons with Notice. On July 17, 2020, the Company received a notice from Garrett asserting that the Company had caused material breaches of the Tax Matters Agreement and that the Tax Matters Agreement was unenforceable.
On September 20, 2020, Garrett and 36 of its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). On September 24, 2020, Garrett moved the existing State Court litigation against Honeywell to the Bankruptcy Court. For the year ended December 31, 2020, the Company reviewed the aggregate carrying value of the receivable amounts due in connection with the Garrett Indemnity and Tax Matters Agreement and reduced the aggregate carrying value of the receivable by $ million to reflect the present value of the amounts owed to the Company over the full term of these agreements.
On April 26, 2021, the Bankruptcy Court confirmed Garrett’s amended Chapter 11 plan of reorganization (the Confirmed Plan), and on April 30, 2021 (the Effective Date), Garrett emerged from bankruptcy. On the Effective Date, and in accordance with the Confirmed Plan, (i) the Company received from Garrett an initial payment of $ million and  million shares of Garrett's Series B Preferred Stock in full and final satisfaction of the Garrett Indemnity and Tax Matters Agreement, (ii) the Garrett Indemnity and Tax Matters Agreement were terminated, (iii) the Company and Garrett mutually released each other from the claims asserted in all pending legal actions related to the Garrett Indemnity and Tax Matters Agreement, and (iv) all pending litigation between the Company and Garrett in connection with those agreements was resolved.
99    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 million in 2022 and $ million per year from 2023 to 2030 (inclusive) at the anniversary of the Effective Date, unless (i) Garrett’s consolidated EBITDA as of the end of the most recently completed fiscal year was less than $ million, or (ii) Garrett did not have sufficient funds available to pay the redemption, at which point the redemption amounts past due would accrue interest. The Series B Preferred Stock Certificate of Designation also included rights which allowed (a) the Company to put the Series B Preferred Stock to Garrett if certain EBITDA conditions were met, and (b) Garrett to call the Series B Preferred Stock in whole or in part if certain EBITDA conditions were met.
On September 30, 2021, Garrett filed an Amended and Restated Series B Preferred Stock Certificate of Designation (Amendment) with the Secretary of State of Delaware. The Amendment required Garrett to partially redeem a portion of the Series B Preferred Stock on or before March 31, 2022, such that the present value of remaining outstanding shares of the Series B Preferred Stock would be $ million (First Partial Redemption), subject to applicable law, including that Garrett had funds legally available for the partial redemption. The First Partial Redemption would be applied to the latest scheduled redemption dates, beginning with the shares to be redeemed in 2030. The Amendment also provided that the Company could not exercise its right to put the Series B Preferred Stock to Garrett until after December 31, 2022, subject to the EBITDA conditions described in the above section, unless the partial redemption did not occur on or before March 31, 2022. All other material terms and conditions in the Amendment were unchanged from the original Series B Preferred Stock Certificate of Designation.
On December 16, 2021, Garrett filed a Second Amended and Restated Series B Preferred Stock Certificate of Designation (Second Amendment) with the Secretary of State of Delaware. The Second Amendment accelerated the First Partial Redemption from March 31, 2022, to December 30, 2021, and allowed Garrett to partially redeem an additional portion of the Series B Preferred Stock on or before March 31, 2022, such that the present value of remaining outstanding shares of the Series B Preferred Stock would be $ million (Second Partial Redemption). The Second Partial Redemption is subject to similar terms as the First Partial Redemption, including that Garrett had funds legally available for the partial redemption. However, the Second Partial Redemption was also contingent upon Garrett completing the First Partial Redemption and either (i) increasing their revolving credit facility, or (ii) the Garrett Board of Directors determining that Garrett otherwise had sufficient liquidity to effect the Second Partial Redemption. The Second Partial Redemption would be applied to the earliest scheduled redemptions beginning with the shares to be redeemed on April 30, 2022.
On December 17, 2021, Garrett announced their intention to effect the First Partial Redemption on December 28, 2021, in the amount of $ million. On December 28, 2021, Garrett paid $ million for the amount due as the First Partial Redemption.
On February 18, 2022, Garrett early redeemed $ million of the Series B Preferred Stock, pursuant to the terms and conditions of the Second Amended and Restated Series B Preferred Stock Certificate of Designation. Immediately following the early redemption, the fair value of the Series B Preferred Stock was $ million.
On June 28, 2022, Garrett early redeemed all remaining shares of the Series B Preferred Stock in the amount of $ million, pursuant to the terms and conditions of the Second Amended and Restated Series B Preferred Stock Certificate of Designation. Following the redemption, the Series B Preferred Stock were no longer outstanding.
The Company recorded the Series B Preferred Stock at fair value at the Effective Date. See Note 12 Fair Value Measurements for additional information on the fair value leveling of the Series B Preferred Stock.
PETROBRAS AND UNAOIL MATTERS
On December 19, 2022, the Company reached a comprehensive resolution to the investigations by the U.S. Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and certain Brazilian authorities (Brazilian Authorities) relating to the Company's use of third parties who previously worked for the Company's UOP business in Brazil in relation to a project awarded in 2010 for Petróleo Brasileiro S.A. (Petrobras). The investigations focused on the Company’s compliance with the U.S. Foreign Corrupt Practices Act and similar Brazilian laws (UOP Matters). The comprehensive resolution also resolves DOJ and SEC investigations relating to a matter involving a foreign subsidiary’s prior contract with Unaoil S.A.M. in Algeria executed in 2011 (the Unaoil Matter).
In connection with the comprehensive resolution, (i) the Company agreed to pay a total equivalent of $ million, which payment occurred in January 2023, to the DOJ, the SEC, and the Brazilian Authorities, collectively, in penalties, disgorgement, and prejudgment interest, (ii) the Company’s subsidiary, UOP, LLC (UOP), entered into a three-year Deferred Prosecution Agreement (DPA) with the DOJ for charges related to the UOP Matters, (iii) UOP entered into leniency agreements with the Brazilian authorities related to the UOP Matter in Brazil, and (iv) the Company entered into an agreement with the SEC that resolves allegations relating to the UOP Matters and the Unaoil Matter. Pursuant to these agreements, the Company agreed to undertake certain compliance measures and compliance reporting obligations. These agreements entirely resolve the Petrobras and Unaoil investigations.
100    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ Accruals for warranties/guarantees issued during the year   Adjustment of pre-existing warranties/guarantees()()()Settlement of warranty/guarantee claims()()()End of year$ $ $ 
Product warranties and product performance guarantees are included in the following balance sheet accounts:
 December 31,
20232022
Accrued liabilities$ $ 
Other liabilities  
Total obligations for product warranties and product performance guarantees$ $ 
NOTE 20.
101    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ Service cost    Interest cost    Plan amendments    
Actuarial (gains) losses1
 () ()Benefits paid()()()()Settlements and curtailments ()  Foreign currency translation   ()Other    Benefit obligation at end of year    Change in plan assetsFair value of plan assets at beginning of year    Actual return on plan assets () ()Company contributions    Benefits paid()()()()Settlements and curtailments ()  Foreign currency translation   ()Other    Fair value of plan assets at end of year    Funded status of plans$ $ $ $ Amounts recognized in the Consolidated Balance Sheet consist of
Prepaid pension benefit cost2
$ $ $ $ 
Accrued pension liabilities—current3
()()()()
Accrued pension liabilities—noncurrent4
()()()()Net amount recognized$ $ $ $ 
1
The actuarial losses incurred in 2023 related to the Company's U.S. plans are primarily the result of a decrease in the discount rate assumption, as well as changes in demographic experience and demographic assumptions used to estimate the benefit obligations as of December 31, 2023, compared to December 31, 2022. Actuarial losses incurred in 2023 related to the Company's non-U.S. plans are primarily the result of a decrease in the discount rate assumption, partially offset by inflation related assumptions used to estimate the benefit obligations as of December 31, 2023, compared to December 31, 2022. Actuarial gains incurred in 2022 related to the Company's U.S. plans are primarily the result of an increase in the discount rate assumption, partially offset by changes in demographic experience and demographic assumptions used to estimate the benefit obligations as of December 31, 2022, compared to December 31, 2021. Actuarial gains incurred in 2022 related to the Company's non-U.S. plans are primarily the result of an increase in the discount rate assumption, partially offset by inflation related assumptions used to estimate the benefit obligations as of December 31, 2022, compared to December 31, 2021.
2
Included in Other assets in the Consolidated Balance Sheet.
3
Included in Accrued liabilities in the Consolidated Balance Sheet.
4Included in Other liabilities in the Consolidated Balance Sheet.

102    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ Service cost  Interest cost  Plan amendments  Actuarial (gains) losses ()Benefits paid()()Benefit obligation at end of year  Change in plan assetsFair value of plan assets at beginning of year  Actual return on plan assets  Company contributions  Benefits paid  Fair value of plan assets at end of year  Funded status of plans$()$()Amounts recognized in the Consolidated Balance Sheet consist ofAccrued liabilities$()$()
Postretirement benefit obligations other than pensions1
()()Net amount recognized$()$()
1
Excludes non-U.S. plan of $ million and $ million as of December 31, 2023, and 2022, respectively.
)$()$ $ Net actuarial (gain) loss    Net amount recognized$ $ $ $ 
 Other
Postretirement
Benefits
20232022
Prior service (credit) cost$()$()
Net actuarial (gain) loss()()
Net amount recognized$()$()
103    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ $ $ Interest cost      Expected return on plan assets()()()()()()Amortization of prior service (credit) cost()()()   Recognition of actuarial (gains) losses ()    Settlements and curtailments ()    Net periodic benefit (income) cost$()$()$()$ $ $()
U.S. PlansNon-U.S. Plans
202320222021202320222021
Actuarial (gains) losses$ $ $()$ $ $()
Prior service (credit) cost     ()
Prior service credit recognized during year    ()()
Actuarial (gains) losses recognized during year   ()()()
Foreign currency translation     ()
Total recognized in Other comprehensive (income) loss$ $ $ $ $()$()
Total recognized in net periodic benefit (income) cost and Other comprehensive (income) loss$()$()$()$ $ $()
Other Postretirement Benefits
Years Ended December 31,
202320222021
Service cost$ $ $ 
Interest cost   
Amortization of prior service (credit) cost()()()
Recognition of actuarial (gains) losses()()()
Net periodic benefit (income) cost$()$()$()
Years Ended December 31,
202320222021
Actuarial (gains) losses$ $()$()
Prior service (credit) cost   
Prior service credit recognized during year   
Actuarial (gains) losses recognized during year   
Total recognized in other comprehensive (income) loss () 
Total recognized in net periodic benefit (income) cost and Other comprehensive (income) loss$ $()$()
104    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 % % % % % %Expected annual rate of compensation increase % % % % % %Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31Discount rate—benefit obligation % % % % % %Discount rate—service cost % % % % % %Discount rate—interest cost % % % % % %Expected rate of return on plan assets % % % % % %Expected annual rate of compensation increase % % % % % %
 Other Postretirement Benefits
202320222021
Actuarial assumptions used to determine benefit obligations as of December 31
Discount rate % % %
Actuarial assumptions used to determine net periodic benefit cost for years ended December 31
Discount rate % % %
The discount rate for the Company's U.S. pension and other postretirement benefit plans reflects the current rate at which the associated liabilities could be settled at the measurement date of December 31. To determine discount rates for the Company's U.S. pension and other postretirement benefit plans, the Company uses a modeling process that involves matching the expected cash outflows of the Company's benefit plans to a yield curve constructed from a portfolio of high-quality, fixed income debt instruments. The Company uses the single weighted average yield of this hypothetical portfolio as a discount rate benchmark. The Company utilizes a full yield curve approach in the estimation of the service and interest cost components of net periodic pension benefit (income) for the Company's significant pension plans. This approach applies the specific spot rates along the yield curve used in the determination of the pension benefit obligation to their underlying projected cash flows and provides a more precise measurement of service and interest costs by improving the correlation between projected cash flows and their corresponding spot rates. For the Company's U.S. pension plans, the single weighted average spot rates used to determine service and interest costs for 2024 are % and %, respectively. The discount rate used to determine the other postretirement benefit obligation is higher principally due to a shorter expected duration of other postretirement plan obligations as compared to pension plan obligations.
The Company plans to use an expected rate of return on U.S. plan assets of % for 2024, which represents an increase from the % assumption used for 2023. The Company's asset return assumption is based on historical plan asset returns over varying long-term periods combined with current market conditions and broad asset mix considerations with a focus on long-term trends rather than short-term market conditions. The Company reviews the expected rate of return on an annual basis and revises it as appropriate.
For non-U.S. benefit plans, actuarial assumptions reflect economic and market factors relevant to each country.
105    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ Accumulated benefit obligation    Fair value of plan assets    
The accumulated benefit obligation for the Company's U.S. defined benefit pension plans was $ billion and $ billion and for the Company's non-U.S. defined benefit pension plans was $ billion and $ billion at December 31, 2023, and 2022, respectively.
The Company's asset investment strategy for its U.S. pension plans focuses on maintaining a diversified portfolio using various asset classes in order to achieve the Company's long-term investment objectives on a risk adjusted basis. The Company's long-term target allocations are as follows: %-% fixed income securities and cash, %-% equity securities, %-% real estate investments, and %-% other types of investments. Equity securities include publicly-traded stock of companies located inside the United States. Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities, and U.S. Treasuries. Real estate investments include direct investments in commercial properties and investments in real estate funds. Other types of investments include investments in private equity that follow several different strategies. The Company reviews its assets on a regular basis to ensure that the Company is within the targeted asset allocation ranges and, if necessary, asset balances are adjusted back within target allocations.
The Company's non-U.S. pension assets are typically managed by decentralized fiduciary committees with the Honeywell Corporate Investments group providing investment guidance. The Company's non-U.S. investment policies are different for each country as local regulations and financial and tax considerations are part of the funding and investment allocation process in each country.
In accordance with Accounting Standards Codification “Fair Value Measurement (Topic 820)”, certain investments that are measured at fair value using the net asset value (NAV) per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the following tables are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefits plan assets.
106    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ U.S. equities    Fixed incomeShort-term investments    Government securities    Corporate bonds    Mortgage/Asset-backed securities    Insurance contracts    Direct investmentsDirect private investments    Real estate properties    Total$ $ $ $ Investments measured at NAVPrivate funds Real estate funds Commingled funds Total assets at fair value$ 
 U.S. Plans
December 31, 2022
TotalLevel 1Level 2Level 3
Equities
Honeywell common stock$ $ $ $ 
U.S. equities    
Fixed income
Short-term investments    
Government securities    
Corporate bonds    
Mortgage/Asset-backed securities    
Insurance contracts    
Direct investments
Direct private investments    
Real estate properties    
Total$ $ $ $ 
Investments measured at NAV
Private funds 
Real estate funds 
Commingled funds 
Total assets at fair value$ 
107    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ Non-U.S. equities    Fixed incomeShort-term investments    Government securities    Corporate bonds    Mortgage/Asset-backed securities    Insurance contracts    Insurance buy-in contracts    Investments in private fundsPrivate funds    Real estate funds    Total$ $ $ $ Investments measured at NAVPrivate funds Real estate funds Total assets at fair value$ 
 Non-U.S. Plans
December 31, 2022
TotalLevel 1Level 2Level 3
Equities
U.S. equities$ $ $ $ 
Non-U.S. equities    
Fixed income
Short-term investments    
Government securities    
Corporate bonds    
Mortgage/Asset-backed securities    
Insurance contracts    
Insurance buy-in contracts    
Investments in private funds
Private funds    
Real estate funds    
Total$ $ $ $ 
Investments measured at NAV
Private funds 
Real estate funds 
Total assets at fair value$ 
108    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ $ $ Actual return on plan assetsRelating to assets still held at year-end()  ()()Relating to assets sold during the year ()   Purchases     Sales and settlements()()()() Balance at December 31, 2022     Actual return on plan assetsRelating to assets still held at year-end()()   Relating to assets sold during the year   () Purchases     Sales and settlements()()()() Balance at December 31, 2023$ $ $ $ $ 
The Company enters into futures contracts to gain exposure to certain markets. Sufficient cash or cash equivalents are held by the Company's pension plans to cover the notional value of the futures contracts. At December 31, 2023, and 2022, the Company's U.S. plans had contracts with notional amounts of $ million and $ million, respectively. At December 31, 2023, and 2022, the Company's non-U.S. plans had contracts with notional amounts of $ million and $ million, respectively. In both the Company's U.S. and non-U.S. pension plans, the notional derivative exposure is related to outstanding equity and fixed income futures contracts.
Common stocks, preferred stocks, real estate investment trusts, and short-term investments are valued at the closing price reported in the active market in which the individual securities are traded. Corporate bonds, mortgage/asset-backed securities, and government securities are valued either by using pricing models, bids provided by brokers or dealers, quoted prices of securities with similar characteristics, or discounted cash flows, and as such, include adjustments for certain risks that may not be observable such as credit and liquidity risks. Certain securities are held in collective trust funds which are valued using net asset values provided by the administrators of the funds. Investments in private equity, debt, real estate and hedge funds, and direct private investments are valued at estimated fair value based on quarterly financial information received from the investment advisor and/or general partner. Investments in real estate properties are valued on a quarterly basis using the income approach. Valuation estimates are periodically supplemented by third party appraisals. The insurance buy-in contracts represent policies held by the Honeywell UK Pension Scheme, whereby the cost of providing pension benefits to plan participants is funded by the policies. The cash flows from the policies are intended to match the pension benefits. The fair value of these policies is based on an estimate of the policies' exit price.
The Company's funding policy for qualified defined benefit pension plans is to contribute amounts at least sufficient to satisfy regulatory funding standards. In 2023, 2022, and 2021, the Company was not required to make contributions to the U.S. pension plans and no contributions were made. The Company is not required to make any contributions to the U.S. pension plans in 2024. In 2023, contributions of $ million were made to the non-U.S. pension plans to satisfy regulatory funding requirements. In 2024, the Company expects to make contributions of cash and/or marketable securities of approximately $ million to the non-U.S. pension plans to satisfy regulatory funding standards. Contributions for both the U.S. and non-U.S. pension plans do not reflect benefits paid directly from Company assets.
109    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ 2025  2026  2027  2028  2029-2033  
During the twelve months ended December 31, 2023, the Company repurchased $ million of outstanding Honeywell shares of common stock from the Honeywell U.S. Pension Plan Master Trust. The Company completed repurchases of outstanding Honeywell shares of common stock from the Honeywell U.S. Pension Plan Master Trust during 2022.
OTHER POSTRETIREMENT BENEFITS
 % %Rate that the cost trend rate gradually declines to % %Year that the rate reaches the rate it is assumed to remain at   $ 2025  2026  2027  2028  2029-2033  
110    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
NOTE 21.
)$()$()Pension ongoing income—non-service()()()Other postretirement income—non-service()()()Equity income of affiliated companies()()()Gain on sale of non-strategic businesses and assets()()()Foreign exchange (gain) loss   Expense related to UOP Matters   Expense (benefit) related to Russia-Ukraine conflict()  Net expense related to the NARCO Buyout and HWI Sale   Other, net  ()Total Other (income) expense$()$()$()
See Note 19 Commitments and Contingencies for more information on the UOP Matters, NARCO Buyout, and HWI Sale. See Note 4 Repositioning and Other Charges for further discussion of the expense related to the Russia-Ukraine conflict. See Note 2 Acquisitions and Divestitures for further discussion on the gain on sale of non-strategic businesses and assets.
NOTE 22.
reportable business segments. Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions, and assesses operating performance.
Honeywell’s senior management evaluates segment performance based on segment profit. Each segment’s profit is measured as segment income (loss) before taxes excluding general corporate unallocated expense, interest and other financial charges, stock compensation expense, pension and other postretirement income (expense), repositioning and other charges, and other items within Other (income) expense.
In October 2023, the Company announced a realignment, effective in the first quarter of 2024, of its business units comprising its Performance Materials and Technologies, and Safety and Productivity Solutions reportable business segments by forming new reportable business segments: Industrial Automation, and Energy and Sustainability Solutions. Industrial Automation will include Sensing and Safety Technologies, Productivity Solutions and Services, and Warehouse and Workflow Solutions, which are currently included in Safety and Productivity Solutions, in addition to Process Solutions, which is currently included in Performance Materials and Technologies. Energy and Sustainability Solutions will include UOP and Advanced Materials, which are currently included in Performance Materials and Technologies. Further, as part of the realignment, the Company will rename its Aerospace and Honeywell Building Technologies reportable business segments to Aerospace Technologies and Building Automation, respectively. Following the realignment, the Company’s reportable business segments will be Aerospace Technologies, Industrial Automation, Building Automation, and Energy and Sustainability Solutions. The realignment will not impact the Company’s historical consolidated financial position, results of operations, or cash flows. The Company expects to report its financial performance based on this realignment effective with the first quarter of 2024.
111    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ Services   Net Aerospace sales   Honeywell Building TechnologiesProducts   Services   Net Honeywell Building Technologies sales   Performance Materials and TechnologiesProducts   Services   Net Performance Materials and Technologies sales   Safety and Productivity SolutionsProducts   Services   Net Safety and Productivity Solutions sales   Corporate and All OtherServices   Net Corporate and All Other sales    Net sales$ $ $ Depreciation and amortizationAerospace$ $ $ Honeywell Building Technologies   Performance Materials and Technologies   Safety and Productivity Solutions   Corporate and All Other   Total depreciation and amortization$ $ $ Segment profitAerospace$ $ $ Honeywell Building Technologies   Performance Materials and Technologies   Safety and Productivity Solutions   Corporate and All Other()()()Total segment profit$ $ $ 
112    Honeywell International Inc.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HONEYWELL INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars in tables in millions, except per share amounts)
 $ $ Honeywell Building Technologies   Performance Materials and Technologies   Safety and Productivity Solutions   Corporate and All Other   Total capital expenditures$ $ $    /s/ Gregory P. Lewis /s/ Robert D. MaillouxGregory P. Lewis
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer) Robert D. Mailloux
Vice President and Controller
(Principal Accounting Officer)
*By: /s/ Gregory P. Lewis  
  Gregory P. Lewis
Attorney-in-fact		  
February 16, 2024
126    Honeywell International Inc.
FORM 10-K CROSS-REFERENCE INDEX
Page(s)PART I
2
ITEM 1
48
 
30
ITEM 1A.
49
ITEM 1B.
49
ITEM 1C.
50
ITEM 2
50
ITEM 3
50
ITEM 4
PART II.
51
ITEM 5

ITEM 6[Reserved]
17 - 29,
38 - 47
ITEM 7
38
ITEM 7A.
53
ITEM 8
117
ITEM 9
117
ITEM 9A.
118
ITEM 9B.
118
Part III.
118
ITEM 10
118
ITEM 11
119
ITEM 12
120
ITEM 13
120
ITEM 14
Part IV.
120
ITEM 15
120
ITEM 16
125
127    Honeywell International Inc.

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