Honeywell shares sink 8% on pension, asbestos woes

14 November 2002 22:38  [Source: ICIS news]

HOUSTON (CNI)--Shares of aerospace and chemicals conglomerate Honeywell were off 8% or $2.09 to $23.16 Thursday on apparent investor concerns about the company's under-funded pension plan and its asbestos liabilities.

The Morris Township, New Jersey-based industrial giant whose chemical business generated 14% of its $5bn (Euro4.95bn) third quarter sales, said that it has more than $1bn in pension obligations and that asbestos claims continue to increase.

In a 10-Q filing with the US Securities and Exchange Commission (SEC), Honeywell said that due to the poor performance of the stock market, the value of the company's pension fund assets has declined.

Honeywell said it contributed $100m to the pension fund in the third quarter and its board authorised it to make voluntary contributions of an additional $900m in Honeywell stock and cash.

Said Honeywell in its 10Q filing: "We presently anticipate that a substantial portion of any such contributions would consist of Honeywell stock."

Honeywell also said that the cost of securing a settlement for all pending and future asbestos claims relating to North American Refractories Company (NARCO) - which it owned from 1979 to 1986 - "could exceed the value of our existing insurance reserves plus the existing NARCO assets."

Honeywell added: "While any such settlement could have a material adverse impact on our consolidation operating results or operating cash flows in the period it is recognised or paid, we do not believe that it would have a material adverse impact on our consolidation financial position."

By: Mike Sheridan
+1 713 525 2653

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