Honeywell International Inc. (HON) | Goodwill and Intangible Assets

Goodwill and Intangible Assets Accounting Policy

Goodwill and Indefinite-Lived Intangible Assets

Goodwill represents the excess of acquisition costs over the fair value of tangible net assets and identifiable intangible assets of businesses acquired. Goodwill and certain other intangible assets deemed to have indefinite lives are not amortized. Intangible assets determined to have definite lives are amortized over their useful lives. Goodwill and indefinite-lived intangible assets are subject to impairment testing annually as of March 31, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. This testing compares carrying values to fair values and, when appropriate, the carrying value of these assets is reduced to fair value. Honeywell completed annual goodwill impairment test as of March 31, 2012 and determined that there was no impairment as of that date.

Other Intangible Assets with Determinable Lives

Other intangible assets with determinable lives consist of customer lists, technology, patents and trademarks and other intangibles and are amortized over their estimated useful lives, ranging from 2 to 24 years.

Source: Honeywell International Inc., Annual Report

Goodwill and Intangible Assets Disclosure

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Honeywell International Inc., Statement of Financial Position, Goodwill and Intangible Assets

USD $ in millions

		Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
	Patents and technology
	Customer relationships
	Trademarks
	Other
	Determinable life intangibles, gross carrying amount
	Accumulated amortization
	Determinable life intangibles, net carrying amount
	Trademarks
	Indefinite life intangibles
	Other intangible assets, net
	Goodwill
	Goodwill and other intangible assets, net

Source: Based on data from Honeywell International Inc. Annual Reports

Item	Description	The company
Other intangible assets, net	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Honeywell International Inc.'s other intangible assets, net declined from 2010 to 2011 and from 2011 to 2012.
Goodwill	Carrying amount as of the balance sheet date, which is the cumulative amount paid and (if applicable) the fair value of any noncontrolling interest in the acquiree, adjusted for any amortization recognized prior to the adoption of any changes in generally accepted accounting principles (as applicable) and for any impairment charges, in excess of the fair value of net assets acquired in one or more business combination transactions.	Honeywell International Inc.'s goodwill increased from 2010 to 2011 and from 2011 to 2012.
Goodwill and other intangible assets, net	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Honeywell International Inc.'s goodwill and other intangible assets, net increased from 2010 to 2011 and from 2011 to 2012.

Analyst Adjustments: Removal of Goodwill

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Honeywell International Inc., adjustments to financial data

USD $ in millions

		Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
	Adjustment to Total Assets
	Total assets (as reported)
	Less: Goodwill
	Total assets (adjusted)
	Adjustment to Total Honeywell Shareowners' Equity
	Total Honeywell shareowners' equity (as reported)
	Less: Goodwill
	Total Honeywell shareowners' equity (adjusted)

Adjusted Ratios: Removal of Goodwill (Summary)

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Honeywell International Inc., adjusted ratios

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE	%	%	%	%	%
Adjusted ROE	%	%	%	%	%
Return on Assets (ROA)
Reported ROA	%	%	%	%	%
Adjusted ROA	%	%	%	%	%

Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Honeywell International Inc.'s adjusted total asset turnover improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders' equity.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Honeywell International Inc.'s adjusted ROA deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.

Adjusted Total Asset Turnover

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		Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
	As Reported
	Net sales (USD $ in millions)
	Total assets (USD $ in millions)

	Total asset turnover¹
	Adjusted for Goodwill
	Net sales (USD $ in millions)
	Adjusted total assets (USD $ in millions)

	Adjusted total asset turnover²

2012 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= ÷ =

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= ÷ =

Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Honeywell International Inc.'s adjusted total asset turnover improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level.

Adjusted Financial Leverage

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		Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
	As Reported
	Total assets (USD $ in millions)
	Total Honeywell shareowners' equity (USD $ in millions)

	Financial leverage¹
	Adjusted for Goodwill
	Adjusted total assets (USD $ in millions)
	Adjusted total Honeywell shareowners' equity (USD $ in millions)

	Adjusted financial leverage²

2012 Calculations

¹ Financial leverage = Total assets ÷ Total Honeywell shareowners' equity
= ÷ =

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Honeywell shareowners' equity
= ÷ =

Ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.

Adjusted Return On Equity (ROE)

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	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Net income attributable to Honeywell (USD $ in millions)
Total Honeywell shareowners' equity (USD $ in millions)

ROE¹	%	%	%	%	%
Adjusted for Goodwill
Net income attributable to Honeywell (USD $ in millions)
Adjusted total Honeywell shareowners' equity (USD $ in millions)

Adjusted ROE²	%	%	%	%	%

2012 Calculations

¹ ROE = 100 × Net income attributable to Honeywell ÷ Total Honeywell shareowners' equity
= 100 × ÷ = %

² Adjusted ROE = 100 × Net income attributable to Honeywell ÷ Adjusted total Honeywell shareowners' equity
= 100 × ÷ = %

Ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders' equity.

Adjusted Return On Assets (ROA)

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	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Net income attributable to Honeywell (USD $ in millions)
Total assets (USD $ in millions)

ROA¹	%	%	%	%	%
Adjusted for Goodwill
Net income attributable to Honeywell (USD $ in millions)
Adjusted total assets (USD $ in millions)

Adjusted ROA²	%	%	%	%	%

2012 Calculations

¹ ROA = 100 × Net income attributable to Honeywell ÷ Total assets
= 100 × ÷ = %

² Adjusted ROA = 100 × Net income attributable to Honeywell ÷ Adjusted total assets
= 100 × ÷ = %

Ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Honeywell International Inc.'s adjusted ROA deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.