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Confidential Treatment Requested by Honeywell International Inc.

HON-001

Honeywell International Inc.

115 Tabor Road

Morris Plains, NJ 07950

August 20, 2018

VIA EDGAR AND COURIER

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Attention:

Andrew Mew and Patrick Kuhn

Division of Corporation Finance

Office of Transportation and Leisure

Re:

Honeywell International Inc.

 Form 10-K for Fiscal Year Ended December 31, 2017

Filed February 9, 2018

 File No. 001-08974

Dear Mr. Mew and Mr. Kuhn:

On behalf of Honeywell International Inc., a Delaware corporation (“Honeywell” or the “Company”), reference is made to the letter from the Staff of the Division of Corporation Finance (the “Staff”), dated August 14, 2018 (the “Comment Letter”), regarding the Company’s Form 10-K for the Fiscal Year Ended December 31, 2017 (“Form 10-K”) as previously filed with the Securities and Exchange Commission (the “Commission”) on February 9, 2018.

Certain confidential portions of this letter have been omitted by means of redacting a portion of the text and replacing it with “**CONFIDENTIAL TREATMENT REQUESTED BY HONEYWELL PURSUANT TO RULE 83**”. Pursuant to the provisions of 17 C.F.R. §200.83, the Company has separately submitted a copy of this letter containing the redacted portions of this letter to the Staff and has requested confidential treatment for those redacted portions.

Certain capitalized terms set forth in this letter are used as defined in the Form 10-K.  For your convenience, we have set forth below the Staff’s comment followed by the Company’s response thereto. All references to page numbers in our response are to the pages of the Form 10-K.

The Company respectfully submits the following as its response to the Staff:

Confidential Treatment Requested by Honeywell International Inc.

HON-002

Securities and Exchange Commission

Division of Corporation Finance

August 20, 2018

 Page 2

Form 10-K for Fiscal Year Ended December 31, 2017

Note 19. Commitments and Contingencies

Asbestos Matters, page 69

1.

We note that you estimate your Bendix and NARCO asbestos related liabilities for future claims based on specific time periods subsequent to your balance sheet date. Please explain why you use different time periods for estimating the liabilities for future asbestos claims for your Bendix products asbestos liability and your NARCO-related asbestos liability. In your response, also please provide us with an analysis that explains your facts and circumstances as well as your basis under ASC 450 to use those specific future time periods. To the extent you determine that the specific future time periods used were incorrect, please provide us with a materiality analysis and your assessment of whether there was a material weakness in internal controls over financial reporting.

Response:

Executive Summary

We have used different methodologies for estimating asbestos-related liabilities for Bendix and for the NARCO Trust due to the significant distinctions in claims data and histories between the two sets of asbestos-related liabilities.  Due to the inherent complexities of modeling numerous layers of uncertain inputs, Honeywell continues to believe that it is critical to retain outside asbestos liability valuation expertise to support our preparation of liability estimates.  The fundamental difference between estimating liability for Bendix and the NARCO Trust is the availability of a robust quantity and quality of information (or in the NARCO Trust case, the lack thereof) that has been available for us to use when attempting to make reasonable estimates of our contingent liability.  This is critical to understanding why we have used different methods to determine our reasonable estimates, for ASC 450-20 purposes, of our Bendix-related asbestos and NARCO Trust-related asbestos liabilities.  We outline below the facts and circumstances behind each of Bendix and the NARCO Trust to clearly differentiate the two and to explain why we have handled the accounting estimates in two different ways.  As described in more detail below and in the Appendices hereto, we are proposing to change our accounting treatment for Bendix asbestos-related liabilities to a terminal value time horizon.  We also discuss our materiality analysis related to that revision and our conclusion that the revision we intend to make does not indicate a material weakness in our internal control over financial reporting.  For NARCO Trust asbestos-related liabilities, we believe based on the absence of reliable claims data, that our current

Confidential Treatment Requested by Honeywell International Inc.

HON-003

Securities and Exchange Commission

Division of Corporation Finance

August 20, 2018

 Page 3

projection of liability is correct as it is the best available estimate and have described in detail our process and position based on the available facts.

Accounting Standards Codification 450, Contingencies (“ASC 450”), the authoritative accounting standard under U.S. GAAP concerning loss contingencies, provides that a company must accrue for a loss when that loss is both probable and reasonably estimable (ASC 450-20-25-2).  If a loss is reasonably possible but not probable and is reasonably estimable, then ASC 450-20-50-3 directs that a company disclose that contingent loss but not record an accrual.  ASC 450-20 makes clear that the same standards for accrual and disclosure of contingent liabilities apply to both unasserted claims as well as asserted claims.  Specifically, ASC 450-20-55-14 provides, “[w]ith respect to unasserted claims and assessments, an entity must determine the degree of probability that a suit may be filed or a claim or assessment may be asserted and the possibility of an unfavorable outcome. If an unfavorable outcome is probable and the amount of loss can be reasonably estimated, accrual of a loss is required by paragraph 450-20-25-2.” We have applied the requirements of ASC 450-20 both for our Bendix and NARCO Trust asbestos-related liabilities.

For Bendix, we believe that the accrual after the change to a terminal value horizon is appropriate as it is probable and reasonably estimable given the quality and quantity of reliable claims data in the tort system.  For the NARCO Trust, we believe that an accrual is necessary despite the challenges of estimating that accrual without sufficiently reliable data, and we believe our accrual estimation methodology (established in 2002) is the most reasonable approach in the absence of a more robust and reliable data set.  The Company has attempted to generate a better estimate of the accrual with the assistance of external experts (valuation experts and law firms) who concur with our assessment that the current inadequate data set does not present an opportunity to further refine the accrual.

Bendix

Upon thorough consideration of the Staff’s comments in its review of the Form 10 submitted to the Staff in connection with the proposed spin-off of Garrett Motion Inc. and of the application of ASC 450, Honeywell determined that we had not appropriately applied the provisions of ASC 450 when measuring asbestos liabilities related to unasserted Bendix claims.  Specifically, we concluded that the appropriate application of ASC 450-20 with respect to unasserted Bendix-related asbestos claims is to reflect the full term of the epidemiological projections in the measurement of such liability.  The Company intends to revise its historical consolidated financial statements in future filings

Confidential Treatment Requested by Honeywell International Inc.

HON-004

Securities and Exchange Commission

Division of Corporation Finance

August 20, 2018

 Page 4

to reflect the inclusion of the full term of the epidemiological projections (through 2059) in its measurement of liability for unasserted Bendix-related asbestos claims.

It is important to note that, unlike the NARCO Trust, Bendix claims have been addressed through the tort system since the mid-1970s, creating a body of historical claims information on which to rely when estimating a future projection of liability.  Each year, we have a substantial body of real-time data of claims asserted, dismissal rates and resolution values that is more than sufficiently robust to support reliable estimates.  The robustness of this data supported our conclusion that application of the claims data to the full term of the epidemiological projections yields a probable and reasonably estimable projection of liability under ASC 450.

As further discussed in Appendix A, Section 1 (Materiality Assessment), Honeywell does not believe that the above-described change in accounting reflects a material error.  In addition, as further discussed in Appendix A, Section 2 (SOX 404 Internal Control Assessment), Honeywell does not believe that the control deficiency that gave rise to the error represents a material weakness in internal control over financial reporting.

NARCO

History of NARCO Litigation and the NARCO Trust

Pre-Bankruptcy Experience.  North American Refractory Company (“NARCO”) asbestos claims arise primarily from alleged occupational exposure to asbestos-containing refractory brick and mortar for high-temperature applications.  NARCO ceased to manufacture these products in 1980, and the first asbestos claims were filed in the tort system against NARCO in 1983. Claims filings and costs were very minimal for a number of years, but increased dramatically in the late 1990s through 2001, which led to NARCO filing for bankruptcy in early 2002.  Once NARCO filed for bankruptcy in 2002, all then current and future NARCO asbestos claims were stayed pending operationalization of the NARCO Trust, a trust established in the course of bankruptcy proceedings for the evaluation and resolution of all NARCO asbestos claims.  Until the Trust became operational in 2013, no claims could be filed, and after the Trust became operational, all claims would be channeled to the Trust and dispositioned in accordance with the Trust Distribution Procedures.

Honeywell’s Involvement.  Honeywell’s predecessor, Allied Corporation owned NARCO from 1979 to 1986.  When the NARCO business was sold, Honeywell’s

Confidential Treatment Requested by Honeywell International Inc.

HON-005

Securities and Exchange Commission

Division of Corporation Finance

August 20, 2018

 Page 5

predecessor entered into a cross-indemnity agreement with NARCO which included an obligation to indemnify the purchaser for asbestos claims.  In connection with NARCO’s Chapter 11 filing, Honeywell proposed and agreed to work toward an agreed resolution of both NARCO and Honeywell’s NARCO-related asbestos liabilities.  Honeywell’s conceptual proposal was to create an asbestos trust, in accordance with 11 U.S.C. § 524(g), to which Honeywell would make an annual capped contribution.  Honeywell’s proposal was that its funding obligation would be evergreen (i.e., Honeywell would agree to provide funding to resolve valid NARCO asbestos claims on an as needed basis for as long as such claims were being presented).  In return, Honeywell would receive the benefit of a §524(g) channeling injunction and play an active role in the administration of the trust.

Ultimately, Honeywell’s initial proposal at the start of the NARCO Chapter 11 case was largely established through the NARCO Plan of Reorganization, consummated in April 2013.  The NARCO Trust Agreement and the NARCO Trust Distribution Procedures are the principal documents setting forth this structure.  These documents establish Honeywell’s evergreen funding obligations.  Importantly, they also establish the material operating rules for the Trust, including Honeywell audit rights and the criteria claimants must meet to have a “valid” claim paid.  These claims criteria include providing the Trust with adequate medical evidence of the claimant’s asbestos related condition and credible evidence of exposure to a specific NARCO asbestos-containing product.

Unique Nature of the NARCO Trust.  The NARCO Trust is unlike any other §524(g) trust.  There is no other trust with evergreen funding, and there is no other trust in which one of the trust settlors – in this case, Honeywell –  retains comprehensive audit rights, for the purpose of ensuring that the Trust continues to adhere to all of the requirements set forth in the Trust Distribution Procedures, including the exposure evidence requirements, throughout its claims processing.  In addition, the Trust’s heightened evidentiary requirements for determining which claims are “valid” and eligible for payout are considered to be more stringent than other § 524(g) asbestos trusts.

Another important aspect of the NARCO Trust is that the Trust holds 79% of the equity interest in (and can receive cash dividends from) Harbison-Walker International, Inc., the reorganized and renamed entity that emerged, fully operational, from the NARCO bankruptcy (“HWI”)1.  Per the Trust Agreement, the NARCO Trust is required to use all HWI proceeds to pay claims until those funds are exhausted.  It is only at this point that Honeywell’s funding obligation to the Trust is triggered.  As a result, there is

1  **CONFIDENTIAL TREATMENT REQUESTED BY HONEYWELL PURSUANT TO RULE 83**

Confidential Treatment Requested by Honeywell International Inc.

HON-006

Securities and Exchange Commission

Division of Corporation Finance

August 20, 2018

 Page 6

an unrelated primary source for funding that can affect Honeywell’s assessment of its accrual.

Trust Not Fully Operational Due to Procedural Disputes.  After the Trust was established in April 2013, the Trust began to receive, process and pay claims that had been “held in inventory” with plaintiffs’ counsel pending operationalization of the Trust.  As the Trust began to process and pay claims in 2014, Honeywell began to assert our audit rights.  In the course of doing so, we identified a number of issues with the manner in which the Trust was implementing the Trust Distribution Procedures.  Two significant deviations from the procedures are illustrative of the issues we encountered during our audit:

•

The NARCO Trust Distribution Procedures require that a claimant provide competent and credible proof that he or she was exposed to a specific NARCO asbestos containing product.  The typical means of doing this is to submit a claimant’s affidavit.  However, many plaintiffs’ firms were filing “form” affidavits – pre-printed, boilerplate forms with identical allegations simply parroting the language of the NARCO Trust Distribution Procedures – that all of their claimants executed.  As a variation on this approach, many claimants filed “check the box” affidavits, which listed all of the NARCO products for a claimant to select from and otherwise provided boilerplate allegations.  The NARCO Trust was accepting these affidavits as “credible” evidence and approving such claims as “valid.”

•

The NARCO Trust Distribution Procedures require that a claimant prove exposure to a specific NARCO asbestos containing product.  However, many claimants did not do so, and instead identified a worksite and alleged they had worked with “refractory products” at that site.  In secret, and in violation of the Trust Agreement’s consultation requirements, the NARCO Trustees adopted a “refractory inference,” essentially permitting the NARCO Trust to assume NARCO exposure if the claimant attested to “refractory” product exposure.

Honeywell’s objections to practices like the foregoing have resulted in litigation before the Bankruptcy Court, an 18-month litigation Standstill Agreement (pursuant to which the Trust deferred its final decision on payment of potentially impacted claims pending resolution of the relevant issue) which expired in October 2017, ongoing mediation and the possibility of further litigation in 201