FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2024

The accounting guidance for fair value measurements and disclosures establishes a three-level fair value hierarchy:

•Level 1 - Inputs are based on quoted prices in active markets for identical assets and liabilities.

•Level 2 - Inputs are based on observable inputs other than quoted prices in active markets for identical or similar assets and liabilities.

•Level 3 - One or more inputs are unobservable and significant.

Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:


	June 30, 2024								December 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Foreign currency exchange contracts	$	—	$	22	$	—	$	22	$	—	$	35	$	—	$	35
Available for sale investments	69		271		—		340		63		217		—		280
Interest rate swap agreements	—		—		—		—		—		18		—		18
Cross currency swap agreements	—		25		—		25		—		—		—		—

Investments in equity securities	20		—		—		20		22		—		—		22
Right to HWI Net Sale Proceeds	—		—		6		6		—		—		9		9
Total assets	$	89	$	318	$	6	$	413	$	85	$	270	$	9	$	364
Liabilities
Foreign currency exchange contracts	$	—	$	23	$	—	$	23	$	—	$	9	$	—	$	9
Interest rate swap agreements	—		212		—		212		—		184		—		184
Commodity contracts	—		—		—		—		—		1		—		1
Cross currency swap agreements	—		83		—		83		—		145		—		145
Total liabilities	$	—	$	318	$	—	$	318	$	—	$	339	$	—	$	339

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 approximates fair value.

As part of the NARCO Buyout (see Note 15 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. The balance of the remaining HWI Net Sale Proceeds as of December 31, 2023, and June 30, 2024, was $9 million and $6 million, respectively, based on the receipt of an additional $3 million in HWI Net Sale Proceeds during the six months ended June 30, 2024.

The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value:


	June 30, 2024				December 31, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets

Long-term receivables	$	759	$	655	$	232	$	173

Liabilities
Long-term debt and related current maturities	23,384		22,291		18,358		17,706

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.

The Company determined the fair value of the long-term debt and related current maturities by utilizing transactions in the listed markets for identical or similar liabilities. As such, the fair value of the long-term debt and related current maturities is considered level 2.