Honeywell 2005 Annual Report Download - page 20

Research and Development
Our research activities are directed toward the discovery and development of new products and processes and the development of
new uses for existing products.
Research and development expense totaled $1,072, $917 and $751 million in 2005, 2004 and 2003, respectively. The increase in
research and development expense in 2004 compared with 2003 resulted primarily from design and developments costs associated
with new aircraft platforms in Aerospace and new product development costs in Automation and Control Solutions. Customer-
sponsored (principally the U.S. Government) research and development activities amounted to an additional $694, $593 and $608
million in 2005, 2004 and 2003, respectively.
Environment
We are subject to various federal, state, local and foreign government requirements regulating the discharge of materials into the
environment or otherwise relating to the protection of the environment. It is our policy to comply with these requirements, and we
believe that, as a general matter, our policies, practices and procedures are properly designed to prevent unreasonable risk of
environmental damage, and of resulting financial liability, in connection with our business. Some risk of environmental damage is,
however, inherent in some of our operations and products, as it is with other companies engaged in similar businesses.
We are and have been engaged in the handling, manufacture, use and disposal of many substances classified as hazardous or toxic
by one or more regulatory agencies. We believe that, as a general matter, our policies, practices and procedures are properly designed
to prevent unreasonable risk of environmental damage and personal injury, and that our handling, manufacture, use and disposal of
these substances are in accord with environmental and safety laws and regulations. It is possible, however, that future knowledge or
other developments, such as improved capability to detect substances in the environment or increasingly strict environmental laws and
standards and enforcement policies, could bring into question our current or past handling, manufacture, use or disposal of these
substances.
Among other environmental requirements, we are subject to the federal superfund and similar state and foreign laws and
regulations, under which we have been designated as a potentially responsible party that may be liable for cleanup costs associated
with various hazardous waste sites, some of which are on the U.S. Environmental Protection Agency's superfund priority list.
Although, under some court interpretations of these laws, there is a possibility that a responsible party might have to bear more than its
proportional share of the cleanup costs if it is unable to obtain appropriate contribution from other responsible parties, we have not had
to bear significantly more than our proportional share in multi-party situations taken as a whole.
Further information regarding environmental matters is included in “Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations,” in Note 21 of Notes to Financial Statements in “Item 8. Financial Statements and
Supplementary Data” and in “Item 1A. Risk Factors.”
Employees
We have approximately 116,000 employees at December 31, 2005, of which approximately 58,000 were located in the United
States.
Item 1A. Risk Factors
Cautionary Statement about Forward-Looking Statements
We have described many of the trends and other factors that drive our business and future results in “Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations”, including under the headings “Economic and Other
Factors”, “Areas of Focus” and “Review of Business Segments”. These sections and other parts of this report (including this Item 1A)
contain
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