Honeywell 2005 Annual Report Download - page 24

Government also reserves the right to debar a contractor from receiving new government contracts for fraudulent, criminal or other
egregious misconduct. Debarment generally does not exceed three years.
Changes in legislation or government regulations or policies can have a significant impact on our results of operations.
The sales and margins of each of our segments are directly impacted by government regulations. Safety and performance
regulations (including mandates of the Federal Aviation Administration and other similar international regulatory bodies requiring the
installation of equipment on aircraft), product certification requirements and government procurement practices can impact Aerospace
sales, research and development expenditures, operating costs and profitability. The demand for and cost of providing Automation and
Control Solutions products, services and solutions can be impacted by fire, security, safety, health care and energy efficiency
standards and regulations. Specialty Materials' results of operations can be affected by environmental (e.g., government regulation of
refrigerants), safety and energy efficiency standards and regulations, while emissions and energy efficiency standards and regulations
can impact the demand for turbochargers in our Transportation Systems segment.
Completed acquisitions may not perform as anticipated or be integrated as planned.
We regularly review our portfolio of businesses and pursue growth through acquisitions and seek to divest non-core businesses.
We may not be able to complete transactions on favorable terms, on a timely basis or at all. In addition, our results of operations and
cash flows may be adversely impacted by (i) the failure of acquired businesses to meet or exceed expected returns, (ii) the failure to
integrate acquired businesses into Honeywell on schedule and/or to achieve synergies within the plan and timeframe, and/or (iii) the
inability to dispose of non-core assets and businesses on satisfactory terms and conditions and within the expected time frame.
We cannot predict the outcome of litigation matters, government proceedings and other contingencies with certainty.
We are subject to a number of lawsuits, investigations and disputes (some of which involve substantial amounts claimed) arising
out of the conduct of our business, including matters relating to commercial transactions, government contracts, product liability, prior
acquisitions and divestitures, employee benefits plans, and environmental, health and safety matters. Resolution of these matters can
be prolonged and costly, and the ultimate results or judgments are uncertain. Moreover, our potential liabilities are subject to change
over time due to new developments, changes in settlement strategy or the impact of evidentiary requirements, and we may be required
to pay damage awards or settlements, or become subject to damage awards or settlements, that could have a material adverse effect on
our results of operations, cash flows and financial condition. While we maintain insurance for certain risks, the amount of our
insurance coverage may not be adequate to cover the total amount of all insured claims and liabilities. It also is not possible to obtain
insurance to protect against all operational risks and liabilities. The incurrence of significant liabilities for which there is no or
insufficient insurance coverage could adversely affect our results of operations, cash flows, liquidity and financial condition.
Our operations and the prior operations of predecessor companies expose us to the risk of material environmental liabilities.
Mainly because of past operations and operations of predecessor companies, we are subject to potentially material liabilities
related to the remediation of environmental hazards and to personal injuries or property damages that may be caused by hazardous
substance releases and exposures. We have incurred remedial response and voluntary clean-up costs for site contamination and are a
party to lawsuits and claims associated with environmental and safety matters, including past production of products containing toxic
substances. Additional lawsuits, claims and costs involving environmental matters are likely to continue to arise in the future. 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. These laws and regulations can
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