Honeywell 2006 Annual Report Download - page 19

Research and Development
Our research activities are directed toward the discovery and development of new products, technologies and processes and the
development of new uses for existing products. The Company has research and development activities in the U.S., Europe, India and
China.
Research and development (R&D) expense totaled $1,411, $1,072 and $917 million in 2006, 2005 and 2004, respectively. The
increase in R&D expense in 2006 compared to 2005 of 32 percent was primarily due to the impact of additional R&D expense for
UOP in Specialty Materials as well as product, design and development costs in Aerospace and Automation and Control Solutions.
The increase in research and development expense in 2005 compared with 2004 of 17 percent 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) R&D activities amounted to an additional $777, $694 and
$593 million in 2006, 2005 and 2004, 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 current and former operating sites and 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, including the current status of significant environmental matters and the financial impact incurred for
remediation of such environmental matters, if any, 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 118,000 employees at December 31, 2006, of which approximately 56,000 were located in the United
States.
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