Honeywell 2007 Annual Report Download - page 19

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 the overview
of the Company and each of our segments and the discussion of their respective economic and other factors and
areas of focus for 2008. These sections and other parts of this report (including this Item 1A) contain "forward-
looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements are those that address activities, events or developments that management
intends, expects, projects, believes or anticipates will or may occur in the future. They are based on
management's assumptions and assessments in light of past experience and trends, current conditions,
expected future developments and other relevant factors. They are not guarantees of future performance, and
actual results, developments and business decisions may differ significantly from those envisaged by our
forward-looking statements. We do not undertake to update or revise any of our forward-looking statements. Our
forward-looking statements are also subject to risks and uncertainties that can affect our performance in both the
near-and long-term. These forward-looking statements should be considered in light of the information included
in this Form 10-K, including, in particular, the factors discussed below.
Risk Factors
Our business, operating results, cash flows and financial condition are subject to various risks and
uncertainties, including, without limitation, those set forth below, any one of which could cause our actual results
to vary materially from recent results or from our anticipated future results.
Industry and economic conditions may adversely affect the market and operating conditions of our
customers, which in turn can affect demand for our products and services and our results of operations.
The operating results of our segments are impacted by general industry and economic conditions that can
cause changes in spending and capital investment patterns, demand for our products and services and the level
of our manufacturing costs. The operating results of our Aerospace segment, which generated 35 percent of our
consolidated revenues in 2007, are directly tied to cyclical industry and economic conditions, including global
demand for air travel as reflected in new aircraft production and/or the retirement of older aircraft, global flying
hours, and business and general aviation aircraft utilization rates, as well as supplier consolidation, factory
transitions and capacity constraints, and the level and mix of U.S. Government appropriations for defense and
space programs (as further discussed in other risk factors below). The challenging operating environment faced
by the commercial airline industry is expected to continue and may be influenced by a wide variety of factors
including aircraft fuel prices, labor issues, airline consolidation, airline insolvencies, terrorism and safety concerns
as well as changes in regulations. Future terrorist actions or pandemic health issues could dramatically reduce
both the demand for air travel and our Aerospace aftermarket sales and margins. The operating results of our
Automation and Control Solutions (ACS) segment, which generated 36 percent of our consolidated revenues in
2007, are impacted by the level of global residential and commercial construction (including retrofits and
upgrades), capital spending on building and process automation, industrial plant capacity utilization and
expansion, and global economic growth rates. Specialty Materials' operating results, which generated 14 percent
of our consolidated revenues in 2007, are impacted by global economic growth rates, and capacity utilization for
chemical, industrial, refining and petrochemical plants. Transportation Systems' operating results, which
generated 15 percent of our consolidated revenues in 2007, are impacted by global production and demand for
automobiles and trucks equipped with turbochargers, regulatory changes regarding automobile and truck
emissions and fuel economy, and consumer spending levels and patterns for automotive aftermarket and car
care products. Each of the segments is impacted by volatility in raw material prices (as further described below)
and non-material inflation.
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