Honeywell 2008 Annual Report Download - page 18

generally adequate, it is difficult to predict what effects shortages or price increases may have in the future.
Furthermore, the inability of these suppliers to meet their quality and/or delivery commitments to us, due to
bankruptcy, natural disasters or any other reason, may result in significant costs and delay, including those in
connection with the required recertification of parts from new suppliers with our customers or regulatory agencies.
Patents, Trademarks, Licenses and Distribution Rights
Our segments are not dependent upon any single patent or related group of patents, or any licenses or
distribution rights. We own, or are licensed under, a large number of patents, patent applications and trademarks
acquired over a period of many years, which relate to many of our products or improvements to those products
and which are of importance to our business. From time to time, new patents and trademarks are obtained, and
patent and trademark licenses and rights are acquired from others. We also have distribution rights of varying
terms for a number of products and services produced by other companies. In our judgment, those rights are
adequate for the conduct of our business. We believe that, in the aggregate, the rights under our patents,
trademarks and licenses are generally important to our operations, but we do not consider any patent, trademark
or related group of patents, or any licensing or distribution rights related to a specific process or product, to be of
material importance in relation to our total business. See "Item 1A. Risk Factors" for further discussion.
We have registered trademarks for a number of our products and services, including Honeywell, Aclar,
Ademco, Autolite, Bendix, Enovate, Fire-Lite, FRAM, Garrett, Genetron, Hand Held, Holts, Jurid, Metrologic, MK,
North, Notifier, Novar, Prestone, Redex, Simoniz, Spectra, System Sensor and UOP.
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 $1,543, $1,459 and $1,411 million in 2008, 2007 and
2006, respectively. The increase in R&D expense in 2008 compared to 2007 of 6 percent was mainly due to
additional product, design and development costs in Automation and Control Solutions, increased expenditures
on the development of products for new aircraft platforms and increased expenditures on the development of
turbocharging systems for new platforms. The increase in R&D expense in 2007 compared to 2006 of 3 percent
was mainly due to additional product, design and development costs in Automation and Control Solutions and
increased expenditures on the development of turbocharging systems for new platforms. Customer-sponsored
(principally the U.S. Government) R&D activities amounted to an additional $903, $881 and $777 million in 2008,
2007 and 2006, 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 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.
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