Honeywell 2008 Annual Report Download - page 24

Our reputation and ability to do business may be impacted by the improper conduct of employees,
agents or business partners.
We cannot ensure that our extensive compliance controls, policies and procedures will in all instances
protect us from reckless or criminal acts committed by our employees, agents or business partners that would
violate the laws of the jurisdictions in which the Company operates, including laws governing payments to
government officials, competition and data privacy. Any improper actions could subject us to civil or criminal
investigations, monetary and non-monetary penalties and could adversely impact our ability to conduct business,
results of operations and reputation.
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, environmental
and energy efficiency standards and regulations. Specialty Materials' results of operations can be affected by
environmental (e.g. government regulation of fluorocarbons), 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. Legislation or regulations regarding areas such as labor
and employment, employee benefit plans, tax, health and safety matters, import, export and trade, intellectual
property, product certification, product liability and environmental remediation may impact the results of each of
our operating segments and our consolidated results.
Completed acquisitions may not perform as anticipated or be integrated as planned, and divestitures
may not occur 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 discovery of unanticipated issues or liabilities, (iii) the
failure to integrate acquired businesses into Honeywell on schedule and/or to achieve synergies in the planned
amount or within the expected timeframe, (iv) the inability to dispose of non-core assets and businesses on
satisfactory terms and conditions and within the expected timeframe, and (v) the degree of protection provided by
indemnities from sellers of acquired companies and the obligations under indemnities provided to purchasers of
our divested businesses.
We cannot predict with certainty the outcome of litigation matters, government proceedings and other
contingencies and uncertainties.
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 (including asbestos), prior acquisitions and divestitures,
employment, employee benefits plans, intellectual property, import and export matters and environmental, health
and safety matters. Resolution of these matters can be prolonged and costly, and the ultimate results or
judgments are uncertain due to the inherent uncertainty in litigation and other proceedings. 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 our operational risks and liabilities. The
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