Honeywell 2010 Annual Report Download - page 16

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 2011. 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 economic and
industry 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 the risks and uncertainties 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 global 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 and shipping costs. The operating results of our Aerospace
segment, which generated 32 percent of our consolidated revenues in 2010, are directly tied to cyclical industry and economic conditions, including global
demand for air travel as reflected in new aircraft production, the deferral or cancellation of orders for new aircraft, delays in launch schedules for new aircraft
platforms, the retirement of aircraft, global flying hours, and business and general aviation aircraft utilization rates, as well as changes in customer buying
patterns with respect to aftermarket parts, supplier consolidation, factory transitions, 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 may be influenced by a wide variety of factors including global flying hours, 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 41 percent of our consolidated revenues in 2010, are impacted by the level of global residential and commercial
construction (including retrofits and upgrades), capital spending and operating expenditures on building and process automation, industrial plant capacity
utilization and expansion, inventory levels in distribution channels, and global economic growth rates. Specialty Materials' operating results, which generated
14 percent of our consolidated revenues in 2010, are impacted by global economic growth rates, capacity utilization for chemical, industrial, refining,
petrochemical and semiconductor plants, our customers' availability of capital for refinery construction and expansion, and commodity demand volatility.
Transportation Systems' operating results, which generated 13 percent of our consolidated revenues in 2010, are impacted by global production and demand
for automobiles and trucks equipped with turbochargers, and regulatory changes regarding automobile and truck emissions and fuel economy, delays in
launch schedules for new automotive platforms, and consumer demand and spending for automotive aftermarket and car care products. Demand of global
automotive and truck manufacturers will continue to be influenced by a wide variety of factors, including ability of consumers to obtain financing, ability to
reduce operating costs and overall consumer and business confidence. Each of the segments is impacted by volatility in raw material prices (as further
described below) and non-material inflation.
Raw material price fluctuations, the ability of key suppliers to meet quality and delivery requirements, or catastrophic events can increase the cost of our
products and services, impact our ability to meet commitments to customers, and cause us to incur significant liabilities.
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