Honeywell 2011 Annual Report Download - page 20

termination costs and a reasonable profit. If a contract is terminated by the government for our failure to perform we could be liable for reprocurement costs
incurred by the government in acquiring undelivered goods or services from another source and for other damages suffered by the government as permitted
under the contract.
We are also subject to government investigations of business practices and compliance with government procurement regulations. If, as a result of any
such investigation or other government investigations (including violations of certain environmental or export laws), Honeywell or one of its businesses were
found to have violated applicable law, it could be suspended from bidding on or receiving awards of new government contracts, suspended from contract
performance pending the completion of legal proceedings and/or have its export privileges suspended. The U.S. Government also reserves the right to debar a
contractor from receiving new government contracts for fraudulent, criminal or other egregious misconduct. Debarment generally does not exceed three years.
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. Performance Materials and Technologies' 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, safety and environmental matters, import, export and trade, intellectual property,
product certification, and product liability 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 become subject to or be required to pay damage awards or
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