Honeywell 2012 Annual Report Download - page 19

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, Bendix, BW, Callidus, Enovate, Esser, Fire-Lite, Garrett, Genetron, Gent, Howard
Leight, Jurid, Matrikon, Maxon, MK, North, Notifier, Novar, RMG, Silent Knight, Solstice, Spectra,
System Sensor, Trend, Tridium 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 and software
applications. The Company’s principal research and development activities are in the U.S., India,
Europe and China.
Research and development (R&D) expense totaled $1,847, $1,799 and $1,450 million in 2012,
2011 and 2010, respectively. The increase in R&D expense of 3 percent in 2012 compared to 2011
was mainly due to increased expenditures on the development of new technologies to support existing
and new aircraft platforms in our Aerospace segment and new product development in our Automation
and Control Solutions and Performance Materials Technologies segments. The increase in R&D
expense of 24 percent in 2011 compared to 2010 was mainly due to increased expenditures on the
development of new technologies to support existing and new aircraft platforms in our Aerospace
segment, the development of turbocharging systems for new diesel and gas applications in our
Transportation Systems segment and new product development in our Automation and Control
Solutions segment. R&D as a percentage of sales was 4.9, 4.9 and 4.5 percent in 2012, 2011 and
2010, respectively. Customer-sponsored (principally the U.S. Government) R&D activities amounted to
an additional $835, $867 and $874 million in 2012, 2011 and 2010, 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.
Among other environmental requirements, we are subject to the federal superfund and similar
state and foreign laws and regulations, under which we have been designated as a potentially
responsible party that may be liable for cleanup costs associated with current and former operating
sites and various hazardous waste sites, some of which are on the U.S. Environmental Protection
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