Honeywell 2012 Annual Report Download - page 26

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, vendors, agents or business partners.
We cannot ensure that our extensive compliance controls, policies and procedures will, in all
instances, protect us from reckless, unethical or criminal acts committed by our employees, vendors,
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, data privacy and
rights of employees. 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, fuel economy and energy efficiency standards and regulations can impact the
demand for turbochargers in our Transportation Systems segment. Honeywell sells products that
address safety and environmental regulation and a substantial portion of our portfolio is dedicated to
energy efficient products and services. 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, antitrust, import and
export matters and environmental, health and safety matters. Resolution of these matters can be
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