Honeywell 2013 Annual Report Download - page 28

Failure to increase productivity through sustainable operational improvements, as well as an
inability to successfully execute repositioning projects, may reduce our profitability or
adversely impact our businesses
Our profitability and margin growth are dependent upon our ability to drive sustainable
improvements through the Honeywell Enablers. In addition, we seek productivity and cost savings
benefits through repositioning actions and projects, such as consolidation of manufacturing facilities,
transitions to cost-competitive regions and product line rationalizations. Risks associated with these
actions include delays in execution of the planned initiatives, additional unexpected costs, adverse
effects on employee morale and the failure to meet operational targets due to employee attrition. Many
of the restructuring actions are complex and difficult to implement. Hence, we may not realize the full
operational or financial benefits we expected, the recognition of these benefits may be delayed and
these actions may potentially disrupt our operations. See Note 3 Repositioning and Other Charges of
Notes to the Financial Statements in “Item 8. Financial Statements and Supplementary Data” for a
summary of our repositioning actions.
Our future growth is largely dependent upon our ability to develop new technologies that
achieve market acceptance with acceptable margins.
Our businesses operate in global markets that are characterized by rapidly changing technologies
and evolving industry standards. Accordingly, our future growth rate depends upon a number of
factors, including our ability to (i) identify emerging technological trends in our target end-markets, (ii)
develop and maintain competitive products, (iii) enhance our products by adding innovative features
that differentiate our products from those of our competitors and prevent commoditization of our
products, (iv) develop, manufacture and bring products to market quickly and cost-effectively, and (v)
develop and retain individuals with the requisite expertise.
Our ability to develop new products based on technological innovation can affect our competitive
position and requires the investment of significant resources. These development efforts divert
resources from other potential investments in our businesses, and they may not lead to the
development of new technologies or products on a timely basis or that meet the needs of our
customers as fully as competitive offerings. In addition, the markets for our products may not develop
or grow as we currently anticipate. The failure of our technologies or products to gain market
acceptance due to more attractive offerings by our competitors could significantly reduce our revenues
and adversely affect our competitive standing and prospects.
Protecting our intellectual property is critical to our innovation efforts.
We own or are licensed under a large number of U.S. and non-U.S. patents and patent
applications, trademarks and copyrights. Our intellectual property rights may expire or be challenged,
invalidated or infringed upon by third parties or we may be unable to maintain, renew or enter into new
licenses of third party proprietary intellectual property on commercially reasonable terms. In some non-
U.S. countries, laws affecting intellectual property are uncertain in their application, which can affect
the scope or enforceability of our patents and other intellectual property rights. Any of these events or
factors could diminish or cause us to lose the competitive advantages associated with our intellectual
property, subject us to judgments, penalties and significant litigation costs, and/or temporarily or
permanently disrupt our sales and marketing of the affected products or services.
Cybersecurity incidents could disrupt business operations, result in the loss of critical and
confidential information, and adversely impact our reputation and results of operations.
Global cybersecurity threats and incidents can range from uncoordinated individual attempts to
gain unauthorized access to information technology (IT) systems to sophisticated and targeted
measures known as advanced persistent threats, directed at the Company and/or its third party service
providers. While we have experienced, and expect to continue to experience, these types of threats
and incidents, none of them to date have been material to the Company. Although we employ
comprehensive measures to prevent, detect, address and mitigate these threats (including access
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