Honeywell 2013 Annual Report Download - page 31

various government regulations. When appropriate and prudent, we have made adjustments and paid
voluntary refunds in the past and may do so in the future.
U.S. Government contracts are subject to termination by the government, either for the
convenience of the government or for our failure to perform consistent with the terms of the
applicable contract. In the case of a termination for convenience, we are typically entitled to
reimbursement for our allowable costs incurred, plus 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, 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
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