Honeywell 2013 Annual Report Download - page 32

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
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 settlements that
could have a material adverse effect on our results of operations, cash flows and financial condition.
While we maintain insurance for certain risks, the amount of our insurance coverage may not be
adequate to cover the total amount of all insured claims and liabilities. It also is not possible to obtain
insurance to protect against all our operational risks and liabilities. The incurrence of significant
liabilities for which there is no or insufficient insurance coverage could adversely affect our results of
operations, cash flows, liquidity and financial condition.
Our operations and the prior operations of predecessor companies expose us to the risk of
material environmental liabilities.
Mainly because of past operations and operations of predecessor companies, we are subject to
potentially material liabilities related to the remediation of environmental hazards and to claims of
personal injuries or property damages that may be caused by hazardous substance releases and
exposures. We have incurred remedial response and voluntary clean-up costs for site contamination
and are a party to lawsuits and claims associated with environmental and safety matters, including past
production of products containing hazardous substances. Additional lawsuits, claims and costs
involving environmental matters are likely to continue to arise in the future. 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. These laws and regulations can
impose substantial fines and criminal sanctions for violations, and require installation of costly
equipment or operational changes to limit emissions and/or decrease the likelihood of accidental
hazardous substance releases. We incur, and expect to continue to incur, capital and operating costs
to comply with these laws and regulations. In addition, changes in laws, regulations and enforcement
of policies, the discovery of previously unknown contamination or new technology or information
related to individual sites, the establishment of stricter state or federal toxicity standards with respect to
certain contaminants, or the imposition of new clean-up requirements or remedial techniques could
require us to incur costs in the future that would have a negative effect on our financial condition or
results of operations.
Our expenses include significant costs related to employee and retiree health benefits.
With approximately 131,000 employees, including approximately 51,000 in the U.S., our expenses
relating to employee health and retiree health benefits are significant. In recent years, we have
experienced significant increases in certain of these costs, largely as a result of economic factors
beyond our control, in particular, ongoing increases in health care costs well in excess of the rate of
inflation. Continued increasing health-care costs, legislative or regulatory changes, and volatility in
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