Honeywell 2014 Annual Report Download - page 19

increased cybersecurity protection and remediation costs, which in turn could adversely affect our
competitiveness and results of operations.
Legal and Regulatory Risks
Our U.S. and non-U.S. tax liabilities are dependent, in part, upon the distribution of income
among various jurisdictions in which we operate.
Our tax expense includes estimates of tax reserves and reflects other estimates and assumptions,
including assessments of future earnings of the Company which could impact the valuation of our
deferred tax assets. Our future results of operations could be adversely affected by changes in the
effective tax rate as a result of a change in the mix of earnings in countries with differing statutory tax
rates, changes in tax laws, regulations and judicial rulings, changes in generally accepted accounting
principles, changes in the valuation of deferred tax assets and liabilities, changes in the amount of
earnings permanently reinvested offshore, the results of audits and examinations of previously filed tax
returns and continuing assessments of our tax exposures and various other governmental enforcement
initiatives.
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
including safety, performance and product certification regulations. Within Aerospace, the operating
results of our Commercial Original Equipment and Commercial Aftermarket business units may be
impacted by, among other things, mandates of the Federal Aviation Administration and other similar
international regulatory bodies requiring the installation of equipment on aircraft. Our Defense and
Space business unit may be effected by changes in government procurement regulations, while
emissions, fuel economy and energy efficiency standards for motor vehicles can impact the
Transportation Systems business unit. Within ACS, the demand for and cost of providing products,
services and solutions can be impacted by fire, security, safety, health care, environmental and energy
efficiency standards and regulations. PMT’s results of operations can be affected by environmental,
safety and energy efficiency standards and regulations.
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. 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. 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.
Item 1B. Unresolved Staff Comments
Not applicable.
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