Honeywell 2015 Annual Report Download - page 13

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 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 (or
changes in the interpretation thereof), 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. 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. Changes in tax laws or regulations, including multi- jurisdictional changes enacted in response to the guidelines
provided by the Organization for Economic Co-operation and Development (OECD) to address base erosion and profit
shifting, will increase tax uncertainty and may adversely impact our provision for income taxes.
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 Commercial Original
Equipment and Commercial Aftermarket 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 affected by changes in government procurement regulations, while emissions,
fuel economy and energy efficiency standards for motor vehicles can impact Transportation Systems. 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. Growth in all our businesses within emerging
markets may be adversely impacted by the inability to acquire and retain qualified employees where local employment law
mandates may be restrictive.
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.
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