Missing from Honeywell investors' scope: grand jury

By SCOTT BARANCIK

© St. Petersburg Times, published May 15, 2000

Publicly traded companies are required by law to tell investors about major legal entanglements that might harm earnings. But as attorneys at Honeywell Inc. well know, many smaller incidents go unreported.

Take the federal government's recent inquiry into possible contract violations at Honeywell. In March, NASA and Department of Defense representatives came to Honeywell's Clearwater facility and left with internal documents concerning satellite navigation devices manufactured at the plant. Subsequently, two Honeywell employees involved in that project testified before a federal grand jury in Tampa, company officials confirmed.

To date, no charges have been filed. Honeywell spokesman Thomas Crane said the company is in the dark about the nature of the government's investigation. And there was no mention of the inquiry in April statements filed with the Securities and Exchange Commission.

Crane said SEC rules require registrants to disclose legal squabbles only when the potential cost exceeds 10 percent of the company's assets. For Honeywell, which had assets of nearly $24-billion as of Dec. 31, the reporting threshold would be $2.4-billion. Besides, Crane said, grand jury hearings don't qualify as "legal proceedings" for SEC reporting purposes.

"We're confident the company has committed no wrongdoing," he said, "and we are well within SEC disclosure requirements by not including this grand jury investigation."

SEC spokesman John Heine declined to address Honeywell specifically, but he verified both the 10 percent threshold and that grand jury hearings needn't be reported.

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