Honeywell 2002 Annual Report Download - page 210

prior year divestitures. The lower commercial sales resulted mainly from the
impact of the terrorist attacks on September 11, 2001 and the already weak
economy. Sales to our business and general aviation OE customers were also lower
by 12 percent. This decrease was partially offset by higher sales in our defense
and space segment, with OE sales up by 11 percent and aftermarket sales higher
by 5 percent, resulting primarily from increased military activity. Sales to our
business and general aviation aftermarket customers also increased by 7 percent.
Aerospace segment profit in 2002 was $1,358 million, a decrease of $383 million,
or 22 percent compared with 2001. This decrease was due mainly to substantially
lower sales of higher-margin commercial aftermarket products such as avionics
upgrades and spare parts. Also, higher retirement benefit costs and contract
losses contributed to this decline in segment profit. This decrease was
partially offset by lower costs primarily from workforce reductions and a
decline in discretionary spending. Aerospace segment profit in 2001 was $1,741
million, a decrease of $454 million, or 21 percent compared with 2000. This
decrease related principally to lower sales of higher-margin aftermarket
products, higher retirement benefit costs, engineering and development costs
related to new products and the impact of prior year divestitures. This decrease
was partially offset by the impact of cost-reduction actions, primarily
workforce reductions.
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