Honeywell 2007 Annual Report Download - page 17

percent of total 2007 Aerospace sales. The principal manufacturing facilities outside the U.S. are in Europe, with
less significant operations in Canada and Asia.
Approximately 2 percent of total 2007 sales of Automation and Control Solutions products were exports of
U.S. manufactured products. Foreign manufactured products and performance of services accounted for 58
percent of total 2007 Automation and Control Solutions sales. The principal manufacturing facilities outside the
U.S. are in Europe with less significant operations in Asia, Canada and Latin America.
Approximately 18 percent of total 2007 sales of Specialty Materials products and services were exports of
U.S. manufactured products. Exports were principally made to Asia and Latin America. Foreign manufactured
products and performance of services comprised 23 percent of total 2007 Specialty Materials sales. The principal
manufacturing facilities outside the U.S. are in Europe, with less significant operations in Asia and Canada.
Exports of U.S. manufactured products comprised 1 percent of total 2007 sales of Transportation Systems
products. Foreign manufactured products accounted for 70 percent of total 2007 sales of Transportation
Systems. The principal manufacturing facilities outside the U.S. are in Europe, with less significant operations in
Asia, Latin America and Canada.
Financial information including net sales and long-lived assets related to geographic areas is included in
Note 24 of Notes to Financial Statements in "Item 8. Financial Statements and Supplementary Data". Information
regarding the economic, political, regulatory and other risks associated with international operations is included in
"Item 1A. Risk Factors."
Raw Materials
The principal raw materials used in our operations are generally readily available. We experienced no
significant problems in the purchase of key raw materials and commodities in 2007. We are not dependent on
any one supplier for a material amount of our raw materials, except related to phenol, a raw material used in our
Specialty Materials segment. We purchase phenol under a supply agreement with one supplier. We have no
reason to believe there is any material risk to this supply.
We are highly dependent on our suppliers and subcontractors in order to meet commitments to our
customers. In addition, many major components and product equipment items are procured or subcontracted on
a sole-source basis with a number of domestic and foreign companies. We maintain a qualification and
performance surveillance process to control risk associated with such reliance on third parties. While we believe
that sources of supply for raw materials and components are generally adequate, it is difficult to predict what
effects shortages or price increases may have in the future.
The costs of certain key raw materials, including natural gas, benzene (the key component in phenol),
ethylene and sulfur in our Specialty Materials' business, steel, nickel, other metals and ethylene glycol in our
Transportation Systems business, and nickel, titanium and other metals in our Aerospace business, have been
and are expected to remain at high price levels. In addition, in 2007 certain large long-term fixed supplier price
agreements expired, primarily relating to components used by our Aerospace business, which in the aggregate,
subjected us to higher volatility in certain component costs. We will continue to attempt to offset raw material cost
increases with formula or long-term price agreements, price increases and hedging activities where feasible. We
have no reason to believe a shortage of raw materials will cause any material adverse impact during 2008. See
"Item 1A. Risk Factors" for further discussion.
Patents, Trademarks, Licenses and Distribution Rights
Our segments are not dependent upon any single patent or related group of patents, or any licenses or
distribution rights. We own, or are licensed under, a large number of patents, patent applications and trademarks
acquired over a period of many years, which relate to many of our products or improvements to those products
and which are of importance to our business. From time to time, new patents and trademarks are obtained, and
patent and trademark licenses and rights are acquired from others. We also have distribution rights of varying
terms for a number of products and services produced by other companies. In our judgment, those rights are
adequate for the conduct of our business. We believe that, in the aggregate, the rights under our patents,
trademarks and licenses
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