Honeywell 2007 Annual Report Download - page 38

consisted of sales of Primus Epic integrated avionics systems and the TFE 731 and HTF 7000 engines.
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Business and general aviation aftermarket sales increased by 16 percent in 2007 and 1 percent in 2006.
The 2007 increase was primarily due to increased revenue under maintenance service agreements and
higher sales of spare parts. The 2006 increase over 2005 was primarily due to higher sales of spare parts
and increased maintenance activity resulting in part from higher engine utilization, partially offset by lower
sales of mandated upgrades and retrofits of avionics equipment required in 2005 to meet certain mandated
regulatory standards.
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Defense and space sales increased by 8 percent in 2007 and 3 percent in 2006. The 2007 increase was
primarily due to, higher sales of surface systems, a 2 percent positive impact of the acquisition of
Dimensions International (a defense logistics business) and an increase in space sales, including
engineering activity relating to the Orion (CEV) program. The 2006 increase over 2005 was primarily due to
higher sales of surface systems and sales of spare parts for helicopters that offset lower volume of space
sales due to delays in project funding.
Aerospace segment profit increased by 16 percent in 2007 compared to 2006 due primarily to sales volume
growth, increased prices and productivity, partially offset by inflation.
Segment profit increased by 13 percent in 2006 compared with 2005 due primarily to sales volume growth,
increased prices and productivity savings (including benefits from prior restructuring actions) that were partially
offset by inflation and the impact of stronger OE sales that typically have lower margins than aftermarket sales.
2008 Areas of Focus
Aerospace's primary areas of focus for 2008 include:
• Continuing to grow the sales and profitability of the commercial aerospace aftermarket in the highly
competitive and cost focused airline industry;
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Securing Honeywell product content on new aircraft platforms;
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Continuing to design equipment that enhances the safety, performance and durability of aerospace and
defense equipment, while reducing weight and operating costs;
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Developing differentiated, affordable products and services for the defense and space end-market; and
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Delivering world-class customer service and enhancing the customer service experience.
Automation and Control Solutions (ACS)
Overview
ACS provides innovative solutions that make homes, buildings, industrial sites, airport facilities and
infrastructure more efficient, safe and comfortable. Our ACS products and services include controls for heating,
cooling, indoor air quality, ventilation, humidification, lighting and home automation; advanced software
applications for home/building control and optimization; sensors, switches, control systems and instruments for
measuring pressure, air flow, temperature and electrical current; security, fire and gas detection; access control;
video surveillance; remote patient monitoring systems; products for automatic identification and data collection,
installation, maintenance and upgrades of systems that keep buildings safe, comfortable and productive; and
automation and control solutions for industrial plants, including advanced software and automation systems that
integrate, control and monitor complex processes in many types of industrial settings.
Economic and Other Factors
ACS's operating results are principally driven by:
• The growth of global commercial construction (including retrofits and upgrades);
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Demand for residential security and environmental control retrofits and upgrades;
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