Honeywell 2008 Annual Report Download - page 39

(3) Costs associated with restricted stock units ("RSU") were excluded from Segment Profit, on a prospective
basis, commencing January 1, 2008. Stock compensation expense, including RSU expense, totaled $112
and $106 million for the years ended December 31, 2007 and 2006, respectively. Stock option expense is
included for all periods presented.
Aerospace
Overview
Aerospace is a leading global supplier of aircraft engines, avionics, and related products and services for
aircraft manufacturers, airlines, aircraft operators, military services, and defense and space contractors. Our
Aerospace products and services include auxiliary power units, propulsion engines, environmental control
systems, engine controls, flight safety, communications, navigation, radar and surveillance systems, aircraft
lighting, management and technical services, advanced systems and instruments, aircraft wheels and brakes and
repair and overhaul services. Aerospace sells its products to original equipment (OE) manufacturers in the air
transport, regional, business and general aviation aircraft segments, and provides spare parts and repair and
maintenance services for the aftermarket (principally to aircraft operators). The United States Government is also
a major customer for our defense and space products.
Economic and Other Factors
Aerospace operating results are principally driven by:
• New aircraft production rates and delivery schedules set by commercial air transport, regional jet, business
and general aviation OE manufacturers, as well as airline profitability and retirement of aircraft from service;
•
Global demand for commercial air travel as reflected in global flying hours and utilization rates for corporate
and general aviation aircraft, as well as the demand for spare parts and maintenance and repair services for
aircraft currently in use;
•
Level and mix of U.S. Government appropriations for defense and space programs and military activity; and
•
Availability and price volatility of raw materials such as titanium and other metals.
Results of Operations
2008 2007 2006
(Dollars in millions)
Net sales $ 12,650 $ 12,236 $ 11,124
% change compared with prior year 3% 10%
Segment profit $ 2,300 $ 2,197 $ 1,892
% change compared with prior year 5% 16%
Aerospace sales by major customer end-markets were as follows:
Customer End-Markets
% of Aerospace
Sales % Change in
Sales
2008 2007 2006
2008
Versus
2007
2007
Versus
2006
Commercial:
Air transport and regional original equipment 14% 16% 16% (6)% 10%
Air transport and regional aftermarket 23 22 22 4 8
Business and general aviation original equipment 11 11 12 5 16
Business and general aviation aftermarket 10 10 10 6 16
Defense and Space 42 41 40 6 8
Total 100% 100% 100% 3% 10%