Honeywell 2008 Annual Report Download - page 50

2007 compared with 2006
Transportation Systems sales increased 9 percent in 2007 compared with 2006, primarily due to the 5
percent favorable impact of foreign exchange and increased Turbo Technologies sales volume.
• Turbo Technologies sales increased by 12 percent primarily due to the favorable impact of foreign exchange
and strong sales to European light vehicle manufacturers, resulting from increased production and diesel
penetration rates, as well as sales related to the launch of new turbo platforms by these customers, partially
offset by lower sales to commercial vehicle engine manufacturers.
•
Consumer Products Group ("CPG") sales increased by 4 percent primarily due to the favorable impact of
foreign exchange and higher prices (primarily to pass through ethylene glycol cost increases). This higher
pricing was offset by lower sales volume, primarily due to continued softness in the US automotive
aftermarket.
Transportation System segment profit increased by 2 percent in 2007 compared with 2006 primarily due to
increased productivity, increased prices and lower warranty expense partially offset by the impact of inflation
(primarily relating to nickel components), investment in product development to support future Turbo platforms,
costs associated with CPG product introductions and CPG operational planning and production issues.
2009 Areas of Focus
Transportation Systems primary areas of focus in 2009 include:
• Sustaining superior turbocharger technology through successful platform launches;
•
Maintaining the high quality of current products while executing new product introductions;
•
Increasing global penetration and share of diesel and gasoline turbocharger OEM demand;
•
Increasing plant productivity to address capacity challenges generated by volatility in product demand and
elevated OEM inventory levels ;
•
Align cost structure to reflect current economic outlook, and successful execution of repositioning actions;
•
Alignment of development efforts and costs with new turbo platform launch schedules; and
•
Further global expansion and extension of established strong product brands in CPG.
Repositioning and Other Charges
See Note 3 to the financial statements for a discussion of repositioning and other charges incurred in 2008,
2007 and 2006. The 2008 and 2007 repositioning actions are expected to generate incremental pretax savings of
approximately $180 million in 2009 compared with 2008 principally from planned workforce reductions. Cash
expenditures for severance and other exit costs necessary to execute our repositioning actions were $157, $92
and $142 million in 2008, 2007 and 2006, respectively. Such expenditures for severance and other exit costs
have been funded principally through operating cash flows. Cash expenditures for severance and other exit costs
necessary to execute the remaining actions are expected to approximate $250 million in 2009 and will be funded
through operating cash flows.
The following tables provide details of the pretax impact of total net repositioning and other charges by
segment.
Years Ended December 31,
2008 2007 2006
(Dollars in millions)
Aerospace
Net repositioning charge $ 84 $ 37 $ 10
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