Honeywell 2010 Annual Report Download - page 13

U.S. Government Sales
Sales to the U.S. Government (principally by our Aerospace segment), acting through its various departments and agencies and through prime
contractors, amounted to $4,354, $4,288 and $4,240 million in 2010, 2009 and 2008, respectively, which included sales to the U.S. Department of Defense, as
a prime contractor and subcontractor, of $3,500, $3,455 and $3,412 million in 2010, 2009 and 2008, respectively. U.S. defense spending increased in 2010.
Although we expect a slight decline in our defense and space revenue in 2011 (see Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations), we do not expect to be significantly affected by any proposed changes in 2011 federal spending due principally to the varied mix of
the government programs which impact us (OEM production, engineering development programs, aftermarket spares and repairs and overhaul programs). Our
contracts with the U.S. Government are subject to audits, investigations, and termination by the government. See "Item 1A. Risk Factors."
Backlog
Our total backlog at December 31, 2010 and 2009 was $14,616 and $13,182 million, respectively. We anticipate that approximately $10,609 million of
the 2010 backlog will be filled in 2011. We believe that backlog is not necessarily a reliable indicator of our future sales because a substantial portion of the
orders constituting this backlog may be canceled at the customer's option.
Competition
We are subject to active competition in substantially all product and service areas. Competition is expected to continue in all geographic regions.
Competitive conditions vary widely among the thousands of products and services provided by us, and vary by country. Depending on the particular customer
or market involved, our businesses compete on a variety of factors, such as price, quality, reliability, delivery, customer service, performance, applied
technology, product innovation and product recognition. Brand identity, service to customers and quality are generally important competitive factors for our
products and services, and there is considerable price competition. Other competitive factors for certain products include breadth of product line, research and
development efforts and technical and managerial capability. While our competitive position varies among our products and services, we believe we are a
significant competitor in each of our major product and service classes. However, a number of our products and services are sold in competition with those of
a large number of other companies, some of which have substantial financial resources and significant technological capabilities. In addition, some of our
products compete with the captive component divisions of original equipment manufacturers. See Item 1A "Risk Factors" for further discussion.
International Operations
We are engaged in manufacturing, sales, service and research and development mainly in the United States, Europe, Asia, Canada, Middle East and
Latin America. U.S. exports and foreign manufactured products are significant to our operations. U.S. exports comprised 11, 12 and 10 percent of our total
sales in 2010, 2009 and 2008, respectively. Foreign manufactured products and services, mainly in Europe, were 41, 39 and 39 percent of our total sales in
2010, 2009 and 2008, respectively.
Approximately 17 percent of total 2010 sales of Aerospace-related products and services were exports of U.S. manufactured products and systems and
performance of services such as aircraft repair and overhaul. Exports were principally made to Europe, Canada, Asia and Latin America. Foreign
manufactured products and systems and performance of services comprised approximately 15 percent of total 2010 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 2010 sales of Automation and Control Solutions products and services were exports of U.S. manufactured products.
Foreign manufactured products and performance of services accounted for 58 percent of total 2010 Automation and Control Solutions sales. The principal
manufacturing facilities outside the U.S. are in Europe, with less significant operations in Asia and Canada.
Approximately 30 percent of total 2010 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 27 percent of total 2010 Specialty
Materials sales. The principal manufacturing facilities outside the U.S. are in Europe, with less significant operations in Asia and Canada.
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