Honeywell 2010 Annual Report Download - page 29

Economic and Other Factors
In addition to the factors listed below with respect to each of our operating segments, our consolidated operating results are principally driven by:
• Impact of global economic growth rates (U.S., Europe and emerging regions) and industry conditions on demand in our key end markets;
• Overall sales mix, in particular the mix of Aerospace original equipment and aftermarket sales and the mix of Automation and Control Solutions
(ACS) products and services sales;
• The extent to which cost savings from productivity actions are able to offset or exceed the impact of material and non-material inflation;
• The impact of the pension discount rate and asset returns on pension expense, including mark-to-market adjustments, and funding requirements; and
• The impact of changes in foreign currency exchange rate, particularly the U.S. dollar-Euro exchange rate.
Areas of Focus for 2011
The areas of focus for 2011, which are generally applicable to each of our operating segments, include:
• Driving profitable growth by building innovative products that address customer needs;
• Achieving sales growth, technological excellence and manufacturing capability through global expansion, especially focused on emerging regions in
China, India and the Middle East;
• Proactively managing raw material costs through formula and long term supply agreements, price increases and hedging activities, where feasible;
• Driving cash flow conversion through effective working capital management and capital investment in our businesses, thereby enhancing liquidity,
repayment of debt, strategic acquisitions, and the ability to return value to shareholders;
• Actively monitoring trends in short-cycle end markets, such as the Transportation Systems Turbo business, ACS Products businesses, Aerospace
commercial after-market and Specialty Materials Advanced Materials, and continuing to take proactive cost actions;
• Aligning and prioritizing investments in long-term growth considering short-term demand volatility;
• Driving productivity savings through execution of repositioning actions;
• Controlling discretionary spending levels with focus on non-customer related costs;
• Ensuring preparedness to maximize performance in response to improving end market conditions while controlling costs by proactively managing
capacity utilization, supply chain and inventory demand;
• Utilizing our enablers Honeywell Operating System (HOS), Functional Transformation and Velocity Product Development (VPD) to standardize the
way we work, increase quality and reduce the costs of product manufacturing, reduce costs and enhance the quality of our administrative functions
and improve business operations through investments in systems and process improvements;
• Monitoring both suppliers and customers for signs of liquidity constraints, limiting exposure to any resulting inability to meet delivery commitments
or pay amounts due, and identifying alternate sources of supply as necessary; and
• Controlling Corporate costs, including costs incurred for asbestos and environmental matters, pension and other post-retirement expenses and tax
expense.
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