Honeywell 2014 Annual Report Download - page 29

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upgrades and lower repair and overhaul activities for our business and general aviation
customers.
•Defense and Space sales decreased by 2% primarily due to lower U.S. government services
revenue and the absence of a prior year royalty gain, partially offset by growth in international
programs.
•Transportation Systems sales decreased by 3% (increased by 5% organic) primarily due to the
Friction Materials divestiture, partially offset by continued growth from new platform launches,
higher global turbo gas penetration and increased commercial vehicle demand in Europe.
Aerospace segment profit increased by 2% due to an 8% increase in operational segment profit,
partially offset by a 6% unfavorable impact from acquisitions, divestitures and other (predominantly
higher OEM Incentive Payments and the absence of a prior year royalty gain), as discussed above.
The increase in operational segment profit is driven primarily by favorable price and productivity, net of
inflation. Cost of products and services sold totaled $11.7 billion in 2014, a decrease of $190 million,
primarily due to the factors discussed above (excluding price).
2013 compared with 2012
Aerospace sales increased primarily due to favorable pricing, increased volumes in our
Commercial Original Equipment business and increased licensing revenue (primarily due to a royalty
gain in the fourth quarter), offset by decreased volumes in our Defense and Space and Commercial
Aftermarket businesses and an increase in incentive payments due to business and general aviation
and air transport and regional OE manufacturers to partially offset their pre-production costs
associated with new aircraft platforms.
•Commercial Original Equipment sales increased by 3% driven primarily by higher air transport
volumes, consistent with the OE Manufacturers’ higher production rates, and strong demand in
the business jet mid to large cabin segment, partially offset by an increase in OEM Incentive
Payments to business and general aviation customers.
•Commercial Aftermarket sales increased by 2% driven primarily by higher retrofits, modifications
and upgrades activities and higher repair and overhaul activities for air transport and regional
customers, partially offset by fewer repair and overhaul activities for business and general
aviation customers.
•Defense and Space sales decreased by 5% primarily due to U.S. government program ramp
downs and lower defense budget, partially offset by a royalty gain in the fourth quarter.
•Transportation Systems sales increased by 5% primarily due to an increase in organic sales
driven by continued strong growth from new platform launches and higher global turbo gas
penetration.
Aerospace segment profit increased by 6% primarily due to an increase in operational segment
profit driven by commercial sales growth, as discussed above, including favorable pricing and
productivity, net of inflation, partially offset by lower defense and space sales, as discussed above.
Cost of products and services sold totaled $11.9 billion in 2013, an increase of approximately $26
million, primarily due to the factors discussed above (excluding price).
Automation and Control Solutions
2014 2013 Change 2012 Change
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,487 $13,465 8% $12,787 5%
Cost of products and services sold . . . . . . . . . . . . . . . 9,447 8,872 8,511
Selling, general and administrative expenses . . . . . . 2,584 2,358 2,197
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256 252 243
Segment profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,200 $ 1,983 11% $ 1,836 8%
20