BUSINESS SEGMENTS AND FOREIGN OPERATIONS

12 Months Ended

Jun. 30, 2014

BUSINESS SEGMENTS AND FOREIGN OPERATIONS [Abstract]

BUSINESS SEGMENTS AND FOREIGN OPERATIONS

J.  BUSINESS SEGMENTS AND FOREIGN OPERATIONS

The Company and its subsidiaries are engaged in the manufacture and sale of marine and heavy duty off-highway power transmission equipment.  Principal products include marine transmissions, surface drives, propellers and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches and controls systems.  The Company sells to both domestic and foreign customers in a variety of market areas, principally pleasure craft, commercial and military marine markets, as well as in the energy and natural resources, government and industrial markets.

Net sales by product group is summarized as follows (in thousands):

	2014		2013		2012
Industrial	$	41,188	$	48,110	$	54,062
Land based transmissions		67,055		68,535		146,686
Marine and propulsion systems		149,432		162,823		151,407
Other		6,234		5,814		3,715
Total	$	263,909	$	285,282	$	355,870

Industrial products include clutches, power take-offs and pump drives sold to the agriculture, recycling, construction and oil and gas markets.  The land based transmission products include applications for oilfield and natural gas, military and airport rescue and fire fighting.  The marine and propulsion systems include marine transmission, controls, surface drives, propellers and boat management systems for the global commercial, pleasure craft and patrol boat markets.  Other products includes non-Twin Disc manufactured product sold through our Company-owned distribution entities.

The Company has two reportable segments: manufacturing and distribution.  These segments are managed separately because each provides different services and requires different technology and marketing strategies.  The accounting practices of the segments are the same as those described in the summary of significant accounting policies. Transfers among segments are at established inter-company selling prices.  Management evaluates the performance of its segments based on net earnings.

Information about the Company's segments is summarized as follows (in thousands):

	Manufacturing		Distribution		Total
2014
Net sales	$	227,590	$	121,389	$	348,979
Intra-segment sales		18,416		9,926		28,342
Inter-segment sales		53,960		2,768		56,728
Interest income		311		22		333
Interest expense		2,565		45		2,610
Income taxes		6,233		1,432		7,665
Depreciation and amortization		8,566		549		9,115
Net earnings attributable to Twin Disc		7,029		6,285		13,314
Assets		254,652		57,233		311,885
Expenditures for segment assets		6,429		315		6,744
2013
Net sales	$	245,592	$	130,360	$	375,952
Intra-segment sales		16,140		15,127		31,267
Inter-segment sales		55,746		3,657		59,403
Interest income		479		19		498
Interest expense		3,248		62		3,310
Income taxes		5,112		1,630		6,742
Depreciation and amortization		8,817		497		9,314
Net earnings attributable to Twin Disc		10,141		5,840		15,981
Assets		258,617		56,965		315,582
Expenditures for segment assets		5,705		349		6,054
2012
Net sales	$	325,174	$	129,411	$	454,585
Intra-segment sales		16,189		7,672		23,861
Inter-segment sales		71,134		3,720		74,854
Interest income		688		39		727
Interest expense		3,798		64		3,862
Income taxes		19,444		2,460		21,904
Depreciation and amortization		8,373		871		9,244
Net earnings attributable to Twin Disc		29,572		7,196		36,768
Assets		272,098		58,275		330,373
Expenditures for segment assets		11,821		1,158		12,979

The following is a reconciliation of reportable segment net sales, net earnings and assets to the Company's consolidated totals (in thousands):

	2014			2013			2012
Net sales:
Total net sales from reportable segments	$	348,979		$	375,952		$	454,585
Elimination of inter-company sales		(85,070	)		(90,670	)		(98,715	)
Total consolidated net sales	$	263,909		$	285,282		$	355,870

Net earnings attributable to Twin Disc:
Total net earnings fromreportable segments	$	13,314		$	15,981		$	36,768
Other corporate expenses		(9,670	)		(12,099	)		(10,025	)
Total consolidated net earnings attributable to Twin Disc	$	3,644		$	3,882		$	26,743

Assets
Total assets for reportable segments	$	311,885		$	315,582
Corporate assets and eliminations		(44,900	)		(30,124	)
Total consolidated assets	$	266,985		$	285,458

Other significant items (in thousands):

	Segment Totals		Adjustments			Consolidated Totals
2014
Interest income	$	333	$	(212	)	$	121
Interest expense		2,610		(1,674	)		936
Income taxes		7,665		(3,439	)		4,226
Depreciation and amortization		9,115		1,542			10,657
Expenditures for segment assets		6,744		501			7,245
2013
Interest income	$	498	$	(396	)	$	102
Interest expense		3,310		(1,875	)		1,435
Income taxes		6,742		(1,756	)		4,986
Depreciation and amortization		9,314		1,524			10,838
Expenditures for segment assets		6,054		528			6,582
2012
Interest income	$	727	$	(632	)	$	95
Interest expense		3,862		(2,387	)		1,475
Income taxes		21,904		(4,089	)		17,815
Depreciation and amortization		9,244		1,512			10,756
Expenditures for segment assets		12,979		754			13,733

All adjustments represent inter-company eliminations and corporate amounts.

Geographic information about the Company is summarized as follows (in thousands):

	2014		2013		2012
Net sales
United States	$	108,380	$	127,844	$	165,658
China		33,830		29,119		19,955
Italy		17,396		19,140		27,075
Canada		9,277		10,846		44,889
Other countries		95,026		98,333		98,293
Total	$	263,909	$	285,282	$	355,870

Net sales by geographic region are based on product shipment destination.

	2014		2013
Long-lived assets
United States	$	46,821	$	51,618
Switzerland		8,196		7,964
Belgium		7,450		7,262
Italy		3,531		3,817
Other countries		2,074		2,330
Total	$	68,072	$	72,991

One customer, Sewart Supply, Inc. (a distributor of Twin Disc), accounted for approximately 11% and 11% of consolidated net sales in fiscal 2014 and 2013, respectively.  There were no customers that accounted for 10% or more of consolidated net sales in fiscal 2012.