Note 20. Segment information

Woodward serves the aerospace and industrial markets through its two reportable segments – Aerospace and Industrial. When appropriate, Woodward’s reportable segments are aggregations of Woodward’s operating segments. Woodward uses operating segment information internally to manage its business, including the assessment of operating segment performance and decisions for the allocation of resources between operating segments.

The accounting policies of the reportable segments are the same as those of the Company. Woodward evaluates segment profit or loss based on internal performance measures for each segment in a given period. In connection with that assessment, Woodward generally excludes matters such as certain charges for restructuring costs, interest income and expense, certain gains and losses from asset dispositions, or other non-recurring and/or non-operationally related expenses.

A summary of consolidated net sales and earnings by segment follows:



	Year Ended September 30,
	2017		2016		2015
Segment external net sales:
Aerospace	$	1,342,339	$	1,233,176	$	1,160,883
Industrial		756,346		789,902		877,420
Total consolidated net sales	$	2,098,685	$	2,023,078	$	2,038,303
Segment earnings:
Aerospace	$	257,813	$	232,166	$	187,747
Industrial		78,991		82,237		126,641
Nonsegment expenses		(58,352)		(63,166)		(49,362)
Interest expense, net		(25,705)		(24,751)		(24,077)
Consolidated earnings before income taxes	$	252,747	$	226,486	$	240,949

Segment assets consist of accounts receivable, inventories, property, plant, and equipment, net, goodwill, and other intangibles, net. A summary of consolidated total assets, consolidated depreciation and amortization and consolidated capital expenditures follows:



	Year Ended September 30,
	2017		2016		2015
Segment assets:
Aerospace	$	1,722,789	$	1,637,522	$	1,566,421
Industrial		695,264		705,169		653,848
Unallocated corporate property, plant and equipment, net		104,755		89,988		85,834
Other unallocated assets		234,301		209,683		206,301
Consolidated total assets	$	2,757,109	$	2,642,362	$	2,512,404

Segment depreciation and amortization:
Aerospace	$	47,277	$	40,825	$	46,488
Industrial		24,421		20,412		20,768
Unallocated corporate amounts		9,219		7,799		7,979
Consolidated depreciation and amortization	$	80,917	$	69,036	$	75,235

Segment capital expenditures:
Aerospace	$	62,812	$	90,749	$	150,021
Industrial		12,189		62,065		113,292
Unallocated corporate amounts		17,335		22,878		23,299
Consolidated capital expenditures	$	92,336	$	175,692	$	286,612

Sales to General Electric Company were made by both of Woodward’s reportable segments and totaled approximately 16% of net sales in fiscal year 2017, 17% of net sales in fiscal year 2016, and 18% of net sales in fiscal year 2015. Sales to The Boeing Company were made by Woodward’s Aerospace segment and totaled approximately 11% of net sales in fiscal year 2017, 8% of net sales in fiscal year 2016, and 7% of net sales in fiscal year 2015.

Accounts receivable from General Electric Company totaled approximately 10% of accounts receivable at September 30, 2017 and 14% of accounts receivable at September 30, 2016. Accounts receivable from Weichai Westport, Inc. totaled approximately 14% of accounts receivable at September 30, 2017 and 3% of accounts receivable at September 30, 2016.

U.S. Government related sales from Woodward’s reportable segments were as follows:



	Direct U.S. Government Sales		Indirect U.S. Government Sales		Total U.S. Government Related Sales
Fiscal year ended September 30, 2017
Aerospace	$	106,685	$	362,536	$	469,221
Industrial		3,726		10,814		14,540
Total net external sales	$	110,411	$	373,350	$	483,761
Percentage of total net sales		5%		18%		23%

Fiscal year ended September 30, 2016
Aerospace	$	103,026	$	310,952	$	413,978
Industrial		6,550		9,845		16,395
Total net external sales	$	109,576	$	320,797	$	430,373
Percentage of total net sales		5%		16%		21%

Fiscal year ended September 30, 2015
Aerospace	$	92,322	$	258,391	$	350,713
Industrial		4,836		8,839		13,675
Total net external sales	$	97,158	$	267,230	$	364,388
Percentage of total net sales		5%		13%		18%

Accounts receivable from the U.S. Government totaled approximately 3% of accounts receivable at September 30, 2017 and 2% of accounts receivable at September 30, 2016.

The customers who account for approximately 10% or more of sales to each of Woodward’s reportable segments for the fiscal year ended September 30, 2017 follow:



		Customer
Aerospace		The Boeing Company, United Technologies Corporation, General Electric Company
Industrial		General Electric Company

Net sales by geographical area, as determined by the location of the customer invoiced, were as follows:



	Year Ended September 30,
	2017		2016		2015
United States	$	1,211,902	$	1,118,833	$	1,054,895
Europe (1)		478,725		537,901		569,322
Asia		288,252		228,683		241,875
Other countries		119,806		137,661		172,211
Consolidated net sales	$	2,098,685	$	2,023,078	$	2,038,303

(1)

As a percentage of consolidated net sales, net sales to customers in Germany accounted for 8% for the year ended September 30, 2017, 10% for the year ended September 30, 2016 and 10% for the year ended September 30, 2015.

Property, plant, and equipment, net by geographical area, as determined by the physical location of the assets, were as follows:



	At September 30,
	2017		2016
United States	$	872,947	$	826,225
Germany		24,541		24,468
Other countries		24,555		25,657
Consolidated property, plant and equipment, net	$	922,043	$	876,350