Segment Information

3 Months Ended

Mar. 28, 2013

Segment Information [Abstract]

Segment Information

23. Segment Information

The Company operates in three principal segments: Fuselage Systems, Propulsion Systems and Wing Systems. Substantially all revenues in the three principal segments are from Boeing, with the exception of Wing Systems, which includes revenues from Airbus and other customers. Approximately 92% of the Company's net revenues for the three months ended March 28, 2013 came from our two largest customers, Boeing and Airbus. All other activities fall within the All Other segment, principally made up of sundry sales of miscellaneous services, tooling contracts, and sales of natural gas through a tenancy-in-common with other companies that have operations in Wichita, Kansas. The Company's primary profitability measure to review a segment's operating performance is segment operating income before unallocated corporate selling, general and administrative expenses, unallocated impact of severe weather event, unallocated research and development and unallocated cost of sales. Unallocated corporate selling, general and administrative expenses include centralized functions such as accounting, treasury and human resources that are not specifically related to our operating segments and are not allocated in measuring the operating segments' profitability and performance and operating margins. Unallocated impact of severe weather event includes property repairs, clean up and recovery costs related to the April 14, 2012 tornado at the Company's Wichita facility. Unallocated research and development includes research and development efforts that benefit the Company as a whole and are not unique to a specific segment. Unallocated cost of sales includes general costs not directly attributable to segment operations, such as early retirement and other incentives. All of these unallocated items are not specifically related to our operating segments and are not allocated in measuring the operating segments' profitability and performance and operating margins.

The Company's Fuselage Systems segment includes development, production and marketing of forward, mid and rear fuselage sections and systems, primarily to aircraft OEMs (OEM refers to aircraft original equipment manufacturer), as well as related spares and maintenance, repairs and overhaul.The Fuselage Systems segment manufactures products at our facilities in Wichita, Kansas and Kinston, North Carolina. The Fuselage Systems segment also includes an assembly plant for the A350 XWB aircraft in Saint-Nazaire, France.

The Company's Propulsion Systems segment includes development, production and marketing of struts/pylons, nacelles (including thrust reversers) and related engine structural components primarily to aircraft or engine OEMs, as well as related spares and MRO services. The Propulsion Systems segment manufactures products at our facilities in Wichita and Chanute, Kansas.

The Company's Wing Systems segment includes development, production and marketing of wings and wing components (including flight control surfaces) as well as other miscellaneous structural parts primarily to aircraft OEMs, as well as related spares and MRO services. These activities take place at the Company's facilities in Tulsa and McAlester, Oklahoma; Kinston, North Carolina; Prestwick, Scotland;and Subang, Malaysia.

The Company's segments are consistent with the organization and responsibilities of management reporting to the chief operating decision-maker for the purpose of assessing performance. The Company's definition of segment operating income differs from operating income as presented in its primary financial statements and a reconciliation of the segment and consolidated results is provided in the table set forth below. Most selling, general and administrative expenses, and all interest expense or income, related financing costs and income tax amounts, are not allocated to the operating segments.

While some working capital accounts are maintained on a segment basis, much of the Company's assets are not managed or maintained on a segment basis. Property, plant and equipment, including tooling, is used in the design and production of products for each of the segments and, therefore, is not allocated to any individual segment. In addition, cash, prepaid expenses, other assets and deferred taxes are managed and maintained on a consolidated basis and generally do not pertain to any particular segment. Raw materials and certain component parts are used in the production of aerostructures across all segments. Work-in-process inventory is identifiable by segment, but is managed and evaluated at the program level. As there is no segmentation of the Company's productive assets, depreciation expense (included in fixed manufacturing costs and selling, general and administrative expenses) and capital expenditures, no allocation of these amounts has been made solely for purposes of segment disclosure requirements.

The following table shows segment revenues and operating income for the threemonths ended March 28, 2013 and March 29, 2012:

		Three Months Ended
		March 28,		March 29,
		2013		2012
Segment Revenues
	Fuselage Systems	$	717.9	$	622.6
	Propulsion Systems		375.3		344.0
	Wing Systems		343.3		296.6
	All Other		5.7		2.6
		$	1,442.2	$	1,265.8
Segment Operating Income (Loss)
	Fuselage Systems	$	121.4	$	88.1
	Propulsion Systems		65.3		58.3
	Wing Systems (1)		18.2		20.8
	All Other		1.6		0.2
			206.5		167.4
Unallocated corporate SG&A			(39.6)		(40.7)
Unallocated impact of severe weather event			(8.8)		-
Unallocated research and development			(1.8)		(1.1)
Unallocated cost of sales(2)			(11.8)		(3.3)
	Total operating income (loss)	$	144.5	$	122.3

• For 2013, net of $15.3 forward loss charge recorded for the B787wing program. For 2012, net of $2.7 and $10.7 forward loss charges recorded for the B747-8 and G280 wing programs, respectively.
• For 2013, includes a warranty reserve of $10.0 and $1.8 related to early retirement incentives to eligible employees. For 2012, includes $2.3 reclassified from segment operating income to unallocated cost of sales to conform to current year presentation and charges of $1.0 related to early retirement incentives to eligible employees.

		Three Months Ended
		March 28,		March 29,
		2013		2012
Segment Revenues
	Fuselage Systems	$	717.9	$	622.6
	Propulsion Systems		375.3		344.0
	Wing Systems		343.3		296.6
	All Other		5.7		2.6
		$	1,442.2	$	1,265.8
Segment Operating Income (Loss)
	Fuselage Systems	$	121.4	$	88.1
	Propulsion Systems		65.3		58.3
	Wing Systems (1)		18.2		20.8
	All Other		1.6		0.2
			206.5		167.4
Unallocated corporate SG&A			(39.6)		(40.7)
Unallocated impact of severe weather event			(8.8)		-
Unallocated research and development			(1.8)		(1.1)
Unallocated cost of sales(2)			(11.8)		(3.3)
	Total operating income (loss)	$	144.5	$	122.3