Business Segment Information

12 Months Ended

May 31, 2013

Business Segment Information

Business Segment Information

16. Business Segment Information

Segment Reporting

        Prior to the second quarter of fiscal year 2013, we reported our activities in four business segments: Aviation Supply Chain; Government and Defense Services; Maintenance, Repair and Overhaul; and Structures and Systems. During the second quarter, we changed our segment presentation to reflect the way our Chief Executive Officer now evaluates performance and the way we are organized internally. We now report our activities in two business segments: Aviation Services and Technology Products. The new Aviation Services segment includes our former Aviation Supply Chain and Maintenance, Repair and Overhaul segments and most of the former Government and Defense Services segment, and the new Technology Products segment represents our former Structures and Systems business segment and our small shelter integration unit, which previously was part of the Government and Defense Services segment. We have recast all prior periods presented to conform to the new segment presentation.

        Sales in the Aviation Services segment are derived from the sale and lease of a wide variety of new, overhauled and repaired engine and airframe parts and components to the commercial aviation and government and defense markets. We provide customized inventory supply chain management, performance based logistics programs, aircraft component repair management services, and aircraft modifications. The segment also includes repair, maintenance and overhaul of aircraft and landing gear and expeditionary airlift services. Cost of sales consists principally of the cost of product, direct labor, overhead, and aircraft maintenance costs.

        Sales in the Technology Products segment are derived from the engineering, designing and manufacturing of containers, pallets and shelters used to support the U.S. military's requirements for a mobile and agile force and system integration services for specialized command and control systems. The segment also manufactures heavy-duty pallets and lightweight cargo containers for the commercial market, in-plane cargo loading and handling systems for commercial and military applications, and steel and composite machined and fabricated parts, components and sub-systems for various aerospace and defense programs. Cost of sales consists principally of the cost of material to manufacture products, direct labor and overhead.

        The accounting policies for the segments are the same as those described in Note 1. Our chief operating decision making officer (Chief Executive Officer) evaluates performance based on the reportable segments and utilizes gross profit as a primary profitability measure. The assets and certain expenses related to corporate activities are not allocated to the segments. Our reportable segments are aligned principally around differences in products and services.

        Gross profit is calculated by subtracting cost of sales from sales. Selected financial information for each segment is as follows:

	For the Year Ended May 31,
	2013		2012		2011
Net sales:
Aviation Services	$	1,614.4	$	1,536.0	$	1,398.2
Technology Products		522.9		529.0		406.9
	$	2,137.3	$	2,065.0	$	1,805.1

	For the Year Ended May 31,
	2013		2012		2011
Gross profit:
Aviation Services	$	227.5	$	237.3	$	235.5
Technology Products		86.7		81.3		71.6
	$	314.2	$	318.6	$	307.1

	May 31,
	2013		2012		2011
Total assets:
Aviation Services	$	1,262.8	$	1,360.1	$	1,236.0
Technology Products		716.6		675.4		326.8
Corporate		157.5		160.2		140.9
	$	2,136.9	$	2,195.7	$	1,703.7

	For the Year Ended May 31,
	2013		2012		2011
Capital expenditures:
Aviation Services	$	28.8	$	77.5	$	115.7
Technology Products		7.7		12.3		6.0
Corporate		1.1		1.4		3.2
	$	37.6	$	91.2	$	124.9

	For the Year Ended May 31,
	2013		2012		2011
Depreciation and amortization:1
Aviation Services	$	59.5	$	56.0	$	47.9
Technology Products		19.6		15.7		10.1
Corporate		11.7		12.8		13.6
	$	90.8	$	84.5	$	71.6

¹

Includes depreciation and amortization of stock-based compensation.

        The following table reconciles segment gross profit to consolidated income before provision for income taxes.

	For the Year Ended May 31,
	2013			2012			2011
Segment gross profit	$	314.2		$	318.6		$	307.1
Selling, general and administrative		(198.4	)		(189.4	)		(182.7	)
Gain on sale of product line		—			—			5.9
Earnings from joint ventures		6.8			1.5			3.3
(Loss) gain on extinguishment of debt		(0.3	)		(0.7	)		0.1
Interest expense		(41.6	)		(37.7	)		(30.7	)
Interest income		1.5			1.2			0.4
Income before provision for income taxes	$	82.2		$	93.5		$	103.4

        The U.S. Department of Defense, other U.S. government agencies and their contractors are our only customers representing 10% or more of total sales in any of the last three fiscal years. Sales by segment for these customers are as follows:

	For the Year Ended May 31,
	2013			2012			2011
Aviation Services	$	548.2		$	534.9		$	540.3
Technology Products		215.0			353.6			352.8
	$	763.2		$	888.5		$	893.1
Percentage of total sales		35.7	%		43.0	%		49.5	%

Geographic Data

	May 31,
	2013		2012
Long-lived assets:
United States	$	834.1	$	882.4
Europe		267.2		248.4
Other		1.9		1.6
	$	1,103.2	$	1,132.4

        Sales to unaffiliated customers in foreign countries (including sales through foreign sales offices of domestic subsidiaries), were approximately $656.5 million (30.7% of total sales), $435.7 million (21.1% of total sales) and $330.2 million (18.3% of total sales) in fiscal 2013, 2012 and 2011, respectively.