Business Segment Information

12 Months Ended

May. 31, 2015

Business Segment Information

Business Segment Information

13. Business Segment Information

Segment Reporting

        As discussed in Note 2—Discontinued Operations, we began reporting our Telair Cargo Group and PSM businesses as discontinued operations in the third quarter of fiscal 2015. Prior to the decision to sell these two businesses, we reported our activities in the following two business segments:Aviation Servicescomprised of our supply chain, maintenance, repair and overhaul ("MRO") and airlift activities andTechnology Productscomprised of our Telair Cargo Group, Precision Systems Manufacturing, and mobility businesses.

        As a result of the decision to divest the Telair Cargo Group and PSM, we have revised our reportable segments to align to our new organizational structure. We now report our results in two new segments:Aviation Servicescomprised of supply chain and MRO activities andExpeditionary Servicescomprised of airlift and mobility activities. This new presentation reflects the way our chief operating decision making officer (Chief Executive Officer) now evaluates performance and our internal organizational and management structure.

        The Aviation Services segment consists of businesses that provide spares and maintenance support for aircraft operated by our commercial and government/defense customers. 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, landing gear and components. Cost of sales consists principally of the cost of product, direct labor, and overhead.

        The Expeditionary Services segment consists of businesses that provide products and services supporting the movement of equipment and personnel by the U.S. DoD, foreign governments and non-governmental organizations. Sales in the Expeditionary Services segment are derived from the delivery of airlift services to mostly government and defense customers and the design and manufacture of pallets, shelters, and containers used to support the U.S. military's requirements for a mobile and agile force. We also provide system integration services for specialized command and control systems. Cost of sales consists principally of aircraft maintenance costs, depreciation, the cost of material to manufacture products, direct labor and overhead.

        Segment results have been reclassified for all periods presented to reflect our new segment presentation.

        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. Gross profit is calculated by subtracting cost of sales from sales. 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.

        Selected financial information for each segment is as follows:

	For the Year Ended May 31,
	2015		2014		2013
Net sales:
Aviation Services	$	1,316.1	$	1,231.2	$	1,246.9
Expeditionary Services		278.2		477.9		561.0
	$	1,594.3	$	1,709.1	$	1,807.9

	For the Year Ended May 31,
	2015		2014		2013
Gross profit:
Aviation Services	$	143.8	$	172.5	$	145.1
Expeditionary Services		15.5		116.4		114.4
	$	159.3	$	288.9	$	259.5

	May 31,
	2015		2014		2013
Total assets:
Aviation Services	$	919.0	$	930.6	$	882.6
Expeditionary Services		387.6		424.4		479.7
Discontinued operations		17.0		663.4		617.1
Corporate		191.4		175.6		157.5
	$	1,515.0	$	2,194.0	$	2,136.9

	For the Year Ended May 31,
	2015		2014		2013
Capital expenditures:
Aviation Services	$	8.7	$	9.5	$	8.7
Expeditionary Services		20.3		9.0		22.7
Corporate		13.1		2.3		1.1
Total continuing operations		42.1		20.8		32.5
Discontinued operations		4.2		5.7		5.1
	$	46.3	$	26.5	$	37.6

	For the Year Ended May 31,
	2015		2014		2013
Depreciation and amortization:1
Aviation Services	$	28.9	$	25.6	$	24.2
Expeditionary Services		24.9		37.1		41.0
Corporate		9.6		10.6		11.7
Total continuing operations		63.4		73.3		76.9
Discontinued operations		13.5		15.8		13.9
	$	76.9	$	89.1	$	90.8

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,
	2015			2014			2013
Segment gross profit	$	159.3		$	288.9		$	259.5
Selling, general and administrative		(171.4	)		(166.3	)		(164.0	)
Earnings from joint ventures		0.2			3.0			6.7
Loss on extinguishment of debt		(44.9	)		—			(0.3	)
Interest expense		(26.5	)		(28.3	)		(29.1	)
Interest income		0.3			1.5			1.4
Income (Loss) from continuing operations before provision for income taxes	$	(83.0	)	$	98.8		$	74.2

        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,
	2015			2014			2013
Aviation Services	$	237.3		$	199.1		$	192.1
Expeditionary Services		255.8			462.6			541.6
	$	493.1		$	661.7		$	733.7
Percentage of total sales		30.9	%		38.7	%		40.6	%

Geographic Data

	May 31,
	2015		2014
Long-lived assets:
United States	$	523.8	$	809.0
Europe		37.0		271.4
Other		0.1		2.2
	$	560.9	$	1,082.6

        Sales to unaffiliated customers in foreign countries (including sales through foreign sales offices of domestic subsidiaries), were approximately $536.5 million (33.7% of total sales), $456.0 million (26.7% of total sales) and $464.9 million (25.7% of total sales) in fiscal 2015, 2014 and 2013, respectively.