Business Segment Information

12 Months Ended

May 31, 2017

Business Segment Information

Business Segment Information

14. Business Segment Information

Segment Reporting

        Consistent with how our chief operating decision making officer (Chief Executive Officer) evaluates performance and the way we are organized internally, we report our activities in two segments:Aviation Servicescomprised of supply chain and MRO activities andExpeditionary Servicescomprised of airlift and mobility activities.

        The Aviation Services segment consists of aftermarket support and services 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 engineering, design, and system integration services for specialized command and control systems and design and manufacture advanced composite materials for commercial, business and military aircraft. Cost of sales consists principally of aircraft maintenance costs, depreciation, 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. 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,
	2017		2016		2015
Net sales:
Aviation Services	$	1,485.4	$	1,425.0	$	1,316.1
Expeditionary Services		282.2		273.9		305.3
	$	1,767.6	$	1,698.9	$	1,621.4

	For the Year Ended May 31,
	2017		2016		2015
Gross profit (loss):
Aviation Services	$	246.2	$	229.8	$	143.8
Expeditionary Services		30.3		8.1		(13.0	)
	$	276.5	$	237.9	$	130.8

	May 31,
	2017		2016		2015
Total assets:
Aviation Services	$	1,057.0	$	944.8	$	919.0
Expeditionary Services		338.8		384.8		406.0
Corporate and discontinued operations		108.3		126.4		129.1
	$	1,504.1	$	1,456.0	$	1,454.1

	For the Year Ended May 31,
	2017		2016		2015
Capital expenditures:
Aviation Services	$	15.0	$	16.4	$	8.7
Expeditionary Services		10.4		50.4		20.3
Corporate		8.2		22.1		13.1
Total continuing operations		33.6		88.9		42.1
Discontinued operations		—		0.1		4.2
	$	33.6	$	89.0	$	46.3

	For the Year Ended May 31,
	2017		2016		2015
Depreciation and amortization:1
Aviation Services	$	30.8	$	26.2	$	28.9
Expeditionary Services		22.2		24.9		26.9
Corporate		10.9		6.7		9.6
Total continuing operations		63.9		57.8		65.4
Discontinued operations		—		—		11.5
	$	63.9	$	57.8	$	76.9

1 Includes depreciation and amortization of stock-based compensation.

        The following table reconciles segment gross profit to income (loss) from continuing operations before provision for income taxes.

	For the Year Ended May 31,
	2017			2016			2015
Segment gross profit	$	276.5		$	237.9		$	130.8
Selling, general and administrative		(196.7	)		(173.2	)		(172.4	)
Earnings (Loss) from joint ventures		(0.2	)		(0.3	)		0.2
Loss on extinguishment of debt		—			(0.4	)		(44.9	)
Interest expense		(5.5	)		(6.4	)		(27.2	)
Interest income		0.2			0.3			0.3
Income (Loss) from continuing operations before provision for income taxes	$	74.3		$	57.9		$	(113.2	)

        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,
	2017			2016			2015
Aviation Services	$	260.2		$	301.1		$	237.3
Expeditionary Services		194.6			222.5			258.3
	$	454.8		$	523.6		$	495.6
Percentage of total sales		25.7	%		30.8	%		30.6	%

        Sales by type of product/service was as follows:

	For the Year Ended May 31,
	2017		2016		2015
Aviation supply chain	$	998.7	$	903.2	$	847.6
Maintenance, repair and overhaul services		486.7		521.8		468.5
Expeditionary airlift services		176.8		173.4		173.3
Mobility products		105.4		100.5		132.0
	$	1,767.6	$	1,698.9	$	1,621.4

Geographic Data

	May 31,
	2017		2016
Long-lived assets:
United States	$	452.8	$	489.9
Europe		122.5		73.1
Other		40.3		11.3
	$	615.6	$	574.3

        Sales to unaffiliated customers in foreign countries (including sales through foreign sales offices of domestic subsidiaries) were approximately $618.8 million (35.0% of total sales), $494.6 million (29.1% of total sales) and $538.9 million (33.2% of total sales) in fiscal 2017, 2016 and 2015, respectively.