Segment Reporting

12 Months Ended

Jul. 31, 2011

Segment Reporting

Segment Reporting

NOTE K Segment Reporting

          Consistent with FASB guidance related to segment reporting, the Company identified two reportable segments: Engine Products and Industrial Products. Segment selection was based on the internal organizational structure, management of operations, and performance evaluation by management and the Company's Board of Directors.

          The Engine Products segment sells to OEMs in the construction, mining, agriculture, aerospace, defense, and truck markets and to independent distributors, OEM dealer networks, private label accounts, and large equipment fleets. Products include air filtration systems, exhaust and emissions systems, liquid filtration systems, and replacement filters.

          The Industrial Products segment sells to various industrial end-users, OEMs of gas-fired turbines, and OEMs and end-users requiring clean air. Products include dust, fume, and mist collectors, compressed air purification systems, air filtration systems for gas turbines, PTFE membrane based products, and specialized air filtration systems for applications including computer hard disk drives.

          Corporate and Unallocated includes corporate expenses determined to be non-allocable to the segments,  interest income, and interest expense. Assets included in Corporate and Unallocated principally are cash and cash equivalents, inventory reserves, certain prepaids, certain investments, other assets, and assets allocated to general corporate purposes.

          The Company has an internal measurement system to evaluate performance and allocate resources based on profit or loss from operations before income taxes. The Company's manufacturing facilities serve both reporting segments. Therefore, the Company uses an allocation methodology to assign costs and assets to the segments. A certain amount of costs and assets relate to general corporate purposes and are not assigned to either segment. Certain accounting policies applied to the reportable segments differ from those described in the summary of significant accounting policies. The reportable segments account for receivables on a gross basis and account for inventory on a standard cost basis.

          Segment allocated assets are primarily accounts receivable, inventories, property, plant and equipment, and goodwill. Reconciling items included in Corporate and Unallocated are created based on accounting differences between segment reporting and the consolidated, external reporting as well as internal allocation methodologies.

          The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, we do not represent that these segments, if operated independently, would report the operating profit and other financial information shown below. In the following table, reclassifications have been made in prior periods as a result of an internal reorganization of Industrial Hydraulics from Industrial Products to Engine Products, which became effective August 1, 2010.

          Segment detail is summarized as follows:

	Engine Products		Industrial Products		Corporate & Unallocated			Total Company
	(thousands of dollars)
2011
Net sales	$	1,440,495	$	853,534	$	—		$	2,294,029
Depreciation and amortization		36,338		19,396		4,757			60,491
Equity earnings in unconsolidated affiliates		3,302		803		—			4,105
Earnings before income taxes		211,255		123,871		(22,863	)		312,263
Assets		888,080		519,730		318,283			1,726,093
Equity investments in unconsolidated affiliates		16,619		2,558		—			19,177
Capital expenditures, net of acquired businesses		36,423		19,442		4,768			60,633
2010
Net sales	$	1,126,007	$	751,057	$	—		$	1,877,064
Depreciation and amortization		33,433		20,935		4,864			59,232
Equity earnings in unconsolidated affiliates		1,859		160		—			2,019
Earnings before income taxes		155,833		91,084		(16,741	)		230,176
Assets		702,300		477,154		320,052			1,499,506
Equity investments in unconsolidated affiliates		14,860		625		—			15,485
Capital expenditures, net of acquired businesses		24,355		15,250		3,544			43,149
2009
Net sales	$	1,027,685	$	840,944	$	—		$	1,868,629
Depreciation and amortization		32,287		20,386		5,924			58,597
Equity earnings in unconsolidated affiliates		2,172		94		—			2,266
Earnings before income taxes		85,896		87,427		(11,898	)		161,425
Assets		631,278		474,291		228,427			1,333,996
Equity investments in unconsolidated affiliates		15,474		517		—			15,991
Capital expenditures, net of acquired businesses		25,390		16,032		4,658			46,080

          Following are net sales by product within the Engine Products segment and Industrial Products segment:

	2011		2010		2009
	(thousands of dollars)
Engine Products segment:
Off-Road Products	$	327,557	$	222,329	$	243,691
Aerospace and Defense Products		104,883		111,977		119,094
On-Road Products		127,107		81,874		71,958
Aftermarket Products*		861,393		691,899		561,846
Retrofit Emissions Products		19,555		17,928		31,096
Total Engine Products segment		1,440,495		1,126,007		1,027,685
Industrial Products segment:
Industrial Filtration Solutions Products		507,646		423,050		477,908
Gas Turbine Products		154,726		150,131		206,760
Special Applications Products		191,162		177,876		156,276
Total Industrial Products segment		853,534		751,057		840,944
Total Company	$	2,294,029	$	1,877,064	$	1,868,629

* Includes replacement part sales to the Company's OEM Customers.

          Geographic sales by origination and property, plant and equipment:

	Net Sales		Property, Plant & Equipment - Net
	(thousands of dollars)
2011
United States	$	941,218	$	141,584
Europe		653,275		131,739
Asia - Pacific		540,874		81,035
Other		158,662		37,144
Total	$	2,294,029	$	391,502
2010
United States	$	745,400	$	139,717
Europe		545,803		122,646
Asia - Pacific		460,470		72,950
Other		125,391		30,579
Total	$	1,877,064	$	365,892
2009
United States	$	778,979	$	141,052
Europe		567,117		138,350
Asia - Pacific		419,423		71,686
Other		103,110		29,980
Total	$	1,868,629	$	381,068

          Concentrations There were no Customers over 10 percent of net sales during Fiscal 2011, 2010, and 2009. There were no Customers over 10 percent of gross accounts receivable in Fiscal 2011 and 2010.