15. Segment Information

We are principally engaged in the worldwide design, manufacture, distribution and service of industrial flow management equipment. We provide long lead-time, highly engineered pumps, standardized, general purpose pumps, mechanical seals, industrial valves and related automation products and solutions primarily for oil and gas, chemical, power generation, water management and other general industries requiring flow management products and services.

We conduct our operations through these three business segments based on type of product and how we manage the business:

	•		Flow Solutions Group (“FSG”) Engineered Product Division (“EPD”) for long lead-time, engineered pumps and pump systems, mechanical seals, auxiliary systems and replacement parts and related services;

	•		FSG IPD for pre-configured pumps and pump systems and related products and services; and

	•		FCD for engineered and industrial valves, control valves, actuators and controls and related services.

The President of FSG reports directly to the Chief Executive Officer (“CEO”) and the FSG Vice President – Finance reports directly to our Chief Accounting Officer (“CAO”). The structure of FSG consists of two reportable operating segments: EPD and IPD. FCD has a President, who reports directly to our CEO, and a Vice President – Finance, who reports directly to our CAO. For decision-making purposes, our CEO and other members of senior executive management use financial information generated and reported at the reportable segment level. Our corporate headquarters does not constitute a separate division or business segment.

We evaluate segment performance and allocate resources based on each reportable segment’s operating income. Amounts classified as “Eliminations and All Other” include corporate headquarters costs and other minor entities that do not constitute separate segments. Intersegment sales and transfers are recorded at cost plus a profit margin, with the sales and related margin on such sales eliminated in consolidation.

The following is a summary of the financial information of the reportable segments reconciled to the amounts reported in the condensed consolidated financial statements:


Three Months Ended June 30, 2011							Subtotal –		Eliminations
	Flow Solutions Group						Reportable		and All			Consolidated
(Amounts in thousands)	EPD		IPD		FCD		Segments		Other			Total
Sales to external customers	$	539,213	$	202,483	$	384,056	$	1,125,752	$	-		$	1,125,752
Intersegment sales		18,080		22,033		3,029		43,142		(43,142	)		-
Segment operating income		86,686		9,617		59,935		156,238		(16,132	)		140,106

Three Months Ended June 30, 2010							Subtotal –		Eliminations
	Flow Solutions Group						Reportable		and All			Consolidated
(Amounts in thousands)	EPD		IPD		FCD		Segments		Other			Total
Sales to external customers	$	508,260	$	185,821	$	267,015	$	961,096	$	-		$	961,096
Intersegment sales		16,192		12,818		1,764		30,774		(30,774	)		-
Segment operating income		106,263		15,912		42,155		164,330		(18,301	)		146,029


Six Months Ended June 30, 2011							Subtotal –		Eliminations
	Flow Solutions Group						Reportable		and All			Consolidated
(Amounts in thousands)	EPD		IPD		FCD		Segments		Other			Total
Sales to external customers	$	1,038,973	$	363,395	$	720,591	$	2,122,959	$	-		$	2,122,959
Intersegment sales		42,091		37,446		4,091		83,628		(83,628	)		-
Segment operating income		178,442		22,693		107,469		308,604		(38,245	)		270,359

Six Months Ended June 30, 2010							Subtotal –		Eliminations
	Flow Solutions Group						Reportable		and All			Consolidated
(Amounts in thousands)	EPD		IPD		FCD		Segments		Other			Total
Sales to external customers	$	1,025,355	$	372,893	$	521,754	$	1,920,002	$	-		$	1,920,002
Intersegment sales		30,922		21,882		3,086		55,890		(55,890	)		-
Segment operating income		208,633		36,880		82,230		327,743		(39,539	)		288,204