Interim Segment Disclosures

6 Months Ended

Jul. 02, 2011

Interim Segment Disclosures

Interim Segment Disclosures

5. Interim Segment Disclosures

The Company is organized into four reportable segments: LXE, Global Tracking, Aviation, and Defense & Space ("D&S").  The Company determines operating segments in accordance with the Company's internal management structure, which is organized based on products and services that share distinct operating characteristics.  Each segment is separately managed and is evaluated primarily upon operating income and earnings before interest expense, income taxes, depreciation and amortization ("EBITDA").

The LXE segment manufactures mobile terminals and wireless data collection equipment for logistics management systems. LXE operates mainly in three target markets; the Americas market, which is comprised of North, South and Central America; the International market, which is comprised of all other geographic areas with the highest concentration in Europe; and direct sales to original equipment manufacturers ("OEM"). LXE's service revenue is mainly generated from product-related repair contracts and extended warranty arrangements. 

The Global Tracking segment provides satellite-based machine-to-machine mobile communications equipment and services to track, monitor and control remote, mobile and fixed assets.  Additionally, Global Tracking provides equipment for the Cospas-Sarsat search-and-rescue system and incident-management software for rescue coordination worldwide.  Global Tracking service revenue is mainly generated from airtime service contracts. 

The Aviation segment designs and develops communications solutions through a broad array of terminals and antennas for the aeronautical market that enable end-users in aircraft to communicate over satellite and air-to-ground links. This segment also designs equipment to process data on board aircraft, including rugged data storage, cabin-wireless connectivity, and air-to-ground connectivity equipment.  Aviation service revenue is generated mainly from product-related service contracts, extended warranty arrangements, and airtime services. 

The Defense & Space segment manufactures custom-designed, highly engineered subsystems and provides design and development services on research projects for defense electronics and satellite applications.  These applications include products from military communications, RADAR, surveillance and countermeasures to high-definition television, satellite radio, and live TV for commercial airlines.  D&S' service revenue is mainly generated from projects that are limited to design and development-related services, and from product-related service contracts.

Following is a summary of the Company's interim segment data (in thousands):

	Three Months Ended		Six Months Ended
	July 2	July 3	July 2	July 3
	2011	2010	2011	2010
Net sales:
LXE	$          37,801	36,365	74,020	66,938
Global Tracking	11,736	10,526	21,644	20,386
Less intercompany sales	(186)	(510)	(358)	(761)
Global Tracking external sales	11,550	10,016	21,286	19,625
Aviation	25,947	25,338	50,957	51,524
Defense & Space	15,741	16,758	29,813	33,292
Total	$          91,039	88,477	176,076	171,379
Operating income (loss):
LXE	$               113	2,077	1,798	2,969
Global Tracking	1,190	684	1,395	838
Aviation	(2,867)	1,816	(2,042)	2,125
Defense & Space	292	1,694	724	2,612
Corporate & Other	(5,958)	(1,097)	(5,536)	(1,445)
Total	$           (7,230)	5,174	(3,661)	7,099
Earnings (loss) before income taxes:
LXE	$               169	2,050	1,826	2,833
Global Tracking	1,184	888	1,343	934
Aviation	(2,943)	1,877	(2,141)	1,805
Defense & Space	292	1,694	724	2,616
Corporate & Other	(6,483)	(1,532)	(6,544)	(2,276)
Total	$           (7,781)	4,977	(4,792)	5,912

The expenses for Corporate & Other in the three and six months ended July 2, 2011included professional fees, mainly related to the proxy contest initiated by one of our shareholders, the review of strategic alternatives, and the proposed merger with Honeywell, and $0.8 million of compensation expense related to an increase in the fair value of phantom stock awards granted to the Company's Directors, which together, was approximately $6.1 million and $6.8 million, respectively.  These expenses were partially offset by costs allocated from Corporate and Other to our operating segments in those periods.  We anticipate additional professional fees and transaction costs related to the merger in the third quarter of 2011.

	July 2	December 31
	2011	2010
Assets:
LXE	$        96,020	78,588
Global Tracking	81,638	80,103
Aviation	153,041	149,834
Defense & Space	41,477	45,968
Corporate & Other	18,752	18,451
Total	$      390,928	372,944
Concentration of net assets by geographic region:
United States	$        54,468	77,006
Canada	75,031	68,677
Europe	122,713	101,880
Other	9,092	9,457
Total	$      261,304	257,020

Sales to no individual customer exceeded 10% of our net sales during the three months and six months ended July 2, 2011, or July 3, 2010.