Segments

Aircraft Controls. We design, manufacture and integrate primary and secondary flight controls for military and commercial aircraft and provide aftermarket support. Our systems are used in large commercial transports, supersonic fighters, multi-role military aircraft, business jets and rotorcraft. We also supply ground-based navigation aids. We are well positioned on both development and production programs. Typically, development programs require concentrated periods of research and development by our engineering teams and involve design, development, testing and integration. We are currently working on several large development programs including the F-35 Joint Strike Fighter, Boeing 787 Dreamliner, COMAC C919, Airbus A350XWB, several business jet programs and a new military air refueling tanker KC-46. The F-35 flight test phase has expanded covering three variants and initial production is increasing with aircraft being delivered to international partners. The 787 program began design and development in 2004 and has transitioned into initial production. Development activity on 787 derivative aircraft will continue through 2013. The Airbus A350XWB is in development with entry into service planned for 2014. Production programs are generally long-term manufacturing efforts that extend for as long as the aircraft builder receives new orders. Our large military production programs include the F/A-18E/F Super Hornet, the V-22 Osprey tiltrotor, the Black Hawk/Seahawk helicopter and the F-35. Our large commercial production programs include the full line of Boeing 7-series aircraft, Airbus A330 and a variety of business jets. Aftermarket sales, which represented 34% of 2012 sales for this segment, consist of the maintenance, repair, overhaul and parts supply for both military and commercial aircraft. Further, we sell to both military and commercial customers spares inventory that they store throughout the world in order to minimize down time.

Space and Defense Controls. Space and Defense Controls provides controls for satellites and space vehicles, launch vehicles, armored combat vehicles, tactical and strategic missiles, security and surveillance and other defense applications. For commercial and military satellites, we design, manufacture and integrate propulsion systems and components (attitude control and orbit insertion) and actuation systems and components for deploying solar panels and antennae pointing. The Atlas, Delta and Ariane launch vehicle programs use our steering and propulsion controls. We are also developing products for NASA’s new Space Launch System. We design and build steering and propulsion controls for tactical and strategic missile programs, including Hellfire, TOW and Trident. We supply valves and steering controls on the U.S. National Missile Defense Agency's Ballistic Missile Defense initiative. We design and manufacture systems for gun aiming, stabilization, turrets, automatic ammunition loading and driver vision enhancement on armored combat vehicles for a variety of international and U.S. customers. We design, build and integrate stores management systems for light attack aerial reconnaissance platforms. We also design and build high power, quiet controls for naval surface ship and submarine applications.

Industrial Systems. Industrial Systems serves a global customer base across a variety of markets. For wind energy, we design and manufacture electric pitch controls and blade monitoring systems for wind turbines. We supply electromechanical motion simulation bases for the flight simulation and training markets. For the plastics making machinery market, we design, manufacture and integrate systems for all axes of injection and blow molding machines using leading edge technology, both hydraulic and electric. In the power generation market, we design, manufacture and integrate complete control assemblies for fuel, steam and variable geometry control applications. For the test markets, we supply controls for automotive, structural and fatigue testing. Metal forming markets use our systems to provide precise control of position, velocity, force, pressure, acceleration and other critical parameters. Heavy industry uses our high precision electrical and hydraulic servovalves for steel and aluminum mill equipment. Other markets include oil exploration, material handling, auto racing, carpet tufting, paper and lumber mills.

Components. The Components segment serves many of the same markets as our other segments. The Components segment’s three largest product categories are slip rings, fiber optic rotary joints and motors. Slip rings and fiber optic rotary joints use sliding contacts and optical technology to allow unimpeded rotation while delivering power and data through a rotating interface. They come in a range of sizes that allow them to be used in many applications, including diagnostic imaging CT scan medical equipment featuring high-speed data communications, de-icing and data transfer for rotorcraft, forward-looking infrared camera installations, radar pedestals, satellites, missiles, wind turbines, surveillance cameras and remotely operated vehicles and floating platforms for offshore oil exploration. Our motors are used in an equally broad range of markets, many of which are the same as for slip rings. Components designs and manufactures a series of fractional horsepower brushless motors that provide extremely low acoustic noise and reliable long life operation, with the largest market being sleep apnea equipment. Industrial markets use our motors for material handling and electric pumps. Military applications use our motors for gimbals, missiles and radar pedestals. Components’ other product lines include electromechanical actuators for military, aerospace and commercial applications, fiber optic modems that provide electrical-to-optical conversion of communication and data signals, avionic instrumentation, optical switches and resolvers.

Medical Devices. This segment operates within four medical devices market areas: infusion therapy, enteral clinical nutrition, sensors and surgical hand pieces. For infusion therapy, our primary products are electronic ambulatory infusion pumps along with the associated administration sets. Applications of these products include hydration, nutrition, patient-controlled analgesia, local anesthesia, chemotherapy and antibiotics. We manufacture and distribute a complete line of portable pumps, stationary pumps and disposable sets that are used in the delivery of enteral nutrition for patients in their own homes, hospitals and long-term care facilities. We manufacture and distribute ultrasonic and optical sensors used to detect air bubbles in infusion pump lines and ensure accurate fluid delivery. Our surgical hand pieces are used to safely fragment and aspirate tissue in common medical procedures such as cataract removal.

Segment information and reconciliations to consolidated amounts are as follows:



	2012			2011			2010
Net sales:
Aircraft Controls	$	963,421		$	850,490		$	756,550
Space and Defense Controls	358,755			355,762			325,474
Industrial Systems	633,713			629,312			545,672
Components	374,081			353,142			359,992
Medical Devices	139,566			141,974			126,564
Net sales	$	2,469,536		$	2,330,680		$	2,114,252
Operating profit (loss) and margins:
Aircraft Controls	$	104,582		$	83,776		$	76,374
	10.9		%	9.9		%	10.1		%
Space and Defense Controls	42,854			49,245			35,844
	11.9		%	13.8		%	11.0		%
Industrial Systems	63,243			62,805			48,109
	10.0		%	10.0		%	8.8		%
Components	57,303			50,353			60,159
	15.3		%	14.3		%	16.7		%
Medical Devices	5,443			241			(4,044		)
	3.9		%	0.2		%	(3.2		%)
Total operating profit	273,425			246,420			216,442
	11.1		%	10.6		%	10.2		%
Deductions from operating profit:
Interest expense	(34,312		)	(35,666		)	(38,742		)
Equity-based compensation expense	(6,226		)	(6,952		)	(5,445		)
Corporate and other expenses, net	(24,046		)	(20,017		)	(22,819		)
Earnings before income taxes	$	208,841		$	183,785		$	149,436
Depreciation and amortization:
Aircraft Controls	$	42,774		$	40,945		$	37,211
Space and Defense Controls	11,996			11,349			10,690
Industrial Systems	23,408			23,194			24,461
Components	9,123			7,409			6,605
Medical Devices	11,101			11,472			10,655
	98,402			94,369			89,622
Corporate	2,414			1,958			1,594
Total depreciation and amortization	$	100,816		$	96,327		$	91,216
Identifiable assets:
Aircraft Controls	1,194,742			$	1,110,771		$	1,028,213
Space and Defense Controls	423,838			342,093			349,987
Industrial Systems	760,829			731,193			684,021
Components	457,254			384,409			362,417
Medical Devices	234,431			243,283			246,606
	3,071,094			2,811,749			2,671,244
Corporate	34,813			31,218			40,890
Total assets	$	3,105,907		$	2,842,967		$	2,712,134



	2012		2011		2010
Capital expenditures:
Aircraft Controls	$	67,507	$	51,727	$	30,449
Space and Defense Controls	10,270		11,589		7,315
Industrial Systems	16,525		11,702		12,478
Components	7,071		4,620		3,961
Medical Devices	2,398		2,737		11,746
	103,771		82,375		65,949
Corporate	3,259		1,320		—
Total capital expenditures	$	107,030	$	83,695	$	65,949

Operating profit is net sales less cost of sales and other operating expenses, excluding interest expense, equity-based compensation expense and other corporate expenses. Cost of sales and other operating expenses are directly identifiable to the respective segment or allocated on the basis of sales, manpower or profit.

Sales, based on the customer’s location, and property, plant and equipment by geographic area are as follows:



	2012		2011		2010
Net sales:
United States	$	1,363,892	$	1,293,058	$	1,185,743
Germany	210,842		185,840		150,427
China	121,338		144,586		157,501
United Kingdom	117,336		113,253		115,944
Japan	118,484		81,999		96,431
Other	537,644		511,944		408,206
Net sales	$	2,469,536	$	2,330,680	$	2,114,252
Property, plant and equipment, net:
United States	$	310,390	$	288,647	$	274,591
Philippines	68,993		70,159		74,720
United Kingdom	58,329		35,468		27,866
Germany	23,720		24,177		25,899
Other	84,747		85,421		83,868
Property, plant and equipment, net	$	546,179	$	503,872	$	486,944

Sales to Boeing were $263,060, $229,825 and $206,775, or 11%, 10% and 10% of sales, in 2012, 2011 and 2010, respectively, including sales to Boeing Commercial Airplanes of $131,318, $110,802 and $91,112 in 2012, 2011 and 2010, respectively. Sales arising from U.S. Government prime or sub-contracts, including military sales to Boeing, were $737,980, $738,429 and $740,701 in 2012, 2011 and 2010, respectively. Sales to Boeing and the U.S. Government and its prime- or sub-contractors are made primarily from the Aircraft Controls and Space and Defense Controls segments.