Segments

During 2016, we made a change to our segment reporting. Components now includes the Medical Devices product lines, which were previously reported as a separate segment. All amounts have been restated to present Medical Devices within Components.

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 on both development and production programs in large commercial transports, supersonic fighters, multi-role military aircraft, business jets and rotorcraft. We also supply ground-based navigation aids.

We are currently working on the KC-46 military air refueling tanker on the military side, and the Airbus A350XWB, COMAC C919 and the Embraer E-Jet E2 family on the commercial side. Typically development programs require concentrated periods of research and development by our engineering teams, while production programs are generally long-term manufacturing efforts that extend for as long as the aircraft builder receives new orders.

In the past few years, a number of significant programs have begun to transition from the development phase to initial low-rate production, including the Lockheed Martin F-35 Joint Strike Fighter on the military side and the Boeing 787 on the commercial side. In terms of mature production programs, our large military programs include the F/A-18E/F Super Hornet, the V-22 Osprey tiltrotor and the Black Hawk UH-60/Seahawk SH-60 helicopter, while our large commercial production programs include the full line of Boeing 7-series aircraft, Airbus A330 and A380 and a variety of business jets.

Aftermarket sales, which represented 29%, 30% and 32% of 2016, 2015 and 2014 sales, respectively, for this segment consist of the maintenance, repair, overhaul and parts supply for both military and commercial aircraft. Further, we sell spare parts and line replaceable units to both military and commercial customers that they store throughout the world in order to minimize down time.

Space and Defense Controls. We provide controls for satellites, space vehicles, launch vehicles, armored combat vehicles, tactical and strategic missiles, security and surveillance and other defense applications.

Within our space market, we design, manufacture and integrate commercial and military satellite positioning controls. These propulsion and actuation systems and the components control attitude, orbit insertion, solar panels and antennas. We also design, manufacture and integrate steering and propulsion controls for space launch vehicles, such as the Atlas, Delta and Ariane platforms. Additionally, we design and manufacture spaceflight electronics and software. We are also developing new control products and systems for a variety of programs related to manned spaceflight including: NASA's new Space Launch System, Multi-Purpose Crew Vehicle and Soft Capture System.

Within our defense market, we design controls for gun aiming, stabilization and automatic ammunition loading for armored combat vehicles for a variety of domestic and international customers. We also design controls for steering tactical and strategic missiles including: Lockheed Martin's Hellfire^®, the U.S. National Missile Defense Agency's Ballistic Missile Defense initiatives and Raytheon's TOW and Trident missiles. We also design, build and integrate weapons stores management systems for light attack aerial reconnaissance, ground and sea platforms, as well as build high power, quiet controls for naval surface ships and submarines such as the US Virginia Class. Our sensor and surveillance products are used in both military and commercial applications such as electrical grid and other critical infrastructure protection applications.

Industrial Systems. Our Industrial Systems segment serves a global customer base across a variety of markets.

In the industrial automation market, we design, manufacture and integrate systems for industrial automation customers for applications in injection and blow molding machinery, metal forming presses and heavy industry in steel and aluminum production. Our systems allow for precise controls of critical parameters in the industrial manufacturing processes, using both hydraulic and electric technology. Other industrial automation markets we serve include material handling and paper mills.

In the energy market, we supply solutions for power generation applications which allow for precise control and greater safety of fuel metering and guide vane positioning on steam and gas turbines. We also design and manufacture high reliability systems and components for applications in oil and gas exploration and production, including downhole drilling, topside and subsea environments, as well as electric pitch controls and blade monitoring systems for wind turbines.

In the simulation and test market, we supply electromechanical motion simulation bases for the flight simulation and training markets, as well as medical training simulators. For the test markets, we supply custom test systems and controls for automotive, structural and fatigue testing.

Components. Our Components segment serves many of the same markets as our other segments. Our Components segment’s largest product categories include slip rings and fiber optic rotary joints, motors, and infusion and enteral pumps and associated sets.

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, blade de-icing and data transfer for rotorcraft, remotely operated vehicles and floating platforms for offshore oil exploration, surveillance cameras, forward-looking infrared camera installations and radar pedestals, satellites, missiles and wind turbines.

Our motors are used in an equally broad range of markets, many of which are the same as for slip rings. We design and manufacture 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 customers use our motors for material handling and electric pumps. Military programs use our motors for gimbals, missiles and radar pedestals.

Infusion therapy products include infusion pumps and associated administration sets. They offer IV, intra-arterial, subcutaneous or epidural flow of fluids and precise medicine delivery and can be applied to many applications, including hydration, nutrition, patient-controlled analgesia, local anesthesia, chemotherapy and antibiotics.

Enteral clinical nutrition products include a complete line of portable and stationary pumps along with disposable sets. They are designed for ease of use and mobility. Medical customers use our enteral feeding products in the delivery of enteral nutrition for patients in their own homes, hospitals and long-term care facilities.

Our Components’ segment's other product lines include ultrasonic and optical sensors and surgical hand pieces used in medical applications, electromechanical actuators for military, aerospace and commercial applications, fiber optic modems that provide electrical-to-optical conversion of communication and data signals, avionic instrumentation, subsea navigation and control systems, acoustic sensors and sonars for energy and marine applications including remotely-operated underwater vehicles and optical switches and resolvers.

Segment information and reconciliations to consolidated amounts are as follows:



	2016		2015		2014
Net sales:
Aircraft Controls	$	1,063,718	$	1,086,547	$	1,117,656
Space and Defense Controls	366,091		381,444		394,505
Industrial Systems	514,984		521,505		590,971
Components	467,144		536,036		545,253
Net sales	$	2,411,937	$	2,525,532	$	2,648,385
Operating profit:
Aircraft Controls	$	98,509	$	100,006	$	115,726
Space and Defense Controls	41,419		33,236		26,119
Industrial Systems	48,542		45,021		58,108
Components	49,772		67,250		75,764
Total operating profit	238,242		245,513		275,717
Deductions from operating profit:
Interest expense	34,605		28,967		12,513
Equity-based compensation expense	3,271		5,074		7,189
Corporate and other expenses, net	27,506		27,638		37,092
Earnings before income taxes	$	172,860	$	183,834	$	218,923
Depreciation and amortization:
Aircraft Controls	$	46,541	$	51,385	$	49,021
Space and Defense Controls	16,033		14,054		15,735
Industrial Systems	20,487		20,731		23,170
Components	14,422		16,576		19,467
Corporate	1,249		863		1,866
Total depreciation and amortization	$	98,732	$	103,609	$	109,259
Identifiable assets:
Aircraft Controls	$	1,150,138	$	1,220,814	$	1,257,099
Space and Defense Controls	450,606		440,439		480,806
Industrial Systems	574,053		591,367		648,580
Components	667,387		607,436		657,327
Corporate	199,675		226,415		164,640
Total assets	$	3,041,859	$	3,086,471	$	3,208,452

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.



	2016		2015		2014
Capital expenditures:
Aircraft Controls	$	28,437	$	47,389	$	45,243
Space and Defense Controls	7,498		9,022		8,992
Industrial Systems	15,276		15,371		12,459
Components	15,576		8,371		11,816
Corporate	421		540		261
Total capital expenditures	$	67,208	$	80,693	$	78,771

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



	2016		2015		2014
Net sales:
United States	$	1,353,398	$	1,413,877	$	1,485,556
Germany	173,182		199,351		205,005
Japan	164,702		156,999		180,026
France	120,907		84,733		75,963
United Kingdom	74,378		97,359		133,777
Other	525,370		573,213		568,058
Net sales	$	2,411,937	$	2,525,532	$	2,648,385
Property, plant and equipment, net:
United States	$	302,446	$	307,874	$	312,790
Philippines	65,000		68,101		72,602
United Kingdom	64,280		77,949		74,111
Other	90,643		82,832		95,845
Property, plant and equipment, net	$	522,369	$	536,756	$	555,348

Sales to Boeing were $346,596, $399,082 and $431,148, or 14%, 16% and 16% of sales, in 2016, 2015 and 2014, respectively, including sales to Boeing Commercial Airplanes of $251,288, $240,984 and $243,114 in 2016, 2015 and 2014, respectively. Sales arising from U.S. Government prime or sub-contracts, including military sales to Boeing, were $726,562, $780,259 and $763,004 in 2016, 2015 and 2014, respectively. Sales to Boeing and the U.S. Government and its prime- or sub-contractors are made primarily from our Aircraft Controls and Space and Defense Controls segments.