Information on Business Segments

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Information on Business Segments

Information on Business Segments

Industrial is a global manufacturer of highly-engineered, high-quality precision components, products and systems for critical applications serving a diverse customer base in end-markets such as transportation, industrial equipment, consumer products, packaging, electronics, medical devices, and energy. Focused on innovative custom solutions, Industrial participates in the design phase of components and assemblies whereby customers receive the benefits of application and systems engineering, new product development, testing and evaluation, and the manufacturing of final products. Products are sold primarily through its direct sales force and global distribution channels. Industrial’s Molding Solutions businesses design and manufacture customized hot runner systems, advanced mold cavity sensors and process control systems, and precision high cavitation mold and cube mold assemblies - collectively, the enabling technologies for many complex injection molding applications. Industrial’s Nitrogen Gas Products business manufactures nitrogen gas springs and manifold systems used to precisely control stamping presses. Industrial’s Engineered Components businesses manufacture and supply precision mechanical products used in transportation and industrial applications, including mechanical springs, high-precision punched and fine-blanked components, and retention rings that position parts on a shaft or other axis. Engineered Components is equipped to produce many types of precision engineered springs, from fine hairsprings for electronics and instruments to large heavy-duty springs for machinery.

Industrial has a diverse customer base with products purchased by durable goods manufacturers located around the world in industries including transportation, consumer products, packaging, farm and mining equipment, telecommunications, medical devices, home appliances and electronics.

Industrial competes with a broad base of large and small companies engaged in the manufacture and sale of custom metal components, products and assemblies, precision molds, and hot runner systems. Industrial competes on the basis of quality, service, reliability of supply, engineering and technical capability, geographic reach, product breadth, innovation, design, and price. Industrial has manufacturing, distribution and assembly operations in the United States, Brazil, China, Germany, Italy, Mexico, Singapore, Sweden and Switzerland. Industrial also has sales and service operations in the United States, Brazil, Canada, Czech Republic, China/Hong Kong, France, Germany, India, Italy, Japan, Mexico, the Netherlands, Portugal, Singapore, Slovakia, South Africa, South Korea, Spain, Switzerland, Thailand and the United Kingdom.

Aerospace is a global provider of fabricated and precision-machined components and assemblies for original equipment manufacturer (“OEM”) turbine engine, airframe and industrial gas turbine builders, and the military. The Aerospace aftermarket business provides jet engine component maintenance repair and overhaul (“MRO”) services, including our Component Repair Programs (“CRPs”), for many of the world’s major turbine engine manufacturers, commercial airlines and the military. The Aerospace aftermarket activities also include the manufacture and delivery of aerospace aftermarket spare parts, including the revenue sharing programs (“RSPs”) under which the Company receives an exclusive right to supply designated aftermarket parts over the life of the related aircraft engine program.

Aerospace’s OEM business supplements the leading jet engine OEM capabilities and competes with a large number of fabrication and machining companies. Competition is based mainly on quality, engineering and technical capability, product breadth, new product introduction, timeliness, service and price. Aerospace’s fabrication and machining operations, with facilities in Arizona, Connecticut, Michigan, Ohio, Utah and Singapore, produce critical engine and airframe components through technically advanced manufacturing processes.

The Aerospace aftermarket business supplements jet engine OEMs’ maintenance, repair and overhaul capabilities, and competes with the service centers of major commercial airlines and other independent service companies for the repair and overhaul of turbine engine components. The manufacture and supply of aerospace aftermarket spare parts, including those related to the RSPs, are dependent upon the reliable and timely delivery of high-quality components. Aerospace’s aftermarket facilities, located in Connecticut, Ohio and Singapore, specialize in the repair and refurbishment of highly engineered components and assemblies such as cases, rotating life limited parts, rotating air seals, turbine shrouds, vanes and honeycomb air seals.

The Company evaluates the performance of its reportable segments based on the operating profit of the respective businesses, which includes net sales, cost of sales, selling and administrative expenses and certain components of other expense (income), net, as well as the allocation of corporate overhead expenses.

Sales between the business segments and between the geographic areas in which the businesses operate are accounted for on the same basis as sales to unaffiliated customers. Additionally, revenues are attributed to countries based on the location of facilities.

The following table (in millions) sets forth summarized financial information by reportable business segment:

	Industrial		Aerospace		Other		Total Company
Sales
2016	$	824.2	$	406.5	$	—	$	1,230.8
2015	782.3		411.7		—		1,194.0
2014	822.1		440.0		—		1,262.0
Operating profit
2016	$	129.7	$	62.5	$	—	$	192.2
2015	103.0		65.4		—		168.4
2014	108.4		71.6		—		180.0
Assets
2016	$	1,356.1	$	647.8	$	133.7	$	2,137.5
2015	1,241.2		654.1		166.5		2,061.9
2014	1,282.0		655.0		136.9		2,073.9
Depreciation and amortization
2016	$	49.5	$	30.0	$	0.7	$	80.2
2015	46.0		30.8		1.3		78.2
2014	54.7		24.9		1.8		81.4
Capital expenditures
2016	$	25.9	$	21.1	$	0.5	$	47.6
2015	28.7		17.2		0.1		46.0
2014	36.1		20.9		0.4		57.4

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Notes:

One customer, General Electric, accounted for 17%, 18% and 19% of the Company’s total revenues in 2016, 2015 and 2014, respectively.

“Other” assets include corporate-controlled assets, the majority of which are cash and deferred tax assets.

A reconciliation of the total reportable segments’ operating profit to income from continuing operations before income taxes follows (in millions):

	2016			2015			2014
Operating profit	$	192.2		$	168.4		$	180.0
Interest expense	11.9			10.7			11.4
Other expense (income), net	(2.3		)	(0.2		)	2.1
Income from continuing operations before income taxes	$	182.6		$	157.9		$	166.5

The following table (in millions) summarizes total net sales of the Company by products and services:

	2016		2015		2014
Engineered Components Products	$	332.6	$	342.2	$	373.1
Molding Solutions Products	376.6		324.6		322.7
Nitrogen Gas Products	115.0		115.5		126.2
Aerospace Original Equipment Manufacturing Products	288.4		295.7		329.6
Aerospace Aftermarket Products and Services	118.2		116.0		110.4
Total net sales	$	1,230.8	$	1,194.0	$	1,262.0

The following table (in millions) summarizes total net sales of the Company by geographic area:

	Domestic		International		Other			Total Company
Sales
2016	$	562.6	$	727.4	$	(59.2	)	$	1,230.8
2015	589.6		661.7		(57.3		)	1,194.0
2014	618.9		677.6		(34.5		)	1,262.0
Long-lived assets
2016	$	368.2	$	1,135.5	$	—		$	1,503.6
2015	379.2		1,069.9		—			1,449.1
2014	380.6		1,094.9		—			1,475.4

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Notes:

Germany, with sales of $238.3 million, $210.5 million and $249.9 million in 2016, 2015 and 2014, respectively, represents the only international country with revenues in excess of 10% of the Company's total revenues.

“Other” revenues represent the elimination of intercompany sales between geographic locations, of which approximately 82% were sales from international locations to domestic locations.

Germany, with long-lived assets of $449.9 million, $362.7 million and $410.0 million in 2016, 2015 and 2014, respectively, Singapore, with long-lived assets of $238.3 million, $246.4 million and $255.3 million in 2016, 2015 and 2014, respectively, Switzerland, with long-lived assets of $169.3 million, $167.0 million and $165.7 million in 2016, 2015 and 2014, respectively and China with long-lived assets of $151.7 million in 2014, represent the only international countries that exceeded 10% of the Company's total long-lived assets in those years.