INFORMATION ON REPORTABLE SEGMENTS

We are a global supplier of highly specialized engineered solutions with operations in over 15 countries and sales in over 100 countries around the world.

We have aggregated our operating segments into the following three reportable segments: HVAC, Detection and Measurement, and Engineered Solutions. The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers, distribution methods, and regulatory environment. In determining our segments, we apply the threshold criteria of the Segment Reporting Topic of the Codification. Operating income or loss for each of our segments is determined before considering impairment and special charges, pension and postretirement expense/income, long-term incentive compensation and other indirect corporate expenses. This is consistent with the way our chief operating decision maker evaluates the results of each segment.

HVAC Reportable Segment

Our HVAC reportable segment engineers, designs, manufactures, installs and services cooling products for the HVAC and industrial markets, as well as boilers, comfort heating and ventilation products for the residential and commercial markets. The primary distribution channels for the segment’s products are direct to customers, independent manufacturing representatives, third-party distributors, and retailers. The segment serves a customer base in North America, Europe, and Asia Pacific.

Detection and Measurement Reportable Segment

Our Detection and Measurement reportable segment engineers, designs, manufactures and installs underground pipe and cable locators and inspection equipment, bus fare collection systems, communication technologies, and specialty lighting. The primary distribution channels for the segment’s products are direct to customers and third-party distributors. The segment serves a global customer base, with a strong presence in North America, Europe, and Asia Pacific.

Engineered Solutions Reportable Segment

Our Engineered Solutions reportable segment engineers, designs, manufactures, installs and services transformers for the power transmission and distribution market and process cooling equipment and stationary heat exchangers for the industrial and power generation markets. The primary distribution channels for the segment’s products are direct to customers and third-party representatives. The segment has a strong presence in North America and South Africa.

Corporate Expense

Corporate expense generally relates to the cost of our Charlotte, North Carolina corporate headquarters.

Financial data for our reportable segments for the three and six months ended July 1, 2017 and July 2, 2016 are presented below:



	Three months ended						Six months ended
	July 1, 2017			July 2, 2016			July 1, 2017			July 2, 2016
Revenues: ⁽¹⁾
HVAC segment	$	120.3		$	121.9		$	230.4		$	233.5
Detection and Measurement segment	64.5			60.1			118.1			115.5
Engineered Solutions segment ⁽²⁾	164.9			189.4			341.8			383.0
Consolidated revenues	$	349.7		$	371.4		$	690.3		$	732.0

Income (loss):
HVAC segment	$	15.4		$	17.1		$	31.9		$	33.0
Detection and Measurement segment	17.3			12.1			28.5			23.1
Engineered Solutions segment ⁽²⁾	(12.0		)	3.0			(5.4		)	5.9
Total income for segments	20.7			32.2			55.0			62.0

Corporate expense	(11.3		)	(8.6		)	(22.7		)	(20.0		)
Long-term incentive compensation expense	(3.6		)	(3.4		)	(6.8		)	(6.1		)
Pension and postretirement expense	(1.2		)	(2.8		)	(2.6		)	(3.8		)
Special charges, net	(0.5		)	(2.4		)	(1.0		)	(2.9		)
Impairment of intangible assets	—			—			—			(4.0		)
Gain (loss) on sale of dry cooling business	—			(1.2		)	—			16.7
Consolidated operating income	$	4.1		$	13.8		$	21.9		$	41.9

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⁽¹⁾

Under the percentage-of-completion method, we recognized revenues of $65.8 and $80.1 in the three months ended July 1, 2017 and July 2, 2016, respectively. For the six months ended July 1, 2017 and July 2, 2016, revenues under the percentage-of-completion method were $144.6 and $184.4, respectively. Costs and estimated earnings in excess of billings on uncompleted contracts accounted for under the percentage-of-completion method were $31.3 and $33.9 as of July 1, 2017 and December 31, 2016, respectively, and are reported as a component of ‘‘Accounts receivable, net’’ in the condensed consolidated balance sheets. Billings in excess of costs and estimated earnings on uncompleted contracts accounted for under the percentage-of-completion method were $42.0 and $53.3 as of July 1, 2017 and December 31, 2016, respectively, and are reported as a component of ‘‘Accrued expenses’’ in the condensed consolidated balance sheets.


⁽²⁾	As further discussed in Note 13, during the second quarter of 2017, we made revisions to our expected revenues and profits on our large power projects in South Africa. As a result of these revisions, we reduced revenue and segment income by $13.5 and $22.9, respectively, for the three and six months ended July 1, 2017.