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 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 several large development programs including: the KC-46 military air refueling tanker and the F-35 Joint Strike Fighter on the military side, and the Airbus A350XWB, COMAC C919 and the Embraer E-Jet E2 family on the commercial side. Typically these development programs require concentrated periods of research and development by our engineering teams.

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-35 Joint Strike Fighter, the V-22 Osprey tiltrotor, the F/A-18E/F Super Hornet and the Black Hawk/Seahawk helicopter. 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 32% of 2013 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.

Within our space market, we design, manufacture and integrate commercial and military satellite positioning controls. These propulsion and actuation systems and the components also 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 programs. Additionally, we design and manufacture spaceflight electronics and software, and develop new products for NASA's new Space Launch 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. Our tactical and strategic missile programs include Hellfire, the U.S. National Missile Defense Agency's Ballistic Missile Defense initiative, TOW and Trident. We design, build and integrate stores management systems for light attack aerial reconnaissance platforms, as well as 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.

In our industrial automation market, we design manufacture and integrate systems for injection and blow molding machines, metal forming presses and our heavy industry customers use our high precision electrical and hydraulic servovalves for steel and aluminum mill equipment. Our systems allow for precise controls of critical parameters in the industrial process, using both hydraulic and electric technology. Other industrial markets we serve include material handling, carpet tufting and paper and lumber mills.

In our energy market, our power generation programs focus on complete control assemblies for fuel, steam and variable geometry control applications. We also design and manufacture electric pitch controls and blade monitoring systems for wind turbines in our wind energy programs.

In our simulation and test market, we supply electromechanical motion simulation bases for the flight simulation and training markets. For the test markets, we supply controls for automotive, structural and fatigue testing.

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, 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. 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.

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.

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 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:



	2013			2012			2011
Net sales:
Aircraft Controls	$	1,059,587		$	963,421		$	850,490
Space and Defense Controls	395,945			358,755			355,762
Industrial Systems	592,112			633,713			629,312
Components	415,428			374,081			353,142
Medical Devices	147,239			139,566			141,974
Net sales	2,610,311			2,469,536			2,330,680
Operating profit (loss) and margins:
Aircraft Controls	126,751			104,582			$	83,776
	12.0		%	10.9		%	9.9		%
Space and Defense Controls	25,350			42,854			49,245
	6.4		%	11.9		%	13.8		%
Industrial Systems	42,254			63,243			62,805
	7.1		%	10.0		%	10.0		%
Components	68,731			57,303			50,353
	16.5		%	15.3		%	14.3		%
Medical Devices	(35,542		)	5,443			241
	(24.1		%)	3.9		%	0.2		%
Total operating profit	227,544			273,425			246,420
	8.7		%	11.1		%	10.6		%
Deductions from operating profit:
Interest expense	26,962			34,312			35,666
Equity-based compensation expense	6,620			6,226			6,952
Corporate and other expenses, net	28,956			24,046			20,017
Earnings before income taxes	$	165,006		$	208,841		$	183,785
Depreciation and amortization:
Aircraft Controls	$	45,547		$	42,774		$	40,945
Space and Defense Controls	15,470			11,996			11,349
Industrial Systems	22,703			23,408			23,194
Components	11,735			9,123			7,409
Medical Devices	10,269			11,101			11,472
Corporate	2,349			2,414			1,958
Total depreciation and amortization	$	108,073		$	100,816		$	96,327
Identifiable assets:
Aircraft Controls	$	1,268,753		$	1,194,742		$	1,110,771
Space and Defense Controls	514,260			423,838			342,093
Industrial Systems	675,115			691,636			689,683
Components	486,421			457,254			384,409
Medical Devices	189,669			234,431			243,283
Corporate	102,877			104,006			72,728
Total assets	$	3,237,095		$	3,105,907		$	2,842,967

Identifiable assets in prior years have been restated to reclassify cash held by our international treasury operation as a corporate asset. Previously, this cash was reported as an Industrial Systems asset.



	2013		2012		2011
Capital expenditures:
Aircraft Controls	$	49,859	$	67,507	$	51,727
Space and Defense Controls	14,401		10,270		11,589
Industrial Systems	14,230		16,525		11,702
Components	8,166		7,071		4,620
Medical Devices	3,659		2,398		2,737
Corporate	2,859		3,259		1,320
Total capital expenditures	$	93,174	$	107,030	$	83,695

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:



	2013		2012		2011
Net sales:
United States	$	1,540,096	$	1,363,892	$	1,293,058
Germany	199,800		210,842		185,840
United Kingdom	123,004		117,336		113,253
China	94,829		121,338		144,586
Other	652,582		656,128		593,943
Net sales	$	2,610,311	$	2,469,536	$	2,330,680
Property, plant and equipment, net:
United States	$	322,282	$	310,390	$	288,647
Philippines	75,087		68,993		70,159
United Kingdom	62,105		58,329		35,468
Other	102,889		108,467		109,598
Property, plant and equipment, net	$	562,363	$	546,179	$	503,872

Sales to Boeing were $366,972, $263,060 and $229,825, or 14%, 11% and 10% of sales, in 2013, 2012 and 2011, respectively, including sales to Boeing Commercial Airplanes of $195,100, $131,318 and $110,802 in 2013, 2012 and 2011, respectively. Sales arising from U.S. Government prime or sub-contracts, including military sales to Boeing, were $807,728, $737,980 and $738,429 in 2013, 2012 and 2011, 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.