Segments

During 2015, we made a change to our segment reporting. Components now includes the sensor and handpieces product line, which we previously included in the Medical Devices segment. This product line consists of manufactured ultrasonic and optical sensors as well as surgical handpieces distributed to medical OEMs. Since the customer base is different from the sale of medical pumps directly to end users, the chief operating decision maker is now reviewing performance and assessing the allocation of resources of this product line as part of the Components segment. Sales of sensors and handpieces were $25,079, $24,763 and $23,144 in 2015, 2014 and 2013, respectively. All amounts, including goodwill, have been restated to present sensors and handpieces within Components. Goodwill was allocated based on the relative fair value of the sensor and handpieces business compared to the Medical Devices segment prior to its transfer to 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, the Bell 525 Helicopter 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, Gulfstream G650 and G280 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 30%, 32% and 32% of 2015, 2014 and 2013 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 ship and submarine applications such as the US Virginia Class. Our sensor and surveillance systems 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 customers 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 and lumber 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 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, 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.

Our Components’ segment's 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, subsea navigation and control systems, acoustic sensors and sonars for energy and marine applications including remotely-operated underwater vehicles, optical switches and resolvers, ultrasonic and optical sensors and surgical hand pieces used in medical applications.

Medical Devices. Our Medical Devices segment operates within two areas: infusion therapy and enteral clinical nutrition.

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.

Segment information and reconciliations to consolidated amounts are as follows:



	2015		2014		2013
Net sales:
Aircraft Controls	$	1,086,547	$	1,117,656	$	1,059,587
Space and Defense Controls	381,444		394,505		395,945
Industrial Systems	521,505		590,971		592,112
Components	437,468		449,891		438,572
Medical Devices	98,568		95,362		124,095
Net sales	$	2,525,532	$	2,648,385	$	2,610,311
Operating profit (loss):
Aircraft Controls	$	100,006	$	115,726	$	126,751
Space and Defense Controls	33,236		26,119		25,350
Industrial Systems	45,021		58,108		42,254
Components	58,693		72,768		74,425
Medical Devices	8,557		2,996		(41,236		)
Total operating profit	245,513		275,717		227,544
Deductions from operating profit:
Interest expense	28,967		12,513		26,962
Equity-based compensation expense	5,074		7,189		6,620
Corporate and other expenses, net	27,638		37,092		28,956
Earnings before income taxes	$	183,834	$	218,923	$	165,006
Depreciation and amortization:
Aircraft Controls	$	51,385	$	49,021	$	45,547
Space and Defense Controls	14,054		15,735		15,470
Industrial Systems	20,731		23,170		22,703
Components	11,438		13,638		12,833
Medical Devices	5,138		5,829		9,171
Corporate	863		1,866		2,349
Total depreciation and amortization	$	103,609	$	109,259	$	108,073
Identifiable assets:
Aircraft Controls	$	1,220,814	$	1,257,099	$	1,268,753
Space and Defense Controls	440,439		480,806		514,260
Industrial Systems	591,367		648,580		675,115
Components	484,036		520,211		515,243
Medical Devices	123,400		137,116		160,847
Corporate	226,415		164,640		102,877
Total assets	$	3,086,471	$	3,208,452	$	3,237,095

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.



	2015		2014		2013
Capital expenditures:
Aircraft Controls	$	47,389	$	45,243	$	49,859
Space and Defense Controls	9,022		8,992		14,401
Industrial Systems	15,371		12,459		14,230
Components	7,016		9,018		8,166
Medical Devices	1,355		2,798		3,659
Corporate	540		261		2,859
Total capital expenditures	$	80,693	$	78,771	$	93,174

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



	2015		2014		2013
Net sales:
United States	$	1,413,877	$	1,485,556	$	1,498,671
Germany	199,351		205,005		199,800
Japan	156,999		180,026		148,770
United Kingdom	97,359		133,777		123,004
Other	657,946		644,021		640,066
Net sales	$	2,525,532	$	2,648,385	$	2,610,311
Property, plant and equipment, net:
United States	$	307,874	$	312,790	$	322,282
United Kingdom	77,949		74,111		62,105
Philippines	68,101		72,602		75,087
Other	82,832		95,845		102,889
Property, plant and equipment, net	$	536,756	$	555,348	$	562,363

Sales to Boeing were $399,082, $431,148 and $366,972, or 16%, 16% and 14% of sales, in 2015, 2014 and 2013, respectively, including sales to Boeing Commercial Airplanes of $240,984, $243,114 and $195,100 in 2015, 2014 and 2013, respectively. Sales arising from U.S. Government prime or sub-contracts, including military sales to Boeing, were $780,259, $763,004 and $807,728 in 2015, 2014 and 2013, 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.