BUSINESS SEGMENTS AND FOREIGN OPERATIONS

12 Months Ended

Jun. 30, 2013

BUSINESS SEGMENTS AND FOREIGN OPERATIONS [Abstract]

BUSINESS SEGMENTS AND FOREIGN OPERATIONS

J.  BUSINESS SEGMENTS AND FOREIGN OPERATIONS

The Company and its subsidiaries are engaged in the manufacture and sale of marine and heavy duty off-highway power transmission equipment.  Principal products include marine transmissions, surface drives, propellers and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches and controls systems.  The Company sells to both domestic and foreign customers in a variety of market areas, principally pleasure craft, commercial and military marine markets, as well as in the energy and natural resources, government and industrial markets.

Net sales by product group is summarized as follows (in thousands):

	2013		2012		2011
Industrial	$	48,110	$	54,062	$	40,279
Land based transmissions		68,535		146,686		121,735
Marine and propulsion systems		162,823		151,407		145,842
Other		5,814		3,715		2,537
Total	$	285,282	$	355,870	$	310,393

Industrial products include clutches, power take-offs and pump drives sold to the agriculture, recycling, construction and oil and gas markets.  The land based transmission products include applications for oilfield and natural gas, military and airport rescue and fire fighting.  The marine and propulsion systems include marine transmission, controls, surface drives, propellers and boat management systems for the global commercial, pleasure craft and patrol boat markets.  Other products includes non-Twin Disc manufactured product sold through our Company-owned distribution entities.

The Company has two reportable segments: manufacturing and distribution.  These segments are managed separately because each provides different services and requires different technology and marketing strategies.  The accounting practices of the segments are the same as those described in the summary of significant accounting policies. Transfers among segments are at established inter-company selling prices.  Management evaluates the performance of its segments based on net earnings.

Information about the Company's segments is summarized as follows (in thousands):

	Manufacturing		Distribution		Total
2013
Net sales	$	245,592	$	130,360	$	375,952
Intra-segment sales		16,140		15,127		31,267
Inter-segment sales		55,746		3,657		59,403
Interest income		479		19		498
Interest expense		3,248		62		3,310
Income taxes		5,112		1,630		6,742
Depreciation and amortization		8,817		497		9,314
Net earnings attributable to Twin Disc		10,141		5,840		15,981
Assets		258,617		56,965		315,582
Expenditures for segment assets		5,705		349		6,054
2012
Net sales	$	325,174	$	129,411	$	454,585
Intra-segment sales		16,189		7,672		23,861
Inter-segment sales		71,134		3,720		74,854
Interest income		688		39		727
Interest expense		3,798		64		3,862
Income taxes		19,444		2,460		21,904
Depreciation and amortization		8,373		871		9,244
Net earnings attributable to Twin Disc		29,572		7,196		36,768
Assets		272,098		58,275		330,373
Expenditures for segment assets		11,821		1,158		12,979
2011
Net sales	$	267,630	$	128,559	$	396,189
Intra-segment sales		12,712		13,289		26,001
Inter-segment sales		56,159		3,636		59,795
Interest income		856		34		890
Interest expense		4,168		66		4,234
Income taxes		19,398		3,233		22,631
Depreciation and amortization		7,605		834		8,439
Net earnings attributable to Twin Disc		25,150		6,759		31,909
Assets		271,454		54,028		325,482
Expenditures for segment assets		11,293		334		11,627

The following is a reconciliation of reportable segment net sales, net earnings and assets to the Company's consolidated totals (in thousands):

	2013				2012				2011
Net sales:
Total net sales from reportable segments		$	375,952			$	454,585			$	396,189
Elimination of inter-company sales			(90,670	)			(98,715	)			(85,796	)
Total consolidated net sales		$	285,282			$	355,870			$	310,393
Net earnings attributable to Twin Disc:
Total net earnings from
reportable segments		$	15,981			$	36,768			$	31,909
Other corporate expenses			(12,099	)			(10,025	)			(13,912	)
Total consolidated net earnings
attributable to Twin Disc		$	3,882			$	26,743			$	17,997
Assets
Total assets for reportable segments		$	315,582			$	330,373
Corporate assets and eliminations			(30,124	)			(26,541	)
Total consolidated assets		$	285,458			$	303,832
Other significant items (in thousands):
	Segment								Consolidated
	Totals				Adjustments				Totals
2013
Interest income		$	498			$	(396	)		$	102
Interest expense			3,310				(1,875	)			1,435
Income taxes			6,742				(1,756	)			4,986
Depreciation and amortization			9,314				1,524				10,838
Expenditures for segment assets			6,054				528				6,582
2012
Interest income		$	727			$	(632	)		$	95
Interest expense			3,862				(2,387	)			1,475
Income taxes			21,904				(4,089	)			17,815
Depreciation and amortization			9,244				1,512				10,756
Expenditures for segment assets			12,979				754				13,733
2011
Interest income		$	890			$	(792	)		$	98
Interest expense			4,234				(2,515	)			1,719
Income taxes			22,631				(8,734	)			13,897
Depreciation and amortization			8,439				1,465				9,904
Expenditures for segment assets			11,627				401				12,028

All adjustments represent inter-company eliminations and corporate amounts.

Geographic information about the Company is summarized as follows (in thousands):

	2013		2012		2011
Net sales
United States	$	127,844	$	165,658	$	127,469
China		29,119		19,955		9,041
Italy		19,140		27,075		32,063
Canada		10,846		44,889		44,659
Other countries		98,333		98,293		97,161
Total	$	285,282	$	355,870	$	310,393
Net sales by geographic region are based on product shipment destination.
		2013		2012
Long-lived assets
United States	$	51,618	$	53,083
Switzerland		7,964		8,278
Belgium		7,262		7,372
Italy		3,817		4,438
Other countries		2,330		1,053
Total	$	72,991	$	74,224

One customer, Sewart Supply, Inc. (a distributor of Twin Disc), accounted for approximately 11% of consolidated net sales in fiscal 2013.  There were no customers that accounted for 10% or more of consolidated net sales in fiscal 2012 or fiscal 2011.