Note 21. Segment information

Woodward serves the aerospace and industrial markets through its two reportable segments - Aerospace and Industrial. When appropriate, Woodward’s reportable segments are aggregations of Woodward’s operating segments. Woodward uses operating segment information internally to manage its business, including the assessment of operating segment performance and decisions for the allocation of resources between operating segments. L’Orange has been included in Woodward’s Industrial segment results since the Closing.

The accounting policies of the reportable segments are the same as those of the Company. Woodward evaluates segment profit or loss based on internal performance measures for each segment in a given period. In connection with that assessment, Woodward generally excludes matters such as certain charges for restructuring, interest income and expense, certain gains and losses from asset dispositions, or other non-recurring and/or non-operationally related expenses.

A summary of consolidated net sales and earnings by segment follows:



	Year Ended September 30,
	2018		2017		2016
Segment external net sales:
Aerospace	$	1,557,988	$	1,342,339	$	1,233,176
Industrial		767,885		756,346		789,902
Total consolidated net sales	$	2,325,873	$	2,098,685	$	2,023,078
Segment earnings:
Aerospace	$	301,803	$	257,813	$	232,166
Industrial		47,938		78,991		82,237
Nonsegment expenses (1)		(100,067)		(58,352)		(63,166)
Interest expense, net		(30,096)		(25,705)		(24,751)
Consolidated earnings before income taxes	$	219,578	$	252,747	$	226,486

(1)

Nonsegment expenses for the fiscal year ended September 30, 2018 includes restructuring charges of $17,013. See Note 14, Accrued liabilities for further details.

Segment assets consist of accounts receivable, inventories, property, plant, and equipment, net, goodwill, and other intangibles, net. A summary of consolidated total assets, consolidated depreciation and amortization and consolidated capital expenditures follows:



	Year Ended September 30,
	2018		2017		2016
Segment assets:
Aerospace	$	1,805,892	$	1,722,789	$	1,637,522
Industrial		1,642,462		695,264		705,169
Unallocated corporate property, plant and equipment, net		102,083		104,755		89,988
Other unallocated assets		240,212		234,301		209,683
Consolidated total assets	$	3,790,649	$	2,757,109	$	2,642,362

Segment depreciation and amortization:
Aerospace	$	54,828	$	47,277	$	40,825
Industrial		51,695		24,421		20,412
Unallocated corporate amounts		9,608		9,219		7,799
Consolidated depreciation and amortization	$	116,131	$	80,917	$	69,036

Segment capital expenditures:
Aerospace	$	98,358	$	62,812	$	90,749
Industrial		17,109		12,189		62,065
Unallocated corporate amounts		11,673		17,335		22,878
Consolidated capital expenditures	$	127,140	$	92,336	$	175,692

Sales to General Electric Company were made by both of Woodward’s reportable segments and totaled approximately 16% of net sales in fiscal year 2018, 16% of net sales in fiscal year 2017, and 17% of net sales in fiscal year 2016. Sales to The Boeing Company were made by Woodward’s Aerospace segment and totaled approximately 12% of net sales in fiscal year 2018, 11% of net sales in fiscal year 2017, and 8% of net sales in fiscal year 2016.

Accounts receivable from General Electric Company totaled approximately 8% of accounts receivable at September 30, 2018 and 10% of accounts receivable at September 30, 2017. Accounts receivable from The Boeing Company totaled approximately 14% of accounts receivable at September 30, 2018 and 9% of accounts receivable at September 30, 2017.

U.S. Government related sales from Woodward’s reportable segments were as follows:



	Direct U.S. Government Sales		Indirect U.S. Government Sales		Total U.S. Government Related Sales
Fiscal year ended September 30, 2018
Aerospace	$	84,252	$	429,386	$	513,638
Industrial		2,547		8,658		11,205
Total net external sales	$	86,799	$	438,044	$	524,843
Percentage of total net sales		4%		19%		23%

Fiscal year ended September 30, 2017
Aerospace	$	106,685	$	362,536	$	469,221
Industrial		3,726		10,814		14,540
Total net external sales	$	110,411	$	373,350	$	483,761
Percentage of total net sales		5%		18%		23%

Fiscal year ended September 30, 2016
Aerospace	$	103,026	$	310,952	$	413,978
Industrial		6,550		9,845		16,395
Total net external sales	$	109,576	$	320,797	$	430,373
Percentage of total net sales		5%		16%		21%

Accounts receivable from the U.S. Government totaled approximately 3% of accounts receivable at September 30, 2018 and 3% of accounts receivable at September 30, 2017.

The customers who account for approximately 10% or more of sales to each of Woodward’s reportable segments for the fiscal year ended September 30, 2018 follow:



		Customer
Aerospace		The Boeing Company, General Electric Company
Industrial		General Electric Company

Net sales by geographical area, as determined by the location of the customer invoiced, were as follows:


	Year Ended September 30,
	2018		2017		2016
United States	$	1,350,708	$	1,211,902	$	1,118,833
Germany		230,834		173,180		200,545
Europe (1)		323,109		305,545		337,356
Asia		283,031		288,252		228,683
Other countries		138,191		119,806		137,661
Consolidated net sales	$	2,325,873	$	2,098,685	$	2,023,078

(1)Includes all European countries other than Germany.

Property, plant, and equipment, net by geographical area, as determined by the physical location of the assets, were as follows:



	At September 30,
	2018		2017
United States	$	922,734	$	872,947
Germany		111,595		24,541
Other countries		25,676		24,555
Consolidated property, plant and equipment, net	$	1,060,005	$	922,043