Business Segment Information

9 Months Ended

Feb. 28, 2014

Business Segment Information

Business Segment Information

Note 10 — Business Segment Information

We report our activities in two business segments: Aviation Services and Technology Products.   Sales in the Aviation Services segment are derived from the sale and lease of a wide variety of new, overhauled, and repaired engine and airframe parts and components to the commercial aviation and government and defense markets.  We provide customized inventory supply chain management and performance-based logistics programs, aircraft component repair management services, and aircraft modifications.  The segment also includes repair, maintenance, and overhaul of aircraft and landing gear and expeditionary airlift services.  Cost of sales consists principally of the cost of product, direct labor, overhead, and aircraft maintenance costs.

Sales in the Technology Products segment are derived from the engineering, designing, and manufacturing of containers, pallets, and shelters used to support the U.S. military’s requirements for a mobile and agile force and system integration services for specialized command and control systems.  The segment also manufactures heavy-duty pallets and lightweight cargo containers for the commercial market, in-plane cargo loading and handling systems for commercial and military applications, and steel and composite machined and fabricated parts, components and sub-systems for various aerospace and defense programs.  Cost of sales consists principally of the cost of material to manufacture products, direct labor and overhead.

The accounting policies for the segments are the same as those described in Note 1 of Notes to Consolidated Financial Statements included in our annual report on Form 10-K for the year ended May 31, 2013.  Our chief operating decision making officer (Chief Executive Officer) evaluates performance based on the reportable segments and utilizes gross profit as a primary profitability measure.  The assets and certain expenses related to corporate activities are not allocated to the segments.  Our reportable segments are aligned principally around differences in products and services.

Gross profit is calculated by subtracting cost of sales from sales.  Selected financial information for each segment is as follows:

	Three Months Ended				Nine Months Ended
	February 28,				February 28,
	2014		2013		2014		2013
Sales:
Aviation Services	$	367.8	$	408.2	$	1,186.2	$	1,197.2
Technology Products	106.6		112.0		343.4		386.3
	$	474.4	$	520.2	$	1,529.6	$	1,583.5

	Three Months Ended				Nine Months Ended
	February 28,				February 28,
	2014		2013		2014		2013
Gross profit:
Aviation Services	$	59.4	$	59.0	$	196.2	$	187.8
Technology Products	19.3		17.2		58.2		66.1
	$	78.7	$	76.2	$	254.4	$	253.9

The following table reconciles segment gross profit to consolidated income before provision for income taxes.

	Three Months Ended						Nine Months Ended
	February 28,						February 28,
	2014			2013			2014			2013
Segment gross profit	$	78.7		$	76.2		$	254.4		$	253.9
Selling, general and administrative	(45.6		)	(41.8		)	(144.4		)	(145.9		)
Earnings from joint ventures	0.6			3.2			2.6			5.8
Loss on extinguishment of debt	—			—			—			(0.3		)
Interest expense	(10.7		)	(10.2		)	(32.2		)	(31.6		)
Interest income	0.3			0.4			0.9			1.1
Income before provision for income taxes	$	23.3		$	27.8		$	81.3		$	83.0