Segment Reporting

12 Months Ended

Jul. 31, 2014

Segment Reporting [Abstract]

Segment Reporting

NOTE K  Segment Reporting

Consistent with FASB guidance related to segment reporting, the Company identified two reportable segments: Engine Products and Industrial Products.  Segment selection was based on the internal organizational structure, management of operations, and performance evaluation by management and the Company’s Board of Directors.

The Engine Products segment sells to original equipment manufacturers (OEM) in the construction, mining, agriculture, aerospace, defense, and truck markets, and to independent distributors, OEM dealer networks, private label accounts, and large equipment fleets. Products include air filtration systems, exhaust and emissions systems, liquid filtration systems including hydraulics, fuel and lube, and replacement filters.

The Industrial Products segment sells to various industrial dealers, distributors, OEMs of gas-fired turbines, and OEMs and end-users requiring clean air.  Products include dust, fume, and mist collectors, compressed air purification systems, air filtration systems for gas turbines, PTFE membrane-based products, and specialized air and gas filtration systems for applications including computer hard disk drives and semi-conductor manufacturing.

Corporate and Unallocated includes corporate expenses determined to be non-allocable to the segments such as interest income and interest expense.  Assets included in Corporate and Unallocated principally are cash and cash equivalents, inventory reserves, certain prepaids, certain investments, other assets, and assets allocated to general corporate purposes.

The Company has an internal measurement system to evaluate performance and allocate resources based on profit or loss from operations before income taxes.  The Company’s manufacturing facilities serve both reporting segments.  Therefore, the Company uses an allocation methodology to assign costs and assets to the segments.  A certain amount of costs and assets relate to general corporate purposes and are not assigned to either segment.  The accounting policy applied to inventory for the reportable segments differs from that described in the summary of significant accounting policies.  The reportable segments account for inventory on a standard cost basis, which is consistent with our internal reporting.

Segment allocated assets are primarily accounts receivable, inventories, property, plant, and equipment, and goodwill.  Reconciling items included in Corporate and Unallocated are created based on accounting differences between segment reporting and the consolidated, external reporting as well as internal allocation methodologies.

The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets.  Therefore, the Company does not represent that these segments, if operated independently, would report the operating profit and other financial information shown below.

Segment detail is summarized as follows:

	Engine		Industrial		Corporate &		Total
	Products		Products		Unallocated		Company
	(thousands of dollars)
2014
Net sales	$	1,584,027	$	889,439	$	—	$	2,473,466
Depreciation and amortization		38,925		23,942		4,296		67,163
Equity earnings in unconsolidated affiliates		5,596		940		—		6,536
Earnings before income taxes		233,920		133,978		(7,195)		360,703
Assets		900,083		572,000		470,328		1,942,411
Equity investments in unconsolidated affiliates		17,439		3,959		—		21,398
Capital expenditures		56,340		34,652		6,218		97,210
2013
Net sales	$	1,504,188	$	932,760	$	—	$	2,436,948
Depreciation and amortization		35,815		22,447		6,028		64,290
Equity earnings in unconsolidated affiliates		4,000		693		—		4,693
Earnings before income taxes		220,892		139,108		(11,819)		348,181
Assets		826,151		527,416		389,989		1,743,556
Equity investments in unconsolidated affiliates		15,563		3,277		—		18,840
Capital expenditures		52,864		33,134		8,897		94,895
2012
Net sales	$	1,570,140	$	923,108	$	—	$	2,493,248
Depreciation and amortization		36,646		18,852		5,667		61,165
Equity earnings in unconsolidated affiliates		3,966		769		—		4,735
Earnings before income taxes		227,941		149,249		(6,410)		370,780
Assets		845,176		520,739		364,167		1,730,082
Equity investments in unconsolidated affiliates		17,304		2,822		—		20,126
Capital expenditures		46,816		24,083		7,240		78,139

Following are net sales by product within the Engine Products segment and Industrial Products segment:

	2014		2013		2012
	(thousands of dollars)
Engine Products segment:
Off-Road Products	$	342,205	$	358,834	$	376,870
On-Road Products		130,029		128,446		163,934
Aftermarket Products*		1,012,165		912,717		922,660
Aerospace and Defense Products		99,628		104,191		106,676
Total Engine Products segment		1,584,027		1,504,188		1,570,140
Industrial Products segment:
Industrial Filtration Solutions Products		553,356		529,751		553,453
Gas Turbine Products		156,860		232,922		180,669
Special Applications Products		179,223		170,087		188,986
Total Industrial Products segment		889,439		932,760		923,108
Total Company	$	2,473,466	$	2,436,948	$	2,493,248

*Includes replacement part sales to the Company’s OEM Customers.

Geographic sales by origination and property, plant, and equipment:

			Property, Plant, &
	Net Sales		Equipment - Net
	(thousands of dollars)
2014
United States	$	1,019,926	$	196,712
Europe		728,554		128,904
Asia - Pacific		517,305		72,089
Other		207,681		53,960
Total	$	2,473,466	$	451,665
2013
United States	$	1,010,934	$	166,614
Europe		678,996		123,710
Asia - Pacific		546,406		75,206
Other		200,612		53,750
Total	$	2,436,948	$	419,280
2012
United States	$	1,064,474	$	146,328
Europe		678,619		114,266
Asia - Pacific		572,163		80,200
Other		177,992		44,115
Total	$	2,493,248	$	384,909

Concentrations There were no Customers over 10 percent of net sales during Fiscal 2014, 2013, and 2012.  There were no Customers over 10 percent of gross accounts receivable in Fiscal 2014 or Fiscal 2013.