SEGMENT AND GEOGRAPHIC INFORMATION

The Company is organized based upon the nature of its products and services, and is composed of two operating segments each overseen by a segment manager. These segments are reflective of how the Company’s Chief Executive Officer, who is its Chief Operating Decision Maker (“CODM”), reviews operating results for the purposes of allocating resources and assessing performance. The Company has not aggregated operating segments for purposes of identifying reportable segments.

The Distribution segment is a leading power transmission, motion control and fluid power industrial distributor with operations throughout the United States. The segment provides electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components, along with engineered integrated solutions to its customers' most challenging applications serving a broad spectrum of industrial markets, including both maintenance, repair and overhaul ("MRO") and original equipment manufacturer ("OEM") customers.

The Aerospace segment produces and markets aerospace solutions consisting of military and defense, missile and bomb fuze and commercial aerospace products. These solutions include proprietary aircraft bearings and components; super precision, miniature ball bearings for the medical, industrial and aerospace markets; complex metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft; and safe and arming solutions for missile and bomb systems for the U.S. and allied militaries. The segment also markets the design and supply of aftermarket parts to businesses performing MRO in aerospace markets; performs helicopter subcontract work; restores, modifies and supports the Company's SH-2G Super Seasprite maritime helicopters; manufactures and supports the Company's K-MAX® manned and unmanned medium-to-heavy lift helicopters; and provides engineering design, analysis and certification services.

Summarized financial information by business segment is as follows:



	For the Three Months Ended						For the Six Months Ended
In thousands	June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
Net sales:
Distribution	$	289,523		$	278,706		$	573,455		$	550,324
Aerospace	178,606			170,300			358,001			334,623
Net sales	$	468,129		$	449,006		$	931,456		$	884,947
Operating income:
Distribution⁽¹⁾	$	13,546		$	15,657		$	25,380		$	27,073
Aerospace⁽¹⁾	22,741			25,712			45,403			41,742
Net gain (loss) on sale of assets	1,525			(15		)	1,588			5
Corporate expense⁽¹⁾	(16,937		)	(14,828		)	(30,772		)	(28,805		)
Operating income⁽¹⁾	20,875			26,526			41,599			40,015
Interest expense, net	5,002			6,122			10,354			10,282
Non-service pension and post retirement benefit cost (income)⁽¹⁾	(3,039		)	(866		)	(6,068		)	(1,585		)
Other expense (income), net	361			(69		)	19			(228		)
Earnings before income taxes	18,551			21,339			37,294			31,546
Income tax expense	3,457			7,881			8,134			11,797
Net earnings	$	15,094		$	13,458		$	29,160		$	19,749

⁽¹⁾The prior year amounts were adjusted to reflect the impact of the adjustments resulting from the adoption of ASU 2017-07, "Compensation - Retirement Benefits (Topic 715) - Improving the Net Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost".

16. SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)

Disaggregation of Revenue

The following table disaggregates total revenue by major product line.



	For the Three Months Ended				For the Six Months Ended
	June 29, 2018		June 30, 2017		June 29, 2018		June 30, 2017
In thousands
Distribution
Bearings and Power Transmission	$	143,802	$	137,776	$	287,187	$	272,698
Automation, Control and Energy	85,976		84,753		171,137		166,835
Fluid Power	59,745		56,177		115,131		110,791
Total Distribution Sales	$	289,523	$	278,706	$	573,455	$	550,324

Aerospace
Military and Defense, excluding fuzes	$	51,743	$	50,675	$	99,499	$	97,656
Missile and Bomb Fuzes	41,601		36,165		94,586		71,379
Commercial Aerospace and Other	85,262		83,460		163,916		165,588
Total Aerospace Sales	$	178,606	$	170,300	$	358,001	$	334,623

Total Sales⁽¹⁾	$	468,129	$	449,006	$	931,456	$	884,947

⁽¹⁾Service revenue was not material for the three-month and six-month fiscal periods ended June 29, 2018 and June 30, 2017.

The following table illustrates the approximate percentage of revenue recognized for performance obligations satisfied over time versus the amount of revenue recognized for performance obligations satisfied at a point in time for the Aerospace segment:



	For the Three Months Ended		For the Six Months Ended
In thousands	June 29, 2018		June 29, 2018
Revenue recognized for performance obligations satisfied:
Over time	48	%	50	%
Point-in-time	52	%	50	%
Total revenue⁽¹⁾	100	%	100	%

⁽¹⁾ The disaggregation of revenue recognized for performance satisfied over time versus point-in-time has not been included for the Distribution segment, as the majority of its revenue is recognized on a point-in-time basis with only approximately 2% of revenue recognized for performance obligations over time.

The majority of the Distribution's segment revenue is recognized at the point in time when title transfers to the customer, as this is when the performance obligations are generally controlled by the customer. A small percentage of revenue within the Distribution segment, specifically certain contracts for value-add services, engineering services and repairs, are accounted for over time. The majority of the Distribution segment's revenue is short cycle in nature with shipments occurring within one year from order. Payment terms generally range from 30 to 90 days from delivery.

16. SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)

Disaggregation of Revenue - continued

For the Aerospace segment, the timing related to the satisfaction of performance obligations and the typical timing of payment could vary between military, fuzing and commercial contracts. For the Aerospace segment's military and fuzing contracts with the USG, payment terms typically include progress payments, and the satisfaction of these performance obligations does not vary significantly from timing of payment. For firm-fixed price military and fuzing contracts with foreign militaries, the satisfaction of performance obligations could occur at a point in time or over time, depending on the nature of the performance obligations and the right to payment terms in the contracts. Generally, payment terms for these types of contracts range from 30 to 180 days from delivery; however, at times, the Company may negotiate advance payments to cover a portion of the initial costs. Payment terms for firm-fixed price commercial contracts generally range from 30 to 90 days from delivery. The satisfaction of these performance obligations could occur at a point in time or over time, depending on the nature of the performance obligations and the right to payment terms in the contracts. For certain commercial contracts, the Company may negotiate advance payments for long-lead materials.