Segment Information

12 Months Ended

Dec. 31, 2011

Segment Information

Segment Information

Note 17 — Segment Information

The financial results for our segments are prepared using a management approach, which is consistent with the basis and manner in which we internally segregate financial information for the purpose of assisting in making internal operating decisions.  We evaluate the performance of our segments based on operating income, and generally account for intersegment sales based on arm’s length prices.  We report two segments, Composite Materials and Engineered Products.  Corporate and certain other expenses are not allocated to the segments, except to the extent that the expense can be directly attributable to the segment. Corporate & Other is shown to reconcile to Hexcel’s consolidated results.

In addition to the product line-based segmentation of our business, we also monitor sales into our principal end markets as a means to understanding demand for our products.  Therefore, for each segment, we have also reported disaggregated sales by end market.

The following table presents financial information on our segments as of December 31, 2011, 2010 and 2009, and for the years then ended.

(In millions)	Composite Materials			Engineered Products		Corporate & Other			Total
Third-Party Sales
2011	$	1,074.5		$	317.9	$	—		$	1,392.4
2010	904.5			269.1		—			1,173.6
2009	856.5			251.8		—			1,108.3
Intersegment sales
2011	$	53.8		$	1.6	$	(55.4	)	$	—
2010	38.7			0.6		(39.3		)	—
2009	27.2			0.1		(27.3		)	—
Operating income (loss)
2011	$	194.5		$	51.6	$	(54.1	)	$	192.0
2010	139.6			45.7		(55.5		)	129.8
2009	111.4			36.0		(43.7		)	103.7
Depreciation
2011	$	50.8		$	4.3	$	0.2		$	55.3
2010	49.1			3.9		0.2			53.2
2009	42.3			4.1		0.2			46.6
Equity in earnings from affiliated companies
2011	$	—		$	1.6	$	—		$	1.6
2010	—			0.5		—			0.5
2009	—			0.7		—			0.7
Other (income) expense, net
2011	$	(5.7	)	$	—	$	2.7		$	(3.0	)
2010	—			—		3.5			3.5
2009	8.4			—		(0.9		)	7.5
Segment assets
2011	$	1,076.0		$	192.3	$	107.8		$	1,376.1
2010	919.9			176.8		161.4			1,258.1
2009	957.3			172.9		116.4			1,246.6
Investments in affiliated companies
2011	$	—		$	21.7	$	—		$	21.7
2010	—			19.9		—			19.9
2009	—			17.7		—			17.7
Accrual basis additions to property, plant and equipment
2011	$	176.6		$	6.9	$	1.0		$	184.5
2010	57.3			3.3		0.1			60.7
2009	82.7			2.4		0.6			85.7

Geographic Data

Net sales and long-lived assets, by geographic area, consisted of the following for the three years ended December 31, 2011, 2010 and 2009:

(In millions)	2011		2010		2009
Net sales by Geography (a):
United States	$	721.5	$	614.8	$	532.6
International
France	257.6		208.8		203.7
Spain	142.6		111.0		95.1
Austria	95.5		91.4		144.4
United Kingdom	102.1		85.9		79.8
Other	73.1		61.7		52.7
Total international	670.9		558.8		575.7
Total consolidated net sales	$	1,392.4	$	1,173.6	$	1,108.3
Net Sales to External Customers (b):
United States	$	615.7	$	528.1	$	462.6
International
France	132.3		107.5		103.7
Spain	120.8		95.6		87.3
Germany	87.7		76.5		83.2
United Kingdom	80.2		67.9		61.2
Other	355.7		298.0		310.3
Total international	776.7		645.5		645.7
Total	$	1,392.4	$	1,173.6	$	1,108.3
Long-lived assets (c):
United States	$	568.2	$	467.8	$	458.8
International
Spain	60.5		58.4		69.0
France	36.0		36.3		40.1
United Kingdom	68.4		53.7		48.1
Other	46.4		38.3		42.8
Total international	211.3		186.7		200.0
Total consolidated long-lived assets	$	779.5	$	654.5	$	658.8

(a)Net sales by geography based on the location in which the product sold was manufactured.

(b)Net sales to external customers based on the location to which the product sold was delivered.

(c)Long-lived assets primarily consist of property, plant and equipment, net and goodwill.

Significant Customers and Suppliers

Boeing and its subcontractors accounted for approximately 30%, 31% and 27% of 2011, 2010 and 2009 net sales, respectively.  Similarly, EADS, including Airbus and its subcontractors accounted for approximately 27%, 24% and 22% of 2011, 2010 and 2009 net sales, respectively.  In the Composites Materials segment approximately 20%, 22% and 18% of sales for 2011, 2010 and 2009, respectively, were to Boeing and its subcontractors.  Approximately 33%, 29% and 27% of sales for 2011, 2010 and 2009, respectively were to EADS and its subcontractors.  In the Engineered Products segment approximately 64%, 62% and 60% of sales for 2011, 2010 and 2009, respectively were to Boeing and its subcontractors.

A significant decline in business with Boeing, or EADS could materially impact our business, operating results, prospects and financial condition.

In 2009, Vestas Wind Systems A/S accounted for nearly 12% of the Company’s total net sales.  All of these sales are included in the Composite Materials segment and are in the Industrial market.  In 2011 and 2010, their sales were less than 10% of total net sales.

Certain key raw materials we consume are available from relatively few sources, and in many cases the cost of product qualification makes it impractical to develop multiple sources of supply. The lack of availability of these materials could under certain circumstances materially impact our consolidated results of operations.