Segment Information

12 Months Ended

Dec. 31, 2012

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, 2012, 2011 and 2010, and for the years then ended.

(In millions)	Composite Materials			Engineered Products		Corporate & Other			Total
Third-Party Sales
2012	$	1,230.9		$	347.3	$	—		$	1,578.2
2011	1,074.5			317.9		—			1,392.4
2010	904.5			269.1		—			1,173.6
Intersegment sales
2012	$	56.8		$	2.0	$	(58.8	)	$	—
2011	53.8			1.6		(55.4		)	—
2010	38.7			0.6		(39.3		)	—
Operating income (loss)
2012	$	257.3		$	50.6	$	(59.1	)	$	248.8
2011	194.5			51.6		(54.1		)	192.0
2010	139.6			45.7		(55.5		)	129.8
Depreciation
2012	$	52.6		$	4.5	$	0.1		$	57.2
2011	50.8			4.3		0.2			55.3
2010	49.1			3.9		0.2			53.2
Equity in earnings from affiliated companies
2012	$	—		$	0.7	$	—		$	0.7
2011	—			1.6		—			1.6
2010	—			0.5		—			0.5
Other (income) expense, net
2012	$	(14.5	)	$	—	$	5.0		$	(9.5	)
2011	(5.7		)	—		2.7			(3.0		)
2010	—			—		3.5			3.5
Segment assets
2012	$	1,295.4		$	215.2	$	92.5		$	1,603.1
2011	1,076.0			192.3		107.8			1,376.1
2010	919.9			176.8		161.4			1,258.1
Investments in affiliated companies
2012	$	—		$	22.6	$	—		$	22.6
2011	—			21.7		—			21.7
2010	—			19.9		—			19.9
Accrual basis additions to property, plant and equipment
2012	$	228.6		$	12.5	$	0.2		$	241.3
2011	176.6			6.9		1.0			184.5
2010	57.3			3.3		0.1			60.7

Geographic Data

Net sales and long-lived assets, by geographic area, consisted of the following for the three years ended December 31, 2012, 2011 and 2010:

(In millions)	2012		2011		2010
Net sales by Geography (a):
United States	$	801.4	$	721.5	$	614.8
International
France	302.9		257.6		208.8
Spain	150.6		142.6		111.0
United Kingdom	114.7		102.1		85.9
Austria	105.0		95.5		91.4
Other	103.6		73.1		61.7
Total international	776.8		670.9		558.8
Total consolidated net sales	$	1,578.2	$	1,392.4	$	1,173.6
Net Sales to External Customers (b):
United States	$	719.4	$	615.7	$	528.1
International
France	144.4		132.3		107.5
Germany	128.2		87.7		76.5
Spain	123.9		120.8		95.6
United Kingdom	82.2		80.2		67.9
Other	380.1		355.7		298.0
Total international	858.8		776.7		645.5
Total	$	1,578.2	$	1,392.4	$	1,173.6
Long-lived assets (c):
United States	$	733.5	$	568.2	$	467.8
International
United Kingdom	83.8		68.4		53.7
Spain	68.2		60.5		58.4
France	37.9		36.0		36.3
Other	48.8		46.4		38.3
Total international	238.7		211.3		186.7
Total consolidated long-lived assets	$	972.2	$	779.5	$	654.5

(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 29%, 30% and 31% of 2012, 2011 and 2010 net sales, respectively.  Similarly, EADS, including Airbus and its subcontractors, accounted for approximately 28%, 27% and 24% of 2012, 2011 and 2010 net sales, respectively.  In the Composites Materials segment approximately 19%, 20% and 22% of sales for 2012, 2011 and 2010, respectively, were to Boeing and its subcontractors.  Approximately 34%, 33% and 29% of sales for 2012, 2011 and 2010, respectively were to EADS and its subcontractors.  In the Engineered Products segment approximately 66%, 64% and 62% of sales for 2012, 2011 and 2010, 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.

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.