Segment Information

12 Months Ended

Dec. 31, 2013

Segment Information

Segment Information

Note 16 — 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, 2013, 2012 and 2011, and for the years then ended.

(In millions)	Composite Materials			Engineered Products		Corporate & Other			Total
Third-Party Sales
2013	$	1,286.9		$	391.3	$	—		$	1,678.2
2012	1,230.9			347.3		—			1,578.2
2011	1,074.5			317.9		—			1,392.4
Intersegment sales
2013	$	68.0		$	1.8	$	(69.8	)	$	—
2012	56.8			2.0		(58.8		)	—
2011	53.8			1.6		(55.4		)	—
Operating income (loss)
2013	$	276.3		$	58.9	$	(64.3	)	$	270.9
2012	257.3			50.6		(59.1		)	248.8
2011	194.5			51.6		(54.1		)	192.0
Depreciation
2013	$	54.4		$	4.7	$	0.2		$	59.3
2012	52.6			4.5		0.1			57.2
2011	50.8			4.3		0.2			55.3
Equity in earnings from affiliated companies
2013	$	—		$	1.3	$	—		$	1.3
2012	—			0.7		—			0.7
2011	—			1.6		—			1.6
Other (income) expense, net
2012	(14.5		)	—		5.0			(9.5		)
2011	(5.7		)	—		2.7			(3.0		)
Segment assets
2013	$	1,479.2		$	244.0	$	112.9		$	1,836.1
2012	1,295.4			215.2		92.5			1,603.1
2011	1,076.0			192.3		107.8			1,376.1
Investments in affiliated companies
2013	$	—		$	23.3	$	—		$	23.3
2012	—			22.6		—			22.6
2011	—			21.7		—			21.7
Accrual basis additions to property, plant and equipment
2013	$	194.6		$	11.9	$	—		$	206.5
2012	228.6			12.5		0.2			241.3
2011	176.6			6.9		1.0			184.5

Geographic Data

Net sales and long-lived assets, by geographic area, consisted of the following for the three years ended December 31, 2013, 2012 and 2011:

(In millions)	2013		2012		2011
Net sales by Geography (a):
United States	$	871.0	$	801.4	$	721.5
International
France	321.1		302.9		257.6
Spain	164.8		150.6		142.6
United Kingdom	110.9		114.7		102.1
Austria	96.2		105.0		95.5
Other	114.2		103.6		73.1
Total international	807.2		776.8		670.9
Total consolidated net sales	$	1,678.2	$	1,578.2	$	1,392.4
Net Sales to External Customers (b):
United States	$	765.2	$	719.4	$	615.7
International
France	146.1		144.4		132.3
Germany	135.2		128.2		87.7
Spain	154.7		123.9		120.8
United Kingdom	81.4		82.2		80.2
Other	395.6		380.1		355.7
Total international	913.0		858.8		776.7
Total	$	1,678.2	$	1,578.2	$	1,392.4
Long-lived assets (c):
United States	$	854.6	$	733.5	$	568.2
International
United Kingdom	92.6		83.8		68.4
Spain	73.2		68.2		60.5
France	55.8		37.9		36.0
Other	75.5		48.8		46.4
Total international	297.1		238.7		211.3
Total consolidated long-lived assets	$	1,151.7	$	972.2	$	779.5

(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 34%, 29% and 30% of 2013, 2012 and 2011 net sales, respectively.  Similarly, Airbus Group, including Airbus and its subcontractors, accounted for approximately 29%, 28% and 27% of 2013, 2012 and 2011 net sales, respectively.  In the Composite Materials segment approximately 24%, 19% and 20% of sales for 2013, 2012 and 2011, respectively, were to Boeing and its subcontractors.  Approximately 35%, 34% and 33% of sales for 2013, 2012 and 2011, respectively were to Airbus Group and its subcontractors.  In the Engineered Products segment approximately 68%, 66% and 64% of sales for 2013, 2012 and 2011, respectively were to Boeing and its subcontractors.

A significant decline in business with Boeing or Airbus Group 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.