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, 2017, 2016 and 2015, and for the years then ended.

(In millions)	Composite Materials			Engineered Products			Corporate & Other				Total
Third-Party Sales
2017	$		1,597.1	$		376.2	$	—			$		1,973.3
2016			1,610.0		394.3			—					2,004.3
2015			1,458.7		402.5			—					1,861.2
Intersegment sales
2017	$	63.6		$	0.4		$		(64.0	)	$	—
2016		67.6			0.1				(67.7	)		—
2015		70.4			8.5				(78.9	)		—
Operating income (loss)
2017	$	359.4		$	48.7		$		(57.5	)	$		350.6
2016		368.3				50.0			(58.2	)		360.1
2015		336.2			55.8				(59.6	)		332.4
Depreciation and amortization
2017	$	96.8		$	7.5		$	0.2			$	104.5
2016			86.0		7.2			0.1				93.3
2015			70.0		6.1			0.3				76.4
Equity in earnings from affiliated companies
2017	$		—	$	3.3		$		—		$	3.3
2016		—			2.5			—					2.5
2015		0.2			1.8			—				2.0
Segment assets
2017	$		2,415.5	$	279.1		$	86.3			$		2,780.9
2016			2,127.2		220.7				52.7				2,400.6
2015			1,892.0		239.4			56.0					2,187.4
Investments in affiliated companies
2017	$		—	$	26.5		$	21.2			$	47.7
2016		—			23.1				30.0			53.1
2015		10.1			20.3			—				30.4
Accrual basis additions to property, plant and equipment
2017	$	270.3		$	14.1		$		—		$	284.4
2016		305.2			14.9			0.1					320.2
2015			276.0			13.0		—					289.0

Geographic Data

Net sales and long-lived assets, by geographic area, consisted of the following for the three years ended December 31, 2017, 2016 and 2015:

Spain	2017			2016			2015
Net sales by Geography (a):
United States	$	937.3		$	957.8		$	955.4
International
France		335.7			335.2			320.6
Spain		187.0			219.7			217.8
Germany		206.0			169.5			83.2
United Kingdom		160.4			154.2			125.1
Austria		86.1			92.8			93.1
Other		60.8			75.1				66.0
Total international			1,036.0			1,046.5			905.8
Total consolidated net sales	$		1,973.3	$		2,004.3	$		1,861.2
Net Sales to External Customers (b):
United States	$	806.6		$	833.1		$	850.1
International
Germany		217.7			210.5			163.7
Spain		199.4			204.4			149.7
France		161.5			153.8			140.3
United Kingdom		80.1			95.5			84.2
Other			508.0			507.0		473.2
Total international			1,166.7			1,171.2			1,011.1
Total	$		1,973.3	$		2,004.3	$		1,861.2
Long-lived assets (c):
United States	$		1,304.4	$		1,213.8	$		1,109.9
International
France		402.7			217.2			112.1
United Kingdom		151.6			130.8			133.4
Spain		61.7			56.2			59.8
Other		94.6			79.8			69.3
Total international		710.6				484.0		374.6
Total consolidated long-lived assets	$		2,015.0	$		1,697.8	$		1,484.5

(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

Approximately 44%, 41% and 35% of our 2017, 2016 and 2015 net sales, respectively, were to Airbus and its subcontractors. Of the 44% of overall sales to Airbus and its subcontractors in 2017, 40 % related to Commercial Aerospace market applications and 4% related to Space & Defense market applications. Approximately 25%, 28% and 31% of our 2017, 2016 and 2015 net sales, respectively, were to Boeing and related subcontractors. Of the 25% of overall sales to Boeing and its subcontractors in 2017, 23% related to Commercial Aerospace market applications and 2% related to Space & Defense market applications. In the Composite Materials segment approximately 16%, 17% and 21% of sales for 2017, 2016 and 2015, respectively, were to Boeing and its subcontractors. Approximately 50%, 48% and 42 % of sales for 2017, 2016 and 2015, respectively were to Airbus and its subcontractors. In the Engineered Products segment approximately 64%, 69% and 71% of sales for 2017, 2016 and 2015, respectively were to Boeing and its subcontractors.

A significant decline in business with Airbus or Boeing 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.