INFORMATION ON REPORTABLE SEGMENTS AND OTHER OPERATING SEGMENTS

9 Months Ended

Sep. 29, 2012

INFORMATION ON REPORTABLE SEGMENTS AND OTHER OPERATING SEGMENTS

INFORMATION ON REPORTABLE SEGMENTS AND OTHER OPERATING SEGMENTS

(4)           INFORMATION ON REPORTABLE SEGMENTS AND OTHER OPERATING SEGMENTS

We are a global, multi-industry manufacturer of highly specialized, engineered solutions with operations in over 35 countries. We offer a diverse collection of products, such as pumps, valves, fluid handling equipment, metering and mixing solutions, cooling, heating and ventilation products, power transformers, and TV and radio broadcast antennas. Our products are used by a broad array of customers in various industries, including food and beverage processing, power generation, chemical processing, pharmaceuticals, infrastructure, mineral processing, petrochemical, telecommunications and transportation.

Prior to 2012, we aggregated our operating segments into four reportable segments; however, because of the impending sale of our Service Solutions business (a business previously reported within the Test & Measurement reportable segment) and its current classification as a discontinued operation, we are no longer reporting the remaining two businesses of the Test & Measurement reportable segment as a separate reportable segment, as the operating results of these two businesses have not been, and are not expected to be, material to our consolidated operating results. These two businesses, along with our remaining operating segments, which do not meet the quantitative threshold criteria of the Segment Reporting Topic of the Codification, have been combined within our “All Other” category, which we refer to as Industrial Products and Services. This is not considered a reportable segment.

The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers and distribution methods. In determining our segments, we apply the threshold criteria of the Segment Reporting Topic of the Codification to operating income or loss of each segment before considering impairment and special charges, pensions and postretirement expense, stock-based compensation and other indirect corporate expenses. This is consistent with the way our chief operating decision maker evaluates the results of each segment.

Flow Technology Reportable Segment

Our Flow Technology segment designs, manufactures and markets products and solutions to process, blend, filter, dry, meter and transport fluids with a focus on creating innovative new products and systems, and also provides comprehensive aftermarket support services. Primary offerings include engineered pumps, mixers, process systems, heat exchangers, valves, and dehydration and drying technologies. The segment continues to focus on optimizing its global footprint while taking advantage of cross-product integration opportunities and increasing its competitive position in global end markets. Flow Technology’s solutions focus on key business drivers, such as product flexibility, process optimization, sustainability and safety.

Thermal Equipment and Services Reportable Segment

Our Thermal Equipment and Services segment engineers, manufactures and services cooling, heating and ventilation products for markets throughout the world. Primary offerings include dry, wet and hybrid cooling systems for the power generation, refrigeration, HVAC and industrial markets, as well as boiler, heating and ventilation products for the commercial and residential markets. This segment also provides thermal components for power generation plants and engineered services to maintain, refurbish, upgrade and modernize power stations. The segment continues to focus on expanding its global reach, as well as its thermal components and service offerings. The segment’s South African subsidiary has a Black Economic Empowerment shareholder, which holds a noncontrolling 25.1% interest.

Industrial Products and Services

Industrial Products and Services comprises operating segments that design, manufacture and market power systems, industrial tools and hydraulic units, precision machine components for the aerospace industry, crystal growing machines for the solar power generation market, television, radio and cell phone and data transmission broadcast antenna systems, communications and signal monitoring systems, fare collection systems, portable cable and pipe locators, and precision controlled industrial ovens and chambers. These operating segments continue to focus on global expansion opportunities.

Corporate Expense

Corporate expense generally relates to the cost of our Charlotte, NC corporate headquarters and our Asia Pacific center in Shanghai, China.

Financial data for our reportable segments and other operating segments, including the results of acquisitions from the dates of the respective acquisitions, were as follows:

	Three months ended						Nine months ended
	September 29,			October 1,			September 29,			October 1,
	2012			2011			2012			2011
Revenues (1):
Flow Technology reportable segment	$	648.6		$	527.9		$	1,954.0		$	1,476.6
Thermal Equipment and Services reportable segment	381.0			433.9			1,051.7			1,191.1
Industrial Products and Services	219.8			204.2			669.2			620.0
Total revenues	$	1,249.4		$	1,166.0		$	3,674.9		$	3,287.7
Income:
Flow Technology reportable segment	$	78.1		$	70.1		$	194.3		$	183.1
Thermal Equipment and Services reportable segment	30.0			40.8			56.3			97.9
Industrial Products and Services	26.1			27.1			82.1			78.6
Total income for reportable and other operating segments	134.2			138.0			332.7			359.6
Corporate expense	(24.9		)	(26.7		)	(79.3		)	(82.9		)
Pension and postretirement expense	(10.7		)	(8.6		)	(28.9		)	(26.7		)
Stock-based compensation expense	(5.6		)	(7.2		)	(33.9		)	(32.9		)
Impairment of goodwill and other intangible assets	—			—			—			(24.7		)
Special charges, net	(7.1		)	(7.2		)	(17.9		)	(13.8		)
Consolidated operating income	$	85.9		$	88.3		$	172.7		$	178.6

(1)Under the percentage of completion method, we recognized revenues of $394.9 and $375.9 in the three months ended September 29, 2012 and October 1, 2011, respectively. For the nine months ended September 29, 2012 and October 1, 2011, revenues under the percentage of completion method were $1,129.6 and $1,074.8, respectively. Costs and estimated earnings in excess of billings on contracts accounted for under the percentage of completion method were $401.0 and $355.9 as of September 29, 2012 and December 31, 2011, respectively, and are reported as a component of “Accounts receivable, net.” Billings in excess of costs and estimated earnings on uncompleted contracts accounted for under the percentage of completion method were $294.3 and $279.0 as of September 29, 2012 and December 31, 2011, respectively. The September 29, 2012 balance includes $293.5 reported as a component of “Accrued expenses” and $0.8 as a component of “Other long-term liabilities” in the condensed consolidated balance sheet. The December 31, 2011 balance includes $275.4 reported as a component of “Accrued expenses” and $3.6 as a component of “Other long-term liabilities” in the condensed consolidated balance sheet.