Information on Business Segments

The Company’s reportable segments offer different products and services. Each segment is managed separately because each business has different core functional and delivery capabilities.

During the fourth quarter of 2011, the Company sold its Barnes Distribution Europe businesses (the "BDE" business). The BDE business was comprised of the Company's European KENT, Toolcom and BD France businesses that were reported within the Company's Logistics and Manufacturing Services segment. The results of these operations have been segregated and presented as discontinued operations in the consolidated financial statements. Segment revenues and operating profit have been adjusted on a retrospective basis for the impact of discontinued operations, including a reallocation of corporate overhead expenses.

The Company operates two reportable business segments, as follows:

Logistics and Manufacturing Services provides value-added logistics support and repair services. Value-added logistics support services include inventory management, technical sales, and supply chain solutions for maintenance, repair, operating, and production supplies and services. Repair services provided include the manufacturing of spare parts for the refurbishment and repair of highly engineered components and assemblies for commercial and military aviation.

Logistics and Manufacturing Services has sales, distribution, and manufacturing operations in the United States, Brazil, Canada, China, France, Mexico, Singapore, Spain and the United Kingdom. Products and services are available in more than 30 countries.

The global operations are engaged in supplying, servicing, and manufacturing of maintenance, repair, and operating components. Activities include logistics support through vendor-managed inventory and technical sales for stocked replacement parts and other products, catalog offerings and custom solutions, and the manufacture and delivery of aerospace aftermarket spare parts, including the RSPs, and component repairs. Key business drivers include a value proposition centered on customer service, delivery, multiple sales channels, procurement systems, and strong customer relationships. In addition, the manufacturing and supplying of aerospace aftermarket spare parts, including the RSPs, are dependent upon the reliable and timely delivery of high-quality components.

The Logistics and Manufacturing Services segment faces active competition throughout the world. The products and services offered are not unique, and its competitors provide substantially similar products and services. Competition comes from local, regional, and national, maintenance and repair supply distributors and specialty manufacturers of springs, gas struts and engineered hardware. The aerospace aftermarket business competes with aerospace OEMs, service centers of major commercial airlines and other independent service companies for the repair and overhaul of turbine engine components. Service alternatives, timeliness and reliability of supply, price, technical capability, product breadth, quality and overall customer service are important competitive factors.

Precision Components is a global supplier of engineered components for critical applications focused on providing solutions for a diverse industrial, transportation and aerospace customer base. It is equipped to produce virtually every type of precision spring, from fine hairsprings for electronics and instruments to large heavy-duty springs for machinery as well as precision-machined and fabricated components and assemblies for OEM turbine engine, airframe and industrial gas turbine builders throughout the world, and the military. It is also a leading manufacturer and supplier of precision mechanical products, including precision mechanical springs, compressor reed valves and nitrogen gas products. Precision Components also manufactures high-precision punched and fine-blanked components used in transportation and industrial applications, nitrogen gas springs and manifold systems used to precisely control stamping presses, and retention rings that position parts on a shaft or other axis.

Precision Components has a diverse customer base with products purchased by durable goods manufacturers located around the world in industries including transportation, consumer products, farm equipment, telecommunications, medical devices, home appliances and electronics, and airframe and gas turbine engine manufacturers for commercial and military jets, business jets, and land-based industrial gas turbines. Long-standing customer relationships enable Precision Components to participate in the design phase of components and assemblies through which customers receive the benefits of manufacturing research, testing and evaluation. Products are sold primarily through Precision Components’ direct sales force and a global distribution channel.

Precision Components competes with a broad base of large and small companies engaged in the manufacture and sale of custom metal components and assemblies while the aerospace manufacturing business competes with both the leading jet engine OEMs and a large number of machining and fabrication companies. Precision Components competes on the basis of quality, service, reliability of supply, engineering and technical capability, product breadth, innovation, design, and price.

Precision Components has manufacturing, sales, assembly and distribution operations in the United States, Brazil, Canada, China, Germany, Korea, Mexico, Singapore, Sweden, Switzerland, Thailand and the United Kingdom.

The Company evaluates the performance of its reportable segments based on the operating profit of the respective businesses, which includes net sales, cost of sales, selling and administrative expenses and certain components of other expense (income), net, as well as the allocation of corporate overhead expenses.

Sales between the business segments and between the geographic areas in which the businesses operate are accounted for on the same basis as sales to unaffiliated customers. Additionally, revenues are attributed to countries based on the location of manufacturing or distribution facilities.

The following tables (dollars shown in millions) set forth information about the Company’s operations by its reportable business segments and by geographic area.

Operations by Reportable Business Segment



	Logistics and Manufacturing Services		Precision Components		Other			Total Company
Revenues
2011	$	492.9	$	687.5	$	(11.0	)	$	1,169.4
2010	443.9		595.9		(11.2		)	1,028.6
2009	428.3		501.5		(6.4		)	923.4
Operating profit
2011	$	64.8	$	62.8	$	—		$	127.6
2010	39.1		47.3		—			86.4
2009	48.7		14.8		—			63.5
Assets
2011	$	642.6	$	634.3	$	163.5		$	1,440.4
2010	716.5		605.8		81.0			1,403.3
2009	723.6		539.6		88.8			1,352.0
Depreciation and amortization
2011	$	27.5	$	29.5	$	1.9		$	58.9
2010	24.9		26.1		1.8			52.8
2009	24.7		24.8		2.0			51.5
Capital expenditures
2011	$	7.5	$	29.4	$	0.2		$	37.1
2010	10.0		18.7		0.1			28.8
2009	13.8		16.3		0.4			30.5

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Notes:

One customer, General Electric, accounted for 19%, 20% and 24% of the Company’s total revenues in 2011, 2010 and 2009, respectively.

“Other” revenues represent the elimination of intersegment sales.

“Other” assets include corporate-controlled assets, the majority of which are cash and deferred tax assets.

A reconciliation of the total reportable segments’ operating profit to income from continuing operations before income taxes follows:



	2011		2010		2009
Operating profit	$	127.6	$	86.4	$	63.5
Interest expense	10.3		20.0		22.5
Other expense (income), net	0.4		2.6		(2.0		)
Income from continuing operations before income taxes	$	116.9	$	63.8	$	43.0

Operations by Geographic Area



	Domestic		International		Other			Total Company
Revenues
2011	$	765.6	$	442.0	$	(38.2	)	$	1,169.4
2010	701.7		368.6		(41.7		)	1,028.6
2009	655.4		300.5		(32.5		)	923.4
Long-lived assets
2011	$	303.7	$	559.0	$	—		$	862.7
2010	290.4		619.9		—			910.3
2009	299.3		619.4		—			918.7

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Notes:

International sales derived from any one country did not exceed 10% of the Company’s total revenues.

“Other” revenues represent the elimination of intercompany sales between geographic locations, of which approximately 49% were sales from international locations to domestic locations.

Long-lived assets located in any one international country that exceeded 10% of the Company’s total long-lived assets as of December 31, 2011 were $247.3 million of intangible assets related to the RSPs recorded in Singapore, $142.2 million primarily related to goodwill and property, plant and equipment at the Hänggi division of the Precision Components segment located in Switzerland and $87.5 million primarily related to goodwill at the Stromsholmen division of the Precision Components segment located in Sweden.

In the first quarter of 2012, the Company is realigning its organizational structure by aligning its strategic business units which will result in three reportable business segments: Aerospace, Industrial and Distribution. The Aerospace segment will produce precision-machined and fabricated components and assemblies for original equipment manufacturer (“OEM”) turbine engine, airframe and industrial gas turbine builders throughout the world, and for the military. Aerospace will also provide jet engine component overhaul and repair services for many of the world's major turbine engine manufacturers, commercial airlines and the military. In addition, Aerospace will manufacture and provide aerospace aftermarket spare parts and will provide repair services for aerospace engine components. The Industrial segment will be a global supplier of high quality manufactured precision components for critical applications serving diverse industrial end markets such as transportation, energy, electronics, medical and consumer products. The Distribution segment will be an industry leader in logistics support through vendor managed inventory and technical sales for maintenance, repair, operating and production supplies, as well as the design, manufacture and distribution of engineered supplies for the global industrial base. All previously reported segment information will be adjusted on a retrospective basis to reflect this change beginning in the first quarter of 2012.