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Aerospace Group sales increased 21% from $345 million in 2010 to $417 million in 2011. The increase in 2011 was due to higher OEM sales which increased $37 million, or 18%, to $246 million in 2011 from $208 million in 2010, primarily due to higher commercial product sales associated with large commercial transport, regional and business jets. In addition, the sales increase was attributable to higher aftermarket product sales which increased $35 million, or 25%, to $172 million in 2011 from $137 million in 2010 primarily due to higher modernization and upgrade (“M&U”) products sales, primarily associated with C130 carbon brake control upgrade pro- gram, as well as commercial and military spares sales. 

Aerospace Group operating profit increased 46% over the prior year, primarily reflecting leverage on the higher sales volume. Aerospace engineering expense was about 11% of sales in 2011 versus 13% in 2010. Total engineering expense for the Aerospace Group was $44 million in both 2011 and 2010. 

Electronics Group sales by market in 2011 were as follows: military/ defense, 61%; commercial aerospace, 27%; and other, 12%. Sales in 2011 by the Group’s solution sets were as follows: Power, 64%; Microwave Systems, 26%; and Microelectronics, 10%. 

Electronics Group sales increased 12% from $232 million in 2010 to $261 million in 2011. The core sales increase reflects higher sales of our Power Solutions and Microelectronics products, partially offset by lower sales of our Microwave products. The increase in Power Solutions product sales reflects an increase in demand from the commercial aviation market. The increase in Microelectronics product sales reflects higher sales to medical device customers. 

Electronics Group operating profit increased 9% over the prior year reflecting the favorable impact of the higher sales volume, partially offset by program execution inefficiencies and unfavorable sales mix. 

## ENGINEERED MATERIALS 

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* The restructuring and related charges are included in operating profit and operating margin. 

2012comparedwith2011. Engineered Materials sales decreased by $4 million to $217 million in 2012, from $220 million in 2011. Operating profit of $25 million in 2012 decreased $5 million in 2012 compared to 2011. Operating margins were 11.3% in 2012 compared with 13.5% in 2011. 

Sales decreased $4 million, or 2%, reflecting lower sales to our domestic transportation-related and international customers, partially offset by higher sales to RV manufacturers. We experi- enced a 10% sales increase to our traditional RV manufacturers reflecting an increase in demand for our RV related applications as RV OEM build rates improved, with strength in both dealer and retail demand in the second half of 2012. In addition, sales to our 

building product customers were flat, reflecting continued soft commercial construction markets. Sales to our transportation- related customers decreased 16%, due to difficult competitive conditions. Sales to our international customers decreased by 30% partly due to softness in our European market. 

Operating profit in our Engineered Materials segment decreased $5 million, or 18%, reflecting lower sales, higher raw material costs and restructuring and related charges of $4 million recorded in 2012 ($1 million was related to the write-down of inventory result- ing from the closure of a product line), partially offset by effective cost management. Our restructuring and related actions include the closure of a small manufacturing facility in the United Kingdom, which had total sales of $8 million in 2011. 

2011comparedwith2010. Engineered Materials sales increased by $8 million to $220 million in 2011, from $212 million in 2010. Operating profit of $30 million in 2011 was generally flat compared to 2010. Operating margins were 13.5% in 2011 com- pared with 14.2% in 2010. 

Sales increased $8 million, or 4%, reflecting higher sales to our domestic transportation-related and building products customers and, to a lesser extent, our international customers, partially offset by lower sales to RV manufacturers. Sales to our transportation- related customers increased 30%, due primarily to price increases implemented earlier this year and, to a lesser extent, improved build rates for dry and refrigerated trailers and new product sales related to aero-dynamic side skirts for trailers. Sales to our build- ing products customers increased by 4%, also reflecting price increases implemented earlier this year. We experienced a 3% sales decrease to RV manufacturers reflecting a decline in demand for our RV related applications, as several RV OEMs slowed manufacturing in the second half of 2011. RV dealers managed their inventory levels down, reflecting a generally uncertain economic environment. In addition, we experienced a 9% increase in our International sales primarily related to increased demand from transportation, and RV customers in Europe. 

Operating profit in our Engineered Materials segment was gen- erally flat reflecting higher raw material costs which were offset by price increases. 

## MERCHANDISING SYSTEMS 

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* The restructuring and related charges are included in operating profit and operating margin. 

2012comparedwith2011. Merchandising Systems sales decreased by $2 million from $374 million in 2011 to $372 million in 2012. Operating profit increased by $3 million from $30 million in 2011 to $34 million in 2012. Operating profit included restructuring and related charges of $4 million in 2012. Operating margins were 9.1% in 2012 compared with 8.1% in 2011. 

