(4) Segments

Effective as of January 1, 2014, we changed our segment reporting structure in order to reflect the way management now makes operating decisions and manages the growth and profitability of the business. This change corresponds with management’s current approach of allocating costs and resources and assessing the performance of our segments. We report our segment information in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 280, “Segment Reporting,” (“FASB ASC Topic 280”). There has been no change in our total condensed consolidated financial condition or results of operations previously reported as a result of the change in our segment structure. There were no changes to the reportable segment assets as a result of the change in segment reporting.

As a result, the Company’s new segment reporting structure consists of three reportable segments and an “Other” category and is as follows:

•

Food Care;

•

Diversey Care;

•

Product Care; and

•

Other (includes Corporate, Medical Applications and New Ventures businesses)

The Company’s Food Care, Diversey Care and Product Care segments are considered reportable segments under FASB ASC Topic 280. Our reportable segments are aligned with similar groups of products. Other includes Corporate and the Medical Applications and New Ventures businesses. The Medical Applications and New Ventures businesses were previously included in the Company’s “Other Category.” Other includes certain costs that are not allocated to the reportable segments, primarily consisting of unallocated corporate overhead costs, including administrative functions and cost recovery variances not allocated to the reportable segments from global functional expenses.

Other also includes all items the Company categorizes as special or unusual items that are reported on the condensed consolidated statements of operations. These special items primarily consist of restructuring and other associated costs, expenses related to stock appreciation rights (“SARs”), which were issued in connection with the acquisition of Diversey in 2011, loss on debt redemptions and foreign currency exchange gains/losses related to Venezuelan subsidiaries.

As of January 1, 2014, the Company also changed the segment performance measure in which the chief operating decision maker (“CODM”), the Company’s Chief Executive Officer, assesses segment performance and makes allocation decisions by segment from operating profit (a U.S. GAAP financial measure) to Adjusted EBITDA (a non-U.S. GAAP financial measure). Adjusted EBITDA is defined as Earnings before Interest Expense, Taxes, Depreciation and Amortization, adjusted to exclude the impact of special items. See “Use of Non-U.S. GAAP Information” above for further information of our use of non-U.S. GAAP measures.

We allocate and disclose depreciation and amortization expense to our segments, although property and equipment, net is not allocated to the segment assets, nor is depreciation and amortization included in the segment performance metric Adjusted EBITDA. We also disclose restructuring and other charges by segment, although it is not included in the segment performance metric Adjusted EBITDA since restructuring and other charges is categorized as a special item as discussed above. The accounting policies of the reportable segments and Other are the same as those applied to the condensed consolidated financial statements.

The changes in the Company’s segment structure and segment performance measure better provides the CODM with information to assess segment performance and to make resource and allocation decisions, as the new segment structure and performance measure reflect the current management of our businesses. Accordingly, the new measure will also assist our investors by providing them with a better understanding of the segment so that the user can make a more informed decision about the Company, which is consistent with FASB ASC Topic 280.

The following tables show net sales and Adjusted EBITDA by our segment reporting structure:


	Three Months Ended March 31,
	2014			2013
Net Sales:
Food Care	$	904.3		$	903.1
As a % of Total Company net sales		49.5	%		49.4	%
Diversey Care		505.1			512.9
As a % of Total Company net sales		27.6	%		28.0	%
Product Care		393.8			387.2
As a % of Total Company net sales		21.5	%		21.2	%

Total Reportable Segments Net Sales		1,803.2			1,803.2
Other		24.5			25.7

Total Company Net Sales	$	1,827.7		$	1,828.9


Adjusted EBITDA:
Food Care	$	159.5		$	145.7
Adjusted EBITDA Margin		17.6	%		16.1	%
Diversey Care		44.5			42.6
Adjusted EBITDA Margin		8.8	%		8.3	%
Product Care		70.1			62.6
Adjusted EBITDA Margin		17.8	%		16.2	%

Total Reportable Segments Adjusted EBITDA		274.1			250.9
Other		(22.0	)		(19.5	)

Non-U.S. GAAP Total Company Adjusted EBITDA	$	252.1		$	231.4

Adjusted EBITDA Margin		13.8	%		12.7	%

The following table shows a reconciliation of Non-U.S. GAAP Total Company Adjusted EBITDA to U.S. GAAP net earnings from continuing operations:


	Three Months Ended March 31,
	2014			2013

Non-U.S. GAAP Total Company Adjusted EBITDA	$	252.1		$	231.4
Depreciation and amortization ⁽¹⁾		(82.8	)		(79.5	)
Special items⁽²⁾:

Restructuring and other charges⁽³⁾		(6.1	)		0.2
Other restructuring associated costs included in cost of sales and selling general and administrative expenses		(4.6	)		(5.9	)

SARs		(0.5	)		(18.0	)

Costs related to the acquisition and integration of Diversey		(0.9	)		(0.4	)

Foreign currency exchange losses related to Venezuelan subsidiaries		(15.0	)		(13.1	)

Loss on debt redemption		(0.4	)		(32.3	)

Gain from Claims Settlement in 2014, Settlement agreement related costs in 2013		21.1			(0.1	)

Other expense, net		(1.9	)		—

Interest expense		(78.5	)		(90.8	)

Income tax provision (benefit)		10.7			(9.2	)

U.S. GAAP net earnings from continuing operations	$	71.8		$	0.7

⁽¹⁾	Depreciation and amortization by segment is as follows:


	Three Months Ended March 31,
	2014		2013
Food Care	$	32.0	$	30.2
Diversey Care		32.3		34.7
Product Care		10.6		9.7

Total reportable segments		74.9		74.6
Other		7.9		4.9

Total Company depreciation and amortization	$	82.8	$	79.5

⁽²⁾	Includes items were consider unusual or special items. See “Non-U.S. GAAP information” above for further information.

⁽³⁾	Restructuring and other charges by segment is as follows:


	Three Months Ended March 31,
	2014		2013
Food Care	$	4.1	$	(1.4	)
Diversey Care		0.4		(0.8	)
Product Care		1.5		2.0

Total reportable segments		6.0		(0.2	)
Other		0.1		—

Total Company restructuring and other charges	$	6.1	$	(0.2	)

Allocation of Goodwill and Identifiable Intangible Assets to Reportable Segments

Our management views goodwill and identifiable intangible assets as corporate assets, so we do not allocate their balances to the reportable segments. However, we are required to allocate their balances to each reporting unit to perform our annual impairment review, which we do during the fourth quarter of the year. There was no change to the allocation of goodwill by reporting unit as a result of the change in our reportable segment structure discussed above. See Note 7, “Goodwill and Identifiable Intangible Assets,” for the allocation of goodwill and identifiable intangible assets and the changes in their balances in the three months ended March 31, 2014 by our segment reporting structure, and the details of our impairment review.