Information on Business Segments

12 Months Ended

Dec. 31, 2013

Information on Business Segments

18.     Information on Business Segments

We report our operating segments based on how operating results are regularly reviewed by our chief operating decision maker for making decisions about resource allocations to segments and assessing performance. The Company’s operating segments and types of products from which each segment derives revenues are described below.

The Kitchen & Bath Cabinetry segment includes custom, semi-custom and stock cabinetry for the kitchen, bath and other parts of the home under brand names including Aristokraft, Kitchen Craft, Kitchen Classics, Omega, Schrock, Homecrest, Decorá, Diamond and Kemper. In addition, cabinets are distributed under the Martha Stewart Living and Thomasville Cabinetry brand names. The Plumbing & Accessories segment manufactures or assembles and sells faucets, bath furnishings, accessories and kitchen sinks predominantly under the Moen brand. The Advanced Material Windows & Door Systems segment includes residential fiberglass and steel entry door systems under the Therma-Tru brand name, vinyl-framed windows and patio doors under the Simonton brand name, and urethane millwork under the Fypon brand name. The Security & Storage segment includes locks, safety and security devices and electronic security products under the Master Lock brand name, and tool storage and garage organization products under the Sears Craftsman and Waterloo brand names.

The Company’s subsidiaries operate principally in the United States, Canada, Mexico, China and Western Europe.

(In millions)	2013		2012		2011
Net sales:
Kitchen & Bath Cabinetry	$	1,642.2	$	1,326.6	$	1,256.3
Plumbing & Accessories		1,287.0		1,100.7		962.8
Advanced Material Windows & Door Systems		657.8		587.2		552.9
Security & Storage		570.4		576.6		556.6
Net sales	$	4,157.4	$	3,591.1	$	3,328.6

Net sales to two of the Company’s customers, The Home Depot, Inc. (“The Home Depot”) and Lowe’s Companies, Inc. (“Lowe’s”) each accounted for greater than 10% of the Company’s net sales in 2013, 2012 and 2011. All segments sell to both The Home Depot and Lowe’s. Net sales to The Home Depot were 14%, 13% and 13% of net sales in 2013, 2012 and 2011, respectively. Net sales to Lowe’s were 13%, 13% and 15% of net sales in 2013, 2012 and 2011, respectively.

(In millions)	2013			2012			2011
Operating income (loss):
Kitchen & Bath Cabinetry	$	97.1		$	20.5		$	5.7
Plumbing & Accessories		228.3			169.2			138.0
Advanced Material Windows & Door Systems		14.4			(1.0	)		(101.2	)
Security & Storage		90.4			75.4			62.6
Less: Corporate expenses(a)		(73.1	)		(102.4	)		(120.7	)
Operating income (loss)	$	357.1		$	161.7		$	(15.6	)
Total assets:
Kitchen & Bath Cabinetry	$	1,588.0		$	1,248.5		$	1,273.2
Plumbing & Accessories		1,176.3			1,081.7			1,065.0
Advanced Material Windows & Door Systems		766.1			778.2			804.2
Security & Storage		461.8			459.8			399.9
Corporate(b)		185.9			305.7			95.6
Total assets	$	4,178.1		$	3,873.9		$	3,637.9
(a)    Below is a table detailing Corporate expenses:
Corporate expenses:
General and administrative expense(c)	$	(78.0	)	$	(63.7	)	$	(44.1	)
Business separation costs		—			—			(2.4	)
Defined benefit plan costs		10.1			3.5			5.8
Defined benefit plan recognition of actuarial losses		(5.2	)		(42.2	)		(80.0	)
Total Corporate expenses	$	(73.1	)	$	(102.4	)	$	(120.7	)

^(b)  Corporate assets at December 31, 2013 and 2012 primarily consisted of cash and at December 31, 2010 predominantly consisted of short-term loans to our Former Parent.

^(c)  General and administrative expense included a $23.4 million allocation of general corporate expenses incurred directly by our Former Parent in the first nine months of 2011.

(In millions)	2013			2012			2011
Depreciation expense:
Kitchen & Bath Cabinetry	$	29.3		$	38.8		$	38.6
Plumbing & Accessories		16.7			18.1			18.2
Advanced Material Windows & Door Systems		16.9			18.5			25.8
Security & Storage		13.0			13.3			14.0
Corporate		1.3			1.5			0.5
Depreciation expense	$	77.2		$	90.2		$	97.1
Amortization of intangible assets:
Kitchen & Bath Cabinetry	$	5.1		$	3.3		$	6.0
Advanced Material Windows & Door Systems		7.5			7.5			7.9
Security & Storage		0.6			0.3			0.5
Amortization of intangible assets	$	13.2		$	11.1		$	14.4
Capital expenditures:
Kitchen & Bath Cabinetry	$	36.4		$	27.7		$	29.1
Plumbing & Accessories		25.3			19.1			16.5
Advanced Material Windows & Door Systems		13.6			15.0			13.5
Security & Storage		18.9			13.0			9.4
Corporate		2.5			0.2			—
Capital expenditures, gross		96.7			75.0			68.5
Less: proceeds from disposition of assets		(2.2	)		(13.5	)		(3.5	)
Capital expenditures, net	$	94.5		$	61.5		$	65.0
Net sales by geographic region(a):
United States	$	3,479.4		$	2,969.1		$	2,755.0
Canada		418.1			405.3			390.3
China and other international		259.9			216.7			183.3
Net sales	$	4,157.4		$	3,591.1		$	3,328.6
Property, plant and equipment, net:
United States	$	439.2		$	428.9		$	443.7
Mexico		55.6			37.0			39.1
Canada		29.4			32.7			32.8
China and other international		10.2			10.8			10.2
Property, plant and equipment, net	$	534.4		$	509.4		$	525.8

^(a)  Based on country of destination