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 Cabinets segment includes custom, semi-custom and stock cabinetry for the kitchen, bath and other parts of the home under brand names including Aristokraft, Diamond, Mid-Continent, Kitchen Craft, Schrock, Homecrest, Omega, Kemper, StarMark and Ultracraft. In addition, cabinets are distributed under the Thomasville Cabinetry brand names. The Plumbing segment manufactures or assembles and sells faucets, bath furnishings, accessories and kitchen sinks and waste disposals predominantly under the Moen, ROHL, Riobel, Perrin & Rowe, Victoria + Albert, Shaws and Waste King brands. The Doors segment includes residential fiberglass and steel entry door systems under the Therma-Tru brand name and urethane millwork product lines under the Fypon brand name. The Security segment includes locks, safety and security devices and electronic security products under the Master Lock and American Lock brand names and fire resistant safes, security containers and commercial cabinets under the SentrySafe brand name. Corporate expenses consist of headquarters administrative expenses and defined benefit plans costs, primarily interest costs and expected return on plan assets, as well as actuarial gains and losses arising from the periodic remeasurement of our liabilities. Corporate assets consist primarily of cash.

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



(In millions)	2017		2016		2015
Net sales:
Cabinets	$	2,467.1	$	2,397.8	$	2,173.4
Plumbing		1,720.8		1,534.4		1,414.5
Doors		502.9		473.0		439.1
Security		592.5		579.7		552.4
Net sales	$	5,283.3	$	4,984.9	$	4,579.4

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 2017, 2016 and 2015. All segments sell to both The Home Depot and Lowe’s. Net sales to The Home Depot were 13%, 13% and 14% of net sales in 2017, 2016 and 2015, respectively. Net sales to Lowe’s were 14%, 14% and 14% of net sales in 2017, 2016 and 2015, respectively.



(In millions)	2017			2016			2015

Operating income:
Cabinets	$	267.2		$	257.8		$	192.4
Plumbing		363.6			326.3			285.4
Doors		74.5			61.9			44.0
Security		72.4			66.6			55.9
Less: Corporate expenses^(a)		(85.6	)		(79.9	)		(81.6	)
Operating income	$	692.1		$	632.7		$	496.1
^(a) Below is a table detailing Corporate expenses:
General and administrative expense	$	(85.2	)	$	(80.9	)	$	(70.1	)
Defined benefit plan income		4.2			2.9			6.1
Recognition of defined benefit plan actuarial gains (losses)		0.5			(1.9	)		(2.5	)
Long-lived asset impairment		(5.1	)		—			—
Norcraft transaction costs^(b)		—			—			(15.1	)
Total Corporate expenses	$	(85.6	)	$	(79.9	)	$	(81.6	)

^(b)	Representing external costs directly related to the acquisition of Norcraft and primarily includes expenditures for banking, legal, accounting and other similar services.



(In millions)	2017			2016			2015
Total assets:
Cabinets	$	2,416.3		$	2,349.4		$	2,364.0
Plumbing		1,854.1			1,626.8			1,341.4
Doors		494.8			480.6			483.9
Security		537.4			514.5			520.7
Corporate		208.8			157.2			165.7
Total assets	$	5,511.4		$	5,128.5		$	4,875.7

Depreciation expense:
Cabinets	$	42.8		$	40.1		$	38.1
Plumbing		26.9			24.6			21.3
Doors		9.1			9.0			11.2
Security		16.8			17.2			19.5
Corporate		3.0			3.7			3.4
Depreciation expense	$	98.6		$	94.6		$	93.5

Amortization of intangible assets:
Cabinets	$	19.7		$	18.4		$	14.3
Plumbing		7.7			3.6			1.2
Doors		2.3			3.8			3.8
Security		2.0			2.3			2.3
Amortization of intangible assets	$	31.7		$	28.1		$	21.6

Capital expenditures:
Cabinets	$	63.4		$	61.7		$	61.3
Plumbing		43.5			48.3			27.2
Doors		20.8			12.9			13.3
Security		19.3			25.9			17.3
Corporate		18.0			0.5			9.4
Capital expenditures, gross		165.0			149.3			128.5
Less: proceeds from disposition of assets		(0.4	)		(3.9	)		(2.5	)
Capital expenditures, net	$	164.6		$	145.4		$	126.0

Net sales by geographic region^(a):
United States	$	4,492.2		$	4,258.5		$	3,892.9
Canada		427.6			406.4			385.1
China		202.3			175.0			163.2
Other international		161.2			145.0			138.2
Net sales	$	5,283.3		$	4,984.9		$	4,579.4

Property, plant and equipment, net:
United States	$	562.3		$	499.8		$	498.9
Mexico		89.0			90.8			74.2
Canada		50.5			45.5			39.4
China		24.8			22.7			14.4
Other international		13.4			3.7			1.0
Property, plant and equipment, net	$	740.0		$	662.5		$	627.9

^(a)	Based on country of destination