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Information on Business Segments
 12 Months Ended
Dec. 31, 2018
Information on Business Segments
19.    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 and Shaws brands. The Doors & Security segment includes residential fiberglass and steel entry door systems under the 
Therma-Tru
 brand name, urethane millwork product lines under the Fypon brand name, locks, safety and security devices and electronic security products under the Master Lock and American Lock brand names, fire resistant safes, security containers and commercial cabinets under the SentrySafe brand name and composite decking, railing and fencing under the Fiberon 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)
 
2018
 
 
2017
 
 
2016
 
Net sales:
 
 
 
 
 
 
 
 
 
 
 
 
Cabinets
 
$
2,418.6
 
 
$
2,467.1
 
 
$
2,397.8
 
Plumbing
 
 
1,883.3
 
 
 
1,720.8
 
 
 
1,534.4
 
Doors & Security
 
 
1,183.2
 
 
 
1,095.4
 
 
 
1,052.7
 
Net sales
 
$
5,485.1
 
 
$
5,283.3
 
 
$
4,984.9
 
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 2018, 2017 and 2016. All segments sell to both The Home Depot and Lowe’s. Net sales to The Home Depot were 13%, 13% and 13% of net sales in 2018, 2017 and 2016, respectively. Net sales to Lowe’s were 14%, 14% and 14% of net sales in 2018, 2017 and 2016, respectively.
 
    
(In millions)
 
2018
 
 
2017
 
 
2016
 
    
Operating income:
 
 
 
 
 
 
 
 
 
 
 
 
Cabinets
 
$
143.5
 
 
$
267.2
 
 
$
257.8
 
Plumbing
(b)
 
 
375.3
 
 
 
358.5
 
 
 
314.9
 
Doors & Security
(b)
 
 
155.6
 
 
 
146.9
 
 
 
126.4
 
Less: Corporate expenses 
(a) (b)
 
 
(79.2
) 
 
 
(90.1
) 
 
 
(80.5
) 
Operating income
 
 
$
595.2
 
 
$
682.5
 
 
$
618.6
 
(a)
  Below is a table detailing Corporate expenses:
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative expense
 
$
(79.2
) 
 
$
(85.0
) 
 
$
(80.5
) 
Long-lived asset impairment
 
 
—
 
 
 
(5.1
) 
 
 
—
 
Total Corporate expenses
 
$
(79.2
) 
 
$
(90.1
) 
 
$
(80.5
) 
 
(b)
 
We revised our previously reported results in 2017 and 2016 for ASU 
2017-07,
 Presentation of Net Periodic and Postretirement Costs and to reflect our new Doors & Security segment resulting from the reorganization we announced in July 2018.
 
  
 
 
 
 
(In millions)
 
2018
 
 
2017
 
 
2016
 
Total assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cabinets
 
$
2,318.7
 
 
$
2,416.3
 
 
$
2,349.4
 
Plumbing
 
 
1,943.1
 
 
 
1,854.1
 
 
 
1,626.8
 
Doors & Security
 
 
1,526.0
 
 
 
1,032.2
 
 
 
995.1
 
Corporate
 
 
176.8
 
 
 
208.8
 
 
 
157.2
 
Total assets
 
$
5,964.6
 
 
$
5,511.4
 
 
$
5,128.5
 
    
Depreciation expense:
            
Cabinets
 
$
50.9
 
 
$
42.8
 
 
$
40.1
 
Plumbing
 
 
29.1
 
 
 
26.9
 
 
 
24.6
 
Doors & Security
 
 
30.2
 
 
 
25.9
 
 
 
26.2
 
Corporate
 
 
3.3
 
 
 
3.0
 
 
 
3.7
 
Depreciation expense
 
$
113.5
 
 
$
98.6
 
 
$
94.6
 
    
Amortization of intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cabinets
 
$
19.6
 
 
$
19.7
 
 
$
18.4
 
Plumbing
 
 
10.4
 
 
 
7.7
 
 
 
3.6
 
Doors & Security
 
 
6.1
 
 
 
4.3
 
 
 
6.1
 
Amortization of intangible assets
 
$
36.1
 
 
$
31.7
 
 
$
28.1
 
    
Capital expenditures:
 
 
 
 
 
 
 
 
 
 
 
 
Cabinets
 
$
73.8
 
 
$
63.4
 
 
$
61.7
 
Plumbing
 
 
41.4
 
 
 
43.5
 
 
 
48.3
 
Doors & Security
 
 
34.3
 
 
 
40.1
 
 
 
38.8
 
Corporate
 
 
0.6
 
 
 
18.0
 
 
 
0.5
 
Capital expenditures, gross
 
 
150.1
 
 
 
165.0
 
 
 
149.3
 
Less: proceeds from disposition of assets
 
 
(6.1
) 
 
 
(0.4
) 
 
 
(3.9
) 
Capital expenditures, net
 
$
144.0
 
 
$
164.6
 
 
$
145.4
 
    
Net sales by geographic region 
(a)
:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
4,606.6
 
 
$
4,492.2
 
 
$
4,258.5
 
Canada
 
 
433.1
 
 
 
427.6
 
 
 
406.4
 
China
 
 
260.6
 
 
 
202.3
 
 
 
175.0
 
Other international
 
 
184.8
 
 
 
161.2
 
 
 
145.0
 
Net sales
 
$
5,485.1
 
 
$
5,283.3
 
 
$
4,984.9
 
    
Property, plant and equipment, net:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
628.9
 
 
$
562.3
 
 
$
499.8
 
Mexico
 
 
103.4
 
 
 
89.0
 
 
 
90.8
 
Canada
 
 
46.0
 
 
 
50.5
 
 
 
45.5
 
China
 
 
22.5
 
 
 
24.8
 
 
 
22.7
 
Other international
 
 
12.6
 
 
 
13.4
 
 
 
3.7
 
Property, plant and equipment, net
 
$
813.4
 
 
$
740.0
 
 
$
662.5
 
 
(a)
 
Based on country of destination