SEGMENT REPORTING

9 Months Ended

Sep. 30, 2012

SEGMENT REPORTING

SEGMENT REPORTING

Our segments meeting the quantitative thresholds to be considered reportable are Shared Mail, Neighborhood Targeted and Free-standing Inserts (“FSI”). All other lines of business fall below a materiality threshold and are, therefore, combined together in an “other” segment named International, Digital Media & Services. These business lines include NCH Marketing Services, Inc., our coupon clearing and analytics business, as well as our digital and in-store businesses. Our reportable segments are strategic business units that offer different products and services and are subject to regular review by our chief operating decision-maker. They are managed separately because each business requires different executional strategies and caters to different client marketing needs.

The accounting policies of the segments are the same as those described in the 2011 Form 10-K and Note 1, Basis of Presentation and Significant Accounting Policies. We evaluate reportable segment performance based on segment profit, which we define as earnings from operations excluding unusual or infrequently occurring items. Assets are not allocated to reportable segments and are not used to assess the performance of a reportable segment.

The following tables set forth, by segment, revenues, depreciation/amortization and segment profit for the indicated periods:

	Three Months Ended
	September 30,
(in millions of U.S. dollars)	Shared Mail		Neighborhood Targeted			FSI			International, Digital Media & Services		Total
2012
Revenues from external customers	$	331.4	$	75.8		$	72.2		$	44.4	$	523.8
Intersegment revenues	$	4.3	$	15.7		$	9.3		$	—	$	29.3
Depreciation/amortization	$	7.7	$	1.0		$	3.2		$	2.0	$	13.9
Segment profit (loss)	$	52.3	$	(1.1	)	$	7.6		$	0.1	$	58.9
2011
Revenues from external customers	$	330.5	$	76.9		$	73.5		$	47.5	$	528.4
Intersegment revenues	$	4.4	$	13.8		$	9.6		$	0.1	$	27.9
Depreciation/amortization	$	8.9	$	1.2		$	3.6		$	0.7	$	14.4
Segment profit (loss)	$	46.2	$	0.4		$	(0.8	)	$	3.2	$	49.0
	Nine Months Ended
	September 30,
(in millions of U.S. dollars)	Shared Mail		Neighborhood Targeted			FSI			International, Digital Media & Services		Total
2012
Revenues from external customers	$	1,008.2	$	225.5		$	219.0		$	129.9	$	1,582.6
Intersegment revenues	$	12.7	$	42.3		$	29.4		$	—	$	84.4
Depreciation/amortization	$	24.2	$	3.1		$	9.6		$	6.1	$	43.0
Segment profit (loss)	$	147.0	$	(5.1	)	$	20.3		$	5.2	$	167.4
2011
Revenues from external customers	$	990.3	$	255.8		$	251.9		$	142.6	$	1,640.6
Intersegment revenues	$	13.0	$	36.0		$	29.2		$	0.3	$	78.5
Depreciation/amortization	$	28.4	$	3.2		$	9.6		$	4.3	$	45.5
Segment profit	$	136.0	$	3.1		$	14.9		$	15.0	$	169.0

The following table provides reconciliations of total segment profit to earnings from operations for the indicated periods (nonoperating expenses are not allocated to reportable segments and are not used to assess the performance of a reportable segment):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions of U.S. dollars)	2012		2011		2012		2011
Total segment profit	$	58.9	$	49.0	$	167.4	$	169.0
Unallocated amounts:
Goodwill impairment	$	—	$	—	$	7.6	$	—
Restructuring and other charges	$	—	$	—	$	9.7	$	—
Earnings from operations	$	58.9	$	49.0	150.1		$	169.0

The $9.7 million of restructuring and other charges recognized during the nine months endedSeptember 30, 2012 consisted of $5.3 million of severance and related costs and $0.7 million of Brand.net acquisition costs, both of which were included in selling, general and administrative expenses in the unaudited, condensed consolidated statements of income, and $3.7 million of lease termination, severance, asset impairment and other costs associated with our decision to exit our solo direct mail business and our newspaper polybag advertising and sampling business, which were included in cost of sales in the unaudited, condensed consolidated statements of income. The results of operations of these businesses were immaterial to our consolidated results of operations for each of the nine months endedSeptember 30, 2012 and 2011.

Domestic and foreign revenues were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions of U.S. dollars)	2012		2011		2012		2011
United States	$	514.6	$	516.4	$	1,550.5	$	1,601.6
Foreign	9.2		12.0		32.1		39.0
Revenues	$	523.8	$	528.4	$	1,582.6	$	1,640.6

Domestic and foreign long-lived assets (property, plant and equipment, net) were as follows:

(in millions of U.S. dollars)	September 30, 2012		December 31, 2011
United States	$	123.9	$	140.7
Foreign	7.7		8.2
Property, plant and equipment, net	$	131.6	$	148.9