SEGMENT REPORTING

12 Months Ended

Jan. 01, 2012

SEGMENT REPORTING

NOTE 17 – SEGMENT REPORTING

We operate the following four business units, which are organized based upon their customer base and the primary markets they serve:  Healthcare, Financial Services, Commercial Markets, and Industrial.  Each of these business units represents an operating segment and a reportable segment.

Under our current operating model, the majority of our manufacturing, printing, warehousing, and distribution functions are managed under a shared-services model and are therefore not specific to a particular reportable segment.  Each business unit is supported by our shared services group comprised of manufacturing, supply chain, and client satisfaction, as well as finance, technology, and other corporate functions.  The profitability measure we use to assess segment performance is segment operating income before restructuring and impairment, and excludes items listed in the following reconciliation that are not allocated to segment operating income.

Production costs for our manufacturing and supply chain shared services functions are accumulated on a customer basis and reported in the applicable business unit’s cost of sales.  Our business units incur a portion of SG&A directly.  Each business unit also receives an allocation of SG&A expense as follows:

● Each business unit has its own sales regions.  Selling expense incurred by each sales region is allocated to other business units based on the percentage of revenue generated for the other business unit.  We use an activity-based method to allocate expense associated with our client satisfaction function to business units.

● Finance, technology, and other corporate general and administrative expenses are allocated based on the business unit’s budgeted revenue as a percentage of actual consolidated revenue.

● General and administrative expense of our remaining shared services is allocated based on a percentage of actual revenue.

In 2011, we reclassified certain customers between our segments to better align them with the core markets served.  Segment information for prior years has been revised from previously reported information to reflect the current presentation.  In addition, we changed the allocation methodology for our finance, technology, and other corporate general and administrative expenses.  Previously, these expenses were allocated based on the business unit’s actual revenue as a percentage of actual consolidated revenue.  Beginning in 2011, these expenses are now allocated based on the business unit’s budgeted revenue as a percentage of budgeted consolidated revenue.

As a result of our shared-services model, our segments do not have separately identified assets and depreciation expense is part of the allocations.  Asset information is not provided as part of the business unit’s discrete financial information.  The accounting policies of the segments are the same as those described in Note 1.  No single customer provided more than 10% of the Company’s consolidated revenue in any of the years presented.

A description of our reportable segments is provided below:

Healthcare -- The Healthcare segment serves hospitals and other providers of healthcare and related services.  Revenues are derived primarily from administrative and clinical forms, critical communications, global marketing solutions, wristbands and labels, secure prescriptions, and patient information solutions.

Financial Services – The Financial Services segment serves the needs of the financial services market, which consists of  retail banks, insurance carriers, credit agencies, security dealers, insurance agents or brokers, and holding companies.  Revenues are derived primarily from traditional documents, global marketing solutions, critical communications, and software and professional services.

Commercial Markets -- The Commercial Markets segment serves the business-to-business or commercial market, focusing primarily on large diverse retailers, state governments, overnight delivery carriers, business service providers, and wholesale companies.  Revenues are derived primarily from traditional documents, global  marketing solutions, labels, critical communications, and professional services.

Industrial – The Industrial segment primarily provides printed production parts to the industrial manufacturing market.  Printed production parts are all of the labels and technical literature which go on a manufactured product or are shipped with a product.  Revenues are derived primarily from functional and decorative labels, in-mold labeling and decorating and printed technical literature and other documents.

Information about our operations by reportable segment is as follows:

		Healthcare		Financial Services		Commercial Markets			Industrial			Total
Revenue from external	2011	$	236,772	$	174,170	$	159,392		$	77,775		$	648,109
customers	2010		250,963		175,677		170,636			71,101			668,377
	2009		265,850		193,203		175,404			59,559			694,016
Operating income (loss)	2011	$	14,475	$	7,329	$	(3,959	)	$	113		$	17,958
from continuing	2010		19,575		7,361		(3,323	)		(449	)		23,164
operations	2009		22,553		7,914		(2,610	)		(2,675	)		25,182
Depreciation and	2011	$	8,011	$	5,534	$	5,475		$	2,789		$	21,809
amortization	2010		8,390		5,980		6,063			2,822			23,255
	2009		9,121		7,169		6,429			2,325			25,044

Reconciling information between reportable segments and our consolidated financial statements is as follows:

	2011			2010			2009
Total consolidated revenue	$	648,109		$	668,377		$	694,016
Segment operating income	$	17,958		$	23,164		$	25,182
Restructuring and other exit costs		(5,198	)		(1,733	)		(11,513	)
Asset impairments		-			-			(1,176	)
Amortization of net pension actuarial losses		(24,281	)		(18,672	)		(14,598	)
Pension settlements		(520	)		(370	)		(20,412	)
Other unallocated pension		1,602			1,455			(209	)
Unallocated portion of postretirement credit		15,164			-			-
Environmental remediation		(203	)		803			(2,513	)
Other unallocated		1,309			(752	)		4
Total other expense		(1,834	)		(2,522	)		(807	)
Income (loss) before income taxes	$	3,997		$	1,373		$	(26,042	)

Our operations are conducted primarily in the United States.  Revenue and long-lived assets for our operations in Mexico are not material.  Revenue by the products and services we provide is as follows:

	2011		2010		2009
Print	$	388,176	$	407,473	$	430,193
Labels		108,640		104,511		102,129
Software		9,980		10,371		8,614
Services		89,445		95,124		99,929
Other		51,868		50,898		53,151
Total consolidated revenue	$	648,109	$	668,377	$	694,016