Business Segments
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Jun. 30, 2012
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Business Segments | Business Segments The Company classifies its business into three reportable segments, which also represent its operating segments: Construction & Do It Yourself (“CDIY”), Security, and Industrial. The CDIY segment is comprised of the Professional Power Tool and Accessories businesses, the Consumer Power Tool business, the Hand Tools, Fasteners & Storage business and the Plumbing Products business. The Professional Power Tool and Accessories business sells professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders. The Consumer Power Tool business sells corded and cordless power tools, lawn and garden products and home products. The Hand Tools, Fasteners & Storage business sells measuring and leveling tools, planes, hammers, demolition tools, knives, saws and chisels. Fastening products include pneumatic tools and fasteners including nail guns, nails, staplers and staples. Storage products include tool boxes, sawhorses and storage units. The Plumbing Products business sells plumbing fixtures primarily for residential use. The Security segment is comprised of the electronic security solutions ("CSS") and the Mechanical Access Solutions businesses. The CSS business designs, supplies and installs electronic security systems and provides electronic security services, including alarm monitoring, video surveillance, fire alarm monitoring, systems integration and system maintenance and repair. Purchasers of these systems typically contract for ongoing security systems monitoring and maintenance at the time of initial equipment installation. The CSS business also sells healthcare solutions which include medical carts and cabinets, asset tracking, infant protection, pediatric protection, patient protection, wander management, fall management, and emergency call products. The Mechanical Access Solutions business sells and installs automatic doors, residential and commercial hardware, locking mechanisms, electronic keyless entry systems, keying systems, tubular and mortise door locksets. The Industrial segment is comprised of the Industrial and Automotive Repair, Engineered Fastening and Infrastructure businesses. The Industrial and Automotive Repair business sells hand tools, power tools, and engineered storage solution products. The Engineered Fastening business primarily sells engineered fasteners designed for specific applications. The businesses product lines include stud welding systems, blind rivets and tools, blind inserts and tools, drawn arc weld studs, engineered plastic fasteners, self-piercing riveting systems and precision nut running systems. The Infrastructure business consists of the CRC-Evans business, and the Company’s Hydraulics business. The business’s product lines include custom pipe handling machinery, joint welding and coating machinery, weld inspection services and hydraulic tools and accessories. The Company utilizes segment profit, which is defined as net sales minus cost of sales and selling, general and administrative (“SG&A”) inclusive of the provision for doubtful accounts (aside from corporate overhead expense), and segment profit as a percentage of net sales to assess the profitability of each segment. Segment profit excludes the corporate overhead expense element of SG&A, interest income, interest expense, other-net (inclusive of intangible asset amortization expense), restructuring, and income tax expense. Refer to Note N, Restructuring Charges, for the amount of restructuring charges by segment. Corporate overhead is comprised of world headquarters facility expense, cost for the executive management team and cost for certain centralized functions that benefit the entire Company but are not directly attributable to the businesses, such as legal and corporate finance functions. Transactions between segments are not material. Segment assets primarily include accounts receivable, inventory, other current assets, property, plant and equipment, intangible assets and other miscellaneous assets.
The Company recorded a total of $8.7 million and $14.1 million of merger and acquisition-related charges, respectively, which reduced segment gross profit associated with facility closures and an additional $16.9 million and $27.2 million, respectively, in SG&A primarily for integration costs associated with merger and acquisition-related activities for the three and six month periods ended June 30, 2012. For the three and six months ended July 2, 2011, the Company recorded a total of $5.3 million and $11.3 million of merger and acquisition-related charges, respectively, which reduced segment gross profit associated with facility closure and an additional $1.3 million and $2.2 million, respectively in SG&A primarily for integration costs associated with the merger and acquisition-related activities. These charges reduced segment profit by $10.5 million in CDIY, $14.1 million in Security and $1.0 million in Industrial for the three months ended June 30, 2012, and $4.2 million in CDIY and $2.1 million in Security, and $0.3 million for Industrial for the three months ended July 2, 2011. On a year-to-date basis, segment profit was reduced by $13.8 million in CDIY, $24.5 million in Security, and $3.0 million in Industrial for six months ended June 30, 2012, and $6.6 million in CDIY, $6.6 million in Security, and $0.3 million in Industrial for the six months ended July 2, 2011. Corporate overhead for the three and six months ended June 30, 2012 includes $17.7 million and $35.2 million of charges pertaining primarily to merger and acquisition-related employee charges and integration costs. For the three and six months ended July 2, 2011, such charges included in corporate overhead were $16.4 million and $31.4 million. The following table is a summary of total assets by segment for the periods ended June 30, 2012 and December 31, 2011:
Corporate assets primarily consist of cash, deferred taxes and property, plant and equipment. |