Business Segments

6 Months Ended

Jul. 02, 2016

Business Segments

Business Segments

The Company's operations are classified into three reportable business segments, which also represent its operating segments: Tools & Storage, Security and Industrial.

The Tools & Storage segment is comprised of the Power Tools and Hand Tools & Storage businesses. The Power Tools business includes professional products, consumer products and power tool accessories. Professional products include professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders, as well as pneumatic tools and fasteners including nail guns, nails, staplers and staples, concrete and masonry anchors. Consumer products include corded and cordless electric power tools sold primarily under the BLACK+DECKER brand, lawn and garden products, including hedge trimmers, string trimmers, lawn mowers, edgers and related accessories, and home products such as hand-held vacuums, paint tools and cleaning appliances. Power tool accessories include drill bits, router bits, abrasives and saw blades.

The Hand Tools & Storage business sells measuring, leveling and layout tools, planes, hammers, demolition tools, knives, saws, chisels and industrial and automotive tools. Storage products include tool boxes, sawhorses, medical cabinets and engineered storage solution products.

The Security segment is comprised of the Convergent Security Solutions ("CSS") and Mechanical Access Solutions ("MAS") 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. Purchasers of these systems typically contract for ongoing security systems monitoring and maintenance at the time of initial equipment installation. The business also sells healthcare solutions, which include asset tracking solutions, infant protection, pediatric protection, patient protection, wander management, fall management, and emergency call products. The MAS business sells automatic doors, commercial hardware, locking mechanisms, electronic keyless entry systems, keying systems, tubular and mortise door locksets.

The Industrial segment is comprised of the Engineered Fastening and Infrastructure businesses. The Engineered Fastening business primarily sells engineered fastening products and systems designed for specific applications. The product lines include stud welding systems, blind rivets and tools, blind inserts and tools, drawn arc weld studs, engineered plastic and mechanical fasteners, self-piercing riveting systems, precision nut running systems, micro fasteners, and high-strength structural fasteners. The Infrastructure business consists of the Oil & Gas and Hydraulics businesses. The Oil & Gas business sells and rents custom pipe handling, joint welding and coating equipment used in the construction of large and small diameter pipelines, and provides pipeline inspection services. The Hydraulics business sells hydraulic tools and accessories.

The Company utilizes segment profit, which is defined as net sales minus cost of sales and 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 charges, and income taxes. Refer to Note N, Restructuring Charges, for the amount of net 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 cash, accounts receivable, inventory, other current assets, property, plant and equipment, intangible assets and other miscellaneous assets.

	Second Quarter						Year-to-Date
(Millions of Dollars)	2016			2015			2016			2015
NET SALES
Tools & Storage	$	1,931.6		$	1,839.5		$	3,638.5		$	3,471.6
Security	537.7			533.3			1,041.9			1,042.9
Industrial	463.1			494.1			924.1			982.4
Total	$	2,932.4		$	2,866.9		$	5,604.5		$	5,496.9
SEGMENT PROFIT
Tools & Storage	$	362.5		$	301.6		$	624.5		$	558.4
Security	67.7			55.2			127.9			110.0
Industrial	78.8			94.3			154.8			169.0
Segment profit	509.0			451.1			907.2			837.4
Corporate overhead	(47.0		)	(38.4		)	(95.4		)	(74.1		)
Other, net	(47.6		)	(50.5		)	(93.8		)	(114.2		)
Restructuring charges	(10.2		)	(5.0		)	(18.2		)	(29.9		)
Interest expense	(47.7		)	(46.2		)	(95.0		)	(90.6		)
Interest income	5.5			3.0			11.3			6.7
Earnings from continuing operations before income taxes	$	362.0		$	314.0		$	616.1		$	535.3

The following table is a summary of total assets by segment as of July 2, 2016 and January 2, 2016:

(Millions of Dollars)	July 2, 2016			January 2, 2016
Tools & Storage	$	8,798.2		$	8,492.9
Security	3,775.4			3,741.6
Industrial	3,482.8			3,438.7
	16,056.4			15,673.2
Corporate assets	(315.6		)	(545.4		)
Consolidated	$	15,740.8		$	15,127.8

Corporate assets primarily consist of cash, deferred taxes and property, plant and equipment. Based on the nature of the Company's cash pooling arrangements, at times corporate-related cash accounts will be in a net liability position.