Note 4 Segments

Effective as of January 1, 2014, we changed our segment reporting structure in order to reflect the way management now makes operating decisions and manages the growth and profitability of the business. This change corresponds with management’s current approach of allocating costs and resources and assessing the performance of our segments. We report our segment information in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 280, “Segment Reporting,” (“FASB ASC Topic 280”). There has been no change in our total consolidated financial condition or results of operations previously reported as a result of the change in our segment structure. There were no changes to the reportable segment assets as a result of the change in segment reporting.

As a result, the Company’s new segment reporting structure consists of three reportable segments and an “Other” category and is as follows:

—	Food Care;

—	Diversey Care;

—	Product Care; and

—	Other (includes Corporate, Medical Applications and New Ventures businesses)

The Company’s Food Care, Diversey Care and Product Care segments are considered reportable segments under FASB ASC Topic 280. Our reportable segments are aligned with similar groups of products. Other includes Corporate and the Medical Applications and New Ventures businesses. The Medical Applications and New Ventures businesses were previously included in the Company’s “Other” category. Other includes certain costs that are not allocated to the reportable segments, primarily consisting of unallocated corporate overhead costs, including administrative functions and cost recovery variances not allocated to the reportable segments from global functional expenses.

Other also includes restructuring and other associated costs, expenses related to stock appreciation rights (“SARs”), which were issued in connection with the acquisition of Diversey in 2011, loss on debt redemptions and foreign currency exchange gains/losses related to Venezuelan subsidiaries and other one-time expenses and/or gains.

As of January 1, 2014, the Company also changed the segment performance measure in which management assesses segment performance and makes allocation decisions by segment from operating profit to Adjusted EBITDA. Adjusted EBITDA is defined as Earnings before Interest Expense, Taxes, Depreciation and Amortization, adjusted to exclude the impact of special items.

We allocate and disclose depreciation and amortization expense to our segments, although property and equipment, net is not allocated to the segment assets, nor is depreciation and amortization included in the segment performance metric Adjusted EBITDA. We also disclose restructuring and other charges and impairment of goodwill and other intangible assets by segment, although these items are not included in the segment performance metric Adjusted EBITDA since restructuring and other charges and impairment of goodwill and other intangible assets are categorized as special items as discussed above. The accounting policies of the reportable segments and Other are the same as those applied to the consolidated financial statements.

The changes in the Company’s segment structure and segment performance measure better provides management with information to assess segment performance and to make resource and allocation decisions, as the new segment structure and performance measure reflect the current management of our businesses. Accordingly, the new measure will also assist our investors by providing them with a better understanding of the segment so that the user can make a more informed decision about the Company, which is consistent with FASB ASC Topic 280.

The following tables show net sales and Adjusted EBITDA by our segment reporting structure:

	Three Months Ended
	March 31,
(In millions)	2015			2014
Net Sales:
Food Care	$	879.8		$	904.3
As a % of Total Company net sales		50.4	%		49.5	%
Diversey Care		467.9			505.1
As a % of Total Company net sales		26.8	%		27.6	%
Product Care		377.1			393.8
As a % of Total Company net sales		21.6	%		21.5	%
Total Reportable Segments Net Sales		1,724.8			1,803.2
Other		21.6			24.5
Total Company Net Sales	$	1,746.4		$	1,827.7

	Three Months Ended
	March 31,
(In millions)	2015			2014⁽¹⁾
Adjusted EBITDA:
Food Care	$	190.5		$	159.0
Adjusted EBITDA Margin		21.7	%		17.6	%
Diversey Care		41.0			44.4
Adjusted EBITDA Margin		8.8	%		8.8	%
Product Care		75.6			69.1
Adjusted EBITDA Margin		20.0	%		17.5	%
Total Reportable Segments Adjusted EBITDA		307.1			272.5
Other		(22.9	)		(21.8	)
Non-U.S. GAAP Total Company Adjusted EBITDA	$	284.2		$	250.7
Adjusted EBITDA Margin		16.3	%		13.7	%

⁽¹⁾

During the fourth quarter of 2014, we changed the method of valuing our inventories that used the LIFO method to the FIFO method, so that all of our inventories are now valued at FIFO. We applied this change in accounting principle retrospectively. Accordingly certain previously reported financial information has been revised. See Note 1, “Organization and Basis of Presentation-Changes in Accounting/Retrospective Application” for additional details regarding this accounting policy change.

The following table shows a reconciliation of Total Company Adjusted EBITDA to net earnings available to common stockholders:

	Three Months Ended
	March 31,
(In millions)	2015			2014⁽¹⁾
Total Company Adjusted EBITDA	$	284.2		$	250.7
Depreciation and amortization⁽²⁾		(73.1	)		(82.8	)
Special items:
Accelerated depreciation of non-strategic assets related to restructuring programs		0.6			—
Restructuring and other charges⁽³⁾		(12.7	)		(6.1	)
Other restructuring associated costs included in cost of sales and selling general and administrative expenses		(6.4	)		(4.6	)
Relocation costs included in cost of sales and selling, general and administrative expenses		(2.6	)		—
Gain from sale of building in connection with relocation		3.5			—
SARs		(2.9	)		(0.5	)
Integration related costs		(0.7	)		(0.9	)
Foreign currency exchange net gains (losses) related to Venezuelan subsidiaries		0.8			(15.0	)
Gain from Claims Settlement in 2014 and related costs		—			21.1
Other expense, net		(0.9	)		(2.3	)
Interest expense		(58.5	)		(78.5	)
Income tax provision		34.1			10.2
Net earnings available to common stockholders	$	97.2		$	70.9

⁽¹⁾

During the fourth quarter of 2014, we changed the method of valuing certain of our inventories that used the LIFO method to the FIFO method, so that all of our inventories are now valued at FIFO. We applied this change in accounting principle retrospectively. Accordingly all previously reported financial information has been revised. See Note 1, “Organization and Basis of Presentation-Changes in Accounting/Retrospective Application” for additional details regarding this accounting policy change. The table below represents the impact to Earnings before income tax provision for the three month period ended March 31, 2014 had we remained on the LIFO method of valuing those inventories:

(In millions)	2014
Food Care	$	(0.5	)
Diversey Care		(0.1	)
Product Care		(0.9	)
Total reportable segments		(1.5	)
Other		0.1
Total Company LIFO Adjustments	$	(1.4	)

⁽²⁾	Depreciation and amortization by segment is as follows:

	Three Months Ended
	March 31,
(In millions)	2015		2014
Food Care	$	28.5	$	32.0
Diversey Care		26.1		32.3
Product Care		10.1		10.6
Total reportable segments		64.7		74.9
Other		8.4		7.9
Total Company depreciation and amortization⁽¹⁾	$	73.1	$	82.8

⁽¹⁾	Includes share-based incentive compensation.

⁽³⁾	Restructuring and other charges by segment were as follows:

	March 31,
(In millions)	2015		2014
Food Care	$	6.9	$	4.1
Diversey Care		3.2		0.4
Product Care		2.6		1.5
Total reportable segments		12.7		6.0
Other		—		0.1
Total Company restructuring and other charges	$	12.7	$	6.1