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Segment Information and Concentration of Risk
 6 Months Ended
Jun. 27, 2015
Segment Reporting [Abstract]  
Segment Information and Concentration of Risk
Segment Information and Concentration of Risk

The Company's principal reporting segments are as follows:

•
the Air Quality and Home Solutions segment,
•
the Security and Control Solutions segment,
•
the Ergonomic and Productivity Solutions segment,
•
the Residential and Commercial HVAC segment, and
•
the Custom and Commercial Air Solutions segment.
 

As noted previously, in the second quarter of 2015, the Company changed the composition of its RCH and CAS segments (see Note A, “Basis of Presentation”). For a description of the activities of the Company's reporting segments, see "Segment Information and Concentration of Credit Risk", of the Company's 2014 Form 10-K.

The Company's performance is significantly impacted by the levels of residential remodeling and replacement activity, as well as the levels of new residential and non-residential construction. The level of new construction activity and, to a lesser extent, the level of residential remodeling and replacement activity are affected by seasonality and cyclical factors such as interest rates, inflation, consumer spending, employment levels, and other macroeconomic factors, over which the Company has no control. Performance in any particular period could be impacted by the timing of sales to certain large customers.

The Company evaluates segment performance based on operating earnings before allocations of corporate overhead costs and impairment charges. With the exception of intersegment net sales between the SCS segment and the combined AVC segments, intersegment net sales and intersegment eliminations are not material for any of the periods presented. The financial statement impact of all acquisition accounting adjustments, including intangible asset amortization and goodwill, are reflected in the applicable operating segment, which are the Company’s reporting units.

Segment Operating Results

Unaudited net sales, operating earnings (loss) and loss before benefit from income taxes for the Company’s reporting segments for the second quarter and first half of 2015 and 2014 were as follows:

 
 
Second Quarter of
 
First Half of
 
 
2015
 
2014
 
2015
 
2014
 
 
(Dollar amounts in millions)
Net sales:
 
 
 
 
 
 
 
 
AQH
 
$
151.8

 
$
151.5

 
$
290.1

 
$
292.3

SCS
 
145.1

 
161.5

 
241.6

 
246.8

ERG
 
85.8

 
69.3

 
156.6

 
130.9

RCH
 
169.9

 
169.2

 
303.2

 
281.2

CAS
 
115.3

 
130.1

 
216.6

 
242.3

AVC
 
36.0

 
37.0

 
68.5

 
72.9

Consolidated net sales
 
$
703.9

 
$
718.6

 
$
1,276.6

 
$
1,266.4

 
 
 
 
 
 
 
 
 
Operating earnings (loss):
 
 

 
 

 
 

 
 

AQH
 
$
19.4

 
$
17.3

 
$
32.8

 
$
26.9

SCS
 
18.5

 
22.0

 
23.1

 
23.1

ERG
 
15.4

 
11.6

 
23.4

 
19.1

RCH
 
(2.1
)
 
9.4

 
(7.8
)
 
11.7

CAS
 
1.1

 
14.7

 
4.0

 
26.7

AVC
 
(4.1
)
 
(8.1
)
 
(6.5
)
 
(12.8
)
Subtotal
 
48.2

 
66.9

 
69.0

 
94.7

Impairment of long-lived assets and goodwill
 
(1.2
)
 
(80.4
)
 
(1.2
)
 
(80.4
)
Unallocated, net
 
(12.3
)
 
(18.6
)
 
(25.4
)
 
(33.9
)
Consolidated operating earnings (loss)
 
34.7

 
(32.1
)
 
42.4

 
(19.6
)
Net interest expense
 
(24.9
)
 
(26.6
)
 
(52.1
)
 
(50.7
)
Loss from debt retirement
 
(14.8
)
 
(1.8
)
 
(14.8
)
 
(1.8
)
Loss before benefit from income taxes
 
$
(5.0
)
 
$
(60.5
)
 
$
(24.5
)
 
$
(72.1
)


Intersegment sales between the SCS segment and the combined AVC segments totaled approximately $3.1 million and $4.7 million for the second quarter of 2015 and 2014, respectively, and totaled approximately $6.1 million and $8.2 million for the first half of 2015 and 2014, respectively.

See Note F, “Exit and Disposal Activities” and Note G, "Commitments and Contingencies", with respect to certain other items affecting segment earnings (loss).

 
Segment Assets

Segment assets at June 27, 2015 and December 31, 2014 for the Company’s reporting segments are presented in the table that follows:
 
 
 
June 27,
2015
 
December 31,
2014
 
 
(Dollar amounts in millions)
Segment Assets:
 
 

 
 

AQH
 
$
592.6

 
$
585.7

SCS
 
388.4

 
339.6

ERG
 
425.9

 
365.0

RCH
 
552.5

 
549.6

CAS
 
187.2

 
179.3

AVC
 
62.8

 
63.2

 
 
2,209.4

 
2,082.4

Unallocated:
 
 

 
 

Cash and cash equivalents, including current restricted cash
 
26.5

 
59.0

Deferred tax assets
 
37.5

 
28.1

Other assets, including long-term restricted investments
 
37.9

 
39.6

Consolidated assets
 
$
2,311.3

 
$
2,209.1



Concentrations of Risk

No single customer accounted for 10% or more of consolidated net sales for the second quarter and first half of 2015 and 2014 or accounts receivable at June 27, 2015 and December 31, 2014.

For reasons of quality assurance, scarcity or cost effectiveness, certain components and raw materials used in the manufacture of the Company’s products are available only from a limited number of suppliers. In the event that the Company is unable to obtain sufficient quantities of raw materials or components on commercially reasonable terms or in a timely manner, the Company’s ability to manufacture its products on a timely and cost-competitive basis may be compromised, which may have a material adverse effect on its business, financial condition and results of operations. To date, the Company has not experienced any material adverse effect on its financial condition or results of operations due to supplier limitations.