SEGMENT INFORMATION

6 Months Ended

12 Months Ended

Aug. 04, 2013

Feb. 03, 2013

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 10—SEGMENT INFORMATION

        HD Supply's operating segments are based on management structure and internal reporting. Each segment offers different products and services to the end customer, except for HD Supply Canada, which is organized based on geographic location and Corporate, which provides general corporate overhead support. Both HD Supply Canada and Corporate are included within "Corporate and Other." The Company determines the reportable segments in accordance with the principles of segment reporting within ASC 280, Segment Reporting. For purposes of evaluation under these segment reporting principles, the Chief Operating Decision Maker for HD Supply assesses HD Supply's ongoing performance, based on the periodic review and evaluation of Net sales, Adjusted EBITDA, and certain other measures for each of the operating segments.

        HD Supply has four reportable segments, each of which is presented below:

• •

  Facilities Maintenance—Facilities Maintenance distributes maintenance, repair and operations ("MRO") products, provides value-add services and fabricates custom products to multifamily, hospitality, healthcare and institutional facilities.

  •

  Waterworks—Waterworks distributes complete lines of water and wastewater transmission products, serving contractors and municipalities in the water and wastewater industries for non-residential and residential uses.

  •

  Power Solutions—Power Solutions distributes electrical transmission and distribution products, power plant MRO supplies and smart-grid products, and arranges materials management and procurement outsourcing for the power generation and distribution industries.

  •

  White Cap—White Cap distributes specialized hardware, tools, engineered materials and safety products to non-residential and residential contractors.

        In addition to the reportable segments, the Company's consolidated financial results include "Corporate & Other." Corporate & Other is comprised of the following operating segments: Crown Bolt, Creative Touch Interiors ("CTI"), Repair & Remodel and HD Supply Canada. Crown Bolt is a retail distribution operator providing program and packaging solutions, sourcing, distribution, and in-store service, fasteners, builders' hardware, rope and chain and plumbing accessories, primarily serving Home Depot and other hardware stores. CTI offers turnkey supply and installation services for multiple interior finish options, including flooring, cabinets, countertops, and window coverings, along with comprehensive design center services for residential, commercial and senior living projects. Repair & Remodel offers light remodeling and construction supplies, kitchen and bath cabinets, windows, plumbing materials, electrical equipment and other products, primarily to small remodeling contractors and trade professionals. HD Supply Canada is an industrial distributor that primarily focuses on servicing fasteners/industrial supplies and specialty lighting markets which operates across nine provinces. Corporate & Other also includes costs related to our centralized support functions, which are comprised of finance, information technology, human resources, legal, supply chain and other support services, and removes inter-segment transactions.

        The following tables present Net sales, Adjusted EBITDA, and other measures for each of the reportable segments, Corporate & Other and total continuing operations for the periods indicated (amounts in millions):

	Facilities Maintenance		Waterworks		Power Solutions		White Cap		Corporate & Other		Total Continuing Operations
Three Months Ended August 4, 2013
Net Sales	$	638	$	601	$	456	$	336	$	226	$	2,257
Adjusted EBITDA		125		50		18		24		1		218
Depreciation(1) & Software Amortization		11		3		2		4		9		29
Other Intangible Amortization		20		1		4		5		3		33
Three Months Ended July 29, 2012
Net Sales	$	571	$	527	$	440	$	307	$	214	$	2,059
Adjusted EBITDA		109		39		20		18		6		192
Depreciation(1) & Software Amortization		10		2		2		3		7		24
Other Intangible Amortization		19		24		4		5		8		60

	Facilities Maintenance		Waterworks		Power Solutions		White Cap		Corporate & Other			Total Continuing Operations
Six Months Ended August 4, 2013
Net Sales	$	1,199	$	1,124	$	918	$	646	$	438		$	4,325
Adjusted EBITDA		225		88		36		38		(5	)		382
Depreciation(1) & Software Amortization		22		5		3		8		17			55
Other Intangible Amortization		40		2		9		10		6			67
Six Months Ended July 29, 2012
Net Sales	$	1,068	$	988	$	855	$	573	$	411		$	3,895
Adjusted EBITDA		194		67		34		26		4			325
Depreciation(1) & Software Amortization		19		4		3		6		15			47
Other Intangible Amortization		38		48		9		10		15			120

(1)

Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Reconciliation to Consolidated Financial Statements

	Three Months Ended						Six Months Ended
	August 4, 2013			July 29, 2012			August 4, 2013			July 29, 2012
Total Adjusted EBITDA	$	218		$	192		$	382		$	325
Depreciation and amortization		62			84			122			167
Stock-based compensation		5			5			8			10
Management fees and expenses		1			2			2			3
Other		—			(2	)		—			(1	)
Operating income (loss)		150			103			250			146
Interest expense		144			158			291			324
Loss on extinguishment & modification of debt		46			—			87			220
Other (income) expense, net		20			—			20			—
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes		(60	)		(55	)		(148	)		(398	)
Provision (benefit) for income taxes		12			1			55			34
Income (loss) from continuing operations	$	(72	)	$	(56	)	$	(203	)	$	(432	)

NOTE 14—SEGMENT INFORMATION

        HD Supply's operating segments are based on management structure and internal reporting. Each segment offers different products and services to the end customer, except for Corporate and Other, which provides general corporate overhead support and HD Supply Canada (included in Corporate and Other), which is organized based on geographic location. The Company determines the reportable segments in accordance with the principles of segment reporting within U.S. GAAP (ASC 280, Segment Reporting). For purposes of evaluation under these segment reporting principles, the Chief Operating Decision Maker for HD Supply assesses HD Supply's ongoing performance, based on the periodic review and evaluation of Net sales, Adjusted EBITDA, and certain other measures for each of the operating segments.

        HD Supply has four reportable segments, each of which is presented below:

• •

  Facilities Maintenance—Supplies maintenance, repair and operations ("MRO") products and upgrade and renovation services largely to the multifamily, healthcare, hospitality, and institutional markets.

  •

  Waterworks—Distributes complete lines of water and wastewater transmission products, serving contractors and municipalities in all aspects of the water and wastewater industries.

  •

  Power Solutions—Distributes electrical transmission and distribution products, power plant maintenance, repair and operations supplies, smart-grid technologies, and provides materials management and procurement outsourcing arrangements to investor-owned utilities, municipal and provincial power authorities, rural electric cooperatives and utility contractors and distributes electrical products such as wire and cable, switch gear supplies, lighting and conduit to residential and commercial contractors.

  •

  White Cap—Distributes specialized hardware, tools, building materials, and safety equipment to professional contractors.

        In addition to the reportable segments, the Company's consolidated financial results include "Corporate and Other." Corporate & Other is comprised of the following business units: Crown Bolt, Creative Touch Interiors ("CTI"), Repair & Remodel and HD Supply Canada. Crown Bolt is a retail distribution operator providing program and packaging solutions, sourcing, distribution, and in-store service, fasteners, builders' hardware, rope and chain and plumbing accessories, primarily serving The Home Depot and other hardware stores. CTI offers turnkey supply and installation services for multiple interior finish options, including flooring, cabinets, countertops, and window coverings, along with comprehensive design center services for residential, commercial and senior living projects. Our Repair & Remodel business unit offers light remodeling and construction supplies, kitchen and bath cabinets, windows, plumbing materials, electrical equipment and other products, primarily to small remodeling contractors and trade professionals. HD Supply Canada is an industrial distributor that primarily focuses on servicing fasteners/industrial supplies and specialty lighting markets which operates across nine provinces. Corporate & Other also includes costs related to our centralized support functions, which include finance, information technology, human resources, legal, supply chain and other support services and removes inter segment transactions.

        The following tables present Net sales, Adjusted EBITDA, and certain other measures for each of the reportable segments and total continuing operations for the periods indicated (amounts in millions):

	Fiscal Year 2012
	Net Sales		Adjusted EBITDA		Depreciation(1) & Software Amortization		Other Intangible Amortization		Total Assets(2)		Capital Expenditures
Facilities Maintenance	$	2,182	$	389	$	39	$	79	$	2,463	$	35
Waterworks		2,028		137		10		96		1,562		12
Power Solutions		1,787		72		7		18		816		4
White Cap		1,178		56		12		20		521		22
Corporate & Other		860		29		28		30		1,972		42
Total continuing operations	$	8,035	$	683	$	96	$	243	$	7,334	$	115

	Fiscal Year 2011
	Net Sales		Adjusted EBITDA		Depreciation(1) & Software Amortization		Other Intangible Amortization		Total Assets(2)		Capital Expenditures
Facilities Maintenance	$	1,870	$	318	$	30	$	75	$	2,264	$	32
Waterworks		1,772		112		5		95		1,562		5
Power Solutions		1,625		50		5		20		775		5
White Cap		981		17		14		19		481		16
Corporate & Other		780		11		31		35		1,656		51
Total continuing operations	$	7,028	$	508	$	85	$	244	$	6,738	$	109

	Fiscal Year 2010
	Net Sales		Adjusted EBITDA			Depreciation(1) & Software Amortization		Other Intangible Amortization		Total Assets(2)		Capital Expenditures
Facilities Maintenance	$	1,682	$	282		$	28	$	75	$	2,265	$	20
Waterworks		1,659		94			5		94		1,582		2
Power Solutions		1,462		49			5		19		740		2
White Cap		852		(10	)		20		19		439		3
Corporate & Other		794		(4	)		41		37		2,063		18
Total continuing operations	$	6,449	$	411		$	99	$	244	$	7,089	$	45

(1)

Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations.

(2)

Total Assets include amounts attributable to discontinued operations for the periods prior to the dispositions.

Reconciliation to Consolidated Financial Statements

	Fiscal 2012			Fiscal 2011			Fiscal 2010
Total Adjusted EBITDA	$	683		$	508		$	411
Depreciation and amortization		339			329			343
Stock-based compensation		16			20			17
Management fees and expenses		5			5			5
Restructuring		—			—			8
Goodwill & other intangible asset impairment		152			—			—
Other		—			(1	)		1
Operating income		171			155			37
Interest expense		658			639			623
Loss on extinguishment of debt		709
Other (income) expense, net		—			—			(1	)
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes		(1,196	)		(484	)		(585	)
Provision (benefit) for income taxes		3			79			28
Income (loss) from continuing operations	$	(1,199	)	$	(563	)	$	(613	)

        Net sales for HD Supply outside the United States, primarily Canada, were $428 million, $404 million, and $365 million in fiscal 2012, fiscal 2011, and fiscal 2010, respectively. Long-lived assets of HD Supply outside the United States, primarily Canada, were $16 million and $18 million as of February 3, 2013 and January 29, 2012, respectively.