SEGMENT INFORMATION

12 Months Ended

Jan. 29, 2017

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 13—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, which provides general corporate overhead support. 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 three 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.

•           Construction & Industrial—Construction & Industrial distributes specialized hardware, tools, engineered materials and safety products to non-residential and residential contractors. Construction & Industrial also 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.

        In addition to the reportable segments, the Company's consolidated financial results include "Corporate" which 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.

        Beginning in the fourth quarter of fiscal 2016, we combined the Home Improvement Solutions business unit with the Construction & Industrial business unit. Prior to the sale of our Interior Solutions business unit, Interior Solutions was under common management with Home Improvement Solutions, with both included in the Corporate segment. As a result of the sale, management elected to realign Home Improvement Solutions into the Construction & Industrial operating segment. The realignment benefits Home Improvement Solutions with the strong leadership, proven category management processes, and customer-centricity at Construction & Industrial. All periods presented have been revised to reflect the combined business unit.

        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 2016
	Facilities Maintenance		Waterworks		Construction & Industrial		Corporate			Total Continuing Operations
Net sales	$	2,762		2,622		2,063		(8	)	$	7,439
Adjusted EBITDA	$	523		234		224		(60	)	$	921
Depreciation(1) & Software Amortization	$	29		11		33		14		$	87
Other Intangible Amortization	$	6		2		1		5		$	14
Total Assets(2)	$	2,358		1,663		808		878		$	5,707
Capital Expenditures(2)	$	22		10		32		17		$	81

	Fiscal Year 2015
	Facilities Maintenance		Waterworks		Construction & Industrial		Corporate			Total Continuing Operations
Net sales	$	2,690		2,510		1,932		(9	)	$	7,123
Adjusted EBITDA	$	529		222		184		(59	)	$	876
Depreciation(1) & Software Amortization	$	43		11		30		14		$	98
Other Intangible Amortization	$	6		2		1		6		$	15
Total Assets(2)	$	2,358		1,636		788		1,234		$	6,016
Capital Expenditures(2)	$	20		10		34		22		$	86

	Fiscal Year 2014
	Facilities Maintenance		Waterworks		Construction & Industrial		Corporate			Total Continuing Operations
Net sales	$	2,510		2,427		1,753		(8	)	$	6,682
Adjusted EBITDA	$	491		198		139		(59	)	$	769
Depreciation(1) & Software Amortization	$	50		11		25		16		$	102
Other Intangible Amortization	$	57		3		14		6		$	80
Total Assets(2)	$	2,390		1,640		768		1,179		$	5,977
Capital Expenditures(2)	$	32		15		35		37		$	119

(1)	Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations.
(2)	Total Assets and capital expenditures include amounts attributable to discontinued operations for the periods prior to the dispositions.

Reconciliation to Consolidated Financial Statements

	Fiscal 2016		Fiscal 2015			Fiscal 2014
Total Adjusted EBITDA	$	921	$	876		$	769
Depreciation and amortization		101		113			182
Stock-based compensation		20		16			17
Restructuring		9		9			6
Other		—		1			(1	)
Operating income		791		737			565
Interest expense		269		394			462
Loss on extinguishment & modification of debt		179		100			108
Other (income) expense, net		—		1			(3	)
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes		343		242			(2	)
Provision (benefit) for income taxes		139		(1,084	)		36
Income (loss) from continuing operations	$	204	$	1,326		$	(38	)

        Net sales for HD Supply outside the United States, primarily Canada, were $124 million, $125 million, and $130 million in fiscal 2016, fiscal 2015, and fiscal 2014, respectively. Long-lived assets of HD Supply outside the United States, primarily Canada, were $5 million and $6 million as of January 29, 2017 and January 31, 2016, respectively.