SEGMENT INFORMATION

9 Months Ended

Oct. 30, 2011

SEGMENT INFORMATION

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, which provides general corporate overhead support and HD Supply Canada (included in 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, operating income before restructuring charges and goodwill impairments, and certain other measures for each of the operating segments.

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

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

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

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

• Utilities – Distributes electrical transmission and distribution products, power plant MRO supplies and 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.

• Industrial Pipe, Valves and Fittings (“IPVF”) – Distributes stainless steel and special alloy pipe, plate, sheet, flanges and fittings as well as high performance valves, actuation services and high-density polyethylene pipes and fittings for use in the oil and gas, petrochemical, power, food and beverage, pulp and paper, mining, and marine industries; in addition, IPVF serves pharmaceutical customers, industrial and mechanical contractors, fabricators, wholesale distributors, exporters and original equipment manufacturers.

• Creative Touch Interiors (“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.

In addition to the reportable segments, the Company’s consolidated financial results include an Other, Corporate, & Eliminations category. Other primarily consists of Electrical, offering electrical products such as wire and cable, switch gear supplies, lighting conduit to residential and commercial contractors; Repair & Remodel, offering light remodeling and construction supplies primarily to small remodeling contractors and tradesmen; Crown Bolt, a retail distribution operator, providing program and packaging solutions, sourcing, distribution, and in-store service, primarily serving Home Depot; and HD Supply Canada, comprised of HD Supply’s Canadian operations (other than the Canadian utilities operations, which are included in the Utilities segment, and Commercial Direct, which is included in the Facilities Maintenance segment). Corporate has enterprise management responsibility and centralized support functions for some of the segments, information technology, human resources, sourcing and support services. Eliminations remove material intersegment transactions.

HD Supply evaluates performance of each segment based on operating income before restructuring charges and goodwill impairments. The following tables present Net sales and operating income before charges by segment for the periods indicated (amounts in millions):

	Three Months Ended
	October 30, 2011					October 31, 2010
	Net Sales		Operating Income  (Loss)			Net Sales		Operating Income  (Loss)
Waterworks	$	490	$	12		$	461	$	7
Facilities Maintenance		497		61			438		53
White Cap		277		4			234		(5	)
Utilities		294		10			263		8
IPVF		183		14			150		8
CTI		53		(4	)		55		(4	)
Other, Corporate, & Eliminations		281		(19	)		273		(20	)
Total operations before charges	$	2,075		78		$	1,874		47
Restructuring charge				—					—
Total operating income (loss)				78					47
Interest expense				160					153
Other (income) expense, net				—					(1	)
Income (loss) from continuing operations before provision for income taxes			$	(82	)			$	(105	)
	Nine Months Ended
	October 30, 2011					October 31, 2010
	Net Sales		Operating Income (Loss)			Net Sales		Operating Income  (Loss)
Waterworks	$	1,373	$	17		$	1,318	$	7
Facilities Maintenance		1,441		176			1,305		151
White Cap		748		(9	)		667		(33	)
Utilities		845		22			746		20
IPVF		524		37			433		21
CTI		143		(18	)		168		(21	)
Other, Corporate, & Eliminations		824		(50	)		788		(69	)
Total operations before charges	$	5,898		175		$	5,425		76
Restructuring charge				—					8
Total operating income (loss)				175					68
Interest expense				477					464
Other (income) expense, net				(1	)				1
Income (loss) from continuing operations before provision for income taxes			$	(301	)			$	(397	)

The following tables present depreciation and amortization expense by segment for the periods indicated (amounts in millions):

	Three Months Ended
	October 30, 2011						October 31, 2010
	Depreciation & Software Amortization		Other Intangible Amortization		Total		Depreciation & Software Amortization		Other Intangible Amortization		Total
Waterworks	$	1	$	24	$	25	$	1	$	24	$	25
Facilities Maintenance		7		19		26		7		19		26
White Cap		3		5		8		4		5		9
Utilities		—		5		5		—		5		5
IPVF		—		4		4		—		4		4
CTI		2		—		2		3		—		3
Other & Corporate		8		8		16		9		8		17
Total continuing operations*	$	21	$	65	$	86	$	24	$	65	$	89

	Nine Months Ended
	October 30, 2011						October 31, 2010
	Depreciation & Software Amortization		Other Intangible Amortization		Total		Depreciation & Software Amortization		Other Intangible Amortization		Total
Waterworks	$	3	$	71	$	74	$	4	$	70	$	74
Facilities Maintenance		22		56		78		21		56		77
White Cap		10		15		25		15		15		30
Utilities		1		14		15		1		14		15
IPVF		2		11		13		2		11		13
CTI		7		1		8		9		1		10
Other & Corporate		21		26		47		27		27		54
Total continuing operations*	$	66	$	194	$	260	$	79	$	194	$	273

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