SEGMENT INFORMATION

6 Months Ended

Jul. 29, 2012

SEGMENT INFORMATION

NOTE 11 — 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, 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 (formerly “Utilities/Electrical”) — Distributes electrical transmission and distribution products, power plant MRO supplies, smart-grid technologies, and provides materials management and procurement outsourcing arrangements to the power generation and distribution industries 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 an Other category, Corporate, & Eliminations. Other primarily consists of (i) Repair & Remodel, offering light remodeling and construction supplies primarily to small remodeling contractors and tradesmen; (ii) Crown Bolt, a retail distribution operator, providing program and packaging solutions, sourcing, distribution, and in-store service, primarily serving Home Depot; (iii) CTI, offering 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; and (iv) HD Supply Canada, comprised of HD Supply’s Canadian operations (other than the Canadian utilities operations, which is included in the Power Solutions 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. All material intersegment transactions have been eliminated.

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

	Facilities Maintenance		Waterworks		Power Solutions		White Cap		Other, Corporate, & Eliminations		Total Continuing Operations
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
Three Months Ended July 31, 2011
Net Sales	$	507	$	496	$	415	$	255	$	202	$	1,875
Adjusted EBITDA		95		33		14		7		6		155
Depreciation(1) & Software Amortization		7		1		1		4		8		21
Other Intangible Amortization		19		23		5		5		9		61

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

	Facilities Maintenance		Waterworks		Power Solutions		White Cap		Other, Corporate, & Eliminations		Total Continuing Operations
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
Six Months Ended July 31, 2011
Net Sales	$	944	$	883	$	810	$	471	$	375	$	3,483
Adjusted EBITDA		167		54		26		4		—		251
Depreciation(1) & Software Amortization		14		2		2		8		17		43
Other Intangible Amortization		38		47		10		10		17		122

(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
	July 29, 2012			July 31, 2011			July 29, 2012			July 31, 2011
Total Adjusted EBITDA	$	192		$	155		$	325		$	251
Depreciation and amortization		84			82			167			165
Stock-based compensation		5			5			10			9
Management fees and expenses		2			2			3			3
Other		(2	)		—			(1	)		—
Operating income (loss)		103			66			146			74
Interest expense		158			159			324			317
Loss on extinguishment of debt		—			—			220			—
Other (income) expense, net		—			—			—			(1	)
Income (Loss) from Continuing Operations Before Provision (Benefit) for Income Taxes		(55	)		(93	)		(398	)		(242	)
Provision (benefit) for income taxes		1			15			34			35
Income (loss) from continuing operations	$	(56	)	$	(108	)	$	(432	)	$	(277	)