SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2012

SEGMENT INFORMATION [Abstract]

SEGMENT INFORMATION

21. SEGMENT INFORMATION

The Company has determined that its reportable segments are those based on its method of internal reporting, which segregates its businesses by product category and production/distribution process.  Effective January 1, 2011, certain changes were made to the manner in which operating segment results are used by or provided to the chief operating decision makers of the Company, including: (1) certain costs related to wages, payroll taxes and incentive compensation that were previously reflected as unallocated corporate expenses are being allocated to the Company's two operating segments; and (2) a majority of corporate incentive agreements (which include vendor rebate agreements) previously included in the corporate segment are being allocated to the operating segments and reflected as a reduction of cost of goods sold.  Prior year results were reclassified to reflect the current year presentation.

A description of the Company's reportable segments is as follows:

Manufacturing - Utilizes various materials, such as lauan, MDF, gypsum, and particleboard, which are bonded by adhesives or a heating process to a number of products, including vinyl, paper, foil, and high-pressure laminate.  These products are utilized to produce furniture, shelving, wall, counter, and cabinet products with a wide variety of finishes and textures.  This segment also includes a cabinet door division, a hardwood furniture division, a vinyl printing division, a solid surface, granite, and quartz fabrication operation, and an exterior graphics division.  Patrick's major manufactured products also include wrapped vinyl, paper and hardwood profile mouldings, interior passage doors, and slotwall panels and components.  The Manufacturing segment contributed approximately 76%, 76% and 80% of the Company's net sales for the years ended December 31, 2012, 2011 and 2010, respectively.

Distribution - Distributes pre-finished wall and ceiling panels, drywall and drywall finishing products, electronics, wiring, electrical and plumbing products, cement siding, interior passage doors, roofing products, laminate and ceramic flooring, shower doors, furniture, fireplaces and surrounds, interior and exterior lighting products, and other miscellaneous products.  The Distribution segment contributed approximately 24%, 24% and 20% of the Company's net sales for the years ended December 31, 2012, 2011 and 2010, respectively.

The accounting policies of the segments are the same as those described in Note 2, except that segment data includes intersegment sales.  Assets are identified to the segments with the exception of cash, prepaid expenses, land and buildings, and certain deferred assets, which are identified with the corporate division.  The corporate division charges rents to the segments for use of the land and buildings based upon estimated market rates.  The Company accounts for intersegment sales similar to third party transactions, which reflect current market prices.  The Company also records certain income from purchase incentive agreements as corporate division revenue.  The Company evaluates the performance of its segments and allocates resources to them based on a variety of indicators including sales, cost of goods sold, operating income and total identifiable assets.  In addition, certain significant items (the majority of which are non-cash in nature), are presented in the table below.

The table below presents information about the net income, segment assets, and certain other items that are either used by or provided to the chief operating decision makers of the Company as of and for the years ended December 31, 2012, 2011 and 2010 (in thousands):

	2012
	Manufacturing		Distribution		Total
Net outside sales	$	330,941	$	106,426	$	437,367
Intersegment sales		16,007		1,830		17,837
Total sales		346,948		108,256		455,204
Cost of goods sold		296,641		90,155		386,796
Operating income		30,798		5,727		36,525
Identifiable assets		85,523		25,745		111,268
Depreciation and amortization		3,851		399		4,250

	2011
	Manufacturing		Distribution		Total
Net outside sales	$	232,460	$	75,362	$	307,822
Intersegment sales		11,800		360		12,160
Total sales		244,260		75,722		319,982
Cost of goods sold		210,797		63,636		274,433
Operating income		18,805		2,689		21,494
Identifiable assets		50,139		16,446		66,585
Depreciation and amortization		3,553		330		3,883

	2010
	Manufacturing		Distribution		Total
Net outside sales	$	222,909	$	55,323	$	278,232
Intersegment sales		11,632		234		11,866
Total sales		234,541		55,557		290,098
Cost of goods sold		212,954		47,235		260,189
Operating income		7,873		1,364		9,237
Identifiable assets		39,414		13,587		53,001
Depreciation and amortization		3,618		199		3,817

A reconciliation of certain line items pertaining to the total reportable segments to the consolidated financial statements as of and for the years ended December 31, 2012, 2011 and 2010 is as follows (in thousands):

	2012			2011			2010
Net sales:
Total sales for reportable segments	$	455,204		$	319,982		$	290,098
Elimination of intersegment sales		(17,837	)		(12,160	)		(11,866	)
Consolidated net sales	$	437,367		$	307,822		$	278,232
Cost of goods sold:
Total cost of goods sold for reportable segments	$	386,796		$	274,433		$	260,189
Elimination of intersegment cost of goods sold		(17,837	)		(12,160	)		(11,866	)
Consolidation reclassifications		1,041			(89	)		(175	)
Corporate incentive agreements		(491	)		(73	)		(269	)
Other		2,114			1,403			715
Consolidated cost of goods sold	$	371,623		$	263,514		$	248,594
Operating income:
Operating income for reportable segments	$	36,525		$	21,494		$	9,237
Corporate incentive agreements		491			73			269
Gain on sale of fixed assets and acquisition of business		238			244			2,866
Unallocated corporate expenses		(8,691	)		(7,507	)		(5,402	)
Amortization		(1,523	)		(829	)		(564	)
Consolidated operating income	$	27,040		$	13,475		$	6,406
Consolidated total assets:
Identifiable assets for reportable segments	$	111,268		$	66,585		$	53,001
Corporate property and equipment		22,025			14,769			14,649
Current assets not allocated to segments		7,028			1,844			3,517
Intangibles and other assets not allocated to segments		3,148			2,572			3,650
Consolidation eliminations		-			-			-
Consolidated total assets	$	143,469		$	85,770		$	74,817
Depreciation and amortization:
Depreciation and amortization for reportable segments	$	4,250		$	3,883		$	3,817
Corporate depreciation and amortization		1,336			1,033			1,153
Consolidated depreciation and amortization	$	5,586		$	4,916		$	4,970

Amortization expense related to intangible assets in the Manufacturing segment for the years ended December 31, 2012, 2011 and 2010 was $1.2 million, $0.6 million and $0.5 million, respectively.  Intangible assets amortization expense in the Distribution segment was $0.3 million, $0.2 million and $61,000 in 2012, 2011 and 2010, respectively.

Corporate incentive agreements include vendor rebate agreements and are included as a reduction of cost of goods sold.  Unallocated corporate expenses include corporate general and administrative expenses comprised of wages, insurance, taxes, supplies, travel and entertainment, professional fees and other.  Beginning in January 2011, a majority of the corporate expenses were allocated to the business units within the Company's Manufacturing and Distribution segments in accordance with changes made to the Company's internal reporting structure.

Major Customers

The Company had one RV customer that accounted for approximately 30% and 34% of the trade receivables balance at December 31, 2012 and 2011, respectively.  This same customer accounted for approximately 34%, 32% and 27% of consolidated net sales for the years ended December 31, 2012, 2011 and 2010, respectively.  In addition, sales to a different RV customer accounted for approximately 20%, 17% and 18% of consolidated net sales in 2012, 2011 and 2010, respectively.  There were no other customers that accounted for more than 10% of the trade receivables balance at December 31, 2012 and 2011.