Business Segments

3 Months Ended

Mar. 30, 2013

Business Segments

Business Segments

The Company classifies its business into three reportable segments, which also represent its operating segments: Construction & Do It Yourself (“CDIY”), Security, and Industrial.

The CDIY segment is comprised of the Professional Power Tool business, the Consumer Products Group, the Hand Tools & Storage business, and the Fastening & Accessories business. The Professional Power Tool business sells professional grade corded and cordless electric power tools and equipment including drills, impact wrenches and drivers, grinders, saws, routers and sanders. The Consumer Products Group sells corded and cordless electric power tools sold under the Black & Decker brand, lawn and garden products and home products. The Hand Tools & Storage business sells measuring and leveling tools, planes, hammers, demolition tools, knives, saws and chisels. The Fastening & Accessories business sells pneumatic tools and fasteners including nail guns, nails, staplers and staples, concrete and masonry anchors, as well as power tool accessories which include drill bits, router bits, abrasives and saw blades.

The Security segment is comprised of the Convergent Security Solutions ("CSS") and the Mechanical Access Solutions ("MAS") businesses. The CSS business designs, supplies and installs electronic security systems and provides electronic security services, including alarm monitoring, video surveillance, fire alarm monitoring, systems integration and system maintenance. Purchasers of these systems typically contract for ongoing security systems monitoring and maintenance at the time of initial equipment installation. The business also includes healthcare solutions, which markets medical carts and cabinets, asset tracking, infant protection, pediatric protection, patient protection, wander management, fall management, and emergency call products. The MAS business sells automatic doors, commercial hardware, locking mechanisms, electronic keyless entry systems, keying systems, tubular and mortise door locksets.

The Industrial segment is comprised of the Industrial and Automotive Repair ("IAR"), Engineered Fastening and Infrastructure businesses. The IAR business sells hand tools, power tools, and engineered storage solution products. The Engineered Fastening business primarily sells engineered fastening products and systems designed for specific applications. The product lines include stud welding systems, blind rivets and tools, blind inserts and tools, drawn arc weld studs, engineered plastic and mechanical fasteners, self-piercing riveting systems, precision nut running systems, micro fasteners, and high-strength structural fasteners & plastics. The Infrastructure business consists of the CRC-Evans business and the Company’s Hydraulics business. The product lines include custom pipe handling machinery, joint welding and coating machinery, weld inspection services and hydraulic tools and accessories.

The Company utilizes segment profit, which is defined as net sales minus cost of sales and selling, general, and administrative ("SG&A") inclusive of the provision for doubtful accounts (aside from corporate overhead expense), and segment profit as a percentage of net sales to assess the profitability of each segment. Segment profit excludes the corporate overhead expense element of SG&A, interest income, interest expense, other-net (inclusive of intangible asset amortization expense), restructuring, and income taxes. Refer to Note O, Restructuring & Asset Impairments, for the amount of restructuring charges and asset impairments by segment. Corporate overhead is comprised of world headquarters facility expenses, cost for the executive management team and costs for certain centralized functions that benefit the entire Company but are not directly attributable to the businesses, such as legal and corporate finance functions. Transactions between segments are not material. Segment assets primarily include accounts receivable, inventory, other current assets, property, plant and equipment, intangible assets and other miscellaneous assets.

	Year-to-Date
	2013			2012
NET SALES
CDIY	$	1,192.4		$	1,172.0
Security	599.4			592.1
Industrial	695.4			662.0
Total	$	2,487.2		$	2,426.1
SEGMENT PROFIT
CDIY	$	169.2		$	148.4
Security	55.3			69.8
Industrial	85.5			122.9
Segment profit	310.0			341.1
Corporate overhead	(69.0		)	(66.4		)
Other-net	(71.0		)	(67.9		)
Restructuring charges and asset impairments	(42.9		)	(40.0		)
Interest expense	(39.9		)	(33.9		)
Interest income	3.2			2.5
Earnings from continuing operations before income taxes	$	90.4		$	135.4

During the three months ended March 30, 2013 and March 31, 2012, the Company recorded $13.3 million and $2.3 million, respectively, of merger and acquisition-related charges associated with facility closures, which reduced segment gross profit, and an additional $8.8 million and $9.9 million, respectively, in SG&A primarily for integration costs associated with merger and acquisition-related activities These charges reduced segment profit by $3.3 million in CDIY, $6.4 million in Security and $12.4 million in Industrial for the three months ended March 30, 2013, and $3.3 million in CDIY, $6.9 million in Security, and $2.0 million for Industrial for the three months ended March 31, 2012.

Corporate overhead for the three months ended March 30, 2013 and March 31, 2012 includes $25.5 million and $17.5 million, respectively, of charges pertaining primarily to merger and acquisition-related employee charges and integration costs.

The following table is a summary of total assets by segment as of March 30, 2013 and December 29, 2012:

	March 30, 2013		December 29, 2012
CDIY	$	7,671.1	$	7,437.9
Security	4,494.1		4,728.9
Industrial	4,618.8		3,456.9
	16,784.0		15,623.7
Discontinued Operations	83.9		135.2
Corporate assets	29.6		85.1
Consolidated	$	16,897.5	$	15,844.0

Corporate assets primarily consist of cash, deferred taxes and property, plant and equipment.