Black & Decker 2010 Annual Report Download - page 120

In addition to the restructuring charges described in the preceding paragraphs, the Company recognized
$21.4 million of restructuring-related costs in 2010 pertaining to the Merger. Those costs are classified in Cost
of Sales and include accelerated depreciation and other charges associated with facility closures.
P. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS
The Company classifies its business into three reportable segments: Construction & Do It Yourself (“CDIY”),
Security, and Industrial.
The CDIY segment manufactures and markets hand tools, corded and cordless electric power tools and
equipment, lawn and garden products, consumer portable power products, home products, accessories and
attachments for power tools, plumbing products, consumer mechanics tools, storage systems, and pneumatic
tools and fasteners. These products are sold to professional end users, distributors, and consumers, and are
distributed through retailers (including home centers, mass merchants, hardware stores, and retail lumber
yards).
The Security segment provides access and security solutions primarily for consumers, retailers, educational,
financial and healthcare institutions, as well as commercial, governmental and industrial customers. The
Company provides an extensive suite of mechanical and electronic security products and systems, and a variety
of security services. These include security integration systems, software, related installation, maintenance,
monitoring services, automatic doors, door closers, electronic keyless entry systems, exit devices, healthcare
storage and supply chain solutions, patient protection products, hardware (including door and cabinet knobs
and hinges, door stops, kick plates, house numbers, gate hardware, cabinet pulls, hooks, braces and shelf
brackets), locking mechanisms, electronic keyless entry systems, keying systems, tubular and mortise door
locksets. Security products are sold primarily on a direct sales basis, and in certain instances, through third
party distributors.
The Industrial segment manufactures and markets professional industrial and automotive mechanics tools and
storage systems, metal and plastic fasteners and engineered fastening systems, hydraulic tools and accessories,
and specialty tools. These products are sold to industrial customers including automotive, transportation,
electronics, aerospace, machine tool and appliance industries and distributed through third party distributors as
well as through direct sales forces. As discussed in Note E, Merger and Acquisitions, in July 2010 the
Company completed the acquisition of CRC-Evans which is a full line supplier of specialized tools, equipment
and services used in the construction of large diameter oil and natural gas transmission pipelines. CRC-Evans
also sells and rents custom pipe handling and joint welding and coating equipment used in the construction of
large and small diameter pipelines. CRC-Evans’ operations are presented within the Industrial segment and
reflect activity since the acquisition date.
As discussed in Note E, Merger and Acquisitions, the Company merged with Black & Decker at the close of
business on March 12, 2010. The Black & Decker businesses were assessed and integrated into the Company’s
existing reportable segments. The legacy Black & Decker segments, Power Tools and Accessories, Hardware &
Home Improvement (“HHI”) and Fastening and Assembly Systems, were integrated into the Company’s CDIY,
Security and Industrial segments, respectively, with the Pfister plumbing products business which was formerly
part of HHI included in the CDIY segment. The results of Black & Decker’s operations are presented within
each of these segments and reflect activity since the merger date.
The Company utilizes segment profit, which is defined as net sales minus cost of sales and 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 tax expense. Refer to Note O, Restructuring and Asset
Impairments for the amount of restructuring charges and asset impairments by segment, and to Note F,
Goodwill and Other Intangible Assets for intangible amortization expense by segment. Corporate overhead is
comprised of world headquarters facility expense, cost for the executive management team and cost 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
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