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Operations by Segment | 12 Months Ended
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Dec. 31, 2017
Operations by Segment |
14. | Operations by Segment
The Company is comprised of two reporting segments: North America and Rest of World. The Rest of World segment is primarily comprised of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas and electric water heaters, boilers and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. The North America segment also manufactures and markets water system tanks. Our Rest of World segment also manufactures and markets in-home air purification products in China. The accounting policies of the reportable segments are the same as those described in the “Summary of Significant Accounting Policies” outlined in Note 1. Segment earnings, defined by the Company as earnings before interest, taxes, general corporate and corporate research and development expenses, were used to measure the performance of the segments.
|  | Net Sales |  |  | Earnings |
Years ended December 31 (dollars in millions) |  | 2017 |  |  | 2016 |  |  | 2015 |  |  | 2017 |  |  | 2016 |  |  | 2015 |
North America |  | $ | 1,904.8 |  |  | $ | 1,743.2 |  |  | $ | 1,703.0 |  |  | $ | 428.6 |  |  | $ | 385.9 |  |  | $ | 339.9 |
Rest of World |  |  | 1,116.3 |  |  |  | 965.6 |  |  |  | 866.1 |  |  |  | 149.3 |  |  |  | 129.1 |  |  |  | 113.0 |
Inter-segment |  |  | (24.4 | ) |  |  | (22.9 | ) |  |  | (32.6 | ) |  |  | — |  |  |  | — |  |  |  | — |
Total segments – sales, segment earnings |  | $ | 2,996.7 |  |  | $ | 2,685.9 |  |  | $ | 2,536.5 |  |  | $ | 577.9 |  |  | $ | 515.0 |  |  | $ | 452.9 |
Corporate expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (47.0 | ) |  |  | (45.2 | ) |  |  | (43.0 | )
Interest expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (10.1 | ) |  |  | (7.3 | ) |  |  | (7.4 | )
Earnings before income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 520.8 |  |  |  | 462.5 |  |  |  | 402.5 |
Provision for income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (224.3 | ) |  |  | (136.0 | ) |  |  | (119.6 | )
Net earnings |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 296.5 |  |  | $ | 326.5 |  |  | $ | 282.9 |
In 2017, the Company recorded provisional one-time charges of $81.8 million associated with U.S. Tax Reform, primarily related to the repatriation of undistributed foreign earnings. In 2017, sales to the North America segment’s two largest customers were $361.4 million and $335.2 million which represented 12 percent and 11 percent of the Company’s net sales, respectively. In 2016, sales to the North America segment’s two largest customers were $311.5 million and $280.8 million which represented 12 percent and 11 percent of the Company’s net sales, respectively. In 2015, sales to the North America segment’s two largest customers were $301.7 million and $287.0 million which represented 12 percent and 11 percent of the Company’s net sales, respectively. Assets, depreciation and capital expenditures by segment
|  | Total Assets (December 31) |  |  | Depreciation and Amortization (Years Ended December 31) |  |  | Capital Expenditures (Years Ended December 31) |
(dollars in millions) |  | 2017 |  |  | 2016 |  |  | 2015 |  |  | 2017 |  |  | 2016 |  |  | 2015 |  |  | 2017 |  |  | 2016 |  |  | 2015 |
North America |  | $ | 1,592.5 |  |  | $ | 1,515.9 |  |  | $ | 1,381.1 |  |  | $ | 45.1 |  |  | $ | 42.9 |  |  | $ | 41.9 |  |  | $ | 38.5 |  |  | $ | 45.9 |  |  | $ | 43.5 |
Rest of World |  |  | 741.4 |  |  |  | 584.3 |  |  |  | 544.2 |  |  |  | 23.8 |  |  |  | 21.0 |  |  |  | 19.8 |  |  |  | 55.2 |  |  |  | 34.3 |  |  |  | 28.4 |
Corporate |  |  | 863.4 |  |  |  | 790.8 |  |  |  | 703.9 |  |  |  | 1.2 |  |  |  | 1.2 |  |  |  | 1.3 |  |  |  | 0.5 |  |  |  | 0.5 |  |  |  | 0.8 |
Total |  | $ | 3,197.3 |  |  | $ | 2,891.0 |  |  | $ | 2,629.2 |  |  | $ | 70.1 |  |  | $ | 65.1 |  |  | $ | 63.0 |  |  | $ | 94.2 |  |  | $ | 80.7 |  |  | $ | 72.7 |
The majority of corporate assets consist of cash, cash equivalents, marketable securities and deferred income taxes. Net sales and long-lived assets by geographic location The following data by geographic area includes net sales based on product shipment destination and long-lived assets based on physical location. Long-lived assets include net property, plant and equipment and other long-term assets.
|  | Long-lived Assets (December 31) |  |  | Net Sales (Years Ended December 31) |
(dollars in millions) |  | 2017 |  |  | 2016 |  |  | 2015 |  |  |  |  | 2017 |  |  | 2016 |  |  | 2015 |
United States |  | $ | 303.0 |  |  | $ | 292.4 |  |  | $ | 297.8 |  |  | United States |  | $ | 1,698.1 |  |  | $ | 1,570.7 |  |  | $ | 1,531.4 |
China |  |  | 250.8 |  |  |  | 184.3 |  |  |  | 157.3 |  |  | China |  |  | 1,034.9 |  |  |  | 887.1 |  |  |  | 787.1 |
Canada |  |  | 3.2 |  |  |  | 3.1 |  |  |  | 2.7 |  |  | Canada |  |  | 163.7 |  |  |  | 138.7 |  |  |  | 129.9 |
Other Foreign |  |  | 47.1 |  |  |  | 48.4 |  |  |  | 55.2 |  |  | Other Foreign |  |  | 100.0 |  |  |  | 89.4 |  |  |  | 88.1 |
Total |  | $ | 604.1 |  |  | $ | 528.2 |  |  | $ | 513.0 |  |  | Total |  | $ | 2,996.7 |  |  | $ | 2,685.9 |  |  | $ | 2,536.5 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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