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Segment Information | 9 Months Ended
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Oct. 01, 2017
Segment Information |
Segment Information | 9. Segment Information The Company operates in three geographic segments: Americas, Europe, and APMEA. Each of these segments sells similar products and has separate financial results that are reviewed by the Company’s chief operating decision‑maker. Each segment earns revenue and income almost exclusively from the sale of our products. The Company sells its products into various end markets around the world, with sales by region based upon location of the entity recording the sale. Products are sold into four product categories: 1) residential & commercial flow control products, 2) HVAC & gas products, 3) drainage & water re-use products, and 4) water quality products. The Americas sells products across all four product categories, Europe primarily sells residential & commercial flow products, HVAC & gas products and drainage products, and APMEA primarily sells residential & commercial flow products and HVAC & gas products. All intercompany sales transactions have been eliminated. The accounting policies for each segment are the same as those described in Note 2 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. As of January 1, 2017, the Company began reporting the results of Watts Industries Middle East FZE (“Watts Middle East”), an indirect, wholly owned subsidiary, as part of the Company’s former Asia-Pacific segment, which is now referred to as APMEA. Watts Middle East had previously been reported within the former EMEA segment, which is now referred to as Europe. This change in segment composition aligns with the structure of the Company’s internal organization and did not result in a material change to previously reported segment information. The 2016 results by segment have been retrospectively revised for comparative purposes. The following is a summary of the Company’s significant accounts and balances by segment, reconciled to its consolidated totals:
|  | Third Quarter Ended |  | Nine Months Ended |
|  | October 1, |  | October 2, |  | October 1, |  | October 2, |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |
|  | (in millions) |
Net Sales |  |  |  |  |  |  |  |  |  |  |  |  |
Americas |  | $ | 239.1 |  | $ | 215.8 |  | $ | 718.3 |  | $ | 677.6 |
Europe |  |  | 109.0 |  |  | 107.0 |  |  | 324.6 |  |  | 329.6 |
APMEA |  |  | 16.6 |  |  | 18.3 |  |  | 47.5 |  |  | 49.2 |
Consolidated net sales |  | $ | 364.7 |  | $ | 341.1 |  | $ | 1,090.4 |  | $ | 1,056.4 |
Operating income (loss) |  |  |  |  |  |  |  |  |  |  |  |  |
Americas |  | $ | 39.8 |  | $ | 32.2 |  | $ | 110.5 |  | $ | 95.7 |
Europe |  |  | 13.4 |  |  | 12.3 |  |  | 38.5 |  |  | 32.3 |
APMEA |  |  | 0.5 |  |  | 1.6 |  |  | 3.3 |  |  | 13.1 |
Subtotal reportable segments |  |  | 53.7 |  |  | 46.1 |  |  | 152.3 |  |  | 141.1 |
Corporate(*) |  |  | (9.4) |  |  | (9.6) |  |  | (27.5) |  |  | (27.7) |
Consolidated operating income |  |  | 44.3 |  |  | 36.5 |  |  | 124.8 |  |  | 113.4 |
Interest income |  |  | (0.2) |  |  | (0.3) |  |  | (0.6) |  |  | (0.8) |
Interest expense |  |  | 4.7 |  |  | 4.9 |  |  | 14.5 |  |  | 17.1 |
Other expense (income), net |  |  | 0.3 |  |  | (0.5) |  |  | 0.8 |  |  | (3.6) |
Income before income taxes |  | $ | 39.5 |  | $ | 32.4 |  | $ | 110.1 |  | $ | 100.7 |
Capital Expenditures |  |  |  |  |  |  |  |  |  |  |  |  |
Americas |  | $ | 4.4 |  | $ | 5.1 |  | $ | 12.5 |  | $ | 19.5 |
Europe |  |  | 1.7 |  |  | 1.9 |  |  | 4.2 |  |  | 6.2 |
APMEA |  |  | 0.1 |  |  | 0.1 |  |  | 0.4 |  |  | 0.6 |
Consolidated capital expenditures |  | $ | 6.2 |  | $ | 7.1 |  | $ | 17.1 |  | $ | 26.3 |
Depreciation and Amortization |  |  |  |  |  |  |  |  |  |  |  |  |
Americas |  | $ | 7.6 |  | $ | 7.7 |  | $ | 22.8 |  | $ | 20.9 |
Europe |  |  | 4.9 |  |  | 4.8 |  |  | 13.8 |  |  | 14.6 |
APMEA |  |  | 0.4 |  |  | 0.7 |  |  | 2.1 |  |  | 2.5 |
Consolidated depreciation and amortization |  | $ | 12.9 |  | $ | 13.2 |  | $ | 38.7 |  | $ | 38.0 |
Identifiable assets (at end of period) |  |  |  |  |  |  |  |  |  |  |  |  |
Americas |  |  |  |  |  |  |  | $ | 1,074.0 |  | $ | 1,011.1 |
Europe |  |  |  |  |  |  |  |  | 510.4 |  |  | 605.6 |
APMEA |  |  |  |  |  |  |  |  | 131.2 |  |  | 130.6 |
Consolidated identifiable assets |  |  |  |  |  |  |  | $ | 1,715.6 |  | $ | 1,747.3 |
Property, plant and equipment, net (at end of period) |  |  |  |  |  |  |  |  |  |  |  |  |
Americas |  |  |  |  |  |  |  | $ | 105.7 |  | $ | 95.8 |
Europe |  |  |  |  |  |  |  |  | 79.2 |  |  | 80.9 |
APMEA |  |  |  |  |  |  |  |  | 7.2 |  |  | 8.1 |
Consolidated property, plant and equipment, net |  |  |  |  |  |  |  | $ | 192.1 |  | $ | 184.8 |
* Corporate expenses are primarily for administrative compensation expense, compliance costs, professional fees, including corporate-related legal and audit expenses, shareholder services and benefit administration costs. Other than the change in composition as noted above, the above operating segments are presented on a basis consistent with the presentation included in the Company’s December 31, 2016 consolidated financial statements included in its Annual Report on Form 10-K. The U.S. property, plant and equipment of the Company’s Americas segment was $102.0 million and $92.0 million at October 1, 2017 and October 2, 2016, respectively. The following includes U.S. net sales of the Company’s Americas segment:
|  | Third Quarter Ended |  | Nine Months Ended |
|  | October 1, |  | October 2, |  | October 1, |  | October 2, |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |
|  | (in millions) |
U.S. net sales |  | $ | 222.0 |  | $ | 200.5 |  | $ | 670.6 |  | $ | 631.9 |
The following includes intersegment sales for Americas, Europe and APMEA:
|  | Third Quarter Ended |  | Nine Months Ended |
|  | October 1, |  | October 2, |  | October 1, |  | October 2, |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |
|  | (in millions) |  |  |  |  |  |  |
Intersegment Sales |  |  |  |  |  |  |  |  |  |  |  |  |
Americas |  | $ | 2.5 |  | $ | 2.9 |  | $ | 9.0 |  | $ | 9.1 |
Europe |  |  | 4.0 |  |  | 2.9 |  |  | 11.9 |  |  | 8.8 |
APMEA |  |  | 12.8 |  |  | 17.2 |  |  | 52.8 |  |  | 58.3 |
Intersegment sales |  | $ | 19.3 |  | $ | 23.0 |  | $ | 73.7 |  | $ | 76.2 |

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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 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599 + Details
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