Operating Segments and Related Information

Operating Segments

The Company has six reportable operating segments as follows:

Surveillance

The Surveillance segment develops and manufactures enhanced imaging and recognition solutions for a wide variety of military, law enforcement, public safety, and other government customers around the world for the protection of borders, troops, and public welfare. Offerings include airborne, land, maritime, and man-portable multi-spectrum imaging systems, radars, lasers, imaging components, integrated multi-sensor system platforms, and services related to these systems.

Instruments

The Instruments segment develops and manufactures devices that image, measure, and assess thermal energy, gases, and other environmental elements for industrial, commercial, and scientific applications. Products include thermal imaging cameras, gas detection cameras, firefighting cameras, process automation cameras, and environmental test and measurement devices.

Security

The Security segment develops and manufactures cameras and video recording systems for use in commercial, critical infrastructure, and home security applications. Products include thermal and visible-spectrum cameras, digital and networked video recorders, and related software and accessories that enable the efficient and effective safeguarding of assets at all hours of the day and through adverse weather conditions.

OEM & Emerging Markets

The OEM & Emerging Markets segment develops and manufactures thermal and visible-spectrum imaging camera cores and components that are utilized by third parties to create thermal, industrial, and other types of imaging systems. The segment also develops and manufactures intelligent traffic monitoring and signal control systems as well as thermal imaging solutions for use by consumers in the smartphone and mobile devices markets.

Maritime

The Maritime segment develops and manufactures electronics and imaging instruments for the recreational and commercial maritime market. The segment provides a full suite of networked electronic systems including multi-function helm displays, navigational instruments, autopilots, radars, sonar systems, thermal and visible imaging systems, and communications equipment for boats of all sizes.

Detection

The Detection segment develops and manufactures sensor instruments and integrated platform solutions for the detection, identification, and suppression of chemical, biological, radiological, nuclear, and explosives threats for military force protection, homeland security, and commercial applications.


Note 17.	Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

The Company’s chief operating decision maker ("CODM"), its Chief Executive Officer, evaluates each of its segment’s performance and allocates resources based on revenue and segment operating income. Intersegment revenues are recorded at cost and are eliminated in consolidation. The Company and each of its segments employ consistent accounting policies.

The following tables present revenue, operating income, and assets for the six segments. Operating income as reviewed by the CODM is revenue less cost of goods sold and operating expense, excluding general corporate expenses, acquisition related costs, executive transition costs, amortization of purchased intangible assets, amortization of acquisition-related inventory step-up, costs associated with the SkyWatch product remediation, restructuring charges, and the loss on net assets held for sale. Accounts receivable and inventories for operating segments are regularly reviewed by management and are reported below as segment assets. As of and for the years ended December 31, 2017 and 2016, all remaining assets, liabilities, capital expenditures and depreciation were managed on a Company-wide basis.

Operating segment information is as follows (in thousands):



	Year Ended December 31,
	2017			2016			2015
Revenue—External Customers:
Surveillance	$	545,755		$	532,476		$	503,045
Instruments	357,834			336,141			347,476
Security	231,456			240,010			226,575
OEM & Emerging Markets	347,160			243,678			186,722
Maritime	189,694			185,726			177,948
Detection	128,535			124,136			115,301
	$	1,800,434		$	1,662,167		$	1,557,067
Revenue—Intersegments:
Surveillance	$	14,074		$	18,835		$	10,761
Instruments	4,686			4,343			9,951
Security	15,845			13,838			12,033
OEM & Emerging Markets	42,985			33,442			33,059
Maritime	2,440			3,450			2,108
Detection	145			31			—
Eliminations	(80,175		)	(73,939		)	(67,912		)
	$	—		$	—		$	—
Segment operating income:
Surveillance	$	151,983		$	151,516		$	149,560
Instruments	106,887			98,775			115,115
Security	13,760			15,885			29,366
OEM & Emerging Markets	103,334			66,141			43,660
Maritime	23,019			18,564			17,383
Detection	36,146			35,276			30,262
	$	435,129		$	386,157		$	385,346


Note 17.	Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

A reconciliation of the Company's consolidated segment operating income to consolidated earnings before income taxes is as follows (in thousands):



	Year Ended December 31,
	2017			2016			2015
Consolidated segment operating income	$	435,129		$	386,157		$	385,346
Unallocated corporate expenses	(87,184		)	(65,012		)	(61,946		)
Amortization of purchased intangible assets	(27,391		)	(18,266		)	(16,275		)
Amortization of acquisition-related inventory step-up	(1,992		)	(3,230		)	—
Restructuring charges	(625		)	(1,431		)	(1,361		)
Loss on net assets held for sale	(23,588		)	—			—
SkyWatch product quality accrual	(4,388		)	(2,500		)	—
Consolidated earnings from operations	289,961			295,718			305,764
Interest and non-operating expense, net	(10,896		)	(19,761		)	(318		)
Consolidated earnings before income taxes	$	279,065		$	275,957		$	305,446

Unallocated corporate expenses include general corporate expenses, acquisition related costs and executive transition costs.



	December 31,
	2017		2016
Segment assets (accounts receivable, net and inventories):
Surveillance	$	296,891	$	283,324
Instruments	139,367		114,681
Security	34,735		93,174
OEM & Emerging Markets	149,346		144,862
Maritime	66,689		61,494
Detection	31,842		25,856
	$	718,870	$	723,391



	December 31,
	2017		2016
Segment goodwill:
Surveillance	$	253,341	$	152,383
Instruments	155,937		147,595
Security	92,719		102,983
OEM & Emerging Markets	256,745		252,647
Maritime	103,048		97,860
Detection	48,021		47,938
	$	909,811	$	801,406


Note 17.	Operating Segments and Related Information - (Continued)

Revenue and Long-Lived Assets by Geographic Area

Information related to revenue by significant geographical location, determined by the end customer, is as follows (in thousands):



	Year Ended December 31,
	2017		2016		2015
United States	$	956,438	$	903,582	$	830,485
Europe	375,474		338,805		338,886
Asia	227,047		195,913		175,616
Middle East/Africa	127,796		130,890		125,848
Canada/Latin America	113,679		92,977		86,232
	$	1,800,434	$	1,662,167	$	1,557,067

Long-lived assets are comprised of net property and equipment, net identifiable intangible assets, goodwill and other long-term assets. Long-lived assets by significant geographic locations are as follows (in thousands):



	December 31,
	2017		2016
United States	$	797,816	$	676,007
Europe	343,208		673,767
Other foreign	260,782		60,032
	$	1,401,806	$	1,409,806

Major Customers

Revenue derived from major customers is as follows (in thousands):



	Year Ended December 31,
	2017		2016		2015
United States government	$	466,304	$	416,341	$	321,420