Operating Segments and Related Information

Operating Segments

The Company has three reportable operating segments as follows:

Industrial Business Unit

The Industrial business unit 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 devices that image, measure, and assess thermal energy, gases, and other environmental elements for industrial, commercial, and scientific applications, imaging payloads for Unmanned Aerial Systems ("UAS"), machine vision cameras, people counting and tracking, and thermal imaging solutions for use by consumers in the smartphone and mobile devices markets. Products include thermal imaging cameras, gas detection cameras, firefighting cameras, process automation cameras, and environmental test and measurement devices.

Note 18. Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

Government and Defense Business Unit

The Government & Defense business unit 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. The segment also develops and manufactures sensor instruments and integrated platform solutions for the detection, identification, and suppression of chemical, biological, radiological, nuclear, and explosives ("CBRNE") threats for military force protection, homeland security, and commercial applications. Offerings include airborne, land, maritime, and man-portable multi-spectrum imaging systems, radars, lasers, imaging components, integrated multi-sensor system platforms, CBRNE detectors, nano-class UAS solutions, and services related to these systems.

Commercial Business Unit

The Commercial business unit develops and manufactures cameras, video recording systems, and video management systems for use in commercial and critical infrastructure, electronics and imaging instruments for the recreational and commercial maritime market, intelligent traffic monitoring and signal control systems, and hand-held and weapon-mounted thermal imaging systems for use in a variety of applications. Products include thermal and visible-spectrum security cameras, digital and networked video recorders, and related software and accessories, a full suite of networked marine 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, traffic cameras, sensors and associated traffic management software, and thermal scopes and handheld thermal cameras.

The Company’s chief operating decision maker ("CODM"), its Chief Executive Officer, evaluates each of its segments’ 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 three segments. Operating income as reviewed by the CODM is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, amortization of purchased intangible assets, amortization of acquisition-related inventory step-up, loss on sale of a business and restructuring and other charges. Net accounts receivable, inventories and demonstration assets for the operating segments are regularly reviewed by management and are reported below as segment assets. All remaining assets, liabilities, capital expenditures, and depreciation are managed on a Company-wide basis.

Operating segment information is as follows (in thousands):



	Three Months Ended March 31,
	2018			2017
Revenue—External Customers:
Industrial	$	170,658		$	154,785
Government and Defense	159,331			138,180
Commercial	109,629			113,849
	$	439,618		$	406,814
Revenue—Intersegments:
Industrial	$	6,332		$	4,941
Government and Defense	1,528			3,267
Commercial	4,481			3,800
Eliminations	$	(12,341	)	$	(12,008	)
	$	—		$	—
Segment operating income:
Industrial	$	45,455		$	42,818
Government and Defense	46,182			33,319
Commercial	14,472			9,988
	$	106,109		$	86,125

Note 18. 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):



	Three Months Ended March 31,
	2018			2017
Consolidated segment operating income	$	106,109		$	86,125
Unallocated corporate expenses	(34,948		)	(18,223		)
Amortization of purchased intangible assets	(5,987		)	(6,736		)
Amortization of acquisition-related inventory step-up	—			(1,992		)
Loss on sale of business	(10,178		)	—
Restructuring and other charges	496			(88		)
Consolidated earnings from operations	55,492			59,086
Interest and non-operating expenses, net	(877		)	(3,522		)
Consolidated earnings before income taxes	$	54,615		$	55,564

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



	March 31,		December 31,
	2018		2017
Operating segment assets:
Net accounts receivable, inventories and demonstration assets:
Industrial	$	277,682	$	287,439
Government and Defense	327,722		332,044
Commercial	149,166		136,942
Total operating segments	$	754,570	$	756,425
Assets not allocated:
Cash, cash equivalents and restricted cash	$	452,138	$	519,090
Assets held for sale, net	—		67,344
Prepaid expenses and other current assets	62,499		44,360
Property and equipment, net	260,200		263,996
Deferred income taxes	15,924		21,001
Goodwill	918,292		909,811
Intangible assets, net	163,429		168,130
Other assets	$	76,948	$	59,869
Total assets	$	2,704,000	$	2,810,026

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):



	Three Months Ended March 31,
	2018		2017
United States	$	225,444	$	221,832
Europe	97,523		83,271
Asia	61,373		53,924
Middle East/Africa	36,407		25,142
Canada/Latin America	18,871		22,645
	$	439,618	$	406,814

Note 18. Operating Segments and Related Information - (Continued)

Revenue and Long-Lived Assets by Geographic Area - (Continued)

Long-lived assets by significant geographic locations are as follows (in thousands):




	March 31, 2018		December 31, 2017
United States	$	858,816	$	797,816
Europe	336,312		343,208
Other foreign	223,741		260,782
	$	1,418,869	$	1,409,806

Major Customers

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



	Three Months Ended March 31,
	2018		2017
United States government	$	117,901	$	116,235