Operating Segments and Related Information

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Operating Business Units and Related Information

Operating Segments and Related Information

Operating Segments

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.

In the first quarter of 2020, the Company completed a business reorganization as part of its "Project Be Ready" restructuring plan which resulted in identification of two reportable segments (Industrial Technologies and Defense Technologies). The Company commenced operating and reporting under the new organization structure effective January 1, 2020. See Note 20, “Restructuring” for further information on Project Be Ready.

Industrial Technologies Segment

The Industrial Technologies 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, manufactures, and services offerings that image, measure, and analyze thermal energy, gases, and other environmental elements for industrial, commercial, and scientific applications, imaging payloads for Unmanned Aerial Systems ("UAS"), and machine vision cameras. Additionally, the segment develops, manufactures, and services fixed-mounted visible and thermal imaging cameras and related analytics software for perimeter security, critical infrastructure, recreational and commercial maritime, and traffic monitoring and control. Offerings include thermal imaging cameras, analytics software, gas detection cameras, firefighting cameras, process automation cameras, environmental test and measurement devices, security cameras, marine electronics, and traffic cameras.

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

Operating Segments - (Continued)

Defense Technologies Segment

The Defense Technologies 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. 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. The segment also produces advanced multi-mission unmanned air and ground based systems serving US Department of Defense and Federal government agencies, public safety, and governmental customers in international markets.

The following tables present revenue, operating income, and assets for the two segments. Operating income as reviewed by the CODM is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, separation, transaction, and integration costs, amortization of acquired intangible assets, restructuring expenses and asset impairment charges, and discrete legal and compliance matters. 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,
	2020			2019
Revenue—External Customers:
Industrial Technologies	$	276,415		$	271,386
Defense Technologies	174,508			173,350
	$	450,923		$	444,736
Revenue—Intersegments:
Industrial Technologies	$	2,702		$	4,586
Defense Technologies	1,834			1,512
Eliminations	(4,536		)	(6,098		)
	$	—		$	—
Segment operating income:
Industrial Technologies	$	64,265		$	69,019
Defense Technologies	33,154			46,890
	$	97,419		$	115,909

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,
	2020			2019
Consolidated segment operating income	$	97,419		$	115,909
Unallocated corporate expenses	(36,244		)	(28,290		)
Amortization of purchased intangible assets	(11,896		)	(5,928		)
Restructuring expenses	(20,784		)	(609		)
Consolidated earnings from operations	28,495			81,082
Interest and non-operating expenses, net	(5,297		)	(6,325		)
Consolidated earnings before income taxes	$	23,198		$	74,757

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

Operating Segments - (Continued)

Unallocated corporate expenses include general corporate expenses, separation, transaction, and integration costs, amortization of acquired intangible assets, restructuring expenses and asset impairment charges, and discrete legal and compliance matters.

A reconciliation of the Company's consolidated segment operating assets to consolidated total assets is as follows (in thousands):

	March 31,		December 31,
	2020		2019
Operating segment assets:
Net accounts receivable, inventories and demonstration assets:
Industrial Technologies	$	368,199	$	405,166
Defense Technologies	360,791		332,639
	$	728,990	$	737,805
Goodwill:
Industrial Technologies	628,655		635,899
Defense Technologies	700,173		728,697
	$	1,328,828	$	1,364,596
Total operating segment assets	$	2,057,818	$	2,102,401
Assets not allocated:
Cash and cash equivalents	$	308,615	$	284,592
Prepaid expenses and other current assets	92,929		86,337
Property and equipment, net	251,421		255,905
Deferred income taxes	39,458		39,983
Intangible assets, net	231,953		247,514
Other assets	140,043		120,809
Total assets	$	3,122,237	$	3,137,541

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, 2020
	Industrial Technologies		Defense Technologies		Total
United States	$	103,337	$	115,947	$	219,284
Europe	65,335		19,476		$	84,811
Asia	73,387		11,864		$	85,251
Middle East/Africa	18,027		25,128		$	43,155
Canada/Latin America	16,329		2,093		$	18,422
	$	276,415	$	174,508	$	450,923

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

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

	Three Months Ended March 31, 2019
	Industrial Technologies		Defense Technologies		Total
United States	$	133,422	$	109,304	$	242,726
Europe	73,864		26,596		100,460
Asia	41,393		17,386		58,779
Middle East/Africa	9,865		17,407		27,272
Canada/Latin America	12,842		2,657		15,499
	$	271,386	$	173,350	$	444,736

Long-lived assets consist 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):

	March 31,		December 31,
	2020		2019
United States	$	1,122,056	$	1,137,375
Europe	418,747		435,024
Other foreign	411,442		416,425
	$	1,952,245	$	1,988,824

Major Customers

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

	Three Months Ended March 31,
	2020		2019
United States government	$	132,149	$	137,493