NOTE 15 – SEGMENT INFORMATION

The Company is organized into three reporting segments. Operations that sell dispensing systems and sealing solutions primarily to the personal care, beauty and home care markets form the Beauty + Home segment. Operations that sell dispensing systems, sealing and active packaging solutions primarily to the prescription drug, consumer health care and injectables markets form the Pharma segment. Operations that sell dispensing systems and sealing solutions primarily to the food and beverage markets form the Food + Beverage segment. CSP Technologies’ financial results are reported in the Pharma and Food + Beverage segments. The accounting policies of the segments are the same as those described in Part II, Item 8, Note 1 - Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. In order to more closely align with how the markets analyze our segment results, we have changed our non-U.S. GAAP segment measure of profitability from Segment Income to Adjusted EBITDA beginning in 2018. All internal segment reporting and discussions of results with our Chief Operating Decision Maker (CODM) are now based on segment Adjusted EBITDA. All references to segment profitability have been updated for this change.

Financial information regarding the Company’s reporting segments is shown below:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Total Sales:
Beauty + Home	$	346,040	$	338,068	$	1,103,664	$	992,476
Pharma		227,691		199,551		699,105		598,168
Food + Beverage		97,297		91,852		294,362		269,159
Total Sales		671,028		629,471		2,097,131		1,859,803
Less: Intersegment Sales:
Beauty + Home	$	4,280	$	4,320	$	15,195	$	14,163
Pharma		176		4		254		7
Food + Beverage		797		821		1,949		2,245
Total Intersegment Sales	$	5,253	$	5,145	$	17,398	$	16,415
Net Sales:
Beauty + Home	$	341,760	$	333,748	$	1,088,469	$	978,313
Pharma		227,515		199,547		698,851		598,161
Food + Beverage		96,500		91,031		292,413		266,914
Net Sales	$	665,775	$	624,326	$	2,079,733	$	1,843,388
Adjusted EBITDA (1):
Beauty + Home	$	42,174	$	42,627	$	141,155	$	129,265
Pharma		84,516		66,260		250,709		204,750
Food + Beverage		15,482		18,116		46,284		49,756
Corporate & Other, unallocated		(7,954)		(8,778)		(28,576)		(26,924)
Acquisition-related costs (2)		(10,369)		—		(12,932)		—
Restructuring Initiatives (3)		(23,852)		—		(48,002)		—
Depreciation and amortization		(41,857)		(40,087)		(123,133)		(114,660)
Interest Expense		(8,735)		(9,733)		(24,754)		(25,707)
Interest Income		1,537		1,113		6,306		2,086
Income before Income Taxes	$	50,942	$	69,518	$	207,057	$	218,566

(1)

The Company evaluates performance of our business units and allocates resources based upon Adjusted EBITDA. Adjusted EBITDA is defined as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring and acquisition-related costs.

(2)

Acquisition-related costs include transaction costs and purchase accounting adjustments related to inventory for acquisitions (see Note 17 – Acquisitions for further details).

(3)

Restructuring Initiatives includes expense items for the three and nine months ended September 30, 2018 as follows (see Note 18 – Restructuring Initiatives for further details):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Restructuring Initiatives by Segment
Beauty + Home	$	18,854	$	—	$	38,501	$	—
Pharma		2,008		—		3,596		—
Food + Beverage		2,638		—		4,307		—
Corporate & Other		352		—		1,598		—
Total Restructuring Initiatives	$	23,852	$	—	$	48,002	$	—