Operating Segments

9 Months Ended

Oct. 02, 2016

Segment Reporting [Abstract]

Operating Segments

Operating Segments

We are organized around five global business platforms:  Broadcast, Enterprise Connectivity, Industrial Connectivity, Industrial IT, and Network Security. Each of the global business platforms represents a reportable segment.

To capitalize on the adoption of IP technology and accelerate our penetration of the commercial audio-video market, we transferred responsibility of audio-video cable and connectors from our Broadcast platform to our Enterprise Connectivity platform effective January 1, 2016. We have revised the prior period segment information to conform to the change in the composition of these reportable segments. This transfer had no impact to our reporting units for purposes of goodwill impairment testing.

The key measures of segment profit or loss reviewed by our chief operating decision maker are Segment Revenues and Segment EBITDA. Segment Revenues represent non-affiliate revenues and include revenues that would have otherwise been recorded by acquired businesses as independent entities but were not recognized in our Consolidated Statements of Operations due to the effects of purchase accounting and the associated write-down of acquired deferred revenue to fair value. Segment EBITDA excludes certain items, including depreciation expense; amortization of intangibles; asset impairment; severance, restructuring, and acquisition integration costs; purchase accounting effects related to acquisitions, such as the adjustment of acquired inventory and deferred revenue to fair value; and other costs. We allocate corporate expenses to the segments for purposes of measuring Segment EBITDA. Corporate expenses are allocated on the basis of each segment’s relative EBITDA prior to the allocation.

Our measure of segment assets does not include cash, goodwill, intangible assets, deferred tax assets, or corporate assets. All goodwill is allocated to reporting units of our segments for purposes of impairment testing.

	Broadcast Solutions		Enterprise Connectivity Solutions		Industrial Connectivity Solutions		Industrial IT Solutions		Network Security Solutions		Total Segments
	(In thousands)
As of and for the three months ended October 2, 2016
Segment revenues	$	196,173	$	156,658	$	149,847	$	60,168	$	39,622	$	602,468
Affiliate revenues	46		1,587		511		13		—		2,157
Segment EBITDA	36,545		27,294		23,649		12,771		11,677		111,936
Depreciation expense	4,063		3,210		2,738		565		1,027		11,603
Amortization expense	10,955		431		604		1,501		10,317		23,808
Severance, restructuring, and acquisition integration costs	174		5,573		4,746		2,302		—		12,795
Deferred gross profit adjustments	283		—		—		—		1,076		1,359
Segment assets	314,020		265,085		261,923		62,828		43,110		946,966
As of and for the three months ended September 27, 2015
Segment revenues	$	186,722	$	155,148	$	147,702	$	59,184	$	41,359	$	590,115
Affiliate revenues	42		1,630		355		37		—		2,064
Segment EBITDA	27,369		25,705		23,225		10,466		11,240		98,005
Depreciation expense	4,027		3,156		2,810		570		1,255		11,818
Amortization expense	12,354		429		799		1,480		10,607		25,669
Severance, restructuring, and acquisition integration costs	13,722		192		118		54		57		14,143
Deferred gross profit adjustments	419		—		—		—		10,909		11,328
Segment assets	346,271		266,248		250,622		61,441		41,520		966,102
As of and for the nine months ended October 2, 2016
Segment revenues	$	560,966	$	452,951	$	438,746	$	176,560	$	120,426	$	1,749,649
Affiliate revenues	644		4,615		906		44		—		6,209
Segment EBITDA	89,317		80,605		73,700		34,056		32,659		310,337
Depreciation expense	12,086		10,028		8,165		1,749		3,225		35,253
Amortization expense	37,306		1,292		1,796		4,517		30,692		75,603
Severance, restructuring, and acquisition integration costs	5,871		7,280		7,982		5,910		29		27,072
Purchase accounting effects of acquisitions	195		—		—		—		—		195
Deferred gross profit adjustments	1,391		—		—		—		4,021		5,412
Segment assets	314,020		265,085		261,923		62,828		43,110		946,966
As of and for the nine months ended September 27, 2015
Segment revenues	$	538,145	$	458,756	$	461,549	$	181,527	$	118,102	$	1,758,079
Affiliate revenues	24		5,328		1,086		68		8		6,514
Segment EBITDA	73,374		75,506		76,078		31,731		29,913		286,602
Depreciation expense	12,140		9,550		8,530		1,713		3,118		35,051
Amortization expense	37,375		1,290		2,429		4,369		32,627		78,090
Severance, restructuring, and acquisition integration costs	28,532		843		3,054		2		1,102		33,533
Purchase accounting effects of acquisitions	—		—		267		—		9,155		9,422
Deferred gross profit adjustments	2,789		—		—		—		43,637		46,426
Segment assets	346,271		266,248		250,622		61,441		41,520		966,102

The following table is a reconciliation of the total of the reportable segments’ Revenues and EBITDA to consolidated revenues and consolidated income from continuing operations before taxes, respectively.

	Three Months Ended						Nine Months Ended
	October 2, 2016			September 27, 2015			October 2, 2016			September 27, 2015
	(In thousands)						(In thousands)
Total Segment Revenues	$	602,468		$	590,115		$	1,749,649		$	1,758,079
Deferred revenue adjustments (1)	(1,359		)	(10,849		)	(5,412		)	(46,101		)
Consolidated Revenues	$	601,109		$	579,266		$	1,744,237		$	1,711,978
Total Segment EBITDA	$	111,936		$	98,005		$	310,337		$	286,602
Amortization of intangibles	(23,808		)	(25,669		)	(75,603		)	(78,090		)
Deferred gross profit adjustments (1)	(1,359		)	(11,328		)	(5,412		)	(46,426		)
Severance, restructuring, and acquisition integration costs (2)	(12,795		)	(14,143		)	(27,072		)	(33,533		)
Depreciation expense	(11,603		)	(11,818		)	(35,253		)	(35,051		)
Purchase accounting effects related to acquisitions (3)	—			—			(195		)	(9,422		)
Income from equity method investment	586			348			1,077			1,459
Eliminations	(977		)	(893		)	(2,694		)	(1,996		)
Consolidated operating income	61,980			34,502			165,185			83,543
Interest expense, net	(23,513		)	(25,416		)	(71,958		)	(74,031		)
Consolidated income from continuing operations before taxes	$	38,467		$	9,086		$	93,227		$	9,512

(1) For both the three and nine months ended October 2, 2016 and September 27, 2015, both our consolidated revenues and gross profit were negatively impacted by the reduction of the acquired deferred revenue balance to fair value associated with our 2015 acquisition of Tripwire.

(2)  See Note 7, Severance, Restructuring, and Acquisition Integration Activities, for details.

(3)  For the nine months ended October 2, 2016, we recognized $0.2 million of cost of sales related to the adjustment of acquired inventory to fair value related to our acquisition of M2FX. For the nine months ended September 27, 2015, we recognized $9.2 million of compensation expense related to the accelerated vesting of acquiree stock based compensation awards associated with our acquisition of Tripwire. In addition, we recognized $0.3 million of cost of sales related to the adjustment of acquired inventory to fair value related to our acquisition of Coast.