Operating Segments

3 Months Ended

Apr. 02, 2017

Segment Reporting [Abstract]

Operating Segments

Operating Segments

We are organized around four global business platforms:  Broadcast Solutions, Enterprise Solutions, Industrial Solutions, and Network Solutions. Each of the global business platforms represents a reportable segment.

To leverage the Company's strengths in networking, IoT, and cybersecurity technologies, effective January 1, 2017, we formed a new segment called Network Solutions, which represents the combination of the prior Industrial IT Solutions and Network Security Solutions segments.  The formation of this new segment is a natural evolution in our organic and inorganic strategies for a range of industrial and non-industrial applications.  We have revised the prior period segment information to conform to the change in the composition of these reportable segments. This change had no impact to our reporting units for purposes of goodwill impairment testing.

Beginning in 2017, sales of certain audio-visual cable that had previously been reported in our Broadcast Solutions segment will now be reported in our Enterprise Solutions segment.  As the annual revenues associated with this product line are not material, we have not revised the prior period segment information. 

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 Solutions		Industrial Solutions		Network Solutions		Total Segments
	(In thousands)
As of and for the three months ended April 2, 2017
Segment revenues	$	168,596	$	145,682	$	146,181	$	90,922	$	551,381
Affiliate revenues	101		2,558		387		60		3,106
Segment EBITDA	25,400		24,100		25,733		17,877		93,110
Depreciation expense	3,949		2,599		3,206		1,629		11,383
Amortization expense	10,015		424		642		12,588		23,669
Severance, restructuring, and acquisition integration costs	408		4,873		1,121		198		6,600
Segment assets	321,342		250,198		264,016		105,156		940,712
As of and for the three months ended April 3, 2016
Segment revenues	$	171,272	$	135,892	$	141,091	$	95,545	$	543,800
Affiliate revenues	424		1,699		182		28		2,333
Segment EBITDA	23,267		23,736		22,987		20,076		90,066
Depreciation expense	3,962		3,389		2,718		1,594		11,663
Amortization expense	12,931		429		591		11,581		25,532
Severance, restructuring, and acquisition integration costs	4,378		500		865		2,665		8,408
Purchase accounting effects of acquisitions	195		—		—		—		195
Deferred gross profit adjustments	614		—		—		1,689		2,303
Segment assets	332,009		233,422		248,971		105,451		919,853

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

	Three Months Ended
	April 2, 2017			April 3, 2016
	(In thousands)
Total Segment Revenues	$	551,381		$	543,800
Deferred revenue adjustments (1)	—			(2,303		)
Consolidated Revenues	$	551,381		$	541,497
Total Segment EBITDA	$	93,110		$	90,066
Amortization of intangibles	(23,669		)	(25,532		)
Depreciation expense	(11,383		)	(11,663		)
Severance, restructuring, and acquisition integration costs (2)	(6,600		)	(8,408		)
Deferred gross profit adjustments (1)	—			(2,303		)
Purchase accounting effects related to acquisitions (3)	—			(195		)
Income (loss) from equity method investment	1,007			(170		)
Eliminations	(1,128		)	(831		)
Consolidated operating income	51,337			40,964
Interest expense, net	(23,506		)	(24,396		)
Consolidated income before taxes	$	27,831		$	16,568

(1) For the three months ended April 3, 2016, our segment results include revenues that would have been recorded by acquired businesses had they remained as independent entities. Our consolidated results do not include these revenues due to the purchase accounting effect of recording deferred revenue at fair value. For the three months ended April 2, 2017, the purchase accounting effect of recording deferred revenue for previous acquisitions was zero.

(2)  See Note 8, Severance, Restructuring, and Acquisition Integration Activities, for details.

(3)  For the three months ended April 3, 2016, we recognized cost of sales for the adjustment of acquired inventory to fair value related to the M2FX acquisition.