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 are now 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 July 2, 2017
Segment revenues	$	188,071	$	160,733	$	159,255	$	102,574	$	610,633
Affiliate revenues	94		1,545		275		32		1,946
Segment EBITDA	29,610		26,801		31,036		22,780		110,227
Depreciation expense	4,058		2,695		3,168		1,607		11,528
Amortization expense	13,453		429		640		12,591		27,113
Severance, restructuring, and acquisition integration costs	970		8,141		346		103		9,560
Purchase accounting effects of acquisitions	1,167		—		—		—		1,167
Segment assets	359,160		275,770		282,068		105,070		1,022,068
As of and for the three months ended July 3, 2016
Segment revenues	$	193,521	$	160,401	$	147,808	$	101,651	$	603,381
Affiliate revenues	173		1,328		214		4		1,719
Segment EBITDA	29,505		29,575		27,064		22,191		108,335
Depreciation expense	4,061		3,429		2,709		1,788		11,987
Amortization expense	13,420		432		601		11,810		26,263
Severance, restructuring, and acquisition integration costs	1,319		1,207		2,371		972		5,869
Deferred gross profit adjustments	494		—		—		1,256		1,750
Segment assets	329,250		253,424		255,250		107,176		945,100
As of and for the six months ended July 2, 2017
Segment revenues	$	356,667	$	306,415	$	305,436	$	193,496	$	1,162,014
Affiliate revenues	195		4,103		662		92		5,052
Segment EBITDA	55,010		50,901		56,769		40,657		203,337
Depreciation expense	8,007		5,294		6,374		3,236		22,911
Amortization expense	23,468		853		1,282		25,179		50,782
Severance, restructuring, and acquisition integration costs	1,378		13,014		1,467		301		16,160
Purchase accounting effects of acquisitions	1,167		—		—		—		1,167
Segment assets	359,160		275,770		282,068		105,070		1,022,068
As of and for the six months ended July 3, 2016
Segment revenues	$	364,793	$	296,293	$	288,899	$	197,196	$	1,147,181
Affiliate revenues	597		3,027		396		32		4,052
Segment EBITDA	52,772		53,311		50,051		42,267		198,401
Depreciation expense	8,023		6,818		5,427		3,382		23,650
Amortization expense	26,351		861		1,192		23,391		51,795
Severance, restructuring, and acquisition integration costs	5,697		1,707		3,236		3,637		14,277
Purchase accounting effects of acquisitions	195		—		—		—		195
Deferred gross profit adjustments	1,108		—		—		2,945		4,053
Segment assets	329,250		253,424		255,250		107,176		945,100

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						Six Months Ended
	July 2, 2017			July 3, 2016			July 2, 2017			July 3, 2016

	(In thousands)
Total Segment Revenues	$	610,633		$	603,381		$	1,162,014		$	1,147,181
Deferred revenue adjustments (1)	—			(1,750		)	—			(4,053		)
Consolidated Revenues	$	610,633		$	601,631		$	1,162,014		$	1,143,128

Total Segment EBITDA	$	110,227		$	108,335		$	203,337		$	198,401
Amortization of intangibles	(27,113		)	(26,263		)	(50,782		)	(51,795		)
Depreciation expense	(11,528		)	(11,987		)	(22,911		)	(23,650		)
Severance, restructuring, and acquisition integration costs (2)	(9,560		)	(5,869		)	(16,160		)	(14,277		)
Purchase accounting effects related to acquisitions (3)	(1,167		)	—			(1,167		)	(195		)
Deferred gross profit adjustments (1)	—			(1,750		)	—			(4,053		)
Income from equity method investment	2,277			661			3,284			491
Eliminations	(655		)	(886		)	(1,783		)	(1,717		)
Consolidated operating income	62,481			62,241			113,818			103,205
Interest expense, net	(23,533		)	(24,049		)	(47,039		)	(48,445		)
Loss on debt extinguishment	(847		)	—			(847		)	—
Consolidated income before taxes	$	38,101		$	38,192		$	65,932		$	54,760

(1) For the three and six months ended July 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.

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

(3) For the three and six months ended July 2, 2017 and July 3, 2016, we recognized cost of sales for the adjustment of acquired inventory to fair value related to the Thinklogical and M2FX acquisitions, respectively.