Reportable Segments

6 Months Ended

Jun. 30, 2019

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

The key measures of segment profit or loss 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 Condensed Consolidated Statements of Operations and Comprehensive Income 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.



	Enterprise Solutions		Industrial Solutions		Total Segments

	(In thousands)
As of and for the three months ended June 30, 2019
Segment revenues	$	369,862	$	267,668	$	637,530
Affiliate revenues	893		—		893
Segment EBITDA	53,483		47,458		100,941
Depreciation expense	7,540		4,761		12,301
Amortization of intangibles	9,320		13,048		22,368
Amortization of software development intangible assets	1,044		28		1,072
Severance, restructuring, and acquisition integration costs	3,082		—		3,082
Purchase accounting effects of acquisitions	718		—		718
Segment assets	822,402		478,894		1,301,296
As of and for the three months ended July 1, 2018
Segment revenues	$	399,695	$	271,746	$	671,441
Affiliate revenues	1,496		17		1,513
Segment EBITDA	70,281		53,225		123,506
Depreciation expense	7,153		4,873		12,026
Amortization of intangibles	11,809		13,230		25,039
Amortization of software development intangible assets	488		—		488
Severance, restructuring, and acquisition integration costs	22,887		2,041		24,928
Purchase accounting effects of acquisitions	1,036		—		1,036
Deferred revenue adjustments	2,802		—		2,802
Segment assets	759,334		436,885		1,196,219
As of and for the six months ended June 30, 2019
Segment revenues	$	696,389	$	528,316	$	1,224,705
Affiliate revenues	2,263		17		2,280
Segment EBITDA	93,041		94,917		187,958
Depreciation expense	15,273		9,748		25,021
Amortization of intangibles	19,490		26,219		45,709
Amortization of software development intangible assets	1,958		51		2,009
Severance, restructuring, and acquisition integration costs	6,860		—		6,860
Purchase accounting effects of acquisitions	2,031		—		2,031
Segment assets	822,402		478,894		1,301,296
As of and for the six months ended July 1, 2018
Segment revenues	$	750,685	$	528,179	$	1,278,864
Affiliate revenues	2,542		46		2,588
Segment EBITDA	127,733		99,651		227,384
Depreciation expense	14,373		9,518		23,891
Amortization of intangibles	22,979		26,478		49,457
Amortization of software development intangible assets	724		—		724
Severance, restructuring, and acquisition integration costs	37,421		7,901		45,322
Purchase accounting effects of acquisitions	1,538		—		1,538
Deferred revenue adjustments	4,660		—		4,660
Segment assets	759,334		436,885		1,196,219

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
	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018

	(In thousands)
Total Segment Revenues	$	637,530		$	671,441		$	1,224,705		$	1,278,864
Deferred revenue adjustments (1)	—			(2,802		)	—			(4,660		)
Consolidated Revenues	$	637,530		$	668,639		$	1,224,705		$	1,274,204

Total Segment EBITDA	$	100,941		$	123,506		$	187,958		$	227,384
Amortization of intangibles	(22,368		)	(25,039		)	(45,709		)	(49,457		)
Depreciation expense	(12,301		)	(12,026		)	(25,021		)	(23,891		)
Severance, restructuring, and acquisition integration costs (2)	(3,082		)	(24,928		)	(6,860		)	(45,322		)
Purchase accounting effects related to acquisitions (3)	(718		)	(1,036		)	(2,031		)	(1,538		)
Amortization of software development intangible assets	(1,072		)	(488		)	(2,009		)	(724		)
Deferred revenue adjustments (1)	—			(2,802		)	—			(4,660		)
Loss on sale of assets	—			—			—			(94		)
Eliminations	(261		)	(681		)	(744		)	(989		)
Consolidated operating income	61,139			56,506			105,584			100,709
Interest expense, net	(14,168		)	(15,088		)	(28,361		)	(32,066		)
Non-operating pension benefit (cost)	481			(257		)	1,028			(532		)
Loss on debt extinguishment	—			(3,030		)	—			(22,990		)
Consolidated income before taxes	$	47,452		$	38,131		$	78,251		$	45,121

(1) 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. See Note 3, Acquisitions, for details.

(2) See Note 9, Severance, Restructuring, and Acquisition Integration Activities, for details.

(3) For the three and six months ended June 30, 2019, we recognized expenses related to the earnout consideration for the SAM acquisition, and we recognized cost of sales for the adjustment of acquired inventory to fair value related to the Opterna and FutureLink acquisitions. For the three and six months ended July 1, 2018, we recognized cost of sales for the adjustment of acquired inventory to fair value related to the SAM and NT2 acquisitions.