Operating Segments and Geographic Information

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Operating Segments and Geographic Information

Operating Segments and Geographic Information

We are organized around two global business platforms: Enterprise Solutions and Industrial Solutions. Each of the global business platforms represents a reportable segment. Effective January 1, 2020, we transferred our West Penn Wire business and multi-conductor product lines from the Enterprise Solutions segment to the Industrial Solutions segment as a result of a shift in responsibilities among the segments. We have recast the prior period segment information to conform to the change in the composition of reportable segments.

The segments design, manufacture, and market a portfolio of signal transmission solutions for mission critical applications used in a variety of end markets. We sell the products manufactured by our segments through distributors or directly to systems integrators, original equipment manufacturers (OEMs), end-users, and installers.

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.

Operating Segment Information

Enterprise Solutions	Years ended December 31,
	2020		2019		2018
	(In thousands)
Segment revenues	$	872,415	$	946,041	$	957,501
Affiliate revenues	1,289		4,162		6,105
Segment EBITDA	99,333		126,925		156,790
Depreciation expense	20,655		19,771		18,490
Amortization of intangibles	21,662		22,324		21,076
Amortization of software development intangible assets	245		175		71
Severance, restructuring, and acquisition integration costs	7,720		10,808		14,863
Purchase accounting effects of acquisitions	125		592		1,690
Acquisition of property, plant and equipment	25,223		42,289		42,624
Segment assets	462,615		487,125		430,128

Industrial Solutions	Years ended December 31,
	2020		2019		2018
	(In thousands)
Segment revenues	$	990,301	$	1,185,237	$	1,208,201
Affiliate revenues	60		11		80
Segment EBITDA	147,626		226,110		237,870
Depreciation expense	21,815		20,638		19,819
Amortization of intangibles	42,733		52,285		54,064
Amortization of software development intangible assets	1,576		350		8
Severance, restructuring, and acquisition integration costs	4,538		15,736		7,762
Acquisition of property, plant and equipment	44,675		35,189		29,529
Segment assets	522,637		504,482		508,843

Total Segments	Years ended December 31,
	2020		2019		2018
	(In thousands)
Segment revenues	$	1,862,716	$	2,131,278	$	2,165,702
Affiliate revenues	1,349		4,173		6,185
Segment EBITDA	246,959		353,035		394,660
Depreciation expense	42,470		40,409		38,309
Amortization of intangibles	64,395		74,609		75,140
Amortization of software development intangible assets	1,821		525		79
Severance, restructuring, and acquisition integration costs	12,258		26,544		22,625
Purchase accounting effects of acquisitions	125		592		1,690
Acquisition of property, plant and equipment	69,898		77,478		72,153
Segment assets	985,252		991,607		938,971

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.

	Years Ended December 31,
	2020		2019		2018
	(In thousands)
Total Segment Revenues	$	1,862,716	$	2,131,278	$	2,165,702
Deferred revenue adjustments	—		—		—
Consolidated Revenues	$	1,862,716	$	2,131,278	$	2,165,702
Total Segment EBITDA	$	246,959	$	353,035	$	394,660
Amortization of intangibles	(64,395)		(74,609)		(75,140)
Depreciation expense	(42,470)		(40,409)		(38,309)
Severance, restructuring, and acquisition integration costs (1)	(12,258)		(26,544)		(22,625)
Purchase accounting effects related to acquisitions (2)	(125)		(592)		(1,690)
Amortization of software development intangible assets	(1,821)		(525)		(79)
Loss on sale of assets (3)	—		—		(94)
Costs related to patent litigation	—		—		(2,634)
Gain from patent litigation	—		—		62,141
Eliminations	(480)		(3,149)		(2,222)
Consolidated operating income	125,410		207,207		314,008
Interest expense, net	(58,888)		(55,814)		(60,839)
Non-operating pension benefit (cost)	(395)		1,017		(99)
Loss on debt extinguishment	—		—		(22,990)
Consolidated income from continuing operations before taxes	$	66,127	$	152,410	$	230,080

(1)See Note 15, Severance, Restructuring, and Acquisition Integration Activities, for details.

(2)In 2020 and 2019, we collectively recognized $0.1 million and $0.6 million, respectively, of cost of sales related to purchase accounting adjustments of acquired inventory to fair value for both our SPC and Opterna acquisitions. In 2018, we made a $1.7 million adjustment to increase the earn-out liability associated with an acquisition.

(3)In 2018, we recognized a $0.1 million loss on sale of assets for the sale of our MCS business and Hirschmann JV. See Note 2.

Below are reconciliations of other segment measures to the consolidated totals. 

	Years Ended December 31,
	2020		2019		2018
	(In thousands)
Total segment assets	$	985,252	$	991,607	$	938,971
Cash and cash equivalents	501,994		407,480		407,454
Goodwill	1,251,938		1,243,669		1,206,877
Intangible assets, less accumulated amortization	287,071		339,505		359,931
Deferred income taxes	29,536		25,216		26,459
Corporate assets	83,943		24,147		16,786
Assets of discontinued operations	—		375,135		822,843
Total assets	$	3,139,734	$	3,406,759	$	3,779,321
Total segment acquisition of property, plant and equipment	$	69,898	$	77,478	$	72,153
Discontinued operations acquisition of property, plant and equipment	16,712		29,414		22,681
Corporate acquisition of property, plant and equipment	3,605		3,110		3,013
Total acquisition of property, plant and equipment	$	90,215	$	110,002	$	97,847

Geographic Information

The Company attributes foreign sales based on the location of the customer purchasing the product. The table below summarizes net sales and long-lived assets for the years ended December 31, 2020, 2019 and 2018 for the following countries: the U.S., Canada, China, and Germany. No other individual foreign country’s net sales or long-lived assets are material to the Company.

	United  States			Canada			China			Germany			All Other			Total
	(In thousands, except percentages)
Year ended December 31, 2020
Revenues	$	1,015,340		$	119,700		$	111,835		$	91,187		$	524,654		$	1,862,716
Percent of total revenues	55		%	6		%	6		%	5		%	28		%	100		%
Long-lived assets	$	163,731		$	32,063		$	44,824		$	63,100		$	114,286		$	418,004
Year ended December 31, 2019
Revenues	$	1,167,033		$	162,975		$	109,522		$	92,913		$	598,835		$	2,131,278
Percent of total revenues	55		%	8		%	5		%	4		%	28		%	100		%
Long-lived assets	$	152,214		$	16,452		$	40,247		$	48,272		$	101,179		$	358,364
Year ended December 31, 2018
Revenues	$	1,206,401		$	166,669		$	107,582		$	100,691		$	584,359		$	2,165,702
Percent of total revenues	56		%	8		%	5		%	4		%	27		%	100		%
Long-lived assets	$	170,368		$	13,352		$	36,989		$	39,724		$	63,776		$	324,209

Major Customer

Revenues generated in both the Enterprise Solutions and Industrial Solutions segments from sales to WESCO were approximately $271.6 million (15% of revenues), $328.2 million (15% of revenues), and $361.7 million (17% of revenues) for 2020, 2019, and 2018, respectively. At December 31, 2020, we had $17.5 million in accounts receivable outstanding from WESCO, which represented approximately 6% of our total accounts receivable outstanding at December 31, 2020.