Note 5: Operating Segments and Geographic Information

In 2013, we re-organized the Company around four global business platforms: Broadcast, Enterprise Connectivity, Industrial Connectivity, and Industrial IT. Previously, we were organized around geographic regions. The re-organization was executed as a result of our transformation into a global provider of comprehensive signal transmission solutions. We believe the new organization will allow us to better capitalize on market opportunities and meet customer demands. We have determined that each of the global business platforms represents a reportable segment. We have revised the prior period segment information to conform to the change in the composition of our reportable segments. The All Other segment represents the financial results of our cable operations that primarily conducted business in the consumer electronics end market, which we sold in December 2012.

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

We evaluate segment performance based on operating income, working capital, and organic growth. Operating income of the segments includes all the ongoing costs of operations, but excludes interest and income taxes. Transactions between the segments are conducted on an arms-length basis. We allocate corporate expenses to the segments for purposes of measuring segment operating income. Corporate expenses are allocated on the basis of each segment’s relative operating income prior to the allocation, adjusted for certain items including asset impairment, severance and other restructuring costs, purchase accounting effects related to acquisitions, accelerated depreciation, amortization of intangible assets, and other costs.

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.

The results of our equity method investment in Xuzhou Hirschmann Electronics Co. Ltd. (the Hirschmann JV) are analyzed separately from the results of our operating segments, and they are not included in the corporate expense allocation.

Operating Segment Information


Broadcast Solutions	Years Ended December 31,
	2014			2013			2012
				(In thousands)
External customer revenues	$	916,632		$	663,900		$	356,320
Affiliate revenues		1,381			933			691

Total revenues		918,013			664,833			357,011
Depreciation and amortization		(67,372	)		(64,420	)		(23,184	)
Operating income (loss)		4,093			15,099			(11,657	)
Total assets		430,991			294,454			272,520
Acquisition of property, plant and equipment		17,912			10,526			8,844


Enterprise Connectivity Solutions	Years Ended December 31,
	2014			2013			2012
				(In thousands)
External customer revenues	$	455,795		$	493,129		$	496,857
Affiliate revenues		8,467			9,823			6,467

Total revenues		464,262			502,952			503,324
Depreciation and amortization		(14,331	)		(12,988	)		(16,057	)
Asset impairment and loss on sale of assets		—			—			(1,468	)
Operating income		47,715			48,753			40,056
Total assets		206,377			223,073			234,882
Acquisition of property, plant and equipment		12,574			11,749			13,013


Industrial Connectivity Solutions	Years Ended December 31,
	2014			2013			2012
				(In thousands)
External customer revenues	$	682,374		$	680,643		$	670,112
Affiliate revenues		2,927			1,901			1,129

Total revenues		685,301			682,544			671,241
Depreciation and amortization		(12,318	)		(11,408	)		(10,970	)
Asset impairment and loss on sale of assets		—			—			(2,435	)
Operating income		80,435			92,562			72,366
Total assets		255,997			259,400			263,293
Acquisition of property, plant and equipment		10,053			14,496			13,077


Industrial IT Solutions	Years Ended December 31,
	2014			2013			2012
				(In thousands)
External customer revenues	$	253,464		$	231,521		$	219,679
Affiliate revenues		54			208			286

Total revenues		253,518			231,729			219,965
Depreciation and amortization		(8,141	)		(5,635	)		(4,848	)
Operating income		30,803			38,440			32,807
Total assets		67,417			56,658			54,428
Acquisition of property, plant and equipment		1,903			2,020			4,597


All Other	Years Ended December 31,
	2014		2013		2012
	(In thousands)
External customer revenues	$	—	$	—	$	97,771
Affiliate revenues		—		—		—

Total revenues		—		—		97,771
Depreciation and amortization		—		—		(2,828	)
Asset impairment and loss on sale of assets		—		—		(29,773	)
Operating income (loss)		—		1,278		(32,640	)
Total assets		—		—		—
Acquisition of property, plant and equipment		—		—		348


Total Segments	Years Ended December 31,
	2014			2013			2012
	(In thousands)
External customer revenues	$	2,308,265		$	2,069,193		$	1,840,739
Affiliate revenues		12,829			12,865			8,573

Total revenues		2,321,094			2,082,058			1,849,312
Depreciation and amortization		(102,162	)		(94,451	)		(57,887	)
Asset impairment and loss on sale of assets		—			—			(33,676	)
Operating income		163,046			196,132			100,932
Total assets		960,782			833,585			825,123
Acquisition of property, plant and equipment		42,442			38,791			39,879

Total segment operating income differs from net income reported in the Consolidated Financial Statements as follows:


	Years Ended December 31,
	2014			2013			2012
	(In thousands)
Total segment operating income	$	163,046		$	196,132		$	100,932
Income from equity method investment		3,955			8,922			9,704
Eliminations		(3,882	)		(3,792	)		(2,139	)

Total operating income		163,119			201,262			108,497
Interest expense		(82,156	)		(73,095	)		(52,038	)
Interest income		583			494			1,033
Loss on debt extinguishment		—			(1,612	)		(52,450	)
Income tax benefit (expense)		(7,114	)		(22,315	)		38,194

Income from continuing operations		74,432			104,734			43,236
Income (loss) from discontinued operations, net of tax		579			(1,421	)		16,774
Gain (loss) from disposal of discontinued operations, net of tax		(562	)		—			134,480

Net income	$	74,449		$	103,313		$	194,490

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


	Years Ended December 31,
	2014			2013			2012
	(In thousands)
Total segment assets	$	960,782		$	833,585		$	825,123
Cash and cash equivalents		741,162			613,304			395,095
Goodwill		943,374			773,048			778,708
Intangible assets, less accumulated amortization		461,292			376,976			428,273
Deferred income taxes		62,809			54,801			66,855
Income tax receivable		4,953			12,169			8,432
Corporate assets		88,455			87,870			82,097

Total assets	$	3,262,827		$	2,751,753		$	2,584,583

Total segment acquisition of property, plant and equipment	$	42,442		$	38,791		$	39,879
Corporate acquisition of property, plant and equipment		3,017			1,418			336
Discontinued operations acquisition of property, plant and equipment		—			—			795

Total acquisition of property, plant and equipment	$	45,459		$	40,209		$	41,010

Total segment depreciation and amortization	$	(102,162	)	$	(94,451	)	$	(57,887	)
Discontinued operations depreciation and amortization		—			—			(1,468	)

Total depreciation and amortization	$	(102,162	)	$	(94,451	)	$	(59,355	)

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, 2014, 2013 and 2012 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, 2014
Revenues	$	1,134,721		$	194,149		$	132,330		$	120,297		$	726,768		$	2,308,265
Percent of total revenues		49	%		8	%		6	%		5	%		32	%		100	%
Long-lived assets	$	191,728		$	29,773		$	70,574		$	40,557		$	70,727		$	403,359
Year ended December 31, 2013
Revenues	$	1,032,190		$	195,387		$	126,461		$	108,745		$	606,410		$	2,069,193
Percent of total revenues		50	%		9	%		6	%		5	%		30	%		100	%
Long-lived assets	$	170,813		$	27,458		$	76,949		$	45,702		$	59,275		$	380,197
Year ended December 31, 2012
Revenues	$	825,437		$	196,761		$	193,082		$	105,377		$	520,082		$	1,840,739
Percent of total revenues		45	%		11	%		10	%		6	%		28	%		100	%
Long-lived assets	$	164,619		$	31,610		$	72,556		$	42,411		$	59,854		$	371,050

Major Customer

Revenues generated from sales to the distributor Anixter International Inc., primarily in the Industrial Connectivity and Enterprise segments, were $290.5 million (13% of revenues), $289.9 million (14% of revenues), and $300.4 million (16% of revenues) for 2014, 2013, and 2012, respectively. At December 31, 2014, we had $37.9 million in accounts receivable outstanding from Anixter International Inc. This represented approximately 10% of our total accounts receivable outstanding at December 31, 2014.