Operating Segments

9 Months Ended

Sep. 27, 2015

Segment Reporting [Abstract]

Operating Segments

Note 3:  Operating Segments

We are organized around five global business platforms: Broadcast, Enterprise Connectivity, Industrial Connectivity, Industrial IT, and Network Security. The Network Security platform was formed with our acquisition of Tripwire in January 2015. Each of the global business platforms represents a reportable segment.

Effective January 1, 2015, 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. The prior period presentation has been updated accordingly.

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   Connectivity   Solutions		Industrial   Connectivity   Solutions		Industrial   IT Solutions		Network Security   Solutions		Total   Segments
	(In thousands)
As of and for the three months ended September 27, 2015
Segment revenues	$	228,097	$	113,773	$	147,702	$	59,184	$	41,359	$	590,115
Affiliate revenues		338		1,337		355		37		-		2,067
Segment EBITDA		34,880		18,232		23,225		10,466		11,240		98,043
Depreciation expense		4,261		2,922		2,810		570		1,255		11,818
Amortization of intangibles		12,647		136		799		1,480		10,607		25,669
Severance, restructuring, and acquisition integration costs		13,722		192		118		54		57		14,143
Deferred gross profit adjustments		419		-		-		-		10,909		11,328
Segment assets		401,405		211,114		250,622		61,441		41,520		966,102
As of and for the three months ended September 28, 2014
Segment revenues	$	256,587	$	115,349	$	171,105	$	70,090	$	-	$	613,131
Affiliate revenues		318		2,147		397		10		-		2,872
Segment EBITDA		38,450		17,730		26,487		13,618		-		96,285
Depreciation expense		3,856		3,134		3,150		606		-		10,746
Amortization of intangibles		13,020		162		266		1,755		-		15,203
Severance, restructuring, and acquisition integration costs		5,794		226		2,106		1,032		-		9,158
Purchase accounting effects of acquisitions		-		-		-		858		-		858
Deferred gross profit adjustments		2,357		-		-		-		-		2,357
Segment assets		433,063		223,726		270,078		64,757		-		991,624
As of and for the nine months ended September 27, 2015
Segment revenues	$	661,098	$	335,803	$	461,549	$	181,527	$	118,102	$	1,758,079
Affiliate revenues		1,059		4,287		1,086		68		8		6,508
Segment EBITDA		95,726		53,214		76,078		31,731		29,913		286,662
Depreciation expense		12,819		8,871		8,530		1,713		3,118		35,051
Amortization of intangibles		38,256		409		2,429		4,369		32,627		78,090
Severance, restructuring, and acquisition integration costs		28,543		832		3,054		2		1,102		33,533
Purchase accounting effects of acquisitions		-		-		267		-		9,155		9,422
Deferred gross profit adjustments		2,789		-		-		-		43,637		46,426
Segment assets		401,405		211,114		250,622		61,441		41,520		966,102
As of and for the nine months ended September 28, 2014
Segment revenues	$	675,350	$	345,015	$	508,667	$	177,460	$	-	$	1,706,492
Affiliate revenues		601		5,852		2,237		18		-		8,708
Segment EBITDA		95,939		51,572		79,631		32,012		-		259,154
Depreciation expense		11,346		10,633		7,992		1,672		-		31,643
Amortization of intangibles		37,963		497		802		3,477		-		42,739
Severance, restructuring, and acquisition integration costs		34,761		2,047		10,250		1,751		-		48,809
Purchase accounting effects of acquisitions		7,458		286		533		1,596		-		9,873
Deferred gross profit adjustments		6,722		-		-		-		-		6,722
Segment assets		433,063		223,726		270,078		64,757		-		991,624

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.

	Three Months Ended				Nine Months Ended
	September 27, 2015		September 28, 2014		September 27, 2015		September 28, 2014
	(In thousands)				(In thousands)
Total Segment Revenues	$	590,115	$	613,131	$	1,758,079	$	1,706,492
Deferred revenue adjustments (1)		(10,849)		(2,357)		(46,101)		(7,137)
Consolidated Revenues	$	579,266	$	610,774	$	1,711,978	$	1,699,355
Total Segment EBITDA	$	98,043	$	96,285	$	286,662	$	259,154
Amortization of intangibles		(25,669)		(15,203)		(78,090)		(42,739)
Deferred gross profit adjustments (1)		(11,328)		(2,357)		(46,426)		(6,722)
Severance, restructuring, and acquisition integration costs (2)		(14,143)		(9,158)		(33,533)		(48,809)
Depreciation expense		(11,818)		(10,746)		(35,051)		(31,643)
Purchase accounting effects related to acquisitions (3)		-		(858)		(9,422)		(9,873)
Income from equity method investment		348		1,030		1,459		3,240
Eliminations		(931)		(982)		(2,056)		(2,760)
Consolidated operating income		34,502		58,011		83,543		119,848
Interest expense, net		(25,416)		(21,497)		(74,031)		(58,259)
Consolidated income from continuing operations before taxes	$	9,086	$	36,514	$	9,512	$	61,589

(1) For the three and nine months ended September 27, 2015, both our consolidated revenues and gross profit were negatively impacted by the reduction of the acquired deferred revenue balance to fair value associated with our acquisition of Tripwire. See Note 2, Acquisitions.

(2) See Note 7, Severance, Restructuring, and Acquisition Integration Activities, for details.

(3) For the nine months ended September 27, 2015, we recognized $9.2 million of compensation expense related to the accelerated vesting of acquiree stock based compensation awards associated with our acquisition of Tripwire. In addition, we recognized $0.3 million of cost of sales related to the adjustment of acquired inventory to fair value related to our acquisition of Coast. For the nine months ended September 28, 2014, we recognized $8.3 million of cost of sales related to the adjustment of acquired inventory to fair value for our acquisitions of Grass Valley and ProSoft. See Note 2, Acquisitions.