Operating Segments

3 Months Ended

Apr. 03, 2016

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. Each of the global business platforms represents a reportable segment.

To capitalize on the adoption of IP technology and accelerate our penetration of the commercial audio-video market, we transferred responsibility of audio-video cable and connectors from our Broadcast platform to our Enterprise Connectivity platform effective January 1, 2016. We have revised the prior period segment information to conform to the change in the composition of these reportable segments. This transfer had no impact to our reporting units for purposes of goodwill impairment testing.

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   Connectivity   Solutions		Industrial   Connectivity   Solutions		Industrial     IT Solutions		Network Security     Solutions		Total     Segments
	(In thousands)
As of and for the three months ended April 3, 2016
Segment revenues	$	171,272	$	135,892	$	141,091	$	53,882	$	41,663	$	543,800
Affiliate revenues		424		1,699		182		28		-		2,333
Segment EBITDA		23,267		23,736		22,987		8,609		11,467		90,066
Depreciation expense		3,962		3,389		2,718		524		1,070		11,663
Amortization of intangibles		12,931		429		591		1,510		10,071		25,532
Severance, restructuring, and acquisition integration costs		4,378		500		865		2,665		-		8,408
Purchase accounting effects of acquisitions		195		-		-		-		-		195
Deferred gross profit adjustments		614		-		-		-		1,689		2,303
Segment assets		332,009		233,422		248,971		59,528		45,923		919,853
As of and for the three months ended March 29, 2015
Segment revenues	$	176,500	$	141,781	$	152,972	$	61,073	$	37,125	$	569,451
Affiliate revenues		102		1,870		323		21		8		2,324
Segment EBITDA		23,127		20,009		24,173		11,087		9,901		88,297
Depreciation expense		3,973		3,214		2,851		559		944		11,541
Amortization of intangibles		12,426		432		823		1,410		11,413		26,504
Severance, restructuring, and acquisition integration costs		11,527		568		1,773		(52)		667		14,483
Purchase accounting effects of acquisitions		-		-		267		-		9,155		9,422
Deferred gross profit adjustments		3,294		-		-		-		18,364		21,658
Segment assets		367,766		260,529		257,059		62,559		43,497		991,410

The following table is a reconciliation of the total of the reportable segments’ revenues and EBITDA to consolidated revenues and consolidated income (loss) before taxes, respectively.

	Three Months Ended
	April 3, 2016		March 29, 2015
	(In thousands)
Total Segment Revenues	$	543,800	$	569,451
Deferred revenue adjustments (1)		(2,303)		(22,494)
Consolidated Revenues	$	541,497	$	546,957
Total Segment EBITDA	$	90,066	$	88,297
Amortization of intangibles		(25,532)		(26,504)
Deferred gross profit adjustments (1)		(2,303)		(21,658)
Severance, restructuring, and acquisition integration costs (2)		(8,408)		(14,483)
Depreciation expense		(11,663)		(11,541)
Purchase accounting effects related to acquisitions (3)		(195)		(9,422)
Income (loss) from equity method investment		(170)		768
Eliminations		(831)		(559)
Consolidated operating income		40,964		4,898
Interest expense, net		(24,396)		(23,846)
Consolidated income (loss) before taxes	$	16,568	$	(18,948)

(1) Represents the negative impact of the adjustment of deferred revenue to fair value as required in purchase accounting for the acquisitions of Tripwire and Grass Valley.

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

(3) For the three months ended March 29, 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 both periods, we recognized cost of sales related to the adjustments of acquired inventory to fair value.