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Operating Segments
6 Months Ended
Jul. 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 July 3, 2016

                                   

Segment revenues

     $     193,521         $     160,401         $     147,808          $ 62,510         $       39,141         $ 603,381     

Affiliate revenues

    173         1,328         214                       1,719     

Segment EBITDA

    29,505         29,575         27,064         12,676         9,515         108,335     

Depreciation expense

    4,061         3,429         2,709         660         1,128         11,987     

Amortization expense

    13,420         432         601         1,506         10,304         26,263     

Severance, restructuring, and acquisition integration costs

    1,319         1,207         2,371         943         29         5,869     

Deferred gross profit adjustments

    494                              1,256         1,750     

Segment assets

    329,250         253,424         255,250         65,603         41,573         945,100     

As of and for the three months ended June 28, 2015

                                   

Segment revenues

     $ 174,923         $ 161,827         $ 160,875          $ 61,270         $ 39,618         $ 598,513     

Affiliate revenues

           1,708         408         10                2,126     

Segment EBITDA

    22,878         29,792         28,680         10,178         8,772         100,300     

Depreciation expense

    4,140         3,180         2,869         584         919         11,692     

Amortization expense

    12,595         429         807         1,479         10,607         25,917     

Severance, restructuring, and acquisition integration costs

    3,283         83         1,163                378         4,907     

Deferred gross profit adjustments

    (924)                              14,364         13,440     

Segment assets

    352,848         279,360         267,448         63,599         42,241         1,005,496     

As of and for the six months ended July 3, 2016

                                   

Segment revenues

     $ 364,793         $ 296,293         $ 288,899          $     116,392         $ 80,804         $ 1,147,181     

Affiliate revenues

    597         3,027         396         32                4,052     

Segment EBITDA

    52,772         53,311         50,051         21,285         20,982         198,401     

Depreciation expense

    8,023         6,818         5,427         1,184         2,198         23,650     

Amortization expense

    26,351         861         1,192         3,016         20,375         51,795     

Severance, restructuring, and acquisition integration costs

    5,697         1,707         3,236         3,608         29         14,277     

Purchase accounting effects of acquisitions

    195                                     195     

Deferred gross profit adjustments

    1,108                              2,945         4,053     

Segment assets

    329,250         253,424         255,250         65,603         41,573         945,100     

As of and for the six months ended June 28, 2015

                                   

Segment revenues

     $ 351,423         $ 303,608         $ 313,847          $ 122,343         $ 76,743         $   1,167,964     

Affiliate revenues

           3,680         731         31                4,450     

Segment EBITDA

    46,005         49,801         52,853         21,265         18,673         188,597     

Depreciation expense

    8,113         6,394         5,720         1,143         1,863         23,233     

Amortization expense

    25,021         861         1,630         2,889         22,020         52,421     

Severance, restructuring, and acquisition integration costs

    14,810         651         2,936         (52)         1,045         19,390     

Purchase accounting effects of acquisitions

                  267                9,155         9,422     

Deferred gross profit adjustments

    2,370                              32,728         35,098     

Segment assets

    352,848         279,360         267,448         63,599         42,241         1,005,496     

 

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      Six Months Ended  
        July 3, 2016           June 28, 2015           July 3, 2016           June 28, 2015    
     (In thousands)      (In thousands)  

Total Segment Revenues

     $         603,381           $         598,513           $       1,147,181           $       1,167,964     

Deferred revenue adjustments (1)

     (1,750)          (12,758)          (4,053)          (35,252)    
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated Revenues

      $ 601,631           $ 585,755           $ 1,143,128           $ 1,132,712    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Segment EBITDA

     $ 108,335           $ 100,300           $ 198,401           $ 188,597     

Amortization of intangibles

     (26,263)          (25,917)          (51,795)          (52,421)    

Deferred gross profit adjustments (1)

     (1,750)          (13,440)          (4,053)          (35,098)    

Severance, restructuring, and acquisition integration costs (2)

     (5,869)          (4,907)          (14,277)          (19,390)    

Depreciation expense

     (11,987)          (11,692)          (23,650)          (23,233)    

Purchase accounting effects related to acquisitions (3)

     -             -             (195)          (9,422)    

Income from equity method investment

     661           343           491           1,111     

Eliminations

     (886)          (544)          (1,717)          (1,103)    
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated operating income

     62,241           44,143           103,205           49,041     

Interest expense, net

     (24,049)          (24,769)          (48,445)          (48,615)    
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated income from continuing operations before taxes

     $ 38,192           $ 19,374           $ 54,760           $ 426     
  

 

 

    

 

 

    

 

 

    

 

 

 

(1) For both the three and six months ended July 3, 2016 and June 28, 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 2015 acquisition of Tripwire.

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

(3)  For the six months ended July 3, 2016, we recognized $0.2 million of cost of sales related to the adjustment of acquired inventory to fair value related to our acquisition of M2FX. For the six months ended June 28, 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.