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		4		-		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		8		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.