Operating Segments and Geographic Information | Operating Segments and Geographic Information Effective January 1, 2018, we changed our organizational structure and, as a result, now are reporting two segments. The segments formerly known as Broadcast Solutions and Enterprise Solutions now are presented as the Enterprise Solutions segment, and the segments formerly known as Industrial Solutions and Network Solutions now are presented as the Industrial Solutions segment. The reorganization allows us to further accelerate progress in key strategic areas, and the segment consolidation properly aligns our external reporting with the way the businesses are now managed. We have recast the prior period segment information to conform to the change in the composition of these reportable segments. This change had no impact to our reporting units for purposes of goodwill impairment testing. We have determined that each of the global business platforms represents a reportable segment. 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. 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. The results of our former equity method investment in the Hirschmann JV, which we sold effective December 31, 2017, were not included in the corporate expense allocation. Operating Segment Information Enterprise Solutions Years ended December 31, 2018 2017 2016 (In thousands) Segment revenues $ 1,522,178 $ 1,356,305 $ 1,372,941 Affiliate revenues 6,085 5,091 2,799 Segment EBITDA 267,656 216,558 239,978 Depreciation expense 28,861 26,272 29,455 Amortization of intangibles 45,944 51,054 48,966 Amortization of software development intangible assets 2,180 56 — Severance, restructuring, and acquisition integration costs 57,563 29,043 18,561 Purchase accounting effects of acquisitions 3,497 6,133 (2,079 ) Deferred revenue adjustments 6,612 — 1,774 Patent settlement — — (5,554 ) Acquisition of property, plant and equipment 65,619 49,440 38,392 Segment assets 761,309 687,914 571,960 Industrial Solutions Years ended December 31, 2018 2017 2016 (In thousands) Segment revenues $ 1,069,802 $ 1,032,338 $ 984,864 Affiliate revenues 81 67 71 Segment EBITDA 207,724 214,190 193,811 Depreciation expense 18,754 19,325 17,753 Amortization of intangibles 52,885 52,943 49,419 Amortization of software development intangible assets 8 — — Severance, restructuring, and acquisition integration costs 11,050 13,747 12,579 Deferred revenue adjustments — — 4,913 Acquisition of property, plant and equipment 29,215 13,319 15,190 Segment assets 458,801 458,481 342,038 Total Segments Years ended December 31, 2018 2017 2016 (In thousands) Segment revenues $ 2,591,980 $ 2,388,643 $ 2,357,805 Affiliate revenues 6,166 5,158 2,870 Segment EBITDA 475,380 430,748 433,789 Depreciation expense 47,615 45,597 47,208 Amortization of intangibles 98,829 103,997 98,385 Amortization of software development intangible assets 2,188 56 — Severance, restructuring, and acquisition integration costs 68,613 42,790 31,140 Purchase accounting effects of acquisitions 3,497 6,133 (2,079 ) Deferred revenue adjustments 6,612 — 6,687 Patent settlement — — (5,554 ) Acquisition of property, plant and equipment 94,834 62,759 53,582 Segment assets 1,220,110 1,146,395 913,998 The following table is a reconciliation of the total of the reportable segments’ Revenues and EBITDA to consolidated revenues and consolidated income before taxes, respectively. Years Ended December 31, 2018 2017 2016 (In thousands) Total Segment Revenues $ 2,591,980 $ 2,388,643 $ 2,357,805 Deferred revenue adjustments (1) (6,612 ) — (6,687 ) Patent settlement (2) — — 5,554 Consolidated Revenues $ 2,585,368 $ 2,388,643 $ 2,356,672 Total Segment EBITDA $ 475,380 $ 430,748 $ 433,789 Amortization of intangibles (98,829 ) (103,997 ) (98,385 ) Severance, restructuring, and acquisition integration costs (3) (68,613 ) (42,790 ) (31,140 ) Depreciation expense (47,615 ) (45,597 ) (47,208 ) Deferred revenue adjustments (1) (6,612 ) — (6,687 ) Purchase accounting effects related to acquisitions (4) (3,497 ) (6,133 ) 2,079 Costs related to patent litigation (2,634 ) — — Amortization of software development intangible assets (2,188 ) (56 ) — Loss on sale of assets (5) (94 ) (1,013 ) — Impairment of assets held for sale (5) — — (23,931 ) Patent settlement (2) — — 5,554 Income from equity method investment — 7,502 1,793 Gain from patent litigation 62,141 — — Eliminations (2,218 ) (3,260 ) (3,781 ) Consolidated operating income 305,221 235,404 232,083 Interest expense, net (61,559 ) (82,901 ) (95,050 ) Non-operating pension cost (342 ) (714 ) (8,230 ) Loss on debt extinguishment (22,990 ) (52,441 ) (2,342 ) Consolidated income before taxes $ 220,330 $ 99,348 $ 126,461 (1) Our segment results include revenues that would have been recorded by acquired businesses had they remained as independent entities. Our consolidated results do not include these revenues due to the purchase accounting effect of recording deferred revenue at fair value. See Note 4, Acquisitions , for details. (2) Both our consolidated revenues and gross profit were positively impacted by royalty revenues received during 2016 that related to years prior to 2016 as a result of a patent settlement. (3) See Note 12, Severance, Restructuring, and Acquisition Integration Activities, for details . (4) In 2018, we recognized $3.5 million of cost of sales related to purchase accounting adjustments, most of which was for the adjustment of acquired inventory to fair value for our SAM and NT2 acquisitions. In 2017, we recognized $6.1 million of cost of sales related to the adjustment of acquired inventory to fair value for our Thinklogical acquisition. In 2016, we made a $3.2 million adjustment to reduce the earn-out liability associated with the M2FX acquisition. This adjustment was partially offset by $0.8 million and $0.2 million of cost of sales related to the adjustment of acquired inventory to fair value related to our Enterprise segment and M2FX acquisition, respectively. (5) In 2018, 2017, and 2016, we recognized a $0.1 million loss on sale of assets, $1.0 million loss on sale of assets, and $23.9 million impairment of assets held for sale, respectively, for the sale of our MCS business and Hirschmann JV. Below are reconciliations of other segment measures to the consolidated totals. Years Ended December 31, 2018 2017 2016 (In thousands) Total segment assets $ 1,220,110 $ 1,146,395 $ 913,998 Cash and cash equivalents 420,610 561,108 848,116 Goodwill 1,557,653 1,478,257 1,385,995 Intangible assets, less accumulated amortization 511,093 545,207 560,082 Deferred income taxes 56,018 42,549 33,706 Corporate assets 13,837 67,097 64,906 Total assets $ 3,779,321 $ 3,840,613 $ 3,806,803 Total segment acquisition of property, plant and equipment $ 94,834 $ 62,759 $ 53,582 Corporate acquisition of property, plant and equipment 3,013 1,502 392 Total acquisition of property, plant and equipment $ 97,847 $ 64,261 $ 53,974 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, 2018 , 2017 and 2016 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, 2018 Revenues $ 1,324,653 $ 174,727 $ 132,544 $ 117,598 $ 835,846 $ 2,585,368 Percent of total revenues 51 % 7 % 5 % 5 % 32 % 100 % Long-lived assets $ 189,211 $ 32,312 $ 37,227 $ 39,870 $ 97,213 $ 395,833 Year ended December 31, 2017 Revenues $ 1,265,455 $ 167,605 $ 121,600 $ 113,990 $ 719,993 $ 2,388,643 Percent of total revenues 53 % 7 % 5 % 5 % 30 % 100 % Long-lived assets $ 231,938 $ 33,806 $ 34,774 $ 38,029 $ 63,982 $ 402,529 Year ended December 31, 2016 Revenues $ 1,283,925 $ 159,985 $ 114,605 $ 104,214 $ 693,943 $ 2,356,672 Percent of total revenues 55 % 7 % 5 % 4 % 29 % 100 % Long-lived assets $ 193,263 $ 31,278 $ 30,487 $ 32,386 $ 60,654 $ 348,068 Major Customer Revenues generated from sales to the distributor Anixter International Inc., in both the Enterprise Solutions and Industrial Solutions segments, were $309.0 million ( 12% of revenues), $292.2 million ( 12% of revenues), and $286.2 million ( 12% of revenues) for 2018 , 2017 , and 2016 , respectively. At December 31, 2018 , we had $37.0 million in accounts receivable outstanding from Anixter International Inc. This represented approximately 8% of our total accounts receivable outstanding at December 31, 2018 . |