Operating Segments and Geographic Information | Operating Segments and Geographic Information We are organized around two global business platforms: Enterprise Solutions and Industrial Solutions. Each of the global business platforms represents a reportable segment. Effective January 1, 2020, we transferred our West Penn Wire business and multi-conductor product lines from the Enterprise Solutions segment to the Industrial Solutions segment as a result of a shift in responsibilities among the segments. We have recast the prior period segment information to conform to the change in the composition of reportable segments. The segments design, manufacture, and market a portfolio of signal transmission solutions for mission critical applications used in a variety of end markets. We sell the products manufactured by our segments 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. Operating Segment Information Enterprise Solutions Years ended December 31, 2020 2019 2018 (In thousands) Segment revenues $ 872,415 $ 946,041 $ 957,501 Affiliate revenues 1,289 4,162 6,105 Segment EBITDA 99,333 126,925 156,790 Depreciation expense 20,655 19,771 18,490 Amortization of intangibles 21,662 22,324 21,076 Amortization of software development intangible assets 245 175 71 Severance, restructuring, and acquisition integration costs 7,720 10,808 14,863 Purchase accounting effects of acquisitions 125 592 1,690 Acquisition of property, plant and equipment 25,223 42,289 42,624 Segment assets 462,615 487,125 430,128 Industrial Solutions Years ended December 31, 2020 2019 2018 (In thousands) Segment revenues $ 990,301 $ 1,185,237 $ 1,208,201 Affiliate revenues 60 11 80 Segment EBITDA 147,626 226,110 237,870 Depreciation expense 21,815 20,638 19,819 Amortization of intangibles 42,733 52,285 54,064 Amortization of software development intangible assets 1,576 350 8 Severance, restructuring, and acquisition integration costs 4,538 15,736 7,762 Acquisition of property, plant and equipment 44,675 35,189 29,529 Segment assets 522,637 504,482 508,843 Total Segments Years ended December 31, 2020 2019 2018 (In thousands) Segment revenues $ 1,862,716 $ 2,131,278 $ 2,165,702 Affiliate revenues 1,349 4,173 6,185 Segment EBITDA 246,959 353,035 394,660 Depreciation expense 42,470 40,409 38,309 Amortization of intangibles 64,395 74,609 75,140 Amortization of software development intangible assets 1,821 525 79 Severance, restructuring, and acquisition integration costs 12,258 26,544 22,625 Purchase accounting effects of acquisitions 125 592 1,690 Acquisition of property, plant and equipment 69,898 77,478 72,153 Segment assets 985,252 991,607 938,971 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. Years Ended December 31, 2020 2019 2018 (In thousands) Total Segment Revenues $ 1,862,716 $ 2,131,278 $ 2,165,702 Deferred revenue adjustments — — — Consolidated Revenues $ 1,862,716 $ 2,131,278 $ 2,165,702 Total Segment EBITDA $ 246,959 $ 353,035 $ 394,660 Amortization of intangibles (64,395) (74,609) (75,140) Depreciation expense (42,470) (40,409) (38,309) Severance, restructuring, and acquisition integration costs (1) (12,258) (26,544) (22,625) Purchase accounting effects related to acquisitions (2) (125) (592) (1,690) Amortization of software development intangible assets (1,821) (525) (79) Loss on sale of assets (3) — — (94) Costs related to patent litigation — — (2,634) Gain from patent litigation — — 62,141 Eliminations (480) (3,149) (2,222) Consolidated operating income 125,410 207,207 314,008 Interest expense, net (58,888) (55,814) (60,839) Non-operating pension benefit (cost) (395) 1,017 (99) Loss on debt extinguishment — — (22,990) Consolidated income from continuing operations before taxes $ 66,127 $ 152,410 $ 230,080 (1) See Note 15, Severance, Restructuring, and Acquisition Integration Activities, for details . (2) In 2020 and 2019, we collectively recognized $0.1 million and $0.6 million, respectively, of cost of sales related to purchase accounting adjustments of acquired inventory to fair value for both our SPC and Opterna acquisitions. In 2018, we made a $1.7 million adjustment to increase the earn-out liability associated with an acquisition. (3) In 2018, we recognized a $0.1 million loss on sale of assets for the sale of our MCS business and Hirschmann JV. See Note 2. Below are reconciliations of other segment measures to the consolidated totals. Years Ended December 31, 2020 2019 2018 (In thousands) Total segment assets $ 985,252 $ 991,607 $ 938,971 Cash and cash equivalents 501,994 407,480 407,454 Goodwill 1,251,938 1,243,669 1,206,877 Intangible assets, less accumulated amortization 287,071 339,505 359,931 Deferred income taxes 29,536 25,216 26,459 Corporate assets 83,943 24,147 16,786 Assets of discontinued operations — 375,135 822,843 Total assets $ 3,139,734 $ 3,406,759 $ 3,779,321 Total segment acquisition of property, plant and equipment $ 69,898 $ 77,478 $ 72,153 Discontinued operations acquisition of property, plant and equipment 16,712 29,414 22,681 Corporate acquisition of property, plant and equipment 3,605 3,110 3,013 Total acquisition of property, plant and equipment $ 90,215 $ 110,002 $ 97,847 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, 2020, 2019 and 2018 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 Canada China Germany All Other Total (In thousands, except percentages) Year ended December 31, 2020 Revenues $ 1,015,340 $ 119,700 $ 111,835 $ 91,187 $ 524,654 $ 1,862,716 Percent of total revenues 55 % 6 % 6 % 5 % 28 % 100 % Long-lived assets $ 163,731 $ 32,063 $ 44,824 $ 63,100 $ 114,286 $ 418,004 Year ended December 31, 2019 Revenues $ 1,167,033 $ 162,975 $ 109,522 $ 92,913 $ 598,835 $ 2,131,278 Percent of total revenues 55 % 8 % 5 % 4 % 28 % 100 % Long-lived assets $ 152,214 $ 16,452 $ 40,247 $ 48,272 $ 101,179 $ 358,364 Year ended December 31, 2018 Revenues $ 1,206,401 $ 166,669 $ 107,582 $ 100,691 $ 584,359 $ 2,165,702 Percent of total revenues 56 % 8 % 5 % 4 % 27 % 100 % Long-lived assets $ 170,368 $ 13,352 $ 36,989 $ 39,724 $ 63,776 $ 324,209 Major Customer Revenues generated in both the Enterprise Solutions and Industrial Solutions segments from sales to WESCO were approximately $271.6 million (15% of revenues), $328.2 million (15% of revenues), and $361.7 million (17% of revenues) for 2020, 2019, and 2018, respectively. At December 31, 2020, we had $17.5 million in accounts receivable outstanding from WESCO, which represented approximately 6% of our total accounts receivable outstanding at December 31, 2020. |