Operating Segments and Related Information

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Operating Segments and Related Information

Operating Segments and Related Information

Operating Segments

The Company has six reportable operating segments as follows:

Surveillance

The Surveillance segment develops and manufactures enhanced imaging and recognition solutions for a wide variety of military, law enforcement, public safety, and other government customers around the world for the protection of borders, troops, and public welfare. Offerings include airborne, land, maritime, and man-portable multi-spectrum imaging systems, radars, lasers, imaging components, integrated multi-sensor system platforms, and services related to these systems.

Instruments

The Instruments segment develops and manufactures devices that image, measure, and assess thermal energy, gases, and other environmental elements for industrial, commercial, and scientific applications. Products include thermal imaging cameras, gas detection cameras, firefighting cameras, process automation cameras, and environmental test and measurement devices.

Security

The Security segment develops and manufactures cameras, video recording systems, and video management systems for use in commercial, critical infrastructure, and home security applications. Products include thermal and visible-spectrum cameras, digital and networkedvideo recorders, and related software and accessories that enable the efficient and effective safeguarding of assets at all hours of the day and through adverse weather conditions.

OEM & Emerging Markets

The OEM & Emerging Markets segment develops and manufactures thermal and visible-spectrum imaging camera cores and components that are utilized by third parties to create thermal, industrial, and other types of imaging systems. The segment also develops and manufactures intelligent traffic monitoring and signal control systems, imaging payloads for Unmanned Aerial Systems ("UAS"), and thermal imaging solutions for use by consumers in the smartphone and mobile devices markets.

Maritime

The Maritime segment develops and manufactures electronics and imaging instruments for the recreational and commercial maritime market. The segment provides a full suite of networked electronic systems including multi-function helm displays, navigational instruments, autopilots, radars, sonar systems, thermal and visible imaging systems, and communications equipment for boats of all sizes.

Detection

The Detection segment develops and manufactures sensor instruments and integrated platform solutions for the detection, identification, and suppression of chemical, biological, radiological, nuclear, and explosives ("CBRNE") threats for military force protection, homeland security, and commercial applications.

The Company’s chief operating decision maker ("CODM"), its Chief Executive Officer, evaluates each of its segment’s performance and allocates resources based on revenue and segment operating income. Intersegment revenues are recorded at cost and are eliminated in consolidation. The Company and each of its segments employ consistent accounting policies.

The following tables present revenue, operating income, and assets for the six segments. Operating income as reviewed by the CODM is revenue less cost of goods sold and operating expense, excluding general corporate expenses, acquisition costs, amortization of purchased intangible assets, amortization of acquisition-related inventory step-up, costs associated with the SkyWatch product remediation, restructuring charges, and executive transition costs. Accounts receivable and inventories for operating segments are regularly reviewed by management and are reported below as segment assets. All remaining assets, liabilities, capital expenditures, and depreciation are managed on a Company-wide basis.

Note 17.        Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

Operating segment information is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue—External Customers:
Surveillance	$	129,209		$	113,440		$	247,938		$	237,591
Instruments	85,969			78,068			163,824			157,487
Security	49,709			63,380			94,786			110,441
OEM & Emerging Markets	87,447			56,980			172,212			104,825
Maritime	55,102			55,163			103,653			106,883
Detection	26,688			35,698			58,525			64,974
	$	434,124		$	402,729		$	840,938		$	782,201
Revenue—Intersegments:
Surveillance	$	3,331		$	4,755		$	8,087		$	8,979
Instruments	7,325			1,213			13,114			2,788
Security	3,640			3,836			6,765			6,308
OEM & Emerging Markets	9,361			8,833			18,530			17,010
Maritime	621			1,458			1,298			2,072
Detection	1			31			1			31
Eliminations	(24,279		)	(20,126		)	(47,795		)	(37,188		)
	$	—		$	—		$	—		$	—
Segment operating income:
Surveillance	$	33,007		$	26,595		$	59,372		$	62,460
Instruments	23,627			19,695			44,773			39,676
Security	1,288			4,410			1,603			2,241
OEM & Emerging Markets	26,340			16,757			50,697			27,443
Maritime	9,390			7,521			14,594			13,328
Detection	7,024			10,320			15,761			18,557
	$	100,676		$	85,298		$	186,800		$	163,705

A reconciliation of the Company's consolidated segment operating income to consolidated earnings before income taxes is as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Consolidated segment operating income	$	100,676		$	85,298		$	186,800		$	163,705
Unallocated corporate expenses	(25,017		)	(16,049		)	(43,240		)	(32,674		)
Amortization of purchased intangible assets	(7,016		)	(3,927		)	(13,751		)	(8,134		)
Amortization of acquisition-related inventory step-up	—			—			(1,992		)	—
SkyWatch product quality accrual	(2,000		)	—			(2,000		)	—
Restructuring charges	(13		)	(110		)	(101		)	(308		)
Consolidated earnings from operations	66,630			65,212			125,716			122,589
Interest and non-operating expense, net	(3,090		)	(5,359		)	(6,612		)	(7,116		)
Consolidated earnings before income taxes	$	63,540		$	59,853		$	119,104		$	115,473

Unallocated corporate expenses include general corporate expenses, acquisition related costs and executive transition costs.

Note 17.        Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

	June 30,		December 31,
	2017		2016
Segment assets (accounts receivable, net and inventories):
Surveillance	$	278,535	$	283,324
Instruments	125,942		114,681
Security	83,493		93,174
OEM & Emerging Markets	141,568		144,862
Maritime	73,963		61,494
Detection	33,836		25,856
	$	737,337	$	723,391

	June 30,		December 31,
	2017		2016
Segment goodwill:
Surveillance	$	258,480	$	152,383
Instruments	151,799		147,595
Security	106,785		102,983
OEM & Emerging Markets	254,592		252,647
Maritime	100,724		97,860
Detection	47,984		47,938
	$	920,364	$	801,406

Revenue and Long-Lived Assets by Geographic Area

Information related to revenue by significant geographical location, determined by the end customer, is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
United States	$	224,025	$	224,305	$	445,856	$	418,589
Europe	91,041		84,297		174,313		168,707
Asia	59,721		47,413		113,645		91,237
Middle East/Africa	35,248		28,629		60,390		56,341
Canada/Latin America	24,089		18,085		46,734		47,327
	$	434,124	$	402,729	$	840,938	$	782,201

Long-lived assets by significant geographic locations are as follows (in thousands):

			December 31, 2016
	June 30, 2017		(as reclassified)
United States	$	689,044	$	676,007
Europe	508,272		490,089
Canada/Latin America	225,100		235,921
Other foreign	8,164		7,789
	$	1,430,580	$	1,409,806

Note 17.        Operating Segments and Related Information - (Continued)

Operating Segments - (Continued)

Major Customers

Revenue derived from major customers is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
United States government	$	111,824	$	100,106	$	228,059	$	185,742