Reportable Business Segments and International Operations

12 Months Ended

Dec. 31, 2022

Reportable Business Segments and International Operations

Reportable Business Segments and International Operations

Note 13—Reportable Business Segments and International Operations

Effective January 1, 2022, the Company aligned its businesses into three newly formed reportable business segments: (i) Harsh Environment Solutions, (ii) Communications Solutions and (iii) Interconnect and Sensor Systems. This new alignment replaced our historic reportable business segments. All businesses previously reported in the Interconnect Products and Assemblies segment have been aligned with one of the three newly formed segments. All businesses previously reported in the Cable Products and Solutions segment have been aligned with our newly formed Communications Solutions segment. This segment structure reflects (i) the manner in which the Chief Operating Decision Maker (“CODM”), who is the Company’s Chief Executive Officer, regularly assesses information for decision-making purposes, including the allocation of resources, and (ii) how the Company operates its businesses, assesses performance, and communicates results and strategy, among other items, to the Board and its stockholders. In conjunction with the new alignment of our business, the Company appointed three new segment managers to lead their

respective reportable business segments, each reporting directly to the Chief Executive Officer. The Company organizes its reportable business segments based on the manner in which management evaluates the performance of the Company, combined with the nature of the individual business activities and the product-based solutions offered.

The following are the Company’s three reportable business segments:

●Harsh Environment Solutions – the Harsh Environment Solutions segment designs, manufactures and markets a broad range of ruggedized interconnect products, including connectors and interconnect systems, printed circuits and printed circuit assemblies and other products for use in the industrial, military, commercial aerospace, automotive, mobile networks and information technology and data communications end markets.

●Communications Solutions – the Communications Solutions segment designs, manufactures and markets a broad range of connector and interconnect systems, including high speed, radio frequency, power, fiber optic and other products, together with antennas, for use in the information technology and data communications, mobile devices, industrial, mobile networks, broadband communications, automotive, commercial aerospace and military end markets.

●Interconnect and Sensor Systems – the Interconnect and Sensor Systems segment designs, manufactures and markets a broad range of sensors, sensor-based systems, connectors and value-add interconnect systems used in the automotive, industrial, information technology and data communications, mobile networks, military and commercial aerospace end markets.

The Company has recast all relevant prior year period segment information in order to enable year-over-year segment comparisons in this Annual Report. The accounting policies of the segments are the same as those for the Company as a whole, as described in Note 1 herein. The Company evaluates the performance of the segments and allocates resources to each of them based on, among other things, profit or loss from operations before certain corporate and other related items such as interest, stock-based compensation expense, income taxes, amortization related to certain intangible assets and nonrecurring gains and losses. The Company also incurs general corporate expenses and costs which are not allocated to the reportable business segments, but have been included in “Corporate / Other” in the following tables for reconciliation purposes. Assets are reviewed by the CODM on a consolidated basis and therefore are not presented by reportable business segment.

Net sales by segment for the years ended December 31, 2022, 2021 and 2020 are as follows:

	External						Intersegment
	2022		2021		2020		2022		2021		2020
Harsh Environment Solutions	$	3,107.2	$	2,752.2	$	2,286.0	$	78.1	$	70.6	$	52.9
Communications Solutions		5,652.4		4,832.1		4,056.2		79.4		75.0		60.5
Interconnect and Sensor Systems		3,863.4		3,292.0		2,256.7		17.2		23.7		25.1
Consolidated Net sales	$	12,623.0	$	10,876.3	$	8,598.9	$	174.7	$	169.3	$	138.5

Segment operating income and the reconciliation of segment operating income to consolidated income from continuing operations before income taxes for the years ended December 31, 2022, 2021 and 2020 are as follows:

	2022		2021		2020
Segment operating income:
Harsh Environment Solutions	$	801.6	$	708.2	$	556.8
Communications Solutions		1,245.7		1,023.3		871.2
Interconnect and Sensor Systems		716.5		588.1		348.6
Total segment operating income		2,763.8		2,319.6		1,776.6
Corporate / Other:
Stock-based compensation expense		(89.5)		(83.0)		(70.5)
Acquisition-related expenses		(21.5)		(70.4)		(11.5)
Other operating expenses		(67.0)		(61.1)		(56.2)
Interest expense		(128.4)		(115.5)		(115.4)
Other income (expense), net		10.0		(0.4)		3.6
Income from continuing operations before income taxes	$	2,467.4	$	1,989.2	$	1,526.6

Depreciation and amortization expense by segment for the years ended December 31, 2022, 2021 and 2020 is as follows:

	2022		2021		2020
Harsh Environment Solutions	$	78.2	$	73.2	$	66.4
Communications Solutions		183.7		179.2		135.7
Interconnect and Sensor Systems		124.5		136.1		99.3
Corporate / Other		6.5		7.1		6.7
Total	$	392.9	$	395.6	$	308.1

Net sales by geographic area for the years ended December 31, 2022, 2021 and 2020 and long-lived assets by geographic area as of December 31 were as follows:

	2022		2021		2020
Net sales
United States	$	4,155.2	$	3,155.9	$	2,494.0
China		3,265.0		3,044.4		2,597.5
Other foreign locations		5,202.8		4,676.0		3,507.4
Total	$	12,623.0	$	10,876.3	$	8,598.9
Long-lived assets(1)
United States	$	386.1	$	362.1	$	352.7
China		470.1		451.7		399.6
Other foreign locations		637.6		606.4		526.7
Total	$	1,493.8	$	1,420.2	$	1,279.0

(1)

Long-lived assets included in this table are comprised of property, plant and equipment, net, and operating lease right-of-use assets for all years presented.

Disaggregation of Net Sales

The following tables show our net sales disaggregated into categories the Company considers meaningful to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors for the years ended December 31, 2022, 2021 and 2020:

Net sales by sales channel:	2022		2021		2020
End customers and contract manufacturers:
Harsh Environment Solutions	$	2,176.4	$	1,980.7	$	1,714.3
Communications Solutions		4,469.0		3,889.0		3,353.8
Interconnect and Sensor Systems		3,724.6		3,168.5		2,176.6
	$	10,370.0	$	9,038.2	$	7,244.7
Distributors and resellers:
Harsh Environment Solutions	$	930.8	$	771.5	$	571.7
Communications Solutions		1,183.4		943.1		702.4
Interconnect and Sensor Systems		138.8		123.5		80.1
	$	2,253.0	$	1,838.1	$	1,354.2
Total Net sales	$	12,623.0	$	10,876.3	$	8,598.9

Net sales by geography:	2022		2021		2020
United States:
Harsh Environment Solutions	$	1,558.2	$	1,352.2	$	1,210.1
Communications Solutions		1,495.3		958.2		749.5
Interconnect and Sensor Systems		1,101.7		845.5		534.4
	$	4,155.2	$	3,155.9	$	2,494.0
China:
Harsh Environment Solutions	$	437.5	$	437.1	$	318.3
Communications Solutions		1,939.6		1,914.6		1,811.5
Interconnect and Sensor Systems		887.9		692.7		467.7
	$	3,265.0	$	3,044.4	$	2,597.5
Other foreign locations:
Harsh Environment Solutions	$	1,111.5	$	962.9	$	757.6
Communications Solutions		2,217.5		1,959.3		1,495.2
Interconnect and Sensor Systems		1,873.8		1,753.8		1,254.6
	$	5,202.8	$	4,676.0	$	3,507.4
Total Net sales	$	12,623.0	$	10,876.3	$	8,598.9

Net sales by geographic area are based on the customer location to which the product is shipped. No single customer accounted for 10% or more of the Company’s net sales during either of the years ended December 31, 2022 and 2021. During the year ended December 31, 2020, aggregate sales to the Company’s largest customer accounted for approximately 11% of the Company’s net sales, nearly all of the sales of which were reported within our Communications Solutions segment. It is impracticable to disclose net sales by product or group of products. For further discussion related to the Company’s policies surrounding revenue recognition, refer to Note 1 herein.