Reportable Business Segments and International Operations

12 Months Ended

Dec. 31, 2023

Reportable Business Segments and International Operations

Reportable Business Segments and International Operations

Note 13—Reportable Business Segments and International Operations

Since January 1, 2022, the Company aligns its businesses into three reportable business segments: (i) Harsh Environment Solutions, (ii) Communications Solutions and (iii) Interconnect and Sensor Systems. 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. The Company has three 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, defense, 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 defense 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, defense and commercial aerospace end markets.

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, 2023, 2022 and 2021 are as follows:

	External						Intersegment
	2023		2022		2021		2023		2022		2021
Harsh Environment Solutions	$	3,530.8	$	3,107.2	$	2,752.2	$	90.8	$	78.1	$	70.6
Communications Solutions		4,912.8		5,652.4		4,832.1		50.2		79.4		75.0
Interconnect and Sensor Systems		4,111.1		3,863.4		3,292.0		18.2		17.2		23.7
Consolidated Net sales	$	12,554.7	$	12,623.0	$	10,876.3	$	159.2	$	174.7	$	169.3

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, 2023, 2022 and 2021 are as follows:

	2023		2022		2021
Segment operating income:
Harsh Environment Solutions	$	943.9	$	801.6	$	708.2
Communications Solutions		1,063.5		1,245.7		1,023.3
Interconnect and Sensor Systems		753.7		716.5		588.1
Total segment operating income		2,761.1		2,763.8		2,319.6
Corporate / Other:
Stock-based compensation expense		(99.0)		(89.5)		(83.0)
Acquisition-related expenses		(34.6)		(21.5)		(70.4)
Other operating expenses		(67.9)		(67.0)		(61.1)
Interest expense		(139.5)		(128.4)		(115.5)
Gain on bargain purchase acquisition		5.4		—		—
Other income (expense), net		29.3		10.0		(0.4)
Income from continuing operations before income taxes	$	2,454.8	$	2,467.4	$	1,989.2

Depreciation and amortization expense by segment for the years ended December 31, 2023, 2022 and 2021 is as follows:

	2023		2022		2021
Harsh Environment Solutions	$	91.0	$	78.2	$	73.2
Communications Solutions		177.0		183.7		179.2
Interconnect and Sensor Systems		131.1		124.5		136.1
Corporate / Other		7.3		6.5		7.1
Total	$	406.4	$	392.9	$	395.6

Net sales by geographic area for the years ended December 31, 2023, 2022 and 2021 and long-lived assets by geographic area as of December 31 were as follows:

	2023		2022		2021
Net sales
United States	$	4,405.4	$	4,155.2	$	3,155.9
China		2,884.0		3,265.0		3,044.4
Other foreign locations		5,265.3		5,202.8		4,676.0
Total	$	12,554.7	$	12,623.0	$	10,876.3
Long-lived assets(1)
United States	$	442.6	$	386.1	$	362.1
China		455.5		470.1		451.7
Other foreign locations		718.1		637.6		606.4
Total	$	1,616.2	$	1,493.8	$	1,420.2

(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, 2023, 2022 and 2021:

Net sales by sales channel:	2023		2022		2021
End customers and contract manufacturers:
Harsh Environment Solutions	$	2,581.6	$	2,176.4	$	1,980.7
Communications Solutions		3,933.2		4,469.0		3,889.0
Interconnect and Sensor Systems		3,947.4		3,724.6		3,168.5
	$	10,462.2	$	10,370.0	$	9,038.2
Distributors and resellers:
Harsh Environment Solutions	$	949.2	$	930.8	$	771.5
Communications Solutions		979.6		1,183.4		943.1
Interconnect and Sensor Systems		163.7		138.8		123.5
	$	2,092.5	$	2,253.0	$	1,838.1
Total Net sales	$	12,554.7	$	12,623.0	$	10,876.3

Net sales by geography:	2023		2022		2021
United States:
Harsh Environment Solutions	$	1,790.5	$	1,558.2	$	1,352.2
Communications Solutions		1,395.8		1,495.3		958.2
Interconnect and Sensor Systems		1,219.1		1,101.7		845.5
	$	4,405.4	$	4,155.2	$	3,155.9
China:
Harsh Environment Solutions	$	351.2	$	437.5	$	437.1
Communications Solutions		1,669.4		1,939.6		1,914.6
Interconnect and Sensor Systems		863.4		887.9		692.7
	$	2,884.0	$	3,265.0	$	3,044.4
Other foreign locations:
Harsh Environment Solutions	$	1,389.1	$	1,111.5	$	962.9
Communications Solutions		1,847.6		2,217.5		1,959.3
Interconnect and Sensor Systems		2,028.6		1,873.8		1,753.8
	$	5,265.3	$	5,202.8	$	4,676.0
Total Net sales	$	12,554.7	$	12,623.0	$	10,876.3

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 the years ended December 31, 2023, 2022 and

2021. 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.

Reportable Business Segments Prior to 2022

Prior to 2022 and through December 31, 2021, the Company operated through two reportable business segments:

●Interconnect Products and Assemblies – The Interconnect Products and Assemblies segment primarily designed, manufactured and marketed a broad range of connector and connector systems, value-add products and other products, including antennas and sensors, used in a wide range of applications in a diverse set of end markets.

●Cable Products and Solutions – The Cable Products and Solutions segment primarily designed, manufactured and marketed cable, value-add products and components for use primarily in the broadband communications and information technology markets, as well as certain applications in other markets.

Businesses previously reported in the Interconnect Products and Assemblies segment were aligned with one of the Company’s three segments, while all businesses previously reported in the Cable Products and Solutions segment were aligned with the Communications Solutions segment.