Operating Segments

We are organized around four global business platforms: Broadcast Solutions, Enterprise Solutions, Industrial Solutions, and Network Solutions. Each of the global business platforms represents a reportable segment.

To leverage the Company's strengths in networking, IoT, and cybersecurity technologies, effective January 1, 2017, we formed a new segment called Network Solutions, which represents the combination of the prior Industrial IT Solutions and Network Security Solutions segments. The formation of this new segment is a natural evolution in our organic and inorganic strategies for a range of industrial and non-industrial applications. We have revised 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.

Beginning in 2017, sales of certain audio-visual cable that had previously been reported in our Broadcast Solutions segment are now reported in our Enterprise Solutions segment. As the annual revenues associated with this product line are not material, we have not revised the prior period segment information.

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.



	Broadcast Solutions		Enterprise Solutions		Industrial Solutions		Network Solutions		Total Segments

	(In thousands)
As of and for the three months ended October 1, 2017
Segment revenues	$	193,753	$	167,089	$	160,471	$	100,432	$	621,745
Affiliate revenues	129		1,419		332		—		1,880
Segment EBITDA	35,671		26,409		30,545		24,906		117,531
Depreciation expense	4,088		2,740		3,285		1,570		11,683
Amortization expense	13,482		438		646		12,596		27,162
Severance, restructuring, and acquisition integration costs	3,056		6,253		6,840		530		16,679
Purchase accounting effects of acquisitions	2,922		—		—		—		2,922
Segment assets	373,848		284,327		291,984		108,554		1,058,713
As of and for the three months ended October 2, 2016
Segment revenues	$	196,173	$	156,658	$	149,847	$	99,790	$	602,468
Affiliate revenues	46		1,587		511		13		2,157
Segment EBITDA	36,545		27,294		23,649		24,448		111,936
Depreciation expense	4,063		3,210		2,738		1,592		11,603
Amortization expense	10,955		431		604		11,818		23,808
Severance, restructuring, and acquisition integration costs	174		5,573		4,746		2,302		12,795
Deferred gross profit adjustments	283		—		—		1,076		1,359
Segment assets	314,020		265,085		261,923		105,938		946,966
As of and for the nine months ended October 1, 2017
Segment revenues	$	550,420	$	473,504	$	465,907	$	293,928	$	1,783,759
Affiliate revenues	324		5,522		994		92		6,932
Segment EBITDA	90,681		77,310		87,314		65,563		320,868
Depreciation expense	12,095		8,034		9,659		4,806		34,594
Amortization expense	36,950		1,291		1,928		37,775		77,944
Severance, restructuring, and acquisition integration costs	4,434		19,267		8,307		831		32,839
Purchase accounting effects of acquisitions	4,089		—		—		—		4,089
Segment assets	373,848		284,327		291,984		108,554		1,058,713
As of and for the nine months ended October 2, 2016
Segment revenues	$	560,966	$	452,951	$	438,746	$	296,986	$	1,749,649
Affiliate revenues	644		4,615		906		44		6,209
Segment EBITDA	89,317		80,605		73,700		66,715		310,337
Depreciation expense	12,086		10,028		8,165		4,974		35,253
Amortization expense	37,306		1,292		1,796		35,209		75,603
Severance, restructuring, and acquisition integration costs	5,871		7,280		7,982		5,939		27,072
Purchase accounting effects of acquisitions	195		—		—		—		195
Deferred gross profit adjustments	1,391		—		—		4,021		5,412
Segment assets	314,020		265,085		261,923		105,938		946,966

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.



	Three Months Ended						Nine Months Ended
	October 1, 2017			October 2, 2016			October 1, 2017			October 2, 2016

	(In thousands)
Total Segment Revenues	$	621,745		$	602,468		$	1,783,759		$	1,749,649
Deferred revenue adjustments (1)	—			(1,359		)	—			(5,412		)
Consolidated Revenues	$	621,745		$	601,109		$	1,783,759		$	1,744,237

Total Segment EBITDA	$	117,531		$	111,936		$	320,868		$	310,337
Amortization of intangibles	(27,162		)	(23,808		)	(77,944		)	(75,603		)
Severance, restructuring, and acquisition integration costs (2)	(16,679		)	(12,795		)	(32,839		)	(27,072		)
Depreciation expense	(11,683		)	(11,603		)	(34,594		)	(35,253		)
Purchase accounting effects related to acquisitions (3)	(2,922		)	—			(4,089		)	(195		)
Deferred gross profit adjustments (1)	—			(1,359		)	—			(5,412		)
Income from equity method investment	2,551			586			5,835			1,077
Eliminations	(845		)	(977		)	(2,628		)	(2,694		)
Consolidated operating income	60,791			61,980			174,609			165,185
Interest expense, net	(19,385		)	(23,513		)	(66,424		)	(71,958		)
Loss on debt extinguishment	(51,594		)	—			(52,441		)	—
Consolidated income (loss) before taxes	$	(10,188	)	$	38,467		$	55,744		$	93,227

(1) For the three and nine months ended October 2, 2016 , 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.

(2) See Note 8, Severance, Restructuring, and Acquisition Integration Activities, for details.

(3) For the three and nine months ended October 1, 2017 and nine months ended October 2, 2016, we recognized cost of sales for the adjustment of acquired inventory to fair value related to the Thinklogical and M2FX acquisitions, respectively.