Segment Reporting

9 Months Ended

Sep. 27, 2014

Segment Reporting

14. Segment Reporting

Intevac’s two reportable segments are: Equipment and Photonics. Intevac’s chief operating decision-maker has been identified as the President and CEO, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon Intevac’s management organization structure as of September 27, 2014 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to the reportable segments disclosed.

Each reportable segment is separately managed and has separate financial results that are reviewed by Intevac’s chief operating decision-maker. Each reportable segment contains closely related products that are unique to the particular segment. Segment operating profit is determined based upon internal performance measures used by the chief operating decision-maker.

Intevac derives the segment results from its internal management reporting system. The accounting policies Intevac uses to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics, including orders, net revenues and operating income. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. Intevac manages certain operating expenses separately at the corporate level. Intevac allocates certain of these corporate expenses to the segments in an amount equal to 3% of net revenues. Segment operating income excludes interest income/expense and other financial charges and income taxes according to how a particular reportable segment’s management is measured. Management does not consider impairment charges, gains and losses on divestitures and sales of intellectual property, and unallocated costs in measuring the performance of the reportable segments.

The Equipment segment designs, develops and markets vacuum process equipment solutions for high-volume manufacturing of small substrates with precise thin film properties for hard drive and solar cell manufacturers as well as other adjacent thin film deposition applications.

The Photonics segment develops compact, cost-effective, high-sensitivity digital-optical products for the capture and display of low-light images and the optical analysis of materials. Intevac provides sensors, cameras and systems for government applications such as night vision and long-range target identification.

Information for each reportable segment for the three and nine months ended September 27, 2014 and September 28, 2013 is as follows:

Net Revenues

	Three Months Ended				Nine Months Ended
	September 27, 2014		September 28, 2013		September 27, 2017		September 28, 2013
	(In thousands)
Equipment	$	3,375	$	11,760	$	16,184	$	26,293
Photonics		11,382		7,355		30,304		22,788
Total segment net revenues	$	14,757	$	19,115	$	46,488	$	49,081

Operating Income (Loss)

	Three Months Ended						Nine Months Ended
	September 27, 2014			September 28, 2013			September 27, 2014			September 28, 2013
	(In thousands)
Equipment	$	(5,872	)	$	(1,423	)	$	(15,681	)	$	(14,607	)
Photonics		3,120			192			6,595			254
Total segment operating income (loss)		(2,752	)		(1,231	)		(9,086	)		(14,353	)
Unallocated costs		(1,332	)		(1,751	)		(4,969	)		(4,436	)
Loss on divestiture		—			—			—			(208	)
Loss from operations		(4,084	)		(2,982	)		(14,055	)		(18,997	)
Interest income and other, net		113			220			306			392
Loss before income taxes	$	(3,971	)	$	(2,762	)	$	(13,749	)	$	(18,605	)

Total assets for each reportable segment as of September 27, 2014 and December 31, 2013 are as follows:

Assets

	September 27, 2014		December 31, 2013
	(In thousands)
Equipment	$	30,129	$	33,428
Photonics		18,936		21,120
Total segment assets		49,065		54,548
Cash, cash equivalents and investments		70,740		81,414
Restricted cash		1,000		—
Deferred income taxes		10,021		9,605
Other current assets		755		982
Common property, plant and equipment		1,068		1,302
Other assets		—		425
Consolidated total assets	$	132,649	$	148,276