Segment Reporting

6 Months Ended

Jul. 02, 2016

Segment Reporting

13. Segment Reporting

Intevac’s two reportable segments are: Thin-film Equipment and Photonics. Effective in the first quarter of 2015, Intevac renamed the Equipment segment Thin-film Equipment. 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 July 2, 2016 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 Thin-film Equipment segment designs, develops and markets vacuum process equipment solutions for high-volume manufacturing of small substrates with precise thin-film properties, such as for the hard drive, solar cell and DCP industries, as well as other adjacent thin-film markets.

The Photonics segment develops compact, cost-effective, high-sensitivity digital-optical products for the capture and display of low-light images. 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 six months ended July 2, 2016 and July 4, 2015 is as follows:

Net Revenues

	Three Months Ended				Six Months Ended
	July 2, 2016		July 4, 2015		July 2, 2016		July 4, 2015
	(In thousands)
Thin-film Equipment	$	6,088	$	11,494	$	11,668	$	22,122
Photonics		8,830		8,964		16,914		18,221
Total segment net revenues	$	14,918	$	20,458	$	28,582	$	40,343

Operating Income (Loss)

	Three Months Ended						Six Months Ended
	July 2, 2016			July 4, 2015			July 2, 2016			July 4, 2015
	(In thousands)
Thin-film Equipment	$	(3,674	)	$	6		$	(9,119	)	$	(3,291	)
Photonics		1,512			1,275			1,919			2,752
Total income (loss) from segment operations		(2,162	)		1,281			(7,200	)		(539	)
Unallocated costs		(1,645	)		(998	)		(2,924	)		(2,118	)
Income (loss) from operations		(3,807	)		283			(10,124	)		(2,657	)
Interest income and other income (expense), net		87			(13	)		125			66
Income (loss) before income taxes	$	(3,720	)	$	270		$	(9,999	)	$	(2,591	)

Total assets for each reportable segment as of July 2, 2016 and January 2, 2016 are as follows:

Assets

	July 2, 2016		January 2, 2016
	(In thousands)
Thin-film Equipment	$	36,278	$	29,528
Photonics		15,479		16,029
Total segment assets		51,757		45,557
Cash, cash equivalents and investments		40,614		46,627
Restricted cash		1,780		1,780
Deferred income taxes		3		12
Other current assets		1,147		1,052
Common property, plant and equipment		2,447		1,218
Other assets		919		1,435
Consolidated total assets	$	98,667	$	97,681