Segment Reporting

3 Months Ended

Apr. 01, 2017

Segment Reporting

13. Segment Reporting

Intevac’s two reportable segments are: Thin-film 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 April 1, 2017 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.

Information for each reportable segment for the three months ended April 1, 2017 and April 2, 2016 is as follows:

Net Revenues

	Three Months Ended
	April 1, 2017		April 2, 2016
	(In thousands)
Thin-film Equipment	$	21,484	$	5,580
Photonics		8,904		8,084
Total segment net revenues	$	30,388	$	13,664

Operating Income (Loss)

	Three Months Ended
	April 1, 2017			April 2, 2016
	(In thousands)
Thin-film Equipment	$	1,859		$	(5,445	)
Photonics		1,465			407
Total segment operating profit (loss)		3,324			(5,038	)
Unallocated costs		(1,233	)		(1,278	)
Income (loss) from operations		2,091			(6,316	)
Interest income and other income (expense), net		110			37
Income (loss) before income taxes	$	2,201		$	(6,279	)

Total assets for each reportable segment as of April 1, 2017 and December 31, 2016 are as follows:

Assets

	April 1, 2017		December 31, 2016
	(In thousands)
Thin-film Equipment	$	41,862	$	39,503
Photonics		17,291		16,071
Total segment assets		59,153		55,574
Cash, cash equivalents and investments		44,842		48,238
Restricted cash		1,450		1,602
Deferred income taxes		3		3
Other current assets		1,001		997
Common property, plant and equipment		1,608		1,039
Other assets		671		871
Consolidated total assets	$	108,728	$	108,324