Segment and Geographic Information

12 Months Ended

Oct. 01, 2016

Segment Reporting [Abstract]

Segment and Geographic Information

SEGMENT AND GEOGRAPHIC INFORMATION

At October 1, 2016, we were organized into two reportable operating segments: Specialty Lasers and Systems ("SLS") and Commercial Lasers and Components ("CLC"). This segmentation reflects the go-to-market strategies for various products and markets. While both segments work to deliver cost-effective solutions, SLS develops and manufactures configurable, advanced-performance products largely serving the microelectronics, scientific research and government programs and OEM components and instrumentation markets. The size and complexity of many of our SLS products require service to be performed at the customer site by factory-trained field service engineers. CLC focuses on higher volume products that are offered in set configurations. The product architectures are designed for easy exchange at the point of use such that product service and repairs are based upon advanced replacement and depot (i.e., factory) repair. CLC's primary markets include materials processing, OEM components and instrumentation and microelectronics.

We have identified SLS and CLC as operating segments for which discrete financial information is available. Both units have dedicated engineering, manufacturing, product business management and product line management functions. A small portion of our outside revenue is attributable to projects and recently developed products for which a segment has not yet been determined. The associated direct and indirect costs are presented in the category of Corporate and other, along with other corporate costs as described below.

Our Chief Executive Officer has been identified as the chief operating decision maker (CODM) as he assesses the performance of the segments and decides how to allocate resources to the segments. Income from operations is the measure of profit and loss that our CODM uses to assess performance and make decisions. As assets are not a measure used to assess the performance of the company by the CODM, asset information is not tracked or compiled by segment and is not available to be reported in our disclosures. Income from operations represents the net sales less the cost of sales and direct operating expenses incurred within the operating segments as well as allocated expenses such as shared sales and manufacturing costs. We do not allocate to our operating segments certain operating expenses which we manage separately at the corporate level. These unallocated costs include stock-based compensation and corporate functions (certain research and development, management, finance, legal and human resources) and are included in the results below under Corporate and other in the reconciliation of operating results. Management does not consider unallocated Corporate and other costs in its measurement of segment performance.

The following table provides net sales and income from operations for our operating segments a reconciliation of our total income from operations to net income (in thousands):

	Fiscal
	2016			2015			2014
Net sales:
Specialty Laser Systems	$	631,313		$	559,593		$	565,552
Commercial Lasers and Components	226,072			242,867			229,087
Total net sales	$	857,385		$	802,460		$	794,639
Income (expense) from operations:
Specialty Laser Systems	$	180,577		$	133,506		$	117,947
Commercial Lasers and Components	3,477			9,127			2,688
Corporate and other	(56,440		)	(41,886		)	(43,769		)
Total income from operations	$	127,614		$	100,747		$	76,866
Total other income (expense), net	(4,718		)	(1,179		)	2,353
Income before income taxes	122,896			99,568			79,219
Provision for income taxes	35,394			23,159			20,113
Net income	$	87,502		$	76,409		$	59,106

Geographic Information

Our foreign operations consist primarily of manufacturing facilities and sales offices in Europe and Asia-Pacific. Sales, marketing and customer service activities are conducted through sales subsidiaries throughout the world. Geographic sales information for fiscal 2016, 2015 and 2014 is based on the location of the end customer. Geographic long-lived asset information presented below is based on the physical location of the assets at the end of each year.

Sales to unaffiliated customers are as follows (in thousands):

	Fiscal
SALES	2016		2015		2014
United States	$	204,963	$	213,483	$	202,205
Foreign countries:
South Korea	187,908		195,589		167,473
Japan	193,418		135,674		124,765
China	63,050		57,548		56,101
Germany	71,427		75,474		86,023
Europe, other	55,351		53,027		64,648
Asia-Pacific, other	36,364		28,036		42,659
Rest of World	44,904		43,629		50,765
Total foreign countries sales	652,422		588,977		592,434
Total sales	$	857,385	$	802,460	$	794,639

Long-lived assets, which include all non-current assets other than goodwill, intangibles and deferred taxes, by geographic region, are as follows (in thousands):

	Fiscal year-end
LONG-LIVED ASSETS	2016		2015
United States	$	92,771	$	82,951
Foreign countries:
Germany	55,786		33,964
Europe, other	2,478		2,993
Asia-Pacific	11,981		11,504
Total foreign countries long-lived assets	70,245		48,461
Total long-lived assets	$	163,016	$	131,412

Major Customers

We had one major customer who accounted for 13%, 17% and 13% of consolidated revenue during fiscal 2016, 2015 and 2014, respectively. We had another major customer who accounted for 16% of consolidated revenue during fiscal 2016. Both customers purchased primarily from our SLS segment.