Segment and Geographic Information

3 Months Ended

Jan. 01, 2022

Segment Reporting [Abstract]

Segment and Geographic Information

SEGMENT AND GEOGRAPHIC INFORMATION

We are organized into two reporting segments, OEM Laser Sources ("OLS") and Industrial Lasers & Systems ("ILS"), based upon our organizational structure and how the CODM receives and utilizes information provided to allocate resources and make decisions. This segmentation reflects the go-to-market strategies and synergies for our broad portfolio of laser technologies and products. While both segments deliver cost-effective, highly reliable photonics solutions, the OLS business segment is focused on high performance laser sources and complex optical sub-systems, typically used in microelectronics manufacturing, medical diagnostics and therapeutic applications, as well as in scientific research. Our ILS business segment delivers high performance laser sources, sub-systems and machine tools primarily used for industrial laser materials processing, serving important end markets like automotive, machine tools, consumer goods and medical device manufacturing as well as applications in aerospace and defense.

We have identified OLS and ILS 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 CODM, as he assesses the performance of the segments and decides how to allocate resources to the segments. Income (loss) from operations is the measure of profit and loss that our CODM uses to assess performance and make decisions. Assets by segment are not a measure used to assess the performance of the company by the CODM and thus are not reported in our disclosures. Income (loss) 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 certain operating expenses to our operating segments and we manage them at the corporate level. These unallocated costs include stock-based compensation and corporate functions (certain 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 (loss) from operations for our operating segments and a reconciliation of our total income (loss) from operations to income before income taxes (in thousands): 

	Three Months Ended
	January 1, 2022		January 2, 2021
Net sales:
OEM Laser Sources	$	242,970	$	211,162
Industrial Lasers & Systems	141,537		114,891
Total net sales	$	384,507	$	326,053
Income (loss) from operations:
OEM Laser Sources	$	72,829	$	49,416
Industrial Lasers & Systems	12,252		(7,912)
Corporate and other	(42,602)		(24,554)
Total income from operations	42,479		16,950
Total other expense, net	(6,185)		(2,289)
Income before income taxes	$	36,294	$	14,661

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 the three months ended January 1, 2022 and January 2, 2021 is based on the location of the end customer.

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

	Three Months Ended
SALES	January 1, 2022		January 2, 2021
United States	$	90,537	$	71,527
Foreign countries:
South Korea	60,638		71,838
China	70,845		61,459
Japan	39,095		23,339
Asia-Pacific, other	37,723		27,411
Germany	34,839		29,285
Europe, other	35,828		28,531
Rest of World	15,002		12,663
Total foreign countries sales	293,970		254,526
Total sales	$	384,507	$	326,053

Major Customers

We had one customer during the three months ended January 1, 2022 and January 2, 2021 that accounted for 14.6% and 18.9% of net sales, respectively. This customer purchased primarily from our OLS segment.

We had one customer that accounted for 14.9% and 17.8% of accounts receivable at January 1, 2022 and October 2, 2021, respectively. This customer purchased primarily from our OLS segment.