SEGMENT REPORTING

9 Months Ended

Feb. 28, 2015

SEGMENT REPORTING

SEGMENT REPORTING    

During the first quarter of fiscal 2015, we created a new strategic business unit called Healthcare.  As hospitals remain under pressure to reduce costs while serving a much larger customer base, there is a growing demand for independent sources of high value replacement parts for diagnostic imaging. Having access to parts that are tested and in stock enables hospitals to terminate expensive service contracts with the OEM and instead use third party service providers or in house technicians. With our global infrastructure, technical sales team, and experience servicing the healthcare market, we are well positioned to take advantage of this market opportunity.  Over time, our plan is to expand our position from being the leader in power grid tubes to a key player in the high growth, high profile healthcare industry.

In accordance with ASC 280-10, Segment Reporting, we have identified three reportable segments: EDG, Canvys, and Healthcare.

Electron Device Group (“EDG”) provides engineered solutions and distributes electronic components to customers in alternative energy, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets. EDG focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar, and radiation oncology. EDG also offers its customers technical services for both microwave and industrial equipment.

Canvys provides customized display solutions serving the corporate enterprise, financial, industrial, and OEM markets.

Healthcare manufactures, distributes and services high value replacement parts for the healthcare market including hospitals, medical centers, independent service organizations, and multi-vendor service providers. Products include power grid tubes, hydrogen thyratrons, klystrons, magnetrons; Image Systems medical displays and workstations for picture archiving and communication systems ("PACS"); visual solutions for operating rooms/surgical environments; digital radiography solutions including replacement flat panel detectors and upgrades; and additional replacement components currently under development for the diagnostic imaging service market. Through a combination of newly developed products and partnerships, service offerings, and training programs, we believe we can help our customers improve efficiency and deliver better clinical outcomes while lowering the cost of healthcare delivery.

The CEO evaluates performance and allocates resources primarily based on the gross profit of each segment.

Operating results by segment are summarized in the following table (in thousands):

	Three Months Ended				Nine Months Ended
	February 28,   2015		March 1,   2014		February 28, 2015		March 1, 2014
EDG
Net Sales	$	25,207	$	24,193	$	79,432	$	75,835
Gross Profit	7,680		7,139		24,904		23,505
Canvys
Net Sales	$	6,236	$	6,732	$	18,110	$	21,769
Gross Profit	1,621		1,945		4,929		5,970
Healthcare
Net Sales	$	2,028	$	1,959	$	4,469	$	4,973
Gross Profit	499		567		1,087		1,375

Geographic net sales information is primarily grouped by customer destination into five areas: North America; Asia/Pacific; Europe; Latin America; and Other.    

Net sales and gross profit by geographic region are summarized in the following table (in thousands):

	Three Months Ended						Nine Months Ended
	February 28, 2015			March 1, 2014			February 28, 2015			March 1, 2014
Net Sales
North America	$	15,905		$	14,742		$	44,373		$	42,970
Asia/Pacific	5,577			4,996			18,001			17,548
Europe	10,006			10,986			33,137			34,651
Latin America	1,905			1,890			6,433			6,661
Other	78			270			67			747
Total	$	33,471		$	32,884		$	102,011		$	102,577
Gross Profit (loss)
North America	$	5,406		$	4,988		$	15,436		$	14,653
Asia/Pacific	1,818			1,547			5,931			5,631
Europe	3,086			3,485			10,833			11,190
Latin America	635			646			2,324			2,479
Other	(1,145		)	(1,015		)	(3,604		)	(3,103		)
Total	$	9,800		$	9,651		$	30,920		$	30,850

We sell our products to customers in diversified industries and perform periodic credit evaluations of our customers’ financial condition. Terms are generally on open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe, and Latin America. Estimates of credit losses are recorded in the financial statements based on monthly reviews of outstanding accounts. Other primarily includes net sales not allocated to a specific geographical region, unabsorbed value-add costs, and other unallocated expenses.