SEGMENT REPORTING

6 Months Ended

Nov. 28, 2015

Segment Reporting [Abstract]

SEGMENT REPORTING

11.  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 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: PMT, Canvys, and Healthcare.

Power and Microwave Technologies Group (“PMT”), launched in July 2015, combines Electron Device Group’s (“EDG”) core engineered solutions, power grid and microwave tube business with new RF and power technologies. As a manufacturer and authorized distributor, PMT’s strategy is to provide specialized technical expertise and engineered solutions based on our core engineering and manufacturing capabilities. We provide solutions and add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service and repair—all through our existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications for customers in alternative energy, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets. PMT 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. PMT also offers its customers technical services for both microwave and industrial equipment.

Canvys provides customized display solutions serving the corporate enterprise, financial, healthcare, industrial, and medical original equipment manufacturers (“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				Six Months Ended
	November 28, 2015		November 29,  2014		November 28, 2015		November 29,  2014
PMT
Net Sales	$	25,162	$	26,787	$	52,357	$	54,225
Gross Profit		7,515		8,537		15,653		17,223
Canvys
Net Sales	$	5,902	$	5,906	$	12,583	$	11,874
Gross Profit		1,526		1,653		3,235		3,309
Healthcare
Net Sales	$	3,022	$	1,148	$	6,217	$	2,441
Gross Profit		1,394		272		2,809		588

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						Six Months Ended
	November 28, 2015			November 29,  2014			November 28, 2015			November 29,  2014
Net Sales
North America	$	15,032		$	13,769		$	32,824		$	28,468
Asia/Pacific		5,832			5,918			11,964			12,424
Europe		11,765			12,082			23,123			23,131
Latin America		1,455			2,207			3,062			4,528
Other (1)		2			(135	)		184			(11	)
Total	$	34,086		$	33,841		$	71,157		$	68,540
Gross Profit
North America	$	5,138		$	4,847		$	11,337		$	10,030
Asia/Pacific		1,859			1,994			3,815			4,113
Europe		3,514			4,028			6,855			7,747
Latin America		549			811			1,174			1,689
Other (1)		(625	)		(1,218	)		(1,484	)		(2,459	)
Total	$	10,435		$	10,462		$	21,697		$	21,120

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(1) Other includes primarily net sales not allocated to a specific geographical region, unabsorbed value-add costs, and other unallocated expenses.

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.