Operating Segments and Geographic Information

6 Months Ended

Dec. 26, 2015

Segment Reporting [Abstract]

Operating Segments and Geographic Information

Note 14. Operating Segments and Geographic Information

Our chief executive officer is our Chief Operating Decision Maker ("CODM"). The CODM allocates resources to the segments based on their business prospects, competitive factors, net revenue and gross margin.

We are an industry leading provider of optical and photonic products defined by revenue and market share addressing a range of end-market applications including optical communications and commercial lasers. We have two operating segments, OpComms and Commercial Lasers ("Lasers"). The two operating segments were primarily determined based on how the CODM views and evaluates our operations. Operating results are regularly reviewed by the CODM to make decisions about resources to be allocated to the segments and to assess their performance. Other factors, including market separation and customer specific applications, go-to-market channels, products and manufacturing, are considered in determining the formation of these operating segments.

Our reportable segments are:

(i) OpComms: Our OpComms portfolio includes products used by Telecom and Datacom network equipment manufacturers (“NEMs”) and both traditional and cloud/data center service providers. These products enable the transmission and transport of video, audio and text data over high-capacity fiber optic cables. Transmission products primarily consist of optical transceivers, optical transponders, and their supporting components such as modulators and source lasers, including innovative products such as the Tunable Small Form-factor Pluggable Plus transceiver. Transport products primarily consist of modules or sub-systems containing optical amplifiers, reconfigurable optical add/drop multiplexers (“ROADMs”) or Wavelength Selective Switches, Optical Channel Monitors and their supporting components. Our products for 3-D sensing applications, formerly referred to as our gesture recognition products, include light source products. Customer solutions containing our 3-D sensing products let a person control electronic or computer devices with natural body or hand gestures instead of using a remote, mouse or other device.

(ii) Commercial Lasers: Our Lasers products serve customers in markets and applications such as manufacturing, biotechnology, graphics and imaging, remote sensing, and precision machining such as drilling in printed circuit boards, wafer singulation and solar cell scribing. These products include diode, direct-diode, diode-pumped solid-state, fiber and gas lasers. In addition, our photonic power products include fiber optic-based systems for delivering and measuring electrical power.

The CODM evaluates segment performance to make financial decisions and allocate resources based on gross margin. We do not allocate research and development, sales and marketing, or general and administrative expenses to our segments because Management does not include the information in its measurement of the performance of the operating segments. In addition, we do not allocate amortization and impairment of acquisition-related intangible assets, stock-based compensation and certain other non-recurring charges impacting the gross margin of each segment because Management does not include this information in its measurement of the performance of the operating segments.

Information on reportable segments utilized by our CODM is as follows (in millions):

	Three Months Ended						Six Months Ended
	December 26, 2015			December 27, 2014			December 26, 2015			December 27, 2014
Net revenue:
OpComms	$	185.8		$	171.1		$	362.9		$	348.0
Lasers	32.5			39.4			68.0			81.5
Net revenue	$	218.3		$	210.5		$	430.9		$	429.5
Gross profit:
OpComms	57.1			50.4			112.7			103.2
Lasers	14.2			20.1			28.4			41.4
Total segment gross profit	71.3			70.5			141.1			144.6
Unallocated amounts:
Stock-based compensation	(1.5		)	(1.2		)	(2.7		)	(2.6		)
Amortization of intangibles	(1.7		)	(1.9		)	(3.4		)	(3.8		)
Other charges related to non-recurring activities	—			(0.5		)	—			(1.0		)
Gross profit	$	68.1		$	66.9		$	135.0		$	137.2

The table below discloses the percentage of our total net revenue attributable to each of our two reportable segments. In addition, it discloses the percentage of our total net revenue attributable to our product offerings which serve the Telecom, Datacom and consumer and industrial ("Consumer and Industrial"):

	Three Months Ended				Six Months Ended
	December 26, 2015		December 27, 2014		December 26, 2015 (a)		December 27, 2014
Optical Communications:	85.1	%	81.3	%	84.2	%	81.0	%
Telecom	63.1	%	59.8	%	62.8	%	60.8	%
Datacom	16.0	%	16.8	%	16.4	%	15.3	%
Consumer and Industrial	6.0	%	4.7	%	5.0	%	4.9	%
Lasers	14.9	%	18.7	%	15.8	%	19.0	%

We operate in three geographic regions: Americas, Asia-Pacific and Europe, Middle East and Africa (“EMEA”). Net revenue is assigned to the geographic region and country where our product is initially shipped. For example, certain customers may request shipment of our product to a contract manufacturer in one country, which may differ from the location of their end customers. The following table presents net revenue by the three geographic regions we operate in and net revenue from countries that exceeded 10% of our total net revenue (in millions, except for percentages) :

	Three Months Ended								Six Months Ended
	December 26, 2015				December 27, 2014				December 26, 2015				December 27, 2014
Net revenue:
Americas:
United States	$	28.0	12.8	%	$	41.1	19.5	%	$	62.5	14.5	%	$	83.5	19.4	%
Mexico	36.5		16.7		23.6		11.2		78.3		18.2		50.1		11.7
Other Americas	5.0		2.3		7.5		3.6		12.8		3.0		13.8		3.2
Total Americas	$	69.5	31.8	%	$	72.2	34.3	%	$	153.6	35.7	%	$	147.4	34.3	%
Asia-Pacific:
Hong Kong	$	51.8	23.8	%	$	34.0	16.1	%	$	82.6	19.1	%	$	62.7	14.6	%
Japan	21.0		9.6		34.9		16.6		46.0		10.7		70.8		16.5
Thailand	25.5		11.7		14.7		7.0		44.0		10.2		29.7		6.9
Other Asia-Pacific	20.8		9.5		23.9		11.4		42.3		9.8		50.0		11.7
Total Asia-Pacific	$	119.1	54.6	%	$	107.5	51.1	%	$	214.9	49.8	%	$	213.2	49.7	%
EMEA	$	29.7	13.6	%	$	30.8	14.6	%	$	62.4	14.5	%	$	68.9	16.0	%
Total net revenue	$	218.3			$	210.5			$	430.9			$	429.5

During the six months endedDecember 26, 2015 and December 27, 2014, net revenue from customers outside the U.S., based on customer shipping location, represented 85.5% and 80.6% of net revenue, respectively. During the three months endedDecember 26, 2015 and December 27, 2014, net revenue from customers outside the U.S., based on customer shipping location, represented 87.2% and 80.5% of net revenue, respectively. Our net revenue is primarily denominated in U.S. dollars, including our net revenue from customers outside the United States as presented above.