Operating Segments and Geographic Information

12 Months Ended

Jul. 02, 2016

Segment Reporting [Abstract]

Operating Segments and Geographic Information

Note 16. 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, Optical Communications, which we refer to as OpComms, and Commercial Lasers, which we refer to as Lasers. The two operating segments were primarily determined based on how the Chief Operating Decision Mater (“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.

OpComms

Our OpComms products address the following markets: telecommunications (Telecom), data communications (Datacom) and Consumer and Industrial.

Our OpComms products include a wide range of components, modules and subsystems to support and maintain customers in our two primary markets: Telecom and Datacom. The Telecom market includes carrier networks for access (local), metro (intracity), long-haul (city-to-city and worldwide) and submarine (undersea) networks. The Datacom market addresses enterprise, cloud and data center applications, including storage-access networks (“SANs”), local-area networks (“LANs”) and wide-area networks (“WANs”). These products enable the transmission and transport of video, audio and text data over high-capacity fiber-optic cables. We maintain leading positions in the fastest-growing OpComms markets, including reconfigurable optical add/drop multiplexers (“ROADMs”), tunable 10-gigabit small form-factor pluggable transceivers and tunable small form-factor pluggables. Our 10G, 40G legacy transceivers and a growing portfolio of 100G pluggable transceivers support LAN/SAN/WAN needs and the cloud for customers building enterprise and hyperscale data center networks.

Our products for 3-D sensing applications include our light source product. Customer solutions containing our 3-D sensing lasers employ our laser technology in mobile, computing, industrial and automotive applications. Emerging 3-D sensing systems simplify the way people interact with technology and were first used in applications for gaming platforms.

Lasers

Our Lasers products serve our 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. Our Lasers products are used in a variety of original equipment manufacturer (“OEM”) applications.

Our Laser products are used in a variety of OEM applications including diode-pumped solid-state, fiber, diode, direct-diode and gas lasers such as argon-ion and helium-neon lasers. Diode-pumped solid-state and fiber lasers provide excellent beam quality, low noise and exceptional reliability and are used in biotechnology, graphics and imaging, remote sensing, materials processing and precision machining applications. Diode and direct-diode lasers address a wide variety of applications, including laser pumping, thermal exposure, illumination, ophthalmology, image recording, printing, plastic welding and selective soldering. Gas lasers such as argon-ion and helium-neon lasers provide a stable, low-cost and reliable solution over a wide range of operating conditions, making them well suited for complex, high-resolution OEM applications such as flow cytometry, DNA sequencing, graphics and imaging and semiconductor inspection.

Our acquisition of Time-Bandwidth enabled us to provide high-powered and ultrafast lasers for the industrial and scientific markets. Manufacturers use high-power, ultrafast lasers to create micro parts for consumer electronics and to process semiconductor, LED, and other types of chips. Use of ultrafast lasers for micromachining applications is being driven primarily by the increasing use of consumer electronics and connected devices globally.

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 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):

	Years Ended
	July 2, 2016			June 27, 2015			June 28, 2014
Net revenue:
OpComms	$	761.3		$	694.1		$	695.1
Lasers	141.7			143.0			122.8
Net revenue	$	903.0		$	837.1		$	817.9
Gross profit:
OpComms	236.3			204.8			212.3
Lasers	61.4			67.4			59.8
Total segment gross profit	297.7			272.2			272.1
Unallocated amounts:
Stock-based compensation	(6.1		)	(5.1		)	(5.6		)
Amortization of intangibles	(6.8		)	(7.6		)	(9.0		)
Other charges	(7.5		)	(1.6		)	(0.9		)
Gross profit	$	277.3		$	257.9		$	256.6

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") markets which accounted for more than 10% or more of our total net revenue during the last three fiscal years:

	Years Ended
	July 2, 2016			June 27, 2015			June 28, 2014
OpComms:		84.3	%		82.9	%		85.0	%
Telecom		61.5	%		60.6	%		60.6	%
Datacom		18.1	%		17.4	%		14.3	%
Consumer and Industrial		4.7	%		4.9	%		10.1	%
Lasers		15.7	%		17.1	%		15.0	%

We operate in three geographic regions: Americas, Asia-Pacific, and EMEA (Europe Middle East and Africa). 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 percentage data):

	Years Ended
	July 2, 2016				June 27, 2015				June 28, 2014
Net revenue:
Americas:
United States	$	162.3	18.0	%	$	162.4	19.4	%	$	177.5	21.7	%
Mexico	112.9		12.5		112.7		13.5		111.3		13.6
Other Americas	19.6		2.2		31.1		3.6		30.3		3.7
Total Americas	$	294.8	32.7	%	$	306.2	36.5	%	$	319.1	39.0	%
Asia-Pacific:
Hong Kong	$	214.0	23.7	%	$	120.4	14.4	%	$	128.7	15.8	%
Japan	92.9		10.3		106.6		12.7		97.6		11.9
Other Asia-Pacific	177.8		19.6		174.4		20.9		138.6		16.9
Total Asia-Pacific	$	484.7	53.6	%	$	401.4	48.0	%	$	364.9	44.6	%
EMEA	$	123.5	13.7	%	$	129.5	15.5	%	$	133.9	16.4	%
Total net revenue	$	903.0			$	837.1			$	817.9
* Represents less than 10% of total net revenue

During fiscal 2016, 2015 and 2014, net revenue from customers outside the United States, based on customer shipping location, represented 82%, 81% and 78% 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.

During fiscal 2016, 2015 and 2014, net revenue generated from a single customer which represented 10% greater of total net revenue is summarized as follows:

	Years Ended
	July 2, 2016		June 27, 2015		June 28, 2014
Huawei Technologies. Co. Ltd.	17.1	%	*		*
Ciena Corporation	17.1	%	14.4	%	15.9	%
Alphabet Inc. (formerly Google)	*		*		10.3	%
Cisco Systems, Inc.	13.0	%	11.8	%	*
*Represents less than 10% of total net revenue

Long-lived assets, namely net property, plant and equipment were identified based on the operations in the corresponding geographic areas (in millions):

	Years Ended
	July 2, 2016		June 27, 2015
Property, Plant and Equipment, net
United States	$	69.0	$	63.0
Canada	21.4		13.5
China	46.6		34.4
Thailand	43.8		29.0
Other Asia-Pacific	0.2		1.2
EMEA	2.4		2.1
Total long-lived assets	$	183.4	$	143.2