Segment and Geographic Information

12 Months Ended

Oct. 03, 2020

SEGMENT AND GEOGRAPHIC INFORMATION

At October 3, 2020, we were organized into two reporting segments, OLS and 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 tools primarily used for industrial laser materials processing, serving important end markets like automotive, machine tools, consumer goods, and medical device manufacturing.

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 continuing 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 continuing 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 research and development, 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 continuing operations for our operating segments and a reconciliation of our total income (loss) from continuing operations to income (loss) from continuing operations before income taxes (in thousands):


	Fiscal
	2020		2019		2018
Net sales:
OEM Laser Sources	$	758,929	$	886,676	$	1,259,477
Industrial Lasers & Systems	470,070		543,964		643,096
Total net sales	$	1,228,999	$	1,430,640	$	1,902,573
Income (loss) from continuing operations:
OEM Laser Sources	$	169,883	$	239,073	$	469,835
Industrial Lasers & Systems (1)	(518,186)		(93,133)		(3,687)
Corporate and other	(81,877)		(62,845)		(73,131)
Total income (loss) from continuing operations	(430,180)		83,095		393,017
Total other expense, net	(12,543)		(23,047)		(31,462)
Income (loss) from continuing operations before income taxes	$	(442,723)	$	60,048	$	361,555

(1) The fiscal 2020 loss includes non-cash pre-tax goodwill impairment charges of $327.2 million as well as non-cash pre-tax charges related to the impairment of intangible assets, property, plant and equipment and ROU assets of $33.9 million, $85.6 million, and $1.8 million, respectively. See Note 8, "Goodwill and Intangible Assets" in the Notes to Consolidated Financial Statements and Note 11, "Leases" in the Notes to Consolidated Financial Statements under Item 8 of this annual report.

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 fiscal 2020, 2019, and 2018 is based on the location of the end customer. Geographic long-lived asset information presented below is based on the physical location of the assets at the end of each year.

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


	Fiscal
SALES	2020		2019		2018
United States	$	296,102	$	339,585	$	309,495
Foreign countries:
South Korea	247,461		313,461		652,313
China	196,824		194,653		235,568
Japan	94,068		138,028		180,223
Asia-Pacific, other	94,835		93,389		124,733
Germany	117,170		145,285		166,926
Europe, other	125,739		148,680		171,936
Rest of World	56,800		57,559		61,379
Total foreign countries sales	932,897		1,091,055		1,593,078
Total sales	$	1,228,999	$	1,430,640	$	1,902,573

Long-lived assets, which include all non-current assets other than goodwill, intangibles, non-current restricted cash, our investment in 3D-Micromac AG and deferred taxes, by geographic region, are as follows (in thousands):


	Fiscal year-end
LONG-LIVED ASSETS	2020		2019
United States	$	170,412	$	151,640
Foreign countries:
Germany	123,019		152,529
Europe, other	35,810		29,815
Asia-Pacific	56,125		39,977
Total foreign countries long-lived assets	214,954		222,321
Total long-lived assets	$	385,366	$	373,961

Major Customers

We had one major customer who accounted for 17.2%, 16.8%, and 25.8% of consolidated revenue during fiscal 2020, 2019, and 2018, respectively. The customer purchased primarily from our OLS segment.