SEGMENT REPORTING

3 Months Ended

Aug. 30, 2014

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 we will 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 Richardson Healthcare.

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 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 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
	August 30,   2014		August 31,   2013
EDG
Net Sales	$	27,438	$	25,479
Gross Profit	8,686		7,859
Canvys
Net Sales	$	5,968	$	7,446
Gross Profit	1,656		1,903
Richardson Healthcare
Net Sales	$	1,293	$	1,332
Gross Profit	316		430

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
	August 30,   2014			August 31,   2013
Net Sales
North America	$	14,699		$	14,109
Asia/Pacific	6,505			6,305
Europe	11,049			11,489
Latin America	2,321			2,197
Other	125			157
Total	$	34,699		$	34,257
Gross Profit (loss)
North America	$	5,183		$	4,935
Asia/Pacific	2,119			1,943
Europe	3,719			3,595
Latin America	878			822
Other	(1,241		)	(1,103		)
Total	$	10,658		$	10,192

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.