SEGMENT AND GEOGRAPHIC INFORMATION

12 Months Ended

May 27, 2017

Segment Reporting [Abstract]

SEGMENT AND GEOGRAPHIC INFORMATION

11. SEGMENT AND GEOGRAPHIC INFORMATION

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 and Canvys, and Healthcare.

The Power and Microwave Technologies Group (“PMT”), formerly called the Electron Device Group (“EDG”), prior to July 2015, provides engineered solutions and distributes electronic components to 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 OEM markets.

Healthcare manufactures, refurbishes and distributes high value replacement parts for the healthcare market including hospitals, medical centers, asset management companies, independent service organizations, and multi-vendor service providers. Products include Diagnostic Imaging replacement parts including CT and MRI tubes, hydrogen thyratrons, klystrons, magnetrons; 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):

	Fiscal Year Ended
	May 27,  2017		May 28,  2016		May 30,  2015
PMT
Net Sales	$	104,226	$	105,554	$	105,748
Gross Profit		33,382		33,088		33,098
Canvys
Net Sales	$	20,534	$	23,453	$	24,645
Gross Profit		5,752		6,017		6,457
Healthcare
Net Sales	$	12,112	$	13,009	$	6,564
Gross Profit		4,749		5,730		1,583

A reconciliation of assets to the relevant consolidated amount is as follows (in thousands):

	May 27,  2017		May 28,  2016
Segment assets	$	80,105	$	84,863
Cash and cash equivalents		55,327		60,454
Investments - current		6,429		2,268
Other current assets (1)		3,330		3,143
Net property, plant and equipment		8,752		8,333
Investments - non-current		2,419		7,799
Other assets - non-current deferred income taxes		1,102		1,270
Total assets	$	157,464	$	168,130

(1) Other current assets include miscellaneous receivables, prepaid expenses, and current deferred income taxes.

Assets are not disclosed by reportable segment as the Company does not track assets by reportable segment and certain assets are not specific to any reportable segment.

Capital expenditures for our Healthcare segment during fiscal 2017 and 2016 were approximately $3.4 million and $2.9 million, respectively. In addition, we also had capital expenditures during fiscal 2017 and fiscal 2016 related to the Company’s new ERP system that are not specific to any particular reportable segment.

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):

	Fiscal Year Ended
	May 27,  2017			May 28,  2016			May 30,  2015
Net Sales
North America	$	55,963		$	66,365		$	59,742
Asia/Pacific		27,997			24,564			24,605
Europe		44,296			44,634			44,425
Latin America		8,552			6,347			8,275
Other (1)		64			106			(90	)
Total	$	136,872		$	142,016		$	136,957
Gross Profit
North America	$	20,597		$	23,506		$	20,352
Asia/Pacific		9,630			8,212			7,967
Europe		14,418			13,541			14,051
Latin America		3,250			2,397			3,082
Other (1)		(4,012	)		(2,821	)		(4,314	)
Total	$	43,883		$	44,835		$	41,138

(1) Other primarily includes 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.

Net assets by geographic region are summarized in the following table (in thousands):

	Fiscal Year Ended
	May 27,  2017		May 28,  2016		May 30,  2015
Net Assets
North America	$	62,085	$	65,832	$	76,153
Asia/Pacific		34,990		42,547		44,602
Europe		32,794		31,495		34,127
Latin America		2,458		1,801		1,770
Total	$	132,327	$	141,675	$	156,652

The Company has long-lived assets of $19.3 million as of May 27, 2017 and $16.8 million as of May 28, 2016. The long-lived assets, which include our fixed assets and intangibles, are primarily in the US. There are approximately $1.2 million of long-lived assets that belong to our foreign affiliates as of May 27, 2017 and $1.3 million as of May 28, 2016.

The Company had depreciation and amortization expense of $2.7 million, $2.4 million and $1.7 million for fiscal 2017, fiscal 2016 and fiscal 2015, respectively. The depreciation and amortization, which includes our fixed assets and intangibles, are primarily in the US. Depreciation and amortization expense that belong to our foreign affiliates was approximately $0.3 million for fiscal 2017, fiscal 2016 and fiscal 2015.