SEGMENT REPORTING

12 Months Ended

May. 30, 2015

SEGMENT REPORTING

10. 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: EDG and Canvys, and Healthcare.

Electron Device Group ("EDG"), renamed Power and Microwave Technologies Group in 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. 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. In July 2015, EDG was re-named Power and Microwave Technologies Group.

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 picture archiving and communication systems ("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 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 30,   2015		May 31,   2014		June 1,   2013
EDG
Net Sales	$	105,748	$	103,274	$	102,593
Gross Profit	33,098		31,610		31,431
Canvys
Net Sales	$	24,645	$	27,857	$	32,139
Gross Profit	6,457		7,588		8,142
Healthcare
Net Sales	$	6,564	$	6,829	$	6,334
Gross Profit	1,583		1,816		1,972

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

	May 30,   2015		May 31,   2014
Segment assets	$	60,200	$	52,790
Cash and cash equivalents	74,535		102,752
Investments - current	23,692		31,732
Other current assets (1)	3,494		5,790
Net property	10,081		7,223
Investments - non-current	11,549		1,516
Other assets - non-current deferred income taxes	1,443		1,724
Assets of discontinued operations (2)	—		18
Total assets	$	184,994	$	203,545

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

(2) See Note 4 “Discontinued Operations”.

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 30,   2015			May 31,   2014			June 1,   2013
Net Sales
North America	$	59,742		$	57,137		$	62,269
Asia/Pacific	24,605			24,069			22,732
Europe	44,425			47,610			45,663
Latin America	8,275			8,936			9,447
Other (1)	(90		)	208			955
Total	$	136,957		$	137,960		$	141,066
Gross Profit
North America	$	20,352		$	18,905		$	20,963
Asia/Pacific	7,967			7,849			7,805
Europe	14,051			15,506			14,248
Latin America	3,082			3,231			3,296
Other (1)	(4,314		)	(4,477		)	(4,767		)
Total	$	41,138		$	41,014		$	41,545

(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 30,   2015		May 31,   2014		June 1,   2013
Net Assets
North America	$	76,153	$	88,902	$	103,006
Asia/Pacific	44,602		45,334		43,604
Europe	34,127		38,407		36,373
Latin America	1,770		2,202		2,256
Total	$	156,652	$	174,845	$	185,239