Note 11 - Significant Customer and Industry Segment Information

12 Months Ended

Mar. 28, 2020

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

11 Significant Customers and Industry Segment Information

The Company has

two

reportable segments: Microsource and the Giga-tronics Division. Microsource’s primary business is the design of custom Microwave Integrated Components as well as the production of MIC components using chip and wire assembly methods. Our Microsource Division offers a line of tunable, synthesized Band Reject Filters (BRF) for solving interference problems in RADAR/EW applications. Self-protection systems onboard high performance military aircraft often require RADAR filters to block electromagnetic interference generated by other onboard electronic systems, particularly the aircraft’s main RADAR. These high-speed, tunable notch filters can quickly block interference from both continuous wave and wide bandwidth emissions. Using proprietary driver and phase lock technology, these filters offer tuning speeds that are up to

ten

times faster than traditional filter designs. We design these filters specifically for each application. Microsource’s

two

largest customers are prime contractors for which it develops and manufactures RADAR filters used in fighter jet aircraft.

The Giga-tronics Division designs, manufactures and markets a family of functional test products for the RADAR and Electronic Warfare (RADAR/EW) segment of the defense electronics market. Our RADAR/EW test products are used to evaluate and improve the performance of RADAR/EW systems.

The accounting policies for the segments are the same as those described in the "Summary of Significant Accounting Policies". The Company evaluates the performance of its segments and allocates resources to them based on earnings before income taxes. Segment net sales include sales to external customers. Inter-segment activities are eliminated in consolidation. Assets include accounts receivable, inventories, equipment, cash, deferred income taxes, prepaid expenses and other long- term assets. The Company accounts for inter-segment sales and transfers at terms that allow a reasonable profit to the seller. During the periods reported there were

no

significant inter-segment sales or transfers.

The Company's reportable operating segments are strategic business units that offer different products and services. They are managed separately because each business utilizes different technology and requires different accounting systems. The Company’s chief operating decision maker is considered to be the Company’s Chief Executive Officer (“CEO”). The CEO reviews financial information presented on a consolidated basis accompanied by disaggregated information about revenues and pre-tax income or loss by operating segment.

The tables below present information for fiscal years

2020

and

2019.

March 28 , 20 20 (Dollars in thousands)	Giga-tronics Division			Microsource		Total
Revenue	$	3,521		$	8,247	$	11,768
Interest expense, net		(252	)		—		(252	)
Depreciation		184			—		184
Income (loss) before income taxes		(3,392	)		2,707		(685	)
Assets		6,011			2,915		8,926

March 30, 2019 (Dollars in thousands)	Giga-tronics Division			Microsource		Total
Revenue	$	1,935		$	9,213	$	11,148
Interest expense, net		(607	)		—		(607	)
Depreciation		257			7		264
Income (loss) before income taxes		(4,521	)		3,626		(895	)
Assets		3,979			2,300		6,279

The Company’s Giga-tronics Division and Microsource segments sell to agencies of the U.S. government and U.S. defense- related customers. In fiscal

2020

and

2019,

U.S. government and U.S. defense-related customers accounted for

85%

and

98%

of sales, respectively. During fiscal

2020,

the Boeing Company accounted for

45%

of the Company’s consolidated revenues and was included in the Microsource segment. A

second

customer, Lockheed Martin Corporation accounted for

19%

of the Company’s consolidated revenues during fiscal

2020

and was also included in the Microsource segment. A

third

customer, DFAS accounted for

18%

of the Company’s consolidated revenues during fiscal

2020

and was included in the Giga-tronics Division.

During fiscal

2019,

the Boeing Company accounted for

57%

of the Company’s consolidated revenues and was included in the Microsource segment. A

second

customer, Lockheed Martin Corporation accounted for

26%

of the Company’s consolidated revenues during fiscal

2019

and was also included in the Microsource segment.

Export sales accounted for

1%

and

1%

of the Company’s sales in fiscal

2020

and

2019,

respectively. Export sales by geographical area for these fiscal years are shown below (Dollars in thousands):

	March 28, 2020		March 30, 2019
Europe	$	13	$	14
Asia		10		12
Rest of world		110		68
Total	$	133	$	94