Operating Segments and Geographic Information

9 Months Ended

Mar. 30, 2024

Segment Reporting [Abstract]

Operating Segments and Geographic Information

Note 19. Operating Segments and Geographic Information

The Company evaluates its reportable segments in accordance with the authoritative guidance on segment reporting. The Company’s CODM uses operating segment financial information to evaluate segment performance and to allocate resources.

The Company’s reportable segments are:

(i) Network Enablement (NE):

NE provides an integrated portfolio of testing solutions that access the network to perform build-out and maintenance tasks. These solutions include instruments, software and services to design, build, turn-up, certify, troubleshoot and optimize networks. The Company also offers a range of product support and professional services such as repair, calibration, software support and technical assistance for its products. NE’s avionics products provide test and measuring solutions for aviation, aerospace, government, defense, communications and public safety.

(ii) Service Enablement (SE):

SE provides embedded systems and enterprise performance management solutions that give global communications service providers, enterprises and cloud operators visibility into network, service and application data. These solutions - including instruments, microprobes and software - monitor, collect and analyze network data to reveal the actual customer experience and to identify opportunities for new revenue streams and network optimization.

(iii) Optical Security and Performance Products (OSP):

OSP leverages its core optical coating technologies and volume manufacturing capability to design, manufacture, and sell technologies for the anti-counterfeiting, consumer electronics, industrial, government and automotive markets.

Segment Reporting

The CODM manages the Company in two broad business categories: NSE and OSP. The CODM evaluates segment performance of the NSE business based on the combined segments (NE and SE) gross and operating margins. Operating expenses associated with the NSE business are not allocated to the individual segments within NSE, as they are managed centrally at the business unit level. The CODM evaluates segment performance of the OSP business based on segment operating margin. The Company allocates corporate-level operating expenses to its segment results, except for certain non-core operating and non-operating activities as discussed below.

The Company does not allocate stock-based compensation, acquisition-related charges, amortization of intangibles, restructuring, impairment of goodwill, non-operating income and expenses, changes in fair value of contingent consideration liabilities, or other charges unrelated to core operating performance to its segments because management does not include this information in its measurement of the performance of the operating segments. These items are presented as “Other Items” in the table below. Additionally, the Company does not specifically identify and allocate all assets by operating segment.

The following tables present information on the Company’s reportable segments for the three months ended March 30, 2024 and April 1, 2023 (in millions):

	Three Months Ended March 30, 2024
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Other Items (1)		Consolidated GAAP Measures
Product revenue	$	124.0		$	7.1		$	131.1		$	76.2		$	—	$	207.3
Service revenue	27.7			11.0			38.7			—			—		38.7
Net revenue	$	151.7		$	18.1		$	169.8		$	76.2		$	—	$	246.0
Gross profit	$	93.3		$	11.0		$	104.3		$	38.2		$	(4.6)	$	137.9
Gross margin	61.5		%	60.8		%	61.4		%	50.1		%			56.1		%
Operating (loss) income							$	(3.1)		$	26.1		$	(34.9)	$	(11.9)
Operating margin							(1.8)		%	34.3		%			(4.8)		%

	Three Months Ended April 1, 2023
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Other Items (1)		Consolidated GAAP Measures
Product revenue	$	122.8		$	11.9		$	134.7		$	70.5		$	—	$	205.2
Service revenue	29.1			13.5			42.6			—			—		42.6
Net revenue	$	151.9		$	25.4		$	177.3		$	70.5		$	—	$	247.8
Gross profit	$	94.5		$	17.8		$	112.3		$	35.7		$	(7.0)	$	141.0
Gross margin	62.2		%	70.1		%	63.3		%	50.6		%			56.9		%
Operating income (loss)							$	2.5		$	25.8		$	(30.4)	$	(2.1)
Operating margin							1.4		%	36.6		%			(0.8)		%

(1)Other Items include charges (benefits) unrelated to core operating performance primarily consisting of stock-based compensation, amortization of acquisition-related intangibles, restructuring, changes in fair value of contingent consideration liabilities and other charges unrelated to core operating performance. During the three months ended March 30, 2024, Other Items include expenses related to the proposed acquisition of Spirent Communications plc (Spirent).

	Three Months Ended
	March 30, 2024		April 1, 2023
Corporate reconciling items impacting gross profit:
Total segment gross profit	$	142.5	$	148.0
Stock-based compensation	(1.2)		(1.2)
Amortization of intangibles	(3.5)		(5.9)
Other benefits unrelated to core operating performance (1)	0.1		0.1
GAAP gross profit	$	137.9	$	141.0
Corporate reconciling items impacting operating income:
Total segment operating income	$	23.0	$	28.3
Stock-based compensation	(12.8)		(12.7)
Amortization of intangibles	(5.0)		(8.0)
Change in fair value of contingent liability	(0.6)		1.9
Other charges unrelated to core operating performance (1)	(16.4)		(1.4)
Restructuring and related charges	(0.1)		(10.2)
GAAP operating loss from continuing operations	$	(11.9)	$	(2.1)

(1)    During the three months ended March 30, 2024 and April 1, 2023, Other benefits (charges) unrelated to core operating performance primarily consisting of certain acquisition and integration related charges, accretion of debt discount and loss on disposal of long-lived assets. During the three months ended March 30, 2024, Other charges include expenses related to the proposed acquisition of Spirent.

	Nine Months Ended March 30, 2024
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Other Items (1)		Consolidated GAAP Measures
Product revenue	$	369.6		$	25.6		$	395.2		$	228.6		$	—	$	623.8
Service revenue	87.6			37.0			124.6			—			—		124.6
Net revenue	$	457.2		$	62.6		$	519.8		$	228.6		$	—	$	748.4
Gross profit	$	285.1		$	41.3		$	326.4		$	117.9		$	(14.0)	$	430.3
Gross margin	62.4		%	66.0		%	62.8		%	51.6		%			57.5		%
Operating income							$	4.8		$	82.7		$	(61.0)	$	26.5
Operating margin							0.9		%	36.2		%			3.5		%

	Nine Months Ended April 1, 2023
	Network and Service Enablement
	Network Enablement			Service Enablement			Network and Service Enablement			Optical Security and Performance Products			Other Items (1)		Consolidated GAAP Measures
Product revenue	$	441.7		$	33.6		$	475.3		$	239.1		$	—	$	714.4
Service revenue	90.0			38.0			128.0			0.1			—		128.1
Net revenue	$	531.7		$	71.6		$	603.3		$	239.2		$	—	$	842.5
Gross profit	$	339.4		$	47.9		$	387.3		$	128.0		$	(22.5)	$	492.8
Gross margin	63.8		%	66.9		%	64.2		%	53.5		%			58.5		%
Operating income							$	49.8		$	91.9		$	(71.1)	$	70.6
Operating margin							8.3		%	38.4		%			8.4		%

(1)Other Items include charges (benefits) unrelated to core operating performance primarily consisting of stock-based compensation, amortization of acquisition-related intangibles, restructuring, changes in fair value of contingent consideration liabilities and other charges unrelated to core operating performance. During the nine months ended March 30, 2024, Other Items include expenses related to the proposed acquisition of Spirent.

	Nine Months Ended
	March 30, 2024		April 1, 2023
Corporate reconciling items impacting gross profit:
Total segment gross profit	$	444.3	$	515.3
Stock-based compensation	(3.7)		(3.6)
Amortization of intangibles	(10.4)		(18.7)
Other benefits (charges) unrelated to core operating performance (1)	0.1		(0.2)
GAAP gross profit	$	430.3	$	492.8
Corporate reconciling items impacting operating income:
Total segment operating income	$	87.5	$	141.7
Stock-based compensation	(36.6)		(38.8)
Amortization of intangibles	(15.4)		(25.2)
Change in fair value of contingent liability	7.8		0.1
Other (charges) benefits unrelated to core operating performance (1)	(17.6)		3.0
Restructuring and related benefits (charges)	0.8		(10.2)
GAAP operating income from continuing operations	$	26.5	$	70.6

(1)    During the nine months ended March 30, 2024 and April 1, 2023, Other benefits (charges) unrelated to core operating performance primarily consisting of certain acquisition and integration related charges, accretion of debt discount and loss on disposal of long-lived assets. During the nine months ended March 30, 2024, Other charges include expenses related to the proposed acquisition of Spirent.

The Company operates primarily in three geographic regions: Americas, Asia-Pacific, and Europe, Middle East and Africa (EMEA). Net revenue is assigned to the geographic region and country where the Company’s product is initially shipped. For example, certain customers may request shipment of the Company’s product to a contract manufacturer in one country, which may differ from the location of their end customers. The following table presents net revenue by the three geographic regions in which the Company operates and net revenue from countries that exceeded 10% of the Company’s total net revenue for the three and nine months ended March 30, 2024 and April 1, 2023 (in millions):

	Three Months Ended
	March 30, 2024						April 1, 2023
	Product Revenue		Service Revenue		Total		Product Revenue		Service Revenue		Total
Americas:
United States	$	62.3	$	14.0	$	76.3	$	68.5	$	14.0	$	82.5
Other Americas	8.8		3.2		12.0		14.0		4.0		18.0
Total Americas	$	71.1	$	17.2	$	88.3	$	82.5	$	18.0	$	100.5
Asia-Pacific:
Greater China	$	45.7	$	1.3	$	47.0	$	43.5	$	1.8	$	45.3
Other Asia-Pacific	36.5		6.2		42.7		24.1		6.1		30.2
Total Asia-Pacific	$	82.2	$	7.5	$	89.7	$	67.6	$	7.9	$	75.5
EMEA:	$	54.0	$	14.0	$	68.0	$	55.1	$	16.7	$	71.8
Total net revenue	$	207.3	$	38.7	$	246.0	$	205.2	$	42.6	$	247.8

	Nine Months Ended
	March 30, 2024						April 1, 2023
	Product Revenue		Service Revenue		Total		Product Revenue		Service Revenue		Total
Americas:
United States	$	198.5	$	45.3	$	243.8	$	227.0	$	44.6	$	271.6
Other Americas	37.1		11.0		48.1		47.4		10.8		58.2
Total Americas	$	235.6	$	56.3	$	291.9	$	274.4	$	55.4	$	329.8
Asia-Pacific:
Greater China	$	141.0	$	4.5	$	145.5	$	165.9	$	5.7	$	171.6
Other Asia	89.7		19.9		109.6		100.8		19.8		120.6
Total Asia-Pacific	$	230.7	$	24.4	$	255.1	$	266.7	$	25.5	$	292.2
EMEA:	$	157.5	$	43.9	$	201.4	$	173.3	$	47.2	$	220.5
Total net revenue	$	623.8	$	124.6	$	748.4	$	714.4	$	128.1	$	842.5