Operating Segments

9 Months Ended

Mar. 30, 2013

Operating Segments

Operating Segments

Note 17. Operating Segments

The Company evaluates its reportable segments in accordance with the authoritative guidance on segment reporting. The Company’s Chief Executive Officer, Thomas H. Waechter, is the Company’s Chief Operating Decision Maker (“CODM”) pursuant to the guidance. The CODM allocates resources to the segments based on their business prospects, competitive factors, net revenue and operating results.

The Company is a leading provider of communications test and measurement solutions and optical products for telecommunications service providers, cable operators, and network equipment manufacturers (“NEMs”), and enterprises. JDSU’s diverse technology portfolio also fights counterfeiting and enables commercial lasers for a range of manufacturing applications.

Effective July 1, 2012, the reporting structure of the previous AOT business segment was reorganized and its previous reporting units, which consisted of COPG, Flex and ASG (excluding the Hologram Business), were merged into the new OSP business segment, having one single reporting unit, replacing the AOT business segment. The Hologram Business was previously presented within the AOT business segment; however, because it is presented as discontinued operations for financial reporting purposes as of September 29, 2012, it has been excluded from the segment results below.

The Company’s reportable segments are:

(i) Communications Test and Measurement Business Segment:

CommTest supplies instruments, software and services to enable the design, deployment and maintenance of communication equipment and networks as well as to ensure the quality of services delivered to the end customer. These solutions speed time-to-revenue by accelerating the deployment of new products and services, lower operating expenses and improve network performance and reliability. Included in the product portfolio are test tools, platforms, software, and services for wireless and fixed networks.

(ii) Communications and Commercial Optical Products Business Segment:

CCOP provides components, modules, subsystems, and solutions used by communications equipment providers for telecommunications and enterprise data communications. These products enable the transmission of video, audio, and text data over high-capacity, fiber-optic cables. The product portfolio includes transmitters, receivers, amplifiers, ROADMs, optical transceivers, multiplexers and demultiplexers, switches, optical-performance monitors and couplers, splitters and circulators.

CCOP also provides a broad laser portfolio that addresses the needs of OEM clients for applications such as micromachining, materials processing, bioinstrumentation, consumer electronics, graphics, medical/dental, and optical pumping. JDSU products include diode, direct-diode, diode-pumped solid-state, fiber and gas lasers.

(iii) Optical Security and Performance Products Business Segment:

OSP provides innovative optical security solutions, with a strategic focus on serving the anti-counterfeiting market through advanced security pigments, thread substrates and printed features for the currency, pharmaceutical and consumer electronic segments. OSP also provides thin-film coating solutions for 3D and gesture recognition applications.

The accounting policies of the reportable segments are the same as those described in the Company’s Current Report on Form 8-K dated December 14, 2012. The Company evaluates segment performance based on operating income (loss), excluding certain infrequent or unusual items.

The amounts shown as Corporate consist of certain unallocated corporate-level operating expenses. In addition, the Company does not allocate stock-based compensation, acquisition-related charges and amortization of intangibles, restructuring and related charges, non-operating income and expenses, or other non-recurring charges to its segments as highlighted in the table below.

Information on reportable segments is as follows (in millions):

	Three Months Ended						Nine Months Ended
	March 30,			March 31,			March 30,			March 31,
	2013			2012			2013			2012
Net revenue:
Communications Test and Measurement	$	174.2		$	177.8		$	539.1		$	559.2
Communications and Commercial Optical Products	179.2			173.1			559.9			516.6
Optical Security and Performance Products	51.9			52.4			156.6			153.2
Deferred revenue related to purchase accounting adjustment	—			—			—			(0.6		)
Net revenue	$	405.3		$	403.3		$	1,255.6		$	1,228.4
Operating income (loss):
Communications Test and Measurement	$	13.0		$	20.1		$	65.1		$	72.2
Communications and Commercial Optical Products	19.2			14.1			64.2			56.3
Optical Security and Performance Products	18.6			18.5			56.0			53.0
Corporate	(23.2		)	(23.5		)	(70.0		)	(65.9		)
Total segment operating income	27.6			29.2			115.3			115.6
Unallocated amounts:
Stock-based compensation	(15.3		)	(13.3		)	(41.5		)	(37.1		)
Acquisition-related charges and amortization of intangibles	(20.1		)	(19.8		)	(58.8		)	(60.6		)
Loss on disposal of long-lived assets	(0.2		)	(0.2		)	(1.6		)	(0.9		)
Restructuring and related charges	(0.4		)	(2.0		)	(6.1		)	(7.5		)
Other non-recurring charges (1)	(12.9		)	(0.3		)	(13.6		)	(9.6		)
Interest and other income	(0.9		)	0.2			(3.7		)	2.2
Interest expense	(4.2		)	(6.9		)	(15.4		)	(20.1		)
Loss from continuing operations before income taxes	$	(26.4	)	$	(13.1	)	$	(25.4	)	$	(18.0	)

(1) During the three months ended March 30, 2013, the Company incurred $11.3 million of inventory related charges, included in Cost of sales, primarily related to a write-off of inventory no longer being sold due to a strategic plan to exit the low-speed wireline product line approved in the third quarter of fiscal 2013.