Operating Segments

3 Months Ended

Sep. 27, 2014

Operating Segments

Operating Segments

Note 16. 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 network service and enablement solutions and optical products for telecommunications service providers, cable operators, network equipment manufacturers (“NEMs”) and enterprises. JDSU’s diverse technology portfolio also fights counterfeiting and enables commercial lasers for a range of manufacturing applications.

In the first quarter of fiscal 2015, the Company reorganized its NSE reportable segment into two separate reportable segments, Network Enablement and Service Enablement. Splitting NSE into two reportable segments provides greater clarity and transparency regarding the markets, financial performance and business models of the NE and SE businesses. NE is a hardware-centric and more mature business consisting primarily of NSE's traditional communications test instrument products. SE is a more software-centric business consisting primarily of software solutions that are embedded within the network and enterprise performance management solutions. Historical segment numbers have been recast to conform to this new reporting structure in our financial statements.

The Company’s reportable segments are:

(i) Network Enablement:

NE provides testing solutions that access the network to perform build out and maintenance tasks. These solutions include instruments and software to design, build, turn-up, certify, troubleshoot, and optimize networks.

(ii) Service Enablement:

SE solutions are embedded systems that yield network, service and application performance data. These solutions—including 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) Communications and Commercial Optical Products:

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, reconfigurable optical add/drop multiplexers ("ROADMs"), optical transceivers, multiplexers and demultiplexers, switches, optical-performance monitors and couplers, splitters and circulators. CCOP also provides near-infrared light source technology used in 3D sensing systems.

CCOP also provides a broad laser portfolio that addresses the needs of original equipment manufacturers ("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.

(iv) Optical Security and Performance Products:

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 Annual Report on Form 10-K for the year ended June 28, 2014. 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
				September 27,		September 28,
				2014		2013
Net revenue:
	Network Enablement			$	132.8	$	145.1
	Service Enablement				48.2		26.8
	Communications and Commercial Optical Products				209.3		204.6
	Optical Security and Performance Products				43.3		52.5
			Net revenue	$	433.6	$	429.0
Operating income (loss):
	Network Enablement			$	20.1	$	22.5
	Service Enablement				0.8		(9.9)
	Communications and Commercial Optical Products				25.1		27.2
	Optical Security and Performance Products				15.9		19.1
	Corporate				(22.4)		(23.5)
			Total segment operating income		39.5		35.4
	Unallocated amounts:
		Stock-based compensation			(15.7)		(15.7)
		Amortization of intangibles			(15.1)		(14.1)
		Loss on disposal of long-lived assets			-		(0.3)
		Restructuring and related charges			(2.9)		0.8
		Other charges related to non-recurring activities			(1.6)		0.5
		Interest and other income (expense), net			0.5		(0.6)
		Interest expense			(8.3)		(5.2)
	Loss (income) before income taxes			$	(3.6)	$	0.8