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SEGMENT AND GEOGRAPHIC INFORMATION
 12 Months Ended
May 28, 2016
Segment Reporting [Abstract]  
SEGMENT AND GEOGRAPHIC INFORMATION
11. 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: PMT and Canvys, and Healthcare.

 

Electron Device Group (“EDG”), renamed Power and Microwave Technologies Group (“PMT”) 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. PMT 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. PMT also offers its customers technical services for both microwave and industrial equipment.

 

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 28,
 2016		   May 30,
 2015		   May 31,
 2014
PMT            
Net Sales   $ 105,554     $ 105,748     $ 103,274  
Gross Profit     33,088       33,098       31,610  
Canvys                        
Net Sales   $ 23,453     $ 24,645     $ 27,857  
Gross Profit     6,017       6,457       7,588  
Healthcare                        
Net Sales   $ 13,009     $ 6,564     $ 6,829  
Gross Profit     5,730       1,583       1,816  

 

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

 

   May 28,
 2016		  May 30,
 2015
Segment assets  $80,210   $60,200 
Cash and cash equivalents   60,454    74,535 
Investments - current   2,268    23,692 
Other current assets (1)   3,143    3,494 
Net property   12,986    10,081 
Investments - non-current   7,799    11,549 
Other assets - non-current deferred income taxes   1,270    1,443 
Total assets  $168,130   $184,994 

  

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

  

Assets are not disclosed by reportable segment as the Company does not track assets by reportable segment and certain assets are not specific to any reportable segment.

 

Capital expenditures for our Healthcare segment during fiscal 2016 were approximately $2.9 million. In addition, we also had capital expenditures during fiscal year 2016 and fiscal year 2015 related to the Company’s new ERP system that are not specific to any particular reportable segment.

 

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 28,
 2016		  May 30,
 2015		  May 31,
 2014
Net Sales         
North America  $66,365   $59,742   $57,137 
Asia/Pacific   24,564    24,605    24,069 
Europe   44,634    44,425    47,610 
Latin America   6,347    8,275    8,936 
Other (1)   106    (90)   208 
Total  $142,016   $136,957   $137,960 
Gross Profit               
North America  $23,506   $20,352   $18,905 
Asia/Pacific   8,212    7,967    7,849 
Europe   13,541    14,051    15,506 
Latin America   2,397    3,082    3,231 
Other (1)   (2,821)   (4,314)   (4,477)
Total  $44,835   $41,138   $41,014 

  

(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 28,
 2016		  May 30,
 2015		  May 31,
 2014
Net Assets         
North America  $65,832   $76,153   $88,902 
Asia/Pacific   42,547    44,602    45,334 
Europe   31,495    34,127    38,407 
Latin America   1,801    1,770    2,202 
Total  $141,675   $156,652   $174,845 

 

The Company has long-lived assets of $16.8 million as of May 28, 2016. The long-lived assets, which include our fixed assets and intangibles, are primarily in the US. There are approximately $1.3 million of long-lived assets that belong to our foreign affiliates.

 

The Company had depreciation and amortization expense of $2.4 million as of May 28, 2016. The depreciation and amortization, which includes our fixed assets and intangibles, are primarily in the US. There was approximately $0.3 million of depreciation and amortization expense that belong to our foreign affiliates.