4. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

Segment Reporting

In accordance with the provisions of Topic 280, Segment Reporting to the FASB ASC (“Topic 280”), the Company has determined that it has six operating segments (Semiconductor Test, Semiconductor Handlers, Contactors, PCB Test, Probes / Pins, and Fixtures). Based on the aggregation criteria of Topic 280, the Company determined that several of the operating segments can be aggregated due to these segments having similar economic characteristics and meeting all of the other aggregation criteria in Topic 280. Consequently, the Company has two reportable segments: the Semiconductor Test Solutions (“STS”) reportable segment, which is comprised of the Semiconductor Test, Semiconductor Handlers and Contactors operating segments, and the Electronic Manufacturing Solutions (“EMS”) reportable segment, which is comprised of the PCB Test, Probes / Pins and Fixtures operating segments.

The Semiconductor Test operating segment includes operations related to the design, manufacture and sale of automated test equipment for the semiconductor industry that is used to test system-on-a-chip, digital, analog and mixed signal integrated circuits. The Semiconductor Handlers operating segment includes operations related to the design, manufacture and sale of test handlers used in the testing of integrated circuits. The Contactors segment includes operations related to the design, manufacture and sale of test contactors which serve as the interface between the test handler and the semiconductor device under test. The PCB Test operating segment includes operations related to design, manufacture and sale of equipment used in the testing of bare and printed circuit boards. The Probes / Pins operating segment includes operations related to the design, manufacture and sale of the physical devices used to connect electronic test equipment to the device under test. The Fixtures segment includes operations related to the design, manufacture and sale of PCB Test fixtures that enable the transmission of test signals from the loaded PCB to the tester. Each operating segment has a segment manager who is directly accountable to and maintains regular contact with the Company’s chief operating decision maker (chief executive officer and chief operating officer) to discuss operating activities, financial results, forecasts, and plans for the segment.

The Company evaluates performance using several factors, of which the primary financial measures are revenue and operating segment operating income. The accounting policies of the operating segments are the same as those described in Note 2 “Summary of Significant Accounting Policies”.

Segment information for the three and nine months ended April 30, 2017 and 2016 is as follows (in thousands):

 

		Semiconductor Test Solutions				Electronic Manufacturing Solutions				Consolidated
Three months ended April 30, 2017
Net sales		$	83,521			$	20,114			$	103,635
Income (loss) from operations		$	11,298			$	(2,412	)		$	8,886
Depreciation and amortization expense		$	1,277			$	258			$	1,535
Three months ended April 30, 2016
Net sales		$	65,878			$	16,359			$	82,237
Income (loss) from operations		$	979			$	(355	)		$	624
Depreciation and amortization expense		$	1,466			$	240			$	1,706

 

		Semiconductor Test Solutions				Electronic Manufacturing Solutions				Consolidated
Nine months ended April 30, 2017
Net sales		$	212,604			$	51,241			$	263,845
Income (loss) from operations		$	12,444			$	(2,042	)		$	10,402
Depreciation and amortization expense		$	3,978			$	663			$	4,641
Nine months ended April 30, 2016
Net sales		$	178,427			$	54,545			$	232,972
Income (loss) from operations		$	(5,932	)		$	542			$	(5,390	)
Depreciation and amortization expense		$	4,374			$	1,073			$	5,447

The Company does not disclose total assets for each of its reportable segments, as total assets by reportable segment is not a key metric utilized by the Company’s chief operating decision maker.

Geographic Information

The Company’s net sales by geographic area for the three and nine months ended April 30, 2017 and 2016, along with its long-lived assets by location at April 30, 2017 and July 31, 2016, are summarized as follows:

 

		Three Months Ended April 30,								Nine months Ended April 30,
		2017				2016				2017				2016
		(in thousands)
Net sales:
United States		$	23,223			$	11,420			$	49,928			$	45,335
Malaysia			8,318				4,619				21,447				14,621
Hong Kong/China			14,943				16,621				31,464				40,654
Taiwan			13,654				6,686				39,208				22,757
Thailand			5,251				6,640				17,217				16,924
Philippines			14,582				9,100				32,975				25,982
Germany			6,615				7,297				20,694				18,201
Singapore			5,197				8,150				17,464				15,853
All other countries			11,852				11,704				33,448				32,645
Total Net Sales		$	103,635			$	82,237			$	263,845			$	232,972

 

		April 30, 2017				July 31, 2016
		(in thousands)
Long-lived assets:
United States		$	12,934			$	11,004
Germany			8,512				8,457
Malaysia			3,040				3,146
China			229				301
Singapore			442				784
Japan			842				878
Philippines			100				186
Taiwan			404				243
All other countries			462				484
Total long-lived assets		$	26,965			$	25,483

Transfer prices on products sold to foreign subsidiaries are intended to produce profit margins that correspond to the subsidiary’s sales and support efforts.