17 Business Segment Information

The accounting standards for segment reporting establish standards for reporting information about operating segments in annual financial statements and require selected information for those segments to be presented in interim financial reports of public business enterprises. They also establish standards for related disclosures about products and services, geographic areas and major customers. The Company’s business activities, for which discrete financial information is available, are regularly reviewed and evaluated by the chief operating decision maker. As a result of this evaluation, the Company determined that it has two operating segments: Waters^TM and TA^TM.

The Waters operating segment is primarily in the business of designing, manufacturing, selling and servicing LC and MS instruments, columns and other precision chemistry consumables that can be integrated and used along with other analytical instruments. The TA operating segment is primarily in the business of designing, manufacturing, selling and servicing thermal analysis, rheometry and calorimetry instruments. The Company’s two operating segments have similar economic characteristics; product processes; products and services; types and classes of customers; methods of distribution; and regulatory environments. Because of these similarities, the two segments have been aggregated into one reporting segment for financial statement purposes. Please refer to the consolidated financial statements for financial information regarding the one reportable segment of the Company.

Net sales for the Company’s products and services are as follows for the years ended December 31, 2018, 2017 and 2016 (in thousands):


	2018		2017		2016
Product net sales:
Waters instrument systems	$	1,000,625	$	988,750	$	943,218
Chemistry consumables		400,287		372,157		345,413
TA instrument systems		204,081		191,442		171,665

Total product sales		1,604,993		1,552,349		1,460,296
Service net sales:
Waters service		738,433		686,656		639,432
TA service		76,503		70,073		67,695

Total service sales		814,936		756,729		707,127

Total net sales	$	2,419,929	$	2,309,078	$	2,167,423

Net sales are attributable to geographic areas based on the region of destination. Geographic sales information is presented below for the years ended December 31, 2018, 2017 and 2016 (in thousands):


	2018		2017		2016
Net Sales:
Asia:
China	$	443,321	$	387,059	$	331,354
Japan		173,357		167,258		167,977
Asia Other		305,613		308,300		283,653

Total Asia		922,291		862,617		782,984
Americas:
United States		683,596		669,274		665,280
Americas Other		151,581		140,715		141,902

Total Americas		835,177		809,989		807,182
Europe		662,461		636,472		577,257

Total net sales	$	2,419,929	$	2,309,078	$	2,167,423

None of the Company’s individual customers accounts for more than 2% of annual Company sales. Net sales by customer class are as follows for the years ended December 31, 2018, 2017 and 2016 (in thousands):


	2018		2017		2016
Pharmaceutical	$	1,365,731	$	1,294,668	$	1,206,316
Industrial		737,144		721,088		690,119
Governmental and academic		317,054		293,322		270,988

Total net sales	$	2,419,929	$	2,309,078	$	2,167,423

Net sales for the Company recognized at a point in time versus over time are as follows for the years ended December 31, 2018, 2017 and 2016 (in thousands):


	2018		2017		2016
Net sales recognized at a point in time:
Instrument systems	$	1,204,706	$	1,180,192	$	1,114,883
Chemistry consumables		400,287		372,157		345,413
Service sales recognized at a point in time (time & materials)		317,549		299,385		279,482

Total net sales recognized at a point in time		1,922,542		1,851,734		1,739,778

Net sales recognized over time:
Service and software sales recognized over time (contracts)		497,387		457,344		427,645

Total net sales	$	2,419,929	$	2,309,078	$	2,167,423

Long-lived assets information at December 31, 2018 and 2017 is presented below (in thousands):


	2018		2017		2016
Long-lived assets:
United States	$	203,664	$	186,344	$	207,062
Americas Other		1,680		1,720		832

Total Americas		205,344		188,064		207,894
Europe		118,513		136,440		114,848
Asia		19,226		24,774		14,376

Total long-lived assets	$	343,083	$	349,278	$	337,118

The Other category includes Canada, Latin America and Puerto Rico. Long-lived assets exclude goodwill, other intangible assets and other assets.