16)	Business Segment, Geographic Area, Product and Significant Customer Information

The Company develops, manufactures, sells and services products that measure, control, power and monitor critical parameters of advanced manufacturing processes. The Company’s Chief Operating Decision Maker (“CODM”) utilizes consolidated financial information to make decisions about allocating resources and assessing performance for the entire Company. In addition, certain disaggregated financial information is also provided to the CODM, which is used in the decision making process to assess performance. Based upon the information provided to the CODM, the Company has determined it has four reportable segments.

The Company’s reportable segments are Advanced Manufacturing Capital Equipment, Global Service, Asia Region Sales and Other. The Company has reported corporate expenses and certain intercompany pricing transactions in a Corporate and Eliminations reconciling column.

The Advanced Manufacturing Capital Equipment segment includes the development, manufacturing and sales of instruments and control products, power and reactive gas products, materials delivery products and vacuum products, all of which are utilized in semiconductor processing and other similar advanced manufacturing processes. Sales in this segment include both external sales and intercompany product sales, which are recorded at transfer prices in accordance with applicable tax requirements.

The Global Service segment includes the worldwide servicing of instruments and control products, power and reactive gas products, materials delivery products and vacuum products, all of which are utilized in semiconductor processing and other similar advanced manufacturing processes. It also includes sales of custom fabrication services.

The Asia Region Sales segment mainly resells products from the Advanced Manufacturing Capital Equipment and Other segments into Asia regions.

The Other segment includes operating segments that are not required to be reported separately as a reportable segment and includes sales for products that are re-sold from the Advanced Manufacturing Capital Equipment into Europe regions as well as sales from other operating segments.

The Company derives its segment results directly from the manner in which results are reported in its management reporting system. The accounting policies that the Company uses to derive reportable segment results are substantially the same as those used for external reporting purposes except that a substantial portion of the sales of the Advanced Manufacturing Capital Equipment and Other segments are intercompany sales to the regions at tax-based transfer prices and certain significant costs, including stock-based compensation and management incentive compensation, are not allocated to the segments and are included in Corporate and Eliminations. The CODM reviews several metrics of each operating segment, including net revenues and gross profit (loss).

The Company does not maintain balance sheets for the majority of its operating segments and, as such, amounts have not been allocated to the reportable segments. The Company does not disclose external or intersegment revenues separately by reportable segment as this information is not presented to the CODM for decision making purposes.

The following is net revenues by reportable segment:


	Three Months Ended March 31,
	2016			2015
Advanced Manufacturing Capital Equipment	$	153,570		$	179,233
Global Service		30,060			27,743
Asia Region Sales⁽¹⁾		43,848			55,377
Other		16,327			21,216
Corporate and Eliminations		(60,124	)		(69,730	)

	$	183,681		$	213,839

The following is a reconciliation of segment gross profit to consolidated net income:


	Three Months Ended March 31,
	2016			2015
Gross profit by reportable segment:
Advanced Manufacturing Capital Equipment	$	67,630		$	78,688
Global Service		9,644			9,603
Asia Region Sales⁽¹⁾		2,413			6,920
Other		4,370			6,843
Corporate and Eliminations		(6,144	)		(5,008	)

Total gross profit by reportable segment		77,913			97,046
Operating expenses:
Research and development		17,227			16,680
Selling, general and administrative		33,950			30,867
Acquisition costs		2,494			30
Restructuring		—			788
Amortization of intangible assets		1,683			1,671

Income from operations		22,559			47,010
Interest and other income, net		1,246			504

Income before income taxes		23,805			47,514
Provision for income taxes		6,242			13,728

Net income	$	17,563		$	33,786

(1)

The Asia Region Sales segment does not represent total geographical Asia financial information. This sales operation only represents the sales from the resale of Advanced Manufacturing Capital Equipment and Other segment products in their respective regions. The Advanced Manufacturing Capital Equipment and Other segments both have sales in this region as well. Accordingly, total geographical sales include sales from multiple reportable segments.

The following is capital expenditures by reportable segment for the three months ended March 31, 2016 and 2015:


	Advanced Manufacturing Capital Equipment		Global Service		Asia Region Sales		Other		Corporate and Eliminations		Total
Three Months Ended March 31, 2016:
Capital expenditures	$	1,389	$	39	$	81	$	28	$	619	$	2,156

Three Months Ended March 31, 2015:

Capital expenditures	$	1,522	$	122	$	42	$	74	$	744	$	2,504

The following is depreciation and amortization by reportable segment for the three months ended March 31, 2016 and 2015:


	Advanced Manufacturing Capital Equipment		Global Service		Asia Region Sales		Other		Corporate and Eliminations		Total
Three Months Ended March 31, 2016:
Depreciation and amortization	$	4,111	$	255	$	89	$	244	$	579	$	5,278

Three Months Ended March 31, 2015:

Depreciation and amortization	$	4,247	$	256	$	85	$	310	$	634	$	5,532

Goodwill associated with each of our reportable segments is as follows:


	March 31, 2016			December 31, 2015
Reportable segment:
Advanced Manufacturing Capital Equipment	$	174,344		$	174,344
Global Service		19,826			19,826
Asia Region Sales		—			—
Other		6,228			6,228
Foreign currency translation		(399	)		(695	)

Total goodwill	$	199,999		$	199,703

Worldwide Product Information

Because the reportable segment information above does not reflect worldwide sales of the Company’s products, the Company groups its products into three groups of similar products based upon the similarity of product function. Worldwide net revenue for each group of products is as follows:


	Three Months Ended March 31,
	2016		2015
Instruments, Control and Vacuum Products	$	94,478	$	110,436
Power and Reactive Gas Products		77,116		88,499
Analytical Solutions Products		12,087		14,904

	$	183,681	$	213,839

Sales of Instruments, Control and Vacuum Products and Power and Reactive Gas Products are included in the Company’s Advanced Manufacturing Capital Equipment, Asia Region Sales, Global Service and Other segments because the products are sold through those segments. Sales of the Analytical Solutions Products are included in the Asia Region Sales, Global Service and Other segments because the products are sold through those segments.

Geographic

Information about the Company’s operations in different geographic regions is presented in the tables below. Net revenues to unaffiliated customers are based on the location in which the sale originated. Transfers between geographic areas are at negotiated transfer prices and have been eliminated from consolidated net revenues.


	Three Months Ended March 31,
	2016		2015
Net revenues:
United States	$	94,218	$	120,181
Korea		20,550		32,072
Japan		16,236		17,256
Asia (excluding Korea and Japan)		33,456		23,683
Europe		19,221		20,647

	$	183,681	$	213,839


	March 31, 2016		December 31, 2015
Long-lived assets:⁽¹⁾
United States	$	55,620	$	56,594
Europe		5,584		5,783
Asia		8,612		8,952

	$	69,816	$	71,329

(1)	Long-lived assets include property, plant and equipment, net and certain other long-term assets, excluding long-term tax related accounts.

Major Customers

The Company had two customers with net revenues greater than 10% of total net revenues in the periods shown as follows:


	Three Months Ended March 31,
	2016			2015
Applied Materials, Inc.		18.8	%		17.4	%
LAM Research Corporation		17.1	%		12.1	%