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

The Company is a global provider of instruments, subsystems and process control solutions that measure, control, power, monitor and analyze critical parameters of advanced manufacturing processes to improve process performance and productivity. The Company also provides services relating to the maintenance and repair of products it sells, software maintenance, installation services and training.

The Company’s Chief Operating Decision Maker (“CODM”) utilizes financial information to make decisions about allocating resources and assessing performance for the entire Company, 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 two reportable segments.

Effective April 29, 2016, in conjunction with the Newport Merger, the Company changed its reportable segments based upon the organizational structure of the Company and how the CODM utilizes information provided to allocate resources and make decisions. The Company’s two reportable segments are the Vacuum & Analysis Division and the Light & Motion Division.

The Vacuum & Analysis Division provides a broad range of instruments, components, subsystems and software which are derived from the Company’s core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, residual gas analysis, leak detection, control and information technology, ozone generation and delivery, RF & DC power, reactive gas generation and vacuum technology.

The Light & Motion Division provides a broad range of instruments, components and subsystems which are derived from the Company’s core competencies in lasers, photonics, sub-micron positioning, vibration isolation and optics.

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. 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 September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Vacuum & Analysis Division	$	229,167	$	209,332	$	620,207	$	641,137
Light & Motion Division		151,493		—		269,995		—

	$	380,660	$	209,332	$	890,202	$	641,137

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


	Three Months Ended September 30,					Nine Months Ended September 30,
	2016			2015		2016			2015
Gross profit by reportable segment:
Vacuum & Analysis Division	$	104,232		$	94,229	$	273,004		$	290,073
Light & Motion Division		64,153			—		109,207			—

Total gross profit by reportable segment		168,385			94,229		382,211			290,073
Operating expenses:
Research and development		32,268			17,217		77,709			51,464
Selling, general and administrative		70,424			33,396		175,803			97,532
Acquisition costs		233			—		10,932			30
Restructuring		—			562		24			1,569
Amortization of intangible assets		12,452			1,691		22,990			5,071

Income from operations		53,008			41,363		94,753			134,407
Interest and other (expense) income, net		(10,760	)		721		(16,332	)		2,015

Income before income taxes		42,248			42,084		78,421			136,422
Provision for income taxes		9,699			12,315		19,099			39,647

Net income	$	32,549		$	29,769	$	59,322		$	96,775

The following is capital expenditures by reportable segment for the three and nine months ended September 30, 2016 and 2015:


	Vacuum & Analysis Division		Light & Motion Division		Total
Three Months Ended September 30, 2016:
Capital expenditures	$	2,772	$	1,923	$	4,695

Nine Months Ended September 30, 2016:
Capital expenditures	$	7,964	$	3,995	$	11,959


	Vacuum & Analysis Division		Light & Motion Division		Total
Three Months Ended September 30, 2015:
Capital expenditures	$	3,497	$	—	$	3,497

Nine Months Ended September 30, 2015:
Capital expenditures	$	8,831	$	—	$	8,831

The following is depreciation and amortization by reportable segment for the three and nine months ended September 30, 2016 and 2015:


	Vacuum & Analysis Division		Light & Motion Division		Total
Three Months Ended September 30, 2016:
Depreciation and amortization	$	5,142	$	16,907	$	22,049

Nine Months Ended September 30, 2016:
Depreciation and amortization	$	15,628	$	28,129	$	43,757


	Vacuum & Analysis Division		Light & Motion Division		Total
Three Months Ended September 30, 2015:
Depreciation and amortization	$	5,524	$	—	$	5,524

Nine Months Ended September 30, 2015:
Depreciation and amortization	$	16,606	$	—	$	16,606

Total income tax expense is not presented by reportable segment because the necessary information is not available or used by the CODM.

The following is segment assets by reportable segment:


September 30, 2016	Vacuum & Analysis Division		Light & Motion Division		Corporate & Eliminations			Total
Segment assets:
Accounts receivable	$	136,654	$	128,401	$	(21,202	)	$	243,853
Inventory		161,219		117,746		—			278,965

Total segment assets	$	297,873	$	246,147	$	(21,202	)	$	522,818


December 31, 2015	Vacuum & Analysis Division		Light & Motion Division		Corporate & Eliminations			Total
Segment assets:
Accounts receivable	$	101,883	$	—	$	—		$	101,883
Inventory		152,631		—		—			152,631

Total segment assets	$	254,514	$	—	$	—		$	254,514

A reconciliation of segment assets to consolidated total assets is as follows:


	September 30, 2016		December 31, 2015
Total segment assets	$	522,818	$	254,514
Cash and cash equivalents and investments		435,234		658,237
Other current assets, including restricted cash		59,547		26,760
Property, plant and equipment, net		179,694		68,856
Goodwill and intangible assets, net		1,014,446		243,730
Other assets		29,926		21,250

Consolidated total assets	$	2,241,665	$	1,273,347

Goodwill associated with the Company’s reportable segments is as follows:


	September 30, 2016		December 31, 2015
Reportable segment:
Vacuum & Analysis Division	$	200,368	$	199,703
Light & Motion Division		394,267		—

Total goodwill	$	594,635	$	199,703

Worldwide Product Information

The Company groups its products into six 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 September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Instruments, Control & Vacuum Products	$	114,491	$	98,614	$	317,141	$	319,491
Power & Reactive Gas Products		98,827		95,311		259,797		276,787
Analytical Solutions Products		15,907		15,407		43,334		44,859
Photonics Products		62,226		—		108,090		—
Optics Products		44,331		—		79,594		—
Lasers Products		44,878		—		82,246		—

	$	380,660	$	209,332	$	890,202	$	641,137

Sales of Instruments, Control & Vacuum Products, Power & Reactive Gas Products and Analytical Solutions Products are included in the Company’s Vacuum & Analysis Division segment. Sales of Photonics Products, Optics Products and Lasers Products are included in the Light & Motion Division segment.

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 September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Net revenues:
North America	$	198,305	$	122,348	$	460,994	$	365,942
Korea		32,642		27,760		79,240		87,181
Japan		26,970		14,699		68,738		49,001
Asia (excluding Korea and Japan)		75,179		24,833		173,526		79,259
Europe		47,564		19,692		107,704		59,754

	$	380,660	$	209,332	$	890,202	$	641,137


	September 30, 2016		December 31, 2015
Long-lived assets:⁽¹⁾
North America	$	120,379	$	56,594
Europe		30,818		5,783
Asia		50,551		8,952

	$	201,748	$	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 September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Applied Materials, Inc.		12	%		18	%		14	%		18	%
LAM Research Corporation		9	%		16	%		11	%		14	%