16)	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, deliver, 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, 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: Vacuum & Analysis and Light & Motion. The Vacuum & Analysis segment represents the legacy MKS business and the Light & Motion segment represents the legacy Newport business.

The Vacuum & Analysis segment provides a broad range of instruments, components and subsystems 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, ozone generation and delivery, RF & DC power, reactive gas generation and vacuum technology.

The Light & Motion segment provides a broad range of instruments, components and subsystems which are derived from the Company’s core competencies in lasers, photonics 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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Vacuum & Analysis	$	309,819	$	207,359	$	587,803	$	391,040
Light & Motion		170,938		118,502		330,107		118,502

	$	480,757	$	325,861	$	917,910	$	509,542

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Gross profit by reportable segment:
Vacuum & Analysis	$	139,867		$	90,859		$	268,790		$	168,772
Light & Motion		79,716			45,054			156,340			45,054

Total gross profit by reportable segment		219,583			135,913			425,130			213,826
Operating expenses:
Research and development		33,680			28,214			66,962			45,441
Selling, general and administrative		71,979			59,579			146,199			93,529
Acquisition and integration costs		790			20,055			2,232			22,549
Restructuring		2,064			24			2,586			24
Asset impairment		6,719			—			6,719			—
Amortization of intangible assets		11,468			8,855			23,969			10,538

Income from operations		92,883			19,186			176,463			41,745
Gain on sale of business		74,856			—			74,856			—
Interest and other (expense), net		(9,767	)		(6,818	)		(16,062	)		(5,572	)

Income before income taxes		157,972			12,368			235,257			36,173
Provision for income taxes		37,532			3,158			49,757			9,400

Net income	$	120,440		$	9,210		$	185,500		$	26,773

The following is capital expenditures by reportable segment for the three and six months ended June 30, 2017 and 2016:


	Vacuum & Analysis		Light & Motion		Total
Three Months Ended June 30, 2017:
Capital expenditures	$	3,528	$	2,112	$	5,640

Six Months Ended June 30, 2017:
Capital expenditures	$	5,902	$	3,837	$	9,739

Three Months Ended June 30, 2016:
Capital expenditures	$	3,036	$	2,072	$	5,108

Six Months Ended June 30, 2016:
Capital expenditures	$	5,192	$	2,072	$	7,264

The following is depreciation and amortization by reportable segment for the three and six months ended June 30, 2017 and 2016:


	Vacuum & Analysis		Light & Motion		Total
Three Months Ended June 30, 2017:
Depreciation and amortization	$	5,097	$	15,491	$	20,588

Six Months Ended June 30, 2017:
Depreciation and amortization	$	10,219	$	32,202	$	42,421

Three Months Ended June 30, 2016:
Depreciation and amortization	$	5,209	$	11,221	$	16,430

Six Months Ended June 30, 2016:
Depreciation and amortization	$	10,487	$	11,221	$	21,708

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:


June 30, 2017:	Vacuum & Analysis		Light & Motion		Corporate, Eliminations & Other			Total
Segment assets:
Accounts receivable	$	177,144	$	102,893	$	(11,493	)	$	268,544
Inventory, net		182,717		121,990		—			304,707

Total segment assets	$	359,861	$	224,883	$	(11,493	)	$	573,251


December 31, 2016:	Vacuum & Analysis		Light & Motion		Corporate, Eliminations & Other			Total
Segment assets:
Accounts receivable	$	148,516	$	121,516	$	(21,275	)	$	248,757
Inventory, net		165,040		110,829		—			275,869

Total segment assets	$	313,556	$	232,345	$	(21,275	)	$	524,626

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


	June 30, 2017		December 31, 2016
Total segment assets:	$	573,251	$	524,626
Cash and cash equivalents, restricted cash and investments		587,457		433,231
Other current assets		51,721		50,770
Property, plant and equipment, net		167,212		174,559
Goodwill and intangible assets, net		972,940		996,589
Other assets		32,102		32,467

Consolidated total assets	$	2,384,683	$	2,212,242

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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Net revenues:
United States	$	244,649	$	168,471	$	462,699	$	262,689
Korea		59,827		26,048		104,705		46,598
Japan		36,865		25,532		74,657		41,768
Asia (excluding Korea and Japan)		91,630		64,891		179,873		98,347
Europe		47,786		40,919		95,976		60,140

	$	480,757	$	325,861	$	917,910	$	509,542


	June 30, 2017		December 31, 2016
Long-lived assets:⁽¹⁾
United States	$	116,650	$	122,547
Europe		28,405		28,717
Asia		48,488		49,406

	$	193,543	$	200,670

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

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


	June 30, 2017		December 31, 2016
Reportable segment:
Vacuum & Analysis	$	196,857	$	199,453
Light & Motion		390,008		389,132

Total goodwill	$	586,865	$	588,585

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 seven 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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Analytical and Control Solutions Products	$	32,801	$	27,787	$	64,621	$	50,765
Materials Delivery Solutions Products		47,298		34,162		90,752		61,671
Power, Plasma and Reactive Gas Solutions Products		142,639		83,844		265,439		160,961
Pressure and Vacuum Measurement Products		87,081		61,566		166,991		117,643
Lasers Products		52,299		37,936		97,243		37,936
Optics Products		50,706		35,263		97,211		35,263
Photonics Products		67,933		45,303		135,653		45,303

	$	480,757	$	325,861	$	917,910	$	509,542

Sales of Analytical and Control Solutions Products; Materials Delivery Solutions Products; Power, Plasma and Reactive Gas Solutions Products; and Pressure and Vacuum Measurement Products are included in the Company’s Vacuum & Analysis segment. Sales of Lasers Products; Optics Products; and Photonics Products are included in the Light & Motion segment.

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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Applied Materials, Inc.		13.0	%		13.5	%		13.0	%		15.4	%
LAM Research Corporation		10.8	%		8.9	%		11.6	%		11.8	%