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, power, monitor and analyze critical parameters of advanced manufacturing processes to improve process performance and productivity. The Company’s products are derived from its core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, residual gas analysis, leak detection, control technology, ozone generation and delivery, RF & DC power, reactive gas generation, vacuum technology, lasers, photonics, sub-micron positioning, vibration isolation, and optics. The Company also provides services related to the maintenance and repair of its products, 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 technology, 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, 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 table sets forth net revenues by reportable segment:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Vacuum & Analysis	$	308,176	$	229,167	$	895,979	$	620,207
Light & Motion		178,091		151,493		508,198		269,995

	$	486,267	$	380,660	$	1,404,177	$	890,202

The following table sets forth a reconciliation of segment gross profit to consolidated net income:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Gross profit by reportable segment:
Vacuum & Analysis	$	141,438		$	104,232		$	410,228		$	273,004
Light & Motion		86,557			64,153			242,897			109,207

Total gross profit by reportable segment		227,995			168,385			653,125			382,211
Operating expenses:
Research and development		32,548			32,268			99,510			77,709
Selling, general and administrative		71,839			68,016			218,038			161,545
Acquisition and integration costs		2,466			2,641			4,698			25,190
Restructuring		10			—			2,596			24
Asset impairment		—			—			6,719			—
Amortization of intangible assets		10,977			12,452			34,946			22,990

Income from operations		110,155			53,008			286,618			94,753
Gain on sale of business		—			—			74,856			—
Interest and other (expense), net		(8,784	)		(10,760	)		(24,846	)		(16,332	)

Income before income taxes		101,371			42,248			336,628			78,421
Provision for income taxes		25,377			9,699			75,134			19,099

Net income	$	75,994		$	32,549		$	261,494		$	59,322

The following table sets forth capital expenditures by reportable segment for the three and nine months ended September 30, 2017 and 2016:


	Vacuum & Analysis		Light & Motion		Total
Three Months Ended September 30, 2017:
Capital expenditures	$	4,212	$	3,906	$	8,118

Nine Months Ended September 30, 2017:
Capital expenditures	$	10,114	$	7,743	$	17,857

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

The following table sets forth depreciation and amortization by reportable segment for the three and nine months ended September 30, 2017 and 2016:


	Vacuum & Analysis		Light & Motion		Total
Three Months Ended September 30, 2017:
Depreciation and amortization	$	5,058	$	15,071	$	20,129

Nine Months Ended September 30, 2017:
Depreciation and amortization	$	15,277	$	47,273	$	62,550

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

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

The following table sets forth segment assets by reportable segment:


September 30, 2017:	Vacuum & Analysis		Light & Motion		Corporate, Eliminations & Other			Total
Segment assets:
Accounts receivable	$	196,149	$	108,223	$	(24,070	)	$	280,302
Inventory, net		190,252		129,208		—			319,460

Total segment assets	$	386,401	$	237,431	$	(24,070	)	$	599,762


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

The following table sets forth a reconciliation of segment assets to consolidated total assets:


	September 30, 2017		December 31, 2016
Total segment assets	$	599,762	$	524,626
Cash and cash equivalents, restricted cash and investments		545,318		433,231
Other current assets		60,716		50,770
Property, plant and equipment, net		166,928		174,559
Goodwill and intangible assets, net		965,433		996,589
Other assets		32,188		32,467

Consolidated total assets	$	2,370,345	$	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 September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Net revenues:
United States	$	237,592	$	198,305	$	700,291	$	460,994
Korea		60,908		32,642		165,613		79,240
Japan		38,411		26,970		113,068		68,738
Asia (excluding Korea and Japan)		94,084		75,179		273,957		173,526
Europe		55,272		47,564		151,248		107,704

	$	486,267	$	380,660	$	1,404,177	$	890,202


	September 30, 2017		December 31, 2016
Long-lived assets:⁽¹⁾
United States	$	116,607	$	122,547
Europe		28,516		28,717
Asia		48,091		49,406

	$	193,214	$	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:


	September 30, 2017		December 31, 2016
Reportable segment:
Vacuum & Analysis	$	196,885	$	199,453
Light & Motion		392,214		389,132

Total goodwill	$	589,099	$	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. The following table sets forth worldwide net revenue for each group of products:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Analytical and Control Solutions Products	$	33,068	$	29,989	$	97,689	$	80,754
Materials Delivery Solutions Products		45,614		36,243		136,366		97,914
Power, Plasma and Reactive Gas Solutions Products		148,194		98,772		413,633		259,731
Pressure and Vacuum Measurement Products		81,300		64,163		248,291		181,808
Lasers Products		56,623		45,597		153,866		83,533
Optics Products		52,548		44,331		149,759		79,594
Photonics Products		68,920		61,565		204,573		106,868

	$	486,267	$	380,660	$	1,404,177	$	890,202

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 below:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Applied Materials, Inc.		12	%		12	%		13	%		14	%
LAM Research Corporation		11	%		9	%		12	%		11	%