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, monitor, deliver, analyze, power and control critical parameters of advanced manufacturing processes to improve process performance and productivity for its customers. 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 control, and optics. The Company also provides services related to the maintenance and repair of its products, installation services and training. The Company’s primary served markets are manufacturers of capital equipment for semiconductor manufacturing, industrial technologies, life and health sciences, as well as research and defense.

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. The Company’s two reportable segments are: Vacuum & Analysis and Light & Motion.

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 control, 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 are net revenues by reportable segment:


	Years Ended December 31,
	2018		2017		2016
Vacuum & Analysis	$	1,260,862	$	1,207,457	$	872,291
Light & Motion		814,246		708,520		423,051

	$	2,075,108	$	1,915,977	$	1,295,342

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


	Years Ended December 31,
	2018		2017		2016
Gross profit by reportable segment:
Vacuum & Analysis	$	577,552	$	551,078	$	388,220
Light & Motion		401,924		340,373		177,399

Total gross profit by reportable segment		979,476		891,451		565,619
Operating expenses:
Research and development		135,720		132,555		110,579
Selling, general and administrative		298,118		290,056		227,932
Acquisition and integration costs		3,113		5,332		27,279
Restructuring		3,567		3,920		642
Environmental costs		1,000		—		—
Asset impairment		—		6,719		5,000
Fees and expenses related to repricing of term loan		378		492		1,239
Amortization of intangible assets		43,521		45,743		35,681

Income from operations		494,059		406,634		157,267
Interest income		5,775		3,021		2,560
Interest expense		16,942		30,990		30,611
Gain on sale of business		—		74,856		—
Other expense, net		1,942		5,896		1,239

Income before income taxes		480,950		447,625		127,977
Provision for income taxes		88,054		108,493		23,168

Net income	$	392,896	$	339,132	$	104,809

The following is capital expenditures by reportable segment for the years ended December 31, 2018, 2017 and 2016:


	Vacuum & Analysis		Light & Motion		Total
December 31, 2018:
Capital expenditures	$	40,144	$	22,797	$	62,941

December 31, 2017:
Capital expenditures	$	17,111	$	14,176	$	31,287

December 31, 2016:
Capital expenditures	$	11,732	$	7,391	$	19,123

The following is depreciation and amortization of intangible assets by reportable segment for the years ended December 31, 2018, 2017 and 2016:


	Vacuum & Analysis		Light & Motion		Total
December 31, 2018:
Depreciation and amortization	$	20,808	$	59,045	$	79,853

December 31, 2017:
Depreciation and amortization	$	20,297	$	62,259	$	82,556

December 31, 2016:
Depreciation and amortization	$	20,820	$	45,106	$	65,926

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

The following are segment assets by reportable segment:


	Vacuum & Analysis		Light & Motion		Corporate, Eliminations and Other			Total
December 31, 2018:
Segment assets:
Accounts receivable	$	171,604	$	140,658	$	(16,808	)	$	295,454
Inventory		222,965		161,658		66			384,689

Total segment assets	$	394,569	$	302,316	$	(16,742	)	$	680,143


	Vacuum & Analysis		Light & Motion		Corporate, Eliminations and Other			Total
December 31, 2017:
Segment assets:
Accounts receivable	$	201,318	$	119,934	$	(20,944	)	$	300,308
Inventory		197,831		141,250		—			339,081

Total segment assets	$	399,149	$	261,184	$	(20,944	)	$	639,389

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


	Years Ended December 31,
	2018		2017
Total segment assets	$	680,143	$	639,389
Cash and cash equivalents, restricted cash and investments		728,461		553,976
Other current assets		65,790		53,543
Property, plant and equipment, net		194,367		171,782
Goodwill and intangible assets, net		906,803		957,445
Other assets		38,682		37,883

Consolidated total assets	$	2,614,246	$	2,414,018

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.


	Years Ended December 31,
Net revenues:	2018		2017		2016
United States	$	1,022,660	$	955,284	$	675,601
South Korea		203,567		212,763		112,432
Japan		193,264		167,318		96,954
Europe		244,009		209,912		156,365
Asia (excluding South Korea and Japan)		411,608		370,700		253,990

	$	2,075,108	$	1,915,977	$	1,295,342


	Years Ended December 31,
Long-lived assets:(1)	2018		2017
United States	$	146,687	$	124,689
Europe		26,794		28,820
Asia		50,572		49,645

	$	224,053	$	203,154

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

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


	Years Ended December 31,
	2018		2017
Reportable segment:
Vacuum & Analysis	$	197,126	$	197,617
Light & Motion		389,870		393,430

Total goodwill	$	586,996	$	591,047

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 six groups of similar products based upon the similarity of product function. Worldwide net revenue for each group of products is as follows:


	Years Ended December 31,
	2018		2017		2016
Analytical and Control Solutions Products	$	116,183	$	131,376	$	115,758
Power, Plasma and Reactive Gas Solutions Products		610,111		564,343		367,665
Vacuum Solutions Products		534,568		511,738		388,868
Laser Products		274,815		225,168		124,432
Optics Products		227,577		203,775		124,218
Photonics Products		311,854		279,577		174,401

	$	2,075,108	$	1,915,977	$	1,295,342

Sales of Analytical and Control Solutions Products; Power, Plasma and Reactive Gas Solutions Products; and Vacuum Solutions Products are included in the Company’s Vacuum & Analysis segment. Sales of Laser 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:


	Years Ended December 31,
	2018			2017			2016
Applied Materials, Inc.		11.7	%		12.7	%		13.6	%
Lam Research Corporation		10.8	%		11.7	%		11.2	%

Net revenues for each of our reportable segments include revenues from each of the two customers, which represent net revenues greater than 10% of total net revenues.