17. Segment Information

Reportable Segments

The Company evaluates the performance of, and allocates resources to, its segments based on revenue, gross profit and operating profit. The Company’s reportable segments have been identified based on commonality and adjacency of technologies, applications and customers amongst the Company’s individual product lines. The Company determined that disclosing revenue by specific product was impracticable due to the highly customized and extensive portfolio of products offered to customers.

The Company operates in three reportable segments: Photonics, Vision, and Precision Motion. The reportable segments and their principal activities are described below.

Photonics

The Photonics segment designs, manufactures and markets photonics-based solutions, including laser scanning and laser beam delivery, CO2 laser, continuous wave and ultrafast laser, and optical light engine products to customers worldwide. The segment serves highly demanding photonics-based applications such as industrial material processing, metrology, medical and life science imaging, DNA sequencing, and medical laser procedures. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Vision

The Vision segment designs, manufactures and markets a range of medical grade technologies, including medical insufflators, pumps and related disposables; surgical displays and operating room integration technologies; optical data collection and machine vision technologies; radio frequency identification (“RFID”) technologies; thermal printers; spectrometry technologies; and embedded touch screen solutions. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Precision Motion

The Precision Motion segment designs, manufactures and markets optical and inductive encoders, precision motor and motion control technology, air bearing spindles and precision machined components to customers worldwide. The vast majority of the segment’s product offerings are sold to OEM customers. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Reportable Segment Financial Information

Revenue, gross profit, gross profit margin, operating income (loss), and depreciation and amortization expenses by reportable segment were as follows (in thousands, except percentage data):

	Three Months Ended				Nine Months Ended
	September 28,		September 29,		September 28,		September 29,
	2018		2017		2018		2017
Revenue
Photonics	$	61,285	$	61,882	$	187,178	$	170,503
Vision		62,113		58,150		172,145		124,943
Precision Motion		37,396		26,264		98,836		78,926
Total	$	160,794	$	146,296	$	458,159	$	374,372

	Three Months Ended						Nine Months Ended
	September 28,			September 29,			September 28,			September 29,
	2018			2017			2018			2017
Gross Profit
Photonics	$	29,218		$	28,966		$	89,510		$	77,423
Vision		24,160			19,792			64,322			47,378
Precision Motion		16,788			10,291			44,750			34,558
Unallocated Corporate and Shared Services		(532	)		(342	)		(1,560	)		(1,069	)
Total	$	69,634		$	58,707		$	197,022		$	158,290

	Three Months Ended						Nine Months Ended
	September 28,			September 29,			September 28,			September 29,
	2018			2017			2018			2017
Gross Profit Margin
Photonics		47.7	%		46.8	%		47.8	%		45.4	%
Vision		38.9	%		34.0	%		37.4	%		37.9	%
Precision Motion		44.9	%		39.2	%		45.3	%		43.8	%
Total		43.3	%		40.1	%		43.0	%		42.3	%

	Three Months Ended						Nine Months Ended
	September 28,			September 29,			September 28,			September 29,
	2018			2017			2018			2017
Operating Income (Loss)
Photonics	$	14,595		$	15,367		$	46,102		$	36,138
Vision		5,380			846			6,246			4,893
Precision Motion		8,818			5,493			25,037			20,238
Unallocated Corporate and Shared Services		(7,798	)		(9,299	)		(22,048	)		(22,776	)
Total	$	20,995		$	12,407		$	55,337		$	38,493

	Three Months Ended				Nine Months Ended
	September 28,		September 29,		September 28,		September 29,
	2018		2017		2018		2017
Depreciation and Amortization Expenses
Photonics	$	2,997	$	3,666	$	9,030	$	10,693
Vision		5,100		4,362		15,371		9,276
Precision Motion		1,020		588		2,364		1,746
Unallocated Corporate and Shared Services		82		248		621		725
Total	$	9,199	$	8,864	$	27,386	$	22,440

Revenue by Geography

The Company aggregates geographic revenue based on the customer location where products are shipped. Revenue from these customers was as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 28,		September 29,		September 28,		September 29,
	2018		2017		2018		2017
United States	$	63,073	$	58,949	$	181,653	$	157,778
Germany		23,089		17,728		64,170		46,807
Rest of Europe		30,222		27,152		80,629		55,164
China		17,516		15,459		51,486		40,920
Rest of Asia-Pacific		24,882		23,769		74,589		64,511
Other		2,012		3,239		5,632		9,192
Total	$	160,794	$	146,296	$	458,159	$	374,372

The majority of revenue from our Photonics, Vision and Precision Motion segments is generated from sales to customers within the United States and Europe. Each segment also generates revenue across the other geographies, with no significant concentration of any segment’s remaining revenue.

Revenue by End Market

The Company primarily operates in two end markets: the advanced industrial market and the medical market. Revenue by end market was approximately as follows:

	Three Months Ended						Nine Months Ended
	September 28,			September 29,			September 28,			September 29,
	2018			2017			2018			2017
Advanced Industrial		50	%		50	%		50	%		55	%
Medical		50	%		50	%		50	%		45	%
Total		100	%		100	%		100	%		100	%

The majority of revenue from the Photonics and Precision Motion segments is generated from sales to customers in the advanced industrial market. The majority of revenue from the Vision segment is generated from sales to customers in the medical market.