NOTE

16:

SEGMENT INFORMATION

Description of segments:

The Company operates under

three

reportable segments.

The Company's segment information has been prepared in accordance with ASC

280,

“Segment Reporting.” Operating segments are defined as components of an enterprise engaging in business activities about which separate financial information is available that is evaluated regularly by the Company's chief operating decision-maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s CODM is its Chief Executive Officer, who evaluates the Company's performance and allocates resources based on segment revenues and operating income.

The Company's operating segments are as follows: Home, Office and SmartVoice. The classification of the Company’s business segments is based on a number of factors that management uses to evaluate, view and run its business operations, which include, but are

not

limited to, customer base, homogeneity of products and technology.

A description of the types of products provided by each business segment is as follows:

Home - Wireless chipset solutions for converged communication at home. Such solutions include integrated circuits targeted for cordless phones sold in retail or supplied by telecommunication service providers, home gateway devices supplied by telecommunication service providers which integrate the DECT/CAT-iq functionality, integrated circuits addressing home automation applications, as well as fixed-mobile convergence solutions. The Company combined the home gateway and home automation products into a single product line called SmartHome. In this segment, (i) revenues from cordless telephony products exceeded

10%

of the Company’s total consolidated revenues and amounted to

45%,

54%

and

57%

of the Company’s total revenues for

2018,

2017

and

2016,

respectively, and (ii) revenues from the Company’s SmartHome products amounted to

12%,

14%

and

12%

of our total revenues for

2018,

2017

and

2016,

respectively.

Office - Comprehensive solution for Voice-over-IP (VoIP) office products, including office solutions that offer businesses of all sizes low-cost VoIP terminals with converged voice and data applications. Revenues from the Company’s VoIP products represented

33%,

28%

and

19%

of the Company’s total revenues for

2018,

2017

and

2016,

respectively.

revenues derived from other products in the office segment exceeded

10%

of the Company’s total consolidated revenues for the years

2018,

2017

and

2016.

SmartVoice - Products for the SmartVoice market that provides voice activation and recognition, voice enhancement, always-on and far-end noise elimination targeted for mobile phone, mobile headsets and other devices that incorporate the Company’s voice recognition, noise suppression and voice quality enhancement HDClear technology. Revenues derived from all products in the SmartVoice segment represented

12%

of the Company’s total revenues for

2016,

but did

not

exceed

10%

of the Company’s total revenues for

2018

2017.

individual product in the SmartVoice segment exceeded

10%

of the Company’s total revenues for the years

2018,

2017

and

2016.

Segment data:

The Company derives the results of its business segments directly from its internal management reporting system and by using certain allocation methods. The accounting policies the Company uses to derive business segment results are substantially the same as those the Company uses for consolidation of its financial statements. The CODM measures the performance of each business segment based on several metrics, including earnings from operations. The CODM uses these results, in part, to evaluate the performance of, and to assign resources to, each of the business segments. The Company does

not

allocate to its business segments certain operating expenses, which it manages separately at the corporate level. These unallocated costs include primarily amortization of purchased intangible assets, equity-based compensation expenses, and certain corporate governance costs.

The Company does

not

allocate any assets to segments and, therefore,

amount of assets is reported to management and disclosed in the financial information for segments. Selected operating results information for each business segment was as follows for the year ended

December

31,

2018,

2017

and

2016:

	Year ended December 31
	Revenues						Income (loss) from operations
	201 8		201 7		201 6		201 8			201 7			201 6
Home	$	67,741	$	85,021	$	95,388	$	14,206		$	16,256		$	17,715
Office	$	38,817	$	34,879	$	26,590	$	12,147		$	9,105		$	(2,961	)
SmartVoice	$	10,880	$	4,853	$	15,891	$	(21,476	)	$	(20,798	)	$	(5,190	)
Total	$	117,438	$	124,753	$	137,869	$	4,877		$	4,563		$	9,564

The reconciliation of segment operating results information to the Company’s consolidated financial information was as follows:

	Year ended December 31,
	201 8			201 7			201 6
Income from operations	$	4,877		$	4,563		$	9,564
Unallocated corporate, general and administrative expenses*		(2,013	)		(1,766	)		(1,388	)
Other income		-			-			2,549
Equity-based compensation expenses		(6,804	)		(5,861	)		(5,088	)
Intangible assets amortization expenses		(1,700	)		(1,700	)		(1,457	)
Financial income, net		1,815			1,669			1,227
Total consolidated income (loss) before taxes	$	(3,825	)	$	(3,095	)	$	5,407

*Includes mainly legal, accounting, board of directors and investors relation expenses.

Major customers and geographic information

The following is a summary of operations within geographic areas based on customer locations:

	Year ended December 31,
	201 8		2017		2016
Revenue distribution

Hong-Kong	$	36,666	$	46,119	$	56,768
Japan		14,284		16,567		18,440
Europe		9,022		9,882		9,703
United States		5,876		4,927		4,696
China		16,107		16,096		10,244
Taiwan		23,940		22,442		16,428
South Korea		7,341		4,190		17,503
Other		4,202		4,530		4,087

	$	117,438	$	124,753	$	137,869

For a summary of revenues from major customers, please see Note

The following is a summary of long-lived assets within geographic areas based on the assets’ locations:

	December 31,
	201 8		2017
Long-lived assets

Europe	$	146	$	144
Israel		1,786		2,017
Other		816		1,023

	$	2,748	$	3,184