Segments and Major Customers

Operating segments are based upon Rambus' internal organization structure, the manner in which its operations are managed, the criteria used by its Chief Operating Decision Maker ("CODM") to evaluate segment performance and availability of separate financial information regularly reviewed for resource allocation and performance assessment.

The Company determined its CODM to be the Chief Executive Officer and determined its operating segments to be: (1) MID, which focuses on the design, development, manufacturing through partnerships and licensing of technology and solutions that is related to memory and interfaces; (2) RSD, which focuses on the design, development, deployment and licensing of technologies for chip, system and in-field application security, anti-counterfeiting, smart ticketing and mobile payments; (3) ESD, which includes the Rambus Labs team, the computational sensing and imaging group as well as the development efforts in the area of emerging technologies; and (4) RLD, which focuses on the design, development and licensing of technologies for advanced LED-based lighting solutions.

For the year ended December 31, 2017, MID and RSD were considered reportable segments as they met the quantitative thresholds for disclosure as reportable segments. The results of the remaining operating segments are shown under “Other”.

The Company evaluates the performance of its segments based on segment operating income (loss), which is defined as revenue minus segment operating expenses. Segment operating expenses are comprised of direct operating expenses.

Segment operating expenses do not include sales, general and administrative expenses and the allocation of certain expenses managed at the corporate level, such as stock-based compensation, amortization, and certain bonus and acquisition costs. The “Reconciling Items” category includes these unallocated sales, general and administrative expenses as well as corporate level expenses.

The tables below present reported segment operating income (loss) for the years ended December 31, 2017, 2016 and 2015:



	For the Year Ended December 31, 2017
	MID		RSD		Other			Total
	(In thousands)
Revenues	$	280,704	$	96,663	$	15,729		$	393,096
Segment operating expenses	86,044		50,010		33,860			169,914
Segment operating income (loss)	$	194,660	$	46,653	$	(18,131	)	$	223,182
Reconciling items								(168,775		)
Operating income								$	54,407
Interest and other income (expense), net								(13,418		)
Income before income taxes								$	40,989



	For the Year Ended December 31, 2016
	MID		RSD		Other			Total
	(In thousands)
Revenues	$	239,843	$	76,175	$	20,579		$	336,597
Segment operating expense	68,460		51,855		30,397			150,712
Segment operating income (loss)	$	171,383	$	24,320	$	(9,818	)	$	185,885
Reconciling items								(152,243		)
Operating income								$	33,642
Interest and other income (expense), net								(11,005		)
Income before income taxes								$	22,637



	For the Year Ended December 31, 2015
	MID		RSD		Other			Total
	(In thousands)
Revenues	$	221,968	$	50,497	$	23,813		$	296,278
Segment operating expenses	47,780		29,056		32,147			108,983
Segment operating income (loss)	$	174,188	$	21,441	$	(8,334	)	$	187,295
Reconciling items								(115,875		)
Operating income								$	71,420
Interest and other income (expense), net								(11,189		)
Income before income taxes								$	60,231

The Company’s CODM does not review information regarding assets on an operating segment basis. Additionally, the Company does not record intersegment revenue or expense.

Accounts receivable from the Company's major customers representing 10% or more of total accounts receivable at December 31, 2017 and December 31, 2016, respectively, was as follows:



	As of December 31,
Customer	2017		2016
Customer 1 (MID reportable segment)	*		13	%
Customer 2 (Other segment)	12	%	12	%
Customer 3 (MID and RSD reportable segment)	13	%	*
Customer 4 (RSD reportable segment)	*		17	%
Customer 5 (RSD reportable segment)	11	%	*

_________________________________________

* Customer accounted for less than 10% of total accounts receivable in the period

Revenue from the Company’s major customers representing 10% or more of total revenue for the years ended December 31, 2017, 2016 and 2015 were as follows:



	Years Ended December 31,
	2017		2016		2015
Customer A (MID and RSD reportable segments)	17	%	19	%	20	%
Customer B (MID reportable segment)	13	%	20	%	19	%
Customer C (MID reportable segment)	13	%	13	%	13	%

Revenue from customers in the geographic regions based on the location of contracting parties is as follows:



	Years Ended December 31,
	2017		2016		2015
	(In thousands)
USA	$	165,263	$	121,209	$	118,278
South Korea	115,811		129,542		115,486
Japan	23,378		30,215		29,687
Europe	22,597		16,031		9,616
Canada	4,373		3,478		214
Singapore	22,554		17,908		16,312
Asia-Other	39,120		18,214		6,685
Total	$	393,096	$	336,597	$	296,278

At December 31, 2017, of the $54.3 million of total property, plant and equipment, approximately $47.2 million were located in the United States, $3.4 million were located in India and $3.7 million were located in other foreign locations. At December 31, 2016, of the $58.4 million of total property, plant and equipment, approximately $55.0 million were located in the United States, $1.3 million were located in India and $2.1 million were located in other foreign locations.