20. Segment and Geographic Information

Operating segments are defined as components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and to assess performance. The Company’s Chief Executive Officer is the Company’s chief operating decision maker.

The Company has two operating and reportable segments consisting of Brooks Semiconductor Solutions Group segment and Brooks Life Sciences segment.

The Brooks Semiconductor Solutions Group segment provides a variety of products, services and solutions that enable improved throughput and yield in controlled operating environments, as well as an extensive range of support services. The solutions include atmospheric and vacuum robots, robotic modules, tool automation systems, and contamination control of wafer carrier front opening unified pods. The support services include repair services, diagnostic support services, and installation services in support of the products, which enable the customers to maximize process tool uptime and productivity. This segment also provides end-user customers with spare parts and productivity enhancement upgrades to maximize tool productivity.

The Brooks Life Sciences segment provides comprehensive life cycle sample management solutions for life science and bioscience customers to advance scientific research and support drug development. The segment’s product offerings include automated cold sample management systems for compound and biological sample storage, equipment for sample preparation and handling, consumables, and informatics that help customers manage samples throughout their research discovery and development work flows. The segment’s service offerings include sample storage and support services provided to a wide range of life science customers, including pharmaceutical companies, biotechnology companies, biobanks and research institutes.

The Company evaluates the performance and future opportunities of its segments and allocates resources to them based on their revenue, operating income (loss) and returns on invested assets. Operating income (loss) for each segment includes selling, general and administrative expenses directly attributable to the segment. Amortization of acquired intangible assets (excluding completed technology), restructuring and other charges, pension settlement, in-process research and development, and other unallocated corporate expenses are excluded from the segments’ operating income (loss). The Company’s indirect overhead costs, which include various general and administrative expenses, are allocated among the segments based upon several cost drivers associated with the respective administrative function, including segment revenue, headcount, or benefits that each segment derives from a specific administrative function. Segment assets exclude cash, cash equivalents, marketable securities, deferred tax assets, assets held for sale and equity method investments.

The following is the summary of the financial information for the Company’s operating and reportable segments for the fiscal years ended September 30, 2018, 2017 and 2016 (in thousands):


	Brooks
	Semiconductor		Brooks
	Solutions Group		Life Sciences		Total
Fiscal Year Ended September 30, 2018
Revenue
Products	$	390,087	$	92,302	$	482,389
Services		44,931		104,240		149,171
Segment revenue	$	435,018	$	196,542	$	631,560
Gross profit	$	173,954	$	72,127	$	246,081
Segment operating income		58,373		1,160		59,533
Depreciation expense		3,869		7,433		11,302
Fiscal Year Ended September 30, 2017
Revenue
Products	$	340,233	$	66,753	$	406,986
Services		38,557		81,956		120,513
Segment revenue	$	378,790	$	148,709	$	527,499
Gross profit	$	144,119	$	54,768	$	198,887
Segment operating income		40,110		1,410		41,520
Depreciation expense		4,592		4,694		9,286
Fiscal Year Ended September 30, 2016
Revenue
Products	$	289,377	$	46,546	$	335,923
Services		36,522		61,567		98,089
Segment revenue	$	325,899	$	108,113	$	434,012
Gross profit	$	117,626	$	39,063	$	156,689
Segment operating income (loss)		16,634		(6,451)		10,183
Depreciation expense		5,158		3,496		8,654


Assets:
September 30, 2018	$	264,452	$	410,581	$	675,033
September 30, 2017		236,755		306,666		543,421

The following is a reconciliation of the Company’s operating and reportable segments’ operating income and segment assets to the corresponding amounts presented in the accompanying Consolidated Balance Sheets and Consolidated Statements of Operations for the fiscal years ended September 30, 2018, 2017 and 2016 (in thousands):


	For the Year Ended
	September 30,
	2018		2017		2016
Segment operating income	$	59,533	$	41,520	$	10,183
Amortization of acquired intangible assets		19,339		13,228		10,799
Restructuring charges		714		3,144		10,210
Other unallocated corporate expenses		8,071		10,829		6,228
Total operating income	$	31,409	$	14,319	$	(17,054)


	September 30,		September 30,
	2018		2017
Segment assets	$	675,033	$	543,421
Cash, cash equivalents and marketable securities		251,226		104,292
Deferred tax assets		43,798		1,692
Assets held for sale		125,200		117,223
Total assets	$	1,095,257	$	766,628

Revenue from external customers is attributed to geographic areas based on locations in which customer orders are placed. Net revenue by geographic area for the fiscal years ended September 30, 2018, 2017 and 2016 are as follows (in thousands):


	Year Ended September 30,
	2018		2017		2016
North America	$	233,243	$	174,432	$	157,426
Asia / Pacific/ Other		262,706		255,825		196,117
Europe:
United Kingdom		51,690		37,283		31,342
Rest of Europe		83,921		59,959		49,127
	$	631,560	$	527,499	$	434,012

The majority of the Company’s net revenue in North America is generated in the United States which amounted to $232.7 million, $172.9 million and $156.9 million, respectively, during fiscal years ended September 30, 2018, 2017 and 2016.

The geographic location of an OEM is not indicative of where the products will eventually be used. The geographic area for the orders is determined by the onward sale of an OEM system which incorporates the sub-systems and/or components.

Property, plant and equipment by geographic area as of September 30, 2018 and 2017 are as follows (in thousands):


	September 30,
	2018		2017
North America	$	50,614	$	50,908
Asia / Pacific/ Other		492		547
Europe:
United Kingdom		5,494		2,848
Rest of Europe		3,388		2,678
	$	59,988	$	56,981

Property, plant and equipment located in the United States amounted to $50.5 million and $50.7 million, respectively, at September 30, 2018 and 2017.