Segment Information

12 Months Ended

Dec. 31, 2013

Segment Information

17. Segment Information

Reportable Segments

The Company evaluates the performance of, and allocates resources to, its segments based on sales, gross profit and operating profit. The Company reports assets on a consolidated basis to the chief operating decision maker, which is the Chief Executive Officer. The Company’s reportable segments have been identified based on commonality of end markets, customers, applications and technologies amongst the Company’s individual product lines, which is consistent with the Company’s operating structure, associated management structure, and management compensation programs.

The Company previously operated in two reportable segments: Laser Products and Precision Technologies. As a result of restructuring activities, the Company’s divestitures, the acquisition of NDS, changes in organizational structure and reallocation of resources, the Company realigned its reportable segments during the fourth quarter of 2013 into three segments: Laser Products, Medical Technologies and Precision Motion. The Laser Products segment is comprised of four product lines: laser scanners, sealed CO₂ lasers, fiber lasers, and scientific lasers. The Medical Technologies segment consists of four product lines: visualization solutions, imaging informatics, thermal printers and light and color measurement instrumentation. The Precision Motion segment consists of two product lines: optical encoders and air bearing spindles. The Company’s reportable segments are the same as our operating segments.

The segment realignment was based on the following factors: (i) customers and sales channel overlap; (ii) adjacency of the technologies and commonality amongst customer applications; (iii) Chief Operating Decision Maker’s (“CODM”) allocation of resources; (iv) better alignment of the product and technology platforms around our acquisition strategy; (v) grouping together those product lines whose organizational and operating cost structures present opportunities for further integration and consolidation in the future; and (vi) the strategy to compensate the CODM. The CODM’s variable compensation is based on overall company performance.

The new reportable segments and their principal activities consist of the following:

Laser Products

The Laser Products segment designs, manufactures and markets photonics-based solutions to customers worldwide. The segment serves highly demanding photonics-based applications such as industrial material processing, and medical and life science imaging and laser procedures. The vast majority of the segment’s product offerings are sold to OEM customers. The business sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Medical Technologies

The Medical Technologies segment designs, manufactures and markets a range of medical grade technologies, including visualization solutions, imaging informatics products, thermal printers, and light and color measurement instrumentation to customers worldwide. 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 encoders and air bearing spindles to customers worldwide. The vast majority of the segment’s product offerings are sold to OEM customers. The vast majority of the segment’s product offerings are sold to into the electronics, industrial and to a lesser extent the medical markets. The segment sells these products both directly, utilizing a highly technical sales force, and indirectly, through resellers and distributors.

Reportable Segment Financial Information

The following table represents sales and gross margin of the Company’s reportable segments (in thousands):

	Year Ended December 31,
	2013		2012		2011
Sales
Laser Products	$	191,300	$	186,341	$	196,014
Medical Technologies		90,276		25,915		27,285
Precision Motion		60,036		59,242		80,997
Total	$	341,612	$	271,498	$	304,296

	Year Ended December 31,
	2013			2012			2011
Gross Profit
Laser Products	$	76,040		$	75,456		$	85,891
Medical Technologies		35,824			13,149			13,647
Precision Motion		27,779			26,796			35,552
Corporate, Shared Services, and Unallocated		(194	)		(925	)		(1,990	)
Total	$	139,449		$	114,476		$	133,100

	Year Ended December 31,
	2013			2012			2011
Operating Income
Laser Products	$	23,388		$	19,225		$	28,572
Medical Technologies		3,566			8,285			8,855
Precision Motion		12,062			9,482			15,675
Corporate, Shared Services, and Unallocated		(21,325	)		(21,985	)		(17,254	)
Total	$	17,691		$	15,007		$	35,848

	Year Ended December 31,
	2013		2012		2011
Depreciation and Amortization
Laser Products	$	7,119	$	9,192	$	7,503
Medical Technologies		8,808		702		688
Precision Motion		1,979		2,066		2,768
Corporate, Shared Services, and Unallocated		2,828		3,467		3,507
Total	$	20,734	$	15,427	$	14,466

Geographic Information

The Company aggregates geographic sales based on the customer location where products are shipped. Sales to these customers are as follows (in thousands except percentage data):

	Year Ended December 31,
	2013					2012					2011
	Sales		% of Total			Sales		% of Total			Sales		% of Total
United States	$	115,351		33.8	%	$	86,310		31.8	%	$	102,792		33.8	%
Germany		57,873		16.9			36,554		13.4			43,805		14.4
Rest of Europe		51,349		15.0			45,261		16.7			47,832		15.7
Asia-Pacific		75,016		22.0			67,717		24.9			72,201		23.7
Japan		29,689		8.7			27,808		10.2			30,597		10.1
Other		12,334		3.6			7,848		3.0			7,069		2.3
Total	$	341,612		100.0	%	$	271,498		100.0	%	$	304,296		100.0	%

Long-lived assets consist of property, plant and equipment, net, and are aggregated based on the location of the assets. A summary of these long-lived assets are as follows (in thousands):

	December 31,
	2013		2012
United States	$	23,691	$	22,679
Europe		5,626		5,963
Japan		159		208
Asia-Pacific and other		3,014		3,488
Total	$	32,490	$	32,338

Significant Customers

No customers accounted for greater than 10% of the Company’s sales during the years ended December 31, 2013, 2012 or 2011.