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 by reportable segment were as follows (in thousands, except percentage data):

	Three Months Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2018		2017		2018		2017
Revenue
Photonics	$	64,062	$	57,885	$	125,893	$	108,621
Vision		53,823		34,031		110,032		66,793
Precision Motion		32,515		27,186		61,440		52,662
Total	$	150,400	$	119,102	$	297,365	$	228,076

	Three Months Ended						Six Months Ended
	June 29,			June 30,			June 29,			June 30,
	2018			2017			2018			2017
Gross Profit
Photonics	$	30,737		$	26,668		$	60,292		$	48,457
Vision		20,441			14,440			40,162			27,586
Precision Motion		14,702			12,749			27,962			24,267
Unallocated Corporate and Shared Services		(651	)		(368	)		(1,028	)		(727	)
Total	$	65,229		$	53,489		$	127,388		$	99,583

	Three Months Ended						Six Months Ended
	June 29,			June 30,			June 29,			June 30,
	2018			2017			2018			2017
Gross Profit Margin
Photonics		48.0	%		46.1	%		47.9	%		44.6	%
Vision		38.0	%		42.4	%		36.5	%		41.3	%
Precision Motion		45.2	%		46.9	%		45.5	%		46.1	%
Total		43.4	%		44.9	%		42.8	%		43.7	%

	Three Months Ended						Six Months Ended
	June 29,			June 30,			June 29,			June 30,
	2018			2017			2018			2017
Operating Income (Loss)
Photonics	$	16,184		$	12,564		$	31,507		$	20,771
Vision		391			2,522			866			4,047
Precision Motion		7,612			7,581			16,219			14,745
Unallocated Corporate and Shared Services		(7,072	)		(6,920	)		(14,250	)		(13,477	)
Total	$	17,115		$	15,747		$	34,342		$	26,086

	Three Months Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2018		2017		2018		2017
Depreciation and Amortization
Photonics	$	2,966	$	3,783	$	6,033	$	7,027
Vision		5,097		2,477		10,271		4,914
Precision Motion		841		592		1,344		1,158
Unallocated Corporate and Shared Services		216		242		539		477
Total	$	9,120	$	7,094	$	18,187	$	13,576

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				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2018		2017		2018		2017
United States	$	60,467	$	51,618	$	118,580	$	98,829
Germany		21,012		14,781		41,081		29,079
Rest of Europe		23,347		14,430		50,407		28,012
China		18,367		13,986		33,970		25,461
Rest of Asia-Pacific		24,987		20,877		49,707		40,742
Other		2,220		3,410		3,620		5,953
Total	$	150,400	$	119,102	$	297,365	$	228,076

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						Six Months Ended
	June 29,			June 30,			June 29,			June 30,
	2018			2017			2018			2017
Advanced Industrial		50	%		60	%		50	%		60	%
Medical		50	%		40	%		50	%		40	%
Total		100	%		100	%		100	%		100	%

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