SEGMENT AND GEOGRAPHIC INFORMATION

As a result of the acquisition of Rofin-Sinar Technologies Inc. ("Rofin") in the first quarter of fiscal 2017 (see discussion below), we reorganized our prior two reporting segments (Specialty Laser Systems and Commercial Lasers and Components) into two new reporting segments for the combined company: OEM Laser Sources (“OLS”) and Industrial Lasers & Systems (“ILS”). This segment reorganization was based upon the organizational structure of the combined company and how the chief operating decision maker ("CODM") receives and utilizes information provided to allocate resources and make decisions. Accordingly, our segment information was restated retroactively in the first quarter of fiscal 2017. This segmentation reflects the go-to-market strategies and synergies for our broad portfolio of laser technologies and products. While both segments deliver cost-effective, highly reliable photonics solutions, the OLS business segment is focused on high performance laser sources and complex optical sub-systems, typically used in microelectronics manufacturing, medical diagnostics and therapeutic medical applications, as well as in scientific research. Our ILS business segment delivers high performance laser sources, sub-systems and tools primarily used for industrial laser materials processing, serving important end markets like automotive, machine tool, consumer goods and medical device manufacturing. Rofin's operating results have been included primarily in our Industrial Lasers & Systems segment.

We have identified OLS and ILS as operating segments for which discrete financial information is available. Both units have dedicated engineering, manufacturing, product business management and product line management functions. A small portion of our outside revenue is attributable to projects and recently developed products for which a segment has not yet been determined. The associated direct and indirect costs are presented in the category of Corporate and other, along with other corporate costs as described below.

Our Chief Executive Officer has been identified as the CODM as he assesses the performance of the segments and decides how to allocate resources to the segments. Income from operations is the measure of profit and loss that our CODM uses to assess performance and make decisions. As assets are not a measure used to assess the performance of the company by the CODM, asset information is not tracked or compiled by segment and is not available to be reported in our disclosures. Income from operations represents the net sales less the cost of sales and direct operating expenses incurred within the operating segments as well as allocated expenses such as shared sales and manufacturing costs. We do not allocate to our operating segments certain operating expenses which we manage separately at the corporate level. These unallocated costs include stock-based compensation and corporate functions (certain research and development, management, finance, legal and human resources) and are included in the results below under Corporate and other in the reconciliation of operating results. Management does not consider unallocated Corporate and other costs in its measurement of segment performance.

The following table provides net sales and income from continuing operations for our operating segments and a reconciliation of our total income from continuing operations to income from continuing operations before income taxes (in thousands):



	Fiscal
	2017			2016			2015
Net sales:
OEM Laser Sources	$	1,143,620		$	722,517		$	655,854
Industrial Lasers & Systems	579,691			134,868			146,606
Total net sales	$	1,723,311		$	857,385		$	802,460
Income (loss) from continuing operations:
OEM Laser Sources	$	432,839		$	197,923		$	152,660
Industrial Lasers & Systems	(26,447		)	(13,869		)	(10,027		)
Corporate and other	(80,897		)	(56,440		)	(41,886		)
Total income from continuing operations	$	325,495		$	127,614		$	100,747
Total other expense, net	(23,440		)	(4,718		)	(1,179		)
Income from continuing operations before income taxes	$	302,055		$	122,896		$	99,568

Geographic Information

Our foreign operations consist primarily of manufacturing facilities and sales offices in Europe and Asia-Pacific. Sales, marketing and customer service activities are conducted through sales subsidiaries throughout the world. Geographic sales information for fiscal 2017, 2016 and 2015 is based on the location of the end customer. Geographic long-lived asset information presented below is based on the physical location of the assets at the end of each year.

Sales to unaffiliated customers are as follows (in thousands):



	Fiscal
SALES	2017		2016		2015
United States	$	297,699	$	204,963	$	213,483
Foreign countries:
South Korea	628,369		187,908		195,589
China	162,316		63,050		57,548
Europe, other	162,162		55,351		53,027
Japan	154,985		193,418		135,674
Germany	145,835		71,427		75,474
Asia-Pacific, other	107,713		36,364		28,036
Rest of World	64,232		44,904		43,629
Total foreign countries sales	1,425,612		652,422		588,977
Total sales	$	1,723,311	$	857,385	$	802,460

Long-lived assets, which include all non-current assets other than goodwill, intangibles, non-current restricted cash and deferred taxes, by geographic region, are as follows (in thousands):



	Fiscal year-end
LONG-LIVED ASSETS	2017		2016
United States	$	120,116	$	92,771
Foreign countries:
Germany	159,483		55,786
Europe, other	18,681		2,478
Asia-Pacific	24,517		11,981
Total foreign countries long-lived assets	202,681		70,245
Total long-lived assets	$	322,797	$	163,016

Major Customers

We had one major customer who accounted for 22.9%, 13.1% and 17.2% of consolidated revenue during fiscal 2017, 2016 and 2015, respectively. We had another major customer who accounted for 16.4% of consolidated revenue during fiscal 2016. Both customers purchased primarily from our OLS segment.