Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

v3.20.2
SEGMENT REPORTING AND GEOGRAPHIC INFORMATION
 12 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
SEGMENT REPORTING AND GEOGRAPHIC INFORMATION SEGMENT REPORTING AND GEOGRAPHIC INFORMATION
ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer.
We have four reportable segments: Semiconductor Process Control; Specialty Semiconductor Process; PCB, Display and Component Inspection; and Other. The reportable segments are determined based on several factors including, but not limited to, customer base, homogeneity of products, technology, delivery channels and similar economic characteristics.
Semiconductor Process Control.
The Semiconductor Process Control (“SPC”) segment offers comprehensive portfolio of inspection, metrology and data analytics products, and related service, which helps integrated circuit manufacturers achieve target yield throughout the entire semiconductor fabrication process-from research and development (“R&D”) to final volume production. Our differentiated products and services are designed to provide comprehensive solutions that help our customers accelerate development and production ramp cycles, achieve higher and more stable semiconductor die yields and improve their overall profitability. This reportable segment is comprised of two operating segments, Wafer Inspection and Patterning and GSS.
Specialty Semiconductor Process
The Specialty Semiconductor Manufacturing segment develops and sells advanced vacuum deposition and etching process tools, which are used by a broad range of specialty semiconductor customers, including manufacturers of microelectromechanical systems (“MEMS”), radio frequency (“RF”) communication chips, and power semiconductors for automotive and industrial applications. This reportable segment is comprised of one operating segment.
PCB, Display and Component Inspection
The PCB, Display and Component Inspection segment enable electronic device manufacturers to inspect, test and measure printed circuit boards (“PCBs”), flat panel displays (“FPDs”) and ICs to verify their quality, pattern the desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces. This segment also engages in the development and marketing of character recognition solutions to banks, financial and other payment processing institutions and healthcare providers. This reportable segment is comprised of two operating segments, PCB and Display and Component Inspection..
Other
We engage in the research, development and marketing of products for the deposition of thin film coating of various materials on crystalline silicon photovoltaic wafers for solar energy panels. This reportable segment is comprised of one operating segment. During the fourth quarter of fiscal 2020, we entered into an Asset Purchase Agreement to sell certain core assets of our non-strategic solar energy business, which is included in our Other reportable segment, for a total consideration of $1.7 million.
The CODM assesses the performance of each operating segment and allocates resources to those segments based on total revenue and segment gross margin and does not evaluate the segments using discrete asset information. Segment gross margin excludes corporate allocation and effects of foreign exchange rates, amortization of intangible assets, amortization of inventory fair value adjustments, and transaction costs associated with our acquisitions related to costs of revenues.
The following is a summary of results for each of our four reportable segments for the indicated periods:
  Year ended June 30,
(In thousands) 2020 2019 2018
Semiconductor Process Control:
Revenue $ 4,745,446    $ 4,080,822    $ 3,944,015   
Segment gross margin $ 3,028,167    $ 2,590,434    $ 2,554,223   
Specialty Semiconductor Process:
Revenue $ 329,700    $ 151,164    $ —   
Segment gross margin $ 183,641    $ 78,800    $ —   
PCB, Display and Component Inspection:
Revenue $ 727,451    $ 332,810    $ 92,516   
Segment gross margin $ 315,723    $ 155,765    $ 38,428   
Other:
Revenue $ 3,614    $ 4,676    $ —   
Segment gross margin $ (63)   $ 1,102    $ —   
Totals:
Revenue $ 5,806,211    $ 4,569,472    $ 4,036,531   
Segment gross margin $ 3,527,468    $ 2,826,101    $ 2,592,651   
The following table reconciles total reportable segment revenue to total revenue for the indicated periods:
  Year ended June 30,
(In thousands) 2020 2019 2018
Total revenue for reportable segments $ 5,806,211    $ 4,569,472    $ 4,036,531   
Corporate allocations and effects of foreign exchange rates 213    (568)   170   
Total revenue $ 5,806,424    $ 4,568,904    $ 4,036,701   
The following table reconciles total segment gross margin to total income before income taxes for the indicated periods:
  Year ended June 30,
(In thousands) 2020 2019 2018
Total segment gross margin $ 3,527,468    $ 2,826,101    $ 2,592,651   
Acquisition-related charges, corporate allocations and effects of foreign exchange rates(1)
170,605    126,574    1,991   
Research and development 863,864    711,030    608,531   
Selling, general and administrative 734,149    599,124    442,304   
Goodwill impairment 256,649    —    —   
Interest expense 160,274    124,604    114,376   
Loss on extinguishment of debt 22,538    —    —   
Other expense (income), net 2,678    (31,462)   (30,482)  
Income before income taxes $ 1,316,711    $ 1,296,231    $ 1,455,931   
__________________
(1)Acquisition-related charges primarily include amortization of intangible assets, amortization of inventory fair value adjustments, and other acquisition-related costs classified or presented as part of costs of revenues.
Our significant operations outside the United States include manufacturing facilities in China, Germany, Israel and Singapore and sales, marketing and service offices in Japan, the rest of the Asia Pacific region and Europe. For geographical revenue reporting, revenues are attributed to the geographic location in which the customer is located. Long-lived assets consist of land, property and equipment, net and are attributed to the geographic region in which they are located.
The following is a summary of revenues by geographic region, based on ship-to location, for the indicated periods:
(Dollar amounts in thousands) Year ended June 30,
2020 2019 2018
Revenues:
Taiwan $ 1,566,823    27  % $ 1,105,726    24  % $ 636,363    16  %
China 1,457,579    25  % 1,215,807    27  % 643,033    16  %
Korea 982,171    17  % 584,091    13  % 1,178,601    29  %
Japan 670,287    12  % 581,529    13  % 638,358    16  %
United States 657,550    11  % 596,452    13  % 494,330    12  %
Europe and Israel 318,483    5  % 305,924    7  % 300,883    7  %
Rest of Asia 153,531    3  % 179,375    3  % 145,133    4  %
Total $ 5,806,424    100  % $ 4,568,904    100  % $ 4,036,701    100  %
The following is a summary of revenues by major products for the indicated periods:
(Dollar amounts in thousands) Year ended June 30,
2020 2019 2018
Revenues:
Wafer Inspection $ 2,080,484    36  % $ 1,630,899    36  % $ 1,714,421    42  %
Patterning 1,278,382    22  % 1,161,263    25  % 1,133,410    29  %
Specialty Semiconductor Process 269,667    5  % 129,854    3  % —    —  %
PCB, Display and Component Inspection 497,026    9  % 238,275    5  % 85,836    2  %
Services 1,477,699    25  % 1,176,661    26  % 876,030    22  %
Other 203,166    3  % 231,952    5  % 227,004    5  %
Total $ 5,806,424    100  % $ 4,568,904    100  % $ 4,036,701    100  %
Wafer Inspection, and Patterning products are offered in Semiconductor Process Control segment. Services are offered in multiple segments. Other includes primarily refurbished systems, remanufactured legacy systems, and enhancements and upgrades for previous-generation products that are part of Semiconductor Process Control segment.
In the fiscal year ended June 30, 2020, two customers accounted for approximately 20% and 14% of total revenues. In the fiscal year ended June 30, 2019, one customer accounted for approximately 15% of total revenues. In the fiscal year ended June 30, 2018, one customer accounted for approximately 21% of total revenues.
Long-lived assets by geographic region as of the dates indicated below were as follows:
  As of June 30,
(In thousands) 2020 2019
Long-lived assets:
United States $ 329,558    $ 253,255   
Israel 59,162    66,082   
Europe 58,065    62,027   
Singapore 54,946    49,523   
Rest of Asia 18,093    17,912   
Total $ 519,824    $ 448,799