Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

v3.20.2
SEGMENT REPORTING AND GEOGRAPHIC INFORMATION
 3 Months Ended
Sep. 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.
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 enables 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.
Other
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 was included in our Other reportable segment. This reportable segment remains comprised of one operating segment.
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 allocations 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:
Three Months Ended
  September 30,
(In thousands) 2020 2019
Semiconductor Process Control:
Revenue $ 1,267,954  $ 1,163,632 
Segment gross margin 814,810  742,342 
Specialty Semiconductor Process:
Revenue 88,954  69,139 
Segment gross margin 49,928  38,164 
PCB, Display and Component Inspection:
Revenue 181,177  178,552 
Segment gross margin 90,169  76,068 
Other:
Revenue 140  2,231 
Segment gross margin 13  653 
Totals:
Revenue $ 1,538,225  $ 1,413,554 
Segment gross margin $ 954,920  $ 857,227 

The following table reconciles total reportable segment revenue to total revenue for the indicated periods:
Three Months Ended
  September 30,
(In thousands) 2020 2019
Total revenue for reportable segments $ 1,538,225  $ 1,413,554 
Corporate allocations and effects of foreign exchange rates 395  (140)
Total revenue $ 1,538,620  $ 1,413,414 

The following table reconciles total segment gross margin to total income before income taxes for the indicated periods:
Three Months Ended
  September 30,
(In thousands) 2020 2019
Total segment gross margin $ 954,920  $ 857,227 
Acquisition-related charges, corporate allocations, and effects of foreign exchange rates(1)
36,862  48,054 
Research and development 219,038  210,580 
Selling, general and administrative 172,631  188,345 
Interest expense 39,386  40,350 
Other expense (income), net 3,197  (1,618)
Income before income taxes $ 483,806  $ 371,516 
__________________
(1)Acquisition-related charges primarily include amortization of intangible assets and amortization of inventory fair value adjustments 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) Three Months Ended September 30,
2020 2019
Revenues:
China $ 486,089  32  % $ 345,856  24  %
Taiwan 369,100  24  % 386,729  27  %
Korea 189,518  12  % 197,450  14  %
North America 170,176  11  % 181,983  13  %
Japan 164,419  11  % 206,211  15  %
Europe and Israel 83,117  5  % 59,383  4  %
Rest of Asia 76,201  5  % 35,802  3  %
Total $ 1,538,620  100  % $ 1,413,414  100  %
The following is a summary of revenues by major products for the indicated periods:
(Dollar amounts in thousands) Three Months Ended September 30,
2020 2019
Revenues:
Wafer Inspection $ 519,551  34  % $ 448,274  32  %
Patterning 370,932  24  % 382,658  27  %
Specialty Semiconductor Process 74,027  5  % 56,870  4  %
PCB, Display and Component Inspection 120,626  8  % 120,360  9  %
Services 393,125  26  % 355,439  25  %
Other 60,359  3  % 49,813  3  %
Total $ 1,538,620  100  % $ 1,413,414  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 which are part of Semiconductor Process Control segment.

In the three months ended September 30, 2020, two customers accounted for approximately 14% and 12% of total revenues. In the three months ended September 30, 2019, one customer accounted for approximately 19% of total revenues. One customer on an individual basis accounted for greater than 10% of net accounts receivables at September 30, 2020 and June 30, 2020.
Land, property and equipment, net by geographic region as of the dates indicated below were as follows: 
As of As of
(In thousands) September 30, 2020 June 30, 2020
Land, property and equipment, net:
United States $ 371,987  $ 329,558 
Israel 57,830  59,162 
Singapore 56,858  54,946 
Europe 56,594  58,065 
Rest of Asia 18,583  18,093 
Total $ 561,852  $ 519,824