Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting and Geographic Information

v3.19.3
Segment Reporting and Geographic Information
 3 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
SEGMENT REPORTING AND GEOGRAPHIC INFORMATION
NOTE 18 – 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 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.
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.
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)
2019
 
2018
Semiconductor Process Control:
 
 
 
Revenue
$
1,163,632

 
$
1,069,959

Segment gross margin
$
742,342

 
$
702,231

Specialty Semiconductor Process:
 
 
 
Revenue
$
69,139

 
$
—

Segment gross margin
$
38,164

 
$
—

PCB, Display and Component Inspection:
 
 
 
Revenue
$
178,552

 
$
23,615

Segment gross margin
$
76,068

 
$
10,533

Other:
 
 
 
Revenue
$
2,231

 
$
—

Segment gross margin
$
653

 
$
—

Totals:
 
 
 
Revenue
$
1,413,554

 
$
1,093,574

Segment gross margin
$
857,227

 
$
712,764


The following table reconciles total reportable segment revenue to total revenue for the indicated periods:
 
Three Months Ended September 30,
(In thousands)
2019
 
2018
Total revenue for reportable segments
$
1,413,554

 
$
1,093,574

Corporate allocations and effects of foreign exchange rates
(140
)
 
(314
)
Total revenue
$
1,413,414

 
$
1,093,260


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)
2019
 
2018
Total segment gross margin
$
857,227

 
$
712,764

Acquisition-related charges, corporate allocations, and effects of foreign exchange rates(1)
48,054

 
891

Research and development
210,580

 
153,530

Selling, general and administrative
188,345

 
114,438

Interest expense
40,350

 
26,362

Other expense (income), net
(1,618
)
 
(10,025
)
Income before income taxes
$
371,516

 
$
427,568

__________________
(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)
Three Months Ended September 30,
2019
 
2018
Revenues:
 
 
 
 
 
 
 
Taiwan
$
386,729

 
27
%
 
$
254,437

 
23
%
China
345,856

 
24
%
 
340,134

 
31
%
Japan
206,211

 
15
%
 
135,578

 
12
%
Korea
197,450

 
14
%
 
153,501

 
14
%
North America
181,983

 
13
%
 
102,129

 
9
%
Europe and Israel
59,383

 
4
%
 
71,669

 
7
%
Rest of Asia
35,802

 
3
%
 
35,812

 
4
%
Total
$
1,413,414

 
100
%
 
$
1,093,260

 
100
%

The following is a summary of revenues by major products for the indicated periods:
(Dollar amounts in thousands)
Three Months Ended September 30,
2019
 
2018
Revenues:
 
 
 
 
 
 
 
Wafer Inspection
$
448,274

 
32
%
 
$
447,292

 
41
%
Patterning
382,658

 
27
%
 
304,001

 
28
%
Specialty Semiconductor Process
56,870

 
4
%
 
—

 
—
%
PCB, Display and Component Inspection
120,360

 
9
%
 
20,835

 
2
%
Services
355,439

 
25
%
 
264,033

 
24
%
Other
49,813

 
3
%
 
57,099

 
5
%
Total
$
1,413,414

 
100
%
 
$
1,093,260

 
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, 2019, two customers accounted for approximately 17% and 12% of total revenues. In the three months ended September 30, 2018, two customers accounted for approximately 15% and 10% of total revenues. One customer on an individual basis accounted for greater than 10% of net accounts receivables at September 30, 2019 and June 30, 2019.
Land, property and equipment, net by geographic region as of the dates indicated below were as follows: 
(In thousands)
As of
September 30, 2019
 
As of
June 30, 2019
Land, property and equipment, net:
 
 
 
United States
$
279,293

 
$
253,255

Singapore
52,778

 
49,523

Israel
63,250

 
66,082

Europe
61,302

 
62,027

Rest of Asia
18,587

 
17,912

Total
$
475,210

 
$
448,799