Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting and Geographic Information

v3.19.3.a.u2
Segment Reporting and Geographic Information
 6 Months Ended
Dec. 31, 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
December 31,
 
Six Months Ended
December 31,
(In thousands)
2019
 
2018
 
2019
 
2018
Semiconductor Process Control:
 
 
 
 
 
 
 
Revenue
$
1,247,430

 
$
1,094,013

 
$
2,411,062

 
$
2,163,972

Segment gross margin
795,730

 
702,119

 
1,538,072

 
1,404,350

Specialty Semiconductor Process:
 
 
 
 
 
 
 
Revenue
75,106

 
—

 
144,245

 
—

Segment gross margin
41,333

 
—

 
79,497

 
—

PCB, Display and Component Inspection:
 
 
 
 
 
 
 
Revenue
186,279

 
26,110

 
364,831

 
49,725

Segment gross margin
82,538

 
10,555

 
158,606

 
21,088

Other:
 
 
 
 
 
 
 
Revenue
517

 
—

 
2,748

 
—

Segment gross margin
117

 
—

 
770

 
—

Totals:
 
 
 
 
 
 
 
Revenue
$
1,509,332

 
$
1,120,123

 
$
2,922,886

 
$
2,213,697

Segment gross margin
$
919,718

 
$
712,674

 
$
1,776,945

 
$
1,425,438


The following table reconciles total reportable segment revenue to total revenue for the indicated periods:
 
Three Months Ended
December 31,
 
Six Months Ended
December 31,
(In thousands)
2019
 
2018
 
2019
 
2018
Total revenue for reportable segments
$
1,509,332

 
$
1,120,123

 
$
2,922,886

 
$
2,213,697

Corporate allocations and effects of foreign exchange rates
121

 
(225
)
 
(19
)
 
(539
)
Total revenue
$
1,509,453

 
$
1,119,898

 
$
2,922,867

 
$
2,213,158


The following table reconciles total segment gross margin to total income before income taxes for the indicated periods:
 
Three Months Ended
December 31,
 
Six Months Ended
December 31,
(In thousands)
2019
 
2018
 
2019
 
2018
Total segment gross margin
$
919,718

 
$
712,674

 
$
1,776,945

 
$
1,425,438

Acquisition-related charges, corporate allocations, and effects of foreign exchange rates(1)
43,883

 
1,036

 
91,937

 
1,927

Research and development
220,751

 
165,903

 
431,331

 
319,433

Selling, general and administrative
192,253

 
112,462

 
380,598

 
226,900

Interest expense
40,472

 
26,538

 
80,822

 
52,900

Other expense (income), net
(2,568
)
 
(9,228
)
 
(4,186
)
 
(19,253
)
Income before income taxes
$
424,927

 
$
415,963

 
$
796,443

 
$
843,531

__________________
(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 December 31,
 
Six Months Ended December 31,
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taiwan
$
447,083


30
%

$
266,534


24
%

$
833,812


28
%

$
520,971


24
%
China
381,752


25
%

269,878


24
%

727,608


25
%

610,012


28
%
Japan
194,804


13
%

180,283


16
%

401,015

 
14
%

315,861

 
14
%
Korea
181,948


12
%

126,968


11
%

379,398


13
%

280,469


13
%
North America
158,517


11
%

150,113


13
%

340,500


12
%

252,242


11
%
Europe and Israel
97,466


6
%

80,618


7
%

156,849


5
%

152,287


7
%
Rest of Asia
47,883


3
%

45,504


5
%

83,685


3
%

81,316


3
%
Total
$
1,509,453

 
100
%
 
$
1,119,898

 
100
%
 
$
2,922,867

 
100
%
 
$
2,213,158

 
100
%

The following is a summary of revenues by major products for the indicated periods:
(Dollar amounts in thousands)
Three Months Ended December 31,
 
Six Months Ended December 31,
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wafer Inspection
$
606,131

 
40
%
 
$
478,553

 
43
%
 
$
1,054,405

 
36
%
 
$
925,845

 
42
%
Patterning
289,078

 
19
%
 
284,496

 
25
%
 
671,736

 
23
%
 
588,497

 
26
%
Specialty Semiconductor Process
60,941

 
4
%
 
—

 
—
%
 
117,811

 
4
%
 
—

 
—
%
PCB, Display and Component Inspection
129,235

 
9
%
 
22,996

 
2
%
 
249,595

 
9
%
 
43,831

 
2
%
Services
364,903

 
24
%
 
267,697

 
24
%
 
720,342

 
24
%
 
531,730

 
24
%
Other
59,165

 
4
%
 
66,156

 
6
%
 
108,978

 
4
%
 
123,255

 
6
%
Total
$
1,509,453

 
100
%
 
$
1,119,898

 
100
%
 
$
2,922,867

 
100
%
 
$
2,213,158

 
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 December 31, 2019, two customers accounted for approximately 24% and 10% of total revenues. In the three months ended December 31, 2018, two customers accounted for approximately 14% and 13% of total revenues. In the six months ended December 31, 2019, two customers accounted for approximately 21% and 11% and of total revenues. In the six months ended December 31, 2018, one customer accounted for approximately 14% of total revenues. One customer on an individual basis accounted for greater than 10% of net accounts receivables at December 31, 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
December 31, 2019
 
As of
June 30, 2019
Land, property and equipment, net:
 
 
 
United States
$
297,938

 
$
253,255

Singapore
53,510

 
49,523

Israel
59,943

 
66,082

Europe
59,843

 
62,027

Rest of Asia
18,746

 
17,912

Total
$
489,980

 
$
448,799