Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting and Geographic Information

v3.20.1
Segment Reporting and Geographic Information
 9 Months Ended
Mar. 31, 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
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
March 31,
 
Nine Months Ended
March 31,
(In thousands)
2020
 
2019
 
2020
 
2019
Semiconductor Process Control:
 
 
 
 
 
 
 
Revenue
$
1,177,777

 
$
914,305

 
$
3,588,839

 
$
3,078,277

Segment gross margin
752,649

 
565,291

 
2,290,721

 
1,969,641

Specialty Semiconductor Process:
 
 
 
 
 
 
 
Revenue
85,083

 
84,388

 
229,328

 
84,388

Segment gross margin
47,187

 
45,296

 
126,684

 
45,296

PCB, Display and Component Inspection:
 
 
 
 
 
 
 
Revenue
160,411

 
98,462

 
525,242

 
148,187

Segment gross margin
71,163

 
45,912

 
229,769

 
67,000

Other:
 
 
 
 
 
 
 
Revenue
469

 
151

 
3,217

 
151

Segment gross margin
(271
)
 
3

 
499

 
3

Totals:
 
 
 
 
 
 
 
Revenue
$
1,423,740

 
$
1,097,306

 
$
4,346,626

 
$
3,311,003

Segment gross margin
$
870,728

 
$
656,502

 
$
2,647,673

 
$
2,081,940


The following table reconciles total reportable segment revenue to total revenue for the indicated periods:
 
Three Months Ended
March 31,
 
Nine Months Ended
March 31,
(In thousands)
2020
 
2019
 
2020
 
2019
Total revenue for reportable segments
$
1,423,740

 
$
1,097,306

 
$
4,346,626

 
$
3,311,003

Corporate allocations and effects of foreign exchange rates
224

 
5

 
205

 
(534
)
Total revenue
$
1,423,964

 
$
1,097,311

 
$
4,346,831

 
$
3,310,469


The following table reconciles total segment gross margin to total income before income taxes for the indicated periods:
 
Three Months Ended
March 31,
 
Nine Months Ended
March 31,
(In thousands)
2020
 
2019
 
2020
 
2019
Total segment gross margin
$
870,728

 
$
656,502

 
$
2,647,673

 
$
2,081,940

Acquisition-related charges, corporate allocations, and effects of foreign exchange rates(1)
36,922

 
46,136

 
128,859

 
48,063

Research and development
215,433

 
184,887

 
646,764

 
504,320

Selling, general and administrative
185,760

 
182,184

 
566,358

 
409,084

Goodwill impairment
256,649

 
—

 
256,649

 
—

Interest expense
39,231

 
31,187

 
120,053

 
84,087

Loss on extinguishment of debt
22,538

 
—

 
22,538

 
—

Other expense (income), net
(1,004
)
 
(9,282
)
 
(5,190
)
 
(28,535
)
Income before income taxes
$
115,199

 
$
221,390

 
$
911,642

 
$
1,064,921

__________________
(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 March 31,
 
Nine Months Ended March 31,
2020
 
2019
 
2020
 
2019
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taiwan
$
349,841


24
%

$
275,507


25
%

$
1,183,653


27
%

$
796,478


24
%
China
352,343


25
%

206,164


19
%

1,079,951


25
%

816,176


25
%
Japan
152,984


11
%

146,069


13
%

553,999

 
13
%

461,930

 
14
%
Korea
297,687


21
%

196,490


18
%

677,085


16
%

476,959


14
%
North America
159,250


11
%

156,824


14
%

499,750


11
%

409,066


12
%
Europe and Israel
76,021


5
%

76,054


7
%

232,870


5
%

228,341


7
%
Rest of Asia
35,838


3
%

40,203


4
%

119,523


3
%

121,519


4
%
Total
$
1,423,964

 
100
%
 
$
1,097,311

 
100
%
 
$
4,346,831

 
100
%
 
$
3,310,469

 
100
%

The following is a summary of revenues by major products for the indicated periods:
(Dollar amounts in thousands)
Three Months Ended March 31,
 
Nine Months Ended March 31,
2020
 
2019
 
2020
 
2019
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wafer Inspection
$
536,318

 
38
%
 
$
309,600

 
28
%
 
$
1,590,723

 
37
%
 
$
1,235,445

 
37
%
Patterning
298,973

 
21
%
 
279,566

 
25
%
 
970,709

 
22
%
 
868,063

 
26
%
Specialty Semiconductor Process
68,815

 
5
%
 
76,386

 
7
%
 
186,626

 
4
%
 
76,386

 
2
%
PCB, Display and Component Inspection
103,811

 
7
%
 
68,143

 
6
%
 
353,406

 
8
%
 
111,974

 
4
%
Services
372,868

 
26
%
 
304,087

 
28
%
 
1,093,210

 
25
%
 
835,817

 
25
%
Other
43,179

 
3
%
 
59,529

 
6
%
 
152,157

 
4
%
 
182,784

 
6
%
Total
$
1,423,964

 
100
%
 
$
1,097,311

 
100
%
 
$
4,346,831

 
100
%
 
$
3,310,469

 
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 March 31, 2020, two customers accounted for approximately 20% and 17% of total revenues. In the three months ended March 31, 2019, one customer accounted for approximately 19% of total revenues. In the nine months ended March 31, 2020, two customers accounted for approximately 20% and 13% and of total revenues. In the nine months ended March 31, 2019, two customers accounted for approximately 15% and 11% of total revenues. One customer on an individual basis accounted for greater than 10% of net accounts receivables at March 31, 2020 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
March 31, 2020
 
As of
June 30, 2019
Land, property and equipment, net:
 
 
 
United States
$
310,730

 
$
253,255

Singapore
51,091

 
49,523

Israel
58,257

 
66,082

Europe
59,034

 
62,027

Rest of Asia
18,631

 
17,912

Total
$
497,743

 
$
448,799