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SEGMENT REPORTING AND GEOGRAPHIC INFORMATION | 6 Months Ended
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Dec. 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 a comprehensive portfolio of inspection, metrology and data analytics products, and related service, which helps integrated circuit ("ICs") 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 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, PCB and Display and Component Inspection. 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 revenues 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 |  | Six Months Ended
| December 31, |  | December 31,
(In thousands) | 2020 |  | 2019 |  | 2020 |  | 2019
Semiconductor Process Control: |  |  |  |  |  |  |
Revenues | $ | 1,380,184 |  |  | $ | 1,247,430 |  |  | $ | 2,648,138 |  |  | $ | 2,411,062 |
Segment gross margin | 884,090 |  |  | 795,730 |  |  | 1,698,900 |  |  | 1,538,072 |
Specialty Semiconductor Process: |  |  |  |  |  |  |
Revenues | 90,587 |  |  | 75,106 |  |  | 179,540 |  |  | 144,245 |
Segment gross margin | 51,171 |  |  | 41,333 |  |  | 101,099 |  |  | 79,497 |
PCB, Display and Component Inspection: |  |  |  |  |  |  |
Revenues | 179,267 |  |  | 186,279 |  |  | 360,444 |  |  | 364,831 |
Segment gross margin | 84,584 |  |  | 82,538 |  |  | 174,753 |  |  | 158,606 |
Other: |  |  |  |  |  |  |
Revenues | 449 |  |  | 517 |  |  | 590 |  |  | 2,748 |
Segment gross margin | (121) |  |  | 117 |  |  | (108) |  |  | 770 |
Totals: |  |  |  |  |  |  |
Revenues for reportable segments | $ | 1,650,487 |  |  | $ | 1,509,332 |  |  | $ | 3,188,712 |  |  | $ | 2,922,886 |
Segment gross margin | $ | 1,019,724 |  |  | $ | 919,718 |  |  | $ | 1,974,644 |  |  | $ | 1,776,945 |
The following table reconciles total reportable segment revenues to total revenues for the indicated periods:
| Three Months Ended |  | Six Months Ended
| December 31, |  | December 31,
(In thousands) | 2020 |  | 2019 |  | 2020 |  | 2019
Total revenues for reportable segments | $ | 1,650,487 |  |  | $ | 1,509,332 |  |  | $ | 3,188,712 |  |  | $ | 2,922,886 |
Corporate allocations and effects of foreign exchange rates | 383 |  |  | 121 |  |  | 778 |  |  | (19) |
Total revenues | $ | 1,650,870 |  |  | $ | 1,509,453 |  |  | $ | 3,189,490 |  |  | $ | 2,922,867 |
The following table reconciles total segment gross margin to total income before income taxes for the indicated periods:
| Three Months Ended |  | Six Months Ended
| December 31, |  | December 31,
(In thousands) | 2020 |  | 2019 |  | 2020 |  | 2019
Total segment gross margin | $ | 1,019,724 |  |  | $ | 919,718 |  |  | $ | 1,974,644 |  |  | $ | 1,776,945 |
Acquisition-related charges, corporate allocations, and effects of foreign exchange rates(1) | 38,587 |  |  | 43,883 |  |  | 75,449 |  |  | 91,937 |
Research and development | 229,064 |  |  | 220,751 |  |  | 448,102 |  |  | 431,331 |
Selling, general and administrative | 181,909 |  |  | 192,253 |  |  | 354,540 |  |  | 380,598 |
Interest expense | 38,880 |  |  | 40,472 |  |  | 78,266 |  |  | 80,822 |
Other expense (income), net | 3,882 |  |  | (2,568) |  |  | 7,079 |  |  | (4,186) |
Income before income taxes | $ | 527,402 |  |  | $ | 424,927 |  |  | $ | 1,011,208 |  |  | $ | 796,443 |
__________________ (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 December 31, |  | Six Months Ended December 31,
2020 |  | 2019 |  | 2020 |  | 2019
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
China | $ | 382,157 |  |  | 23 | % |  | $ | 381,752 |  |  | 25 | % |  | $ | 868,246 |  |  | 27 | % |  | $ | 727,608 |  |  | 25 | %
Taiwan | 380,785 |  |  | 23 | % |  | 447,083 |  |  | 30 | % |  | 749,886 |  |  | 24 | % |  | 833,812 |  |  | 28 | %
Korea | 347,947 |  |  | 21 | % |  | 181,948 |  |  | 12 | % |  | 537,465 |  |  | 17 | % |  | 379,398 |  |  | 13 | %
North America | 214,808 |  |  | 13 | % |  | 158,517 |  |  | 11 | % |  | 384,984 |  |  | 12 | % |  | 340,500 |  |  | 12 | %
Japan | 156,721 |  |  | 10 | % |  | 194,804 |  |  | 13 | % |  | 321,140 |  |  | 10 | % |  | 401,015 |  |  | 14 | %
Europe and Israel | 100,201 |  |  | 6 | % |  | 97,466 |  |  | 6 | % |  | 183,318 |  |  | 6 | % |  | 156,849 |  |  | 5 | %
Rest of Asia | 68,251 |  |  | 4 | % |  | 47,883 |  |  | 3 | % |  | 144,451 |  |  | 4 | % |  | 83,685 |  |  | 3 | %
Total | $ | 1,650,870 |  |  | 100 | % |  | $ | 1,509,453 |  |  | 100 | % |  | $ | 3,189,490 |  |  | 100 | % |  | $ | 2,922,867 |  |  | 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,
2020 |  | 2019 |  | 2020 |  | 2019
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Wafer Inspection | $ | 687,030 |  |  | 42 | % |  | $ | 606,131 |  |  | 40 | % |  | $ | 1,206,581 |  |  | 38 | % |  | $ | 1,054,405 |  |  | 36 | %
Patterning | 307,512 |  |  | 19 | % |  | 289,078 |  |  | 19 | % |  | 678,444 |  |  | 21 | % |  | 671,736 |  |  | 23 | %
Specialty Semiconductor Process | 71,978 |  |  | 4 | % |  | 60,941 |  |  | 4 | % |  | 146,005 |  |  | 5 | % |  | 117,811 |  |  | 4 | %
PCB, Display and Component Inspection | 115,825 |  |  | 7 | % |  | 129,235 |  |  | 9 | % |  | 236,451 |  |  | 7 | % |  | 249,595 |  |  | 9 | %
Services | 412,847 |  |  | 25 | % |  | 364,903 |  |  | 24 | % |  | 805,972 |  |  | 25 | % |  | 720,342 |  |  | 24 | %
Other | 55,678 |  |  | 3 | % |  | 59,165 |  |  | 4 | % |  | 116,037 |  |  | 4 | % |  | 108,978 |  |  | 4 | %
Total | $ | 1,650,870 |  |  | 100 | % |  | $ | 1,509,453 |  |  | 100 | % |  | $ | 3,189,490 |  |  | 100 | % |  | $ | 2,922,867 |  |  | 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, 2020, two customers each accounted for approximately 14% of total revenues. In the three months ended December 31, 2019, two customers accounted for approximately 24% and 10% of total revenues. In the six months ended December 31, 2020, 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% of total revenues. Two customers on an individual basis accounted for greater than 10% of net accounts receivable at December 31, 2020 and one customer on an individual basis accounted for greater than 10% of net accounts receivable at 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) | December 31, 2020 |  | June 30, 2020
Land, property and equipment, net: |  |  |
United States | $ | 391,080 |  |  | $ | 329,558 |
Israel | 57,562 |  |  | 59,162 |
Singapore | 68,027 |  |  | 54,946 |
Europe | 55,979 |  |  | 58,065 |
Rest of Asia | 21,537 |  |  | 18,093 |
Total | $ | 594,185 |  |  | $ | 519,824 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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