XML 56 R28.htm IDEA: XBRL DOCUMENT
v2.4.1.9

Business Segment, Geographic Area, Product and Significant Customer Information | 12 Months Ended
--- | ---
Dec. 31, 2014
Segment Reporting [Abstract] |
Business Segment, Geographic Area, Product and Significant Customer Information |
21) | Business Segment, Geographic Area, Product and Significant Customer Information
The Company develops, manufactures, sells and services products that measure, control, power and monitor critical parameters of advanced manufacturing processes. The Company’s Chief Operating Decision Maker (“CODM”) utilizes consolidated financial information to make decisions about allocating resources and assessing performance for the entire Company. In addition, certain disaggregated financial information is also provided to the CODM. Based upon the information provided to the CODM, the Company has determined it has nine operating segments and four reportable segments. The nine operating segments are PFMC Products, Controls Products, ASTeX Products, Granville-Phillips Products, ENI Products, HPS Products (Vacuum Products), Analytical Solutions Group, Europe Region Sales & Service and Asia Region Sales & Service. PFMC Products, Controls Products, ASTeX Products, Granville-Phillips Products, ENI Products and HPS Products comprise a single reportable segment due to the similarities of the segments. This reportable segment, Advanced Manufacturing Capital Equipment, includes the development, manufacturing, sales and servicing of instruments and control products, power and reactive gas products and vacuum products, all of which are utilized in semiconductor processing and other similar advanced manufacturing processes. Sales in this segment include both external sales and intercompany sales (which are stated at agreed upon transfer prices). External sales of these products made in Europe or Asia are reported as sales in the Europe Region Sales & Service or Asia Region Sales & Service segments. Analytical Solutions Group, Europe Region Sales & Service and Asia Region Sales & Service are each separate reportable segments. The Company has reported corporate expenses and certain intercompany pricing transactions in a Corporate, Eliminations and Other reconciling column. The Analytical Solutions Group includes gas composition analysis and information technology products and custom fabrication services. The Europe and Asia sales and service segments mainly resell and service the Advanced Manufacturing Capital Equipment and Analytical Solutions Group products sold in their respective regions. MKS derives the segment results directly from the manner in which results are reported in its management reporting system. The accounting policies MKS uses to derive reportable segment results are substantially the same as those used for external reporting purposes except that a substantial portion of the sales of the Advanced Manufacturing Capital Equipment and Analytical Solutions Group segments are intercompany sales to the regions at tax-based transfer prices and certain significant costs, including stock-based compensation and management incentive compensation, are not allocated to the segments and are included in Corporate, Eliminations and Other. The CODM reviews several metrics of each operating segment, including net revenues and gross profit (loss). The following is net revenues by reportable segment:
|  | Years Ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Advanced Manufacturing Capital Equipment |  | $ | 639,623 |  |  | $ | 526,027 |  |  | $ | 479,751 |
Analytical Solutions Group |  |  | 61,161 |  |  |  | 56,324 |  |  |  | 62,765 |
Europe Region Sales & Service(1) |  |  | 55,115 |  |  |  | 48,518 |  |  |  | 51,440 |
Asia Region Sales & Service(1) |  |  | 240,772 |  |  |  | 218,048 |  |  |  | 229,731 |
Corporate, Eliminations and Other |  |  | (215,802 | ) |  |  | (179,497 | ) |  |  | (180,179 | )
|  | $ | 780,869 |  |  | $ | 669,420 |  |  | $ | 643,508 |
The following is a reconciliation of segment gross profit to consolidated net income:
|  | Years Ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Gross profit by reportable segment: |  |  |  |  |  |  |  |  |  |  |  |
Advanced Manufacturing Capital Equipment |  |  | 260,669 |  |  |  | 187,685 |  |  |  | 171,308 |
Analytical Solutions Group |  |  | 30,787 |  |  |  | 29,431 |  |  |  | 32,741 |
Europe Region Sales & Service(1) |  |  | 15,467 |  |  |  | 13,600 |  |  |  | 15,156 |
Asia Region Sales & Service(1) |  |  | 40,717 |  |  |  | 42,948 |  |  |  | 36,962 |
Corporate, Eliminations and Other |  |  | (9,874 | ) |  |  | (7,090 | ) |  |  | 13,312 |
Total gross profit by reportable segment |  |  | 337,766 |  |  |  | 266,574 |  |  |  | 269,479 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  |  | 62,888 |  |  |  | 63,570 |  |  |  | 60,118 |
Selling, general and administrative |  |  | 131,828 |  |  |  | 142,014 |  |  |  | 127,185 |
Litigation |  |  | — |  |  |  | — |  |  |  | 5,316 |
Insurance reimbursement |  |  | — |  |  |  | (1,071 | ) |  |  | — |
Acquisition costs |  |  | 499 |  |  |  | 171 |  |  |  | 1,258 |
Restructuring |  |  | 2,464 |  |  |  | 1,364 |  |  |  | 343 |
Amortization of intangible assets |  |  | 4,945 |  |  |  | 2,139 |  |  |  | 1,036 |
Income from operations |  |  | 135,142 |  |  |  | 58,387 |  |  |  | 74,223 |
Net interest income |  |  | 1,251 |  |  |  | 914 |  |  |  | 913 |
Income before income taxes |  |  | 136,393 |  |  |  | 59,301 |  |  |  | 75,136 |
Provision for income taxes |  |  | 20,615 |  |  |  | 23,525 |  |  |  | 27,107 |
Net income |  | $ | 115,778 |  |  | $ | 35,776 |  |  | $ | 48,029 |
(1) | The Europe and Asia sales and service operations do not represent total geographical Europe and Asia financial information. These sales and service operations only represent the sales from the resale and service of Advanced Manufacturing Capital Equipment and Analytical Solutions Group products in their respective regions. The Advanced Manufacturing Capital Equipment and Analytical Solutions Group segments both have sales in each region. Accordingly, total geographical sales include sales from multiple reportable segments.
The following is capital expenditures by reportable segment for the years ended December 31, 2014, 2013 and 2012:
|  | Product Groups |  |  | Foreign Sales & Service Operations |  |  |  |  |  |  |
|  | Advanced Manufacturing Capital Equipment |  |  | Analytical Solutions Group |  |  | Europe |  |  | Asia |  |  | Corporate, Eliminations and Other |  |  | Total |
December 31, 2014: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 8,634 |  |  | $ | 1,763 |  |  | $ | 183 |  |  | $ | 690 |  |  | $ | 1,913 |  |  | $ | 13,183 |
December 31, 2013: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 8,729 |  |  | $ | 513 |  |  | $ | 250 |  |  | $ | 857 |  |  | $ | 2,061 |  |  | $ | 12,410 |
December 31, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 11,817 |  |  | $ | 1,228 |  |  | $ | 132 |  |  | $ | 886 |  |  | $ | 3,642 |  |  | $ | 17,705 |
The following is depreciation and amortization expense by reportable segment for the years ended December 31, 2014, 2013 and 2012:
|  | Product Groups |  |  | Foreign Sales & Service Operations |  |  |  |  |  |  |
|  | Advanced Manufacturing Capital Equipment |  |  | Analytical Solutions Group |  |  | Europe |  |  | Asia |  |  | Corporate, Eliminations and Other |  |  | Total |
December 31, 2014: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | 15,119 |  |  | $ | 1,101 |  |  | $ | 488 |  |  | $ | 1,241 |  |  | $ | 2,565 |  |  | $ | 20,514 |
December 31, 2013: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | 11,836 |  |  | $ | 1,252 |  |  | $ | 348 |  |  | $ | 1,177 |  |  | $ | 2,489 |  |  | $ | 17,102 |
December 31, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | 9,594 |  |  | $ | 1,176 |  |  | $ | 326 |  |  | $ | 1,711 |  |  | $ | 1,635 |  |  | $ | 14,442 |
Total income tax expense is impracticable to present by reportable segment because the necessary information is not available or used by the CODM. The following is segment assets by reportable segment:
|  | Product Groups |  |  | Foreign Sales & Service Operations |  |  |  |  |  |  |
|  | Advanced Manufacturing Capital Equipment |  |  | Analytical Solutions Group |  |  | Europe |  |  | Asia |  |  | Corporate, Eliminations and Other |  |  | Total |
December 31, 2014: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Segment assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable |  | $ | 15,296 |  |  | $ | 5,335 |  |  | $ | 6,503 |  |  | $ | 39,046 |  |  | $ | 40,182 |  |  | $ | 106,362 |
Inventory |  |  | 128,345 |  |  |  | 3,915 |  |  |  | 3,241 |  |  |  | 24,619 |  |  |  | (4,951 | ) |  |  | 155,169 |
Total segment assets |  | $ | 143,641 |  |  | $ | 9,250 |  |  | $ | 9,744 |  |  | $ | 63,665 |  |  | $ | 35,231 |  |  | $ | 261,531 |
|  | Product Groups |  |  | Foreign Sales & Service Operations |  |  |  |  |  |  |
|  | Advanced Manufacturing Capital Equipment |  |  | Analytical Solutions Group |  |  | Europe |  |  | Asia |  |  | Corporate, Eliminations and Other |  |  | Total |
December 31, 2013: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Segment assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable |  | $ | 20,767 |  |  | $ | 5,603 |  |  | $ | 6,538 |  |  | $ | 44,207 |  |  | $ | 39,629 |  |  | $ | 116,744 |
Inventory |  |  | 117,822 |  |  |  | 4,391 |  |  |  | 4,254 |  |  |  | 25,094 |  |  |  | (8,834 | ) |  |  | 142,727 |
Total segment assets |  | $ | 138,589 |  |  | $ | 9,994 |  |  | $ | 10,792 |  |  | $ | 69,301 |  |  | $ | 30,795 |  |  | $ | 259,471 |
A reconciliation of segment assets to consolidated total assets is as follows:
|  | Years Ended December 31, |
|  | 2014 |  |  | 2013 |
Total segment assets |  | $ | 261,531 |  |  | $ | 259,471 |
Cash and cash equivalents and investments |  |  | 592,232 |  |  |  | 650,022 |
Other current assets |  |  | 41,529 |  |  |  | 30,143 |
Property, plant and equipment, net |  |  | 72,776 |  |  |  | 77,536 |
Goodwill and intangible assets, net |  |  | 238,770 |  |  |  | 163,999 |
Other assets |  |  | 17,206 |  |  |  | 31,847 |
Consolidated total assets |  | $ | 1,224,044 |  |  | $ | 1,213,018 |
Information about the Company’s operations in different geographic regions is presented in the tables below. Net revenues to unaffiliated customers are based on the location in which the sale originated. Transfers between geographic areas are at negotiated transfer prices and have been eliminated from consolidated net revenues.
|  | Years Ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Net revenues: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 448,452 |  |  | $ | 363,948 |  |  | $ | 326,894 |
Korea |  |  | 97,323 |  |  |  | 75,401 |  |  |  | 64,541 |
Japan |  |  | 61,092 |  |  |  | 56,978 |  |  |  | 81,883 |
Europe |  |  | 80,659 |  |  |  | 77,910 |  |  |  | 85,362 |
Asia (excluding Korea and Japan) |  |  | 93,343 |  |  |  | 95,183 |  |  |  | 84,828 |
|  | $ | 780,869 |  |  | $ | 669,420 |  |  | $ | 643,508 |
|  | Years Ended December 31, |
|  | 2014 |  |  | 2013 |
Long-lived assets:(1) |  |  |  |  |  |  |  |
United States |  | $ | 57,701 |  |  | $ | 60,700 |
Europe |  |  | 6,099 |  |  |  | 5,484 |
Asia |  |  | 10,887 |  |  |  | 13,475 |
|  | $ | 74,687 |  |  | $ | 79,659 |
(1) | Long-lived assets include property, plant and equipment, net and certain other assets, excluding long-term income tax receivable in the U.S.
Worldwide Product Information Because the reportable segment information above does not reflect worldwide sales of the Company’s products, the Company groups its products into three groups of similar products based upon the similarity of product function. Worldwide net revenue for each group of products is as follows:
|  | Years Ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Instruments, Control and Vacuum Products |  | $ | 383,863 |  |  | $ | 341,375 |  |  | $ | 324,939 |
Power and Reactive Gas Products |  |  | 335,271 |  |  |  | 273,357 |  |  |  | 251,669 |
Analytical Solutions Group Products |  |  | 61,735 |  |  |  | 54,688 |  |  |  | 66,900 |
|  | $ | 780,869 |  |  | $ | 669,420 |  |  | $ | 643,508 |
Sales of Instruments, Control Products and Vacuum Products, Power and Reactive Gas Products are included in the Company’s Advanced Manufacturing Capital Equipment Products segment as well as in the foreign sales and service operations because the products are sold through the foreign sales and service operations in their respective regions. Sales of the Analytical Solutions Group Products are included in the Analytical Solutions Group Products segment as well as in the foreign sales and service operations because the products are sold through the foreign sales and service operations in their respective regions. Major Customers The Company had two customers with net revenues greater than 10% of total net revenues in the periods shown as follows:
|  | Years Ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Applied Materials, Inc. |  |  | 19.1 | % |  |  | 17.0 | % |  |  | 14.5 | %
Lam Research Corporation |  |  | 12.9 | % |  |  | 12.3 | % |  |  | 10.1 | %
Net revenues for each of our reportable segments include revenues from each of the two customers, which represent net revenues greater than 10% of total net revenues.

X
- Details
Name: | us-gaap_SegmentReportingAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 + Details
Name: | us-gaap_SegmentReportingDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration