XML 56 R22.htm IDEA: XBRL DOCUMENT
v2.4.1.9

Business Segment, Geographic Area, Product and Significant Customer Information | 3 Months Ended
--- | ---
Mar. 31, 2015
Segment Reporting [Abstract] |
Business Segment, Geographic Area, Product and Significant Customer Information |
16) | 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, which is used in the decision making process to assess performance. Based upon the information provided to the CODM, the Company has determined it has four reportable segments. Effective January 1, 2015, the Company changed the structure of its reportable segments based upon a change in the information that is provided to the Company’s CODM. The Company’s four reportable segments prior to the change in structure were: Advanced Manufacturing Capital Equipment, Analytical Solutions Group, Europe Region Sales & Service and Asia Region Sales & Service. The Company’s new structure still reflects four reportable segments; however, the composition of the segments has changed. The Company’s new reportable segments are Advanced Manufacturing Capital Equipment, Global Service, Asia Region Sales and Other. The primary change to the segment structure was to separate worldwide service from product sales and create a separate reportable segment known as Global Service. Product sales in the Advanced Manufacturing Capital Equipment segment remained with this segment. Asia product sales became a separate reportable segment. The product sales from the operating segments that made up the Analytical Solutions Group and Europe Region sales were combined into the Other segment and are not reported separately as they are individually immaterial and collectively below the separate segment reporting guidelines. The Company has reported corporate expenses and certain intercompany pricing transactions in a Corporate and Eliminations reconciling column. Due to these changes, the results presented under segment reporting for the three months ended March 31, 2014 and as of December 31, 2014 reflect the new segments to conform to the current period segment reporting presentation with no impact to the consolidated results of operations. The Advanced Manufacturing Capital Equipment segment includes the development, manufacturing and sales of instruments and control products, power and reactive gas products, materials delivery 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 product sales, which are recorded at transfer prices in accordance with applicable tax requirements. The Global Service segment includes the worldwide servicing of instruments and control products, power and reactive gas products, materials delivery products and vacuum products, all of which are utilized in semiconductor processing and other similar advanced manufacturing processes. It also includes sales of custom fabrication services. The Asia Region Sales segment mainly resells products from the Advanced Manufacturing Capital Equipment and Other segments into Asia regions. The Other segment includes operating segments that are not required to be reported separately as a reportable segment and includes sales for products that are re-sold from the Advanced Manufacturing Capital Equipment into Europe regions as well as sales from other operating segments. 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 Other 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 and Eliminations. The CODM reviews several metrics of each operating segment, including net revenues and gross profit (loss). The Company does not maintain balance sheets for the majority of its operating segments and, as such, amounts have not been allocated to the reportable segments. The Company does not disclose external or intersegment revenues separately by reportable segment as this information is not presented to the CODM for decision making purposes. The following is net revenues by reportable segment:
|  | Three Months Ended March 31, |
|  | 2015 |  |  | 2014 |
Advanced Manufacturing Capital Equipment |  | $ | 179,233 |  |  | $ | 165,498 |
Global Service |  |  | 27,743 |  |  |  | 25,167 |
Asia Region Sales (1) |  |  | 55,377 |  |  |  | 52,099 |
Other |  |  | 21,216 |  |  |  | 20,893 |
Corporate and Eliminations |  |  | (69,730 | ) |  |  | (57,304 | )
|  | $ | 213,839 |  |  | $ | 206,353 |
The following is a reconciliation of segment gross profit to consolidated net income:
|  | Three Months Ended March 31, |
|  | 2015 |  |  | 2014 |
Gross profit by reportable segment: |  |  |  |  |  |  |  |
Advanced Manufacturing Capital Equipment |  | $ | 78,688 |  |  | $ | 67,107 |
Global Service |  |  | 9,603 |  |  |  | 8,397 |
Asia Region Sales (1) |  |  | 6,920 |  |  |  | 9,077 |
Other |  |  | 6,843 |  |  |  | 6,747 |
Corporate and Eliminations |  |  | (5,008 | ) |  |  | (1,956 | )
Total gross profit by reportable segment |  |  | 97,046 |  |  |  | 89,372 |
Operating expenses: |  |  |  |  |  |  |  |
Research and development |  |  | 16,680 |  |  |  | 15,618 |
Selling, general and administrative |  |  | 30,867 |  |  |  | 34,591 |
Acquisition costs |  |  | 30 |  |  |  | 228 |
Restructuring |  |  | 788 |  |  |  | 747 |
Amortization of intangible assets |  |  | 1,671 |  |  |  | 410 |
Income from operations |  |  | 47,010 |  |  |  | 37,778 |
Net interest income |  |  | 504 |  |  |  | 235 |
Income before income taxes |  |  | 47,514 |  |  |  | 38,013 |
Provision for income taxes |  |  | 13,728 |  |  |  | 6,768 |
Net income |  | $ | 33,786 |  |  | $ | 31,245 |
(1) | The Asia Region Sales segment does not represent total geographical Asia financial information. This sales operation only represents the sales from the resale of Advanced Manufacturing Capital Equipment and Other segment products in their respective regions. The Advanced Manufacturing Capital Equipment and Other segments both have sales in this region. Accordingly, total geographical sales include sales from multiple reportable segments.
The following is capital expenditures by reportable segment for the three months ended March 31, 2015 and 2014:
|  | Advanced Manufacturing Capital Equipment |  |  | Global Service |  |  | Asia Region Sales |  |  | Other |  |  | Corporate and Eliminations |  |  | Total |
Three Months Ended March 31, 2015: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 1,522 |  |  | $ | 122 |  |  | $ | 42 |  |  | $ | 74 |  |  | $ | 744 |  |  | $ | 2,504 |
|  | Advanced Manufacturing Capital Equipment |  |  | Global Service |  |  | Asia Region Sales |  |  | Other |  |  | Corporate and Eliminations |  |  | Total |
Three Months Ended March 31, 2014: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 2,574 |  |  | $ | 170 |  |  | $ | 41 |  |  | $ | 75 |  |  | $ | 238 |  |  | $ | 3,098 |
The following is depreciation and amortization by reportable segment for the three months ended March 31, 2015 and 2014:
|  | Advanced Manufacturing Capital Equipment |  |  | Global Service |  |  | Asia Region Sales |  |  | Other |  |  | Corporate and Eliminations |  |  | Total |
Three Months Ended March 31, 2015: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | 4,247 |  |  | $ | 256 |  |  | $ | 85 |  |  | $ | 310 |  |  | $ | 634 |  |  | $ | 5,532 |
|  | Advanced Manufacturing Capital Equipment |  |  | Global Service |  |  | Asia Region Sales |  |  | Other |  |  | Corporate and Eliminations |  |  | Total |
Three Months Ended March 31, 2014: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | 2,926 |  |  | $ | 272 |  |  | $ | 99 |  |  | $ | 208 |  |  | $ | 645 |  |  | $ | 4,150 |
In connection with the new segment structure, goodwill was allocated to each reportable segment on a relative fair value basis. The Company performed an interim quantitative impairment test as of January 1, 2015 and concluded that the fair values of each reporting unit exceeded their respective carrying values. Goodwill associated with each of our reportable segments is as follows:
|  | March 31, 2015 |  |  | December 31, 2014 |
Reportable segment: |  |  |  |  |  |  |  |
Advanced Manufacturing Capital Equipment |  | $ | 173,510 |  |  | $ | 166,946 |
Global Service |  |  | 19,728 |  |  |  | 19,728 |
Asia Region Sales |  |  | — |  |  |  | — |
Other |  |  | 6,228 |  |  |  | 6,228 |
Foreign currency translation |  |  | (136 | ) |  |  | (521 | )
Total goodwill |  | $ | 199,330 |  |  | $ | 192,381 |
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:
|  | Three Months Ended March 31, |
|  | 2015 |  |  | 2014 |
Instruments, Control and Vacuum Products |  | $ | 110,436 |  |  | $ | 101,657 |
Power and Reactive Gas Products |  |  | 88,499 |  |  |  | 90,602 |
Analytical Solutions Group Products |  |  | 14,904 |  |  |  | 14,094 |
|  | $ | 213,839 |  |  | $ | 206,353 |
Sales of Instruments, Control and Vacuum Products and Power and Reactive Gas Products are included in the Company’s Advanced Manufacturing Capital Equipment, Asia Region Sales, Global Service and Other segments because the products are sold through these segments. Sales of the Analytical Solutions Group products are included in the Asia Region Sales, Global Service and Other segments because the products are sold through these segments. Geographic 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.
|  | Three Months Ended March 31, |
|  | 2015 |  |  | 2014 |
Net revenues: |  |  |  |  |  |  |  |
United States |  | $ | 120,181 |  |  | $ | 117,377 |
Korea |  |  | 32,072 |  |  |  | 27,591 |
Japan |  |  | 17,256 |  |  |  | 16,928 |
Asia (excluding Korea and Japan) |  |  | 23,683 |  |  |  | 24,902 |
Europe |  |  | 20,647 |  |  |  | 19,555 |
|  | $ | 213,839 |  |  | $ | 206,353 |
|  | March 31, 2015 |  |  | December 31, 2014 |
Long-lived assets: (1) |  |  |  |  |  |  |  |
United States |  | $ | 57,337 |  |  | $ | 57,701 |
Europe |  |  | 5,531 |  |  |  | 6,099 |
Asia |  |  | 10,162 |  |  |  | 10,887 |
|  | $ | 73,030 |  |  | $ | 74,687 |
(1) | Long-lived assets include property, plant and equipment, net and certain other long-term assets, excluding long-term income tax receivable.
Major Customers The Company had two customers with net revenues greater than 10% of total net revenues in the periods shown as follows:
|  | Three Months Ended March 31, |
|  | 2015 |  |  | 2014 |
Customer A |  |  | 17.4 | % |  |  | 20.3 | %
Customer B |  |  | 12.1 | % |  |  | 13.1 | %

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