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Business Segment, Geographic Area, Product and Significant Customer Information
 3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Business Segment, Geographic Area, Product and Significant Customer Information
16) Business Segment, Geographic Area, Product and Significant Customer Information

The Company is a global provider of instruments, subsystems and process control solutions that measure, control, deliver, power, monitor and analyze critical parameters of advanced manufacturing processes to improve process performance and productivity. The Company also provides services relating to the maintenance and repair of products it sells, installation services and training.

The Company’s Chief Operating Decision Maker (“CODM”) utilizes financial information to make decisions about allocating resources and assessing performance for the entire Company, 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 two reportable segments.

Effective April 29, 2016, in conjunction with the Newport Merger, the Company changed its reportable segments based upon the organizational structure of the Company and how the CODM utilizes information provided to allocate resources and make decisions. The Company’s two reportable segments are: Vacuum & Analysis and Light & Motion. The Vacuum & Analysis segment represents the legacy MKS business and the Light & Motion segment represents the legacy Newport business.

The Vacuum & Analysis segment provides a broad range of instruments, components and subsystems which are derived from the Company’s core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, residual gas analysis, leak detection, control and information technology, ozone generation and delivery, RF & DC power, reactive gas generation and vacuum technology.

The Light & Motion segment provides a broad range of instruments, components and subsystems which are derived from the Company’s core competencies in lasers, photonics and optics.

The Company derives its segment results directly from the manner in which results are reported in its management reporting system. The accounting policies that the Company uses to derive reportable segment results are substantially the same as those used for external reporting purposes. 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,  
     2017      2016  

Vacuum & Analysis

    $ 277,984      $ 183,681  

Light & Motion

      159,169        —    
  

 

 

     

 

 

  
   $ 437,153      $ 183,681  
  

 

 

     

 

 

  

The following is a reconciliation of segment gross profit to consolidated net income:

 

     Three Months Ended March 31,  
     2017      2016  

Gross profit by reportable segment:

      

Vacuum & Analysis

    $ 128,924      $ 77,913  

Light & Motion

      76,623        —    
  

 

 

     

 

 

  

Total gross profit by reportable segment

      205,547        77,913  

Operating expenses:

      

Research and development

      33,282        17,227  

Selling, general and administrative

      74,220        33,950  

Acquisition and integration costs

      1,442        2,494  

Restructuring

      522        —    

Amortization of intangible assets

      12,501        1,683  
  

 

 

     

 

 

  

Income from operations

      83,580        22,559  

Interest and other (expense) income, net

      (6,295 )       1,246  
  

 

 

     

 

 

  

Income before income taxes

      77,285        23,805  

Provision for income taxes

      12,225        6,242  
  

 

 

     

 

 

  

Net income

    $ 65,060      $ 17,563  
  

 

 

     

 

 

  

The following is capital expenditures by reportable segment for the three months ended March 31, 2017 and 2016:

 

     Vacuum & Analysis      Light & Motion      Total  

Three Months Ended March 31, 2017:

         

Capital expenditures

    $ 2,374      $ 1,725      $ 4,099  
  

 

 

     

 

 

     

 

 

  

Three Months Ended March 31, 2016:

         

Capital expenditures

    $ 2,156      $ —        $ 2,156  
  

 

 

     

 

 

     

 

 

  

The following is depreciation and amortization by reportable segment for the three months ended March 31, 2017 and 2016:

 

     Vacuum & Analysis      Light & Motion      Total  

Three Months Ended March 31, 2017:

         

Depreciation and amortization

    $ 5,122      $ 16,711      $ 21,833  
  

 

 

     

 

 

     

 

 

  

Three Months Ended March 31, 2016:

         

Depreciation and amortization

    $ 5,278      $ —        $ 5,278  
  

 

 

     

 

 

     

 

 

  

Total income tax expense is not presented by reportable segment because the necessary information is not available or used by the CODM.

The following is segment assets by reportable segment:

 

March 31, 2017:    Vacuum &
Analysis		      Light & Motion      Corporate,
Eliminations
and Other		      Total  

Segment assets:

            

Accounts receivable

    $ 165,210      $ 123,247      $ (21,208 )     $ 267,249  

Inventory, net

      167,322        118,196        —          285,518  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total segment assets

    $ 332,532      $ 241,443      $ (21,208 )     $ 552,767  
  

 

 

     

 

 

     

 

 

     

 

 

  
December 31, 2016:    Vacuum &
Analysis		      Light & Motion      Corporate,
Eliminations
and Other		      Total  

Segment assets:

            

Accounts receivable

    $ 148,516      $ 121,516      $ (21,275 )     $ 248,757  

Inventory, net

      165,040        110,829        —          275,869  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total segment assets

    $ 313,556      $ 232,345      $ (21,275 )     $ 524,626  
  

 

 

     

 

 

     

 

 

     

 

 

  

A reconciliation of segment assets to consolidated total assets is as follows:

 

     March 31, 2017      December 31, 2016  

Total segment assets

    $ 552,767      $ 524,626  

Cash and cash equivalents, restricted cash and investments

      426,418        433,231  

Income tax receivable and other current assets

      52,266        50,770  

Property, plant and equipment, net

      169,833        174,559  

Goodwill and intangible assets, net

      986,911        996,589  

Other assets

      32,352        32,467  
  

 

 

     

 

 

  

Consolidated total assets

    $ 2,220,547      $ 2,212,242  
  

 

 

     

 

 

  

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,  
     2017      2016  

Net revenues:

      

United States

    $ 218,050      $ 94,218  

Korea

      44,878        20,550  

Japan

      37,792        16,236  

Asia (excluding Korea and Japan)

      88,243        33,456  

Europe

      48,190        19,221  
  

 

 

     

 

 

  
   $ 437,153      $ 183,681  
  

 

 

     

 

 

  
Long-lived assets:(1)    March 31, 2017      December 31, 2016  

United States

    $ 119,337      $ 122,547  

Europe

      28,152        28,717  

Asia

      49,275        49,406  
  

 

 

     

 

 

  
   $ 196,764      $ 200,670  
  

 

 

     

 

 

  

 

(1)  Long-lived assets include property, plant and equipment, net and certain other long-term assets, excluding long-term tax related accounts.

Goodwill associated with each of our reportable segments is as follows:

 

     March 31, 2017      December 31, 2016  

Reportable segment:

      

Vacuum & Analysis

    $ 200,206      $ 199,453  

Light & Motion

      390,296        389,132  
  

 

 

     

 

 

  

Total goodwill

    $ 590,502      $ 588,585  
  

 

 

     

 

 

  

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 seven 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,  
     2017      2016  

Analytical and Control Solutions Products

    $ 31,820      $ 22,978  

Materials Delivery Solutions Products

      43,454        27,509  

Power, Plasma and Reactive Gas Solutions Products

      122,800        77,116  

Pressure and Vacuum Measurement Products

      79,910        56,078  

Lasers Products

      44,944        —    

Optics Products

      46,505        —    

Photonics Products

      67,720        —    
  

 

 

     

 

 

  
   $ 437,153      $ 183,681  
  

 

 

     

 

 

  

Sales of Analytical and Control Solutions Products; Materials Delivery Solutions Products; Power, Plasma and Reactive Gas Solutions Products; and Pressure and Vacuum Measurement Products are included in the Company’s Vacuum & Analysis segment. Sales of Lasers Products; Optics Products; and Photonics Products are included in the Light & Motion segment.

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,  
     2017     2016  

Applied Materials, Inc.

      13.0 %      18.8 % 

LAM Research Corporation

      12.6 %      17.1 %