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Business Segment, Geographic Area, Product and Significant Customer Information | 9 Months Ended
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Sep. 30, 2018
Segment Reporting [Abstract] |
Business Segment, Geographic Area, Product and Significant Customer Information |
17) | Business Segment, Geographic Area, Product and Significant Customer Information
The Company is a global provider of instruments, subsystems and process control solutions that measure, monitor, deliver, analyze, power and control critical parameters of advanced manufacturing processes to improve process performance and productivity for its customers. The Company’s products are derived from its core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, residual gas analysis, leak detection, control technology, ozone generation and delivery, power, reactive gas generation, vacuum technology, lasers, photonics, sub-micron positioning, vibration control, and optics. The Company also provides services related to the maintenance and repair of its products, installation services and training. The Company’s primary served markets are manufacturers of capital equipment for semiconductor manufacturing, industrial technologies, life and health sciences, as well as research and defense. 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. The Company’s two reportable segments are: Vacuum & Analysis and Light & Motion. 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 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, sub-micron positioning, vibration control, 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 are net revenues by reportable segment:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Vacuum & Analysis |  | $ | 286,038 |  |  | $ | 308,269 |  |  | $ | 1,002,710 |  |  | $ | 896,214 |
Light & Motion |  |  | 201,114 |  |  |  | 177,998 |  |  |  | 611,857 |  |  |  | 507,963 |
|  | $ | 487,152 |  |  | $ | 486,267 |  |  | $ | 1,614,567 |  |  | $ | 1,404,177 |
The following is a reconciliation of segment gross profit to consolidated net income:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Gross profit by reportable segment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Vacuum & Analysis |  | $ | 132,835 |  |  | $ | 141,438 |  |  | $ | 462,418 |  |  | $ | 410,228 |
Light & Motion |  |  | 99,025 |  |  |  | 86,557 |  |  |  | 307,174 |  |  |  | 242,897 |
Total gross profit by reportable segment |  |  | 231,860 |  |  |  | 227,995 |  |  |  | 769,592 |  |  |  | 653,125 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  |  | 31,898 |  |  |  | 32,548 |  |  |  | 103,259 |  |  |  | 99,510 |
Selling, general and administrative |  |  | 70,822 |  |  |  | 71,347 |  |  |  | 229,952 |  |  |  | 217,546 |
Acquisition and integration costs |  |  | 36 |  |  |  | 2,466 |  |  |  | (1,132 | ) |  |  | 4,698 |
Restructuring |  |  | 1,364 |  |  |  | 10 |  |  |  | 3,374 |  |  |  | 2,596 |
Asset impairment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,719 |
Fees and expenses related to repricing of term loan |  |  | — |  |  |  | 492 |  |  |  | 378 |  |  |  | 492 |
Environmental Costs |  |  | — |  |  |  | — |  |  |  | 1,000 |  |  |  | — |
Amortization of intangible assets |  |  | 10,695 |  |  |  | 10,977 |  |  |  | 32,786 |  |  |  | 34,946 |
Income from operations |  |  | 117,045 |  |  |  | 110,155 |  |  |  | 399,975 |  |  |  | 286,618 |
Gain on sale of business |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 74,856 |
Interest and other expense, net |  |  | 2,529 |  |  |  | 8,784 |  |  |  | 10,173 |  |  |  | 24,846 |
Income before income taxes |  |  | 114,516 |  |  |  | 101,371 |  |  |  | 389,802 |  |  |  | 336,628 |
Provision for income taxes |  |  | 21,239 |  |  |  | 25,377 |  |  |  | 68,542 |  |  |  | 75,134 |
Net income |  | $ | 93,277 |  |  | $ | 75,994 |  |  | $ | 321,260 |  |  | $ | 261,494 |
The following is capital expenditures by reportable segment for the three and nine months ended September 30, 2018 and 2017:
|  | Vacuum & Analysis |  |  | Light & Motion |  |  | Total |
Three Months Ended September 30, 2018: |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 9,532 |  |  | $ | 5,535 |  |  | $ | 15,067 |
Nine Months Ended September 30, 2018: |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 22,701 |  |  | $ | 14,184 |  |  | $ | 36,885 |
Three Months Ended September 30, 2017: |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 4,212 |  |  | $ | 3,906 |  |  | $ | 8,118 |
Nine Months Ended September 30, 2017: |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 10,114 |  |  | $ | 7,743 |  |  | $ | 17,857 |
The following is depreciation and amortization by reportable segment for the three and nine months ended September 30, 2018 and 2017:
|  | Vacuum & Analysis |  |  | Light & Motion |  |  | Total |
Three Months Ended September 30, 2018: |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | 5,083 |  |  | $ | 14,446 |  |  | $ | 19,529 |
Nine Months Ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | 15,180 |  |  | $ | 44,726 |  |  | $ | 59,906 |
Three Months Ended September 30, 2017: |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | 5,058 |  |  | $ | 15,071 |  |  | $ | 20,129 |
Nine Months Ended September 30, 2017: |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | 15,277 |  |  | $ | 47,273 |  |  | $ | 62,550 |
Total income tax expense is not presented by reportable segment because the necessary information is not available or used by the CODM. The following are segment assets by reportable segment:
September 30, 2018: |  | Vacuum & Analysis |  |  | Light & Motion |  |  | Corporate, Eliminations & Other |  |  | Total |
Segment assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable |  | $ | 195,244 |  |  | $ | 138,599 |  |  | $ | (15,373 | ) |  | $ | 318,470 |
Inventory, net |  |  | 235,253 |  |  |  | 163,783 |  |  |  | 41 |  |  |  | 399,077 |
Total segment assets |  | $ | 430,497 |  |  | $ | 302,382 |  |  | $ | (15,332 | ) |  | $ | 717,547 |
December 31, 2017: |  | Vacuum & Analysis |  |  | Light & Motion |  |  | Corporate, Eliminations & Other |  |  | Total |
Segment assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable |  | $ | 201,318 |  |  | $ | 119,934 |  |  | $ | (20,944 | ) |  | $ | 300,308 |
Inventory, net |  |  | 197,831 |  |  |  | 141,250 |  |  |  | — |  |  |  | 339,081 |
Total segment assets |  | $ | 399,149 |  |  | $ | 261,184 |  |  | $ | (20,944 | ) |  | $ | 639,389 |
A reconciliation of segment assets to consolidated total assets is as follows:
|  | September 30, 2018 |  |  | December 31, 2017 |
Total segment assets |  | $ | 717,547 |  |  | $ | 639,389 |
Cash and cash equivalents, restricted cash and investments |  |  | 630,030 |  |  |  | 553,976 |
Other current assets |  |  | 75,298 |  |  |  | 53,543 |
Property, plant and equipment, net |  |  | 180,182 |  |  |  | 171,782 |
Goodwill and intangible assets, net |  |  | 919,149 |  |  |  | 957,445 |
Other assets |  |  | 42,390 |  |  |  | 37,883 |
Consolidated total assets |  | $ | 2,564,596 |  |  | $ | 2,414,018 |
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 tax transfer prices and have been eliminated from consolidated net revenues.
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Net revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 243,273 |  |  | $ | 237,592 |  |  | $ | 801,811 |  |  | $ | 700,291 |
Korea |  |  | 43,468 |  |  |  | 60,908 |  |  |  | 164,462 |  |  |  | 165,613 |
Japan |  |  | 38,964 |  |  |  | 38,411 |  |  |  | 151,325 |  |  |  | 113,068 |
Asia (excluding Korea and Japan) |  |  | 105,336 |  |  |  | 94,084 |  |  |  | 313,913 |  |  |  | 273,957 |
Europe |  |  | 56,111 |  |  |  | 55,272 |  |  |  | 183,056 |  |  |  | 151,248 |
|  | $ | 487,152 |  |  | $ | 486,267 |  |  | $ | 1,614,567 |  |  | $ | 1,404,177 |
Long-lived assets:(1) |  | September 30, 2018 |  |  | December 31, 2017 |
United States |  | $ | 138,549 |  |  | $ | 124,689 |
Europe |  |  | 26,188 |  |  |  | 28,820 |
Asia |  |  | 49,801 |  |  |  | 49,645 |
|  | $ | 214,538 |  |  | $ | 203,154 |
| (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 the Company’s reportable segments is as follows:
|  | September 30, 2018 |  |  | December 31, 2017 |
Reportable segment: |  |  |  |  |  |  |  |
Vacuum & Analysis |  | $ | 197,193 |  |  | $ | 197,617 |
Light & Motion |  |  | 390,668 |  |  |  | 393,430 |
Total goodwill |  | $ | 587,861 |  |  | $ | 591,047 |
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 six groups of similar products based upon the similarity of product function. The following table sets forth worldwide net revenue for each group of products:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Analytical and Control Solutions Products |  | $ | 26,727 |  |  | $ | 33,068 |  |  | $ | 91,932 |  |  | $ | 97,689 |
Power, Plasma and Reactive Gas Solutions Products |  |  | 132,469 |  |  |  | 193,808 |  |  |  | 487,286 |  |  |  | 549,999 |
Vacuum Solutions Products |  |  | 126,842 |  |  |  | 81,300 |  |  |  | 423,492 |  |  |  | 248,291 |
Lasers Products |  |  | 63,999 |  |  |  | 56,623 |  |  |  | 209,459 |  |  |  | 153,866 |
Optics Products |  |  | 57,836 |  |  |  | 52,548 |  |  |  | 169,415 |  |  |  | 149,759 |
Photonics Products |  |  | 79,279 |  |  |  | 68,920 |  |  |  | 232,983 |  |  |  | 204,573 |
|  | $ | 487,152 |  |  | $ | 486,267 |  |  | $ | 1,614,567 |  |  | $ | 1,404,177 |
Sales of Analytical and Control Solutions Products; Power, Plasma and Reactive Gas Solutions Products; and Vacuum Solutions Products are included in the Company’s Vacuum & Analysis segment. Sales of Laser 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 below:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Applied Materials, Inc. |  |  | 12 | % |  |  | 12 | % |  |  | 13 | % |  |  | 13 | %
LAM Research Corporation |  |  | 8 | % |  |  | 11 | % |  |  | 11 | % |  |  | 12 | %

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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