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Business Segment, Geographic Area, and Significant Customer Information | 9 Months Ended
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Sep. 30, 2022
Segment Reporting [Abstract] |
Business Segment, Geographic Area, and Significant Customer Information | Business Segment, Geographic Area, and Significant Customer Information The Company has three reportable segments, VSD, PSD and MSD. During the third quarter of 2022, MKS consolidated its Equipment Solutions business, previously ESD, into a component of PSD and prior periods were recast to reflect this change. The Company's Chief Operating Decision Maker ("CODM"), which is the Company's Chief Executive Officer, 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 and allocate resources to the three segments. Reportable Segments VSD delivers foundational technology solutions to leading edge semiconductor manufacturing, advanced electronics and specialty industrial applications. VSD products are derived from our core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, electronic control technology, reactive gas generation and delivery, power generation and delivery, and vacuum technology. PSD provides a full range of solutions including lasers, beam measurement and profiling, precision motion control, vibration isolation systems, photonics instruments, temperature sensing, opto-mechanical components, optical elements, systems for flexible PCB laser processing, high-speed multilayer ceramic capacitor testing, laser-based systems for high density interconnect PCB and IC substrate manufacturing. MSD develops leading process and manufacturing technologies for advanced surface modification, electroless and electrolytic plating, and surface finishing. Atotech is a brand within MSD. Applying a comprehensive systems-and-solutions approach, MSD's portfolio includes chemistry, equipment, software, and services for innovative and high-technology applications in a wide variety of end-markets. 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 groups similar products within its three reportable segments. The following table sets forth net revenues by reportable segment:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Vacuum Solutions Division |  | $ | 510 |  |  | $ | 483 |  |  | $ | 1,491 |  |  | $ | 1,377 |
Photonics Solutions Division |  |  | 267 |  |  |  | 259 |  |  |  | 793 |  |  |  | 809 |
Materials Solutions Division |  |  | 177 |  |  |  | — |  |  |  | 177 |  |  |  | — |
|  | $ | 954 |  |  | $ | 742 |  |  | $ | 2,461 |  |  | $ | 2,186 |
The following table sets forth a reconciliation of gross profit by reportable segment to net income:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Gross profit by reportable segment: |  |  |  |  |  |  |  |  |  |  |  |
Vacuum Solutions Division |  | $ | 220 |  |  | $ | 226 |  |  | $ | 645 |  |  | $ | 644 |
Photonics Solutions Division |  |  | 125 |  |  |  | 122 |  |  |  | 372 |  |  |  | 382 |
Materials Solutions Division |  |  | 45 |  |  |  | — |  |  |  | 45 |  |  |  | — |
Total gross profit by reportable segment |  |  | 390 |  |  |  | 348 |  |  |  | 1,062 |  |  |  | 1,026 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  |  | 63 |  |  |  | 52 |  |  |  | 168 |  |  |  | 149 |
Selling, general and administrative |  |  | 126 |  |  |  | 95 |  |  |  | 319 |  |  |  | 289 |
Acquisition and integration costs |  |  | 31 |  |  |  | 9 |  |  |  | 41 |  |  |  | 21 |
Restructuring and other |  |  | 5 |  |  |  | 2 |  |  |  | 10 |  |  |  | 10 |
Amortization of intangible assets |  |  | 47 |  |  |  | 15 |  |  |  | 77 |  |  |  | 40 |
Gain on sale of long-lived assets |  |  | — |  |  |  | — |  |  |  | (7 | ) |  |  | — |
Income from operations |  |  | 118 |  |  |  | 175 |  |  |  | 454 |  |  |  | 517 |
Interest income |  |  | 1 |  |  |  | — |  |  |  | 2 |  |  |  | 1 |
Interest expense |  |  | 80 |  |  |  | 6 |  |  |  | 93 |  |  |  | 19 |
Other (income) expense, net |  |  | (1 | ) |  |  | 3 |  |  |  | (4 | ) |  |  | 12 |
Income before income taxes |  |  | 40 |  |  |  | 166 |  |  |  | 367 |  |  |  | 487 |
Provision for income taxes |  |  | 34 |  |  |  | 34 |  |  |  | 88 |  |  |  | 86 |
Net income |  | $ | 6 |  |  | $ | 132 |  |  | $ | 279 |  |  | $ | 401 |
Interest income, interest expense and income tax expense are not presented by reportable segment because the necessary information is not classified within the segments nor used by the CODM. The following table sets forth segment assets by reportable segment:
September 30, 2022 |  | Accounts receivable |  |  | Inventory |  |  | Total |
Vacuum Solutions Division |  | $ | 342 |  |  | $ | 449 |  |  | $ | 791 |
Photonics Solutions Division |  |  | 185 |  |  |  | 282 |  |  |  | 467 |
Materials Solutions Division |  |  | 301 |  |  |  | 230 |  |  |  | 531 |
Corporate, Eliminations & Other |  |  | (98 | ) |  |  | — |  |  |  | (98 | )
Total segment assets |  | $ | 730 |  |  | $ | 961 |  |  | $ | 1,691 |
December 31, 2021 |  | Accounts receivable |  |  | Inventory |  |  | Total |
Vacuum Solutions Division |  | $ | 285 |  |  | $ | 339 |  |  | $ | 624 |
Photonics Solutions Division |  |  | 182 |  |  |  | 239 |  |  |  | 421 |
Materials Solutions Division |  |  | — |  |  |  | — |  |  |  | — |
Corporate, Eliminations & Other |  |  | (24 | ) |  |  | (1 | ) |  |  | (25 | )
Total segment assets |  | $ | 443 |  |  | $ | 577 |  |  | $ | 1,020 |
The following is a reconciliation of segment assets to total assets:
|  | September 30, 2022 |  |  | December 31, 2021 |
Total segment assets |  | $ | 1,691 |  |  | $ | 1,020 |
Cash and cash equivalents and short-term investments |  |  | 885 |  |  |  | 1,042 |
Other current assets |  |  | 215 |  |  |  | 85 |
Property, plant and equipment, net |  |  | 655 |  |  |  | 326 |
Right-of-use assets |  |  | 235 |  |  |  | 184 |
Goodwill and intangible assets, net |  |  | 7,504 |  |  |  | 1,804 |
Other assets and long-term investments |  |  | 187 |  |  |  | 79 |
Total assets |  | $ | 11,372 |  |  | $ | 4,540 |
Geographic Area Information about the Company's operations by geographic area is presented in the tables below. Net revenues from unaffiliated customers are based on the location in which the sale originated. Intercompany sales 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, |
Net revenues: |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
United States |  | $ | 393 |  |  | $ | 343 |  |  | $ | 1,112 |  |  | $ | 917 |
China |  |  | 135 |  |  |  | 80 |  |  |  | 275 |  |  |  | 263 |
Germany |  |  | 100 |  |  |  | 37 |  |  |  | 176 |  |  |  | 108 |
South Korea |  |  | 82 |  |  |  | 91 |  |  |  | 260 |  |  |  | 293 |
Other |  |  | 244 |  |  |  | 191 |  |  |  | 638 |  |  |  | 605 |
|  | $ | 954 |  |  | $ | 742 |  |  | $ | 2,461 |  |  | $ | 2,186 |
Long-lived assets include property, plant and equipment, net, right-of-use assets, and certain other assets, and exclude goodwill, intangible assets and long-term tax-related accounts.
Long-lived assets: |  | September 30, 2022 |  |  | December 31, 2021 |
United States |  | $ | 497 |  |  | $ | 412 |
Germany |  |  | 123 |  |  |  | 18 |
China |  |  | 120 |  |  |  | 16 |
Other |  |  | 310 |  |  |  | 128 |
|  | $ | 1,050 |  |  | $ | 574 |
Goodwill associated with each of the Company's reportable segments is as follows:
|  | September 30, 2022 |  |  | December 31, 2021 |
Reportable segment: |  |  |  |  |  |
Vacuum Solutions Division |  | $ | 193 |  |  | $ | 195 |
Photonics Solutions Division |  |  | 1,020 |  |  |  | 1,033 |
Materials Solutions Division |  |  | 2,638 |  |  |  | — |
Total goodwill |  | $ | 3,851 |  |  | $ | 1,228 |
Major Customers The following customers represented greater than 10% of the Company's net revenues:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Lam Research Corporation |  |  | 15 | % |  |  | 15 | % |  |  | 15 | % |  |  | 15 | %
Applied Materials, Inc. |  |  | 10 | % |  |  | 11 | % |  |  | 11 | % |  |  | 11 | %

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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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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