Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

v3.21.1
SEGMENT REPORTING AND GEOGRAPHIC INFORMATION
9 Months Ended
Mar. 31, 2021
Segment Reporting [Abstract]  
SEGMENT REPORTING AND GEOGRAPHIC INFORMATION SEGMENT REPORTING AND GEOGRAPHIC INFORMATION
ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer.
We have four reportable segments: Semiconductor Process Control; Specialty Semiconductor Process; PCB, Display and Component Inspection; and Other. The reportable segments are determined based on several factors including, but not limited to, customer base, homogeneity of products, technology, delivery channels and similar economic characteristics.
Semiconductor Process Control
The Semiconductor Process Control (“SPC”) segment offers a comprehensive portfolio of inspection, metrology and data analytics products, and related service, which helps integrated circuit ("ICs") manufacturers achieve target yield throughout the entire semiconductor fabrication process – from research and development (“R&D”) to final volume production. Our differentiated products and services are designed to provide comprehensive solutions that help our customers accelerate development and production ramp cycles, achieve higher and more stable semiconductor die yields and improve their overall profitability. This reportable segment is comprised of two operating segments, Wafer Inspection and Patterning and GSS.
Specialty Semiconductor Process
The Specialty Semiconductor Manufacturing segment develops and sells advanced vacuum deposition and etching process tools, which are used by a broad range of specialty semiconductor customers, including manufacturers of microelectromechanical systems (“MEMS”), radio frequency (“RF”) communication chips, and power semiconductors for automotive and industrial applications. This reportable segment is comprised of one operating segment.
PCB, Display and Component Inspection
The PCB, Display and Component Inspection segment enables electronic device manufacturers to inspect, test and measure printed circuit boards (“PCBs”), flat panel displays (“FPDs”) and ICs to verify their quality, pattern the desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces. This segment also engages in the development and marketing of character recognition solutions to banks, financial and other payment processing institutions and healthcare providers. This reportable segment is comprised of two operating segments, PCB and Display and Component Inspection.
Other
During the fourth quarter of fiscal 2020, we entered into an Asset Purchase Agreement to sell certain core assets of our non-strategic solar energy business, which was included in our Other reportable segment. This reportable segment remains comprised of one operating segment.
The CODM assesses the performance of each operating segment and allocates resources to those segments based on total revenues and segment gross margin and does not evaluate the segments using discrete asset information. Segment gross margin excludes corporate allocations and effects of foreign exchange rates, amortization of intangible assets, amortization of inventory fair value adjustments, and transaction costs associated with our acquisitions related to costs of revenues.
The following is a summary of results for each of our four reportable segments for the indicated periods:
Three Months Ended Nine Months Ended
  March 31, March 31,
(In thousands) 2021 2020 2021 2020
Semiconductor Process Control:
Revenues $ 1,506,140  $ 1,177,777  $ 4,154,278  $ 3,588,839 
Segment gross margin 982,511  752,649  2,681,411  2,290,721 
Specialty Semiconductor Process:
Revenues 91,724  85,083  271,264  229,328 
Segment gross margin 51,720  47,187  152,819  126,684 
PCB, Display and Component Inspection:
Revenues 205,202  160,411  565,646  525,242 
Segment gross margin 100,311  71,163  275,064  229,769 
Other:
Revenues 149  469  739  3,217 
Segment gross margin 40  (271) (68) 499 
Totals:
Revenues for reportable segments $ 1,803,215  $ 1,423,740  $ 4,991,927  $ 4,346,626 
Segment gross margin $ 1,134,582  $ 870,728  $ 3,109,226  $ 2,647,673 

The following table reconciles total revenues for reportable segments to total revenues for the indicated periods:
Three Months Ended Nine Months Ended
  March 31, March 31,
(In thousands) 2021 2020 2021 2020
Total revenues for reportable segments $ 1,803,215  $ 1,423,740  $ 4,991,927  $ 4,346,626 
Corporate allocations and effects of foreign exchange rates 558  224  1,336  205 
Total revenues $ 1,803,773  $ 1,423,964  $ 4,993,263  $ 4,346,831 

The following table reconciles total segment gross margin to total income before income taxes for the indicated periods:
Three Months Ended Nine Months Ended
  March 31, March 31,
(In thousands) 2021 2020 2021 2020
Total segment gross margin $ 1,134,582  $ 870,728  $ 3,109,226  $ 2,647,673 
Acquisition-related charges, corporate allocations, and effects of foreign exchange rates(1)
40,438  36,922  115,887  128,859 
Research and development 238,957  215,433  687,059  646,764 
Selling, general and administrative 183,040  185,760  537,580  566,358 
Goodwill impairment —  256,649  —  256,649 
Interest expense 39,092  39,231  117,358  120,053 
Loss on extinguishment of debt —  22,538  —  22,538 
Other expense (income), net (7,348) (1,004) (269) (5,190)
Income before income taxes $ 640,403  $ 115,199  $ 1,651,611  $ 911,642 
__________________
(1)Acquisition-related charges primarily include amortization of intangible assets and amortization of inventory fair value adjustments presented as part of costs of revenues.
Our significant operations outside the United States include manufacturing facilities in China, Germany, Israel and Singapore and sales, marketing and service offices in Japan, the rest of the Asia Pacific region and Europe. For geographical revenue reporting, revenues are attributed to the geographic location in which the customer is located. Long-lived assets consist of land, property and equipment, net and are attributed to the geographic region in which they are located.
The following is a summary of revenues by geographic region, based on ship-to location, for the indicated periods:
(Dollar amounts in thousands) Three Months Ended March 31, Nine Months Ended March 31,
2021 2020 2021 2020
Revenues:
Korea $ 557,514  31  % $ 297,687  21  % $ 1,094,979  22  % $ 677,085  16  %
Taiwan 401,797  22  % 349,841  24  % 1,151,683  23  % 1,183,653  27  %
China 353,393  20  % 352,343  25  % 1,221,639  24  % 1,079,951  25  %
North America 174,728  10  % 159,250  11  % 559,712  11  % 499,750  11  %
Japan 161,190  % 152,984  11  % 482,330  10  % 553,999  13  %
Europe and Israel 95,080  % 76,021  % 278,398  % 232,870  %
Rest of Asia 60,071  % 35,838  % 204,522  % 119,523  %
Total $ 1,803,773  100  % $ 1,423,964  100  % $ 4,993,263  100  % $ 4,346,831  100  %
The following is a summary of revenues by major product categories for the indicated periods:
(Dollar amounts in thousands) Three Months Ended March 31, Nine Months Ended March 31,
2021 2020 2021 2020
Revenues:
Wafer Inspection $ 714,990  40  % $ 536,318  38  % $ 1,921,571  38  % $ 1,590,723  37  %
Patterning 399,533  22  % 298,973  21  % 1,077,977  22  % 970,709  22  %
Specialty Semiconductor Process 76,852  % 68,815  % 222,857  % 186,626  %
PCB, Display and Component Inspection 141,539  % 103,811  % 377,990  % 353,406  %
Services 428,453  24  % 372,868  26  % 1,234,425  25  % 1,093,210  25  %
Other 42,406  % 43,179  % 158,443  % 152,157  %
Total $ 1,803,773  100  % $ 1,423,964  100  % $ 4,993,263  100  % $ 4,346,831  100  %

Wafer Inspection and Patterning products are offered in the Semiconductor Process Control segment. Services are offered in multiple segments. Other includes primarily refurbished systems, remanufactured legacy systems, and enhancements and upgrades for previous-generation products which are part of the Semiconductor Process Control segment.

In the three months ended March 31, 2021, two customers accounted for approximately 24% and 16% of total revenues. In the three months ended March 31, 2020, two customers accounted for approximately 20% and 17% of total revenues. In the nine months ended March 31, 2021, two customers accounted for approximately 17% and 15% of total revenues. In the nine months ended March 31, 2020, two customers accounted for approximately 20% and 13% of total revenues. Two customers on an individual basis accounted for greater than 10% of net accounts receivable at March 31, 2021 and at June 30, 2020.
Land, property and equipment, net by geographic region as of the dates indicated below were as follows: 
As of As of
(In thousands) March 31, 2021 June 30, 2020
Land, property and equipment, net:
United States $ 419,581  $ 329,558 
Singapore 73,403  54,946 
Europe 56,016  58,065 
Israel 55,849  59,162 
Rest of Asia 23,589  18,093 
Total $ 628,438  $ 519,824