SEGMENT REPORTING AND GEOGRAPHIC INFORMATION | NOTE 18 – 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 comprehensive portfolio of inspection, metrology and data analytics products, and related service, which helps integrated circuit 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. 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 enable 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. Other We engage in the research, development and marketing of products for the deposition of thin film coating of various materials on crystalline silicon photovoltaic wafers for solar energy panels. This reportable segment is comprised of one operating segment. The CODM assesses the performance of each operating segment and allocates resources to those segments based on total revenue 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 Six Months Ended (In thousands) 2019 2018 2019 2018 Semiconductor Process Control: Revenue $ 1,247,430 $ 1,094,013 $ 2,411,062 $ 2,163,972 Segment gross margin 795,730 702,119 1,538,072 1,404,350 Specialty Semiconductor Process: Revenue 75,106 — 144,245 — Segment gross margin 41,333 — 79,497 — PCB, Display and Component Inspection: Revenue 186,279 26,110 364,831 49,725 Segment gross margin 82,538 10,555 158,606 21,088 Other: Revenue 517 — 2,748 — Segment gross margin 117 — 770 — Totals: Revenue $ 1,509,332 $ 1,120,123 $ 2,922,886 $ 2,213,697 Segment gross margin $ 919,718 $ 712,674 $ 1,776,945 $ 1,425,438 The following table reconciles total reportable segment revenue to total revenue for the indicated periods: Three Months Ended Six Months Ended (In thousands) 2019 2018 2019 2018 Total revenue for reportable segments $ 1,509,332 $ 1,120,123 $ 2,922,886 $ 2,213,697 Corporate allocations and effects of foreign exchange rates 121 (225 ) (19 ) (539 ) Total revenue $ 1,509,453 $ 1,119,898 $ 2,922,867 $ 2,213,158 The following table reconciles total segment gross margin to total income before income taxes for the indicated periods: Three Months Ended Six Months Ended (In thousands) 2019 2018 2019 2018 Total segment gross margin $ 919,718 $ 712,674 $ 1,776,945 $ 1,425,438 Acquisition-related charges, corporate allocations, and effects of foreign exchange rates (1) 43,883 1,036 91,937 1,927 Research and development 220,751 165,903 431,331 319,433 Selling, general and administrative 192,253 112,462 380,598 226,900 Interest expense 40,472 26,538 80,822 52,900 Other expense (income), net (2,568 ) (9,228 ) (4,186 ) (19,253 ) Income before income taxes $ 424,927 $ 415,963 $ 796,443 $ 843,531 __________________ (1) Acquisition-related charges primarily include amortization of intangible assets, amortization of inventory fair value adjustments, and other acquisition-related costs classified or 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 December 31, Six Months Ended December 31, 2019 2018 2019 2018 Revenues: Taiwan $ 447,083 30 % $ 266,534 24 % $ 833,812 28 % $ 520,971 24 % China 381,752 25 % 269,878 24 % 727,608 25 % 610,012 28 % Japan 194,804 13 % 180,283 16 % 401,015 14 % 315,861 14 % Korea 181,948 12 % 126,968 11 % 379,398 13 % 280,469 13 % North America 158,517 11 % 150,113 13 % 340,500 12 % 252,242 11 % Europe and Israel 97,466 6 % 80,618 7 % 156,849 5 % 152,287 7 % Rest of Asia 47,883 3 % 45,504 5 % 83,685 3 % 81,316 3 % Total $ 1,509,453 100 % $ 1,119,898 100 % $ 2,922,867 100 % $ 2,213,158 100 % The following is a summary of revenues by major products for the indicated periods: (Dollar amounts in thousands) Three Months Ended December 31, Six Months Ended December 31, 2019 2018 2019 2018 Revenues: Wafer Inspection $ 606,131 40 % $ 478,553 43 % $ 1,054,405 36 % $ 925,845 42 % Patterning 289,078 19 % 284,496 25 % 671,736 23 % 588,497 26 % Specialty Semiconductor Process 60,941 4 % — — % 117,811 4 % — — % PCB, Display and Component Inspection 129,235 9 % 22,996 2 % 249,595 9 % 43,831 2 % Services 364,903 24 % 267,697 24 % 720,342 24 % 531,730 24 % Other 59,165 4 % 66,156 6 % 108,978 4 % 123,255 6 % Total $ 1,509,453 100 % $ 1,119,898 100 % $ 2,922,867 100 % $ 2,213,158 100 % Wafer Inspection, and Patterning products are offered in 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 Semiconductor Process Control segment. In the three months ended December 31, 2019 , two customers accounted for approximately 24% and 10% of total revenues. In the three months ended December 31, 2018, two customers accounted for approximately 14% and 13% of total revenues. In the six months ended December 31, 2019 , two customers accounted for approximately 21% and 11% and of total revenues. In the six months ended December 31, 2018, one customer accounted for approximately 14% of total revenues. One customer on an individual basis accounted for greater than 10% of net accounts receivables at December 31, 2019 and June 30, 2019 . Land, property and equipment, net by geographic region as of the dates indicated below were as follows: (In thousands) As of As of Land, property and equipment, net: United States $ 297,938 $ 253,255 Singapore 53,510 49,523 Israel 59,943 66,082 Europe 59,843 62,027 Rest of Asia 18,746 17,912 Total $ 489,980 $ 448,799 |