Segment Reporting

6 Months Ended

Jun. 29, 2019

SEGMENT REPORTING

The Company’s financial segment reporting reflects an organizational alignment intended to leverage the Company’s unique portfolio of capabilities to create value for its customers by developing mission-critical solutions to maximize manufacturing

yields and enable higher performance of devices. While these segments have separate products and technical know-how, they share common business systems and processes, technology centers, and strategic and technology roadmaps. The Company leverages its expertise from these three segments to create new and increasingly integrated solutions for its customers. The Company’s business is reported in the following segments:


•	Specialty Chemicals and Engineered Materials (SCEM): SCEM provides high-performance and high-purity process chemistries, gases, and materials and safe and efficient delivery systems to support semiconductor and other advanced manufacturing processes.


•	Microcontamination Control (MC): MC solutions purify critical liquid chemistries and gases used in semiconductor manufacturing processes and other high-technology industries.


•	Advanced Materials Handling (AMH): AMH develops solutions to monitor, protect, transport, and deliver critical liquid chemistries, wafers, and substrates for a broad set of applications in the semiconductor industry and other high-technology industries.

In the first quarter of 2019, the Company changed its definition of segment profit to include inter-segment sales. The Company updated its recognition of inter-segment sales to recognize the revenue and profit associated with products and components produced in one segment and supplied to another, before being sold to the ultimate end customer. The Company accounts for inter-segment sales and transfers as if the sales or transfers were to third parties, that is, at approximate market prices. Inter-segment sales are presented as an elimination below. Segment profit is defined as net sales less direct and indirect segment operating expenses, including certain general and administrative costs for the Company’s human resources, finance and information technology functions. The remaining unallocated expenses consist mainly of the Company’s corporate functions as well as interest expense, amortization of intangible assets and income tax expense. Prior quarter information was recast to reflect the change in the Company’s definition of segment profit.

Summarized financial information for the Company’s reportable segments is shown in the following tables.



	Three months ended						Six months ended
(In thousands)	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Net sales
SCEM	$	127,552		$	134,336		$	252,022		$	265,079
MC	150,185			124,937			307,891			243,860
AMH	107,515			130,572			223,579			254,650
Inter-segment elimination	(6,378		)	(6,786		)	(13,571		)	(13,331		)
Total net sales	$	378,874		$	383,059		$	769,921		$	750,258



	Three months ended				Six months ended
(In thousands)	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
Segment profit
SCEM	$	24,000	$	36,728	$	48,431	$	67,649
MC	43,126		37,214		90,449		77,525
AMH	15,043		25,542		37,410		51,005
Total segment profit	$	82,169	$	99,484	$	176,290	$	196,179

The following table reconciles total segment profit to income before income taxes:



	Three months ended						Six months ended
(In thousands)	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Total segment profit	$	82,169		$	99,484		$	176,290		$	196,179
Less:
Amortization of intangible assets	16,591			12,014			35,248			23,683
Unallocated general and administrative expenses	10,669			12,537			38,642			19,090
Operating income	54,909			74,933			102,400			153,406
Interest expense	11,315			8,296			22,199			16,455
Interest income	(1,623		)	(1,371		)	(2,848		)	(2,304		)
Other (income) expense, net	(122,015		)	3,877			(122,263		)	4,016
Income before income tax expense	$	167,232		$	64,131		$	205,312		$	135,239

In the following tables, revenue is disaggregated by country or region for the three and six months ended June 29, 2019 and June 30, 2018, respectively.



	Three months ended June 29, 2019											Six months ended June 29, 2019
(In thousands)	SCEM		MC		AMH		Inter-segment			Total		SCEM		MC		AMH		Inter-segment			Total
Taiwan	$	21,584	$	31,205	$	12,740	$	—		$	65,529	$	46,757	$	69,695	$	30,863	$	—		$	147,315
United States	33,676		25,092		35,193		(6,378		)	87,583		66,414		52,674		73,739		(13,571		)	179,256
South Korea	17,696		28,531		16,766		—			62,993		37,022		54,346		32,744		—			124,112
Japan	15,089		24,721		11,954		—			51,764		26,767		49,816		23,344		—			99,927
China	20,413		22,538		10,653		—			53,604		34,570		44,703		20,499		—			99,772
Europe	7,652		11,402		14,408		—			33,462		16,429		22,177		30,007		—			68,613
Southeast Asia	11,442		6,696		5,801		—			23,939		24,063		14,480		12,383		—			50,926
	$	127,552	$	150,185	$	107,515	$	(6,378	)	$	378,874	$	252,022	$	307,891	$	223,579	$	(13,571	)	$	769,921



	Three months ended June 30, 2018											Six months ended June 30, 2018
(In thousands)	SCEM		MC		AMH		Inter-segment			Total		SCEM		MC		AMH		Inter-segment			Total
Taiwan	$	26,575	$	23,572	$	17,280	$	—		$	67,427	$	54,217	$	46,104	$	32,197	$	—		$	132,518
United States	34,128		20,528		35,996		(6,786		)	83,866		66,529		41,589		75,344		(13,331		)	170,131
South Korea	20,791		19,982		23,961		—			64,734		41,118		39,805		46,549		—			127,472
Japan	14,060		28,545		12,079		—			54,684		28,566		54,537		23,111		—			106,214
China	16,726		15,753		14,319		—			46,798		31,706		29,057		26,530		—			87,293
Europe	7,970		10,406		17,553		—			35,929		15,766		20,090		32,960		—			68,816
Southeast Asia	14,086		6,151		9,384		—			29,621		27,177		12,678		17,959		—			57,814
	$	134,336	$	124,937	$	130,572	$	(6,786	)	$	383,059	$	265,079	$	243,860	$	254,650	$	(13,331	)	$	750,258