| Segment Reporting |
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 |
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