Segment Information

12 Months Ended

Dec. 31, 2019

SEGMENT INFORMATION

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 a 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 offers solutions to filter and 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 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 has been recast to reflect the change in the Company’s definition of segment profit.

Corporate assets consist primarily of cash and cash equivalents, deferred tax assets and deferred tax charges.

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



(In thousands)	2019			2018			2017
Net sales:
SCEM	$	526,519		$	530,241		$	485,470
MC	633,664			553,838			436,812
AMH	458,290			493,404			444,743
Inter-segment elimination	(27,407		)	(26,986		)	(24,493		)
Total net sales	$	1,591,066		$	1,550,497		$	1,342,532

(In thousands)	2019			2018			2017
Segment profit:
SCEM	$	98,327		$	127,080		$	109,571
MC	194,398			166,852			134,439
AMH	75,173			92,327			69,043
Total segment profit	$	367,898		$	386,259		$	313,053
(In thousands)	2019			2018			2017
Total assets:
SCEM	$	936,609		$	757,381		$	749,379
MC	786,131			680,080			251,216
AMH	372,849			359,991			278,079
Corporate	420,497			520,189			697,498
Total assets	$	2,516,086		$	2,317,641		$	1,976,172



(In thousands)	2019		2018		2017
Depreciation and amortization:
SCEM	$	75,391	$	70,329	$	66,514
MC	41,917		33,590		13,744
AMH	23,911		22,805		21,003
Corporate	184		544		970
Total depreciation and amortization	$	141,403	$	127,268	$	102,231

(In thousands)	2019		2018		2017
Capital expenditures:
SCEM	$	57,585	$	44,337	$	44,350
MC	28,549		38,331		27,178
AMH	25,212		26,545		18,378
Corporate	1,009		940		3,691
Total capital expenditures	$	112,355	$	110,153	$	93,597

The following table reconciles total segment profit to income before income taxes and equity in net loss of affiliate:



(In thousands)	2019			2018			2017
Total segment profit	$	367,898		$	386,259		$	313,053
Less:
Amortization of intangibles	66,428			62,152			44,023
Unallocated general and administrative expenses	62,192			31,418			27,213
Operating income	239,278			292,689			241,817
Interest expense	46,962			34,094			32,343
Interest income	(4,652		)	(3,839		)	(715		)
Other (income) expense, net	(121,081		)	8,002			25,458
Income before income tax expense	$	318,049		$	254,432		$	184,731

In the following tables, revenue is disaggregated by country or region based on the ship to location of the customer for the years ended December 31, 2019, 2018 and 2017:



(In thousands)	2019
	SCEM		MC		AMH		Inter-segment			Total
Taiwan	$	94,561	$	144,404	$	70,864	$	—		$	309,829
United States	149,570		113,551		145,150		(27,407		)	380,864
South Korea	76,447		98,568		69,352		—			244,367
Japan	57,456		104,202		43,832		—			205,490
China	67,877		98,693		48,170		—			214,740
Europe	33,147		45,454		53,622		—			132,223
Southeast Asia	47,461		28,792		27,300		—			103,553
	$	526,519	$	633,664	$	458,290	$	(27,407	)	$	1,591,066



	2018
(In thousands)	SCEM		MC		AMH		Inter-segment			Total
Taiwan	$	104,707	$	118,208	$	66,948	$	—		$	289,863
United States	133,834		95,421		144,763		(26,986		)	347,032
South Korea	82,890		74,623		84,883		—			242,396
Japan	52,731		110,997		47,027		—			210,755
China	68,365		84,652		51,368		—			204,385
Europe	32,088		40,635		65,352		—			138,075
Southeast Asia	55,626		29,302		33,063		—			117,991
	$	530,241	$	553,838	$	493,404	$	(26,986	)	$	1,550,497



(In thousands)	2017
	SCEM		MC		AMH		Inter-segment			Total
Taiwan	$	113,279	$	109,815	$	66,620	$	—		$	289,714
United States	117,602		71,421		121,809		(24,493		)	286,339
South Korea	74,773		65,677		76,418		—			216,868
Japan	41,164		89,638		38,678		—			169,480
China	64,796		45,382		38,712		—			148,890
Europe	30,472		30,479		59,530		—			120,481
Southeast Asia	43,384		24,400		42,976		—			110,760
	$	485,470	$	436,812	$	444,743	$	(24,493	)	$	1,342,532

The following table summarizes property, plant and equipment, net, attributed to significant countries for the years ended December 31, 2019, 2018 and 2017:



(In thousands)	2019		2018		2017
Property, plant and equipment:
United States	$	308,156	$	289,049	$	257,584
South Korea	43,540		41,698		39,562
Japan	37,851		34,276		23,648
Malaysia	34,339		31,138		19,212
Taiwan	16,264		18,804		16,073
Other	39,394		4,564		3,444
	$	479,544	$	419,529	$	359,523

In the years ended December 31, 2019, 2018 and 2017, Taiwan Semiconductor Manufacturing Company Limited accounted for $187.0 million, $153.9 million and $167.9 million of net sales, respectively, all of which include sales from all of the Company’s segments. In addition, in the years ended December 31, 2019, 2018 and 2017, Samsung Electronics Co. accounted for $128.0 million, $164.3 million and $140.6 million of net sales, respectively, which include sales from all of the Company’s segments.