KLA
Annual Report 2024

2024 Letter to Stockholders
Dear Stockholders:
Fiscal Year 2024 (FY24) Highlights
KLA performed well in FY24 relative to industry peers, while revenue declined modestly year over
year reflecting weaker Semiconductor and Wafer Fabrication Equipment (WFE) industry conditions.
KLA customers continued to prioritize investments in Process Control which contributed to KLA’s
relative strength through the year. KLA’s performance is supported by successful diversification and
growth in adjacent markets, including new markets for KLA including Advanced Packaging as well as
above industry growth in Service. Through it all, KLA remained focused on delivering to customer
requirements, executing the financial model, and driving strong returns to shareholders.
Revenue declined 7% in FY24 to $9.8 billion. Revenue in the Semiconductor Process Control
segment, which accounted for 89% of KLA revenue, was down 6% in the fiscal year. Revenue from
our Specialty Semiconductor Process segment declined 3% in FY24 and was 5% of revenue. This
business includes etch and deposition solutions for Advanced Packaging and Specialty
Semiconductor markets. Demonstrating success in new markets, KLA saw strong growth in
Advanced Packaging in FY24, which partially offset challenging market conditions in automotive and
consumer markets. Revenue from our PCB and Component Inspection segment decreased 13% in
FY24, primarily due to continued market softening in smart phones and other consumer
electronics.
Service revenue grew 10% in the year to $2.3 billion. KLA’s Service business has been delivering
consistent growth, more than doubling since first topping $1 billion in 2019. Due to the increase in
the installed base of KLA systems and improving equipment utilization rates, KLA’s Service revenue
is on track to deliver growth at the upper end of the range of our 12-14% long-term revenue
compound annual growth rate (CAGR) target for the period from calendar year 2021 through
calendar 2026, as set forth in our 2022 Investor Day. KLA’s Service revenue is driven by growth in
the installed base, increasing value of our contract offerings, and the extension of system lifetimes
due to growth in legacy semiconductor markets. Furthermore, over 75% of the revenue generated
is from recurring “subscription-like” contracts, reflecting the growing value of advanced process
control systems and Services in our product portfolio.
Free cash flow was $3.0 billion in FY24, and free cash flow margin or free cash flow as a percent of
company revenue, remained very strong at 31%, placing this metric within the top-tier of the S&P
500 according to our analysis. Consistent with long-term strategic objectives, KLA delivered on our
ongoing commitment to return value to shareholders, including a 14th consecutive dividend
increase announced in September 2023. Also in September 2023, we announced the Board of
Directors had authorized an additional $2 billion share repurchase program. Total returns to
shareholders in FY24 (including dividends and share repurchases) were $2.5 billion, or
approximately 83% of free cash flow. Additionally, in September 2024, we announced our 15th
consecutive dividend increase to $1.70 per share per quarter, consistent with our capital return
commitment and trends.
KLA’s balance sheet remains strong, with $4.5 billion in total cash, cash equivalents and marketable
securities, $6.6 billion in debt, and an attractive bond maturity profile supported by investment-
Page | 1

grade ratings from all three agencies. KLA’s investment grade credit ratings underscore the strength
of our balance sheet and the sustainability of our business and financial performance. We remain
disciplined in executing our capital management strategy: investing at a high level to strengthen
our competitive advantages, growing free cash flow, and targeting returns to stockholders of at
least 85% of free cash flow over the long-term.
Celebrating 40 Years of Broadband Plasma (BBP) Innovation
In June 2024, KLA marked the 40th anniversary of our BBP optical patterned wafer inspectors which
remain at the forefront of the semiconductor industry and an indispensable technology for our
customers. Over the past 40 years, approximately 3,000 BBP systems have been installed
worldwide and KLA has approximately 1,000 BBP-related patents filed.
KLA’s BBP systems are the flagship product of our market leading inspection portfolio. Our BBP
systems use advanced optical and data processing technologies to discover critical defects on
patterned wafers during chip manufacturing.
Capturing critical defects helps engineers characterize and debug new processes, patterning
schemes, materials and device architectures during research and development (R&D), and helps
accelerate semiconductor yield, reliability and performance during high-volume manufacturing.
With the continuing advancement of semiconductor technologies, we are developing physics-based
artificial intelligence (AI) algorithm innovations that will extend BBP’s legacy of high-sensitivity
inspection at optical inspection speed into the future.
Three Key Priorities in FY25
•
As always, our first priority is to go above and beyond to support customers and meet
commitments for product delivery and support.
•
Secondly, it is critical we execute on product roadmaps to deliver the innovation that
customers expect and need to solve next generation process challenges and to enable the
continued differentiation that drives KLA’s business model.
•
And finally, the third priority in fiscal year 2025 is to ensure our global teams are prepared
for the expected return to growth at the leading-edge as the industry and KLA expand to
support new process technology innovations to drive the compelling long-term growth
outlook of semiconductor markets, including the broadening adoption of artificial
intelligence (AI) applications.
The KLA Operating Model informs and guides the company as we execute our strategic objectives,
positions us for sustainable outperformance relative to the industry. It also guides our critical
strategic objectives. These objectives fuel our growth, reliable operational excellence, and
differentiation across increasingly diverse products and service offerings. Our strategic objectives
also form the foundation for KLA’s sustained technology leadership, wide competitive moat,
leading financial performance, strong free cash flow generation, and consistent capital returns to
shareholders.

Calendar 2026 Financial Targets Remain on Track
At KLA’s June 2022 Investor Day, the company introduced long-term financial targets for calendar
2026. KLA’s 9-11% revenue growth objective for the period from calendar 2021 through calendar
2026 features strong relative growth in each major business segment over that period and includes
the revised long-term revenue growth target of 12-14% CAGR in our Services business driven by
growth in the installed base, and new value-added service offerings. KLA’s long-term model
assumes a baseline semiconductor industry growth CAGR of 6-7% through 2026 and ultimately for
the size of the semiconductor industry to exceed $1 trillion by calendar year 2030.
Delivering Sustained Outperformance
In conclusion, KLA’s FY24 was a success as the company continued to execute against our long-term
strategic objectives and deliver strong growth against the backdrop of a challenging year for the
WFE market. Despite these headwinds, KLA outperformed to meet customer requirements.
Once again, the global KLA team persevered through dynamic and complex situations to produce
strong relative industry performance. KLA’s demonstrated resilience and adaptability in delivering
on commitments reflects the unique KLA culture, which is grounded in our values. Through this, we
will continue to deliver value for customers, employees, stockholders, and partners as we position
the company for growth at the leading edge.
As KLA continued to execute against our commitments to customers, we also made strides in
environmental, social and governance (ESG) initiatives. Relevant to these initiatives, in August 2024,
KLA received validation from the Science Based Target initiative (SBTi) of near-term greenhouse gas
(GHG) emissions targets and published its annual Global Impact Report.
KLA remains well positioned at the forefront of technology innovations, including helping enable
critical AI technologies. Our investment in the long-term continues to be a top priority, given it is an
essential ingredient that drives our sustained success and relative outperformance. The
semiconductor and electronics landscapes are constantly changing and expanding across new
geographies. Broadening customer interest is driven by more technology innovation than ever at
the leading edge, as well as expansion and investment in the legacy nodes to establish local
manufacturing of semiconductors and more resilient supply chains.
Despite a more challenging market demand backdrop in FY24, we delivered strong relative
performance, guided by the KLA Operating Model and reflecting the focused commitment of our
world-class global teams. We are well positioned for a return to growth at the leading-edge in fiscal
year 2025 and expect the recent improvement in our business to sustain as we move into next
year.
On behalf of all of us at KLA, we thank you for your ongoing support and investment.
Sincerely,
Richard P. Wallace
President and Chief Executive Officer

Note on Forward-Looking Statements
Statements in this letter other than historical facts, such as statements pertaining to: (1) the growth
outlook of the semiconductor markets; (2) anticipated growth at the leading edge; (3) our long-term
revenue growth targets and other long-term financial objectives announced at our June 2022
Investor Day and underlying assumptions; (4) future shareholder returns; and (5) our targets to
reduce GHG emissions, are forward-looking statements and are subject to the Safe Harbor provisions
created by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are
based on current information and expectations and involve a number of risks and uncertainties.
Actual results may differ materially from those projected in such statements due to various factors,
including, but not limited to: unexpected delays, difficulties, and expenses in executing against our
ESG targets, goals and commitments, including, but not limited to, our efforts to reduce GHG
emissions, as well as our vulnerability to a weakening in the condition of the financial markets and
the global economy; risks related to our international operations; evolving Bureau of Industry and
Security of the U.S. Department of Commerce rules and regulations and their impact on our ability to
sell products to and provide services to certain customers in China; costly intellectual property
disputes that could result in our inability to sell or use the challenged technology; risks related to the
legal, regulatory and tax environments in which we conduct our business; increasing attention to ESG
matters and the resulting costs, risks and impact on our business; unexpected delays, difficulties and
expenses in executing against our environmental, climate, diversity and inclusion or other ESG
targets, goals and commitments; our ability to attract, retain and motivate key personnel; our
vulnerability to disruptions and delays at our third party service providers; cybersecurity threats,
cyber incidents affecting our and our business partners’ systems and networks; our inability to access
critical information in a timely manner due to system failures; our ability to identify suitable
acquisition targets and successfully integrate and manage acquired businesses; climate change,
earthquake, flood or other natural catastrophic events, public health crises such as the COVID-19
pandemic or terrorism and the adverse impact on our business operations; the war between Ukraine
and Russia, and the war between Israel and Hamas, and the significant military activity in those
regions; lack of insurance for losses and interruptions caused by terrorists and acts of war, and our
self-insurance of certain risks including earthquake risk; risks related to fluctuations in foreign
currency exchange rates; risks related to fluctuations in interest rates and the market values of our
portfolio investments; risks related to tax and regulatory compliance audits; any change in taxation
rules or practices and our effective tax rate; compliance costs with federal securities laws, rules,
regulations, NASDAQ requirements, and evolving accounting standards and practices; ongoing
changes in the technology industry, and the semiconductor industry in particular, including future
growth rates, pricing trends in end-markets, or changes in customer capital spending patterns; our
vulnerability to a highly concentrated customer base; the cyclicality of the industries in which we
operate; our ability to timely develop new technologies and products that successfully address
changes in the industry; risks related to artificial intelligence; our ability to maintain our technology
advantage and protect proprietary rights; our ability to compete in the industry; availability and cost
of the materials and parts used in the production of our products; our ability to operate our business
in accordance with our business plan; risks related to our debt and leveraged capital structure; we
may not be able to declare cash dividends at all or in any particular amount; liability to our customers
under indemnification provisions if our products fail to operate properly or contain defects or our
customers are sued by third parties due to our products; our government funding for R&D is subject
to audit, and potential termination or penalties; we may incur significant restructuring charges or
other asset impairment charges or inventory write offs; risks related to receivables factoring
arrangements and compliance risk of certain settlement agreements with the government; and risks
related to the Court of Chancery of the State of Delaware being the sole and exclusive forum for
certain actions and proceedings. For other factors that may cause actual results to differ materially

from those projected and anticipated in forward-looking statements in this press release, please refer
to KLA’s Annual Report on Form 10-K for the year ended June 30, 2024, and other subsequent filings
with the Securities and Exchange Commission (including, but not limited to, the risk factors described
therein). KLA assumes no obligation to, and does not currently intend to, update these forward-
looking statements.
This letter contains ESG-related statements based on hypothetical scenarios and assumptions as well
as estimates that are subject to a high level of uncertainty, and these statements should not
necessarily be viewed as being representative of current or actual risk or performance, or forecasts of
expected risk or performance. In addition, historical, current, and forward-looking environmental and
social-related statements may be based on standards for measuring progress that are still developing,
and internal controls and processes that continue to evolve. Forward-looking and other statements in
this letter including regarding our sustainability progress, plans and goals, are in some instances
informed by various stakeholder expectations, including certain third-party standards and
frameworks; as such, the inclusion of such statements is not an indication that these matters are
necessarily material for the purposes of complying with or reporting pursuant to the U.S. federal
securities laws and regulations, even if we use the word “material” or “materiality” in this letter or
elsewhere.
Reconciliation of Free Cash Flow and Related Metrics
Free Cash Flow Measures
(Dollars in millions)
For the twelve
months ended
June 30, 2024
Net cash provided by operating activities
$
3,308.6
Less Capital expenditures
(277.4)
Free cash flow
$
3,031.2
Free cash flow
$
3,031.2
Revenue
$
9,812.2
Free cash flow margin
30.9%
Cash paid for dividends
$
773.0
Cash paid for share repurchases
1,735.7
Capital returns
$
2,508.8
Capital returns / Free cash flow
82.8%
Amounts may not sum due to rounding
The Company presents free cash flow and certain related metrics as supplemental non-GAAP
measures of its liquidity. Free cash flow is determined by adjusting GAAP net cash provided by
operating activities for capital expenditures. Free cash flow margin is defined as free cash flow
divided by revenue.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
È
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2024
OR
‘
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from
to
Commission File Number 000-09992
KLA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
04-2564110
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
One Technology Drive,
Milpitas,
California
95035
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s telephone number, including area code: (408) 875-3000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 par value per share
KLAC
The Nasdaq Stock Market, LLC
The NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.
Yes È
No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.
Yes ‘
No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes È
No ‘
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files).
Yes È
No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer È
Accelerated filer
‘
Non-accelerated filer
‘
Smaller reporting company ‘
Emerging growth company ‘
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
the registered public accounting firm that prepared or issued its audit report. È
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ‘
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)
Yes ‘
No È
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant based upon the
closing price of the registrant’s stock, as of December 31, 2023, was approximately $78.54 billion.
The registrant had 134,425,022 shares of common stock outstanding as of July 22, 2024.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 2024 Annual Meeting of Stockholders (“Proxy Statement”) to be filed pursuant to
Regulation 14A within 120 days after the registrant’s fiscal year ended June 30, 2024, are incorporated by reference into Part III of
this report.

INDEX
Special Note Regarding Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
PART I
Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Item 1A.
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Item 1B.
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43
Item 1C.
Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43
Item 2.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45
Item 3.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45
Item 4.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46
Item 6.
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . .
48
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64
Item 8.
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65
Consolidated Balance Sheets as of June 30, 2024 and 2023 . . . . . . . . . . . . . . . . . . . . . . . . .
66
Consolidated Statements of Operations for each of the three years in the period ended
June 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67
Consolidated Statements of Comprehensive Income for each of the three years in the
period ended June 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
Consolidated Statements of Stockholders’ Equity for each of the three years in the period
ended June 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
Consolidated Statements of Cash Flows for each of the three years in the period ended
June 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . .
122
Schedule II Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . .
125
Item 9A.
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125
Item 9B.
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
126
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . . . .
127
PART III
Item 10.
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
127
Item 11.
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
127
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
127
Item 13.
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . .
127
Item 14.
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128
PART IV
Item 15.
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128
Item 16.
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
132
i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Securities Exchange
Act”). All statements other than statements of historical fact may be forward-looking statements. You can identify
these and other forward-looking statements by the use of words such as “may,” “will,” “could,” “would,”
“should,” “expects,” “plans,” “anticipates,” “relies,” “believes,” “estimates,” “predicts,” “intends,”
“potential,” “continues,” “thinks,” “seeks,” or the negative of such terms, or other comparable terminology.
Forward-looking statements also include the assumptions underlying or relating to any of the foregoing
statements. Such forward-looking statements include those regarding, among others: forecasts of the future
results of our operations, including profitability; orders for our products and capital equipment generally; sales
of semiconductors; the investments by our customers in advanced technologies and new materials; growth of
revenue in the semiconductor industry, the semiconductor capital equipment industry and our business;
technological trends in the semiconductor industry; future developments or trends in the global capital and
financial markets; our future product offerings and product features; the success and market acceptance of new
products; timing of shipment of order backlog; our future product shipments and product and service revenues;
our future gross margins; our future research and development (“R&D”) expenses and selling, general and
administrative (“SG&A”) expenses; international sales and operations; our ability to maintain or improve our
existing competitive position; success of our product offerings; creation and funding of programs for R&D;
results of our investment in leading edge technologies; the effects of hedging transactions; the effect of the sale of
trade receivables and promissory notes from customers; the effect of future compliance with laws and
regulations; our future effective income tax rate; our recognition of tax benefits; the effects of any audits or
litigation; future payments of dividends to our stockholders; the completion of any acquisitions of third parties,
or the technology or assets thereof; benefits received from any acquisitions and development of acquired
technologies; sufficiency of our existing cash balance, investments, cash generated from operations and the
unfunded portion of our Revolving Credit Facility (as defined below in Item 1A “Risk Factors”) to meet our
operating and working capital requirements, including debt service and payment thereof; future dividends, and
stock repurchases; our compliance with the financial covenants under the Credit Agreement (as defined below in
Item 1A “Risk Factors”) for our Revolving Credit Facility; the adoption of new accounting pronouncements; our
repayment of our outstanding indebtedness; and our environmental, social and governance (“ESG”) related
targets, goals and commitments.
Our actual results may differ significantly from those projected in the forward-looking statements in this
report. Factors that might cause or contribute to such differences include, but are not limited to:
•
Our vulnerability to a weakening in the condition of the financial markets and the global economy;
•
Risks related to our international operations;
•
Evolving Bureau of Industry and Security (“BIS”) of the U.S. Department of Commerce
(“Commerce”) rules and regulations (the “BIS Rules”) and their impact on our ability to sell products
to and provide services to certain customers in People’s Republic of China (“China”);
•
Costly intellectual property (“IP”) disputes that could result in our inability to sell or use the
challenged technology;
•
Risks related to the legal, regulatory and tax environments in which we conduct our business;
•
Increasing attention to ESG matters and the resulting costs, risks and impact on our business;
•
Unexpected delays, difficulties and expenses in executing against our environmental, climate, diversity
and inclusion or other ESG target, goals and commitments;
•
Our ability to attract, retain and motivate key personnel;
•
Our vulnerability to disruptions and delays at our third-party service providers;
ii

•
Cybersecurity threats, cyber incidents affecting our and our business partners’ systems and networks;
•
Our inability to access critical information in a timely manner due to system failures;
•
Our ability to identify suitable acquisition targets and successfully integrate and manage acquired
businesses;
•
Climate change, earthquake, flood or other natural catastrophic events, public health crises such as
the COVID-19 pandemic or terrorism and the adverse impact on our business operations;
•
The war between Ukraine and Russia, and the war between Israel and Hamas, and the significant
military activity in those regions;
•
Lack of insurance for losses and interruptions caused by terrorists and acts of war, and our self-
insurance of certain risks including earthquake risk;
•
Risks related to fluctuations in foreign currency exchange rates;
•
Risks related to fluctuations in interest rates and the market values of our portfolio investments;
•
Risks related to tax and regulatory compliance audits;
•
Any change in taxation rules or practices and our effective tax rate;
•
Compliance costs with federal securities laws, rules, regulations, NASDAQ requirements, and evolving
accounting standards and practices;
•
Ongoing changes in the technology industry, and the semiconductor industry in particular, including
future growth rates, pricing trends in end-markets, or changes in customer capital spending patterns;
•
Our vulnerability to a highly concentrated customer base;
•
The cyclicality of the industries in which we operate;
•
Our ability to timely develop new technologies and products that successfully address changes in the
industry;
•
Risks related to artificial intelligence;
•
Our ability to maintain our technology advantage and protect proprietary rights;
•
Our ability to compete in the industry;
•
Availability and cost of the materials and parts used in the production of our products;
•
Our ability to operate our business in accordance with our business plan;
•
Risks related to our debt and leveraged capital structure;
•
We may not be able to declare cash dividends at all or in any particular amount;
•
Liability to our customers under indemnification provisions if our products fail to operate properly or
contain defects or our customers are sued by third parties due to our products;
•
Our government funding for R&D is subject to audit, and potential termination or penalties;
•
We may incur significant restructuring charges or other asset impairment charges or inventory write
offs;
•
We are subject to risks related to receivables factoring arrangements and compliance risk of certain
settlement agreements with the government; and
•
Risks related to the Court of Chancery of the State of Delaware being the sole and exclusive forum for
certain actions and proceedings.
iii

This report contains ESG-related statements based on hypothetical scenarios and assumptions as well as
estimates that are subject to a high level of uncertainty, and these statements should not necessarily be viewed as
being representative of current or actual risk or performance, or forecasts of expected risk or performance. In
addition, historical, current, and forward-looking environmental and social-related statements may be based on
standards for measuring progress that are still developing, and internal controls and processes that continue to
evolve. Forward-looking and other statements in this report including regarding our corporate responsibility
and sustainability progress, plans and goals, are in some instances informed by various stakeholder
expectations, including certain third-party standards and frameworks; as such, the inclusion of such statements
is not an indication that these matters are necessarily material for the purposes of complying with or reporting
pursuant to the U.S. federal securities laws and regulations, even if we use the word “material” or “materiality”
in this report or elsewhere.
For a more detailed discussion of these and other risk factors, that might cause or contribute to differences
from the forward looking statements in this report, see Item 1A “Risk Factors” in this Annual Report on Form
10-K, as well as in Item 1 “Business” and Item 7 “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in this report. You should carefully review these risks and also review the
risks described in other parts of this report and in documents we file from time to time with the Securities and
Exchange Commission (“SEC”), including the Quarterly Reports on Form 10-Q that we will file in the fiscal
year ending June 30, 2025. You are cautioned not to place undue reliance on these forward-looking statements,
and we expressly assume no obligation and do not intend to update the forward-looking statements in this report
after the date hereof.
iv

PART I
ITEM 1.
BUSINESS
Specific industry and technical terms used in this section are defined in the subsection entitled “Glossary,”
found at the end of this Item 1.
The Company
KLA Corporation and its majority-owned subsidiaries (“KLA” or the “Company” and also referred to as
“we,” “our,” “us” or similar references) are suppliers of industry-leading equipment and services that enables
innovation throughout the electronics industry. We provide advanced process control and process-enabling
solutions for manufacturing wafers, reticles/masks, chemicals/materials, integrated circuits (“IC” or “chip”),
packaged ICs and printed circuit boards (“PCB”), as well as comprehensive support and services across our
installed base. Our suite of advanced products, coupled with our unique process control software and services,
allow us to deliver the solutions our customers need to achieve their technology advancement and high volume
production goals by significantly improving yields, while simultaneously reducing waste, risks and costs. This
improves our customers’ overall profitability and return on investment.
KLA was formed as KLA-Tencor Corporation in April 1997 through the merger of KLA Instruments
Corporation and Tencor Instruments, two long-time leaders in the semiconductor capital equipment industry that
began operations in 1975 and 1976, respectively. We are organized into three reportable segments:
Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection.
Within the Semiconductor Process Control segment, our comprehensive portfolio of inspection, metrology
and software products, as well as related services, help IC, wafer, reticle/mask and chemical/materials
manufacturers achieve target yields throughout the entire fabrication process, from R&D to high volume
production. These products and services are designed to provide comprehensive solutions to help customers
accelerate development and production ramp cycles, achieve higher and more stable product yields and improve
their overall profitability.
Within the Specialty Semiconductor Process segment, we develop and sell advanced vacuum deposition and
etch process tools, which are used by a broad range of specialty semiconductor customers, including
manufacturers of microelectromechanical systems (“MEMS”), radio frequency (“RF”) communication
semiconductors, and power semiconductors for automotive and industrial applications.
Within the PCB and Component Inspection segment, we sell products and services that enable electronic
device manufacturers to inspect, test and measure PCBs, IC substrates and packaged 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.
Additional information about KLA is available at www.kla.com. Our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act are available free of charge on our
website as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.
Information on our website is not part of this Annual Report on Form 10-K or our other filings with the SEC.
Additionally, these filings may be obtained through the SEC’s website (www.sec.gov), which contains reports,
proxy and information statements and other information regarding issuers that file electronically.
Investors and others should note that we may announce material financial information to investors using our
investor relations website (ir.kla.com), which includes our SEC filings, press releases, public earnings calls and
conference webcasts. The investor relations website is used to communicate with the public about us and our
products, services and other matters.
1

Industry
Our core focus is enabling technological advances and improving manufacturing yields in the
semiconductor industry. The semiconductor fabrication process begins with a bare silicon wafer — a round disk
typically 200 millimeters or 300 millimeters in diameter, about as thick as a credit card and gray in color. The
process of manufacturing wafers is highly sophisticated and involves the creation of large ingots of silicon by
pulling them out of a vat of molten silicon. The ingots are then sliced into wafers. Prime silicon wafers are then
polished to a mirror finish. Other, more specialized wafers, such as epitaxial silicon (“epi”), silicon on insulator
(“SOI”), gallium nitride (“GaN”) and silicon carbide (“SiC”) are also used in the semiconductor industry.
The manufacturing cycle of an IC is grouped into three phases: design, fabrication and testing. IC design
involves the architectural layout of the circuit, as well as design verification and reticle generation. The
fabrication of a semiconductor chip (or “semiconductor”) is accomplished by depositing a series of film layers
that act as conductors, semiconductors or insulators on bare wafers. The deposition of these film layers is
interspersed with numerous other process steps that create circuit patterns, remove portions of the film layers,
and perform other functions such as heat treatment, measurement and inspection. Most advanced chip designs
require hundreds of individual steps, many performed multiple times. Most chips consist of two main structures:
the lower structure, typically consisting of transistors or capacitors, which performs the “smart” functions; and
the upper “interconnect” structure, typically consisting of circuitry, which connects the components in the lower
structure. When the layers on the wafer have been fabricated, each chip on the wafer is tested for functionality.
The wafer is then cut into individual chips, and the chips that pass functional testing are packaged. Final testing
is performed on all packaged chips. Packaged chips are then mounted onto PCBs for connection to the rest of the
electronic system.
Our business depends upon the capital expenditures of semiconductor, semiconductor-related and electronic
device manufacturers. This is driven by the current and anticipated market demand for ICs, products utilizing ICs
and other electronic components. We do not consider our business to be seasonal. Still, our business has
historically been cyclical with respect to the capital equipment procurement practices of semiconductor,
semiconductor-related and electronic device manufacturers, and it is impacted by the investment patterns of such
manufacturers in different global markets. Downturns in the semiconductor or other industries in which we
operate, or slowdowns in the worldwide economy as well as customer consolidation, could have a material
adverse effect on our future business and financial results.
Companies anticipating future market demands by developing and advancing new technologies and
manufacturing processes are better positioned to lead in the semiconductor market. Accelerating the yield ramp
and maximizing production yields of high-performance devices are critical goals of modern semiconductor and
related electronics manufacturing. Ramping to high-volume production ahead of competitors can dramatically
increase IC manufacturers’ revenue and profit for a given product. Leading semiconductor manufacturers invest
in simultaneous production integration of multiple new process technologies, some requiring new substrate and
film materials, new geometries, new transistor architectures, new power distribution schemes, advanced multi-
patterning optical and extreme ultraviolet (“EUV”) lithography, and advanced packaging techniques. As design
rules decrease, yields become more sensitive to the size and density of defects. Device performance
characteristics (namely speed, capacity or power management) also become more sensitive to parameters such as
linewidth and film thickness variation. New process materials require extensive characterization before they can
be used in the manufacturing process. Moving several of these advanced technologies into production at once
only adds to the risks that chipmakers face. The continuing evolution of semiconductors to smaller geometries
and more complex multi-level circuitry has significantly increased the performance and cost requirements of the
capital equipment used to manufacture these devices. Construction of an advanced IC fabrication facility today
can cost well above $10 billion, substantially more than previous-generation facilities. In addition, chipmakers
are demanding increased productivity and higher returns from their manufacturing equipment and are also
seeking ways to extend the performance of their existing equipment.
2

The semiconductor capital equipment industry has been experiencing multiple growth drivers bolstered by
demand for semiconductors from leading-edge foundry and logic manufacturers to support computational power
and connectivity for markets such as artificial intelligence (“AI”) and 5G wireless technology and increasing
investment by our customers in legacy nodes. The growth of virtual engagement and the pace of digitization has
been driven by COVID-19 related travel restrictions, work from home activities, and advances in healthcare and
industrial applications. These factors, together with the increasing adoption of electric vehicles and intelligence
in automobiles, are powering leading-edge design node technology investments and capacity expansions.
Intertwined in these areas, spurred by the requirements of AI, is the growth in demand for memory chips.
Regionalization of semiconductors has become a trend as access to semiconductors is viewed from the lens of
national security. China remains as a major region for the manufacturing of legacy node logic and memory chips,
adding to its role as the world’s largest consumer of ICs. The Chinese government initiatives around self-
sustainability are propelling China to expand its domestic manufacturing capacity. Although China is currently
seen as an important long-term growth region for the semiconductor capital equipment sector, Commerce has
added certain China-based entities to the U.S. Entity List (a list of parties that are generally ineligible to receive
U.S. regulated items without prior licensing from BIS), restricting our ability to provide products and services to
such entities without a license. In addition, Commerce has imposed export licensing requirements on China-
based customers that are military end users or engaged in military end uses. It also requires our customers to
obtain an export license when they use certain semiconductor capital equipment based on U.S. technology to
manufacture products connected to certain entities on the U.S. Entity List.
Research and Development
The market for semiconductor and electronics industries is characterized by rapid technological
development and product innovation. These technical innovations are inherently complex and require long
development cycles and appropriate professional staffing. We make significant investments in product R&D for
the timely development of new products and enhancements necessary to maintain our competitive position.
Accordingly, we devote a significant portion of our human and financial resources to R&D programs and seek to
maintain close relationships with customers to remain responsive to their needs.
Our key R&D activities during the fiscal year ended June 30, 2024 involved the development of process
control and process-enabling solutions for a broad range of industries including semiconductors and PCBs. For
information regarding our R&D expenses during the last three fiscal years, see Item 7 “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.
The strength of our competitive positions in many of our existing markets is primarily due to our leading
technology, which is the result of our continuing significant investments in product R&D. Even during down
cycles in the semiconductor industry, we have remained committed to significant engineering efforts toward both
product improvement and new product development to enhance our competitive position.
Customers
We count among our largest customers the leading semiconductor, semiconductor-related and electronic
device manufacturers in Asia, the U.S. and Europe. Our future performance will depend, in part, on our ability to
continue to compete successfully in Asia, one of the largest markets for our equipment. Our ability to compete in
this area depends upon the continuation of favorable trading relationships between countries in the region and the
U.S., and our continuing ability to maintain satisfactory relationships with leading semiconductor companies in
the region. Refer to “Backlog” section below for information regarding export licenses now required for certain
products and services sold to China.
3

For the fiscal years ended June 30, 2024, 2023 and 2022, the following customers each accounted for more
than 10% of total revenues, primarily in the Semiconductor Process Control segment:
Fiscal Year Ended June 30,
2024
2023
2022
Taiwan Semiconductor
Manufacturing Company Limited
Taiwan Semiconductor
Manufacturing Company Limited
Taiwan Semiconductor
Manufacturing Company Limited
Samsung Electronics Co., Ltd.
Samsung Electronics Co., Ltd.
Sales, Service and Marketing
Our sales, service and marketing efforts aim to build deep long-term relationships with our customers. We
focus on providing comprehensive resources for the full breadth of process control, process-enabling and yield
management solutions for manufacturing and testing wafers and reticles, a wide variety of ICs, PCBs, IC
substrates and packaging as well as general materials research. Our revenues are derived primarily from product
sales and related service contracts, mostly through our direct sales force.
We believe that the size and location of our field sales, service engineering, applications engineering, and
marketing organizations represent a competitive advantage in our served markets. We have direct sales forces in
Asia, the U.S. and Europe. We maintain an export compliance program designed to meet the requirements of
Commerce and the U.S. Department of State and the trade regulations of the international jurisdictions in which
we operate.
In addition to sales and service offices in the U.S., we conduct sales, marketing and services out of
subsidiaries or branches in many regions; some of the largest include China, Germany, Israel, Japan, Korea,
Singapore, Taiwan and the United Kingdom. We believe sales outside the U.S. will continue to be a significant
percentage of our total revenues. International revenues accounted for approximately 89%, 88% and 90% of our
total revenues in the fiscal years ended June 30, 2024, 2023 and 2022, respectively. Additional information
regarding our revenues from foreign operations for our last three fiscal years can be found in Note 19 “Segment
Reporting and Geographic Information” to our Consolidated Financial Statements.
International sales and operations may be adversely affected by the imposition of governmental controls,
restrictions on export technology, political instability, trade restrictions, changes in tariffs and the difficulties
associated with staffing and managing international operations. In addition, international sales may be adversely
affected by the economic conditions in each country and by fluctuations in currency exchange rates. Such
fluctuations may negatively impact our ability to compete on price with local providers or the value of revenues
we generate from our international business. Although we attempt to manage some of the currency risk inherent
in non-U.S. dollar product sales through hedging activities, there can be no assurance that such efforts will be
adequate. These factors, as well as any of the other risk factors related to our international business and
operations that are described in Item 1A “Risk Factors,” could have a material adverse effect on our future
business and financial results.
Products and Services
KLA develops industry-leading process control and yield management solutions and services that enable
innovation throughout the semiconductor and related electronics industries. We provide advanced process control
and process-enabling solutions for manufacturing wafers, reticles, ICs, packaging, PCBs, IC substrates and flat
and flexible panel displays. In March 2024, we made the decision to exit our business of manufacturing flat and
flexible panel displays (“Display”) by announcing the end of manufacturing of most Display products by
December 31, 2024, but we will continue to provide services to the installed base of Display products for existing
customers.
4

The Semiconductor Process Control segment offers a comprehensive portfolio of inspection, metrology,
chemistry process control and software products and related services, which support the semiconductor
ecosystem from R&D to final volume production. For IC manufacturing, our systems support the production of
all chip types including advanced logic, DRAM, 3D NAND, power devices, MEMS, legacy design node chips
and more. Our substrate manufacturing systems support the production of a broad range of wafer types and sizes
including silicon, prime silicon SOI, sapphire, glass, wide bandgap substrates (e.g., SiC, GaN) and more. Our
reticle systems support quality control during the manufacturing of optical and EUV reticle types. We also make
products that support chemical/materials quality control, and process tool development and qualification. Our
products and services for chip, wafer, reticle, packaging, solar, hard disk drive, original equipment manufacturer
(“OEM”) and chemical/materials manufacturing are designed to provide comprehensive solutions that help our
customers accelerate development and production ramp cycles, achieve higher and more stable product yields
and improve their overall profitability. The Semiconductor Process Control segment offers a variety of solutions
and products, including:
Segment
Technologies
Products
Semiconductor Process Control
Chip Manufacturing: Defect Inspection and
Review
Inspection and review tools are used to identify,
locate, characterize, review, and analyze
defects on various surfaces of patterned and
unpatterned wafers.
39xx Series, 29xx Series, C30x Series,
eSL10™, Voyager® Series, 8 Series, Puma™
Series, CIRCL™Series, Surfscan® Series,
Surfscan® SP Ax Series, eDR® Series.
Chip Manufacturing: Metrology
Metrology systems are used to measure pattern
dimensions, film thickness(es), film stress,
layer-to-layer alignment, pattern placement,
surface topography and electro-optical
properties for wafers.
Archer™Series, ATL™Series, Axion® Series,
SpectraShape™Series, SpectraFilm™Series,
Aleris® Series, PWG™Series, Therma-Probe®
Series, OmniMap® RS-xxx Series,
MicroSense® product family, CAPRES product
family.
Chip Manufacturing: Chemistry Process
Control
Chemical process control equipment qualifies
incoming supplies, manages tool inputs, adjusts
chamber/bath conditions and monitors process
waste.
QualiSurf® Series, Quali-Line Quanta® Series,
Quali-Line® Prima® Series, QualiLab Elite®
Series.
Chip Manufacturing: In Situ Process
Management
Wired and wireless sensor wafers and reticles
provide comprehensive data used to visualize,
diagnose and control process conditions in the
equipment used to manufacture chips and
reticles. Additional wafer diagnostic solutions
help troubleshoot and monitor materials
handling to help detect and predict mechanical
behaviors that may cause wafer damage.
SensArray® product family.
5

Segment
Technologies
Products
Wafer Manufacturing: Defect Inspection and
Review, Metrology, and In Situ Process
Management
Wafer defect inspection, review and metrology
systems are used to help wafer/substrate
manufacturers manage quality throughout the
wafer fabrication process by detecting defects,
characterizing surface quality and assessing
wafer geometry.
Surfscan® Series, Surfscan® SP Ax Series,
eDR® Series, WaferSight™Series,
MicroSense® wafer geometry product family,
SensArray® product family, Candela® Series,
QualiSurf® Series.
Reticle Manufacturing: Defect Inspection,
Metrology and In Situ Process Management
Reticle inspection and metrology systems help
reticle blank, patterned optical reticle, patterned
EUV reticle, and chip manufacturers identify
defects, pattern placement errors, and process
issues during reticle manufacturing. In addition
to reducing yield risk during production, these
systems also support outgoing and incoming
reticle quality control.
Teron™SL6xx Series, Teron™6xx Series,
TeraScan™5xx Series, X5.x™Series,
FlashScan® Series, LMS IPRO Series,
SensArray® product family.
Packaging Manufacturing: Wafer Inspection
and Metrology, Chemistry Process Control, In
Situ Process Management
Wafer inspection and metrology systems for
advanced wafer-level packaging help packaging
manufacturers detect, resolve and monitor
excursions to provide greater control of quality
for improved device performance. Chemistry
process monitoring systems analyze and
monitor wet chemicals used in wafer-level
packaging (WLP), panel-level packaging
(PLP), and IC substrates.
Kronos™Series, CIRCL™-AP, irArcher®
Series, PWG5™with XT Option, QualiSurf®
Series, Quali-Fill® Libra® Series, QualiLab
Elite® Series, Quali-Dose®, SensArray®
product family.
Semiconductor Software Solutions
Software solutions centralize and analyze the
data produced by inspection, metrology and
process systems for chip, wafer, reticle and
packaging manufacturing. These solutions
provide run-time process control, defect
excursion identification, process corrections
and defect classification to accelerate yield
learning rates and reduce production risk.
Patterning simulation software allows
researchers to evaluate advanced patterning
technologies, such as EUV lithography and
multiple patterning techniques.
Klarity® product family, 5D Analyzer®,
OVALiS, aiSIGHT™, Anchor product family,
RDC, FabVision® Series, ProDATA™,
PROLITH™, I-PAT®, SPOT®.
KLA Pro Systems: Certified and
Remanufactured Products
Inspection and metrology systems support
manufacture of larger design node chips and
≤200mm wafer manufacturing.
Surfscan® Series, 2835, 2367, ASET-F5x Pro,
Archer™Series.
6

Segment
Technologies
Products
General Purpose/Lab Application
Specialty Semiconductor Manufacturing,
Benchtop Metrology, Surface Characterization,
Material Strength Characterization and
Electrical Property Measurement.
Candela® Series, HRP® -260, Zeta™Series,
Tencor® P Series, Nano Indenter® Series,
Alpha-Step® Series, Filmetrics® F Series,
Filmetrics® R Series, iMicro, iNano®,
Filmetrics® Profilm3D® Series, T150 UTM,
NanoFlip, InSEM® HT.
The Specialty Semiconductor Process 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
MEMS, RF communication chips and power semiconductors for automotive and industrial applications. The
Specialty Semiconductor Process segment offers a variety of solutions and products, including:
Segment
Technologies
Products
Specialty Semiconductor Process
Specialty Semiconductor Manufacturing
Etch, plasma dicing, deposition and other
wafer processing technologies and solutions
for the semiconductor and microelectronics
industry.
SPTS Omega® Series, SPTS Sigma® Series,
SPTS Delta™Series, Primaxx® Series, Xactix®
Series, SPTS Mosaic™Series, MVD Series.
The PCB and Component Inspection segment enables electronic device manufacturers to inspect, test and
measure PCBs, IC substrates, flat panel displays (“FPD”) and packaged 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. The PCB and Component Inspection segment offers a variety of solutions and products,
including:
Segment
Technologies
Products
PCB and Component Inspection
PCB
Direct imaging, inspection, optical shaping,
inkjet and additive printing, UV laser drilling
as well as computer-aided manufacturing and
engineering solutions for the PCB and IC
substrate market.
Orbotech Corus™Series, Orbotech Infinitum™
Series, Orbotech Nuvogo™Fine/ Nuvogo™
Series, Orbotech Diamond™Series, Orbotech
Ultra Dimension™Series, Orbotech Ultra
Fusion™/ Fusion™Series, Orbotech
Discovery™II Series, Orbotech Precise™
Series, Orbotech Ultra PerFix™/ PerFix™
Series, Orbotech Neos™Series, Orbotech
Sprint™Series, Orbotech Magna™Series,
Orbotech Jetext™Series, Orbotech Apeiron™
Series, Frontline product family.
Display
Inspection and electrical testing systems to
identify and classify defects, as well as systems
to repair defects for the display market.
Castor™, Orbotech Sirius™Series, Orbotech
Flare™Series, Orbotech Array Checker™
Series, Orbotech Ignite™Series, Orbotech
Prism™Series, Orbotech OASIS™.
Component
Inspection and metrology systems for quality
control and yield improvement in advanced
and traditional semiconductor packaging
markets.
ICOS™F26x, ICOS™Tx Series, Zeta™-5xx/
6xx.
7

Services
Our service programs enable our customers in all business sectors to maintain the high performance and
productivity of our products through a flexible array of service options. Whether a manufacturing site is
producing wafers, reticles, ICs, FPD or PCB products, our highly trained service teams collaborate with
customers to determine the best products and services to meet technology and business requirements.
Backlog
Our backlog, which represents our remaining performance obligation (“RPO”) to deliver products and
services, totaled $9.83 billion and $11.40 billion as of June 30, 2024 and 2023, respectively, and primarily
consists of sales orders where written customer requests have been received. We expect to recognize
approximately 59% to 64% of these performance obligations as revenue in the next 12 months, 29% to 34% in
the subsequent 12 months and the remainder thereafter, but this estimate is subject to constant change. The
timing of revenue recognition of our RPO is evaluated quarterly and is largely driven by multiple variables, many
of which are beyond our control, such as: the readiness of customer fabs, end market needs for capacity, changes
in the estimated versus actual start time of customers’ projects, timing of delivery and installation dates, supply
chain constraints and changes in regulations. The estimated amount and timing of revenue recognition are also
dependent on the following:
Macro-economic factors and the effect on customer behavior: Our customers are currently purchasing
equipment from us with lead times that are longer than our historical experience. As customers try to balance the
evolution of their technological, production or market needs with the timing and content of orders placed with us,
there is increased risk of order modifications, pushouts or cancellations.
Export restrictions: Commerce and BIS have mandated the following BIS Rules in October 2022 and
October 2023:
•
Requiring an export license from BIS for sale of anything to an entity on the U.S. Entity List of China-
based entities, which is a list of parties that are generally ineligible to receive U.S.-regulated products
and services without prior licensing, as well as for the use of certain semiconductor capital equipment
based on U.S. technology to manufacture products connected to certain entities on the U.S. Entity List.
•
Requiring an export license for sales to China-based customers that are military end users or engaged
in military end uses, and for certain U.S. semiconductor and high-performance computing technology
(including wafer fab equipment), for the use of such technology for certain end uses in China, and for
the provision of support by U.S. persons to certain advanced IC fabs located in China.
We are taking appropriate measures to comply with these regulations and are applying for export licenses,
when required, although there can be no assurance that export licenses will be granted. The possible negative
effects on our future business of export licenses not being granted could be material and could result in a
substantial reduction to our RPO or require us to return substantial deposits received from customers in China for
purchase orders previously placed.
Manufacturing, Raw Materials and Supplies
We perform system design, assembly and testing in-house and utilize an outsourcing strategy to
manufacture components and major subassemblies. Our in-house manufacturing activities consist primarily of
assembling and testing components and subassemblies acquired from third-party vendors and integrating those
subassemblies into our finished products. Our principal manufacturing activities occur in the U.S., Singapore,
Israel, Germany, United Kingdom, Italy and China. Our supply chain strategy incorporates considerations for
ethical labor practices, responsible minerals sourcing, and Responsible Business Alliance and SEMI guidelines,
and there are increasing regulatory expectations on the environmental, social and/or geographic provenance of
materials or components that may at times require us to incorporate further such considerations to our supply
chain strategy.
8

Some critical parts, components and subassemblies (collectively, “parts”) that we use are designed by us
and manufactured by suppliers in accordance with our specifications, while other parts are standard commercial
products. We use numerous vendors to supply parts and raw materials to manufacture and support our products.
Although we make reasonable efforts to ensure that these parts and raw materials are available from multiple
suppliers, this is not always possible. Certain parts and raw materials included in our systems may be obtained
only from a single supplier or a limited group of suppliers. Through our business interruption planning, we
endeavor to minimize the risk of production interruption by, among other things, monitoring the financial
condition of suppliers of key parts and raw materials, providing financial support and incentives to encourage
vendors to increase capacity when required, identifying (but not necessarily qualifying) possible alternative
suppliers of such parts and materials, and ensuring adequate inventories of key parts and raw materials are
available to maintain manufacturing schedules.
Although we seek to reduce our dependence on sole and limited source suppliers, in some cases the partial
or complete loss of certain of these sources, or disruptions within our suppliers’ often complex supply chains,
could disrupt scheduled deliveries to customers, damage customer relationships and have a material adverse
effect on our results of operations.
Competition
The worldwide market for technologically advanced process control, process-enabling and yield
management solutions used by semiconductor and electronics manufacturers is highly competitive, with
important competitive factors including system performance, ease of use, reliability, technical service and
support, and overall cost of ownership. However, we believe that, while the competitive factors listed are
important, the customers’ overriding requirement is for systems that easily and effectively incorporate automated
capabilities into their existing development and manufacturing processes to enhance productivity, improve yields
and reduce waste. To remain competitive, we use significant financial resources to offer a broad range of
products, to maintain customer service and support centers worldwide, and to invest in product R&D. In each of
our product markets, we have many competitors, including companies such as Applied Materials, Inc., ASML
Holding N.V., Hitachi High-Technologies Corporation, Onto Innovation, Inc. and Lasertec, Inc., some of which
may have greater financial, research, engineering, manufacturing and marketing resources than we have. We
expect our competitors to continue to improve the design and performance of their current products and to
introduce new products with improved pricing and performance characteristics. We may also face future
competition from new market entrants overseas or domestically. We maintain our market position by building
long-term relationships with our customers to meet their dynamic needs, as well as anticipating future market
demands and enabling our customers to accelerate adoption and production of new technologies, as discussed
further in the “Industry” section of this Item 1. Management believes that we are well positioned in the market
with our industry-leading portfolio of products and services. However, any loss of competitive position could
negatively impact our prices, customer orders, revenue, gross margin and market share. Should this occur, it
could negatively impact our operating results and financial condition.
Acquisitions
We continuously evaluate strategic acquisitions and alliances to expand our technologies, product offerings
and distribution capabilities. Acquisitions involve numerous risks, including management issues and costs in
connection with integration of the operations, technologies and products of the acquired companies, and the
potential loss of key employees of the acquired companies. The inability to manage these risks effectively could
negatively impact our operating results and financial condition.
Patents and Other Proprietary Rights
We protect our proprietary technology through reliance on a variety of IP laws, including patent, copyright
and trade secret. We have filed and obtained a number of patents in the U.S. and abroad and intend to continue
pursuing the legal protection of our technology through IP laws. In addition, from time to time we acquire license
9

rights under U.S. and foreign patents and other proprietary rights of third parties, and we attempt to protect our
trade secrets and other proprietary information through confidentiality and other agreements with our customers,
suppliers, employees and consultants, and through other security measures.
Although we consider patents and other IP significant to our business, no single patent, copyright or trade
secret is essential to us as a whole or to any of our business segments.
No assurance can be given that patents will be issued on any of our applications, that license assignments
will be made as anticipated, or that our patents, licenses or other proprietary rights will be sufficiently broad to
protect our technology. No assurance can be given that any patents issued to or licensed by us will not be
challenged, invalidated or circumvented or that the rights granted thereunder will provide us with a competitive
advantage. In addition, there can be no assurance that we will be able to protect our technology or that
competitors will not be able to independently develop similar or functionally competitive technology.
Government Regulations
We are subject to a variety of federal, state and local governmental laws and regulations worldwide,
including, but not limited to, laws, rules and regulations related to anti-corruption, antitrust, data privacy
requirements, employment, environmental, foreign exchange controls, health and safety requirements,
immigration, import/export requirements, IP and tax. Any failure to comply with laws and regulations may
subject us to a range of consequences including fines, suspension of certain of our business activities, limitations
on our ability to sell our products, obligations to remediate in the case of environmental contamination, and
criminal and civil liabilities or other sanctions. Changes in environmental laws and regulations could require us
to invest in potentially costly pollution control equipment, alter our manufacturing processes or use substitute
materials. Our failure to comply with laws, rules and regulations could subject us to future liabilities.
For information about risks related to government regulations, see “Backlog — Export restrictions” above
and Item 1A “Risk Factors” in this Annual Report on Form 10-K.
Environmental, Social and Governance Initiatives
KLA strives to proactively manage and address the ESG topics most important to our stakeholders. Guided
by our values, we have integrated ESG considerations into many of our business practices and policies, and work
together with our customers, peers, partners and suppliers to promote improvement in human rights, labor,
environment, health and safety, anti-corruption, ethics and management system standards within our operations
and our supply chain. Our ESG initiatives are another way KLA seeks to deliver long-term value for our
stockholders and exemplify our core values. For more information on our core values, refer to the “Human
Capital Management” section of this Item 1.
We have an ESG Steering Committee composed of global leaders within the organization that implements
and executes our ESG strategy under the oversight of the KLA executive team and the Board of Directors.
Training and awareness are central to the strategy’s success. As part of its responsibilities, the steering committee
partners with policy owners to promote KLA’s ESG goals within all KLA policies, such as our Standards of
Business Conduct. Our ESG strategy is organized into four pillars based on the areas where we believe we have
the greatest opportunities to make positive impacts:
Advancing Innovation: As a technological innovator, we seek to deliver solutions for our customers to
increase production yields, reduce waste, and meet their own profitability and sustainability goals. Refer to
“Research and Development” and “Patents and Other Proprietary Rights” of this Item 1 for more information on
our efforts for advancing innovation. In addition to legal protections as already discussed above, we also work to
protect our operations by significantly focusing on cybersecurity. We have developed and implemented a
cybersecurity risk management process intended to protect the confidentiality, integrity and availability of our
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critical systems and information. For more information on our cybersecurity efforts, initiatives and governance,
refer to Item 1C “Cybersecurity” in this Annual Report on Form 10-K.
Advancing Stewardship: We work across our global footprint to shape a more sustainable future. As part of
our drive to be better, we have established environmental sustainability goals. Our goals include using 100%
renewable electricity across our global operations by 2030, reducing our Scope 1 and 2 emissions from our 2021
baseline by 50% by 2030 and achieving net zero Scope 1 and 2 emissions by 2050. In 2023, we announced that
we are submitting our climate goals, including a goal for Scope 3 emissions reductions, to the Science Based
Target Initiative (SBTi) for validation, which was recently received. Our company-wide Environmental
Management Policy establishes a commitment to complying with applicable environmental laws and standards
across company locations globally. In 2023, we established a global waste and water policy to guide our efforts
in these spaces as well. KLA is committed to protecting and respecting our environment and energy resources
throughout our operations for future generations, and follows the recommendations of the Task Force on
Climate-Related Financial Disclosures, transparently reporting climate-related governance, strategy, risk
management, metrics and targets to our stakeholders. We continue to monitor various climate-related risks even
if some are not currently expected to have a material impact on KLA’s business or financial condition for
assessed time horizons.
Advancing Opportunity: Our goal is to work together to harness the untapped human potential of a more just
and inclusive world. Refer to the “Human Capital Management” and “Manufacturing, Raw Materials and
Supplies” sections of this Item 1 for information on our inclusion, human rights, health and safety initiatives.
Advancing Leadership: We aim to empower today’s as well as tomorrow’s leaders by infusing our values
into everything we do. Refer to the “Human Capital Management” and “Government Regulations” sections of
this Item 1 for examples of our employee-centric culture and our commitment to operating our business
responsibly in compliance with regulations and best practices worldwide.
For more information on ESG, see KLA’s 2022 Global Impact Report on our website; however, this citation
is provided solely for informational purposes and the content of KLA’s 2022 Global Impact Report is expressly
not incorporated by reference into this filing. We include details in our 2022 Global Impact Report that are not
included in this Form 10-K because we seek to be responsive to various areas of interest of our stakeholders;
however, such information generally does not, and is not expected to, have a material effect on our capital
expenditures, financial condition, results of operations or competitive position. In addition, no assurance can be
given that our ESG initiatives will have the intended results or be able to be completed as currently envisioned,
whether due to cost, feasibility or other constraints. Our 2023 Global Impact Report is expected to be published
in the first quarter of fiscal 2025.
Human Capital Management
At KLA, our people drive our success, and we celebrate the diversity of backgrounds and experiences that
all employees bring to the table. We recognize that our competitive advantage is our people and the technology
they develop. We believe it is critical to attract, motivate and retain a dedicated, talented, and innovative team of
employees who exhibit our core values. As talent and retention continue to be a challenging issue for many
companies, we strive to work proactively to address these concerns. We also aim to support employees’ personal
and professional growth. Our talent development programs focus on developing the whole person through
comprehensive training offerings, employee engagement programs and health and wellness activities. We
embrace our responsibility to lead through exceptional training programs and professional development and
through enabling our employees to be safe, secure, healthy and feel included and empowered to bring their whole
self to work.
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Our Core Values
At KLA, our core values – demonstrating perseverance; striving to be better; being honest, forthright, and
consistent; building high-performing teams; and being indispensable to our customers – serve as a foundation for
our relationships with employees, customers, suppliers, and other stakeholders and reflect a commitment to
ethical business practices and corporate citizenship in the places where we do business.
Our Workforce
As of June 30, 2024, we had approximately 15,000 regular full-time employees and approximately 230 part-
time and temporary employees in facilities located in 18 regions. Approximately 31% of our regular full-time
employees are located in the U.S., 21% in Europe and Middle Eastern countries and 48% in Asia Pacific and
Japan, with approximately 20% engaged in manufacturing, 27% in R&D, 28% in customer service, 5% in sales
and marketing and 20% in other roles. Except for our employees in Belgium (where a trade union delegation has
been recognized) and our employees in the German operations of our MIE and Laser Imaging Systems business
units (who are represented by employee works councils), none of our employees are represented by a labor
union. We have not experienced work stoppages and believe that our employee relations are good.
In fiscal year 2024, our overall employee voluntary turnover rate was 3.7%.
Compensation and Benefits
At KLA, our talent is the heartbeat of our organization. We value our employees as individuals and aim to
recognize and support their needs so they can bring their best selves to work every day. We engage with our
employees about what they need to be successful in and out of the workplace.
We seek to achieve our objective of attracting, retaining, and motivating our workforce by linking a
significant portion of compensation to Company and business unit performance. We seek competitiveness and
fairness in total compensation relative to peer comparisons and internal equity. We offer a long-term benefit
program to a broad base of employees to share in our success through restricted stock units (“RSU”) and an
Employee Stock Purchase Plan (“ESPP”). We also provide incentive bonus or profit sharing to employees.
In addition to providing our employees with competitive compensation packages, we have built out a robust
suite of benefits to help foster the well-being of all employees. Our benefits are designed to meet the needs of
employees and their families. Benefits are inclusive of leave programs (e.g., paid time off, parental leave and
bereavement leave), health coverage, contributions to retirement savings and access to employee assistance and
work-life programs.
We offer programs and opportunities to employees to help improve their health and well-being. KLA’s
virtual and in-person well-being course offerings span physical, financial, and mental health. We offer in-person
and virtual workout classes. We hold online fitness and well-being classes that include body-tune-up, yoga and
nutrition as well as the maintenance of life balance and the importance of sleep, hydration, and relaxation.
Throughout our sites, we host a series of events and challenges, both virtually and in person, to encourage our
employees to stay active. We offer employees the opportunity to pursue coaching and therapy sessions through
our Employee Assistance Program, and we host seminars on financial literacy and planning and other wellness
topics. We expanded hybrid work options and telecommuting. We support working parents faced with challenges
balancing working from home and caring for their families’ needs. Our well-being programs help employees
manage and improve their physical, financial, and mental health and build healthy lifestyle habits in engaging
ways.
A Culture of Inclusion
The journey to becoming a truly inclusive and diverse global organization takes time, and we are deeply
committed to this path. At KLA, Inclusion & Diversity (“I&D”) is a shared aspiration, commitment and
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responsibility, as well as a direct expression of our core values. In our drive to be better, we seek to create an
increasingly diverse workforce. We do this because KLA, like society, benefits when we work with diverse
teams to harness varying perspectives and talents in the furtherance of humanity.
KLA is an equal opportunity employer and we follow affirmative action requirements applicable to federal
contractors. We continue to look for ways to recruit, develop and retain a more diverse workforce with a focus on
groups underrepresented in the technology field. We continue to provide training with a focus on inclusion.
Managers and employees are introduced to models of intentional inclusion that emphasize key leadership
qualities. We continued our campaign on Inclusion For All through fiscal 2024. This campaign engages all
employees in KLA’s I&D efforts by providing tips on everyday actions that can have large impacts. This
campaign supplements the formal training we offer around I&D and the work of our Employee Resource Groups
(“ERG”).
KLA currently has four ERGs with chapters around the world to engage employees in service of our I&D
and business goals, fostering an inclusive environment. WISE (Women in STEM, Empowered), is an
employee-led group that includes people of all genders, who have joined to support the professional growth of
women at KLA. WISE has chapters in the U.S., Israel, Europe and India with more chapters forming in other
regions. Konexión is our Hispanic/Latinx ERG where employees can interact and innovate through cultural
sharing and understanding of the Hispanic/Latinx community. BELIEVE (Black Employees Leading in
Inclusion, Excellence, Values and Education) supports the recruitment and advancement of Black talent while
also promoting cultural awareness, understanding and allyship of the Black community. Both Konexión and
BELIEVE have chapters throughout the U.S. Our fourth ERG is PRISM (where Pride, Respect, Inclusion and
Solidarity Meet), and was started as a global ERG. PRISM’s mission is to amplify KLA’s commitment to
equality and inclusion by encouraging a safe and open working environment for LGBTQ+ employees and allies.
Celebrating our diversity through formal observations of cultural holidays is another way we advance
inclusion at KLA. These celebrations are an important way for KLA employees to learn about different
traditions, cultural norms and our own employees’ experiences with different cultures.
As of June 30, 2024, our global workforce was 81% male and 19% female, and 9% of our workforce in the
U.S. was composed of Black or African American, and/or Hispanic/Latinx employees. At the end of fiscal 2024,
30% of our Board of Directors were female and 20% of our Board of Directors were underrepresented minorities
under the listing rules of the NASDAQ Stock Market.
Learning and Development
We offer our employees opportunities to advance their careers at KLA. We emphasize stretch assignments,
on-the-job development, as well as classroom and online training. Our employees have access to a wide range of
programs, workshops, classes and resources to help them excel in their careers and share what they know with
others. Our performance management process includes performance feedback against goals, a review of key
competencies that are needed to be successful at KLA and career development discussions.
We emphasize frequent 1-on-1 meetings between managers and employees and regular coaching and
feedback sessions. Through coaching and mentorship programs, our employees are inspired to push the
boundaries of their comfort zones and seek creative solutions.
If our employees pursue external learning opportunities and education, we support that too, through tuition
reimbursement. Through our partnerships with Stanford University and the University of Michigan, employees
can pursue advanced degrees in engineering that are customized for KLA, and the skills and competencies
required to support our customers. We also offer a competitive student loan reimbursement program in the U.S.
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We have a robust succession planning process especially targeted at director level positions and above.
Additionally, our Values in Action training, which was also targeted at the director level and above, provided
further guidance on our values, business ethics and inclusion and diversity.
Most of our employees are also required to take annual training courses and regular certifications related to
their work, including those pertaining to the environment, data privacy and workplace health and safety.
Employee Engagement
We conduct regular employee surveys to check in with our global workforce and obtain input on several
topics. The feedback we receive from these surveys helps us assess employee sentiment, identify areas of
improvement and guides our decision-making as it relates to people management. In addition, our executives
conduct regular quarterly webcasts that enable all employees to engage with senior leaders and ask questions in
an open Q&A session.
As we emerged from the global pandemic, many employees continued to seek connections. Through our
Employee Engagement Survey, we continued to identify the top priorities in a post-pandemic world. We created
action plans and involved our workforce in developing potential solutions to address these top concerns. We
created initiatives including global manager communications, individual and team coaching and a training course
titled “Engaging with Engagement.”
Employee Health and Safety
The health and safety of our employees is paramount to our success. We are committed to providing a safe
and healthy workplace for all employees. We accomplish this through strict compliance with applicable laws and
regulations regarding workplace safety, including recognition and control of workplace hazards, tracking injury
and illness rates, utilizing a global travel health program and maintaining detailed emergency and disaster
recovery plans.
A legacy of the COVID-19 pandemic has been the development and implementation of a global approach to
Employee Health and Safety (“EHS”) with strong collaboration across the regions. This has resulted in the
adoption of best practices for each of our sites, improving business resiliency and the health and safety of our
employees worldwide. We continue to monitor developments in our communities to help us be able to adjust
practices and controls as needed.
Our goal is always zero accidents across our facilities, and to achieve that, we conduct proactive risk
assessments and audits to constantly improve our efforts. We implemented a global standard for our incidents to
ensure consistency across our regions, and continually outperform industry averages for injury rates.
We made a commitment to globalize our ISO 45001 (the internationally recognized standard for
Occupational Health & Safety (“OHS”) Management Systems) certification and expand our ISO 14001 (the
internationally recognized standard for Environmental Management Systems (“EMS”)) certification beyond our
larger sites. In 2023, we continued to make progress expanding our ISO 14001 and ISO 45001 programs across
our main production and R&D facilities. As of year-end 2023, our sites in Singapore; Newport, Wales; Milpitas,
California; and Migdal Ha’emek, Israel are certified to ISO 14001 and our Wales site is also certified to ISO
45001.
We are committed to reducing safety risks across business units and at corporate sites worldwide. We
revised our approach to risk assessments to “risk rank” our own operations. We are utilizing this system not only
to measure our own performance, but also to help improve the performance of our supply chain and customers.
All new hires are required to complete a health and safety training program. In addition, our service technicians
are required to achieve and maintain role-specific safety training certifications. Our excellent safety record,
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which is less than half of the semiconductor industry average, is a tribute to our employees’ efforts, the breadth
and depth of our training programs and our dedication to safety policy management.
For more information on Human Capital, see KLA’s 2022 Global Impact Report on our website; however,
this citation is provided solely for informational purposes, and the content of KLA’s 2022 Global Impact Report
is expressly not incorporated by reference into this filing.
Glossary
This section provides definitions for certain industry and technical terms commonly used in our business,
that are used elsewhere in this Annual Report on Form 10-K:
compound semiconductor
A semiconductor formed from chemical elements in two or more different groups
in the periodic table (ex. III-V). The composition of these materials influences
their properties, resulting in different performance than silicon when used in
electronics. Primary examples include SiC, GaN, gallium arsenide (GaAs), and
indium phosphide (InP).
design rules
Rules that set forth the allowable dimensions of particular features used in the
design and layout of ICs.
die
A single semiconductor chip on a wafer.
epitaxial silicon (“epi”)
A substrate technology based on growing a crystalline silicon layer on top of a
silicon wafer. The added layer, where the structure and orientation are matched to
those of the silicon wafer, includes dopants (impurities) to imbue the substrate
with special electronic properties.
etching
A process step in which layers of material are removed from a semiconductor
wafer in a specific pattern.
excursion
For a manufacturing step or process, a deviation from normal operating
conditions that can lead to decreased performance or yield of the final product.
fab
The main manufacturing facility for processing semiconductor wafers.
flat panel display (“FPD”)
A display appliance that uses a thin panel design. Also includes flexible displays.
geometry
The surface shape of an object, such as the 3D shape of a semiconductor device
structure or the shape of base or patterned wafers.
integrated circuit substrate
(“IC substrate”)
A base board used for providing support inside a package and connecting the chip
to the printed circuit board.
in situ
Of processing steps or tests, done without moving the wafer. Latin for “in original
position.”
ingot
A piece of pure metal intended to be processed. In semiconductors, a silicon ingot
is typically created in such a way that slicing cross-sections creates bare wafers.
interconnect
A highly conductive material, usually copper or aluminum, which carries
electrical signals to different parts of a die.
internet of things (“IoT”)
A network of devices with the ability to transfer data without human interaction.
light emitting diode
(“LED”)
A semiconductor device that releases electromagnetic radiation (light) when
current flows through it. The bandgap of the semiconductor material determines
the wavelength (color) of the light emitted.
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lithography
A process in which a masked pattern is projected onto a photosensitive coating
that covers a substrate.
metrology
The science of measurement to determine dimensions, quantity or capacity. In the
semiconductor industry, typical measurements include critical dimension, overlay
and film thickness.
microelectromechanical
systems (“MEMS”)
Micron-sized mechanical devices powered by electricity, created using processes
similar to those used to manufacture IC devices.
micron
A metric unit of linear measure that equals 1/1,000,000 meter (10-6m), or 10,000
angstroms (the diameter of a human hair is approximately 75 microns).
patterned
For semiconductor manufacturing and industries using similar processing
technologies, substrates that have electronic circuits (transistors, interconnects,
etc.) fabricated on the surface.
photovoltaic
The property of semiconductor devices to create electric current through exposure
to sunlight.
printed circuit board
(“PCB”)
A board used to mechanically support and electrically connect various electrical
and mechanical components.
process control
The ability to maintain specifications of products and equipment during
manufacturing operations.
reticle or mask
A very flat glass plate that contains the patterns to be reproduced on a wafer.
silicon on insulator
(“SOI”)
A substrate technology comprised of a thin top silicon layer separated from the
silicon substrate by a thin insulating layer of glass or silicon dioxide, used to
improve performance and reduce the power consumption of IC circuits.
substrate
A wafer or other material on which layers of various materials are added during
the process of manufacturing semiconductor devices (circuits), FPDs or PCBs.
unpatterned
For semiconductor manufacturing and industries using similar processing
technologies, substrates that do not have electronic circuits (transistors,
interconnects, etc.) fabricated on the surface. These can include bare silicon
wafers, other bare substrates or substrates on which blanket films have been
deposited.
yield management
The ability of a semiconductor manufacturer to oversee, manage and control its
manufacturing processes so as to maximize the percentage of manufactured
wafers or die that conform to pre-determined specifications.
The definitions above are from internal sources, as well as online semiconductor dictionaries such as
https://www.semiconductors.org/semiconductors-101/frequently asked questions/. Such citation is for
informational purposes only and the content referenced is not otherwise incorporated by reference herein.
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ITEM 1A. RISK FACTORS
A description of factors that could materially affect our business, financial condition or operating results is
provided below.
Risk Factors Summary
The following summarizes the most material risks that make an investment in our securities risky or
speculative. If any of the following risks occur or persist, our business, financial condition and results of
operations could be materially harmed and the price of our common stock could significantly decline.
Commercial, Operational, Financial and Regulatory Risks
•
Our vulnerability to a weakening in the condition of the financial markets and the global economy;
•
Risks related to our international operations, such as tariffs or similar trade impairments, and longer
payment cycles or collection difficulties associated with international sales;
•
Laws, rules, regulations or other orders that may limit our ability to sell our products or provide service
on products previously sold to certain customers;
•
IP disputes can be expensive and could result in an inability to sell our products in certain jurisdictions;
•
Increasing attention to ESG matters, including any targets or other ESG initiatives, could result in
additional costs or risks or adversely impact our business;
•
We may be unable to attract, onboard and retain key personnel;
•
Reliance on third-party service providers could result in disruptions if such third parties cannot perform
services for us in a timely manner;
•
Cybersecurity incidents could result in the loss of valuable information or assets or subject us to costly
disruption, remediation, regulatory investigations, litigation and reputational damage;
•
We may face disruptions if we cannot access critical information in a timely manner due to system
failures;
•
We may not find suitable acquisition candidates or fail to successfully integrate our acquisitions;
•
Natural disasters, such as earthquakes, health crises such as the COVID-19 pandemic, acts of terrorism
or war or other catastrophic events, and the lack of insurance thereof, could significantly disrupt our
operations, including affecting the global supply chain, for lengthy periods of time;
•
We are exposed to fluctuations in foreign currency exchange rates, interest rates and the market values
of our portfolio investments;
•
We are subject to tax and regulatory compliance audits;
•
Economic, political or other conditions in the jurisdictions where we earn profits can impact the tax
laws and taxes we pay in those jurisdictions, subsequently impacting our effective tax rate, cash flows
and results of operations;
•
Increased compliance costs with federal securities laws, rules, and regulations, as well as NASDAQ
requirements; and
•
Changes in accounting pronouncements and laws could have unforeseen effects.
Industry Risks
•
We may not be able to keep pace with trends and technological changes in the industries in which we
operate;
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•
We have a highly concentrated customer base;
•
Prevailing local and global economic conditions may negatively affect the purchasing decisions of our
customers; and
•
We are exposed to risks related to the use of AI by us and our competitors.
Business Model and Capital Structure Risks
•
We may not be able to maintain our technology advantage or protect our proprietary rights;
•
We may not be able to compete with new products introduced by our competitors;
•
We may not receive components necessary to build our products in a timely manner;
•
We may fail to operate our business in a manner consistent with our business plan;
•
We may fail to comply with the covenants in our Revolving Credit Facility (defined below) and Senior
Notes (defined below), which could impair our ability to borrow needed funds, or require us to repay
debt sooner than we planned;
•
We may not have sufficient financial resources to repay our indebtedness when it becomes due, and our
leveraged capital structure may divert resources from operations and other corporate uses;
•
We may not be able to declare cash dividends at all or in any particular amounts;
•
Risks related to our commercial terms and conditions, including our indemnification of third parties, as
well as the performance of our products;
•
Our government funding for R&D is subject to termination, audit and any further penalties;
•
We may incur significant restructuring charges or other asset impairment charges or inventory write-
offs;
•
We are subject to risks related to receivables factoring arrangements, and compliance risk of certain
settlement agreements with the government; and
•
Our Amended and Restated Bylaws (“Bylaws”) designate the Court of Chancery of the State of
Delaware as the sole forum for certain actions, which may discourage claims against the Company.
For a more complete discussion of the material risks facing our business, see below.
Commercial, Operational, Financial and Regulatory Risks
We are exposed to risks associated with a weakening in the condition of the financial markets and the
global economy.
Demand for our products is ultimately driven by the global demand for electronic devices by consumers and
businesses. Economic uncertainty frequently leads to reduced consumer and business spending, and can cause
our customers to decrease, cancel or delay their equipment and service orders. The tightening of credit markets,
rising interest rates and concerns regarding the availability of credit can make it more difficult for our customers
to raise capital, whether debt or equity, to finance their purchases of capital equipment, including the products we
sell. Reduced demand, combined with delays in our customers’ ability to obtain financing (or the unavailability
of such financing), has, at times in the past, adversely affected our product and service sales and revenues and,
therefore, has harmed our business and operating results, and our operating results and financial condition may
again be adversely impacted if economic conditions decline from their current levels.
In addition, a decline in the condition of the global financial markets could adversely impact the market values
or liquidity of our investments. Our investment portfolio includes corporate and government securities, money
market funds and other types of debt and equity investments. Although we believe our portfolio continues to be
comprised of sound investments due to the quality and (where applicable) credit ratings of such investments, a
18

decline in the capital and financial markets or rising interest rates would adversely impact the market value of our
investments and their liquidity. If the market value of such investments were to decline, or if we were to have to sell
some of our investments under illiquid market conditions, we may be required to recognize an impairment charge
on such investments or a loss on such sales, either of which could have an adverse effect on our financial condition
and operating results.
If we are unable to timely and appropriately adapt to changes resulting from difficult macroeconomic
conditions, our business, financial condition or results of operations may be materially and adversely affected.
A majority of our annual revenues are derived from outside the U.S., and we maintain significant
operations outside the U.S. We are exposed to numerous risks as a result of the international nature of our
business and operations. We expect these conditions to continue in the foreseeable future.
Managing global operations and sites located throughout the world presents a number of challenges,
including, but not limited to:
•
Global trade issues and changes in and uncertainties with respect to trade policies, including the ability
to obtain required import and export licenses, trade sanctions, tariffs and international trade disputes;
•
Political and social attitudes, laws, rules, regulations and policies within countries that favor domestic
companies over non-domestic companies, including customer- or government-supported efforts to
promote the development and growth of local competitors;
•
Ineffective or inadequate legal protection of IP rights in certain countries;
•
Managing cultural diversity and organizational alignment;
•
Exposure to the unique characteristics of each region in the global market, which can cause capital
equipment investment patterns to vary significantly from period to period;
•
Periodic local or international economic downturns;
•
Potential adverse tax consequences, including withholding tax rules that may limit the repatriation of
our earnings, and higher effective income tax rates in foreign countries where we do business;
•
Compliance with customs regulations in the countries in which we do business;
•
Existing and potentially new tariffs or other trade restrictions and barriers (including those applied to
our products, spare parts and services, or to parts and supplies that we purchase);
•
Political instability, geopolitical tensions, natural disasters, legal or regulatory changes, acts of war
such as the wars between Russia and Ukraine or Israel and Hamas and further escalation thereof, or
terrorism in regions where we, our customers or our suppliers have operations or where we or they do
business;
•
Rising inflation and fluctuations in interest and currency exchange rates may adversely impact our
ability to compete on price with local providers or the value of revenues we generate from our
international business. Although we attempt to manage some of our near-term currency risks through
the use of hedging instruments, there can be no assurance that such efforts will be adequate;
•
Slowing growth, increased unemployment changes in fiscal and/or monetary policies in the countries
where we operate;
•
Our ability to receive prepayments for certain of our products and services sold in certain jurisdictions.
These prepayments increase our cash flows for the quarter in which they are received. If our practice of
requiring prepayments in those jurisdictions changes or deteriorates, our cash flows would be harmed;
•
Required refunds for customer prepayments resulting from our inability to ship to certain jurisdictions,
especially for customers in China, as described in more detail below. If we are required to make such
refunds, our cash flows could be negatively affected;
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•
Longer payment cycles and difficulties in collecting accounts receivable outside of the U.S.;
•
Difficulties in managing foreign distributors (including monitoring and ensuring our distributors’
compliance with applicable laws); and
•
Inadequate protection or enforcement of our IP and other legal rights in foreign jurisdictions.
Any of the factors above could have a significant negative impact on our business and results of operations.
Over the past several years, there have been a variety of rules and regulations issued by BIS that have
had an impact on our ability to sell certain products and provide certain services to certain customers in
China. These rules and regulations may significantly harm our business, results of operations, financial
condition and cash flows in future periods, unless we are able to obtain required licenses.
We maintain significant operations outside the United States, and existing and evolving trade restrictions
imposed by the U.S. and other governments could significantly disrupt our global operations. The U.S.
government has tightened export controls for commodities, software, and technology (collectively, “items”)
destined to China over the past several years. These controls have included, for example, restrictions on
exporting certain items to military end users and for military end uses, the addition of numerous entities to the
U.S. Entity List (a list of parties that are generally ineligible to receive U.S.-regulated items without prior
licensing from BIS), and the creation of new licensing requirements that apply to the export, re-export, and
transfer of certain foreign-made items that are the direct product of U.S. origin technology or produced by a plant
or major component of a plant that itself is the direct product of U.S. origin technology and which are destined to
Huawei or its affiliates and other specified companies on the U.S. Entity List.
In October 2022, BIS published the 2022 BIS Rules (the “2022 BIS Rules”) that introduce restrictions
related to semiconductor, semiconductor manufacturing, supercomputer, and advanced computing items and end
uses. These rules impose restrictions on our ability to sell, ship and support certain equipment and otherwise
conduct business with certain counterparties, primarily including China-based companies involved in advanced
semiconductor manufacturing. Further, the 2022 BIS Rules impose restrictions on the activities of U.S. persons
with respect to certain items that are not subject to the Export Administration Regulations (“EAR”), which
departs from BIS’ typical practice of controlling items that are subject to the EAR, and could further restrict our
ability to conduct business in China. In October 2023, BIS issued the 2023 BIS Rules (the “2023 BIS Rules”)
designed to update export controls on advanced computing semiconductors and semiconductor manufacturing
equipment, as well as items that support supercomputing applications and end-uses, to certain D1, D4 and/or D5
countries in Supplement No. 1 of Part 740 of the U.S. Export Administration Regulations, including China. The
2023 BIS Rules adjust the parameters included in the 2022 BIS Rules that determine whether an advanced
computing chip is restricted and impose new measures to address risks of circumvention of the controls
established by the 2022 BIS Rules. The 2023 BIS Rules are very complex and, in January 2024, KLA, among
other companies, submitted comments to BIS on the 2023 BIS Rules. BIS could revise or expand the 2023 BIS
Rules in response to public comments. Likewise, BIS may issue guidance clarifying the scope of the rules. Such
revisions, expansions or guidance could change the impact of the rules for our business. Commerce has also
added, and may continue to add, China-based entities to the U.S. Entity List, imposing export restrictions to
entities that could disrupt or prevent our product shipment, and further disrupt our revenue recognition and
business operations, and our ability to support our customers in China.
These rules and regulations may significantly harm our business unless we are able to obtain required
licenses. We will continue to apply for export licenses, when required, in an effort to avoid disruption to our and
our customers’ operations, but there can be no assurance that export licenses applied for by either us or our
customers, now or in the future, will be granted. To the extent BIS does issue licenses to us or to our customers,
such licenses may have a short duration or require us to satisfy various conditions. If pending and future export
license applications are not granted, or additional restrictions are imposed, or if regulators adopt new
interpretations of existing regulations, the potential impact on us could be material by disrupting our supply chain
20

and product shipment, impairing our ability to complete product development in a timely manner, or our ability
to support existing customers of covered products or supply customers of covered products outside the impacted
regions, and requiring us to transition certain operations out of one or more of the identified countries. Failure to
obtain export licenses could also harm our RPO, requiring us to return substantial deposits received from
customers in China for purchase orders, and/or further limiting our ability to meet our contractual obligations and
sell our products or provide services to our customers in China.
We may lose revenue in future periods related to anticipated sales to customers in China unless we are able
to replace their orders with other customer orders for which either a license has been obtained or is not required.
Our revenue from sales of products and provision of services to customers in China was 43%, 27% and 29% for
fiscal years 2024, 2023 and 2022, respectively.
Additionally, the Chinese government has adopted, and may further adopt, new regulations, in response to
U.S. government actions, which could adversely affect our ability to do business in China. We have controls and
procedures designed to maintain compliance with U.S. and other applicable export control laws and regulations;
however, we cannot guarantee that such controls and procedures will be successful in preventing violations or
allegations of violations, of increasingly complex and often conflicting regulations worldwide. The complexity
and evolving nature of the rules and regulations, and the fact that Commerce or other relevant regulators might
adopt interpretations of regulations that differ from those of the Company, increase our risk of non-compliance.
Any violations by us of applicable export laws and regulations could result in significant civil and criminal
penalties, including fines and criminal proceedings against the Company or responsible employees, a denial of
export privileges, suspension or debarment. Our employees, customers, suppliers or other third parties with
whom we work may also engage in conduct for which the Company might be held responsible. We could face
significant compliance, litigation or settlement costs and diversion of management’s attention from our business
as a result. Further, the Company may be subject to negative publicity or reputational harm, resulting in reduced
demand for our products, employee attrition and other negative impact on our business, results of operations,
financial condition and cash flows.
We might be involved in claims or disputes related to IP or other confidential information that may be
costly to resolve, prevent us from selling or using the challenged technology and seriously harm our operating
results and financial condition.
As is typical in the industries in which we serve, from time to time we have received communications from
other parties asserting the existence of patent rights, copyrights, trademark rights or other IP rights which they
believe cover certain of our products, processes, technologies or information. In addition, we occasionally
receive notification from customers who believe that we owe them indemnification or other obligations related to
IP claims made against such customers by third parties. With respect to IP infringement disputes, our customary
practice is to evaluate such infringement assertions and to consider whether to seek licenses where appropriate.
However, there can be no assurance that licenses will be granted or, if granted, will be on acceptable terms or that
costly litigation or other administrative proceedings will not occur. The inability to obtain necessary licenses or
other rights on reasonable terms could seriously harm our results of operations and financial condition.
Furthermore, we may potentially be subject to claims by customers, suppliers or other business partners, or by
governmental law enforcement agencies, related to our receipt, distribution and/or use of third-party IP or
confidential information. Legal proceedings and claims, regardless of their merit, and associated internal
investigations with respect to IP or confidential information disputes are often expensive to prosecute, defend or
conduct; may divert management’s attention and other Company resources; and/or may result in restrictions on
our ability to sell our products, settlements on significantly adverse terms or adverse judgments for damages,
injunctive relief, penalties and fines, any of which could have a significant negative effect on our business,
results of operations and financial condition. There can be no assurance regarding the outcome of future legal
proceedings, claims or investigations. The instigation of legal proceedings or claims, our inability to favorably
resolve or settle such proceedings or claims, or the determination of any adverse findings against us or any of our
21

employees in connection with such proceedings or claims could materially and adversely affect our business,
financial condition and results of operations, as well as our business reputation.
We are exposed to various risks related to the legal, regulatory and tax environments in which we
perform our operations and conduct our business.
We are subject to various risks related to compliance with laws, rules and regulations enacted by legislative
bodies and/or regulatory agencies in the countries in which we operate and with which we must comply,
including environmental, safety, antitrust, anti-corruption/anti-bribery, unclaimed property, economic sanctions
and export control regulations. We have policies and procedures designed to promote compliance with applicable
laws, but there can be no assurance our policies and procedures will prove completely effective in ensuring
compliance by all our personnel, business partners and representatives, for whose misconduct we may under
some circumstances be legally responsible. Our failure or inability to comply with existing or future laws, rules
or regulations in the countries in which we operate could result in government investigations and/or enforcement
actions, which could result in significant financial cost (including investigation expenses, defense costs,
assessments and criminal or civil penalties), reputational harm and other consequences that may adversely affect
our operating results, financial condition and ability to conduct our business. For instance, in response to the war
between Russia and Ukraine, the U.S., European Union and other countries have imposed sanctions against
Russia, Belarus and certain other regions, entities and individuals, and may impose additional sanctions, export
controls or other measures. The imposition of sanctions, export controls and other measures could adversely
impact our business including preventing us from performing existing contracts, recognizing revenue, pursuing
new business opportunities or receiving payment for products already supplied or services already performed
with customers.
Additionally, we are subject to various domestic and international environmental laws and regulations,
including those that control and restrict the use, transportation, emission, discharge, storage, and disposal of
certain chemicals, gases and other substances. Current and proposed restrictions on per- and polyfluoroalkyl
substances (“PFAS”) may negatively impact our supply chain due to potentially decreased availability, or
non-availability, of PFAS-containing products or commercially feasible alternatives. Any failure to comply with
applicable environmental laws, regulations or requirements may subject us to a range of consequences, including
fines, suspension of certain of our business activities, limitations on our ability to sell our products, obligations to
remediate environmental contamination, and criminal and civil liabilities or other sanctions. Some of these laws
impose strict liability for certain releases, which may require us to incur costs regardless of fault or the legality of
actions at the time of release. In addition, changes in environmental laws and regulations (including any relating
to climate change and greenhouse gas (“GHG”) emissions) could require us, or others in our value chain, to
install additional equipment, alter operations to incorporate new technologies or processes, or revise process
inputs, among other things, which may cause us to incur significant costs or otherwise adversely impact our
business performance. Various agencies and governmental bodies have expressed particular interest in
promulgating rules relating to climate change. For example, in March 2022, the SEC published a proposed rule
that would require companies to provide significantly expanded climate-related disclosures, which may require
us to incur significant additional costs to comply and impose increased oversight obligations on our management
and Board of Directors. We also face increasing complexity in our manufacturing, product design and
procurement operations as we adjust to new and prospective requirements relating to the composition of our
products, including restrictions on lead and other substances and requirements to track the sources, production
methods, or provenance of certain metals and other materials. The cost of complying, or failing to comply, with
these and other regulatory requirements or contractual obligations could adversely affect our operating results,
financial condition and ability to conduct our business.
From time to time, we may receive inquiries, subpoenas, investigative demands or audit notices from
governmental or regulatory bodies, or we may make voluntary disclosures, related to legal, regulatory or tax
compliance matters, and these matters may result in significant financial cost (including investigation expenses,
defense costs, assessments and criminal or civil penalties), reputational harm and other consequences that could
22

materially and adversely affect our operating results and financial condition. In addition, we may be subject to
new or amended laws, including laws that conflict with other applicable laws, which may impose compliance
challenges and create the risk of non-compliance.
In addition, we may from time to time be involved in legal proceedings or claims regarding employment,
immigration, contracts, product performance, product liability, antitrust, ESG, IP, export controls, cybersecurity
and data privacy, tax, securities, unfair competition and other matters. These legal proceedings and claims,
regardless of their merit, may be time-consuming and expensive to prosecute or defend, divert management’s
attention and resources, and/or inhibit our ability to sell our products. There can be no assurance regarding the
outcome of current or future legal proceedings or claims, which could adversely affect our operating results,
financial condition and ability to operate our business.
Increasing attention to ESG matters, including any targets or other ESG initiatives, could result in
additional costs or risks or adversely impact our business.
Certain investors, capital providers, shareholder advocacy groups, other market participants, customers and
other stakeholder groups have focused increasingly on companies’ ESG initiatives, including those regarding
climate change, human rights and inclusion and diversity, among others. This has increased, and may in the
future continue to increase, certain of our compliance and disclosure costs, and may also result in further impacts
on our business, financial condition or results of operations, including changes in demand for certain types of
products.
From time to time, we create and publish voluntary disclosures regarding ESG matters. Identification,
assessment and disclosure of such matters is complex. Many of the statements in such voluntary disclosures are
based on our expectations and assumptions, which may require substantial discretion and forecasts about costs
and future circumstances. Additionally, expectations regarding companies’ management of ESG matters
continues to evolve rapidly, in many instances due to factors that are out of our control.
Although we have engaged, and expect to continue to engage, in certain voluntary ESG initiatives, to
improve the ESG profile of our operations and product offerings, we cannot guarantee that such efforts will have
the intended results, including whether we are able to measure and disclose related data of sufficient quality or
timeliness or in accordance with particular methodological practices. For example, we have adopted certain GHG
emissions reduction targets for Scope 1, 2 and 3 emissions. Although several of these goals have been validated
by SBTi, our estimates concerning the timing and cost of implementing our goals are subject to risks and
uncertainties, some of which are outside of our control. In addition, standards for calculating and disclosing
emissions and other sustainability metrics continue to evolve, which can result in inconsistencies or other
changes to data over time, revisions to our strategies and targets, or our ability to achieve them, subjecting us to
additional scrutiny. For example, we have recently elected to align our emissions reporting with the SBTi
methodology, which will result in certain changes to our emissions metrics from historical calculations; however,
to the extent the SBTi methodology is ultimately deemed to be not in keeping with regulatory standards or best
practices, we may be subject to additional scrutiny or costs. Standards for ESG metrics and reporting continue to
evolve due to a variety of factors, and our disclosures may evolve as well; however, we cannot guarantee that our
approach will align with any particular methodology or stakeholder expectations. Any failure, or perceived
failure, to disclose in keeping with best practices, regulations, or other stakeholder expectations or to successfully
achieve our voluntary goals, or the manner in which we achieve some or any portion of our goals, could
adversely impact our reputation or, to the extent related to our sustainability-linked capital sources, financial
condition and results of operations.
Our ESG efforts have included, and may in the future include further adoption, or expansion, of certain ESG
practices or policies, which may require us to expend additional resources to implement or to forego certain
business opportunities to the extent others in our value chain do not meet pertinent requirements of such policies.
By contrast, any failure, or perceived failure, to conform to such policies could have an adverse impact on our
23

reputation and business activities. Our performance may be subject to greater scrutiny as a result of our
announcement of any goals or policies and the publication of our performance against the same. Moreover,
despite the voluntary nature of such efforts, we may receive increasing scrutiny and pressure from external
sources, such as lenders, investors, proxy advisory firms, rating agencies or other investor advocacy groups, to
adopt more transparent or aggressive climate or other ESG-related initiatives; however, we may not agree that
such initiatives will be appropriate for our business, and we may not be able to implement such initiatives
because of potential costs or technical or operational obstacles. Any unfavorable ESG ratings could lead to or
increase any negative investor sentiment toward us, our customers or our industry, which could negatively
impact our share price as well as our access to and cost of capital. To the extent ESG matters negatively impact
our reputation, they may also impede our ability to compete as effectively to recruit or retain employees or
customers, which may adversely affect our operations. Simultaneously, there are efforts by some stakeholders,
including certain policymakers, to reduce companies’ efforts on certain environmental, social and sustainability-
related matters, which could subject us to increased activism or litigation. In addition, we note that regulators,
including the SEC, have adopted, or are considering adopting, regulations regarding ESG matters, including, but
not limited to, climate change-related matters. To the extent we are subject to increased regulatory requirements,
we could become subject to increased compliance-related costs and risks, including potential enforcement and
litigation. Such ESG matters also impact at least certain of our suppliers and customers, which may compound or
cause new impacts on our business, financial condition or results of operations.
We depend on key personnel to manage our business effectively, and if we are unable to attract, retain
and motivate our key employees, our sales and product development could be harmed.
Our employees are vital to our success, and our key management, engineering and other employees are
difficult to replace. We generally do not have employment contracts with our key employees. Further, we do not
maintain key person life insurance for any of our employees. The expansion of high technology companies
worldwide and the elevated demand for talent from the growth in the demand for semiconductors in recent years
has increased demand and competition for qualified personnel. Competition for engineering and other technical
personnel in many areas of the world in which we operate is especially intense due to the proliferation of
technology companies worldwide. Our competitors have targeted individuals in our organization who have
desired skills and experience. In addition, current or future immigration laws, policies or regulations may limit
our ability to attract, hire and retain qualified personnel. If we are unable to attract, onboard and retain key
personnel, or if we are not able to attract, assimilate, onboard and retain additional highly qualified employees to
meet our current and future needs, our business and operations could be harmed.
We outsource a number of services to third-party service providers, which decreases our control over the
performance of these functions. Disruptions or delays at our third-party service providers could adversely
impact our operations.
We outsource a number of services, including our transportation, information systems management and
logistics management of spare parts and certain accounting and procurement functions, among others, to
domestic and overseas third-party service providers. While outsourcing arrangements may lower our cost of
operations, they also reduce our direct control over the services rendered. It is uncertain what effect such
diminished control will have on the quality or quantity of products delivered or services rendered, on our ability
to quickly respond to changing market conditions, or on our ability to ensure compliance with all applicable
domestic and foreign laws and regulations. In addition, many of these outsourced service providers, including
certain hosted software applications that we use for confidential data storage, may employ cloud computing
technology and other systems. These providers may be susceptible to “cyber incidents,” such as software
vulnerabilities, cyber-attacks aimed at theft of sensitive data, inadvertent cyber-security compromises, attacks
aimed at operational disruption at the target or third-party service providers, all of which are outside of our
control. If we do not effectively develop and manage our outsourcing strategies, if required export and other
governmental approvals are not timely obtained, if our third-party service providers pass on the cost of inflation
to us or do not perform as anticipated, or do not adequately maintain operational resilience or fail to protect our
24

data from cyber-related security breaches, or if there are delays or difficulties in enhancing business processes,
we may experience operational difficulties (such as limitations on our ability to ship products), increased costs,
manufacturing or service interruptions or delays, loss of IP rights or other sensitive data, quality and compliance
issues, and challenges in managing our product inventory or recording and reporting financial and management
information, any of which could materially and adversely affect our business, financial condition and results of
operations.
We depend on information technology for our business and are exposed to risks related to cybersecurity
threats and cyber incidents affecting our, our customers’, suppliers’ and other service providers’ systems and
networks.
In the conduct of our business, we and certain of our third-party providers collect, use, transmit and store
data on information systems and networks, including systems, software, hardware and networks owned and
maintained by KLA and/or by third-party providers (collectively, “IT Systems”). This data includes confidential
information, transactional information and IP belonging to us, our customers and our business partners, as well as
personal information of individuals (collectively, “Confidential Information”). We also integrate and use third-
party services and products, including software, in our IT Systems, and such third-party products, services and
systems are beyond our control. We face numerous and evolving cybersecurity risks that threaten the
confidentiality, integrity and availability of our IT Systems and Confidential Information, including from diverse
threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as diverse
attack vectors, such as computer viruses, bugs, ransomware and other malware, technological errors and known
and unknown vulnerabilities in our software and systems and those of third parties, cyber-related security
breaches and similar disruptions from unauthorized intrusions, tampering, misuse or criminal acts made directly
against our systems or networks, or through our third-party providers or the supply chain, including social
engineering, phishing, or other events or developments that we may be unable to anticipate or fail to mitigate,
including, but not limited to, financial fraud, including check fraud, vulnerabilities or misconfigurations in our IT
Systems. In addition, insider actors, malicious or otherwise, could misappropriate our Confidential Information,
compromise our IT Systems, tamper with our products or otherwise cause disruptions to our business operations.
Moreover, we have acquired and continue to acquire companies with cybersecurity vulnerabilities and/or
unsophisticated security measures, which may expose us to significant cybersecurity, operational and financial
risks. Remote and hybrid working arrangements at our company (and at many third-party providers) also increase
cybersecurity risks due to the challenges associated with managing remote computing assets and security
vulnerabilities that are present in many non-corporate and home networks.
We and our third-party providers regularly experience cyber-attacks and events and on occasion incidents
involving unauthorized access to systems and data and, although no such attacks, events or incidents have
materially impacted our operations or financial results, there can be no assurance that such attacks, events or
incidents will not be material to KLA in the future. Because the techniques used to obtain unauthorized access to
our IT Systems change frequently and increasingly leverage technologies such as AI, cyber-attacks may not be
recognized until launched against a target and are increasingly designed to circumvent controls, avoid detection
and remove or obfuscate forensic artifacts. As such, we may be unable to anticipate these techniques, implement
adequate preventative measures, or adequately identify, investigate and recover from cybersecurity incidents.
There can also be no assurance that our cybersecurity risk management program and processes, including our
policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT
Systems and Confidential Information. We prioritize the remediation of identified security vulnerabilities based
on known and anticipated risks, and we aim to patch vulnerabilities within reasonable timeframes. However, we
are unable to comprehensively identify all vulnerabilities (particularly as related to third-party software and
systems), apply patches or confirm that mitigating measures are in place, or ensure that any patches will be
applied by us or our third parties before exploitation by a threat actor. If attackers are able to exploit
vulnerabilities before patches are installed or mitigating measures are implemented, significant compromises
could impact our systems and data. AI may be used to generate cyberattacks as AI capabilities improve and are
increasingly adopted. These attacks crafted with AI tools could directly attack our IT Systems with greater speed
25

and/or efficiency than a human threat actor or create more effective phishing emails. In addition, the threat could
be introduced from the result of us, our customers and business partners incorporating the output of an AI tool
that includes a threat, such as introducing malicious code by incorporating AI generated source code.
Any cybersecurity incident or occurrence could impact our business directly, or indirectly by impacting
third parties in the supply chain, in many potential ways: disruptions to operations; misappropriation, corruption
or theft of Confidential Information; misappropriation of funds and Company assets; reduced value of our
investments in research, development and engineering; litigation (including class action lawsuits) with, or
payment of damages to, third parties; reputational damage; costs to comply with regulatory inquiries or actions;
data privacy issues; costs to rebuild our information systems and networks; and increased cybersecurity
protection and remediation costs. Cybersecurity incidents affecting our customers could result in substantial
delays in our ability to ship to those customers or install our products, which could result in delays in revenue
recognition or the cancellation of orders, and cybersecurity incidents affecting our suppliers could result in
substantial delays in our ability to obtain necessary components for our products from those suppliers, which
could hamper our ability to ship our products to our customers and service them, harming our results of
operations. For example, in February 2023, one of our suppliers experienced a ransomware event that caused
delays in its manufacturing operations, resulting in its shipment delays to us for components we ordered, which
in turn caused delays in some of our outbound shipments during the quarter. Similar events could cause
disruptions in the future.
We carry insurance that provides limited protection against the potential losses arising from a cybersecurity
incident, but it will not likely cover all such losses, and the losses it does not cover may be significant.
We rely upon certain critical information systems for our daily business operations. Our inability to use
or access our information systems at critical points in time could unfavorably impact our business operations.
Our global operations are dependent upon certain information systems, including telecommunications, the
internet, our corporate intranet, network communications, email and various computer hardware and software
applications. System failures or malfunctions, such as difficulties with our customer and supplier relationship
management systems, could disrupt our operations and our ability to timely and accurately process and report
key components of our financial results. Our enterprise resource planning (“ERP”) system is integral to our
ability to accurately and efficiently maintain our books and records, record transactions, provide critical
information to our management, and prepare our financial statements. Any disruptions or difficulties that may
occur in connection with our ERP system or other systems (whether in connection with the regular operation,
periodic enhancements, modifications or upgrades of such systems or the integration of our acquired businesses
into such systems, or due to cybersecurity events such as ransomware attacks, including attacks on the
information systems of our business partners and other third parties) could adversely affect our ability to
complete important business processes, such as the evaluation of our internal controls over financial reporting
pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. Any of these events could have an adverse effect on
our business, operating results and financial condition.
Acquisitions are an important element of our strategy but, because of the uncertainties involved, we may
not find suitable acquisition candidates and we may not be able to successfully integrate and manage acquired
businesses. We are also exposed to risks in connection with strategic alliances into which we may enter.
In addition to our efforts to develop new technologies from internal sources, part of our growth strategy is to
pursue acquisitions and acquire new technologies from external sources. We may also enter into definitive
agreements for and consummate acquisitions of, or significant investments in, businesses with complementary
products, services and/or technologies. There can be no assurance that we will find suitable acquisition
candidates, that we can close such acquisitions or that acquisitions we complete will be successful. In addition,
we may use equity to finance future acquisitions, which would increase our number of shares outstanding and be
dilutive to current stockholders.
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If we are unable to successfully integrate and manage acquired businesses, if the costs associated with
integrating the acquired businesses exceeds our expectations, or if acquired businesses perform poorly, then our
business and financial results may suffer. It is possible that the businesses we have acquired, as well as
businesses we may acquire in the future, may perform worse than expected or prove to be more difficult to
integrate and manage than anticipated. In addition, we may face other risks associated with acquisition
transactions that may lead to a material adverse effect on our business and financial results, including:
•
We may have to devote unanticipated financial and management resources to acquired businesses;
•
The combination of businesses may result in the loss of key personnel or an interruption of, or loss of
momentum in, the activities of our Company and/or the acquired business;
•
We may not be able to realize expected operating efficiencies or product integration benefits from our
acquisitions;
•
We may experience challenges in entering into new market segments for which we have not previously
manufactured and sold products;
•
We may face difficulties in coordinating geographically separated organizations, systems and facilities;
•
The customers, distributors, suppliers, employees and others with whom the companies we acquire
have business dealings may have a potentially adverse reaction to the acquisition;
•
We may have difficulty implementing a cohesive framework of controls, procedures and policies
appropriate for a larger, U.S.-based public company at companies that, prior to acquisition, may not
have as robust controls, procedures and policies, particularly with respect to the effectiveness of cyber
and information security practices and incident response plans, compliance with data privacy and
protection and other laws and regulations, and compliance with U.S.-based economic policies and
sanctions that may not have previously been applicable to the acquired company’s operations;
•
We may have to write off goodwill or other intangible assets; and
•
We may incur unforeseen obligations or liabilities in connection with acquisitions including, but not
limited to, cybersecurity risks associated with integrating our networks or systems with those of
acquired entities.
At times, we may also enter into strategic alliances with customers, suppliers or other business partners with
respect to development of technology and IP. These alliances typically require significant investments of capital
and exchange of proprietary, highly sensitive information. The success of these alliances depends on various
factors over which we may have limited or no control and requires ongoing and effective cooperation with our
strategic partners. Mergers and acquisitions and strategic alliances are inherently subject to significant risks, and
the inability to effectively manage these risks could materially and adversely affect our business, financial
condition and operating results.
Disruption of our manufacturing facilities or other operations or those of our suppliers, or in the
operations of our customers, due to climate change, earthquake, flood, other natural catastrophic events,
public health crises such as the COVID-19 pandemic or terrorism could result in cancellation of orders,
delays in deliveries or other business activities, or loss of customers and could seriously harm our business.
We have significant manufacturing operations in the U.S., Singapore, Israel, Germany, United Kingdom,
Italy and China. In addition, our business is international in nature, with our sales, service and administrative
personnel and our customers and suppliers located in numerous countries throughout the world. Operations at our
manufacturing facilities and our assembly subcontractors and those of our suppliers, as well as our other
operations and those of our customers, are subject to disruption for a variety of reasons, including work
stoppages, acts of war, terrorism, public health crises such as the COVID-19 pandemic, fire, earthquake, volcanic
eruptions, drought, storms, extreme temperatures, energy shortages, spikes in energy demand or power blackouts,
27

disruptions in the availability of water necessary for our operations (including, but not limited to, in areas of
relatively high water stress), flooding or other natural disasters. Certain of these events may become more
frequent or intense as a result of climate change, and climate change may also contribute to chronic changes such
as sea-level rise or changes to meteorological or hydrological patterns that may also disrupt our or our suppliers’
operations or otherwise adversely impact our business. Such disruption has caused (as with the COVID-19
pandemic, for example) and could in the future cause inefficiencies in our workforce and delays in, among other
things, shipments of products to our customers, our ability to perform services requested by our customers, the
ability of our suppliers to supply us components for our products in a timely manner, or the timely installation
and acceptance of our products at customer sites. Such disruptions could also induce illiquidity for our customers
and suppliers, further straining our supply chain and causing continued uncertainty in customers’ abilities to pay
for the products they purchase and their demand for our products and services. In case of any disruptions in our
supply chain, we may need to commit to increased purchases and provide longer lead times to secure critical
components, which could increase inventory obsolescence risk.
We cannot provide any assurance that alternate means of conducting our operations (whether through
alternate production capacity or service providers or otherwise) would be available if a major disruption were to
occur or that, if such alternate means were available, they could be obtained on favorable terms.
We maintain a program of insurance coverage for a variety of property, casualty and other risks. The types
and amounts of insurance we obtain vary depending on availability, cost and decisions with respect to risk
retention. Some of our policies have broad exclusions. In addition, one or more of our insurance providers may
be unable or unwilling to continue to provide certain coverage in the future or pay a claim. Losses not covered by
insurance may be large, which could harm our results of operations and financial condition. Even where insured,
there is a risk that an insurer may deny or limit coverage or may become financially incapable of covering
claims.
In addition, as part of our cost-cutting actions, we have consolidated several operating facilities. Our
California operations are now primarily centralized in our Milpitas facility. The consolidation of our California
operations into a single campus could further concentrate the risks related to any of the disruptive events
described above, such as acts of war or terrorism, earthquakes, fires or other natural disasters, if any such event
were to impact our Milpitas facility.
We are predominantly uninsured for losses and interruptions caused by terrorist acts and acts of war. If
international political instability or geopolitical tensions continue or increase, our business and results of
operations could be harmed.
The threat of terrorism targeted at, or acts of war in, the regions of the world in which we do business
increases the uncertainty in our markets. Any act of terrorism or war that affects the economy or the industries
we serve could adversely affect our business. Increased international political instability or geopolitical tensions
in various parts of the world, disruption in air transportation and further enhanced security measures as a result of
terrorist attacks may hinder our ability to do business and may increase our costs of operations. We maintain
significant operations in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts
have taken place between Israel and its Arab neighbors, and a state of hostility varying in degree and intensity
has led to security and economic challenges for Israel. In October 2023, war between Israel and Hamas began,
which has resulted in significant military activity in the region. In addition, some of our employees in Israel are
obligated to perform annual reserve duty in the Israel Defense Forces, and may be called to active military duty
in emergency circumstances, including the war against Hamas. Following the war between Israel and Hamas, the
Houthis launched a number of attacks on marine vessels traversing the Red Sea, which marine vessels were
thought to either be in route towards Israel or to be partly owned by Israeli businessmen. The Red Sea is a vital
maritime route for international trade and major shipping companies announced suspensions of operations
following these attacks. Disruptions in shipping routes in the Red Sea could result in delays in shipping our
products to customers, which could delay the timing of revenue recognition. We cannot assess the impact that
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emergency conditions in Israel may have on our business, operations, financial condition or results of operations,
but it could be material. Instability in any region could directly impact our ability to operate our business (or our
customers’ ability to operate their businesses), cause us to incur increased costs in transportation, make such
transportation unreliable, increase our insurance costs, and cause international currency markets to fluctuate.
Instability in any region could also have the same effects on our suppliers and their ability to timely deliver their
products. Our insurance does not cover losses we suffer attributable to war. If international political instability
and geopolitical tensions continue or increase in any region in which we do business, our business and results of
operations could be harmed.
We self-insure certain risks including earthquake risk. If one or more of the uninsured events occurs, we
could suffer major financial loss.
We purchase insurance to help mitigate the economic impact of certain insurable risks; however, certain
risks are uninsurable, are insurable only at significant cost or cannot be mitigated with insurance. Accordingly,
we may experience a loss that is not covered by insurance, either because we do not carry applicable insurance or
because the loss exceeds the applicable policy amount or is less than the deductible amount of the applicable
policy. For example, we do not currently hold earthquake insurance. An earthquake could significantly disrupt
our manufacturing operations, a significant portion of which are conducted in California, an area highly
susceptible to earthquakes. It could also significantly delay our research and engineering efforts on new products,
much of which is also conducted in California. We take steps to minimize the damage that would be caused by an
earthquake, but there is no certainty that our efforts will prove successful in the event of an earthquake. We self-
insure earthquake risks because we believe this is a prudent financial decision based on our cash reserves and the
high cost and limited coverage available in the earthquake insurance market. Certain other risks are also self-
insured either based on a similar cost-benefit analysis, or based on the unavailability of insurance. If one or more
of the uninsured events occurs, we could suffer major financial loss.
We are exposed to foreign currency exchange rate fluctuations. Although we hedge certain currency
risks, we may still be adversely affected by changes in foreign currency exchange rates or declining economic
conditions in these countries.
We have some exposure to fluctuations in foreign currency exchange rates, primarily the Japanese Yen, the
euro, the pound sterling and the new Israeli shekel. We have international subsidiaries that operate and sell our
products globally. In addition, an increasing proportion of our manufacturing activities are conducted outside of
the U.S., and many of the costs associated with such activities are denominated in foreign currencies. We
routinely hedge our exposures to certain foreign currencies with certain financial institutions in an effort to
minimize the impact of certain currency exchange rate fluctuations, but these hedges may be inadequate to
protect us from currency exchange rate fluctuations. To the extent that these hedges are inadequate, or if there are
significant currency exchange rate fluctuations in currencies for which we do not have hedges in place, our
reported financial results or the way we conduct our business could be adversely affected. Furthermore, if a
financial counterparty to our hedges experiences financial difficulties or is otherwise unable to honor the terms of
the foreign currency hedge, we may experience material financial losses.
We are exposed to fluctuations in interest rates and the market values of our portfolio investments, and
an impairment of our investments could harm our earnings. In addition, we and our stockholders are exposed
to risks related to the volatility of the market for our common stock.
Our investment portfolio primarily consists of both corporate and government debt securities that are
susceptible to changes in market interest rates and bond yields. As market interest rates and bond yields increase,
those securities with a lower yield-at-cost show a mark-to-market unrealized loss. An impairment of the fair
market value of our investments, even if unrealized, must be reflected in our financial statements for the
applicable period and may, therefore, have a material adverse effect on our results of operations for that period.
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In addition, the market price for our common stock is volatile and has fluctuated significantly during recent
years. The trading price of our common stock could continue to be highly volatile and fluctuate widely in
response to various factors, including, without limitation, conditions in the semiconductor industry and other
industries in which we operate, fluctuations in the global economy or capital markets, our operating results or
other performance metrics, or adverse consequences experienced by us as a result of any of the risks described
elsewhere in this Item 1A. Volatility in the market price of our common stock could cause an investor in our
common stock to experience a loss on the value of their investment in us and could also adversely impact our
ability to raise capital through the sale of our common stock or to use our common stock as consideration to
acquire other companies.
We are exposed to risks in connection with tax and regulatory compliance audits in various jurisdictions.
We are subject to tax and regulatory compliance audits (such as related to customs or product safety
requirements) in various jurisdictions, and such jurisdictions may assess additional income or other taxes,
penalties, fines or other prohibitions against us. Although we believe our tax estimates are reasonable and that
our products and practices comply with applicable regulations, the final determination of any such audit and any
related litigation could be materially different from our historical income tax provisions and accruals related to
income taxes and other contingencies. The results of an audit or litigation could have a material adverse effect on
our operating results or cash flows in the period or periods for which that determination is made.
A change in our effective tax rate can have a significant adverse impact on our business.
We earn profits in, and are therefore potentially subject to taxes in, the U.S. and numerous foreign
jurisdictions, including Singapore and Israel, the countries in which we earn the majority of our non-U.S. profits.
Due to economic, political or other conditions, tax rates in those jurisdictions may be subject to significant
change. A number of factors may adversely impact our future effective tax rates, such as the jurisdictions in
which our profits are determined to be earned and taxed; changes in the tax rates imposed by those jurisdictions;
expiration of tax holidays in certain jurisdictions that are not renewed; the resolution of issues arising from tax
audits with various tax authorities; changes in the valuation of our deferred tax assets and liabilities; adjustments
to estimated taxes upon finalization of various tax returns; increases in expenses not deductible for tax purposes,
including write-offs of acquired in-process research and development and impairment of goodwill in connection
with acquisitions; changes in available tax credits; changes in stock-based compensation expense; changes in tax
laws or the interpretation of such tax laws; changes in generally accepted accounting principles; and the
repatriation of earnings from outside the U.S. for which we have not previously provided for U.S. taxes. A
change in our effective tax rate can materially and adversely impact our results from operations.
In addition, recent changes to U.S. tax laws will significantly impact how U.S. multinational corporations
are taxed on foreign earnings. We have completed our accounting for the tax effects of the Tax Cuts and Jobs Act
(the “Tax Act”), which was enacted into law on December 22, 2017. The recent U.S. tax law changes are subject
to future guidance from U.S. federal and state governments, such as the Treasury Department and/or the Internal
Revenue Service. Any future guidance can change our tax liability. A significant portion of the income taxes due
to the enactment of the Tax Act is payable by us over a period of eight years. As a result, our cash flows from
operating activities will be adversely impacted until the tax liability is paid in full.
The Tax Act also provides that a percentage of foreign earnings under the Global Intangible Low-Taxed
Income (“GILTI”) regime is taxable in the U.S. and a percentage of U.S. earnings under the Foreign Derived
Intangible Income (“FDII”) regime is not subject to tax in the U.S. For tax years beginning on January 1, 2026,
the percentage of GILTI that is taxable in the U.S. increases from 50% to 62.5% and the percentage of FDII not
subject to tax in the U.S. decreases from 37.5% to 21.875%. The change in GILTI and FDII percentages can have
a material and adverse impact to our effective tax rate beginning in the quarter ending September 30, 2026.
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On August 16, 2022, the enactment of the Inflation Reduction Act (“IRA”) introduced a corporate
alternative minimum tax (“CAMT”) that is effective for us beginning in the quarter ended September 30, 2023.
The CAMT applies a 15% minimum income tax rate on certain large corporations. We are not expecting to have
any effective tax rate impact from the CAMT but changes to U.S. tax laws or the interpretation of such tax laws
may result in CAMT liability which can have a material and adverse impact to our future effective tax rates.
Numerous countries are evaluating their existing tax laws due in part, to recommendations made by the
Organization for Economic Co-operation and Development’s (“OECD”) Base Erosion and Profit Shifting
(“BEPS”) project. The OECD continues to advance its work under the BEPS 2.0 initiative to develop the
framework for Pillar Two — which aims to implement a global minimum tax of 15%. Many countries have
enacted or drafted legislation using the Pillar Two framework to propose domestic tax laws requiring a minimum
tax rate of 15% (“top-up tax”) on income earned in the respective countries. One country that has drafted Pillar
Two legislation is Singapore, where KLA earns significant profits and currently benefits from tax incentives
granted by the Singapore Economic Development Board. If enacted, the tax liability from top-up tax may have a
material and adverse impact to our effective tax rate in the fiscal year when such law is effective.
Compliance with federal securities laws, rules and regulations, as well as NASDAQ requirements, has
become increasingly complex, and the significant attention and expense we must devote to those areas may
have an adverse impact on our business.
Federal securities laws, rules and regulations, as well as NASDAQ rules and regulations, require companies
to maintain extensive corporate governance measures, impose comprehensive reporting and disclosure
requirements, set strict independence and financial expertise standards for audit and other committee members
and impose civil and criminal penalties for companies and their chief executive officers, chief financial officers
and directors for securities law violations. These laws, rules and regulations have increased, and in the future are
expected to continue to increase, the scope, complexity and cost of our corporate governance, reporting and
disclosure practices, which could harm our results of operations and divert management’s attention from business
operations.
A change in accounting standards or practices or a change in existing taxation rules or practices (or
changes in interpretations of such standards, practices or rules) can have a significant effect on our reported
results and may even affect reporting of transactions completed before the change is effective.
New accounting standards and taxation rules and varying interpretations of accounting pronouncements and
taxation rules have occurred and will continue to occur in the future. Changes to (or revised interpretations or
applications of) existing accounting standards or tax rules or the questioning of current or past practices may
adversely affect our reported financial results or the way we conduct our business. Adoption of new standards
may require changes to our processes, accounting systems, and internal controls. Difficulties encountered during
adoption could result in internal control deficiencies or delay the reporting of our financial results.
Risks Associated with Our Industry
Ongoing changes in the technology industry, as well as the semiconductor industry in particular, could
expose our business to significant risks.
The industries we serve, including the semiconductor and PCB industries, are constantly developing and
changing. Many of the risks associated with operating in these industries are comparable to the risks faced by all
technology companies, such as the uncertainty of future growth rates in the industries that we serve, pricing
trends in the end-markets for consumer electronics and other products (which place a growing emphasis on our
customers’ cost of ownership), rising inflation in the supply chain and interest rates, changes in our customers’
capital spending patterns and, in general, an environment of constant change and development, including
decreasing product and component dimensions, use of new materials, and increasingly complex device
structures, applications and process steps. If we fail to appropriately adjust our cost structure and operations to
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adapt to any of these trends, or, with respect to technological advances, if we do not timely develop new
technologies and products that successfully anticipate and address these changes, we could experience a material
adverse effect on our business, financial condition and operating results.
In addition, we face a number of risks specific to ongoing changes in the semiconductor industry, as a
significant majority of our sales are our process control and yield management products sold to semiconductor
manufacturers. The trends our management monitors in operating our business include the following:
•
The potential for reversal of the long-term historical trend of declining cost per transistor with each
new generation of technological advancement within the semiconductor industry, and the adverse
impact that such reversal may have upon our business;
•
The increasing cost of building and operating fabrication facilities and the impact of such increases on
our customers’ capital equipment investment decisions;
•
Differing market growth rates and capital requirements for different applications, such as memory and
foundry/logic;
•
Lower level of process control adoption by our memory customers compared to our foundry/logic
customers;
•
Our customers’ reuse of existing and installed products, which may decrease their need to purchase
new products or solutions at more advanced technology nodes;
•
The emergence of disruptive technologies that change the prevailing semiconductor manufacturing
processes (or the economics associated with semiconductor manufacturing) and, as a result, also impact
the inspection and metrology requirements associated with such processes;
•
The higher design costs for the most advanced ICs, which could economically constrain leading-edge
manufacturing technology customers to focus their resources on only the large, technologically
advanced products and applications;
•
The possible introduction of integrated products by our larger competitors that offer inspection and
metrology functionality in addition to managing other semiconductor manufacturing processes;
•
Changes in semiconductor manufacturing processes that are extremely costly for our customers to
implement and, accordingly, our customers could reduce their available budgets for process control
equipment by reducing inspection and metrology sampling rates for certain technologies;
•
The bifurcation of the semiconductor manufacturing industry into (a) leading edge manufacturers
driving continued R&D into next-generation products and technologies and (b) other manufacturers
that are content with existing (including previous generation) products and technologies;
•
The ever escalating cost of next-generation product development, which may result in joint
development programs between us and our customers or government entities to help fund such
programs that could restrict our control and ownership of and profitability from the products and
technologies developed through those programs; and
•
The entry by some semiconductor manufacturers into collaboration or sharing arrangements for
capacity, cost or risk with other manufacturers, as well as increased outsourcing of their manufacturing
activities, and greater focus only on specific markets or applications, whether in response to adverse
market conditions or other market pressures.
Any of the changes described above may negatively affect our customers’ rate of investment in the capital
equipment that we produce, which could result in downward pressure on our prices, customer orders, revenues
and gross margins. If we do not successfully manage the risks resulting from any of these or other potential
changes in our industries, our business, financial condition and operating results could be adversely impacted.
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We are exposed to risks associated with a highly concentrated customer base.
Our customer base, particularly in the semiconductor industry, historically has been highly concentrated due
to corporate consolidation, acquisitions and business closures. In this environment, orders from a relatively
limited number of manufacturers have accounted for, and are expected to continue to account for, a substantial
portion of our sales. This increasing concentration exposes our business, financial condition and operating results
to a number of risks, including the following:
•
The mix and type of customers, and sales to any single customer, may vary significantly from quarter
to quarter and from year to year, which expose our business and operating results to increased volatility
tied to individual customers;
•
New orders from our foundry/logic customers in the past several years have constituted a significant
portion of our total orders. This concentration increases the impact that future business or technology
changes within the foundry/logic industry may have on our business, financial condition and operating
results;
•
In a highly concentrated business environment, if a particular customer does not place an order, or if
they delay or cancel orders, we may not be able to replace the business. Furthermore, because our
process control and yield management products are configured to each customer’s specifications, any
changes, delays or cancellations of orders may result in significant, non-recoverable costs;
•
As a result of this consolidation, the customers that survive the consolidation represent a greater
portion of our sales and, consequently, have greater commercial negotiating leverage. Many of our
large customers have more aggressive policies regarding engaging alternative, second-source suppliers
for the products we offer and, in addition, may seek and, on occasion, receive pricing, payment,
IP-related or other commercial terms that may have an adverse impact on our business and we may not
be able to pass on the cost of inflation to our customers. Any of these changes could negatively impact
our prices, customer orders, revenues and gross margins;
•
Certain customers have undergone significant ownership changes, created alliances with other
companies, experienced management changes or have outsourced manufacturing activities, any of
which may result in additional complexities in managing customer relationships and transactions. Any
future change in ownership or management of our existing customers may result in similar challenges,
including the possibility of the successor entity or new management deciding to select a competitor’s
products;
•
The highly concentrated business environment also increases our exposure to risks related to the
financial condition of each of our customers. For example, as a result of the challenging economic
environment during fiscal year 2009, we were (and, in some cases, continue to be) exposed to
additional risks related to the continued financial viability of certain of our customers. To the extent
our customers experience liquidity issues in the future, we may be required to incur additional credit
losses with respect to receivables owed to us by those customers. In addition, customers with liquidity
issues may be forced to reduce purchases of our equipment, delay deliveries of our products,
discontinue operations or may be acquired by one of our customers, and, in either case, such event
would have the effect of further consolidating our customer base;
•
Semiconductor manufacturers generally must commit significant resources to qualify, install and
integrate process control and yield management equipment into a semiconductor production line. We
believe that once a semiconductor manufacturer selects a particular supplier’s process control and yield
management equipment, the manufacturer generally relies upon that equipment for that specific
production line application for an extended period of time. Accordingly, we expect it to be more
difficult to sell our products to a given customer for that specific production line application and other
similar production line applications if that customer initially selects a competitor’s equipment; and
•
Prices differ among the products we offer for different applications due to differences in features
offered or manufacturing costs. If there is a shift in demand by our customers from our higher-priced to
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lower-priced products, our gross margin and revenues would decrease. In addition, when products are
initially introduced, they tend to have higher costs because of initial development costs and lower
production volumes relative to the previous product generation, which can impact gross margin.
Any of these factors could have a material adverse effect on our business, financial condition and operating
results.
We operate in industries that have historically been cyclical, including the semiconductor industry. The
purchasing decisions of our customers are highly dependent on the economies of both the local markets in
which they are located and the condition of the industry worldwide. If we fail to respond to industry cycles, our
business, financial condition and operating results could be adversely impacted.
The timing, length and severity of the up-and-down cycles in the industries in which we serve are difficult to
predict. The historically cyclical nature of the semiconductor industry in which we primarily operate is largely a
function of our customers’ capital spending patterns and need for expanded manufacturing capacity, which, in
turn, are affected by factors such as capacity utilization, consumer demand for products, inventory levels and our
customers’ access to capital. Cyclicality affects our ability to accurately predict future revenue and, in some
cases, future expense levels. During down cycles in our industry, the financial results of our customers may be
negatively impacted, which could result not only in a decrease in, or cancellation or delay of, orders (which are
generally subject to cancellation or delay by the customer with limited or no penalty) but also a weakening of
their financial condition that could impair their ability to pay for our products or our ability to recognize revenue
from certain customers. Our ability to recognize revenue from a particular customer may also be negatively
impacted by the customer’s funding status, which could be weakened not only by rising interest rates, adverse
business conditions or inaccessibility to capital markets for any number of macroeconomic or company-specific
reasons, but also by funding limitations imposed by the customer’s unique organizational structure. Any of these
factors could negatively impact our business, operating results and financial condition.
When cyclical fluctuations result in lower than expected revenue levels, operating results may be adversely
affected and cost reduction measures may be necessary for us to remain competitive and financially sound.
During periods of declining revenues, we must be in a position to adjust our cost and expense structure to
prevailing market conditions and to continue to motivate and retain our key employees. If we fail to respond, or
if our attempts to respond fail to accomplish our intended results, our business could be seriously harmed.
Furthermore, any workforce reductions and cost reduction actions that we adopt in response to down cycles may
result in additional restructuring charges, disruptions in our operations and loss of key personnel. In addition,
during periods of rapid growth, we must be able to increase manufacturing capacity and personnel to meet
customer demand. We can provide no assurance that these objectives can be met in a timely manner in response
to industry cycles. Each of these factors could adversely impact our operating results and financial condition.
The growth that we have experienced over the past few years has resulted in higher levels of backlog, or
RPO. The supply chain disruptions caused by the ongoing pandemic as well as favorable market trends have led
to customers agreeing to purchase equipment from us with lead times that are longer than our historical
experience. As the lead times for delivery of our equipment get longer, the risk increases that customers may
choose to change their equipment orders due to the evolution of the customer’s technological, production or
market needs. This could result in order modifications, rescheduling or even cancellations that may not be
communicated to us in a timely manner, causing RPO to remain elevated until agreed with the customer.
Customer communication delays for orders already placed could affect our ability to respond quickly in
weakening demand environments, which could harm our results of operations.
We are exposed to risks related to the use of AI by us, our competitors and other third parties.
We are increasingly incorporating AI capabilities into the development of technologies and our business
operations, and into our products and services. AI technology is complex and rapidly evolving, and may subject
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us to significant competitive, legal, regulatory and other risks. The implementation of AI can be costly and there
is no guarantee that our use of artificial intelligence will enhance our technologies, benefit our business
operations or produce products and services that are preferred by our customers. Our competitors may be more
successful in their artificial intelligence strategy and develop superior products and services with the aid of AI.
Additionally, AI algorithms or training methodologies may be flawed, and datasets may contain irrelevant,
insufficient or biased information, which can cause errors in outputs. This may give rise to legal liability, damage
our reputation and materially harm our business. The use of AI in the development of our products and services,
and our customers’ use of AI in relation to our products and services could also cause loss of IP, as well as
subject us to risks, including third-party claims, related to IP infringement or misappropriation, data privacy and
cybersecurity. Additionally, concerns over the use of AI for purposes contrary to public interests could impair
public acceptance of AI and impair demand for our products and services. Furthermore, the United States and
other countries may adopt laws and regulations related to AI. Such laws and regulations could cause us to incur
greater compliance costs and limit the use of AI in the development of our products and services. Any failure or
perceived failure by us to comply with such regulatory requirements could subject us to legal liabilities, damage
our reputation, or otherwise have a material and adverse impact on our business.
Risks Related to Our Business Model and Capital Structure
If we do not develop and introduce new products and technologies in a timely manner in response to
changing market conditions or customer requirements, our business could be seriously harmed.
Success in the industries in which we serve, including the semiconductor and PCB industries depends, in
part, on the continual improvement of existing technologies and rapid innovation of new solutions. The primary
driver of technology advancement in the semiconductor industry has been to shrink the lithography that prints the
circuit design on semiconductor chips. To the extent that driver slows, semiconductor manufacturers may delay
investments in equipment, investigate more complex device architectures, use new materials and develop
innovative fabrication processes. These and other evolving customer plans and needs require us to respond with
continued development programs and cut back or discontinue older programs, which may no longer have
industry-wide support. Technical innovations are inherently complex and require long development cycles and
appropriate staffing of highly qualified employees. Our competitive advantage and future business success
depend on our ability to accurately predict evolving industry standards, develop and introduce new products and
solutions that successfully address changing customer needs, win market acceptance of these new products and
solutions, and manufacture these new products in a timely and cost-effective manner. Our failure to accurately
predict evolving industry standards and develop as well as offer competitive technology solutions in a timely
manner with cost-effective products could result in loss of market share, unanticipated costs and inventory
obsolescence, which would adversely impact our business, operating results and financial condition.
We must continue to make significant investments in R&D in order to enhance the performance, features
and functionality of our products, to keep pace with competitive products and to satisfy customer demands.
Substantial R&D costs typically are incurred before we confirm the technical feasibility and commercial viability
of a new product, and not all development activities result in commercially viable products. There can be no
assurance that revenues from future products or product enhancements will be sufficient to recover the
development costs associated with such products or enhancements. In addition, we cannot be sure that these
products or enhancements will receive market acceptance nor that we will be able to sell these products at prices
that are favorable to us. Our business will be seriously harmed if we are unable to sell our products at favorable
prices or if the market in which we operate does not accept our products.
In addition, the complexity of our products exposes us to other risks. We regularly recognize revenue from a
sale upon shipment of the applicable product to the customer (even before receiving the customer’s formal
acceptance of that product) in certain situations, including sales of products for which installation is considered
perfunctory, transactions in which the product is sold to an independent distributor and we have no installation
35

obligations, and sales of products where we have previously delivered the same product to the same customer
location and that prior delivery has been accepted. However, our products are very technologically complex and
rely on the interconnection of numerous subcomponents (all of which must perform to their respective
specifications), so it is conceivable that a product for which we recognize revenue upon shipment may ultimately
fail to meet the overall product’s required specifications. In such a situation, the customer may be entitled to
certain remedies, which could materially and adversely affect our operating results for various periods and, as a
result, our stock price.
We derive a substantial percentage of our revenues from sales of inspection products. As a result, any delay
or reduction of sales of these products could have a material adverse effect on our business, financial condition
and operating results. The continued customer demand for these products and the development, introduction and
market acceptance of new products and technologies are critical to our future success.
Our success is dependent in part on our technology and other proprietary rights. If we are unable to
maintain our lead or protect our proprietary technology, we may lose valuable assets.
Our success is dependent, in part, on our technology and other proprietary rights. We own various U.S. and
international patents and have additional pending patent applications relating to some of our products and
technologies. The process of seeking patent protection is lengthy and expensive, and we cannot be certain that
pending or future applications will actually result in issued patents or that issued patents will be of sufficient
scope or strength to provide meaningful protection or commercial advantage to us. Other companies and
individuals, including our larger competitors, may develop technologies and obtain patents relating to our
business that are similar or superior to our technology or may design around the patents we own, which may
adversely affect our business. In addition, we at times engage in collaborative technology development efforts
with our customers and suppliers, and these collaborations may constitute a key component of certain of our
ongoing technology and product R&D projects. The termination of any such collaboration, or delays caused by
disputes or other unanticipated challenges that may arise in connection with any such collaboration, could
significantly impair our R&D efforts, which could have a material adverse impact on our business and
operations.
We also maintain trademarks on certain of our products and services and claim copyright protection for
certain proprietary software and documentation. However, we can give no assurance that our trademarks and
copyrights will be upheld or successfully deter infringement by third parties.
While patent, copyright and trademark protection for our IP is important, we believe our future success in
highly dynamic markets is most dependent upon the technical competence and creative skills of our personnel.
We attempt to protect our trade secrets and other proprietary information through confidentiality and other
agreements with our customers, suppliers, employees and consultants and through other security measures. We
also maintain exclusive and non-exclusive licenses with third parties for strategic technology used in certain
products. However, these employees, consultants and third parties may breach these agreements, and we may not
have adequate remedies for wrongdoing. We also try to control access to and distribution of our technology and
proprietary information. Despite our efforts, internal or external parties may attempt to copy, disclose, obtain or
misappropriate our IP or technology. In addition, former employees may seek employment with our customers,
suppliers or competitors and there can be no assurance that the confidential nature of our proprietary information
will be maintained in the course of such future employment. In addition, the laws of certain territories in which
we develop, manufacture or sell our products may not protect our IP rights to the same extent as the laws of the
U.S. In any event, the extent to which we can protect our trade secrets through the use of confidentiality
agreements is limited, and our success will depend to a significant extent on our ability to innovate ahead of our
competitors.
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Our future performance depends, in part, upon our ability to continue to compete successfully worldwide.
Our industry includes large manufacturers with substantial resources to support customers worldwide. Some
of our competitors are diversified companies with greater financial resources and more extensive research,
engineering, manufacturing, marketing, and customer service and support capabilities than we possess. We face
competition from companies whose strategy is to provide a broad array of products and services, some of which
compete with the products and services we offer. These competitors may bundle their products in a manner that
may discourage customers from purchasing our products, including pricing such competitive tools significantly
below our product offerings. In addition, we face competition from smaller emerging companies whose strategy
is to provide a portion of the products and services that we offer, using innovative technology to sell products
into specialized markets. The strength of our competitive positions in many of our existing markets is largely due
to our leading technology, which is the result of continuing significant investments in product R&D. However,
we may enter new markets, whether through acquisitions or new internal product development, in which
competition is based primarily on product pricing, not technological superiority. Further, some new growth
markets that emerge may not require leading technologies. Loss of competitive position in any of the markets we
serve, or an inability to sell our products on favorable commercial terms in new markets we may enter, could
negatively affect our prices, customer orders, revenues, gross margins and market share, any of which would
negatively affect our operating results and financial condition.
Our business would be harmed if we do not receive parts sufficient in number and performance to meet
our production requirements and product specifications in a timely and cost-effective manner.
We use a wide range of materials in the production of our products, including custom electronic and
mechanical components, and we use numerous suppliers to supply these materials. Generally, we do not have
guaranteed supply arrangements with our suppliers. Because of the variability and uniqueness of customers’
orders, we do not maintain an extensive inventory of materials for manufacturing. Through our business
interruption planning, we seek to minimize the risk of production and service interruptions and/or shortages of
key parts by, among other things, monitoring the financial stability of key suppliers, identifying (but not
necessarily qualifying) possible alternative suppliers and maintaining appropriate inventories of key parts.
Although we make reasonable efforts to ensure that parts are available from multiple suppliers, certain key parts
are available only from a single supplier or a limited group of suppliers. Also, key parts we obtain from some of
our suppliers incorporate the suppliers’ proprietary IP; in those cases, we are increasingly reliant on third parties
for high-performance, high-technology components, which reduces the amount of control we have over the
availability and protection of the technology and IP that is used in our products. In addition, if certain of our key
suppliers experience liquidity issues and are forced to discontinue operations, which is a heightened risk,
especially during economic downturns, it could affect their ability to deliver parts and could result in delays for
our products. Similarly, especially with respect to suppliers of high-technology components, our suppliers
themselves have increasingly complex supply chains, and delays or disruptions at any stage of their supply
chains may prevent us from obtaining parts in a timely manner and result in delays for our products, or our
suppliers might pass on the cost of inflation to us while we are unable to adjust pricing with our own customers.
Our operating results and business may be adversely impacted if we are unable to obtain parts to meet our
production requirements and product specifications, or if we are able to do so only on unfavorable terms.
Furthermore, a supplier may discontinue production of a particular part for any number of reasons, including the
supplier’s financial condition or business operational decisions, which would require us to purchase, in a single
transaction, a large number of such discontinued parts in order to ensure that a continuous supply of such parts
remains available to our customers. Such “end-of-life” parts purchases could result in significant expenditures by
us in a particular period, and, ultimately, any unused parts may result in a significant inventory write-off, either
of which could have an adverse impact on our financial condition and results of operations for the applicable
periods.
37

If we fail to operate our business in accordance with our business plan, our operating results, business
and stock price may be significantly and adversely impacted.
We attempt to operate our business in accordance with a business plan that is established annually, revised
frequently (generally quarterly), and reviewed by management even more frequently (at least monthly). Our
business plan is developed based on a number of factors, many of which require estimates and assumptions, such
as our expectations of the economic environment, future business levels, our customers’ willingness and ability
to place orders, lead-times, and future revenue and cash flow. Our budgeted operating expenses, for example, are
based in part on our future revenue expectations. However, our ability to achieve our anticipated revenue levels is
a function of numerous factors, including the volatile and historically cyclical nature of our primary industry,
customer order cancellations, macroeconomic changes, operational matters regarding particular agreements, our
ability to manage customer deliveries, the availability of resources for the installation of our products, delays or
accelerations by customers in taking deliveries and the acceptance of our products (for products where customer
acceptance is required before we can recognize revenue from such sales), our ability to operate our business and
sales processes effectively, and a number of the other risk factors set forth in this Item 1A.
Because our expenses are in most cases relatively fixed in the short term, any revenue shortfall below
expectations could have an immediate and significant adverse effect on our operating results. Similarly, if we fail
to manage our expenses effectively or otherwise fail to maintain rigorous cost controls, we could experience
greater than anticipated expenses during an operating period, which would also negatively affect our results of
operations. If we fail to operate our business consistent with our business plan, our operating results in any period
may be significantly and adversely impacted. Such an outcome could cause customers, suppliers or investors to
view us as less stable, or could cause us to fail to meet financial analysts’ revenue or earnings estimates, any of
which could have an adverse impact on our stock price.
In addition, our management is constantly striving to balance the requirements and demands of our
customers with the availability of resources, the need to manage our operating model and other factors. In
furtherance of those efforts, we often must exercise discretion and judgment as to the timing and prioritization of
manufacturing, deliveries, installations and payment scheduling. Any such decisions may impact our ability to
recognize revenue, including the fiscal period during which such revenue may be recognized, with respect to
such products, which could have a material adverse effect on our business, results of operations or stock price.
We have a leveraged capital structure.
As of June 30, 2024, we had $6.70 billion aggregate principal amount of outstanding indebtedness,
consisting of $5.95 billion aggregate principal amount of senior, unsecured long-term notes (the “Senior Notes”).
We have $750.0 million principal of our senior, unsecured long-term notes due during the second quarter of
fiscal 2025. This includes an issuance in February 2024 of $750.0 million aggregate principal amount of senior,
unsecured notes, consisting of $500.0 million of 4.700% senior, unsecured notes due February 1, 2034 and an
additional $250.0 million of 4.950% senior, unsecured notes due July 15, 2052 which was originally issued in
June 2022. We have a Credit Agreement (the “Credit Agreement”) and a Revolving Credit Facility (the
“Revolving Credit Facility”) with a maturity date of June 8, 2027 with two one-year extension options that allow
us to borrow up to $1.50 billion. Subject to the terms of the Credit Agreement, the Revolving Credit Facility may
be increased by an amount up to $250.0 million in the aggregate. As of June 30, 2024, we had no outstanding
borrowings under our Revolving Credit Facility. We may incur additional indebtedness in the future by accessing
the unfunded portion of our Revolving Credit Facility and/or entering into new financing arrangements. We also
announced a stock repurchase program, under which the remaining available for repurchases was $2.18 billion as
of June 30, 2024. A portion of the remaining repurchases may be financed with new indebtedness. Our ability to
pay interest and repay the principal amount of our current indebtedness is dependent upon our ability to manage
our business operations, our credit rating, the ongoing interest rate environment and the other risk factors
discussed in this Item 1A. There can be no assurance that we will be able to manage any of these risks
successfully.
38

In certain circumstances involving a change of control followed by a downgrade of the rating of a series of
our Senior Notes by at least two of Moody’s Investors Service (“Moody’s”), S&P Global Ratings (“S&P”) and
Fitch Inc. (“Fitch”) unless we have exercised our rights to redeem the Senior Notes of such series, we will be
required to make an offer to repurchase all or, at the holder’s option, any part, of each holder’s Senior Notes of
that series pursuant to the offer. At that time, we will be required to offer payment in cash equal to 101% of the
aggregate principal amount of Senior Notes repurchased plus accrued and unpaid interest, if any, on the Senior
Notes repurchased, up to, but not including, the date of repurchase. We cannot make any assurance that we will
have sufficient financial resources at such time, nor that we will be able to arrange financing to pay the
repurchase price of that series of Senior Notes. Our ability to repurchase that series of Senior Notes in such event
may be limited by law, by the relevant indenture associated with that series of Senior Notes, or by the terms of
other agreements to which we may be a party at such time. If we fail to repurchase that series of Senior Notes as
required by the terms of such Senior Notes, it would constitute an event of default under the relevant indenture
governing that series of Senior Notes which, in turn, may also constitute an event of default under our other
obligations.
Borrowings under our Revolving Credit Facility bear interest at a floating rate, and an increase in interest
rates, particularly in the current environment of rising interest rates, would require us to pay additional interest on
any borrowings, which may have an adverse effect on the value and liquidity of our debt and the market price of
our common stock could decline. The interest rate under our Revolving Credit Facility is also subject to (i) an
adjustment in conjunction with our credit rating downgrades or upgrades and (ii) an adjustment based on our
performance against certain sustainability key performance indicators (“KPI”) related to GHG emissions and
renewable electricity usage. Additionally, under our Revolving Credit Facility, we are required to comply with
affirmative and negative covenants, which include the maintenance of certain financial ratios, the details of
which can be found in Note 8 “Debt” to our Consolidated Financial Statements.
If we fail to comply with these covenants, we will be in default and our borrowings may become
immediately due and payable. There can be no assurance that we will have sufficient financial resources nor that
we will be able to arrange financing to repay our borrowings at such time. In addition, certain of our domestic
subsidiaries are required to guarantee our borrowings under our Revolving Credit Facility. In the event we
default on our borrowings, these domestic subsidiaries shall be liable for our borrowings, which could disrupt our
operations and result in a material adverse impact on our business, financial condition or stock price.
Our leveraged capital structure may adversely affect our financial condition, results of operations and net
income per share.
Our substantial amount of indebtedness could have adverse consequences including, but not limited to:
•
A negative impact on our ability to satisfy our future obligations;
•
An increase in the portion of our cash flows that may have to be dedicated to interest and principal
payments that may not be available for operations, working capital, capital expenditures, acquisitions,
investments, dividends, stock repurchases, general corporate or other purposes;
•
An impairment of our ability to obtain additional financing in the future; and
•
Obligations to comply with restrictive and financial covenants as noted in the above risk factor and
Note 8 “Debt” to our Consolidated Financial Statements.
Our ability to satisfy our future expenses as well as our debt obligations will depend on our future
performance, which will be affected by financial, business, economic, regulatory and other factors. Furthermore,
our future operations may not generate sufficient cash flows to enable us to meet our future expenses and service
our debt obligations, which may impact our ability to manage our capital structure to preserve and maintain our
investment grade rating. If our future operations do not generate sufficient cash flows, we may need to access the
money available for borrowing under our Revolving Credit Facility or enter into new financing arrangements to
39

obtain necessary funds. If we determine it is necessary to seek additional funding for any reason, we may not be
able to obtain such funding or, if funding is available, we may not be able to obtain it on acceptable terms. Any
borrowings under our Revolving Credit Facility will place further pressure on us to comply with the financial
covenants. If we fail to make a payment associated with our debt obligations, we could be in default on such
debt, and such a default could cause us to be in default on our other obligations.
There can be no assurance that we will continue to declare cash dividends at all or in any particular
amounts.
We intend to continue to pay quarterly dividends subject to capital availability and periodic determinations
by our Board of Directors that cash dividends are in the best interest of our stockholders and are in compliance
with all laws and agreements applicable to the declaration and payment of cash dividends by us. However, future
dividends may be affected by, among other factors: our views on potential future capital requirements for
investments in acquisitions and the funding of our R&D; legal risks; stock repurchase programs; changes in
federal and state income tax laws or corporate laws; changes to our business model; and our increased interest
and principal payments required by our outstanding indebtedness and any additional indebtedness that we may
incur in the future. Our dividend payments may change from time to time, and we cannot provide assurance that
we will continue to declare dividends at all or in any particular amounts. A reduction in our dividend payments
could have a negative effect on our stock price.
We are exposed to risks related to our commercial terms and conditions, including our indemnification of
third parties, as well as the performance of our products.
Although our standard commercial documentation sets forth the terms and conditions that we intend to
apply to commercial transactions with our business partners, counterparties to such transactions may not
explicitly agree to our terms and conditions. In situations where we engage in business with a third party without
an explicit master agreement regarding the applicable terms and conditions, or where the commercial
documentation applicable to the transaction is subject to varying interpretations, we may have disputes with those
third parties regarding the applicable terms and conditions of our business relationship with them. Such disputes
could lead to a deterioration of our commercial relationship with those parties, costly and time-consuming
litigation, or additional concessions or obligations being offered by us to resolve such disputes, or could impact
our revenue or cost recognition. Any of these outcomes could materially and adversely affect our business,
financial condition and results of operations.
In addition, in our commercial agreements, from time to time in the normal course of business, we
indemnify third parties with whom we enter into contractual relationships, including customers, suppliers and
lessors, with respect to certain matters. We have agreed, under certain conditions, to hold these third parties
harmless against specified losses, such as those arising from a breach of representations or covenants, third-party
claims that our products, when used for their intended purposes, infringe the IP rights of such third parties, or
other claims made against certain parties. We may be compelled to enter into or accrue for probable settlements
of alleged indemnification obligations, or we may be subject to potential liability arising from our customers’
involvements in legal disputes. In addition, notwithstanding the provisions related to limitations on our liability
that we seek to include in our business agreements, the counterparties to such agreements may dispute our
interpretation or application of such provisions, and a court of law may not interpret or apply such provisions in
our favor, any of which could result in an obligation for us to pay material damages to third parties and engage in
costly legal proceedings. It is difficult to determine the maximum potential amount of liability under any
indemnification obligations, whether or not asserted, due to our limited history of prior indemnification claims
and the unique facts and circumstances that are likely to be involved in any particular claim. Our business,
financial condition and results of operations in a reported fiscal period could be materially and adversely affected
if we expend significant amounts in defending or settling any purported claims, regardless of their merit or
outcomes.
40

We are also exposed to potential costs associated with unexpected product performance issues. Our products
and production processes are extremely complex and, thus, could contain unexpected product defects, especially
when products are first introduced. Unexpected product performance issues could result in significant costs being
incurred by us, including increased service or warranty costs, providing product replacements for (or
modifications to) defective products, litigation related to defective products, reimbursement for damages caused
by our products, product recalls, or product write-offs or disposal costs. These costs could be substantial and
could have an adverse impact upon our business, financial condition and operating results. In addition, our
reputation with our customers could be damaged as a result of such product defects, which could reduce demand
for our products and negatively impact our business.
Furthermore, we occasionally enter into volume purchase agreements with our larger customers, and these
agreements may provide for certain volume purchase incentives, such as credits toward future purchases. We
believe that these arrangements are beneficial to our long-term business, as they are designed to encourage our
customers to purchase larger volumes of our products. However, these arrangements could require us to
recognize a reduced level of revenue for the products that are initially purchased, to account for the potential
future credits or other volume purchase incentives. Our volume purchase agreements require significant
estimation for the amounts to be accrued depending upon the estimate of volume of future purchases. As such,
we are required to update our estimates of the accruals on a periodic basis. Until the earnings process is
complete, our estimates could differ in comparison to actual results. As a result, these volume purchase
arrangements, while expected to be beneficial to our business over time, could materially and adversely affect
our results of operations in near-term periods, including the revenue we can recognize on product sales and,
therefore, our gross margins.
In addition, we may, in limited circumstances, enter into agreements that contain customer-specific
commitments on pricing, tool reliability, spare parts stocking levels, response time and other commitments, and
we may be unable to adjust pricing with our customers despite rising inflation in our supply chain. Furthermore,
we may give these customers limited audit or inspection rights to enable them to confirm that we are complying
with these commitments. If a customer elects to exercise its audit or inspection rights, we may be required to
expend significant resources to support the audit or inspection, as well as to defend or settle any dispute with a
customer that could potentially arise out of such audit or inspection. To date, we have made no significant
accruals in our Consolidated Financial Statements for this contingency. While we have not in the past incurred
significant expenses for resolving disputes regarding these types of commitments, we cannot make any assurance
that we will not incur any such liabilities in the future. Our business, financial condition and results of operations
in a reported fiscal period could be materially and adversely affected if we expend significant amounts in
supporting an audit or inspection, or defending or settling any purported claims, regardless of their merit or
outcomes.
There are risks associated with our receipt of government funding for R&D.
We are exposed to additional risks related to our receipt of external funding for certain strategic
development programs from various governments and government agencies, both domestically and
internationally. Governments and government agencies typically have the right to terminate funding programs at
any time in their sole discretion, or a project may be terminated by mutual agreement if the parties determine that
the project’s goals or milestones are not being achieved, so there is no assurance that these sources of external
funding will continue to be available to us in the future. In addition, under the terms of these government grants,
the applicable granting agency typically has the right to audit the costs that we incur, directly and indirectly, in
connection with such programs. Any such audit could result in modifications to, or even termination of, the
applicable government funding program. For example, if an audit were to identify any costs as being improperly
allocated to the applicable program, those costs would not be reimbursed, and any such costs that had already
been reimbursed would have to be refunded. We do not know the outcome of any future audits. Any adverse
finding resulting from any such audit could lead to penalties (financial or otherwise), termination of funding
programs, suspension of payments, fines and suspension or prohibition from receiving future government
41

funding from the applicable government or government agency, any of which could adversely impact our
operating results, financial condition and ability to operate our business.
We have recorded significant asset impairment, restructuring and inventory write-off charges and may do
so again in the future, which could have a material negative impact on our results of operations.
Historically, we have recorded restructuring charges related to our prior global workforce reductions, large
excess inventory write-offs, and material impairment charges related to our goodwill and purchased intangible
assets, such as the goodwill impairment charge recorded in the third quarter of fiscal 2024 and the goodwill and
purchased intangible asset impairment charges recorded in the second quarter of fiscal 2024. Workforce changes
can also temporarily reduce workforce productivity, which could be disruptive to our business and adversely
affect our results of operations. In addition, we may not achieve or sustain the expected cost savings or other
benefits of our restructuring plans, or do so within the expected time frame. If we again restructure our
organization and business processes, implement additional cost-reduction actions or discontinue certain business
operations, we may take additional, potentially material, restructuring charges related to, among other things,
employee terminations or exit costs. We may also be required to write off additional inventory if our product
build plans or demand for service inventory decline. Also, in the event that our lead times from suppliers increase
(possibly due to the increasing complexity of the parts and components they provide) and the lead times
demanded by our customers decrease (which may be due to many factors, including the time pressures they face
when introducing new products or technology or bringing new facilities into production), we may be compelled
to increase our commitments, and, therefore, our risk exposure, to inventory purchases to meet our customers’
demands in a timely manner, and that inventory may need to be written off if demand for the underlying product
declines for any reason. Such additional write-offs could result in material charges.
We have recorded material charges related to the impairment of our goodwill and purchased intangible
assets. Goodwill represents the excess of costs over the net fair value of net assets acquired in a business
combination. Goodwill is not amortized, but is instead tested for impairment at least annually in accordance with
authoritative guidance for goodwill. Purchased intangible assets with estimable useful lives are amortized over
their respective estimated useful lives based on economic benefit if known or using the straight-line method, and
are reviewed for impairment in accordance with authoritative guidance for long-lived assets. The valuation of
goodwill and intangible assets requires assumptions and estimates of many critical factors, including, but not
limited to, declines in our operating cash flows, declines in our stock price or market capitalization, declines in
our market share, and declines in revenues or profits. A substantial decline in our stock price, or any other
adverse change in market conditions, particularly if such change has the effect of changing one of the critical
assumptions or estimates we previously used to calculate the value of our goodwill or intangible assets (and, as
applicable, the amount of any previous impairment charge), could result in a change to the estimation of fair
value that could result in an additional impairment charge.
Any such additional material charges, whether related to restructuring or goodwill or purchased intangible
asset impairment, may have a material negative impact on our operating results and related financial statements.
We are exposed to risks related to our receivables factoring and banking arrangements.
We enter into factoring arrangements with financial institutions to sell certain of our trade receivables and
promissory notes from customers without recourse. In addition, we maintain cash and cash equivalents with
several domestic and foreign financial institutions, in excess of the Federal Deposit Insurance Corporation
insurance limit. If we were to stop entering into these factoring arrangements, our operating results, financial
condition and cash flows could be adversely impacted by delays or failures in collecting trade receivables.
However, by engaging these financial institutions for factoring arrangements and for banking services, we are
exposed to additional risks that any of such financial institutions may prove to be not financially viable. If any of
these financial institutions experiences financial difficulties or is otherwise unable to honor the terms of our
factoring or deposit arrangements, we may experience material financial losses due to the failure of such
42

arrangements or a lack of access to our funds, any of which could have an adverse impact upon our operating
results, financial condition and cash flows.
We are subject to the risks of additional government actions in the event we were to breach the terms of
any settlement arrangement into which we have entered.
In connection with the settlement of certain government actions and other legal proceedings related to our
historical stock option practices, we have explicitly agreed, as a condition to such settlements, that we will
comply with certain laws, such as the books and records provisions of the federal securities laws. If we were to
violate any such law, we might not only be subject to the significant penalties applicable to such violation, but
our past settlements may also be impacted by such violation, which could give rise to additional government
actions or other legal proceedings. Any such additional actions or proceedings may require us to expend
significant management time and incur significant accounting, legal and other expenses, and may divert attention
and resources from the operation of our business. These expenditures and diversions, as well as an adverse
resolution of any such action or proceeding, could have a material adverse effect on our business, financial
condition and results of operations.
Our Bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for
certain actions and proceedings, which could limit the ability of our stockholders to obtain a judicial forum of
their choice for disputes with the Company or its directors, officers or employees.
Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of
Chancery of the State of Delaware generally shall be the sole and exclusive forum for (i) any derivative action or
proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty
owed by any director, officer or employee of the Company to the Company or its stockholders, (iii) any action
asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, our
Certificate of Incorporation or Bylaws or (iv) any other action asserting a claim arising under, in connection with,
and governed by the internal affairs doctrine. This choice of forum provision does not waive our compliance with
our obligations under the federal securities laws and the rules and regulations thereunder. Moreover, the
provision does not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act or
by the Securities Act of 1933, as amended.
This choice of forum provision may increase costs to bring a claim, discourage claims or limit a
stockholder’s ability to bring a claim in a judicial forum that the stockholder finds favorable for disputes with the
Company or our directors, officers or employees, which may discourage such lawsuits against the Company and
its directors, officers and employees, even though an action, if successful, might benefit our stockholders.
Alternatively, if a court were to find the choice of forum provision to be inapplicable or unenforceable in an
action, we may incur additional costs associated with resolving such matters in other jurisdictions, which could
increase our costs of litigation and adversely affect our business and financial condition.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C.CYBERSECURITY
Cybersecurity Risk Management and Strategy
We have a cybersecurity risk management process intended to protect the confidentiality, integrity and
availability of our critical systems and information. We design and assess our process based on the National
Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”). This does not imply that we
meet any particular technical standards, specifications or requirements, only that we use the NIST CSF as a guide
to help us identify, assess and manage cybersecurity risks relevant to our business.
43

Our cybersecurity risk management process is integrated into our overall risk management process, and
shares common methodologies, reporting channels and governance processes that apply across the risk
management process to other legal, compliance, strategic, operational and financial risk areas.
Key elements of our cybersecurity risk management process include, but are not limited to, the following:
•
Risk assessments designed to help identify material risks from cybersecurity threats to our critical
systems and information;
•
A cybersecurity team principally responsible for managing (1) our cybersecurity risk assessment
processes, (2) our security controls, and (3) our response to cybersecurity incidents;
•
The use of external service providers, where appropriate, to assess, test or otherwise assist with aspects
of our security processes;
•
Cybersecurity awareness training of our workforce;
•
A cybersecurity incident response plan and processes for responding to cybersecurity incidents; and
•
Risk management processes based on our assessment of the respective risk profile of key third parties.
We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us,
including our operations, business strategy, results of operations, or financial condition. See Part I Item 1A “Risk
Factors – We depend on information technology for our business and are exposed to risks related to
cybersecurity threats and cyber incidents affecting our, our customers’, suppliers’ and other service providers’
systems and networks.”
Cybersecurity Governance
Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit
Committee (the “Committee”) oversight of cybersecurity risks, including oversight of management’s
implementation of our cybersecurity risk management process.
The Committee receives quarterly reports from management on our cybersecurity risks. In addition,
management updates the Committee, where it deems appropriate, regarding cybersecurity incidents it considers
to be significant or potentially significant.
The Committee reports to the full Board regarding its activities, including those related to cybersecurity.
The full Board also regularly receives briefings from management on our cyber risk management process. Board
members receive presentations on cybersecurity topics from management or external experts as part of the
Board’s continuing education on topics that impact public companies.
Our management team, including our Chief Legal Officer and Chief Information Security Officer (“CISO”),
is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary
responsibility for our overall cybersecurity risk management process and supervises both our internal
cybersecurity personnel and our retained external cybersecurity consultants. Our CISO has a degree with a focus
on information technology, and is a Certified Information Systems Auditor with over 20 years of experience in
information technology related roles, including building and leading cybersecurity, risk management and
information protection teams. Our CISO reports to our Chief Legal Officer who oversees cybersecurity, and
holds a Carnegie Mellon University Software Engineering Institute CERT Certificate for Cybersecurity
Oversight. The other members of the operational cybersecurity team collectively have decades of relevant
education and experience and maintain a wide range of industry certifications. We invest in regular, ongoing
cybersecurity training for the cybersecurity team.
44

Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate
and remediate cybersecurity risks and incidents through various means, which may include: briefings from
internal security personnel; threat intelligence and other information obtained from governmental, public or
private sources, including external consultants engaged by us; and alerts and reports produced by security tools
deployed in our information technology environment.
ITEM 2.
PROPERTIES
Our headquarters are located in Milpitas, California. As of June 30, 2024, we owned or leased a total of
approximately 5 million square feet of space for research, engineering, marketing, service, sales and
administration worldwide primarily in the U.S., Singapore, Israel, India, China, and Belgium. Our operating
leases expire at various times through April 1, 2052, subject to renewal, with some of the leases containing
renewal option clauses at the fair market value, for additional periods up to five years. Additional information
regarding these leases is incorporated herein by reference to Note 9 “Leases” to our Consolidated Financial
Statements. We believe our properties are adequately maintained and suitable for their intended use and that our
production facilities have capacity adequate for our current needs. We do not identify or allocate assets by
operating segment.
Information regarding our principal properties as of June 30, 2024 is set forth below:
(Square Feet)
US
Other Countries
Total
Owned(1)
1,134,127
1,086,070
2,220,197
Leased
612,631
2,523,446
3,136,077
Total
1,746,758
3,609,516
5,356,274
(1)
Includes 421,132 square feet of property owned at our location in Serangoon, Singapore, where the land on
which this building resides is leased.
ITEM 3.
LEGAL PROCEEDINGS
The information set forth below under Note 15 “Litigation and Other Legal Matters” to our Consolidated
Financial Statements is incorporated herein by reference.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
45

PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed and traded on the NASDAQ Global Select Market of The Nasdaq Stock Market
LLC under the symbol “KLAC.”
On August 1, 2024, we announced that our Board of Directors had declared a quarterly cash dividend of
$1.45 per share to be paid on September 3, 2024 to stockholders of record as of the close of business on
August 15, 2024.
As of July 22, 2024, there were 413 holders of record of our common stock.
Equity Repurchase Plans
The following is a summary of stock repurchases for each month during the fourth quarter of the fiscal year
ended June 30, 2024.
Period
Total Number of
Shares
Purchased(1)
Average Price Paid(3)
per Share
Total Number of
Shares Purchased
As Part of
Publicly Announced
Plans or Programs(1)
Approximate Dollar Value
that May Yet Be Purchased
Under the Plans or
Programs(1)(2)
April 1, 2024 to April 30, 2024
247,051
$674.14
247,051
$2,478,282,516
May 1, 2024 to May 31, 2024
223,638
$728.15
223,638
$2,315,441,164
June 1, 2024 to June 30, 2024
168,498
$802.35
168,498
$2,180,246,686
Total
639,187
639,187
(1)
Our Board of Directors has authorized a program that permits us to repurchase our common stock, including
a $2.00 billion increase approved by the Board in the first quarter of fiscal 2024. As of June 30, 2024,
approximately $2.18 billion remained available for repurchases under our repurchase program. All shares in
the table were purchased pursuant to our publicly announced repurchase program.
(2)
Our stock repurchase program has no expiration date and may be suspended at any time. Future repurchases
of shares of our common stock under our repurchase program may be effected through various different
repurchase transaction structures including isolated open market transactions, accelerated share repurchase
agreements or systematic repurchase plans, subject to market conditions, applicable legal requirements and
other factors.
(3)
Average price paid per share and approximate dollar value of shares that may yet be purchased under the
plans or programs exclude the excise tax imposed on certain stock repurchases as part of the IRA, or other
fees, costs or expenses that may be applicable to the repurchases.
Stock Performance Graph and Cumulative Total Return
Notwithstanding any statement to the contrary in any of our previous or future filings with the SEC, the
following information relating to the price performance of our common stock shall not be deemed “filed” with
the SEC under the Securities Exchange Act and shall not be incorporated by reference into any such filings.
46

The following graph compares the cumulative five-year total return attained by stockholders on our
common stock relative to the cumulative total returns of the S&P 500 Index and the Philadelphia Semiconductor
Index (“PHLX”). The graph tracks the performance of a $100 investment in our common stock and in each of the
indices (with the reinvestment of all dividends) from June 30, 2019 to June 30, 2024.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among KLA Corporation, the S&P 500 Index
and the PHLX Semiconductor Index
KLA Corporation
$800
$600
$700
$500
$400
$300
$200
$100
$0
6/19
6/20
6/21
6/22
6/23
6/24
S&P 500
PHLX Semiconductor
* $100 invested on 6/30/19 in stock or index, including reinvestment of dividends. Fiscal year ending June 30.
Copyright© 2024 Standard & Poor’s, a division of S&P Global. All rights reserved.
June 2019
June 2020
June 2021
June 2022
June 2023
June 2024
KLA Corporation
$100.00
$167.96
$283.88
$282.67
$435.50
$747.40
S&P 500
$100.00
$107.51
$151.36
$135.29
$161.80
$201.54
PHLX Semiconductor
$100.00
$139.33
$236.62
$183.13
$266.96
$402.02
Our fiscal year ends June 30. The comparisons in the graph above are based upon historical data and are not
necessarily indicative of, nor intended to forecast, future stock price performance.
47

ITEM 6.
[RESERVED]
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction
with our Consolidated Financial Statements and the related notes included in Item 8 “Financial Statements and
Supplementary Data” in this Annual Report on Form 10-K. This discussion contains forward-looking statements,
which involve risks and uncertainties. Our actual results could differ materially from those anticipated in the
forward-looking statements as a result of certain factors, including but not limited to those discussed in Part I
Item 1A “Risk Factors” and elsewhere in this Annual Report on Form 10-K (see “Special Note Regarding
Forward-Looking Statements”). Discussions and analysis of fiscal year 2023 as compared against fiscal year
2022 have been omitted and can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended
June 30, 2023, filed with the SEC.
EXECUTIVE SUMMARY
We are a leading supplier of process control and yield management solutions and services for the
semiconductor and related electronics industries. Our broad portfolio of inspection and metrology products, and
related service, software and other offerings, support R&D and manufacturing of ICs, wafers and reticles. Our
products, services and expertise are used by our customers to measure, detect, analyze and resolve critical and
nanometric level product defects, helping them to manage manufacturing process challenges and to obtain higher
finish product yields at lower cost. We also offer advanced technology solutions to address various
manufacturing needs of PCBs, FPDs, specialty semiconductor devices and other electronic components,
including advanced packaging, LED, power devices, compound semiconductor, and data storage industries, as
well as general materials research.
Our semiconductor customers generally operate in one or both of the major semiconductor device
manufacturing markets: memory and foundry/logic. The pervasive and increasing needs for semiconductors in
many consumer and industrial products, the rapid proliferation of new applications for more advanced
semiconductor devices, and the increasing complexity associated with leading edge semiconductor
manufacturing drive demand for our process control and yield management solutions. Continuing advancement
of innovation spurred by the performance, power and price benefits of being at the leading edge, increasing
involvement in legacy nodes as semiconductor content increases, and innovation and growth of new enabling
technologies are fueling long-term growth for the semiconductor equipment industry. End-market demand
drivers that are expected to continue in the long term are related to high performance computing, AI including
2-nanometer chip technology, the deployment of 5G telecommunications technology and associated high-end
mobile devices, the electrification and digitization of the automotive industry, the revival of personal computer
demand and associated innovations to support remote work, virtual collaboration, remote learning and
entertainment, and the growth of the IoT.
Recently, the semiconductor industry environment has improved as the emergence of disruptive
technologies such as AI and continuing advancement of innovation, as well as rising semiconductor content
across end-markets and strategic investments in legacy nodes fuel growth. Our foundry/logic customers are
slowly increasing their capital intensity, as they continue to scale and incorporate new technologies.
Additionally, technology development investments supporting AI and high bandwidth memory are improving the
environment for memory device manufacturers. While we continue to invest in technological innovation, factors
such as delays from customers, in adopting new chips and technology methods, could impact process control
capital intensity. Push out or cancellation of deliveries to our customers could still cause earnings volatility, due
to the timing of revenue recognition as well as increased risk of inventory-related charges.
48

We are organized into three reportable segments, as follows:
•
Semiconductor Process Control: a comprehensive portfolio of inspection, metrology and data analytics
products as well as related service offerings that help IC manufacturers achieve target yields
throughout the semiconductor fabrication process, from R&D to final volume production.
•
Specialty Semiconductor Process: advanced vacuum deposition and etching process tools used by a
broad range of specialty semiconductor customers.
•
PCB and Component Inspection: a range of inspection, testing and measurement, and direct imaging
for patterning products used by manufacturers of PCBs, FPDs, advanced packaging, MEMS and other
electronic components. In March 2024, we made the decision to exit the Display business by
announcing the end of manufacturing of most Display products by December 31, 2024, but we will
continue to provide services to the installed base of Display products for existing customers.
A majority of our revenues are derived from outside the U.S., and include geographic regions such as China,
Taiwan, Korea, Japan, Europe and Israel, and Rest of Asia. China remains a major region for manufacturing of
legacy node logic and memory chips, adding to its role as the world’s largest consumer of ICs. Additionally, a
significant portion of global FPD and PCB manufacturing has migrated to China. Chinese government initiatives
around self-sustainability are propelling China to expand its domestic manufacturing capacity and attracting
investment from semiconductor manufacturers from Taiwan, Korea, Japan and the U.S. Although China is
currently seen as an important long-term growth region for the semiconductor and electronics capital equipment
sector, Commerce has adopted regulations and added certain China-based entities to the U.S. Entity List (a list of
parties that are generally ineligible to receive U.S.-regulated items without prior licensing from BIS), restricting
our ability to provide products and services to such entities without a license. In addition, Commerce has
imposed export licensing requirements on China-based customers that are military end users or engaged in
military end uses, as well as requiring our customers to obtain an export license when they use certain
semiconductor capital equipment based on U.S. technology to manufacture products connected to certain entities
on the U.S. Entity List.
In addition, in October 2022, BIS issued the 2022 BIS Rules, which imposed export licensing requirements
for certain U.S. semiconductor and high-performance computing technology (including wafer fab equipment), for
the use of such technology for certain end uses in China, and for the provision of support by U.S. Persons to
certain advanced IC fabs located in China. In particular, the 2022 BIS Rules impose export license requirements
effectively on all KLA products and services to customers located in China that fabricate:
a. Non-planar ICs (e.g., FinFet or GaaFeT) or 14/16nm and below logic ICs;
b. NAND ICs at 128 layers and above; and
c. DRAM ICs using a “production” technology node of 18 nanometer half-pitch or less.
KLA is also restricted from providing certain U.S. origin tools, software and technology to certain wafer fab
equipment manufacturers located in China, absent an export license.
In October 2023, BIS issued additional rules that went into effect in November 2023. These 2023 BIS Rules
are designed to update export controls on advanced computing semiconductors and semiconductor manufacturing
equipment, as well as items that support supercomputing applications and end-uses, to arms embargoed
countries, including China. The 2023 BIS Rules adjust the parameters included in the 2022 BIS Rules that
determine whether an advanced computing chip is restricted and impose new measures to address risks of
circumvention of the controls established by the 2022 BIS Rules. The 2023 BIS Rules are very complex and, in
January 2024, KLA, among other companies, submitted comments to the BIS on the 2023 BIS Rules. We are
taking appropriate measures to comply with all BIS Rules, and will continue to apply for export licenses, when
49

required, to avoid disruption to our customers’ operations. While some export licenses have been obtained by us
or our customers, there can be no assurance that export licenses applied for by either us or our customers, now or
in the future, will be granted.
The possible negative effects on our future business of export licenses not being granted could be material
and could disrupt our supply chain and product shipment, and impair our ability to complete product
development in a timely manner, or our ability to support existing customers of covered products or supply
customers of covered products outside the impacted regions, and may require us to transition certain operations
out of one or more of the identified countries. Failure to obtain export licenses could also result in a substantial
reduction to our RPO or require us to return substantial deposits received from customers in China for purchase
orders. We are continuously assessing the aggregate potential impact of government regulations on our financial
results and operations. See Part I Item 1A “Risk Factors” in this report for more information regarding how such
actions by the U.S. government or another country could significantly impact our ability to provide our products
and services to existing and potential customers, especially in China, and adversely affect our business, financial
condition and results of operations.
The following table sets forth some of our key consolidated financial information for each of our last three
fiscal years:
Year Ended June 30,
(Dollar amounts in thousands, except diluted net income per share)
2024
2023
2022
Total revenues
$9,812,247
$10,496,056
$9,211,883
Costs of revenues
$3,928,073
$ 4,218,307
$3,592,441
Gross margin
60%
60%
61%
Net income attributable to KLA
$2,761,896
$ 3,387,277
$3,321,807
Diluted net income per share attributable to KLA
$
20.28
$
24.15
$
21.92
CRITICAL ACCOUNTING ESTIMATES
The preparation of our Consolidated Financial Statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and assumptions in
applying our accounting policies that affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. We base these estimates and assumptions on historical
experience and evaluate them on an ongoing basis to ensure that they remain reasonable under current conditions.
Actual results could differ from those estimates. In accordance with SEC guidance, the estimates within our
accounting policies that we believe are the most critical to an investor’s understanding of our financial condition
and results of operations, including those requiring more complex management judgment, are discussed below.
Revenue Recognition. We recognize revenue from sales at a point in time when we have satisfied our
performance obligation by transferring control of the goods or services to the customer. To determine when to
recognize revenue, we perform the following five steps: (1) identify the contract with customers, (2) identify the
performance obligations in the contract, (3) determine the transaction consideration, (4) allocate the transaction
consideration to the performance obligations in the contract, and (5) recognize revenue when, or as, a
performance obligation is satisfied. Management uses judgments in identifying performance obligations,
determining the stand-alone selling price (“SSP”) for each distinct performance obligation and allocating
consideration from an arrangement to the individual performance obligations based on the SSP. We typically
estimate the SSP of products and services based on observable transactions when the products and services are
sold on a stand-alone basis and those prices fall within a reasonable range. We typically have established SSP
ranges for individual products and services due to the stratification of these products by customers and
circumstances. In these instances, we use information such as the size of the customer, geographic region as well
as customization of the products in determining the SSP ranges. In instances where the SSP is not directly
observable, we determine the SSP using information that includes market conditions, entity-specific factors
50

including discounting strategies, information about the customer or class of customer that is reasonably available
and other observable inputs. While changes in the allocation of SSP between performance obligations will not
affect the amount of total revenue recognized for a particular contract, any material changes could impact the
timing of revenue recognition, which could have a material effect on our financial position and results of
operations. Additionally, management also uses judgments to evaluate whether or not the customer has obtained
control of the product and consider several indicators in evaluating whether or not control has transferred to the
customer, which could also impact the timing of revenue recognition, and could have a material effect on our
financial position and results of operations.
Inventory Valuation. Inventories are stated at the lower of cost or net realizable value using standard costs
that approximate actual costs on a first-in, first-out basis. The carrying value of inventory is reduced for
estimated obsolescence equal to the difference between its cost and the estimated net realizable value based on
assumptions about future demand for meeting our product manufacturing plans and our customers’ support
requirements. The estimate of net realizable value of inventory is impacted by assumptions regarding general
semiconductor market conditions, manufacturing schedules, technology changes, new product introductions and
possible alternative uses, and requires us to use significant judgment that may include uncertain elements. Actual
demand may differ from forecasted demand, and such differences may have a material effect on recorded
inventory values. If in any period we anticipate an adverse change in assumptions such as future demand or
market conditions to be less favorable than our previous estimates, additional inventory write-downs may be
required and would be reflected in cost of revenues, resulting in a negative impact to our gross margin in that
period. On the other hand, if in any period we are able to sell inventories that had been written down in a
previous period to a level below the ultimate realized selling price, related revenue would be recorded with a
lower or no offsetting charge to cost of revenues resulting in a net benefit to our gross margin in that period.
Goodwill and Long-Lived Assets Impairment. We assess goodwill for impairment annually as well as
whenever events or changes in circumstances indicate that the carrying value of a reporting unit may not be
recoverable. Events or changes in circumstances that could affect the likelihood that we will be required to
recognize an impairment charge for goodwill include, but are not limited to, declines in our stock price or market
capitalization, declines in our market share and declines in revenues or profits at our reporting units. If the fair
value of a reporting unit is less than its carrying value, a goodwill impairment charge is recorded for the
difference.
We determine the fair value of a reporting unit using the income approach or market approach, or a
combination of both. If multiple valuation methodologies are used, the results are judgmentally weighted. The
income approach is estimated through discounted cash flow analysis. The estimated fair value of a reporting unit
is computed by adding the present value of the estimated annual discounted cash flows over a discrete projection
period to the residual value of the business at the end of the projection period. This valuation technique requires
us to use significant estimates and assumptions, including long-term growth rates, discount rates and other inputs.
The estimated growth rates for the projection period are based on our internal forecasts of anticipated future
performance of the business. The residual value is estimated using a perpetual nominal growth rate, which is
based on projected long-range inflation and long-term industry projections. The discount rates are calculated as
the weighted average cost of capital of comparable peer companies, adjusted for company-specific risk. The
market approach estimates the fair value of a reporting unit by utilizing the market comparable method, which
uses revenue and earnings multiples from comparable companies.
Due to the downward revision of financial outlook for our PCB and Display businesses, we performed a
quantitative goodwill impairment assessment and recorded impairment losses related to goodwill of
$192.6 million in the second quarter of fiscal 2024.
In March 2024, we made the decision to exit the Display business but continue to provide services to the
installed base for the discontinued product lines. This decision triggered a quantitative impairment assessment for
the Display reporting unit as of March 31, 2024, which resulted in a total goodwill impairment charge of
$70.5 million in the third quarter of fiscal 2024.
51

Long-lived assets, including both tangible and purchased intangible assets, are tested for impairment
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Events
or changes in circumstances that could affect the likelihood that we will be required to recognize an impairment
charge for long-lived assets primarily include declines in our operating cash flows from the use of these assets.
For finite-lived purchased intangible assets, we determine whether the assets are recoverable based on the
forecasted undiscounted future cash flows that are expected to be generated by the lowest-level associated asset
grouping. If the undiscounted cash flows used in the recoverability test are less than the assets’ carrying value,
we recognize an impairment loss for the amount that the carrying value exceeds the fair value.
We determine the fair value of purchased intangible assets using the income approach, primarily by
applying the relief-from-royalty or multi-period excess-earnings methods. In connection with the downward
revision of financial outlook for our PCB and Display businesses noted above, we recorded impairment losses
related to purchased intangible assets of $26.4 million during the second quarter of fiscal 2024. As a result of the
Company’s decision to exit the Display business, also described above, an immaterial purchased intangible asset
impairment charge was recorded in the third quarter of fiscal 2024.
There can be no assurance that the estimates and assumptions used in our fair value calculations will prove
to be an accurate prediction of the future. If our assumptions are not realized, or if there are future changes in any
of the assumptions due to a change in economic conditions or otherwise, it is possible that a further impairment
charge may need to be recorded in the future.
See Note 7 “Goodwill and Purchased Intangible Assets” in the Notes to the Consolidated Financial
Statements for additional information.
Income Taxes. The calculation of our effective tax rate involves significant judgment in the application of
complex tax laws among various tax jurisdictions worldwide; identifying uncertain tax positions; and estimating
the amount of deferred tax assets that will be realized in the future. We believe that our tax positions and
judgments are reasonable, but actual results may differ. If one or more taxing authorities were to successfully
overturn our tax positions, it could have a material adverse effect on our effective tax rate, results of operations,
or cash flows.
Unrecognized tax benefits are recorded for uncertain tax positions on the largest amount that is more than
50% likely of being realized upon ultimate settlement. We recorded unrecognized tax benefits of $245.7 million
and $213.1 million for the years ended June 30, 2024 and June 30, 2023, respectively. We reevaluate these
uncertain tax positions on a quarterly basis based on certain factors including, but not limited to, changes in facts
or circumstances; changes in tax law; audit settlements; new audit activities; and changes in accounting
standards. Any changes to these factors can result in a material change to tax expense.
Our calculations of deferred tax assets and liabilities are based on estimates and judgments related to
uncertainties in the application of complex tax laws and projections of future taxable income. The guidance
requires that deferred tax assets be reduced by a valuation allowance if we determine it is more likely than not
that a portion of the deferred tax asset will not be realized in the foreseeable future. We have determined that a
valuation allowance is necessary against a portion of the deferred tax assets, but we anticipate that our future
taxable income will be sufficient to recover the remainder of our deferred tax assets. We recorded a valuation
allowance of $289.5 million and $259.2 million for the years ended June 30, 2024 and June 30, 2023,
respectively, primarily related to California credit carry-forwards. Based on the enacted income apportionment
rules in California, our future California income tax liability will not be sufficient to fully utilize the credit carry-
forwards. We assess on a quarterly basis whether there should be a change to the valuation allowance for some
portion or all of the deferred tax assets. If there is a change in our ability to recover our deferred tax assets that
are not subject to a valuation allowance, we will be required to record an additional valuation allowance against
such deferred tax assets which may materially increase our tax expense. If there is a change in our ability to
utilize the California credit carry-forwards, we will be required to reduce our valuation allowance against such
deferred tax assets which may materially decrease our tax expense.
52

Recent Accounting Pronouncements
For a description of recent accounting pronouncements, including those recently adopted and the expected
dates of adoption as well as estimated effects, if any, on our Consolidated Financial Statements of those not yet
adopted, see Note 1 “Description of Business and Summary of Significant Accounting Policies” to our
Consolidated Financial Statements.
RESULTS OF OPERATIONS
Revenues and Gross Margin
Year Ended June 30,
(Dollar amounts in thousands)
2024
2023
2022
FY24 vs. FY23
FY23 vs. FY22
Revenues:
Product
$7,482,679
$ 8,379,025
$7,301,428
$(896,346)
(11)% $1,077,597
15%
Service
2,329,568
2,117,031
1,910,455
212,537
10%
206,576
11%
Total revenues
$9,812,247
$10,496,056
$9,211,883
$(683,809)
(7)% $1,284,173
14%
Costs of revenues
$3,928,073
$ 4,218,307
$3,592,441
$(290,234)
(7)% $ 625,866
17%
Gross margin
60%
60%
61%
— %
(1)%
Product revenues
Our business is affected by the concentration of our customer base and our customers’ capital equipment
procurement schedules as a result of their investment plans. Our product revenues in any particular period are
impacted by the amount of new orders that we receive during that period and, depending upon the duration of
manufacturing and installation cycles, in the preceding periods. Revenue is also impacted by average customer
pricing, customer revenue deferrals associated with volume purchase agreements, the effect of fluctuations in
foreign currency exchange rates and increased trade restrictions as discussed in the “Executive Summary” section
above.
The decrease in product revenues by 11% in the fiscal year ended June 30, 2024 compared to the prior fiscal
year is primarily due to the broad, macro-driven slowdown that has impacted semiconductor demand overall,
causing the semiconductor industry to rebalance its supply chain and reduce inventory levels, and memory device
manufacturers and foundry/logic customers to reduce their capacity expansion-focused capital expenditure plans.
Service revenues
Service revenues are generated from product maintenance and support services, as well as billable time and
material service calls made to our customers. The amount of our service revenues is typically a function of the
number of systems installed at our customers’ sites and the utilization of those systems, but it is also impacted by
other factors, such as our rate of service contract renewals, the types of systems being serviced and fluctuations
in foreign currency exchange rates.
The increase in service revenues by 10% in the fiscal year ended June 30, 2024 compared to the prior fiscal
year is primarily attributable to an increase in our installed base.
53

Revenues by segment(1)
Year Ended June 30,
(Dollar amounts in thousands)
2024
2023
2022
FY24 vs. FY23
FY23 vs. FY22
Revenues:
Semiconductor Process
Control
$8,733,556
$ 9,324,190
$7,924,822
$(590,634)
(6)% $1,399,368
18%
Specialty Semiconductor
Process
528,701
543,398
456,579
(14,697)
(3)%
86,819
19%
PCB and Component
Inspection
552,491
631,604
832,176
(79,113) (13)%
(200,572) (24)%
Total segment revenues
$9,814,748
$10,499,192
$9,213,577
$(684,444)
(7)% $1,285,615
14%
(1)
Segment revenues exclude corporate allocations and the effects of changes in foreign currency exchange
rates. For additional details, refer to Note 19 “Segment Reporting and Geographic Information” to our
Consolidated Financial Statements.
The primary factors impacting the performance of our segment revenues for fiscal year 2024 compared to
fiscal year 2023 are summarized as follows:
•
Revenue from our Semiconductor Process Control segment decreased in fiscal 2024 compared to fiscal
2023 primarily due to the broad, macro-driven slowdown that has impacted semiconductor demand
overall, causing the semiconductor industry to rebalance its supply chain and reduce inventory levels,
and memory device manufacturers and foundry/logic customers to reduce their capacity expansion-
focused capital expenditure plans.
•
Revenue from our Specialty Semiconductor Process segment, which comprises etching and deposition
solutions for advanced packaging and specialty semiconductor markets, remained relatively flat in
fiscal 2024 compared to fiscal 2023.
•
Revenue from our PCB and Component Inspection segment decreased in fiscal 2024 as compared to
fiscal 2023 primarily due to continued market softening.
Revenues - Top Customers
The following customers each accounted for more than 10% of our total revenues primarily in our
Semiconductor Process Control segment for the indicated periods:
Fiscal Year Ended June 30,
2024
2023
2022
Taiwan Semiconductor
Manufacturing Company Limited
Taiwan Semiconductor
Manufacturing Company Limited
Taiwan Semiconductor
Manufacturing Company Limited
Samsung Electronics Co., Ltd.
Samsung Electronics Co., Ltd.
54

Revenues by region
Revenues by region, based on ship-to location, for the periods indicated were as follows:
Year Ended June 30,
(Dollar amounts in thousands)
2024
2023
2022
China
$4,196,727
43% $ 2,867,443
27% $2,660,438
29%
Taiwan
1,738,065
18%
2,493,379
24%
2,528,482
27%
North America
1,070,791
11%
1,254,956
12%
928,043
10%
Japan
963,203
10%
888,016
9%
724,773
8%
Korea
906,924
9%
1,895,710
18%
1,430,495
16%
Europe and Israel
540,263
6%
682,103
6%
636,664
7%
Rest of Asia
396,274
3%
414,449
4%
302,988
3%
Total
$9,812,247
100% $10,496,056
100% $9,211,883
100%
A significant portion of our revenues continues to be generated in Asia, where a substantial portion of the
world’s semiconductor manufacturing capacity is located, and we expect that trend to continue.
Gross margin
Our gross margin fluctuates with revenue levels and product mix and is affected by variations in costs
related to manufacturing and servicing our products, including our ability to scale our operations efficiently and
effectively in response to prevailing business conditions.
The following table summarizes the major factors that contributed to the changes in gross margin:
Gross Margin
Fiscal Year Ended June 30, 2022
61.0%
Revenue volume of products and services
0.9%
Mix of products and services sold
0.1%
Manufacturing labor, overhead and efficiencies
(0.1)%
Other service and manufacturing costs
(2.1)%
Fiscal Year Ended June 30, 2023
59.8%
Revenue volume of products and services
(1.1)%
Mix of products and services sold
0.6%
Manufacturing labor, overhead and efficiencies
(0.3)%
Other service and manufacturing costs
1.0%
Fiscal Year Ended June 30, 2024
60.0%
Changes in gross margin from revenue volume of products and services reflect our ability to leverage
existing infrastructure to generate higher revenues. Changes in gross margin from the mix of products and
services sold reflect the impact of changes within the composition of product and service offerings. Changes in
gross margin from manufacturing labor, overhead and efficiencies reflect our ability to manage costs and drive
productivity as we scale our manufacturing activity to respond to customer requirements and amortization of
intangible assets. Changes in gross margin from other service and manufacturing costs include the impact of
customer support costs, including the efficiencies with which we deliver services to our customers, and the
effectiveness with which we manage our production plans and inventory risk.
55

The increase in our gross margin from 59.8% to 60.0% during the fiscal year ended June 30, 2024 is
primarily attributable to a decrease in other service and manufacturing costs and a more profitable mix of
products and services sold, partially offset by a lower revenue volume of products and services sold.
Segment gross profit(1)
Year Ended June 30,
(Dollar amounts in thousands)
2024
2023
2022
FY24 vs. FY23
FY23 vs. FY22
Segment gross profit:
Semiconductor Process
Control
$5,629,302
$5,957,573
$5,167,679
$(328,271)
(6)% $ 789,894
15%
Specialty Semiconductor
Process
282,910
281,942
242,520
968
— %
39,422
16%
PCB and Component
Inspection
158,960
221,251
378,964
(62,291)
(28)%
(157,713) (42)%
(1)
Segment gross profit is calculated as segment revenues less segment costs of revenues and excludes
corporate allocations, amortization of intangible assets and the effects of changes in foreign currency
exchange rates. For additional details, refer to Note 19 “Segment Reporting and Geographic Information” to
our Consolidated Financial Statements.
The primary factors impacting the performance of our segment gross profits for fiscal year 2024 compared
to fiscal year 2023 are summarized as follows:
•
Semiconductor Process Control segment gross profit decreased primarily due to a lower revenue
volume of products and services sold.
•
Specialty Semiconductor Process segment gross profit remained relatively flat.
•
PCB and Component Inspection segment gross profit decreased primarily due to a non-cash expenses
to write off excess and obsolete inventory largely related to the discontinued Display product lines.
Research and Development
Year Ended June 30,
(Dollar amounts in thousands)
2024
2023
2022
FY24 vs. FY23
FY23 vs. FY22
R&D expenses
$1,278,981
$1,296,727
$1,105,254
$(17,746) (1)% $191,473
17%
R&D expenses as a percentage of
total revenues
13%
12%
12%
1%
— %
R&D expenses may fluctuate with product development phases and project timing as well as our R&D
efforts. As technological innovation is essential to our success, we may incur significant costs associated with
R&D projects, including compensation for engineering talent, engineering material costs and other expenses.
R&D expenses during the fiscal year ended June 30, 2024 decreased compared to the fiscal year ended
June 30, 2023 primarily due to a decrease in engineering project material costs of $36.5 million, a decrease in
consulting costs of $7.1 million and a decrease in restructuring expense of $5.8 million. These decreases were
partially offset by an increase in employee-related expenses of $31.1 million.
Our future operating results will depend significantly on our ability to make products and provide services
that have a competitive advantage in our marketplace. To do this, we believe that we must continue to make
substantial and focused investments in our R&D. We remain committed to product development in new and
emerging technologies.
56

Selling, General and Administrative
Year Ended June 30,
(Dollar amounts in thousands)
2024
2023
2022
FY24 vs. FY23
FY23 vs. FY22
SG&A expenses
$969,509
$986,326
$860,007
$(16,817) (2)% $126,319
15%
SG&A expenses as a percentage of total
revenues
10%
9%
9%
1%
— %
SG&A expenses during the fiscal year ended June 30, 2024 decreased compared to the fiscal year ended
June 30, 2023 primarily due to $16.8 million of compensation-related expense from the sale of Orbograph Ltd.
(“Orbograph”) recorded in the fiscal year ended June 30, 2023, a decrease in allowance for credit losses of
$13.9 million, a decrease in depreciation expense of $11.5 million, a decrease in restructuring expense of
$6.6 million and a decrease in promotional expenses of $5.9 million. These decreases were partially offset by an
increase in facility-related expenses of $25.3 million and an increase in consulting costs of $12.5 million.
Impairment of Goodwill and Purchased Intangible Assets
During the second quarter of fiscal 2024, we noted a significant deterioration of the long-term forecast for
our PCB and Display businesses. As a result, we recorded a $219.0 million goodwill and purchased intangible
asset impairment charge for the PCB and Display reporting unit in the second quarter of fiscal 2024. In March
2024, we made the decision to exit the Display business but continue to provide services to the installed base for
the discontinued product lines. As a result, we recorded a $70.5 million goodwill impairment charge and an
immaterial amount of purchased intangible assets were abandoned in the third quarter of fiscal 2024. See Note 7
“Goodwill and Purchased Intangible Assets” to our Consolidated Financial Statements for further details.
Restructuring Charges
Over the last few years, management approved plans to streamline our operations, which included
reductions of workforce.
Restructuring charges were $21.6 million for the year ended June 30, 2024, primarily due to severance and
related charges for the restructuring of the PCB and Display operating segment, as described further in Note 7
“Goodwill and Purchased Intangible Assets,” as well as writedowns of certain right of use (“ROU”) assets and
fixed assets that were abandoned. Restructuring charges were $44.0 million for the year ended June 30, 2023,
primarily due to workforce reductions announced and substantially completed in the third and fourth fiscal
quarters.
For additional information, refer to Note 20 “Restructuring Charges” to our Consolidated Financial
Statements.
Interest Expense and Other Expense (Income), Net
Year Ended June 30,
(Dollar amounts in thousands)
2024
2023
2022
FY24 vs. FY23
FY23 vs. FY22
Interest expense
$ 311,253
$ 296,940
$160,339
$ 14,313
5% $ 136,601
85%
Other expense (income), net
$(155,075) $(104,720) $
4,605
(50,355) (48)% $(109,325) (2,374)%
Interest expense as a percentage of
total revenues
3%
3%
2%
Other expense (income), net as a
percentage of total revenues
(2)%
(1)%
— %
57

The increase in interest expense during the fiscal year ended June 30, 2024 compared to the fiscal year
ended June 30, 2023 was primarily due to additional interest expense on our $750.0 million Senior Notes issued
in February 2024.
Other expense (income), net is comprised primarily of fair value adjustments and realized gains or losses on
sales of marketable and non-marketable securities, gains or losses from revaluations of certain foreign currency
denominated assets and liabilities as well as foreign currency contracts, interest-related accruals (such as interest
and penalty accruals related to our tax obligations) and interest income earned on our invested cash, cash
equivalents and marketable securities.
The change in Other expense (income), net during the fiscal year ended June 30, 2024 compared to the
fiscal year ended June 30, 2023 was primarily due to the following: higher interest income of $87.8 million due
to higher rates, partially offset by the following: a pre-tax gain of $29.7 million from the sale of our interest in
Orbograph to a portfolio company of a private equity firm in fiscal year 2023 and a higher net fair value loss of
$17.3 million from an equity security compared to the prior fiscal year.
Loss on Extinguishment of Debt
For the fiscal years ended June 30, 2024 and 2022, we had no loss on extinguishment of debt. For the fiscal
year ended June 30, 2023, loss on extinguishment of debt reflected a pre-tax net loss of $13.3 million associated
with the redemption of $500.0 million of our Senior Notes due 2024, including associated redemption premiums,
accrued interest and other fees and expenses.
Provision for Income Taxes
The following table provides details of income taxes:
Year Ended June 30,
(Dollar amounts in thousands)
2024
2023
2022
Income before income taxes
$3,190,032
$3,789,190
$3,489,237
Provision for income taxes
$ 428,136
$ 401,839
$ 167,177
Effective tax rate
13.4%
10.6%
4.8%
Tax expense was higher as a percentage of income before taxes during the fiscal year ended June 30, 2024
compared to the fiscal year ended June 30, 2023 primarily due to the impact of the following items:
•
Tax expense as a percentage of income increased during the fiscal year ended June 30, 2024 due to a
$263.1 million goodwill impairment charge, which is non-deductible for income tax purposes; and
•
Tax expense decreased by $35.2 million during the fiscal year ended June 30, 2023 primarily relating
to a decrease in our unrecognized tax benefits from the settlement of income tax examinations.
Our future effective income tax rate depends on various factors, such as tax legislation, the geographic
composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate,
non-deductible expenses incurred in connection with acquisitions, R&D credits as a percentage of aggregate
pre-tax income, non-taxable or non-deductible increases or decreases in the assets held within our Executive
Deferred Savings Plan (“EDSP”), the tax effects of employee stock activity and the effectiveness of our tax
planning strategies. We also continue to monitor the adoption of Pillar Two relating to the global minimum tax in
each of our tax jurisdictions to evaluate its impact on our effective income tax rate.
For discussions on tax examinations, assessments and certain related proceedings, see Note 14 “Income
Taxes” to our Consolidated Financial Statements.
58

Liquidity and Capital Resources
As of June 30,
(Dollar amounts in thousands)
2024
2023
2022
Cash and cash equivalents
$ 1,977,129
$ 1,927,865
$ 1,584,908
Marketable securities
2,526,866
1,315,294
1,123,100
Total cash, cash equivalents and marketable securities
$ 4,503,995
$ 3,243,159
$ 2,708,008
Percentage of total assets
29%
23%
21%
Year Ended June 30,
(In thousands)
2024
2023
2022
Cash flows:
Net cash provided by operating activities
$ 3,308,575
$ 3,669,805
$ 3,312,702
Net cash used in investing activities
(1,476,985)
(482,571)
(876,458)
Net cash used in financing activities
(1,776,017)
(2,830,289)
(2,257,005)
Effect of exchange rate changes on cash and cash equivalents
(6,309)
(13,988)
(28,941)
Net increase in cash and cash equivalents
$
49,264
$
342,957
$
150,298
Cash, Cash Equivalents and Marketable Securities:
As of June 30, 2024, our cash, cash equivalents and marketable securities totaled $4.50 billion, which
represents an increase of $1.26 billion from June 30, 2023. The increase is mainly due to net cash provided by
operating activities of $3.31 billion and net proceeds from debt issuance of $735.0 million, partially offset by
stock repurchases of $1.74 billion, cash used for payments of dividends and dividend equivalents
of $773.0 million and capital expenditures of $277.4 million.
As of June 30, 2024, $1.13 billion of our $4.50 billion of cash, cash equivalents, and marketable securities
were held by our foreign subsidiaries and branch offices. We currently intend to indefinitely reinvest
$122.1 million of the cash, cash equivalents and marketable securities held by our foreign subsidiaries for which
we assert that earnings are permanently reinvested. If, however, a portion of these funds were to be repatriated to
the U.S., we would be required to accrue and pay state and foreign taxes of approximately 1%-22% of the funds
repatriated. The amount of taxes due will depend on the amount and manner of the repatriation, as well as the
location from which the funds are repatriated. We have accrued state and foreign tax on the remaining cash of
$1.01 billion of the $1.13 billion held by our foreign subsidiaries and branch offices. As such, these funds can be
returned to the U.S. without accruing any additional U.S. tax expense.
Cash Dividends:
The total amounts of regular quarterly cash dividends and dividend equivalents paid during the fiscal years
ended June 30, 2024, 2023 and 2022 were $773.0 million, $732.6 million and $638.5 million, respectively. The
increase in the amount of regular quarterly cash dividends and dividends equivalents paid during the fiscal year
ended June 30, 2024 as compared to the fiscal year ended June 30, 2023 reflected the increase in the level of our
regular quarterly cash dividend from $1.30 to $1.45 per share that was announced during the three months ended
September 30, 2023. The amounts of accrued dividend equivalents payable for regular quarterly cash dividends
on unvested RSUs with dividend equivalent rights were $11.8 million and $12.2 million as of June 30, 2024 and
2023, respectively. These amounts will be paid upon vesting of the underlying unvested RSUs as described in
Note 10 “Equity, Long-term Incentive Compensation Plans and Non-Controlling Interest” to our Consolidated
Financial Statements.
59

On August 1, 2024, we announced that our Board of Directors had declared a quarterly cash dividend of
$1.45 per share. Refer to Note 21 “Subsequent Events” to our Consolidated Financial Statements for additional
information regarding the declaration of our quarterly cash dividend announced subsequent to June 30, 2024.
Stock Repurchases:
The shares repurchased under our stock repurchase program have reduced our basic and diluted weighted-
average shares outstanding for the fiscal years ended June 30, 2024 and 2023. Our stock repurchase program is
intended, in part, to mitigate the potential dilutive impact related to our equity incentive plans and shares issued
in connection with our ESPP as well as to return excess cash to our stockholders. As of June 30, 2024, an
aggregate of $2.18 billion was available for repurchase under our stock repurchase program, which reflects an
increase in the authorized repurchase amount of $2.00 billion in the first quarter of fiscal 2024.
Cash Flows Provided by Operating Activities:
We have historically financed our liquidity requirements through cash generated from operations. Net cash
provided by operating activities during the fiscal year ended June 30, 2024 decreased by $361.2 million
compared to the fiscal year ended June 30, 2023, from $3.67 billion to $3.31 billion, primarily as a result of the
following factors:
•
A decrease in collections of approximately $769 million mainly driven by lower shipments and
customer prepayments;
•
An increase in income tax payments of approximately $336 million as some of the tax payments due in
the prior fiscal year were delayed to the current fiscal year due to California Flood Tax Relief; and
•
An increase in debt interest payment of approximately $53 million; partially offset by
•
A decrease in accounts payable payments of approximately $720 million as we adjusted inventory
levels to reflect lower business volumes;
•
An increase in interest income of approximately $87 million, driven by higher interest rates and
invested cash balances.
Cash Flows Used in Investing Activities
Net cash used in investing activities during the fiscal year ended June 30, 2024 was $1.48 billion compared
to $482.6 million during the fiscal year ended June 30, 2023. This increase in cash used was mainly due to an
increase in net purchases of available-for-sale, equity and trading securities of $1.01 billion and a decrease in
proceeds from the sale of a business of $75.4 million, partially offset by a decrease in capital expenditures of
$64.2 million and a decrease in cash used in business acquisitions of $23.5 million.
Cash Flows Used in Financing Activities:
Net cash used in financing activities during the fiscal year ended June 30, 2024 was $1.78 billion compared
to $2.83 billion during the fiscal year ended June 30, 2023. This decrease was mainly due to a net increase in
debt-related proceeds of $1.53 billion, partially offset by an increase in cash used for common stock repurchases
of $423.9 million, and an increase in cash paid for dividends and dividend equivalents of $40.5 million.
Senior Notes:
As of June 30, 2024, we had an aggregate principal amount of senior, unsecured notes totaling $6.70 billion
with due dates ranging from fiscal 2025 through fiscal 2063. For additional information on these senior notes, see
Note 8 “Debt” in the Notes to the Consolidated Financial Statements. As of June 30, 2024, we were in
compliance with all of our covenants under the relevant indentures associated with the Senior Notes.
60

Revolving Credit Facility:
We have in place a Credit Agreement for an unsecured Revolving Credit Facility with a maturity of June 8,
2027 that allows us to borrow up to $1.50 billion. Subject to the terms of the Credit Agreement, the Revolving
Credit Facility may be increased by an amount up to $250.0 million in the aggregate. As of June 30, 2024 and 2023,
we had no outstanding borrowings under the Revolving Credit Facility. We were in compliance with all covenants
under the Credit Agreement as of June 30, 2024 (the leverage ratio was 1.51 to 1.00 and our then maximum allowed
leverage ratio was 3.50 to 1.00). Considering our current liquidity position, short-term financial forecasts and ability
to prepay the Revolving Credit Facility, if necessary, we expect to continue to be in compliance with our financial
covenants at the end of our fiscal year ending June 30, 2025. For additional information on the Revolving Credit
Facility, see Note 8 “Debt” in the Notes to the Consolidated Financial Statements.
Factoring Arrangements
We have agreements with financial institutions to sell certain of our trade receivables and promissory notes
from customers without recourse. In addition, we periodically sell certain letters of credit (“LC”), without
recourse, received from customers as payment for goods and services.
The following table shows total receivables sold under factoring agreements and proceeds from sales of LC
for the indicated periods:
Year Ended June 30,
(In thousands)
2024
2023
2022
Receivables sold under factoring agreements
$254,889
$328,933
$250,983
Proceeds from sales of LC
$ 22,242
$ 69,247
$151,924
Factoring and LC fees for the sale of certain trade receivables were recorded in Other expense (income), net
and were not material for the periods presented.
We maintain guarantee arrangements available through various financial institutions for up to $83.9 million,
of which $49.9 million had been issued as of June 30, 2024, primarily to fund guarantees to customs authorities
for value-added tax and other operating requirements of our subsidiaries in Europe, Israel, and Asia.
Material Cash Requirements
The following is a schedule summarizing our future material cash requirements as of June 30, 2024:
(In thousands)
Total
Short-Term
Long-term
Debt obligations(1)
$ 6,700,000
$
750,000
$ 5,950,000
Interest payments associated with all debt obligations(2)
5,767,881
292,681
5,475,200
Purchase commitments(3)
2,172,863
1,990,254
182,609
Income taxes payable(4)
250,864
—
250,864
Operating leases(5)
224,171
43,565
180,606
Cash long-term incentive program(6)
143,134
64,994
78,140
Pension obligations(7)
52,037
3,203
48,834
EDSP(8)
303,088
—
303,088
Transition tax payable(9)
146,696
65,357
81,339
Liability for employee rights upon retirement(10)
45,884
—
45,884
Other(11)
11,832
5,728
6,104
Total material cash requirements
$15,818,450
$ 3,215,782
$12,602,668
(1)
Represents $6.70 billion aggregate principal amount of Senior Notes due from fiscal year 2025 to fiscal year
2063.
61

(2)
The interest payments associated with the Senior Notes payable included in the table above are based on the
principal amount multiplied by the applicable interest rate for each series of Senior Notes. As of July 2,
2024, the commitment fee payment under the Revolving Credit Facility for the undrawn balance is payable
at 5.5 bps based on the daily undrawn balance, and we assumed no borrowings under the Revolving Credit
Facility for the future and utilized the existing commitment fee rate for the projected interest payments
included in the table above. Our future interest payments for the Revolving Credit Facility are subject to
change due to our actual borrowings under the Revolving Credit Facility, any upgrades or downgrades to
our then-effective credit rating as well as the Company’s performance against certain environmental
sustainability KPIs related to GHG emissions and renewable electricity usage.
(3)
Represents an estimate of significant commitments to purchase inventory from our suppliers as well as an
estimate of significant purchase commitments associated with goods, services and other assets in the
ordinary course of business. Our obligation under these purchase commitments is generally restricted to a
forecasted time-horizon as mutually agreed upon between the parties. This forecasted time-horizon can vary
among different suppliers. Actual expenditures will vary based upon the volume of the transactions and
length of contractual service provided. In addition, the amounts paid under these arrangements may be less
in the event the arrangements are renegotiated or canceled. Certain agreements provide for potential
cancellation penalties.
(4)
Represents the estimated income tax payable obligation related to uncertain tax positions as well as related
accrued interest. We are unable to make a reasonably reliable estimate of the timing of payments in
individual years due to uncertainties in the timing of tax audit outcomes.
(5)
Operating lease obligations represent the undiscounted lease payments under non-cancelable leases, but
exclude non-lease components.
(6)
As part of our employee compensation program, we issue cash-based long-term incentive (“Cash LTI”)
awards to many of our employees. Cash LTI awards issued to employees under the Cash Long-Term
Incentive Plan (“Cash LTI Plan”) generally vest in three or four equal installments. The amounts in the table
above are those committed under the Cash LTI Plan; the expected total payment after estimated forfeitures
is approximately $123 million. For additional details, refer to Note 10 “Equity, Long-term Incentive
Compensation Plans and Non-Controlling Interest” to our Consolidated Financial Statements.
(7)
Represents an estimate of expected benefit payments up to fiscal year 2034 that was actuarially determined
and excludes the minimum cash required to contribute to our defined benefit pension plans. As of June 30,
2024, our defined benefit pension plans do not have material required minimum cash contribution
obligations.
(8)
Represents the amount committed under our non-qualified executive deferred compensation plan. We are
unable to make a reasonably reliable estimate of the timing of payments in individual years due to the
uncertainties in the timing around participant’s separation and any potential changes that participants may
decide to make to the previous distribution elections.
(9)
Represents the transition tax liability associated with our deemed repatriation of accumulated foreign
earnings resulting from the enactment of the Tax Act into law on December 22, 2017.
(10) Represents severance payments due upon dismissal of an employee or upon termination of employment in
certain other circumstances as required under Israeli law.
(11) Represents amounts committed for accrued dividends payable for quarterly cash dividends for unvested
RSUs granted with dividend equivalent rights. For additional details, refer to Note 10 “Equity, Long-term
Incentive Compensation Plans and Non-Controlling Interest” to our Consolidated Financial Statements.
Working Capital:
Working capital was $5.37 billion as of June 30, 2024, which represents an increase of $741.2 million
compared to our working capital as of June 30, 2023. As of June 30, 2024, our principal sources of liquidity
consisted of $4.50 billion of cash, cash equivalents and marketable securities and availability under our
Revolving Credit Facility. Our liquidity may be affected by many factors, some of which are based on the normal
ongoing operations of the business, spending for business acquisitions, and other factors such as uncertainty in
the global and regional economies and the semiconductor, semiconductor-related and electronic device
62

industries. Although cash requirements will fluctuate based on the timing and extent of these factors, we believe
that cash generated from operations, together with the liquidity provided by existing cash and cash equivalents
balances and our Revolving Credit Facility, will be sufficient to satisfy our liquidity requirements associated with
working capital needs, capital expenditures, cash dividends, stock repurchases and other contractual obligations,
including repayment of outstanding debt, for at least the next 12 months.
Our credit ratings as of June 30, 2024 are summarized below:
Rating Agency
Rating
Fitch
A
Moody’s
A2
S&P
A-
In December 2023, Fitch upgraded our senior unsecured credit rating from A- to A. Factors that can affect
our credit ratings include changes in our operating performance, the economic environment, conditions in the
semiconductor and semiconductor capital equipment industries, our financial position, material acquisitions and
changes in our business strategy.
Off-Balance Sheet Arrangements:
As of June 30, 2024, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of
Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition
and results of operations that are material to investors.
63

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to financial market risks, including changes in interest rates, foreign currency exchange
rates and marketable equity security prices. To mitigate these risks, we utilize derivative financial instruments,
such as foreign currency hedges. All of the potential changes noted below are based on sensitivity analyses
performed on our financial position as of June 30, 2024. Actual results may differ materially.
As of June 30, 2024, we had an investment portfolio of fixed income securities of $1.71 billion. These
securities, as with all fixed income instruments, are subject to interest rate risk and will decline in value if market
interest rates increase. If market interest rates were to increase immediately and uniformly by 100 bps from levels
as of June 30, 2024, the fair value of the portfolio would have declined by $16.1 million.
The fair market value of our long-term fixed interest rate Senior Notes is subject to interest rate risk.
Generally, the fair market value of fixed interest rate notes will increase as market interest rates fall and decrease
as market interest rates rise. As of June 30, 2024, the fair value and the book value of our Senior Notes due in
various fiscal years ranging from 2025 to 2063 were $6.26 billion and $6.63 billion, respectively.
We have in place a Revolving Credit Facility that allows us to borrow up to $1.50 billion, has a maturity
date of June 8, 2027 with two one-year extension options, and may be increased by an amount up to
$250.0 million in the aggregate. As of June 30, 2024, we had no borrowings under the Revolving Credit Facility.
Each Term SOFR Loan will bear interest at a rate per annum equal to the applicable Adjusted Term SOFR rate,
which is equal to the applicable Term SOFR rate plus 10 bps that shall not be less than zero, plus a spread
ranging from 75 bps to 125 bps, as determined by our credit ratings at the time. The fair value of the borrowings
under the Revolving Credit Facility is subject to interest rate and credit risk due to the timing of the rate resets
and changes in the market’s assessment of risk of default, respectively. Pursuant to the terms of the Credit
Agreement, we are also obligated to pay an annual commitment fee on the daily undrawn balance of the
Revolving Credit Facility at a rate that ranges from 4.5 bps to 12.5 bps, depending upon our then prevailing
credit rating. As of June 30, 2024 the annual commitment fee was 6 bps. Additionally, as of June 30, 2024, if our
credit ratings were downgraded to be below investment grade, the maximum potential increase to our annual
commitment fee for the Revolving Credit Facility, using the highest range of the ranges discussed above, is
estimated to be approximately $1 million.
Our equity investment in a publicly traded company is subject to market price risk, which we typically do
not attempt to reduce or eliminate through hedging activities. As of June 30, 2024, the fair value of our
investment in the marketable equity security, which began publicly trading on the Tokyo Stock Exchange on
April 5, 2021, was $25.6 million. Assuming a decline of 50% in market prices, the aggregate value of our
investment in the marketable equity security could decrease by approximately $13 million, based on the value as
of June 30, 2024.
See Note 5 “Marketable Securities” to our Consolidated Financial Statements in Part II, Item 8; “Liquidity
and Capital Resources” in “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in Part II Item 7; and “Risk Factors” in Part I Item 1A of this Annual Report on Form 10-K for a
description of recent market events that may affect the value of the investments in our portfolio that we held as of
June 30, 2024.
As of June 30, 2024, we had net forward and option contracts to purchase $254.1 million in foreign currency in
order to hedge certain currency exposures (see Note 17 “Derivative Instruments and Hedging Activities” to our
Consolidated Financial Statements for additional details). If we had entered into these contracts on June 30, 2024, the
U.S. dollar equivalent would have been $274.9 million. A 10% adverse move in all currency exchange rates affecting
the contracts would decrease the fair value of the contracts by $124.1 million. However, if this occurred, the fair value
of the underlying exposures hedged by the contracts would increase by a similar amount. Accordingly, we believe that,
as a result of the hedging of certain of our foreign currency exposure, changes in most relevant foreign currency
exchange rates should have no material impact on our results of operations or cash flows.
64

ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Balance Sheets as of June 30, 2024 and 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66
Consolidated Statements of Operations for each of the three years in the period ended June 30, 2024 . . . . .
67
Consolidated Statements of Comprehensive Income for each of the three years in the period ended June 30,
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended June 30,
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
Consolidated Statements of Cash Flows for each of the three years in the period ended June 30, 2024 . . . . .
70
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72
Report of Independent Registered Public Accounting Firm (PCAOB ID 238) . . . . . . . . . . . . . . . . . . . . . . . .
122
Schedule II Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125
65

KLA CORPORATION
Consolidated Balance Sheets
As of June 30,
(In thousands, except par value)
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$ 1,977,129
$ 1,927,865
Marketable securities
2,526,866
1,315,294
Accounts receivable, net
1,833,041
1,753,361
Inventories
3,034,781
2,876,784
Other current assets
659,327
498,728
Total current assets
10,031,144
8,372,032
Land, property and equipment, net
1,109,968
1,031,841
Goodwill, net
2,015,726
2,278,820
Deferred income taxes
915,241
816,899
Purchased intangible assets, net
668,764
935,303
Other non-current assets
692,723
637,462
Total assets
$15,433,566
$14,072,357
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
359,487
$
371,026
Deferred system revenue
985,856
651,720
Deferred service revenue
501,926
416,606
Current portion of long-term debt
749,936
—
Other current liabilities
2,063,569
2,303,490
Total current liabilities
4,660,774
3,742,842
Long-term debt
5,880,199
5,890,736
Deferred tax liabilities
486,690
529,287
Deferred service revenue
294,460
176,681
Other non-current liabilities
743,115
813,058
Total liabilities
12,065,238
11,152,604
Commitments and contingencies (Notes 9, 15 and 16)
Stockholders’ equity:
Preferred stock, $0.001 par value, 1,000 shares authorized, none outstanding
—
—
Common stock, $0.001 par value, 500,000 shares authorized, 280,649 and 279,995 shares
issued, 134,425 and 136,750 shares outstanding, as of June 30, 2024 and June 30, 2023,
respectively
134
137
Capital in excess of par value
2,279,999
2,107,526
Retained earnings
1,137,270
848,431
Accumulated other comprehensive loss
(49,075)
(36,341)
Total stockholders’ equity
3,368,328
2,919,753
Total liabilities and stockholders’ equity
$15,433,566
$14,072,357
See accompanying notes to Consolidated Financial Statements.
66

KLA CORPORATION
Consolidated Statements of Operations
Year Ended June 30,
(In thousands, except per share amounts)
2024
2023
2022
Revenues:
Product
$
7,482,679
$
8,379,025
$
7,301,428
Service
2,329,568
2,117,031
1,910,455
Total revenues
9,812,247
10,496,056
9,211,883
Costs and expenses:
Costs of revenues
3,928,073
4,218,307
3,592,441
Research and development
1,278,981
1,296,727
1,105,254
Selling, general and administrative
969,509
986,326
860,007
Impairment of goodwill and purchased intangible assets
289,474
—
—
Interest expense
311,253
296,940
160,339
Loss on extinguishment of debt
—
13,286
—
Other expense (income), net
(155,075)
(104,720)
4,605
Income before income taxes
3,190,032
3,789,190
3,489,237
Provision for income taxes
428,136
401,839
167,177
Net income
2,761,896
3,387,351
3,322,060
Less: Net income attributable to non-controlling interest
—
74
253
Net income attributable to KLA
$
2,761,896
$
3,387,277
$
3,321,807
Net income per share attributable to KLA
Basic
$
20.41
$
24.28
$
22.07
Diluted
$
20.28
$
24.15
$
21.92
Weighted-average number of shares:
Basic
135,345
139,483
150,494
Diluted
136,187
140,235
151,555
See accompanying notes to Consolidated Financial Statements.
67

KLA CORPORATION
Consolidated Statements of Comprehensive Income
Year Ended June 30,
(In thousands)
2024
2023
2022
Net income
$
2,761,896
$
3,387,351
$
3,322,060
Other comprehensive income (loss):
Currency translation adjustments:
Cumulative currency translation adjustments
(11,763)
(22,288)
(15,915)
Income tax benefit
544
1,547
4,592
Net change related to currency translation
adjustments
(11,219)
(20,741)
(11,323)
Cash flow hedges:
Net unrealized gains arising during the period
9,737
30,025
104,952
Reclassification adjustments for net gains included in
net income
(25,904)
(29,058)
(5,919)
Income tax (provision) benefit
2,466
2,141
(22,105)
Net change related to cash flow hedges
(13,701)
3,108
76,928
Net change related to unrecognized losses and transition
obligations in connection with defined benefit plans
3,043
6,074
(1,438)
Available-for-sale securities:
Net unrealized gains (losses) arising during the period
11,527
2,459
(20,792)
Reclassification adjustments for net losses included in
net income
103
986
306
Income tax (provision) benefit
(2,487)
(756)
4,405
Net change related to available-for-sale
securities
9,143
2,689
(16,081)
Other comprehensive income (loss)
(12,734)
(8,870)
48,086
Less: Comprehensive income attributable to non-controlling
interest
—
74
253
Total comprehensive income attributable to KLA
$
2,749,162
$
3,378,407
$
3,369,893
See accompanying notes to Consolidated Financial Statements.
68

KLA CORPORATION
Consolidated Statements of Stockholders’ Equity
(In thousands, except per share
amounts)
Common Stock and
Capital in Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
KLA
Stockholders’
Equity
Non-Controlling
Interest
Total
Stockholders’
Equity
Shares
Amount
Balances as of June 30, 2021
152,776 $ 2,175,988 $ 1,277,123
$(75,557)
$ 3,377,554
$(1,912)
$ 3,375,642
Net income attributable to KLA
—
—
3,321,807
—
3,321,807
—
3,321,807
Net income attributable to
non-controlling interest
—
—
—
—
—
253
253
Other comprehensive income
—
—
—
48,086
48,086
—
48,086
Net issuance under employee stock
plans
796
28,644
—
—
28,644
—
28,644
Repurchase of common stock
(11,768) (1,269,610) (3,592,657)
—
(4,862,267)
—
(4,862,267)
Cash dividends ($4.20 per share)
and dividend equivalents
declared
—
—
(639,391)
—
(639,391)
—
(639,391)
Dividend to non-controlling
interest
—
—
—
—
—
(602)
(602)
Stock-based compensation expense
—
126,918
—
—
126,918
—
126,918
Balances as of June 30, 2022
141,804
1,061,940
366,882
(27,471)
1,401,351
(2,261)
1,399,090
Net income attributable to KLA
—
—
3,387,277
—
3,387,277
—
3,387,277
Net income attributable to
non-controlling interest
—
—
—
—
—
74
74
Other comprehensive loss
—
—
—
(8,870)
(8,870)
—
(8,870)
Net issuance under employee stock
plans
790
29,930
—
—
29,930
—
29,930
Repurchase of common stock
(5,844)
842,467
(2,172,181)
—
(1,329,714)
—
(1,329,714)
Cash dividends ($5.20 per share)
and dividend equivalents
declared
—
—
(733,547)
—
(733,547)
—
(733,547)
Stock-based compensation expense
—
171,424
—
—
171,424
171,424
Purchase of non-controlling
interest
—
1,902
—
—
1,902
(6,196)
(4,294)
Disposal of non-controlling interest
—
—
—
—
—
8,383
8,383
Balances as of June 30, 2023
136,750
2,107,663
848,431
(36,341)
2,919,753
—
2,919,753
Net income attributable to KLA
—
—
2,761,896
—
2,761,896
—
2,761,896
Other comprehensive loss
—
—
—
(12,734)
(12,734)
—
(12,734)
Net issuance under employee stock
plans
707
1,908
—
—
1,908
—
1,908
Repurchase of common stock
(3,032)
(42,133) (1,700,368)
—
(1,742,501)
—
(1,742,501)
Cash dividends ($5.65 per share)
and dividend equivalents
declared
—
—
(772,689)
—
(772,689)
—
(772,689)
Stock-based compensation expense
—
212,695
—
—
212,695
212,695
Balances as of June 30, 2024
134,425 $ 2,280,133 $ 1,137,270
$(49,075)
$ 3,368,328
$
—
$ 3,368,328
See accompanying notes to Consolidated Financial Statements.
69

KLA CORPORATION
Consolidated Statements of Cash Flows
Year Ended June 30,
(In thousands)
2024
2023
2022
Cash flows from operating activities:
Net income
$ 2,761,896
$ 3,387,351
$ 3,322,060
Adjustments to reconcile net income to net cash provided by
operating activities:
Impairment of goodwill and purchased intangible assets
289,474
9,905
5,962
Depreciation and amortization
401,730
415,113
363,344
Loss on extinguishment of debt
—
13,286
—
Unrealized foreign exchange (gain) loss and other
(12,533)
(17,825)
46,531
Asset impairment charges
11,307
—
—
Disposal of non-controlling interest
—
8,270
—
Stock-based compensation expense
212,695
171,424
126,918
Gain on sale of business
—
(29,687)
—
Deferred income taxes
(155,228)
(298,145)
(329,501)
Settlement of treasury lock agreement
415
—
82,799
Changes in assets and liabilities, net of assets acquired and
liabilities assumed in business acquisitions:
Accounts receivable
(80,894)
(48,534)
(510,326)
Inventories
(164,092)
(749,047)
(567,003)
Other assets
(289,509)
(121,018)
(217,070)
Accounts payable
24,976
(144,661)
101,632
Deferred system revenue
334,136
150,750
213,368
Deferred service revenue
203,106
88,223
129,718
Other liabilities
(228,904)
834,400
544,270
Net cash provided by operating activities
3,308,575
3,669,805
3,312,702
Cash flows from investing activities:
Proceeds from sale of assets
5,079
—
27,658
Net proceeds from sale of business
—
75,358
—
Business acquisitions, net of cash acquired
(3,682)
(27,144)
(479,113)
Capital expenditures
(277,384)
(341,591)
(307,320)
Purchases of available-for-sale securities
(2,756,987)
(1,441,933)
(987,660)
Proceeds from sale of available-for-sale securities
107,773
124,620
113,538
Proceeds from maturity of available-for-sale securities
1,459,864
1,134,182
760,548
Purchases of trading securities
(134,098)
(96,611)
(121,254)
Proceeds from sale of trading securities
121,020
89,528
116,350
Proceeds from other investments
1,430
1,020
795
Net cash used in investing activities
(1,476,985)
(482,571)
(876,458)
Cash flows from financing activities:
Payment of debt issuance costs
—
(6,515)
—
Proceeds from issuance of debt, net of issuance costs
735,043
—
2,967,409
70

Year Ended June 30,
(In thousands)
2024
2023
2022
Proceeds from revolving credit facility, net of costs
$
—
$
300,000
$
875,000
Repayment of debt
—
(1,087,250)
(620,000)
Common stock repurchases
(1,735,746)
(1,311,864)
(3,967,806)
Forward contract for accelerated share repurchases
—
—
(900,000)
Payment of dividends to stockholders
(773,041)
(732,556)
(638,528)
Payment of dividends to subsidiary’s non-controlling interest
holders
—
—
(602)
Issuance of common stock
144,934
124,847
113,014
Tax withholding payments related to vested and released
restricted stock units
(143,024)
(94,806)
(84,371)
Contingent consideration payable and other, net
(4,183)
(17,850)
(1,121)
Purchase of non-controlling interest
—
(4,295)
—
Net cash used in financing activities
(1,776,017)
(2,830,289)
(2,257,005)
Effect of exchange rate changes on cash and cash equivalents
(6,309)
(13,988)
(28,941)
Net increase in cash and cash equivalents
49,264
342,957
150,298
Cash and cash equivalents at beginning of period
1,927,865
1,584,908
1,434,610
Cash and cash equivalents at end of period
$ 1,977,129
$ 1,927,865
$ 1,584,908
Supplemental cash flow disclosures:
Income taxes paid, net
$
830,835
$
495,101
$
464,526
Interest paid
$
276,597
$
223,955
$
154,673
Non-cash activities:
Contingent consideration payable - financing activities
$
(765) $
(1,878) $
16,281
Dividends payable - financing activities
$
8,043
$
7,903
$
7,028
Unsettled common stock repurchase - financing activities
$
5,500
$
11,000
$
—
Accrued purchase of land, property and equipment - investing
activities
$
13,849
$
18,445
$
19,595
See accompanying notes to Consolidated Financial Statements.
71

KLA CORPORATION
Notes to Consolidated Financial Statements
NOTE 1 — DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Description of Business and Principles of Consolidation. KLA Corporation and its majority-owned
subsidiaries (“KLA” or the “Company” and also referred to as “we,” “our,” “us” or similar references) is a
supplier of process equipment, process control equipment, and data analytics products for a broad range of
industries, including semiconductors and printed circuit boards (“PCB”). We provide advanced process control
and process-enabling solutions for manufacturing and testing wafers and reticles, integrated circuits (“IC”),
advanced packaging, light-emitting diodes, power devices, compound semiconductor devices,
microelectromechanical systems (“MEMS”), data storage and PCBs as well as general materials research. We
also provide comprehensive support and services across our installed base. Our extensive portfolio of inspection,
metrology and data analytics products, and related services, helps IC manufacturers achieve target yield
throughout the entire semiconductor fabrication process, from research and development (“R&D”) to final
volume production. We develop and sell advanced vacuum deposition and etching process tools, which are used
by a broad range of specialty semiconductor customers. We enable electronic device manufacturers to inspect,
test and measure PCBs and ICs to verify their quality, deposit a pattern of desired electronic circuitry on the
relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces. Our
advanced products, coupled with our unique yield management software and services, allow us to deliver the
solutions our semiconductor and PCB customers need to achieve their productivity goals by significantly
reducing their risks and costs and improving their overall profitability and return on investment. Headquartered
in Milpitas, California, we have subsidiaries both in the U.S. and key markets throughout the world.
The Consolidated Financial Statements include the accounts of KLA and its majority-owned subsidiaries.
All significant intercompany balances and transactions have been eliminated.
Comparability. Certain reclassifications have been made to the prior year’s Consolidated Financial
Statements to conform to the current year presentation. The reclassifications did not have material effects on the
prior year’s Consolidated Balance Sheets, Statements of Operations, Comprehensive Income and Cash Flows.
Management Estimates. The preparation of the Consolidated Financial Statements in conformity with
accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions in applying our accounting policies that affect the reported amounts of assets and liabilities (and
related disclosure of contingent assets and liabilities) at the date of the Consolidated Financial Statements and the
reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those
estimates.
Cash Equivalents and Fixed Income Marketable Securities. All highly liquid debt instruments with
original or remaining maturities of less than three months at the date of purchase are cash equivalents. Fixed
income marketable securities are generally classified as available-for-sale for use in current operations, if
required, and are reported at fair value, with unrealized gains and non-credit related unrealized losses, net of tax,
presented as a separate component of stockholders’ equity under the caption “Accumulated other comprehensive
income (loss).” All realized gains and losses are recorded in earnings in the period of occurrence. The specific
identification method is used to determine the realized gains and losses on investments.
We regularly review the available-for-sale debt securities in an unrealized loss position and evaluate the
current expected credit loss by considering available information relevant to the collectability of the security,
such as historical experience, market data, issuer-specific factors including credit ratings, default and loss rates of
the underlying collateral and structure and credit enhancements, current economic conditions and reasonable and
supportable forecasts. There were no credit losses on available-for-sale debt securities recognized in the years
ended June 30, 2024, 2023 and 2022.
72

If we do not expect to recover the entire amortized cost of the security, the amount representing credit
losses, defined as the difference between the present value of the cash flows expected to be collected and the
amortized cost basis of the debt security, is recorded as an allowance for credit losses with an offsetting entry to
net income, and the amount that is not credit-related is recognized in other comprehensive income (loss) (“OCI”).
If we have the intent to sell the security or it is more likely than not that we will be required to sell the security
before recovery of its entire amortized cost basis, we first write off any previously recognized allowance for
credit losses with an offsetting entry to the security’s amortized cost basis. If the allowance has been fully written
off and fair value is less than amortized cost basis, we write down the amortized cost basis of the security to its
fair value with an offsetting entry to net income.
Investments in Equity Securities. We hold equity securities in publicly and privately held companies for
the promotion of business and strategic objectives. Equity securities in publicly held companies, or marketable
equity securities, are measured and recorded at fair value on a recurring basis. Equity securities in privately held
companies, or non-marketable equity securities, are accounted for at cost, less impairment, plus or minus
observable price changes in orderly transactions for identical or similar securities of the same issuer.
Non-marketable equity securities are subject to a periodic impairment review; however, since there are no open-
market valuations, the impairment analysis requires significant judgment. This analysis includes assessment of
the investee’s financial condition, the business outlook for its products and technology, its projected results and
cash flow, financing transactions subsequent to the acquisition of the investment, the likelihood of obtaining
subsequent rounds of financing and the impact of any relevant contractual equity preferences held by us or the
others. Non-marketable equity securities are included in “Other non-current assets” on the balance sheet.
Realized and unrealized gains and losses resulting from changes in fair value or the sale of our marketable and
non-marketable equity securities are recorded in Other expense (income), net.
Variable Interest Entities. We use a qualitative approach in assessing the consolidation requirement for
variable interest entities. The approach focuses on identifying which enterprise has the power to direct the
activities that most significantly impact the variable interest entity’s economic performance and which enterprise
has the obligation to absorb losses or the right to receive benefits from the variable interest entity. In the event we
are the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the
variable interest entity will be included in our Consolidated Financial Statements. We have concluded that none
of our equity investments require consolidation based on our most recent qualitative assessment.
Inventory Valuation. Inventories are stated at the lower of cost or net realizable value using standard costs
that approximate actual costs on a first-in, first-out basis. The carrying value of product inventory is reduced for
estimated obsolescence equal to the difference between its cost and the estimated net realizable value based on
assumptions about future demand for meeting our product manufacturing plans. The carrying value of service
inventory is reduced for estimated obsolescence equal to the difference between its cost and the estimated net
realizable value based on assumptions about future demand to meet our customers’ support requirements.
Demonstration units are stated at their manufacturing cost and written down to their net realizable value. The
Company’s policy is to assess the valuation of all inventories including manufacturing raw materials,
work-in-process, finished goods and spare parts in each reporting period. The estimate of net realizable value of
inventory is impacted by assumptions regarding general semiconductor market conditions, manufacturing
schedules, technology changes, new product introductions and possible alternative uses, and require us to use
significant judgment that may include uncertain elements. Actual demand may differ from forecasted demand,
and such differences may have a material effect on recorded inventory values. Our manufacturing overhead
standards for product costs are calculated assuming full absorption of forecasted spending over projected
volumes, adjusted for excess capacity. Abnormal inventory costs such as costs of idle facilities, excess freight
and handling costs and spoilage are recognized as current period charges.
Allowance for Credit Losses. A majority of our accounts receivable are derived from sales to large
multinational semiconductor and electronics manufacturers throughout the world. We maintain an allowance for
credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable
73

and changes in such are classified as selling, general and administrative (“SG&A”) expense in the Consolidated
Statements of Operations. We assess collectability by reviewing accounts receivable on a collective basis where
similar risk characteristics exist and on an individual basis when we identify specific customers with known
disputes or collectability issues. The estimate of expected credit losses considers historical credit loss information
that is adjusted for current conditions and reasonable and supportable forecasts. The allowance for credit losses is
reviewed on a quarterly basis to assess the adequacy of the allowance. Our assessment considered estimates of
expected credit and collectability trends. The credit losses recognized on accounts receivable were not significant
as of June 30, 2024 and 2023. Volatility in market conditions and evolving credit trends are difficult to predict
and may cause variability that may have a material impact on our allowance for credit losses in future periods.
Property and Equipment. Property and equipment are recorded at cost, net of accumulated depreciation.
Depreciation of property and equipment is based on the straight-line method over the estimated useful lives of
the assets. The following table sets forth the estimated useful life for various asset categories:
Asset Category
Range of Useful Lives
Buildings
30 to 50 years
Leasehold improvements
Shorter of 15 years or lease term
Machinery and equipment
2 to 10 years
Office furniture and fixtures
7 years
Construction-in-process assets are not depreciated until the assets are placed in service. Depreciation
expense for the fiscal years ended June 30, 2024, 2023 and 2022 was $181.7 million, $154.2 million and
$122.2 million, respectively.
Leases. Under Accounting Standards Codification (“ASC”) 842, Leases, a contract is or contains a lease
when we have the right to control the use of an identified asset for a period of time. We determine if an
arrangement is a lease at inception of the contract, which is the date on which the terms of the contract are agreed
to, and the agreement creates enforceable rights and obligations. The commencement date of the lease is the date
that the lessor makes an underlying asset available for our use. On the commencement date, leases are evaluated
for classification and assets and liabilities are recognized based on the present value of lease payments over the
lease term.
The lease term used to calculate the lease liability includes options to extend or terminate the lease when it
is reasonably certain that the option will be exercised. The right of use (“ROU”) asset is initially measured as the
amount of lease liability, adjusted for any initial lease costs, prepaid lease payments and any lease incentives.
Variable lease payments, consisting primarily of reimbursement of costs incurred by lessors for common area
maintenance, real estate taxes and insurance, are not included in the lease liability and are recognized as they are
incurred.
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate at lease
commencement to measure ROU assets and lease liabilities. The incremental borrowing rate used by us is based
on baseline rates and adjusted by the credit spreads commensurate with our secured borrowing rate, over a
similar term. We used the incremental borrowing rate on June 30, 2019 for all leases that commenced on or prior
to that date. Operating lease expense is generally recognized on a straight-line basis over the lease term.
We have elected the practical expedient to account for the lease and non-lease components as a single lease
component for the majority of our asset classes. For leases with a term of one year or less, we have elected not to
record the ROU asset or liability.
Goodwill, Purchased Intangible Assets and Impairment Assessment. Goodwill represents the excess of
the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired.
We assess goodwill for impairment annually during our third fiscal quarter or whenever events or changes in
74

circumstances indicate the carrying value may not be fully recoverable. We have the option to perform a
qualitative assessment prior to necessitating a quantitative impairment test. In the qualitative assessment, if we
determine that it is more likely than not that the fair value of a reporting unit is less than the carrying value, a
quantitative test is then performed, which involves comparing the estimated fair value of a reporting unit to its
carrying value including goodwill. If goodwill is considered to be impaired, the amount of any impairment is
measured as the difference between the carrying value and the fair value. Refer to Note 7 “Goodwill and
Purchased Intangible Assets” for information related to determining the fair value of a reporting unit.
Purchased intangible assets that are not considered to have an indefinite useful life are amortized over their
estimated useful lives, which generally range from six months to nine years. The carrying values of our
intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying value of an asset or asset group may not be recoverable.
Impairment of Long-Lived Assets. Long-lived assets are tested for impairment whenever events or
changes in circumstances indicate that their carrying amounts may not be recoverable. Events or changes in
circumstances that could affect the likelihood that we will be required to recognize an impairment charge for the
long-lived assets primarily include declines in our operating cash flows from the use of these assets. We
determine whether long-lived assets are recoverable based on the forecasted undiscounted future cash flows that
are expected to be generated by the lowest-level associated asset grouping. If the undiscounted cash flows used in
the recoverability test are less than the long-lived assets’ carrying value, we recognize an impairment loss for the
amount that the carrying value exceeds the fair value. We determine the fair value of long-lived assets using the
income approach, primarily by applying the relief-from-royalty or multi-period excess-earnings methods, when
deemed appropriate.
Concentration of Credit Risk. Financial instruments that potentially subject us to significant
concentrations of credit risk consist primarily of cash equivalents, short-term marketable securities, trade
accounts receivable and derivative financial instruments used in hedging activities. We invest in a variety of
financial instruments, such as, but not limited to, certificates of deposit, corporate debt and municipal securities,
U.S. Treasury and Government agency securities, and equity securities and, by policy, we limit the amount of
credit exposure with any one financial institution or commercial issuer. We have not experienced any material
credit losses on our investments.
A majority of our accounts receivable are derived from sales to large multinational semiconductor and
electronics manufacturers located throughout the world, with a majority located in Asia. In recent years, our
customer base has become increasingly concentrated due to corporate consolidations, acquisitions and business
closures, and to the extent that these customers experience liquidity issues in the future, we may be required to
reserve for potential credit losses with respect to trade receivables. We perform ongoing credit evaluations of our
customers’ financial condition and generally require little to no collateral to secure accounts receivable. We
maintain an allowance for potential credit losses based upon expected collectability risk of all accounts
receivable. In addition, we may utilize letters of credit (“LC”) or non-recourse factoring to mitigate credit risk
when considered appropriate.
We are exposed to credit loss in the event of non-performance by counterparties on the foreign exchange
contracts that we use in hedging activities and in certain factoring transactions. These counterparties are large
international financial institutions, and, to date, no such counterparty has failed to meet its financial obligations
to us under such contracts.
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The following customers each accounted for more than 10% of total revenues, primarily in the
Semiconductor Process Control segment, for the indicated periods:
Year Ended June 30,
2024
2023
2022
Taiwan Semiconductor
Manufacturing Company Limited
Taiwan Semiconductor
Manufacturing Company Limited
Taiwan Semiconductor
Manufacturing Company Limited
Samsung Electronics Co., Ltd.
Samsung Electronics Co., Ltd.
The following customers each accounted for more than 10% of net accounts receivable as of the dates
indicated below:
As of June 30,
2024
2023
Taiwan Semiconductor Manufacturing Company
Limited
Taiwan Semiconductor Manufacturing Company
Limited
Samsung Electronics Co., Ltd.
Foreign Currency. The functional currencies of our foreign subsidiaries are primarily the local currencies,
except as described below. Accordingly, all assets and liabilities of these foreign operations are translated to U.S.
dollars at current period end exchange rates, and revenues and expenses are translated to U.S. dollars using
average exchange rates in effect during the period. The gains and losses from foreign currency translation of
these subsidiaries’ financial statements are recorded directly into a separate component of stockholders’ equity
under the caption “Accumulated other comprehensive income (loss).”
Our manufacturing subsidiaries in Singapore, Israel, Germany, and the United Kingdom use the U.S. dollar
as their functional currency. Accordingly, monetary assets and liabilities in non-functional currency of these
subsidiaries are remeasured using exchange rates in effect at the end of the period. Revenues and costs in local
currency are remeasured using average exchange rates for the period, except for costs related to those balance
sheet items that are remeasured using historical exchange rates. The resulting remeasurement gains and losses are
included in the Consolidated Statements of Operations as incurred.
Derivative Financial Instruments. We use financial instruments, such as foreign exchange contracts
including forward and options transactions, to hedge a portion of, but not all, existing and forecasted foreign
currency denominated transactions. The purpose of our foreign exchange hedging program is to manage the
effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash
flows. The effect of exchange rate changes on foreign exchange contracts is expected to offset the effect of
exchange rate changes on the underlying hedged items. We also use forward contracts to hedge the risk
associated with the variability of cash flows due to changes in the benchmark interest rate of the intended debt
financing (“Rate Lock Agreements”). We believe these financial instruments do not subject us to speculative risk
that would otherwise result from changes in currency exchange rates or interest rates. All of our derivative
financial instruments are recorded at fair value based upon quoted market prices for comparable instruments
adjusted for risk of counterparty non-performance.
For derivative instruments designated and qualifying as cash flow hedges of forecasted foreign currency
denominated transactions or debt financing, the effective portion of the gains or losses is reported in
Accumulated other comprehensive income (loss) (“AOCI”) and reclassified into earnings in the same period or
periods during which the hedged transaction affects earnings. We elected to include time value for the
assessment of effectiveness on all forward transactions designated as cash flow hedges. The change in fair value
of the derivative is recorded in AOCI until the hedged transaction is recognized in earnings. The assessment of
effectiveness of options contracts designated as cash flow hedges excludes time value. The initial value of the
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component excluded from the assessment of effectiveness is recognized in earnings over the life of the derivative
contract. Any differences between change in the fair value of the excluded components and the amounts
recognized in earnings are recorded in AOCI. For foreign exchange contracts that are designated and qualify as a
net investment hedge in a foreign operation and that meet the effectiveness requirements, the net gains or losses
attributable to changes in spot exchange rates are recorded in cumulative translation within AOCI. The remainder
of the change in value of such instruments is recorded in earnings using the mark-to-market approach.
Recognition in earnings of amounts previously recorded in cumulative translation is limited to circumstances
such as complete or substantially complete liquidation of the net investment in the hedged foreign operations. For
foreign exchange contracts that are not designated as hedges, gains and losses are recognized in Other expense
(income), net. We use foreign exchange contracts to hedge certain foreign currency denominated assets or
liabilities. The gains and losses on these derivative instruments are largely offset by the changes in the fair value
of the assets or liabilities being hedged.
Revenue Recognition. We primarily derive revenue from the sale of process control and process-enabling
solutions for the semiconductor and related electronics industries, maintenance and support of all these products,
installation and training services and the sale of spare parts. Our portfolio includes yield enhancement and
production solutions for manufacturing wafers and reticles, ICs, packaging, PCBs and flat panel displays
(“FPD”), as well as comprehensive support and services across our installed base.
Our solutions are generally not sold with a right of return, nor have we experienced significant returns from
or refunds to our customers.
We account for a contract with a customer when there is approval and commitment from both parties, the
rights of the parties are identified, payment terms are identified, the contract has commercial substance and
collectability of consideration is probable.
Our revenues are measured based on consideration stipulated in the arrangement with each customer, net of
any sales incentives and amounts collected on behalf of third parties, such as sales taxes. The revenues are
recognized as separate performance obligations that are satisfied by transferring control of the product or service
to the customer.
Our arrangements with our customers include various combinations of products and services, which are
generally capable of being distinct and accounted for as separate performance obligations. A product or service is
considered distinct if it is separately identifiable from other deliverables in the arrangement and if a customer can
benefit from it on its own or with other resources that are readily available to the customer.
The transaction consideration, including any sales incentives, is allocated between separate performance
obligations of an arrangement based on the stand-alone selling price (“SSP”) for each distinct product or service.
Management considers a variety of factors to determine the SSP, such as historical stand-alone sales of products
and services, discounting strategies and other observable data.
From time to time, our contracts are modified to account for additional, or to change existing, performance
obligations. Our contract modifications are generally accounted for prospectively.
Product Revenue
We recognize revenue from product sales at a point in time when we have satisfied our performance
obligation by transferring control of the product to the customer. We use judgment to evaluate whether control
has transferred by considering several indicators, including whether:
•
We have a present right to payment;
•
The customer has legal title;
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•
The customer has physical possession;
•
The customer has significant risk and rewards of ownership; and
•
The customer has accepted the product, or whether customer acceptance is considered a formality
based on history of acceptance of similar products (for example, when the customer has previously
accepted the same tool, with the same specifications, and when we can objectively demonstrate that the
tool meets all of the required acceptance criteria, and when the installation of the system is deemed
perfunctory).
Not all of the indicators need to be met for us to conclude that control has transferred to the customer. In
circumstances in which revenue is recognized prior to the product acceptance, the fair value of revenue
associated with our performance obligations to install the product is deferred and recognized as revenue at a
point in time, once installation is complete.
We enter into volume purchase agreements with some of our customers. We adjust the transaction
consideration for estimated credits and incentives earned by our customers. These credits are estimated based
upon the forecasted and actual product sales for any given period and agreed incentive rate. The estimate is
reviewed for material changes and updated at each reporting period.
We offer perpetual and term licenses for software products. The primary difference between perpetual and
term licenses is the duration over which the customer can benefit from the use of the software, while the
functionality and the features of the software are the same. Software is generally bundled with post-contract
customer support (“PCS”), which includes unspecified software updates that are made available throughout the
entire term of the arrangement. Revenue from software licenses is recognized at a point in time, when the
software is made available to the customer. Revenue from PCS is deferred at contract inception and recognized
ratably over the service period, or as services are performed.
Services Revenue
The majority of product sales include a standard 12-month warranty that is not separately paid for by the
customers. The customers may also purchase an extended warranty for periods beyond the initial period as part
of the initial product sale. We have concluded that the standard 12-month warranty as well as any extended
warranty periods included in the initial product sales are separate performance obligations for most of our
products. The estimated fair value of warranty services is deferred and recognized ratably as revenue over the
warranty period, as the customer simultaneously receives and consumes the benefits of warranty services
provided by us.
Additionally, we offer product maintenance and support services, which the customer may purchase
separately from the standard and extended warranty offered as part of the initial product sale. Revenue from
separately negotiated maintenance and support service contracts is also recognized over time based on the terms
of the applicable service period. Revenue from services performed in the absence of a maintenance contract,
including training revenue, is recognized when the related services are performed. We also sell spare parts,
revenue from which is recognized when control over the spare parts is transferred to the customer.
Significant Judgments
Our contracts with our customers often include promises to transfer multiple products and services. Each
product and service is generally capable of being distinct within the context of the contract and represents a
separate performance obligation. Determining the SSP for each distinct performance obligation and allocation of
consideration from an arrangement to the individual performance obligations and the appropriate timing of
revenue recognition are significant judgments with respect to these arrangements. We typically estimate the SSP
of products and services based on observable transactions when the products and services are sold on a
stand-alone basis and those prices fall within a reasonable range. We typically have more than one SSP for
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individual products and services due to the stratification of these products by customers and circumstances. In
these instances, we use information such as the size of the customer, geographic region, as well as customization
of the products in determining the SSP. In instances where the SSP is not directly observable, we determine the
SSP using information that includes market conditions, entity-specific factors, including discounting strategies,
information about the customer or class of customer that is reasonably available and other observable inputs.
While changes in the allocation of SSP between performance obligations will not affect the amount of total
revenue recognized for a particular contract, any material changes could impact the timing of revenue
recognition, which could have a material effect on our financial position and results of operations.
Although our products are generally not sold with a right of return, we may provide other credits or sales
incentives, which are accounted for either as variable consideration or material right, depending on the specific
terms and conditions of the arrangement. These credits and incentives are estimated at contract inception and
updated at the end of each reporting period if and when additional information becomes available.
As outlined above, we use judgments to evaluate whether or not the customer has obtained control of the
product and consider several indicators in evaluating whether or not control has transferred to the customer. Not
all of the indicators need to be met for us to conclude that control has transferred to the customer.
Contract Assets/Liabilities
The timing of revenue recognition, billings and cash collections may result in accounts receivable, contract
assets, and contract liabilities (deferred revenue) on our Consolidated Balance Sheets. A receivable is recorded in
the period we deliver products or provide services when we have an unconditional right to payment. Contract
assets primarily relate to the value of products and services transferred to the customer for which the right to
payment is not just dependent on the passage of time. Contract assets are transferred to accounts receivable when
rights to payment become unconditional.
A contract liability is recognized when we receive payment or have an unconditional right to payment in
advance of the satisfaction of performance. The contract liabilities represent (1) deferred product revenue related
to the value of products that have been shipped and billed to customers and for which control has not been
transferred to the customers, and (2) deferred service revenue, which is recorded when we receive consideration,
or such consideration is unconditionally due, from a customer prior to transferring services to the customer under
the terms of a contract. Deferred service revenue typically results from warranty services, and maintenance and
other service contracts.
Contract assets and liabilities related to rights and obligations in a contract are recorded net in the
Consolidated Balance Sheets.
Research and Development Costs. R&D costs are expensed as incurred.
Shipping and Handling Costs. Shipping and handling costs are included as a component of cost of sales.
Accounting for Stock-Based Compensation Plans. We account for stock-based awards granted to
employees for services based on the fair value of those awards. The fair value of stock-based awards is measured
at the grant date and is recognized as expense over the employee’s requisite service period. The fair value for
restricted stock units (“RSU”) granted without “dividend equivalent” rights is determined using the closing price
of our common stock on the grant date, adjusted to exclude the present value of dividends which are not accrued
on the RSUs. The fair value for RSUs granted with “dividend equivalent” rights is determined using the closing
price of our common stock on the grant date. The award holder is not entitled to receive payments under dividend
equivalent rights unless the associated RSU award vests (i.e., the award holder is entitled to receive credits,
payable in cash or shares of common stock, equal to the cash dividends that would have been received on the
shares of our common stock underlying the RSUs had the shares been issued and outstanding on the dividend
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record date, but such dividend equivalents are only paid subject to the recipient satisfying the vesting
requirements of the underlying award). Compensation expense for RSUs with performance metrics is calculated
based upon expected achievement of the metrics specified in the grant, or when a grant contains a market
condition, the grant date fair value using a Monte Carlo simulation. The Monte Carlo simulation incorporates
estimates of the potential outcomes of the market condition on the grant date fair value of each award.
Additionally, we estimate forfeitures based on historical experience and revise those estimates in subsequent
periods if actual forfeitures differ from the estimated amounts. The fair value for our Employee Stock Purchase
Plan (“ESPP”) is determined using a Black-Scholes valuation model for purchase rights. The Black-Scholes
option-pricing model requires the input of assumptions, including the option’s expected term and the expected
price volatility of the underlying stock. The expected stock price volatility assumption is based on the market-
based historical implied volatility from traded options of our common stock.
Accounting for Cash-Based Long-Term Incentive Compensation. Cash-based long-term incentive
(“Cash LTI”) awards issued to employees under our Cash Long-Term Incentive Plan (“Cash LTI Plan”) vest in
three or four equal installments, with one-third or one-fourth of the aggregate amount of the Cash LTI award
vesting on each yearly anniversary of the grant date over a three- or four-year period. In order to receive
payments under a Cash LTI award, participants must remain employed by us as of the applicable award vesting
date. Compensation expense related to the Cash LTI awards is recognized over the vesting term and adjusted for
the impact of estimated forfeitures.
Accounting for Non-qualified Deferred Compensation Plan. We have a non-qualified deferred
compensation plan (known as the “Executive Deferred Savings Plan” (“EDSP”)) under which certain executives
and non-employee directors may defer a portion of their compensation. Participants are credited with returns
based on their allocation of their account balances among measurement funds. We control the investment of
these funds, and the participants remain general creditors of ours. We invest these funds in certain mutual funds
and such investments are classified as trading securities in the Consolidated Balance Sheets. Investments in
trading securities are measured at fair value in the statement of financial position. Unrealized holding gains and
losses for trading securities are included in earnings. Distributions from the EDSP commence following a
participant’s retirement or termination of employment or on a specified date allowed per the EDSP provisions,
except in cases where such distributions are required to be delayed in order to avoid a prohibited distribution
under Internal Revenue Code Section 409A. Participants can generally elect for the distributions to be paid in a
lump sum or quarterly cash payments over a scheduled period for up to 15 years and are allowed to make
subsequent changes to their existing elections as permissible under the EDSP provisions. The liability associated
with the EDSP is included as a component of other current liabilities in the Consolidated Balance Sheets.
Changes in the EDSP liability are recorded in SG&A expense in the Consolidated Statements of Operations. The
net expense (benefit) associated with changes in the liability included in SG&A expense was $37.2 million,
$27.6 million and $(44.2) million for the fiscal years ended June 30, 2024, 2023 and 2022, respectively. We also
have a deferred compensation asset that corresponds to the liability under the EDSP and it is included as a
component of other non-current assets in the Consolidated Balance Sheets. Changes in the EDSP assets are
recorded as gains (losses), net in SG&A expense in the Consolidated Statements of Operations. The amount of
net gains (losses) included in SG&A expense were $36.6 million, $27.6 million and $(44.3) million for the fiscal
years ended June 30, 2024, 2023 and 2022, respectively.
Income Taxes. We account for current and deferred income taxes in accordance with the authoritative
guidance, which requires that the income tax impact is to be recognized in the period in which the law is enacted.
Current income tax expense represents taxes paid or payable for the current period. Deferred tax assets and
liabilities are recognized using enacted tax rates for the future tax impact of temporary differences between the
financial statement and tax bases of recorded assets and liabilities. A valuation allowance is recorded to reduce
deferred tax assets when it is more likely than not that a tax benefit will not be realized based on historical and
projected future taxable income over the periods in which the temporary differences are expected to be recovered
or settled.
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We record income taxes on the undistributed earnings of foreign subsidiaries unless the subsidiaries’
earnings are considered indefinitely reinvested outside the U.S. Our income taxes will be greater if some or all of
the indefinitely reinvested earnings are taxable when distributed to the U.S.
In accordance with the authoritative guidance on accounting for uncertainty in income taxes, we recognize
liabilities for uncertain tax positions based on the two-step process. The first step is to evaluate the tax position
for recognition by determining if the weight of available evidence indicates that it is more likely than not that the
position will be sustained in audit, including resolution of related appeals or litigation processes, if any. The
second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized
upon ultimate settlement.
Global Intangible Low-Taxed Income. The Tax Cut and Jobs Act includes provisions for Global
Intangible Low-Taxed Income (“GILTI”) wherein U.S. taxes on foreign income are imposed in excess of a
deemed return on tangible assets of foreign corporations. This income is effectively taxed at a 10.5% tax rate in
general. We elect to account for GILTI as a component of current period tax expense and not recognize deferred
tax assets and liabilities for the basis differences expected to reverse as a result of GILTI provisions.
Business Combinations. We allocate the fair value of the purchase price of our acquisitions to the tangible
assets acquired, liabilities assumed, and intangible assets acquired, including in-process research and
development (“IPR&D”), based on their estimated fair values at acquisition date. The excess of the fair value of
the purchase price over the fair values of these net tangible and intangible assets acquired is recorded as
goodwill. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but our
estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the
measurement period, which will not exceed one year from the acquisition date, we record adjustments to the
assets acquired and liabilities assumed with the corresponding offset to goodwill. After the conclusion of the
measurement period or final determination of the fair value of the purchase price of our acquisitions, whichever
comes first, any subsequent adjustments are recorded to our Consolidated Statements of Operations.
The fair value of IPR&D is initially capitalized as an intangible asset with an indefinite life and assessed for
impairment thereafter whenever events or changes in circumstances indicate that the carrying value of the
IPR&D assets may not be recoverable. Impairment of IPR&D is recorded to R&D expenses. When an IPR&D
project is completed, the IPR&D is reclassified as an amortizable purchased intangible asset and amortized to
costs of revenues over the asset’s estimated useful life.
Acquisition-related expenses are recognized separately from the business combination and are expensed as
incurred.
Net Income Per Share. Basic net income per share is calculated by dividing net income available to
common stockholders by the weighted-average number of common shares outstanding during the period. Diluted
net income per share is calculated by using the weighted-average number of common shares outstanding during
the period increased to include the number of additional shares of common stock that would have been
outstanding if the dilutive potential shares of common stock had been issued. The dilutive effect of RSUs and
options is reflected in diluted net income per share by application of the treasury stock method. The dilutive
securities are excluded from the computation of diluted net loss per share when a net loss is recorded for the
period as their effect would be anti-dilutive.
Contingencies and Litigation. We are subject to the possibility of losses from various contingencies.
Considerable judgment is necessary to estimate the probability and amount of any loss from such contingencies.
An accrual is made when it is probable that a liability has been incurred or an asset has been impaired, and the
amount of loss can be reasonably estimated. We accrue a liability and recognize as expense the estimated costs to
defend or settle asserted and unasserted claims existing as of the balance sheet date. See Note 15 “Litigation and
Other Legal Matters” and Note 16 “Commitments and Contingencies” for additional details.
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Recent Accounting Pronouncements
Recently Adopted
In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities
from Contracts with Customers. The new guidance requires companies to apply revenue guidance to recognize
and measure contract assets and contract liabilities from contracts with customers acquired in a business
combination at carrying value. Under the prior business combination guidance, such assets and liabilities were
recognized by the acquirer at fair value on the acquisition date. We adopted this update beginning in the first
quarter of our fiscal year ending June 30, 2024 on a prospective basis. The impact of adopting this update will
depend on the magnitude of contract assets and contract liabilities acquired in future acquisitions.
Updates Not Yet Effective
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to
Reportable Segment Disclosures. The new guidance requires enhanced disclosures about significant segment
expenses. This standard update is effective for our annual reports beginning in the fiscal year ending June 30,
2025 and interim period reports beginning in the first quarter of the fiscal year ending June 30, 2026. Early
adoption is permitted on a retrospective basis. We are currently evaluating the impact of this ASU on our
segment disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income
Tax Disclosures. The new guidance requires enhanced disclosures about income tax expenses. This standard
update is effective for our annual reports beginning in the fiscal year ending June 30, 2026. Early adoption is
permitted on a prospective basis. We are currently evaluating the impact of this ASU on our annual income tax
disclosures.
NOTE 2 — REVENUE
Contract Balances
The following table represents the opening and closing balances of accounts receivable, contract assets and
contract liabilities for the indicated periods.
(In thousands, except for percentages)
As of
June 30,
2024
As of
June 30,
2023
As of
June 30,
2022
Change in
Fiscal 2024
Change in
Fiscal 2023
Accounts receivable, net
$1,833,041
$1,753,361
$1,811,877
$ 79,680
5% $ (58,516)
(3)%
Contract assets
$
69,259
$ 117,137
$ 114,747
$ (47,878) (41)% $
2,390
2%
Contract liabilities
$1,782,242
$1,245,007
$1,007,324
$537,235
43% $237,683
24%
Our payment terms and conditions vary by contract type, although terms generally include a requirement of
payment of 70% to 90% of total contract consideration within 30 to 60 days of shipment, with the remainder
payable within 30 days of acceptance.
The change in contract assets during the fiscal year ended June 30, 2024 was mainly due to $104.1 million
of contract assets reclassified to net accounts receivable as our right to consideration for these contract assets
became unconditional, partially offset by $56.8 million of revenue recognized for which the payment is subject to
conditions other than the passage of time. Contract assets are included in other current assets on our Consolidated
Balance Sheets.
The change in contract liabilities during the fiscal year ended June 30, 2024 was mainly due to the value of
products and services billed to customers for which control of the products and services has not transferred to the
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customers, partially offset by the recognition in revenue of $963.5 million that was included in contract liabilities
as of June 30, 2023. The change in contract liabilities during the fiscal year ended June 30, 2023 was mainly due
to the value of products and services billed to customers for which control of the products and services has not
transferred to the customers, partially offset by the recognition in revenue of $819.0 million that was included in
contract liabilities as of June 30, 2022. Contract liabilities are included in current and non-current liabilities on
our Consolidated Balance Sheet.
Remaining Performance Obligations
As of June 30, 2024, we had $9.83 billion of remaining performance obligations (“RPO”), which represents
our obligation to deliver products and services, and primarily consists of sales orders where written customer
requests have been received. This amount includes customer deposits of $745.7 million as disclosed in Note 4
“Financial Statement Components” and excludes contract liabilities of $1.78 billion as disclosed above. We
expect to recognize approximately 59% to 64% of these performance obligations as revenue in the next 12
months, 29% to 34% in the subsequent 12 months and the remainder thereafter, but this estimate is subject to
constant change. The timing of revenue recognition of our RPO is evaluated quarterly and is largely driven by
multiple variables, many of which are beyond our control, such as: the readiness of customer fabs, end market
needs for capacity, changes in the estimated versus actual start time of customers’ projects, timing of delivery
and installation dates, supply chain constraints and changes in regulations. Our customers are currently
purchasing equipment from us with lead times that are longer than our historical experience. As customers try to
balance the evolution of their technological, production or market needs with the timing and content of orders
placed with us, there is elevated risk of order modifications, pushouts or cancellations.
In addition, in October 2022, the U.S. government issued regulations that imposed new export licensing
requirements for certain U.S. semiconductor and high-performance computing technology (including wafer fab
equipment), for the use of such technology for certain end uses in the People’s Republic of China (“China”), and
for the provision of support by U.S. Persons to certain advanced IC fabs located in China. The regulations impose
export license requirements effectively on all KLA products and services to customers located in China that
fabricate certain advanced logic, NAND and DRAM ICs. KLA is also restricted from providing certain U.S.
origin tools, software and technology to certain wafer fab equipment manufacturers located in China, absent an
export license. In October 2023, the U.S. government issued additional regulations that went into effect in
November 2023. These additional rules are designed to update export controls on advanced computing
semiconductors and semiconductor manufacturing equipment, as well as items that support supercomputing
applications and end-uses, to arms embargoed countries, including China. They adjust the parameters included in
the existing regulations that determine whether an advanced computing chip is restricted and impose new
measures to address risks of circumvention of the controls established in October 2022. The regulations are very
complex and, in January 2024, KLA, among other companies, submitted comments to the government regarding
these regulations. We are taking appropriate measures to comply with all government regulations, and will
continue to apply for export licenses, when required, to avoid disruption to our customers’ operations. While
some export licenses have been obtained by us or our customers, there can be no assurance that export licenses
applied for by either us or our customers, now or in the future, will be granted.
Practical expedients
We apply the following practical expedients in accordance with ASC 606, Revenue from Contracts with
Customers:
•
We account for shipping and handling costs as activities to fulfill the promise to transfer goods, instead
of a promised service to our customer.
•
We have elected to not adjust the promised amount of consideration for the effects of a significant
financing component as we expect, at contract inception, that the period between when we transfer a
promised good or service to a customer and when the customer pays for that good or service will
generally be one year or less.
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•
We have elected to expense costs to obtain a contract as incurred because the expected amortization
period is one year or less.
Refer to Note 19 “Segment Reporting and Geographic Information” for information related to revenue by
geographic region as well as significant product and service offerings.
NOTE 3 — FAIR VALUE MEASUREMENTS
Our financial assets and liabilities are measured and recorded at fair value, except for our debt and certain
equity investments in privately held companies. Equity investments without a readily available fair value are
accounted for using the measurement alternative. The measurement alternative is calculated as cost minus
impairment, if any, plus or minus changes resulting from observable price changes. See Note 8 “Debt” for
disclosure of the fair value of our Senior Notes, as defined in that Note.
Our non-financial assets, such as goodwill, intangible assets, and land, property and equipment, are assessed
for impairment when an event or circumstance indicates that an other-than-temporary decline in value may have
occurred.
Fair Value of Financial Instruments. We have evaluated the estimated fair value of financial instruments
using available market information and valuations as provided by third-party sources. The use of different market
assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.
The fair value of our cash equivalents, accounts receivable, accounts payable and other current assets and
liabilities approximate their carrying amounts due to the relatively short maturity of these items.
Fair Value Hierarchy. The authoritative guidance for fair value measurements establishes a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the
fair value hierarchy are described below:
Level 1
Valuations based on quoted prices in active markets for identical assets or liabilities that the entity
has the ability to access.
Level 2
Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are
not active, or other inputs that are observable or can be corroborated by observable data for
substantially the full term of the assets or liabilities.
Level 3
Valuations based on inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is
significant to the fair value measurement. There were no transfers between Level 1, Level 2 and Level 3 fair
value measurements during the years ended June 30, 2024 and June 30, 2023.
The types of instruments valued based on quoted market prices in active markets included money market
funds, certain U.S. Treasury securities, U.S. Government agency securities and equity securities. Such
instruments are generally classified within Level 1 of the fair value hierarchy.
The types of instruments valued based on other observable inputs included corporate debt securities,
municipal securities and certain U.S. Treasury securities. The market inputs used to value these instruments
generally consist of market yields, reported trades and broker/dealer quotes. Such instruments are generally
classified within Level 2 of the fair value hierarchy.
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The principal market in which we execute our foreign currency contracts is the institutional market in an
over-the-counter environment with a relatively high level of price transparency. The market participants
generally are large financial institutions. Our foreign currency contracts’ valuation inputs are based on quoted
prices and quoted pricing intervals from public data sources and do not involve management judgment. These
contracts are typically classified within Level 2 of the fair value hierarchy.
The fair values of contingent consideration payable, the majority of which were recorded in connection with
business combinations, were classified as Level 3 and estimated using significant inputs that were not observable
in the market. See Note 6 “Business Combinations and Dispositions” for additional information.
Financial assets (excluding cash held in operating accounts and time deposits) and liabilities measured at
fair value on a recurring basis as of the date indicated below were presented on our Consolidated Balance Sheets
as follows:
As of June 30, 2024 (In thousands)
Total
Quoted Prices
in Active
Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Little or No
Market Activity
Inputs (Level 3)
Assets
Cash equivalents:
Corporate debt securities
$
2,312
$
—
$
2,312
$—
Money market funds and other
1,585,832
1,585,832
—
—
U.S. Treasury securities
35,158
—
35,158
—
Marketable securities:
Corporate debt securities
771,920
—
771,920
—
Municipal securities
41,159
—
41,159
—
U.S. Government agency securities
105,874
105,874
—
—
U.S. Treasury securities
716,148
476,230
239,918
—
Equity securities
25,566
25,566
—
—
Total cash equivalents and marketable securities(1)
3,283,969
2,193,502
1,090,467
—
Other current assets:
Derivative assets
36,503
—
36,503
—
Other non-current assets:
EDSP
303,365
272,816
30,549
—
Total financial assets(1)
$3,623,837
$2,466,318
$1,157,519
$—
Liabilities
Derivative liabilities
$
(15,683)
$
—
$
(15,683)
$—
Total financial liabilities
$
(15,683)
$
—
$
(15,683)
$—
(1)
Excludes cash of $287.6 million held in operating accounts and time deposits of $932.4 million (of which
$66.2 million were cash equivalents) as of June 30, 2024.
85

Financial assets (excluding cash held in operating accounts and time deposits) and liabilities measured at
fair value on a recurring basis as of the date indicated below were presented on our Consolidated Balance Sheets
as follows:
As of June 30, 2023 (In thousands)
Total
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Little or No
Market Activity
Inputs (Level 3)
Assets
Cash equivalents:
Money market funds and other
$1,257,223
$1,257,223
$
—
$
—
U.S. Government agency securities
3,788
—
3,788
—
U.S. Treasury securities
11,500
—
11,500
—
Marketable securities:
Corporate debt securities
502,650
—
502,650
—
Municipal securities
31,788
—
31,788
—
U.S. Government agency securities
129,784
127,715
2,069
—
U.S. Treasury securities
518,215
425,234
92,981
—
Equity securities
18,159
18,159
—
—
Total cash equivalents and marketable securities(1)
2,473,107
1,828,331
644,776
—
Other current assets:
Derivative assets
35,712
—
35,712
—
Other non-current assets:
EDSP
256,846
198,639
58,207
—
Total financial assets(1)
$2,765,665
$2,026,970
$738,695
$
—
Liabilities
Derivative liabilities
$
(12,106)
$
—
$ (12,106)
$
—
Contingent consideration payable
(6,447)
—
—
(6,447)
Total financial liabilities
$
(18,553)
$
—
$ (12,106)
$(6,447)
(1)
Excludes cash of $298.6 million held in operating accounts and time deposits of $471.4 million (of which
$356.7 million were cash equivalents) as of June 30, 2023.
86

NOTE 4 — FINANCIAL STATEMENT COMPONENTS
Consolidated Balance Sheets
As of June 30,
(In thousands)
2024
2023
Accounts receivable, net:
Accounts receivable, gross
$ 1,865,823
$ 1,786,993
Allowance for credit losses
(32,782)
(33,632)
$ 1,833,041
$ 1,753,361
Inventories:
Customer service parts
$
589,751
$
524,096
Raw materials
1,485,400
1,559,202
Work-in-process
700,895
578,864
Finished goods
258,735
214,622
$ 3,034,781
$ 2,876,784
Other current assets:
Deferred costs of revenue
$
279,879
$
133,067
Prepaid expenses
124,969
121,204
Prepaid income and other taxes
102,398
64,901
Contract assets
69,259
117,137
Other current assets
82,822
62,419
$
659,327
$
498,728
Land, property and equipment, net:
Land
$
78,260
$
72,287
Buildings and leasehold improvements
919,919
825,975
Machinery and equipment
1,116,793
1,016,713
Office furniture and fixtures
64,480
58,036
Construction-in-process
215,006
168,817
2,394,458
2,141,828
Less: accumulated depreciation
(1,284,490)
(1,109,987)
$ 1,109,968
$ 1,031,841
Other non-current assets:
EDSP
$
303,365
$
256,846
Operating lease ROU assets
231,812
208,706
Other non-current assets
157,546
171,910
$
692,723
$
637,462
87

As of June 30,
(In thousands)
2024
2023
Other current liabilities:
Customer deposits
$
645,893
$
769,000
Compensation and benefits
371,713
370,536
EDSP
303,088
258,223
Income taxes payable
146,740
383,012
Interest payable
128,727
105,270
Operating lease liabilities
36,391
34,042
Other liabilities and accrued expenses
431,017
383,407
$ 2,063,569
$ 2,303,490
Other non-current liabilities:
Income taxes payable
$
291,106
$
322,113
Operating lease liabilities
153,117
138,354
Customer deposits
99,794
156,874
Pension liabilities
51,778
63,672
Other non-current liabilities
147,320
132,045
$
743,115
$
813,058
Accumulated Other Comprehensive Income (Loss)
The components of AOCI as of the dates indicated below were as follows:
(In thousands)
Currency
Translation
Adjustments
Unrealized Gains
(Losses) on
Available-for-Sale
Securities
Unrealized Gains
(Losses) on
Derivatives
Unrealized
Gains (Losses)
on Defined
Benefit Plans
Total
Balance as of June 30, 2024
$(75,846)
$ (3,654)
$46,243
$(15,818)
$(49,075)
Balance as of June 30, 2023
$(64,627)
$(12,797)
$59,944
$(18,861)
$(36,341)
The effects on net income of amounts reclassified from AOCI to the Consolidated Statements of Operations
for the indicated periods were as follows (in thousands, amounts in parentheses indicate debits or reductions to
earnings):
Location in the Consolidated
Statements of Operations
Year Ended June 30,
AOCI Components
2024
2023
2022
Unrealized gains (losses) on cash flow
hedges from foreign exchange and
interest rate contracts
Revenues
$18,374
$31,837
$10,688
Costs of revenues and operating
expenses
3,766
(6,526)
(3,762)
Interest expense
3,764
3,747
(1,007)
Net gains (losses) reclassified from
AOCI
$25,904
$29,058
$ 5,919
Unrealized gains (losses) on
available-for-sale securities
Other expense (income), net
$
(103) $
(986) $
(306)
88

The amounts reclassified out of AOCI related to our defined benefit pension plans, which were recognized
as a component of net periodic cost, for the fiscal years ended June 30, 2024, 2023 and 2022 were $1.1 million,
$1.7 million and $1.4 million, respectively. For additional details, refer to Note 13 “Employee Benefit Plans.”
Consolidated Statements of Operations
The following table shows Other expense (income), net for the indicated periods:
Year Ended June 30,
(In thousands)
2024
2023
2022
Other expense (income), net:
Interest income
$(160,688) $ (74,095) $(8,695)
Foreign exchange (gains) losses, net
(7,268)
233
3,925
Net realized losses on sale of investments
103
986
306
Other
12,778
(31,844)
9,069
$(155,075) $(104,720) $ 4,605
NOTE 5 — MARKETABLE SECURITIES
The amortized cost and fair value of our fixed income marketable securities as of the dates indicated below
were as follows:
As of June 30, 2024 (In thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Corporate debt securities
$ 775,277
$ 973
$ (2,018) $ 774,232
Money market funds and other
1,585,832
—
—
1,585,832
Municipal securities
41,343
13
(197)
41,159
U.S. Government agency securities
106,101
26
(253)
105,874
U.S. Treasury securities
754,505
209
(3,408)
751,306
Subtotal
3,263,058
1,221
(5,876)
3,258,403
Add: Time deposits(1)
932,436
—
—
932,436
Less: Cash equivalents
1,689,540
—
(1)
1,689,539
Marketable securities(2)
$2,505,954
$1,221
$ (5,875) $2,501,300
As of June 30, 2023 (In thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Corporate debt securities
$ 508,511
$
52
$ (5,913) $ 502,650
Money market funds and other
1,257,223
—
—
1,257,223
Municipal securities
32,525
—
(737)
31,788
U.S. Government agency securities
134,486
4
(918)
133,572
U.S. Treasury securities
538,487
10
(8,782)
529,715
Subtotal
2,471,232
66
(16,350)
2,454,948
Add: Time deposits(1)
471,439
—
—
471,439
Less: Cash equivalents
1,629,248
4
—
1,629,252
Marketable securities(2)
$1,313,423
$
62
$(16,350) $1,297,135
89

(1)
Time deposits excluded from fair value measurements.
(2)
Excludes equity marketable securities.
Our investment portfolio includes both corporate and government securities that have a maximum maturity
of three years. The longer the duration of these securities, the more susceptible they are to changes in market
interest rates and bond yields. As yields increase, those securities with a lower yield-at-cost show a
mark-to-market unrealized loss. Most of our unrealized losses are due to changes in market interest rates, and
bond yields. We believe that we have the ability to realize the full value of all these investments upon maturity.
As of June 30, 2024, we had 409 investments in an unrealized loss position. The following table summarizes the
fair value and gross unrealized losses of our investments that were in an unrealized loss position as of the dates
indicated below:
Less than 12 Months
12 Months or Greater
Total
As of June 30, 2024 (In thousands)
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Corporate debt securities
$355,882
$ (942)
$100,957
$(1,076)
$ 456,839
$(2,018)
Municipal securities
17,364
(81)
10,788
(116)
28,152
(197)
U.S. Government agency securities
58,598
(137)
17,197
(116)
75,795
(253)
U.S. Treasury securities
466,144
(1,040)
166,867
(2,368)
633,011
(3,408)
Total
$897,988
$(2,200)
$295,809
$(3,676)
$1,193,797
$(5,876)
Less than 12 Months
12 Months or Greater
Total
As of June 30, 2023 (In thousands)
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Corporate debt securities
$310,613
$(2,242)
$161,263
$(3,671)
$ 471,876
$ (5,913)
Municipal securities
9,011
(199)
17,253
(538)
26,264
(737)
U.S. Government agency securities
80,793
(459)
36,406
(459)
117,199
(918)
U.S. Treasury securities
288,376
(4,117)
183,475
(4,665)
471,851
(8,782)
Total
$688,793
$(7,017)
$398,397
$(9,333)
$1,087,190
$(16,350)
The contractual maturities of securities classified as available-for-sale, regardless of their classification on
our Consolidated Balance Sheets, as of the date indicated below were as follows:
As of June 30, 2024 (In thousands)
Amortized
Cost
Fair Value
Due within one year
$1,608,395
$1,606,178
Due after one year through three years
897,559
895,122
$2,505,954
$2,501,300
Actual maturities may differ from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties. Realized gains and losses on available for sale
securities were immaterial for the fiscal years ended June 30, 2024, 2023 and 2022.
The costs for our equity marketable securities were $22.9 million and $3.2 million as of June 30, 2024, and
June 30, 2023, respectively. Unrealized gains (losses) for our equity marketable securities were $(12.3) million,
$7.1 million and $(18.9) million during the fiscal years ended June 30, 2024, 2023 and 2022 respectively.
90

NOTE 6 — BUSINESS COMBINATIONS AND DISPOSITIONS
Fiscal 2023 Acquisitions
On August 9, 2022, we acquired a privately held company, primarily to secure the supply of materials for
existing products, for aggregate purchase consideration of $32.7 million payable in cash. We allocated the purchase
consideration as follows: $30.0 million to identifiable intangible assets, $2.3 million to net tangible assets,
$6.5 million to deferred tax liabilities and $6.8 million to goodwill. The goodwill was assigned to the Wafer
Inspection and Patterning reporting unit. The purchase consideration included a $3.7 million holdback to satisfy
general warranties and representations that was paid in full in February 2024.
Fiscal 2022 Acquisitions
On May 1, 2022, we acquired the outstanding shares of a privately held company for total purchase
consideration of $8.6 million, paid in cash. We allocated the purchase price to the tangible and identified
intangible assets acquired and liabilities assumed based on their fair values, and residual goodwill was allocated
to the Wafer Inspection and Patterning reporting unit.
On February 28, 2022, we completed the acquisition of 100% of the outstanding shares of ECI Technology,
Inc. (“ECI”), a privately held company, for aggregate purchase consideration of $431.5 million, paid in cash. ECI
is a provider of chemical management systems for semiconductor, photovoltaic and PCB industries. KLA
acquired ECI to extend and enhance our portfolio of products and services. We allocated the purchase
consideration as follows: $208.4 million to identifiable intangible assets, $2.9 million to net tangible liabilities,
$40.5 million to deferred tax liabilities and $266.4 million to goodwill. The goodwill was assigned to the Wafer
Inspection and Patterning reporting unit.
On July 1, 2021, we acquired Anchor Semiconductor Inc., a privately held company, primarily to expand
our products and services offerings, for a total purchase consideration of $81.7 million, including post-closing
working capital adjustments, as well as the fair value of the promise to pay an additional consideration up to
$35.0 million contingent on the achievement of certain revenue milestones. The total purchase consideration was
allocated as follows: $31.7 million to identifiable intangible assets, $26.4 million to net tangible assets,
$8.0 million to deferred tax liabilities and $31.5 million to goodwill. The goodwill was assigned to the Wafer
Inspection and Patterning reporting unit.
We have included the financial results of the acquisitions in our Consolidated Financial Statements from
their respective acquisition dates, and these results were not material to our Consolidated Financial Statements.
The goodwill recorded as a result of the above acquisitions was not deductible for tax purposes.
Refer to Note 1 “Description of Business and Summary of Significant Accounting Policies” for our policy
of allocating the purchase price of an acquisition to tangible and intangible assets as well as goodwill.
Business Dispositions
As of June 30, 2022, we owned approximately 94% of the outstanding equity interest in Orbograph Ltd.
(“Orbograph”), a non-core business engaged in the development and marketing of character recognition solutions
to banks, financial and other payment processing institutions and healthcare providers. On August 9, 2022, we
acquired the non-controlling interest in Orbograph. On August 11, 2022, we sold our entire interest in Orbograph
to a portfolio company of a private equity firm for total consideration of $110.0 million and net cash proceeds
from the transaction of $75.4 million. We recognized a pre-tax gain from the sale of $29.7 million, which was
recorded as part of Other expense (income), net. Included in the sale were $26.5 million in tangible assets,
$30.5 million in liabilities and $61.2 million in goodwill and intangible assets.
91

Acquisition-Related Costs
Our acquisition and disposition related costs are primarily included within SG&A expenses in our
Consolidated Statements of Operations. We incurred immaterial acquisition-related costs for fiscal 2023 and
fiscal 2022 acquisitions.
NOTE 7 — GOODWILL AND PURCHASED INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable
intangible assets acquired in business combinations. As of June 30, 2024, we have three reportable segments, five
operating segments and six reporting units.
The following table presents the carrying value of goodwill and the movements by reporting unit during the
fiscal years ended June 30, 2024 and 2023:
(In thousands)
Wafer
Inspection and
Patterning
Global Service
and Support
(“GSS”)
Specialty
Semiconductor
Process
PCB and
Display
PCB
Display
Component
Inspection
Total
Balances as of June 30, 2022
Goodwill
$1,003,307
$25,908
$ 826,037
$ 985,441 $
—
$
—
$13,575
$2,854,268
Accumulated impairment
losses
(277,570)
—
(144,179)
(112,470)
—
—
—
(534,219)
725,737
25,908
681,858
872,971
—
—
13,575
$2,320,049
Activity for the year ended
June 30, 2023
Acquired goodwill
6,776
—
—
—
—
—
—
6,776
Goodwill disposal from sale
of business(1)
—
—
—
(42,622)
—
—
—
(42,622)
Goodwill adjustments
(5,337)
—
—
—
—
—
—
(5,337)
Foreign currency adjustment
(46)
—
—
—
—
—
—
(46)
Balances as of June 30, 2023
Goodwill
1,004,700
25,908
826,037
942,819
—
—
13,575
2,813,039
Accumulated impairment
losses
(277,570)
—
(144,179)
(112,470)
—
—
—
(534,219)
727,130
25,908
681,858
830,349
—
—
13,575
2,278,820
Activity for the year ended
June 30, 2024
Goodwill impairment
—
—
—
(192,600)
—
(70,474)
(263,074)
Reallocation due to change in
reporting units
—
—
—
(637,749) 567,275
70,474
—
Foreign currency adjustments
(20)
—
—
—
—
—
—
(20)
Balances as of June 30, 2024
Goodwill
1,004,680
25,908
826,037
—
567,275
70,474
13,575
2,507,949
Accumulated impairment
losses
(277,570)
—
(144,179)
—
—
(70,474)
—
(492,223)
$ 727,110
$25,908
$ 681,858
$
—
$567,275 $
—
$13,575
$2,015,726
(1)
Refer to the Business Dispositions section of Note 6 “Business Combinations and Dispositions” for more
information on the sale of Orbograph.
92

Goodwill is not subject to amortization but is tested for impairment annually during the third fiscal quarter,
as well as whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
During the second quarter of fiscal 2024, we noted a significant deterioration of the long-term forecast for
our PCB and manufacturing flat and flexible panel displays (“Display”) businesses, which are a part of our PCB
and Display operating segment, as the company initiated its annual strategic planning process. The downward
revision of financial outlook for the PCB and Display businesses triggered a goodwill impairment test. In
addition, in the second quarter of fiscal 2024, we began to evaluate strategic options for our Display business.
Effective from the second quarter of fiscal 2024, our PCB and Display operating segment is comprised of two
reporting units, 1) PCB and 2) Display while, prior to the change, the PCB and Display operating segment
represented a single reporting unit. As a result of our quantitative assessment, we recorded a total goodwill
impairment charge of $192.6 million for the PCB and Display reporting unit in the quarter ended December 31,
2023. The goodwill balances of the new PCB and Display reporting units were determined based on their relative
fair values. We assessed for impairment subsequent to the reporting unit change and noted no impairment.
To determine the fair value of a reporting unit, we utilized income and market approaches and applied a
weighting of 75 percent and 25 percent, respectively. The income approach is estimated through discounted cash flow
analysis. The estimated fair value of this reporting unit was computed by adding the present value of the estimated
annual discounted cash flows over a discrete projection period to the residual value of the business at the end of the
projection period. This valuation technique requires us to use significant estimates and assumptions, including long-
term growth rates, discount rates and other inputs. The estimated growth rates for the projection period are based on
our internal forecasts of anticipated future performance of the business. The residual value is estimated using a
perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections.
The discount rates are calculated as the weighted average cost of capital of comparable peer companies, adjusted for
company-specific risk. The market approach estimates the fair value of the reporting unit by utilizing the market
comparable method, which uses revenue and earnings multiples from comparable companies.
We performed the required annual goodwill impairment testing for all reporting units as of February 29, 2024,
and concluded that goodwill was not impaired, except for the Display reporting unit. As a result of this qualitative
assessment, we determined that it was not necessary to perform a quantitative assessment for the reporting units subject
to testing other than Display. In March 2024, we made the decision to exit the Display business by announcing the end
of manufacturing of most Display products by December 31, 2024, but we will continue to provide services to the
installed base of Display products for existing customers. The exit of the business does not qualify as a discontinued
operation under the relevant accounting guidance, but the decision triggered a quantitative impairment assessment for
the Display reporting unit, which resulted in a total goodwill impairment charge of $70.5 million in the quarter ended
March 31, 2024.
To determine the fair value of the reporting unit, we utilized an income approach estimated through a discounted
cash flow analysis, by adding the present value of the estimated annual discounted cash flows over a discrete projection
period. This valuation technique requires us to use significant estimates and assumptions, including discount rates and
internal forecasts of the anticipated future performance of the business. The discount rates are calculated as the
weighted average cost of capital of comparable peer companies, adjusted for company-specific risk. There can be no
assurance that these estimates and assumptions will prove to be an accurate prediction of the future.
We performed the required annual goodwill impairment test as of February 28, 2023 and concluded that goodwill
was not impaired. As a result of our qualitative assessments, we determined that it was not necessary to perform a
quantitative assessment at that time.
There have been no significant events or circumstances affecting the valuation of goodwill subsequent to the
assessment performed in the third quarter of the fiscal year ended June 30, 2024. The next annual assessment of
goodwill by reporting unit is scheduled to be performed in the third quarter of the fiscal year ending June 30, 2025.
93

Purchased Intangible Assets
The components of purchased intangible assets as of the dates indicated below were as follows:
(In thousands)
As of June 30, 2024
As of June 30, 2023
Category
Range of
Useful Lives
(in years)
Gross
Carrying
Amount
Accumulated
Amortization
and
Impairment
Net
Amount
Gross
Carrying
Amount
Accumulated
Amortization
and
Impairment
Net
Amount
Existing technology
4-8
$1,552,074 $1,045,585 $506,489 $1,536,826 $ 841,815 $695,011
Customer relationships
4-9
358,567
248,106
110,461
358,567
205,037
153,530
Trade name/trademark
4-7
119,083
97,106
21,977
116,583
78,749
37,834
Order backlog and other
<1-7
83,336
82,740
596
85,836
82,264
3,572
Intangible assets subject to
amortization
2,113,060
1,473,537
639,523
2,097,812
1,207,865
889,947
IPR&D
46,074
16,833
29,241
61,322
15,966
45,356
Total
$2,159,134 $1,490,370 $668,764 $2,159,134 $1,223,831 $935,303
Refer to Note 1 “Description of Business and Summary of Significant Accounting Policies” for our policy
of testing purchased intangible assets for impairment.
In connection with the evaluation of the goodwill impairment in the PCB and Display reporting unit during
the second quarter of fiscal 2024, due to the downward revision of financial outlook for the businesses as noted
above, the Company assessed tangible and intangible assets for impairment prior to performing the goodwill
impairment test. The Company first performed a recoverability test for each asset group identified in the PCB
and Display operating segment by comparing projected undiscounted cash flows from the use and eventual
disposition of each asset group to its carrying value. This test indicated that the undiscounted cash flows were not
sufficient to recover the carrying value of the asset groups. We then compared the carrying value of the
individual long-lived assets within those asset groups against their fair value in order to measure the impairment
loss. As a result of this assessment, we recorded a total purchased intangible asset impairment charge of
$26.4 million. No impairment was identified for other long-lived assets in the three months ended December 31,
2023.
The total impairment charges for goodwill and purchased intangible assets of $219.0 million during the
three months ended December 31, 2023, as well as the goodwill impairment charge of $70.5 million in the three
months ended March 31, 2024, were recognized as separate charges and included in income (loss) from
operations.
As of June 30, 2024 and 2023, there were no impairment indicators for purchased intangible assets.
Amortization expense for purchased intangible assets for the periods indicated below was as follows:
Year Ended June 30,
(In thousands)
2024
2023
2022
Amortization expense — Cost of revenues
$182,970
$181,405
$168,957
Amortization expense — SG&A
56,302
79,089
60,017
Amortization expense — R&D
—
125
124
Total
$239,272
$260,619
$229,098
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Based on the purchased intangible assets’ gross carrying value recorded as of June 30, 2024, the remaining
estimated annual amortization expense is expected to be as follows:
Fiscal Year Ending June 30:
Amortization
(In thousands)
2025
$218,639
2026
197,846
2027
125,517
2028
48,849
2029
34,530
Thereafter
14,142
Total
$639,523
NOTE 8 — DEBT
The following table summarizes our debt as of June 30, 2024 and June 30, 2023:
As of June 30, 2024
As of June 30, 2023
Amount
(In thousands)
Effective
Interest Rate
Amount
(In thousands)
Effective
Interest Rate
Fixed-rate 4.650% Senior Notes due on November 1, 2024
$ 750,000
4.682%
$ 750,000
4.682%
Fixed-rate 5.650% Senior Notes due on November 1, 2034
250,000
5.670%
250,000
5.670%
Fixed-rate 4.100% Senior Notes due on March 15, 2029
800,000
4.159%
800,000
4.159%
Fixed-rate 5.000% Senior Notes due on March 15, 2049
400,000
5.047%
400,000
5.047%
Fixed-rate 3.300% Senior Notes due on March 1, 2050
750,000
3.302%
750,000
3.302%
Fixed-rate 4.650% Senior Notes due on July 15, 2032
1,000,000
4.657%
1,000,000
4.657%
Fixed-rate 4.950% Senior Notes due on July 15, 2052
1,450,000
5.023%
1,200,000
5.009%
Fixed-rate 5.250% Senior Notes due on July 15, 2062
800,000
5.259%
800,000
5.259%
Fixed-rate 4.700% Senior Notes due on February 1, 2034
500,000
4.777%
—
— %
Total
6,700,000
5,950,000
Unamortized discount/premium, net
(24,866)
(17,848)
Unamortized debt issuance costs
(44,999)
(41,416)
Total
$6,630,135
$5,890,736
Reported as:
Current portion of long-term debt
$ 749,936
$
—
Long-term debt
5,880,199
5,890,736
Total
$6,630,135
$5,890,736
Senior Notes and Debt Redemption:
In February 2024, we issued $750.0 million aggregate principal amount of senior, unsecured notes as
follows: $500.0 million of 4.700% senior, unsecured notes (the “2024 Senior Notes”) due February 1, 2034; and
an additional $250.0 million of 4.950% senior, unsecured notes due July 15, 2052 which was originally issued in
June 2022, resulting in an aggregate principal amount of $1.45 billion. The net proceeds will be used for general
corporate purposes, including repayment of outstanding indebtedness at or prior to maturity.
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In June 2022, we issued $3.00 billion aggregate principal amount of senior, unsecured notes (the “2022
Senior Notes”) as follows: $1.00 billion of 4.650% senior, unsecured notes due July 15, 2032; $1.20 billion of
4.950% senior, unsecured notes due July 15, 2052; and $800.0 million of 5.250% senior, unsecured notes due
July 15, 2062. A portion of the net proceeds of the 2022 Senior Notes was used to complete a tender offer in July
2022 for $500.0 million of our 2014 Senior Notes due 2024 including associated redemption premiums, accrued
interest and other fees and expenses. The redemption resulted in a pre-tax net loss on extinguishment of debt
of $13.3 million for the fiscal year ended June 30, 2023. The remainder of the net proceeds was used for share
repurchases and for general corporate purposes.
In February 2020, March 2019 and November 2014, we issued $750.0 million, $1.20 billion and
$2.50 billion, respectively (the “2020 Senior Notes,” “2019 Senior Notes” and “2014 Senior Notes,” respectively,
and, collectively with the 2024 and 2022 Senior Notes, the “Senior Notes”) aggregate principal amount of senior,
unsecured notes. In July 2022, February 2020, October 2019 and November 2017, we repaid $500.0 million,
$500.0 million, $250.0 million and $250.0 million of the Senior Notes, respectively.
The original discounts on the Senior Notes are being amortized over the life of the debt. Interest is payable
as follows: semi-annually on February 1 and August 1 of each year for the 2024 Senior Notes; semi-annually on
January 15 and July 15 of each year for the 2022 Senior Notes; semi-annually on March 1 and September 1 of
each year for the 2020 Senior Notes; semi-annually on March 15 and September 15 of each year for the 2019
Senior Notes; and semi-annually on May 1 and November 1 of each year for the 2014 Senior Notes. The relevant
indentures for the Senior Notes (collectively, the “Indenture”) include covenants that limit our ability to grant
liens on our facilities and enter into sale and leaseback transactions.
In certain circumstances involving a change of control followed by a downgrade of the rating of a series of
Senior Notes by at least two of Moody’s Investors Service, S&P Global Ratings and Fitch Inc., unless we have
exercised our rights to redeem the Senior Notes of such series, we will be required to make an offer to repurchase
all or, at the holder’s option, any part, of each holder’s Senior Notes of that series pursuant to the offer described
below (the “Change of Control Offer”). In the Change of Control Offer, we will be required to offer payment in
cash equal to 101% of the aggregate principal amount of Senior Notes repurchased plus accrued and unpaid
interest, if any, on the Senior Notes repurchased, up to, but not including, the date of repurchase.
The fair value of the Senior Notes as of June 30, 2024 and 2023 was $6.26 billion and $5.69 billion,
respectively. While the Senior Notes are recorded at cost, the fair value of the long-term debt was determined
based on quoted prices in markets that are not active; accordingly, the long-term debt is categorized as Level 2
for purposes of the fair value measurement hierarchy.
As of June 30, 2024, we were in compliance with all of our covenants under the Indenture associated with
the Senior Notes.
Revolving Credit Facility:
We have in place a Credit Agreement (“Credit Agreement”) for an unsecured Revolving Credit Facility
(“Revolving Credit Facility”) having a maturity date of June 8, 2027 that allows us to borrow up to $1.50 billion.
Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to
$250.0 million in the aggregate. As of June 30, 2024 and 2023, there were no borrowings under the Revolving
Credit Facility.
We may borrow, repay and reborrow funds under the Revolving Credit Facility until the maturity date, at
which time may exercise two one-year extension options with the consent of the lenders. We may prepay
outstanding borrowings under the Revolving Credit Facility at any time without a prepayment penalty.
Borrowings under the Revolving Credit Facility can be made as Term Secured Overnight Financing
(“SOFR”) Loans or Alternate Base Rate (“ABR”) Loans, at the Company’s option. In the event that Term SOFR
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is unavailable, any Term SOFR elections will be converted to Daily Simple SOFR, as long as it is available. Each
Term SOFR Loan will bear interest at a rate per annum equal to the applicable Adjusted Term SOFR rate, which
is equal to the applicable Term SOFR rate plus 10 bps that shall not be less than zero, plus a spread ranging from
75 bps to 125 bps, as determined by the Company’s credit ratings at the time. Each ABR Loan will bear interest
at a rate per annum equal to the ABR plus a spread ranging from 0 bps to 25 bps, as determined by the
Company’s credit ratings at the time. We are also obligated to pay an annual commitment fee on the daily
undrawn balance of the Revolving Credit Facility, which ranges from 4.5 bps to 12.5 bps, subject to an
adjustment in conjunction with changes to our credit rating. The applicable interest rates and commitment fees
are also subject to adjustment based on the Company’s performance against certain environmental sustainability
key performance indicators related to greenhouse gas emissions and renewable electricity usage. Our
performance against these key performance indicators in calendar year 2022 resulted in reductions to the fees
associated with our Revolving Credit Facility. As of June 30, 2024, we elected to pay interest on borrowings
under the Revolving Credit Facility at the applicable Adjusted Term SOFR plus a spread of 85 bps and the
applicable commitment fee on the daily undrawn balance of the Revolving Credit Facility was 6 bps.
Under the Credit Agreement, the maximum leverage ratio as described in the Credit Agreement, on a
quarterly basis, is 3.50 to 1.00, covering the trailing four consecutive fiscal quarters for each fiscal quarter, which
may be increased to 4.00 to 1.00 for a period of time in connection with a material acquisition or a series of
material acquisitions. As of June 30, 2024, our maximum allowed leverage ratio was 3.50 to 1.00.
We were in compliance with all covenants under the Credit Agreement as of June 30, 2024.
NOTE 9 — LEASES
We have operating leases for facilities, vehicles and other equipment. Our facility leases are primarily used
for administrative functions, R&D, manufacturing, and storage and distribution. Our finance leases are not
material.
Our existing leases do not contain significant restrictive provisions or residual value guarantees; however,
certain leases contain provisions for the payment of maintenance, real estate taxes or insurance costs by us. Our
leases have remaining lease terms ranging from less than one year to 28 years, including periods covered by
options to extend the lease when it is reasonably certain that the option will be exercised.
Lease expense was $54.6 million, $41.8 million and $36.6 million for the fiscal years ended June 30, 2024,
2023 and 2022, respectively. Expense related to short-term leases, which are not recorded on the Consolidated
Balance Sheets, was not material for the fiscal years ended June 30, 2024 and 2023. As of both June 30, 2024 and
2023, the weighted-average remaining lease term was 6.7 years, and the weighted-average discount rate was
4.30% and 3.36%, as of June 30, 2024 and 2023, respectively.
Supplemental cash flow information related to leases was as follows:
Year Ended June 30,
(In thousands)
2024
2023
Operating cash outflows from operating leases
$41,405
$ 47,294
ROU assets obtained in exchange for new operating lease liabilities
$62,505
$115,377
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Maturities of lease liabilities as of June 30, 2024 were as follows:
Fiscal Year Ending June 30:
Amount
(In thousands)
2025
$ 43,565
2026
38,395
2027
30,962
2028
21,694
2029
18,918
2030 and thereafter
70,637
Total lease payments
224,171
Less imputed interest
(34,663)
Total
$189,508
As of June 30, 2024, we did not have any material leases that had not yet commenced.
NOTE 10 — EQUITY, LONG-TERM INCENTIVE COMPENSATION PLANS AND NON-CONTROLLING
INTEREST
Equity Incentive Program
On August 3, 2023, our Board of Directors adopted the KLA Corporation 2023 Incentive Award Plan (the
“2023 Plan”), which replaced our 2004 Equity Incentive Plan (the “2004 Plan”) for grants of equity awards
occurring on or after November 1, 2023. The new plan was approved by our stockholders at the annual meeting
of stockholders held on November 1, 2023. As of June 30, 2024, we were able to issue new equity incentive
awards, such as RSUs and stock options, to our employees, consultants and members of our Board of Directors
under our 2023 Plan, with 10.2 million shares available for issuance.
Any 2004 Plan and 2023 Plan awards of RSUs, performance shares, performance units or deferred stock
units are counted against the total number of shares issuable under the 2023 Plan share reserve, or previously
under the 2004 Plan reserve, as two shares for every one share subject thereto.
In addition, the plan administrator has the ability to grant “dividend equivalent” rights in connection with
awards of RSUs, performance shares, performance units and deferred stock units before they are fully vested.
The plan administrator, at its discretion, may grant a right to receive dividends on the aforementioned awards,
which may be settled in cash or our stock subject to meeting the vesting requirement of the underlying awards.
All grants during the fiscal years ended June 30, 2024, 2023 and 2022 included dividend equivalent rights.
Assumed Equity Plans
As of the Orbotech Ltd. (“Orbotech”) Acquisition on February 20, 2019 (“Acquisition Date”), we assumed
outstanding equity incentive awards under Orbotech equity incentive plans (the “Assumed Equity Plans”). The
awards under the Assumed Equity Plans, previously issued in the form of stock options and RSUs, were
generally settled as follows:
a)
Each award of Orbotech’s stock options and RSUs that was outstanding and vested immediately prior
to the Acquisition Date (collectively, the “Vested Equity Awards”) was canceled and terminated and
converted into the right to receive the purchase consideration in respect of such Vested Equity Awards
as of the Acquisition Date and, in the case of stock options, less the exercise price.
b)
Each award of Orbotech’s stock options and RSUs that was outstanding and unvested immediately
prior to the Acquisition Date was assumed by us (each, an “Assumed Option” and “Assumed RSU,”
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and collectively the “Assumed Equity Awards”) and converted to stock options and RSUs exercisable
for the number of shares of our common stock based on the exchange ratio defined in the acquisition
agreement. The Assumed Equity Awards generally retain all of the rights, terms and conditions of the
respective plans under which they were originally granted, including the same service-based vesting
schedule, applicable thereto.
As of the Acquisition Date, the estimated fair value of the Assumed Equity Awards was $55.0 million, of
which $13.3 million was recognized as goodwill and the balance of $41.7 million was recognized as stock-based
compensation (“SBC”) expense over the remaining service period of the Assumed Equity Awards. The fair value
of the Assumed Equity Awards for services rendered through the Acquisition Date was recognized as a
component of the merger consideration, with the remaining fair value related to the post-combination services
being recorded as SBC over the remaining vesting period. At the Acquisition Date, a total of 14,558 and 518,971
shares of our common stock underlay the Assumed Options and RSUs, respectively, and had an estimated
weighted-average fair value of $53.3 and $104.5 per share, respectively. All Assumed Options were fully
exercised as of June 30, 2020 and all Assumed RSUs were fully vested as of June 30, 2023.
Equity Incentive Plans — General Information
The following table summarizes the combined activity under our equity incentive plans:
(In thousands)
Available
For Grant(1)(4)
Balances as of June 30, 2021
10,253
RSUs granted(2)
(1,152)
RSUs granted adjustment(3)
39
RSUs canceled
102
Balances as of June 30, 2022
9,242
RSUs granted(2)
(1,601)
RSUs canceled
120
Balances as of June 30, 2023
7,761
Plan shares increased
3,250
RSUs granted(2)
(849)
RSUs canceled
78
Balances as of June 30, 2024
10,240
(1)
The number of RSUs reflects the application of the award multiplier of 2.0x as described above.
(2)
Includes RSUs granted to senior management with performance-based vesting criteria (in addition to
service-based vesting criteria for any of such RSUs that are deemed to have been earned) (“performance-
based RSU”). As of June 30, 2024, it had not yet been determined the extent to which (if at all) the
performance-based vesting criteria had been satisfied. Therefore, this line item includes all such
performance-based RSUs granted during the fiscal year, reported at the maximum possible number of shares
that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum
levels and all applicable service-based criteria are fully satisfied (0.2 million shares, 0.6 million shares and
0.2 million shares for the fiscal years ended June 30, 2024, 2023 and 2022, respectively, reflecting the
application of the 2.0x multiplier described above).
(3)
Represents the portion of RSUs granted with performance-based vesting criteria and reported at the actual
number of shares issued upon achievement of the performance vesting criteria during the fiscal years
ended June 30, 2024, 2023, and 2022.
(4)
No additional stock options, RSUs or other awards will be granted under the Assumed Equity Plans.
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The fair value of stock-based awards is measured at the grant date and is recognized as an expense over the
employee’s requisite service period. The fair value for RSUs granted with “dividend equivalent” rights is
determined using the closing price of our common stock on the grant date. The fair value for market-based RSUs
is estimated on the grant date using a Monte Carlo simulation model with the following assumptions: expected
volatilities ranging from 27.8% to 28.1%, based on a combination of implied volatility from traded options on
our common stock and the historical volatility of our common stock; dividend yield ranging from 2.4% to 2.5%,
based on our current expectations for our anticipated dividend policy; risk-free interest rate ranging from 2.3%
to 2.4%, based on the implied yield available on U.S. Treasury zero-coupon issues with terms equal to the
contractual terms of each tranche; and an expected term that takes into consideration the vesting term and the
contractual term of the market-based award. The awards are amortized over service periods of three, four,
and five years, which is the longer of the explicit service period or the period in which the market target is
expected to be met. The fair value for purchase rights under our ESPP is determined using a Black-Scholes
model.
The following table shows SBC expense for the indicated periods:
Year Ended June 30,
(In thousands)
2024
2023
2022
SBC expense by:
Costs of revenues
$ 35,942
$ 29,101
$ 21,108
R&D
60,124
44,702
27,618
SG&A
116,629
97,621
78,192
Total SBC expense
$212,695
$171,424
$126,918
SBC capitalized as inventory as of June 30, 2024 and 2023 was $21.5 million and $16.7 million, respectively.
Restricted Stock Units
The following table shows the activity and weighted-average grant date fair value for RSUs during the fiscal
year ended June 30, 2024:
Shares
(In thousands) (1)
Weighted-Average
Grant Date
Fair Value
Outstanding RSUs as of June 30, 2023(2)
1,715
$312.40
Granted(2)
424
$584.49
Vested and released
(633)
$229.02
Forfeited
(39)
$366.93
Outstanding RSUs as of June 30, 2024(2)
1,467
$424.66
(1)
Share numbers reflect actual shares subject to awarded RSUs. Under the terms of the 2004 Plan for grants
prior to November 1, 2023 or the terms of the 2023 Plan for grants on or after November 1, 2023, the
number of shares subject to each award reflected in this number is multiplied by 2.0x to calculate the impact
of the award on the share reserve under the respective plan.
(2)
Includes performance-based RSUs. As of June 30, 2024, it had not yet been determined the extent to which
(if at all) the performance-based criteria had been satisfied. Therefore, this line item includes all such RSUs,
reported at the maximum possible number of shares (i.e., 0.1 million shares for the fiscal year ended
June 30, 2024) that may ultimately be issuable if all applicable performance-based criteria are achieved at
their maximum.
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The RSUs granted by us generally vest (a) with respect to awards with only service-based vesting criteria,
over periods ranging from two to four years and (b) with respect to awards with both performance-based and
service-based vesting criteria, over periods ranging from three to four years, and (c) with respect to awards with
both market-based and service-based vesting criteria, in three equal installments on the third, fourth and fifth
anniversaries of the grant date, in each case subject to the recipient remaining employed by us as of the
applicable vesting date. The RSUs granted to the independent members of the Board of Directors vest annually.
The following table shows the weighted-average grant date fair value per unit for the RSUs granted,
aggregate grant date fair value of RSUs vested, and tax benefits realized by us in connection with vested and
released RSUs for the indicated periods:
(In thousands, except for weighted-average grant date fair value)
Year Ended June 30,
2024
2023
2022
Weighted-average grant date fair value per unit
$ 584.49
$ 385.98
$353.27
Grant date fair value of vested RSUs
$144,888
$107,217
$74,794
Tax benefits realized by us in connection with vested and released RSUs
$ 47,315
$ 25,989
$23,634
As of June 30, 2024, the unrecognized SBC expense balance related to RSUs was $428.2 million, excluding
the impact of estimated forfeitures, and will be recognized over a weighted-average remaining contractual term
and an estimated weighted-average amortization period of 1.5 years. The intrinsic value of outstanding RSUs as
of June 30, 2024 was $1.21 billion.
Cash LTI Compensation
As part of our employee compensation program, we issue Cash LTI awards to many of our employees.
Executives and non-employee members of the Board of Directors do not participate in the Cash LTI Plan. During
the fiscal years ended June 30, 2024 and 2023, we approved Cash LTI awards of $51.4 million and $67.1 million,
respectively. Cash LTI awards issued to employees under the Cash LTI Plan will vest in three or four equal
installments, with one-third or one-fourth of the aggregate amount of the Cash LTI award vesting on each
anniversary of the grant date over a three or four-year period. In order to receive payments under a Cash LTI
award, participants must remain employed by us as of the applicable award vesting date. During the fiscal years
ended June 30, 2024, 2023 and 2022, we recognized $70.3 million, $76.4 million and $85.3 million, respectively,
in compensation expense under the Cash LTI Plan. As of June 30, 2024, the unrecognized compensation balance
(excluding the impact of estimated forfeitures) related to the Cash LTI Plan was $126.8 million.
Employee Stock Purchase Plan
Our ESPP provides that eligible employees may contribute up to 15% of their eligible earnings toward the
semi-annual purchase of our common stock. The ESPP is qualified under Section 423 of the Internal Revenue
Code. The employee’s purchase price is derived from a formula based on the closing price of the common stock
on the first day of the offering period versus the closing price on the date of purchase (or, if not a trading day, on
the immediately preceding trading day).
The offering period (or length of the look-back period) under the ESPP has a duration of six months, and the
purchase price with respect to each offering period beginning on or after such date is, until otherwise amended,
equal to 85% of the lesser of (i) the fair market value of our common stock at the commencement of the
applicable six-month offering period or (ii) the fair market value of our common stock on the purchase date. We
estimate the fair value of purchase rights under the ESPP using a Black-Scholes model.
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The fair value of each purchase right under the ESPP was estimated on the date of grant using the Black-
Scholes model and the straight-line attribution approach with the following weighted-average assumptions:
Year Ended June 30,
2024
2023
2022
Stock purchase plan:
Expected stock price volatility
32.2% 42.7% 38.2%
Risk-free interest rate
5.3% 2.5% 0.1%
Dividend yield
1.1% 1.6% 1.2%
Expected life (in years)
0.50
0.50
0.50
The following table shows total cash received from employees for the issuance of shares under the ESPP,
the number of shares purchased by employees through the ESPP, the tax benefits realized by us in connection
with the disqualifying dispositions of shares purchased under the ESPP and the weighted-average fair value per
share for the indicated periods:
Year Ended June 30,
(In thousands, except for weighted-average fair value per share)
2024
2023
2022
Total cash received from employees for the issuance of shares under the ESPP
$144,934 $124,731 $113,015
Number of shares purchased by employees through the ESPP
320
418
419
Tax benefits realized by us in connection with the disqualifying dispositions of
shares purchased under the ESPP
$
2,623 $
1,916 $
1,853
Weighted-average fair value per share based on Black-Scholes model
$ 125.04 $
89.52 $
94.35
The ESPP shares are replenished annually on the first day of each fiscal year by virtue of an evergreen
provision. The provision allows for share replenishment equal to the lesser of 2.0 million shares or the number of
shares that we estimate will be required to be issued under the ESPP during the forthcoming fiscal year. As of
June 30, 2024, a total of 2.3 million shares were reserved and available for issuance under the ESPP.
Quarterly cash dividends
On May 31, 2024, we paid a quarterly cash dividend of $1.45 per share on the outstanding shares of our
common stock to stockholders of record as of the close of business on May 15, 2024. The total amount of regular
quarterly cash dividends and dividend equivalents paid during the fiscal years ended June 30, 2024 and 2023 was
$773.0 million and $732.6 million, respectively. The amount of accrued dividend equivalents payable related to
unvested RSUs with dividend equivalent rights was $11.8 million and $12.2 million as of June 30, 2024 and
2023, respectively. These amounts will be paid upon vesting of the underlying RSUs. Refer to Note 21
“Subsequent Events” to the Consolidated Financial Statements for additional information regarding the
declaration of our quarterly cash dividend announced subsequent to June 30, 2024.
Non-controlling Interests
As of June 30, 2022, we owned approximately 94% of the outstanding equity interest of Orbograph, which
was a non-core business engaged in the development and marketing of character recognition solutions to banks,
financial and other payment processing institutions and healthcare providers. On August 11, 2022, we sold our
interest in Orbograph; for further details, refer to Note 6 “Business Combinations and Dispositions” to our
Consolidated Financial Statements.
NOTE 11 — STOCK REPURCHASE PROGRAM
Our Board of Directors has authorized a program that permits us to repurchase our common stock, including
increases in the authorized repurchase amount of $2.00 billion in the first quarter of fiscal 2022, $6.00 billion in
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the fourth quarter of fiscal 2022, and $2.00 billion in the first quarter of fiscal 2024. The stock repurchase
program has no expiration date and may be suspended at any time. The intent of the program is, in part, to
mitigate the potential dilutive impact related to our equity incentive plans and shares issued in connection with
our ESPP as well as to return excess cash to our stockholders. Any and all share repurchase transactions are
subject to market conditions and applicable legal requirements.
On June 23, 2022, the Company executed accelerated share repurchase agreements (“ASR Agreements”)
with two financial institutions to repurchase shares of our common stock in exchange for an upfront payment of
$3.00 billion. The Company received initial deliveries totaling approximately 6.5 million shares of common
stock in the fourth quarter of fiscal 2022, which represented 70% of the prepayment amount at the then
prevailing market price of the Company’s shares of common stock. The initial shares delivered were retired
immediately upon settlement and treated as repurchases of the Company’s common stock for purposes of
earnings per share calculations. The total number of shares received under the ASR Agreements was based on the
volume-weighted average price of the Company’s common stock during the term of the ASR Agreements, less
an agreed-upon discount. Final settlement of the ASR Agreements occurred during the three months ended
December 31, 2022, resulting in the delivery of 2.4 million additional shares, which yielded an average share
price of $333.88 for the entire transaction.
Under the authoritative guidance, share repurchases are recognized as a reduction to retained earnings to the
extent available, with any excess recognized as a reduction of capital in excess of par value. In addition, as
explained further in Note 14 “Income Taxes,” the Inflation Reduction Act of 2022 (“IRA”) introduced a 1%
excise tax imposed on certain stock repurchases by publicly traded companies made after December 31, 2022.
The excise tax is recorded as part of the cost basis of treasury stock repurchased after December 31, 2022 and, as
such, is included in stockholders’ equity.
As of June 30, 2024, an aggregate of approximately $2.18 billion was available for repurchase under our
stock repurchase program.
Share repurchase transactions for the indicated periods (based on the trade date of the applicable
repurchase), with fiscal 2022 excluding the $0.90 billion portion of the ASR upfront payment that was recorded
as an unsettled forward contract in fiscal 2022, were as follows:
(In thousands)
Year Ended June 30,
2024
2023
2022
Number of shares of common stock repurchased
3,032
5,844
11,768
Total cost of repurchases
$1,742,501
$1,329,714
$3,962,267
NOTE 12 — NET INCOME PER SHARE
Basic net income per share is calculated by dividing net income available to common stockholders by the
weighted-average number of common shares outstanding during the period. Diluted net income per share is
calculated by using the weighted-average number of common shares outstanding during the period, increased to
include the number of additional shares of common stock that would have been outstanding if the shares of
common stock underlying our outstanding dilutive RSUs had been issued. The dilutive effect of outstanding
RSUs is reflected in diluted net income per share by application of the treasury stock method. In addition, the
shares delivered under the ASR Agreements discussed in Note 11 “Stock Repurchase Program” in the fourth
quarter of fiscal 2022 and second quarter of fiscal 2023 resulted in a reduction of outstanding shares used to
determine our weighted-average common shares outstanding for purposes of calculating basic and diluted
earnings per share for those respective fiscal years.
103

The following table sets forth the computation of basic and diluted net income per share attributable to
KLA:
Year Ended June 30,
(In thousands, except per share amounts)
2024
2023
2022
Numerator:
Net income attributable to KLA
$2,761,896
$3,387,277
$3,321,807
Denominator:
Weighted-average shares-basic, excluding unvested RSUs
135,345
139,483
150,494
Effect of dilutive RSUs and options
842
752
1,061
Weighted-average shares-diluted
136,187
140,235
151,555
Basic net income per share attributable to KLA
$
20.41
$
24.28
$
22.07
Diluted net income per share attributable to KLA
$
20.28
$
24.15
$
21.92
Anti-dilutive securities excluded from the computation of diluted net
income per share
35
8
7
NOTE 13 — EMPLOYEE BENEFIT PLANS
We have a profit sharing program for eligible employees, which distributes a percentage of our pre-tax
profits on a quarterly basis. In addition, we have an employee savings plan that qualifies as a deferred salary
arrangement under Section 401(k) of the Internal Revenue Code. Since January 1, 2019, the employer match is
the greater of 50% of the first $8,000 of an eligible employee’s contributions or 50% of the first 5% of eligible
compensation contributed plus 25% of the next 5% of compensation contributed.
The total expenses under the profit sharing and 401(k) programs amounted to $39.4 million, $37.3 million,
and $33.3 million in the fiscal years ended June 30, 2024, 2023 and 2022, respectively. We have no defined
benefit plans in the U.S. In addition to the profit sharing plan and the U.S. 401(k), several of our foreign
subsidiaries have retirement plans for their full-time employees, several of which are defined benefit plans.
Consistent with the requirements of local law, our deposited funds for certain of these plans are held with
insurance companies, with third-party trustees or in government-managed accounts. The assumptions used in
calculating the obligation for the foreign plans depend on the local economic environment.
We apply authoritative guidance that requires an employer to recognize the funded status of each of our
defined benefit pension and post-retirement benefit plans as a net asset or liability on its balance sheets.
Additionally, the authoritative guidance requires an employer to measure the funded status of each of its plans as
of the date of its year-end statement of financial position. The benefit obligations and related assets under our
plans have been measured as of June 30, 2024 and 2023.
104

Summary data relating to our foreign defined benefit pension plans, including key weighted-average
assumptions used, is provided in the following tables:
Year Ended June 30,
(In thousands)
2024
2023
Change in projected benefit obligation:
Projected benefit obligation as of the beginning of the fiscal year
$113,136
$124,585
Service cost
4,494
3,807
Interest cost
2,177
1,689
Contributions by plan participants
65
70
Actuarial gain
(2,341)
(7,686)
Benefit payments
(4,752)
(4,837)
Plan amendment impact
—
191
Settlements impact
(1,433)
(931)
Foreign currency exchange rate changes and other, net
(6,101)
(3,752)
Projected benefit obligation as of the end of the fiscal year
$105,245
$113,136
Year Ended June 30,
(In thousands)
2024
2023
Change in fair value of plan assets:
Fair value of plan assets as of the beginning of the fiscal year
$45,930
$43,593
Employer contributions
9,514
8,396
Foreign currency exchange rate changes and other, net
(1,863)
(827)
Settlements impact
(1,433)
(931)
Actual return on plan assets
1,542
(1,064)
Benefit and expense payments
(3,295)
(3,237)
Fair value of plan assets as of the end of the fiscal year
$50,395
$45,930
As of June 30,
(In thousands)
2024
2023
Underfunded status
$54,850
$67,206
As of June 30,
(In thousands)
2024
2023
Plans with accumulated benefit obligations in excess of plan assets:
Accumulated benefit obligation
$ 67,349
$ 65,992
Projected benefit obligation
$105,245
$108,084
Plan assets at fair value
$ 50,395
$ 40,648
105

Year Ended June 30,
2024
2023
2022
Weighted-average assumptions(1):
Discount rate
1.5% - 3.9%
0.9% - 3.0%
0.9% - 3.0%
Expected rate of return on assets
1.5% - 3.9%
0.9% - 2.6%
0.9% - 3.0%
Rate of compensation increases
3.0% - 5.0%
3.0% - 5.0%
2.3% - 5.0%
(1)
Represents the weighted-average assumptions used to determine the benefit obligation.
The assumptions for expected rate of return on assets were developed by considering the historical returns
and expectations of future returns relevant to the country in which each plan is in effect and the investments
applicable to the corresponding plan. The discount rate for each plan was derived by reference to appropriate
benchmark yields on high-quality corporate bonds, allowing for the approximate duration of both plan
obligations and the relevant benchmark index.
The following table presents losses recognized in AOCI before tax related to our foreign defined benefit
pension plans:
As of June 30,
(In thousands)
2024
2023
Unrecognized prior service cost
$10,360
$10,733
Unrealized net loss
9,662
12,932
Amount of losses recognized
$20,022
$23,665
The components of our net periodic cost relating to our foreign subsidiaries’ defined benefit pension plans
are as follows:
Year Ended June 30,
(In thousands)
2024
2023
2022
Components of net periodic pension cost:
Service cost(1)
$4,494
$3,807
$5,054
Interest cost
2,177
1,678
1,003
Return on plan assets
(961)
(426)
(528)
Amortization of prior service cost
853
873
671
Amortization of net loss
221
698
1,406
Loss due to settlement/curtailment
68
85
38
Foreign currency exchange rate changes
—
—
(19)
Net periodic pension cost
$6,852
$6,715
$7,625
(1)
Service cost is reported in Cost of revenues, R&D and SG&A expenses. All other components of net periodic
pension cost are reported in Other expense (income), net in the Consolidated Statements of Operations.
Fair Value of Plan Assets
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The three levels of inputs used to measure fair
value of plan assets are described in Note 3 “Fair Value Measurements.”
106

The foreign plans’ investments are managed by third-party trustees consistent with the regulations or market
practice of the country where the assets are invested. We are not actively involved in the investment strategy, nor
do we have control over the target allocation of these investments. These investments made up 100% of total
foreign plan assets in the fiscal years ended June 30, 2024 and 2023.
The expected aggregate employer contribution for the foreign plans during the fiscal year ending June 30,
2025 is $2.6 million.
The total benefits to be paid from the foreign pension plans are not expected to exceed $6.9 million in any
year through the fiscal year ending June 30, 2034.
Foreign plan assets measured at fair value on a recurring basis consisted of the following investment
categories as of June 30, 2024 and 2023, respectively:
As of June 30, 2024 (In thousands)
Total
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable Inputs
(Level 2)
Cash and cash equivalents
$35,811
$35,811
$
—
Bonds, equity securities and other investments
14,584
—
14,584
Total assets measured at fair value
$50,395
$35,811
$14,584
As of June 30, 2023 (In thousands)
Total
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable Inputs
(Level 2)
Cash and cash equivalents
$32,114
$32,114
$
—
Bonds, equity securities and other investments
13,816
—
13,816
Total assets measured at fair value
$45,930
$32,114
$13,816
Concentration of Risk
We manage a variety of risks, including market, credit and liquidity risks, across our plan assets through our
investment managers. We define a concentration of risk as an undiversified exposure to one of the above-
mentioned risks that increases the exposure of the loss of plan assets unnecessarily. We monitor exposure to such
risks in the foreign plans by monitoring the magnitude of the risk in each plan and diversifying our exposure to
such risks across a variety of instruments, markets and counterparties. As of June 30, 2024, we did not have
concentrations of plan asset investment risk in any single entity, manager, counterparty, sector, industry or
country.
NOTE 14 — INCOME TAXES
The components of income before income taxes were as follows:
Year Ended June 30,
(In thousands)
2024
2023
2022
Domestic income before income taxes
$1,997,090
$2,017,338
$1,909,699
Foreign income before income taxes
1,192,942
1,771,852
1,579,538
Total income before income taxes
$3,190,032
$3,789,190
$3,489,237
107

The provision for income taxes was comprised of the following:
Year Ended June 30,
(In thousands)
2024
2023
2022
Current:
Federal
$ 395,876
$ 553,197
$ 341,614
State
10,737
14,804
14,149
Foreign
160,401
188,991
165,194
567,014
756,992
520,957
Deferred:
Federal
(110,686)
(228,414)
11,564
State
(2,770)
(4,295)
(311)
Foreign
(25,422)
(122,444)
(365,033)
(138,878)
(355,153)
(353,780)
Provision for income taxes
$ 428,136
$ 401,839
$ 167,177
The significant components of deferred income tax assets and liabilities were as follows:
As of June 30,
(In thousands)
2024
2023
Deferred tax assets:
Capitalized R&D expenses
$ 328,061
$ 201,228
Tax credits and net operating losses
311,026
271,500
Depreciation and amortization
151,371
73,691
Inventory reserves
121,238
103,646
Employee benefits accrual
95,461
92,696
Non-deductible reserves
53,668
52,147
Unearned revenue
25,532
16,668
SBC
15,375
12,710
Other
12,785
35,360
Gross deferred tax assets
1,114,517
859,646
Valuation allowance
(289,534)
(259,172)
Net deferred tax assets
$ 824,983
$ 600,474
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries not indefinitely reinvested
$ (315,231) $(279,677)
Deferred profit
(70,204)
(23,149)
Unrealized gain on investments
(10,949)
(9,994)
Total deferred tax liabilities
(396,384)
(312,820)
Total net deferred tax assets
$ 428,599
$ 287,654
Our deferred tax assets for the years ended June 30, 2024 and 2023 reflect the impact of the mandatory
capitalization of research and experimental expenditures as required by the 2017 Tax Cuts and Jobs Act. This
provision was first effective for the Company in the year ending June 30, 2023.
108

As of June 30, 2024, we had U.S. federal, state and foreign net operating loss (“NOL”) carry-forwards of
$6.5 million, $11.8 million and $221.5 million, respectively. We also had foreign capital loss carry-forwards of
$8.6 million as of June 30, 2024. The U.S. federal NOL carry-forwards will expire at various dates beginning in
2025 through 2042. The utilization of NOLs created by acquired companies is subject to annual limitations under
Section 382 of the Internal Revenue Code. However, it is not expected that such annual limitation will
significantly impair the realization of these NOLs. The state NOLs will expire at various dates beginning in 2028
through 2036. Foreign NOLs and capital loss carry-forwards will be carried forward indefinitely. State credits of
$366.6 million will also be carried forward indefinitely.
The net deferred tax asset valuation allowance was $289.5 million and $259.2 million as of June 30, 2024
and 2023, respectively. The change was primarily due to an increase in the valuation allowance related to state
credit carry-forwards generated in the fiscal year ended June 30, 2024. The valuation allowance is based on our
assessment that it is more likely than not that certain deferred tax assets will not be realized in the foreseeable
future. Of the valuation allowance as of June 30, 2024, $285.4 million was related to federal and state credit
carry-forwards. The remainder of the valuation allowance was related to state and foreign NOL carry-forwards.
As of June 30, 2024, we intend to indefinitely reinvest $185.9 million of cumulative undistributed earnings
held by certain non-U.S. subsidiaries. If these undistributed earnings were repatriated to the U.S., the potential
deferred tax liability associated with the undistributed earnings would be approximately $39 million.
We benefit from tax holidays in Singapore where we manufacture certain of our products. These tax
holidays are on approved investments. The tax holidays in Singapore are scheduled to expire in five to eight
years. We were in compliance with all the terms and conditions of the tax holidays as of June 30, 2024. The net
impact of these tax holidays was to decrease our tax expense by $159.4 million, $161.5 million and
$543.7 million in the fiscal years ended June 30, 2024, 2023 and 2022, respectively. The benefits of the tax
holidays on diluted net income per share were $1.19, $1.18 and $3.83 for the fiscal years ended June 30, 2024,
2023 and 2022, respectively. The benefits during the fiscal year ended June 30, 2022 include a one-time deferred
tax benefit of approximately $398 million due to a tax basis step-up from a restructuring.
The reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate was as
follows:
Year ended June 30,
2024
2023
2022
Federal statutory rate
21.0% 21.0% 21.0%
GILTI
3.7% 3.4%
2.0%
Goodwill impairment
1.7% — % — %
Net change in tax reserves
1.1% — %
2.0%
State income taxes, net of federal benefit
0.3% 0.2%
0.3%
Restructuring
— % — % (11.2)%
Effect of SBC
— % 0.1% (0.2)%
R&D tax credit
(1.6)%(1.5)% (1.1)%
Foreign derived intangible income
(5.9)%(5.7)% (4.0)%
Effect of foreign operations taxed at various rates
(6.6)%(7.1)% (4.2)%
Other
(0.3)% 0.2%
0.2%
Effective income tax rate
13.4% 10.6%
4.8%
109

A reconciliation of gross unrecognized tax benefits was as follows:
Year Ended June 30,
(In thousands)
2024
2023
2022
Unrecognized tax benefits at the beginning of the year
$213,092
$217,927
$149,642
Increases for tax positions taken in current year
40,209
44,590
49,311
Increases for tax positions taken in prior years
23,291
434
20,917
Decreases for settlements with taxing authorities
—
(45,042)
—
Decreases for tax positions taken in prior years
(26,766)
(3,929)
(267)
Decreases for lapsing of statutes of limitations
(4,119)
(888)
(1,676)
Unrecognized tax benefits at the end of the year
$245,707
$213,092
$217,927
The amounts of unrecognized tax benefits that would impact the effective tax rate were $244.6 million,
$199.0 million and $205.0 million as of June 30, 2024, 2023 and 2022, respectively. The amounts of interest and
penalties recognized during the years ended June 30, 2024, 2023 and 2022 were expenses (benefits) of
$8.3 million, $(20.2) million and $11.5 million, respectively. Our policy is to include interest and penalties
related to unrecognized tax benefits within Other expense (income), net. The amounts of interest and penalties
accrued as of June 30, 2024 and 2023 were $41.1 million and $32.6 million, respectively.
In the normal course of business, we are subject to examination by tax authorities throughout the world. We
are subject to U.S. federal income tax examinations for all years beginning from the fiscal year ended June 30,
2018 and are under U.S. federal income tax examination for the fiscal years ended June 30, 2018, 2019 and 2020.
We are subject to state income tax examinations for all years beginning from the fiscal year ended June 30, 2020.
We are also subject to examinations in other major foreign jurisdictions, including Singapore and Israel, for all
years beginning from the calendar year ended December 31, 2019 and are under audit in Israel for the period
from January 1, 2019 to June 30, 2022. We have changed our year end in Israel to a fiscal year ending June 30.
In August 2022, Orbotech executed a settlement agreement with the Israel Tax Authority (“ITA”) in
resolution of tax examinations for fiscal years 2012 through 2014 and 2015 through 2018. The settlement
agreement included a payment of approximately $25.7 million, including interest, to the ITA. In addition,
Orbotech paid approximately $16.2 million to the ITA related to previous “tax exempt” earnings under the
historical Approved or Beneficial Enterprises regimes. The current year election to pay tax on the previous
exempt earnings was made under the Temporary Order issued in the Israel Budget, which allows for a reduced
tax rate on such earnings. Approximately $5.7 million of the settlement payment related to the amount of R&D
expenses eligible for deduction during the above referenced years was refunded to Orbotech in January 2023.
We believe that we may recognize up to $16.5 million of our existing unrecognized tax benefits within the
next 12 months as a result of the lapse of statutes of limitations. It is possible that certain income tax
examinations may be concluded in the next 12 months. Given the uncertainty around the timing of the resolution
of these ongoing examinations, we are unable to estimate the full range of possible adjustments to our
unrecognized tax benefits within the next 12 months.
Legislative Developments
President Biden signed into law the CHIPS and Science Act of 2022 (“CHIPS Act,” where “CHIPS” stands
for Creating Helpful Incentives to Produce Semiconductors) on August 9, 2022. The CHIPS Act provides for
various incentives and tax credits among other items, including the Advanced Manufacturing Investment Credit
(“AMIC”), which equals 25% of qualified investments in an advanced manufacturing facility that is placed in
service after December 31, 2022. There was no material impact to our financial statements from the AMIC
provision.
110

President Biden also signed into law the IRA on August 16, 2022. The IRA has several provisions including
a 15% corporate alternative minimum tax (“CAMT”) for certain large corporations that have at least an average
of $1.0 billion of adjusted financial statement income over a consecutive three-tax-year period. The CAMT was
effective for us beginning in our fiscal year ending June 30, 2024 and there was no tax impact to our financial
statements from the CAMT provision.
The IRA also introduced a 1% excise tax imposed on certain stock repurchases by publicly traded
companies made after December 31, 2022. We began recording the excise tax as part of the cost basis of treasury
stock repurchased after December 31, 2022.
Other than the AMIC and the excise tax imposed on certain stock repurchases as mentioned above, we are
currently evaluating the applicability and impact of the other provisions in the IRA and the CHIPS Act on our
Consolidated Financial Statements including our future cash flows.
California Governor Newsom approved the 2024-25 California State Budget on June 27, 2024, which
includes a provision to suspend the use of all net operating losses and limits the use of R&D tax credits to
$5 million for tax years 2024 through 2026. This provision will be effective in our fiscal years ending June 30,
2025 through June 30, 2027. We do not expect these modifications to have any impact to our Consolidated
Financial Statements.
NOTE 15 — LITIGATION AND OTHER LEGAL MATTERS
We are named, from time to time, as a party to lawsuits and other types of legal proceedings and claims in
the normal course of our business. Actions filed against us include commercial, intellectual property (“IP”),
customer, and labor and employment related claims, including complaints of alleged wrongful termination and
potential class action lawsuits regarding alleged violations of federal and state wage and hour and other laws. In
general, legal proceedings and claims, regardless of their merit, and associated internal investigations (especially
those relating to IP or confidential information disputes) are often expensive to prosecute, defend or conduct and
may divert management’s attention and other company resources. Moreover, the results of legal proceedings are
difficult to predict, and the costs incurred in litigation can be substantial, regardless of outcome. We believe the
amounts provided in our Consolidated Financial Statements are adequate in light of the probable and estimated
liabilities. However, because such matters are subject to many uncertainties and the ultimate outcomes are not
predictable, there can be no assurances that the actual amounts required to satisfy alleged liabilities from the
matters described above will not exceed the amounts reflected in our Consolidated Financial Statements or will
not have a material adverse effect on our results of operations, financial condition or cash flows.
NOTE 16 — COMMITMENTS AND CONTINGENCIES
Factoring. We have factoring agreements with financial institutions to sell certain of our trade receivables
and promissory notes from customers without recourse. We do not believe we are at risk for any material losses
as a result of these agreements. In addition, we periodically sell certain LC, without recourse, received from
customers in payment for goods and services.
The following table shows total receivables sold under factoring agreements and proceeds from sales of LC
for the indicated periods:
Year Ended June 30,
(In thousands)
2024
2023
2022
Receivables sold under factoring agreements
$254,889
$328,933
$250,983
Proceeds from sales of LC
$ 22,242
$ 69,247
$151,924
Factoring and LC fees for the sale of certain trade receivables were recorded in Other expense (income), net
and were not material for the periods presented.
111

Purchase Commitments. We maintain commitments to purchase inventory from our suppliers as well as
goods, services, and other assets in the ordinary course of business. Our liability under these purchase
commitments is generally restricted to a forecasted time-horizon as mutually agreed between the parties. This
forecasted time-horizon can vary among different suppliers. Our estimate of our significant purchase
commitments primarily for material, services, supplies and asset purchases is $2.17 billion as of June 30, 2024, a
majority of which will be due within the next 12 months. Actual expenditures will vary based upon the volume of
the transactions and length of contractual service provided. In addition, the amounts paid under these
arrangements may be less in the event that the arrangements are renegotiated or canceled. Certain agreements
provide for potential cancellation penalties.
Cash LTI Plan. As of June 30, 2024, we have committed $143.1 million for future payment obligations
under our Cash LTI Plan. Cash LTI awards issued to employees under the Cash LTI Plan vest in three or four
equal installments, with one-third or one-fourth of the aggregate amount of the Cash LTI award vesting on each
anniversary of the grant date over a three or four-year period. In order to receive payments under a Cash LTI
award, participants must be employed by us as of the applicable award vesting date.
Guarantees and Contingencies. We maintain guarantee arrangements available through various financial
institutions for up to $83.9 million, of which $49.9 million had been issued as of June 30, 2024, primarily to fund
guarantees to customs authorities for value-added tax and other operating requirements of our consolidated
subsidiaries in Europe, Israel and Asia.
Indemnification Obligations. Subject to certain limitations, we are obligated to indemnify our current and
former directors, officers and employees with respect to certain litigation matters and investigations that arise in
connection with their service to us. These obligations arise under the terms of our certificate of incorporation,
bylaws, applicable contracts, and Delaware and California law. The obligation to indemnify generally means that
we are required to pay or reimburse the individuals’ reasonable legal expenses and possibly damages and other
liabilities incurred by several of our current and former directors, officers and employees in connection with
these matters. For example, we have paid or reimbursed legal expenses incurred in connection with the
investigation of our historical stock option practices and the related litigation and government inquiries.
Although the maximum potential amount of future payments we could be required to make under the
indemnification obligations generally described in this paragraph is theoretically unlimited, we believe the fair
value of this liability, to the extent estimable, is appropriately considered within the reserve we have established
for currently pending legal proceedings.
We are a party to a variety of agreements pursuant to which we may be obligated to indemnify the other
party with respect to certain matters. Typically, these obligations arise in connection with contracts and license
agreements or the sale of assets, under which we customarily agree to hold the other party harmless against
losses arising therefrom, or provide customers with other remedies to protect against, bodily injury or damage to
personal property caused by our products, non-compliance with our product performance specifications,
infringement by our products of third-party IP rights and a breach of warranties, representations and covenants
related to matters such as title to assets sold, validity of certain IP rights, non-infringement of third-party rights,
and certain income tax-related matters. In each of these circumstances, payment by us is typically subject to the
other party making a claim to and cooperating with us pursuant to the procedures specified in the particular
contract. This usually allows us to challenge the other party’s claims or, in case of breach of IP representations or
covenants, to control the defense or settlement of any third-party claims brought against the other party. Further,
our obligations under these agreements may be limited in terms of amounts, activity (typically at our option to
replace or correct the products or terminate the agreement with a refund to the other party), and duration. In some
instances, we may have recourse against third parties and/or insurance covering certain payments made by us.
In addition, we may, in limited circumstances, enter into agreements that contain customer-specific
commitments on pricing, tool reliability, spare parts stocking levels, response time and other commitments.
Furthermore, we may give these customers limited audit or inspection rights to enable them to confirm that we
are complying with these commitments. If a customer elects to exercise its audit or inspection rights, we may be
112

required to expend significant resources to support the audit or inspection, as well as to defend or settle any
dispute with a customer that could potentially arise out of such audit or inspection. To date, we have made no
significant accruals in our Consolidated Financial Statements for this contingency. While we have not in the past
incurred significant expenses for resolving disputes regarding these types of commitments, we cannot make any
assurance that it will not incur any such liabilities in the future.
It is not possible to predict the maximum potential amount of future payments under these or similar
agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in
each particular agreement. Historically, payments made by us under these agreements have not had a material
effect on our business, financial condition, results of operations or cash flows.
NOTE 17 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The authoritative guidance requires companies to recognize all derivative instruments, including foreign
exchange contracts and rate lock agreements (collectively “derivatives”) as either assets or liabilities at fair value
on the Consolidated Balance Sheets. In accordance with the accounting guidance, we designate foreign currency
forward transactions and options contracts and interest rate forward transactions as cash flow hedges. In
accordance with the accounting guidance, we also designate certain foreign currency exchange contracts as net
investment hedge transactions intended to mitigate the variability of the value of certain investments in foreign
subsidiaries.
Our foreign subsidiaries operate and sell our products in various global markets. As a result, we are exposed
to risks relating to changes in foreign currency exchange rates. We utilize foreign exchange contracts to hedge
against future movements in foreign currency exchange rates that affect certain existing and forecasted foreign
currency denominated sales and purchase transactions, such as the Japanese yen, the euro, the pound sterling and
the new Israeli shekel.
We routinely hedge our exposures to certain foreign currencies with various financial institutions in an
effort to minimize the impact of certain currency exchange rate fluctuations. These foreign exchange contracts,
designated as cash flow hedges, generally have maturities of less than 18 months. Cash flow hedges are evaluated
for effectiveness monthly, based on changes in total fair value of the derivatives. If a financial counterparty to
any of our hedging arrangements experiences financial difficulties or is otherwise unable to honor the terms of
the foreign currency hedge, we may experience material losses.
Since fiscal 2015, we have entered into five sets of Rate Lock Agreements to hedge the benchmark interest
rate on portions of our Senior Notes prior to issuance. Upon issuance of the associated debt, the Rate Lock
Agreements were settled and their fair values were recorded within AOCI. The resulting gains and losses from
these transactions are amortized to interest expense over the lives of the associated debt. As of June 30, 2024, the
aggregate unamortized portion of the fair value of the Rate Lock Agreements was a $47.7 million net gain.
For derivatives that are designated and qualify as cash flow hedges, the effective portion of the gains or
losses is reported in AOCI and reclassified into earnings in the same period or periods during which the hedged
transaction affects earnings. For derivative contracts executed after adopting the new accounting guidance in
fiscal 2019, the election to include time value for the assessment of effectiveness is made on all forward contracts
designated as cash flow hedges. The change in fair value of the derivative is recorded in AOCI until the hedged
item is recognized in earnings. The assessment of effectiveness of options contracts designated as cash flow
hedges exclude time value. The initial value of the component excluded from the assessment of effectiveness is
recognized in earnings over the life of the derivative contract. Any difference between change in the fair value of
the excluded components and the amounts recognized in earnings are recorded in AOCI.
For derivatives that are designated and qualify as a net investment hedge in a foreign operation and that
meet the effectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are
recorded in cumulative translation within AOCI. The remainder of the change in value of such instruments is
recorded in earnings using the mark-to-market approach. Recognition in earnings of amounts previously recorded
113

in cumulative translation is limited to circumstances such as complete or substantially complete liquidation or
sale of the net investment in the hedged foreign operations.
For derivatives that are not designated as hedges, gains and losses are recognized in Other expense
(income), net. We use foreign exchange contracts to hedge certain foreign currency denominated assets or
liabilities. The gains and losses on these derivative instruments are largely offset by the changes in the fair value
of the assets or liabilities being hedged.
Derivatives in Hedging Relationships: Foreign Exchange Contracts and Rate Lock Agreements
The gains (losses) on derivatives in cash flow and net investment hedging relationships recognized in OCI
for the indicated periods were as follows:
Year Ended June 30,
(In thousands)
2024
2023
2022
Derivatives Designated as Cash Flow Hedging Instruments:
Rate lock agreements:
Amounts included in the assessment of effectiveness
$ 415
$
—
$82,969
Foreign exchange contracts:
Amounts included in the assessment of effectiveness
$9,176
$30,153
$21,940
Amounts excluded from the assessment of effectiveness
$ 146
$
(128) $
43
Derivatives Designated as Net Investment Hedging Instruments:
Foreign exchange contracts(1)
$3,459
$ 3,626
$ 3,815
(1)
No amounts were reclassified from AOCI into earnings related to the sale of a subsidiary.
The locations and amounts of designated and non-designated derivatives’ gains and losses reported in the
Consolidated Statements of Operations for the indicated periods were as follows:
(In thousands)
Revenues
Costs of
Revenues and
Operating
Expense
Interest
Expense
Other
Expense
(Income),
Net
For the year ended June 30, 2022
Total amounts presented in the Consolidated
Statements of Operations in which the effects of
cash flow hedges are recorded
$ 9,211,883
$5,557,702
$160,339
$
4,605
Gains (Losses) on Derivatives Designated as Hedging
Instruments:
Rate lock agreements:
Amount of gains (losses) reclassified from AOCI
to earnings
$
—
$
—
$ (1,007) $
—
Foreign exchange contracts:
Amount of gains (losses) reclassified from AOCI
to earnings
$
11,219
$
(3,762) $
—
$
—
Amount excluded from the assessment of
effectiveness recognized in earnings
$
(531) $
—
$
—
$
2,333
Gains (Losses) on Derivatives Not Designated as
Hedging Instruments:
Amount of gains (losses) recognized in earnings
$
—
$
—
$
—
$ (10,665)
114

(In thousands)
Revenues
Costs of
Revenues and
Operating
Expense
Interest
Expense
Other
Expense
(Income),
Net
For the year ended June 30, 2023
Total amounts presented in the Consolidated
Statements of Operations in which the effects of
cash flow hedges are recorded
$10,496,056
$6,501,360
$296,940
$(104,720)
Gains (Losses) on Derivatives Designated as Hedging
Instruments:
Rate lock agreements:
Amount of gains (losses) reclassified from AOCI
to earnings
$
—
$
—
$
3,747
$
—
Foreign exchange contracts:
Amount of gains (losses) reclassified from AOCI
to earnings
$
33,243
$
(6,526) $
—
$
—
Amount excluded from the assessment of
effectiveness recognized in earnings
$
(1,406) $
—
$
—
$
2,598
Gains (Losses) on Derivatives Not Designated as
Hedging Instruments:
Amount of gains (losses) recognized in earnings
$
—
$
—
$
—
$
(2,062)
For the year ended June 30, 2024
Total amounts presented in the Consolidated
Statements of Operations in which the effects of
cash flow hedges are recorded
$ 9,812,247
$6,466,037
$311,253
$(155,075)
Gains (Losses) on Derivatives Designated as Hedging
Instruments:
Rate lock agreements:
Amount of gains (losses) reclassified from AOCI
to earnings
$
—
$
—
$
3,764
$
—
Foreign exchange contracts:
Amount of gains (losses) reclassified from AOCI
to earnings
$
19,246
$
3,766
$
—
$
—
Amount excluded from the assessment of
effectiveness recognized in earnings
$
(872) $
—
$
—
$
2,328
Gains (Losses) on Derivatives Not Designated as
Hedging Instruments:
Amount of gains (losses) recognized in earnings
$
—
$
—
$
—
$
10,597
115

The U.S. dollar equivalent of all outstanding notional amounts of foreign currency hedge contracts, with
maximum remaining maturities of approximately 12 months as of June 30, 2024 and 11 months as of June 30,
2023, were as follows:
(In thousands)
As of June 30, 2024
As of June 30, 2023
Cash flow hedge contracts — foreign currency
Purchase
$426,839
$218,315
Sell
$ 76,342
$123,951
Net Investment hedge contracts — foreign currency
Sell
$273,952
$ 87,157
Other foreign currency hedge contracts
Purchase
$589,171
$527,349
Sell
$411,635
$204,902
The locations and fair value of our derivatives reported in our Consolidated Balance Sheets as of the dates
indicated below were as follows:
Asset Derivatives
Liability Derivatives
Balance Sheet
Location
As of June 30,
2024
As of June 30,
2023
Balance Sheet
Location
As of June 30,
2024
As of June 30,
2023
(In thousands)
Fair Value
Fair Value
Derivatives designated as
hedging instruments
Foreign exchange
contracts
Other current assets
$13,783
$24,498
Other current liabilities
$ (8,066)
$
(442)
Total derivatives designated
as hedging instruments
13,783
24,498
(8,066)
(442)
Derivatives not designated
as hedging instruments
Foreign exchange
contracts
Other current assets
22,720
11,214
Other current liabilities
(7,617)
(11,664)
Total derivatives not
designated as hedging
instruments
22,720
11,214
(7,617)
(11,664)
Total derivatives
$36,503
$35,712
$(15,683)
$(12,106)
The changes in AOCI, before taxes, related to derivatives for the indicated periods were as follows:
Year Ended June 30,
(In thousands)
2024
2023
2022
Beginning balance
$ 81,611
$ 77,018
$ (25,830)
Amount reclassified to earnings as net gains
(25,904)
(29,058)
(5,919)
Net change in unrealized gains
13,196
33,651
108,767
Ending balance
$ 68,903
$ 81,611
$ 77,018
116

Offsetting of Derivative Assets and Liabilities
We present derivatives at gross fair values in the Consolidated Balance Sheets. We have entered into
arrangements with each of our counterparties, which reduce credit risk by permitting net settlement of
transactions with the same counterparty under certain conditions. The information related to the offsetting
arrangements for the periods indicated was as follows:
As of June 30, 2024
Gross Amounts of Derivatives
Not Offset in the Consolidated
Balance Sheets
(In thousands)
Gross
Amounts of
Derivatives
Gross Amounts of
Derivatives Offset in
the Consolidated
Balance Sheets
Net Amount of
Derivatives
Presented in the
Consolidated
Balance Sheets
Financial
Instruments
Cash
Collateral
Received
Net
Amount
Derivatives — assets
$ 36,503
$—
$ 36,503
$(15,173)
$—
$21,330
Derivatives — liabilities
$(15,683)
$—
$(15,683)
$ 15,173
$—
$
(510)
As of June 30, 2023
Gross Amounts of Derivatives
Not Offset in the Consolidated
Balance Sheets
(In thousands)
Gross
Amounts of
Derivatives
Gross Amounts of
Derivatives Offset in
the Consolidated
Balance Sheets
Net Amount of
Derivatives
Presented in the
Consolidated
Balance Sheets
Financial
Instruments
Cash
Collateral
Received
Net
Amount
Derivatives — assets
$ 35,712
$—
$ 35,712
$(8,968)
$—
$26,744
Derivatives — liabilities
$(12,106)
$—
$(12,106)
$ 8,968
$—
$ (3,138)
NOTE 18 — RELATED PARTY TRANSACTIONS
During the fiscal years ended June 30, 2024, 2023 and 2022, we purchased from, or sold to, several entities
where one or more of our executive officers or members of our Board of Directors were, during the periods
presented, an executive officer or a board member, including Advanced Micro Devices, Inc., Agilent
Technologies, Inc., Ansys, Inc., HP Inc., Keysight Technologies, Inc., Microchip Technology Incorporated,
Splunk Inc. and Tenneco Inc. Citrix Systems, Inc. was a related party only during the fiscal year ended June 30,
2022. The following table provides the transactions with these parties for the indicated periods (for the portion of
such period that they were considered related):
Year Ended June 30,
(In thousands)
2024
2023
2022
Total revenues
$8,144
$24,373
$2,334
Total purchases
$3,100
$ 3,883
$1,082
Our receivable balances were immaterial and $1.0 million and payable balances were immaterial from these
parties as of June 30, 2024 and 2023, respectively. All of the related party transactions were made at current
market rates.
NOTE 19 — 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.
117

We have three reportable segments: Semiconductor Process Control; Specialty Semiconductor Process; and
PCB and Component Inspection. 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 segment offers a comprehensive portfolio of inspection, metrology and
data analytics products, and related services, which helps IC manufacturers achieve target yield throughout the
entire semiconductor fabrication process, from 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 Process 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
MEMS, radio frequency communication chips, and power semiconductors for automotive and industrial
applications. This reportable segment is comprised of one operating segment.
PCB and Component Inspection
The PCB and Component Inspection segment enables electronic device manufacturers to inspect, test and
measure PCBs, 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 reportable
segment is comprised of two operating segments, PCB and Component Inspection. In March 2024, we made the
decision to exit the Display business by announcing the end of manufacturing of most Display products by
December 31, 2024, but we will continue to provide services to the installed base of Display products for existing
customers.
The CODM assesses the performance of each operating segment and allocates resources to those segments
based on total revenues and segment gross profit and does not evaluate the segments using discrete asset
information. Segment gross profit excludes corporate allocations and effects of changes in foreign currency
exchange rates, amortization of intangible assets, amortization of inventory fair value adjustments, and
transaction costs associated with our acquisitions related to costs of revenues.
118

The following is a summary of results for each of our three reportable segments for the indicated periods.
Year Ended June 30,
(In thousands)
2024
2023
2022
Semiconductor Process Control:
Revenues
$8,733,556
$ 9,324,190
$7,924,822
Segment gross profit
$5,629,302
$ 5,957,573
$5,167,679
Specialty Semiconductor Process:
Revenues
$ 528,701
$
543,398
$ 456,579
Segment gross profit
$ 282,910
$
281,942
$ 242,520
PCB and Component Inspection:
Revenues
$ 552,491
$
631,604
$ 832,176
Segment gross profit
$ 158,960
$
221,251
$ 378,964
Totals:
Revenues for reportable segments
$9,814,748
$10,499,192
$9,213,577
Segment gross profit
$6,071,172
$ 6,460,766
$5,789,163
The following table reconciles total reportable segment revenue to total revenue for the indicated periods:
Year Ended June 30,
(In thousands)
2024
2023
2022
Total revenues for reportable segments
$9,814,748
$10,499,192
$9,213,577
Corporate allocations and effects of changes in foreign currency
exchange rates
(2,501)
(3,136)
(1,694)
Total revenues
$9,812,247
$10,496,056
$9,211,883
The following table reconciles total segment gross profit to total income before income taxes for the
indicated periods:
Year Ended June 30,
(In thousands)
2024
2023
2022
Total segment gross profit
$6,071,172
$6,460,766
$5,789,163
Acquisition-related charges, corporate allocations and effects of
changes in foreign currency exchange rates(1)
186,998
183,017
169,721
R&D
1,278,981
1,296,727
1,105,254
SG&A
969,509
986,326
860,007
Impairment of goodwill and purchased intangible assets
289,474
—
—
Interest expense
311,253
296,940
160,339
Loss on extinguishment of debt
—
13,286
—
Other expense (income), net
(155,075)
(104,720)
4,605
Income before income taxes
$3,190,032
$3,789,190
$3,489,237
(1)
Acquisition-related charges primarily include amortization of intangible assets and other acquisition-related
costs classified or presented as part of Costs of revenues.
119

Our significant operations outside the U.S. 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:
Year Ended June 30,
(Dollar amounts in thousands)
2024
2023
2022
Revenues:
China
$4,196,727
43% $ 2,867,443
27% $2,660,438
29%
Taiwan
1,738,065
18%
2,493,379
24% 2,528,482
27%
North America
1,070,791
11%
1,254,956
12%
928,043
10%
Japan
963,203
10%
888,016
9%
724,773
8%
Korea
906,924
9%
1,895,710
18% 1,430,495
16%
Europe and Israel
540,263
6%
682,103
6%
636,664
7%
Rest of Asia
396,274
3%
414,449
4%
302,988
3%
Total
$9,812,247
100% $10,496,056
100% $9,211,883
100%
The following is a summary of revenues by major product categories for the indicated periods:
Year ended June 30,
(Dollar amounts in thousands)
2024
2023
2022
Revenues:
Wafer Inspection
$4,333,296
44% $ 4,336,663
41% $4,014,726
44%
Patterning
2,054,442
21%
2,791,130
26% 2,050,025
22%
Specialty Semiconductor Process
470,565
5%
492,109
5%
414,811
4%
PCB and Component Inspection
291,161
3%
378,030
4%
562,464
6%
Services
2,329,568
24%
2,117,031
20% 1,910,455
21%
Other
333,215
3%
381,093
4%
259,402
3%
Total
$9,812,247
100% $10,496,056
100% $9,211,883
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 that are part of the Semiconductor
Process Control segment.
In the fiscal year ended June 30, 2024, one customer accounted for approximately 13% of total revenues. In
the fiscal year ended June 30, 2023, two customers accounted for approximately 18% and 15% of total revenues.
In the fiscal year ended June 30, 2022, two customers accounted for approximately 20% and 12% of total
revenues.
120

Land, property and equipment, net by geographic region as of the dates indicated below were as follows:
As of June 30,
(In thousands)
2024
2023
Land, property and equipment, net:
U.S.
$ 689,937
$ 672,561
Europe
155,812
74,015
Singapore
148,557
150,989
Israel
84,279
92,815
Rest of Asia
31,383
41,461
Total
$1,109,968
$1,031,841
NOTE 20 — RESTRUCTURING CHARGES
Over the last few years, management approved plans to streamline operations, which included reductions of
workforce.
Restructuring charges were $21.6 million for fiscal year ended June 30, 2024, primarily due to severance
and related charges for the restructuring of the PCB and Display operating segment, as described further in
Note 7 “Goodwill and Purchased Intangible Assets,” as well as writedowns of certain ROU assets and fixed
assets that were abandoned. Restructuring charges were $44.0 million for the year ended June 30, 2023, primarily
due to workforce reductions announced and substantially completed in the third and fourth fiscal quarters.
Restructuring charges were $1.0 million for the year ended June 30, 2022. The amounts of restructuring charges
accrued were $6.5 million and $11.0 million as of June 30, 2024 and 2023, respectively.
NOTE 21 — SUBSEQUENT EVENTS
On August 1, 2024, we announced that our Board of Directors had declared a quarterly cash dividend of
$1.45 per share to be paid on September 3, 2024 to stockholders of record as of the close of business on
August 15, 2024.
121

Report of Independent Registered Public Accounting Firm
To the Board of Directors and
Stockholders of KLA Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of KLA Corporation and its subsidiaries (the
“Company”) as of June 30, 2024 and 2023, and the related consolidated statements of operations, comprehensive
income, stockholders’ equity and cash flows for each of the three years in the period ended June 30, 2024, including
the related notes and financial statement schedule listed in the accompanying index under item 15(a)(2) (collectively
referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over
financial reporting as of June 30, 2024, based on criteria established in Internal Control — Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of June 30, 2024, and 2023, and the results of its operations and its cash
flows for each of the three years in the period ended June 30, 2024 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of June 30, 2024, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing
under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and
on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
122

accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit committee
and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and
(ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we
are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
Revenue Recognition
As described in Note 1 to the consolidated financial statements, the Company’s arrangements with its customers
include various combinations of products and services, which are generally capable of being distinct and
accounted for as separate performance obligations. The transaction consideration, including any sales incentives,
is allocated between separate performance obligations of an arrangement based on the stand-alone selling price
for each distinct product or service. Revenues are measured based on consideration stipulated in the arrangement
with each customer. Revenue is recognized from product sales at a point in time when the performance
obligation has been satisfied by transferring control of the product to the customer. Services revenue is
recognized ratably over the period the customer simultaneously receives and consumes the benefits of the
services provided or when the related service is performed. The Company’s total revenues were $9,812.2 million
for the year ended June 30, 2024.
The principal consideration for our determination that performing procedures relating to revenue recognition is a
critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue
recognition.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness
of controls relating to the revenue recognition process, including controls over the recording of product and
services revenue at the transaction consideration once control passes to the customer. These procedures also
included, among others (i) testing the completeness, accuracy, and occurrence of revenue recognized for a
sample of product revenue transactions by obtaining and inspecting source documents, such as purchase orders,
sales orders, and proof of shipment; (ii) testing the completeness, accuracy, and occurrence of a sample of service
revenue transactions by obtaining and inspecting source documents, such as purchase orders, sales orders, and
other evidence supporting the service period; and (iii) confirming a sample of outstanding customer invoice
balances as of June 30, 2024 and, for confirmations not returned, obtaining and inspecting source documents,
such as invoices, proof of shipment, and subsequent cash receipts.
123

/s/ PricewaterhouseCoopers LLP
San Jose, California
August 5, 2024
We have served as the Company’s auditor since 1977.
124

SCHEDULE II
Valuation and Qualifying Accounts
(In thousands)
Balance at
Beginning
of Period
Charged to
Expense
Deductions/
Adjustments
Balance
at End
of Period
Fiscal Year Ended June 30, 2022:
Allowance for Credit Losses
$ 18,036
$ 5,710
$ (3,115)
$ 20,631
Allowance for Deferred Tax Assets
$204,433
$ 8,096
$31,900
$244,429
Fiscal Year Ended June 30, 2023:
Allowance for Credit Losses
$ 20,631
$19,894
$ (6,893)
$ 33,632
Allowance for Deferred Tax Assets
$244,429
$
—
$14,743
$259,172
Fiscal Year Ended June 30, 2024:
Allowance for Credit Losses
$ 33,632
$ 5,912
$ (6,762)
$ 32,782
Allowance for Deferred Tax Assets
$259,172
$
—
$30,362
$289,534
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act (“Disclosure
Controls”) as of the end of the period covered by this Annual Report on Form 10-K (this “Report”) required by
Securities Exchange Act Rules 13a-15(b) or 15d-15(b). The evaluation of our disclosure controls and procedures
was conducted under the supervision and with the participation of our management, including our Chief
Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based on this evaluation, the CEO and CFO
have concluded that as of June 30, 2024, the end of the period covered by this Report, our Disclosure Controls
were effective at a reasonable assurance level.
Attached as exhibits to this Report are certifications of the CEO and CFO, which are required in accordance
with Rule 13a-14 of the Securities Exchange Act. This Controls and Procedures section includes the information
concerning the controls evaluation referred to in the certifications, and it should be read in conjunction with the
certifications for a more complete understanding of the topics presented.
Definition of Disclosure Controls
Disclosure Controls are controls and procedures designed to reasonably assure that information required to
be disclosed in our reports filed or submitted under the Securities Exchange Act, such as this Report, is recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms. Disclosure Controls are also designed to reasonably assure that such information
is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow
timely decisions regarding required disclosure. Our Disclosure Controls include components of our internal
control over financial reporting, which consists of control processes designed to provide reasonable assurance
regarding the reliability of our financial reporting and the preparation of financial statements in accordance with
generally accepted accounting principles in the United States. To the extent that components of our internal
control over financial reporting are included within our Disclosure Controls, they are included in the scope of our
annual controls evaluation.
125

Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Under the supervision
and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the
effectiveness of our internal control over financial reporting based on criteria established in the framework in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, our management concluded that our internal control over
financial reporting was effective as of June 30, 2024.
The effectiveness of our internal control over financial reporting as of June 30, 2024 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which
appears in Item 8, “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
Limitations on the Effectiveness of Controls
Our management, including our CEO and CFO, does not expect that our Disclosure Controls or internal
control over financial reporting will prevent all error and all fraud. A control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives
will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected. These inherent limitations include the realities that
judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake.
Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or
by management override of the controls. The design of any system of controls is based in part on certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in
achieving our stated goals under all potential future conditions. Over time, controls may become inadequate
because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may
occur and not be detected.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the
evaluation required by Rule 13a-15(d) and 15d-15(d) of the Securities Exchange Act that occurred during the
fourth quarter of the fiscal year ended June 30, 2024 that have materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Plans Adopted by Officers and Directors During the Fourth Quarter
During the three months ended June 30, 2024, the following officers of the Company adopted trading plans
to sell and/or gift shares of our common stock that have been or will be issued upon the vesting of RSUs, or
purchased in our Employee Stock Purchase Plan, that are intended to satisfy the affirmative defense conditions
set forth in Rule 10b5-1(c) under the Securities Exchange Act. The material terms of the trading plans other than
pricing conditions are set forth in the table below:
Name of Officer
Title of Officer
Date of Adoption
Duration
Maximum Number of
Shares to be Sold* ^
Bren Higgins
Executive Vice
President and Chief
Financial Officer
April 30, 2024
427 days**
19,666
126

*
Due to pricing conditions in the trading plans, the number of shares actually sold under the trading plans
may be less than the maximum number of shares that can be sold. Shares sold under plans upon the vesting
of PRSUs where the performance conditions have not been met at the time of plan adoption or are to be
purchased in the future under our employee stock purchase plan are calculated at the maximum number of
shares that may be issued, with fractional shares disregarded.
^
For RSUs that have not vested, the maximum number of shares to be sold does not take into account shares
withheld for taxes.
**
Mr. Higgins’ trading plan terminates when the last trade is placed under the plan. The last scheduled trade is
on May 22, 2025; provided that if any scheduled trades are not placed because of trading conditions set forth
in the plan, the trading plan will terminate on June 30, 2025.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
For the information required by this Item, see “Information About the Board of Directors and its
Committees,” “Information About Executive Officers,” “Our Corporate Governance Practices — Standards of
Business Conduct; Whistleblower Hotline and Website,” “Our Corporate Governance Practices — Insider
Trading Policy,” “Report of the Audit Committee,” and, if applicable, “Security Ownership of Certain Beneficial
Owners and Management — Delinquent Section 16(a) Reports,” in the Proxy Statement, which is incorporated
herein by reference.
ITEM 11.
EXECUTIVE COMPENSATION
For the information required by this Item, see “Executive Compensation and Other Matters,” “Information
About the Board of Directors and Its Committees — Director Compensation,” “Our Corporate Governance
Practices — Compensation and Talent Committee Interlocks and Insider Participation,” “Compensation and
Talent Committee Report,” and “Information About the Board of Directors and Its Committees — Compensation
and Talent Committee — Risk Considerations in Our Compensation Programs” in the Proxy Statement, which is
incorporated herein by reference.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
For the information required by this Item, see “Security Ownership of Certain Beneficial Owners and
Management” and “Equity Compensation Plan Information” in the Proxy Statement, which is incorporated
herein by reference.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
For the information required by this Item, see “Certain Relationships and Related Transactions” and
“Information About the Board of Directors and Its Committees — The Board of Directors” in the Proxy
Statement, which is incorporated herein by reference.
127

ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
For the information required by this Item, see “Proposal Two: Ratification of Appointment of
PricewaterhouseCoopers LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending
June 30, 2025” in the Proxy Statement, which is incorporated herein by reference.
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Annual Report on Form 10-K:
1. Financial Statements:
The following financial statements and schedules of the Registrant are contained in Item 8, “Financial
Statements and Supplementary Data” of this Annual Report on Form 10-K:
Consolidated Balance Sheets as of June 30, 2024 and 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66
Consolidated Statements of Operations for each of the three years in the period ended June 30, 2024 . . . . .
67
Consolidated Statements of Comprehensive Income for each of the three years in the period ended June 30,
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended June 30,
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
Consolidated Statements of Cash Flows for each of the three years in the period ended June 30, 2024 . . . . .
70
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72
Report of Independent Registered Public Accounting Firm (PCAOB ID 238) . . . . . . . . . . . . . . . . . . . . . . . .
122
2. Financial Statement Schedule:
The following financial statement schedule of the Registrant is filed as part of this Annual Report on Form
10-K and should be read in conjunction with the financial statements:
Schedule II — Valuation and Qualifying Accounts for the three years in the period ended June 30, 2024 . . . .
125
All other schedules are omitted because they are either not applicable or the required information is shown
in the Consolidated Financial Statements or notes thereto.
3. Exhibits
The information required by this item is set forth below.
Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
File No.
Exhibit
Number
Filing Date
3.1
Restated Certificate of Incorporation
10-K
No. 000-09992
3.1
August 16, 2019
3.2
Amended and Restated Bylaws
8-K
No. 000-09992
3.1
November 4, 2022
4.1
Indenture dated November 6, 2014
between KLA-Tencor Corporation and
Wells Fargo Bank, National Association,
as trustee
8-K
No. 000-09992
4.1
November 7, 2014
4.2
Form of Officer’s Certificate setting forth
the terms of the Notes (with form of Notes
attached)
8-K
No. 000-09992
4.2
November 7, 2014
128

Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
File No.
Exhibit
Number
Filing Date
4.3
Indenture, dated as of June 23, 2022
between KLA Corporation and U.S. Bank
Trust Company, National Association, as
trustee
8-K
No. 000-09992
4.1
June 24, 2022
4.4
Form of Officer’s Certificate setting forth
the terms of the 4.650% Senior Notes due
2032, 4.950% Senior Notes due 2052, and
5.250% Senior Notes due 2062 (with form
of Notes attached)
8-K
No. 000-09992
4.2
June 24, 2022
4.5
Form of Officer’s Certificate setting forth
the terms of the 4.100% Senior Notes due
2029 and 5.000% Senior Notes due 2049
(with form of Notes attached)
8-K
No. 000-09992
4.2
March 20, 2019
4.6
Form of Officer’s Certificate setting forth
the terms of the 3.300% Senior Notes due
2050 (with form of Notes attached)
8-K
No. 000-09992
4.2
March 3, 2020
4.7
Officer’s Certificate, dated February 1,
2024, including the form of the Company’s
4.700% Senior Notes due 2034
8-K
No. 000-09992
4.2
February 1, 2024
4.8
Description of the Registrant’s securities
registered under Section 12 of the
Securities Act of 1934
10-Q
No. 000-09992
4.1
October 30, 2020
10.1
2004 Equity Incentive Plan (as amended
and restated (as of November 7, 2018))*
S-8
No. 228283
10.1
November 8, 2018
10.12
KLA Corporation 2023 Incentive Award
Plan
8-K
No. 000-09992
10.1
November 3, 2023
10.13
KLA Corporation 2023 Incentive Award
Plan Global Restricted Stock Unit
Agreement
10-Q
No. 000-09992
10.2
January 26, 2024
10.2
Form of Restricted Stock Unit Award
Notification (Performance-Vesting)*
10-K
No. 000-09992
10.2
August 6, 2021
10.3
Form of Restricted Stock Unit Award
Notification (Service-Vesting)*
10-K
No. 000-09992
10.3
August 6, 2021
10.4
Form of Accelerated Stock Repurchases
Agreement
8-K
No. 000-09992
10.1
June 24, 2022
10.5
Executive Deferred Savings Plan (as
amended and restated effective July 31,
2019)*
10-K
No. 000-09992
10.9
August 16, 2019
10.6
Credit Agreement, dated as of June 8,
2022, by and among KLA Corporation, the
several banks and other financial
institutions party thereto as lenders, and
JPMorgan Chase Bank, N.A., as
administrative agent
8-K
No. 000-09992
10.1
June 8, 2022
129

Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
File No.
Exhibit
Number
Filing Date
10.7
Amended and Restated Executive
Severance Plan*
8-K
No. 000-09992
10.1
October 20, 2016
10.8
Amended and Restated 2010 Executive
Severance Plan*
10-Q
No. 000-09992
10.45
October 22, 2015
10.9
Calendar Year 2024 Executive Incentive
Plan*+
10-Q
No. 000-09992
10.1
April 26, 2024
10.10
Amendment No. 1 dated as of July 25,
2022, by and among the registrant, the
subsidiary guarantors party thereto, the
lenders party thereto and JPMorgan Chase
Bank, N.A., as administrative agent ^
10-K
No. 000-09992
10.10
August 5, 2022
10.11
Form of Restricted Stock Unit Award
Notification and Agreement (Special
Awards)*+
10-Q
No. 000-09992
10.1
October 28, 2022
19.1
Policy on Insider Trading and
Unauthorized Disclosures
10-K
No. 000-09992
19.1
August 4, 2023
21.1
List of Subsidiaries
23.1
Consent of Independent Registered Public
Accounting Firm
31.1
Certification of Chief Executive Officer
under Rule 13a-14(a)/15d - 14(a) of the
Securities Exchange Act of 1934
31.2
Certification of Chief Financial Officer
under Rule 13a-14(a)/15d - 14(a) of the
Securities Exchange Act of 1934
32
Certification of Chief Executive Officer
and Chief Financial Officer Pursuant to 18
U.S.C. Section 1350^
97.1
Policy for Recovery of Erroneously
Awarded Compensation
101.INS
XBRL Instance Document — the instance
document does not appear in the
Interactive Data File because its XBRL
tags are embedded within the Inline XBRL
document.
101.SCH
XBRL Taxonomy Extension Schema
Document
101.CAL
XBRL Taxonomy Extension Calculation
Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition
Linkbase Document
101.LAB
XBRL Taxonomy Extension Label
Linkbase Document
130

Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
File No.
Exhibit
Number
Filing Date
101.PRE
XBRL Taxonomy Extension Presentation
Linkbase Document
104
Cover Page Interactive Data File (the cover
page XBRL tags are embedded within the
Inline XBRL document).
* Denotes a management contract, plan or arrangement.
+ Certain portions of this document that constitute confidential information have been redacted in accordance
with Regulation S-K, Item 601(b)(10).
^ Furnished herewith
ITEM 16.
FORM 10-K SUMMARY
None.
131

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
KLA Corporation
August 2, 2024
By:
/S/ RICHARD P. WALLACE
Date
Richard P. Wallace
President and Chief Executive Officer
Each person whose signature appears below constitutes and appoints Richard P. Wallace and Bren D.
Higgins, and each or any of them, his or her true and lawful attorney-in-fact and agent, each acting alone, with
full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all
capacities, to sign any or all amendments or supplements (including post-effective amendments) to this Report,
and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ RICHARD P. WALLACE
Richard P. Wallace
President, Chief Executive Officer and Director
(principal executive officer)
August 2, 2024
/s/ BREN D. HIGGINS
Bren D. Higgins
Executive Vice President and Chief Financial
Officer (principal financial officer)
August 1, 2024
/s/ VIRENDRA A. KIRLOSKAR
Virendra A. Kirloskar
Senior Vice President and Chief Accounting
Officer (principal accounting officer)
August 1, 2024
/s/ ROBERT M. CALDERONI
Robert M. Calderoni
Chairman of the Board and Director
August 1, 2024
/s/ JENEANNE HANLEY
Jeneanne Hanley
Director
August 1, 2024
/s/ EMIKO HIGASHI
Emiko Higashi
Director
August 1, 2024
/s/ KEVIN J. KENNEDY
Kevin J. Kennedy
Director
August 1, 2024
/s/ MICHAEL R. MCMULLEN
Michael R. McMullen
Director
August 1, 2024
/s/ GARY B. MOORE
Gary B. Moore
Director
August 1, 2024
132

Signature
Title
Date
/s/ MARIE MYERS
Marie Myers
Director
August 1, 2024
/s/ VICTOR PENG
Victor Peng
Director
August 1, 2024
/s/ ROBERT A. RANGO
Robert A. Rango
Director
August 2, 2024
133

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* Ms. Myers is not standing for reelection to the Board at the Annual Meeting. 
*