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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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,California95035
(Address of principal executive offices)(Zip Code)
(408) 875-3000
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareKLACThe Nasdaq Stock Market, LLC
The Nasdaq Global Select Market
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      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      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 filerAccelerated 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No  
As of April 15, 2024, there were 134,639,951 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.


INDEX
 
  Page
Number
PART IFINANCIAL INFORMATION
Item 1.
Condensed Consolidated Statements of Comprehensive Income for the Three Months and Nine Months Ended March 31, 2024 and 2023
Condensed Consolidated Statements of Stockholders Equity for the Three Months and Nine Months Ended March 31, 2024 and 2023
Item 2.
Item 3.
Item 4.
PART IIOTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


 
2

PART I. FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS
KLA CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
 
(In thousands)March 31,
2024
June 30,
2023
ASSETS
Current assets:
Cash and cash equivalents$1,848,167 $1,927,865 
Marketable securities2,446,135 1,315,294 
Accounts receivable, net1,625,257 1,753,361 
Inventories3,007,053 2,876,784 
Other current assets601,470 498,728 
Total current assets9,528,082 8,372,032 
Land, property and equipment, net1,106,278 1,031,841 
Goodwill, net2,015,727 2,278,820 
Deferred income taxes879,380 816,899 
Purchased intangible assets, net727,601 935,303 
Other non-current assets700,221 637,462 
Total assets$14,957,289 $14,072,357 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$354,720 $371,026 
Deferred system revenue994,469 651,720 
Deferred service revenue450,933 416,606 
Short-term debt749,889  
Other current liabilities1,908,527 2,303,490 
Total current liabilities4,458,538 3,742,842 
Long-term debt5,879,025 5,890,736 
Deferred tax liabilities480,270 529,287 
Deferred service revenue271,365 176,681 
Other non-current liabilities773,206 813,058 
Total liabilities11,862,404 11,152,604 
Commitments and contingencies (Notes 9, 14 and 15)
Stockholders’ equity:
Common stock and capital in excess of par value2,177,501 2,107,663 
Retained earnings958,904 848,431 
Accumulated other comprehensive loss(41,520)(36,341)
Total stockholders’ equity3,094,885 2,919,753 
Total liabilities and stockholders’ equity$14,957,289 $14,072,357 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
3

KLA CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended March 31,Nine Months Ended March 31,
(In thousands, except per share amounts)2024202320242023
Revenues:
Product$1,769,369 $1,903,484 $5,527,842 $6,562,501 
Service590,461 529,124 1,715,670 1,578,418 
Total revenues2,359,830 2,432,608 7,243,512 8,140,919 
Costs and expenses:
Costs of revenues993,885 1,005,346 2,917,522 3,255,358 
Research and development321,590 328,276 953,222 979,617 
Selling, general and administrative237,514 238,393 714,403 735,469 
Impairment of goodwill and purchased intangible assets70,474  289,474  
Interest expense79,981 74,774 228,417 223,449 
Loss on extinguishment of debt   13,286 
Other expense (income), net(45,622)(14,864)(104,515)(79,944)
Income before income taxes702,008 800,683 2,244,989 3,013,684 
Provision for income taxes100,467 102,846 319,539 310,987 
Net income601,541 697,837 1,925,450 2,702,697 
Less: Net income attributable to non-controlling interest   74 
Net income attributable to KLA$601,541 $697,837 $1,925,450 $2,702,623 
Net income per share attributable to KLA
Basic$4.46 $5.06 $14.20 $19.26 
Diluted$4.43 $5.03 $14.11 $19.16 
Weighted-average number of shares:
Basic134,954 137,865 135,638 140,349 
Diluted135,856 138,645 136,428 141,073 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
4

KLA CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended March 31,Nine Months Ended March 31,
(In thousands)2024202320242023
Net income $601,541 $697,837 $1,925,450 $2,702,697 
Other comprehensive income (loss):
Currency translation adjustments:
Cumulative currency translation adjustments(2,255)4,235 (5,836)(8,015)
Income tax benefit (provision)660 (15)42 264 
Net change related to currency translation adjustments(1,595)4,220 (5,794)(7,751)
Cash flow hedges:
Net unrealized gains arising during the period3,003 6,660 11,328 16,667 
Reclassification adjustments for net gains included in net income(7,604)(2,824)(23,665)(25,960)
Income tax (provision) benefit(782)(352)2,749 4,111 
Net change related to cash flow hedges(5,383)3,484 (9,588)(5,182)
Net change related to unrecognized losses and transition obligations in connection with defined benefit plans814 86 661 561 
Available-for-sale securities:
Net unrealized (losses) gains arising during the period(3,881)7,422 12,123 4,969 
Reclassification adjustments for net losses included in net income(54)250 19 831 
Income tax benefit (provision)843 (1,651)(2,600)(1,248)
Net change related to available-for-sale securities(3,092)6,021 9,542 4,552 
Other comprehensive income (loss)(9,256)13,811 (5,179)(7,820)
Less: Comprehensive income attributable to non-controlling interest   74 
Total comprehensive income attributable to KLA$592,285 $711,648 $1,920,271 $2,694,803 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
5

KLA CORPORATION
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
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
(In thousands, except per share amounts)SharesAmount
Balances as of June 30, 2023136,750 $2,107,663 $848,431 $(36,341)$2,919,753 $ $2,919,753 
Net income— — 741,375 — 741,375 — 741,375 
Other comprehensive loss— — — (13,097)(13,097)— (13,097)
Net issuance under employee stock plans173 (68,237)— — (68,237)— (68,237)
Repurchase of common stock(956)(14,722)(444,371)— (459,093)— (459,093)
Cash dividends ($1.30 per share) and dividend equivalents declared
— — (179,256)— (179,256)— (179,256)
Stock-based compensation expense— 48,772 — — 48,772 — 48,772 
Balances as of September 30, 2023135,967 2,073,476 966,179 (49,438)2,990,217  2,990,217 
Net income— — 582,534 — 582,534 — 582,534 
Other comprehensive income— — — 17,174 17,174 — 17,174 
Net issuance under employee stock plans141 45,427 — — 45,427 — 45,427 
Repurchase of common stock(848)(13,014)(428,549)— (441,563)— (441,563)
Cash dividends ($1.45 per share) and dividend equivalents declared
— — (198,698)— (198,698)— (198,698)
Stock-based compensation expense— 48,620 — — 48,620 — 48,620 
Balances as of December 31, 2023135,260 2,154,509 921,466 (32,264)3,043,711  3,043,711 
Net income— — 601,541 — 601,541 — 601,541 
Other comprehensive loss— — — (9,256)(9,256)— (9,256)
Net issuance under employee stock plans41 (24,275)— — (24,275)— (24,275)
Repurchase of common stock(588)(9,415)(366,281)— (375,696)— (375,696)
Cash dividends ($1.45 per share) and dividend equivalents declared
— — (197,822)— (197,822)— (197,822)
Stock-based compensation expense— 56,682 — — 56,682 — 56,682 
Balances as of March 31, 2024134,713 $2,177,501 $958,904 $(41,520)$3,094,885 $ $3,094,885 

6

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
(In thousands, except per share amounts)SharesAmount
Balances as of June 30, 2022141,804 $1,061,940 $366,882 $(27,471)$1,401,351 $(2,261)$1,399,090 
Net income attributable to KLA— — 1,025,991 — 1,025,991 — 1,025,991 
Net income attributable to non-controlling interest— — — — — 74 74 
Other comprehensive loss — — — (31,370)(31,370)— (31,370)
Net issuance under employee stock plans171 (54,950)— — (54,950)— (54,950)
Repurchase of common stock(257)(1,926)(87,690)— (89,616)— (89,616)
Cash dividends ($1.30 per share) and dividend equivalents declared
— — (186,216)— (186,216)— (186,216)
Stock-based compensation expense— 34,982 — — 34,982 — 34,982 
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 September 30, 2022141,718 1,041,948 1,118,967 (58,841)2,102,074  2,102,074 
Net income— — 978,795 — 978,795 — 978,795 
Other comprehensive income— — — 9,739 9,739 — 9,739 
Net issuance under employee stock plans170 31,196 — — 31,196 — 31,196 
Repurchase of common stock(3,429)870,811 (1,241,793)— (370,982)— (370,982)
Cash dividends ($1.30 per share) and dividend equivalents declared
— — (185,967)— (185,967)— (185,967)
Stock-based compensation expense— 38,405 — — 38,405 — 38,405 
Balances as of December 31, 2022138,459 1,982,360 670,002 (49,102)2,603,260  2,603,260 
Net income— — 697,837 — 697,837 — 697,837 
Other comprehensive income— — — 13,811 13,811 — 13,811 
Net issuance under employee stock plans57 (16,154)— (16,154)— (16,154)
Repurchase of common stock(1,227)(17,563)(465,149)— (482,712)— (482,712)
Cash dividends ($1.30 per share) and dividend equivalents declared
— — (181,391)— (181,391)— (181,391)
Stock-based compensation expense— 48,130 — — 48,130 — 48,130 
Balances as of March 31, 2023137,289 $1,996,773 $721,299 $(35,291)$2,682,781 $ $2,682,781 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
7

KLA CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended March 31,
(In thousands)20242023
Cash flows from operating activities:
Net income$1,925,450 $2,702,697 
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment of goodwill and purchased intangible assets289,474  
Depreciation and amortization300,729 310,300 
Loss on extinguishment of debt 13,286 
Unrealized foreign exchange gain and other(16,747)(35,427)
Asset impairment charges 9,905 
Disposal of non-controlling interest 8,270 
Stock-based compensation expense154,074 121,517 
Gain on sale of business (29,687)
Deferred income taxes(124,594)(321,712)
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:
Accounts receivable141,064 (153,630)
Inventories(131,249)(604,393)
Other assets(223,625)(30,427)
Accounts payable799 (38,817)
Deferred system revenue342,749 32,822 
Deferred service revenue129,010 35,551 
Other liabilities(371,174)690,435 
Net cash provided by operating activities2,415,960 2,710,690 
Cash flows from investing activities:
Proceeds from sale of assets5,079  
Net proceeds from sale of business 75,358 
Business acquisitions, net of cash acquired(3,682)(27,144)
Capital expenditures(216,639)(262,908)
Purchases of available-for-sale and equity securities(2,154,906)(960,837)
Proceeds from sale of available-for-sale securities70,957 74,541 
Proceeds from maturity of available-for-sale securities971,085 699,363 
Purchases of trading securities(112,463)(77,759)
Proceeds from sale of trading securities102,376 70,279 
Proceeds from other investments 1,020 
Net cash used in investing activities(1,338,193)(408,087)
Cash flows from financing activities:
Payment of debt issuance costs (6,515)
Proceeds from issuance of debt, net of issuance costs735,043  
Proceeds from revolving credit facility 300,000 
Repayment of debt (1,087,250)
Common stock repurchases(1,265,480)(923,039)
Payment of dividends to stockholders(575,520)(553,046)
Issuance of common stock48,433 33,908 
Tax withholding payments related to vested and released restricted stock units(95,516)(73,704)
Contingent consideration payable and other, net(4,116)(5,027)
Purchase of non-controlling interest (4,295)
Net cash used in financing activities(1,157,156)(2,318,968)
Effect of exchange rate changes on cash and cash equivalents(309)(30)
Net decrease in cash and cash equivalents(79,698)(16,395)
Cash and cash equivalents at beginning of period1,927,865 1,584,908 
Cash and cash equivalents at end of period$1,848,167 $1,568,513 
Supplemental cash flow disclosures:
Income taxes paid, net$765,282 $451,243 
Interest paid$251,426 $198,906 
Non-cash activities:
Contingent consideration payable - financing activities$(765)$(1,849)
Dividends payable - financing activities$6,090 $5,856 
Unsettled common stock repurchase - financing activities$10,999 $15,943 
Accrued purchases of land, property and equipment - investing activities$15,378 $14,390 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
8

KLA CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)

NOTE 1 – BASIS OF PRESENTATION
Basis of Presentation. For purposes of this report, “KLA,” the “Company,” “we,” “our,” “us” or similar references mean KLA Corporation and its majority-owned subsidiaries unless the context requires otherwise. The Condensed Consolidated Financial Statements have been prepared by us pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations.
The unaudited interim Condensed Consolidated Financial Statements do not include all of the information and footnotes required by GAAP for audited financial statements. The balance sheet as of June 30, 2023 was derived from the Company’s audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, but does not include all disclosures required by GAAP for audited financial statements. The unaudited interim Condensed Consolidated Financial Statements reflect all adjustments (consisting only of normal, recurring adjustments) necessary for a fair statement of the financial position, results of operations, comprehensive income, stockholders’ equity and cash flows for the periods indicated. These Condensed Consolidated Financial Statements and notes, however, should be read in conjunction with Item 8 “Financial Statements and Supplementary Data” included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
The Condensed Consolidated Financial Statements include the accounts of KLA and its majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
The results of operations for the three and nine months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the full fiscal year ending June 30, 2024.
Management Estimates. The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP 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 dates of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Reclassifications. The Company has reclassified certain prior period balances to conform to the current year presentation. These reclassifications did not impact any prior amounts of reported total assets, total liabilities, stockholders’ equity, results of operations or cash flows.
Significant Accounting Policies. There have been no material changes to our significant accounting policies summarized in Note 1 “Description of Business and Summary of Significant Accounting Policies” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
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
9

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, net, contract assets and contract liabilities as of the indicated dates.
As ofAs of
(Dollar amounts in thousands)March 31, 2024June 30, 2023$ Change% Change
Accounts receivable, net$1,625,257 $1,753,361 $(128,104)(7)%
Contract assets$87,621 $117,137 $(29,516)(25)%
Contract liabilities$1,716,767 $1,245,007 $471,760 38 %
Our payment terms and conditions vary by contract type, although the terms generally include a requirement of payment of 70% to 90% of total contract consideration within 30 to 60 days of product shipment, with the remainder payable within 30 days of acceptance.
The change in contract assets during the nine months ended March 31, 2024 was mainly due to $98.5 million of contract assets reclassified to accounts receivable, net, as our right to consideration for these contract assets became unconditional, partially offset by $69.2 million of revenue recognized for which the payment is subject to conditions other than passage of time. Contract assets are included in other current assets on our Condensed Consolidated Balance Sheets.
The change in contract liabilities during the nine months ended March 31, 2024 was mainly due to an increase in 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 recognition in revenue of $884.0 million that was included in contract liabilities as of June 30, 2023. Contract liabilities are included in current and non-current liabilities on our Condensed Consolidated Balance Sheets.

Remaining Performance Obligations

As of March 31, 2024, we had $9.90 billion of remaining performance obligations, 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 $677.0 million as disclosed in Note 4 “Financial Statement Components” and excludes contract liabilities of $1.72 billion as described above. We expect to recognize approximately 40% to 45% of these performance obligations as revenue beyond the next 12 months, but this estimate is subject to constant change. 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.

10

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 integrated circuit (“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.
Refer to Note 18 “Segment Reporting and Geographic Information” to our Condensed Consolidated Financial Statements for information related to revenues 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” to our Condensed Consolidated Financial Statements 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 1Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2Valuations 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 3Valuations 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 nine months ended March 31, 2024.
The types of instruments valued based on quoted market prices in active markets include 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 include 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.
11

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” to our Condensed Consolidated Financial Statements 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 dates indicated below, were presented on our Condensed Consolidated Balance Sheets as follows:
Quoted Prices in Active Markets for Identical AssetsSignificant Other Observable InputsLittle or No Market Activity Inputs
As of March 31, 2024 (In thousands)Total (Level 1) (Level 2) (Level 3)
Assets
Cash equivalents:
Corporate debt securities$1,517 $ $1,517 $ 
Money market funds and other1,091,385 1,091,385   
U.S. Treasury securities35,606  35,606  
Marketable securities:
Corporate debt securities765,619  765,619  
Municipal securities40,127  40,127  
U.S. Government agency securities93,208 93,208   
U.S. Treasury securities725,509 435,647 289,862  
Equity securities29,260 29,260   
Total cash equivalents and marketable securities(1)
2,782,231 1,649,500 1,132,731  
Other current assets:
Derivative assets35,838  35,838  
Other non-current assets:
Executive Deferred Savings Plan297,915 265,969 31,946  
Total financial assets(1)
$3,115,984 $1,915,469 $1,200,515 $ 
Liabilities
Derivative liabilities$(16,716)$ $(16,716)$ 
Contingent consideration payable(67)  (67)
Total financial liabilities$(16,783)$ $(16,716)$(67)
________________
(1) Excludes cash of $457.6 million held in operating accounts and time deposits of $1.05 billion (of which $262.1 million were cash equivalents) as of March 31, 2024.
12

 
Quoted Prices in Active Markets for Identical AssetsSignificant Other Observable InputsLittle or No Market Activity Inputs
As of June 30, 2023 (In thousands)Total(Level 1)(Level 2)(Level 3)
Assets
Cash equivalents:
Money market funds and other$1,257,223 $1,257,223 $ $ 
U.S. Government agency securities3,788  3,788  
U.S. Treasury securities11,500  11,500  
Marketable securities:
Corporate debt securities502,650  502,650  
Municipal securities31,788  31,788  
U.S. Government agency securities129,784 127,715 2,069  
U.S. Treasury securities518,215 425,234 92,981  
Equity securities18,159 18,159   
Total cash equivalents and marketable securities(1)
2,473,107 1,828,331 644,776  
Other current assets:
Derivative assets35,712  35,712  
Other non-current assets:
Executive Deferred Savings Plan256,846 198,639 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.

13

NOTE 4 – FINANCIAL STATEMENT COMPONENTS
Condensed Consolidated Balance Sheets
As ofAs of
(In thousands)March 31, 2024June 30, 2023
Accounts receivable, net:
Accounts receivable, gross$1,658,872 $1,786,993 
Allowance for credit losses(33,615)(33,632)
$1,625,257 $1,753,361 
Inventories:
Customer service parts$594,953 $524,096 
Raw materials1,513,119 1,559,202 
Work-in-process674,193 578,864 
Finished goods224,788 214,622 
$3,007,053 $2,876,784 
Other current assets:
Deferred costs of revenues$242,520 $133,067 
Prepaid expenses115,377 121,204 
Contract assets87,621 117,137 
Prepaid income and other taxes76,900 64,901 
Other current assets79,052 62,419 
$601,470 $498,728 
Land, property and equipment, net:
Land$78,260 $72,287 
Buildings and leasehold improvements923,347 825,975 
Machinery and equipment1,095,517 1,016,713 
Office furniture and fixtures64,142 58,036 
Construction-in-process186,090 168,817 
2,347,356 2,141,828 
Less: accumulated depreciation(1,241,078)(1,109,987)
$1,106,278 $1,031,841 
Other non-current assets:
Executive Deferred Savings Plan(1)
$297,915 $256,846 
Operating lease right of use assets241,163 208,706 
Other non-current assets161,143 171,910 
$700,221 $637,462 
Other current liabilities:
Customer deposits$553,703 $769,000