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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 September 30, 2023
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 filer☒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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No  ☒
As of October 16, 2023, there were 135,932,316 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

INDEX
 
  Page
Number
PART IFINANCIAL INFORMATION
Item 1.
Condensed Consolidated Balance Sheets as of September 30, 2023 and June 30, 2023
Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended September 30, 2023 and 2022
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)September 30,
2023		June 30,
2023
ASSETS
Current assets:
Cash and cash equivalents$1,711,570 $1,927,865 
Marketable securities1,637,751 1,315,294 
Accounts receivable, net1,630,746 1,753,361 
Inventories3,007,705 2,876,784 
Other current assets443,019 498,728 
Total current assets8,430,791 8,372,032 
Land, property and equipment, net1,059,925 1,031,841 
Goodwill2,278,805 2,278,820 
Deferred income taxes870,472 816,899 
Purchased intangible assets, net871,999 935,303 
Other non-current assets624,849 637,462 
Total assets$14,136,841 $14,072,357 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$363,662 $371,026 
Deferred system revenue665,777 651,720 
Deferred service revenue406,940 416,606 
Other current liabilities2,381,364 2,303,490 
Total current liabilities3,817,743 3,742,842 
Long-term debt5,891,731 5,890,736 
Deferred tax liabilities505,812 529,287 
Deferred service revenue192,236 176,681 
Other non-current liabilities739,102 813,058 
Total liabilities11,146,624 11,152,604 
Commitments and contingencies (Notes 9, 14 and 15)
Stockholders’ equity:
Common stock and capital in excess of par value2,073,476 2,107,663 
Retained earnings966,179 848,431 
Accumulated other comprehensive loss(49,438)(36,341)
Total stockholders’ equity2,990,217 2,919,753 
Total liabilities and stockholders’ equity$14,136,841 $14,072,357 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
3
KLA CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended September 30,
(In thousands, except per share amounts)20232022
Revenues:
Product$1,836,664 $2,195,609 
Service560,292 528,815 
Total revenues2,396,956 2,724,424 
Costs and expenses:
Costs of revenues946,891 1,041,226 
Research and development311,214 318,515 
Selling, general and administrative239,645 253,980 
Interest expense74,234 74,395 
Loss on extinguishment of debt— 13,286 
Other expense (income), net(26,739)(47,006)
Income before income taxes851,711 1,070,028 
Provision for income taxes110,336 43,963 
Net income741,375 1,026,065 
Less: Net income attributable to non-controlling interest— 74 
Net income attributable to KLA$741,375 $1,025,991 
Net income per share attributable to KLA
Basic$5.43 $7.23 
Diluted$5.41 $7.20 
Weighted-average number of shares:
Basic136,412 141,829 
Diluted137,104 142,563 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
4
KLA CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended September 30,
(In thousands)20232022
Net income $741,375 $1,026,065 
Other comprehensive income (loss):
Currency translation adjustments:
Cumulative currency translation adjustments(6,853)(19,712)
Income tax benefit260 — 
Net change related to currency translation adjustments(6,593)(19,712)
Cash flow hedges:
Net unrealized gains (losses) arising during the period(1,481)1,768 
Reclassification adjustments for net gains included in net income(7,108)(10,175)
Income tax benefit856 1,188 
Net change related to cash flow hedges(7,733)(7,219)
Net change related to unrecognized losses and transition obligations in connection with defined benefit plans242 891 
Available-for-sale securities:
Net unrealized gains (losses) arising during the period1,244 (6,964)
Reclassification adjustments for net losses included in net income12 174 
Income tax (provision) benefit(269)1,460 
Net change related to available-for-sale securities987 (5,330)
Other comprehensive loss(13,097)(31,370)
Less: Comprehensive income attributable to non-controlling interest— 74 
Total comprehensive income attributable to KLA$728,278 $994,621 
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 

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 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
6

KLA CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended September 30,
(In thousands)20232022
Cash flows from operating activities:
Net income$741,375 $1,026,065 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization102,403 101,938 
Loss on extinguishment of debt— 13,286 
Unrealized foreign exchange loss and other9,970 1,783 
Asset impairment charges— 9,156 
Disposal of non-controlling interest— 8,270 
Stock-based compensation expense48,772 34,982 
Gain on sale of business— (29,687)
Deferred income taxes(71,322)(156,226)
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:
Accounts receivable107,018 (55,073)
Inventories(138,419)(265,530)
Other assets(7,520)45,637 
Accounts payable8,345 36,472 
Deferred system revenue14,057 (60,492)
Deferred service revenue5,901 (12,411)
Other liabilities63,160 313,375 
Net cash provided by operating activities883,740 1,011,545 
Cash flows from investing activities:
Net proceeds from sale of business— 75,358 
Business acquisitions, net of cash acquired— (27,144)
Capital expenditures(68,045)(84,352)
Purchases of available-for-sale securities(530,842)(256,793)
Proceeds from sale of available-for-sale securities7,983 26,608 
Proceeds from maturity of available-for-sale securities201,149 211,465 
Purchases of trading securities(49,958)(19,512)
Proceeds from sale of trading securities48,042 19,875 
Proceeds from other investments— 1,020 
Net cash used in investing activities(391,671)(53,475)
Cash flows from financing activities:
Payment of debt issuance costs— (6,515)
Proceeds from revolving credit facility— 300,000 
Repayment of debt— (662,250)
Common stock repurchases(455,412)(89,846)
Payment of dividends to stockholders(181,507)(187,984)
Issuance of common stock— 115 
Tax withholding payments related to vested and released restricted stock units(68,237)(54,952)
Purchase of non-controlling interest— (4,295)
Net cash used in financing activities(705,156)(705,727)
Effect of exchange rate changes on cash and cash equivalents(3,208)(17,971)
Net increase (decrease) in cash and cash equivalents(216,295)234,372 
Cash and cash equivalents at beginning of period1,927,865 1,584,908 
Cash and cash equivalents at end of period$1,711,570 $1,819,280 
Supplemental cash flow disclosures:
Income taxes paid, net$99,388 $101,061 
Interest paid$113,236 $44,216 
Non-cash activities:
Contingent consideration payable - financing activities$(920)$145 
Dividends payable - financing activities$1,853 $1,942 
Unsettled common stock repurchase - financing activities$11,000 $— 
Accrued purchases of land, property and equipment - investing activities$22,729 $34,027 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
7
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 months ended September 30, 2023 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.
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 issued Accounting Standards Update 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
None.
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.
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As ofAs of
(Dollar amounts in thousands)September 30, 2023June 30, 2023$ Change% Change
Accounts receivable, net$1,630,746 $1,753,361 $(122,615)(7)%
Contract assets$93,300 $117,137 $(23,837)(20)%
Contract liabilities$1,264,953 $1,245,007 $19,946 2 %
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 three months ended September 30, 2023 was mainly due to $69.8 million of contract assets reclassified to accounts receivable, net as our right to consideration for these contract assets became unconditional, partially offset by $46.5 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 three months ended September 30, 2023 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 $601.1 million that was included in contract liabilities as of June 30, 2023. The change in contract liabilities during the three months ended September 30, 2022 was mainly due to the recognition in revenue of $489.5 million that was included in contract liabilities as of June 30, 2022, partially offset by 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. Contract liabilities are included in current and non-current liabilities on our Condensed Consolidated Balance Sheets.

Remaining Performance Obligations

As of September 30, 2023, we had $10.85 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 $818.9 million as disclosed in Note 4 “Financial Statement Components” and excludes contract liabilities of $1.26 billion as described above. We expect to recognize approximately 40% to 50% of these performance obligations as revenue beyond the next 12 months, but this estimate is subject to constant change. The supply chain disruptions caused by the pandemic as well as elevated demand levels in recent years have led to customers agreeing to purchase equipment from us with lead times that are longer than our historical experience. More recently, we have seen the macro-driven slowdown has impacted consumers’ semiconductor device demand, causing the semiconductor industry to rebalance its supply chain and inventory levels. In response to this change, some of our customers began adjusting their capacity expansion-focused capital expenditure plans for calendar year 2023. 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 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 go 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 we are still evaluating these rules and assessing their impact on our business and operations. 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.
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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 three months ended September 30, 2023.
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.
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.
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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 Condensed Consolidated Balance Sheets as follows:
Quoted Prices in Active Markets for Identical AssetsSignificant Other Observable InputsLittle or No Market Activity Inputs
As of September 30, 2023 (In thousands)Total (Level 1) (Level 2) (Level 3)
Assets
Cash equivalents:
Money market funds and other$1,077,456 $1,077,456 $— $— 
U.S. Treasury securities12,740 — 12,740 — 
Marketable securities:
Corporate debt securities681,245 — 681,245 — 
Municipal securities30,478 — 30,478 — 
U.S. Government agency securities133,687 133,687 — — 
U.S. Treasury securities595,220 473,725 121,495 — 
Equity securities13,825 13,825 — — 
Total cash equivalents and marketable securities(1)
2,544,651 1,698,693 845,958 — 
Other current assets:
Derivative assets37,808 — 37,808 — 
Other non-current assets:
Executive Deferred Savings Plan248,455 223,621 24,834 — 
Total financial assets(1)
$2,830,914 $1,922,314 $908,600 $— 
Liabilities
Derivative liabilities$(27,682)$— $(27,682)$— 
Contingent consideration payable(5,528)— — (5,528)
Total financial liabilities$(33,210)$— $(27,682)$(5,528)
________________
(1) Excludes cash of $311.9 million held in operating accounts and time deposits of $492.8 million (of which $309.5 million were cash equivalents) as of September 30, 2023.
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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 Condensed Consolidated Balance Sheets as follows: 
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.

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NOTE 4 – FINANCIAL STATEMENT COMPONENTS
Condensed Consolidated Balance Sheets
As ofAs of
(In thousands)September 30, 2023June 30, 2023
Accounts receivable, net:
Accounts receivable, gross$1,664,280 $1,786,993 
Allowance for credit losses(33,534)(33,632)
$1,630,746 $1,753,361 
Inventories:
Customer service parts$560,088 $524,096 
Raw materials1,614,050 1,559,202 
Work-in-process635,045 578,864 
Finished goods198,522 214,622 
$3,007,705 $2,876,784 
Other current assets:
Deferred costs of revenues$126,873 $133,067 
Prepaid expenses120,553 121,204 
Contract assets93,300 117,137 
Prepaid income and other taxes33,371 64,901 
Other current assets68,922 62,419 
$443,019 $498,728 
Land, property and equipment, net:
Land$78,261 $72,287 
Buildings and leasehold improvements862,733 825,975 
Machinery and equipment1,044,335 1,016,713 
Office furniture and fixtures59,221 58,036 
Construction-in-process169,306 168,817 
2,213,856 2,141,828 
Less: accumulated depreciation(1,153,931)(1,109,987)
$1,059,925 $1,031,841 
Other non-current assets:
Executive Deferred Savings Plan(1)
$248,455 $256,846 
Operating lease right of use assets218,053 208,706 
Other non-current assets158,341 171,910 
$624,849 $637,462 
Other current liabilities:
Customer deposits$675,582 $769,000 
Income taxes payable517,768 383,012 
Compensation and benefits472,768 370,536 
Other liabilities and accrued expenses365,615 383,407 
Executive Deferred Savings Plan(1)
248,818 258,223 
Interest payable65,299 105,270 
Operating lease liabilities35,514 34,042 
$2,381,364 $2,303,490 
Other non-current liabilities:
Income taxes payable$267,185 $322,113 
Customer deposits143,339 156,874 
Operating lease liabilities138,682 138,354 
Pension liabilities60,821 63,672 
Other non-current liabilities129,075 132,045 
$739,102 $813,058 
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________________
(1)We have a non-qualified deferred compensation plan (known as “Executive Deferred Savings Plan” or “EDSP”) under which certain employees and non-employee directors may defer a portion of their compensation. The benefit associated with changes in the EDSP liability included in selling, general and administrative (“SG&A”) expense was $9.3 million and $10.3 million during the three months ended September 30, 2023 and 2022, respectively. The amount of net losses associated with changes in the EDSP assets included in SG&A expense was $9.5 million and $10.3 million during the three months ended September 30, 2023 and 2022, respectively. For additional details, refer to Note 1 “Description of Business and Summary of Significant Accounting Policies” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
Accumulated Other Comprehensive Income (Loss)
The components of Accumulated Other Comprehensive Income (Loss) (“AOCI”) as of the dates indicated below were as follows:
(In thousands)Currency Translation AdjustmentsUnrealized Gains (Losses) on Available-for-Sale SecuritiesUnrealized Gains (Losses) on DerivativesUnrealized Gains (Losses) on Defined Benefit PlansTotal
Balance as of September 30, 2023$(71,220)$(11,810)$52,211 $(18,619)$(49,438)
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 Condensed Consolidated Statements of Operations for the indicated periods were as follows (in thousands; amounts in parentheses indicate debits or reductions to earnings):
AOCI ComponentsThree Months Ended
Location in the Condensed Consolidated Statement of OperationsSeptember 30,
20232022
Unrealized gains (losses) on cash flow hedges from foreign exchange and interest rate contractsRevenues$3,396 $14,605 
Costs of revenues and operating expenses2,775 (5,367)
Interest expense937 937 
Net gains reclassified from AOCI$7,108 $10,175 
Unrealized losses on available-for-sale securitiesOther expense (income), net$(12)$(174)

The amount reclassified out of AOCI related to our defined benefit pension plans that was recognized as a component of net periodic cost for the three months ended September 30, 2023 and 2022 was $0.3 million and $0.4 million, respectively. For additional details, refer to Note 13 “Employee Benefit Plans” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
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NOTE 5 – MARKETABLE SECURITIES
The amortized cost and fair value of marketable securities as of the dates indicated below were as follows:
As of September 30, 2023 (In thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Corporate debt securities$687,213 $48 $(6,016)$681,245 
Money market funds and other1,077,456 — — 1,077,456 
Municipal securities31,032 2 (556)30,478 
U.S. Government agency securities134,563 — (876)133,687 
U.S. Treasury securities615,592 5 (7,637)607,960 
Equity securities(1)
3,211 10,614 — 13,825 
Subtotal2,549,067 10,669 (15,085)2,544,651 
Add: Time deposits(2)
492,767 — — 492,767 
Less: Cash equivalents1,399,666 1 — 1,399,667 
Marketable securities$1,642,168 $10,668 $(15,085)$1,637,751 
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 other1,257,223 — — 1,257,223 
Municipal securities32,525 — (737)31,788 
U.S. Government agency securities134,486 4 (918)133,572 
U.S. Treasury securities538,487 10 (8,782)529,715 
Equity securities(1)
3,211 14,948 — 18,159 
Subtotal2,474,443 15,014 (16,350)2,473,107 
Add: Time deposits(2)
471,439 — — 471,439 
Less: Cash equivalents1,629,248 4 — 1,629,252 
Marketable securities$1,316,634 $15,010 $(16,350)$1,315,294 
________________
(1) Unrealized gains on equity securities included in our portfolio include the initial fair value adjustment recorded upon a security becoming marketable.
(2) Time deposits excluded from fair value measurements.
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 September 30, 2023, we had 591 investments in a gross 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.
As of September 30, 2023Less than 12 Months12 Months or GreaterTotal
(In thousands)Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses
Corporate debt securities$463,017 $(2,772)$165,161 $(3,244)$628,178 $(6,016)
Municipal securities11,480 (147)14,834 (409)26,314 (556)
U.S. Government agency securities112,180 (736)19,667 (140)131,847 (876)
U.S. Treasury securities305,758 (2,456)249,795 (5,181)555,553 (7,637)
Total$892,435 $(6,111)$449,457 $(8,974)$1,341,892 $(15,085)
15
As of June 30, 2023Less than 12 Months12 Months or GreaterTotal
(In thousands)Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses		Fair ValueGross
Unrealized
Losses
Corporate debt securities$310,613 $(2,242)$161,263 $(3,671)$471,876 $(5,913)
Municipal securities9,011 (199)17,253 (538)26,264 (737)
U.S. Government agency securities80,793 (459)36,406 (459)117,199 (918)
U.S. Treasury securities288,376 (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 Condensed Consolidated Balance Sheets, as of the date indicated below were as follows:
As of September 30, 2023 (In thousands)Amortized CostFair Value
Due within one year$846,346 $852,255 
Due after one year through three years795,822 785,496 
Total$1,642,168 $1,637,751 
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 for the three months ended September 30, 2023 and 2022 were immaterial.
NOTE 6 - BUSINESS COMBINATIONS AND DISPOSITIONS
Business Combinations
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.
We have included the financial results of the acquisition in our Condensed Consolidated Financial Statements from the acquisition date, and these results were not material to our Condensed Consolidated Financial Statements. The goodwill recorded as a result of the above acquisition was not deductible for tax purposes.
As of September 30, 2023, we had $5.5 million of contingent consideration recorded for the acquisitions completed during our fiscal year ended June 30, 2019, all of which is classified as a current liability on the Condensed Consolidated Balance Sheet.
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.
For additional details of business combinations and assets held for sale, refer to Note 6 “Business Combinations and Dispositions” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
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. We have three reportable segments and five operating segments. The operating
16
segments are determined to be the same as reporting units. For additional details, refer to Note 18 “Segment Reporting and Geographic Information” to our Condensed Consolidated Financial Statements. The following table presents changes in goodwill carrying value during the three months ended September 30, 2023:
(In thousands)Wafer Inspection and Patterning
Global Service and Support (“GSS”)
Specialty Semiconductor ProcessPrinted Circuit Board (“PCB”) and DisplayComponent InspectionTotal
Balance as of June 30, 2023$727,130 $25,908 $681,858 $830,349 $13,575 $2,278,820 
Foreign currency adjustments(15)— — — — (15)
Balance as of September 30, 2023$727,115 $25,908 $681,858 $830,349 $13,575 $2,278,805 
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.
As of September 30, 2023, there have been no significant events or circumstances affecting the valuation of goodwill subsequent to the annual assessment performed in the third quarter of the fiscal year ended June 30, 2023. There was no goodwill impairment as a result of that assessment. For additional details, refer to Note 7, "Goodwill and Purchased Intangible Assets" to our Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

Purchased Intangible Assets
The components of purchased intangible assets as of the dates indicated below were as follows:
(In thousands) As of September 30, 2023As 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 $887,902 $664,172 $1,536,826 $841,815 $695,011 
Customer relationships
4-9
358,567 214,609 143,958 358,567 205,037