KLA Tencor Earnings 2020-12-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

klac-20201231

Table of Contents

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 December 31, 2020


☐			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)

(408) 875-3000

(Registrant’s telephone number, including area code)

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

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 January 15, 2021, there were 154,074,651 shares of the registrant’s Common Stock, $0.001 par value, outstanding.

Table of Contents

INDEX


		Page Number

PART I	FINANCIAL INFORMATION
Item 1	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of December 31, 2020 and June 30, 2020	3
	Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended December 31, 2020 and 2019	4
	Condensed Consolidated Statements of Comprehensive Income for the Three Months and Six Months Ended December 31, 2020 and 2019	5
	Condensed Consolidated Statements of Stockholders' Equit y for t he Three Months and Six Months Ended December 31, 2020 and 2019	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2020 and 2019	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4	Controls and Procedures	54

PART II	OTHER INFORMATION
Item 1	Legal Proceedings	55
Item 1A	Risk Factors	55
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 3	Defaults Upon Senior Securities	73
Item 4	Mine Safety Disclosures	73
Item 5	Other Information	73
Item 6	Exhibits	74

SIGNATURES		75

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

KLA CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)


(In thousands)	December 31, 2020		June 30, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	1,431,466	$	1,234,409
Marketable securities	865,064		746,063
Accounts receivable, net	1,219,189		1,107,413
Inventories	1,420,618		1,310,985
Other current assets	286,617		324,675
Total current assets	5,222,954		4,723,545
Land, property and equipment, net	594,185		519,824
Goodwill	2,045,445		2,045,402
Deferred income taxes	258,734		236,797
Purchased intangible assets, net	1,289,843		1,391,413
Other non-current assets	403,483		362,979
Total assets	$	9,814,644	$	9,279,960
LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	262,496	$	264,280
Deferred system revenue	274,642		336,237
Deferred service revenue	239,618		233,493
Short-term debt	20,000		—
Other current liabilities	1,223,356		865,776
Total current liabilities	2,020,112		1,699,786
Non-current liabilities:
Long-term debt	3,441,465		3,469,670
Deferred tax liabilities	646,028		660,885
Deferred service revenue	88,769		96,325
Other non-current liabilities	667,964		672,284
Total liabilities	6,864,338		6,598,950
Commitments and contingencies (Notes 9, 14 and 15)
Stockholders’ equity:
Common stock and capital in excess of par value	2,104,190		2,090,268
Retained earnings	903,696		654,930
Accumulated other comprehensive income (loss)	(72,704)		(79,774)
Total KLA stockholders’ equity	2,935,182		2,665,424
Non-controlling interest in consolidated subsidiaries	15,124		15,586
Total stockholders’ equity	2,950,306		2,681,010
Total liabilities and stockholders’ equity	$	9,814,644	$	9,279,960

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

Table of Contents

KLA CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended				Six Months Ended
	December 31,				December 31,
(In thousands, except per share amounts)	2020		2019		2020		2019
Revenues:
Product	$	1,238,023	$	1,144,550	$	2,383,518	$	2,202,525
Service	412,847		364,903		805,972		720,342
Total revenues	1,650,870		1,509,453		3,189,490		2,922,867
Costs and expenses:
Costs of revenues	669,733		633,618		1,290,295		1,237,859
Research and development	229,064		220,751		448,102		431,331
Selling, general and administrative	181,909		192,253		354,540		380,598

Interest expense	38,880		40,472		78,266		80,822

Other expense (income), net	3,882		(2,568)		7,079		(4,186)
Income before income taxes	527,402		424,927		1,011,208		796,443
Provision for income taxes	70,419		44,622		134,083		69,742

Net income	456,983		380,305		877,125		726,701
Less: Net loss attributable to non-controlling interest	(268)		(250)		(693)		(379)
Net income attributable to KLA	$	457,251	$	380,555	$	877,818	$	727,080
Net income per share attributable to KLA
Basic	$	2.96	$	2.42	$	5.67	$	4.60
Diluted	$	2.94	$	2.40	$	5.62	$	4.56
Weighted-average number of shares:
Basic	154,273		157,290		154,777		157,994
Diluted	155,560		158,620		156,057		159,314

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

Table of Contents

KLA CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended				Six Months Ended
	December 31,				December 31,
(In thousands)	2020		2019		2020		2019
Net income	$	456,983	$	380,305	$	877,125	$	726,701
Other comprehensive income (loss):
Currency translation adjustments:
Cumulative currency translation adjustments	8,901		2,844		14,341		406
Income tax (provision) benefit	(787)		(247)		(1,190)		146
Net change related to currency translation adjustments	8,114		2,597		13,151		552
Cash flow hedges:
Net unrealized gains (losses) arising during the period	(1,357)		2,290		(2,275)		1,548
Reclassification adjustments for net (gains) losses included in net income	1,115		125		1,061		1,652
Income tax (provision) benefit	52		(412)		260		(436)
Net change related to cash flow hedges	(190)		2,003		(954)		2,764
Net change related to unrecognized losses and transition obligations in connection with defined benefit plans	(379)		(51)		(3,498)		678
Available-for-sale securities:
Net unrealized gains (losses) arising during the period	(911)		616		(1,862)		1,799
Reclassification adjustments for net (gains) losses included in net income	(111)		82		(212)		86
Income tax (provision) benefit	219		(150)		445		392
Net change related to available-for-sale securities	(803)		548		(1,629)		2,277
Other comprehensive income (loss)	6,742		5,097		7,070		6,271
Less: Comprehensive loss attributable to non-controlling interest	(268)		(250)		(693)		(379)
Total comprehensive income attributable to KLA	$	463,993	$	385,652	$	884,888	$	733,351

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

Table of Contents

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 Stockholder's Equity		Non- Controlling Interest		Total Stockholders' Equity
(In thousands, except per share amounts)	Shares	Amount
Balance as of June 30, 2020	155,461	$	2,090,268	$	654,930	$	(79,774)	$	2,665,424	$	15,586	$	2,681,010
Adoption of ASC 326	—	—		(5,530)		—		(5,530)		—		(5,530)
Net income attributable to KLA	—	—		420,567		—		420,567		—		420,567




Other comprehensive income	—	—		—		328		328		—		328
Net loss attributable to non-controlling interest	—	—		—		—		—		(425)		(425)


Net issuance under employee stock plans	172	(25,145)		—		—		(25,145)		—		(25,145)
Repurchase of common stock	(1,027)	(19,400)		(174,497)		—		(193,897)		—		(193,897)
Cash dividends ($0.90 per share) and dividend equivalents declared	—	—		(141,555)		—		(141,555)		—		(141,555)

Stock-based compensation expense		26,992		—		—		26,992		—		26,992
Balance as of September 30, 2020	154,606	2,072,715		753,915		(79,446)		2,747,184		15,161		2,762,345
Net income attributable to KLA	—	—		457,251		—		457,251		—		457,251




Other comprehensive income	—	—		—		6,742		6,742		—		6,742
Net loss attributable to non-controlling interest	—	—		—		—		—		(268)		(268)


Net issuance under employee stock plans	329	15,356		—		—		15,356		—		15,356
Repurchase of common stock	(774)	(10,477)		(167,015)		—		(177,492)		—		(177,492)
Cash dividends ($0.90 per share) and dividend equivalents declared	—	—		(140,455)		—		(140,455)		—		(140,455)

Stock-based compensation expense	—	26,596		—		—		26,596		231		26,827
Balance as of December 31, 2020	154,161	$	2,104,190	$	903,696	$	(72,704)	$	2,935,182	$	15,124	$	2,950,306


	Common Stock and Capital in Excess of Par Value			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total KLA Stockholder's Equity		Non- Controlling Interest		Total Stockholders' Equity
(In thousands, except per share amounts)	Shares	Amount
Balance as of June 30, 2019	159,475	$	2,017,312	$	714,825	$	(73,029)	$	2,659,108	$	18,585	$	2,677,693
Net income attributable to KLA	—	—		346,525		—		346,525		—		346,525




Other comprehensive income	—	—		—		1,174		1,174		—		1,174
Net loss attributable to non-controlling interest	—	—		—		—		—		(129)		(129)
Net issuance under employee stock plans	281	(23,423)		—		—		(23,423)		—		(23,423)
Repurchase of common stock	(1,659)	(20,988)		(207,508)		—		(228,496)		—		(228,496)
Cash dividends ($0.75 per share) and dividend equivalents declared	—	—		(120,669)		—		(120,669)		—		(120,669)
Stock-based compensation expense	—	26,944		—		—		26,944		—		26,944
Balance as of September 30, 2019	158,097	1,999,845		733,173		(71,855)		2,661,163		18,456		2,679,619
Net income attributable to KLA	—	—		380,555		—		380,555		—		380,555
Other comprehensive income	—	—		—		5,097		5,097		—		5,097
Net loss attributable to non-controlling interest	—	—		—		—		—		(250)		(250)
Net issuance under employee stock plans	442	12,262		—		—		12,262		—		12,262
Repurchase of common stock	(1,690)	(21,375)		(259,218)		—		(280,593)		—		(280,593)
Cash dividends ($0.85 per share) and dividend equivalents declared	—	—		(135,509)		—		(135,509)		—		(135,509)
Stock-based compensation expense	—	26,789		—		—		26,789		—		26,789
Balance as of December 31, 2019	156,849	$	2,017,521	$	719,001	$	(66,758)	$	2,669,764	$	18,206	$	2,687,970

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

Table of Contents

KLA CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended
	December 31,
(In thousands)	2020		2019
Cash flows from operating activities:
Net income	$	877,125	$	726,701
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization	164,323		187,122

Loss (gain) on unrealized foreign exchange and other	(18,570)		4,763
Asset impairment charges	865		2,581
Stock-based compensation expense	53,819		53,733
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:
Accounts receivable	(117,189)		(201,896)
Inventories	(112,206)		(6,568)
Other assets</

Price	158.48	EPS	7
Shares	160	P/E	23
MCap	25,378	P/FCF	26
Net Debt	2,462	EBIT	1,403
TEV	27,839	TEV/EBIT	20
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-12-31	Filed 2021-02-04
10-Q	2020-09-30	Filed 2020-10-30
10-K	2020-06-30	Filed 2020-08-10
10-Q	2020-03-31	Filed 2020-05-06
10-Q	2019-12-31	Filed 2020-02-05
10-Q	2019-09-30	Filed 2019-10-31
10-K	2019-06-30	Filed 2019-08-16
10-Q	2019-03-31	Filed 2019-05-08
10-Q	2018-12-31	Filed 2019-01-29
10-Q	2018-09-30	Filed 2018-10-31
10-K	2018-06-30	Filed 2018-08-06
10-Q	2018-03-31	Filed 2018-04-27
10-Q	2017-12-31	Filed 2018-01-26
10-Q	2017-09-30	Filed 2017-10-27
10-K	2017-06-30	Filed 2017-08-04
10-Q	2017-03-31	Filed 2017-04-28
10-Q	2016-12-31	Filed 2017-01-27
10-Q	2016-09-30	Filed 2016-10-20
10-K	2016-06-30	Filed 2016-08-05
10-Q	2016-03-31	Filed 2016-04-26
10-Q	2015-12-31	Filed 2016-01-28
10-Q	2015-09-30	Filed 2015-10-22
10-K	2015-06-30	Filed 2015-08-07
10-Q	2015-03-31	Filed 2015-04-24
10-Q	2014-12-31	Filed 2015-01-23
10-Q	2014-09-30	Filed 2014-10-24
10-K	2014-06-30	Filed 2014-08-08
10-Q	2014-03-31	Filed 2014-04-25
10-Q	2013-12-31	Filed 2014-01-24
10-Q	2013-09-30	Filed 2013-10-25
10-K	2013-06-30	Filed 2013-08-08
10-Q	2013-03-31	Filed 2013-04-26
10-Q	2012-12-31	Filed 2013-01-25
10-Q	2012-09-30	Filed 2012-10-26
10-K	2012-06-30	Filed 2012-08-06
10-Q	2012-03-31	Filed 2012-04-27
10-Q	2011-12-31	Filed 2012-01-27
10-Q	2011-09-30	Filed 2011-10-28
10-K	2011-06-30	Filed 2011-08-05
10-Q	2011-03-31	Filed 2011-04-29
10-Q	2010-12-31	Filed 2011-01-28
10-K	2010-06-30	Filed 2010-08-06
10-Q	2010-03-31	Filed 2010-04-30
10-Q	2009-12-31	Filed 2010-01-29

8-K	2020-11-04
8-K	2020-10-28
8-K	2020-08-06
8-K	2020-08-03
8-K	2020-05-07
8-K	2020-05-05
8-K	2020-02-28
8-K	2020-02-19
8-K	2020-02-10
8-K	2020-02-04
8-K	2019-11-05
8-K	2019-10-30
8-K	2019-08-16
8-K	2019-08-05
8-K	2019-08-01
8-K	2019-07-15
8-K	2019-06-10
8-K	2019-05-06
8-K	2019-05-03
8-K	2019-03-20
8-K	2019-03-13
8-K	2019-02-14
8-K	2019-01-31
8-K	2019-01-29
8-K	2018-11-08
8-K	2018-10-29
8-K	2018-08-13
8-K	2018-08-02
8-K	2018-07-25
8-K	2018-07-12
8-K	2018-06-18
8-K	2018-06-04
8-K	2018-05-11
8-K	2018-05-02
8-K	2018-04-26
8-K	2018-03-18
8-K	2018-02-14
8-K	2018-02-01
8-K	2018-01-25

EX-31.1	klac10-qex311123120.htm
EX-31.2	klac10-qex312123120.htm
EX-32	klac10-qex32123120.htm

KLAC 10Q Quarterly Report

KLA Tencor Earnings 2020-12-31