Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Consolidated Balance Sheets as of June 30, 2025 and 2024			50

Consolidated Statements of Operations for each of the three years in the period ended June 30, 2025			51

Consolidated Statements of Comprehensive Income for each of the three years in the period ended June 30, 2025			52

Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended June 30, 2025			53

Consolidated Statements of Cash Flows for each of the three years in the period ended June 30, 2025			54

Notes to Consolidated Financial Statements			55

Report of Independent Registered Public Accounting Firm (PCAOB ID 238)			95

Schedule II Valuation and Qualifying Accounts for the three years in the period ended June 30, 2025			97

KLA CORPORATION

Consolidated Balance Sheets


	As of June 30,
(In thousands, except par value)	2025		2024
ASSETS
Current assets:
Cash and cash equivalents	$	2,078,908	$	1,977,129
Marketable securities	2,415,715		2,526,866
Accounts receivable, net	2,263,915		1,833,041
Inventories	3,212,149		3,034,781

Other current assets	728,102		659,327
Total current assets	10,698,789		10,031,144
Land, property and equipment, net	1,252,775		1,109,968
Goodwill, net	1,792,193		2,015,726
Deferred income taxes	1,105,770		915,241
Purchased intangible assets, net	444,785		668,764
Other non-current assets	773,614		692,723
Total assets	$	16,067,926	$	15,433,566
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	458,509	$	359,487
Deferred system revenue	816,834		985,856
Deferred service revenue	548,011		501,926

Current portion of long-term debt	—		749,936
Other current liabilities	2,262,441		2,063,569
Total current liabilities	4,085,795		4,660,774
Long-term debt	5,884,257		5,880,199
Deferred tax liabilities	446,945		486,690
Deferred service revenue	348,844		294,460
Other non-current liabilities	609,632		743,115
Total liabilities	11,375,473		12,065,238
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, 281,176 and 280,649 shares issued, 132,023 and 134,425 shares outstanding, as of June 30, 2025 and June 30, 2024, respectively	132		134
Capital in excess of par value	2,511,790		2,279,999
Retained earnings	2,179,330		1,137,270
Accumulated other comprehensive income (loss)	1,201		(49,075)


Total stockholders’ equity	4,692,453		3,368,328
Total liabilities and stockholders’ equity	$	16,067,926	$	15,433,566

See accompanying notes to Consolidated Financial Statements.

KLA CORPORATION

Consolidated Statements of Operations


	Year Ended June 30,
(In thousands, except per share amounts)	2025		2024		2023
Revenues:
Product	$	9,472,854	$	7,482,679	$	8,379,025
Service	2,683,308		2,329,568		2,117,031
Total revenues	12,156,162		9,812,247		10,496,056
Costs and expenses:
Costs of revenues	4,751,867		3,928,073		4,218,307
Research and development	1,360,334		1,278,981		1,296,727
Selling, general and administrative	1,029,734		969,509		986,326
Impairment of goodwill and purchased intangible assets	239,100		289,474		—
Interest expense	302,166		311,253		296,940
Loss on extinguishment of debt	—		—		13,286
Other expense (income), net	(171,487)		(155,075)		(104,720)
Income before income taxes	4,644,448		3,190,032		3,789,190
Provision for income taxes	582,805		428,136		401,839
Net income	4,061,643		2,761,896		3,387,351
Less: Net income attributable to non-controlling interest	—		—		74
Net income attributable to KLA	$	4,061,643	$	2,761,896	$	3,387,277
Net income per share attributable to KLA
Basic	$	30.53	$	20.41	$	24.28
Diluted	$	30.37	$	20.28	$	24.15
Weighted-average number of shares:
Basic	133,030		135,345		139,483
Diluted	133,750		136,187		140,235

See accompanying notes to Consolidated Financial Statements.

KLA CORPORATION

Consolidated Statements of Comprehensive Income


	Year Ended June 30,
(In thousands)	2025		2024		2023
Net income	$	4,061,643	$	2,761,896	$	3,387,351
Other comprehensive income (loss):
Currency translation adjustments:
Cumulative currency translation adjustments	17,820		(11,763)		(22,288)
Income tax benefit	749		544		1,547
Net change related to currency translation adjustments	18,569		(11,219)		(20,741)
Cash flow hedges:
Net unrealized gains arising during the period	36,726		9,737		30,025
Reclassification adjustments for net gains included in net income	(15,429)		(25,904)		(29,058)
Income tax (provision) benefit	(2,742)		2,466		2,141
Net change related to cash flow hedges	18,555		(13,701)		3,108
Net change related to unrecognized losses and transition obligations in connection with defined benefit plans	3,706		3,043		6,074
Available-for-sale securities:
Net unrealized gains arising during the period	12,090		11,527		2,459
Reclassification adjustments for net (gains) losses included in net income	(59)		103		986
Income tax provision	(2,585)		(2,487)		(756)
Net change related to available-for-sale securities	9,446		9,143		2,689
Other comprehensive income (loss)	50,276		(12,734)		(8,870)
Less: Comprehensive income attributable to non-controlling interest	—		—		74
Total comprehensive income attributable to KLA	$	4,111,919	$	2,749,162	$	3,378,407

See accompanying notes to Consolidated Financial Statements.

KLA CORPORATION

Consolidated Statements of Stockholders’ Equity


	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)	Shares	Amount
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
Net income attributable to KLA	—	—		4,061,643		—		4,061,643		—		4,061,643
Other comprehensive income	—	—		—		50,276		50,276		—		50,276
Net issuance under employee stock plans	605	18,853		—		—		18,853		—		18,853
Repurchase of common stock	(3,007)	(52,075)		(2,113,560)		—		(2,165,635)		—		(2,165,635)
Cash dividends ($6.75 per share) and dividend equivalents declared	—	—		(906,023)		—		(906,023)		—		(906,023)
Stock-based compensation expense	—	265,011		—		—		265,011				265,011
Balances as of June 30, 2025	132,023	$	2,511,922	$	2,179,330	$	1,201	$	4,692,453	$	—	$	4,692,453

See accompanying notes to Consolidated Financial Statements.

KLA CORPORATION

Consolidated Statements of Cash Flows


	Year Ended June 30,
(In thousands)	2025		2024		2023
Cash flows from operating activities:
Net income	$	4,061,643	$	2,761,896	$	3,387,351
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment of goodwill and purchased intangible assets	239,100		289,474		9,905
Depreciation and amortization	394,088		401,730		415,113
Loss on extinguishment of debt	—		—		13,286

Unrealized foreign exchange (gain) loss and other	14,974		(12,533)		(17,825)
Asset impairment charges	—		11,307		—
Disposal of non-controlling interest	—		—		8,270
Stock-based compensation expense	265,011		212,695		171,424
Net gain on sale of assets	(161)		—		—
Gain on sale of business	—		—		(29,687)
Deferred income taxes	(246,577)		(155,228)		(298,145)

Settlement of treasury lock agreement	—		415		—
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:
Accounts receivable	(367,897)		(80,894)		(48,534)
Inventories	(155,170)		(164,092)		(749,047)
Other assets	(10,459)		(289,509)		(121,018)
Accounts payable	33,789		24,976		(144,661)
Deferred system revenue	(169,027)		334,136		150,750
Deferred service revenue	100,460		203,106		88,223

Other liabilities	(77,871)		(228,904)		834,400
Net cash provided by operating activities	4,081,903		3,308,575		3,669,805
Cash flows from investing activities:

Proceeds from sale of assets	161		5,079		—
Net proceeds from sale of business	—		—		75,358
Business acquisitions, net of cash acquired	—		(3,682)		(27,144)
Acquisition of intellectual property	(4,950)		—		—
Capital expenditures	(335,259)		(277,384)		(341,591)
Proceeds from capital-related government assistance	6,263		—		—
Purchases of available-for-sale and equity securities	(2,772,578)		(2,756,987)		(1,441,933)
Proceeds from sale of available-for-sale securities	459,620		107,773		124,620
Proceeds from maturity of available-for-sale securities	2,455,815		1,459,864		1,134,182
Purchases of trading securities	(118,288)		(134,098)		(96,611)
Proceeds from sale of trading securities	105,751		121,020		89,528
Proceeds from other investments	984		1,430		1,020
Net cash used in investing activities	(202,481)		(1,476,985)		(482,571)
Cash flows from financing activities:
Payment of debt issuance costs	—		—		(6,515)
Proceeds from issuance of debt, net of issuance costs	—		735,043		—
Proceeds from revolving credit facility, net of costs	—		—		300,000
Repayment of debt	(750,000)		—		(1,087,250)
Common stock repurchases	(2,149,946)		(1,735,746)		(1,311,864)

Payment of dividends to stockholders	(904,594)		(773,041)		(732,556)

Issuance of common stock	151,514		144,934		124,847
Tax withholding payments related to vested and released restricted stock units	(132,661)		(143,024)		(94,806)
Contingent consideration payable and other, net	—		(4,183)		(17,850)

Purchase of non-controlling interest	—		—		(4,295)
Net cash used in financing activities	(3,785,687)		(1,776,017)		(2,830,289)
Effect of exchange rate changes on cash and cash equivalents	8,044		(6,309)		(13,988)
Net increase in cash and cash equivalents	101,779		49,264		342,957
Cash and cash equivalents at beginning of period	1,977,129		1,927,865		1,584,908
Cash and cash equivalents at end of period	$	2,078,908	$	1,977,129	$	1,927,865
Supplemental cash flow disclosures:
Income taxes paid, net	$	886,937	$	830,835	$	495,101
Interest paid, net of capitalized interest	$	292,771	$	276,597	$	223,955
Non-cash activities:

Contingent consideration payable - financing activities	$	—	$	(765)	$	(1,878)
Dividends payable - financing activities	$	8,660	$	8,043	$	7,903

Unsettled common stock repurchase - financing activities	$	5,500	$	5,500	$	11,000

Accrued purchases of land, property and equipment - investing activities	$	25,740	$	13,849	$	18,445

See accompanying notes to Consolidated Financial Statements.

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) (“AOCI”). 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, 2025, 2024 and 2023.

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.

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 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, 2025 and 2024. 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, 2025, 2024 and 2023 was $192.0 million, $181.7 million and $154.2 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 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.

Two customers and one customer on an individual basis accounted for greater than 10% of accounts receivable, net as of June 30, 2025 and 2024, respectively.

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 AOCI.

Our manufacturing subsidiaries in Singapore, Israel, Germany, and the U. K. 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 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 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. Cash flows associated with these derivatives are classified as cash flows from operating activities in the Consolidated Statement of Cash Flows to align with the underlying items.

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 and PCBs, 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;
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 or technology, 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 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 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” or “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 associated with changes in the liability included in SG&A expense was $41.5 million, $37.2 million and $27.6 million for the fiscal years ended June 30, 2025, 2024 and 2023, 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 included in SG&A expense were $40.7 million, $36.6 million and $27.6 million for the fiscal years ended June 30, 2025, 2024 and 2023, 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.

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 introduced the Global Intangible Low-Taxed Income (“GILTI”) provisions, 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. The One Big Beautiful Bill Act (“OBBBA”) renames GILTI to Net Controlled Foreign Corporation (“CFC”) Tested Income (“NCTI”), modifies the general effective tax rate on GILTI to 12.6% and removes the deemed return on tangible assets deduction. 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.

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.

Government Incentives. We occasionally receive incentives from governmental entities related to capital expenditures, expenses and other activities, primarily in the form of cash grants and tax credits. Government assistance is recognized when there is reasonable assurance that (1) the Company will comply with relevant conditions; and (2) the assistance will be received. Government incentives related to the acquisition or construction of property, plant and equipment are recognized as a reduction in the carrying amounts of the related assets and reduce depreciation expense over the useful lives of the assets. Incentives related to specific operating activities are offset against the related expense in the period the expense is incurred.

Collaborative Arrangements. We assess joint development arrangements to determine whether they are in the scope of ASC 808, Collaborative Arrangements. In our assessment, we evaluate whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on commercial success of the activities. This assessment is performed throughout the life of such arrangement with consideration given to the changes in the roles and responsibilities between the parties. During the quarter ended September 30, 2024, we entered into a joint development arrangement within the scope of ASC 808 to develop and commercialize a new product.

Recent Accounting Pronouncements

Recently Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 ended 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 adopted ASU 2023-07 for the fiscal year ended June 30, 2025 on a retrospective basis.

Updates Not Yet Effective

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.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). The new guidance requires enhanced disclosures about certain costs and expenses. This standard update is effective for our annual reports beginning in the fiscal year ending June 30, 2028, and interim period reports beginning in the first quarter of the fiscal year ending June 30, 2029. Early adoption is permitted either on a prospective or retrospective basis. We are currently evaluating the impact of this ASU on our disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets. The new guidance allows companies to apply a practical expedient when estimating credit losses on current accounts receivable and contract assets. The standard update is effective for our annual and interim reports beginning in the first quarter of our fiscal year ending June 30, 2027. Early adoption is permitted for periods in which financial statements have not yet been issued or made ready for issuance on a prospective basis. We are currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.

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 of		As of		As of
(In thousands, except for percentages)	June 30, 2025		June 30, 2024		June 30, 2023		Change in Fiscal 2025				Change in Fiscal 2024
Accounts receivable, net	$	2,263,915	$	1,833,041	$	1,753,361	$	430,874	24	%	$	79,680	5	%
Contract assets	$	105,081	$	69,259	$	117,137	$	35,822	52	%	$	(47,878)	(41)	%
Contract liabilities	$	1,713,689	$	1,782,242	$	1,245,007	$	(68,553)	(4)	%	$	537,235	43	%

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, 2025 was mainly due to $94.4 million of revenue recognized for which the payment is subject to conditions other than the passage of time, partially offset by $58.8 million of contract assets reclassified to net accounts receivable as our right to consideration for these contract assets became unconditional. 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, 2025 was mainly due to the recognition in revenue of $1.39 billion that was included in contract liabilities as of June 30, 2024, partially offset by 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 Consolidated Balance Sheet.

Remaining Performance Obligations

As of June 30, 2025, we had $7.86 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 $643.2 million as disclosed in Note 4 “Financial Statement Components” and excludes contract liabilities of $1.71 billion as disclosed above. We expect to recognize approximately 71% to 76% of these performance obligations as revenue in the next 12 months, 20% to 25% in the subsequent 12 months and the remainder thereafter, but this estimate is subject to constant change.

The amount of our RPO and timing of revenue recognition of our RPO are evaluated quarterly and are largely driven by multiple variables, many of which are beyond our control, such as: changes in regulations, 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 and supply chain constraints. 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.

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.
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 18 “Segment Reporting and Geographic Information” 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” 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 and, for goodwill, also annually.

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.

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.

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 Consolidated Balance Sheets as follows:


As of June 30, 2025 (In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets
Cash equivalents:
Municipal securities	$	6,120	$	—	$	6,120
Corporate debt securities	1,498		—		1,498
Money market funds and other	1,531,022		1,531,022		—
U.S. Government agency securities	9,955		—		9,955
U.S. Treasury securities	9,981		—		9,981


Marketable securities:
Corporate debt securities	960,148		—		960,148
Municipal securities	51,453		—		51,453


U.S. Government agency securities	106,881		106,881		—
U.S. Treasury securities	877,578		802,682		74,896
Equity securities	23,962		23,962		—

Total cash equivalents and marketable securities(1)	3,578,598		2,464,547		1,114,051
Other current assets:
Derivative assets	59,503		—		59,503
Other non-current assets:
EDSP	349,530		336,090		13,440
Total financial assets(1)	$	3,987,631	$	2,800,637	$	1,186,994
Liabilities
Derivative liabilities	$	(28,615)	$	—	$	(28,615)


Total financial liabilities	$	(28,615)	$	—	$	(28,615)

(1)Excludes cash of $437.8 million held in operating accounts and time deposits of $478.2 million (of which $82.5 million were cash equivalents) as of June 30, 2025.


As of June 30, 2024 (In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
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.

We did not have any financial assets or liabilities measured at fair value on a recurring basis within Level 3 fair value measurements as of June 30, 2025 or June 30, 2024.

NOTE 4 — FINANCIAL STATEMENT COMPONENTS

Consolidated Balance Sheets


	As of June 30,
(In thousands)	2025		2024
Accounts receivable, net:
Accounts receivable, gross	$	2,297,930	$	1,865,823
Allowance for credit losses	(34,015)		(32,782)
	$	2,263,915	$	1,833,041
Inventories:
Customer service parts	$	600,769	$	589,751
Raw materials	1,491,786		1,485,400
Work-in-process	833,933		700,895
Finished goods	285,661		258,735
	$	3,212,149	$	3,034,781
Other current assets:
Deferred costs of revenues	$	223,829	$	279,879
Prepaid expenses	201,053		124,969
Contract assets	105,081		69,259

Prepaid income and other taxes	64,704		102,398
Other current assets	133,435		82,822
	$	728,102	$	659,327
Land, property and equipment, net:
Land	$	86,677	$	78,260
Buildings and leasehold improvements	1,132,176		919,919
Machinery and equipment	1,238,599		1,116,793
Office furniture and fixtures	73,993		64,480
Construction-in-process	207,807		215,006
	2,739,252		2,394,458
Less: accumulated depreciation	(1,486,477)		(1,284,490)
	$	1,252,775	$	1,109,968
Other non-current assets:
EDSP	$	349,530	$	303,365
Operating lease ROU assets	269,714		231,812
Other non-current assets	154,370		157,546
	$	773,614	$	692,723
Other current liabilities:
Customer deposits	$	636,369	$	645,893
Compensation and benefits	418,515		371,713
EDSP	350,426		303,088
Income taxes payable	167,262		146,740
Interest payable	110,056		128,727
Operating lease liabilities	45,192		36,391

Other liabilities and accrued expenses	534,621		431,017
	$	2,262,441	$	2,063,569
Other non-current liabilities:
Income taxes payable	$	221,808	$	291,106
Operating lease liabilities	158,833		153,117
Pension liabilities	51,750		51,778
Customer deposits	6,823		99,794
Other non-current liabilities	170,418		147,320
	$	609,632	$	743,115

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, 2025	$	(57,277)	$	5,792	$	64,798	$	(12,112)	$	1,201

Balance as of June 30, 2024	$	(75,846)	$	(3,654)	$	46,243	$	(15,818)	$	(49,075)

The effects on net income of amounts reclassified from AOCI to our 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		2025			2024			2023
Unrealized gains (losses) on cash flow hedges from foreign exchange and interest rate contracts	Revenues		$	7,466		$	18,374		$	31,837
	Costs of revenues and operating expenses		4,678			3,766			(6,526)
	Interest expense		3,285			3,764			3,747

	Net gains reclassified from AOCI		$	15,429		$	25,904		$	29,058

Unrealized gains (losses) on available-for-sale securities	Other expense (income), net		$	59		$	(103)		$	(986)

Consolidated Statements of Operations

The following table shows Other expense (income), net for the indicated periods:


	Year Ended June 30,
(In thousands)	2025		2024		2023
Other expense (income), net:
Interest income	$	(180,276)	$	(160,688)	$	(74,095)
Foreign exchange (gains) losses, net	2,964		(7,268)		233
Net realized (gains) losses on sale of investments	(59)		103		986
Other	5,884		12,778		(31,844)
	$	(171,487)	$	(155,075)	$	(104,720)

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, 2025 (In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate debt securities	$	957,256	$	4,456	$	(66)	$	961,646
Money market funds and other	1,531,022		—		—		1,531,022
Municipal securities	57,445		129		(1)		57,573

U.S. Government agency securities	116,436		458		(58)		116,836
U.S. Treasury securities	885,101		2,787		(329)		887,559


Subtotal	3,547,260		7,830		(454)		3,554,636
Add: Time deposits(1)	478,191		—		—		478,191
Less: Cash equivalents	1,641,074		1		(1)		1,641,074
Marketable securities(2)	$	2,384,377	$	7,829	$	(453)	$	2,391,753

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

(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, 2025, we had 104 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 June 30, 2025	Less than 12 Months				12 Months or Greater				Total
(In thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Corporate debt securities	$	98,149	$	(63)	$	2,528	$	(3)	$	100,677	$	(66)
Municipal securities	5,774		(1)		—		—		5,774		(1)

U.S. Government agency securities	32,780		(58)		—		—		32,780		(58)
U.S. Treasury securities	238,627		(297)		20,330		(32)		258,957		(329)
Total	$	375,330	$	(419)	$	22,858	$	(35)	$	398,188	$	(454)


As of June 30, 2024	Less than 12 Months				12 Months or Greater				Total
(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)

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, 2025 (In thousands)	Amortized Cost		Fair Value
Due within one year	$	1,244,804	$	1,246,095
Due after one year through three years	1,139,573		1,145,658
Total	$	2,384,377	$	2,391,753

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, 2025, 2024 and 2023.

The costs for our equity marketable securities were $22.9 million as of both June 30, 2025, and June 30, 2024. Unrealized gains (losses) for our equity marketable securities were $(1.6) million, $(12.3) million and $7.1 million during the fiscal years ended June 30, 2025, 2024 and 2023 respectively.

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 Semiconductor Process Control reportable segment. The purchase consideration included a $3.7 million holdback to satisfy general warranties and representations that was paid in full in February 2024.

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.

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 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. 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.

The following table presents the carrying value of goodwill and the movements by reportable segment during the fiscal years ended June 30, 2025 and 2024:


(In thousands)	Semiconductor Process Control		Specialty Semiconductor Process		PCB & Component Inspection		Total
Balances as of June 30, 2023	$	753,038	$	681,858	$	843,924	$	2,278,820



Goodwill impairment	—		—		(263,074)		(263,074)
Foreign currency adjustment	(20)		—		—		(20)
Balances as of June 30, 2024	753,018		681,858		580,850		2,015,726



Goodwill impairment	—		—		(230,400)		(230,400)

Foreign currency adjustments	6,867		—		—		6,867
Balances as of June 30, 2025	$	759,885	$	681,858	$	350,450	$	1,792,193

During the second quarter of fiscal 2025, in connection with our annual strategic planning process, we noted a continued deterioration of the long-term forecast for our PCB business, which is part of our PCB and Component Inspection reportable segment. In addition, in the second quarter of fiscal 2025, we completed an internal reorganization affecting the composition of reporting units within our Specialty Semiconductor Process and PCB and Component Inspection reportable segments. The downward revision of financial outlook for PCB and the reorganization of reporting units triggered goodwill impairment tests. As a result of our quantitative assessment before reorganization, we recorded a total goodwill impairment charge of $230.4 million in the former PCB reporting unit, which was part of the PCB and Component Inspection reportable segment, in the second quarter of fiscal 2025. No goodwill impairment was identified in the Specialty Semiconductor Process reportable segment. We assessed for impairment subsequent to the reorganization and noted no impairment. The goodwill balances of our new reporting units after reorganization were allocated on a relative fair value basis.

During the second quarter of fiscal 2024, we noted a significant deterioration of the long-term forecast for our PCB and flat and flexible panel displays (“Display”) businesses, which were part of our former 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 was 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 second quarter of fiscal 2024. 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 the reporting units noted above, 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 test as of February 28, 2025 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.

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, 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 third quarter of fiscal 2024.

To determine the fair value of the Display 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.

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, 2025. 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, 2026.

As of June 30, 2025, following the internal reorganization noted above, goodwill is net of accumulated impairment losses of $277.6 million and $70.5 million in the Semiconductor Process Control and PCB and Component Inspection reportable segments, respectively. As of June 30, 2024, following the fiscal 2024 goodwill impairment and changes to the PCB and Display operating segment noted above, goodwill is net of accumulated impairment losses of $277.6 million, $144.2 million and $70.5 million in the Semiconductor Process Control, Specialty Semiconductor Process and PCB and Component Inspection reportable segments, respectively. As of June 30, 2023, goodwill is net of accumulated impairment losses of $277.6 million, $144.2 million and $112.5 million in the Semiconductor Process Control, Specialty Semiconductor Process and PCB and Component Inspection reportable segments, respectively.

Purchased Intangible Assets

Changes in the gross carrying amount of intangible assets result from changes in foreign currency exchange rates and acquisitions. The components of purchased intangible assets as of the dates indicated below were as follows:


(In thousands)	As of June 30, 2025						As of June 30, 2024
Category	Gross Carrying Amount		Accumulated Amortization and Impairment		Net Amount		Gross Carrying Amount		Accumulated Amortization and Impairment		Net Amount
Existing technology	$	1,555,688	$	1,222,520	$	333,168	$	1,552,074	$	1,045,585	$	506,489
Customer relationships	359,555		285,274		74,281		358,567		248,106		110,461
Trade name/trademark	119,409		113,210		6,199		119,083		97,106		21,977
Order backlog and other	89,309		84,419		4,890		83,336		82,740		596
Intangible assets subject to amortization	2,123,961		1,705,423		418,538		2,113,060		1,473,537		639,523
IPR&D	46,074		19,827		26,247		46,074		16,833		29,241
Total	$	2,170,035	$	1,725,250	$	444,785	$	2,159,134	$	1,490,370	$	668,764

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 Component Inspection reportable segment during the second quarter of fiscal 2025, due to the continued deterioration of financial outlook for the businesses and internal reorganization both 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 Component Inspection reportable 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 $8.7 million. No impairment was identified for other long-lived assets in the second quarter of fiscal 2025.

As part of the evaluation of goodwill impairment in the former PCB and Display operating segment in the second quarter of fiscal 2024 noted above, the Company assessed long-lived assets for impairment prior to performing the goodwill impairment test. As a result, we recorded a total purchased intangible asset impairment charge of $26.4 million in the second quarter of fiscal 2024.

In the third quarter of fiscal 2024, in connection with the Company's decision to exit the Display business, as described above, an immaterial amount of purchased intangible assets were abandoned.

The total impairment charges for goodwill and purchased intangible assets of $239.1 million during the second quarter of fiscal 2025 and $219.0 million during the second quarter of fiscal 2024, as well as the goodwill impairment charge of $70.5 million in the third quarter of fiscal 2024, were recognized as separate charges and included in income (loss) from operations.

As of June 30, 2025 and 2024, there were no impairment indicators for purchased intangible assets.

Amortization expense for purchased intangible assets was $220.4 million, $239.3 million, and $260.6 million, for the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

Based on the purchased intangible assets gross carrying amount recorded as of June 30, 2025, the remaining estimated annual amortization expense is expected to be as follows:


Fiscal Year Ending June 30:	Amortization (In thousands)
2026	$	195,869
2027	123,357
2028	48,123
2029	35,237
2030	14,349
Thereafter	1,603
Total	$	418,538

The expected amortization expense is an estimate. Actual amounts of amortization may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment of intangible assets and other events.

NOTE 8 — DEBT

The following table summarizes our debt as of June 30, 2025 and June 30, 2024:


	As of June 30, 2025				As of June 30, 2024
	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	%
Fixed-rate 4.100% Senior Notes due on March 15, 2029	800,000		4.159	%	800,000		4.159	%
Fixed-rate 4.650% Senior Notes due on July 15, 2032	1,000,000		4.657	%	1,000,000		4.657	%
Fixed-rate 4.700% Senior Notes due on February 1, 2034	500,000		4.777	%	500,000		4.777	%
Fixed-rate 5.650% Senior Notes due on November 1, 2034	250,000		5.670	%	250,000		5.670	%
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 4.950% Senior Notes due on July 15, 2052	1,450,000		5.023	%	1,450,000		5.023	%
Fixed-rate 5.250% Senior Notes due on July 15, 2062	800,000		5.259	%	800,000		5.259	%


Total	5,950,000				6,700,000
Unamortized discount	(23,338)				(24,866)
Unamortized debt issuance costs	(42,405)				(44,999)
Total	$	5,884,257			$	6,630,135
Reported as:
Current portion of long-term debt	$	—			$	749,936
Long-term debt	5,884,257				5,880,199
Total	$	5,884,257			$	6,630,135

Senior Notes and Debt Redemption:

In November 2024, we repaid $750.0 million of the Senior Notes that were due on November 1, 2024. In February 2024, KLA Corporation (the “Issuer”) 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 were used for general corporate purposes, including repayment of outstanding indebtedness.

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.

The Senior Notes rank senior in right of payment to all of the Issuer's future subordinated indebtedness, equally in right of payment with all of the Issuer's existing and future unsecured and unsubordinated indebtedness, are effectively subordinated in right of payment to all of the Issuer's future secured indebtedness to the extent of the collateral securing such indebtedness and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of the Issuer's subsidiaries.

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, 2025 and 2024 was $5.54 billion and $6.26 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, 2025, we were in compliance with all of our covenants under the Indenture associated with the Senior Notes.

Revolving Credit Facility:

On July 3, 2025, we replaced our existing revolving credit facility (see Note 20 “Subsequent Events”). As of June 30, 2025, we had in place a Credit Agreement dated June 8, 2022 (“Prior Credit Agreement”) for an unsecured Revolving Credit Facility (“Prior Revolving Credit Facility”) having a maturity date of June 8, 2027 that allowed us to borrow up to $1.50 billion. Subject to the terms of the Prior Credit Agreement, the Prior Revolving Credit Facility could have been increased by an amount up to $250.0 million in the aggregate. As of June 30, 2025 and 2024, we had no outstanding borrowings under the Prior Revolving Credit Facility.

We could borrow, repay and reborrow funds under the Prior Revolving Credit Facility until the maturity date, at which time we could exercise two one-year extension options with the consent of the lenders. We could prepay outstanding borrowings under the Prior Revolving Credit Facility at any time without a prepayment penalty.

Under the Prior Credit Agreement, borrowings could be made as Term Secured Overnight Financing Rate (“SOFR”) Loans or Alternate Base Rate (“ABR”) Loans, at the Company’s option. In the event that Term SOFR was unavailable, any Term SOFR elections would be converted to Daily Simple SOFR, if available. Each Term SOFR Loan would 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 would 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 were also obligated to pay an annual commitment fee on the daily undrawn balance of the Prior 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 were also subject to adjustment based on the Company’s performance against certain environmental sustainability key performance indicators (“KPI”) related to greenhouse gas (“GHG”) emissions and renewable electricity usage. Our performance against these KPIs in calendar year 2024 resulted in reductions to the fees associated with our Prior Revolving Credit Facility. As of June 30, 2025, the applicable commitment fee on the daily undrawn balance of the Prior Revolving Credit Facility was 5.5 bps.

Under the Prior Credit Agreement, the maximum leverage ratio on a quarterly basis, was 3.50 to 1.00, covering the trailing four consecutive fiscal quarters for each fiscal quarter, which could have been 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, 2025, our maximum allowed leverage ratio was 3.50 to 1.00.

We were in compliance with all covenants under the Prior Credit Agreement as of June 30, 2025.

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 significant.

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 27 years, including periods covered by options to extend the lease when it is reasonably certain that the option will be exercised.

Lease expense was $51.5 million, $54.6 million and $41.8 million for the fiscal years ended June 30, 2025, 2024 and 2023, 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, 2025 and 2024. As of June 30, 2025 and 2024, the weighted-average remaining lease term was 6.2 years and 6.7 years, respectively, and the weighted-average discount rate for operating leases was 4.06% and 4.30%, as of June 30, 2025 and 2024, respectively.

Supplemental cash flow information related to leases was as follows:


	Year Ended June 30,
(In thousands)	2025		2024
Operating cash outflows from operating leases	$	47,183	$	41,405
ROU assets obtained in exchange for new operating lease liabilities	$	46,018	$	62,505

Maturities of lease liabilities as of June 30, 2025 were as follows:


Fiscal Year Ending June 30:	Amount (In thousands)
2026	$	53,182
2027	47,113
2028	28,659
2029	24,033
2030	21,503
2031 and thereafter	59,562
Total lease payments	234,052
Less imputed interest	(30,027)
Total	$	204,025

As of June 30, 2025, 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, 2025, 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 9.6 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, 2025, 2024 and 2023 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,” 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)(3)
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

RSUs granted(2)			(805)
RSUs granted adjustment(4)			62
RSUs canceled			77
Balances as of June 30, 2025			9,574

(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, 2025, 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, 0.2 million shares and 0.6 million shares for the fiscal years ended June 30, 2025, 2024 and 2023, respectively, reflecting the application of the 2.0x multiplier described above).

(3)No additional stock options, RSUs or other awards will be granted under the Assumed Equity Plans.

(4)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 year ended June 30, 2025.

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)	2025		2024		2023
SBC expense by:
Costs of revenues	$	46,502	$	35,942	$	29,101
R&D	77,271		60,124		44,702
SG&A	141,238		116,629		97,621
Total SBC expense	$	265,011	$	212,695	$	171,424

SBC capitalized as inventory as of June 30, 2025 and 2024 was $26.3 million and $21.5 million, respectively.

Restricted Stock Units

The following table shows the activity and weighted-average grant date fair values for RSUs during the fiscal year ended June 30, 2025:


	Shares (In thousands) (1)	Weighted-Average Grant Date Fair Value
Outstanding RSUs as of June 30, 2024(2)	1,467	$	424.66
Granted(3)	402	$	726.75
Granted adjustments(4)	(31)	$	397.40
Vested and released	(507)	$	377.12

Forfeited	(39)	$	482.79
Outstanding RSUs as of June 30, 2025(2)	1,292	$	536.30

(1)Share numbers reflect actual shares subject to awarded RSUs.

(2)Includes performance-based RSUs.

(3)This line item includes all performance-based RSUs granted during the fiscal year ended June 30, 2025 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 (0.1 million shares for the fiscal year ended June 30, 2025), reflect the application of the multiplier described above.

The RSUs granted by us generally vest as follows, in each case subject to the recipient remaining employed by us as of the applicable vesting date: (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. 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,
2025			2024			2023
Weighted-average grant date fair value per unit	$	726.75		$	584.49		$	385.98

Grant date fair value of vested RSUs	$	191,352		$	144,888		$	107,217
Tax benefits realized by us in connection with vested and released RSUs	$	48,858		$	47,315		$	25,989

As of June 30, 2025, the unrecognized SBC expense balance related to RSUs was $485.8 million, excluding the impact of estimated forfeitures, and will be recognized over an estimated weighted-average amortization period of 1.4 years. The intrinsic value of outstanding RSUs as of June 30, 2025 was $1.16 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, 2025 and 2024, we approved Cash LTI awards of $41.7 million and $51.4 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, 2025, 2024 and 2023, we recognized $56.8 million, $70.3 million and $76.4 million, respectively, in compensation expense under the Cash LTI Plan. As of June 30, 2025, the unrecognized compensation balance (excluding the impact of estimated forfeitures) related to the Cash LTI Plan was $108.8 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.

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,
	2025		2024		2023
Stock purchase plan:
Expected stock price volatility	33.8	%	32.2	%	42.7	%
Risk-free interest rate	5.0	%	5.3	%	2.5	%
Dividend yield	0.9	%	1.1	%	1.6	%
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:


(In thousands, except for weighted-average fair value per share)	Year Ended June 30,
2025			2024			2023
Total cash received from employees for the issuance of shares under the ESPP	$	151,514		$	144,934		$	124,731
Number of shares purchased by employees through the ESPP	281			320			418
Tax benefits realized by us in connection with the disqualifying dispositions of shares purchased under the ESPP	$	2,834		$	2,623		$	1,916
Weighted-average fair value per share based on Black-Scholes model	$	164.88		$	125.04		$	89.52

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, 2025, a total of 2.4 million shares were reserved and available for issuance under the ESPP.

Quarterly cash dividends

On June 3, 2025, we paid a quarterly cash dividend of $1.90 per share on the outstanding shares of our common stock to stockholders of record as of the close of business on May 19, 2025. The total amount of regular quarterly cash dividends and dividend equivalents paid during the fiscal years ended June 30, 2025 and 2024 was $904.6 million and $773.0 million,

respectively. The amount of accrued dividend equivalents payable related to unvested RSUs with dividend equivalent rights was $13.3 million and $11.8 million as of June 30, 2025 and 2024, respectively. These amounts will be paid upon vesting of the underlying RSUs. Refer to Note 20 “Subsequent Events” to our Consolidated Financial Statements for additional information regarding the declaration of our quarterly cash dividend announced subsequent to June 30, 2025.

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 an increase in the authorized repurchase amount of $5.00 billion in the fourth quarter of fiscal 2025. 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 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 second quarter of fiscal 2023, 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 made after December 31, 2022 by publicly traded companies. 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, 2025, an aggregate of $5.03 billion of authorization was available for repurchase under the stock repurchase program.

Share repurchases for the indicated periods (based on the trade date of the applicable repurchase) were as follows:


(In thousands)	Year Ended June 30,
2025			2024			2023
Number of shares of common stock repurchased	3,007			3,032			5,844
Total cost of repurchases	$	2,165,635		$	1,742,501		$	1,329,714

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 shares of common stock outstanding during the period. Diluted net income per share is calculated by using the weighted-average number of shares of common stock 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.

The following table sets forth the computation of basic and diluted net income per share attributable to KLA:


(In thousands, except per share amounts)	Year Ended June 30,
2025			2024			2023
Numerator:
Net income attributable to KLA	$	4,061,643		$	2,761,896		$	3,387,277
Denominator:
Weighted-average shares - basic, excluding unvested RSUs	133,030			135,345			139,483
Effect of dilutive RSUs and options	720			842			752
Weighted-average shares - diluted	133,750			136,187			140,235
Basic net income per share attributable to KLA	$	30.53		$	20.41		$	24.28
Diluted net income per share attributable to KLA	$	30.37		$	20.28		$	24.15
Anti-dilutive securities excluded from the computation of diluted net income per share	—			35			8

NOTE 13 — EMPLOYEE BENEFIT PLANS

Profit-sharing program and U.S. 401(k)

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 $43.2 million, $39.4 million, and $37.3 million in the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

Employee benefit plans

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, many of which are defined benefit plans. The assumptions used in calculating the obligations for the foreign plans depend on the local economic environment. Discount rates for the plans are 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. Asset return assumptions are 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 foreign plans’ investments are measured at fair value on a recurring basis. They 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. 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, 2025, we did not have concentrations of plan asset investment risk in any single entity, manager, counterparty, sector, industry or country.

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, 2025 and 2024 and were immaterial. The net funded status of these plans is recognized as a liability and included in other current or non-current liabilities in the Consolidated Balance Sheets in the years presented. The net periodic benefit costs were immaterial for the fiscal years ended June 30, 2025, 2024 and 2023.

NOTE 14 — INCOME TAXES

The components of income before income taxes were as follows:


	Year Ended June 30,
(In thousands)	2025		2024		2023
Domestic income before income taxes	$	3,070,097	$	1,997,090	$	2,017,338
Foreign income before income taxes	1,574,351		1,192,942		1,771,852
Total income before income taxes	$	4,644,448	$	3,190,032	$	3,789,190

The provision for income taxes was comprised of the following:


(In thousands)	Year Ended June 30,
2025			2024			2023
Current:
Federal	$	624,002		$	395,876		$	553,197
State	21,161			10,737			14,804
Foreign	182,448			160,401			188,991
	827,611			567,014			756,992
Deferred:
Federal	(222,907)			(110,686)			(228,414)
State	(5,433)			(2,770)			(4,295)
Foreign	(16,466)			(25,422)			(122,444)
	(244,806)			(138,878)			(355,153)
Provision for income taxes	$	582,805		$	428,136		$	401,839

The significant components of deferred income tax assets and liabilities were as follows:


(In thousands)	As of June 30,
2025			2024
Deferred tax assets:
Capitalized R&D expenses	$	447,043		$	328,061
Tax credits and net operating losses	327,618			311,026
Depreciation and amortization	190,256			151,371
Inventory reserves	135,121			121,238
Employee benefits accrual	106,746			95,461
Non-deductible reserves	69,790			53,668

Unearned revenue	48,372			25,532
SBC	18,835			15,375

Other	43,843			12,785
Gross deferred tax assets	1,387,624			1,114,517
Valuation allowance	(310,599)			(289,534)
Net deferred tax assets	$	1,077,025		$	824,983
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries not indefinitely reinvested	$	(360,544)		$	(315,231)
Deferred profit	(41,378)			(70,204)
Unrealized gain on investments	(16,278)			(10,949)

Total deferred tax liabilities	(418,200)			(396,384)
Total net deferred tax assets	$	658,825		$	428,599

Our deferred tax assets for the years ended June 30, 2025 and 2024 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 us in the year ending June 30, 2023.

As of June 30, 2025, we had U.S. federal, state and foreign net operating loss (“NOL”) carry-forwards of $3.7 million, $10.0 million and $174.5 million, respectively. We also had foreign capital loss carry-forwards of $1.3 million as of June 30, 2025. The U.S. federal NOL carry-forwards will expire at various dates beginning in 2026 through 2036. 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 $395.2 million will also be carried forward indefinitely.

The net deferred tax asset valuation allowance was $310.6 million and $289.5 million as of June 30, 2025 and 2024, 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, 2025. 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, 2025, $308.5 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, 2025, 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 four to seven years. We were in compliance with all the terms and conditions of the tax holidays as of June 30, 2025. The net impact of these tax holidays was to decrease our tax expense by $198.6 million, $159.4 million and $161.5 million in the fiscal years ended June 30, 2025, 2024 and 2023, respectively. The benefits of the tax holidays on diluted net income per share were $1.49, $1.19 and $1.18 for the fiscal years ended June 30, 2025, 2024 and 2023, respectively.

The reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate was as follows:


	Year Ended June 30,
	2025		2024		2023
Federal statutory rate	21.0	%	21.0	%	21.0	%
GILTI	2.9	%	3.7	%	3.4	%
Goodwill impairment	1.1	%	1.7	%	—	%
Net change in tax reserves	0.3	%	1.1	%	—	%
State income taxes, net of federal benefit	0.3	%	0.3	%	0.2	%




Effect of SBC	—	%	—	%	0.1	%

Foreign derived intangible income	(6.6)	%	(5.9)	%	(5.7)	%
Effect of foreign operations taxed at various rates	(5.1)	%	(6.6)	%	(7.1)	%
R&D tax credit	(1.1)	%	(1.6)	%	(1.5)	%
Other	(0.3)	%	(0.3)	%	0.2	%
Effective income tax rate	12.5	%	13.4	%	10.6	%

A reconciliation of gross unrecognized tax benefits was as follows:


	Year Ended June 30,
(In thousands)	2025		2024		2023
Unrecognized tax benefits at the beginning of the year	$	245,707	$	213,092	$	217,927

Increases for tax positions taken in current year	35,429		40,209		44,590
Increases for tax positions taken in prior years	10,862		23,291		434
Decreases for lapsing of statutes of limitations	(17,100)		(4,119)		(888)

Decreases for tax positions taken in prior years	(11,607)		(26,766)		(3,929)
Decreases for settlements with taxing authorities	(4,687)		—		(45,042)
Unrecognized tax benefits at the end of the year	$	258,604	$	245,707	$	213,092

The amounts of unrecognized tax benefits that would impact the effective tax rate were $244.9 million, $244.6 million and $199.0 million as of June 30, 2025, 2024 and 2023, respectively. The amounts of interest and penalties recognized during the years ended June 30, 2025, 2024 and 2023 were expenses (benefits) of $9.0 million, $8.3 million and $(20.2) 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, 2025 and 2024 were $50.1 million and $41.1 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, 2022 and are under U.S. federal income tax examination for the fiscal year ended June 30, 2018. We have completed the federal income tax examination for the fiscal years ended June 30, 2019 and June 30, 2020. We are subject to state income tax examinations for all years beginning from the fiscal year ended June 30, 2021. 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. We are under audit in Israel for calendar year 2019 to the fiscal year ended June 30, 2022, and received a tax assessment from the Israel Tax Authority. The assessment will be appealed. We believe our current unrecognized tax benefits are sufficient.

We believe that we may recognize up to $22.7 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. The timing and resolution of income tax examinations are uncertain. 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 tax impact to our Consolidated Financial Statements from the AMIC provision.

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. There was no material tax impact to our Consolidated Financial Statements in our fiscal year ended June 30, 2025 from the CAMT provision.

California Governor Newsom approved the 2024-25 California State Budget on June 27, 2024, which includes a provision to suspend the use of all NOLs 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 ended June 30, 2025 through June 30, 2027. There was no material tax impact to our Consolidated Financial Statements in our fiscal year ended June 30, 2025.

In December 2021, the Organization for Economic Co-operation and Development’s Inclusive Framework on Base Erosion and Profit Shifting released Global Anti-Base Erosion (“GloBE”) rules under Pillar Two. For the countries that have enacted legislation to adopt the Pillar Two GloBE rules, the provision requiring a 15% minimum effective tax rate on income earned in the respective countries was effective for us beginning in our fiscal year ended June 30, 2025, and there was no material tax impact to our Consolidated Financial Statements from this Pillar Two provision.

In November 2024, Singapore adopted the Pillar Two GloBE rules under the Multinational Enterprise (“Minimum Tax”) Act (“MMT Act”), which includes a domestic minimum tax of 15% for financial years beginning on or after January 1, 2025. We earn significant profits and currently benefit from tax incentives in Singapore, so it is likely the MMT Act will neutralize our current tax incentives when it is effective for us beginning in our fiscal year ending June 30, 2026. We will continue to evaluate the impact of the MMT Act to our future financial statements. The Pillar Two GloBE rules are deemed an alternative minimum tax so we will not recognize any deferred taxes for the estimated effects of the future minimum tax under current U.S. GAAP.

On July 4, 2025, President Trump signed into law the OBBBA, also known as the Tax Relief for American Families and Workers Act of 2025. The OBBBA provides for several permanent changes to the United States tax code including, among other items, modifying the GILTI and Foreign-Derived Intangible Income rules from the Tax Cuts and Jobs Act, restoring full expensing for domestic research expenses and reinstating 100% bonus depreciation provisions. ASC 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. Consequently, we are evaluating the impact of the OBBBA on our future Consolidated Financial Statements including our cash flows. We may be subject to the CAMT of 15% in future periods as a result of the OBBBA provisions.

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)	2025		2024		2023
Receivables sold under factoring agreements	$	230,552	$	254,889	$	328,933
Proceeds from sales of LC	$	55,525	$	22,242	$	69,247

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. KLA may continue servicing the receivables that are sold.

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 estimate of our significant purchase commitments primarily for material, services, supplies and asset purchases is $2.42 billion as of June 30, 2025, a majority of which are 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, 2025, we have committed $119.6 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 remain 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 $126.8 million, of which $92.7 million had been issued as of June 30, 2025, primarily to fund guarantees to customs authorities for value-added tax and other operating requirements of our consolidated subsidiaries worldwide.

In January 2025, we entered into a long-term virtual power purchase agreement to purchase a portion of the output generated from a solar energy project for a fixed price. As part of this agreement, we will also receive renewable energy credits commensurate with the power we acquire. These credits can be applied against our GHG emissions, accelerating the progress towards our goals of 100% renewable electricity across our global operations by 2030, reduction of our Scope 1 and 2 emissions from our 2021 baseline by 50% by 2030 and achievement of net zero Scope 1 and Scope 2 emissions by 2050. This agreement had no material impact on our results of operations, financial condition or cash flows during the fiscal year ended June 30, 2025.

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 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.

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, 2025, the aggregate unamortized portion of the fair value of the forward contracts for the Rate Lock Agreements was a $44.4 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 differences between changes 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 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)	2025		2024		2023
Derivatives Designated as Cash Flow Hedging Instruments:
Rate lock agreements:
Amounts included in the assessment of effectiveness	$	—	$	415	$	—
Foreign exchange contracts:
Amounts included in the assessment of effectiveness	$	36,747	$	9,176	$	30,153
Amounts excluded from the assessment of effectiveness	$	(21)	$	146	$	(128)
Derivatives Designated as Net Investment Hedging Instruments:
Foreign exchange contracts(1)	$	(23,630)	$	3,459	$	3,626

(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, 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 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 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 reclassified from AOCI to earnings	$	—	$	—	$	3,764	$	—

Foreign exchange contracts:
Amount of gains 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 recognized in earnings	$	—	$	—	$	—	$	10,597
For the year ended June 30, 2025
Total amounts presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded	$	12,156,162	$	7,381,035	$	302,166	$	(171,487)
Gains (Losses) on Derivatives Designated as Hedging Instruments:
Rate lock agreements:
Amount of gains reclassified from AOCI to earnings	$	—	$	—	$	3,285	$	—

Foreign exchange contracts:
Amount of gains reclassified from AOCI to earnings	$	8,950	$	4,678	$	—	$	—
Amount excluded from the assessment of effectiveness recognized in earnings	$	(1,484)	$	—	$	—	$	2,984
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Amount of gains recognized in earnings	$	—	$	—	$	—	$	37,588

The U.S. dollar equivalent of all outstanding notional amounts of foreign currency hedge contracts, with maximum remaining maturities of approximately 14 months as of June 30, 2025 and 12 months as of June 30, 2024, were as follows:


(In thousands)	As of June 30, 2025		As of June 30, 2024
Cash flow hedge contracts - foreign currency
Purchase	$	405,349	$	426,839
Sell	$	159,475	$	76,342
Net Investment hedge contracts - foreign currency

Sell	$	384,130	$	273,952
Other foreign currency hedge contracts
Purchase	$	618,844	$	589,171
Sell	$	429,643	$	411,635

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, 2025		As of June 30, 2024			Balance Sheet Location	As of June 30, 2025		As of June 30, 2024

(In thousands)	Fair Value					Fair Value
Derivatives designated as hedging instruments

Foreign exchange contracts	Other current assets	$	29,492	$	13,783		Other current liabilities	$	(24,331)	$	(8,066)
Total derivatives designated as hedging instruments		29,492		13,783				(24,331)		(8,066)
Derivatives not designated as hedging instruments

Foreign exchange contracts	Other current assets	30,011		22,720			Other current liabilities	(4,284)		(7,617)
Total derivatives not designated as hedging instruments		30,011		22,720				(4,284)		(7,617)
Total derivatives		$	59,503	$	36,503			$	(28,615)	$	(15,683)

The changes in AOCI, before taxes, related to derivatives for the indicated periods were as follows:


	Year Ended June 30,
(In thousands)	2025		2024		2023
Beginning balance	$	68,903	$	81,611	$	77,018
Amount reclassified to earnings as net gains	(15,429)		(25,904)		(29,058)
Net change in unrealized gains	13,096		13,196		33,651
Ending balance	$	66,570	$	68,903	$	81,611

As of June 30, 2025, the net gain reported in AOCI that is expected to be reclassified into earnings within the next 12 months is $29.4 million.

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, 2025							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	$	59,503	$	—	$	59,503	$	(28,615)	$	—	$	30,888
Derivatives - liabilities	$	(28,615)	$	—	$	(28,615)	$	28,615	$	—	$	—


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)

NOTE 18 — 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.

Our operating segments are aggregated into reportable segments based on several factors including, but not limited to, customer base, homogeneity of products, technology, delivery channels and similar economic characteristics. We have three reportable segments: Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection.

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.

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.

PCB and Component Inspection

The PCB and Component Inspection segment enables electronic device manufacturers to inspect, test and measure PCBs, flat panel displays 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. In March 2024, we made the decision to exit the Display business by announcing we would end manufacturing of most Display products, but will continue to provide services to the installed base of Display products for existing customers.

The CODM uses total segment revenues and segment profit (loss) to assess performance and allocate resources (including employees, financial or capital resources), primarily during the annual strategic long-term planning and budgeting process. The CODM considers changes in market conditions, technology constraints and the competitive environment when making decisions about allocating resources to segments. The CODM does not evaluate segments using discrete asset

information. Segment profit (loss) represents segment income (loss) before income taxes, and excludes interest expense, other expense (income), net, restructuring costs, effects of changes in foreign currency exchange rates, and other corporate expenses.

The following is a summary of results for each of our three reportable segments for the indicated periods.


(In thousands)	Semiconductor Process Control		Specialty Semiconductor Process		PCB and Component Inspection		Total
For the year ended June 30, 2023
Revenue	$	9,324,190	$	543,398	$	631,604	$	10,499,192
Less:
Cost of revenue	3,366,617		261,456		410,353
R&D	1,064,752		40,436		168,283
SG&A	713,924		45,982		116,613
Other segment items (1)	78,747		114,049		78,768
Segment profit (loss)	$	4,100,150	$	81,475	$	(142,413)	$	4,039,212
For the year ended June 30, 2024
Revenue	$	8,733,556	$	528,701	$	552,491	$	9,814,748
Less:
Cost of revenue	3,104,254		245,791		393,531
R&D	1,077,366		40,043		147,867
SG&A	728,349		43,959		116,074
Other segment items (1)	56,014		108,069		365,292
Segment profit (loss)	$	3,767,573	$	90,839	$	(470,273)	$	3,388,139
For the year ended June 30, 2025
Revenue	$	10,947,359	$	587,107	$	621,721	$	12,156,187
Less:
Cost of revenue	3,922,735		283,160		358,847
R&D	1,165,858		47,054		133,487
SG&A	814,074		48,980		102,662
Other segment items (1)	41,946		108,961		307,882
Segment profit (loss)	$	5,002,746	$	98,952	$	(281,157)	$	4,820,541

(1)Other segment items for each reportable segment includes:

Semiconductor Process Control — amortization of purchased intangible assets and acquisition related expenses.
Specialty Semiconductor Process — amortization of purchased intangible assets.
PCB and Component Inspection — amortization of purchased intangible assets and impairment of goodwill and purchased intangible assets for the years ended June 30, 2024 and 2025.

The following table reconciles total reportable segment revenue to total revenue for the indicated periods:


	Year Ended June 30,
(In thousands)	2025		2024		2023
Total revenues for reportable segments	$	12,156,187	$	9,814,748	$	10,499,192
Corporate allocations and effects of changes in foreign currency exchange rates	(25)		(2,501)		(3,136)
Total revenues	$	12,156,162	$	9,812,247	$	10,496,056

The following table reconciles total segment profit to total income before income taxes for the indicated periods:


	Year Ended June 30,
(In thousands)	2025		2024		2023
Total segment profit	$	4,820,541	$	3,388,139	$	4,039,212
Unallocated expenses (1)	45,414		41,929		44,516
Interest expense	302,166		311,253		296,940
Loss on extinguishment of debt	—		—		13,286
Other expense (income), net	(171,487)		(155,075)		(104,720)
Income before income taxes	$	4,644,448	$	3,190,032	$	3,789,190

(1)Unallocated expenses include restructuring costs, effects of changes in exchange rates and other corporate expenses.

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:


(Dollar amounts in thousands)	Year Ended June 30,
2025					2024					2023
Revenues:
China	$	4,042,567	33	%		$	4,196,727	43	%		$	2,867,443	27	%
Taiwan	3,205,392		27	%		1,738,065		18	%		2,493,379		24	%
Korea	1,452,826		12	%		906,924		9	%		1,895,710		18	%
North America	1,362,311		11	%		1,070,791		11	%		1,254,956		12	%
Japan	1,133,002		9	%		963,203		10	%		888,016		9	%
Europe and Israel	574,197		5	%		540,263		6	%		682,103		6	%
Rest of Asia	385,867		3	%		396,274		3	%		414,449		4	%
Total	$	12,156,162	100	%		$	9,812,247	100	%		$	10,496,056	100	%

The following is a summary of revenues by major product categories for the indicated periods:


(Dollar amounts in thousands)	Year Ended June 30,
2025					2024					2023
Revenues:
Wafer Inspection	$	6,198,815	51	%		$	4,333,296	44	%		$	4,336,663	41	%
Patterning	2,196,347		18	%		2,054,442		21	%		2,791,130		26	%
Specialty Semiconductor Process	517,201		4	%		470,565		5	%		492,109		5	%
PCB and Component Inspection	355,891		3	%		291,161		3	%		378,030		4	%
Services	2,683,308		22	%		2,329,568		24	%		2,117,031		20	%
Other	204,600		2	%		333,215		3	%		381,093		4	%
Total	$	12,156,162	100	%		$	9,812,247	100	%		$	10,496,056	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, 2025, one customer accounted for approximately 19% of total revenues. 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.

Land, property and equipment, net by geographic region as of the dates indicated below were as follows:


	As of June 30,
(In thousands)	2025		2024
Land, property and equipment, net:
U.S.	$	728,162	$	689,937
Europe	253,848		155,812
Singapore	153,052		148,557
Israel	68,604		84,279



Rest of Asia	49,109		31,383
Total	$	1,252,775	$	1,109,968

NOTE 19 — RESTRUCTURING CHARGES

From time to time, management approves restructuring plans including workforce reductions in an effort to streamline operations.

Restructuring charges were $7.7 million and $21.6 million for fiscal years ended June 30, 2025 and June 30, 2024, respectively, primarily due to severance and related charges for the restructuring of the former PCB and Display operating segment, as described further in Note 7 “Goodwill and Purchased Intangible Assets,” as well as write-downs 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. The amounts of restructuring charges accrued were $5.9 million and $6.5 million as of June 30, 2025 and 2024, respectively.

NOTE 20 — SUBSEQUENT EVENTS

On August 7, 2025, we announced that our Board of Directors had declared a quarterly cash dividend of $1.90 per share to be paid on September 3, 2025 to stockholders of record as of the close of business on August 18, 2025.

On July 3, 2025, we replaced our Prior Revolving Credit Facility. The new Credit Agreement maturity date is July 3, 2030, and allows us the ability to request an increase in the Revolving Credit Facility by $500.0 million in aggregate.

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, 2025 and 2024, 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, 2025, including the related notes and financial statement schedule listed in the index appearing 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2025 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, 2025, 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 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 $12,156.2 million for the year ended June 30, 2025.

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) for a sample of outstanding customer invoice balances as of June 30, 2025, obtaining and inspecting source documents, such as invoices, proof of shipment, and subsequent cash receipts.

/s/ PricewaterhouseCoopers LLP

San Jose, California

August 8, 2025

We have served as the Company’s auditor since 1977.

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, 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
Fiscal Year Ended June 30, 2025:
Allowance for Credit Losses	$	32,782	$	11,494	$	(10,261)	$	34,015
Allowance for Deferred Tax Assets	$	289,534	$	(1,315)	$	22,380	$	310,599

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