KLA CORP

Previous wording

•The war between Ukraine and Russia, and the war between Israel and Hamas, and the significant military activity in that region;

Current wording

•The war between Ukraine and Russia, and the war between Israel and Hamas, and the significant military activity in those regions;

Previous wording

Our semiconductor customers generally operate in one or both of the major semiconductor device manufacturing markets: memory and foundry/logic. The pervasive and increasing needs for semiconductors in many consumer and industrial products, the rapid proliferation of new applications for more advanced semiconductor devices, and the increasing complexity associated with leading edge semiconductor manufacturing drives demand for our process control and yield management solutions. Continuing advancement of technology spurred by the economic, power and performance benefits of being at the leading edge, increasing involvement in legacy nodes as semiconductor content increases, and innovation and growth of new enabling technologies are fueling long-term growth for the semiconductor equipment industry. End-market demand drivers that are expected to continue in the long term are related to artificial intelligence (“AI”), the deployment of 5G telecommunications technology and associated high-end mobile devices, the electrification and digitization of the automotive industry, the revival of personal computer demand and associated innovations to support remote work, virtual collaboration, remote learning and entertainment, and the growth of the Internet of Things (“IoT”). Recently, the macro-driven slowdown has impacted general semiconductor demand as the semiconductor industry rebalances its supply chain and reduces inventory levels. As a result of this slowdown as well as a higher interest rate environment, memory device manufacturers and foundry/logic customers are reducing their capacity expansion-focused capital expenditure plans. In addition, semiconductor and other technology delays from customers, in converting to new chips and technology methods, for example, may result in impacts to process control capital intensity. Therefore, while we continue to invest in technological innovation, we are focusing on moderating our spending levels to reflect the changing environment. Push out or cancellation of deliveries to our customers could cause earnings volatility, due to the timing of revenue recognition as well as increased risk of inventory-related charges.

Current wording

Our semiconductor customers generally operate in one or both of the major semiconductor device manufacturing markets: memory and foundry/logic. The pervasive and increasing needs for semiconductors in many consumer and industrial products, the rapid proliferation of new applications for more advanced semiconductor devices, and the increasing complexity associated with leading edge semiconductor manufacturing drives demand for our process control and yield management solutions. Continuing advancement of innovation spurred by the performance, power and price benefits of being at the leading edge, increasing involvement in legacy nodes as semiconductor content increases, and innovation and growth of new enabling technologies are fueling long-term growth for the semiconductor equipment industry. End-market demand drivers that are expected to continue in the long term are related to artificial intelligence (“AI”), the deployment of 5G telecommunications technology and associated high-end mobile devices, the electrification and digitization of the automotive industry, the revival of personal computer demand and associated innovations to support remote work, virtual collaboration, remote learning and entertainment, and the growth of the Internet of Things (“IoT”).

Previous wording

(1)For the explanation why our net income attributable to KLA decreased to $582.5 million in the three months ended December 31, 2023 compared to the three months ended December 31, 2022, refer to the “Results of Operations” section below, as the change is a result of movements in various income statement line items.

Current wording

(1)For the explanation why our net income attributable to KLA decreased to $601.5 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, refer to the “Results of Operations” section below, as the change is a result of movements in various income statement line items.

Previous wording

(2)Our net income attributable to KLA for the three months ended December 31, 2023 includes a pre-tax goodwill and purchased intangible asset impairment charge of $219.0 million. For additional details, refer to Note 7 “Goodwill and Purchased Intangible Assets” in the Notes to our Condensed Consolidated Financial Statements.

Current wording

(2)Our net income attributable to KLA for the three months ended March 31, 2024 included a pre-tax goodwill impairment charge of $70.5 million. Our net income attributable to KLA for the three months ended December 31, 2023 included a pre-tax goodwill and purchased intangible asset impairment charge of $219.0 million. For additional details, refer to Note 7 “Goodwill and Purchased Intangible Assets” in the Notes to our Condensed Consolidated Financial Statements.

Previous wording

carrying value may not be recoverable. 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 goodwill include, but are not limited to, declines in our stock price or market capitalization, declines in our market share, and declines in revenues or profits at our reporting units. Additionally, 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. Any impairment charge could have a material adverse effect on our operating results and net asset value in the quarter in which we recognize the impairment charge. Due to the downward revision of financial outlook for our PCB and Display businesses, we performed a quantitative goodwill impairment assessment and recorded impairment losses related to goodwill of $192.6 million in the second quarter of fiscal 2024. See Note 7 “Goodwill and Purchased Intangible Assets” in the Notes to the Condensed Consolidated Financial Statements for further detail.

Current wording

carrying value may not be recoverable. 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 goodwill include, but are not limited to, declines in our stock price or market capitalization, declines in our market share, and declines in revenues or profits at our reporting units. Additionally, 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. Any impairment charge could have a material adverse effect on our operating results and net asset value in the quarter in which we recognize the impairment charge. Due to the downward revision of financial outlook for our PCB and Display businesses, we performed a quantitative goodwill impairment assessment and recorded impairment losses related to goodwill of $192.6 million in the second quarter of fiscal 2024.

Previous wording

Product revenues during the three and six months ended December 31, 2023 decreased compared to the three and six months ended December 31, 2022 primarily due to the broad, macro-driven slowdown that has impacted semiconductor demand overall, causing the semiconductor industry to rebalance its supply chain and reduce inventory levels, and memory device manufacturers and foundry/logic customers to reduce their capacity expansion-focused capital expenditure plans.

Current wording

Product revenues during the three and nine months ended March 31, 2024 decreased compared to the three and nine months ended March 31, 2023 primarily due to the broad, macro-driven slowdown that has impacted semiconductor demand overall, causing the semiconductor industry to rebalance its supply chain and reduce inventory levels, and memory device manufacturers and foundry/logic customers to reduce their capacity expansion-focused capital expenditure plans.

Previous wording

Service revenues during the three and six months ended December 31, 2023 increased compared to the three and six months ended December 31, 2022 primarily due to an increase in our installed base.

Current wording

Service revenues during the three and nine months ended March 31, 2024 increased compared to the three and nine months ended March 31, 2023 primarily due to an increase in our installed base.

Previous wording

Revenues from our Semiconductor Process Control segment during the three andsix months ended December 31, 2023 decreased compared to three andsix months ended December 31, 2022 primarilydue to the broad, macro-driven slowdown that has impacted semiconductor demand overall, causing the semiconductor industry to rebalance its supply chain and reduce inventory levels, and memory device manufacturers and foundry/logic customers to reduce their capacity expansion-focused capital expenditure plans. Revenues in the Specialty Semiconductor Process segment during the three months ended December 31, 2023 decreased compared to the three months ended December 31, 2022 due to a lower revenue volume of products sold in second quarter of fiscal 2024. Revenues in the Specialty Semiconductor Process segment during thesix months ended December 31, 2023 remained relatively flat compared to thesix months ended December 31, 2022. Revenues in the PCB, Display and Component Inspection segment during the three andsix months ended December 31, 2023 decreased compared to the three andsix months ended December 31, 2022 primarily due to market softening.

Current wording

Revenues from our Semiconductor Process Control segment during the three andnine months ended March 31, 2024 decreased compared to the three andnine months ended March 31, 2023 primarilydue to the broad, macro-driven slowdown that has impacted semiconductor demand overall, causing the semiconductor industry to rebalance its supply chain and reduce inventory levels, and memory device manufacturers and foundry/logic customers to reduce their capacity expansion-focused capital expenditure plans. Revenues in the Specialty Semiconductor Process segment during the three andnine months ended March 31, 2024 remained relatively flat compared to the three andnine months ended March 31, 2023. Revenues in the PCB, Display and Component Inspection segment during the three months ended March 31, 2024 also remained relatively flat compared to the three months ended March 31, 2023. Revenues in the PCB, Display and Component Inspection segment during thenine months ended March 31, 2024 decreased compared to thenine months ended March 31, 2023 primarily due to market softening.

Previous wording

The increase in our gross margin during the three months ended December 31, 2023 compared to the three months ended December 31, 2022 is primarily due to a more profitable mix of products and services sold and a decrease in other service and manufacturing costs, partially offset by a lower revenue volume of products and services sold.

Current wording

The decrease in our gross margin during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 is primarily due to a lower revenue volume of products and services sold and a less profitable mix of products and services sold. The decrease in our gross margin during the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023 is primarily due to a lower revenue volume of products and services sold and an increase in manufacturing labor and overhead costs, partially offset by lower other service and manufacturing costs and a more profitable mix of products and services sold.

Previous wording

Gross profit in the Semiconductor Process Control segment during the three and six months ended December 31, 2023 decreased compared to the three and six months ended December 31, 2022 primarily due to a lower revenue volume of products and services sold. Gross profit in the Specialty Semiconductor Process segment during the three and six months ended December 31, 2023 remained relatively flat compared to the three months and six ended December 31, 2022. Gross profit in the PCB, Display and Component Inspection segment during the three months ended December 31, 2023 increased compared to the three months ended December 31, 2022 due to lower other service and manufacturing costs in the second quarter of fiscal 2024, partially offset by lower volume of products and services sold. Gross profit in the PCB, Display and Component Inspection segment during the six months ended December 31, 2023 decreased compared to the six months ended December 31, 2022 primarily due to a lower revenue volume of products and services sold and an increase in other service and manufacturing costs in the fiscal 2024 period.

Current wording

Gross profit in the Semiconductor Process Control segment during the three and nine months ended March 31, 2024 decreased compared to the three and nine months ended March 31, 2023 primarily due to a lower revenue volume of products sold. Gross profit in the Specialty Semiconductor Process segment during the three months ended March 31, 2024 increased compared to the three months ended March 31, 2023 primarily due to a more profitable mix of products and services sold. Gross profit in the Specialty Semiconductor Process segment during the nine months ended March 31, 2024 remained relatively flat compared to the nine months ended March 31, 2023. Gross profit in the PCB, Display and Component Inspection segment during the three and nine months ended March 31, 2024 decreased compared to the three and nine months ended March 31, 2023 primarily due to non-cash expenses to write off excess and obsolete inventory related to the discontinued Display product lines.

Previous wording

R&D expenses during the three months ended December 31, 2023 decreased compared to the three months ended December 31, 2022 primarily due to a decrease in engineering project material costs of $18.0 million and a decrease in consulting costs of $3.1 million. These decreases were partially offset by an increase in employee-related expenses of $6.1 million and an increase in depreciation expense of $2.4 million.

Current wording

R&D expenses during the three months ended March 31, 2024 decreased compared to the three months ended March 31, 2023 primarily due to a decrease in engineering project material costs of $6.3 million and a decrease in restructuring expense of $5.7 million. These decreases were partially offset by an increase in employee-related expenses of $5.8 million.

Previous wording

R&D expenses during the six months ended December 31, 2023 decreased compared to the six months ended December 31, 2022 primarily due to a decrease in engineering project material costs of $25.9 million, a decrease of $3.7 million in consulting costs, and a decrease of $3.7 million in depreciation expense. These decreases were partially offset by an increase in employee-related expenses of $13.2 million.

Current wording

R&D expenses during the nine months ended March 31, 2024 decreased compared to the nine months ended March 31, 2023 primarily due to a decrease in engineering project material costs of $32.2 million, a decrease in restructuring expense of $5.3 million, and a decrease in consulting costs of $5.1 million. These decreases were partially offset by an increase in employee-related expenses of $19.0 million.

Previous wording

SG&A expenses during the three months ended December 31, 2023 decreased compared to the three months ended December 31, 2022 primarily due to a decrease in allowance for credit losses of $7.1 million and a decrease in depreciation expense of $2.6 million. These decreases were partially offset by an increase in facility-related expenses of $4.5 million.

Current wording

SG&A expenses during the three months ended March 31, 2024 decreased slightly compared to the three months ended March 31, 2023 primarily due to a decrease in employee-related expenses of $7.3 million, a decrease in restructuring expense of $6.1 million, and a decrease in depreciation expense of $2.7 million. These decreases were partially offset by increases in the following areas: facility-related expenses of $7.3 million, consulting costs of $3.9 million, software maintenance and support costs of $2.5 million and allowance for credit losses of $2.3 million.

Previous wording

SG&A expenses during the six months ended December 31, 2023 decreased compared to the six months ended December 31, 2022 primarily due to $16.8 million of compensation-related expense from the sale of Orbograph Ltd. (“Orbograph”) recorded in the six months ended December 31, 2022 and a decrease in allowance for credit losses of $14.3 million. These decreases were partially offset by an increase in facility-related expenses of $13.8 million.

Current wording

SG&A expenses during the nine months ended March 31, 2024 decreased compared to the nine months ended March 31, 2023 primarily due to $16.8 million of compensation-related expense from the sale of Orbograph Ltd. (“Orbograph”) recorded in the nine months ended March 31, 2023, a decrease in allowance for credit losses of $12.0 million, a decrease in restructuring expense of $5.7 million, a decrease in depreciation expense of $4.7 million and a decrease in promotional expenses of $4.5 million. These decreases were partially offset by an increase in facility-related expenses of $21.0 million.

Previous wording

During the second quarter of fiscal 2024, we noted a significant deterioration of the long-term forecast for our PCB and Display businesses. As a result, we recorded a $219.0 million goodwill and purchased intangible asset impairment charge for the PCB and Display reporting unit during the three and six months ended December 31, 2023. See Note 7 “Goodwill and Purchased Intangible Assets” to our Condensed Consolidated Financial Statements for further details.

Current wording

During the second quarter of fiscal 2024, we noted a significant deterioration of the long-term forecast for our PCB and Display businesses. As a result, we recorded a $219.0 million goodwill and purchased intangible asset impairment charge for the PCB and Display reporting unit during the three months ended December 31, 2023. In March 2024, we made the decision to exit the Display business but continue to provide services to the installed base for the discontinued product lines. As a result, we recorded a $70.5 million goodwill impairment charge and an immaterial amount of purchased intangible assets were abandoned in the third quarter of fiscal 2024. See Note 7 “Goodwill and Purchased Intangible Assets” to our Condensed Consolidated Financial Statements for further details.

Previous wording

Restructuring charges were $1.3 million and $0.6 million for the three months ended December 31, 2023 and 2022, respectively. Restructuring charges were $1.9 million and $16.8 million for the six months ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the accrual for restructuring charges was $3.2 million.

Current wording

Restructuring charges were $2.0 million and $19.1 million for the three months ended March 31, 2024 and 2023, respectively. Restructuring charges were $3.9 million and $35.9 million for the nine months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the accrual for restructuring charges was $2.6 million.

Previous wording

Interest expense during the three months ended December 31, 2023 remained relatively flat compared to the three months ended December 31, 2022.

Current wording

Interest expense during the three months ended March 31, 2024 increased compared to the three months ended March 31, 2023 primarily due to additional interest expense on our $750.0 million Senior Notes issued in February 2024.

Previous wording

The change in other expense (income), net during the three months ended December 31, 2023 compared to the three months ended December 31, 2022 was primarily due to higher interest income of $16.9 million compared to the prior fiscal year due to higher interest rates, partially offset by $4.6 million net change in interest accruals related to uncertain tax positions.

Current wording

The change in other expense (income), net during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily due to higher interest income of $24.6 million compared to the prior fiscal year due to higher interest rates and higher net foreign exchange gains of $9.3 million.

Previous wording

The change in other expense (income), net during the six months ended December 31, 2023 compared to the six months ended December 31, 2022 was primarily due to the following: a gain of $29.7 million from the sale of our interest in Orbograph to a portfolio company of a private equity firm in the prior fiscal year and $15.4 million net change in interest accruals related to uncertain tax positions, partially offset by higher interest income of $39.5 million compared to the prior fiscal year due to higher interest rates.

Current wording

The change in other expense (income), net during the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023 was primarily due to higher interest income of $64.6 million compared to the prior fiscal year due to higher interest rates, partially offset by the following: a gain of $29.7 million from the sale of our interest in Orbograph to a portfolio company of a private equity firm in the prior fiscal year and $14.3 million net change in interest accruals related to uncertain tax positions.

Previous wording

For the three months ended December 31, 2023 and December 31, 2022, we had no loss on extinguishment of debt. For the six months ended December 31, 2023, we had no loss on extinguishment of debt. For the six months ended December 31, 2022, loss on extinguishment of debt reflected a pre-tax net loss of $13.3 million associated with the redemption of $500.0 million of the Senior Notes due 2024, including associated redemption premiums, accrued interest and other fees and expenses.

Current wording

For the three months ended March 31, 2024 and March 31, 2023, we had no loss on extinguishment of debt. For the nine months ended March 31, 2024, we had no loss on extinguishment of debt. For the nine months ended March 31, 2023, loss on extinguishment of debt reflected a pre-tax net loss of $13.3 million associated with the redemption of $500.0 million of the Senior Notes due 2024, including associated redemption premiums, accrued interest and other fees and expenses.

Previous wording

The effective tax rate during the three months ended December 31, 2023 was higher compared to the three months ended December 31, 2022 primarily due to a $192.6 million goodwill impairment charge during the three months ended December 31, 2023, which is non-deductible for income tax purposes. Excluding the goodwill impairment charge, tax expense was lower as a percentage of income before taxes during the three months ended December 31, 2023 compared to the three months ended December 31, 2022 primarily due to the impact of the following item that occurred in the three months ended December 31, 2022:

Current wording

The effective tax rate during the three months ended March 31, 2024 was higher compared to the three months ended March 31, 2023 primarily due to a $70.5 million goodwill impairment charge during the three months ended March 31, 2024, which is non-deductible for income tax purposes.

Previous wording

The effective tax rate during the six months ended December 31, 2023 was higher compared to the six months ended December 31, 2022 primarily due to the impact of the following items:

Current wording

The effective tax rate during the nine months ended March 31, 2024 was higher compared to the nine months ended March 31, 2023 primarily due to the impact of the following items:

Previous wording

•The $192.6 million goodwill impairment charge during the six months ended December 31, 2023, which is non-deductible for income tax purposes;

Current wording

•The $263.1 million goodwill impairment charge during the nine months ended March 31, 2024, which is non-deductible for income tax purposes;

Previous wording

•$62 million less tax expense during the six months ended December 31, 2022 relating to a decrease in our deferred tax liabilities on unremitted earnings and unrealized gains;

Current wording

•Tax expense decreased by $62.0 million during the nine months ended March 31, 2023 relating to a decrease in our deferred tax liabilities on unremitted earnings and unrealized gains;

Previous wording

•$31.8 million less tax expense during the six months ended December 31, 2022 relating to a decrease in our unrecognized tax benefits from the settlement of income tax examinations; partially offset by

Current wording

•Tax expense decreased by $31.8 million during the nine months ended March 31, 2023 relating to a decrease in our unrecognized tax benefits from the settlement of income tax examinations; partially offset by

Previous wording

•$11.7 million more tax expense during the six months ended December 31, 2022 relating to the sale of an Orbotech Ltd. subsidiary; and

Current wording

•Tax expense increased by $11.7 million during the nine months ended March 31, 2023 relating to the sale of an Orbotech Ltd. subsidiary; and

Previous wording

•Tax expense decreased by $10.8 million during the six months ended December 31, 2023 relating to an increase in the proportion of our earnings generated in jurisdictions with tax rates lower than the U.S. statutory rate.

Current wording

•Tax expense decreased by $14.7 million during the nine months ended March 31, 2023 relating to an increase in the proportion of our earnings generated in jurisdictions with tax rates lower than the U.S. statutory rate.

Previous wording

As of December 31, 2023, our cash, cash equivalents and marketable securities totaled $3.34 billion, which represents an increase of $99.8 million from June 30, 2023. The increase is due to net cash provided by operating activities of $1,506.0 million, partially offset by stock repurchases of $893.2 million and cash used for payment of dividends and dividend equivalents of $378.4 million.

Current wording

As of March 31, 2024, our cash, cash equivalents and marketable securities totaled $4.29 billion, which represents an increase of $1.05 billion from June 30, 2023. The increase is due to net cash provided by operating activities of $2.42 billion and net cash received from issuance of debt of $735.0 million, partially offset by stock repurchases of $1.27 billion and cash used for payment of dividends and dividend equivalents of $575.5 million.

Previous wording

As of December 31, 2023, $1.11 billion of our $3.34 billion of cash, cash equivalents and marketable securities were held by our foreign subsidiaries and branch offices. We currently intend to indefinitely reinvest $103.8 million of the cash, cash equivalents and marketable securities held by our foreign subsidiaries for which we assert that earnings are permanently reinvested. If, however, a portion of these funds were to be repatriated to the United States, we would be required to accrue and pay state and foreign taxes of approximately 1% - 22% of the funds repatriated. The amount of taxes due will depend on the amount and manner of the repatriation, as well as the location from which the funds are repatriated. We have accrued state and foreign tax on the remaining cash of $1.01 billion of the $1.11 billion held by our foreign subsidiaries and branch offices. As such, these funds can be returned to the U.S. without accruing any additional U.S. tax expense.

Current wording

As of March 31, 2024, $1.16 billion of our $4.29 billion of cash, cash equivalents and marketable securities were held by our foreign subsidiaries and branch offices. We currently intend to indefinitely reinvest $109.3 million of the cash, cash equivalents and marketable securities held by our foreign subsidiaries for which we assert that earnings are permanently reinvested. If, however, a portion of these funds were to be repatriated to the United States, we would be required to accrue and pay state and foreign taxes of approximately 1% - 22% of the funds repatriated. The amount of taxes due will depend on the amount and manner of the repatriation, as well as the location from which the funds are repatriated. We have accrued state and foreign tax on the remaining cash of $1.05 billion of the $1.16 billion held by our foreign subsidiaries and branch offices. As such, these funds can be returned to the U.S. without accruing any additional U.S. tax expense.

Previous wording

During the three months ended December 31, 2023, our Board of Directors declared a regular quarterly cash dividend of $1.45 per share on our outstanding common stock, which was paid on December 1, 2023 to our stockholders of record as of the close of business on November 15, 2023. During the same period in fiscal year ended June 30, 2023, our Board of Directors declared and paid a regular quarterly cash dividend of $1.30 per share on our outstanding common stock. The total amount of regular quarterly cash dividends and dividend equivalents paid during the three months ended December 31, 2023 and 2022 was $196.9 million and $184.2 million, respectively. The total amount of regular quarterly cash dividends and dividend equivalents paid during the six months ended December 31, 2023 and 2022 was $378.4 million and $372.2 million, respectively. The amount of accrued dividend equivalents payable for regular quarterly cash dividends on unvested restricted stock units (“RSU”) with dividend equivalent rights as of December 31, 2023 and June 30, 2023 was $11.8 million and $12.2 million, respectively. These amounts will be paid upon vesting of the underlying unvested RSUs as described in Note 10 “Equity, Long-term Incentive Compensation Plans and Non-Controlling Interest” to our Condensed Consolidated Financial Statements.

Current wording

During the three months ended March 31, 2024, our Board of Directors declared a regular quarterly cash dividend of $1.45 per share on our outstanding common stock, which was paid on March 1, 2024 to our stockholders of record as of the close of business on February 19, 2024. During the same period in fiscal year ended June 30, 2023, our Board of Directors declared and paid a regular quarterly cash dividend of $1.30 per share on our outstanding common stock. The total amount of regular quarterly cash dividends and dividend equivalents paid during the three months ended March 31, 2024 and 2023 was $197.2 million and $180.9 million, respectively. The total amount of regular quarterly cash dividends and dividend equivalents paid during the nine months ended March 31, 2024 and 2023 was $575.5 million and $553.0 million, respectively. The amount of accrued dividend equivalents payable for regular quarterly cash dividends on unvested restricted stock units (“RSU”) with dividend equivalent rights as of March 31, 2024 and June 30, 2023 was $12.4 million and $12.2 million, respectively. These amounts will be paid upon vesting of the underlying unvested RSUs as described in Note 10 “Equity, Long-term Incentive Compensation Plans and Non-Controlling Interest” to our Condensed Consolidated Financial Statements.

Previous wording

The shares of common stock repurchased under our stock repurchase program have reduced our basic and diluted weighted-average shares outstanding for the six months ended December 31, 2023 and 2022. The stock repurchase program is intended, in part, to mitigate the potential dilutive impact related to our equity incentive plans and shares issued in connection with our Employee Stock Purchase Program as well as to return excess cash to our stockholders.

Current wording

The shares of common stock repurchased under our stock repurchase program have reduced our basic and diluted weighted-average shares outstanding for the nine months ended March 31, 2024 and 2023. The stock repurchase program is intended, in part, to mitigate the potential dilutive impact related to our equity incentive plans and shares issued in connection with our Employee Stock Purchase Program as well as to return excess cash to our stockholders.

Previous wording

Historically, we have financed our liquidity requirements through cash generated from our operations. Net cash provided by operating activities during the six months ended December 31, 2023 was $1.51 billion compared to $1.70 billion during the six months ended December 31, 2022. This decrease of $193.9 million resulted primarily from the following:

Current wording

Historically, we have financed our liquidity requirements through cash generated from our operations. Net cash provided by operating activities during the nine months ended March 31, 2024 was $2.42 billion compared to $2.71 billion during the nine months ended March 31, 2023. This decrease of $294.7 million resulted primarily from the following:

Previous wording

•An increase in income tax payments of approximately $211 million; and

Current wording

•An increase in income tax payments of approximately $314 million; and

Previous wording

•An increase in debt interest payment of approximately $64 million; partially offset by

Current wording

•An increase in debt interest payment of approximately $53 million; partially offset by

Previous wording

•A decrease in accounts payable payments of approximately $338 million; and

Current wording

•A decrease in accounts payable payments of approximately $600 million; and

Previous wording

•An increase in interest income of approximately $40 million.

Current wording

•An increase in interest income of approximately $64 million.

Previous wording

Net cash used in investing activities during the six months ended December 31, 2023 was $480.1 million compared to $294.9 million during the six months ended December 31, 2022. This increase in cash used was mainly due to an increase in net purchases of available-for-sale and trading securities of $174.3 million and a decrease in proceeds from the sale of a business of $75.4 million, partially offset by a decrease in cash used in business acquisitions of $27.1 million and a decrease in capital expenditures of $33.1 million.

Current wording

Net cash used in investing activities during the nine months ended March 31, 2024 was $1.34 billion compared to $408.1 million during the nine months ended March 31, 2023. This increase in cash used was mainly due to an increase in net purchases of available-for-sale, equity and trading securities of $928.5 million and a decrease in proceeds from the sale of a business of $75.4 million, partially offset by a decrease in capital expenditures of $46.3 million and a decrease in cash used in business acquisitions of $23.5 million.

Previous wording

Net cash used in financing activities during the six months ended December 31, 2023 was $1.30 billion compared to net cash used in financing activities of $1.42 billion during the six months ended December 31, 2022. This decrease was mainly due to decreases in debt-related payments of $868.8 million, partially offset by an increase in cash used for common stock repurchases of $448.4 million and proceeds received from our revolving credit facility of $300.0 million in the quarter ended September 30, 2022.

Current wording

Net cash used in financing activities during the nine months ended March 31, 2024 was $1.16 billion compared to net cash used in financing activities of $2.32 billion during the nine months ended March 31, 2023. This decrease was mainly due to a decrease in debt-related payments of $1.09 billion and an increase in proceeds received from issuance of debt, net of issuance costs, of $741.6 million, partially offset by an increase in cash used for common stock repurchases of $342.4 million and proceeds received from our revolving credit facility of $300.0 million in the quarter ended September 30, 2022.

Previous wording

As of December 31, 2023, we had an aggregate principal amount of senior, unsecured notes totaling $5.95 billion. For additional information on these senior notes, see Note 8 “Debt” to our Condensed Consolidated Financial Statements. As of December 31, 2023, we were in compliance with all of our covenants under the Indenture associated with the Senior Notes.

Current wording

As of March 31, 2024, we had an aggregate principal amount of senior, unsecured notes totaling $6.70 billion. For additional information on these senior notes, see Note 8 “Debt” to our Condensed Consolidated Financial Statements. As of March 31, 2024, we were in compliance with all of our covenants under the Indenture associated with the Senior Notes.

Previous wording

We have in place a Credit Agreement (“Credit Agreement”) for an unsecured Revolving Credit Facility (“Revolving Credit Facility”) with a maturity date of June 8, 2027 that allows us to borrow up to $1.50 billion. As of December 31, 2023, we had no outstanding borrowings under the Revolving Credit Facility. For additional information on the Revolving Credit Facility, see Note 8 “Debt” to our Condensed Consolidated Financial Statements. We were in compliance with all covenants under the Credit Agreement as of December 31, 2023 (the leverage ratio was 1.39 to 1.00, compared to a maximum leverage ratio of 3.50 to 1.00 on a quarterly basis covering the trailing four consecutive fiscal quarters for each fiscal quarter). Considering our current liquidity position, short-term financial forecasts and ability to prepay the Revolving Credit Facility, if necessary, we expect to continue to be in compliance with our financial covenants at the end of our fiscal year ending June 30, 2024.

Current wording

We have in place a Credit Agreement (“Credit Agreement”) for an unsecured Revolving Credit Facility (“Revolving Credit Facility”) with a maturity date of June 8, 2027 that allows us to borrow up to $1.50 billion. As of March 31, 2024, we had no outstanding borrowings under the Revolving Credit Facility. For additional information on the Revolving Credit Facility, see Note 8 “Debt” to our Condensed Consolidated Financial Statements. We were in compliance with all covenants under the Credit Agreement as of March 31, 2024 (the leverage ratio was 1.58 to 1.00, compared to a maximum leverage ratio of 3.50 to 1.00 on a quarterly basis covering the trailing four consecutive fiscal quarters for each fiscal quarter). Considering our current liquidity position, short-term financial forecasts and ability to prepay the Revolving Credit Facility, if necessary, we expect to continue to be in compliance with our financial covenants at the end of our fiscal year ending June 30, 2024.