KLA CORP

Previous wording

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact may be forward-looking statements. You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “could,” “would,” “should,” “expects,” “plans,” “anticipates,” “relies,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continues,” “thinks,” “seeks,” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Such forward-looking statements include those regarding, among others: the future impacts of the COVID-19 pandemic; forecasts of the future results of our operations, including profitability; orders for our products and capital equipment generally; sales of semiconductors; the investments by our customers in advanced technologies and new materials; growth of revenue in the semiconductor industry, the semiconductor capital equipment industry and our business; technological trends in the semiconductor industry; future developments or trends in the global capital and financial markets; our future product offerings and product features; the success and market acceptance of new products; timing of shipment of order backlog; our future product shipments and product and service revenues; our future gross margins; our future research and development (“R&D”) expenses and selling, general and administrative (“SG&A”) expenses; international sales and operations; our ability to maintain or improve our existing competitive position; success of our product offerings; creation and funding of programs for R&D; results of our investment in leading edge technologies; the effects of hedging transactions; the effect of the sale of trade receivables and promissory notes from customers; the effect of future compliance with laws and regulations; our future effective income tax rate; our recognition of tax benefits; the effects of any audits or litigation; future payments of dividends to our stockholders; the completion of any acquisitions of third parties, or the technology or assets thereof; benefits received from any acquisitions and development of acquired technologies; sufficiency of our existing cash balance, investments, cash generated from operations and the unfunded portion of our Revolving Credit Facility (as defined below in the “Revolving Credit Facility” section of “Results of Operations”) to meet our operating and working capital requirements, including debt service and payment thereof; future dividends, and stock repurchases; our compliance with the financial covenants under the Credit Agreement (as defined below in the “Revolving Credit Facility” section of “Results of Operations”) for our Revolving Credit Facility; the adoption of new accounting pronou…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”). All statements other than statements of historical fact may be forward-looking statements. You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “could,” “would,” “should,” “expects,” “plans,” “anticipates,” “relies,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continues,” “thinks,” “seeks,” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Such forward-looking statements include those regarding, among others: forecasts of the future results of our operations, including profitability; orders for our products and capital equipment generally; sales of semiconductors; the investments by our customers in advanced technologies and new materials; growth of revenue in the semiconductor industry, the semiconductor capital equipment industry and our business; technological trends in the semiconductor industry; future developments or trends in the global capital and financial markets; our future product offerings and product features; the success and market acceptance of new products; timing of shipment of order backlog; our future product shipments and product and service revenues; our future gross margins; our future research and development (“R&D”) expenses and selling, general and administrative (“SG&A”) expenses; international sales and operations; our ability to maintain or improve our existing competitive position; success of our product offerings; creation and funding of programs for R&D; results of our investment in leading edge technologies; the effects of hedging transactions; the effect of the sale of trade receivables and promissory notes from customers; the effect of future compliance with laws and regulations; our future effective income tax rate; our recognition of tax benefits; the effects of any audits or litigation; future payments of dividends to our stockholders; the completion of any acquisitions of third parties, or the technology or assets thereof; benefits received from any acquisitions and development of acquired technologies; sufficiency of our existing cash balance, investments, cash generated from operations and the unfunded portion of our Revolving Credit Facility (as defined below in the “Revolving Credit Facility” section of “Liquidity and Capital Resources”) to meet our operating and working capital requirements, including debt service and payment thereof; future dividends, and stock repurchases; our compliance with the financial covenants under the Credit Agreement (as defined below in the “Revolving Credit Facility” section of “Liquidity and Capital Resources”) for our Revolving Credit Facility; the adoption of ne…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

•Evolving Bureau of Industry and Security (“BIS”) of the U.S. Department of Commerce (“Commerce”) rules and regulations (the “2022 BIS Rules,” the “2023 BIS Rules” and, collectively, the “BIS Rules”) and their impact on our ability to sell products to and provide services to certain customers in People’s Republic of China (“China”);

Current wording

•Evolving Bureau of Industry and Security (“BIS”) of the U.S. Department of Commerce (“Commerce”) rules and regulations (the “BIS Rules”) and their impact on our ability to sell products to and provide services to certain customers in People’s Republic of China (“China”);

Previous wording

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

Current wording

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

Previous wording

•We may incur significant restructuring charges or other asset impairment charges or inventory write offs; and

Current wording

•We may incur significant restructuring charges or other asset impairment charges or inventory write offs;

Previous wording

•We are subject to risks related to receivables factoring arrangements and compliance risk of certain settlement agreements with the government.

Current wording

•We are subject to risks related to receivables factoring arrangements and compliance risk of certain settlement agreements with the government; and

Previous wording

We are a leading supplier of process control and yield management solutions and services for the semiconductor and related electronics industries. Our broad portfolio of inspection and metrology products, and related service, software and other offerings, support R&D and manufacturing of integrated circuits (“IC”), wafers and reticles. Our products, services and expertise are used by our customers to measure, detect, analyze and resolve critical and nanometric level product defects, helping them to manage manufacturing process challenges and to obtain higher finish product yields at lower cost. We also offer advanced technology solutions to address various manufacturing needs of printed circuit boards (“PCB”), flat panel displays (“FPD”), specialty semiconductor devices and other electronic components, including advanced packaging, light-emitting diode (“LED”), power devices, compound semiconductor, and data storage industries, as well as general materials research.

Current wording

We are a leading supplier of process control and yield management solutions and services for the semiconductor and related electronics industries. Our broad portfolio of inspection and metrology products, and related service, software and other offerings, support R&D and manufacturing of integrated circuits (“IC”), wafers and reticles. Our products, services and expertise are used by our customers to measure, detect, analyze and resolve critical and nanometric level product defects, helping them to manage manufacturing process challenges and to obtain higher finish product yields at lower cost. We also offer advanced technology solutions to address various manufacturing needs of printed circuit boards (“PCB”), flat panel displays (“FPD”), specialty semiconductor devices and other electronic components, including advanced packaging, light-emitting diode (“LED”), power devices, compound semiconductor, and data storage industries, as well as general materials research. In addition, our services business, which generates revenue largely from recurring “subscription-like” contracts, has grown consistently due to increases in the installed base of KLA systems, increasing the value of our contract offerings and extension of system lifetimes resulting from growth in legacy semiconductor markets.

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 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”).

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 AI including 2-nanometer chip technology, 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

In recent history, the macro-driven slowdown had impacted general semiconductor demand as the semiconductor industry rebalanced its supply chain and reduced inventory levels. As a result of this slowdown as well as a higher interest rate environment, memory device manufacturers and foundry/logic customers reduced their capacity expansion-focused capital expenditure plans. While we continue to invest in technological innovation, we remain focused on calibrating our spending levels to reflect the changing environment. Semiconductor and other technology delays from customers, in converting to new chips and technology methods, for example, could impact process control capital intensity. Push out or cancellation of deliveries to our customers could still cause earnings volatility, due to the timing of revenue recognition as well as increased risk of inventory-related charges.

Current wording

Recently, the semiconductor industry environment has improved as the emergence of disruptive technologies such as AI and continuing advancement of innovation, as well as rising semiconductor content across end-markets and strategic investments in legacy nodes fuel growth. Our foundry/logic customers are slowly increasing their capital intensity, as they continue to scale and incorporate new technologies. Additionally, technology development investments supporting AI and high bandwidth memory are improving the environment for memory device manufacturers. While we continue to invest in technological innovation, factors such as delays from customers in adopting new chips and technology methods, could impact process control capital intensity. Push out or cancellation of deliveries to our customers could still cause earnings volatility, due to the timing of revenue recognition as well as increased risk of inventory-related charges.

Previous wording

•PCB, Display and Component Inspection: a range of inspection, testing and measurement, and direct imaging for patterning products used by manufacturers of PCBs, FPDs, advanced packaging, microelectromechanical systems, and other electronic components.

Current wording

•PCB and Component Inspection: a range of inspection, testing and measurement, and direct imaging for patterning products used by manufacturers of PCBs, FPDs, advanced packaging, MEMS and other electronic components. In March 2024, we made the decision to exit the Display business by announcing the end of manufacturing of most Display products by December 31, 2024, but we will continue to provide services to the installed base of Display products for existing customers.

Previous wording

A majority of our revenues are derived from outside the U.S., and include geographic regions such as China, Taiwan, Korea, Japan, Europe and Israel, and Rest of Asia. China has emerged as a major region for manufacturing of logic and memory chips, adding to its role as the world’s largest consumer of ICs. Additionally, a significant portion of global FPD and PCB manufacturing has migrated to China. Chinese government initiatives are propelling China to expand its domestic manufacturing capacity and attracting investment from semiconductor manufacturers from Taiwan, Korea, Japan and the U.S. Although China is currently seen as an important long-term growth region for the semiconductor and electronics capital equipment sector, Commerce has adopted regulations and added certain China-based entities to the U.S. Entity List (a list of parties that are generally ineligible to receive U.S.-regulated items without prior licensing from BIS), restricting our ability to provide products and services to such entities without a license. In addition, Commerce has imposed export licensing requirements on China-based customers that are military end users or engaged in military end uses, as well as requiring our customers to obtain an export license when they use certain semiconductor capital equipment based on U.S. technology to manufacture products connected to certain entities on the U.S. Entity List.

Current wording

A majority of our revenues are derived from outside the U.S., and include geographic regions such as China, Taiwan, Korea, Japan, Europe and Israel, and Rest of Asia. China remains a major region for manufacturing of legacy node logic and memory chips, adding to its role as the world’s largest consumer of ICs. Additionally, a significant portion of global FPD and PCB manufacturing has migrated to China. Chinese government initiatives around self-sustainability are propelling China to expand its domestic manufacturing capacity and attracting investment from semiconductor manufacturers from Taiwan, Korea, Japan and the U.S. Although China is currently seen as an important long-term growth region for the semiconductor and electronics capital equipment sector, Commerce has adopted regulations and added certain China-based entities to the U.S. Entity List (a list of parties that are generally ineligible to receive U.S.-regulated items without prior licensing from BIS), restricting our ability to provide products and services to such entities without a license. In addition, Commerce has imposed export licensing requirements on China-based customers that are military end users or engaged in military end uses, as well as requiring our customers to obtain an export license when they use certain semiconductor capital equipment based on U.S. technology to manufacture products connected to certain entities on the U.S. Entity List.

Previous wording

In addition, in October 2022, BIS issued the 2022 BIS Rules, which imposed export licensing requirements for certain U.S. semiconductor and high-performance computing technology (including wafer fab equipment), for the use of such technology for certain end uses in China, and for the provision of support by U.S. Persons to certain advanced IC fabs located in China. In particular, the 2022 BIS Rules impose export license requirements effectively on all KLA products and services to customers located in China that fabricate:

Current wording

In addition, in October 2022, BIS issued the 2022 BIS Rules (the “2022 BIS Rules”), which imposed export licensing requirements for certain U.S. semiconductor and high-performance computing technology (including wafer fab equipment), for the use of such technology for certain end uses in China, and for the provision of support by U.S. Persons to certain advanced IC fabs located in China. In particular, the 2022 BIS Rules impose export license requirements effectively on all KLA products and services to customers located in China that fabricate:

Previous wording

In October 2023, BIS issued additional rules that went into effect in November 2023. These 2023 BIS Rules are designed to update export controls on advanced computing semiconductors and semiconductor manufacturing equipment, as well as items that support supercomputing applications and end-uses, to arms embargoed countries, including China. The 2023 BIS Rules adjust the parameters included in the 2022 BIS Rules that determine whether an advanced computing chip is restricted and impose new measures to address risks of circumvention of the controls established by the 2022 BIS Rules. The 2023 BIS Rules are very complex and, in January 2024, KLA, among other companies, submitted comments to the BIS on the 2023 BIS Rules. We are taking appropriate measures to comply with all BIS Rules, and will continue to apply for export licenses, when required, to avoid disruption to our customers’ operations. While some export licenses have been obtained by us or our customers, there can be no assurance that export licenses applied for by either us or our customers, now or in the future, will be granted.

Current wording

In October 2023, BIS issued additional rules that went into effect in November 2023 (the “2023 BIS Rules”). These 2023 BIS Rules are designed to update export controls on advanced computing semiconductors and semiconductor manufacturing equipment, as well as items that support supercomputing applications and end-uses, to arms embargoed countries, including China. The 2023 BIS Rules adjust the parameters included in the 2022 BIS Rules that determine whether an advanced computing chip is restricted and impose new measures to address risks of circumvention of the controls established by the 2022 BIS Rules. The 2023 BIS Rules are very complex and, in January 2024, KLA, among other companies, submitted comments to the BIS on the 2023 BIS Rules. We are taking appropriate measures to comply with all BIS Rules, and will continue to apply for export licenses, when required, to avoid disruption to our customers’ operations. While some export licenses have been obtained by us or our customers, there can be no assurance that export licenses applied for by either us or our customers, now or in the future, will be granted.

Previous 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.

Current wording

(1)For the explanation why our net income increased to $945.9 million in the three months ended September 30, 2024 compared to the three months ended September 30, 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 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.

Current wording

(2)Our net income for the three months ended March 31, 2024 included a pre-tax goodwill impairment charge of $70.5 million. Our net income 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” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

Previous wording

There have been no material changes in our critical accounting estimates and policies since our Annual Report on Form 10-K for the fiscal year ended June 30, 2023. Refer to Note 1 “Description of Business and Summary of Significant Accounting Policies” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for our fiscal year ended June 30, 2023 for additional details on significant accounting policies. In addition, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended June 30, 2023 for a complete description of our critical accounting estimates.

Current wording

There have been no material changes in our critical accounting estimates since our Annual Report on Form 10-K for the fiscal year ended June 30, 2024. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of

Previous wording

Our business is affected by the concentration of our customer base and our customers’ capital equipment procurement schedules as a result of their investment plans. Our product revenues in any particular period are impacted by the amount of new orders we receive during that period and, depending upon the duration of manufacturing and installation cycles, in the preceding periods. Revenue is also impacted by average customer pricing, customer revenue deferrals associated with volume purchase agreements, the effect of fluctuations in foreign currency exchange rates and increased trade restrictions as discussed in the “Executive Summary” section above.

Current wording

Our business is affected by the concentration of our customer base and our customers’ capital equipment procurement schedules as a result of their investment plans. Our product revenues in any particular period are impacted by the amount of new orders we receive during that period and, depending upon the duration of manufacturing and installation cycles, in the preceding periods. Revenue is also impacted by average customer pricing, customer revenue deferrals associated with volume purchase agreements, the effect of fluctuations in foreign currency exchange rates, increased trade restrictions as discussed in the “Executive Summary” section above and the availability of government incentives for semiconductor capital investments. A significant portion of our revenues continues to be generated in Asia, where a substantial portion of the world’s semiconductor manufacturing capacity is located, and we expect that trend to continue.

Previous 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.

Current wording

Service revenues during the three months ended September 30, 2024 increased, compared to the three months ended September 30, 2023, from $560.3 million to $644.2 million, primarily due to an increase in our installed base.

Previous 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.

Current wording

The decrease in our gross margin during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 is primarily due to a less profitable mix of products and services sold, partially offset by a higher revenue volume of products and services sold, a decrease in other service and manufacturing costs and a decrease in manufacturing labor and overhead costs.

Previous 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.

Current wording

Gross profit in the Semiconductor Process Control segment during the three months ended September 30, 2024 increased compared to the three months ended September 30, 2023 primarily due to a higher revenue volume of products and services sold. Gross profit in the Specialty Semiconductor Process segment during the three months ended September 30, 2024 decreased compared to the three months ended September 30, 2023 primarily due to an unfavorable mix of products and services sold. Gross profit in the PCB and Component Inspection segment during the three months ended September 30, 2024 increased compared to the three months ended September 30, 2023 primarily due to a decrease in other service and manufacturing costs and a higher revenue volume of products and services sold.

Previous 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.

Current wording

R&D expenses during the three months ended September 30, 2024 increased compared to the three months ended September 30, 2023 primarily due to an increase in employee-related expenses of $15.5 million and an increase in depreciation expense of $2.6 million, partially offset by a decrease in engineering project material costs of $6.1 million.

Previous 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.

Current wording

Restructuring charges were $2.9 million and $0.6 million for the three months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the accrual for restructuring charges was $8.0 million.

Previous 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.

Current wording

The change in other expense (income), net during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to higher interest income of $22.5 million compared to the prior fiscal year due to higher interest rates, partially offset by a higher net fair value loss of $3.5 million from an equity security and higher net foreign exchange losses of $3.2 million compared to the prior fiscal year.

Previous 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:

Current wording

The effective tax rate during the three months ended September 30, 2024 was lower compared to the three months ended September 30, 2023 primarily due to the impact of the following items:

Previous 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

Current wording

•Tax expense increased by $4.1 million during the three months ended September 30, 2024 relating to the U.S. federal research credit.

Previous wording

Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses incurred in connection with acquisitions, R&D credits as a percentage of aggregate pre-tax income, non-taxable or non-deductible increases or decreases in the assets held within our Executive Deferred Savings Plan, the tax effects of employee stock activity and the effectiveness of our tax planning strategies.

Current wording

Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses incurred in connection with acquisitions, R&D credits as a percentage of aggregate pre-tax income, non-taxable or non-deductible increases or decreases in the assets held within our Executive Deferred Savings Plan, the tax effects of employee stock activity and the effectiveness of our tax planning strategies. We also continue to monitor the adoption of Pillar Two relating to the global minimum tax in each of our tax jurisdictions to evaluate its impact on our effective income tax rate. For the jurisdictions that have adopted Pillar Two in their tax legislation, it is effective for us beginning in our current fiscal year and there was no material impact to our effective tax rate during the three months ended September 30, 2024 .

Previous 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.

Current wording

As of September 30, 2024, our cash, cash equivalents and marketable securities totaled $4.63 billion, which represents an increase of $125.7 million from June 30, 2024. The increase is due to net cash provided by operating activities of $995.2 million, partially offset by stock repurchases of $567.4 million and cash used for payment of dividends and dividend equivalents of $198.1 million as well as tax withholding payments related to vested and released restricted stock units (“RSU”) of $72.2 million.

Previous 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.

Current wording

As of September 30, 2024, $1.20 billion of our $4.63 billion of cash, cash equivalents and marketable securities were held by our foreign subsidiaries and branch offices. We currently intend to indefinitely reinvest $126.7 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 $1.07 billion of the $1.20 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 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.

Current wording

During the three months ended September 30, 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 September 3, 2024 to our stockholders of record as of the close of business on August 15, 2024. During the same period in fiscal year ended June 30, 2024, 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 September 30, 2024 and 2023 was $198.1 million and $181.5 million, respectively. The amount of accrued dividend equivalents payable for regular quarterly cash dividends on unvested RSUs with dividend equivalent rights as of September 30, 2024 and June 30, 2024 was $10.3 million and $11.8 million, respectively. These amounts will be paid upon vesting of the underlying unvested RSUs as described in Note 9 “Equity and Long-term Incentive Compensation Plans” 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 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.

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 three months ended September 30, 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 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:

Current wording

Historically, we have financed our liquidity requirements through cash generated from our operations. Net cash provided by operating activities during the three months ended September 30, 2024 was $995.2 million compared to $883.7 million during the three months ended September 30, 2023. This increase of $111.5 million resulted primarily from the following:

Previous wording

•A decrease in customer and other collections of approximately $585 million; and

Current wording

•An increase in customer and other collections of approximately $53 million primarily due to higher customer prepayments; and

Previous wording

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

Current wording

•An increase in interest income of approximately $22 million from higher cash balances and higher interest rates; and

Previous 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.

Current wording

Net cash used in investing activities during the three months ended September 30, 2024 was $171.0 million compared to $391.7 million during the three months ended September 30, 2023. This decrease in cash used resulted from a decrease in net purchases of available-for-sale, equity and trading securities of $213.0 million and a decrease in capital expenditures of $7.7 million.

Previous 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.

Current wording

Net cash used in financing activities during the three months ended September 30, 2024 was $837.7 million compared to net cash used in financing activities of $705.2 million during the three months ended September 30, 2023. This increase in cash used resulted from an increase in cash used for common stock repurchases of $112.0 million, payment of dividends, dividend equivalents of $16.6 million and tax withholding payments related to vested and released RSU of $4.0 million.

Previous 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.

Current wording

As of September 30, 2024, we had an aggregate principal amount of senior, unsecured notes totaling $6.70 billion (“Senior Notes”). For additional information on these Senior Notes, see Note 7 “Debt” to our Condensed Consolidated Financial Statements. As of September 30, 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 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.

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. Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $250.0 million in the aggregate. As of September 30, 2024, we had no outstanding borrowings under the Revolving Credit Facility. We were in compliance with all covenants under the Credit Agreement as of September 30, 2024 (the leverage ratio was 1.43 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, 2025.

Previous wording

Working capital was $5.07 billion as of March 31, 2024, which represents an increase of $440.4 million compared to our working capital of $4.63 billion as of June 30, 2023. As of March 31, 2024, our principal sources of liquidity consisted of $4.29 billion of cash, cash equivalents, marketable securities and availability under our Revolving Credit Facility. Our liquidity may be affected by many factors, some of which are based on the normal ongoing operations of the business, spending for business acquisitions, and other factors such as uncertainty in the global and regional economies and the semiconductor, semiconductor-related and electronic device industries. Although cash requirements will fluctuate based on the timing and extent of these factors, we believe that cash generated from operations, together with the liquidity provided by existing cash and cash equivalents balances, marketable securities and our $1.50 billion Revolving Credit Facility, will be sufficient to satisfy our liquidity requirements associated with working capital needs, capital expenditures, cash dividends, stock repurchases and other contractual obligations, including repayment of outstanding debt, for at least the next 12 months.

Current wording

Working capital was $5.43 billion as of September 30, 2024, which represents an increase of $59.9 million compared to our working capital of $5.37 billion as of June 30, 2024. As of September 30, 2024, our principal sources of liquidity consisted of $4.63 billion of cash, cash equivalents, marketable securities and availability under our Revolving Credit Facility. Our liquidity may be affected by many factors, some of which are based on the normal ongoing operations of the business, spending for business acquisitions, and other factors such as uncertainty in the global and regional economies and the semiconductor, semiconductor-related and electronic device industries. Although cash requirements will fluctuate based on the timing and extent of these factors, we believe that cash generated from operations, together with the liquidity provided by existing cash and cash equivalents balances, marketable securities and our $1.50 billion Revolving Credit Facility, will be sufficient to satisfy our liquidity requirements associated with working capital needs, capital expenditures, cash dividends, stock repurchases and other contractual obligations, including repayment of outstanding debt, for at least the next 12 months.

Previous wording

In December 2023, Fitch upgraded our senior unsecured credit rating from A- to A. Factors that can affect our credit ratings include changes in our operating performance, the economic environment, conditions in the semiconductor and semiconductor equipment industries, our financial position, material acquisitions and changes in our business strategy.

Current wording

In December 2023, Fitch Inc. upgraded our senior unsecured credit rating from A- to A. Factors that can affect our credit ratings include changes in our operating performance, the economic environment, conditions in the semiconductor and semiconductor capital equipment industries, our financial position, material acquisitions and changes in our business strategy.