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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 000-09992
KLA CORPORATION
(Exact name of registrant as specified in its charter)
  
Delaware 04-2564110
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
One Technology Drive,Milpitas,California95035
(Address of Principal Executive Offices)(Zip Code)
(408) 875-3000
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareKLACThe Nasdaq Stock Market, LLC
The Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer 
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No  
As of April 19, 2021, there were 153,281,783 shares of the registrant’s Common Stock, $0.001 par value, outstanding.


Table of Contents
INDEX
 
  Page
Number
PART IFINANCIAL INFORMATION
Item 1
6
Item 2
Item 3
Item 4
PART IIOTHER INFORMATION
Item 1
Item 1A
Item 2
Item 3
Item 4
Item 5
Item 6


 
2

Table of Contents
PART I. FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS
KLA CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
 
(In thousands)March 31,
2021
June 30,
2020
ASSETS
Current assets:
Cash and cash equivalents$1,452,150 $1,234,409 
Marketable securities990,575 746,063 
Accounts receivable, net1,201,991 1,107,413 
Inventories1,450,588 1,310,985 
Other current assets309,861 324,675 
Total current assets5,405,165 4,723,545 
Land, property and equipment, net628,438 519,824 
Goodwill2,011,187 2,045,402 
Deferred income taxes240,822 236,797 
Purchased intangible assets, net1,237,589 1,391,413 
Other non-current assets416,039 362,979 
Total assets$9,939,240 $9,279,960 
LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$295,111 $264,280 
Deferred system revenue332,296 336,237 
Deferred service revenue252,992 233,493 
Short-term debt20,000  
Other current liabilities1,129,067 865,776 
Total current liabilities2,029,466 1,699,786 
Non-current liabilities:
Long-term debt3,422,097 3,469,670 
Deferred tax liabilities629,896 660,885 
Deferred service revenue86,902 96,325 
Other non-current liabilities658,015 672,284 
Total liabilities6,826,376 6,598,950 
Commitments and contingencies (Notes 9, 14 and 15)
Stockholders’ equity:
Common stock and capital in excess of par value2,115,205 2,090,268 
Retained earnings1,070,124 654,930 
Accumulated other comprehensive income (loss)(70,473)(79,774)
Total KLA stockholders’ equity3,114,856 2,665,424 
Non-controlling interest in consolidated subsidiaries(1,992)15,586 
Total stockholders’ equity3,112,864 2,681,010 
Total liabilities and stockholders’ equity$9,939,240 $9,279,960 
 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
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KLA CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
 
 Three Months EndedNine Months Ended
March 31,March 31,
(In thousands, except per share amounts)2021202020212020
Revenues:
Product$1,375,320 $1,051,096 $3,758,838 $3,253,621 
Service428,453 372,868 1,234,425 1,093,210 
Total revenues1,803,773 1,423,964 4,993,263 4,346,831 
Costs and expenses:
Costs of revenues709,629 590,158 1,999,924 1,828,017 
Research and development238,957 215,433 687,059 646,764 
Selling, general and administrative183,040 185,760 537,580 566,358 
Goodwill impairment 256,649  256,649 
Interest expense39,092 39,231 117,358 120,053 
Loss on extinguishment of debt 22,538  22,538 
Other expense (income), net(7,348)(1,004)(269)(5,190)
Income before income taxes640,403 115,199 1,651,611 911,642 
Provision for income taxes73,233 37,190 207,316 106,932 
Net income567,170 78,009 1,444,295 804,710 
Less: Net loss attributable to non-controlling interest(326)(443)(1,019)(822)
Net income attributable to KLA$567,496 $78,452 $1,445,314 $805,532 
Net income per share attributable to KLA
Basic$3.69 $0.50 $9.36 $5.12 
Diluted$3.66 $0.50 $9.28 $5.08 
Weighted-average number of shares:
Basic153,801 156,067 154,457 157,356 
Diluted155,159 157,172 155,789 158,586 

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
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KLA CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months EndedNine Months Ended
March 31,March 31,
(In thousands)2021202020212020
Net income $567,170 $78,009 $1,444,295 $804,710 
Other comprehensive income (loss):
Currency translation adjustments:
Cumulative currency translation adjustments(2,079)(3,769)12,262 (3,363)
Income tax (provision) benefit(417)114 (1,607)260 
Net change related to currency translation adjustments(2,496)(3,655)10,655 (3,103)
Cash flow hedges:
Net unrealized gains (losses) arising during the period5,824 (19,333)3,550 (17,785)
Reclassification adjustments for net (gains) losses included in net income675 (2,904)1,736 (1,252)
Income tax (provision) benefit(1,629)4,816 (1,369)4,380 
Net change related to cash flow hedges4,870 (17,421)3,917 (14,657)
Net change related to unrecognized losses and transition obligations in connection with defined benefit plans872 425 (2,626)1,103 
Available-for-sale securities:
Net unrealized gains (losses) arising during the period(1,268)(695)(3,130)1,104 
Reclassification adjustments for net (gains) losses included in net income(25)(432)(238)(346)
Income tax (provision) benefit278 242 723 634 
Net change related to available-for-sale securities(1,015)(885)(2,645)1,392 
Other comprehensive income (loss)2,231 (21,536)9,301 (15,265)
Less: Comprehensive loss attributable to non-controlling interest(326)(443)(1,019)(822)
Total comprehensive income attributable to KLA$569,727 $56,916 $1,454,615 $790,267 

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
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KLA CORPORATION
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
Common Stock and
Capital in Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total KLA
Stockholders'
Equity
Non-
Controlling
Interest
Total
Stockholders'
Equity
(In thousands, except per share amounts)SharesAmount
Balance as of June 30, 2020155,461 $2,090,268 $654,930 $(79,774)$2,665,424 $15,586 $2,681,010 
Adoption of ASC 326— — (5,530)— (5,530)— (5,530)
Net income attributable to KLA— — 420,567 — 420,567 — 420,567 
Other comprehensive income — — — 328 328 — 328 
Net loss attributable to non-controlling interest— — — — — (425)(425)
Net issuance under employee stock plans172 (25,145)— — (25,145)— (25,145)
Repurchase of common stock(1,027)(19,400)(174,497)— (193,897)— (193,897)
Cash dividends ($0.90 per share) and dividend equivalents declared
— — (141,555)— (141,555)— (141,555)
Stock-based compensation expense— 26,992 — — 26,992 — 26,992 
Balance as of September 30, 2020154,606 2,072,715 753,915 (79,446)2,747,184 15,161 2,762,345 
Net income attributable to KLA— — 457,251 — 457,251 — 457,251 
Other comprehensive income — — — 6,742 6,742 — 6,742 
Net loss attributable to non-controlling interest— — — — — (268)(268)
Net issuance under employee stock plans329 15,356 — — 15,356 — 15,356 
Repurchase of common stock(774)(10,477)(167,015)— (177,492)— (177,492)
Cash dividends ($0.90 per share) and dividend equivalents declared
— — (140,455)— (140,455)— (140,455)
Stock-based compensation expense— 26,596 — — 26,596 231 26,827 
Balance as of December 31, 2020154,161 2,104,190 903,696 (72,704)2,935,182 15,124 2,950,306 
Net income attributable to KLA— — 567,496 — 567,496 — 567,496 
Other comprehensive income — — — 2,231 2,231 — 2,231 
Net loss attributable to non-controlling interest— — — — — (326)(326)
Net issuance under employee stock plans104 (6,674)— — (6,674)— (6,674)
Repurchase of common stock(906)(12,431)(261,010)— (273,441)— (273,441)
Cash dividends ($0.90 per share) and dividend equivalents declared
— — (140,058)— (140,058)— (140,058)
Stock-based compensation expense— 30,120 — — 30,120 207 30,327 
Net issuance on exercise of options by non-controlling interest— — — — — 127 127 
Disposal of non-controlling interest— — — — — (17,124)(17,124)
Balance as of March 31, 2021153,359 $2,115,205 $1,070,124 $(70,473)$3,114,856 $(1,992)$3,112,864 


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Common Stock and
Capital in Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total KLA
Stockholder's
Equity
Non-
Controlling
Interest
Total
Stockholders'
Equity
(In thousands, except per share amounts)SharesAmount
Balance as of June 30, 2019159,475 $2,017,312 $714,825 $(73,029)$2,659,108 $18,585 $2,677,693 
Net income attributable to KLA— — 346,525 — 346,525 — 346,525 
Other comprehensive income — — — 1,174 1,174 — 1,174 
Net loss attributable to non-controlling interest— — — — — (129)(129)
Net issuance under employee stock plans281 (23,423)— — (23,423)— (23,423)
Repurchase of common stock(1,659)(20,988)(207,508)— (228,496)— (228,496)
Cash dividends ($0.75 per share) and dividend equivalents declared
— — (120,669)— (120,669)— (120,669)
Stock-based compensation expense— 26,944 — — 26,944 — 26,944 
Balance as of September 30, 2019158,097 1,999,845 733,173 (71,855)2,661,163 18,456 2,679,619 
Net income attributable to KLA— — 380,555 — 380,555 — 380,555 
Other comprehensive income— — — 5,097 5,097 — 5,097 
Net loss attributable to non-controlling interest— — — — — (250)(250)
Net issuance under employee stock plans442 12,262 — — 12,262 — 12,262 
Repurchase of common stock(1,690)(21,375)(259,218)— (280,593)— (280,593)
Cash dividends ($0.85 per share) and dividend equivalents declared
— — (135,509)— (135,509)— (135,509)
Stock-based compensation expense— 26,789 — — 26,789 — 26,789 
Balance as of December 31, 2019156,849 2,017,521 719,001 (66,758)2,669,764 18,206 2,687,970 
Net income attributable to KLA— — 78,452 — 78,452 — 78,452 
Other comprehensive income— — — (21,536)(21,536)— (21,536)
Net loss attributable to non-controlling interest— — — — — (443)(443)
Net issuance under employee stock plans177 (4,284)— — (4,284)— (4,284)
Repurchase of common stock(1,977)(25,436)(286,559)— (311,995)— (311,995)
Cash dividends ($0.85 per share) and dividend equivalents declared
— — (134,238)— (134,238)— (134,238)
Stock-based compensation expense— 31,270 — — 31,270 — 31,270 
Balance as of March 31, 2020155,049 $2,019,071 $376,656 $(88,294)$2,307,433 $17,763 $2,325,196 

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).
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KLA CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
 March 31,
(In thousands)20212020
Cash flows from operating activities:
Net income$1,444,295 $804,710 
Adjustments to reconcile net income to net cash provided by operating activities:
Goodwill impairment 256,649 
Depreciation and amortization248,688 269,112 
Loss on extinguishment of debt 22,538 
Loss (gain) on unrealized foreign exchange and other(13,339)(1,187)
Asset impairment charges842 2,581 
Stock-based compensation expense84,146 85,003 
Gain on sale of business(4,422) 
Settlement of treasury lock agreement (21,518)
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:
Accounts receivable(101,134)(128,793)
Inventories(146,375)(18,208)
Other assets(72,138)(29,271)
Accounts payable30,952 41,239 
Deferred system revenue(3,775)54,035 
Deferred service revenue10,076 7,574 
Other liabilities241,586 (18,460)
Net cash provided by operating activities1,719,402 1,326,004 
Cash flows from investing activities:
Proceeds from sale of assets1,855  
Proceeds from sale of business16,833  
Business acquisitions, net of cash acquired (78,600)
Capital expenditures(176,252)(110,885)
Purchases of available-for-sale securities(795,124)(564,655)
Proceeds from sale of available-for-sale securities125,774 104,770 
Proceeds from maturity of available-for-sale securities418,447 491,269 
Purchases of trading securities(83,866)(68,657)
Proceeds from sale of trading securities84,919 72,619 
Proceeds from other investments614 1,086 
Net cash used in investing activities(406,800)(153,053)
Cash flows from financing activities:
Proceeds from issuance of debt, net of issuance costs40,343 742,004 
Proceeds from revolving credit facility 250,000 
Repayment of debt(70,000)(996,033)
Common stock repurchases(638,830)(829,084)
Payment of dividends to stockholders(420,086)(389,659)
Issuance of common stock26,356 25,285 
Tax withholding payments related to vested and released restricted stock units(42,819)(40,733)
Payment of contingent consideration payable (60)
Net cash used in financing activities(1,105,036)(1,238,280)
Effect of exchange rate changes on cash and cash equivalents10,175 (