KLA CORP (KLAC) · Annual Report (10-K) SEC Filing

PART I ITEM 1.BUSINESS The Company KLA Corporation and its majority-owned subsidiaries ( KLA or the Company, and also referred to as we, our, us or similar references) are suppliers of industry-leading equipment and services that enable innovation throughout the electronics industry. We provide advanced process control and process-enabling solutions for manufacturing wafers, reticles/masks, chemicals/materials, integrated circuits ( ICs or chips ), packaged ICs and printed circuit boards ( PCBs ), as well as comprehensive support and services across our installed base. Our suite of advanced products, coupled with our unique process control software and services, allows us to deliver solutions that help our customers achieve their technology advancement and high-volume production goals by improving yields while reducing waste, risks and costs. This improves our customers overall profitability and return on investment. Our services business, which accounted for approximately 23% of our total revenues in fiscal 2026, provides maintenance and other services to maximize uptime, productivity and tool life for our customers. KLA was formed as KLA-Tencor Corporation in April 1997 through the merger of KLA Instruments Corporation and Tencor Instruments, two long-time leaders in the semiconductor capital equipment industry that began operations in 1975 and 1976, respectively. We are organized into three reportable segments: Semiconductor Process Control, Specialty Semiconductor Process and PCB and Component Inspection. Within the Semiconductor Process Control segment, our comprehensive portfolio of inspection, metrology and software products, as well as related services, help IC, wafer, reticle/mask and chemical/materials manufacturers achieve target yields throughout the entire fabrication process, from R&D to final volume production. These products and services are designed to provide comprehensive solutions to help customers accelerate development and production ramp cycles, achieve higher and more stable product yields and improve their overall profitability. Within the Specialty Semiconductor Process segment, we develop and sell advanced vacuum deposition and etching process tools, which are used by a broad range of specialty semiconductor customers, including manufacturers of microelectromechanical systems ( MEMS ), radio frequency ( RF ) communication semiconductors, and power semiconductors for automotive and industrial applications. Within the PCB and Component Inspection segment, we enable electronic device manufacturers to inspect, test and measure PCBs, IC substrates and packaged ICs to verify their quality, pattern the desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces. Additional information about KLA is available at www.kla.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act are available free of charge on our website as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Information on our website is not part of this Annual Report on Form 10-K or our other filings with the SEC. Additionally, these filings may be obtained through the SEC s website (www.sec.gov), which contains reports, proxy and information statements and other information regarding issuers that file electronically. Investors and others should note that we may announce material financial information to investors using our investor relations website (ir.kla.com), which includes our SEC filings, press releases, public earnings calls and conference webcasts. The investor relations website is used to communicate with the public about us and our products, services and other matters. Industry Our core focus is enabling technological advances and improving manufacturing yields in the semiconductor industry. Semiconductors, or ICs, are fabricated on silicon wafers through a highly sophisticated sequence of process steps, including deposition of film layers, patterning, material removal, heat treatment, and measurement and inspection. The most advanced chip designs repeat these steps hundreds of times before the wafer is cut into individual chips, packaged and tested. Our business depends upon the capital expenditures of semiconductor, semiconductor-related and electronic device manufacturers, which are driven by current and anticipated market demand for ICs and the products that use them. While we do not consider our business to be seasonal, it has historically been cyclical with respect to these manufacturers capital equipment procurement practices and is affected by their investment patterns across global markets, industry downturns, broader economic conditions, customer consolidation, and political and regulatory change. The continuing evolution of semiconductors toward smaller geometries and more complex multi-level circuitry, requiring new substrate and film materials, new transistor architectures, advanced multi-patterning optical and extreme ultraviolet ( EUV ) lithography, and advanced packaging, has 1 Table of Contents significantly increased both the performance and cost requirements of the capital equipment used to manufacture these devices, with construction of an advanced IC fabrication facility today costing well above $10 billion. In this environment, accelerating the yield ramp and reaching high-volume production ahead of competitors are critical to manufacturers revenue and profitability, and chipmakers increasingly demand higher productivity and returns from their equipment, positioning the process control and yield management solution we provide as an essential enabler of their success. The semiconductor industry continues to experience market expansion and diversification. High-performance computing ( HPC ) and data centers, supported by increasing adoption of AI, are contributing to industry growth and these trends are expected to continue to influence industry investment during fiscal year 2027. AI-related demand is driving innovation and investment at the leading edge and we believe our portfolio of products is uniquely positioned to support leading-edge semiconductor manufacturing and ongoing AI infrastructure buildout. Our semiconductor customers generally operate in one or both of the major semiconductor device manufacturing markets: memory and foundry/logic. End-market demand drivers expected to benefit KLA over the long term include adoption of EUV in high-volume manufacturing ( HVM ) for logic and DRAM memory, including high-bandwidth memory, which drives new process control requirements and growth in key markets for KLA. Demand for advanced semiconductor technologies, particularly at the 2-nanometer node, where investment levels and process control intensity are increasing, continues to support AI-related investments. Increasing complexity and value of semiconductor packages, particularly for AI and HPC applications, is also driving significant growth in our advanced packaging business. The digitization of industries, including 5G markets, advances in healthcare and industrial applications, and the increasing adoption of electric vehicles and intelligence in automobiles, also supports leading-edge design node technology investments and capacity expansions. Research and Development The markets for semiconductor and electronics technologies are characterized by rapid technological development and product innovation. These innovations are inherently complex and require long development cycles and appropriate professional staffing. We make significant investments in product R&D for the timely development of new products and enhancements necessary to maintain our competitive position. Accordingly, we devote a significant portion of our human and financial resources to R&D programs and seek to maintain close relationships with customers to remain responsive to their needs. Our key R&D activities during the fiscal year ended June 30, 2026 involved the development of process control and process-enabling solutions for front end semiconductors and advanced packaging. Our primary R&D centers are located in the U.S., United Kingdom ( U.K. ), India, China, Singapore and Israel. For information regarding our R&D expenses during the last three fiscal years, see Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report on Form 10-K. The strength of our competitive positions in many of our existing markets is primarily due to our leading technology, which is the result of our continuing significant investments in product R&D. Even during down cycles in the semiconductor industry, we have remained committed to significant engineering efforts toward both product improvement and new product development to enhance our competitive position. Customers We count among our largest customers the leading semiconductor, semiconductor-related and electronic device manufacturers in Asia, the U.S. and Europe. Our future performance depends, in part, on our ability to continue to compete successfully in Asia, one of the largest markets for our equipment. Our business depends on capital expenditures from these manufacturers which, in turn, depend on many factors including general economic conditions, anticipated market demand, evolving government regulations and capacity constraints. Our ability to compete in this region depends on the continuation of favorable trading relationships between countries in the region and the U.S., and our continuing ability to maintain satisfactory relationships with leading semiconductor companies in the region. For the fiscal years ended June 30, 2026, 2025 and 2024, the following customers each accounted for more than 10% of total revenues, primarily in the Semiconductor Process Control segment: Year Ended June 30, 202620252024 Taiwan Semiconductor Manufacturing Company LimitedTaiwan Semiconductor Manufacturing Company LimitedTaiwan Semiconductor Manufacturing Company Limited TechnologiesProducts Semiconductor Process Control Chip Manufacturing: Defect Inspection and Review Inspection and review tools are used to identify, locate, characterize, review, and analyze defects on various surfaces of patterned and unpatterned wafers. 39xx Series, R9xx Series, 29xx Series, C30x Series, eSixx Series, eSVx00 Series, Voyager Series, 8 Series, Puma Series, Micro-SR , CIRCL Series, Castor , Surfscan Series, eDRX Series, eDR7xxx Series. Chip Manufacturing: Metrology Metrology systems are used to measure pattern dimensions, film thickness(es), film stress, layer-to-layer alignment, pattern placement, surface topography and electro-optical properties for wafers. Archer Series, ATL Series, Axion Series, SpectraShape Series, eM Series, SpectraFilm Series, Aleris Series, PWG Series, Therma-Probe Series, OmniMap RS-xxx Series, MicroSense product family, CAPRES product family. Chip Manufacturing: Chemistry Process Control Chemical process control equipment qualifies incoming supplies, manages tool inputs, adjusts chamber/bath conditions and monitors process waste. QualiSurf Series, Quali-Line Quanta Series, Quali-Line Prima Series, QualiLab Elite Series. 3 Table of Contents Chip Manufacturing: In Situ Process Management Wired and wireless sensor wafers and reticles provide comprehensive data used to visualize, diagnose and control process conditions in the equipment used to manufacture chips and reticles. Additional wafer diagnostic solutions help troubleshoot and monitor materials handling to help detect and predict mechanical behaviors that may cause wafer damage. SensArray product family. Wafer Manufacturing: Defect Inspection and Review, Metrology, and In Situ Process Management Wafer defect inspection, review and metrology systems are used to help wafer/substrate manufacturers manage quality throughout the wafer fabrication process by detecting defects, characterizing surface quality and assessing wafer geometry. Surfscan Series, eDRX Series, eDR7xxx Series, WaferSight Series, MicroSense wafer geometry product family, SensArray product family, Candela Series. Reticle Manufacturing: Defect Inspection, Metrology and In Situ Process Management Reticle inspection and metrology systems help reticle blank, patterned optical reticle, patterned EUV reticle, and chip manufacturers identify defects, pattern placement errors, and process issues during reticle manufacturing. In addition to reducing yield risk during production, these systems also support outgoing and incoming reticle quality control. Teron SL6xx Series, Teron 6xx Series, TeraScan 5xx Series, X5.x Series, FlashScan Series, LMS IPRO Series, SensArray product family. Packaging Manufacturing: Wafer Inspection and Metrology, Chemistry Process Control, In Situ Process Management Wafer inspection and metrology systems for advanced wafer-level packaging help packaging manufacturers detect, resolve and monitor excursions to provide greater control of quality for improved device performance. Chemistry process monitoring systems analyze and monitor wet chemicals used in wafer-level packaging (WLP), panel-level packaging (PLP), and IC substrates. Kronos Series, Micro-SR , CIRCL -AP, irArcher Series, PWG5 with XT Option, eDR7xxxAP , OmniMap RS-xxx Series, QualiSurf Series, Quali-Fill Libra Series, QualiLab Elite Series, SensArray product family. Semiconductor Software Solutions Software solutions centralize and analyze the data produced by inspection, metrology and process systems for chip, wafer, reticle and packaging manufacturing. These solutions provide run-time process control, defect excursion identification, process corrections and defect classification to accelerate yield learning rates and reduce production risk. Patterning simulation software allows researchers to evaluate advanced patterning technologies, such as EUV lithography and multiple patterning techniques. Klarity product family, 5D Analyzer , OVALiS, aiSIGHT , Anchor product family, RDC, FabVision Series, ProDATA , PROLITH , ProETCH , I-PAT , SPOT . KLA Pro Systems: Certified and Remanufactured Products Inspection and metrology systems support the manufacture of larger design node chips and 200mm wafer manufacturing. Surfscan Series, 2835, 2367 Pro, ASET-F5x Pro, Archer Series. General Purpose/Lab Application Specialty Semiconductor Manufacturing, Benchtop Metrology, Surface Characterization, Material Strength Characterization and Electrical Property Measurement. HRP -260, Zeta Series, Tencor P Series, Nano Indenter G200X, Alpha-Step Series, Filmetrics F Series, Filmetrics R Series, iMicro, iNano , Filmetrics Profilm3D Series, NanoFlip. The Specialty Semiconductor Process segment develops and sells advanced vacuum deposition and etching process tools, which are used by a broad range of specialty semiconductor customers, including manufacturers of MEMS, RF communication chips and power semiconductors for automotive and industrial applications. The Specialty Semiconductor Process segment offers a variety of solutions and products, including: SegmentTechnologiesProducts Specialty Semiconductor Process Specialty Semiconductor Manufacturing Etch, plasma dicing, deposition and other wafer processing technologies and solutions for the semiconductor and microelectronics industry. SPTS Omega Series, SPTS Sigma Series, SPTS Delta Series, SPTS Osprey Series, Primaxx Series, Xactix Series, SPTS Mosaic Series, MVD Series. 4 Table of Contents The PCB and Component Inspection segment enables electronic device manufacturers to inspect, test and measure PCBs, IC substrates and packaged ICs to verify their quality, pattern the desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces. The PCB and Component Inspection segment offers a variety of solutions and products, including: SegmentTechnologiesProducts PCB and Component Inspection PCB Direct imaging, inspection, optical shaping, inkjet and additive printing as well as computer-aided manufacturing and engineering solutions for the PCB and IC substrate market. Serena , Orbotech Corus Series, Orbotech Infinitum Series, Orbotech Nuvogo Fine/ Nuvogo Series, Orbotech Diamond Series, Lumina , Orbotech Ultra Dimension Series, Orbotech Ultra Fusion / Fusion Series, Orbotech Discovery II Series, Orbotech Precise Series, Orbotech Ultra PerFix / PerFix Series, Orbotech Neos Series, Orbotech Sprint Series, Orbotech Magna Series, Frontline product family. Component Inspection and metrology systems for quality control and yield improvement in advanced and traditional semiconductor packaging markets. ICOS F26x, ICOS Tx Series, Zeta -5xx/6xx. Services Our service programs enable our customers in all business sectors to maintain the high performance and productivity of our products through a flexible array of service options. Whether a manufacturing site is producing wafers, reticles, ICs or PCB products, our highly trained service teams collaborate with customers to determine the best products and services to meet technology and business requirements. Backlog Our backlog, primarily consisting of sales orders where written customer requests have been received, increased from $7.86 billion as of June 30, 2025, to $12.57 billion as of June 30, 2026, due to strong demand driven by the AI infrastructure buildout. The amount of backlog and timing of revenue recognition are driven by multiple variables, many of which are beyond our control, such as lead-time expectations, changes in government regulations, the readiness of customer fabs, end market needs for capacity, changes in the estimated versus actual start time of customers projects, timing of delivery and installation dates and supply chain constraints. As customers try to balance the evolution of their technological, production or market needs with the timing and content of orders placed with us, there is increased risk of order modifications, pushouts or cancellations. Our backlog on any particular date does not provide meaningful information about the timing of future revenue recognition. Manufacturing, Raw Materials and Supplies We perform system design, assembly and testing in-house and use an outsourcing strategy to manufacture components and major subassemblies. Our in-house manufacturing activities consist primarily of assembling and testing components and subassemblies acquired from third-party vendors and integrating those subassemblies into our finished products. Our principal manufacturing activities occur in the U.S., Singapore, Israel, China and various locations throughout Europe. Our supply chain strategy incorporates considerations for ethical labor practices, responsible minerals sourcing, and Responsible Business Alliance and SEMI guidelines, and increasing regulatory expectations regarding the environmental, social and/or geographic provenance of materials or components may at times require us to incorporate further such considerations into our supply chain strategy. Some critical parts, components and subassemblies (collectively, parts ) that we use are designed by us and manufactured by suppliers in accordance with our specifications, while other parts are standard commercial products. We use numerous vendors to supply parts and raw materials to manufacture and support our products. Although we make reasonable efforts to ensure that these parts and raw materials are available from multiple suppliers, this is not always possible. Certain parts and raw materials included in our systems may be obtained only from a single supplier or a limited group of suppliers. Through our business interruption planning, we endeavor to minimize the risk of production interruption by, among other things, monitoring the financial condition of suppliers of key parts and raw materials, providing financial support and incentives to encourage vendors to increase capacity when required, identifying (but not necessarily qualifying) possible alternative suppliers of such parts and materials, and ensuring adequate inventories of key parts and raw materials are available to maintain manufacturing schedules. 5 Table of Contents Although we seek to reduce our dependence on sole and limited source suppliers, in some cases the partial or complete loss of certain of these sources, or disruptions within our suppliers often complex supply chains, could disrupt scheduled deliveries to customers, damage customer relationships and have a material adverse effect on our results of operations. Competition The worldwide market for technologically advanced process control, process-enabling and yield management solutions used by semiconductor and electronics manufacturers is highly competitive, with important competitive factors including system performance, ease of use, reliability, technical service and support, and overall cost of ownership. However, we believe that, while these competitive factors are important, our customers overriding requirement is for systems that effectively incorporate automated capabilities into their existing development and manufacturing processes to enhance productivity, improve yields and reduce waste. To remain competitive, we use significant financial resources to offer a broad range of products, maintain customer service and support centers worldwide, and invest significantly in product R&D. In each of our product markets, we have many competitors, including companies such as Applied Materials, Inc., ASML Holding N.V., Hitachi High-Tech Corporation, Lasertec, Inc. and Onto Innovation, Inc., some of which may have greater financial, research, engineering, manufacturing and marketing resources than we have. We expect our competitors to continue to improve the design and performance of their current products and to introduce new products with improved pricing and performance characteristics. We may also face future competition from new market entrants overseas or domestically. We seek to maintain our market position by building long-term customer relationships, meeting customers evolving needs, anticipating future market demands and enabling customers to accelerate adoption and production of new technologies, as discussed further in the Industry section of this Item 1. However, any loss of competitive position could negatively impact our prices, customer orders, revenue, gross margin and market share. Should this occur, it could negatively impact our operating results and financial condition. Patents and Other Proprietary Rights We protect our proprietary technology through reliance on a variety of IP laws, including patent, copyright and trade secret. We have filed and obtained a number of patents in the U.S. and abroad and intend to continue pursuing the legal protection of our technology through IP laws. As of June 30, 2026, we owned over 9,100 active patents in the U.S. and other countries and had over 3,600 U.S. and foreign patent applications pending. Our patents have various terms expiring through 2045. In addition, from time to time, we acquire license rights under U.S. and foreign patents and other proprietary rights of third parties, and we attempt to protect our trade secrets and other proprietary information through confidentiality and other agreements with our customers, suppliers, employees and consultants, and through other security measures. Although we consider patents and other IP significant to our business, no single patent, copyright or trade secret is essential to us as a whole or to any of our business segments. No assurance can be given that patents will be issued on any of our applications, that license assignments will be made as anticipated, or that our patents, licenses or other proprietary rights will be sufficiently broad to protect our technology. No assurance can be given that any patents issued to or licensed by us will not be challenged, invalidated or circumvented or that the rights granted thereunder will provide us with a competitive advantage. In addition, there can be no assurance that we will be able to protect our technology or that competitors will not be able to independently develop similar or functionally competitive technology. Government Regulations We are subject to a variety of federal, state and local governmental laws and regulations worldwide, including, but not limited to, laws, rules and regulations related to anti-corruption, antitrust, data privacy requirements, employment, environmental, foreign exchange controls, health and safety requirements, immigration, import/export requirements, IP and tax. Compliance with these laws and regulations does not presently have a material effect on our capital expenditures, financial condition, results of operations or competitive position. Any failure to comply with laws and regulations may subject us to a range of consequences including fines, suspension of certain of our business activities, limitations on our ability to sell our products, obligations to remediate in the case of environmental contamination, and criminal and civil liabilities or other sanctions. Changes in environmental laws and regulations could require us to invest in potentially costly pollution control equipment, alter our manufacturing processes or use substitute materials. Our failure to comply with laws, rules and regulations could subject us to future liabilities. Regulations that impact trade, including the imposition of export controls and tariffs, have had an adverse impact on our results of operations. Such actions by the U.S. government or another country could significantly impact our ability to provide products and services to existing and potential customers, especially in China, and adversely affect our business, financial condition and results of operations. 6 Table of Contents For information about risks related to government regulations, see Item 1A Risk Factors in this Annual Report on Form 10-K. Environmental, Social and Governance Initiatives KLA strives to proactively manage and address the ESG topics most important to our stakeholders. Guided by our values, we have integrated ESG considerations into many of our business practices and policies, and work together with our customers, peers, partners and suppliers to promote improvement in human rights, labor, environment, health and safety, anti-corruption, ethics and management system standards within our operations and our supply chain. Our ESG initiatives are another way KLA seeks to deliver long-term value for our stockholders and draw on our core values. We work across our global footprint to shape a more sustainable future in collaboration with our customers and suppliers. As part of our drive to be better, we have science-based targets to reduce greenhouse gas ( GHG ) emissions which were validated in 2024 by the Science Based Target Initiative ( SBTi ). Our targets are to reduce absolute Scope 1 and 2 GHG emissions 50% by 2030 from a 2021 base year and to reduce Scope 3 GHG emissions from the use of sold products 52% per billion transistors inspected, measured, or processed, also with a 2030 goal and 2021 base year. In addition to our science-based targets, we have established goals to use 100% renewable electricity across our global operations by 2030 and achieve net zero Scope 1 and 2 emissions by 2050. In January 2025, we entered into a long-term virtual power purchase agreement to purchase a portion of the output generated from a solar energy project. As part of this agreement, we will also receive renewable energy credits commensurate with the power we acquire. These credits allow us to characterize a commensurate portion of our energy usage as deriving from renewable energy, helping to reduce our Scope 2 GHG emissions, and supporting progress toward our renewable electricity goal mentioned above. This agreement did not have a material impact on our results of operations, financial condition or cash flows during the fiscal years ended June 30, 2026 or June 30, 2025. We understand that sustainability is a shared endeavor across the value chain and broader economy. Beginning in 2023, KLA engaged directly with key supply chain partners, as defined by their share of our purchased goods and services emissions, to reduce their contribution to our Scope 3 footprint, align on common goals and enhance overall transparency. Our company-wide Environmental, Health and Safety Commitment Policy underscores compliance with applicable environmental laws and standards across company locations globally. In 2023, we established a global waste and water policy to guide our efforts in these areas. KLA recognizes the importance of protecting and respecting our environment and energy resources throughout our operations for future generations, and follows the recommendations of the Task Force on Climate-Related Financial Disclosures, transparently reporting climate-related governance, strategy, risk management, metrics and targets to our stakeholders. We continue to monitor various risks, including climate-related and other ESG-related risks, even if some are not currently expected to have a material impact on KLA s business or financial condition for assessed time horizons. For more information on ESG, see KLA s 2024 Global Impact Report ( GIR ) on our website; however, this citation is provided solely for informational purposes and the content of KLA s 2024 GIR is expressly not incorporated by reference into this filing. We include details in our 2024 GIR and other similar disclosures that are not included in this Form 10-K because we seek to be responsive to various areas of interest of our stakeholders; however, such information generally does not, and is not expected to, have a material effect on our capital expenditures, financial condition, results of operations or competitive position. In addition, no assurance can be given that our ESG initiatives will have the intended results or be able to be completed as currently envisioned, whether due to cost, feasibility or other constraints. Our 2025 GIR is expected to be published in the first quarter of fiscal 2027 and, for the avoidance of doubt, is also not incorporated by reference into this filing. Human Capital Management KLA s performance and long-term success depend on the skills, experience and engagement of its workforce. We view our employees and the technology they develop as a key competitive advantage. Our human capital strategy focuses on anticipating workforce needs and attracting, developing, and retaining talent aligned to our core values. In response to competitive labor markets, we take a proactive and inclusive approach to talent development, retention and employee wellbeing. Our programs are designed to support professional growth, workforce capability building, and employee engagement while maintaining a safe, secure, and healthy workforce. Our Core Values At KLA, our core values demonstrating perseverance; striving to be better; being honest, forthright, and consistent; building high-performing teams; and being indispensable to our customers guide our decision-making and interactions with employees, customers, suppliers, and other stakeholders. These values inform our expectations for ethical conduct, 7 Table of Contents collaboration, and respect across the organization and support a culture that values diverse perspectives and shared accountability. Our Workforce As of June 30, 2026, we had approximately 17,000 regular full-time employees and approximately 200 part-time and temporary employees in facilities located in 18 major regions. Approximately 31% of our regular full-time employees are located in the U.S., 19% in Europe and Middle Eastern countries and 50% in Asia, with approximately 21% engaged in manufacturing, 27% in R&D, 27% in customer service, 4% in sales and marketing and 21% in other roles. None of our employees are represented by a labor union; however, there is a trade union delegation for our employees in Belgium and our employees in the German operations of our MIE and Laser Imaging Systems business units are represented by employee works councils. We have not experienced work stoppages and believe that our employee relations are good. In fiscal year 2026, our overall employee voluntary turnover rate was under 3.4%. Compensation and Benefits KLA seeks to provide competitive and equitable compensation and benefits that support employee engagement and retention across its global workforce. We conduct annual compensation reviews to assess market competitiveness and internal alignment, and a significant portion of employee compensation is linked to company and business unit performance. Eligible employees may participate in long-term incentive programs, including restricted stock units ( RSUs ) and an Employee Stock Purchase Plan ( ESPP ), as well as incentive bonus or profit-sharing programs. KLA also offers benefits intended to support employee wellbeing and work-life needs, subject to local requirements and practices. These may include paid time off, parental and bereavement leave, health coverage, income replacement programs, retirement savings plans, and employee assistance programs. In several regions, KLA provides programs and resources focused on physical, financial, and mental wellbeing through virtual and in-person offerings. Learning and Development KLA invests in employee learning and development to support workforce capability, performance, and internal mobility. Development opportunities include stretch assignments, on-the-job learning, classroom instruction, and online training. Employees have access to a range of programs and resources intended to build technical, leadership, and professional skills. Performance management processes include regular feedback on objectives, assessment of key competencies, and career development discussions. KLA emphasizes ongoing manager-employee engagement through regular one-on-one meetings, coaching, and mentorship. The company also supports external education through tuition reimbursement programs. Through partnerships with Stanford University and the University of Michigan, eligible employees may pursue advanced engineering degrees customized for KLA s business needs. In the U.S., KLA offers a student loan reimbursement program. KLA maintains a succession planning process, particularly for director-level positions and above. Leadership development programs, including Values in Action training, reinforce the company s values, ethical standards, and expectations for inclusive leadership. Employees also complete required annual training and certifications related to their roles, including training on environmental practices, data privacy and workplace health and safety. Employee Engagement KLA uses regular employee surveys to gather feedback and assess workforce sentiment across its global operations. Survey results are reviewed to identify trends, areas for improvement, and opportunities to strengthen engagement and performance. Action plans are developed in response to survey feedback and may include enhancements to manager communications, coaching, and targeted training initiatives. KLA s senior leaders engage with employees through regular communications, including quarterly webcasts that provide updates on business priorities and enable employees to ask questions in open Q&A sessions. Employee Health and Safety The health and safety of our employees is paramount to our success. We are committed to providing a safe and healthy workplace for all employees. We accomplish this through promoting strict compliance with applicable laws and regulations regarding workplace safety, including recognition and control of workplace hazards, tracking injury and illness rates, utilizing a global travel health program and maintaining detailed emergency and disaster recovery plans. 8 Table of Contents Our goal is always zero injuries across our facilities, and to achieve that, we conduct proactive risk assessments and audits to constantly improve our efforts. We implemented a global standard for our safety reporting and inspections to promote consistency across our regions, and continually outperform industry averages for injury rates. We made a commitment to globalize our ISO 45001 (the internationally recognized standard for Occupational Health & Safety Management Systems) certification and expand our ISO 14001 (the internationally recognized standard for Environmental Management Systems) certification beyond our larger sites. In calendar-year 2024, we achieved the certification for ISO 14001 and ISO 45001 across our main production and R&D facilities. As of calendar year-end 2024, our sites in Singapore; Newport, Wales; Milpitas, California; Ann Arbor, Michigan; Weilburg, Germany; and our two Israel locations in Migdal HaEmek and Yavne are certified to ISO 14001 and ISO 45001. We are focused on reducing safety risks across business units and at corporate sites worldwide. We revised our approach to risk assessments to risk rank our own operations. We are utilizing this system not only to measure our own performance, but also to help improve the performance of our supply chain and customers. All new hires are required to complete a health and safety training program. In addition, our service technicians are required to achieve and maintain role-specific safety training certifications. Our excellent safety record, which is less than half of the semiconductor industry average, is a tribute to our employees efforts, the breadth and depth of our training programs and our dedication to safety policy management. For more information on Human Capital, see KLA s 2024 GIR on our website; however, this citation is provided solely for informational purposes, and the content of KLA s 2024 GIR is expressly not incorporated by reference into this filing. ITEM 1A.RISK FACTORS A description of factors that could materially affect our business, financial condition or operating results is provided below. Risk Factors Summary The following summarizes the most material risks that make an investment in our securities risky or speculative. If any of the following risks occur or persist, our business, financial condition and results of operations could be materially harmed and the price of our common stock could significantly decline. Macroeconomic, International Trade, Operational and Regulatory Risks Our vulnerability to a weakening in the condition of the financial markets and the global economy; Risks related to our international operations; Export controls, sanctions and other laws, rules, regulations or orders that may limit our ability to sell products or provide services to certain customers, particularly in China; Tariffs, retaliatory trade measures and other trade restrictions, including uncertainty related to tariff authority, implementation and refund processes; IP disputes can be expensive and could result in an inability to use or sell our products in certain jurisdictions; Legal, regulatory and tax environments in which we conduct our business; Differing stakeholder expectations, requirements and attention to ESG matters, including any targets or other ESG initiatives, could result in additional costs or risks or adversely impact our business; We may be unable to attract, retain and motivate key personnel; Reliance on third-party service providers could result in disruptions if such third parties cannot perform services for us in a timely manner; Cybersecurity incidents could result in operational disruption and the loss of valuable information or assets or subject us to costly disruption, remediation, regulatory investigations, litigation and reputational damage; System failures, ERP system implementation risks or limited access to critical information could disrupt our operations and financial reporting processes; We may not find suitable acquisition candidates or fail to successfully integrate our acquisitions; Natural disasters, climate-related events, public health crises, acts of terrorism or war, and other catastrophic events, could disrupt our operations, customer operations or global supply chains for lengthy periods of time; We are exposed to fluctuations in foreign currency exchange rates, interest rates, the market values of our portfolio investments and the market price of our common stock; Our interest rate hedging activities expose us to risks related to changes in floating interest rates; 9 Table of Contents We are subject to tax and regulatory compliance audits; Economic, geopolitical or other conditions in the jurisdictions where we earn profits can impact the tax laws and taxes we pay in those jurisdictions, subsequently impacting our effective tax rate, cash flows and results of operations; Increased compliance costs with federal securities laws, rules, and regulations, as well as NASDAQ requirements; and Changes in accounting standards or practices or taxation rules or practices could have unforeseen effects. Industry and Technology Risks We may not be able to keep pace with trends and technological changes in the industries in which we operate; We have a highly concentrated customer base; Prevailing local and global economic conditions, semiconductor industry cyclicality, customer capital spending patterns and AI-related investment trends may negatively affect customer demand and purchasing decisions; and We are exposed to risks related to the development, adoption, governance and use of AI by us, our competitors, customers, and other third parties. Business Model and Capital Structure Risks We may not be able to maintain our technology advantage or protect our proprietary rights; We may not be able to continue to compete successfully worldwide; We may not receive components, materials or subassemblies necessary to build our products in a timely, cost-effective or compliant manner, including as a result of limited-source suppliers, the availability of rare earth elements or DRAM chip shortages; We may fail to operate our business in a manner consistent with our business plan; We may fail to comply with the covenants in our Revolving Credit Facility (defined below) and Senior Notes (defined below), which could impair our ability to borrow needed funds, or require us to repay debt sooner than we planned; We may not have sufficient financial resources to repay indebtedness when due, and our leveraged capital structure may divert resources from operations, investments, dividends, stock repurchases and other corporate uses; We may not be able to declare cash dividends at all or in any particular amounts; Risks related to our commercial terms and conditions, including our indemnification of third parties, as well as the performance of our products; Government funding may be terminated, modified or subject to audit, repayment obligations, penalties or other restrictions; We may incur significant restructuring charges or other asset impairment charges or inventory write-offs; We are subject to risks related to receivables factoring, banking arrangements, and compliance with certain settlement agreements with the government; and Our Amended and Restated Bylaws ( Bylaws ) designate the Court of Chancery of the State of Delaware as the sole forum for certain actions, which may discourage claims against the Company. For a more complete discussion of the material risks facing our business, see below. Macroeconomic, International Trade, Operational and Regulatory Risks We are exposed to risks associated with a weakening in the condition of the financial markets and the global economy. Demand for our products is ultimately driven by the global demand for electronic devices by consumers and businesses. Economic uncertainty frequently leads to reduced consumer and business spending, and can cause our customers to decrease, cancel or delay their equipment and service orders. The tightening of credit markets, rising interest rates and concerns regarding the availability of credit can make it more difficult for our customers to raise capital, whether debt or equity, to finance their purchases of capital equipment, including the products we sell. Reduced demand, combined with delays in our customers ability to obtain financing (or the unavailability of such financing), has, at times in the past, adversely affected our product and service sales and revenues and, therefore, has harmed our business and operating results, and our operating results and financial condition may again be adversely impacted if economic conditions decline from their current levels. In addition, a decline in the condition of the global financial markets could adversely impact the market values or liquidity of our investments. Our investment portfolio includes corporate and government securities, money market funds and other types of debt and equity investments. Although we believe our portfolio continues to be comprised of sound investments due to the quality and (where applicable) credit ratings of such investments, a decline in the capital and financial markets or 10 Table of Contents rising interest rates would adversely impact the market value of our investments and their liquidity. If the market value of such investments were to decline, or if we were to have to sell some of our investments under illiquid market conditions, we may be required to recognize an impairment charge on such investments or a loss on such sales, either of which could have an adverse effect on our financial condition and operating results. If we are unable to timely and appropriately adapt to changes resulting from difficult macroeconomic conditions, our business, financial condition or results of operations may be materially and adversely affected. A majority of our total revenues are derived from outside the U.S., and we maintain significant operations outside the U.S. We are exposed to numerous risks as a result of the international nature of our business and operations. We expect these conditions to continue in the foreseeable future. Managing global operations and sites located throughout the world presents a number of challenges, including, but not limited to: Global trade issues and changes in and uncertainties with respect to trade policies, including the ability to obtain required import and export licenses, trade sanctions, tariffs and international trade disputes; Political and social attitudes, laws, rules, regulations and policies within countries that favor domestic companies over non-domestic companies, including customer- or government-supported efforts to promote the development and growth of local competitors; Ineffective or inadequate legal protection of IP rights in certain countries; Managing cultural diversity and organizational alignment; Exposure to the unique characteristics of each region in the global market, which can cause capital equipment investment patterns to vary significantly from period to period; Periodic local or international economic downturns; Potential adverse tax consequences, including withholding tax rules that may limit the repatriation of our earnings, and higher effective income tax rates in foreign countries where we do business; Compliance with customs regulations in the countries in which we do business; Existing and potentially new tariffs or other trade restrictions and barriers (including those applied to our products, spare parts and services, or to parts and supplies that we purchase); Political instability, geopolitical tensions, natural disasters, legal or regulatory changes, acts of war such as the wars between Russia and Ukraine and the military conflicts in the Middle East and any further escalation thereof, or terrorism in regions where we, our customers or our suppliers have operations or where we or they do business; Rising inflation and fluctuations in interest and currency exchange rates may adversely impact our ability to compete on price with local providers or the value of revenues we generate from our international business. Although we attempt to manage some of our near-term currency risks through the use of hedging instruments, there can be no assurance that such efforts will be adequate; Slowing growth, increased unemployment, and changes in fiscal and/or monetary policies in the countries where we operate; Our ability to receive prepayments for certain of our products and services sold in certain jurisdictions. These prepayments increase our cash flows for the quarter in which they are received. If our practice of requiring prepayments in those jurisdictions changes or deteriorates, our cash flows would be harmed; Required refunds for customer prepayments resulting from our inability to ship to certain jurisdictions, especially for customers in China, as described in more detail below. If we are required to make such refunds, our cash flows could be negatively affected; Longer payment cycles and difficulties in collecting accounts receivable outside of the U.S.; Difficulties in managing foreign distributors (including monitoring and ensuring our distributors compliance with applicable laws); and Inadequate protection or enforcement of our IP and other legal rights in foreign jurisdictions. Any of the factors above could have a significant negative impact on our business and results of operations. Export controls, sanctions and other trade-related regulations issued by Commerce and other governmental authorities may limit our ability to sell certain products or provide certain services to certain customers, particularly in 11 Table of Contents China, and may significantly harm our business, results of operations, financial condition and cash flows, unless we are able to obtain required licenses. We maintain significant operations outside the United States, and existing and evolving trade restrictions imposed by the U.S. and other governments could significantly disrupt our global operations. The U.S. government has tightened export controls for commodities, software, and technology (collectively, items ) destined to China over the past several years. These controls have included, for example, restrictions on exporting certain items to military end users and for military end uses, the addition of numerous 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 Commerce), and the creation of new licensing requirements that apply to the export, re-export, and transfer of certain foreign-made items that are the direct product of U.S.-origin technology or produced by a plant or major component of a plant that itself is the direct product of U.S.-origin technology and that are destined to Huawei or its affiliates and other specified companies on the U.S. Entity List, and other facilities in China where the production of advanced node ICs occurs. In October 2022, Commerce published the 2022 BIS Rules, which introduced restrictions related to semiconductor, semiconductor manufacturing, supercomputer and advanced computing items and end uses. These rules impose restrictions on our ability to sell, ship and support certain equipment and otherwise conduct business with certain counterparties, primarily including China-based companies involved in advanced semiconductor manufacturing. Further, the 2022 BIS Rules impose restrictions on the activities of U.S. persons with respect to certain items that are not subject to the Export Administration Regulations ( EAR ), which departs from Commerce s typical practice of controlling items that are subject to the EAR and could further restrict our ability to conduct business in China. In October 2023, Commerce issued the 2023 BIS Rules 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 certain D1, D4 and/or D5 countries in Supplement No. 1 of Part 740 of the U.S. EAR, 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. In December 2024 and January 2025, Commerce again issued incremental 2024 BIS Rules and 2025 BIS Rules, adding even more companies to the U.S. Entity List and revising the definition of advanced DRAM, further restricting our ability to provide certain items and services to facilities in China producing advanced DRAM ICs. In September 2025, Commerce released an interim final rule that further expands export control restrictions and licensing requirements for foreign entities 50% or more directly or indirectly owned by one or more listed parties on the U.S. Entity List, Military End-User List, and certain entities on the Specially Designated Nationals and Block Persons List, which Commerce has labeled the Affiliates Rule. The new rule increases compliance requirements with the EAR by imposing on exporters, re-exporters, and transferors of items subject to the EAR a responsibility to know the ownership of the parties to a transaction. In November 2025, the BIS suspended the Affiliates Rule for one year until November 2026. Commerce may continue to add China-based entities to the U.S. Entity List and impose other end use or end user export restrictions, which could disrupt or prevent our product shipments to China-based entities, and further disrupt our revenue recognition, business operations and our ability to support our customers in China. These rules and regulations may significantly harm our business unless we are able to obtain required licenses. We will continue to apply for export licenses, when required, in an effort to avoid disruption to our and our customers operations, but there can be no assurance that export licenses applied for by either us or our customers, now or in the future, will be granted. To the extent Commerce does issue licenses to us or to our customers, such licenses may have a short duration or require us to satisfy various conditions. If pending and future export license applications are not granted, or additional restrictions are imposed, or if regulators adopt new interpretations of existing regulations, the potential impact on us could be material by disrupting our supply chain and product shipment, impairing our ability to complete product development in a timely manner, or our ability to support existing customers of covered products or supply customers of covered products outside the impacted regions, and requiring us to transition certain operations out of one or more of the identified countries. Failure to obtain export licenses has harmed and could continue to harm our backlog, requiring us to return substantial deposits received from customers in China for purchase orders, and/or further limiting our ability to meet our contractual obligations and sell our products or provide services to our customers in China. In addition, the U.S. export restrictions on semiconductors and semiconductor technology to China and Chinese customers may reduce the need for our products and make it easier for our China-based competitors to develop and sell their own products and take market share from us. We may lose revenue in future periods related to anticipated sales to customers in China unless we are able to replace their orders with other customer orders for which either an export license has been obtained or is not required. Our revenue from sales of products and provision of services to customers in China was 30%, 33% and 43% for fiscal years 2026, 2025 and 12 Table of Contents 2024, respectively, and future revenue from China as a percentage of our overall revenue may decline as a result of the current and future Commerce rules and regulations. Additionally, the Chinese government has adopted, and may further adopt, new regulations, in response to U.S. government actions, which could adversely affect our ability to do business in China. We have faced delays and could face additional delays or denials in the export of our tools by regulatory agencies for national security or other regulatory concerns in the countries in which we do business, which could negatively affect our results of operations and timing of revenue recognition. We have controls and procedures designed to maintain compliance with U.S. and other applicable export control laws and regulations; however, we cannot guarantee that such controls and procedures will be successful in preventing violations or allegations of violations of increasingly complex and often conflicting regulations worldwide. Recently, some of our products destined for China have been held up by U.S. Customs and Border Protection due to questions about the nature of the customer or about the capabilities of our products. We cannot make any assurance that products that have been held up will be cleared for shipment in a timely manner or without a license. Shipment delays or cancellations could have an adverse effect on our financial condition and results of operations. The complexity and evolving nature of the rules and regulations, and the fact that Commerce or other relevant regulators might adopt interpretations of regulations that differ from those of the Company, increase our risk of non-compliance. Any violations by us of applicable export laws and regulations could result in significant civil and criminal penalties, including fines and criminal proceedings against the Company or responsible employees, a denial of export privileges, suspension or debarment. Our employees, customers, suppliers or other third parties with whom we work may also engage in conduct for which the Company might be held responsible. We could face significant compliance, litigation or settlement costs and diversion of management s attention from our business as a result. Further, the Company may be subject to negative publicity or reputational harm, resulting in reduced demand for our products, employee attrition and other negative impact on our business, results of operations, financial condition and cash flows. Recently announced and future U.S. tariffs, retaliatory trade measures and other trade restrictions, as well as uncertainty regarding tariff authority, implementation and refund processes, may have a material adverse impact on our results of operations. In 2025, the U.S. implemented a number of tariffs on goods imported into the U.S., on a country and industry-specific basis (including aluminum, copper and steel). While some of the U.S. tariffs have been paused, certain U.S. tariffs are currently in effect, including a base tariff on nearly all imports into the U.S., certain reciprocal tariffs by country, and certain sectoral tariffs on copper, aluminum and steel, among others. In retaliation to the tariffs imposed on U.S. imports, a number of other countries announced reciprocal tariffs on goods imported from the U.S. While most countries paused their reciprocal tariffs on U.S. imported goods, those reciprocal tariffs could be reinstated at any time. Tariffs imposed by the U.S. on goods imported into the U.S. and tariffs imposed by other countries on U.S. goods imported into those countries may continue to evolve. In April 2025, Commerce announced the initiation of investigations into the effects on U.S. national security of imports of semiconductors under Section 232 of the Trade Expansion Act of 1962. The scope of the investigations includes semiconductors, semiconductor manufacturing equipment and their derivative products, including semiconductor substrates and bare wafers, legacy chips, leading-edge chips, microelectronics and other components. While the results of the investigations are currently unknown, they may result in additional tariffs and trade restrictions, which may adversely impact our business. In February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act were not authorized, creating uncertainty around the status of prior tariffs, potential refund processes and the scope of future presidential tariff authority. This ruling adds volatility to an already fluid tariff environment and may result in rapid changes in tariff rates, shifts in enforcement, delays in customs processing and increased uncertainty in supply chain and capital planning for us and our customers. The U.S. tariffs have increased our cost of revenues due to the increase in the cost of importing foreign sourced components to our U.S. facilities to build the products that we manufacture in the U.S. Tariffs imposed on U.S. goods by other countries may harm demand for our products from customers in those regions, or may cause our customers in those regions to push out or cancel previously placed purchase orders. In addition, we have had to return deposits given to us by our customers upon cancellation of their purchase orders. Moreover, tariffs can make it difficult for us and our customers and suppliers to make and execute business and capital equipment investment plans or increase supply chain complexity, which may have an impact on our ability to source the materials necessary to manufacture our products. Our efforts to address these risks, such as through operational adjustments and pricing strategies, may not be successful. Such efforts may need time to take effect and may have an adverse impact on our results of operations. 13 Table of Contents Additionally, while we are pursuing recovery of duties previously paid through the administrative refund process established by U.S. Customs and Border Protection and have begun receiving refunds, changes in the refund process or related legal challenges could impact the timing of cash receipts and our results of operations. Unless rescinded or exemptions apply, tariffs and any escalations in the trade war could significantly harm our business, financial condition and results of operations. We might be involved in claims or disputes related to IP or other confidential information that may be costly to resolve, prevent us from selling or using the challenged technology and seriously harm our operating results and financial condition. As is typical in the industries in which we serve, from time to time we have received communications from other parties asserting the existence of patent rights, copyrights, trademark rights or other IP rights which they believe cover certain of our products, processes, technologies or information. In addition, we occasionally receive notification from customers who believe that we owe them indemnification or other obligations related to IP claims made against such customers by third parties. With respect to IP infringement disputes, our customary practice is to evaluate such infringement assertions and to consider whether to seek licenses where appropriate. However, there can be no assurance that licenses will be granted or, if granted, will be on acceptable terms or that costly litigation or other administrative proceedings will not occur. The inability to obtain necessary licenses or other rights on reasonable terms could seriously harm our results of operations and financial condition. Furthermore, we may potentially be subject to claims by customers, suppliers or other business partners, or by governmental law enforcement agencies, related to our receipt, distribution and/or use of third-party IP or confidential information. Legal proceedings and claims, regardless of their merit, and associated internal investigations with respect to IP or confidential information disputes are often expensive to prosecute, defend or conduct; may divert management s attention and other Company resources; and/or may result in restrictions on our ability to sell our products, settlements on significantly adverse terms or adverse judgments for damages, injunctive relief, penalties and fines, any of which could have a significant negative effect on our business, results of operations and financial condition. There can be no assurance regarding the outcome of future legal proceedings, claims or investigations. The instigation of legal proceedings or claims, our inability to favorably resolve or settle such proceedings or claims, or the determination of any adverse findings against us or any of our employees in connection with such proceedings or claims could materially and adversely affect our business, financial condition and results of operations, as well as our business reputation. We are exposed to various risks related to the legal, regulatory and tax environments in which we perform our operations and conduct our business. We are subject to various risks related to compliance with laws, rules and regulations enacted by legislative bodies and/or regulatory agencies in the countries in which we operate and with which we must comply, including environmental, safety, antitrust, anti-corruption/anti-bribery, unclaimed property, conflict minerals and other responsible sourcing practices, economic sanctions and export control regulations. We have policies and procedures designed to promote compliance with applicable laws, but there can be no assurance our policies and procedures will prove completely effective in ensuring compliance by all our personnel, business partners and representatives, for whose misconduct we may under some circumstances be legally responsible. Our failure or inability to comply with existing or future laws, rules or regulations in the countries in which we operate could result in government investigations and/or enforcement actions, which could result in significant financial cost (including investigation expenses, defense costs, assessments and criminal or civil penalties), reputational harm and other consequences that may adversely affect our operating results, financial condition and ability to conduct our business. For instance, in response to the war between Russia and Ukraine, the U.S., the European Union and other countries have imposed sanctions against Russia, Belarus and certain other regions, entities and individuals, and may impose additional sanctions, export controls or other measures. The imposition of sanctions, export controls and other measures could adversely impact our business including preventing us from performing existing contracts, recognizing revenue, pursuing new business opportunities or receiving payment for products already supplied or services already performed with customers. Additionally, we are subject to various domestic and international environmental laws and regulations, including those that control and restrict the use, transportation, emission, discharge, storage, and disposal of certain chemicals, gases and other substances. Current and proposed restrictions on per- and polyfluoroalkyl substances ( PFAS ) may negatively impact our supply chain due to potentially decreased availability, or non-availability, of PFAS-containing products or commercially feasible alternatives. Any failure to comply with applicable environmental laws, regulations or requirements may subject us to a range of consequences, including fines, suspension of certain of our business activities, limitations on our ability to sell our products, obligations to remediate environmental contamination, and criminal and civil liabilities or other sanctions. Some of these laws impose strict liability for certain releases, which may require us to incur costs regardless of fault or the legality of actions at the time of release. In addition, changes in environmental laws and regulations (including any relating to climate change and GHG emissions) could require us, or others in our value chain, to install additional equipment, alter operations to 14 Table of Contents incorporate new technologies or processes, or revise process inputs, among other things, which may cause us to incur significant costs or otherwise adversely impact our business performance. Various agencies and governmental bodies have expressed particular interest in promulgating rules relating to climate change or other sustainability matters. For example, policymakers in the European Union, the State of California and elsewhere have adopted, or are considering adopting, various legal requirements on disclosures or other actions on certain climate or other sustainability matters. We also face increasing complexity in our manufacturing, product design and procurement operations as we adjust to new and prospective requirements relating to the composition of our products, including restrictions on lead and other substances and requirements to track the sources, production methods, or provenance of certain metals and other materials. The cost of complying, or failing to comply, with these and other regulatory requirements or contractual obligations could adversely affect our operating results, financial condition and ability to conduct our business. From time to time, we may receive inquiries, subpoenas, investigative demands or audit notices from governmental or regulatory bodies, or we may make voluntary disclosures, related to legal, regulatory or tax compliance matters, and these matters may result in significant financial cost (including investigation expenses, defense costs, assessments and criminal or civil penalties), reputational harm and other consequences that could materially and adversely affect our operating results and financial condition. In addition, we may be subject to new or amended laws, including laws that conflict with other applicable laws, which may impose compliance challenges and create the risk of non-compliance. In addition, we may from time to time be involved in legal proceedings or claims regarding employment, immigration, contracts, product performance, product liability, antitrust, ESG, IP, export controls, cybersecurity and data privacy, tax, securities, unfair competition and other matters. These legal proceedings and claims, regardless of their merit, may be time-consuming and expensive to prosecute or defend, divert management s attention and resources, and/or inhibit our ability to sell our products. There can be no assurance regarding the outcome of current or future legal proceedings or claims, which could adversely affect our operating results, financial condition and ability to operate our business. Differing expectations, requirements and attention to ESG matters from our stakeholders, including any targets or other ESG initiatives, could result in additional costs or risks or adversely impact our business. Certain investors, capital providers, shareholder advocacy groups, other market participants, customers and other stakeholder groups have focused on companies ESG initiatives, including those regarding climate change, human rights and inclusion and diversity, among others. This has increased, and may in the future continue to increase, certain of our compliance and disclosure costs, and may also result in further impacts on our business, financial condition or results of operations, including changes in demand for certain types of products. From time to time, we create and publish voluntary disclosures regarding ESG matters. Identification, assessment and disclosure of such matters is complex. Many of the statements in such voluntary disclosures are based on our expectations and assumptions, which may require substantial discretion and forecasts about costs and future circumstances. Additionally, expectations regarding companies management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control. Although we have engaged, and expect to continue to engage, in certain voluntary ESG initiatives to improve the ESG profile of our operations and product offerings, we cannot guarantee that such efforts will have the intended results, including whether we are able to measure and disclose related data of sufficient quality or timeliness or in accordance with particular methodological practices. For example, we have adopted certain GHG emissions reduction targets for Scope 1, 2 and 3 emissions. Although several of these goals have been validated by SBTi, our estimates concerning the timing and cost of implementing our goals are subject to risks and uncertainties, some of which are outside of our control. In addition, standards for calculating and disclosing emissions and other sustainability metrics continue to evolve, which can result in inconsistencies or other changes to data over time, revisions to our strategies and targets, or our ability to achieve them, subjecting us to additional scrutiny. Standards for ESG metrics and reporting continue to evolve due to a variety of factors, and our disclosures are expected to evolve as well, whether in response to regulatory requirements or otherwise; however, we cannot guarantee that our approach will align with any particular methodology or stakeholder expectations. Any failure, or perceived failure, to disclose in keeping with best practices, regulations, or other stakeholder expectations or to successfully achieve our voluntary goals, or the manner in which we achieve some or any portion of our goals, could adversely impact our reputation or, to the extent related to our sustainability-linked capital sources, financial condition and results of operations. Our ESG efforts have included, and may in the future include further adoption, or expansion, of certain ESG practices or policies, which may require us to expend additional resources to implement or to forego certain business opportunities to the extent others in our value chain do not meet pertinent requirements of such policies. By contrast, any failure, or perceived failure, to conform to such policies could have an adverse impact on our reputation and business activities. Our performance may be subject to greater scrutiny as a result of our announcement of any goals or policies and the publication of our 15 Table of Contents performance against the same. Stakeholders may have different, and at times conflicting, expectations. While some external sources may seek to pressure us to adopt additional or more aggressive ESG initiatives, there are simultaneous efforts by others to reduce companies efforts on such matters. Such proponents and opponents of ESG matters are increasingly resorting to activism or litigation to advance their perspectives. In addition, as noted above, regulators, including the European Union and the State of California, have adopted, or are considering adopting, regulations regarding ESG matters, including, but not limited to, climate change-related matters. Such regulatory approaches are not uniform, which may increase the cost and complexity of compliance. Addressing stakeholder expectations, including regulations, entails costs and any failure to successfully navigate such expectations may result in reputational harm, loss of customers or contracts, potential regulatory or investor engagement, or other adverse impacts to our business. Such ESG matters also impact at least certain of our suppliers and customers, which may compound or cause new impacts on our business, financial condition or results of operations. We depend on key personnel to manage our business effectively, and if we are unable to attract, retain and motivate our key employees, our sales and product development could be harmed. Our employees are vital to our success, and our key management, engineering and other employees are difficult to replace. We generally do not have employment contracts with our key employees. Further, we do not maintain key person life insurance for any of our employees. The expansion of high technology companies worldwide and the elevated demand for talent from the growth in demand for semiconductors in recent years has increased competition for qualified personnel. Competition for engineering and other technical personnel in many areas of the world in which we operate is especially intense due to the proliferation of technology companies worldwide. Our competitors have targeted individuals in our organization who have desired skills and experience. In addition, current or future immigration laws, policies or regulations may limit our ability to attract, hire and retain qualified personnel. If we are unable to attract, onboard and retain key personnel, or if we are not able to attract, assimilate, onboard and retain additional highly qualified employees to meet our current and future needs, our business and operations could be harmed. We outsource a number of services to third-party service providers, which decreases our control over the performance of these functions. Disruptions or delays at our third-party service providers could adversely impact our operations. We outsource a number of services, including our transportation, information systems management and logistics management of spare parts and certain accounting and procurement functions, among others, to domestic and overseas third-party service providers. While outsourcing arrangements may lower our cost of operations, they also reduce our direct control over the services rendered. It is uncertain what effect such diminished control will have on the quality or quantity of products delivered or services rendered, on our ability to quickly respond to changing market conditions, or on our ability to ensure compliance with all applicable domestic and foreign laws and regulations. In addition, many of these outsourced service providers, including certain hosted software applications that we use for confidential data storage, may employ cloud computing technology and other systems. These providers are susceptible to cyber incidents, such as software vulnerabilities, cyber-attacks aimed at theft of sensitive data, inadvertent cyber-security compromises, attacks aimed at operational disruption at the target or third-party service providers, all of which are outside of our control. If we do not effectively develop and manage our outsourcing strategies, if required export and other governmental approvals are not timely obtained, if our third-party service providers pass on the cost of inflation to us or do not perform as anticipated, or do not adequately maintain operational resilience or fail to protect our data from cyber-related security breaches, or if there are delays or difficulties in enhancing business processes, we may experience operational difficulties (such as limitations on our ability to ship products), increased costs, manufacturing or service interruptions or delays, loss of IP rights or other sensitive data, quality and compliance issues, and challenges in managing our product inventory or recording and reporting financial and management information, any of which could materially and adversely affect our business, financial condition and results of operations. We depend on information technology for our business and are exposed to risks related to cybersecurity threats and cyber incidents affecting our, our customers , suppliers and other service providers systems and networks. In the conduct of our business, we and certain of our third-party providers collect, use, transmit and store data on information systems and networks, including systems, software, hardware and networks owned and maintained by KLA and/or by third-party providers (collectively, IT Systems ). This data includes confidential information, transactional information and IP belonging to us, our customers and our business partners, as well as personal information of individuals (collectively, Confidential Information ). We also integrate and use certain third-party services and products, including software, in our IT Systems, and such third-party products, services and systems are beyond our control. We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information, including from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as diverse attack vectors, such as computer viruses, bugs, ransomware and other malware, technological errors and known and unknown vulnerabilities in our software and systems and those of third parties, cyber-related security breaches and similar disruptions from unauthorized intrusions, tampering, misuse or criminal acts made directly against our systems or networks, or 16 Table of Contents through our third-party providers or the supply chain, including social engineering, phishing, or other events or developments that we may be unable to anticipate or fail to mitigate, including, but not limited to, financial fraud, including check fraud, vulnerabilities or misconfigurations in our IT Systems. In addition, insider actors, malicious or otherwise, could misappropriate our Confidential Information, compromise our IT Systems, tamper with our products or otherwise cause disruptions to our business operations. Cybersecurity threats also include attempts to infiltrate our products or services, including attacks targeting the security, confidentiality, integrity and/or availability of the hardware, software, and information stored in our products, including after those products have been sold by us and when they are incorporated into third-party facilities or infrastructure. Moreover, we have acquired and may continue to acquire companies with cybersecurity vulnerabilities and/or unsophisticated security measures, which exposes us to significant cybersecurity, operational and financial risks. Remote and hybrid working arrangements at our company (and at many third-party providers) also increase cybersecurity risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks. We and our third-party providers regularly experience cyber-attacks and events and on occasion incidents involving unauthorized access to IT Systems and Confidential Information and, although no such attacks, events or incidents have materially impacted our operations or financial results to date, there can be no assurance that such attacks, events or incidents will not be material to KLA in the future. Because the techniques used to perpetrate cyberattacks and other security incidents change frequently and increasingly leverage technologies such as AI, cyber-attacks may not be recognized until launched against a target and are increasingly designed to circumvent controls, avoid detection and remove or obfuscate forensic artifacts. As such, we may be unable to anticipate these techniques, implement adequate preventative measures, or adequately identify, investigate and recover from cybersecurity incidents. There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information. We strive to prioritize the remediation of identified security vulnerabilities based on known and anticipated risks, and we aim to patch vulnerabilities within reasonable timeframes. However, we are unable to comprehensively identify all vulnerabilities (particularly as related to third-party software and systems), apply patches or confirm that mitigating measures are in place, or ensure that any patches will be applied by us or our third parties before exploitation by a threat actor. If attackers are able to exploit vulnerabilities before patches are installed or mitigating measures are implemented, significant compromises could impact our IT Systems and Confidential Information. Moreover, AI may be used to generate cyberattacks as AI capabilities improve and are increasingly adopted. These attacks crafted with AI tools could directly attack our IT Systems or Confidential Information with greater speed and/or efficiency than a human threat actor or create more effective phishing emails, polymorphic malware that adapts real-time to a victim environment during deployment, and automated vulnerability identification, among other things. In addition, the threat could be introduced from the result of us, our customers or business partners incorporating AI into our respective businesses, for example, introducing malicious code by incorporating AI generated source code. Any impact to the availability, integrity or confidentiality of our IT Systems or Confidential Information can materially adversely impact our business, operations and financial condition directly, or indirectly by impacting third parties in the supply chain, including direct or sub-tier suppliers, in many potential ways: disruptions to operations; misappropriation, corruption or theft of Confidential Information; misappropriation of funds and Company assets; reduced value of our investments in research, development and engineering; litigation (including class action lawsuits) with, or payment of damages to, third parties; reputational damage; costs to comply with regulatory inquiries or actions; data privacy issues; costs to rebuild our IT Systems or restore our Confidential Information; and increased cybersecurity protection and remediation costs. Additionally, cybersecurity and data security and protection laws and regulations are evolving and present increasing compliance challenges, which may increase our costs, affect our competitiveness, cause reputational harm and expose us to substantial fines or other penalties. Cybersecurity incidents affecting our customers could result in substantial delays in our ability to ship to those customers or install our products, which could result in delays in revenue recognition or the cancellation of orders, and cybersecurity incidents affecting our suppliers could result in substantial delays in our ability to obtain necessary components for our products from those suppliers, which could hamper our ability to ship our products to our customers and service them, harming our results of operations. For example, in February 2023, one of our suppliers experienced a ransomware event that caused delays in its manufacturing operations, resulting in its shipment delays to us for components we ordered, which, in turn, caused delays in some of our outbound shipments during the quarter. Similar events could cause disruptions in the future. We carry insurance that provides limited protection against the potential losses arising from a cybersecurity incident, but it will not likely cover all such losses, and the losses it does not cover may be significant. 17 Table of Contents We rely upon critical information systems, including our ERP system, for daily business operations and financial reporting, and system failures, implementation issues, or limited access to critical information could adversely affect our business operations. Our global operations are dependent upon certain information systems, including telecommunications, the internet, our corporate intranet, network communications, email and various computer hardware and software applications. System failures or malfunctions, such as difficulties with our customer and supplier relationship management systems, could disrupt our operations and our ability to timely and accurately process and report key components of our financial results. Our ERP system is integral to our ability to accurately and efficiently maintain our books and records, record transactions, provide critical information to our management, and prepare our financial statements. We are currently upgrading our ERP system, with implementation expected to be completed in the first quarter of fiscal year 2027. Implementation of an upgrade to an ERP system requires the investment of significant resources and could lead to data migration issues, administrative and technical problems, and delays. Moreover, once our ERP system is upgraded, it may not operate as we expect it to. Any disruptions or difficulties that may occur in connection with our ERP system or other systems (whether in connection with the regular operation, periodic enhancements, modifications or upgrades of such systems or the integration of our acquired businesses into such systems, or due to cybersecurity events such as ransomware attacks, including attacks on the information systems of our business partners and other third parties) could adversely affect our ability to complete important business processes, such as the evaluation of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. Any of these events could have an adverse effect on our business, operating results and financial condition. Acquisitions are an important element of our strategy but, because of the uncertainties involved, we may not find suitable acquisition candidates and we may not be able to successfully integrate and manage acquired businesses. We are also exposed to risks in connection with strategic alliances or collaborative arrangements. In addition to our efforts to develop new technologies from internal sources, part of our growth strategy is to pursue acquisitions and acquire new technologies from external sources. We may also enter into definitive agreements for and consummate acquisitions of, or significant investments in, businesses with complementary products, services and/or technologies. There can be no assurance that we will find suitable acquisition candidates, that we can close such acquisitions or that acquisitions we complete will be successful. In addition, we may use equity to finance future acquisitions, which would increase our number of shares outstanding and be dilutive to current stockholders. If we are unable to successfully integrate and manage acquired businesses, if the costs associated with integrating the acquired businesses exceed our expectations, or if acquired businesses perform poorly, then our business and financial results may suffer. It is possible that the businesses we have acquired, as well as businesses we may acquire in the future, may perform worse than expected or prove to be more difficult to integrate and manage than anticipated. In addition, we may face other risks associated with acquisition transactions that may lead to a material adverse effect on our business and financial results, including: We may have to devote unanticipated financial and management resources to acquired businesses; The combination of businesses may result in the loss of key personnel or an interruption of, or loss of momentum in, the activities of our Company and/or the acquired business; We may not be able to realize expected operating efficiencies or product integration benefits from our acquisitions; We may experience challenges in entering into new market segments for which we have not previously manufactured and sold products; We may face difficulties in coordinating geographically separated organizations, systems and facilities; The customers, distributors, suppliers, employees and others with whom the companies we acquire have business dealings may have a potentially adverse reaction to the acquisition; We may have difficulty implementing a cohesive framework of controls, procedures and policies appropriate for a larger, U.S.-based public company at companies that, prior to acquisition, may not have as robust controls, procedures and policies, particularly with respect to the effectiveness of cyber and information security practices and incident response plans, compliance with data privacy and protection and other laws and regulations, and compliance with U.S.-based economic policies and sanctions that may not have previously been applicable to the acquired company s operations; We may have to write off goodwill or other intangible assets; and We may incur unforeseen obligations or liabilities in connection with acquisitions including, but not limited to, cybersecurity risks associated with integrating our networks or systems with those of acquired entities. 18 Table of Contents At times, we may also enter into strategic alliances or collaborative arrangements with customers, suppliers or other business partners with respect to development of technology and IP. These projects typically require significant investments of capital and exchange of proprietary, highly sensitive information. The success of these alliances and arrangements depends on various factors over which we may have limited or no control, including the other party s discretion in determining the efforts and resources they will apply to the project, and requires ongoing and effective cooperation with our strategic partners and collaborators. Mergers, acquisitions, strategic alliances and collaborative arrangements are inherently subject to significant risks, and the inability to effectively manage these risks could materially and adversely affect our business, financial condition and operating results. Disruption of our manufacturing facilities, other operations, suppliers, or customers due to climate change, natural disasters, public health crises, terrorism, acts of war or other catastrophic events could result in order cancellations, delivery delays, supply chain disruption or loss of customers and could seriously harm our business. We have significant manufacturing operations in the U.S., Singapore, Israel, China and various locations throughout Europe. In addition, our business is international in nature, with our sales, service and administrative personnel and our customers and suppliers located in numerous countries throughout the world. Operations at our manufacturing facilities and our assembly subcontractors and those of our suppliers, as well as our other operations and those of our customers, are subject to disruption for a variety of reasons, including work stoppages, acts of war, terrorism, public health crises, fire, earthquake, volcanic eruptions, drought, storms, extreme temperatures, energy shortages, spikes in energy demand or power blackouts, disruptions in the availability of water necessary for our operations, including in areas of relatively high water stress, flooding or other natural disasters. Certain of these events may become more frequent or intense as a result of climate change, or other environmental or social issues, which may in some instances also contribute to chronic changes such as sea-level rise or changes to meteorological or hydrological patterns that may also disrupt our or our suppliers operations or otherwise adversely impact our business. Such disruption has caused, as with the COVID-19 pandemic, and could in the future cause inefficiencies in our workforce and delays in, among other things, shipments of products to our customers, our ability to perform services requested by our customers, the ability of our suppliers to supply us components for our products in a timely manner, or the timely installation and acceptance of our products at customer sites. Such disruptions could also induce illiquidity for our customers and suppliers, further straining our supply chain and causing continued uncertainty in customers abilities to pay for the products they purchase and their demand for our products and services. In case of any disruptions in our supply chain, we may need to commit to increased purchases and provide longer lead times to secure critical components, which could increase inventory obsolescence risk. We cannot provide any assurance that alternate means of conducting our operations (whether through alternate production capacity or service providers or otherwise) would be available if a major disruption were to occur or that, if such alternate means were available, they could be obtained on favorable terms. We maintain a program of insurance coverage for a variety of property, casualty and other risks. The types and amounts of insurance we obtain vary depending on availability, cost and decisions with respect to risk retention. Some of our policies have broad exclusions. In addition, one or more of our insurance providers may be unable or unwilling to continue to provide certain coverage in the future or pay a claim. Losses not covered by insurance may be large, which could harm our results of operations and financial condition. Even where insured, there is a risk that an insurer may deny or limit coverage or may become financially incapable of covering claims. In addition, as part of our cost-cutting actions, we have consolidated several operating facilities. Our California operations are now primarily centralized in our Milpitas facility. The consolidation of our California operations into a single campus could further concentrate the risks related to any of the disruptive events described above, such as acts of war or terrorism, earthquakes, fires or other natural disasters, if any such event were to impact our Milpitas facility. We are predominantly uninsured for losses and interruptions caused by terrorist acts and acts of war. If international political instability or geopolitical tensions continue or increase, our business and results of operations could be harmed. The threat of terrorism targeted at, or acts of war in, the regions of the world in which we do business increases the uncertainty in our markets. Any act of terrorism or war that affects the economy or the industries we serve could adversely affect our business. Increased international political instability or geopolitical tensions in various parts of the world, disruption in air transportation and further enhanced security measures as a result of terrorist attacks may hinder our ability to do business and may increase our costs of operations. We maintain significant operations in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors, and a state of hostility varying in degree and intensity has led to security and economic challenges for Israel. Persistent hostilities involving Iran and Iran-backed groups, including Hezbollah in Lebanon, the Houthis in Yemen and Hamas in the Gaza Strip, have involved missile strikes against civilian targets in various 19 Table of Contents parts of Israel and attacks on marine vessels traversing the Red Sea. The recent escalation of conflicts in the region has heightened instability, disrupted airspace, and increased freight and insurance costs. Disruptions in shipping routes in the Red Sea could result in delays in shipping our products to customers, which could delay the timing of revenue recognition and create uncertainty related to timeliness of shipments from the region. In addition, some of our employees in Israel are obligated to perform annual reserve duty in the Israel Defense Forces, and may be called to active military duty in emergency circumstances. The ongoing conflicts, including additional military actions, retaliatory measures, sanctions, cyberattacks, or other governmental or market responses, could lead to further disruption of global energy supplies, heighten inflationary pressures on our input costs, adversely affect global supply chains, commodity prices, currency exchange rates, financial markets and overall macroeconomic conditions. These developments could impact our ability to operate our business directly and indirectly through a similar impact on our suppliers and customers. We self-insure certain risks including earthquake risk. If one or more of the uninsured events occurs, we could suffer major financial loss. We purchase insurance to help mitigate the economic impact of certain insurable risks; however, certain risks are uninsurable, are insurable only at significant cost or cannot be mitigated with insurance. Accordingly, we may experience a loss that is not covered by insurance, either because we do not carry applicable insurance or because the loss exceeds the applicable policy amount or is less than the deductible amount of the applicable policy. For example, we do not currently hold earthquake insurance. An earthquake could significantly disrupt our manufacturing operations, a significant portion of which are conducted in California, an area highly susceptible to earthquakes. It could also significantly delay our research and engineering efforts on new products, much of which is also conducted in California. We take steps to minimize the damage that would be caused by an earthquake, but there is no certainty that our efforts will prove successful in the event of an earthquake. We self-insure earthquake risks because we believe this is a prudent financial decision based on our cash reserves and the high cost and limited coverage available in the earthquake insurance market. Certain other risks are also self-insured either based on a similar cost-benefit analysis, or based on the unavailability of insurance. If one or more of the uninsured events occurs, we could suffer major financial loss. We are exposed to foreign currency exchange rate fluctuations. Although we hedge certain currency risks, we may still be adversely affected by changes in foreign currency exchange rates or declining economic conditions in these countries. We have some exposure to fluctuations in foreign currency exchange rates, primarily the Japanese Yen, the euro, the pound sterling and the new Israeli shekel. We have international subsidiaries that operate and sell our products globally. In addition, an increasing proportion of our manufacturing activities are conducted outside of the U.S., and many of the costs associated with such activities are denominated in foreign currencies. We routinely hedge our exposures to certain foreign currencies with certain financial institutions in an effort to minimize the impact of certain currency exchange rate fluctuations, but these hedges may be inadequate to protect us from currency exchange rate fluctuations. To the extent that these hedges are inadequate, or if there are significant currency exchange rate fluctuations in currencies for which we do not have hedges in place, our reported financial results or the way we conduct our business could be adversely affected. Furthermore, if a financial counterparty to our hedges experiences financial difficulties or is otherwise unable to honor the terms of the foreign currency hedge, we may experience material financial losses. We are exposed to fluctuations in interest rates and the market values of our portfolio investments, and an impairment of our investments could harm our earnings. In addition, we and our stockholders are exposed to risks related to the volatility of the market for our common stock. Our investment portfolio primarily consists of both corporate and government debt securities that are susceptible to changes in market interest rates and bond yields. As market interest rates and bond yields increase, those securities with a lower yield-at-cost show a mark-to-market unrealized loss. An impairment of the fair market value of our investments, even if unrealized, must be reflected in our financial statements for the applicable period and may, therefore, have a material adverse effect on our results of operations for that period. In addition, the market price for our common stock is volatile and has fluctuated significantly during recent years. The trading price of our common stock could continue to be highly volatile and fluctuate widely in response to various factors, including, without limitation, conditions in the semiconductor industry and other industries in which we operate, fluctuations in the global economy or capital markets, our operating results or other performance metrics, or adverse consequences experienced by us as a result of any of the risks described elsewhere in this Item 1A. Volatility in the market price of our common stock could cause an investor in our common stock to experience a loss on the value of their investment in us. It could also increase stock-based compensation expenses, affect our effective tax rate and adversely impact our ability to raise capital through the sale of our common stock or to use our common stock as consideration to acquire other companies. 20 Table of Contents We are exposed to risks associated with our interest rate hedging activities. In 2026, we entered into interest rate swaps which are designated as fair value hedges and allow us to convert a portion of our fixed-rate payments under the senior, unsecured long-term notes issued in June 2022 ( 2022 Senior Notes ) into floating-rate payments based on the Daily Secured Overnight Financing Rate swap rate plus a fixed number of basis points. As of June 30, 2026, we had an aggregate principal amount of $2.00 billion in fixed-rate debt that was swapped to floating-rate debt. Because the interest rate swaps convert a portion of our fixed-rate debt to floating-rate debt, an increase in interest rates would require us to pay additional interest on the swapped debt, which may have an adverse effect on our results of operations and cash flows. These hedges may be inadequate to achieve their intended purpose of managing the fair value of our fixed-rate debt exposure. Furthermore, if a financial counterparty to our hedges experiences financial difficulties or is otherwise unable to honor the terms of the interest rate hedges, we may experience material financial losses. We are exposed to risks in connection with tax and regulatory compliance audits in various jurisdictions. We are subject to tax and regulatory compliance audits (such as related to customs or product safety requirements) in various jurisdictions, and such jurisdictions may assess additional income or other taxes, penalties, fines or other prohibitions against us. Although we believe our tax estimates are reasonable and we have the controls in place to help ensure our products and practices comply with applicable regulations, the final determination of any such audit and any related litigation could be materially different from our historical income tax provisions and accruals related to income taxes and other contingencies. The results of an audit or litigation could have a material adverse effect on our operating results or cash flows in the period or periods for which that determination is made. A change in our effective tax rate can have a significant adverse impact on our business. We earn profits in, and are therefore potentially subject to taxes in, the U.S. and numerous foreign jurisdictions, including Singapore and Israel, the countries in which we earn the majority of our non-U.S. profits. Due to economic, political or other conditions, tax rates in those jurisdictions may be subject to significant change. A number of factors may adversely impact our future effective tax rates, such as the jurisdictions in which our profits are determined to be earned and taxed; changes in the tax rates imposed by those jurisdictions; expiration of tax holidays in certain jurisdictions that are not renewed; the resolution of issues arising from tax audits with various tax authorities; changes in the valuation of our deferred tax assets and liabilities; adjustments to estimated taxes upon finalization of various tax returns; increases in expenses not deductible for tax purposes, including write-offs of acquired in-process research and development and impairment of goodwill in connection with acquisitions; changes in available tax credits; changes in stock-based compensation expense; changes in tax laws or the interpretation of such tax laws; changes in generally accepted accounting principles; and the repatriation of earnings from outside the U.S. for which we have not previously provided for U.S. taxes. A change in our effective tax rate can materially and adversely impact our results of operations. In addition, changes to U.S. tax laws will significantly impact how U.S. multinational corporations are taxed on U.S. and foreign earnings. On July 4, 2025, the enactment of the One Big Beautiful Bill Act ( OBBBA ) provides for several permanent changes to the U.S. tax code including, among other items, modifying the Global Intangible Low-Taxed Income ( GILTI ) and Foreign-Derived Intangible Income ( FDII ) rules that were included in the Tax Cuts and Jobs Act, which was enacted into law on December 22, 2017. The OBBBA renames GILTI to Net Controlled Foreign Corporation ( CFC ) Tested Income ( NCTI ) and modifies the percentage of foreign earnings under the GILTI regime that is taxable in the U.S. from 50% to 40% for tax years beginning after December 31, 2025. It also renames FDII to Foreign-Derived Deduction Eligible Income ( FDDEI ) and modifies the percentage of U.S. earnings under the FDII regime that is not subject to tax in the U.S. from 37.5% to 33.34% for tax years beginning after December 31, 2025. The net impact of the changes provided by the OBBBA and interpretations of such law may have a material and adverse impact to our effective tax rate. The enactment of the Inflation Reduction Act ( IRA ) introduced a corporate alternative minimum tax ( CAMT ). The CAMT applies a 15% minimum income tax rate on certain large corporations. Although we were not subject to the CAMT in our fiscal year ended June 30, 2026, the enactment of the OBBBA and interpretations of such law may result in our subjection to CAMT liability in future periods, which can have a material and adverse impact to our future effective tax rate. Numerous countries are evaluating their existing tax laws due, in part, to recommendations made by the Organization for Economic Co-operation and Development s ( OECD ) Base Erosion and Profit Shifting ( BEPS ) project. The OECD continues to advance its work under the BEPS 2.0 initiative to develop the framework for Pillar Two, which aims to implement a global minimum tax of 15%. Many countries have enacted or drafted legislation using the Pillar Two framework to propose 21 Table of Contents domestic tax laws requiring a minimum tax rate of 15% ( top-up tax ) on income earned in the respective countries. The tax liability from top-up tax may have a material and adverse impact to our effective tax rate. Compliance with federal securities laws, rules and regulations, as well as NASDAQ requirements, has become increasingly complex, and the significant attention and expense we must devote to those areas may have an adverse impact on our business. Federal securities laws, rules and regulations, as well as NASDAQ rules and regulations, require companies to maintain extensive corporate governance measures, impose comprehensive reporting and disclosure requirements, set strict independence and financial expertise standards for audit and other committee members and impose civil and criminal penalties for companies and their chief executive officers, chief financial officers and directors for securities law violations. These laws, rules and regulations have increased, and in the future are expected to continue to increase, the scope, complexity and cost of our corporate governance, reporting and disclosure practices, which could harm our results of operations and divert management s attention from business operations. A change in accounting standards or practices or a change in existing taxation rules or practices (or changes in interpretations of such standards, practices or rules) can have a significant effect on our reported results and may even affect reporting of transactions completed before the change is effective. New accounting standards and taxation rules and varying interpretations of accounting pronouncements and taxation rules have occurred and will continue to occur in the future. Changes to (or revised interpretations or applications of) existing accounting standards or tax rules or the questioning of current or past practices may adversely affect our reported financial results or the way we conduct our business. Adoption of new standards may require changes to our processes, accounting systems, and internal controls. Difficulties encountered during adoption could result in internal control deficiencies or delay the reporting of our financial results. Industry and Technology Risks Ongoing changes in the technology industry, including AI-related developments and changes in semiconductor manufacturing processes, customer investment patterns and end-market demand, could expose our business to significant risks. The industries we serve, including the semiconductor and PCB industries, are constantly developing and changing. Many of the risks associated with operating in these industries are comparable to the risks faced by all technology companies, such as the uncertainty of future growth rates in the industries that we serve, pricing trends in the end-markets for consumer electronics and other products (which place a growing emphasis on our customers cost of ownership), rising inflation in the supply chain and interest rates, changes in our customers capital spending patterns and, in general, an environment of constant change and development, including decreasing product and component dimensions, use of new materials, and increasingly complex device structures, applications and process steps. If we fail to appropriately adjust our cost structure and operations to adapt to any of these trends, or, with respect to technological advances, if we do not timely develop new technologies and products that successfully anticipate and address these changes, we could experience a material adverse effect on our business, financial condition and operating results. In addition, we face a number of risks specific to ongoing changes in the semiconductor industry, as a significant majority of our sales are our process control and yield management products sold to semiconductor manufacturers. The trends our management monitors in operating our business include the following: The potential for reversal of the long-term historical trend of declining cost per transistor with each new generation of technological advancement within the semiconductor industry, and the adverse impact that such reversal may have upon our business; The increasing cost of building and operating fabrication facilities and the impact of such increases on our customers capital equipment investment decisions; Differing market growth rates and capital requirements for different applications, such as memory and foundry/logic; Lower level of process control adoption by our memory customers compared to our foundry/logic customers; Our customers reuse of existing and installed products, which may decrease their need to purchase new products or solutions at more advanced technology nodes; The emergence of disruptive technologies that change the prevailing semiconductor manufacturing processes (or the economics associated with semiconductor manufacturing) and, as a result, also impact the inspection and metrology requirements associated with such processes; 22 Table of Contents The higher design costs for the most advanced ICs, which could economically constrain leading-edge manufacturing technology customers to focus their resources on only the large, technologically advanced products and applications; The possible introduction of integrated products by our larger competitors that offer inspection and metrology functionality in addition to managing other semiconductor manufacturing processes; Changes in semiconductor manufacturing processes that are extremely costly for our customers to implement and, accordingly, our customers could reduce their available budgets for process control equipment by reducing inspection and metrology sampling rates for certain technologies; AI-driven design, verification, testing, process-node development, chip-based architectures, advanced packaging and novel materials science may compress semiconductor development cycles, lower barriers to entry, accelerate vertical integration or insourcing by customers or other technology companies, change inspection and metrology requirements, shorten the useful commercial life of existing products, reduce returns on our R&D investments, or render certain product lines, manufacturing processes or IP less valuable or obsolete; The focus on reducing energy usage and improving the environmental impact and sustainability associated with semiconductor manufacturing operations, including the availability of adequate and reliable energy sources Changes in demand for semiconductor chips due to changes in the timing, level of investment in, or technologies used in the buildout of data centers, including data-center buildout driven by demand for AI technologies; The bifurcation of the semiconductor manufacturing industry into (a) leading edge manufacturers driving continued R&D into next-generation products and technologies and (b) other manufacturers that are content with existing (including previous generation) products and technologies; The ever escalating cost of next-generation product development, which may result in joint development programs between us and our customers or government entities to help fund such programs that could restrict our control and ownership of and profitability from the products and technologies developed through those programs; and The entry by some semiconductor manufacturers into collaboration or sharing arrangements for capacity, cost or risk with other manufacturers, as well as increased outsourcing of their manufacturing activities, and greater focus only on specific markets or applications, whether in response to adverse market conditions or other market pressures. Any of the changes described above may negatively affect our customers rate of investment in the capital equipment that we produce, which could result in downward pressure on our prices, customer orders, revenues and gross margins. If we do not successfully manage the risks resulting from any of these or other potential changes in our industries, our business, financial condition and operating results could be adversely impacted. We are exposed to risks associated with a highly concentrated customer base. Our customer base, particularly in the semiconductor industry, historically has been highly concentrated due to corporate consolidation, acquisitions and business closures. In this environment, orders from a relatively limited number of manufacturers have accounted for, and are expected to continue to account for, a substantial portion of our sales. This increasing concentration exposes our business, financial condition and operating results to a number of risks, including the following: The mix and type of customers, and sales to any single customer, may vary significantly from quarter to quarter and from year to year, which expose our business and operating results to increased volatility tied to individual customers; New orders from our foundry/logic customers in the past several years have constituted a significant portion of our total orders. This concentration increases the impact that future business or technology changes within the foundry/logic industry may have on our business, financial condition and operating results; In a highly concentrated business environment, if a particular customer does not place an order, or if they delay or cancel orders, we may not be able to replace the business. Furthermore, because our process control and yield management products are configured to each customer s specifications, any changes, delays or cancellations of orders may result in significant, non-recoverable costs; As a result of this consolidation, the customers that survive the consolidation represent a greater portion of our sales and, consequently, have greater commercial negotiating leverage. Many of our large customers have more aggressive policies regarding engaging alternative, second-source suppliers for the products we offer and, in addition, may seek and, on occasion, receive pricing, payment, IP-related or other commercial terms that may have an adverse impact on our business and we may not be able to pass on the cost of inflation to our customers. Any of these changes could negatively impact our prices, customer orders, revenues and gross margins; Certain customers have undergone significant ownership changes, created alliances with other companies, experienced management changes or have outsourced manufacturing activities, any of which may result in additional complexities in managing customer relationships and transactions. Any future change in ownership or management of our existing 23 Table of Contents customers may result in similar challenges, including the possibility of the successor entity or new management deciding to select a competitor s products; The highly concentrated business environment also increases our exposure to risks related to the financial condition of each of our customers. For example, as a result of the challenging economic environment during fiscal year 2009, we were (and, in some cases, continue to be) exposed to additional risks related to the continued financial viability of certain of our customers. To the extent our customers experience liquidity issues in the future, we may be required to incur additional credit losses with respect to receivables owed to us by those customers. In addition, customers with liquidity issues may be forced to reduce purchases of our equipment, delay deliveries of our products, discontinue operations or may be acquired by one of our customers, and, in either case, such event would have the effect of further consolidating our customer base; Semiconductor manufacturers generally must commit significant resources to qualify, install and integrate process control and yield management equipment into a semiconductor production line. We believe that once a semiconductor manufacturer selects a particular supplier s process control and yield management equipment, the manufacturer generally relies upon that equipment for that specific production line application for an extended period of time. Accordingly, we expect it to be more difficult to sell our products to a given customer for that specific production line application and other similar production line applications if that customer initially selects a competitor s equipment; and Prices differ among the products we offer for different applications due to differences in features offered or manufacturing costs. If there is a shift in demand by our customers from our higher-priced to lower-priced products, our gross margin and revenues would decrease. In addition, when products are initially introduced, they tend to have higher costs because of initial development costs and lower production volumes relative to the previous product generation, which can impact gross margin. Any of these factors could have a material adverse effect on our business, financial condition and operating results. We operate in industries that have historically been cyclical, including the semiconductor industry, and customer purchasing decisions are highly dependent on local and global economic conditions, industry conditions, capital spending patterns and AI-related investment trends. If we fail to respond to industry cycles, our business, financial condition and operating results could be adversely impacted. The timing, length and severity of the up-and-down cycles in the industries that we serve are difficult to predict. The historically cyclical nature of the semiconductor industry in which we primarily operate is largely a function of our customers capital spending patterns and need for expanded manufacturing capacity, which, in turn, are affected by factors such as capacity utilization, consumer demand for products, inventory levels and our customers access to capital. Heavy investments in the capacity and infrastructure needed to support AI-driven semiconductor growth have elevated our customers capital spending. While AI adoption is likely to continue and grow, the sustainability of such elevated investments cannot be assured. Cyclicality affects our ability to accurately predict customer demand, future revenue and, in some cases, future expense levels. In anticipation of customer demand, including demand driven by AI-related investments, we may purchase or commit to purchase inventory, manufacturing capacity or other resources that do not materialize or are delayed, reduced or canceled. If our forecasts are inaccurate, we may hold inadequate, excess or obsolete inventory, incur cancellation, postponement or expediting costs, experience underutilized capacity or manufacturing inefficiencies, miss revenue opportunities, lose market share or damage customer relationships. The growth that we have experienced over the past few years has resulted in higher levels of backlog. This could result in order modifications, rescheduling or even cancellations that may not be communicated to us in a timely manner, causing backlog to remain elevated until timing changes are agreed with the customer. Customer communication delays for orders already placed could affect our ability to respond quickly in weakening demand environments, which could harm our results of operations. During down cycles in our industry, the financial results of our customers may be negatively impacted, which could result not only in a decrease in, or cancellation or delay of, orders (which are generally subject to cancellation or delay by the customer with limited or no penalty) but also a weakening of their financial condition that could impair their ability to pay for our products or our ability to recognize revenue from certain customers. Our ability to recognize revenue from a particular customer may also be negatively impacted by the customer s funding status, which could be weakened not only by rising interest rates, adverse business conditions or inaccessibility to capital markets for any number of macroeconomic or company-specific reasons, but also by funding limitations imposed by the customer s unique organizational structure. Any of these factors could negatively impact our business, operating results and financial condition. 24 Table of Contents When cyclical fluctuations result in lower than expected revenue levels, operating results may be adversely affected and cost reduction measures may be necessary for us to remain competitive and financially sound. During periods of declining revenues, we must be in a position to adjust our cost and expense structure to prevailing market conditions and to continue to motivate and retain our key employees. If we fail to respond, or if our attempts to respond fail to accomplish our intended results, our business could be seriously harmed. Furthermore, any workforce reductions and cost reduction actions that we adopt in response to down cycles may result in additional restructuring charges, disruptions in our operations and loss of key personnel. In addition, during periods of rapid growth, we must be able to increase manufacturing capacity and personnel to meet customer demand. We can provide no assurance that these objectives can be met in a timely manner in response to industry cycles. Each of these factors could adversely impact our operating results and financial condition. We are exposed to risks related to the development, adoption, governance and use of AI by us, our competitors and other third parties. We are increasingly incorporating AI capabilities into the development of technologies and our business operations, and into our products and services. AI technology is complex and rapidly evolving, and may subject us to significant competitive, legal, regulatory and other risks. We cannot predict the pace or trajectory of AI development or the extent to which AI-driven disruption will affect the semiconductor industry, and AI technologies may disrupt the broader semiconductor supply chain and ecosystem in ways that are difficult to predict. The implementation of AI can be costly and there is no guarantee that our use of AI will enhance our technologies, benefit our business operations or produce products and services that are preferred by our customers. Our competitors may be more successful in their AI strategy and develop superior products and services with the aid of AI. Additionally, AI algorithms or training methodologies may be flawed, and datasets may contain irrelevant, insufficient or biased information, which can cause errors in outputs. This may give rise to legal liability, damage our reputation and materially harm our business. Our employees, consultants, partners or third-party vendors may use AI tools without authorization or in a manner inconsistent with our policies, which could expose proprietary, confidential or regulated information to unauthorized recipients or create claims relating to privacy, open-source software, contractual obligations or other legal requirements. The use of AI in the development of our products and services, and our customers use of AI in relation to our products and services could also cause loss of IP, as well as subject us to risks, including third-party claims, related to IP infringement or misappropriation, data privacy and cybersecurity. Additionally, concerns over the use of AI for purposes contrary to public interests could impair public acceptance of AI and impair demand for our products and services. Although we strive to use AI technologies responsibly and have implemented internal processes and controls designed to identify and mitigate ethical and legal concerns related to our use of AI technologies, such processes and controls may not be sufficient to identify, assess, and mitigate all AI-related risks, and we may not identify or resolve issues before they occur. Failure to effectively develop and manage our AI governance framework could result in legal liability, regulatory action, reputational harm, or other adverse consequences to our business. Furthermore, the regulatory framework for AI technologies is rapidly evolving, uncertain, and varies significantly by jurisdiction, with new laws and regulations being enacted or proposed in the United States, the European Union and elsewhere. Compliance with new or changing AI-related laws and regulations may impose significant operational costs, require additional investment in governance and controls, or necessitate changes to our offerings or business practices. Any failure or perceived failure by us to comply with such regulatory requirements could subject us to legal liabilities, damage our reputation, or otherwise have a material and adverse impact on our business. Business Model and Capital Structure Risks If we do not develop and introduce new products and technologies in a timely manner in response to changing market conditions or customer requirements, our business could be seriously harmed. Success in the industries in which we serve, including the semiconductor and PCB industries depends, in part, on the continual improvement of existing technologies and rapid innovation of new solutions. The primary driver of technology advancement in the semiconductor industry has been to shrink the lithography that prints the circuit design on semiconductor chips. To the extent that driver slows, semiconductor manufacturers may delay investments in equipment, investigate more complex device architectures, use new materials and develop innovative fabrication processes. These and other evolving customer plans and needs require us to respond with continued development programs and cut back or discontinue older programs, which may no longer have industry-wide support. Technical innovations are inherently complex and require long development cycles and appropriate staffing of highly qualified employees. Our competitive advantage and future business success depend on our ability to accurately predict evolving industry standards, develop and introduce new products and solutions that successfully address changing customer needs, win market acceptance of these new products and solutions, and manufacture these new products in a timely and cost-effective manner. Our failure to accurately predict evolving industry 25 Table of Contents standards and develop as well as offer competitive technology solutions in a timely manner with cost-effective products could result in loss of market share, unanticipated costs and inventory obsolescence, which would adversely impact our business, operating results and financial condition. We must continue to make significant investments in R&D in order to enhance the performance, features and functionality of our products, to keep pace with competitive products and to satisfy customer demands. Substantial R&D costs typically are incurred before we confirm the technical feasibility and commercial viability of a new product, and not all development activities result in commercially viable products. There can be no assurance that revenues from future products or product enhancements will be sufficient to recover the development costs associated with such products or enhancements. In addition, we cannot be sure that these products or enhancements will receive market acceptance nor that we will be able to sell these products at prices that are favorable to us. Our business will be seriously harmed if we are unable to sell our products at favorable prices or if the market in which we operate does not accept our products. In addition, the complexity of our products exposes us to other risks. We regularly recognize revenue from a sale upon shipment of the applicable product to the customer (even before receiving the customer s formal acceptance of that product) in certain situations, including sales of products for which installation is considered perfunctory, transactions in which the product is sold to an independent distributor and we have no installation obligations, and sales of products where we have previously delivered the same product to the same customer location and that prior delivery has been accepted. However, our products are very technologically complex and rely on the interconnection of numerous subcomponents (all of which must perform to their respective specifications), so it is conceivable that a product for which we recognize revenue upon shipment may ultimately fail to meet the overall product s required specifications. In such a situation, the customer may be entitled to certain remedies, which could materially and adversely affect our operating results for various periods and, as a result, our stock price. We derive a substantial percentage of our revenues from sales of inspection products. As a result, any delay or reduction of sales of these products could have a material adverse effect on our business, financial condition and operating results. The continued customer demand for these products and the development, introduction and market acceptance of new products and technologies are critical to our future success. Our success is dependent in part on our technology and other proprietary rights. If we are unable to maintain our lead or protect our proprietary technology, we may lose valuable assets. Our success is dependent, in part, on our technology and other proprietary rights. We own various U.S. and international patents and have additional pending patent applications relating to some of our products and technologies. The process of seeking patent protection is lengthy and expensive, and we cannot be certain that pending or future applications will actually result in issued patents or that issued patents will be of sufficient scope or strength to provide meaningful protection or commercial advantage to us. Other companies and individuals, including our larger competitors, may develop technologies and obtain patents relating to our business that are similar or superior to our technology or may design around the patents we own, which may adversely affect our business. In addition, we at times engage in collaborative technology development efforts with our customers and suppliers, and these collaborations may constitute a key component of certain of our ongoing technology and product R&D projects. The termination of any such collaboration, or delays caused by disputes or other unanticipated challenges that may arise in connection with any such collaboration, could significantly impair our R&D efforts, which could have a material adverse impact on our business and operations. We also maintain trademarks on certain of our products and services and claim copyright protection for certain proprietary software and documentation. However, we can give no assurance that our trademarks and copyrights will be upheld or successfully deter infringement by third parties. While patent, copyright and trademark protection for our IP is important, we believe our future success in highly dynamic markets is most dependent upon the technical competence and creative skills of our personnel. We attempt to protect our trade secrets and other proprietary information through confidentiality and other agreements with our customers, suppliers, employees and consultants and through other security measures. We also maintain exclusive and non-exclusive licenses with third parties for strategic technology used in certain products. However, these employees, consultants and third parties may breach these agreements, and we may not have adequate remedies for wrongdoing. We also try to control access to and distribution of our technology and proprietary information. Despite our efforts, internal or external parties may attempt to copy, disclose, obtain or misappropriate our IP or technology. In addition, former employees may seek employment with our customers, suppliers or competitors and there can be no assurance that the confidential nature of our proprietary information will be maintained in the course of such future employment. In addition, the laws of certain territories in which we develop, manufacture or sell our products may not protect our IP rights to the same extent as the laws of the U.S. In any event, the extent to which we can protect our trade secrets through the use of confidentiality agreements is limited, and our success will depend to a significant extent on our ability to innovate ahead of our competitors. 26 Table of Contents Our future performance depends, in part, upon our ability to continue to compete successfully worldwide. Our industry includes large manufacturers with substantial resources to support customers worldwide. Some of our competitors are diversified companies with greater financial resources and more extensive research, engineering, manufacturing, marketing, and customer service and support capabilities than we possess. We face competition from companies whose strategy is to provide a broad array of products and services, some of which compete with the products and services we offer. These competitors may bundle their products in a manner that may discourage customers from purchasing our products, including pricing such competitive tools significantly below our product offerings. In addition, we face competition from smaller emerging companies whose strategy is to provide a portion of the products and services that we offer, using innovative technology to sell products into specialized markets. The strength of our competitive positions in many of our existing markets is largely due to our leading technology, which is the result of continuing significant investments in product R&D. However, we may enter new markets, whether through acquisitions or new internal product development, in which competition is based primarily on product pricing, not technological superiority. Further, some new growth markets that emerge may not require leading technologies. Loss of competitive position in any of the markets we serve, or an inability to sell our products on favorable commercial terms in new markets we may enter, could negatively affect our prices, customer orders, revenues, gross margins and market share, any of which would negatively affect our operating results and financial condition. Our business would be harmed if we do not receive parts, materials and subassemblies sufficient in number and performance to meet our production requirements and product specifications in a timely, cost-effective and compliant manner. We use a wide range of materials in the production of our products, including custom electronic and mechanical components, and we use numerous suppliers to supply these materials. Generally, we do not have guaranteed supply arrangements with our suppliers. Because of the variability and uniqueness of customers orders, we do not maintain an extensive inventory of materials for manufacturing. Through our business interruption planning, we seek to minimize the risk of production and service interruptions and/or shortages of key parts by, among other things, monitoring the financial stability of key suppliers, identifying (but not necessarily qualifying) possible alternative suppliers and maintaining appropriate inventories of key parts. Although we make reasonable efforts to ensure that parts are available from multiple suppliers, certain key parts are available only from a single supplier or a limited group of suppliers. Also, key parts we obtain from some of our suppliers incorporate the suppliers proprietary IP; in those cases, we are increasingly reliant on third parties for high-performance, high-technology components, which reduces the amount of control we have over the availability and protection of the technology and IP that is used in our products. In addition, if certain of our key suppliers experience liquidity issues and are forced to discontinue operations, which is a heightened risk, especially during economic downturns, it could affect their ability to deliver parts and could result in delays for our products. Similarly, especially with respect to suppliers of high-technology components, our suppliers themselves have increasingly complex supply chains, and delays or disruptions at any stage of their supply chains may prevent us from obtaining parts in a timely manner and result in delays for our products, or our suppliers might pass on the cost of inflation to us while we are unable to adjust pricing with our own customers. In April 2025, the Chinese government imposed export controls on seven of the seventeen elements classified as rare earth elements. In October 2025, the Chinese government imposed additional restrictions and licensing requirements on certain rare earth elements, some of which became effective immediately on the announcement date and other portions of the regulations became effective in November 2025. The Chinese government imposed export controls on an additional five rare earth elements and certain license requirements for items made outside of China that incorporate controlled rare earth elements. It is estimated that China controls about 70% of the worldwide mining of rare earth elements, 90% of the separation and processing of those elements and 93% of the magnets manufactured from those elements. Rare earth elements are critical to certain components contained in our products. If our suppliers are unable to provide the components necessary to make our products because of restrictions placed on their access to rare earth elements or products derived from rare earth elements, our business, financial condition and results of operations could be materially harmed. Our operating results and business may be adversely impacted if we are unable to obtain parts to meet our production requirements and product specifications, or if we are able to do so only on unfavorable terms. A supplier may discontinue production of a particular part for any number of reasons, including the supplier s financial condition or business operational decisions, which would require us to purchase, in a single transaction, a large number of such discontinued parts in order to ensure that a continuous supply of such parts remains available to our customers. Such end-of-life parts purchases could result in significant expenditures by us in a particular period, and, ultimately, any unused parts may result in a significant inventory write-off, either of which could have an adverse impact on our financial condition and results of operations for the applicable periods. Recently, a few large suppliers have discontinued manufacturing certain DRAM chips that are incorporated in a number of our products, and the resulting shortage has caused a dramatic increase in the prices to acquire these chips. Our efforts to procure these chips contributed to an increase in purchase commitments in fiscal 2026. We estimate that the additional costs to procure these DRAM chips will continue to have an adverse impact on our gross margin in 27 Table of Contents fiscal 2027. If we are unable to acquire adequate supply of such chips or acquire them in a timely or cost-controlled manner, our results of operations could be harmed. If we fail to operate our business in accordance with our business plan, our operating results, business and stock price may be significantly and adversely impacted. We attempt to operate our business in accordance with a business plan that is established annually, revised frequently (generally quarterly), and reviewed by management even more frequently (at least monthly). Our business plan is developed based on a number of factors, many of which require estimates and assumptions, such as our expectations of the economic environment, future business levels, our customers willingness and ability to place orders, lead-times, and future revenue and cash flow. Our budgeted operating expenses, for example, are based in part on our future revenue expectations. However, our ability to achieve our anticipated revenue levels is a function of numerous factors, including the volatile and historically cyclical nature of our primary industry, customer order cancellations, macroeconomic changes, operational matters regarding particular agreements, our ability to manage customer deliveries, the availability of resources for the installation of our products, delays or accelerations by customers in taking deliveries and the acceptance of our products (for products where customer acceptance is required before we can recognize revenue from such sales), our ability to operate our business and sales processes effectively, and a number of the other risk factors set forth in this Item 1A. Because our expenses are in most cases relatively fixed in the short term, any revenue shortfall below expectations could have an immediate and significant adverse effect on our operating results. Similarly, if we fail to manage our expenses effectively or otherwise fail to maintain rigorous cost controls, we could experience greater than anticipated expenses during an operating period, which would also negatively affect our results of operations. If we fail to operate our business consistent with our business plan, our operating results in any period may be significantly and adversely impacted. Such an outcome could cause customers, suppliers or investors to view us as less stable, or could cause us to fail to meet financial analysts revenue or earnings estimates, any of which could have an adverse impact on our stock price. In addition, our management is constantly striving to balance the requirements and demands of our customers with the availability and allocation of resources, the need to manage our operating model and other factors. In furtherance of those efforts, we often must exercise discretion and judgment as to the timing and prioritization of manufacturing, deliveries, installations and payment scheduling. Any such decisions may impact our ability to recognize revenue, including the fiscal period during which such revenue may be recognized, with respect to such products, which could have a material adverse effect on our business, results of operations or stock price. We have a leveraged capital structure. As of June 30, 2026, we had $5.95 billion aggregate principal amount of outstanding indebtedness, consisting of senior, unsecured long-term notes (the Senior Notes ). This aggregate principal amount of senior, unsecured notes includes an issuance in February 2024 of $750.0 million aggregate principal amount of senior, unsecured notes, consisting of $500.0 million of 4.700% senior, unsecured notes due February 1, 2034 and an additional $250.0 million of 4.950% senior, unsecured notes due July 15, 2052 which was originally issued in June 2022. We have a Credit Agreement (the Credit Agreement ) and Revolving Credit Facility (the Revolving Credit Facility ) with a maturity date of July 3, 2030, with two one-year extension options that allow 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 $500.0 million in the aggregate. As of June 30, 2026, we had no outstanding borrowings under our Revolving Credit Facility. We may incur additional indebtedness in the future by accessing the unfunded portion of our Revolving Credit Facility and/or entering into new financing arrangements. We also announced a stock repurchase program, under which the remaining available for repurchases was $9.74 billion as of June 30, 2026. A portion of the remaining repurchases may be financed with new indebtedness. Our ability to pay interest and repay the principal amount of our current indebtedness is dependent upon our ability to manage our business operations, our credit rating, the ongoing interest rate environment and the other risk factors discussed in this Item 1A. There can be no assurance that we will be able to manage any of these risks successfully. In certain circumstances involving a change of control followed by a downgrade of the rating of a series of our Senior Notes by at least two of Moody s Investors Service ( Moody s ), S&P Global Ratings ( S&P ) and Fitch Inc. ( Fitch ) unless we have exercised our rights to redeem the Senior Notes of such series, we will be required to make an offer to repurchase all or, at the holder s option, any part, of each holder s Senior Notes of that series pursuant to the offer. At that time, we will be required to offer payment in cash equal to 101% of the aggregate principal amount of Senior Notes repurchased plus accrued and unpaid interest, if any, on the Senior Notes repurchased, up to, but not including, the date of repurchase. We cannot make any assurance that we will have sufficient financial resources at such time, nor that we will be able to arrange financing to pay the repurchase price of that series of Senior Notes. Our ability to repurchase that series of Senior Notes in such event may be limited by law, by the relevant indenture associated with that series of Senior Notes, or by the terms of other agreements to 28 Table of Contents which we may be a party at such time. If we fail to repurchase that series of Senior Notes as required by the terms of such Senior Notes, it would constitute an event of default under the relevant indenture governing that series of Senior Notes which, in turn, may also constitute an event of default under our other obligations. Borrowings under our Revolving Credit Facility bear interest at a floating rate, and an increase in interest rates, particularly in the current environment of rising interest rates, would require us to pay additional interest on any borrowings, which may have an adverse effect on the value and liquidity of our debt and the market price of our common stock could decline. The interest rate under our Revolving Credit Facility is also subject to (i) an adjustment in conjunction with our credit rating downgrades or upgrades and (ii) an adjustment based on our performance against certain sustainability key performance indicators related to GHG emissions and renewable electricity usage. Additionally, under our Revolving Credit Facility, we are required to comply with affirmative and negative covenants, which include the maintenance of certain financial ratios, the details of which can be found in Note 7 Debt to our Consolidated Financial Statements. If we fail to comply with these covenants, we will be in default and our borrowings may become immediately due and payable. There can be no assurance that we will have sufficient financial resources nor that we will be able to arrange financing to repay our borrowings at such time. In addition, certain of our domestic subsidiaries are required to guarantee our borrowings under our Revolving Credit Facility. In the event we default on our borrowings, these domestic subsidiaries shall be liable for our borrowings, which could disrupt our operations and result in a material adverse impact on our business, financial condition or stock price. Our leveraged capital structure may adversely affect our financial condition, results of operations and net income per share. Our substantial amount of indebtedness could have adverse consequences including, but not limited to: A negative impact on our ability to satisfy our future obligations; An increase in the portion of our cash flows that may have to be dedicated to interest and principal payments that may not be available for operations, working capital, capital expenditures, acquisitions, investments, dividends, stock repurchases, general corporate or other purposes; An impairment of our ability to obtain additional financing in the future; and Obligations to comply with restrictive and financial covenants as noted in the above risk factor and Note 7 Debt to our Consolidated Financial Statements. Our ability to satisfy our future expenses as well as our debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors. Furthermore, our future operations may not generate sufficient cash flows to enable us to meet our future expenses and service our debt obligations, which may impact our ability to manage our capital structure to preserve and maintain our investment grade rating. If our future operations do not generate sufficient cash flows, we may need to access the money available for borrowing under our Revolving Credit Facility or enter into new financing arrangements to obtain necessary funds. If we determine it is necessary to seek additional funding for any reason, we may not be able to obtain such funding or, if funding is available, we may not be able to obtain it on acceptable terms. Any borrowings under our Revolving Credit Facility will place further pressure on us to comply with the financial covenants. If we fail to make a payment associated with our debt obligations, we could be in default on such debt, and such a default could cause us to be in default on our other obligations. There can be no assurance that we will continue to declare cash dividends at all or in any particular amounts. We intend to continue to pay quarterly dividends subject to capital availability and periodic determinations by our Board of Directors that cash dividends are in the best interest of our stockholders and are in compliance with all laws and agreements applicable to the declaration and payment of cash dividends by us. However, future dividends may be affected by, among other factors: our views on potential future capital requirements for investments in acquisitions and the funding of our R&D; legal risks; stock repurchase programs; changes in federal and state income tax laws or corporate laws; changes to our business model; and our increased interest and principal payments required by our outstanding indebtedness and any additional indebtedness that we may incur in the future. Our dividend payments may change from time to time, and we cannot provide assurance that we will continue to declare dividends at all or in any particular amounts. A reduction in our dividend payments could have a negative effect on our stock price. We are exposed to risks related to our commercial terms and conditions, including our indemnification of third parties, as well as the performance of our products. Although our standard commercial documentation sets forth the terms and conditions that we intend to apply to commercial transactions with our business partners, counterparties to such transactions may not explicitly agree to our terms 29 Table of Contents and conditions. In situations where we engage in business with a third party without an explicit master agreement regarding the applicable terms and conditions, or where the commercial documentation applicable to the transaction is subject to varying interpretations, we may have disputes with those third parties regarding the applicable terms and conditions of our business relationship with them. Such disputes could lead to a deterioration of our commercial relationship with those parties, costly and time-consuming litigation, or additional concessions or obligations being offered by us to resolve such disputes, or could impact our revenue or cost recognition. Any of these outcomes could materially and adversely affect our business, financial condition and results of operations. In addition, in our commercial agreements, from time to time in the normal course of business, we indemnify third parties with whom we enter into contractual relationships, including customers, suppliers and lessors, with respect to certain matters. We have agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, third-party claims that our products, when used for their intended purposes, infringe the IP rights of such third parties, or other claims made against certain parties. We may be compelled to enter into or accrue for probable settlements of alleged indemnification obligations, or we may be subject to potential liability arising from our customers involvements in legal disputes. In addition, notwithstanding the provisions related to limitations on our liability that we seek to include in our business agreements, the counterparties to such agreements may dispute our interpretation or application of such provisions, and a court of law may not interpret or apply such provisions in our favor, any of which could result in an obligation for us to pay material damages to third parties and engage in costly legal proceedings. It is difficult to determine the maximum potential amount of liability under any indemnification obligations, whether or not asserted, due to our limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in any particular claim. Our business, financial condition and results of operations in a reported fiscal period could be materially and adversely affected if we expend significant amounts in defending or settling any purported claims, regardless of their merit or outcomes. We are also exposed to potential costs associated with unexpected product performance issues. Our products and production processes are extremely complex and, thus, could contain unexpected product defects, especially when products are first introduced. Unexpected product performance issues could result in significant costs being incurred by us, including increased service or warranty costs, providing product replacements for (or modifications to) defective products, litigation related to defective products, reimbursement for damages caused by our products, product recalls, or product write-offs or disposal costs. These costs could be substantial and could have an adverse impact upon our business, financial condition and operating results. In addition, our reputation with our customers could be damaged as a result of such product defects, which could reduce demand for our products and negatively impact our business. Furthermore, we occasionally enter into volume purchase agreements with our larger customers, and these agreements may provide for certain volume purchase incentives, such as credits toward future purchases. We believe that these arrangements are beneficial to our long-term business, as they are designed to encourage our customers to purchase larger volumes of our products. However, these arrangements could require us to recognize a reduced level of revenue for the products that are initially purchased, to account for the potential future credits or other volume purchase incentives. Our volume purchase agreements require significant estimation for the amounts to be accrued depending upon the estimate of volume of future purchases. As such, we are required to update our estimates of the accruals on a periodic basis. Until the earnings process is complete, our estimates could differ in comparison to actual results. As a result, these volume purchase arrangements, while expected to be beneficial to our business over time, could materially and adversely affect our results of operations in near-term periods, including the revenue we can recognize on product sales and, therefore, our gross margins. In addition, we may, in limited circumstances, enter into agreements that contain customer-specific commitments on pricing, tool reliability, spare parts stocking levels, response time and other commitments, and we may be unable to adjust pricing with our customers despite rising inflation in our supply chain. Furthermore, we may give these customers limited audit or inspection rights to enable them to confirm that we are complying with these commitments. If a customer elects to exercise its audit or inspection rights, we may be required to expend significant resources to support the audit or inspection, as well as to defend or settle any dispute with a customer that could potentially arise out of such audit or inspection. To date, we have made no significant accruals in our Consolidated Financial Statements for this contingency. While we have not in the past incurred significant expenses for resolving disputes regarding these types of commitments, we cannot make any assurance that we will not incur any such liabilities in the future. Our business, financial condition and results of operations in a reported fiscal period could be materially and adversely affected if we expend significant amounts in supporting an audit or inspection, or defending or settling any purported claims, regardless of their merit or outcomes. There are risks associated with our receipt of government funding. We are exposed to additional risks related to our receipt of external funding for certain strategic development programs from various governments and government agencies, both domestically and internationally. Governments and government 30 Table of Contents agencies typically have the right to terminate funding programs at any time in their sole discretion, or a project may be terminated by mutual agreement if the parties determine that the project s goals or milestones are not being achieved, so there is no assurance that these sources of external funding will continue to be available to us in the future. In addition, under the terms of these government grants, the applicable granting agency typically has the right to audit the costs that we incur, directly and indirectly, in connection with such programs. Any such audit could result in modifications to, or even termination of, the applicable government funding program. For example, if an audit were to identify any costs as being improperly allocated to the applicable program, those costs would not be reimbursed, and any such costs that had already been reimbursed would have to be refunded. We do not know the outcome of any future audits. Any adverse finding resulting from any such audit could lead to penalties (financial or otherwise), termination of funding programs, suspension of payments, fines and suspension or prohibition from receiving future government funding from the applicable government or government agency, any of which could adversely impact our operating results, financial condition and ability to operate our business. We have recorded significant asset impairment, restructuring and inventory write-off charges and may do so again in the future, which could have a material negative impact on our results of operations. Historically, we have recorded restructuring charges related to our prior global workforce reductions, large excess inventory write-offs, and material impairment charges related to our goodwill and purchased intangible assets, such as the goodwill and purchased intangible asset impairment charges recorded in the second quarter of fiscal 2025. Workforce changes can also temporarily reduce workforce productivity, which could be disruptive to our business and adversely affect our results of operations. In addition, we may not achieve or sustain the expected cost savings or other benefits of our restructuring plans, or do so within the expected time frame. If we again restructure our organization and business processes, implement additional cost-reduction actions or discontinue certain business operations, we may take additional, potentially material, restructuring charges related to, among other things, employee terminations or exit costs. We may also be required to write off additional inventory if our product build plans or demand for service inventory decline. Also, in the event that our lead times from suppliers increase (possibly due to the increasing complexity of the parts and components they provide) and the lead times demanded by our customers decrease (which may be due to many factors, including the time pressures they face when introducing new products or technology or bringing new facilities into production), we may be compelled to increase our commitments, and, therefore, our risk exposure, to inventory purchases to meet our customers demands in a timely manner, and that inventory may need to be written off if demand for the underlying product declines for any reason. Such additional write-offs could result in material charges. We have recorded material charges related to the impairment of our goodwill and purchased intangible assets. Goodwill represents the excess of costs over the net fair value of net assets acquired in a business combination. Goodwill is not amortized, but is instead tested for impairment at least annually in accordance with authoritative guidance for goodwill. Purchased intangible assets with estimable useful lives are amortized over their respective estimated useful lives based on economic benefit if known or using the straight-line method, and are reviewed for impairment in accordance with authoritative guidance for long-lived assets. The valuation of goodwill and intangible assets requires assumptions and estimates of many critical factors, including, but not limited to, declines in our operating cash flows, declines in our stock price or market capitalization, declines in our market share, and declines in revenues or profits. A substantial decline in our stock price, or any other adverse change in market conditions, particularly if such change has the effect of changing one of the critical assumptions or estimates we previously used to calculate the value of our goodwill or intangible assets (and, as applicable, the amount of any previous impairment charge), could result in a change to the estimation of fair value that could result in an additional impairment charge. Any such additional material charges, whether related to restructuring or goodwill or purchased intangible asset impairment, may have a material negative impact on our operating results and related financial statements. We are exposed to risks related to our receivables factoring and banking arrangements. We enter into factoring arrangements with financial institutions to sell certain of our trade receivables and promissory notes from customers without recourse. In addition, we maintain cash and cash equivalents with several domestic and foreign financial institutions, in excess of the Federal Deposit Insurance Corporation insurance limit. If we were to stop entering into these factoring arrangements, our operating results, financial condition and cash flows could be adversely impacted by delays or failures in collecting trade receivables. However, by engaging these financial institutions for factoring arrangements and for banking services, we are exposed to additional risks that any of such financial institutions may prove to be not financially viable. If any of these financial institutions experiences financial difficulties or is otherwise unable to honor the terms of our factoring or deposit arrangements, we may experience material financial losses due to the failure of such arrangements or a lack of access to our funds, any of which could have an adverse impact upon our operating results, financial condition and cash flows. 31 Table of Contents We are subject to the risks of additional government actions in the event we were to breach the terms of any settlement arrangement into which we have entered. In connection with the settlement of certain government actions and other legal proceedings related to our historical stock option practices, we have explicitly agreed, as a condition to such settlements, that we will comply with certain laws, such as the books and records provisions of the federal securities laws. If we were to violate any such law, we might not only be subject to the significant penalties applicable to such violation, but our past settlements may also be impacted by such violation, which could give rise to additional government actions or other legal proceedings. Any such additional actions or proceedings may require us to expend significant management time and incur significant accounting, legal and other expenses, and may divert attention and resources from the operation of our business. These expenditures and diversions, as well as an adverse resolution of any such action or proceeding, could have a material adverse effect on our business, financial condition and results of operations. Our Bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions and proceedings, which could limit the ability of our stockholders to obtain a judicial forum of their choice for disputes with the Company or its directors, officers or employees. Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware generally shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or employee of the Company to the Company or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, our Certificate of Incorporation or Bylaws or (iv) any other action asserting a claim arising under, in connection with, and governed by the internal affairs doctrine. This choice of forum provision does not waive our compliance with our obligations under the federal securities laws and the rules and regulations thereunder. Moreover, the provision does not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act or by the Securities Act of 1933, as amended. This choice of forum provision may increase costs to bring a claim, discourage claims or limit a stockholder s ability to bring a claim in a judicial forum that the stockholder finds favorable for disputes with the Company or our directors, officers or employees, which may discourage such lawsuits against the Company and its directors, officers and employees, even though an action, if successful, might benefit our stockholders. Alternatively, if a court were to find the choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such matters in other jurisdictions, which could increase our costs of litigation and adversely affect our business and financial condition. ITEM 1B.UNRESOLVED STAFF COMMENTS None. ITEM 1C.CYBERSECURITY Cybersecurity Risk Management and Strategy We have a cybersecurity risk management process intended to protect the confidentiality, integrity and availability of our critical systems and information. We design and assess our process based on the National Institute of Standards and Technology Cybersecurity Framework ( NIST CSF ). This does not imply that we meet any particular technical standards, specifications or requirements, only that we use the NIST CSF as a guide to help us identify, assess and manage cybersecurity risks relevant to our business. Our cybersecurity risk management process is integrated into our overall risk management process, and shares common methodologies, reporting channels and governance processes that apply across the risk management process to other legal, compliance, strategic, operational and financial risk areas. Key elements of our cybersecurity risk management process include, but are not limited to, the following: Risk assessments designed to help identify material risks from cybersecurity threats to our critical systems and information; A cybersecurity team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; The use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes; Cybersecurity awareness training of our workforce; 32 Table of Contents A cybersecurity incident response plan and processes for responding to cybersecurity incidents; and Risk management processes based on our assessment of the respective risk profile of key third parties. We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition. We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See Part I Item 1A Risk Factors We depend on information technology for our business and are exposed to risks related to cybersecurity threats and cyber incidents affecting our, our customers , suppliers and other service providers systems and networks. Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (the Committee ) oversight of cybersecurity risks, including oversight of management s implementation of our cybersecurity risk management process. The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, where it deems appropriate, regarding cybersecurity incidents it considers to be significant or potentially significant. The Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also regularly receives briefings from management on our cyber risk management process. Board members receive presentations on cybersecurity topics from management or external experts as part of the Board s continuing education on topics that impact public companies. Our Chief Legal Officer and Chief Information Security Officer ( CISO ) are members of our management team. They are principally responsible for assessing and managing our material risks from cybersecurity threats and for our overall cybersecurity risk management process, including the supervision of both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our CISO has a degree with a focus on information technology, and is a Certified Information Systems Auditor with over 20 years of experience in information technology related roles, including building and leading cybersecurity, risk management and information protection teams. Our CISO reports to our Chief Legal Officer who oversees cybersecurity, and holds a Carnegie Mellon University Software Engineering Institute CERT Certificate for Cybersecurity Oversight. The operational cybersecurity team collectively have decades of relevant cybersecurity education and experience and maintain a wide range of industry certifications. We invest in regular, ongoing cybersecurity training for the cybersecurity team. Our management team works closely with our Chief Legal Officer and CISO to stay informed about and monitor efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents through various means, which may include: briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our information technology environment. ITEM 2.PROPERTIES Our headquarters are located in Milpitas, California. We own and lease facilities worldwide that support our manufacturing, R&D, sales, service and administrative activities. Our principal manufacturing operations are located in the U.S., Singapore, Israel, China and various locations throughout Europe. Our principal R&D activities are conducted in the U.S., U.K., India, China, Singapore and Israel. We also maintain sales and service facilities in major semiconductor manufacturing regions around the world to support our global customer base. We believe our facilities are well maintained and suitable for their intended purposes and that our existing manufacturing capacity, together with planned expansions and operational improvements, is adequate to meet our current requirements and expected near-term growth. Because many of our facilities support multiple business activities and technologies, we do not identify or allocate property assets by operating segment. ITEM 3.LEGAL PROCEEDINGS The information set forth below under Note 14 Litigation and Other Legal Matters to our Consolidated Financial Statements is incorporated herein by reference. ITEM 4.MINE SAFETY DISCLOSURES Not applicable. 33 Table of Contents PART II ITEM 5.MARKET FOR REGISTRANT S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed and traded on the NASDAQ Global Select Market of The Nasdaq Stock Market LLC under the symbol KLAC. On June 11, 2026, the Company effected a ten-for-one stock split of its common stock and a proportional increase in the number of authorized shares of common stock. Share and per share information throughout this Annual Report on Form 10-K have been retroactively adjusted to reflect the stock split. The par value per share remains unchanged at $0.001 per share after the stock split. On August 6, 2026, we announced that our Board of Directors had declared a quarterly cash dividend of $0.230 per share to be paid on September 1, 2026 to stockholders of record as of the close of business on August 17, 2026. As of August 3, 2026, there were 416 holders of record of our common stock. Equity Repurchase Plans The following is a summary of stock repurchases for each month during the fourth quarter of the fiscal year ended June 30, 2026: PeriodTotal Number of Shares Purchased(1) Average Price Paid(3) per Share Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs(1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)(2) April 1, 2026 to April 30, 20261,184,390 $170.47 1,184,390 $10,111,119,596 May 1, 2026 to May 31, 2026999,790 $178.64 999,790 $9,932,517,229 June 1, 2026 to June 30, 2026836,720 $227.35 836,720 $9,742,290,167 3,020,900 3,020,900 __________________ (1)Our Board of Directors has authorized a program that permits us to repurchase our common stock, including a $7.00 billion increase approved by the Board on March 11, 2026, which is in addition to the $3.94 billion authorization remaining as of December 31, 2025 under the then existing share repurchase program approved on April 30, 2025. As of June 30, 2026, $9.74 billion remained available for repurchases under our repurchase program. All shares in the table were purchased pursuant to our publicly announced repurchase program. (2)Our stock repurchase program has no expiration date and may be suspended at any time. Future repurchases of shares of our common stock under our repurchase program may be effected through various different repurchase transaction structures including isolated open market transactions, accelerated share repurchase agreements or systematic repurchase plans, subject to market conditions, applicable legal requirements and other factors. (3)Average price paid per share and approximate dollar value of shares that may yet be purchased under the plans or programs exclude the excise tax imposed on certain stock repurchases as part of the IRA, or other fees, costs or expenses that may be applicable to the repurchases. Stock Performance Graph and Cumulative Total Return Notwithstanding any statement to the contrary in any of our previous or future filings with the SEC, the following information relating to the price performance of our common stock shall not be deemed filed with the SEC under the Securities Exchange Act and shall not be incorporated by reference into any such filings. The following graph compares the cumulative five-year total return attained by stockholders on our common stock relative to the cumulative total returns of the S&P 500 Index and the Philadelphia Semiconductor Index ( PHLX ). The graph tracks the performance of a $100 investment in our common stock and in each of the indices (with the reinvestment of all dividends) from June 30, 2021 to June 30, 2026. 34 Table of Contents June 2021June 2022June 2023June 2024June 2025June 2026 KLA Corporation$100.00$99.58$153.41$263.28$288.67$978.58 S&P 500$100.00$89.38$106.90$133.15$153.34$187.57 PHLX Semiconductor$100.00$77.39$112.82$169.90$173.82$449.45 Our fiscal year ends June 30. The comparisons in the graph above are based upon historical data and are not necessarily indicative of, nor intended to forecast, future stock price performance. ITEM 6.[RESERVED] ITEM 7.MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes included in Item 8 Financial Statements and Supplementary Data in this Annual Report on Form 10-K. This discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors, including but not limited to those discussed in Part I Item 1A Risk Factors and elsewhere in this Annual Report on Form 10-K (see Special Note Regarding Forward-Looking Statements ). Discussions and analysis of fiscal year 2025 as compared against fiscal year 2024 have been omitted and can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the SEC. 35 Table of Contents EXECUTIVE SUMMARY 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, along with related services, software and other offerings, supports R&D and manufacturing of ICs, wafers and reticles. Our products, services and expertise enable our customers to measure, detect, analyze and resolve critical nanometer-scale product defects, helping them to address manufacturing challenges and achieve higher yields at lower cost. We also offer advanced technology solutions across a range of adjacent markets, including PCBs, advanced packaging, specialty semiconductors (such as LEDs, power devices and compound semiconductors), data storage and general materials research. In addition, our services business has grown consistently year over year and accounted for approximately 23% of our total revenues in fiscal 2026. Our services revenue, which is generated largely from recurring subscription-like contracts, provides maintenance and other services to maximize uptime, productivity and tool life for our customers, supported in part by continued demand from legacy semiconductor markets. We are organized into three reportable segments, as follows: Semiconductor Process Control: a comprehensive portfolio of inspection, metrology and data analytics products, as well as related service offerings that help IC manufacturers achieve target yields throughout the semiconductor fabrication process, from R&D through volume production. Specialty Semiconductor Process: advanced vacuum deposition and etching process tools used by a broad range of specialty semiconductor customers. PCB and Component Inspection: a range of inspection, testing and measurement, and direct imaging for patterning products used by manufacturers of PCBs, advanced packaging, MEMS and other electronic components. The semiconductor industry continues to experience market expansion and diversification. HPC and data centers, supported by increasing adoption of AI, are contributing to industry growth and these trends are expected to continue to influence industry investment into fiscal year 2027. AI represents a key technology inflection point driving innovation and demand at the leading edge, and our portfolio of products is well positioned to support leading-edge demand and the ongoing AI infrastructure buildout. Our semiconductor customers generally operate in one or both major semiconductor device manufacturing markets: memory and foundry/logic. Long-term demand drivers include continued adoption of EUV in HVM for logic and DRAM (including high-bandwidth memory), which are increasing process control requirements and expanding our served market. Demand for advanced semiconductor technologies, particularly at leading-edge nodes such as 2-nanometer, is increasing process complexity and process control intensity, which in turn is driving incremental demand for our solutions. Increasing complexity and value of semiconductor packages, particularly for AI and HPC applications, is also driving significant growth in our advanced packaging business. Broader industry trends, including digitization, communication improvements, healthcare innovation, industrial applications, and increasing semiconductor content in automobiles and intelligent systems, are supporting continued investment in legacy and mature-node capacity, where long product lifecycles and expanding end-market demand require ongoing manufacturing investments. While we continue to invest in technological innovation, demand for our products may be affected by the timing of customer adoption decisions and changes in delivery schedules, which can result in variability in our operating results. In addition, geopolitical factors, including government regulations and tariffs, have impacted our results of operations and may continue to do so. We have also increased our purchase commitments, in part to secure the supply of key components, which may affect the timing and magnitude of our costs and working capital requirements. Despite these dynamics, we delivered higher revenue and net income in fiscal year 2026 compared to fiscal year 2025, driven by increased sales volume and disciplined cost management. Looking ahead to fiscal year 2027, we expect continued revenue growth as customer engagement and demand signals continue to strengthen. We are continuously assessing the aggregate potential impact of government regulations, tariffs and other geopolitical risks on our financial results and operations. See Part I Item 1A Risk Factors for more information regarding how such actions by the U.S. government or another country could significantly impact our ability to provide our products and services to existing and potential customers, especially in China, and adversely affect our business, financial condition and results of operations. On June 11, 2026, the Company effected a ten-for-one stock split of its common stock and a proportional increase in the number of authorized shares of common stock. Share and per share information throughout this Annual Report on Form 10-K have been retroactively adjusted to reflect the stock split. 36 Table of Contents The following table sets forth some of our key consolidated financial information for each of our last three fiscal years: Year Ended June 30, (Dollar amounts in thousands, except diluted net income per share)202620252024 Total revenues$13,579,476 $12,156,162 $9,812,247 Costs of revenues$5,255,060 $4,751,867 $3,928,073 Gross margin61.3 %60.9 %60.0 % Net income$4,830,771 $4,061,643 $2,761,896 Diluted net income per share$3.66 $3.04 $2.03 We continue to focus on returning cash to our investors, making $2.29 billion in share repurchases and paying $1.06 billion in dividends in the year ended June 30, 2026. Our Board of Directors has authorized a program that permits us to repurchase our common stock, including an increase in the authorized repurchase amount of $7.00 billion in the third quarter of fiscal 2026. As of June 30, 2026, we had $9.74 billion of repurchase authority remaining. We also announced an increase in the dividend level in the third quarter of fiscal 2026 to $0.230 per share per quarter, which was our 17th consecutive annual dividend increase. Refer to the Liquidity and Capital Resources section below for more information on our strong cash flow generation and strategy of returning excess cash to our stockholders. CRITICAL ACCOUNTING ESTIMATES A critical accounting estimate is defined as one that has a material impact on our financial condition and results of operations and requires us to make difficult, complex or subjective judgments, often as a result of the need to make estimates about matters that are inherently uncertain. Where applicable, we base these estimates and assumptions on historical experience and evaluate them on an ongoing basis to ensure that they remain reasonable under current conditions. Actual results could differ from those estimates. We believe that the following critical accounting policies reflect more significant judgments and estimates used in the preparation of our consolidated financial statements regarding critical accounting estimates. See Note 1 Description of Business and Summary of Significant Accounting Policies to our Consolidated Financial Statements for additional information regarding our accounting policies. Revenue Recognition. We recognize revenue from sales at a point in time when we have satisfied our performance obligation by transferring control of the goods or services to the customer. The transaction price for our contracts with customers is allocated among the identified performance obligations and consists of both fixed and variable consideration provided it is probable that a significant reversal of revenue will not occur when the uncertainty related to variable consideration is resolved. Fixed consideration includes amounts to be contractually billed to the customer while variable consideration includes estimates for discounts and credits for future usage. Management uses judgment in identifying performance obligations, determining the stand-alone selling price ( SSP ) for each distinct performance obligation and allocating consideration from an arrangement to the individual performance obligations based on the SSP. We estimate the SSP of products and services based on observable transactions when the products and services are sold on a stand-alone basis and those prices fall within a reasonable range. We typically have established SSP ranges for individual products and services due to the stratification of these products by customers and circumstances. In instances where the SSP is not directly observable, we determine the SSP using information that includes market conditions, entity-specific factors including discounting strategies, information about the customer or class of customer that is reasonably available and other observable inputs. While changes in the allocation of SSP between performance obligations will not affect the amount of total revenue recognized for a particular contract, any material changes could impact the timing of revenue recognition, which could have a material effect on our financial position and results of operations. Additionally, management also uses judgments to evaluate whether or not the customer has obtained control of the product and considers several indicators in evaluating whether or not control has transferred to the customer, which could also impact the timing of revenue recognition, and could have a material effect on our financial position and results of operations. Although our products are generally not sold with a right of return, we may provide other credits or sales incentives, which are accounted for either as variable consideration or a material right, depending on the specific terms and conditions of the arrangement. These credits and incentives are estimated at contract inception and updated at the end of each reporting period if and when additional information becomes available. Inventory Valuation. Inventories are stated at the lower of cost or net realizable value using standard costs that approximate actual costs on a first-in, first-out basis. The carrying value of inventory is reduced for estimated obsolescence equal to the difference between its cost and the estimated net realizable value based on assumptions about future demand for meeting our product manufacturing plans and our customers support requirements. The estimate of net realizable value of inventory is impacted by assumptions regarding general semiconductor market conditions, manufacturing schedules, 37 Table of Contents technology changes, new product introductions and possible alternative uses, and requires us to use significant judgment that may include uncertain elements. Actual demand may differ from forecasted demand, and such differences may have a material effect on recorded inventory values. If in any period we anticipate an adverse change in assumptions such as future demand or market conditions to be less favorable than our previous estimates, additional inventory write-downs may be required and would be reflected in cost of revenues, resulting in a negative impact to our gross margin in that period. The potential negative impact based on future demand is not practically quantifiable. On the other hand, if in any period we are able to sell inventories that had been written down in a previous period to a level below the ultimate realized selling price, related revenue would be recorded with a lower or no offsetting charge to cost of revenues resulting in a net benefit to our gross margin in that period. A decrease in the future average selling prices would not have a material impact on the estimated net realizable value of finished goods and work in process inventories. Goodwill and Long-Lived Assets Impairment. We assess goodwill for impairment annually as well as whenever events or changes in circumstances indicate that the carrying value of a reporting unit 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. If the fair value of a reporting unit is less than its carrying value, a goodwill impairment charge is recorded for the difference. We determine the fair value of a reporting unit using the income approach or market approach, or a combination of both. If multiple valuation methodologies are used, the results are judgmentally weighted. The income approach is estimated through discounted cash flow analysis. The estimated fair value of a reporting unit is computed by adding the present value of the estimated annual discounted cash flows over a discrete projection period to the residual value of the business at the end of the projection period. This valuation technique requires us to use significant estimates and assumptions, including long-term growth rates, discount rates and other inputs. The estimated growth rates for the projection period are based on our internal forecasts of anticipated future performance of the business. The residual value is estimated using a perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections. The discount rates are calculated as the weighted average cost of capital of comparable peer companies, adjusted for company-specific risk. The market approach estimates the fair value of a reporting unit by utilizing the market comparable method, which uses revenue and earnings multiples from comparable companies. We performed the required annual goodwill impairment testing for all reportable segments as of December 31, 2025, and concluded that goodwill was not impaired. As a result of our qualitative assessment, we determined that it was not necessary to perform the quantitative assessment. During the second quarter of fiscal 2025, we noted a continued deterioration of the long-term forecast for our PCB business, which is part of our PCB and Component Inspection reportable segment. We also completed an internal reorganization affecting the composition of reporting units within our Specialty Semiconductor Process and PCB and Component Inspection reportable segments. These two events triggered goodwill and purchased intangible assets impairment tests, which resulted in a $230.4 million pre-reorganization goodwill impairment charge in the PCB and Component Inspection reportable segment. The quantitative assessment performed, which utilized a combination of the income and market approaches described above, was particularly sensitive to changes in the underlying estimates and assumptions. For example, if these estimates and assumptions were adjusted to the extent the fair value of the reporting unit was calculated to be 10% lower, we would have incurred an additional approximately $50 million impairment charge. Long-lived assets, including both tangible and purchased intangible 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 long-lived assets primarily include declines in our operating cash flows from the use of these assets. For finite-lived purchased intangible assets, we determine whether the assets are recoverable based on the forecasted undiscounted future cash flows that are expected to be generated by the lowest-level associated asset grouping. If the undiscounted cash flows used in the recoverability test are less than the assets carrying value, we recognize an impairment loss for the amount that the carrying value exceeds the fair value. We determine the fair value of purchased intangible assets using the income approach, primarily by applying the relief-from-royalty or multi-period excess-earnings methods. In connection with the continued deterioration of the long-term forecast for our PCB businesses noted above, we recorded impairment losses related to purchased intangible assets of $8.7 million during the second quarter of fiscal 2025. There can be no assurance that the estimates and assumptions used in our fair value calculations will prove to be an accurate prediction of the future. If our assumptions are not realized, or if there are future changes in any of the assumptions 38 Table of Contents due to a change in economic conditions or otherwise, it is possible that a further impairment charge may need to be recorded in the future. See Note 6 Goodwill and Purchased Intangible Assets in the Notes to our Consolidated Financial Statements for additional information. Income Taxes. The calculation of our effective tax rate involves significant judgment in the application of complex tax laws among various tax jurisdictions worldwide; identifying uncertain tax positions; and estimating the amount of deferred tax assets that will be realized in the future. We believe that our tax positions and judgments are reasonable, but actual results may differ. If one or more taxing authorities were to successfully overturn our tax positions, it could have a material adverse effect on our effective tax rate, results of operations, or cash flows. Unrecognized tax benefits are recorded for uncertain tax positions on the largest amount that is more than 50% likely of being realized upon ultimate settlement. Evaluation of tax positions, their technical merits, and measurements using cumulative probability are inherently subjective estimates since they require our assessment of the probability of future outcomes. We recorded unrecognized tax benefits of $257.8 million and $258.6 million for the years ended June 30, 2026 and June 30, 2025, respectively. We reevaluate these uncertain tax positions on a quarterly basis based on certain factors including, but not limited to, changes in facts or circumstances; changes in tax law; audit settlements; new audit activities; and changes in accounting standards. Any changes to these factors can result in a material change to tax expense. Our calculations of deferred tax assets and liabilities are based on estimates and judgments related to uncertainties in the application of complex tax laws and projections of future taxable income. The guidance requires that deferred tax assets be reduced by a valuation allowance if we determine it is more likely than not that a portion of the deferred tax asset will not be realized in the foreseeable future. We have determined that a valuation allowance is necessary against a portion of the deferred tax assets, but we anticipate that our future taxable income will be sufficient to recover the remainder of our deferred tax assets. We recorded tax valuation allowances of $356.6 million and $310.6 million as of June 30, 2026 and June 30, 2025, respectively, primarily related to California credit carry-forwards. Based on the enacted income apportionment rules in California, our future California income tax liability will not be sufficient to fully utilize the credit carry-forwards. We assess on a quarterly basis whether there should be a change to the valuation allowance for some portion or all of the deferred tax assets. If there is a change in our ability to recover our deferred tax assets that are not subject to a valuation allowance, we will be required to record an additional valuation allowance against such deferred tax assets which may materially increase our tax expense. If there is a change in our ability to utilize the California credit carry-forwards, we will be required to reduce our valuation allowance against such deferred tax assets which may materially decrease our tax expense. Recent Accounting Pronouncements For a description of recent accounting pronouncements, including those recently adopted and the expected dates of adoption as well as estimated effects, if any, on our Consolidated Financial Statements of those not yet adopted, see Note 1 Description of Business and Summary of Significant Accounting Policies to our Consolidated Financial Statements. RESULTS OF OPERATIONS Revenues and Gross Margin Year Ended June 30, (Dollar amounts in thousands)202620252024FY26 vs. FY25FY25 vs. FY24 Revenues: Product$10,453,537 $9,472,854 $7,482,679 $980,683 10 %$1,990,175 27 % Service3,125,939 2,683,308 2,329,568 442,631 16 %353,740 15 % Total revenues$13,579,476 $12,156,162 $9,812,247 $1,423,314 12 %$2,343,915 24 % Costs of revenues$5,255,060 $4,751,867 $3,928,073 $503,193 11 %$823,794 21 % Gross margin61.3%60.9%60.0%0.4%0.9% 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. Service revenues are generated from product maintenance and support services, as well as billable time and material service 39 Table of Contents calls made to our customers. The amount of our service revenues is typically a function of the number of systems installed at our customers sites and the utilization of those systems, but it is also impacted by other factors, such as our rate of service contract renewals, the types of systems being serviced and fluctuations in foreign currency exchange rates. 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. The 12% increase in total revenues in the fiscal year ended June 30, 2026 compared to the prior fiscal year was primarily driven by higher product revenues resulting from increased leading-edge customer investments in foundry/logic, memory and advanced packaging technologies, supported by strong demand associated with AI and HPC applications. Revenue growth also benefited from higher service revenues, which increased 16% due to growth in our installed base of tools. Revenues by segment(1) Year Ended June 30, (Dollar amounts in thousands)202620252024FY26 vs. FY25FY25 vs. FY24 Revenues: Semiconductor Process Control$12,244,733 $10,947,359 $8,733,556 $1,297,374 12 %$2,213,803 25 % Specialty Semiconductor Process584,064 587,107 528,701 (3,043)(1)%58,406 11 % PCB and Component Inspection750,415 621,721 552,491 128,694 21 %69,230 13 % Total segment revenues$13,579,212 $12,156,187 $9,814,748 $1,423,025 12 %$2,341,439 24 % __________ (1)Segment revenues exclude corporate allocations and the effects of changes in foreign currency exchange rates. For additional details, refer to Note 17 Segment Reporting and Geographic Information to our Consolidated Financial Statements. Revenue from our Semiconductor Process Control segment increased 12% in fiscal 2026 compared to fiscal 2025, primarily due to increased revenue from foundry/logic and memory customers, driven by continued leading-edge investment supporting AI and HPC applications. Revenue growth also benefited from strong customer adoption of our advanced packaging products and higher service revenue attributable to growth in the installed base of tools. Revenue from our Specialty Semiconductor Process segment decreased slightly by 1% in fiscal 2026 compared to fiscal 2025, primarily due to lower customer investments and reduced product sales in China, mostly offset by higher service revenues resulting from growth in the installed base of tools. Revenue from our PCB and Component Inspection segment increased 21% in fiscal 2026 compared to fiscal 2025, primarily driven by increased demand from customers investing in advanced packaging technologies, higher revenue from our PCB business, and increased service revenue attributable to growth in the installed base of tools. The increase was partially offset by the absence of revenue from our Display business following our exit from this business in the prior year. Below is supplementary revenue information by major product categories for the indicated periods: Year Ended June 30, (Dollar amounts in thousands)202620252024FY26 vs. FY25FY25 vs. FY24 Revenues: Wafer Inspection$6,630,813 49 %$6,198,815 51 %$4,333,296 44 %$431,998 7 %$1,865,519 43 % Patterning2,706,763 20 %2,196,347 18 %2,054,442 21 %510,416 23 %141,905 7 % Specialty Semiconductor Process502,519 4 %517,201 4 %470,565 5 %(14,682)(3)%46,636 10 % PCB and Component Inspection460,320 3 %355,891 3 %291,161 3 %104,429 29 %64,730 22 % Services3,125,939 23 %2,683,308 22 %2,329,568 24 %442,631 16 %353,740 15 % Other153,122 1 %204,600 2 %333,215 3 %(51,478)(25)%(128,615)(39)% Total$13,579,476 100 %$12,156,162 100 %$9,812,247 100 %$1,423,314 12 %$2,343,915 24 % 40 Table of Contents The following customer accounted for more than 10% of our total revenues, primarily in our Semiconductor Process Control segment, for the indicated periods: Year Ended June 30, 202620252024 Taiwan Semiconductor Manufacturing Company LimitedTaiwan Semiconductor Manufacturing Company LimitedTaiwan Semiconductor Manufacturing Company Limited (Dollar amounts in thousands)202620252024 China$4,048,358 29.8 %$4,042,567 33.3 %$4,196,727 42.8 % Taiwan3,643,742 26.8 %3,205,392 26.4 %1,738,065 17.7 % Korea1,833,836 13.5 %1,452,826 11.9 %906,924 9.2 % North America1,757,337 13.0 %1,362,311 11.2 %1,070,791 10.9 % Japan915,111 6.7 %1,133,002 9.3 %963,203 9.8 % Europe and Israel726,693 5.4 %574,197 4.7 %540,263 5.6 % Rest of Asia654,399 4.8 %385,867 3.2 %396,274 4.0 % Total$13,579,476 100.0 %$12,156,162 100.0 %$9,812,247 100.0 % Revenue in China was comparable to the prior fiscal year, as continued investments in legacy-node technologies by domestic semiconductor companies were largely offset by export control restrictions affecting certain advanced technology transactions. Revenue in Taiwan increased 13.7% compared with the prior fiscal year, primarily due to increased leading-edge customer investments in foundry/logic, memory and advanced packaging technologies, supported by strong demand associated with AI and HPC applications. Revenue in Korea increased 26.2% compared with the prior fiscal year, due to increased investments by memory customers, including investments supporting high-bandwidth memory and advanced DRAM technology roadmaps. Revenue in North America increased 29.0% compared with the prior fiscal year, primarily due to increased leading-edge customer investments in foundry/logic and memory technologies, supported by strong demand associated with AI and HPC applications. Each of the remaining regions accounted for less than 10% of revenue in all periods presented. Gross margin Our gross margin fluctuates with revenue levels and product mix and is affected by variations in costs related to manufacturing and servicing our products, including our ability to scale our operations efficiently and effectively in response to prevailing business conditions. The following table summarizes the major factors that contributed to the changes in gross margin: Gross Margin 60.9 % Revenue volume of products and services0.5 % Mix of products and services sold(0.2)% Manufacturing labor, overhead and efficiencies0.2 % Other service and manufacturing costs(0.1)% 61.3 % Changes in gross margin from revenue volume of products and services reflect our ability to leverage existing infrastructure to generate higher revenues. Changes in gross margin from the mix of products and services sold reflect the impact of changes within the composition of product and service offerings. Changes in gross margin from manufacturing labor, 41 Table of Contents overhead and efficiencies reflect our ability to manage costs and drive productivity as we scale our manufacturing activity to respond to customer requirements and amortization of intangible assets. Changes in gross margin from other service and manufacturing costs include the impact of tariffs, customer support costs, including the efficiencies with which we deliver services to our customers, and the effectiveness with which we manage our production plans and inventory risk. Other service and manufacturing costs included higher installation and warranty costs and increased costs due to tariffs, partially offset by lower inventory-related charges in fiscal year 2026 compared to fiscal year 2025. Research and Development Year Ended June 30, (Dollar amounts in thousands)202620252024FY26 vs. FY25FY25 vs. FY24 R&D expenses$1,532,118 $1,360,334 $1,278,981 $171,784 13 %$81,353 6 % R&D expenses as a percentage of total revenues11 %11 %13 % %(2)% R&D expenses may fluctuate with product development phases and project timing as well as our R&D efforts. As technological innovation is essential to our success, we may incur significant costs associated with R&D projects, including compensation for engineering talent, engineering material costs and other expenses. R&D expenses during the fiscal year ended June 30, 2026 increased compared to the fiscal year ended June 30, 2025, primarily due to increases in employee-related expenses of $124.8 million as a result of increased headcount and higher compensation and benefits costs, and engineering project material costs of $36.0 million. Our future operating results will depend significantly on our ability to make products and provide services that have a competitive advantage in our marketplace. To do this, we believe that we must continue to make substantial and focused investments in our R&D. We remain committed to product development in new and emerging technologies. Selling, General and Administrative Year Ended June 30, (Dollar amounts in thousands)202620252024FY26 vs. FY25FY25 vs. FY24 SG&A expenses$1,131,518 $1,029,734 $969,509 $101,784 10 %$60,225 6 % SG&A expenses as a percentage of total revenues8 %8 %10 % %(2)% SG&A expenses during the fiscal year ended June 30, 2026 increased compared to the fiscal year ended June 30, 2025, primarily due to increases in the following areas: employee-related expenses of $35.9 million as a result of increased headcount and higher compensation and benefits costs, facility-related expenses of $23.9 million, and provision for credit losses of $22.7 million. Impairment of Goodwill and Purchased Intangible Assets During the second quarter of fiscal 2025, we noted a continued deterioration of the long-term forecast for our PCB business, which is part of our PCB and Component Inspection reportable segment. We also completed an internal reorganization affecting the composition of reporting units within our Specialty Semiconductor Process and PCB and Component Inspection reportable segments. These two events triggered goodwill and purchased intangible assets impairment tests, which resulted in a $239.1 million goodwill and purchased intangible assets impairment charge in the PCB and Component Inspection reportable segment. See Note 6 Goodwill and Purchased Intangible Assets to our Consolidated Financial Statements for further details. Restructuring Charges Restructuring charges were $1.2 million and $7.7 million for the years ended June 30, 2026 and June 30, 2025, respectively, primarily due to severance and related charges for the restructuring of the former PCB and Display operating segment, as described further in Note 6 Goodwill and Purchased Intangible Assets, as well as write-downs of certain right of use assets and fixed assets that were abandoned. For additional information, refer to Note 18 Restructuring Charges to our Consolidated Financial Statements. 42 Table of Contents Interest Expense and Other Expense (Income), Net Year Ended June 30, (Dollar amounts in thousands)202620252024FY26 vs. FY25FY25 vs. FY24 Interest expense$284,440 $302,166 $311,253 $(17,726)(6)%$(9,087)(3)% Other expense (income), net$(229,585)$(171,487)$(155,075)$(58,098)(34)%$(16,412)(11)% Interest expense as a percentage of total revenues2 %2 %3 % Other expense (income), net as a percentage of total revenues(2)%(1)%(2)% Interest expense represents interest associated with our debt instruments. Interest on our Senior Notes is payable semi-annually. Concurrent with the Senior Notes interest payments, floating interest payments on our interest rate swaps are paid semi-annually and the fixed-rate interest receivable on the swaps is received semi-annually. Interest expense during the fiscal year ended June 30, 2026 decreased compared to the fiscal year ended June 30, 2025 primarily due to reduced interest expense following our $750.0 million debt repayment in the second quarter of fiscal 2025. Other expense (income), net is comprised primarily of fair value adjustments and realized gains or losses on sales of marketable and non-marketable securities, gains or losses from revaluations of certain foreign currency denominated assets and liabilities as well as foreign currency contracts, interest-related accruals (such as interest and penalty accruals related to our tax obligations) and interest income earned on our invested cash, cash equivalents and marketable securities. The change in Other expense (income), net during the fiscal year ended June 30, 2026 compared to the fiscal year ended June 30, 2025 was primarily due to a net fair value gain of $28.0 million from an equity security, favorable foreign exchange fluctuation of $19.2 million, and release of a tax reserve of $11.6 million compared to the prior fiscal year, partially offset by lower interest income of $3.8 million. Provision for Income Taxes The following table provides details of income taxes: Year Ended June 30, (Dollar amounts in thousands)202620252024 Income before income taxes$5,605,925 $4,644,448 $3,190,032 Provision for income taxes$775,154 $582,805 $428,136 Effective tax rate13.8 %12.5 %13.4 % Tax expense was higher as a percentage of income before taxes during the fiscal year ended June 30, 2026 compared to the fiscal year ended June 30, 2025 primarily due to a decrease in the proportion of earnings generated in jurisdictions with tax rates lower than the U.S. statutory rates and a decrease in the proportion of U.S. earnings eligible for the FDDEI deduction, partially offset by a decrease in our NCTI during the fiscal year ended June 30, 2026 and a $230.4 million goodwill impairment charge during the fiscal year ended June 30, 2025 which is non-deductible for income tax. 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 some of the jurisdictions that have adopted Pillar Two in their tax legislation, it was effective for us beginning in our fiscal year ended June 30, 2025. For discussions on tax examinations, assessments and certain related proceedings, see Note 13 Income Taxes to our Consolidated Financial Statements. 43 Table of Contents LIQUIDITY AND CAPITAL RESOURCES As of June 30, (Dollar amounts in thousands)202620252024 Cash and cash equivalents$1,649,842 $2,078,908 $1,977,129 Marketable securities3,252,566 2,415,715 2,526,866 Total cash, cash equivalents and marketable securities$4,902,408 $4,494,623 $4,503,995 Percentage of total assets27 %28 %29 % Year Ended June 30, (In thousands)202620252024 Cash flows: Net cash provided by operating activities$4,143,079 $4,081,903 $3,308,575 Net cash used in investing activities(1,190,095)(202,481)(1,476,985) Net cash used in financing activities(3,385,606)(3,785,687)(1,776,017) Effect of exchange rate changes on cash and cash equivalents3,556 8,044 (6,309) Net increase (decrease) in cash and cash equivalents$(429,066)$101,779 $49,264 Cash, Cash Equivalents and Marketable Securities: As of June 30, 2026, our cash, cash equivalents and marketable securities totaled $4.90 billion, compared to the $4.49 billion balance as of June 30, 2025. Refer to below discussions of sources and uses of cash during the fiscal year. As of June 30, 2026, $735.1 million of our $4.90 billion cash, cash equivalents, and marketable securities were held by our foreign subsidiaries and branch offices. We have recorded appropriate provisions for income or withholding taxes that may result from future repatriations of this balance. Cash Flows Provided by Operating Activities: We typically finance our liquidity requirements through cash generated from our operations. Net cash provided by operating activities during the fiscal year ended June 30, 2026 was $4.14 billion compared to $4.08 billion during the fiscal year ended June 30, 2025. The increase in cash provided was primarily due to an increase in customer and other collections of approximately $1.2 billion, mainly driven by higher shipments, plus a decrease of income tax and other tax payments of approximately $136 million; partially offset by increases in accounts payable payments of approximately $1.1 billion and employee-related payments of approximately $213 million. Cash Flows Used in Investing Activities Net cash used in investing activities during the fiscal year ended June 30, 2026 was $1.19 billion compared to $202.5 million during the fiscal year ended June 30, 2025. The increase in cash used was primarily due to increases in net purchases of available-for-sale securities of $959.9 million, and capital expenditures of $40.7 million, partially offset by a $10.5 million increase in proceeds from capital-related government assistance. Cash Flows Used in Financing Activities: Net cash used in financing activities during the fiscal year ended June 30, 2026 was $3.39 billion compared to $3.79 billion during the fiscal year ended June 30, 2025. The decrease in cash used was primarily due to a debt repayment of $750.0 million in the prior year, and an increase of cash provided by issuance of common stock of $17.1 million; partially offset by increases in cash paid for dividends and dividend equivalents of $153.2 million, cash used for common stock repurchases of $139.8 million and tax withholding payments related to vested and released RSUs of $72.3 million. Stock Repurchases: The shares of common stock repurchased under our stock repurchase program have reduced our basic and diluted weighted-average shares outstanding for the fiscal years ended June 30, 2026, 2025 and 2024. The total amount of stock repurchases during the fiscal years ended June 30, 2026, 2025 and 2024 was $2.29 billion, $2.15 billion and $1.74 billion, respectively. 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 ESPP as well as to return excess cash to our stockholders. As of June 30, 2026, an aggregate of $9.74 billion was available for repurchase under our stock repurchase program, which reflects an increase in the authorized repurchase amount of $7.00 billion in the third quarter of fiscal 2026, which is in addition to the 44 Table of Contents $3.94 billion authorization remaining as of December 31, 2025 under the then existing share repurchase program announced in the fourth quarter of fiscal 2025. Cash Dividends: The total amounts of regular quarterly cash dividends and dividend equivalents paid during the fiscal years ended June 30, 2026, 2025 and 2024 were $1.06 billion, $904.6 million and $773.0 million, respectively. The increase in the amount of regular quarterly cash dividends and dividend equivalents paid during the fiscal year ended June 30, 2026 as compared to the fiscal year ended June 30, 2025 reflected the cumulative effect of two increases in the level of our regular quarterly cash dividend from $0.170 to $0.190 per share announced during the fourth quarter of fiscal 2025, and from $0.190 to $0.230 per share announced during the third quarter of fiscal 2026. The amounts of accrued dividend equivalents payable for regular quarterly cash dividends on unvested RSUs with dividend equivalent rights were $13.3 million as of both June 30, 2026 and 2025. 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 Consolidated Financial Statements. On August 6, 2026, we announced that our Board of Directors had declared a quarterly cash dividend of $0.230 per share. Refer to Note 19 Subsequent Events to our Consolidated Financial Statements for additional information regarding the declaration of our quarterly cash dividend announced subsequent to June 30, 2026. Senior Notes: In 2026, we entered into interest rate swaps which are designated as fair value hedges and allow us to effectively convert a portion of our fixed-rate payments under the 2022 Senior Notes into floating-rate payments. Interest on the Senior Notes and interest on the swaps are both payable semi-annually. As of June 30, 2026, we had an aggregate principal amount of senior, unsecured notes totaling $5.95 billion with due dates ranging from fiscal 2029 through fiscal 2063. For additional information on these senior notes, see Note 7 Debt in the Notes to our Consolidated Financial Statements. As of June 30, 2026, we were in compliance with all of our covenants under the relevant indentures associated with the Senior Notes. Revolving Credit Facility: On July 3, 2025, we entered into a Revolving Credit Facility with a maturity date of July 3, 2030, that allows us to borrow up to $1.50 billion, replacing the Prior Revolving Credit Facility (as defined below). Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $500.0 million in the aggregate. As of June 30, 2025, we had in place a Credit Agreement dated June 8, 2022 ( Prior Credit Agreement ) for an unsecured Revolving Credit Facility ( Prior Revolving Credit Facility ) with a maturity date of June 8, 2027 that allowed us to borrow up to $1.50 billion. Subject to the terms of the Prior Credit Agreement, the Prior Revolving Credit Facility could have been increased by an amount up to $250.0 million in the aggregate. As of June 30, 2026 and 2025, we had no outstanding borrowings under the Revolving Credit Facility or Prior Revolving Credit Facility, respectively. We were in compliance with all covenants under the Credit Agreement as of June 30, 2026 (the net leverage ratio was 0.53 to 1.00 compared to a maximum net leverage ratio of 3.25 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, 2027. For additional information on the Revolving Credit Facility, see Note 7 Debt in the Notes to our Consolidated Financial Statements. Factoring Arrangements We have agreements with financial institutions to sell certain of our trade receivables and promissory notes from customers without recourse. In addition, we periodically sell certain letters of credit ( LC ), without recourse, received from customers as payment for goods and services. The following table shows total receivables sold under factoring agreements and proceeds from sales of LC for the indicated periods: Year Ended June 30, (In thousands)202620252024 Receivables sold under factoring agreements$515,480 $230,552 $254,889 Proceeds from sales of LC$86,020 $55,525 $22,242 Factoring and LC fees for the sale of certain trade receivables were recorded in Other expense (income), net and were not material for the periods presented. 45 Table of Contents We maintain guarantee arrangements available through various financial institutions for up to $176.2 million, of which $142.5 million had been issued as of June 30, 2026, primarily to fund guarantees to customs authorities for value-added tax and other operating requirements of our consolidated subsidiaries worldwide. Material Cash Requirements As of June 30, 2026, our aggregate principal debt obligation was $5.95 billion, which represents Senior Notes due from fiscal year 2029 to fiscal year 2063. Interest payments of $5.20 billion associated with all of our debt obligations are based on the principal amount multiplied by the applicable interest rate for each series of Senior Notes. For additional details, refer to Note 7 Debt to our Consolidated Financial Statements. We maintain commitments to purchase inventory from our suppliers as well as goods, services, and other assets in the ordinary course of business. Our estimate of our significant purchase commitments primarily for material, services, supplies and asset purchases is $5.97 billion as of June 30, 2026, a majority of which will be due within the next 12 months. For additional details, refer to Note 15 Commitments and Contingencies to our Consolidated Financial Statements. We also have commitments for our non-qualified executive deferred compensation plan of 417.3 million, operating lease obligations of $301.5 million and an income tax payable obligation related to uncertain tax positions of $275.3 million. Working Capital Working capital was $8.08 billion as of June 30, 2026, which represents an increase of $1.46 billion compared to our working capital as of June 30, 2025. As of June 30, 2026, our principal sources of liquidity consisted of $4.90 billion of cash, cash equivalents and marketable securities, as well as $1.50 billion 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 for at least the next 12 months. Credit Ratings Our credit ratings as of June 30, 2026 are summarized below: RatingAA2A-49 Consolidated Statements of Operations for each of the three years in the period ended June 30, 2026 50 Consolidated Statements of Comprehensive Income for each of the three years in the period ended June 30, 2026 51 Consolidated Statements of Stockholders Equity for each of the three years in the period ended June 30, 2026 52 Consolidated Statements of Cash Flows for each of the three years in the period ended June 30, 2026 53 Notes to Consolidated Financial Statements 54 Report of Independent Registered Public Accounting Firm (PCAOB ID 238) 93 Schedule II Valuation and Qualifying Accounts for the three years in the period ended June 30, 2026 95 48 Table of Contents KLA CORPORATION Consolidated Balance Sheets As of June 30, (In thousands, except par value)20262025 ASSETS Current assets: Cash and cash equivalents$1,649,842 $2,078,908 Marketable securities3,252,566 2,415,715 Accounts receivable, net2,889,208 2,263,915 Inventories3,648,538 3,212,149 941,636 728,102 Total current assets12,381,790 10,698,789 Land, property and equipment, net1,380,550 1,252,775 Goodwill, net1,788,758 1,792,193 Deferred income taxes1,037,224 1,105,770 Purchased intangible assets, net255,835 444,785 Other non-current assets1,107,378 773,614 Total assets$17,951,535 $16,067,926 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Accounts payable$623,668 $458,509 Deferred system revenue932,901 816,834 Deferred service revenue604,127 548,011 2,144,231 2,262,441 Total current liabilities4,304,927 4,085,795 Long-term debt5,887,415 5,884,257 Deferred tax liabilities473,648 446,945 Deferred service revenue238,111 348,844 Other non-current liabilities697,614 609,632 Total liabilities11,601,715 11,375,473 Commitments and contingencies (Notes 8, 14 and 15) Stockholders equity: Preferred stock, $0.001 par value, 1,000 shares authorized, none outstanding Common stock, $0.001 par value, 5,000,000 shares authorized, 2,816,579 and 2,811,758 shares issued, 1,306,983 and 1,320,227 shares outstanding, as of June 30, 2026 and June 30, 2025, respectively 1,307 1,320 Capital in excess of par value2,699,102 2,510,602 Retained earnings3,683,864 2,179,330 Accumulated other comprehensive income (loss)(34,453)1,201 6,349,820 4,692,453 Total liabilities and stockholders equity$17,951,535 $16,067,926 See accompanying notes to Consolidated Financial Statements. 49 Table of Contents KLA CORPORATION Consolidated Statements of Operations Year Ended June 30, (In thousands, except per share amounts)202620252024 Revenues: Product$10,453,537 $9,472,854 $7,482,679 Service3,125,939 2,683,308 2,329,568 Total revenues13,579,476 12,156,162 9,812,247 Costs and expenses: Costs of revenues5,255,060 4,751,867 3,928,073 Research and development1,532,118 1,360,334 1,278,981 Selling, general and administrative1,131,518 1,029,734 969,509 Impairment of goodwill and purchased intangible assets 239,100 289,474 Interest expense284,440 302,166 311,253 (229,585)(171,487)(155,075) Income before income taxes5,605,925 4,644,448 3,190,032 Provision for income taxes775,154 582,805 428,136 Net income4,830,771 4,061,643 2,761,896 Basic$3.68 $3.05 $2.04 Diluted$3.66 $3.04 $2.03 Weighted-average number of shares: Basic1,311,516 1,330,299 1,353,452 Diluted1,319,633 1,337,502 1,361,869 See accompanying notes to Consolidated Financial Statements. 50 Table of Contents KLA CORPORATION Consolidated Statements of Comprehensive Income Year Ended June 30, (In thousands)202620252024 Net income $4,830,771 $4,061,643 $2,761,896 Other comprehensive income (loss): Currency translation adjustments: Cumulative currency translation adjustments(11,744)17,820 (11,763) Income tax (provision) benefit(499)749 544 Net change related to currency translation adjustments(12,243)18,569 (11,219) Cash flow hedges: Net unrealized gains arising during the period34,383 36,726 9,737 Reclassification adjustments for net gains included in net income(52,824)(15,429)(25,904) Income tax (provision) benefit4,085 (2,742)2,466 Net change related to cash flow hedges(14,356)18,555 (13,701) Net change related to unrecognized losses and transition obligations in connection with defined benefit plans3,571 3,706 3,043 Available-for-sale securities: Net unrealized gains (losses) arising during the period(15,491)12,090 11,527 Reclassification adjustments for net (gains) losses included in net income(587)(59)103 Income tax (provision) benefit3,452 (2,585)(2,487) Net change related to available-for-sale securities(12,626)9,446 9,143 Other comprehensive income (loss)(35,654)50,276 (12,734) $4,795,117 $4,111,919 $2,749,162 See accompanying notes to Consolidated Financial Statements. 51 Table of Contents KLA CORPORATION Consolidated Statements of Stockholders Equity Retained EarningsAccumulated Other Comprehensive Income (Loss) (In thousands, except per share amounts)SharesAmount Balances as of June 30, 20231,367,496 $2,107,663 $848,431 $(36,341)2,919,753 Net income 2,761,896 Other comprehensive loss (12,734) Net issuance under employee stock plans7,074 1,908 Repurchase of common stock(30,320)(42,133)(1,700,368) Cash dividends ($0.565 per share) and dividend equivalents declared (772,689) Stock-based compensation expense 212,695 Balances as of June 30, 20241,344,250 2,280,133 1,137,270 (49,075) Net income 4,061,643 Other comprehensive income 50,276 Net issuance under employee stock plans6,034 18,853 Repurchase of common stock(30,057)(52,075)(2,113,560) Cash dividends ($0.675 per share) and dividend equivalents declared (906,023) Stock-based compensation expense 265,011 Balances as of June 30, 20251,320,227 2,511,922 2,179,330 1,201 Net income 4,830,771 Other comprehensive loss (35,654) Net issuance under employee stock plans4,997 (86,154) Repurchase of common stock(18,241)(35,530)(2,268,405) Cash dividends ($0.800 per share) and dividend equivalents declared (1,057,832) Stock-based compensation expense 310,171 Balances as of June 30, 20261,306,983 $2,700,409 $3,683,864 $(34,453)6,349,820 See accompanying notes to Consolidated Financial Statements. 52 Table of Contents KLA CORPORATION Consolidated Statements of Cash Flows Year Ended June 30, (In thousands)202620252024 Cash flows from operating activities: Net income$4,830,771 $4,061,643 $2,761,896 Adjustments to reconcile net income to net cash provided by operating activities: Impairment of goodwill and purchased intangible assets 239,100 289,474 Depreciation and amortization393,978 394,088 401,730 6,725 14,974 (12,533) Asset impairment charges 11,307 310,171 265,011 212,695 Net gain on sale of assets(683)(161) 77,795 (246,577)(155,228) 415 Changes in assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions: Accounts receivable(641,824)(367,897)(80,894) Inventories(465,963)(155,170)(164,092) Other assets(501,420)(10,459)(289,509) Accounts payable172,357 33,789 24,976 Deferred system revenue116,071 (169,027)334,136 Deferred service revenue(54,617)100,460 203,106 (100,282)(77,871)(228,904) Net cash provided by operating activities4,143,079 4,081,903 3,308,575 Cash flows from investing activities: (3,682) Capital expenditures(375,945)(335,259)(277,384) Proceeds from capital-related government assistance16,782 6,263 Purchases of available-for-sale and equity securities(3,711,093)(2,772,578)(2,756,987) Proceeds from maturity and sale of available-for-sale securities2,894,046 2,915,435 1,567,637 Purchases of trading securities(264,960)(118,288)(134,098) Proceeds from sale of trading securities248,624 105,751 121,020 Other, net2,451 (3,805)6,509 Net cash used in investing activities(1,190,095)(202,481)(1,476,985) Cash flows from financing activities: (1,602) 735,043 (750,000) Common stock repurchases(2,289,769)(2,149,946)(1,735,746) (1,057,832)(904,594)(773,041) 168,573 151,514 144,934 Tax withholding payments related to vested and released restricted stock units(204,976)(132,661)(143,024) Contingent consideration payable and other, net (4,183) (3,385,606)(3,785,687)(1,776,017) Effect of exchange rate changes on cash and cash equivalents3,556 8,044 (6,309) Net increase (decrease) in cash and cash equivalents(429,066)101,779 49,264 Cash and cash equivalents at beginning of period2,078,908 1,977,129 1,927,865 Cash and cash equivalents at end of period$1,649,842 $2,078,908 $1,977,129 Supplemental cash flow disclosures: Income taxes paid, net$781,409 $886,937 $830,835 Interest paid, net of capitalized interest$282,505 $292,771 $276,597 Non-cash activities: $ $ $(765) Dividends payable - financing activities$8,942 $8,660 $8,043 $5,494 $5,500 $5,500 $21,531 $25,740 $13,849 See accompanying notes to Consolidated Financial Statements. 53 Table of Contents KLA CORPORATION Notes to Consolidated Financial Statements NOTE 1 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business and Principles of Consolidation. KLA Corporation and its majority-owned subsidiaries ( KLA or the Company and also referred to as we, our, us or similar references) is a supplier of process equipment, process control equipment, and data analytics products for a broad range of industries, including semiconductors and printed circuit boards ( PCBs ). We provide advanced process control and process-enabling solutions for manufacturing and testing wafers and reticles, integrated circuits ( ICs ), advanced packaging, light-emitting diodes, power devices, compound semiconductor devices, microelectromechanical systems ( MEMS ), data storage and PCBs as well as general materials research. We also provide comprehensive support and services across our installed base. Our extensive portfolio of inspection, metrology and data analytics products, and related services, helps IC manufacturers achieve target yield throughout the entire semiconductor fabrication process, from research and development ( R&D ) to final volume production. We develop and sell advanced vacuum deposition and etching process tools, which are used by a broad range of specialty semiconductor customers. We enable electronic device manufacturers to inspect, test and measure PCBs and ICs to verify their quality, deposit a pattern of desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces. Our advanced products, coupled with our unique yield management software and services, allow us to deliver the solutions our semiconductor and PCB customers need to achieve their productivity goals by significantly reducing their risks and costs and improving their overall profitability and return on investment. Headquartered in Milpitas, California, we have subsidiaries both in the U.S. and key markets throughout the world. The Consolidated Financial Statements include the accounts of KLA and its majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Common Stock Split. On June 11, 2026, the Company effected a ten-for-one stock split of its common stock and a proportional increase in the number of authorized shares of common stock. Share and per share information throughout this Annual Report on Form 10-K have been retroactively adjusted to reflect the stock split. The par value per share remains unchanged at $0.001 per share after the stock split. Comparability. Certain reclassifications have been made to the prior year s Consolidated Financial Statements to conform to the current year presentation. The reclassifications did not have material effects on the prior year s Consolidated Balance Sheets, Statements of Operations, Comprehensive Income and Cash Flows. Management Estimates. The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions in applying our accounting policies that affect the reported amounts of assets and liabilities (and related disclosure of contingent assets and liabilities) at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Cash Equivalents and Fixed Income Marketable Securities. All highly liquid debt instruments with original or remaining maturities of less than three months at the date of purchase are cash equivalents. Fixed income marketable securities are generally classified as available-for-sale for use in current operations, if required, and are reported at fair value, with unrealized gains and non-credit related unrealized losses, net of tax, presented as a separate component of stockholders equity under the caption Accumulated other comprehensive income (loss) ( AOCI ). All realized gains and losses are recorded in earnings in the period of occurrence. The specific identification method is used to determine the realized gains and losses on investments. We regularly review the available-for-sale debt securities in an unrealized loss position and evaluate the current expected credit loss by considering available information relevant to the collectability of the security, such as historical experience, market data, issuer-specific factors including credit ratings, default and loss rates of the underlying collateral and structure and credit enhancements, current economic conditions and reasonable and supportable forecasts. There were no credit losses on available-for-sale debt securities recognized in the years ended June 30, 2026, 2025 and 2024. If we do not expect to recover the entire amortized cost of the security, the amount representing credit losses, defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis of the debt security, is recorded as an allowance for credit losses with an offsetting entry to net income, and the amount that is not credit-related is recognized in other comprehensive income (loss) ( OCI ). If we have the intent to sell the security or it is more likely than not that we will be required to sell the security before recovery of its entire amortized cost basis, we first write off any previously recognized allowance for credit losses with an offsetting entry to the security s amortized cost basis. If the allowance 54 Table of Contents has been fully written off and fair value is less than amortized cost basis, we write down the amortized cost basis of the security to its fair value with an offsetting entry to net income. Investments in Equity Securities. We hold equity securities in publicly and privately held companies for the promotion of business and strategic objectives. Equity securities in publicly held companies, or marketable equity securities, are measured and recorded at fair value on a recurring basis. Equity securities in privately held companies, or non-marketable equity securities, are accounted for at cost, less impairment, plus or minus observable price changes in orderly transactions for identical or similar securities of the same issuer. Non-marketable equity securities are subject to a periodic impairment review; however, since there are no open-market valuations, the impairment analysis requires significant judgment. This analysis includes assessment of the investee s financial condition, the business outlook for its products and technology, its projected results and cash flow, financing transactions subsequent to the acquisition of the investment, the likelihood of obtaining subsequent rounds of financing and the impact of any relevant contractual equity preferences held by us or the others. Non-marketable equity securities are included in Other non-current assets on the balance sheet. Realized and unrealized gains and losses resulting from changes in fair value or the sale of our marketable and non-marketable equity securities are recorded in Other expense (income), net. Inventory Valuation. Inventories are stated at the lower of cost or net realizable value using standard costs that approximate actual costs on a first-in, first-out basis. The carrying value of product inventory is reduced for estimated obsolescence equal to the difference between its cost and the estimated net realizable value based on assumptions about future demand for meeting our product manufacturing plans. The carrying value of service inventory is reduced for estimated obsolescence equal to the difference between its cost and the estimated net realizable value based on assumptions about future demand to meet our customers support requirements. Demonstration units are stated at their manufacturing cost and written down to their net realizable value. The Company s policy is to assess the valuation of all inventories including manufacturing raw materials, work-in-process, finished goods and spare parts in each reporting period. The estimate of net realizable value of inventory is impacted by assumptions regarding general semiconductor market conditions, manufacturing schedules, technology changes, new product introductions and possible alternative uses, and requires us to use significant judgment that may include uncertain elements. Actual demand may differ from forecasted demand, and such differences may have a material effect on recorded inventory values. Our manufacturing overhead standards for product costs are calculated assuming full absorption of forecasted spending over projected volumes, adjusted for excess capacity. Abnormal inventory costs such as costs of idle facilities, excess freight and handling costs and spoilage are recognized as current period charges. Allowance for Credit Losses. A majority of our accounts receivable are derived from sales to large multinational semiconductor and electronics manufacturers throughout the world. We maintain an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as selling, general and administrative ( SG&A ) expense in the Consolidated Statements of Operations. We assess collectability by reviewing accounts receivable on a collective basis where similar risk characteristics exist and on an individual basis when we identify specific customers with known disputes or collectability issues. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The allowance for credit losses is reviewed on a quarterly basis to assess the adequacy of the allowance. Our assessment considered estimates of expected credit and collectability trends. The credit losses recognized on accounts receivable were not significant as of June 30, 2026 and 2025. Volatility in market conditions and evolving credit trends are difficult to predict and may cause variability that may have a material impact on our allowance for credit losses in future periods. Property and Equipment. Property and equipment are recorded at cost, net of accumulated depreciation. Depreciation of property and equipment is based on the straight-line method over the estimated useful lives of the assets. Estimated useful lives of certain assets for financial reporting purposes are as follows: buildings, 30 to 50 years, leasehold improvements, shorter of 15 years or lease term, machinery and equipment, 2 to 5 years, office furniture and fixtures, 7 years. Construction-in-process assets are not depreciated until the assets are placed in service. Depreciation expense for the fiscal years ended June 30, 2026, 2025 and 2024 was $214.5 million, $192.0 million and $181.7 million, respectively. Leases. Under Accounting Standards Codification ( ASC ) 842, Leases, a contract is or contains a lease when we have the right to control the use of an identified asset for a period of time. We determine if an arrangement is a lease at inception of the contract, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. The commencement date of the lease is the date that the lessor makes an underlying asset available for our use. On the commencement date, leases are evaluated for classification and assets and liabilities are recognized based on the present value of lease payments over the lease term. The lease term used to calculate the lease liability includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised. The right of use ( ROU ) asset is initially measured as the amount of lease liability, 55 Table of Contents adjusted for any initial lease costs, prepaid lease payments and any lease incentives. Variable lease payments, consisting primarily of reimbursement of costs incurred by lessors for common area maintenance, real estate taxes and insurance, are not included in the lease liability and are recognized as they are incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate at lease commencement to measure ROU assets and lease liabilities. The incremental borrowing rate used by us is based on baseline rates and adjusted by the credit spreads commensurate with our secured borrowing rate, over a similar term. We used the incremental borrowing rate on June 30, 2019 for all leases that commenced on or prior to that date. Operating lease expense is generally recognized on a straight-line basis over the lease term. We have elected the practical expedient to account for the lease and non-lease components as a single lease component for the majority of our asset classes. For leases with a term of one year or less, we have elected not to record the ROU asset or liability. Goodwill, Purchased Intangible Assets and Impairment Assessment. Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. During the second quarter of fiscal 2026, the Company changed the annual goodwill impairment testing date for all reporting units from February 28 to December 31 to better align with the timing of our budgeting and strategic planning process. We believe that the change in our annual impairment test date is preferable as it allows us to evaluate any potential impact strategic decisions may have on the recoverability of goodwill as those decisions are reached. This will also enable us to use the most current information available in the assessment process. The change in the annual impairment testing date did not delay, accelerate or avoid an impairment charge. We assess goodwill for impairment annually during our second fiscal quarter or whenever events or changes in circumstances indicate the carrying value may not be fully recoverable. We have the option to perform a qualitative assessment prior to necessitating a quantitative impairment test. In the qualitative assessment, if we determine that it is more likely than not that the fair value of a reporting unit is less than the carrying value, a quantitative test is then performed, which involves comparing the estimated fair value of a reporting unit to its carrying value including goodwill. If goodwill is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value. Refer to Note 6 Goodwill and Purchased Intangible Assets for information related to determining the fair value of a reporting unit. Purchased intangible assets that are not considered to have an indefinite useful life are amortized over their estimated useful lives, which generally range from six months to nine years. The carrying values of our intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. Fully amortized intangible assets are derecognized when they no longer provide future economic benefit. Impairment of Long-Lived Assets. Long-lived assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Events or changes in circumstances that could affect the likelihood that we will be required to recognize an impairment charge for the long-lived assets primarily include declines in our operating cash flows from the use of these assets. We determine whether long-lived assets are recoverable based on the forecasted undiscounted future cash flows that are expected to be generated by the lowest-level associated asset grouping. If the undiscounted cash flows used in the recoverability test are less than the long-lived assets carrying value, we recognize an impairment loss for the amount that the carrying value exceeds the fair value. We determine the fair value of long-lived assets using the income approach, primarily by applying the relief-from-royalty or multi-period excess-earnings methods, when deemed appropriate. Concentration of Credit Risk. Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash equivalents, short-term marketable securities, trade accounts receivable and derivative financial instruments used in hedging activities. We invest in a variety of financial instruments, such as, but not limited to, certificates of deposit, corporate debt and municipal securities, U.S. Treasury and Government agency securities, and equity securities and, by policy, we limit the amount of credit exposure with any one financial institution or commercial issuer. We have not experienced any material credit losses on our investments. A majority of our accounts receivable are derived from sales to large multinational semiconductor and electronics manufacturers located throughout the world, with a majority located in Asia. Our customer base is concentrated due to corporate consolidations, acquisitions and business closures, and to the extent that these customers experience liquidity issues in the future, we may be required to reserve for potential credit losses with respect to trade receivables. We perform ongoing credit evaluations of our customers financial condition and generally require little to no collateral to secure accounts receivable. We maintain an allowance for potential credit losses based upon expected collectability risk of all accounts receivable, however write-offs have historically not been significant. In addition, we may utilize letters of credit ( LC ) or non-recourse factoring to mitigate credit risk when considered appropriate. 56 Table of Contents We are exposed to credit loss in the event of non-performance by counterparties on the foreign exchange and interest rate swap contracts that we use in hedging activities and in certain factoring transactions. These counterparties are large international financial institutions, and, to date, no such counterparty has failed to meet its financial obligations to us under such contracts. Foreign Currency. The functional currencies of our foreign subsidiaries are primarily the local currencies, except as described below. Accordingly, all assets and liabilities of these foreign operations are translated to U.S. dollars at current period end exchange rates, and revenues and expenses are translated to U.S. dollars using average exchange rates in effect during the period. The gains and losses from foreign currency translation of these subsidiaries financial statements are recorded directly into a separate component of stockholders equity under the caption AOCI. Our manufacturing subsidiaries in Singapore, Israel, Germany, and the United Kingdom use the U.S. dollar as their functional currency. Accordingly, monetary assets and liabilities in non-functional currency of these subsidiaries are remeasured using exchange rates in effect at the end of the period. Revenues and costs in local currency are remeasured using average exchange rates for the period, except for costs related to those balance sheet items that are remeasured using historical exchange rates. The resulting remeasurement gains and losses are included in the Consolidated Statements of Operations as incurred. Fair Value of Financial Instruments. Our financial assets and liabilities are measured and recorded at fair value, except for our debt and certain equity investments in privately held companies. Equity investments without a readily available fair value are accounted for using the measurement alternative. The measurement alternative is calculated as cost minus impairment, if any, plus or minus changes resulting from observable price changes. See Note 7 Debt for disclosure of the fair value of our Senior Notes, as defined in that Note. Our non-financial assets, such as goodwill, intangible assets, and land, property and equipment, are recorded at fair value only if an impairment is recognized in the current period. We assess for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. For goodwill, we assess for impairment annually. We have evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. The fair value of our cash equivalents, accounts receivable, accounts payable and other current assets and liabilities approximate their carrying amounts due to the relatively short maturity of these items. The authoritative guidance for fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. Level 2Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. Level 3Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. A financial instrument s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The types of instruments valued based on quoted market prices in active markets include money market funds, certain U.S. Treasury securities, U.S. Government agency securities and equity securities. Such instruments are generally classified within Level 1 of the fair value hierarchy. The types of instruments valued based on other observable inputs include corporate debt securities, sovereign securities, municipal securities and certain U.S. Treasury securities. The market inputs used to value these instruments generally consist of market yields, reported trades and broker/dealer quotes. Such instruments are generally classified within Level 2 of the fair value hierarchy. 57 Table of Contents The principal market in which we execute our foreign currency and swap contracts is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants generally are large financial institutions. Our foreign currency contracts valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. Our interest rate swap derivatives are valued using discounted cash flow methodologies based on observable interest rate data. These contracts are typically classified within Level 2 of the fair value hierarchy. Derivative Financial Instruments. We use financial instruments, such as foreign exchange contracts including forward and options transactions, to hedge a portion of, but not all, existing and forecasted foreign currency denominated transactions. We utilize foreign exchange contracts to hedge against future movements in foreign currency exchange rates that affect certain existing and forecasted foreign currency denominated sales and purchase transactions, such as the Japanese yen, the euro, the pound sterling and the new Israeli shekel. These foreign exchange contracts, designated as cash flow hedges, generally have maturities of less than 24 months. The effect of exchange rate changes on foreign exchange contracts is expected to offset the effect of exchange rate changes on the underlying hedged items. We use forward contracts to hedge the risk associated with the variability of cash flows due to changes in the benchmark interest rate of the intended debt financing ( Rate Lock Agreements ). We also enter into interest rate contracts, such as interest rate swaps, to hedge against the changes in fair value on certain of our fixed-rate indebtedness attributable to changes in the benchmark interest rate. These contracts are designated as fair value hedges. We believe these financial instruments do not subject us to speculative risk that would otherwise result from changes in currency exchange rates or interest rates. All of our derivative financial instruments are recorded at fair value based upon quoted market prices for comparable instruments adjusted for risk of counterparty non-performance. If a financial counterparty to any of our hedging arrangements experiences financial difficulties or is otherwise unable to honor the terms of the foreign currency hedge or interest rate swap, we may experience material losses. For derivative instruments designated and qualifying as cash flow hedges of forecasted foreign currency denominated transactions or debt financing, the effective portion of the gains or losses is reported in AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. We elected to include time value for the assessment of effectiveness on all forward transactions designated as cash flow hedges. The change in fair value of the derivative is recorded in AOCI until the hedged transaction is recognized in earnings. Cash flow hedges are evaluated for effectiveness monthly, based on changes in total fair value of the derivatives. The assessment of effectiveness of options contracts designated as cash flow hedges excludes time value. The initial value of the component excluded from the assessment of effectiveness is recognized in earnings over the life of the derivative contract. Any differences between change in the fair value of the excluded components and the amounts recognized in earnings are recorded in AOCI. For foreign exchange contracts that are designated and qualify as a net investment hedge in a foreign operation and that meet the effectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are recorded in cumulative translation within AOCI. The remainder of the change in value of such instruments is recorded in earnings on a straight-line basis over the lives of the associated derivative contracts. Recognition in earnings of amounts previously recorded in cumulative translation is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operations. For foreign exchange contracts that are not designated as hedges, gains and losses are recognized in Other expense (income), net. We use foreign exchange contracts to hedge certain foreign currency denominated assets or liabilities. The gains and losses on these derivative instruments are largely offset by the changes in the fair value of the assets or liabilities being hedged. Cash flows associated with these derivatives are classified as cash flows from operating activities in the Consolidated Statement of Cash Flows to align with the underlying items. For fair value hedges, the gains and losses related to changes in the fair value of interest rate swaps substantially offset changes in the hedged portion of the underlying debt that are attributable to changes in the market interest rates. The net gains and losses on the interest rate swaps, as well as the offsetting gains or losses on the fixed-rate debt attributable to the hedged risks, are recognized as interest expense in the current period. The interest settlement payments associated with the interest rate swap agreements are classified as cash flows from operating activities in the Consolidated Statement of Cash Flows. Revenue Recognition. We primarily derive revenue from the sale of process control and process-enabling solutions for the semiconductor and related electronics industries, maintenance and support of all these products, installation and training services and the sale of spare parts. Our portfolio includes yield enhancement and production solutions for manufacturing wafers and reticles, ICs, packaging and PCBs, as well as comprehensive support and services across our installed base. Our solutions are generally not sold with a right of return, nor have we experienced significant returns from or refunds to our customers. 58 Table of Contents We account for a contract with a customer when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Our revenues are measured based on consideration stipulated in the arrangement with each customer, net of any sales incentives and amounts collected on behalf of third parties, such as sales taxes. The revenues are recognized as separate performance obligations that are satisfied by transferring control of the product or service to the customer. Our arrangements with our customers include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. A product or service is considered distinct if it is separately identifiable from other deliverables in the arrangement and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The transaction consideration, including any sales incentives, is allocated between separate performance obligations of an arrangement based on the stand-alone selling price ( SSP ) for each distinct product or service. Management considers a variety of factors to determine the SSP, such as historical stand-alone sales of products and services, discounting strategies and other observable data. From time to time, our contracts are modified to account for additional, or to change existing, performance obligations. Our contract modifications are generally accounted for prospectively. Product Revenue We recognize revenue from product sales at a point in time when we have satisfied our performance obligation by transferring control of the product to the customer. We use judgment to evaluate whether control has transferred by considering several indicators, including whether: We have a present right to payment; The customer has legal title; The customer has physical possession; The customer has significant risk and rewards of ownership; and The customer has accepted the product, or whether customer acceptance is considered a formality based on history of acceptance of similar products (for example, when the customer has previously accepted the same tool, with the same specifications or technology, and when we can objectively demonstrate that the tool meets all of the required acceptance criteria, and when the installation of the system is deemed perfunctory). Not all of the indicators need to be met for us to conclude that control has transferred to the customer. In circumstances in which revenue is recognized prior to the product acceptance, the fair value of revenue associated with our performance obligations to install the product is deferred and recognized as revenue at a point in time, once installation is complete. We enter into volume purchase agreements with some of our customers. We adjust the transaction consideration for estimated credits and incentives earned by our customers. These credits are estimated based upon the forecasted and actual product sales for any given period and agreed incentive rate. The estimate is reviewed for material changes and updated at each reporting period. We offer perpetual and term licenses for software products. The primary difference between perpetual and term licenses is the duration over which the customer can benefit from the use of the software, while the functionality and the features of the software are the same. Software is generally bundled with post-contract customer support ( PCS ), which includes unspecified software updates that are made available throughout the entire term of the arrangement. Revenue from software licenses is recognized at a point in time, when the software is made available to the customer. Revenue from PCS is deferred at contract inception and recognized ratably over the service period, or as services are performed. Services Revenue The majority of product sales include a standard 12-month warranty that is not separately paid for by the customers. The customers may also purchase an extended warranty for periods beyond the initial period as part of the initial product sale. We have concluded that the standard 12-month warranty as well as any extended warranty periods included in the initial product sales are separate performance obligations for most of our products. The estimated fair value of warranty services is deferred and recognized ratably as revenue over the warranty period, as the customer simultaneously receives and consumes the benefits of warranty services provided by us. 59 Table of Contents Additionally, we offer product maintenance and support services, which the customer may purchase separately from the standard and extended warranty offered as part of the initial product sale. Revenue from separately negotiated maintenance and support service contracts is also recognized over time based on the terms of the applicable service period. Revenue from services performed in the absence of a maintenance contract, including training revenue, is recognized when the related services are performed. We also sell spare parts, revenue from which is recognized when control over the spare parts is transferred to the customer. Contract Assets/Liabilities The timing of revenue recognition, billings and cash collections may result in accounts receivable, contract assets, and contract liabilities (deferred revenue) on our Consolidated Balance Sheets. A receivable is recorded in the period we deliver products or provide services when we have an unconditional right to payment. Contract assets primarily relate to the value of products and services transferred to the customer for which the right to payment is not just dependent on the passage of time. Contract assets are transferred to accounts receivable when rights to payment become unconditional. A contract liability is recognized when we receive payment or have an unconditional right to payment in advance of the satisfaction of performance. The contract liabilities represent (1) deferred product revenue related to the value of products that have been shipped and billed to customers and for which control has not been transferred to the customers, and (2) deferred service revenue, which is recorded when we receive consideration, or such consideration is unconditionally due, from a customer prior to transferring services to the customer under the terms of a contract. Deferred service revenue typically results from warranty services, and maintenance and other service contracts. Contract assets and liabilities related to rights and obligations in a contract are recorded net in the Consolidated Balance Sheets. Practical expedients We apply the following practical expedients in accordance with ASC 606, Revenue from Contracts with Customers: We account for shipping and handling costs as activities to fulfill the promise to transfer goods, instead of a promised service to our customer. We have elected to not adjust the promised amount of consideration for the effects of a significant financing component as we expect, at contract inception, that the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will generally be one year or less. We have elected to expense costs to obtain a contract as incurred because the expected amortization period is one year or less. Research and Development Costs. R&D costs are expensed as incurred. Shipping and Handling Costs. Shipping and handling costs are included as a component of cost of sales. Accounting for Stock-Based Compensation Awards. We account for stock-based awards granted to employees for services based on the fair value of those awards. The fair value of stock-based awards is measured at the grant date and is recognized as expense over the employee s requisite service period. The fair value for restricted stock units ( RSUs ) granted without dividend equivalent rights is determined using the closing price of our common stock on the grant date, adjusted to exclude the present value of dividends which are not accrued on the RSUs. The fair value for RSUs granted with dividend equivalent rights is determined using the closing price of our common stock on the grant date. The award holder is not entitled to receive payments under dividend equivalent rights unless the associated RSU award vests (i.e., the award holder is entitled to receive credits, payable in cash or shares of common stock, equal to the cash dividends that would have been received on the shares of our common stock underlying the RSUs had the shares been issued and outstanding on the dividend record date, but such dividend equivalents are only paid subject to the recipient satisfying the vesting requirements of the underlying award). Compensation expense for RSUs with performance metrics is calculated based upon expected achievement of the metrics specified in the grant, or when a grant contains a market condition, the grant date fair value using a Monte Carlo simulation. The Monte Carlo simulation incorporates estimates of the potential outcomes of the market condition on the grant date fair value of each award. Additionally, we estimate forfeitures based on historical experience and revise those estimates in subsequent periods if actual forfeitures differ from the estimated amounts. The fair value for our Employee Stock Purchase Plan ( ESPP ) is determined using a Black-Scholes valuation model for purchase rights. The Black-Scholes option-pricing model requires the input of assumptions, including the option s expected term and the expected price volatility of the underlying stock. The expected stock price volatility assumption is based on the market-based historical implied volatility from traded options of our common stock. 60 Table of Contents Accounting for Cash-Based Long-Term Incentive Compensation. Cash-based long-term incentive ( Cash LTI ) awards issued to employees under our Cash Long-Term Incentive Plan ( Cash LTI Plan ) vest in three or four equal installments, with one-third or one-fourth of the aggregate amount of the Cash LTI award vesting on each yearly anniversary of the grant date over a three- or four-year period. In order to receive payments under a Cash LTI award, participants must remain employed by us as of the applicable award vesting date. Compensation expense related to the Cash LTI awards is recognized over the vesting term and adjusted for the impact of estimated forfeitures. Accounting for Non-qualified Deferred Compensation Plan. We have a non-qualified deferred compensation plan (known as the Executive Deferred Savings Plan or EDSP ) under which certain executives and non-employee directors may defer a portion of their compensation. Participants are credited with returns based on their allocation of their account balances among measurement funds. We control the investment of these funds, and the participants remain general creditors of ours. We invest these funds in certain mutual funds and such investments are classified as trading securities in the Consolidated Balance Sheets. Investments in trading securities are measured at fair value in the statement of financial position. Unrealized holding gains and losses for trading securities are included in earnings. Distributions from the EDSP commence following a participant s retirement or termination of employment or on a specified date allowed per the EDSP provisions, except in cases where such distributions are required to be delayed in order to avoid a prohibited distribution under Internal Revenue Code Section 409A. Participants can generally elect for the distributions to be paid in a lump sum or quarterly cash payments over a scheduled period for up to 15 years and are allowed to make subsequent changes to their existing elections as permissible under the EDSP provisions. The liability associated with the EDSP is included as a component of other current liabilities in the Consolidated Balance Sheets. Changes in the EDSP liability are recorded in SG&A expense in the Consolidated Statements of Operations. The net expense associated with changes in the liability included in SG&A expense was $60.0 million, $41.5 million and $37.2 million for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. We also have a deferred compensation asset that corresponds to the liability under the EDSP and it is included as a component of other non-current assets in the Consolidated Balance Sheets. Changes in the EDSP assets are recorded as net gains or losses in SG&A expense in the Consolidated Statements of Operations. The amount of net gains included in SG&A expense were $59.4 million, $40.7 million and $36.6 million for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. Income Taxes. We account for current and deferred income taxes in accordance with the authoritative guidance, which requires that the income tax impact is to be recognized in the period in which the law is enacted. Current income tax expense represents taxes paid or payable for the current period. Deferred tax assets and liabilities are recognized using enacted tax rates for the future tax impact of temporary differences between the financial statement and tax bases of recorded assets and liabilities. A valuation allowance is recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized based on historical and projected future taxable income over the periods in which the temporary differences are expected to be recovered or settled. We record income taxes on the undistributed earnings of foreign subsidiaries unless the subsidiaries earnings are considered indefinitely reinvested outside the U.S. Our income taxes will be greater if some or all of the indefinitely reinvested earnings are taxable when distributed to the U.S. In accordance with the authoritative guidance on accounting for uncertainty in income taxes, we recognize liabilities for uncertain tax positions based on the two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Tax Cuts and Jobs Act introduced the Foreign-Derived Intangible Income ( FDII ) rules and Global Intangible Low-Taxed Income ( GILTI ) provisions, wherein U.S. taxes on foreign income are imposed in excess of a deemed return on tangible assets of foreign corporations. This income is effectively taxed at a 10.5% tax rate in general. The One Big Beautiful Bill Act ( OBBBA ) renames FDII to Foreign-Derived Deduction Eligible Income ( FDDEI ), modifies the percentage of U.S. earnings under the FDII regime that is not subject to tax in the U.S. from 37.5% to 33.34%, renames GILTI to Net Controlled Foreign Corporation ( CFC ) Tested Income ( NCTI ), modifies the general effective tax rate on GILTI to 12.6% and removes the deemed return on tangible assets deduction. We elect to account for GILTI as a component of current period tax expense and not recognize deferred tax assets and liabilities for the basis differences expected to reverse as a result of GILTI provisions. Business Combinations. We allocate the fair value of the purchase price of our acquisitions to the tangible assets acquired, liabilities assumed, and intangible assets acquired, including in-process research and development ( IPR&D ), based on their estimated fair values at acquisition date. The excess of the fair value of the purchase price over the fair values of these net tangible and intangible assets acquired is recorded as goodwill. Management s estimates of fair value are based upon assumptions believed to be reasonable, but our estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the measurement period, which will not exceed one year from the acquisition date, we record adjustments to the 61 Table of Contents assets acquired and liabilities assumed with the corresponding offset to goodwill. After the conclusion of the measurement period or final determination of the fair value of the purchase price of our acquisitions, whichever comes first, any subsequent adjustments are recorded to our Consolidated Statements of Operations. The fair value of IPR&D is initially capitalized as an intangible asset with an indefinite life and assessed for impairment thereafter whenever events or changes in circumstances indicate that the carrying value of the IPR&D assets may not be recoverable. Impairment of IPR&D is recorded to R&D expenses. When an IPR&D project is completed, the IPR&D is reclassified as an amortizable purchased intangible asset and amortized to costs of revenues over the asset s estimated useful life. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. Contingencies and Litigation. We are subject to the possibility of losses from various contingencies. Considerable judgment is necessary to estimate the probability and amount of any loss from such contingencies. An accrual is made when it is probable that a liability has been incurred or an asset has been impaired, and the amount of loss can be reasonably estimated. We accrue a liability and recognize as expense the estimated costs to defend or settle asserted and unasserted claims existing as of the balance sheet date. See Note 14 Litigation and Other Legal Matters and Note 15 Commitments and Contingencies for additional details. Government Incentives. We occasionally receive incentives from various international governmental entities related to capital expenditures, expenses and other activities, primarily in the form of cash grants and refundable tax credits. Government assistance is recognized when there is reasonable assurance that (1) the Company will comply with relevant conditions, such as employment levels, R&D investment, or construction of property, plant and equipment; and (2) the assistance will be received. If conditions are not satisfied or if the duration period for the arrangement is not met, the incentives may become subject to reduction, repayment, or termination. Government incentives related to the acquisition or construction of property, plant and equipment are recognized as a reduction in the carrying amounts of the related assets and reduce depreciation expense over the useful lives of the assets. Incentives related to specific operating activities are offset against the related expense in the period the expense is incurred. During the fiscal years ended June 30, 2026 and June 30, 2025, we recognized an immaterial amount of government incentives, including both cash grants and refundable tax credits. These amounts were recognized as reductions to expense in the same line item on the Consolidated Statement of Operations as the expenditure in which the incentive is intended to compensate, or as a reduction in the cost basis of property, plant and equipment. For cash grants, the corresponding receivable is recorded within other current assets or other non-current assets, as appropriate, in the Consolidated Balance Sheets. For refundable tax credits, the amounts are recorded as a reduction of income taxes payable and classified within other current liabilities or other non-current liabilities, as appropriate, in the Consolidated Balance Sheets. Collaborative Arrangements. We assess joint development arrangements to determine whether they are in the scope of ASC 808, Collaborative Arrangements. In our assessment, we evaluate whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on commercial success of the activities. This assessment is performed throughout the life of such arrangement with consideration given to the changes in the roles and responsibilities between the parties. During the quarter ended September 30, 2024, we entered into a joint development arrangement within the scope of ASC 808 to develop and commercialize a new product. Recent Accounting Pronouncements Recently Adopted In December 2023, the Financial Accounting Standards Board ( FASB ) issued Accounting Standards Update ( ASU ) 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. The new guidance requires enhanced disclosures about income tax expenses. This standard update is effective for our annual reports beginning in the fiscal year ended June 30, 2026. We adopted ASU 2023-09 starting with our annual report for the fiscal year ended June 30, 2026 on a prospective basis. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The new guidance removes all references to prescriptive and sequential software development stages or project stages throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when management has authorized and committed to funding the software project 62 Table of Contents and it is probable that the project will be completed, and the software will be used to perform the function intended. The standard update is effective for our annual and interim reports beginning in the first quarter of our fiscal year ending June 30, 2028. Early adoption is permitted as of the beginning of an annual reporting period. We adopted ASU 2025-06 for our first quarter of the fiscal year ended June 30, 2026 using a prospective transition approach, and the effect was immaterial to our Consolidated Financial Statements. In July 2025, the FASB issued ASU 2025-05, Financial Instruments Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient to measure credit losses on current accounts receivable and contract assets arising from transactions accounted for under ASC 606. This practical expedient allows companies to assume the current conditions as of the balance sheet date do not change for the remaining life of the current accounts receivable and current contract assets. The standard update is effective for our annual and interim reports beginning in the first quarter of our fiscal year ending June 30, 2027. The amendments in this ASU should be applied on a prospective basis and early adoption is permitted. We chose to early adopt ASU 2025-05 during the quarter ended March 31, 2026, and elected the practical expedient. Since we adopted ASU 2025-05 in an interim reporting period, we are required to apply the amendments as of the beginning of the annual reporting period containing this interim reporting period. The adoption did not have a material impact on our Consolidated Financial Statements or related disclosures. Updates Not Yet Effective In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The new guidance requires enhanced disclosures about certain expenses in the notes to the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement. In 2025, the FASB issued ASU 2025-01 which clarifies the effective date for entities that do not have an annual reporting period that ends on December 31st. The Company is required to adopt this standard for our annual reports beginning in the fiscal year ending June 30, 2028, and interim period reports beginning in the first quarter of the fiscal year ending June 30, 2029. Early adoption is permitted. The amendments in this ASU should be applied either on a prospective or retrospective basis. We are currently evaluating the impact of this ASU on our disclosures. In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The new guidance establishes the accounting for a government grant received by a business entity, including guidance for a grant related to an asset and a grant related to income. The new guidance also requires disclosures, including the nature of the government grant received, the accounting policies used to account for the grant, and significant terms and conditions of the grant unless legally prohibited from being disclosed. The standard update is effective for our annual and interim reports beginning in the fiscal year ending June 30, 2030. Early adoption is permitted in both interim and annual reporting periods in which the financial statements have not yet been issued or made available for issuance. If adopted in an interim reporting period, it must be adopted as of the beginning of the annual reporting period that includes that interim reporting period. The amendments in this ASU should be applied using a modified prospective, modified retrospective, or retrospective approach. We are currently evaluating the impact of this guidance on our Consolidated Financial Statements. NOTE 2 REVENUE The following table represents the opening and closing balances of accounts receivable, net, contract assets, long-term accounts receivable, net, and contract liabilities as of the indicated dates. As of June 30, (Dollar amounts in thousands)202620252024FY26 vs. FY25FY25 vs. FY24 Accounts receivable, net$2,889,208 $2,263,915 $1,833,041 $625,293 28 %$430,874 24 % Contract assets$131,673 $105,081 $69,259 $26,592 25 %$35,822 52 % Long-term accounts receivable, net$180,729 $ $ $180,729 100 %$ % Contract liabilities$1,775,139 $1,713,689 $1,782,242 $61,450 4 %$(68,553)(4)% Our payment terms and conditions vary by contract type, although terms generally include a requirement of payment of 70% to 90% of total contract consideration within 30 to 60 days of shipment, with the remainder payable within 30 days of acceptance. The change in contract assets during the fiscal year ended June 30, 2026 was mainly due to $124.1 million of revenue recognized for which the payment is subject to conditions other than the passage of time, partially offset by $97.2 million of 63 Table of Contents contract assets reclassified to accounts receivable, net, as our right to consideration for these contract assets became unconditional. Contract assets are included in other current assets on our Consolidated Balance Sheets. The change in contract liabilities during the fiscal year ended June 30, 2026 was mainly due to an increase in the value of products and services billed to customers for which control of the products and services has not transferred to the customers, partially offset by the recognition as revenue of $1.29 billion that was included in contract liabilities as of June 30, 2025. Contract liabilities are included in current liabilities and non-current liabilities, classified as deferred system revenue or deferred service revenue, on our Consolidated Balance Sheets. The following table represents the transaction price for contracts that have not yet been recognized as revenue as of June 30, 2026, which equals our contract liabilities, and when the Company expects to recognize the amounts as revenue: (In thousands)Less than 12 months12 to 24 months24 months or greaterTotal Contract liabilities$1,537,028 $163,356 $74,755 $1,775,139 NOTE 3 FAIR VALUE MEASUREMENTS Financial assets (excluding cash held in operating accounts and time deposits) and liabilities measured at fair value on a recurring basis as of the dates indicated below were presented on our Consolidated Balance Sheets as follows:TotalQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)$6,016 $ $6,016 6,075 6,075 1,233,035 1,233,035 999 999 1,297,450 1,297,450 17,403 17,403 39,219 39,219 75,742 75,742 1,355,711 1,275,725 79,986 46,772 46,772 4,078,422 2,631,274 1,447,148 41,821 41,821 2,534 2,534 416,389 398,414 17,975 6,990 6,990 180,729 180,729 $4,726,885 $3,029,688 $1,697,197 $(12,546)$ $(12,546)(10,107) (10,107)$(22,653)$ $(22,653)TotalQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)$6,120 $ $6,120 1,498 1,498 1,531,022 1,531,022 9,955 9,955 9,981 9,981 960,148 960,148 51,453 51,453 106,881 106,881 877,578 802,682 74,896 23,962 23,962 3,578,598 2,464,547 1,114,051 59,503 59,503 349,530 336,090 13,440 $3,987,631 $2,800,637 $1,186,994 $(28,615)$ $(28,615)$(28,615)$ $(28,615) (In thousands)20262025 Accounts receivable, net: Accounts receivable, gross$2,920,238 $2,297,930 Allowance for credit losses(31,030)(34,015) $2,889,208 $2,263,915 Inventories: Customer service parts$622,714 $600,769 Raw materials1,849,676 1,491,786 Work-in-process937,724 833,933 Finished goods238,424 285,661 $3,648,538 $3,212,149 Other current assets: Deferred costs of revenues$257,175 $223,829 Prepaid expenses224,515 201,053 Prepaid income and other taxes169,090 64,704 131,673 105,081 Other current assets159,183 133,435 $941,636 $728,102 Land, property and equipment, net: Land$86,654 $86,677 Buildings and leasehold improvements1,254,196 1,132,176 Machinery and equipment1,418,112 1,238,599 Office furniture and fixtures86,119 73,993 Construction-in-process224,431 207,807 3,069,512 2,739,252 Less: accumulated depreciation(1,688,962)(1,486,477) $1,380,550 $1,252,775 Other non-current assets: EDSP assets$416,389 $349,530 Operating lease ROU assets335,065 269,714 Long-term accounts receivable, net180,729 Other non-current assets175,195 154,370 $1,107,378 $773,614 Other current liabilities: Compensation and benefits$491,108 $418,515 Customer deposits430,128 636,369 EDSP liabilities417,257 350,426 Interest payable108,913 110,056 Income taxes payable83,996 167,262 Operating lease liabilities52,937 45,192 Other liabilities and accrued expenses559,892 534,621 $2,144,231 $2,262,441 Other non-current liabilities: Income taxes payable$250,846 $221,808 Operating lease liabilities211,361 158,833 Pension liabilities43,128 51,750 Customer deposits3,816 6,823 Other non-current liabilities188,463 170,418 $697,614 $609,632 66 Table of Contents Accumulated Other Comprehensive Income (Loss) The components of AOCI as of the dates indicated below were as follows: (In thousands)Currency Translation AdjustmentsUnrealized Gains (Losses) on Available-for-Sale SecuritiesUnrealized Gains (Losses) on DerivativesUnrealized Gains (Losses) on Defined Benefit PlansTotal Balance as of June 30, 2026$(69,520)$(6,834)$50,442 $(8,541)$(34,453) Balance as of June 30, 2025$(57,277)$5,792 $64,798 $(12,112)$1,201 The effects on net income of amounts reclassified from AOCI to our Consolidated Statements of Operations for the indicated periods were as follows (in thousands, amounts in parentheses indicate debits or reductions to earnings): Location in the Consolidated Statements of Operations Year Ended June 30, AOCI Components202620252024 Unrealized gains on cash flow hedges from foreign exchange and interest rate contractsRevenues$6,826 $7,466 $18,374 Costs of revenues and operating expenses42,964 4,678 3,766 Interest expense3,034 3,285 3,764 $52,824 $15,429 $25,904 Unrealized gains (losses) on available-for-sale securitiesOther expense (income), net$587 $59 $(103) Consolidated Statements of Operations The following table shows Other expense (income), net for the indicated periods: Year Ended June 30, (In thousands)202620252024 Other expense (income), net: Interest income$(177,055)$(180,276)$(160,688) Foreign exchange (gains) losses, net(16,248)2,964 (7,268) Net realized (gains) losses on sale of investments(587)(59)103 Other(35,695)5,884 12,778 $(229,585)$(171,487)$(155,075) 67 Table of Contents NOTE 5 MARKETABLE SECURITIES The amortized cost and fair value of our fixed income marketable securities as of the dates indicated below were as follows: As of June 30, 2026 (In thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value Corporate debt securities$1,304,718 $1,123 $(2,316)$1,303,525 Money market funds and other1,233,035 1,233,035 Municipal securities23,417 12 (10)23,419 Sovereign securities40,245 (27)40,218 U.S. Government agency securities75,848 81 (187)75,742 U.S. Treasury securities1,363,089 266 (7,644)1,355,711 4,040,352 1,482 (10,184)4,031,650 Add: Time deposits(1) 490,231 490,231 Less: Cash equivalents1,316,087 1,316,087 Marketable securities(2) $3,214,496 $1,482 $(10,184)$3,205,794 As of June 30, 2025 (In thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value Corporate debt securities$957,256 $4,456 $(66)$961,646 Money market funds and other1,531,022 1,531,022 Municipal securities57,445 129 (1)57,573 116,436 458 (58)116,836 U.S. Treasury securities885,101 2,787 (329)887,559 3,547,260 7,830 (454)3,554,636 Add: Time deposits(1) 478,191 478,191 Less: Cash equivalents1,641,074 1 (1)1,641,074 Marketable securities(2) $2,384,377 $7,829 $(453)$2,391,753 __________________ (1)Time deposits excluded from fair value measurements. (2)Excludes equity marketable securities. Our investment portfolio includes both corporate and government securities that have a maximum maturity of three years. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As yields increase, those securities with a lower yield-at-cost show a mark-to-market unrealized loss. Most of our unrealized losses are due to changes in market interest rates, and bond yields. We believe that we have the ability to realize the full value of all these investments upon maturity. As of June 30, 2026, we had 555 investments in a gross unrealized loss position. The following table summarizes the fair value and gross unrealized losses of our investments that were in an unrealized loss position as of the dates indicated below: As of June 30, 2026Less than 12 Months12 Months or GreaterTotal (In thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses Corporate debt securities$703,303 $(2,316)$ $ $703,303 $(2,316) Municipal securities9,957 (10) 9,957 (10) Sovereign securities37,200 (27) 37,200 (27) U.S. Government agency securities47,855 (187) 47,855 (187) U.S. Treasury securities1,185,956 (7,644) 1,185,956 (7,644) Total$1,984,271 $(10,184)$ $ $1,984,271 $(10,184) 68 Table of Contents As of June 30, 2025Less than 12 Months12 Months or GreaterTotal (In thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses Corporate debt securities$98,149 $(63)$2,528 $(3)$100,677 $(66) Municipal securities5,774 (1) 5,774 (1) 32,780 (58) 32,780 (58) U.S. Treasury securities238,627 (297)20,330 (32)258,957 (329) Total$375,330 $(419)$22,858 $(35)$398,188 $(454) The contractual maturities of securities classified as available-for-sale, regardless of their classification on our Consolidated Balance Sheets, as of the date indicated below were as follows: As of June 30, 2026 (In thousands)Amortized CostFair Value Due within one year$1,468,388 $1,468,438 Due after one year through three years1,746,108 1,737,356 Total$3,214,496 $3,205,794 Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Realized gains and losses on available-for-sale securities for the fiscal years ended June 30, 2026, 2025 and 2024 were immaterial. The costs for our equity marketable securities were $22.9 million as of both June 30, 2026, and June 30, 2025. Unrealized gains and losses for our equity marketable securities for the fiscal years ended June 30, 2026, 2025 and 2024 were immaterial. NOTE 6 GOODWILL AND PURCHASED INTANGIBLE ASSETS Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in business combinations. Goodwill is not subject to amortization but is tested for impairment annually during the second fiscal quarter, as well as whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The following table presents changes in goodwill carrying value by reportable segment during the fiscal years ended June 30, 2026 and 2025: (In thousands)Semiconductor Process ControlSpecialty Semiconductor ProcessPCB & Component InspectionTotal Balances as of June 30, 2024$753,018 $681,858 $580,850 $2,015,726 (230,400)(230,400) Foreign currency adjustments6,867 6,867 Balances as of June 30, 2025759,885 681,858 350,450 1,792,193 (1,669)(768)(998)(3,435) Balances as of June 30, 2026$758,216 $681,090 $349,452 $1,788,758 We performed the required annual goodwill impairment test as of December 31, 2025 and concluded that goodwill was not impaired. As a result of our qualitative assessments, we determined that it was not necessary to perform a quantitative assessment at that time. During the second quarter of fiscal 2025, in connection with our annual strategic planning process, we noted a continued deterioration of the long-term forecast for our PCB business, which is part of our PCB and Component Inspection reportable segment. In addition, in the second quarter of fiscal 2025, we completed an internal reorganization affecting the composition of reporting units within our Specialty Semiconductor Process and PCB and Component Inspection reportable segments. The downward revision of financial outlook for PCB and the reorganization of reporting units triggered goodwill impairment tests. As a result of our quantitative assessment before reorganization, we recorded a total goodwill impairment charge of $230.4 million in the former PCB reporting unit, which was part of the PCB and Component Inspection reportable segment, in the 69 Table of Contents second quarter of fiscal 2025. No goodwill impairment was identified in the Specialty Semiconductor Process reportable segment. We assessed for impairment subsequent to the reorganization and noted no impairment. The goodwill balances of our new reporting units after reorganization were allocated on a relative fair value basis. During the second quarter of fiscal 2024, we noted a significant deterioration of the long-term forecast for our PCB and flat and flexible panel displays ( Display ) businesses, which were part of our former PCB and Display operating segment, as the Company initiated its annual strategic planning process. The downward revision of financial outlook for the PCB and Display businesses triggered a goodwill impairment test. In addition, in the second quarter of fiscal 2024, we began to evaluate strategic options for our Display business. Effective from the second quarter of fiscal 2024, our PCB and Display operating segment was comprised of two reporting units, 1) PCB and 2) Display while, prior to the change, the PCB and Display operating segment represented a single reporting unit. As a result of our quantitative assessment, we recorded a total goodwill impairment charge of $192.6 million for the PCB and Display reporting unit in the second quarter of fiscal 2024. The goodwill balances of the new PCB and Display reporting units were determined based on their relative fair values. We assessed for impairment subsequent to the reporting unit change and noted no impairment. To determine the fair value of the reporting units noted above, we utilized income and market approaches and applied a weighting of 75 percent and 25 percent, respectively. The income approach was estimated through discounted cash flow analysis. The estimated fair value of this reporting unit was computed by adding the present value of the estimated annual discounted cash flows over a discrete projection period to the residual value of the business at the end of the projection period. This valuation technique required us to use significant estimates and assumptions, including long-term growth rates, discount rates and other inputs. The estimated growth rates for the projection period were based on our internal forecasts of anticipated future performance of the business. The residual value was estimated using a perpetual nominal growth rate, which was based on projected long-range inflation and long-term industry projections. The discount rates were calculated as the weighted average cost of capital of comparable peer companies, adjusted for company-specific risk. The market approach estimated the fair value of the reporting unit by utilizing the market comparable method, which uses revenue and earnings multiples from comparable companies. We performed the required annual goodwill impairment testing for all reporting units as of February 29, 2024, and concluded that goodwill was not impaired, except for the Display reporting unit. As a result of this qualitative assessment, we determined that it was not necessary to perform a quantitative assessment for the reporting units subject to testing other than Display. In March 2024, we announced the end of manufacturing of most Display products, but we will continue to provide services to the installed base of Display products for existing customers. The exit of the business does not qualify as a discontinued operation under the relevant accounting guidance, but the decision triggered a quantitative impairment assessment for the Display reporting unit, which resulted in a total goodwill impairment charge of $70.5 million in the third quarter of fiscal 2024. To determine the fair value of the Display reporting unit, we utilized an income approach estimated through a discounted cash flow analysis, by adding the present value of the estimated annual discounted cash flows over a discrete projection period. This valuation technique required us to use significant estimates and assumptions, including discount rates and internal forecasts of the anticipated future performance of the business. The discount rates were calculated as the weighted average cost of capital of comparable peer companies, adjusted for company-specific risk. There can be no assurance that these estimates and assumptions will prove to be an accurate prediction of the future, and a downward revision of these estimates and/or assumptions would decrease the fair value of our reporting units, which could result in additional impairment charges in the future. There have been no significant events or circumstances affecting the valuation of goodwill subsequent to the assessment performed in the second quarter of the fiscal year ended June 30, 2026. The next annual assessment of goodwill by reporting unit is scheduled to be performed in the second quarter of the fiscal year ending June 30, 2027. As of both June 30, 2026 and 2025, following the internal reorganization noted above, goodwill is net of accumulated impairment losses of $277.6 million and $70.5 million in the Semiconductor Process Control and PCB and Component Inspection reportable segments, respectively. As of June 30, 2024, following the fiscal 2024 goodwill impairment and changes to the PCB and Display operating segment noted above, goodwill is net of accumulated impairment losses of $277.6 million, $144.2 million and $70.5 million in the Semiconductor Process Control, Specialty Semiconductor Process and PCB and Component Inspection reportable segments, respectively. Purchased Intangible Assets Changes in the gross carrying amount of intangible assets result from changes in foreign currency exchange rates and acquisitions and derecognition of fully amortized intangible assets that no longer provide future economic benefit. The 70 Table of Contents components of purchased intangible assets as of the dates indicated below were as follows: (In thousands)As of June 30, 2026As of June 30, 2025 Category Gross Carrying AmountAccumulated Amortization and ImpairmentNet AmountGross Carrying AmountAccumulated Amortization and ImpairmentNet Amount Existing technology$1,531,405 $1,346,585 $184,820 $1,555,688 $1,222,520 $333,168 Customer relationships323,297 283,438 39,859 359,555 285,274 74,281 Trade name/trademark98,238 98,192 46 119,409 113,210 6,199 Order backlog and other8,612 2,549 6,063 89,309 84,419 4,890 Intangible assets subject to amortization 1,961,552 1,730,764 230,788 2,123,961 1,705,423 418,538 IPR&D43,907 18,860 25,047 46,074 19,827 26,247 Total$2,005,459 $1,749,624 $255,835 $2,170,035 $1,725,250 $444,785 Refer to Note 1 Description of Business and Summary of Significant Accounting Policies for our policy of testing purchased intangible assets for impairment. In connection with the evaluation of the goodwill impairment in the PCB and Component Inspection reportable segment during the second quarter of fiscal 2025, due to the continued deterioration of financial outlook for the businesses and internal reorganization both noted above, the Company assessed tangible and intangible assets for impairment prior to performing the goodwill impairment test. The Company first performed a recoverability test for each asset group identified in the PCB and Component Inspection reportable segment by comparing projected undiscounted cash flows from the use and eventual disposition of each asset group to its carrying value. This test indicated that the undiscounted cash flows were not sufficient to recover the carrying value of the asset groups. We then compared the carrying value of the individual long-lived assets within those asset groups against their fair value in order to measure the impairment loss. As a result of this assessment, we recorded a total purchased intangible asset impairment charge of $8.7 million. No impairment was identified for other long-lived assets in the second quarter of fiscal 2025. As part of the evaluation of goodwill impairment in the former PCB and Display operating segment in the second quarter of fiscal 2024 noted above, the Company assessed long-lived assets for impairment prior to performing the goodwill impairment test. As a result, we recorded a total purchased intangible asset impairment charge of $26.4 million in the second quarter of fiscal 2024. In the third quarter of fiscal 2024, in connection with the Company s decision to exit the Display business, as described above, an immaterial amount of purchased intangible assets were abandoned. The total impairment charges for goodwill and purchased intangible assets of $239.1 million during the second quarter of fiscal 2025 and $219.0 million during the second quarter of fiscal 2024, as well as the goodwill impairment charge of $70.5 million in the third quarter of fiscal 2024, were recognized as separate charges and included in income (loss) from operations. As of June 30, 2026 and 2025, there were no impairment indicators for purchased intangible assets. Amortization expense for purchased intangible assets was $190.8 million, $220.4 million, and $239.3 million, for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. Based on the purchased intangible assets gross carrying amount recorded as of June 30, 2026, the remaining estimated annual amortization expense is expected to be as follows: Fiscal Year Ending June 30:Amortization (In thousands) 2027$129,024 202849,123 202935,566 203014,760 20311,514 Thereafter801 Total$230,788 71 Table of Contents The expected amortization expense is an estimate. Actual amounts of amortization may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment of intangible assets and other events. NOTE 7 DEBT The following table summarizes our debt as of June 30, 2026 and June 30, 2025: As of June 30, 2026As of June 30, 2025 Amount (In thousands)Effective Interest RateAmount (In thousands)Effective Interest Rate Fixed-rate 4.100% Senior Notes due on March 15, 2029 $800,000 4.159 %$800,000 4.159 % Fixed-rate 4.650% Senior Notes due on July 15, 2032 1,000,000 4.657 %1,000,000 4.657 % Fixed-rate 4.700% Senior Notes due on February 1, 2034 500,000 4.777 %500,000 4.777 % Fixed-rate 5.650% Senior Notes due on November 1, 2034 250,000 5.670 %250,000 5.670 % Fixed-rate 5.000% Senior Notes due on March 15, 2049 400,000 5.047 %400,000 5.047 % Fixed-rate 3.300% Senior Notes due on March 1, 2050 750,000 3.302 %750,000 3.302 % 1,450,000 5.023 %1,450,000 5.023 % Fixed-rate 5.250% Senior Notes due on July 15, 2062 800,000 5.259 %800,000 5.259 % 5,950,000 5,950,000 Fair value of interest rate swaps(584) Unamortized discount(21,873)(23,338) Unamortized debt issuance costs(40,128)(42,405) Total $5,887,415 $5,884,257 Reported as: $5,887,415 $5,884,257 Total $5,887,415 $5,884,257 Senior Notes and Debt Redemption In 2026, we entered into interest rate swaps on $2.00 billion principal amount of the 2022 Senior Notes (defined below). The interest rate swaps effectively convert the fixed interest rates on the Senior Notes to floating interest rates based on the Secured Overnight Financing Rate ( SOFR ) swap rate. Under the terms of the swaps, we pay semi-annual interest at the daily compounded SOFR swap plus a fixed number of basis points on the notional amount and in exchange, we receive semi-annual fixed-rate interest on the Senior Notes from the swap. The interest rate swaps are accounted for as fair value hedges, and as a result the carrying value of the hedged portion of our 2022 Senior Notes reflects adjustments in fair value. In November 2024, we repaid $750.0 million of the Senior Notes that were due on November 1, 2024. In February 2024, KLA Corporation (the Issuer ) issued $750.0 million aggregate principal amount of senior, unsecured notes as follows: $500.0 million of 4.700% senior, unsecured notes (the 2024 Senior Notes ) due February 1, 2034; and an additional $250.0 million of 4.950% senior, unsecured notes due July 15, 2052 which was originally issued in June 2022, resulting in an aggregate principal amount of $1.45 billion. The net proceeds were used for general corporate purposes, including repayment of outstanding indebtedness. In June 2022, we issued $3.00 billion aggregate principal amount of senior, unsecured notes (the 2022 Senior Notes ) as follows: $1.00 billion of 4.650% senior, unsecured notes due July 15, 2032; $1.20 billion of 4.950% senior, unsecured notes due July 15, 2052; and $800.0 million of 5.250% senior, unsecured notes due July 15, 2062. A portion of the net proceeds of the 2022 Senior Notes was used to complete a tender offer in July 2022 for $500.0 million of our 2014 Senior Notes (defined below) due 2024 including associated redemption premiums, accrued interest and other fees and expenses. The redemption resulted in a pre-tax net loss on extinguishment of debt of $13.3 million for the fiscal year ended June 30, 2023. The remainder of the net proceeds was used for share repurchases and for general corporate purposes. In February 2020, March 2019 and November 2014, we issued $750.0 million, $1.20 billion and $2.50 billion, respectively (the 2020 Senior Notes, 2019 Senior Notes and 2014 Senior Notes, respectively, and, collectively with the 2024 and 2022 Senior Notes, the Senior Notes ) aggregate principal amount of senior, unsecured notes. In July 2022, February 72 Table of Contents 2020, October 2019 and November 2017, we repaid $500.0 million, $500.0 million, $250.0 million and $250.0 million of the Senior Notes, respectively. The original discounts on the Senior Notes are being amortized over the life of the debt. Interest is payable as follows: semi-annually on February 1 and August 1 of each year for the 2024 Senior Notes; semi-annually on January 15 and July 15 of each year for the 2022 Senior Notes; semi-annually on March 1 and September 1 of each year for the 2020 Senior Notes; semi-annually on March 15 and September 15 of each year for the 2019 Senior Notes; and semi-annually on May 1 and November 1 of each year for the 2014 Senior Notes. The relevant indentures for the Senior Notes (collectively, the Indenture ) include covenants that limit our ability to grant liens on our facilities and enter into sale and leaseback transactions. The Senior Notes rank senior in right of payment to all of the Issuer s future subordinated indebtedness, equally in right of payment with all of the Issuer s existing and future unsecured and unsubordinated indebtedness, are effectively subordinated in right of payment to all of the Issuer s future secured indebtedness to the extent of the collateral securing such indebtedness and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of the Issuer s subsidiaries. In certain circumstances involving a change of control followed by a downgrade of the rating of a series of Senior Notes by at least two of Moody s Investors Service, S&P Global Ratings and Fitch Inc., unless we have exercised our rights to redeem the Senior Notes of such series, we will be required to make an offer to repurchase all or, at the holder s option, any part, of each holder s Senior Notes of that series pursuant to the offer described below (the Change of Control Offer ). In the Change of Control Offer, we will be required to offer payment in cash equal to 101% of the aggregate principal amount of Senior Notes repurchased plus accrued and unpaid interest, if any, on the Senior Notes repurchased, up to, but not including, the date of repurchase. Based on the trading prices of the Senior Notes on the applicable dates, the fair value of the Senior Notes as of June 30, 2026 and 2025 was $5.48 billion and $5.54 billion, respectively. While the Senior Notes are recorded at cost, the fair value of the long-term debt was determined based on quoted prices in markets that are not active; accordingly, the long-term debt is categorized as Level 2 for purposes of the fair value measurement hierarchy. As of June 30, 2026, we were in compliance with all of our covenants under the Indenture associated with the Senior Notes. Revolving Credit Facility On July 3, 2025, we entered into a revolving credit facility ( Revolving Credit Facility ) with a maturity date of July 3, 2030 that allows us to borrow up to $1.50 billion, pursuant to the terms set forth in the credit agreement ( Credit Agreement ). The Revolving Credit Facility replaced our Prior Revolving Credit Facility described below. Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $500.0 million in the aggregate. As of June 30, 2026, we had no outstanding borrowings under the Revolving Credit Facility. As of June 30, 2025, we had in place a Credit Agreement dated June 8, 2022 ( Prior Credit Agreement ) for an unsecured Revolving Credit Facility ( Prior Revolving Credit Facility ) having a maturity date of June 8, 2027 that allowed us to borrow up to $1.50 billion. Subject to the terms of the Prior Credit Agreement, the Prior Revolving Credit Facility could have been increased by an amount up to $250.0 million in the aggregate. As of June 30, 2025, we had no outstanding borrowings under the Prior Revolving Credit Facility. Under the Revolving Credit Facility, we may borrow, repay and reborrow funds until the maturity date, which may be extended following the exercise of no more than two one-year extension options with the consent of the lenders. We may prepay outstanding borrowings under the Revolving Credit Facility at any time without a prepayment penalty. Borrowings under the Revolving Credit Facility can be made as Term SOFR Loans or Alternate Base Rate ( ABR ) Loans, at the Company s option. In the event that Term SOFR is unavailable, any Term SOFR elections will be converted to Daily Simple SOFR, as long as it is available. Each Term SOFR Loan will bear interest at a rate per annum equal to the applicable Adjusted Term SOFR rate, which is equal to the applicable Term SOFR rate plus a spread ranging from 62.5 bps to 100.0 bps, as determined by the Company s credit ratings at the time. Each ABR Loan will bear interest at a rate per annum equal to the ABR, as determined by the Company s credit ratings at the time. We are also obligated to pay an annual commitment fee on the daily undrawn balance of the Revolving Credit Facility, which ranges from 4.0 bps to 10.0 bps, subject to an adjustment in conjunction with changes to our credit rating. The applicable interest rates and commitment fees are also subject to adjustment based on the Company s performance against certain environmental sustainability key performance indicators ( KPIs ) related to greenhouse gas ( GHG ) emissions and renewable electricity usage. Our performance against these KPIs in calendar year 2025 resulted in reductions to the fees associated with our Revolving Credit Facility. As of June 30, 2026, the applicable commitment fee on the daily undrawn balance of the Revolving Credit Facility was 5.5 bps. 73 Table of Contents Under the Revolving Credit Facility, the maximum net leverage ratio on a quarterly basis is 3.25 to 1.00, covering the trailing four consecutive fiscal quarters for each fiscal quarter, which may be increased to 3.75 to 1.00 for a period of time in connection with a material acquisition or a series of material acquisitions. As of June 30, 2026, our maximum allowed net leverage ratio was 3.25 to 1.00. We were in compliance with all covenants under the Credit Agreement as of June 30, 2026. NOTE 8 LEASES We have operating leases for facilities, vehicles and other equipment. Our facility leases are primarily used for administrative functions, R&D, manufacturing, and storage and distribution. Our finance leases are not material. Our existing leases do not contain significant restrictive provisions or residual value guarantees; however, certain leases contain provisions for the payment of maintenance, real estate taxes or insurance costs by us. Our leases have remaining lease terms ranging from less than one year to 26 years, including periods covered by options to extend the lease when it is reasonably certain that the option will be exercised. Lease expense was $61.4 million, $51.5 million and $54.6 million for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. Expense related to short-term leases, which were not recorded on the Consolidated Balance Sheets, were not material for the fiscal years ended June 30, 2026 and 2025. As of June 30, 2026 and 2025, the weighted-average remaining lease term was 6.5 years and 6.2 years, respectively, and the weighted-average discount rate for operating leases was 3.74% and 4.06%, as of June 30, 2026 and 2025, respectively. Supplemental cash flow information related to leases was as follows: Year Ended June 30, (In thousands)20262025 Operating cash outflows from operating leases$56,558 $47,183 ROU assets obtained in exchange for new operating lease liabilities$101,074 $46,018 Maturities of lease liabilities as of June 30, 2026 were as follows: Fiscal Year Ending June 30:Amount (In thousands) 2027$62,474 202854,245 202942,585 203038,615 203130,180 2032 and thereafter73,387 Total lease payments301,486 Less imputed interest(37,188) Total$264,298 As of June 30, 2026, we did not have any material leases that had not yet commenced. NOTE 9 EQUITY AND LONG-TERM INCENTIVE COMPENSATION PLANS Equity Incentive Program On August 3, 2023, our Board of Directors adopted the KLA Corporation 2023 Incentive Award Plan (the 2023 Plan ), which replaced our 2004 Equity Incentive Plan (the 2004 Plan ) for grants of equity awards occurring on or after November 1, 2023. The new plan was approved by our stockholders at the annual meeting of stockholders held on November 1, 2023. As of June 30, 2026, we were able to issue new equity incentive awards, such as RSUs and stock options, to our employees, consultants and members of our Board of Directors under our 2023 Plan, with 91.5 million shares available for issuance. Any 2004 Plan and 2023 Plan awards of RSUs, performance shares, performance units or deferred stock units are counted against the total number of shares issuable under the 2023 Plan share reserve, or previously under the 2004 Plan reserve, as two shares for every one share subject thereto. 74 Table of Contents In addition, the plan administrator has the ability to grant dividend equivalent rights in connection with awards of RSUs, performance shares, performance units and deferred stock units before they are fully vested. The plan administrator, at its discretion, may grant a right to receive dividends on the aforementioned awards, which may be settled in cash or our stock subject to meeting the vesting requirement of the underlying awards. All grants during the fiscal years ended June 30, 2026, 2025 and 2024 included dividend equivalent rights. Equity Incentive Plans - General Information The following table summarizes the combined activity under our equity incentive plans: (In thousands)Available For Grant(1) Balances as of June 30, 202377,602 Plan shares increased32,500 RSUs granted(2) (8,484) 783 102,401 (8,050) RSUs granted adjustment(3) 617 RSUs canceled774 Balances as of June 30, 202595,742 (5,367) RSUs granted adjustment(3) 535 RSUs canceled572 Balances as of June 30, 202691,482 __________________ (1)The number of RSUs reflects the application of the award multiplier of 2.0x as described above. (2)Includes RSUs granted to senior management with performance-based vesting criteria (in addition to service-based vesting criteria for any of such RSUs that are deemed to have been earned) ( performance-based RSUs ). As of June 30, 2026, it had not yet been determined the extent to which (if at all) the performance-based vesting criteria had been satisfied. Therefore, this line item includes all such performance-based RSUs granted during the fiscal year, reported at the maximum possible number of shares that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied (1.5 million shares, 1.5 million shares and 1.7 million shares for the fiscal years ended June 30, 2026, 2025 and 2024, respectively, reflecting the application of the 2.0x multiplier described above). (3)Represents the portion of RSUs granted with performance-based vesting criteria and reported at the actual number of shares issued upon achievement of the performance vesting criteria during the fiscal year ended June 30, 2026. The fair value of stock-based awards is measured at the grant date and is recognized as an expense over the employee s requisite service period. The fair value for RSUs granted with dividend equivalent rights is determined using the closing price of our common stock on the grant date. The fair value for market-based RSUs is estimated on the grant date using a Monte Carlo simulation model with the following assumptions: expected volatilities ranging from 27.8% to 28.1%, based on a combination of implied volatility from traded options on our common stock and the historical volatility of our common stock; dividend yield ranging from 2.4% to 2.5%, based on our current expectations for our anticipated dividend policy; risk-free interest rate ranging from 2.3% to 2.4%, based on the implied yield available on U.S. Treasury zero-coupon issues with terms equal to the contractual terms of each tranche; and an expected term that takes into consideration the vesting term and the contractual term of the market-based award. The awards are amortized over service periods of three, four, and five years, which is the longer of the explicit service period or the period in which the market target is expected to be met. The fair value for purchase rights under our ESPP is determined using a Black-Scholes model. 75 Table of Contents The following table shows stock-based compensation ( SBC ) expense for the indicated periods: Year Ended June 30, (In thousands)202620252024 SBC expense by: Costs of revenues$57,680 $46,502 $35,942 R&D95,249 77,271 60,124 SG&A157,242 141,238 116,629 Total SBC expense$310,171 $265,011 $212,695 SBC capitalized as inventory as of June 30, 2026 and 2025 was $34.0 million and $26.3 million, respectively. Restricted Stock Units The following table shows the activity and weighted-average grant date fair values for RSUs during the fiscal year ended June 30, 2026: Shares (In thousands) (1) Weighted-Average Grant Date Fair Value Outstanding RSUs as of June 30, 2025(2) 12,926 $53.63 Granted(3) 2,683 $128.33 Granted adjustments(4) (267)$39.74 Vested and released(5,035)$46.94 (286)$62.64 Outstanding RSUs as of June 30, 2026(2) 10,021 $77.11 __________________ (1)Share numbers reflect actual shares subject to awarded RSUs. (2)Includes performance-based RSUs. (3)This line item includes performance-based RSUs granted during the fiscal year ended June 30, 2026 reported at the maximum possible number of shares that may ultimately be issuable if all applicable performance-based criteria are achieved at their maximum levels and all applicable service-based criteria are fully satisfied (0.7 million shares for the fiscal year ended June 30, 2026, reflect the application of the multiplier described above). (4)Represents the portion of RSUs granted with performance-based vesting criteria and reported at the actual number of shares issued upon achievement of the performance vesting criteria during the fiscal year ended June 30, 2026. The RSUs granted by us generally vest as follows, in each case subject to the recipient remaining employed by us as of the applicable vesting date: (a) with respect to awards with only service-based vesting criteria, over periods ranging from two to four years and (b) with respect to awards with both performance-based and service-based vesting criteria, over periods ranging from three to four years. The RSUs granted to the independent members of the Board of Directors vest annually. The following table shows the weighted-average grant date fair value per unit for the RSUs granted, aggregate grant date fair value of RSUs vested, and tax benefits realized by us in connection with vested and released RSUs for the indicated periods: (In thousands, except for weighted-average grant date fair value)Year Ended June 30, 202620252024 Weighted-average grant date fair value per unit$128.33 $72.68 $58.45 $236,333 $191,352 $144,888 Tax benefits realized by us in connection with vested and released RSUs$108,264 $48,858 $47,315 As of June 30, 2026, the unrecognized SBC expense balance related to RSUs was $558.1 million, excluding the impact of estimated forfeitures, and will be recognized over an estimated weighted-average amortization period of 1.3 years. The intrinsic value of outstanding RSUs as of June 30, 2026 was $3.02 billion. 76 Table of Contents Cash LTI Compensation As part of our employee compensation program, we issue Cash LTI awards to many of our employees. Executives and non-employee members of the Board of Directors do not participate in the Cash LTI Plan. During the fiscal years ended June 30, 2026 and 2025, we approved Cash LTI awards of $33.4 million and $41.7 million, respectively. Cash LTI awards issued to employees under the Cash LTI Plan will vest in three or four equal installments, with one-third or one-fourth of the aggregate amount of the Cash LTI award vesting on each anniversary of the grant date over a three or four-year period. In order to receive payments under a Cash LTI award, participants must remain employed by us as of the applicable award vesting date. During the fiscal years ended June 30, 2026, 2025 and 2024, we recognized $45.5 million, $56.8 million and $70.3 million, respectively, in compensation expense under the Cash LTI Plan. As of June 30, 2026, the unrecognized compensation balance (excluding the impact of estimated forfeitures) related to the Cash LTI Plan was $81.7 million. Employee Stock Purchase Plan Our ESPP provides that eligible employees may contribute up to 15% of their eligible earnings toward the semi-annual purchase of our common stock. The ESPP is qualified under Section 423 of the Internal Revenue Code. The employee s purchase price is derived from a formula based on the closing price of the common stock on the first day of the offering period versus the closing price on the date of purchase (or, if not a trading day, on the immediately preceding trading day). The offering period (or length of the look-back period) under the ESPP has a duration of six months, and the purchase price with respect to each offering period beginning on or after such date is, until otherwise amended, equal to 85% of the lesser of (i) the fair market value of our common stock at the commencement of the applicable six-month offering period or (ii) the fair market value of our common stock on the purchase date. We estimate the fair value of purchase rights under the ESPP using a Black-Scholes model. The fair value of each purchase right under the ESPP was estimated on the date of grant using the Black-Scholes model and the straight-line attribution approach with the following weighted-average assumptions: Year Ended June 30, 202620252024 Stock purchase plan: Expected stock price volatility41.3 %33.8 %32.2 % Risk-free interest rate4.1 %5.0 %5.3 % Dividend yield0.7 %0.9 %1.1 % Expected life (in years)0.500.500.50 The following table shows total cash received from employees for the issuance of shares under the ESPP, the number of shares purchased by employees through the ESPP, the tax benefits realized by us in connection with the disqualifying dispositions of shares purchased under the ESPP and the weighted-average fair value per share for the indicated periods: (In thousands, except for weighted-average fair value per share)Year Ended June 30, 202620252024 Total cash received from employees for the issuance of shares under the ESPP$168,573 $151,514 $144,934 Number of shares purchased by employees through the ESPP1,770 2,809 3,201 Tax benefits realized by us in connection with the disqualifying dispositions of shares purchased under the ESPP$3,812 $2,834 $2,623 Weighted-average fair value per share based on Black-Scholes model$27.91 $16.49 $12.50 The ESPP shares are replenished annually on the first day of each fiscal year by virtue of an evergreen provision. The provision allows for share replenishment equal to the lesser of 20.0 million shares or the number of shares that we estimate will be required to be issued under the ESPP during the forthcoming fiscal year. As of June 30, 2026, a total of 24.7 million shares were reserved and available for issuance under the ESPP. Quarterly cash dividends On June 2, 2026, we paid a quarterly cash dividend of $0.230 per share on the outstanding shares of our common stock to stockholders of record as of the close of business on May 18, 2026. The total amount of regular quarterly cash dividends and dividend equivalents paid during the fiscal years ended June 30, 2026 and 2025 was $1.06 billion and $904.6 million, 77 Table of Contents respectively. The amount of accrued dividend equivalents payable related to unvested RSUs with dividend equivalent rights was $13.3 million as of both June 30, 2026 and 2025. These amounts will be paid upon vesting of the underlying RSUs. Refer to Note 19 Subsequent Events to our Consolidated Financial Statements for additional information regarding the declaration of our quarterly cash dividend announced subsequent to June 30, 2026. NOTE 10 STOCK REPURCHASE PROGRAM Our Board of Directors has authorized a program that permits us to repurchase our common stock, including increases in the authorized repurchase amount of $5.00 billion in the fourth quarter of fiscal 2025 and $7.00 billion in the third quarter of fiscal 2026. The stock repurchase program has no expiration date and may be suspended at any time. The intent of the program is, in part, to mitigate the potential dilutive impact related to our equity incentive plans and shares issued in connection with our ESPP as well as to return excess cash to our stockholders. Any and all share repurchase transactions are subject to market conditions and applicable legal requirements. Under the authoritative guidance, share repurchases are recognized as a reduction to retained earnings to the extent available, with any excess recognized as a reduction of capital in excess of par value. In addition, as explained further in Note 13 Income Taxes, the Inflation Reduction Act of 2022 ( IRA ) introduced a 1% excise tax imposed on certain stock repurchases made after December 31, 2022 by publicly traded companies. The excise tax is recorded as part of the cost basis of treasury stock repurchased after December 31, 2022 and, as such, is included in stockholders equity. As of June 30, 2026, an aggregate of $9.74 billion of authorization was available for repurchase under the stock repurchase program. Share repurchases for the indicated periods (based on the trade date of the applicable repurchase) were as follows: (In thousands)Year Ended June 30, 202620252024 Number of shares of common stock repurchased18,241 30,057 30,320 Total cost of repurchases$2,303,935 $2,165,635 $1,742,501 NOTE 11 NET INCOME PER SHARE Basic net income per share is calculated by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is calculated by using the weighted-average number of shares of common stock outstanding during the period, increased to include the number of additional shares of common stock that would have been outstanding if the shares of common stock underlying our outstanding dilutive RSUs had been issued. The dilutive effect of outstanding RSUs is reflected in diluted net income per share by application of the treasury stock method. The following table sets forth the computation of basic and diluted net income per share: (In thousands, except per share amounts)Year Ended June 30, 202620252024 Numerator: Net income$4,830,771 $4,061,643 $2,761,896 Denominator: Weighted-average shares basic, excluding unvested RSUs1,311,516 1,330,299 1,353,452 Effect of dilutive RSUs and options8,117 7,203 8,417 Weighted-average shares diluted1,319,633 1,337,502 1,361,869 Basic net income per share$3.68 $3.05 $2.04 Diluted net income per share$3.66 $3.04 $2.03 Anti-dilutive securities excluded from the computation of diluted net income per share162 353 78 Table of Contents NOTE 12 EMPLOYEE BENEFIT PLANS Profit-sharing program and U.S. 401(k) We have a profit-sharing program for eligible employees, which distributes a percentage of our pre-tax profits on a quarterly basis. In addition, we have an employee savings plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Beginning in July 2025, the employer match is 100% of an employee s eligible contributions up to 4% of eligible compensation. Prior to July 2025, the employer match was the greater of 50% of the first $8,000 of an eligible employee s contributions or 50% of the first 5% of eligible compensation contributed plus 25% of the next 5% of compensation contributed. The total expenses under the profit-sharing and 401(k) programs amounted to $50.1 million, $43.2 million, and $39.4 million in the fiscal years ended June 30, 2026, 2025 and 2024, respectively. Employee benefit plans In addition to the profit-sharing plan and the U.S. 401(k), several of our foreign subsidiaries have retirement plans for their full-time employees, many of which are defined benefit plans. The assumptions used in calculating the obligations for the foreign plans depend on the local economic environment. Discount rates for the plans are derived by reference to appropriate benchmark yields on high-quality corporate bonds, allowing for the approximate duration of both plan obligations and the relevant benchmark index. Asset return assumptions are developed by considering the historical returns and expectations of future returns relevant to the country in which each plan is in effect and the investments applicable to the corresponding plan. The foreign plans investments are measured at fair value on a recurring basis. They are managed by third-party trustees consistent with the regulations or market practice of the country where the assets are invested. We are not actively involved in the investment strategy, nor do we have control over the target allocation of these investments. We manage a variety of risks, including market, credit and liquidity risks, across our plan assets through our investment managers. We define a concentration of risk as an undiversified exposure to one of the above-mentioned risks that increases the exposure of the loss of plan assets unnecessarily. We monitor exposure to such risks in the foreign plans by monitoring the magnitude of the risk in each plan and diversifying our exposure to such risks across a variety of instruments, markets and counterparties. As of June 30, 2026, we did not have concentrations of plan asset investment risk in any single entity, manager, counterparty, sector, industry or country. We apply authoritative guidance that requires an employer to recognize the funded status of each of our defined benefit pension and post-retirement benefit plans as a net asset or liability on its balance sheets. Additionally, the authoritative guidance requires an employer to measure the funded status of each of its plans as of the date of its year-end statement of financial position. The benefit obligations and related assets under our plans have been measured as of June 30, 2026 and 2025 and were immaterial. The net funded status of these plans is recognized as a liability and included in other current or non-current liabilities in the Consolidated Balance Sheets in the years presented. The net periodic benefit costs were immaterial for the fiscal years ended June 30, 2026, 2025 and 2024. NOTE 13 INCOME TAXES The components of income before income taxes were as follows: Year Ended June 30, (In thousands)202620252024 Domestic income before income taxes$3,629,727 $3,070,097 $1,997,090 Foreign income before income taxes1,976,198 1,574,351 1,192,942 Total income before income taxes$5,605,925 $4,644,448 $3,190,032 79 Table of Contents The provision for income taxes was comprised of the following: (In thousands)Year Ended June 30, 202620252024 Current: Federal$330,215 $624,002 $395,876 State9,621 21,161 10,737 Foreign348,301 182,448 160,401 688,137 827,611 567,014 Deferred: Federal80,690 (222,907)(110,686) State952 (5,433)(2,770) Foreign5,375 (16,466)(25,422) 87,017 (244,806)(138,878) Provision for income taxes$775,154 $582,805 $428,136 The significant components of deferred income tax assets and liabilities were as follows: (In thousands)As of June 30, 20262025 Deferred tax assets: Tax credits and net operating losses$364,290 $327,618 Capitalized R&D expenses361,467 447,043 Depreciation and amortization220,997 190,256 Inventory reserves144,298 135,121 Employee benefits accrual125,406 106,746 Non-deductible reserves63,679 69,790 52,454 48,372 SBC19,978 18,835 17,936 43,843 Gross deferred tax assets1,370,505 1,387,624 Valuation allowance(356,639)(310,599) Net deferred tax assets$1,013,866 $1,077,025 Deferred tax liabilities: Unremitted earnings of foreign subsidiaries not indefinitely reinvested$(411,657)$(360,544) Deferred profit(31,064)(41,378) Unrealized gain on investments(7,569)(16,278) (450,290)(418,200) Total net deferred tax assets$563,576 $658,825 Our deferred tax assets for the years ended June 30, 2026 and 2025 reflect the impact of the mandatory capitalization of research and experimental expenditures as required by the 2017 Tax Cuts and Jobs Act, which was subsequently modified by the OBBBA to require capitalization of only foreign research expenses. As of June 30, 2026, we had U.S. federal, state and foreign net operating loss ( NOL ) carry-forwards of $1.3 million, $10.0 million and $83.2 million, respectively. We also had foreign capital loss carry-forwards of $1.7 million as of June 30, 2026. The U.S. federal NOL carry-forwards will expire at various dates from 2027 through 2035. The utilization of NOLs created by acquired companies is subject to annual limitations under Section 382 of the Internal Revenue Code. However, it is not expected that such annual limitation will significantly impair the realization of these NOLs. The state NOLs will expire at various dates beginning in 2031 through 2036. Foreign NOLs and capital loss carry-forwards will be carried forward indefinitely. State credits of $440.8 million will also be carried forward indefinitely. 80 Table of Contents The net deferred tax asset valuation allowance was $356.6 million and $310.6 million as of June 30, 2026 and 2025, respectively. The change was primarily due to an increase in the valuation allowance related to state credit carry-forwards generated in the fiscal year ended June 30, 2026. The valuation allowance is based on our assessment that it is more likely than not that certain deferred tax assets will not be realized in the foreseeable future. Of the valuation allowance as of June 30, 2026, $355.9 million was related to federal and state credit carry-forwards. The remainder of the valuation allowance was related to state NOL carry-forwards. As of June 30, 2026, we intend to indefinitely reinvest $185.9 million of cumulative undistributed earnings held by certain non-U.S. subsidiaries. If these undistributed earnings were repatriated to the U.S., the potential deferred tax liability associated with the undistributed earnings would be approximately $39 million. We benefit from tax holidays in Singapore where we manufacture certain of our products. These tax holidays are on approved investments. The tax holidays were amended and renewed under substantially similar terms as of July 1, 2025, and are scheduled to expire through December 2032. We are in compliance with all the terms and conditions of the tax holidays as of June 30, 2026. The net impact of these tax holidays was to decrease our tax expense by $120.9 million, $198.6 million, and $159.4 million in the fiscal years ended June 30, 2026, 2025, and 2024, respectively. The benefits of the tax holidays on diluted net income per share were $0.09, $0.15 and $0.12 for the fiscal years ended June 30, 2026, 2025, and 2024, respectively. Beginning in the fiscal year ended June 30, 2026, we adopted ASU 2023-09 on a prospective basis. The reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate pursuant to the disclosure requirements of ASU 2023-09 for the fiscal year ended June 30, 2026 was as follows: (Dollar amounts in thousands)Year Ended June 30, 2026 Federal statutory income tax rate$1,177,244 21.0 % State and local income taxes, net of federal income tax effect(1) 8,553 0.2 % (222,284)(4.0)% Other17,952 0.3 % Tax credits (59,203)(1.0)% Other(9,043)(0.2)% Nontaxable or nondeductible items12,380 0.2 % Changes in unrecognized tax benefits(8,439)(0.2)% Other adjustments SBC(72,329)(1.3)% Other(4,499)(0.1)% Foreign tax effects Singapore (95,804)(1.7)% Other(2) (38,928)(0.7)% China48,337 0.9 % Other jurisdictions21,217 0.4 % $775,154 13.8 % ________________ (1)Oregon makes up the majority of the effect of the state and local income tax category. (2)Includes foreign tax rate differential. 81 Table of Contents The reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate was as follows: Year Ended June 30, 20252024 Federal statutory rate21.0 %21.0 % GILTI2.9 %3.7 % Goodwill impairment1.1 %1.7 % Net change in tax reserves0.3 %1.1 % State income taxes, net of federal benefit0.3 %0.3 % (6.6)%(5.9)% Effect of foreign operations taxed at various rates(5.1)%(6.6)% R&D tax credit(1.1)%(1.6)% Other(0.3)%(0.3)% Effective income tax rate12.5 %13.4 % Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended June 30, 2026 was as follows: (In thousands)Year Ended June 30, 2026 Federal$509,387 State12,426 Foreign China91,214 168,382 Cash paid for income taxes, net of refunds received$781,409 A reconciliation of gross unrecognized tax benefits was as follows: Year Ended June 30, (In thousands)202620252024 Unrecognized tax benefits at the beginning of the year$258,604 $245,707 $213,092 38,538 35,429 40,209 Increases for tax positions taken in prior years10,685 10,862 23,291 Increases (decreases) for settlements with taxing authorities1,808 (4,687) Decreases for tax positions taken in prior years(31,840)(11,607)(26,766) Decreases for lapsing of statutes of limitations(20,028)(17,100)(4,119) $257,767 $258,604 $245,707 The amounts of unrecognized tax benefits that would impact the effective tax rate were $237.7 million, $244.9 million and $244.6 million as of June 30, 2026, 2025 and 2024, respectively. The amounts of interest and penalties recognized during the years ended June 30, 2026, 2025 and 2024 were expenses (benefits) of ($4.5 million), $9.0 million and $8.3 million, respectively. Our policy is to include interest and penalties related to unrecognized tax benefits within Other expense (income), net. The amounts of interest and penalties accrued as of June 30, 2026 and 2025 were $45.8 million and $50.1 million, respectively. In the normal course of business, we are subject to examination by tax authorities throughout the world. We are subject to U.S. federal income tax examinations for all years beginning from the fiscal year ended June 30, 2023 and are under U.S. federal income tax examination for the fiscal year ended June 30, 2018. We are subject to state income tax examinations for all years beginning from the fiscal year ended June 30, 2022. We are also subject to examinations in other major foreign jurisdictions, including Singapore and Israel, for all years beginning from the fiscal year ended June 30, 2019. We have completed the audit in Israel for calendar year ended December 31, 2019 to the fiscal year ended June 30, 2022. We believe our current unrecognized tax benefits are sufficient. 82 Table of Contents Legislative Developments In January 2026, the Organization for Economic Co-operation and Development ( OECD ) introduced two new Pillar Two safe harbors which are expected to be available for fiscal years beginning on or after January 1, 2026: (1) the Side-by-Side Safe Harbor ( SBSSH ) for multinational entities headquartered in the jurisdictions with both eligible domestic and worldwide tax systems, and (2) the Ultimate Parent Entity ( UPE ) Safe Harbor for multinational entities with a UPE located in a jurisdiction that has only an eligible domestic tax system. The U.S. is an eligible jurisdiction for the SBSSH. We are not expecting a material tax impact to our Consolidated Financial Statements when countries begin to enact legislation to adopt the SBSSH provisions. In December 2025, Israel adopted the Pillar Two Global Anti-Base Erosion ( GloBE ) rules under the Multinational Enterprise ( Minimum Tax ) Act, which includes a domestic minimum tax of 15% that will be effective for us beginning in the fiscal year ending June 30, 2027. The Pillar Two GloBE rules are deemed an alternative minimum tax so we did not recognize any deferred taxes for the estimated effects of the future minimum tax under current GAAP. We are not expecting a material tax impact to our Consolidated Financial Statements. On July 4, 2025, President Trump signed into law the OBBBA. The OBBBA provides for several permanent changes to the U.S. tax code among other items, including modifying the GILTI and FDII rules from the Tax Cuts and Jobs Act; restoring full expensing for domestic research expenses; and reinstating 100% bonus depreciation provisions. ASC 740, Income Taxes, requires that the tax effects of changes in tax rates and laws be recognized in the period in which the legislation is enacted. The OBBBA provisions resulted in an increase to our cash flows from operating activities and an increase to our effective tax rate in our fiscal year ended June 30, 2026. The effective tax rate changes have been reflected in the Consolidated Financial Statements for the fiscal year ended June 30, 2026, and did not have a material impact to our Consolidated Financial Statements. In November 2024, Singapore adopted the Pillar Two GloBE rules under the Minimum Tax Act, which includes a domestic minimum tax of 15% that is effective for us in the fiscal year ended June 30, 2026. There was no material impact to our Consolidated Financial Statements during the fiscal year ended June 30, 2026. The Pillar Two GloBE rules are deemed an alternative minimum tax so we did not recognize any deferred taxes for the estimated effects of the future minimum tax under current GAAP. California Governor Newsom approved the 2024-25 California State Budget on June 27, 2024, which includes a provision to suspend the use of all NOLs and limits the use of R&D tax credits to $5 million for tax years 2024 through 2026. On June 29, 2026, Governor Newsom approved the 2026-27 California State Budget, which extends the $5 million limitation through tax years beginning before January 1, 2030. Effective for tax years beginning on or after January 1, 2030, the business credit limitation will apply permanently and it will equal the greater of 70% of the total taxes imposed or $5 million per tax year. There was no material tax impact to our Consolidated Financial Statements in our fiscal years ended June 30, 2026 and June 30, 2025 from the California State Budget provisions. President Biden signed into law the CHIPS and Science Act of 2022 ( CHIPS Act, where CHIPS stands for Creating Helpful Incentives to Produce Semiconductors) on August 9, 2022. The CHIPS Act provides for various incentives and tax credits among other items, including the Advanced Manufacturing Investment Credit ( AMIC ), which equals 25% of qualified investments in an advanced manufacturing facility that is placed in service after December 31, 2022. There was no material tax impact to our Consolidated Financial Statements from the AMIC provision. President Biden also signed into law the IRA on August 16, 2022. The IRA has several provisions including a 15% corporate alternative minimum tax ( CAMT ) for certain large corporations that have at least an average of $1.0 billion of adjusted financial statement income over a consecutive three-tax-year period. There was no material tax impact to our Consolidated Financial Statements in our fiscal year ended June 30, 2026 from the CAMT provision. In December 2021, the OECD s Inclusive Framework on Base Erosion and Profit Shifting released GloBE rules under Pillar Two. For the countries that have enacted legislation to adopt the Pillar Two GloBE rules, the provision requiring a 15% minimum effective tax rate on income earned in the respective countries and a global 15% minimum effective top-up tax are effective for us beginning in our fiscal year ended June 30, 2025. There was no material tax impact to our Consolidated Financial Statements from these Pillar Two provisions during our fiscal years ended June 30, 2026 and June 30, 2025. NOTE 14 LITIGATION AND OTHER LEGAL MATTERS We are named, from time to time, as a party to lawsuits and other types of legal proceedings and claims in the normal course of our business. Actions filed against us include commercial, intellectual property ( IP ), customer, and labor and employment related claims, including complaints of alleged wrongful termination and potential class action lawsuits regarding alleged violations of federal and state wage and hour and other laws. In general, legal proceedings and claims, regardless of 83 Table of Contents their merit, and associated internal investigations (especially those relating to IP or confidential information disputes) are often expensive to prosecute, defend or conduct and may divert management s attention and other Company resources. Moreover, the results of legal proceedings are difficult to predict, and the costs incurred in litigation can be substantial, regardless of outcome. We believe the amounts provided in our Consolidated Financial Statements are adequate in light of the probable and estimated liabilities. However, because such matters are subject to many uncertainties and the ultimate outcomes are not predictable, there can be no assurances that the actual amounts required to satisfy alleged liabilities from the matters described above will not exceed the amounts reflected in our Consolidated Financial Statements or will not have a material adverse effect on our results of operations, financial condition or cash flows. NOTE 15 COMMITMENTS AND CONTINGENCIES Factoring. We have factoring agreements with financial institutions to sell certain of our trade receivables and promissory notes from customers without recourse. We do not believe we are at risk for any material losses as a result of these agreements. In addition, we periodically sell certain LC, without recourse, received from customers in payment for goods and services. The following table shows total receivables sold under factoring agreements and proceeds from sales of LC for the indicated periods: Year Ended June 30, (In thousands)202620252024 Receivables sold under factoring agreements$515,480 $230,552 $254,889 Proceeds from sales of LC$86,020 $55,525 $22,242 Factoring and LC fees for the sale of certain trade receivables were recorded in Other expense (income), net and were not material for the periods presented. KLA may continue servicing the receivables that are sold. Purchase Commitments. We maintain commitments to purchase inventory from our suppliers as well as goods, services, and other assets in the ordinary course of business. Our liability under these purchase commitments is generally restricted to a forecasted time-horizon as mutually agreed between the parties. This forecasted time-horizon can vary among different suppliers. Our estimate of our significant purchase commitments primarily for material, services, supplies and asset purchases is approximately $5.97 billion as of June 30, 2026, a majority of which are due within the next 12 months. Actual expenditures will vary based upon the volume of the transactions and length of contractual service provided. In addition, the amounts paid under these arrangements may be less in the event that the arrangements are renegotiated or canceled. Certain agreements provide for potential cancellation penalties. Cash LTI Plan. As of June 30, 2026, we have committed $101.2 million for future payment obligations under our Cash LTI Plan. Cash LTI awards issued to employees under the Cash LTI Plan vest in three or four equal installments, with one-third or one-fourth of the aggregate amount of the Cash LTI award vesting on each anniversary of the grant date over a three or four-year period. In order to receive payments under a Cash LTI award, participants must remain employed by us as of the applicable award vesting date. Guarantees and Contingencies. We maintain guarantee arrangements available through various financial institutions for up to $176.2 million, of which $142.5 million had been issued as of June 30, 2026, primarily to fund guarantees to customs authorities for value-added tax and other operating requirements of our consolidated subsidiaries worldwide. We have a duty drawback program that allows for the recovery of certain import duties upon the export of qualifying goods. Our accounting policy is to recognize a receivable for duty drawback upon submission of a qualifying claim to U.S. Customs and Border Protection when recovery is considered probable and estimable. In February 2026, the U.S. Supreme Court held that certain tariffs imposed under the International Emergency Economic Powers Act were not authorized. As a result, we are pursuing recovery of duties previously paid and have submitted and will continue to submit qualifying claims through the administrative refund process established by U.S. Customs and Border Protection. We have also begun receiving refunds through this process. Our accounting policy is to recognize a receivable for a tariff refund upon submission of a qualifying claim to U.S. Customs and Border Protection. Changes in the refund process or related legal challenges could impact the timing of cash receipts and our results of operations; however, we do not expect the impact to be material. In January 2025, we entered into a long-term virtual power purchase agreement to purchase a portion of the output generated from a solar energy project for a fixed price. As part of this agreement, we will also receive renewable energy credits 84 Table of Contents commensurate with the power we acquire. These credits can be applied against our GHG emissions, accelerating the progress towards our goals of 100% renewable electricity across our global operations by 2030, reduction of our Scope 1 and 2 emissions from our 2021 baseline by 50% by 2030 and achievement of net zero Scope 1 and Scope 2 emissions by 2050. This agreement did not have a material impact on our results of operations, financial condition or cash flows during the fiscal years ended June 30, 2026 and June 30, 2025. Indemnification Obligations. Subject to certain limitations, we are obligated to indemnify our current and former directors, officers and employees with respect to certain litigation matters and investigations that arise in connection with their service to us. These obligations arise under the terms of our certificate of incorporation, bylaws, applicable contracts, and Delaware and California law. The obligation to indemnify generally means that we are required to pay or reimburse the individuals reasonable legal expenses and possibly damages and other liabilities incurred by several of our current and former directors, officers and employees in connection with these matters. For example, we have paid or reimbursed legal expenses incurred in connection with the investigation of our historical stock option practices and the related litigation and government inquiries. Although the maximum potential amount of future payments we could be required to make under the indemnification obligations generally described in this paragraph is theoretically unlimited, we believe the fair value of this liability, to the extent estimable, is appropriately considered within the reserve we have established for currently pending legal proceedings. We are a party to a variety of agreements pursuant to which we may be obligated to indemnify the other party with respect to certain matters. Typically, these obligations arise in connection with contracts and license agreements or the sale of assets, under which we customarily agree to hold the other party harmless against losses arising therefrom, or provide customers with other remedies to protect against, bodily injury or damage to personal property caused by our products, non-compliance with our product performance specifications, infringement by our products of third-party IP rights and a breach of warranties, representations and covenants related to matters such as title to assets sold, validity of certain IP rights, non-infringement of third-party rights, and certain income tax-related matters. In each of these circumstances, payment by us is typically subject to the other party making a claim to and cooperating with us pursuant to the procedures specified in the particular contract. This usually allows us to challenge the other party s claims or, in case of breach of IP representations or covenants, to control the defense or settlement of any third-party claims brought against the other party. Further, our obligations under these agreements may be limited in terms of amounts, activity (typically at our option to replace or correct the products or terminate the agreement with a refund to the other party), and duration. In some instances, we may have recourse against third parties and/or insurance covering certain payments made by us. In addition, we may, in limited circumstances, enter into agreements that contain customer-specific commitments on pricing, tool reliability, spare parts stocking levels, response time and other commitments. Furthermore, we may give these customers limited audit or inspection rights to enable them to confirm that we are complying with these commitments. If a customer elects to exercise its audit or inspection rights, we may be required to expend significant resources to support the audit or inspection, as well as to defend or settle any dispute with a customer that could potentially arise out of such audit or inspection. To date, we have made no significant accruals in our Consolidated Financial Statements for this contingency. While we have not in the past incurred significant expenses for resolving disputes regarding these types of commitments, we cannot make any assurance that we will not incur any such liabilities in the future. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements have not had a material effect on our business, financial condition, results of operations or cash flows. NOTE 16 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The authoritative guidance requires companies to recognize all derivative instruments, including foreign exchange contracts, rate lock agreements and interest rate swaps (collectively derivatives ), as either assets or liabilities at fair value on the Consolidated Balance Sheets. In accordance with the accounting guidance, we designate foreign currency forward transactions and options contracts and interest rate forward transactions as cash flow hedges. In accordance with the accounting guidance, we also designate certain foreign currency exchange contracts as net investment hedge transactions intended to mitigate the variability of the value of certain investments in foreign subsidiaries. Since fiscal 2015, we have entered into five sets of Rate Lock Agreements to hedge the benchmark interest rate on portions of our Senior Notes prior to issuance. Upon issuance of the associated debt, the Rate Lock Agreements were settled and their fair values were recorded within AOCI. The resulting gains and losses from these transactions are amortized to interest expense over the lives of the associated debt. As of June 30, 2026, the aggregate unamortized portion of the fair value of the forward contracts for the Rate Lock Agreements was a $41.3 million net gain. 85 Table of Contents We utilize fixed-to-floating interest rate swaps designated as fair value hedges to minimize certain exposures to changes in the fair value of fixed-rate debt that result from fluctuations in benchmark interest rates. The interest rate swaps effectively convert the fixed interest rates on a portion of our 2022 Senior Notes to floating interest rates based on the SOFR swap rate. Under the terms of the swaps, we pay semi-annual interest at the daily compounded SOFR swap rate plus a fixed number of basis points on the $2.00 billion notional amount of Senior Notes hedged, and in exchange, we receive fixed-rate interest on the Senior Notes hedged from the swap counterparties on a semi-annual basis. If a financial counterparty to any of our hedging arrangements experiences financial difficulties or is otherwise unable to honor the terms of the interest rate swap, we may experience material losses. We apply the shortcut method to these fair value hedges as they are assumed to be perfectly effective in hedging the change in interest rates related to a portion of our 2022 Senior Notes. The resulting gains and losses from these transactions are recognized in interest expense each period. Derivatives in Hedging Relationships: Foreign Exchange Contracts and Rate Lock Agreements The gains (losses) on derivatives in cash flow and net investment hedging relationships recognized in OCI for the indicated periods were as follows: Year Ended June 30, (In thousands)202620252024 Derivatives Designated as Cash Flow Hedging Instruments: Rate lock agreements: Amounts included in the assessment of effectiveness$ $ $415 Foreign exchange contracts: Amounts included in the assessment of effectiveness$34,281 $36,747 $9,176 Amounts excluded from the assessment of effectiveness$102 $(21)$146 Derivatives Designated as Net Investment Hedging Instruments: Foreign exchange contracts(1) $19,053 $(23,630)$3,459 ________________ (1)No amounts were reclassified from AOCI into earnings related to the sale of a subsidiary, as there were no such sales during the periods presented. 86 Table of Contents The locations and amounts of designated and non-designated derivatives gains and losses reported in the Consolidated Statements of Operations for the indicated periods were as follows: (In thousands)RevenuesCosts of Revenues and Operating ExpenseInterest ExpenseOther Expense (Income), Net For the year ended June 30, 2024 Total amounts presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded$9,812,247 $6,466,037 $311,253 $(155,075) Gains (Losses) on Derivatives Designated as Hedging Instruments: Rate lock agreements: Amount of gains reclassified from AOCI to earnings$ $ $3,764 $ Amount of gains reclassified from AOCI to earnings$19,246 $3,766 $ $ Amount excluded from the assessment of effectiveness recognized in earnings$(872)$ $ $2,328 Amount of gains recognized in earnings$ $ $ $10,597 For the year ended June 30, 2025 Total amounts presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded$12,156,162 $7,381,035 $302,166 $(171,487) Gains (Losses) on Derivatives Designated as Hedging Instruments: Rate lock agreements: Amount of gains reclassified from AOCI to earnings$ $ $3,285 $ Amount of gains reclassified from AOCI to earnings$8,950 $4,678 $ $ Amount excluded from the assessment of effectiveness recognized in earnings $(1,484)$ $ $2,984 Amount of gains recognized in earnings$ $ $ $37,588 For the year ended June 30, 2026 Total amounts presented in the Consolidated Statements of Operations in which the effects of cash flow and fair value hedges are recorded$13,579,476 $7,918,696 $284,440 $(229,585) Gains (Losses) on Derivatives Designated as Hedging Instruments: Rate lock agreements: Amount of gains reclassified from AOCI to earnings$ $ $3,034 $ Amount of gains reclassified from AOCI to earnings$7,577 $42,964 $ $ Amount excluded from the assessment of effectiveness recognized in earnings$(751)$ $ $18,944 Interest rate contracts: Amount of gains recognized in earnings$ $ $559 $ Gains (Losses) on Derivatives Not Designated as Hedging Instruments: Amount of gains recognized in earnings$ $ $ $24,135 87 Table of Contents The U.S. dollar equivalent of all outstanding notional amounts of foreign currency hedge contracts, with maximum remaining maturities of approximately 11 months as of June 30, 2026 and 14 months as of June 30, 2025, were as follows: (In thousands)As of June 30, 2026As of June 30, 2025 Cash flow hedge contracts - foreign currency Purchase$533,193 $405,349 Sell$61,209 $159,475 Net Investment hedge contracts - foreign currency $343,791 $384,130 Other foreign currency hedge contracts Purchase$978,174 $618,844 Sell$608,933 $429,643 The locations and fair value of our derivatives reported in our Consolidated Balance Sheets as of the dates indicated below were as follows: Asset DerivativesLiability Derivatives Balance Sheet LocationAs of June 30, 2026As of June 30, 2025Balance Sheet LocationAs of June 30, 2026As of June 30, 2025 (In thousands)Fair ValueFair Value Derivatives designated as hedging instruments Other current assets$28,423 $29,492 Other current liabilities$(5,385)$(24,331) Interest rate contractsOther current assets2,534 Interest rate contractsOther non-current assets6,990 Other non-current liabilities(10,107) Total derivatives designated as hedging instruments37,947 29,492 (15,492)(24,331) Derivatives not designated as hedging instruments Other current assets13,398 30,011 Other current liabilities(7,161)(4,284) Total derivatives not designated as hedging instruments13,398 30,011 (7,161)(4,284) Total derivatives$51,345 $59,503 $(22,653)$(28,615) The changes in AOCI, before taxes, related to derivatives for the indicated periods were as follows: Year Ended June 30, (In thousands)202620252024 Beginning balance$66,570 $68,903 $81,611 Amount reclassified to earnings as net gains(52,824)(15,429)(25,904) Net change in unrealized gains53,436 13,096 13,196 Ending balance$67,182 $66,570 $68,903 As of June 30, 2026, the net gain reported in AOCI that is expected to be reclassified into earnings within the next 12 months is $16.7 million. 88 Table of Contents Offsetting of Derivative Assets and Liabilities We present derivatives at gross fair values in the Consolidated Balance Sheets. We have entered into arrangements with each of our counterparties, which reduce credit risk by permitting net settlement of transactions with the same counterparty under certain conditions. The information related to the offsetting arrangements for the periods indicated was as follows: As of June 30, 2026Gross Amounts of Derivatives Not Offset in the Consolidated Balance Sheets (In thousands)Gross Amounts of Derivatives Gross Amounts of Derivatives Offset in the Consolidated Balance Sheets Net Amount of Derivatives Presented in the Consolidated Balance Sheets Financial InstrumentsCash Collateral ReceivedNet Amount Derivatives - assets$51,345 $ $51,345 $(17,605)$ $33,740 Derivatives - liabilities$(22,653)$ $(22,653)$17,605 $ $(5,048) As of June 30, 2025Gross Amounts of Derivatives Not Offset in the Consolidated Balance Sheets (In thousands)Gross Amounts of Derivatives Gross Amounts of Derivatives Offset in the Consolidated Balance Sheets Net Amount of Derivatives Presented in the Consolidated Balance Sheets Financial InstrumentsCash Collateral ReceivedNet Amount Derivatives - assets$59,503 $ $59,503 $(28,615)$ $30,888 Derivatives - liabilities$(28,615)$ $(28,615)$28,615 $ $ NOTE 17 SEGMENT REPORTING AND GEOGRAPHIC INFORMATION ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker ( CODM ) in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer. Our operating segments are aggregated into reportable segments based on several factors including, but not limited to, customer base, homogeneity of products, technology, delivery channels and similar economic characteristics. We have three reportable segments: Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection. Semiconductor Process Control The Semiconductor Process Control segment offers a comprehensive portfolio of inspection, metrology and data analytics products, and related services, which helps IC manufacturers achieve target yield throughout the entire semiconductor fabrication process, from R&D to final volume production. Our differentiated products and services are designed to provide comprehensive solutions that help our customers accelerate development and production ramp cycles, achieve higher and more stable semiconductor die yields and improve their overall profitability. Specialty Semiconductor Process The Specialty Semiconductor Process segment develops and sells advanced vacuum deposition and etching process tools, which are used by a broad range of specialty semiconductor customers, including manufacturers of MEMS, radio frequency communication chips, and power semiconductors for automotive and industrial applications. PCB and Component Inspection The PCB and Component Inspection segment enables electronic device manufacturers to inspect, test and measure PCBs, flat panel displays and ICs to verify their quality, pattern the desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces. In March 2024, we announced the end of manufacturing of most Display products, but will continue to provide services to the installed base of Display products for existing customers. The CODM uses total segment revenues and segment profit (loss) to assess performance and allocate resources (including employees, financial or capital resources), primarily during the annual strategic long-term planning and budgeting process. The CODM considers changes in market conditions, technology constraints and the competitive environment when making decisions about allocating resources to segments. The CODM does not evaluate segments using discrete asset information because asset allocation is not managed at the segment level and assets are not tracked by segment in a way that it 89 Table of Contents is meaningful for decision-making. Segment profit (loss) represents segment income (loss) before income taxes, and excludes interest expense, other expense (income), net, restructuring costs, effects of changes in foreign currency exchange rates, and other corporate expenses. The following is a summary of results for each of our three reportable segments for the indicated periods. (In thousands) Semiconductor Process ControlSpecialty Semiconductor ProcessPCB and Component InspectionTotal For the year ended June 30, 2024 Revenues$8,733,556 $528,701 $552,491 $9,814,748 Less: Costs of revenues3,104,254 245,791 393,531 R&D1,077,366 40,043 147,867 SG&A728,349 43,959 116,074 Other segment items (1) 56,014 108,069 365,292 Segment profit (loss)$3,767,573 $90,839 $(470,273)$3,388,139 For the year ended June 30, 2025 Revenues$10,947,359 $587,107 $621,721 $12,156,187 Less: Costs of revenues3,922,735 283,160 358,847 R&D1,165,858 47,054 133,487 SG&A814,074 48,980 102,662 Other segment items (1) 41,946 108,961 307,882 Segment profit (loss)$5,002,746 $98,952 $(281,157)$4,820,541 For the year ended June 30, 2026 Revenues$12,244,733 $584,064 $750,415 $13,579,212 Less: Costs of revenues4,453,558 305,303 365,120 R&D1,341,321 59,418 130,166 SG&A930,850 47,423 100,930 Other segment items (1) 36,174 107,347 46,155 Segment profit$5,482,830 $64,573 $108,044 $5,655,447 __________________ (1)Other segment items for each reportable segment includes: Semiconductor Process Control amortization of purchased intangible assets and acquisition related expenses. Specialty Semiconductor Process amortization of purchased intangible assets. PCB and Component Inspection amortization of purchased intangible assets for all periods presented and impairment of goodwill and purchased intangible assets for the years ended June 30, 2024 and 2025. The following table reconciles total reportable segment revenue to total revenue for the indicated periods: Year Ended June 30, (In thousands)202620252024 Total revenues for reportable segments$13,579,212 $12,156,187 $9,814,748 Effects of changes in foreign currency exchange rates264 (25)(2,501) Total revenues$13,579,476 $12,156,162 $9,812,247 90 Table of Contents The following table reconciles total segment profit to total income before income taxes for the indicated periods: Year Ended June 30, (In thousands)202620252024 Total segment profit$5,655,447 $4,820,541 $3,388,139 Unallocated amounts (1) (5,333)45,414 41,929 Interest expense284,440 302,166 311,253 (229,585)(171,487)(155,075) Income before income taxes$5,605,925 $4,644,448 $3,190,032 __________________ (1)Unallocated amounts include effects of changes in exchange rates, restructuring costs and other corporate expenses. Our significant operations outside the U.S. include manufacturing facilities in Singapore, Israel, China and various locations throughout Europe and sales and service facilities in major semiconductor manufacturing regions around the world to support our global customer base. For geographical revenue reporting, revenues are attributed to the geographic location in which the customer is located. Long-lived assets consist of land, property and equipment, net, and are attributed to the geographic region in which they are located. The following is a summary of revenues by geographic region, based on ship-to location, for the indicated periods: (Dollar amounts in thousands)Year Ended June 30, 202620252024 Revenues: China$4,048,358 29.8 %$4,042,567 33.3 %$4,196,727 42.8 % Taiwan3,643,742 26.8 %3,205,392 26.4 %1,738,065 17.7 % Korea1,833,836 13.5 %1,452,826 11.9 %906,924 9.2 % North America1,757,337 13.0 %1,362,311 11.2 %1,070,791 10.9 % Japan915,111 6.7 %1,133,002 9.3 %963,203 9.8 % Europe and Israel726,693 5.4 %574,197 4.7 %540,263 5.6 % Rest of Asia654,399 4.8 %385,867 3.2 %396,274 4.0 % Total$13,579,476 100.0 %$12,156,162 100.0 %$9,812,247 100.0 % The following is a summary of revenues by major product categories for the indicated periods: (Dollar amounts in thousands)Year Ended June 30, 202620252024 Revenues: Wafer Inspection$6,630,813 49 %$6,198,815 51 %$4,333,296 44 % Patterning2,706,763 20 %2,196,347 18 %2,054,442 21 % Specialty Semiconductor Process502,519 4 %517,201 4 %470,565 5 % PCB and Component Inspection460,320 3 %355,891 3 %291,161 3 % Services3,125,939 23 %2,683,308 22 %2,329,568 24 % Other153,122 1 %204,600 2 %333,215 3 % Total$13,579,476 100 %$12,156,162 100 %$9,812,247 100 % Wafer Inspection and Patterning products are offered in the Semiconductor Process Control segment. Services are offered in multiple segments. Other includes primarily refurbished systems, remanufactured legacy systems, and enhancements and upgrades for previous-generation products that are part of the Semiconductor Process Control segment. In each of the fiscal years ended June 30, 2026 and 2025, one customer accounted for approximately 19% of total revenues. In the fiscal year ended June 30, 2024, one customer accounted for approximately 13% of total revenues. 91 Table of Contents Land, property and equipment, net by geographic region as of the dates indicated below were as follows: 20262025$771,331 $728,162 289,614 253,848 191,534 153,052 73,110 49,109 54,961 68,604 $1,380,550 $1,252,775 Balance at Beginning of PeriodCharged to ExpenseDeductions/AdjustmentsBalance at End of Period Fiscal Year Ended June 30, 2024: Allowance for Credit Losses$33,632 $5,912 $(6,762)$32,782 Allowance for Deferred Tax Assets$259,172 $ $30,362 $289,534 Fiscal Year Ended June 30, 2025: Allowance for Credit Losses$32,782 $11,494 $(10,261)$34,015 Allowance for Deferred Tax Assets$289,534 $(1,315)$22,380 $310,599 Fiscal Year Ended June 30, 2026: Allowance for Credit Losses$34,015 $28,398 $(31,383)$31,030 Allowance for Deferred Tax Assets$310,599 $(1,366)$47,406 $356,639 ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A.CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act ( Disclosure Controls ) as of the end of the period covered by this Annual Report on Form 10-K (this Report ) required by Securities Exchange Act Rules 13a-15(b) or 15d-15(b). The evaluation of our disclosure controls and procedures was conducted under the supervision and with the participation of our management, including our Chief Executive Officer ( CEO ) and Chief Financial Officer ( CFO ). Based on this evaluation, the CEO and CFO have concluded that as of June 30, 2026, the end of the period covered by this Report, our Disclosure Controls were effective at a reasonable assurance level. Attached as exhibits to this Report are certifications of the CEO and CFO, which are required in accordance with Rule 13a-14 of the Securities Exchange Act. This Controls and Procedures section includes the information concerning the controls evaluation referred to in the certifications, and it should be read in conjunction with the certifications for a more complete understanding of the topics presented. Definition of Disclosure Controls Disclosure Controls are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act, such as this Report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission s rules and forms. Disclosure Controls are also designed to reasonably assure that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Our Disclosure Controls include components of our internal control over financial reporting, which consists of control processes designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. To the extent that components of our internal control over financial reporting are included within our Disclosure Controls, they are included in the scope of our annual controls evaluation. Management s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in the framework in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of June 30, 2026. 95 Table of Contents The effectiveness of our internal control over financial reporting as of June 30, 2026 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears in Item 8, Financial Statements and Supplementary Data in this Annual Report on Form 10-K. Limitations on the Effectiveness of Controls Our management, including our CEO and CFO, does not expect that our Disclosure Controls or internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Securities Exchange Act that occurred during the fourth quarter of the fiscal year ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B.OTHER INFORMATION Rule 10b5-1 Trading Plans Adopted by Officers and Directors During the Fourth Quarter In the fourth quarter of fiscal 2026, the following officers adopted trading plans, or amendments to existing trading plans, to sell and/or gift shares of our common stock that have been or will be issued upon the vesting of RSUs, or purchased in our employee stock purchase plan, that are intended to satisfy the affirmative defense conditions set forth in Rule 10b5-1(c) under the Securities Exchange Act. The material terms of the trading plans other than pricing conditions are set forth in the table below: Name of Officer Title of Officer Date of Adoption Duration Maximum Number of Shares to be Sold (1) (2) Bren HigginsExecutive Vice President and Chief Financial OfficerMay 11, 2026446 days (3) 202,480 Ahmad KhanPresident, Semiconductor Products and CustomersMay 11, 2026285 days (4) 253,159 Brian LorigExecutive Vice President, KLA Global ServicesMay 14, 2026287 days (5) 122,773 (1) Due to pricing conditions in the trading plans, the number of shares actually sold under the trading plans may be less than the maximum number of shares that can be sold. Shares sold under plans upon the vesting of performance-based RSUs where the performance conditions have not been met at the time of plan adoption or are to be purchased in the future under our employee stock purchase plan are calculated at the maximum number of shares that may be issued, with fractional shares disregarded. (2) For RSUs that have not vested, the maximum number of shares to be sold does not take into account shares withheld for taxes. (3) Mr. Higgins trading plan terminates when the last trade is placed under the plan. The last scheduled trade is on July 6, 2027; provided that if any scheduled trades are not placed because of trading conditions set forth in the plan, the trading plan will terminate on July 30, 2027. 96 Table of Contents (4) Mr. Khan s trading plan terminates when the last trade is placed under the plan. The last scheduled trade is on February 8, 2027; provided that if any scheduled trades are not placed because of trading conditions set forth in the plan, the trading plan will terminate on February 19, 2027. (5) Mr. Lorig s trading plan terminates when the last trade is placed under the plan. The last scheduled trade is on January 4, 2027; provided that if any scheduled trades are not placed because of trading conditions set forth in the plan, the trading plan will terminate on February 24, 2027. ITEM 9C.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE For the information required by this Item, see Information About the Board of Directors and its Committees, Information About Executive Officers, Our Corporate Governance Practices - Standards of Business Conduct; Whistleblower Hotline and Website, Our Corporate Governance Practices - Insider Trading Policy, Report of the Audit Committee, and, if applicable, Security Ownership of Certain Beneficial Owners and Management - Delinquent Section 16(a) Reports, in the Proxy Statement, which is incorporated herein by reference. ITEM 11.EXECUTIVE COMPENSATION For the information required by this Item, see Executive Compensation and Other Matters, Information About the Board of Directors and Its Committees - Director Compensation, Our Corporate Governance Practices - Compensation and Talent Committee Interlocks and Insider Participation, Compensation and Talent Committee Report, and Information About the Board of Directors and Its Committees - Compensation and Talent Committee - Risk Considerations in Our Compensation Programs in the Proxy Statement, which is incorporated herein by reference. ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS For the information required by this Item, see Security Ownership of Certain Beneficial Owners and Management and Equity Compensation Plan Information in the Proxy Statement, which is incorporated herein by reference. ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE For the information required by this Item, see Certain Relationships and Related Transactions and Information About the Board of Directors and Its Committees - The Board of Directors in the Proxy Statement, which is incorporated herein by reference. ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES For the information required by this Item, see Proposal Two: Ratification of Appointment of PricewaterhouseCoopers LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending June 30, 2027 in the Proxy Statement, which is incorporated herein by reference. PART IV