AddedRisk Factors
•Tariffs, retaliatory trade measures and other trade restrictions, including uncertainty related to tariff authority, implementation and refund processes;
KLACKLA Corporation
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. 10-K, Item 1
- Headquarters
- Milpitas, CA
- CEO
- Richard P. Wallace
- Next results
- around Jan 28, 2027
10-K 0000319201-26-000027 (2026-08-06) vs 10-K 0000319201-25-000024 (2025-08-08)
| Section | Compared text | Words now | Changed |
|---|---|---|---|
| Risk Factors | Item 1A | 19,896 | 13.5% |
| MD&A | Item 7 | 6,650 | 30.4% |
| Legal Proceedings | Item 3, via Note 14 – LITIGATION AND OTHER LEGAL MATTERS | 213 | 64.8% |
| Accounting Policies | Item 8, Note 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 8,118 | 22.5% |
The redline: what was cut and what was added
In each section, the paragraph that changed most, marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
Risk Factors 274 words changed in this paragraph; it is 39% similar to last year's version.
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 and Hamas in the Gaza Strip, have involved missile strikes against civilian targets in various parts of Israel and attacks on marine vessels traversing the Red Sea. 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. 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. We cannot assess the impact that emergency conditions in Israel may have on our business, operations, financial condition or results of operations, but it could be material. Instability in any region could directly impact our ability to operate our business (or our customers’ ability to operate their businesses), cause us to incur increased costs in transportation, make such transportation unreliable, increase our insurance costs, and cause international currency markets to fluctuate. Instability in any region could also have the same effects on our suppliers and their ability to timely deliver their products. Our insurance does not cover losses we suffer attributable to war. If international political instability and geopolitical tensions continue or increase in any region in which we do business, our business and results of operations could be harmed.
Source: Item 1A, 10-K 0000319201-26-000027 vs Item 1A, 10-K 0000319201-25-000024
MD&A 257 words changed in this paragraph; it is 38% similar to last year's version.
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 of the major semiconductor device manufacturing markets: memory and foundry/logic. End-market Long-term demand drivers that are expected to continue to benefit KLA in the long term include continued adoption of EUV in HVM for Logic logic and DRAM memory, (including high-bandwidth memory), which drives new are increasing process control requirements and growth in key markets for KLA. expanding our served market. Demand for advanced semiconductor technologies, particularly evident in the 2-nanometer node, which at leading-edge nodes such as 2-nanometer, is seeing higher levels of investment increasing process complexity and process control intensity, continues to drive investments which in AI. 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. The digitization of all industries, Broader industry trends, including 5G markets, advances in digitization, communication improvements, healthcare and innovation, industrial applications, together with the and increasing adoption of electric vehicles semiconductor content in automobiles and intelligence intelligent systems, are supporting continued investment in automobiles, are powering leading-edge design node technology investments legacy and capacity expansions. While we continue to invest in technological innovation, factors such as delays from customers in adopting new chips mature-node capacity, where long product lifecycles and technology methods could impact process control capital intensity. Push out or cancellation of deliveries to our customers could still cause earnings volatility, due to the timing of revenue recognition as well as increased risk of inventory-related charges. expanding end-market demand require ongoing manufacturing investments.
Source: Item 7, 10-K 0000319201-26-000027 vs Item 7, 10-K 0000319201-25-000024
Accounting Policies 195 words changed in this paragraph; it is 60% similar to last year's version.
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 using the mark-to-market approach. Recognition in earnings of amounts previously recorded in cumulative translation is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operations. For foreign exchange contracts that are not designated as hedges, gains and losses are recognized in Other expense (income), net. We use foreign exchange contracts to hedge certain foreign currency denominated assets or liabilities. The gains and losses on these derivative instruments are largely offset by the changes in the fair value of the assets or liabilities being hedged. Cash flows associated with these derivatives are classified as cash flows from operating activities in the Consolidated Statement of Cash Flows to align with the underlying items.
Source: Item 8, Note 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, 10-K 0000319201-26-000027 vs Item 8, Note 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, 10-K 0000319201-25-000024
Legal Proceedings 138 words changed in this paragraph; it is 52% similar to last year's version.
We are named, from time to time, as a party to lawsuits and other types of legal proceedings and claims in the normal course of our business. Actions filed against us include commercial, intellectual property (“IP”), customer, and labor and employment related claims, including complaints of alleged wrongful termination and potential class action lawsuits regarding alleged violations of federal and state wage and hour and other laws. In general, legal proceedings and claims, regardless of their merit, and associated internal investigations (especially those relating to IP or confidential information disputes) are often expensive to prosecute, defend or conduct and may divert management’s attention and other Company resources. Moreover, the results of legal proceedings are difficult to predict, and the costs incurred in litigation can be substantial, regardless of outcome. We believe the amounts provided in our Consolidated Financial Statements are adequate in light of the probable and estimated liabilities. However, because such matters are subject to many uncertainties and the ultimate outcomes are not predictable, there can be no assurances that the actual amounts required to satisfy alleged liabilities from the matters described above will not exceed the amounts reflected in our Consolidated Financial Statements or will not have a material adverse effect on our results of operations, financial condition or cash flows.
Source: Item 3, via Note 14 – LITIGATION AND OTHER LEGAL MATTERS, 10-K 0000319201-26-000027 vs Item 3, via Note 15 – LITIGATION AND OTHER LEGAL MATTERS, 10-K 0000319201-25-000024
Every change, by type
Sentences and paragraphs of KLAC's Risk Factors and MD&A, 10-K 2026-08-06 against 10-K 2025-08-08. Each links to the text at sec.gov.
Quiet changes are sentences kept from last year with one to four words changed, at least one of them a hedge, a modal or a qualifier
(may, could, will, not, significant, material…). A year or date rolling forward is not counted.
The full word list
adverse, adversely, all, although, anticipate, anticipates, any, approximately, believe, believes, can, cannot, certain, could, expect, expects, generally, however, if, intend, intends, largely, likely, many, material, materially, may, might, most, must, never, no, not, possible, primarily, probable, should, significant, significantly, some, substantial, substantially, unlikely, will, would
AddedRisk Factors
•System failures, ERP system implementation risks or limited access to critical information could disrupt our operations and financial reporting processes;
AddedRisk Factors
•Our interest rate hedging activities expose us to risks related to changes in floating interest rates;
AddedRisk Factors
•Changes in accounting standards or practices or taxation rules or practices could have unforeseen effects.
AddedRisk Factors
•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
AddedRisk Factors
•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;
AddedRisk Factors
•Government funding may be terminated, modified or subject to audit, repayment obligations, penalties or other restrictions;
AddedRisk Factors
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.
AddedRisk Factors
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.
AddedRisk Factors
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.
AddedRisk Factors
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.
AddedRisk Factors
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
RemovedRisk Factors
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RewordedRisk Factors
Disruption of our manufacturing facilities or facilities, other operations or those of our operations, suppliers, or in the operations of our customers, customers due to climate change, earthquake, flood, other natural catastrophic events, disasters, public health crises crises, terrorism, acts of war or terrorism other catastrophic events could result in cancellation of orders, delays in deliveries or other business activities, order cancellations, delivery delays, supply chain disruption or loss of customers and could seriously harm our business.
RewordedRisk Factors
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.
RewordedRisk Factors
RewordedRisk Factors
Our revenue from sales of products and provision of services to customers in China was 33%, 30%, 33% and 43% and 27% for fiscal years 2025, 2024 2026, 2025 and 2023, 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.
RewordedRisk Factors
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
RewordedRisk Factors
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 and could also 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. us.
RewordedRisk Factors
Recently announced and future U.S. tariffs or other restrictions placed on imports, tariffs, retaliatory trade measures taken by and other countries trade restrictions, as well as uncertainty regarding tariff authority, implementation and resulting trade wars refund processes, may have a material adverse impact on our results of operations.
RewordedRisk Factors
We operate in industries that have historically been cyclical, including the semiconductor industry. industry, and customer purchasing decisions are highly dependent on local and global economic conditions, industry conditions, capital spending patterns and AI-related investment trends.
RewordedRisk Factors
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.
RewordedRisk Factors
RewordedRisk Factors
Ongoing changes in the technology industry, as well as the including AI-related developments and changes in semiconductor industry in particular, manufacturing processes, customer investment patterns and end-market demand, could expose our business to significant risks.
RewordedRisk Factors
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. emails, polymorphic malware that adapts real-time to a victim environment during deployment, and automated vulnerability identification, among other things.
Quiet changesRisk Factors
These providers may be 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.
Quiet changesRisk Factors
Moreover, we have acquired and may continue to acquire companies with cybersecurity vulnerabilities and/or unsophisticated security measures, which may expose exposes us to significant cybersecurity, operational and financial risks.
AddedMD&A
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.
AddedMD&A
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.
AddedMD&A
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.
AddedMD&A
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.
AddedMD&A
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.
AddedMD&A
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.
AddedMD&A
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.
AddedMD&A
Each of the remaining regions accounted for less than 10% of revenue in all periods presented.
AddedMD&A
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.
AddedMD&A
$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.
RemovedMD&A
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RewordedMD&A
The change in Other expense (income), net during the fiscal year ended June 30, 2025 2026 compared to the fiscal year ended June 30, 2024 2025 was primarily attributable due to higher 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 $17.1 million due to higher interest earning balances and a $3.8 million.
RewordedMD&A
SG&A expenses during the fiscal year ended June 30, 2025 2026 increased compared to the fiscal year ended June 30, 2024 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 $15.9 $23.9 million, employee-related expenses and provision for credit losses of $12.9 million, depreciation expense of $12.0 million, promotional expenses of $8.3 million, travel expenses of $6.8 million and engineering project material costs of $6.1 $22.7 million.
RewordedMD&A
The increase in the amount of regular quarterly cash dividends and dividends dividend equivalents paid during the fiscal year ended June 30, 2025 2026 as compared to the fiscal year ended June 30, 2024 2025 reflected the cumulative effect of two increases in the level of our regular quarterly cash dividend from $1.45 $0.170 to $1.70 $0.190 per share and from $1.70 to $1.90 per share that were announced during the first and fourth quarters, respectively quarter of fiscal 2025. 2025, and from $0.190 to $0.230 per share announced during the third quarter of fiscal 2026.
RewordedMD&A
RewordedMD&A
R&D expenses during the fiscal year ended June 30, 2025 2026 increased compared to the fiscal year ended June 30, 2024 2025, primarily due to an increase increases in employee-related expenses of $70.1 million, an increase in depreciation expense $124.8 million as a result of $5.9 million increased headcount and an increase in higher compensation and benefits costs, and engineering project material costs of $4.9 $36.0 million.
RewordedMD&A
Other service and manufacturing costs included lower inventory obsolescence charges higher installation and warranty costs and increased costs due to tariffs, partially offset by higher tariff and freight expenses lower inventory-related charges in fiscal year 2025 2026 compared to fiscal year 2024. 2025.
RewordedMD&A
The increase in cash provided was primarily due to an increase in customer and other collections of approximately $1.4 $1.2 billion, mainly driven by higher shipments; 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 $480 million $1.1 billion and employee-related payments of approximately $130 $213 million.
RewordedMD&A
If our assumptions are not realized, or if there are future changes in any of the assumptions 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.
RewordedMD&A
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.
RewordedMD&A
In addition, our services business has grown consistently each quarter on a year-over-year basis year over year and accounted for approximately 22% 23% of our total revenues in fiscal 2025, due to increases in the installed base of KLA systems. 2026.
RewordedMD&A
In connection with the downward revision continued deterioration of financial outlook the long-term forecast for our PCB and Display businesses noted above, we recorded impairment losses related to purchased intangible assets of $8.7 million during the second quarter of fiscal 2025 and $26.4 million during the second quarter of fiscal 2024. 2025.
RewordedMD&A
On July 3, 2025, we replaced our Prior Revolving Credit Facility with entered into a new unsecured Revolving Credit Facility with a maturity date of July 3, 2030, that allows us to borrow up to $1.50 billion. billion, replacing the Prior Revolving Credit Facility (as defined below).
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