Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin | ||||
|
| ||||
|
|
| Three Months Ending Dec. 31, 2023 | ||
|
|
| Low |
| High |
GAAP gross margin |
| 58.6 % |
| 60.6 % |
Acquisition-related charges | a | 1.8 % |
| 1.8 % |
Restructuring, severance and other charges | b | 0.1 % |
| 0.1 % |
Non-GAAP gross margin |
| 60.5 % |
| 62.5 % |
The non-GAAP and supplemental information provided in this press release is a supplement to, and not a substitute for, KLA's financial results presented in accordance with United States GAAP.
To supplement our Condensed Consolidated Financial Statements presented in accordance with GAAP, we provide certain non-GAAP financial information, which is adjusted from results based on GAAP to exclude certain gains, costs and expenses, as well as other supplemental information. The non-GAAP and supplemental information is provided to enhance the user's overall understanding of our operating performance and our prospects in the future. Specifically, we believe that the non-GAAP information, including non-GAAP net income attributable to KLA, non-GAAP net income per diluted share attributable to KLA, non-GAAP gross margin and free cash flow, provides useful measures to both management and investors regarding financial and business trends relating to our financial performance by excluding certain costs and expenses that we believe are not indicative of our core operating results to help investors compare our operating performances with our results in prior periods as well as with the performance of other companies. The non-GAAP information is among the budgeting and planning tools that management uses for future forecasting. However, because there are no standardized or generally accepted definitions for most non-GAAP financial metrics, definitions of non-GAAP financial metrics are inherently subject to significant discretion (for example, determining which costs and expenses to exclude when calculating such a metric). As a result, non-GAAP financial metrics may be defined very differently from company to company, or even from period to period within the same company, which can potentially limit the usefulness of such information to an investor. The presentation of non-GAAP and supplemental information is not meant to be considered in isolation or as a substitute for results prepared and presented in accordance with United States GAAP. The following are descriptions of the adjustments made to reconcile GAAP net income attributable to KLA to non-GAAP net income attributable to KLA:
a. | Acquisition-related charges primarily include amortization of intangible assets, transaction costs associated with our acquisitions and dispositions, as well as intangible asset impairment charges. Although we exclude the effect of amortization of all acquired intangible assets from these non-GAAP financial measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase price accounting arising from acquisitions, and such amortization of intangible assets related to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Investors should note that the use of these intangible assets contributed to our revenues earned during the periods presented and are expected to contribute to our future period revenues as well. |
b. | Restructuring, severance and other charges primarily include costs associated with employee severance, gains and losses from exiting non-core businesses and adjustments related to non-controlling interest. Restructuring, severance and other charges in the three months ended Sept. 30, 2022 include a gain on the sale of Orbograph, Ltd. ("Orbograph"), partially offset by certain transaction bonuses triggered by the sale of Orbograph. |
c. | Loss on extinguishment of debt includes a pre-tax loss on early extinguishment of the $500 million 4.650% Senior Notes due in Nov. 2024. |
d. | Income tax effect of non-GAAP adjustments includes the income tax effects of the excluded items noted above. |
e. | Discrete tax items in all periods presented include a tax impact relating to the amortization of certain intellectual property as a result of an internal restructuring of ownership rights to align with how our business operates. Discrete items in the three months ended Sept. 30, 2022 also include an adjustment of the net benefit of the Orbotech Ltd. 2012 to 2018 Israel tax audit settlement, for which the net benefit includes the liability on the audit settlement less reductions in unrecognized tax positions and deferred tax assets and liabilities. Discrete items in the three months ended Sept. 30, 2022 also include a tax impact from the sale of Orbograph. |
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SOURCE KLA Corporation
| Contact: |
| Company Name: KLA Corporation
Investor Relations: Kevin Kessel, CFA, Vice President, Investor Relations, (408) 875-6627 Email Contact Media Relations: Mike Dulin, Corporate & KLA Services Communications Email Contact Financial data for KLA Corporation |
