KLA Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

12 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments, Location, Designated and Non-Designated, Gains (Losses)

The gains (losses) on derivatives in cash flow hedging relationships recognized in OCI for the indicated periods were as follows:


	Year ended June 30,
(In thousands)	2020		2019
Derivatives Designated as Hedging Instruments:
Rate lock agreements:
Amounts included in the assessment of effectiveness	$	—	$	(8,649)
Foreign exchange contracts:
Amounts included in the assessment of effectiveness	$	(16,649)	$	(358)
Amounts excluded from the assessment of effectiveness	$	(90)	$	(112)

The locations and amounts of designated and non-designated derivative’s gains and losses reported in the Consolidated Statements of Operations for the indicated periods were as follows:


	Year ended June 30,
	2020														2019
(In thousands)	Revenues		Costs of Revenues and Operating Expense		Interest Expense		Other Expense (Income), Net		Revenues		Costs of Revenues		Interest Expense		Other Expense (Income), Net
Total amounts presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded	$	5,806,424	$	2,449,561	$	160,274	$	2,678	$	4,568,904	$	1,869,377	$	124,604	$	(31,462)
Gains (losses) on Derivatives Designated as Hedging Instruments:
Rate lock agreements:
Amount of gains (losses) reclassified from accumulated OCI to earnings	$	—	$	—	$	(637)	$	—	$	—	$	—	$	424	$	—
Amount of gains (losses) reclassified from accumulated OCI to earnings as a result that a forecasted transaction is no longer probable of occurring	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	4
Foreign exchange contracts:
Amount of gains (losses) reclassified from accumulated OCI to earnings	$	4,473	$	(1,377)	$	—	$	—	$	4,329	$	(739)	$	—	$	—
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach	$	(387)	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Amount excluded from the assessment of effectiveness	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	(323)
Gains (losses) on Derivatives Not Designated as Hedging Instruments:
Amount of gains (losses) recognized in earnings	$	—	$	—	$	—	$	1,990	$	—	$	—	$	—	$	(23)

Schedule of Notional Amounts of Derivatives Outstanding

The U.S. dollar equivalent of all outstanding notional amounts of foreign currency hedge contracts, with maximum remaining maturities of approximately seven months as of June 30, 2020 and 2019, were as follows:


(In thousands)	As of June 30, 2020		As of June 30, 2019
Cash flow hedge contracts- foreign currency
Purchase	$	10,705	$	31,108
Sell	$	71,431	$	113,226
Other foreign currency hedge contracts
Purchase	$	329,310	$	257,614
Sell	$	357,939	$	273,061

Schedule of Derivative Instruments, Fair Value

The locations and fair value of our derivatives reported in our Consolidated Balance Sheets as of the dates indicated below were as follows:


	Asset Derivatives								Liability Derivatives
	Balance Sheet Location	As of June 30,2020		As of June 30,2019		Balance Sheet Location	As of June 30,2020		As of June 30,2019

(In thousands)				Fair Value							Fair Value
Derivatives designated as hedging instruments
Rate lock contracts	Other current assets	$	—	$	—	Other current liabilities	$	—	$	—
Foreign exchange contracts	Other current assets	680		397		Other current liabilities	45		2,097
Total derivatives designated as hedging instruments		$	680	$	397		$	45	$	2,097
Derivatives not designated as hedging instruments

Foreign exchange contracts	Other current assets	$	1,397	$	2,160	Other current liabilities	$	1,365	$	1,237
Total derivatives not designated as hedging instruments		$	1,397	$	2,160		$	1,365	$	1,237
Total derivatives		$	2,077	$	2,557		$	1,410	$	3,334

Balances and Changes in Accumulated Other Comprehensive Income Related to Derivative Instruments

The changes in OCI, before taxes, related to derivatives for the indicated periods were as follows:


	Year ended June 30,
(In thousands)	2020		2019
Beginning balance	$	(10,791)	$	2,346
Amount reclassified to earnings	(2,072)		(4,018)
Net change in unrealized gains or losses	(16,739)		(9,119)
Ending balance	$	(29,602)	$	(10,791)

Offsetting of Derivative Assets and Liabilities

The information related to the offsetting arrangements for the periods indicated was as follows (in thousands):


As of June 30, 2020									Gross Amounts of Derivatives Not Offset in the Consolidated Balance Sheets
Description	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 Instruments		Cash Collateral Received		Net Amount
Derivatives - assets	$	2,077	$	—	$	2,077	$	(1,020)	$	—	$	1,057
Derivatives - liabilities	$	(1,410)	$	—	$	(1,410)	$	1,020	$	—	$	(390)


As of June 30, 2019									Gross Amounts of Derivatives Not Offset in the Consolidated Balance Sheets
Description	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 Instruments		Cash Collateral Received		Net Amount
Derivatives - assets	$	2,557	$	—	$	2,557	$	(1,397)	$	—	$	1,160
Derivatives - liabilities	$	(3,334)	$	—	$	(3,334)	$	1,397	$	—	$	(1,937)

Offsetting of Derivative Assets and Liabilities

The information related to the offsetting arrangements for the periods indicated was as follows (in thousands):


As of June 30, 2020									Gross Amounts of Derivatives Not Offset in the Consolidated Balance Sheets
Description	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 Instruments		Cash Collateral Received		Net Amount
Derivatives - assets	$	2,077	$	—	$	2,077	$	(1,020)	$	—	$	1,057
Derivatives - liabilities	$	(1,410)	$	—	$	(1,410)	$	1,020	$	—	$	(390)


As of June 30, 2019									Gross Amounts of Derivatives Not Offset in the Consolidated Balance Sheets
Description	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 Instruments		Cash Collateral Received		Net Amount
Derivatives - assets	$	2,557	$	—	$	2,557	$	(1,397)	$	—	$	1,160
Derivatives - liabilities	$	(3,334)	$	—	$	(3,334)	$	1,397	$	—	$	(1,937)