| FINANCIAL STATEMENT COMPONENTS |
NOTE 3 – FINANCIAL STATEMENT COMPONENTS
Balance Sheet Components
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(In thousands) |
As of
December 31, 2017 |
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As of
June 30, 2017 |
Accounts receivable, net: |
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Accounts receivable, gross |
$ |
752,618 |
|
|
$ |
592,753 |
|
Allowance for doubtful accounts |
(11,715 |
) |
|
(21,636 |
) |
|
$ |
740,903 |
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|
$ |
571,117 |
|
Inventories: |
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|
Customer service parts |
$ |
248,937 |
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|
$ |
245,172 |
|
Raw materials |
248,475 |
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|
240,389 |
|
Work-in-process |
237,261 |
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|
193,026 |
|
Finished goods |
53,298 |
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|
54,401 |
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|
$ |
787,971 |
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|
$ |
732,988 |
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Other current assets: |
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Prepaid expenses |
$ |
46,451 |
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|
$ |
36,146 |
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Other current assets |
11,512 |
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|
13,004 |
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Income tax related receivables |
8,966 |
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|
22,071 |
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|
$ |
66,929 |
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|
$ |
71,221 |
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Land, property and equipment, net: |
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Land |
$ |
40,620 |
|
|
$ |
40,617 |
|
Buildings and leasehold improvements |
323,143 |
|
|
319,306 |
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Machinery and equipment |
568,203 |
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|
551,277 |
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Office furniture and fixtures |
21,909 |
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|
21,328 |
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Construction-in-process |
7,214 |
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|
4,597 |
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|
961,089 |
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|
937,125 |
|
Less: accumulated depreciation and amortization |
(679,455 |
) |
|
(653,150 |
) |
|
$ |
281,634 |
|
|
$ |
283,975 |
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Other non-current assets: |
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Executive Deferred Savings Plan(1)
|
$ |
192,169 |
|
|
$ |
182,150 |
|
Other non-current assets |
19,146 |
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|
13,526 |
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|
$ |
211,315 |
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|
$ |
195,676 |
|
Other current liabilities: |
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Compensation and benefits |
$ |
222,503 |
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|
$ |
172,707 |
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Executive Deferred Savings Plan(1)
|
192,849 |
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|
183,603 |
|
Customer credits and advances |
116,856 |
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|
95,188 |
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Other accrued expenses |
86,865 |
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|
116,039 |
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Warranty |
45,013 |
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|
45,458 |
|
Income taxes payable |
22,525 |
|
|
17,040 |
|
Interest payable |
17,008 |
|
|
19,396 |
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|
$ |
703,619 |
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|
$ |
649,431 |
|
Other non-current liabilities: |
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Income taxes payable |
$ |
355,849 |
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|
$ |
68,439 |
|
Pension liabilities |
74,868 |
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|
72,801 |
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Other non-current liabilities |
30,025 |
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|
31,167 |
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$ |
460,742 |
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$ |
172,407 |
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________________
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(1) |
KLA-Tencor has a non-qualified deferred compensation plan (known as “Executive Deferred Savings Plan”) 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. The Company controls the investment of these funds, and the participants remain general creditors of the Company. The Company invests these funds in certain mutual funds and such investments are classified as trading securities in the condensed consolidated balance sheets. Distributions from the Executive Deferred Savings Plan commence following a participant’s retirement or termination of employment or on a specified date allowed per the Executive Deferred Savings Plan 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 the distributions to be paid in 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 Executive Deferred Savings Plan provisions. Changes in the Executive Deferred Savings Plan liability are recorded in selling, general and administrative expense in the condensed consolidated statements of operations. The expense associated with changes in the liability included in selling, general and administrative expense was $7.0 million and $1.2 million during the three months ended December 31, 2017 and 2016, respectively and $13.8 million and $7.0 million during the six months ended December 31, 2017 and 2016. Changes in the Executive Deferred Savings Plan assets are recorded as gains (losses), net in selling, general and administrative expense in the condensed consolidated statements of operations. The amount of net gains included in selling, general and administrative expense was $7.0 million and $0.8 million during the three months ended December 31, 2017 and 2016, respectively and $13.9 million and $6.7 million during the six months ended December 31, 2017 and 2016, respectively.
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Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss) (“OCI”) as of the dates indicated below were as follows:
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(In thousands) |
Currency Translation Adjustments |
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Unrealized Gains (Losses) on Available-for-Sale Securities |
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Unrealized Gains (Losses) on Cash Flow Hedges |
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Unrealized Gains (Losses) on Defined Benefit Plans |
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Total |
Balance as of December 31, 2017 |
$ |
(26,614 |
) |
|
$ |
(7,751 |
) |
|
$ |
3,957 |
|
|
$ |
(22,114 |
) |
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$ |
(52,522 |
) |
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Balance as of June 30, 2017 |
$ |
(30,654 |
) |
|
$ |
(3,869 |
) |
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$ |
5,221 |
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|
$ |
(22,021 |
) |
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$ |
(51,323 |
) |
The effects on net income (loss) of amounts reclassified from accumulated OCI to the Condensed Consolidated Statement of Operations for the indicated period were as follows (in thousands):
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Location in the Condensed Consolidated |
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Three months ended
December 31, |
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Six months ended
December 31, |
Accumulated OCI Components |
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Statements of Operations |
|
2017 |
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2016 |
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2017 |
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2016 |
Unrealized gains (losses) on cash flow hedges from foreign exchange and interest rate contracts |
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Revenues |
|
$ |
397 |
|
|
$ |
(1,425 |
) |
|
$ |
1,365 |
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|
$ |
(2,906 |
) |
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Costs of revenues |
|
377 |
|
|
(69 |
) |
|
1,338 |
|
|
(156 |
) |
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Interest expense |
|
189 |
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|
189 |
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|
378 |
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|
378 |
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Net gains (losses) reclassified from accumulated OCI |
|
$ |
963 |
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$ |
(1,305 |
) |
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$ |
3,081 |
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$ |
(2,684 |
) |
Unrealized gains (losses) on available-for-sale securities |
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Other expense (income), net |
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$ |
(69 |
) |
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$ |
30 |
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$ |
(63 |
) |
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$ |
234 |
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The amounts reclassified out of accumulated OCI related to the Company’s defined benefit pension plans, which were recognized as a component of net periodic cost for the three and six months ended December 31, 2017 were $0.4 million and $0.8 million, respectively. The amounts reclassified out of accumulated OCI related to the Company’s defined benefit pension plans, which were recognized as a component of net periodic cost for the three and six months ended December 31, 2016 were $0.9 million and $1.3 million, respectively. For additional details, refer to Note 11, “Employee Benefit Plans” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017.
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