Fourth Quarter Fiscal 2023 Guidance
Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS |
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| Three Months Ending June 30, 2023 | ||
(In millions, except per share amounts) |
| Low |
| High |
GAAP net income per diluted share |
| $3.87 |
| $5.07 |
Acquisition-related charges | a | 0.49 |
| 0.49 |
Restructuring, severance and other charges | b | 0.01 |
| 0.01 |
Income tax effect of non-GAAP adjustments | d | (0.14) |
| (0.14) |
Non-GAAP net income per diluted share |
| $4.23 |
| $5.43 |
Shares used in net income per diluted share calculation |
| 137.5 |
| 137.5 |
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Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin |
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| Three Months Ending June 30, 2023 | ||
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| Low |
| High |
GAAP gross margin |
| 57.58 % |
| 59.85 % |
Acquisition-related charges | a | 2.14 % |
| 1.87 % |
Restructuring, severance and other charges | b | 0.03 % |
| 0.03 % |
Non-GAAP gross margin |
| 59.75 % |
| 61.75 % |
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. |
b. | Restructuring, severance and other charges primarily include costs associated with employee severance including associated acceleration of recognition of certain stock-based and other compensation expenses, gains and losses from exiting non-core businesses, charges related to liquidation of legal entities and adjustments related to non-controlling interest. Restructuring, severance and other charges in the nine months ended March 31, 2023 include a gain on the sale of Orbograph, Ltd. ("Orbograph"), which was sold in the first quarter of fiscal 2023, 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 November 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 tax items in the three months ended Dec. 31, 2022, also consist of a tax expense of $19.8 million from an internal restructuring. Discrete items in the nine months ended March 31, 2023 include the aggregate of the aforementioned discrete tax items as well as 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 tax items in the nine months ended March 31, 2023 also include a tax impact from the sale of Orbograph. Discrete tax items in the nine months ended March 31, 2022 primarily include a tax expense of $163.7 million from an increase in deferred tax liabilities on unremitted foreign earnings due to a change in tax law, partially offset by a net benefit of $69.2 million from an internal restructuring as well as a one-time tax benefit of $394.5 million resulting from changes made to our international structure to better align ownership of certain intellectual property rights with how our business operates. |
