LAM RESEARCH CORP 10-Q

ITEM 1. Financial Statements LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended September 26, 2021 September 27, 2020 Revenue $ 4,304,465 $ 3,177,080 Cost of goods sold 2,327,711 1,670,901 Gross margin 1,976,754 1,506,179 Research and development 382,327 355,367 Selling, general, and administrative 222,194 189,748 Total operating expenses 604,521 545,115 Operating income 1,372,233 961,064 Other expense, net ( 28,857 ) ( 38,792 ) Income before income taxes 1,343,376 922,272 Income tax expense ( 163,632 ) ( 98,821 ) Net income $ 1,179,744 $ 823,451 Net income per share: Basic $ 8.32 $ 5.67 Diluted $ 8.27 $ 5.59 Number of shares used in per share calculations: Basic 141,743 145,267 Diluted 142,612 147,248 See Notes to Condensed Consolidated Financial Statements 3 Table of Contents LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) (unaudited) Three Months Ended September 26, 2021 September 27, 2020 Net income $ 1,179,744 $ 823,451 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment ( 4,032 ) 12,124 Cash flow hedges: Net unrealized losses during the period ( 9,005 ) ( 350 ) Net (gains) losses reclassified into net income ( 3,542 ) 767 ( 12,547 ) 417 Available-for-sale investments: Net unrealized losses during the period ( 2,405 ) ( 1,400 ) Net losses reclassified into net income 1,145 402 ( 1,260 ) ( 998 ) Defined benefit plans, net change in unrealized component 199 ( 4 ) Other comprehensive (loss) income, net of tax ( 17,640 ) 11,539 Comprehensive income $ 1,162,104 $ 834,990 See Notes to Condensed Consolidated Financial Statements 4 Table of Contents LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) September 26, 2021 June 27, 2021 (unaudited) (1) ASSETS Cash and cash equivalents $ 4,042,151 $ 4,418,263 Investments 569,472 1,310,872 Accounts receivable, less allowance of $ 5,361 as of September 26, 2021, and $ 5,255 as of June 27, 2021 3,397,180 3,026,430 Inventories 2,872,141 2,689,294 Prepaid expenses and other current assets 263,738 207,528 Total current assets 11,144,682 11,652,387 Property and equipment, net 1,372,533 1,303,479 Restricted cash and investments 251,448 252,487 Goodwill 1,489,945 1,490,134 Intangible assets, net 125,014 132,365 Other assets 1,181,930 1,061,300 Total assets $ 15,565,552 $ 15,892,152 LIABILITIES AND STOCKHOLDERS’ EQUITY Trade accounts payable $ 837,708 $ 829,710 Accrued expenses and other current liabilities 1,633,729 1,719,483 Deferred profit 931,415 967,325 Current portion of long-term debt and finance lease obligations 6,368 11,349 Total current liabilities 3,409,220 3,527,867 Long-term debt and finance lease obligations, less current portion 4,988,964 4,990,333 Income taxes payable 881,325 948,037 Other long-term liabilities 466,000 398,727 Total liabilities 9,745,509 9,864,964 Commitments and contingencies Stockholders’ equity: Preferred stock, at par value of $ 0.001 per share; authorized, 5,000 shares, none outstanding — — Common stock, at par value of $ 0.001 per share; authorized, 400,000 shares as of September 26, 2021 and June 27, 2021; issued and outstanding, 140,811 shares as of September 26, 2021, and 142,501 shares as of June 27, 2021 141 143 Additional paid-in capital 7,111,803 7,052,962 Treasury stock, at cost; 152,503 shares as of September 26, 2021, and 150,766 shares as of June 27, 2021 ( 16,863,573 ) ( 15,646,701 ) Accumulated other comprehensive loss ( 81,768 ) ( 64,128 ) Retained earnings 15,653,440 14,684,912 Total stockholders’ equity 5,820,043 6,027,188 Total liabilities and stockholders’ equity $ 15,565,552 $ 15,892,152 (1) Derived from audited financial statements See Notes to Condensed Consolidated Financial Statements 5 Table of Contents LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended September 26, 2021 September 27, 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income 1,179,744 $ 823,451 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 79,874 72,912 Deferred income taxes ( 13,023 ) ( 1,850 ) Equity-based compensation expense 58,099 55,988 Other, net ( 8,690 ) 4,339 Changes in operating assets and liabilities ( 838,480 ) ( 312,329 ) Net cash provided by operating activities 457,524 642,511 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures and intangible assets ( 136,427 ) ( 62,806 ) Purchases of available-for-sale securities ( 25,297 ) ( 1,750,188 ) Maturities of available-for-sales securities 106,836 597,252 Sales of available-for-sale securities 656,504 415,862 Other, net ( 4,923 ) ( 1,786 ) Net cash provided by (used for) investing activities 596,693 ( 801,666 ) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt ( 6,338 ) ( 19,173 ) Treasury stock purchases ( 1,236,753 ) ( 448,581 ) Dividends paid ( 185,431 ) ( 167,129 ) Proceeds from issuance of common stock 742 5,538 Other, net 188 ( 2,140 ) Net cash used for financing activities ( 1,427,592 ) ( 631,485 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 3,776 ) 4,082 Net decrease in cash, cash equivalents, and restricted cash ( 377,151 ) ( 786,558 ) Cash, cash equivalents, and restricted cash at beginning of period 4,670,750 5,169,083 Cash, cash equivalents, and restricted cash at end of period $ 4,293,599 $ 4,382,525 Schedule of non-cash transactions: Accrued payables for stock repurchases 126 18,599 Accrued payables for capital expenditures 66,117 37,733 Dividends payable 211,216 188,046 Transfers of finished goods inventory to property and equipment 15,518 29,019 Reconciliation of cash, cash equivalents, and restricted cash September 26, 2021 September 27, 2020 Cash and cash equivalents $ 4,042,151 $ 4,129,067 Restricted cash and cash equivalents 251,448 253,458 Total cash, cash equivalents, and restricted cash $ 4,293,599 $ 4,382,525 See Notes to Condensed Consolidated Financial Statements 6 Table of Contents LAM RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (unaudited) Three Months Ended September 26, 2021 Common Stock Shares Common Stock Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Loss Retained Earnings Total Balance at June 27, 2021 142,501 $ 143 $ 7,052,962 $ ( 15,646,701 ) $ ( 64,128 ) $ 14,684,912 $ 6,027,188 Issuance of common stock 47 — 742 — — — 742 Purchase of treasury stock ( 1,737 ) ( 2 ) — ( 1,216,872 ) — — ( 1,216,874 ) Equity-based compensation expense — — 58,099 — — — 58,099 Net income — — — — — 1,179,744 1,179,744 Other comprehensive loss — — — — ( 17,640 ) — ( 17,640 ) Cash dividends declared ($ 1.50 per common share) — — — — — ( 211,216 ) ( 211,216 ) Balance at September 26, 2021 140,811 $ 141 $ 7,111,803 $ ( 16,863,573 ) $ ( 81,768 ) $ 15,653,440 $ 5,820,043 Three Months Ended September 27, 2020 Common Stock Shares Common Stock Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Loss Retained Earnings Total Balance at June 28, 2020 145,331 $ 145 $ 6,695,858 $ ( 12,949,889 ) $ ( 94,211 ) $ 11,520,591 $ 5,172,494 Issuance of common stock 105 — 5,538 — — — 5,538 Purchase of treasury stock ( 1,360 ) ( 1 ) — ( 467,097 ) — — ( 467,098 ) Equity-based compensation expense — — 55,988 — — — 55,988 Effect of conversion of convertible notes 517 1 ( 527 ) — — — ( 526 ) Reclassification from temporary to permanent equity — — 4,688 — — — 4,688 Adoption of ASU 2018-18 — — — — — 1,157 1,157 Net income — — — — — 823,451 823,451 Other comprehensive income — — — — 11,539 — 11,539 Cash dividends declared ($ 1.30 per common share) — — — — — ( 188,046 ) ( 188,046 ) Balance at September 27, 2020 144,593 $ 145 $ 6,761,545 $ ( 13,416,986 ) $ ( 82,672 ) $ 12,157,153 $ 5,419,185 See Notes to Condensed Consolidated Financial Statements 7 Table of Contents LAM RESEARCH CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 26, 2021 (Unaudited) NOTE 1 — BASIS OF PRESENTATION The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements of Lam Research Corporation (“Lam Research” or the “Company”) for the fiscal year ended June 27, 2021, which are included in the Company’s Annual Report on Form 10-K as of and for the year ended June 27, 2021 (the “2021 Form 10-K”). The Company’s reports on Form 10-K, Form 10-Q and Form 8-K are available online at the Securities and Exchange Commission website on the Internet. The address of that site is www.sec.gov . The Company also posts its reports on Form 10-K, Form 10-Q and Form 8-K on its corporate website at http://investor.lamresearch.com . The content on any website referred to in this Form 10-Q is not a part of or incorporated by reference in this Form 10-Q unless expressly noted. The condensed consolidated financial statements include the accounts of Lam Research and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s reporting period is a 52/53-week fiscal year. The Company’s current fiscal year will end June 26, 2022 and includes 52 weeks. The quarters ended September 26, 2021 (the “September 2021 quarter”) and September 27, 2020 (the “September 2020 quarter”) included 13 weeks. NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted The Company did not adopt any new accounting standards during the first quarter of fiscal year 2022 that had a material impact on the Company’s Condensed Consolidated Financial Statements. Updates Not Yet Adopted or Effective There are no new accounting pronouncements not yet adopted or effective that are expected to have a material impact on the Company’s Condensed Consolidated Financial Statements. NOTE 3 — REVENUE Deferred Revenue Revenue of $ 565.7 million included in deferred revenue as of June 27, 2021 was recognized during the three months ended September 26, 2021. The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of September 26, 2021 and when the Company expects to recognize the amounts as revenue: Less than 1 Year 1-3 Years More than 3 Years Total (In thousands) Deferred revenue $ 951,080 $ 158,546 (1) $ — $ 1,109,626 (1) This amount is reported in Deferred profit on the Company's Condensed Consolidated Balance Sheets as the customers can demand the liability to be performed at any time. Disaggregation of Revenue The Company operates in one reportable business segment: manufacturing and servicing of wafer processing semiconductor manufacturing equipment. The Company’s material operating segments qualify for aggregation due to their customer base and similarities in economic characteristics, nature of products and services, and processes for procurement, manufacturing, and distribution. 8 Table of Contents The Company operates in seven geographic regions: United States, China, Europe, Japan, Korea, Southeast Asia, and Taiwan. For geographical reporting, revenue is attributed to the geographic location in which the customers’ facilities are located. The Company serves three primary markets: memory, foundry, and logic/integrated device manufacturing. The following table presents the Company’s revenues disaggregated between system and its customer support-related revenue: Three Months Ended September 26, 2021 September 27, 2020 (In thousands) System revenue $ 2,924,883 $ 2,148,241 Customer support-related revenue and other 1,379,582 1,028,839 $ 4,304,465 $ 3,177,080 System revenue includes sales of new leading-edge equipment in deposition, etch and clean markets. Customer support-related revenue includes sales of customer service, spares, upgrades, and non-leading-edge equipment from the Company’s Reliant product line. The following table presents the Company’s revenues disaggregated by geographic region: Three Months Ended September 26, 2021 September 27, 2020 (In thousands) China $ 1,607,710 $ 1,174,669 Korea 918,137 756,257 Taiwan 638,066 446,091 Japan 468,731 392,526 Southeast Asia 365,248 203,339 United States 228,211 137,892 Europe 78,362 66,306 $ 4,304,465 $ 3,177,080 The following table presents the percentages of leading- and non-leading-edge equipment and upgrade revenue to each of the primary markets the Company serves: Three Months Ended September 26, 2021 September 27, 2020 Memory 64 % 58 % Foundry 25 % 36 % Logic/integrated device manufacturing 11 % 6 % NOTE 4 — EQUITY-BASED COMPENSATION PLANS The Lam Research Corporation 2015 Stock Incentive Plan, as amended (the “2015 Plan”), provides for the grant of non-qualified equity-based awards of the Company’s Common Stock to eligible employees and non-employee directors, including stock options, restricted stock units (“RSUs”), and market-based performance RSUs (“market-based PRSUs”). An option is a right to purchase Common Stock at a set price. An RSU award is an agreement to issue a set number of shares of Common Stock at the time of vesting. The Company’s market-based PRSUs contain both a market condition and a service condition. The Company’s option, RSU, and market-based PRSU awards typically vest over a period of three years . The Company also has an employee stock purchase plan that allows employees to purchase its Common Stock at a discount through payroll deductions. 9 Table of Contents The Company recognized the following equity-based compensation expense (including expense related to the employee stock purchase plan) and related income tax benefit in the Condensed Consolidated Statements of Operations: Three Months Ended September 26, 2021 September 27, 2020 (in thousands) Equity-based compensation expense $ 58,099 $ 55,988 Income tax benefit recognized related to equity-based compensation expense $ 8,208 $ 9,877 NOTE 5 — OTHER EXPENSE, NET The significant components of other expense, net, are as follows: Three Months Ended September 26, 2021 September 27, 2020 (in thousands) Interest income $ 4,678 $ 6,959 Interest expense ( 45,056 ) ( 52,115 ) Gains on deferred compensation plan-related assets, net 7,437 12,927 Foreign exchange losses, net ( 17 ) ( 1,375 ) Other, net 4,101 ( 5,188 ) $ ( 28,857 ) $ ( 38,792 ) NOTE 6 — INCOME TAX EXPENSE The Company’s provision for income taxes and effective tax rate are as follows: Three Months Ended September 26, 2021 September 27, 2020 (in thousands, except percentages) Income tax expense $ 163,632 $ 98,821 Effective tax rate 12.2 % 10.7 % The difference between the U.S. federal statutory tax rate of 21% and the Company’s effective tax rate for the three months ended September 26, 2021 and the three months ended September 27, 2020 was primarily due to income in lower tax jurisdictions. The Company transferred its international sales operations from Switzerland to Malaysia, effective from fiscal year 2022. Through fiscal year 2036, the Company expects to operate under various tax incentives in Malaysia which provide exemptions on foreign income earned and are contingent upon meeting certain conditions. The Internal Revenue Service (“IRS”) is examining the Company’s U.S. federal income tax return for the fiscal year ended June 24, 2018. As of September 26, 2021, no significant adjustments have been proposed by the IRS. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the IRS will occur. The Company is in various stages of examinations in connection with all of its tax audits worldwide, and it is difficult to determine when these examinations will be settled. It is reasonably possible that over the next 12-month period the Company may experience an increase or decrease in its uncertain tax positions as a result of tax examinations or lapses of statutes of limitation. The change in uncertain tax positions as a result of lapses of statutes of limitation may range up to $ 8.0 million. 10 Table of Contents NOTE 7 — NET INCOME PER SHARE Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the treasury stock method, for dilutive stock options, restricted stock units, and convertible notes. The following table reconciles the inputs to the basic and diluted computations for net income per share. Three Months Ended September 26, 2021 September 27, 2020 (in thousands, except per share data) Numerator: Net income $ 1,179,744 $ 823,451 Denominator: Basic average shares outstanding 141,743 145,267 Effect of potential dilutive securities: Employee stock plans 869 1,112 Convertible notes — 869 Diluted average shares outstanding 142,612 147,248 Net income per share - basic $ 8.32 $ 5.67 Net income per share - diluted $ 8.27 $ 5.59 For purposes of computing diluted net income per share, weighted-average common shares do not include potentially dilutive securities that are anti-dilutive under the treasury stock method. The impact from potentially dilutive securities, including options and RSUs, was not material for the three months ended September 26, 2021 and September 27, 2020. NOTE 8 — FINANCIAL INSTRUMENTS The Company maintains an investment portfolio of various holdings, types, and maturities. The Company’s mutual funds, which are related to the Company’s obligations under the deferred compensation plan, are classified as trading securities. Investments classified as trading securities are recorded at fair value based upon quoted market prices. Differences between the cost and fair value of trading securities are recognized as other expense, net in the Condensed Consolidated Statements of Operations. All of the Company’s other investments are classified as available-for-sale and consequently are recorded in the Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses associated with market valuation changes, unrelated to credit losses, reported as a separate component of accumulated other comprehensive income (loss), net of tax; and credit losses, if any, recognized as other expense, net in the Condensed Consolidated Statements of Operations. Fair Value The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability. A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value. The level of an asset or liability in the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1: Valuations based on quoted prices in active markets for identical assets or liabilities with sufficient volume and frequency of transactions. Level 2: Valuations based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or model-derived valuations techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. 11 Table of Contents Level 3: Valuations based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities and based on non-binding, broker-provided price quotes and may not have been corroborated by observable market data. The Company engages with pricing vendors to provide fair values for a majority of its Level 1 and Level 2 investments. The vendors provide either a quoted market price in an active market or use observable inputs without applying significant adjustments in their pricing. Significant observable inputs include interest rates and yield curves observable at commonly quoted intervals, volatility and credit risks. The fair value of derivative contracts is determined using observable market inputs such as the foreign currency rates, forward rate curves, currency volatility and interest rates and considers nonperformance risk of the Company and its counterparties. The Company’s primary financial instruments include its cash, cash equivalents, investments, restricted cash and investments, long-term investments, accounts receivable, accounts payable, long-term debt and leases, and foreign currency related derivative instruments. The estimated fair value of cash, accounts receivable, and accounts payable approximates their carrying value due to the short period of time to their maturities. The estimated fair values of lease obligations approximate their carrying value as the majority of these obligations have interest rates that adjust to market rates on a periodic basis. Refer to Note 12 - Long-Term Debt and Other Borrowings for additional information regarding the fair value of the Company’s senior notes. Investments The following tables set forth the Company’s cash, cash equivalents, investments, restricted cash and investments, and other assets measured at fair value on a recurring basis as of September 26, 2021, and June 27, 2021: September 26, 2021 (Reported Within) Cost Unrealized Gain Unrealized (Loss) Fair Value Cash and Cash Equivalents Investments Restricted Cash & Investments Other Assets (in thousands) Cash $ 1,063,562 $ — $ — $ 1,063,562 $ 1,062,142 $ — $ 1,420 $ — Time deposits 1,920,427 — — 1,920,427 1,670,399 — 250,028 — Level 1: Money market funds 1,309,610 — — 1,309,610 1,309,610 — — — U.S. Treasury and agencies 1,850 — ( 1 ) 1,849 — 1,849 — — Mutual funds 81,576 19,389 ( 27 ) 100,938 — — — 100,938 Level 1 Total 1,393,036 19,389 ( 28 ) 1,412,397 1,309,610 1,849 — 100,938 Level 2: Foreign government bonds 15,119 14 — 15,133 — 15,133 — — Corporate notes and bonds 535,888 766 ( 271 ) 536,383 — 536,383 — — Mortgage backed securities — commercial 16,164 1 ( 58 ) 16,107 — 16,107 — — Level 2 Total 567,171 781 ( 329 ) 567,623 — 567,623 — — Total $ 4,944,196 $ 20,170 $ ( 357 ) $ 4,964,009 $ 4,042,151 $ 569,472 $ 251,448 $ 100,938 12 Table of Contents June 27, 2021 (Reported Within) Cost Unrealized Gain Unrealized (Loss) Fair Value Cash and Cash Equivalents Investments Restricted Cash & Investments Other Assets (in thousands) Cash $ 875,738 $ — $ — $ 875,738 $ 873,278 $ — $ 2,460 $ — Time deposits 1,548,874 — — 1,548,874 1,298,847 — 250,027 — Level 1: Money market funds 2,246,138 — — 2,246,138 2,246,138 — — — U.S. Treasury and agencies 204,743 96 ( 47 ) 204,792 — 204,792 — — Mutual funds 80,694 15,510 ( 33 ) 96,171 — — — 96,171 Level 1 Total 2,531,575 15,606 ( 80 ) 2,547,101 2,246,138 204,792 — 96,171 Level 2: Government-sponsored enterprises 3,498 7 — 3,505 — 3,505 — — Foreign government bonds 32,995 21 ( 4 ) 33,012 — 33,012 — — Corporate notes and bonds 1,043,308 2,247 ( 457 ) 1,045,098 — 1,045,098 — — Mortgage backed securities — residential 5,623 54 — 5,677 — 5,677 — — Mortgage backed securities — commercial 18,830 17 ( 59 ) 18,788 — 18,788 — — Level 2 Total 1,104,254 2,346 ( 520 ) 1,106,080 — 1,106,080 — — Total $ 6,060,441 $ 17,952 $ ( 600 ) $ 6,077,793 $ 4,418,263 $ 1,310,872 $ 252,487 $ 96,171 The Company accounts for its investment portfolio at fair value. Realized gains (losses) for investment sales are specifically identified. Management assesses the fair value of investments in debt securities that are not actively traded through consideration of interest rates and their impact on the present value of the cash flows to be received from the investments. The Company evaluates its investments with fair value less than amortized cost by first considering whether the Company has the intent to sell the security or whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. In either such situation, the difference between fair value and amortized cost is recognized as a loss in the income statement. Where such sales are not likely to occur, the Company considers whether a portion of the loss is the result of a credit loss. To the extent such losses are the result of credit losses, those amounts are recognized in the income statement. All other differences between fair value and amortized cost are recognized in other comprehensive income. No such losses were recognized through the income statement during the three months ended September 26, 2021 and September 27, 2020. Gross realized gains/(losses) from sales of investments were insignificant in the three months ended September 26, 2021 and September 27, 2020. The following is an analysis of the Company’s cash, cash equivalents, investments, and restricted cash and investments in unrealized loss positions: September 26, 2021 Unrealized Losses Less than 12 Months Unrealized Losses 12 Months or Greater Total Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss (in thousands) U.S. Treasury and agencies $ 1,848 $ ( 1 ) $ — $ — $ 1,848 $ ( 1 ) Municipal notes and bonds 2,082 ( 27 ) — — 2,082 ( 27 ) Corporate notes and bonds 155,500 ( 229 ) 7,673 ( 42 ) 163,173 ( 271 ) Mortgage backed securities — commercial 14,988 ( 58 ) — — 14,988 ( 58 ) $ 174,418 $ ( 315 ) $ 7,673 $ ( 42 ) $ 182,091 $ ( 357 ) 13 Table of Contents The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of September 26, 2021: Cost Fair Value (in thousands) Due in one year or less $ 3,367,984 $ 3,368,163 Due after one year through five years 404,834 405,155 Due in more than five years 26,240 26,191 $ 3,799,058 $ 3,799,509 The Company has the ability, if necessary, to liquidate its investments in order to meet the Company’s liquidity needs in the next 12 months. Accordingly, those investments with contractual maturities greater than 12 months from the date of purchase nonetheless are classified as short-term on the accompanying Condensed Consolidated Balance Sheets. Derivative Instruments and Hedging The Company carries derivative financial instruments (“derivatives”) on its Condensed Consolidated Balance Sheets at their fair values. The Company enters into foreign currency forward contracts and foreign currency options with financial institutions with the primary objective of reducing volatility of earnings and cash flows related to foreign currency exchange rate fluctuations. In addition, the Company enters into interest rate swap arrangements to manage interest rate risk. The counterparties to these derivatives are large global financial institutions that the Company believes are creditworthy, and therefore, it does not consider the risk of counterparty nonperformance to be material. Under the master netting agreements with the respective counterparties to the Company’s derivative contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. However, the Company has elected to present the derivative assets and derivative liabilities on a gross basis on its balance sheet. As of September 26, 2021 and June 27, 2021, the potential effect of rights of offset associated with the above foreign exchange and interest rate contracts would be immaterial to the Condensed Consolidated Balance Sheets. Cash Flow Hedges The Company’s financial position is routinely subjected to market risk associated with foreign currency exchange rate fluctuations on non-U.S. dollar transactions or cash flows. The Company’s policy is to mitigate the foreign exchange risk arising from the fluctuations in the value of these non-U.S. dollar denominated transactions or cash flows through a foreign currency cash flow hedging program, using forward contracts and foreign currency options that generally expire within 12 months and no later than 24 months. These hedge contracts are designated as cash flow hedges and are carried on the Company’s balance sheet at fair value with the effective portion of the contracts’ gains or losses included in accumulated other comprehensive income (loss) and subsequently recognized in revenue/expense in the same period the hedged items affect earnings. In addition, the Company has entered into interest rate swap agreements to hedge against the variability of cash flows due to changes in certain benchmark interest rates on fixed rate debt. These instruments are designated as cash flow hedges at inception and are settled in conjunction with the issuance of debt. The effective portion of the contracts’ gains or losses is included in accumulated other comprehensive income (loss) and is amortized into income as the hedged item affects earnings. At inception and at each quarter-end, hedges are tested prospectively and retrospectively for effectiveness using regression analysis. Changes in the fair value of foreign exchange contracts due to changes in time value are included in the assessment of effectiveness. To qualify for hedge accounting, the hedge relationship must meet criteria relating to both the derivative instrument and the hedged item. These criteria include identification of the hedging instrument, the hedged item, the nature of the risk being hedged, and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows will be measured. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be tested to demonstrate an expectation of providing highly effective offsetting changes to future cash flows on hedged transactions. When derivative instruments are designated and qualify as effective cash flow hedges, the Company recognizes effective changes in the fair value of the hedging instrument within accumulated other comprehensive income (loss) until the hedged exposure is realized. Consequently, the Company’s results of operations are not subject to fluctuation as a result of changes in the fair value of the derivative instruments. If hedges are not highly effective or if the Company does not believe that the underlying hedged forecasted transactions will occur, the Company may not be able to account for its derivative 14 Table of Contents instruments as cash flow hedges. If this were to occur, future changes in the fair values of the Company’s derivative instruments would be recognized in earnings. Additionally, related amounts previously recorded in other comprehensive income would be reclassified to earnings immediately. As of September 26, 2021 and June 27, 2021, the fair value of outstanding cash flow hedges was not material. Additionally, as of September 26, 2021, the Company had an immaterial net gain or loss accumulated in other comprehensive income, net of tax, related to foreign exchange cash flow hedges and interest rate contracts which it expects to reclassify from other comprehensive income into earnings over the next 12 months. The following table provides the total notional value of cash flow hedge instruments outstanding as of September 26, 2021: September 26, 2021 (In thousands) Buy Contracts $ 307,590 Sell Contracts 565,342 The effect of derivative instruments designated as cash flow hedges on the Company’s Condensed Consolidated Statements of Operations, including accumulated other comprehensive income (“AOCI”), was as follows: Three Months Ended September 26, 2021 Location of Gain or (Loss) Recognized in or Reclassified into Net Income Loss Recognized in AOCI Gain (Loss) Reclassified from AOCI into Net Income Derivatives in Cash Flow Hedging Relationships (in thousands) Foreign Exchange Contracts Revenue $ ( 5,936 ) $ 5,263 Foreign Exchange Contracts Cost of goods sold ( 3,761 ) ( 643 ) Foreign Exchange Contracts Research and Development ( 1,249 ) — Foreign Exchange Contracts Selling, general, and administrative ( 1,314 ) ( 26 ) Interest Rate Contracts Other expense, net — ( 1,051 ) $ ( 12,260 ) $ 3,543 Three Months Ended September 27, 2020 Location of Gain or (Loss) Recognized in or Reclassified into Income (Loss) Gain Recognized in AOCI (Loss) Gain Reclassified from AOCI into Net Income Derivatives in Cash Flow Hedging Relationships (in thousands) Foreign Exchange Contracts Revenue $ ( 3,281 ) $ ( 835 ) Foreign Exchange Contracts Cost of goods sold 1,093 560 Foreign Exchange Contracts Research and Development 394 — Foreign Exchange Contracts Selling, general, and administrative 1,640 305 Interest Rate Contracts Other expense, net — ( 952 ) $ ( 154 ) $ ( 922 ) Balance Sheet Hedges The Company also enters into foreign currency forward contracts to hedge fluctuations associated with foreign currency denominated monetary assets and liabilities, primarily cash, third-party accounts receivable, accounts payable, and intercompany receivables and payables. These forward contracts are not designated for hedge accounting treatment. Therefore, the change in the carrying value of these derivatives is recorded as a component of other expense, net and offsets the change in fair value of the foreign currency denominated assets and liabilities related to remeasurement, which are also recorded in other expense, net. As of September 26, 2021 and June 27, 2021, the fair value of outstanding balance sheet hedges was not material. 15 Table of Contents The following table provides the total notional value of balance sheet hedge instruments outstanding as of September 26, 2021: September 26, 2021 (In thousands) Buy Contracts $ 161,560 Sell Contracts 312,721 The effect of the Company’s balance sheet hedge derivative instruments on the Company’s Condensed Consolidated Statements of Operations was as follows: Three Months Ended September 26, 2021 September 27, 2020 Derivatives Not Designated as Hedging Instruments: Location of Gain Recognized in Income Gain Recognized in Net Income Gain Recognized in Net Income (in thousands) Foreign Exchange Contracts Other expense, net $ 6,520 $ 2,747 Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments, restricted cash and investments, trade accounts receivable, and derivative financial instruments used in hedging activities. Cash is placed on deposit at large global financial institutions. Such deposits may be in excess of insured limits. Management believes that the financial institutions that hold the Company’s cash are creditworthy and, accordingly, minimal credit risk exists with respect to these balances. The Company’s overall portfolio of available-for-sale securities must maintain an average minimum rating of “AA-” or “Aa3” as rated by Standard and Poor’s, Fitch Ratings, or Moody’s Investor Services. To ensure diversification and minimize concentration, the Company’s policy limits the amount of credit exposure with any one financial institution or commercial issuer. The Company is exposed to credit losses in the event of nonperformance by counterparties on foreign currency and interest rate hedge contracts that are used to mitigate the effect of exchange rate and interest rate fluctuations, and on contracts related to structured share repurchase arrangements. These counterparties are large global financial institutions, and, to date, no such counterparty has failed to meet its financial obligations to the Company. Credit risk evaluations, including trade references, bank references, and Dun & Bradstreet ratings, are performed on all new customers and the Company monitors its customers’ financial condition and payment performance. In general, the Company does not require collateral on sales. NOTE 9 — INVENTORIES Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. System shipments to customers in Japan, for which title does not transfer until customer acceptance, are classified as finished goods inventory and carried at cost until title transfers. Inventories consist of the following: September 26, 2021 June 27, 2021 (in thousands) Raw materials $ 1,612,811 $ 1,519,456 Work-in-process 431,646 391,686 Finished goods 827,684 778,152 $ 2,872,141 $ 2,689,294 16 Table of Contents NOTE 10 — GOODWILL AND INTANGIBLE ASSETS Goodwill The balance of goodwill is approximately $ 1.5 billion as of September 26, 2021 and June 27, 2021. As of September 26, 2021 and June 27, 2021, $ 61.1 million of the goodwill balance is tax deductible and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law. Intangible Assets The following table provides the Company’s intangible assets, other than goodwill: September 26, 2021 June 27, 2021 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 630,268 $ ( 593,497 ) $ 36,771 $ 630,303 $ ( 581,406 ) $ 48,897 Existing technology 669,285 ( 660,915 ) 8,370 669,359 ( 659,898 ) 9,461 Patents and other intangible assets 144,650 ( 64,777 ) 79,873 132,774 ( 58,767 ) 74,007 Total intangible assets $ 1,444,203 $ ( 1,319,189 ) $ 125,014 $ 1,432,436 $ ( 1,300,071 ) $ 132,365 The Company recognized $ 19.1 million and $ 16.8 million in intangible asset amortization expense during the three months ended September 26, 2021 and September 27, 2020, respectively. The estimated future amortization expense of intangible assets as of September 26, 2021, is reflected in the table below. The table excludes $ 12.0 million of capitalized costs for internal-use software that have not been placed into service. Fiscal Year Amount (in thousands) 2022 (remaining 9 months) $ 54,972 2023 28,079 2024 17,194 2025 8,863 2026 3,203 Thereafter 724 $ 113,035 NOTE 11 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: September 26, 2021 June 27, 2021 (in thousands) Accrued compensation $ 571,930 $ 552,925 Warranty reserves 198,660 176,030 Income and other taxes payable 191,967 348,206 Dividend payable 211,216 185,431 Other 459,956 456,891 $ 1,633,729 $ 1,719,483 17 Table of Contents NOTE 12 — LONG-TERM DEBT AND OTHER BORROWINGS As of September 26, 2021, and June 27, 2021, the Company’s outstanding debt consisted of the following: September 26, 2021 June 27, 2021 Amount (in thousands) Effective Interest Rate Amount (in thousands) Effective Interest Rate Fixed-rate 3.80 % Senior Notes Due March 15, 2025 ("2025 Notes") 500,000 3.87 % 500,000 3.87 % Fixed-rate 3.75 % Senior Notes Due March 15, 2026 ("2026 Notes") 750,000 3.86 % 750,000 3.86 % Fixed-rate 4.00 % Senior Notes Due March 15, 2029 ("2029 Notes") 1,000,000 4.09 % 1,000,000 4.09 % Fixed-rate 1.90 % Senior Note Due June 15, 2030 ("2030 Notes") 750,000 2.01 % 750,000 2.01 % Fixed-rate 4.875 % Senior Notes Due March 15, 2049 ("2049 Notes") 750,000 4.93 % 750,000 4.93 % Fixed-rate 2.875 % Senior Note Due June 15, 2050 ("2050 Notes") 750,000 2.93 % 750,000 2.93 % Fixed-rate 3.125 % Senior Note Due June 15, 2060 ("2060 Notes") 500,000 3.18 % 500,000 3.18 % Total debt outstanding, at par 5,000,000 5,000,000 Unamortized discount ( 37,634 ) ( 38,243 ) Fair value adjustment - interest rate contracts 6,174 (1) 6,621 (1) Unamortized bond issuance costs ( 7,291 ) ( 7,443 ) Total debt outstanding, at carrying value $ 4,961,249 $ 4,960,935 Reported as: Long-term debt $ 4,961,249 $ 4,960,935 ____________________________ (1) This amount represents a cumulative fair value gain for discontinued hedging relationships, net of an immaterial amount of amortization as of the periods presented. Senior Notes On May 5, 2020, the company completed a public offering of $ 750 million aggregate principal amount of the Company’s Senior Notes due June 15, 2030 (the “2030 Notes”), $ 750 million aggregate principal amount of the Company’s Senior Notes due June 15, 2050 (the “2050 Notes”), and $ 500 million aggregate principal amount of the Company’s Senior Notes due June 15, 2060 (the “2060 Notes”). The Company pays interest at an annual rate of 1.90 %, 2.875 %, and 3.125 %, on the 2030, 2050, and 2060 Notes, respectively, on a semi-annual basis on June 15 and December 15 of each year. On March 4, 2019, the company completed a public offering of $ 750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2026 (the “2026 Notes”), $ 1.0 billion aggregate principal amount of the Company’s Senior Notes due March 15, 2029 (the “2029 Notes”), and $ 750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2049 (the “2049 Notes”). The Company pays interest at an annual rate of 3.75 %, 4.00 %, and 4.875 %, on the 2026, 2029, and 2049 Notes, respectively, on a semi-annual basis on March 15 and September 15 of each year. On March 12, 2015, the Company completed a public offering of $ 500 million aggregate principal amount of the Company’s Senior Notes due March 15, 2025 (the “2025 Notes”). The Company pays interest at an annual rate of 3.80 % on the 2025 Notes on a semi-annual basis on March 15 and September 15 of each year. The Company may redeem the 2025, 2026, 2029, 2030, 2049, 2050, and 2060 Notes (collectively the “Senior Notes”) at a redemption price equal to 100 % of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect to the Senior Notes and accrued and unpaid interest before December 15, 2024 for the 2025 Notes, before January 15, 2026 for the 2026 Notes, before December 15, 2028 for the 2029 Notes, before March 15, 2030 for the 2030 Notes, before September 15, 2048 for the 2049 Notes, before December 15, 2049 for the 2050 Notes, and before December 15, 2059 for the 2060 Notes. The Company may redeem the Senior Notes at par, plus accrued and unpaid interest at any time on or after December 24, 2024 for the 2025 Notes, on or after January 15, 2026 for the 2026 Notes, on or after December 15, 2028 for the 2029 Notes, on or after March 15, 2030 for the 2030 Notes, on or after September 15, 2048 for the 2049 Notes, on or after December 15, 2049 for the 2050 Notes, and on or after December 15, 2059 for the 2060 Notes. In addition, upon the occurrence of certain events, as described in the indenture, the Company will be required to make an offer to repurchase the Senior Notes at a price equal to 101 % of the principal amount of the respective note, plus accrued and unpaid interest. 18 Table of Contents Selected additional information regarding the Senior Notes outstanding as of September 26, 2021, is as follows: Remaining Amortization period Fair Value of Notes (Level 2) (years) (in thousands) 2025 Notes 3.5 $ 545,650 2026 Notes 4.5 $ 833,085 2029 Notes 7.5 $ 1,154,650 2030 Notes 8.7 $ 753,600 2049 Notes 27.5 $ 1,033,058 2050 Notes 28.7 $ 772,118 2060 Notes 38.7 $ 529,535 Revolving Credit Facility On March 12, 2014, the Company established an unsecured Credit Agreement. This agreement was amended on November 10, 2015 (the “Amended and Restated Credit Agreement”), October 13, 2017 (the “2nd Amendment”), February 25, 2019 (the “3rd Amendment”), and June 17, 2021 (the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement provides for a $ 1.50 billion revolving credit facility with a syndicate of lenders, along with an expansion option that will allow the Company, subject to certain requirements, to request an increase in the facility of up to an additional $ 600.0 million, for a potential total commitment of $ 2.10 billion. The facility matures on June 17, 2026. Interest on amounts borrowed under the credit facility is, at the Company’s option, based on (1) a base rate, defined as the greatest of (a) prime rate, (b) Federal Funds rate plus 0.5 %, or (c) one-month LIBOR plus 1.0 %, plus a spread of 0.00 % to 0.30 %, or (2) LIBOR multiplied by the statutory rate, plus a spread of 0.805 % to 1.30 %, in each case plus a facility fee, with such spread and facility fee determined based on the rating of the Company’s non-credit enhanced, senior unsecured long-term debt. Such spreads and such facility fees are further subject to sustainability adjustments as described in the Second Amended and Restated Credit Agreement, in each case based on the Company’s performance of certain energy savings and health and safety standards metrics. Principal and any accrued and unpaid interest is due and payable upon maturity. Additionally, the Company will pay the lenders a quarterly commitment fee that varies based on the Company’s credit rating. The Second Amended and Restated Credit Agreement incorporates provisions for the replacement of LIBOR or other reference rates with alternative reference rates under certain circumstances, including when, or if, such reference rates cease to be available. The Second Amended and Restated Credit Agreement contains affirmative covenants, negative covenants, financial covenants, and events of default. As of September 26, 2021, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants. Commercial Paper Program On November 13, 2017, the Company established a commercial paper program (“the CP Program”) under which the Company may issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate principal amount of $ 1.25 billion. In July 2021, the Company amended the CP Program size to a maximum aggregate amount outstanding at any time of $ 1.50 billion. The net proceeds from the CP Program will be used for general corporate purposes, including repurchases of the Company’s Common Stock from time to time under the Company’s stock repurchase program. Amounts available under the CP Program may be re-borrowed. The CP Program is backstopped by the Company’s Revolving Credit Arrangement. As of September 26, 2021 and June 27, 2021, the Company had no outstanding borrowings under the CP Program. 19 Table of Contents Interest Cost The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, and the revolving credit facility during the three months ended September 26, 2021 and September 27, 2020. Three Months Ended September 26, 2021 September 27, 2020 (in thousands) Contractual interest coupon $ 43,782 $ 49,571 Amortization of interest discount 683 1,012 Amortization of issuance costs 335 411 Effect of interest rate contracts, net 605 506 Total interest cost recognized $ 45,405 $ 51,500 NOTE 13 — LEASES The Company leases certain office spaces, manufacturing and warehouse spaces, equipment, and vehicles. While the majority of the Company’s lease arrangements are operating leases, the Company has certain leases that qualify as finance leases. Selected Leases and Related Guarantees The Company leases the majority of its administrative, research and development and manufacturing facilities, regional sales/service offices, and certain equipment under non-cancelable leases. Certain of the Company’s facility leases for buildings located at its Fremont, California headquarters, Tualatin, Oregon campus, and certain other facility leases provide the Company with options to extend the leases for additional periods or to purchase the facilities. Certain of the Company’s facility leases provide for periodic rent increases based on the general rate of inflation. The Company has finance leases for certain improved properties in Fremont and Livermore, California (the “California Facility Leases”). The Company is required to maintain cash collateral in an aggregate of approximately $ 250.0 million in separate interest-bearing accounts as security for the Company’s obligations. These amounts are recorded with other restricted cash and investments in the Company’s Condensed Consolidated Balance Sheet as of September 26, 2021. During the seven-year term of the California Facility Leases and when the terms of the California Facility Leases expire, the property subject to the California Facility Leases may be re-marketed. The Company has guaranteed to the lessor that each property will have a certain minimum residual value. The aggregate maximum guarantee made by the Company under the California Facility Leases is $ 298.4 million. NOTE 14 — COMMITMENTS AND CONTINGENCIES Refer to Note 13 - Leases for details regarding guarantees surrounding selected leases. Other Guarantees The Company has issued certain indemnifications to its lessors for taxes and general liability under some of its agreements. The Company has entered into insurance contracts that are intended to limit its exposure to such indemnifications. As of September 26, 2021, the Company had not recorded any liability on its Condensed Consolidated Financial Statements in connection with these indemnifications, as it does not believe that it is probable that any material amounts will be paid under these guarantees. Generally, the Company indemnifies, under pre-determined conditions and limitations, its customers for infringement of third-party intellectual property rights by the Company’s products or services. The Company seeks to limit its liability for such indemnity to an amount not to exceed the sales price of the products or services subject to its indemnification obligations. The Company does not believe that it is probable that any material amounts will be paid under these guarantees. The Company provides guarantees and standby letters of credit to certain parties as required for certain transactions initiated during the ordinary course of business. As of September 26, 2021, the maximum potential amount of future payments that the Company could be required to make under these arrangements and letters of credit was $ 74.1 million. The Company does not 20 Table of Contents believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid. In addition, the Company has entered into indemnification agreements with its directors, officers, and certain other employees, consistent with its Bylaws and Certificate of Incorporation; and under local law, the Company may be required to provide indemnification to its employees for actions within the scope of their employment. Although the Company maintains insurance contracts that cover some of the potential liability associated with these indemnification agreements, there is no guarantee that all such liabilities will be covered. The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under such indemnification agreements or statutory obligations. Warranties The Company provides standard warranties on its systems. The liability amount is based on actual historical warranty spending activity by type of system, customer, and geographic region, modified for any known differences such as the impact of system reliability improvements. As of September 26, 2021, warranty reserves totaling $ 15.6 million were recognized in other long-term liabilities, the remainder were included in accrued expenses and other current liabilities in the Company’s Condensed Consolidated Balance Sheets. Changes in the Company’s product warranty reserves were as follows: Three Months Ended September 26, 2021 September 27, 2020 (in thousands) Balance at beginning of period $ 191,758 $ 129,197 Warranties issued during the period 70,672 46,044 Settlements made during the period ( 60,292 ) ( 36,131 ) Changes in liability for pre-existing warranties 12,106 ( 2,250 ) Balance at end of period $ 214,244 $ 136,860 Legal Proceedings While the Company is not currently a party to any legal proceedings that it believes material, the Company is either a defendant or plaintiff in various actions that have arisen from time to time in the normal course of business, including intellectual property claims. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. Based on current information, the Company does not believe that a material loss from known matters is probable and therefore has not recorded an accrual of any material amount for litigation or other contingencies related to existing legal proceedings. NOTE 15 — STOCK REPURCHASE PROGRAM In November 2020, the Board of Directors authorized the Company to repurchase up to an additional $ 5.0 billion of Common Stock; this authorization supplements the remaining balances from any prior authorizations. These repurchases can be conducted on the open market or as private purchases and may include the use of derivative contracts with large financial institutions, in all cases subject to compliance with applicable law. This repurchase program has no termination date and may be suspended or discontinued at any time. 21 Table of Contents Repurchases under the repurchase program were as follows during the periods indicated: Period Total Number of Shares Repurchased Total Cost of Repurchase Average Price Paid Per Share (1) Amount Available Under Repurchase Program (in thousands, except per share data) Available balance as of June 27, 2021 $ 4,222,220 Quarter ended September 26, 2021 1,725 $ 1,209,744 $ 608.98 $ 3,012,476 (1) Average price paid per share excludes the effect of accelerated share repurchase activities. See additional disclosure below regarding the Company’s accelerated share repurchase activity during the three months ended September 26, 2021. In addition to the shares repurchased under the Board-authorized repurchase program shown above, during the three months ended September 26, 2021, the Company acquired 12 thousand shares at a total cost of $ 7.1 million, which the Company withheld through net settlements to cover minimum tax withholding obligations upon the vesting of restricted stock unit awards granted under the Company’s equity compensation plans. The shares retained by the Company through these net share settlements are not a part of the Board-authorized repurchase program but instead are authorized under the Company’s equity compensation plan. Accelerated Share Repurchase Agreements On August 31, 2021, the Company entered into an accelerated share repurchase agreement (the “September 2021 ASR") with two financial institutions to repurchase a total of $ 650 million of Common Stock. The Company took an initial delivery of approximately 806 thousand shares, which represented 75 % of the prepayment amount divided by the Company’s closing stock price on August 31, 2021. The total number of shares received under the September 2021 ASR will be based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount. Final settlement of the September 2021 ASR will occur no later than January 6, 2022. NOTE 16 — ACCUMULATED OTHER COMPREHENSIVE LOSS The components of accumulated other comprehensive loss, net of tax at September 26, 2021, as well as the activity for the three months ending September 26, 2021, were as follows: Accumulated Foreign Currency Translation Adjustment Accumulated Unrealized Gain or Loss on Cash flow hedges Accumulated Unrealized Holding Gain or Loss on Available-For-Sale Investments Accumulated Unrealized Components of Defined Benefit Plans Total (in thousands) Balance at June 27, 2021 $ ( 31,413 ) $ ( 14,125 ) $ 1,611 $ ( 20,201 ) $ ( 64,128 ) Other comprehensive (loss) income before reclassifications ( 4,032 ) ( 9,005 ) ( 2,405 ) 199 ( 15,243 ) (Gains) losses reclassified from accumulated other comprehensive loss to net income (1) — ( 3,542 ) 1,145 — ( 2,397 ) Net current-period other comprehensive (loss) income ( 4,032 ) ( 12,547 ) ( 1,260 ) 199 ( 17,640 ) Balance at September 26, 2021 $ ( 35,445 ) $ ( 26,672 ) $ 351 $ ( 20,002 ) $ ( 81,768 ) (1) Amount of after-tax gains reclassified from AOCI into net income is not material in the aggregate, or to any individual location in our Condensed Consolidated Statements of Operations. 22 Table of Contents