What changed in this filing

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Item 1. Financial Statements

2023-07-24 compared with 2023-04-24 · 101 added, 81 removed, 355 unchanged (34% of the section changed)

31 unchanged sentences

5,000 shares authorized;

no shares issued and outstanding as of April 1, 2023 and December 31, 2022

no shares issued and outstanding as of July 1, 2023 and December 31, 2022

Common stock, $ 0.025 par value;

100,000 shares authorized;

66,244 shares issued and outstanding as of April 1, 2023, and 65,735 shares issued and outstanding as of December 31, 2022

66,320 shares issued and outstanding as of July 1, 2023, and 65,735 shares issued and outstanding as of December 31, 2022

Additional paid-in capital 1,112,434 1,070,100

6 unchanged sentences

(In thousands, except per share data)

Three Months Ended

2023 April 2,

Three Months Ended Six Months Ended

Revenue $ 261,016 $ 202,042 $ 511,024 $ 386,990

7 unchanged sentences

Operating income 11,811 9,701 21,747 19,554

Interest income and other expense, net:

Interest income and other income (expense), net:

Interest income, net 2,255 240 3,895 275

Other expense, net ( 167 ) ( 68 )

Total interest income and other expense, net 1,473 ( 33 )

Other income (expense), net 163 ( 272 ) ( 4 ) ( 340 )

Total interest income and other income (expense), net 2,418 ( 32 ) 3,891 ( 65 )

Income before income taxes 14,229 9,669 25,638 19,489

9 unchanged sentences

Net income $ 9,373 $ 7,521 $ 18,971 $ 15,640

Other comprehensive income, net of tax:

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on available-for-sale marketable securities, net ( 141 ) ( 306 ) 921 ( 1,467 )

Foreign currency translation adjustments, net ( 141 ) ( 403 ) ( 37 ) ( 474 )

Total other comprehensive income, net of tax 1,166 ( 1,232 )

Total other comprehensive income (loss), net of tax ( 282 ) ( 709 ) 884 ( 1,941 )

Comprehensive income $ 9,091 $ 6,812 $ 19,855 $ 13,699

4 unchanged sentences

Shares Amount

Balance as of April 1, 2023 66,244 $ 1,656 $ 1,097,596 $ ( 1,307 ) $ ( 380,106 ) $ 717,839

Stock-based compensation — — 17,844 — — 17,844

Issuance of common stock under equity incentive plans, net of forfeitures 276 7 5,806 — — 5,813

Repurchases of common stock ( 200 ) ( 5 ) ( 8,812 ) — — ( 8,817 )

Net income — — — — 9,373 9,373

Other comprehensive loss — — — ( 282 ) — ( 282 )

Balance as of July 1, 2023 66,320 $ 1,658 $ 1,112,434 $ ( 1,589 ) $ ( 370,733 ) $ 741,770

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

Shares Amount

Balance as of April 2, 2022 64,612 $ 1,616 $ 1,014,336 $ ( 1,552 ) $ ( 422,595 ) $ 591,805

Stock-based compensation

— — 10,007 — — 10,007

Issuance of common stock under equity incentive plans, net of forfeitures 629 15 8,490 — — 8,505

Net income — — — — 7,521 7,521

Other comprehensive loss — — — ( 709 ) — ( 709 )

Balance as of July 2, 2022 65,241 $ 1,631 $ 1,032,833 $ ( 2,261 ) $ ( 415,074 ) $ 617,129

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

Shares Amount

Balance as of December 31, 2022 65,735 $ 1,644 $ 1,070,100 $ ( 2,473 ) $ ( 389,704 ) $ 679,567

5 unchanged sentences

Other comprehensive income — — — 884 — 884

Balance as of April 1, 2023 66,244 $ 1,656 $ 1,097,596 $ ( 1,307 ) $ ( 380,106 ) $ 717,839

Balance as of July 1, 2023 66,320 $ 1,658 $ 1,112,434 $ ( 1,589 ) $ ( 370,733 ) $ 741,770

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

6 unchanged sentences

Other comprehensive loss — — — ( 1,941 ) — ( 1,941 )

Balance as of April 2, 2022 64,612 $ 1,616 $ 1,014,336 $ ( 1,552 ) $ ( 422,595 ) $ 591,805

Balance as of July 2, 2022 65,241 $ 1,631 $ 1,032,833 $ ( 2,261 ) $ ( 415,074 ) $ 617,129

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

(In thousands, unaudited)

Three Months Ended

2023 April 2,

Six Months Ended

Operating activities:

25 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 114 ( 376 )

Net increase (decrease) in cash and cash equivalents 15,113 ( 6,964 )

Net increase in cash and cash equivalents 11,114 183

Cash and cash equivalents at beginning of period 79,073 51,333

22 unchanged sentences

Quarterly periods are based on a 4-4-5 calendar with the first quarter ending on the Saturday closest to March 31 st .

As a result, the Company had one less day in the three months ended April 1, 2023 than for the three months ended April 2, 2022.

As a result, the Company had one less day in the six months ended July 1, 2023 than for the six months ended July 2, 2022.

The preparation of financial statements in conformity with GAAP for interim financial reporting requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

2 unchanged sentences

The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022.

The Company’s significant accounting policies did not change during the three months ended April 1, 2023.

The Company’s significant accounting policies did not change during the six months ended July 1, 2023.

Newly Adopted Accounting Standard

The Company did not adopt any new accounting standards during the three months ended April 1, 2023 that were significant to the Company.

The Company did not adopt any new accounting standards during the six months ended July 1, 2023 that were significant to the Company.

Recent Accounting Pronouncements Not Yet Adopted

There have been no additional accounting pronouncements or changes in accounting pronouncements during the three months ended April 1, 2023 as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, that are significant or potentially significant to the Company.

There have been no additional accounting pronouncements or changes in accounting pronouncements during the six months ended July 1, 2023 as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, that are significant or expected to be significant to the Company.

Cash, Cash Equivalents and Marketable Securities

11 unchanged sentences

Realized gains and losses on sales of marketable securities, if any, are determined on the specific identification method and are reclassified from accumulated other comprehensive loss to results of operations as other expense, net.

There were no realized gains and losses for the three months ended April 1, 2023 and April 2, 2022, respectively.

There were no realized gains and losses for the three and six months ended July 1, 2023 and July 2, 2022, respectively.

Cash, cash equivalents and marketable securities consisted of the following (in thousands):

3 unchanged sentences

Commercial paper 25,270 33,199

Money market funds 6,249 555

government securities 14,914 5,990

government agency securities 2,954 —

Money market funds 1,065 555

Corporate debt securities — 140

government securities — 5,990

Total cash and cash equivalents 90,187 79,073

9 unchanged sentences

The amortized cost and fair value of marketable securities were as follows (in thousands):

As of April 1, 2023 Amortized Cost Gross Unrealized Gains/(Losses) Fair Value

As of July 1, 2023 Amortized Cost Unrealized Losses Fair Value

government securities $ 114,541 $ ( 454 ) $ 114,087

2 unchanged sentences

Corporate debt securities 4,570 ( 24 ) 4,546

Total marketable securities $ 200,510 $ ( 843 ) $ 199,667

As of December 31, 2022 Amortized Cost Gross Unrealized Losses Fair Value

$ 218,042 $ ( 963 ) $ 217,079

As of December 31, 2022 Amortized Cost Unrealized Losses Fair Value

government securities $ 114,119 $ ( 1,379 ) $ 112,740

3 unchanged sentences

Municipal securities 101 ( 1 ) 100

Total marketable securities $ 203,670 $ ( 1,699 ) $ 201,971

$ 203,670 $ ( 1,699 ) $ 201,971

Fair Value Measurements

8 unchanged sentences

The following tables sets forth the Company’s financial assets measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):

As of April 1, 2023 Level 1 Level 2 Total

As of July 1, 2023 Level 1 Level 2 Total

Money market funds $ 1,065 $ — $ 1,065

42 unchanged sentences

Component inventory held by suppliers 11,484 10,280

Revenue share payments 10,490 7,210

Professional and consulting fees 8,311 7,307

Taxes payable 6,451 4,581

Current portion of warranty and retrofit 6,216 6,377

Customer advances or rebates 7,888 5,653

Revenue share payments 7,585 7,210

Current portion of warranty and retrofit 5,786 6,377

Taxes payable 4,425 4,581

Operating leases 3,895 3,949

Product returns 2,394 2,961

Insurance 2,139 1,785

Freight 995 3,649

2 unchanged sentences

$ 85,275 $ 90,474

In March 2018, and as amended in December 2020, the Company entered into an agreement with a vendor to develop a certain software product and related enhancements pursuant to which the Company is obligated to make revenue-share payments under the program, subject to aggregate fixed revenue-share payments of $ 15.8 million.

The payments are based on a revenue-share rate applied to revenue from the developed-product and the corresponding hardware sales through March 2024.

If the minimum revenue-share payments are not achieved by the end of that period, a true-up payment will be due.

As of July 1, 2023, the liability, including accrued interest, was $ 7.6 million, which is included in “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheet.

As of December 31, 2022, the liability, including accrued interest, was $ 11.4 million, of which $ 7.2 million was included in “Accrued liabilities” and $ 4.2 million in “Other long-term liabilities.”

Changes in the Company’s accrued warranty and retrofit liability were as follows (in thousands):

Three Months Ended

2023 April 2,

Three Months Ended Six Months Ended

Balance at beginning of period $ 8,445 $ 9,570 $ 8,386 $ 9,594

Accruals for product warranty and retrofit

802 ( 351 ) 1,817 177

Cost of warranty and retrofit claims

1 unchanged sentence

Balance at end of period $ 8,306 $ 8,654 $ 8,306 $ 8,654

The payments are based on a revenue-share rate applied to revenue from the developed-product and the corresponding hardware sales through March 2024.

If the minimum revenue-share payments are not achieved by the end of that period, a true-up payment will be due.

As of April 1, 2023, the liability, including accrued interest, was $ 10.5 million, which is included in “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheet.

Commitments and Contingencies

2 unchanged sentences

Certain of the Company’s operating leases contain renewal options and rent acceleration clauses.

Future minimum payments under the non-cancelable operating leases consisted of the following as of April 1, 2023 (in thousands):

Future minimum payments under the non-cancelable operating leases consisted of the following as of July 1, 2023 (in thousands):

Period Future Minimum Lease Payments

3 unchanged sentences

Less imputed interest ( 1,251 )

As of April 1, 2023, the operating lease liability consisted of the following (in thousands):

As of July 1, 2023, the operating lease liability consisted of the following (in thousands):

Accrued liabilities - current portion of operating leases $ 3,895

2 unchanged sentences

The future minimum lease payments under the lease are $ 6.1 million and are included in the table above.

The weighted average discount rate for the Company’s operating leases as of April 1, 2023 was 5.8 %.

The weighted average remaining lease term as of April 1, 2023 was 3.2 years.

Total rent expense of the Company was $ 1.2 million and $ 1.1 million for the three months ended April 1, 2023 and April 2, 2022, respectively.

Cash paid within operating cash flows for operating leases was $ 1.2 million and $ 1.1 million for the three months ended April 1, 2023 and April 2, 2022, respectively.

The weighted average discount rate for the Company’s operating leases as of July 1, 2023 was 5.4 %.

The weighted average remaining lease term as of July 1, 2023 was 3.5 years.

For the three and six months ended July 1, 2023, total rent expense of the Company was $ 1.2 million and $ 2.4 million, respectively.

For the three and six months ended July 2, 2022, total rent expense of the Company was $ 1.1 million and $ 2.2 million, respectively.

Cash paid within operating cash flows for operating leases was $ 2.3 million for the six months ended July 1, 2023 and July 2, 2022 for each respective period.

Purchase Commitments

5 unchanged sentences

In the event of termination of services with a manufacturing partner, the Company has purchased, and may be required to purchase in the future, certain of the remaining components inventory held by the CM or ODM as well as any outstanding orders pursuant to the contractual provisions with such CM or ODM.

As of April 1, 2023 and December 31, 2022, the Company had approximately $ 305.7 million and $ 340.6 million, respectively, of outstanding purchase commitments for inventories to be delivered by its suppliers, including CMs and ODMs, within one to two years .

As of July 1, 2023 and December 31, 2022, the Company had approximately $ 253.9 million and $ 340.6 million, respectively, of outstanding purchase commitments for inventories to be delivered by its suppliers, including CMs and ODMs, within two years .

The Company has from time to time, and subject to certain conditions, reimbursed certain suppliers for component inventory purchases when this inventory has been rendered excess or obsolete, for example due to manufacturing and engineering change orders resulting from design changes, manufacturing discontinuation of products by its suppliers, or in cases where the Company has committed inventory levels that greatly exceed projected demand.

The estimated excess and obsolete inventory liabilities related to such manufacturing and engineering change orders and other factors, which are included in accrued liabilities in the accompanying balance sheets, were $ 11.4 million and $ 10.3 million as of April 1, 2023 and December 31, 2022, respectively.

The estimated excess and obsolete inventory liabilities related to such manufacturing and engineering change orders and other factors, which are included in accrued liabilities in the accompanying balance sheets, were $ 11.5 million and $ 10.3 million as of July 1, 2023 and December 31, 2022, respectively.

The Company records the related charges in cost of revenue in its Condensed Consolidated Statements of Comprehensive Income.

5 unchanged sentences

The 2019 Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock or cash-based awards and dividend equivalents to eligible individuals.

As of April 1, 2023, there were 4.4 million shares available for issuance under the 2019 Plan.

During the three months ended April 1, 2023, stock option awards exercisable for up to an aggregate of 0.4 million shares of common stock were granted with a grant date weighted-average exercise price of $ 51.77 per share.

At the Company’s 2023 annual meeting of stockholders, the stockholders approved an increase in the number of shares of common stock issuable under the 2019 Plan by 1.5 million shares.

As of July 1, 2023, there were 5.7 million shares available for issuance under the 2019 Plan.

During the three months ended July 1, 2023, stock option awards exercisable for up to an aggregate of 0.2 million shares of common stock were granted with a grant date weighted-average exercise price of $ 42.79 per share.

During the six months ended July 1, 2023, stock option awards exercisable for up to an aggregate of 0.6 million shares of common stock were granted with a grant date weighted-average exercise price of $ 48.75 per share.

These stock option awards vest 25 % on the first anniversary of the vesting commencement date and on a quarterly basis thereafter over an additional three years .

6 unchanged sentences

The maximum combined award is 100 %.

The probability of meeting the performance conditions related to these performance-based stock option awards was assessed to be probable as of April 1, 2023, and stock-based compensation expense of $ 2.5 million was recognized for the three months ended April 1, 2023.

During the three months ended April 1, 2023, shares of common stock of 0.2 million were issued pursuant to the exercise of stock options at a weighted-average exercise price of $ 12.09 per share.

As of April 1, 2023, unrecognized stock-based compensation expense of $ 105.1 million related to stock options, net of estimated forfeitures, is expected to be recognized over a weighted-average period of 2.3 years.

The probability of meeting the performance conditions related to these performance-based stock option awards was assessed to be probable as of July 1, 2023 based on adjusted targets, and stock-based compensation expense of $ 4.5 million was recognized for the three months ended July 1, 2023.

For the six months ended July 1, 2023, stock-based compensation expense of $ 6.9 million was recognized.

During the three months ended July 1, 2023, 31,000 shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $ 16.30 per share.

During the six months ended July 1, 2023, 0.3 million shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $ 12.56 per share.

As of July 1, 2023, unrecognized stock-based compensation expense of $ 95.0 million related to stock options, net of estimated forfeitures, is expected to be recognized over a weighted-average period of 2.2 years.

Employee Stock Purchase Plans

3 unchanged sentences

The price of common stock purchased under the ESPP is 85 % of the lower of the fair market value of the common stock on the commencement date and the end date of each six-month offering period.

As of April 1, 2023, there were 4.6 million shares available for issuance under the ESPP.

During the three months ended April 1, 2023, 0.1 million shares were purchased under the ESPP.

As of April 1, 2023, unrecognized stock-based compensation expense of $ 1.0 million related to the ESPP is expected to be recognized over a remaining service period of 0.4 years.

As of July 1, 2023, there were 4.6 million shares available for issuance under the ESPP.

During the six months ended July 1, 2023, 0.1 million shares were purchased under the ESPP.

As of July 1, 2023, unrecognized stock-based compensation expense of $ 0.3 million related to the ESPP is expected to be recognized over a remaining service period of 0.1 years.

The NQ ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions of up to 25 % of their eligible recurring compensation.

1 unchanged sentence

The NQ ESPP provides quarterly offering periods from February 8 th through May 7 th , May 8 th through August 7 th , August 8 th through November 7 th and November 8 th through February 7 th of each year, with a maximum of 0.25 million shares allocated per purchase period.

As of April 1, 2023, there were 2.9 million shares available for issuance under the NQ ESPP.

During the three months ended April 1, 2023, 0.2 million shares were purchased and issued.

As of April 1, 2023, unrecognized stock-based compensation expense of $ 10.9 million related to the NQ ESPP is expected to be recognized over a remaining weighted-average service period of 0.8 years.

At the Company’s 2023 annual meeting of stockholders, the stockholders approved an increase in the number of shares of common stock issuable under the NQ ESPP by 1.2 million shares.

The maximum number of shares of common stock currently authorized for issuance under the NQ ESPP is 7.5 million shares.

As of July 1, 2023, there were 3.8 million shares available for issuance under the NQ ESPP.

During the six months ended July 1, 2023, 0.4 million shares were purchased and issued.

As of July 1, 2023, unrecognized stock-based compensation expense of $ 10.9 million related to the NQ ESPP is expected to be recognized over a remaining weighted-average service period of 0.8 years.

Stock-Based Compensation

The following table summarizes stock-based compensation expense (in thousands):

Three Months Ended

2023 April 2,

Three Months Ended Six Months Ended

Cost of revenue $ 780 $ 650 $ 1,580 $ 1,266

9 unchanged sentences

The repurchase program does not obligate the Company to acquire a particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

As of April 1, 2023, the remaining authorized amount for stock repurchases under this program was $ 98.8 million.

A summary of the stock repurchase activity under the repurchase program for the three months ended April 1, 2023 is as follows (in thousands, except per share amounts):

Aggregate purchase price $ 1,183

Shares repurchased 25

Average price paid per share $ 48.05

In May 2023, the Company’s Board of Directors amended the repurchase program to remove the one-year end date.

As of July 1, 2023, the remaining authorized amount for stock repurchases under this program was $ 90.0 million.

For the six months ended July 1, 2023, the Company purchased 0.2 million shares of common stock for $ 10.0 million at an average price per share of $ 44.53 .

Revenue from Contracts with Customers

3 unchanged sentences

The following is a summary of revenue disaggregated by geographic region based upon the location of the customers (in thousands):

Three Months Ended

April 1, 2023 April 2, 2022

Three Months Ended Six Months Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

United States $ 232,423 $ 183,932 $ 460,362 $ 349,563

1 unchanged sentence

Americas ex U.S.

11,329 10,808 18,866 19,679

Middle East & Africa 2,375 4,099 4,148 7,717

4 unchanged sentences

Amounts are billed in accordance with the agreed-upon contractual terms.

The closing balance as of April 1, 2023 was $ 5.5 million of which the Company expects to bill 77 % of the balance during the remainder of 2023.

The closing balance as of July 1, 2023 was $ 4.3 million of which the Company expects to bill 54 % of the balance during the remainder of 2023.

The contract asset balance may fluctuate depending on the timing of fulfilling the related performance obligations with the Company's customers.

Contract Liability

Deferred revenue was $ 69.6 million and $ 58.6 million as of April 1, 2023 and December 31, 2022, respectively.

The increase in the deferred revenue balance for the three months ended April 1, 2023 is driven by cash payments received or due in advance of satisfying the Company’s performance obligations and balances reclassified to contract asset during the period offset by $ 13.0 million of revenue recognized that was included in the deferred revenue balance at the beginning of the period.

Deferred revenue was $ 67.2 million, $ 69.6 million and $ 58.6 million as of July 1, 2023, April 1, 2023 and December 31, 2022, respectively.

The decrease in the deferred revenue balance for the three months ended July 1, 2023 was the result of revenue recognized of $ 11.3 million that was included in the deferred revenue balance at the beginning the period offset by cash payments received or due in advance of satisfying the Company’s performance obligations.

The increase in the deferred revenue balance for the six months ended July 1, 2023 was driven by cash payments received or due in advance of satisfying

the Company’s performance obligations and balances reclassified to contract assets during the period offset by $ 20.0 million of revenue recognized that was included in the deferred revenue balance at the beginning of the period.

Revenue allocated to remaining performance obligations (“RPOs”) represents contract revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods but excludes variable consideration where the monthly invoicing is based on usage or where actual usage exceeds the minimum commitment.

RPOs were $ 206.2 million as of April 1, 2023, and the Company expects to recognize as revenue 37 % of this amount over the next 12 months and the remainder thereafter.

RPOs were $ 213.0 million as of July 1, 2023, and the Company expects to recognize as revenue 38 % of this amount over the next 12 months and the remainder thereafter.

Contract Costs

The Company capitalizes certain sales commissions related primarily to multi-year subscriptions and extended warranty support for which the expected amortization period is greater than one year.

As of April 1, 2023 and December 31, 2022, the unamortized balance of deferred commissions was $ 10.3 million and $ 11.2 million, respectively.

For the three months ended April 1, 2023 and April 2, 2022, the amount of amortization was $ 1.3 million and $ 0.8 million, respectively.

As of July 1, 2023 and December 31, 2022, the unamortized balance of deferred commissions was $ 10.4 million and $ 11.2 million, respectively.

For the three and six months ended July 1, 2023, the amount of amortization was $ 1.5 million and $ 2.9 million, respectively, compared to $ 0.9 million and $ 1.6 million for the three and six months ended July 2, 2022, respectively.

There was no impairment loss in relation to the costs capitalized for either period.

Concentration of Customer Risk

No customer accounted for more than 10% of the Company’s revenue for the three months ended April 1, 2023 and April 2, 2022.

Two customers represented more than 10% of the Company’s accounts receivable as of April 1, 2023, and were 12 % and 11 %, respectively.

No customer accounted for more than 10% of the Company’s revenue for the three or six months ended July 1, 2023 and July 2, 2022.

One customer represented 14 % of the Company’s accounts receivable as of July 1, 2023.

One customer represented 11 % of the Company’s accounts receivable as of December 31, 2022.

The following table presents income taxes and the effective tax rates for the periods indicated (in thousands, except percentages):

Three Months Ended

2023 April 2,

Three Months Ended Six Months Ended

Income before income taxes $ 14,229 $ 9,669 $ 25,638 $ 19,489

1 unchanged sentence

Effective tax rate 34.1 % 22.2 % 26.0 % 19.7 %

The Company’s income taxes for the three months ended April 1, 2023 and April 2, 2022 were determined using an estimated effective tax rate adjusted for discrete items that occurred during the respective periods.

The Company’s effective tax rate for the three months ended April 1, 2023 and April 2, 2022 differed from the statutory federal corporate tax rate of 21% primarily due to state taxes, the inclusion of income from certain foreign operations and the effect of non-deductible stock-based compensation for executive officers offset by U.S.

The Company’s income taxes for the three and six months ended July 1, 2023 and July 2, 2022 were determined using an estimated effective tax rate adjusted for discrete items that occurred during the respective periods.

The Company’s effective tax rate for the three and six months ended July 1, 2023 and July 2, 2022 differed from the statutory federal corporate tax rate of 21% primarily due to state taxes, the inclusion of income from certain foreign operations and the effect of non-deductible stock-based compensation for executive officers offset by U.S.

federal research tax credits and excess tax benefits from stock-based compensation.

1 unchanged sentence

The Company’s ability to realize a deferred tax asset is based on its ability to generate sufficient future taxable income within the applicable carryforward period and subject to any applicable limitations.

Management believes that it is more likely than not we will utilize a significant portion of our deferred tax assets.

The Company maintained a valuation allowance of $ 29.9 million on certain U.S.

Management believes that it is more likely than not that the Company will utilize a significant portion of its deferred tax assets.

The Company maintained a valuation allowance for the three and six months ended July 1, 2023 and July 2, 2022 of $ 29.9 million on certain U.S.

federal and state deferred tax assets that the Company believes are not more likely than not to be realized in future periods.

3 unchanged sentences

The following table sets forth the computation of basic and diluted net income per common share for the periods indicated (in thousands, except per share data):

Three Months Ended

2023 April 2,

Three Months Ended Six Months Ended

Net income $ 9,373 $ 7,521 $ 18,971 $ 15,640

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements