What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-04-29 compared with 2020-10-27 · 120 added, 271 removed, 464 unchanged (46% of the section changed)

1 unchanged sentence

Consolidated Balance Sheets

(In millions, except par value data) September 30, 2020 December 31, 2019

(In millions, except par value data) March 31, 2021 December 31, 2020

Current assets:

8 unchanged sentences

Goodwill 18.9 19.3

Deferred tax assets 216.7 216.4

Other assets 20.4 21.4

14 unchanged sentences

Preferred stock, $ 0.001 par value, 5.0 million shares authorized;

no shares issued and outstanding at September 30, 2020 and December 31, 2019 — —

no shares issued and outstanding at March 31, 2021 and December 31, 2020

Common stock, $ 0.001 par value, 200.0 million shares authorized;

96.8 million and 96.0 million shares issued and outstanding, respectively, at September 30, 2020;

97.5 million and 96.7 million shares issued and outstanding, respectively, at March 31, 2021;

and 96.9 million and 96.1 million shares issued and outstanding, respectively, at December 31, 2020

3 unchanged sentences

Treasury stock, at cost;

0.8 million shares at September 30, 2020 and December 31, 2019 ( 100.0 ) ( 100.0 )

0.8 million shares at March 31, 2021 and December 31, 2020

( 100.0 ) ( 100.0 )

Total stockholders’ equity 1,903.2 1,826.5

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions, except per share data) 2021 2020

8 unchanged sentences

Interest expense ( 24.8 ) ( 15.4 )

Loss on extinguishment of debt ( 0.5 ) — ( 5.9 ) —

Loss from equity investments — — — ( 4.2 )

Interest and other income, net 0.1 4.2

Income before income taxes 21.2 22.4

Income tax expense 2.9 — 5.3 1.5

Income tax expense (benefit) ( 19.1 ) 2.5

Net income $ 40.3 $ 19.9

6 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2021 2020

2 unchanged sentences

Translation adjustments and other ( 0.3 ) ( 0.7 )

Unrealized gain (loss) on marketable debt securities ( 1.1 ) ( 0.1 ) 0.3 0.5

Unrealized gain on marketable debt securities — 2.1

Total other comprehensive income (loss), net of tax ( 0.3 ) 1.4

2 unchanged sentences

Consolidated Statements of Stockholders’ Equity

Three Months Ended September 30, 2020

(In millions) Common Stock Additional

Capital Accumulated

Comprehensive

Income Accumulated

Deficit Treasury Stock Total

Stockholders’

Shares Amount

Balance at June 30, 2020 95.4 $ 0.1 $ 2,079.8 $ 3.5 $ ( 629.5 ) $ ( 100.0 ) $ 1,353.9

Issuance of common stock under equity incentive plans 0.2 — — — — — —

Issuance of common stock for Employee Stock Purchase Plan — — 8.6 — — — 8.6

Repurchase and conversions of 2022 Notes 0.4 — 34.6 — — — 34.6

Share-based compensation expense — — 30.7 — — — 30.7

Net income — — — — 72.2 — 72.2

Other comprehensive loss, net of tax — — — ( 0.7 ) — — ( 0.7 )

Balance at September 30, 2020 96.0 $ 0.1 $ 2,153.7 $ 2.8 $ ( 557.3 ) $ ( 100.0 ) $ 1,499.3

Three Months Ended September 30, 2019

Three Months Ended March 31, 2021

(In millions) Common Stock Additional

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Shares Amount

Balance at June 30, 2019 91.2 $ 0.1 $ 1,620.4 $ 2.0 $ ( 834.2 ) $ ( 100.0 ) $ 688.3

Balance at December 31, 2020 96.1 $ 0.1 $ 2,125.3 $ 3.2 $ ( 202.1 ) $ ( 100.0 ) $ 1,826.5

Issuance of common stock under equity incentive plans 0.6 — — — — — —

3 unchanged sentences

Other comprehensive loss, net of tax — — — ( 0.3 ) — — ( 0.3 )

Balance at September 30, 2019 91.5 $ 0.1 $ 1,651.6 $ 1.0 $ ( 788.4 ) $ ( 100.0 ) $ 764.3

See accompanying notes

Consolidated Statements of Stockholders’ Equity

Nine Months Ended September 30, 2020

Balance at March 31, 2021 96.7 $ 0.1 $ 2,162.0 $ 2.9 $ ( 161.8 ) $ ( 100.0 ) $ 1,903.2

Three Months Ended March 31, 2020

(In millions) Common Stock Additional

8 unchanged sentences

Issuance of common stock for Employee Stock Purchase Plan — — 6.4 — — — 6.4

Equity component of 2025 Notes issuance, net of issuance costs — — 289.4 — — — 289.4

Repurchase and conversions of 2022 Notes 3.4 — 87.8 — — — 87.8

Share-based compensation expense — — 23.9 — — — 23.9

1 unchanged sentence

Other comprehensive income, net of tax — — — 1.4 — — 1.4

Balance at September 30, 2020 96.0 $ 0.1 $ 2,153.7 $ 2.8 $ ( 557.3 ) $ ( 100.0 ) $ 1,499.3

Nine Months Ended September 30, 2019

(In millions) Common Stock Additional

Capital Accumulated

Comprehensive

Income Accumulated

Deficit Treasury Stock Total

Stockholders’

Shares Amount

Balance at December 31, 2018 90.0 $ 0.1 $ 1,560.6 $ 1.5 $ ( 798.9 ) $ ( 100.0 ) $ 663.3

Cumulative-effect adjustment from adoption of new lease accounting standard — — — — 2.1 — 2.1

Issuance of common stock under equity incentive plans 1.3 — 0.3 — — — 0.3

Issuance of common stock for Employee Stock Purchase Plan 0.2 — 11.6 — — — 11.6

Share-based compensation expense — — 79.1 — — — 79.1

Net income — — — — 8.4 — 8.4

Other comprehensive loss, net of tax — — — ( 0.5 ) — — ( 0.5 )

Balance at September 30, 2019 91.5 $ 0.1 $ 1,651.6 $ 1.0 $ ( 788.4 ) $ ( 100.0 ) $ 764.3

Balance at March 31, 2020 92.3 $ 0.1 $ 1,706.5 $ 3.7 $ ( 675.8 ) $ ( 100.0 ) $ 934.5

See accompanying notes

Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

(In millions) 2021 2020

Operating activities

Net income $ 40.3 $ 19.9

2 unchanged sentences

Share-based compensation 28.0 23.9

Loss on extinguishment of debt 5.9 —

Non-cash interest expense 22.2 12.7

Realized loss on equity investment 1.4 4.2

Deferred income taxes ( 0.3 ) —

Other non-cash income and expenses 8.0 0.1

8 unchanged sentences

Net cash provided by operating activities 27.8 1.9

Cash flows from investing activities:

Investing activities

Purchases of marketable securities ( 802.0 ) ( 365.8 )

2 unchanged sentences

Other investing activities ( 0.5 ) ( 0.4 )

Net cash used in investing activities ( 994.0 ) ( 920.9 )

Cash flows from financing activities:

Proceeds from issuance of convertible notes, net of issuance costs 1,188.8 —

Repurchase of convertible notes ( 282.6 ) —

Net cash provided by (used in) investing activities ( 112.2 ) 130.6

Financing activities

Net proceeds from issuance of common stock 8.7 6.7

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Supplemental disclosure of non-cash investing and financing transactions:

Common stock issued for repurchase and conversions of senior convertible notes $ 1,350.9 $ —

Acquisition of property and equipment included in accounts payable and accrued liabilities $ 35.0 $ 19.6

Right-of-use assets obtained in exchange for operating lease liabilities $ 9.9 $ 5.3

Right-of-use assets obtained in exchange for finance lease liabilities $ 33.4 $ —

See accompanying notes

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In the opinion of management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.

Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

We expect that revenues we generate from the sales of our products will fluctuate from quarter to quarter.

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All significant intercompany balances and transactions have been eliminated in consolidation.

The functional currencies of our international subsidiaries are generally the local currencies.

We translate the financial statements of our foreign subsidiaries into U.S.

We determine the functional currencies of our international subsidiaries by reviewing the environment where each subsidiary primarily generates and expends cash.

For international subsidiaries whose functional currencies are the local currencies, we translate the financial statements into U.S.

dollars using period-end exchange rates for assets and liabilities and average exchange rates for each period for revenue, costs and expenses.

We include translation-related adjustments in comprehensive income (loss) and in accumulated other comprehensive income in the equity section of our consolidated balance sheets.

Gains and losses resulting from certain intercompany transactions as well as transactions with customers and vendors that are denominated in currencies other than the functional currency of each entity give rise to foreign exchange gains or losses that we record in interest and other income, net in our consolidated statements of operations.

We include translation-related adjustments in comprehensive income and in accumulated other comprehensive income in the equity section of our consolidated balance sheets.

We record gains and losses resulting from transactions with customers and vendors that are denominated in currencies other than the functional currency and from certain intercompany transactions in interest and other income, net in our consolidated statements of operations.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the amounts reported in our consolidated financial statements and the disclosures made in the accompanying notes.

Areas requiring significant estimates include transaction price, net accounts receivable, excess or obsolete inventories and the valuation of inventory, and accruals for litigation contingencies.

Areas requiring significant estimates include rebates, transaction price, the collectibility of accounts receivable, excess or obsolete inventories and the valuation of inventory, accruals for litigation contingencies, and the amount of our worldwide tax provision and the realizability of deferred tax assets.

Despite our intention to establish accurate estimates and use reasonable assumptions, actual results may differ from our estimates.

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Financial instruments which potentially subject us to concentrations of credit risk consist primarily of cash, cash equivalents, short-term marketable securities, and accounts receivable.

We limit our exposure to credit risk by placing our cash and investments with high credit quality financial institutions.

We limit our exposure to credit risk by placing our cash and investments with a few major financial institutions.

We have also established guidelines regarding diversification of our investments and their maturities that are designed to maintain principal and maximize liquidity.

1 unchanged sentence

Revenue Recognition

We generate our revenue from the sale of our reusable transmitter and receiver, collectively referred to as Reusable Hardware and disposable sensors.

We refer to Reusable Hardware and disposable sensors in this section as Components.

Policy Elections

• We report revenue net of taxes collected from customers, which are subsequently remitted to governmental authorities;

• We account for shipping and handling activities that are performed after a customer has obtained control of a good as fulfillment costs rather than as separate performance obligations;

• We do not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer;

• If we expect, at contract inception, that the period between the transfer of control and corresponding payment from the customer will be one year or less, we do not adjust the amount of consideration for the effects of a significant financing component.

We generate our revenue from the sale of disposable sensors and our reusable transmitter and receiver, collectively referred to as Reusable Hardware.

We also refer to Reusable Hardware in this section as Components.

We generally recognize revenue when control is transferred to our customers in an amount that reflects the net consideration to which we expect to be entitled.

In determining how revenue should be recognized, a five-step process is used, which includes identifying performance obligations in the contract, determining whether the performance obligations are separate, allocating the transaction price to each separate performance obligation, estimating the amount of variable consideration to include in the transaction price and determining the timing of revenue recognition for separate performance obligations.

Contracts and Performance Obligations

2 unchanged sentences

We also provide free-of-charge software, mobile applications and updates for our Dexcom Share ® remote monitoring system.

The standalone selling prices of our free-of-charge software, mobile applications and updates are estimated based on an expected cost plus a margin approach.

The standalone selling prices of Dexcom Share ® are estimated based on an expected cost plus a margin approach.

Transaction Price

2 unchanged sentences

Variable Consideration

We estimate reductions for rebates based on contractual arrangements, estimates of products sold subject to rebate, known events or trends and channel inventory data.

We include an estimate of variable consideration in the calculation of the transaction price at the time of sale, when control of the Components transfers to the customer.

Variable consideration includes, but is not limited to:

rebates, chargebacks, consideration payable to customers such as specialty distributor and wholesaler fees, product returns provision, prompt payment discounts, and various other promotional or incentive arrangements.

We classify our provisions related to variable consideration as a reduction of accounts receivable when we are not required to make a payment or as a liability when we are required to make a payment.

We are subject to rebates on pricing programs with managed care organizations, such as pharmacy benefit managers, governmental and third-party commercial payors, primarily in the U.S.

We estimate provisions for rebates based on contractual arrangements, estimates of products sold subject to rebate, known events or trends and channel inventory data.

We participate in chargeback programs, primarily with government entities in the U.S., under which pricing on products below negotiated list prices is provided to participating entities and equal to the difference between their acquisition cost and the lower negotiated price.

We estimate provisions for chargebacks primarily based on historical experience on a product and program basis, current contract prices under the chargeback programs and channel inventory data.

Consideration Payable to the Customer

We pay administrative and service fees to certain of our distributors based on a fixed percentage of the product price.

These fees are not in exchange for a distinct good or service and therefore are recognized as a reduction of the transaction price.

We accrue for these fees based on actual net sales and contractual fee rates negotiated with the customer.

Product Returns

In accordance with the terms of their distribution agreements, most distributors do not have rights of return outside of our limited warranty.

In accordance with the terms of their distribution agreements, most distributors do not have rights of return.

The distributors typically have a limited time frame to notify us of any missing, damaged, defective or non-conforming products.

We generally provide a “ 30 -day money back guarantee” program whereby first-time end-user customers may return Reusable Hardware.

Product returns have historically been immaterial.

We estimate our product returns provision principally based on historical experience by applying a historical return rate to the amounts of revenue estimated to be subject to returns.

Additionally, we consider other specific factors such as estimated shelf life of inventory in the distribution channel and changes to customer terms.

Prompt Payment Discounts

We provide customers with prompt payment discounts which may result in adjustments to the price that is invoiced for the product transferred, in the case that payments are made within a defined period.

We estimate prompt payment discount accruals based on actual net sales and contractual discount rates.

Various Other Promotional or Incentive Arrangements

Other promotional or incentive arrangements are periodically offered to customers, including but not limited to co-payment assistance we provide to patients with commercial insurance, promotional programs related to the launch of products or other targeted promotions.

We record a provision for the incentive earned based on the number of estimated claims and our estimate of the cost per claim related to product sales that we have recognized as revenue.

Revenue Recognition

3 unchanged sentences

orders or Free Carrier (FCA) shipping point for international orders.

For certain of sales transactions, control transfers at delivery of the product to the customer.

For certain sales transactions, control transfers at delivery of the product to the customer.

In cases where our free-of-charge software, mobile applications and updates are deemed to be separate performance obligations, revenue is recognized over time on a ratable basis over the estimated life of the related Reusable Hardware component.

Our sales of Components include an assurance-type warranty.

Judgments and Estimates

In determining how revenue should be recognized, a five-step process is used, which requires judgment and estimates that can have a significant impact on the amount and timing of revenue we report.

These judgments and estimates include identifying performance obligations in the contract, determining whether the performance obligations are separate, allocating the transaction price to each separate performance obligation, determining the timing of revenue recognition for separate performance obligations and estimating the amount of variable consideration to include in the transaction price.

Contract Balances

2 unchanged sentences

Payment terms vary by contract type and type of customer and generally range from 30 to 90 days.

Accounts receivable as of September 30, 2020 included unbilled accounts receivable of $ 8.3 million.

Unbilled accounts receivable consists of revenue recognized for Components we have delivered but not yet invoiced to customers.

Accounts receivable as of March 31, 2021 included unbilled accounts receivable of $ 12.2 million.

We expect to invoice and collect all unbilled accounts receivable within 12 months.

We record deferred revenue when we have entered into a contract with a customer and cash payments are received or due prior to transfer of control or satisfaction of the related performance obligation.

The table below shows revenue that we recognized as a result of changes in the contract liability balances in the periods shown.

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2020 2019 2020 2019

Revenue recognized in the period from:

Amounts included in contract liabilities at the beginning of the period $ 1.0 $ 2.9 $ 1.8 $ 2.6

Our performance obligations are generally satisfied within 12 months of the initial contract date.

The deferred revenue balance related to performance obligations that will be satisfied after 12 months was $ 7.1 million as of September 30, 2020 and $ 2.1 million as of December 31, 2019, and is included in other long-term liabilities in our consolidated balance sheets.

The deferred revenue balance related to performance obligations that will be satisfied after 12 months was $ 9.5 million as of March 31, 2021 and $ 8.2 million as of December 31, 2020.

These balances are included in other long-term liabilities in our consolidated balance sheets.

Revenue recognized in the period from performance obligations satisfied in previous periods was not material for the periods presented.

Deferred Cost of Sales

Deferred cost of sales are associated with sales for which revenue recognition criteria are not met but product has shipped and released from inventory.

Deferred cost of sales are associated with transactions for which revenue recognition criteria are not met but product has shipped and released from inventory.

Deferred cost of sales are included in prepaid and other current assets in our consolidated balance sheets.

11 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2021 2020

11 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2021 2020

Restricted stock units — 0.1

Warrants — 5.2 — 5.2

Senior convertible notes 7.2 9.2

2 unchanged sentences

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses:

Measurement of Credit Losses on Financial Instruments , which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities.

This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods, and early adoption is permitted.

Our adoption of ASU 2016-13 at the beginning of the first quarter of 2020 did not have a significant impact on our consolidated financial statements.

In addition, the outbreak of the novel strain of coronavirus, SARS-CoV-2 ("COVID-19"), has not had a significant impact on our expected credit losses or our consolidated financial statements during the first nine months of 2020.

We are continuing to monitor the impact of COVID-19 on expected credit losses.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles – Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment (ASU 2017-04).

This new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge.

Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value.

ASU 2017-04 is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted.

Our adoption of ASU 2017-04 at the beginning of the first quarter of 2020 did not have a significant impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement:

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13), which adds and modifies certain disclosure requirements for fair value measurements.

Under the new guidance, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, or valuation processes for Level 3 fair value measurements.

However, public business entities will be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and related changes in unrealized gains and losses included in other comprehensive income.

ASU 2018-13 is effective for public business entities for fiscal years beginning after

December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted.

Our adoption of ASU 2018-13 at the beginning of the first quarter of 2020 did not have a significant impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles - Goodwill and Other – Internal-Use Software:

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (ASU 2018-15).

This new guidance requires a customer in a cloud computing arrangement to determine which implementation costs to capitalize as assets or expense as incurred.

Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use.

ASU 2018-15 is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted.

Application of this guidance can be applied either prospectively or retrospectively.

We adopted the new standard on January 1, 2020 on a prospective basis.

Our adoption of ASU 2018-15 at the beginning of the first quarter of 2020 did not have a significant impact on our consolidated financial statements, however, the adoption of the standard resulted in an increase in capitalized assets related to qualifying cloud computing arrangement implementation costs incurred after the adoption date.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU No.

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ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, and early adoption is permitted.

We are currently evaluating the impact that this guidance will have on our consolidated financial statements.

Our adoption of ASU 2019-12 at the beginning of the first quarter of 2021 did not have a significant impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued ASU No.

1 unchanged sentence

This new guidance is intended to reduce the complexity of accounting for convertible instruments.

The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments.

The guidance also addresses how convertible instruments are

accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments.

Entities may adopt ASU 2020-06 using either a partial retrospective or fully retrospective method of transition.

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We obtain the fair values for our Level 2 financial instruments, which are not in active markets, from a primary professional pricing source that uses quoted market prices for identical or comparable instruments, rather than direct observations of quoted prices in active markets.

Fair values obtained from this professional pricing source can also be based on pricing models whereby all significant observable inputs, including maturity dates, issue dates, settlement date, benchmark yields, reported trades, broker-dealer quotes, issue spreads, benchmark securities, bids, offers or other market related data, are observable or can be derived from, or corroborated by, observable market data for substantially the full term of the asset.

Fair values obtained from this professional pricing source can also be based on pricing models whereby all significant observable inputs, including maturity dates, issue dates, settlement dates, benchmark yields, reported trades, broker-dealer quotes, issue spreads, benchmark securities, bids, offers or other market related data, are observable or can be derived from, or corroborated by, observable market data for substantially the full term of the asset.

We validate the quoted market prices provided by our primary pricing service by comparing the fair values of our Level 2 marketable securities portfolio balance provided by our primary pricing service against the fair values of our Level 2 marketable securities portfolio balance provided by our investment managers.

The following table summarizes financial assets that we measured at fair value on a recurring basis as of September 30, 2020, classified in accordance with the fair value hierarchy:

The following table summarizes financial assets that we measured at fair value on a recurring basis as of March 31, 2021, classified in accordance with the fair value hierarchy:

Fair Value Measurements Using

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(1) Includes assets which are held pursuant to a deferred compensation plan for senior management, which consist mainly of mutual funds.

There were no transfers between Level 1 and Level 2 securities during the three and nine months ended September 30, 2020 and 2019.

There were no transfers into or out of Level 3 securities during the three and nine months ended September 30, 2020 and 2019.

There were no transfers into or out of Level 3 securities during the three months ended March 31, 2021.

We hold certain other investments that we do not measure at fair value on a recurring basis.

The carrying values of these investments are not significant and we include them in other assets in our consolidated balance sheets.

It is impracticable for us to estimate the fair value of these investments on a recurring basis due to the fact that these entities are often privately held and limited information is available.

It is impracticable for us to estimate the fair value of these investments on a recurring basis due to the fact that these entities are privately held and limited information is available.

We monitor the information that becomes available from time to time and adjust the carrying values of these investments if there are identified events or changes in circumstances that have a significant adverse effect on the fair values.

2 unchanged sentences

Fair Value Measurements Using Level 1

(In millions) September 30, 2020 December 31, 2019

Senior Convertible Notes due 2022 * $ 890.8

(In millions) March 31, 2021 December 31, 2020

Senior Convertible Notes due 2023 $ 1,879.1 $ 1,936.4

1 unchanged sentence

Total fair value of outstanding senior convertible notes $ 3,075.7 $ 3,155.6

* Not applicable as no notes were outstanding at this date.

For more information on the carrying values of our senior convertible notes, see Note 4, “Debt.”

Foreign Currency and Derivative Financial Instruments

From time to time we engage in limited hedging transactions to reduce foreign currency risks.

From time to time we engage in hedging transactions to reduce foreign currency risks.

The fair values of these derivatives are based on quoted market prices, which are Level 1 inputs, and the derivative instruments are recorded in current assets or current liabilities in our consolidated balance sheets consistent with the nature of the instrument at period end.

Derivative gains and losses are included in interest and other income, net in our consolidated statements of operations.

As of September 30, 2020 and December 31, 2019, notional amounts of $ 39.0 million and $ 8.0 million, respectively, were outstanding to hedge certain foreign currency risk.

The resulting impact from the hedging activity on our consolidated financial statements was not significant for the periods presented.

Our foreign currency exposures vary but are primarily concentrated in the British Pound, the Euro, and the Canadian Dollar.

As of March 31, 2021 and December 31, 2020, notional amounts of $ 54.0 million and $ 48.0 million, respectively, were outstanding to hedge certain foreign currency risk.

The resulting impact on our consolidated financial statements from currency hedging activities was not significant for the three months ended March 31, 2021 or 2020.

Our foreign currency exposures vary but are primarily concentrated primarily in the British Pound and the Euro.

We monitor the costs and the impact of foreign currency risks upon our financial results as part of our risk management program.

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Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Certain non-financial assets and liabilities are measured at fair value, usually with Level 3 inputs including the discounted cash flow method or cost method, on a nonrecurring basis in accordance with authoritative guidance.

In accordance with authoritative guidance, we measure certain non-financial assets and liabilities at fair value on a non-recurring basis.

These measurements are usually performed using the discounted cash flow method or cost method and Level 3 inputs.

These include items such as non-financial assets and liabilities initially measured at fair value in a business combination and non-financial long-lived assets measured at fair value for an impairment assessment.

In general, non-financial assets, including goodwill, intangible assets and property and equipment, are measured at fair value when there is an indication of impairment and are recorded at fair value only when any impairment is recognized.

We recorded no significant impairment losses during the three and nine months ended September 30, 2020 and 2019.

In general, non-financial assets, including goodwill, intangible assets, and property and equipment, are measured at fair value when there are indicators of impairment and are recorded at fair value only when any impairment is recognized.

We recorded no significant impairment losses during the three months ended March 31, 2021 and 2020.

Balance Sheet Details

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Short-term marketable securities, consisting of debt securities, were as follows as of the dates indicated:

September 30, 2020

March 31, 2021

(In millions) Amortized

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Total debt securities, available for sale $ 1,890.0 $ 0.2 $ ( 0.1 ) $ 1,890.1

As of September 30, 2020 and December 31, 2019, all of our debt securities had contractual maturities of less than 12 months.

Gross realized gains and losses on sales of our debt securities during the three and nine months ended September 30, 2020 and 2019 were not significant.

As of March 31, 2021 and December 31, 2020, all of our debt securities had contractual maturities of less than 12 months.

Gross realized gains and losses on sales of our debt securities for the three months ended March 31, 2021 and March 31, 2020 were not significant.

We periodically review our portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns.

For the debt securities where the fair value of the investment is less than the amortized cost basis, we have assessed at the individual security level for various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment.

Unrealized losses on available-for-sale debt securities as of September 30, 2020 were not significant and were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

For debt securities where the fair value of the investment is less than the amortized cost basis, we have assessed at the individual security level for various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment.

Unrealized losses on available-for-sale debt securities at March 31, 2021 were not significant and were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

Accordingly, we have not recorded an allowance for credit losses.

We do not intend to sell these investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

Inventory was as follows as of the dates indicated:

(In millions) September 30, 2020 December 31, 2019

(In millions) March 31, 2021 December 31, 2020

Raw materials $ 87.5 $ 69.9

2 unchanged sentences

Total inventory $ 289.7 $ 234.7

During the three and nine months ended September 30, 2020, we recorded excess and obsolete inventory charges of $ 6.4 million and $ 13.2 million, respectively, in cost of sales as a result of our ongoing assessment of sales demand, inventory on hand for each product and the continuous improvement and innovation of our products.

During the three and nine months ended September 30, 2019, we recorded excess and obsolete inventory charges of $ 6.8 million and $ 10.1 million, respectively, in cost of sales primarily as a result of our ongoing assessment of sales demand and inventory on hand.

Property and Equipment

Property and equipment was as follows as of the dates indicated:

(In millions) September 30, 2020 December 31, 2019

Building and land (1)

(In millions) March 31, 2021 December 31, 2020

$ 15.6 $ 15.6

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Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities were as follows as of the dates indicated:

(In millions) September 30, 2020 December 31, 2019

(In millions) March 31, 2021 December 31, 2020

Accounts payable trade $ 152.2 $ 163.3

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Other Long-Term Liabilities

Other long-term liabilities were as follows as of the dates indicated:

(In millions) September 30, 2020 December 31, 2019

(In millions) March 31, 2021 December 31, 2020

Finance lease obligations

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The carrying amounts of our senior convertible notes were as follows as of the dates indicated:

(In millions) September 30, 2020 December 31, 2019

(Dollars in millions) March 31, 2021 December 31, 2020

Principal amount:

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Senior Convertible Notes due 2025 1,207.5 1,207.5

Senior Convertible Notes due 2025 1,207.5 —

Total principal amount 2,057.5 2,057.5

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Remaining amortization period of debt discount on the liability component:

Senior Convertible Notes due 2022 * 2.5 years

Senior Convertible Notes due 2023 2.7 years 2.9 years

Senior Convertible Notes due 2025 5.1 years *

* Not applicable as no notes were outstanding at this date.

For our senior convertible notes for which the if-converted value exceeded the principal amount, the amount in excess of principal is as follows as of the dates indicated:

(In millions) September 30, 2020 December 31, 2019

Senior Convertible Notes due 2022 * $ 486.2

Senior Convertible Notes due 2025 4.6 years 4.9 years

For our senior convertible notes for which the if-converted value exceeded the principal amount, the amount in excess of principal was as follows as of the dates indicated:

(In millions) March 31, 2021 December 31, 2020

Senior Convertible Notes due 2023 $ 1,024.2 1,077.5

Total by which the notes ’ if-converted value exceeds their principal amount

$ 1,293.6 $ 858.6

* Not applicable as no notes were outstanding at this date.

The following table summarizes the components of interest expense and the effective interest rates for each of our senior convertible notes for the periods shown.

Three Months Ended

September 30, Nine Months Ended

September 30,

(Dollars in millions) 2021 2020

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Contractual coupon interest (1),(2)

$ 2.4 $ 2.4 $ 7.1 $ 7.1

Non-cash interest expense:

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Senior Convertible Notes due 2022 (2)

5.1 % 5.1 % 5.1 % 5.1 %

Senior Convertible Notes due 2023 5.6 % 5.6 %

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Interest on the 2025 Notes began accruing upon issuance and is payable semi-annually on May 15 and November 15 of each year.

(2) The effective interest rate presented represents the rate applicable for the period outstanding.

The Senior Convertible Notes due 2022 were fully redeemed by July 31, 2020 as described below.

(2) Our $ 400.0 million aggregate principal amount of unsecured senior convertible notes issued in June 2017 with a stated interest rate of 0.75 % and maturity date of May 15, 2022 (the 2022 Notes) were repurchased and converted by August 2020.

* Not applicable as no notes were outstanding at this date.

0 .75% Senior Convertible Notes due 2023

In June 2017, we completed an offering of $ 400.0 million aggregate principal amount of unsecured senior convertible notes with a stated interest rate of 0.75 % and a maturity date of May 15, 2022 (the 2022 Notes).

The net proceeds from the offering, after deducting initial purchasers’ discounts and costs directly related to the offering, were approximately $ 389.0 million.

The initial conversion rate of the 2022 Notes was 10.0918 shares per $ 1,000 principal amount of notes, which was equivalent to a conversion price of approximately $ 99.09 per share, subject to adjustments.

The 2022 Notes could be settled in cash, stock, or a combination thereof, solely at our discretion.

We used the if-converted method for assumed conversion of the 2022 Notes to compute the weighted average shares of common stock outstanding for diluted earnings per share.

Since upon conversion by the holders we could elect to settle such conversion in shares of our common stock, cash, or a combination thereof, we accounted for the cash conversion option as an equity instrument classified to stockholders’ equity.

As a result, we recognized $ 72.6 million in additional paid-in-capital during 2017.

No principal payments were due on the 2022 Notes prior to maturity.

Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the indenture relating to the 2022 Notes included customary terms and covenants, including certain events of default after which the 2022 Notes could be due and payable immediately.

Conversion Rights at the Option of the Holders

In the event of a fundamental change (as defined in the indenture related to the 2022 Notes), holders of the 2022 Notes had the right to require us to repurchase for cash all or a portion of their notes at a price equal to 100 % of the principal amount of the 2022 Notes, plus any accrued and unpaid interest.

Holders of the 2022 Notes who would convert their notes in connection with a make-whole fundamental change (as defined in the indenture) or following the delivery by DexCom of a notice of redemption were, under certain circumstances, entitled to an increase in the conversion rate.

Prior to 5:00 p.m., New York City time, on the business day immediately preceding February 15, 2022, holders of the 2022 Notes could convert all or a portion of their notes, in multiples of $ 1,000 principal amount, only under the following circumstances:

(1) during any calendar quarter commencing after September 30, 2017 (and only during such calendar quarter), if the last reported sale price of DexCom’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the applicable conversion price of the 2022 Notes on each such trading day;

(2) during the five business day period after any five consecutive trading day period in which the trading price per $ 1,000 principal amount of the 2022 Notes for each day of that five day consecutive trading day period was less than 98 % of the product of the last reported sale price of DexCom’s common stock and the applicable conversion rate of the Notes on such trading day;

(3) if we call any or all of the Notes for redemption, at any time prior to the close on business on the scheduled trading day immediately preceding the redemption date;

(4) upon the occurrence of specified corporate transactions.

On or after February 15, 2022, until 5:00 p.m., New York City time, on the business day immediately preceding the maturity date, holders of the 2022 Notes may convert all or a portion of their notes regardless of the foregoing circumstances.

Circumstance (1) listed above occurred during the quarter ended March 31, 2020 and as a result, the 2022 Notes were convertible at the option of the holder from April 1, 2020 through June 30, 2020.

On June 29, 2020, DexCom issued a notice of redemption to the holders of its outstanding 2022 Notes which is described below.

Conversion Rights at Our Option

On or after May 15, 2020, DexCom could redeem for cash all or part of the remaining 2022 Notes, at its option, if the last reported sale price of our common stock has been at least 140 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which DexCom provides notice of redemption.

The redemption price will be equal to 100 % of the principal amount of the 2022 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

Repurchase, Conversion, and Redemption of 2022 Notes

In May 2020, we used approximately $ 282.6 million of the net proceeds from the 2025 Notes offering described below and issued 1,953,067 shares of DexCom common stock to repurchase $ 260.0 million principal amount outstanding of the 2022 Notes and the associated conversion feature of the repurchased notes (which was recorded in additional paid-in capital).

In addition, during the nine months ended September 30, 2020, holders of 2022 Notes with a principal amount of $ 140.0 million exercised their option to convert their 2022 Notes.

We settled these conversions by issuing 1,412,497 shares of our common stock.

As a result of the repurchase and conversions of the 2022 Notes, we recorded losses on extinguishment of debt of $ 0.5 million for the three months ended September 30, 2020 and $ 5.9 million for the nine months ended September 30, 2020.

The losses on extinguishment of debt included the unamortized debt issuance costs for the 2022 Notes.

On June 29, 2020, we issued a notice of redemption to the holders of our outstanding 2022 Notes pursuant to which we would redeem the outstanding 2022 Notes for cash at a price of 100 % of the principal amount of the 2022 Notes plus accrued and unpaid interest, if any, on July 31, 2020, unless earlier converted.

The principal amount of 2022 Notes actually redeemed for cash was not significant.

0.75% Senior Convertible Notes due 2023

In November 2018, we completed an offering of $ 850.0 million aggregate principal amount of unsecured senior convertible notes with a stated interest rate of 0.75 % and a maturity date of December 1, 2023 (the 2023 Notes).

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Since upon conversion by the holders we may elect to settle such conversion in shares of our common stock, cash, or a combination thereof, we accounted for the cash conversion option as an equity instrument classified to stockholders’ equity.

As a result, we recognized $ 174.4 million in additional paid-in capital during 2018.

As a result, we recognized $ 171.6 million in additional paid-in capital, net of debt issuance costs, during 2018.

No principal payments are due on the 2023 Notes prior to maturity.

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Conversion Rights at the Option of the Holders

Holders of the 2023 Notes have the right to require us to repurchase for cash all or a portion of their notes at 100 % of their principal amount, plus any accrued and unpaid interest, upon the occurrence of a fundamental change (as defined in the

indenture relating to the notes).

We will also be required to increase the conversion rate for holders who convert their 2023 Notes in connection with certain fundamental changes occurring prior to the maturity date or following the delivery by Dexcom of a notice of redemption.

Holders of the 2023 Notes may convert all or a portion of their notes at their option prior to 5:00 p.m., New York City time, on the business day immediately preceding September 1, 2023, in multiples of $ 1,000 principal amount, only under the following circumstances:

(1) during any calendar quarter commencing after March 31, 2019 (and only during such calendar quarter), if the last reported sale price of DexCom’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the applicable conversion price of the 2023 Notes on each such trading day;

(1) during any calendar quarter commencing after March 31, 2019 (and only during such calendar quarter), if the last reported sale price of Dexcom’s common stock for at least 20 trading days (whether or not consecutive) during the

period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the applicable conversion price of the 2023 Notes on each such trading day;

(2) during the five business day period after any five consecutive trading day period in which the trading price per $ 1,000 principal amount of the 2023 Notes for each day of that five -day consecutive trading day period was less than 98 % of the product of the last reported sale price of Dexcom’s common stock and the applicable conversion rate of the 2023 Notes on such trading day;

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On or after September 1, 2023, until 5:00 p.m., New York City time, on the second scheduled trading day immediately preceding the maturity date, holders of the 2023 Notes may convert all or a portion of their notes regardless of the foregoing circumstances.

Circumstance (1) listed above occurred during the quarters ended March 31, 2020 and June 30, 2020 and as a result, the 2023 Notes were convertible at the option of the holder from April 1, 2020 through September 30, 2020;

Circumstance (1) listed above occurred during the quarter ended December 31, 2020.

As a result, the 2023 Notes were convertible at the option of the holder from January 1, 2021 through March 31, 2021;

actual conversions during that period were not significant.

Circumstance (1) listed above also occurred during the quarter ended September 30, 2020 and as a result, the 2023 Notes will remain convertible at the option of the holder from October 1, 2020 through December 31, 2020.

Circumstance (1) listed above also occurred during the quarter ended March 31, 2021 and as a result, the 2023 Notes will remain convertible at the option of the holder from April 1, 2021 through June 30, 2021.

Conversion Rights at Our Option

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As a result, we recognized $ 289.4 million in additional paid-in-capital during 2020.

As a result, we recognized $ 289.4 million in additional paid-in-capital, net of debt issuance costs, during 2020.

No principal payments are due on the 2025 Notes prior to maturity.

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On December 19, 2018, we entered into an amended and restated revolving credit agreement which was subsequently amended on May 11, 2020 (as amended, the Credit Agreement).

The Credit Agreement provides for available principal amount of $ 200.0 million which can be increased up to $ 500.0 million at our option subject to customary conditions and approval of

The Credit Agreement provides for available principal amount of $ 200.0 million which can be increased up to $ 500.0 million at our option subject to customary conditions and approval of our lenders.

Borrowings under the Credit Agreement are available for general corporate purposes, including working capital and capital expenditures.

Information related to availability and outstanding borrowings on our Credit Agreement is as follows as of the date indicated:

(In millions) September 30, 2020

(In millions) March 31, 2021

Available principal amount $ 200.0

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We will also pay a commitment fee of between 0.2 % and 0.3 %, payable quarterly in arrears, on the average daily unused amount of the revolving facility based on our leverage ratio.

The Credit Agreement will mature on the earlier to occur of (i) December 19, 2023 or (ii) 91 days prior to the maturity date of the 2022 Notes or (iii) 91 days prior to the maturity date of the 2023 Notes if both (a) the aggregate outstanding principal amount of the 2022 Notes or the 2023 Notes, as applicable, is greater than EBITDA for the period of four consecutive fiscal quarters ending prior to such date and (b) unrestricted domestic cash on hand is less than the aggregate outstanding principal amount of the 2022 Notes or the 2023 Notes, as applicable, plus $ 100.0 million.

The Credit Agreement will mature on the earlier to occur of (i) December 19, 2023, (ii) 91 days prior to the maturity date of the 2022 Notes or (iii) 91 days prior to the maturity date of the 2023 Notes if both (a) the aggregate outstanding principal amount of the 2022 Notes or the 2023 Notes, as applicable, is greater than EBITDA for the period of four consecutive fiscal quarters ending prior to such date and (b) unrestricted domestic cash on hand is less than the aggregate outstanding principal amount of the 2022 Notes or the 2023 Notes, as applicable, plus $ 100.0 million.

Our obligations under the Credit Agreement are guaranteed by our existing and future wholly-owned domestic subsidiaries, and are secured by a first-priority security interest in substantially all of the assets of Dexcom and the guarantors, including all or a portion of the equity interests of our domestic subsidiaries and first-tier foreign subsidiaries but excluding real property and intellectual property (which is subject to a negative pledge).

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The Credit Agreement also requires us to maintain a maximum leverage ratio and a minimum fixed charge coverage ratio.

We were in compliance with these covenants as of September 30, 2020.

We were in compliance with these covenants as of March 31, 2021.

Contingencies

We are subject to various claims, complaints and legal actions that arise from time to time in the normal course of business, including commercial insurance, product liability and employment related matters.

We are subject to various claims, complaints and legal actions that arise from time to time in the normal course of business, including commercial insurance, product liability, intellectual property and employment related matters.

In addition, from time to time we may bring claims or initiate lawsuits against various third parties with respect to matters arising out of the ordinary course of our business, including commercial and employment related matters.

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There can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, financial condition or results of operations.

Our effective tax rate for the nine months ended September 30, 2020 was 3.7 %, based on an estimated annual effective tax rate of 3.1 % and including the impact of certain return to provision adjustments.

The income taxes estimated for the year include state and foreign income taxes in jurisdictions where we have no net operating losses.

As of September 30, 2020, we continue to maintain a full valuation allowance against our net deferred tax assets based on our assessment that it is not more likely than not these future benefits will be realized before expiration.

We analyze our ability to realize our deferred tax assets quarterly, weighing all available positive and negative evidence of future taxable income.

A future release of the valuation allowance will result in a material tax benefit recognized in the quarter of release.

We estimate our annual effective tax rate to be 21.4 % for the full year 2021, which differed from the U.S.

federal statutory rate due to state and foreign income taxes, nondeductible executive compensation, and increases to unrecognized tax benefits offset by federal research tax credits generated.

Our negative effective tax rate of 90.1 % for the three months ended March 31, 2021 was due to excess tax benefits recognized for employee share-based compensation.

Stockholders’ Equity

Share-Based Compensation Expense

The following table summarizes share-based compensation expense, net of capitalized amounts, for the periods shown.

Share-Based Compensation

Our share-based compensation expense is associated with restricted stock units, or RSUs, performance stock units, or PSUs, and our Employee Stock Purchase Plan, or ESPP.

The following table summarizes our share-based compensation expense included in our consolidated statements of operations for the periods shown.

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2021 2020

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Selling, general and administrative 15.6 13.8

Total share-based compensation expense included in net income $ 30.7 $ 24.4 $ 85.3 $ 79.1

As of September 30, 2020, unrecognized estimated compensation costs related to unvested restricted stock units, or RSUs, and performance stock units, or PSUs, totaled $ 170.3 million and is expected to be recognized through 2023.

Restricted Stock Units

A summary of our RSU and PSU activity for the nine months ended September 30, 2020 is as follows:

Average Aggregate

Grant Date Intrinsic

(In millions, except weighted average grant date fair values) Shares Fair Value Value

Nonvested at December 31, 2019 1.8 $ 96.63 $ 392.0

Granted 0.4 296.24

Vested ( 1.0 ) 88.57

Forfeited — 119.25

Nonvested at September 30, 2020 1.2 $ 176.10 $ 500.8

The total vest date fair value of RSUs that vested during the nine months ended September 30, 2020 was $ 305.2 million.

No PSUs vested during that period.

Total share-based compensation expense $ 28.0 $ 23.9

At March 31, 2021, unrecognized estimated compensation costs related to RSUs, PSUs and ESPP totaled $ 240.9 million and is expected to be recognized through 2024.

Equity Award Activity

The total vest date fair value of RSUs and PSUs that vested during the three months ended March 31, 2021 was $ 183.2 million and $ 29.5 million, respectively.

Business Segment and Geographic Information

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Disaggregation of Revenue

We disaggregate revenue by geographic region and by major sales channel.

We have determined that disaggregating revenue into these categories achieves the ASC Topic 606 disclosure objectives of depicting how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Dexcom is domiciled in the United States.

We sell our CGM systems through a direct sales force in the United States, Canada and some countries in Europe, and through distribution arrangements in the United States, and certain countries in Africa, Asia, Europe, Latin America, and the Middle East, as well as Australia, Canada, and New Zealand.

We disaggregate our revenue from contracts by geography and by major sales channel as we believe they best depict how the nature, amount and timing of revenues and cash flows are affected by economic factors.

Revenues by geographic region

During the three and nine months ended September 30, 2020 and 2019, no individual country outside the United States generated revenue that represented more than 10% of our total revenue.

The table below sets forth revenues for the periods shown by our two primary geographical markets, the United States and outside of the United States, based on the geographic location to which we deliver the product.

During the three months ended March 31, 2021 and 2020, no individual country outside the United States generated revenue that represented more than 10% of our total revenue.

The table below sets forth revenues by our two primary geographical markets, the United States and outside of the United States, based on the geographic location to which we deliver the components.

The majority of our long-lived assets are located in the United States.

Three Months Ended

September 30, 2020 Three Months Ended

September 30, 2019

March 31, 2021 Three Months Ended

March 31, 2020

(Dollars in millions) Amount % of Total Amount % of Total

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Total $ 505.0 100 % $ 405.1 100 %

Nine Months Ended

September 30, 2020 Nine Months Ended

September 30, 2019

(Dollars in millions) Amount % of Total Amount % of Total

United States $ 1,058.0 78 % $ 785.6 78 %

Outside of the United States 299.8 22 % 227.6 22 %

Total revenues $ 1,357.8 100 % $ 1,013.2 100 %

Revenues by customer sales channel

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Three Months Ended

September 30, 2020 Three Months Ended

September 30, 2019

(Dollars in millions) Amount % of Total Amount % of Total

Distributor $ 382.4 76 % $ 270.4 68 %

Direct 118.5 24 % 125.9 32 %

Total $ 500.9 100 % $ 396.3 100 %

Nine Months Ended

September 30, 2020 Nine Months Ended

September 30, 2019

March 31, 2021 Three Months Ended

March 31, 2020

(Dollars in millions) Amount % of Total Amount % of Total

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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