What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-02 compared with 2021-07-30 · 123 added, 105 removed, 219 unchanged (51% of the section changed)

8 unchanged sentences

We have no obligation to update any of these statements.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements, including risks related to general market trends, the benefits of acquisitions and investments, uncertainties related to COVID-19 and the impact of our responses to it, the interpretation and impacts of changes in export controls and other trade barriers, our ability to execute our business strategy and other risks discussed in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 26, 2020 and in this Quarterly Report on Form 10-Q.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements, including risks related to general market trends, the benefits of acquisitions and investments, our supply chain, uncertainties related to COVID-19 and the impact of our responses to it, the interpretation and impacts of changes in export controls and other trade barriers, our ability to execute our business strategy and other risks discussed in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 26, 2020 and in this Quarterly Report on Form 10-Q.

You should carefully consider the numerous risks and uncertainties described under these sections.

8 unchanged sentences

Sales of our probe cards and analytical probes are included in the Probe Cards segment, while sales of our probe stations, metrology systems, and thermal and cryogenic systems are included in the Systems segment.

We generated net income of $37.5 million in the first six months of fiscal 2021 as compared to $36.4 million in the first six months of fiscal 2020.

The increase in net income was primarily due to increased revenues, partially offset by slightly lower margins on a lower mix of Foundry & Logic probe card sales and higher operating expenses on higher operating levels.

We generated net income of $58.0 million in the first nine months of fiscal 2021 as compared to $59.3 million in the first nine months of fiscal 2020.

The small decrease in net income was primarily due to increased revenues, partially offset by slightly lower margins on a lower mix of Foundry & Logic probe card sales and higher taxes on higher taxable income and a higher tax rate due to significant one-time tax benefits during 2020.

Impact of COVID-19

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The COVID-19 pandemic has resulted in significant governmental actions designed to control the spread of the virus, including the imposition of safety requirements and other orders in locations where we have manufacturing and other activities.

We believe that we operate in a critical infrastructure industry, as defined by the U.S.

Department of Homeland Security.

This reduces the current and anticipated impacts of the COVID-19 pandemic on our major customers and suppliers, and upon our operations, as compared to companies that are not part of the critical infrastructure.

We currently continue to operate in all of our manufacturing sites at production levels comparable to those prior to the pandemic, albeit subject to certain safety and related constraints.

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Actual results in these areas could differ from management’s estimates.

During the six months ended June 26, 2021, there were no significant changes in our significant accounting policies or estimates from those reported in our Annual Report on Form 10-K for the year ended December 26, 2020, which was filed with the Securities and Exchange Commission on February 22, 2021.

During the nine months ended September 25, 2021, there were no significant changes in our significant accounting policies or estimates from those reported in our Annual Report on Form 10-K for the year ended December 26, 2020, which was filed with the Securities and Exchange Commission on February 22, 2021.

Results of Operations

The following table sets forth our operating results as a percentage of revenues for the periods indicated:

Three Months Ended Six Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Three Months Ended Nine Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

Revenues 100.0 % 100.0 % 100.0 % 100.0 %

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Income before income taxes 12.3 12.5 11.7 12.9

Provision for income taxes 1.2 1.4 1.5 1.6

Provision (benefit) for income taxes 1.5 (0.3) 1.4 0.9

Net income 10.8 % 12.8 % 10.3 % 12.0 %

Revenues by Segment and Market

Three Months Ended Six Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Three Months Ended Nine Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

(In thousands)

3 unchanged sentences

Three Months Ended

2021 % of Revenues June 27,

September 25,

2021 % of Revenues September 26,

2020 % of Revenues $ Change % Change

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Total revenues $ 189,964 100.0 % $ 177,996 100.0 % $ 11,968 6.7 %

Six Months Ended

2021 % of Revenues June 27,

Nine Months Ended

September 25,

2021 % of Revenues September 26,

2020 % of Revenues $ Change % Change

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Total revenues $ 564,676 100.0 % $ 496,573 100.0 % $ 68,103 13.7 %

The decrease in Foundry & Logic product revenue for the three months ended June 26, 2021, compared to the three months ended June 27, 2020, was driven principally by lower demand from one major customer, partially offset by increased unit sales to other large semiconductor foundries and integrated device manufacturers, demonstrating success in diversifying across our strategic accounts.

The increase in Foundry & Logic product revenue for the six months ended June 26, 2021, compared to the six months ended June 27, 2020, was driven principally by increased unit sales to large semiconductor foundries and integrated device manufacturers, partially offset by lower demand from one major customer.

The increase in DRAM product revenue for the three and six months ended June 26, 2021, compared to the three and six months ended June 27, 2020, was driven by an increase in sales as a result of increased design wins and customer demand.

The increase in Flash product revenue for the three and six months ended June 26, 2021, compared to the three and six months ended June 27, 2020, was driven by increased sales resulting from the acquisition of Baldwin Park.

Our revenue in this market continues to be highly variable.

The increase in Systems product revenue for the three and six months ended June 26, 2021, compared to the three and six months ended June 27, 2020, was driven by increased sales of cryogenic systems due to the acquisition of High Precision Devices, Inc.

The decrease in Foundry & Logic product revenue for the three months ended September 25, 2021, compared to the three months ended September 26, 2020, was driven by lower demand from two major customers, partially offset by increased unit sales to other large semiconductor foundries and integrated device manufacturers.

The decrease for the nine months ended September 25, 2021, compared to the nine months ended September 26, 2020, was driven by lower demand from one major customer, partially offset by increased unit sales to other large semiconductor foundries and integrated device manufacturers.

The relative stability of our overall revenue, despite these fluctuations, is the result of our long-term customer and market diversification initiatives.

The increase in DRAM product revenue for the three and nine months ended September 25, 2021, compared to the three and nine months ended September 26, 2020, was driven by increased sales to several customers and strong market-based demand for DRAM products through the first three quarters of fiscal 2021.

Flash product revenue was down slightly for the three months ended September 25, 2021, compared to the three months ended September 26, 2020, with shifts between customers that are typical as our revenue in this market continues to be highly variable.

The increase in Flash product revenue for the nine months ended September 25, 2021, compared to the nine months ended September 26, 2020, was driven by increased sales resulting from the acquisition of Baldwin Park offset by decreased sales as a result of decreased customer demand for our existing products.

The increase in Systems product revenue for the three and nine months ended September 25, 2021, compared to the three and nine months ended September 26, 2020, was driven by increased sales of cryogenic systems due to the acquisition of High Precision Devices, Inc.

(“HPD”) and increased sales of thermal sub-systems and metrology systems.

Due to COVID-19, there were various impacts across our segments due to governmental mandates of social distancing.

This resulted in a temporary factory shutdown for almost two weeks during our first fiscal quarter of 2020 in certain locations, limiting our manufacturing capacity.

We believe these shutdowns negatively affected revenue and impacted our ability to maintain typical lead times, especially in our Probes segment.

The plant shutdowns we experienced in the six months ended June 27, 2020 did not recur in the six months ended June 26, 2021, which presumably drove some of the increased sales, particularly in the Probe Cards segment where the plant shutdowns in 2020 were longer in duration than the shutdowns for the Systems segment.

Revenues by Geographic Region

Three Months Ended Six Months Ended

Revenue June 27,

Revenue June 26,

Revenue June 27,

Three Months Ended Nine Months Ended

September 25,

Revenue September 26,

Revenue September 25,

Revenue September 26,

(Dollars in thousands)

Taiwan $ 41,574 21.9 % $ 36,935 20.8 % $ 139,038 24.6 % $ 101,886 20.5 %

South Korea 36,177 19.2 % 15,113 9.6 % 55,262 14.7 % 29,201 9.2 %

United States 32,650 17.4 % 28,121 17.8 % 62,136 16.6 % 60,037 18.8 %

China 51,047 26.8 28,546 16.0 125,499 22.2 120,946 24.4

United States 25,468 13.4 36,328 20.4 87,604 15.5 96,365 19.4

South Korea 28,972 15.3 29,571 16.6 84,234 14.9 58,772 11.8

Asia-Pacific 1

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subsidiary and requests the products to be shipped to an address in South Korea, this sale will be reflected in the revenue for South Korea rather than the U.S.

Changes in revenue by geographic region for the three and six months ended June 26, 2021, compared to the three and six months ended June 27, 2020, were primarily attributable to changes in customer demand, shifts in customer regional manufacturing strategies, particularly with our large multinational customers, and product sales mix.

Changes in revenue by geographic region for the three and nine months ended September 25, 2021, compared to the three and nine months ended September 26, 2020, were primarily attributable to changes in customer demand, shifts in customer regional manufacturing strategies, particularly with our large multinational customers, and product sales mix.

Cost of Revenues and Gross Margins

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Three Months Ended

2021 June 27,

September 25,

2021 September 26,

2020 $ Change % Change

1 unchanged sentence

Gross margin 42.2 % 43.1 %

Six Months Ended

2021 June 27,

Nine Months Ended

September 25,

2021 September 26,

2020 $ Change % Change

3 unchanged sentences

Three Months Ended

June 26, 2021 June 27, 2020

September 25, 2021 September 26, 2020

Probe Cards Systems Corporate and Other Total Probe Cards Systems Corporate and Other Total

1 unchanged sentence

Gross margin 45.1 % 50.0 % 42.2 % 46.2 % 49.8 % 43.1 %

Six Months Ended

June 26, 2021 June 27, 2020

Nine Months Ended

September 25, 2021 September 26, 2020

Probe Cards Systems Corporate and Other Total Probe Cards Systems Corporate and Other Total

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Gross margin 44.2 % 49.4 % 41.3 % 45.8 % 48.7 % 42.4 %

For the three and six months ended June 26, 2021, gross margins decreased compared to the three and six months ended June 27, 2020, primarily due to a lesser proportion of sales coming from higher gross margin Foundry & Logic probe card sales and a greater proportion of sales coming from lower gross margin DRAM sales, combined with higher materials costs.

For the three and six months ended June 26, 2021, gross margins increased compared to the three and six months ended June 27, 2020, primarily as a result of favorable product mix, largely related to increased sales of thermal sub-systems and metrology systems.

For the three and nine months ended September 25, 2021, gross margins decreased compared to the three and nine months ended September 26, 2020, primarily due to higher material costs driven by fluctuations in commodity costs, somewhat offset by higher standard margins on Foundry & Logic sales.

For the three and nine months ended September 25, 2021, gross margins increased compared to the three and nine months ended September 26, 2020, primarily as a result of favorable product mix, largely related to increased sales of metrology systems and thermal sub-systems.

Corporate and Other

Corporate and Other includes unallocated expenses relating to share-based compensation and amortization of intangible assets, inventory and fixed asset fair value adjustments due to acquisitions, and other which are not used in evaluating the results of, or in allocating resources to, our reportable segments.

Corporate and Other includes unallocated expenses relating to share-based compensation and amortization of intangible assets, inventory and fixed asset fair value adjustments due to acquisitions, and restructuring which are not used in evaluating the results of, or in allocating resources to, our reportable segments.

Gross profit and gross margins fluctuate with revenue levels, product mix, selling prices, factory loading and material costs.

For the three and six months ended June 26, 2021, compared to the three and six months ended June 27, 2020, gross profit has increased on greater revenue levels while gross margins have decreased, primarily on less favorable Probes segment product mix.

For the three and nine months ended September 25, 2021, compared to the three and nine months ended September 26, 2020, gross profit has increased on greater revenue levels while gross margins have decreased, primarily on higher material costs, partially offset by a more favorable product mix.

Cost of revenues included stock-based compensation expense as follows (in thousands):

Three Months Ended Six Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Three Months Ended Nine Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

Stock-based compensation $ 1,392 $ 962 $ 3,806 $ 2,800

1 unchanged sentence

Three Months Ended

2021 June 27,

September 25,

2021 September 26,

2020 $ Change % Change

2 unchanged sentences

% of revenues 13.7 % 12.9 %

Six Months Ended

2021 June 27,

Nine Months Ended

September 25,

2021 September 26,

2020 $ Change % Change

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% of revenues 13.4 % 13.1 %

The increase in research and development expenses in the three and six months ended June 26, 2021 when compared to the corresponding period in the prior year was primarily driven by our recent acquisitions of Baldwin Park and HPD, which increased headcount and general operational costs.

Annual salary increases and higher stock-based compensation also contributed to the increase.

The increase is in alignment with current operating levels with no change as a percent of revenues for the six months ended June 26, 2021 when compared to the corresponding period in the prior year.

The increase in research and development expenses in the three and nine months ended September 25, 2021 when compared to the corresponding period in the prior year was primarily driven by our recent acquisitions of Baldwin Park and HPD, which increased headcount and general operational costs.

Annual salary increases, higher stock-based compensation, and restructuring charges also contributed to the increase.

A detail of the changes is as follows (in thousands):

Three Months Ended June 26, 2021 compared to Three Months Ended June 27, 2020 Six Months Ended June 26, 2021 compared to Six Months Ended June 27, 2020

Three Months Ended September 25, 2021 compared to Three Months Ended September 26, 2020 Nine Months Ended September 25, 2021 compared to Nine Months Ended September 26, 2020

Employee compensation costs $ 1,330 $ 5,354

Stock-based compensation 684 1,208

Restructuring charges 289 694

Project material costs (129) 381

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Research and development included stock-based compensation expense as follows (in thousands):

Three Months Ended Six Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Three Months Ended Nine Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

Stock-based compensation $ 2,010 $ 1,326 $ 5,362 $ 4,154

1 unchanged sentence

Three Months Ended

2021 June 27,

September 25,

2021 September 26,

2020 $ Change % Change

2 unchanged sentences

% of revenues 16.3 % 17.9 %

Six Months Ended

2021 June 27,

Nine Months Ended

September 25,

2021 September 26,

2020 $ Change % Change

2 unchanged sentences

% of revenues 16.2 % 16.6 %

The increase in selling, general and administrative expenses in the three and six months ended June 26, 2021 when compared to the corresponding period in the prior year was primarily driven by our recent acquisitions of Baldwin Park and HPD, which increased headcount and general operational costs.

Annual salary increases and higher stock-based compensation also contributed to the increase, together with a benefit in the prior year related to contingent consideration for the acquisition of FRT GmbH ("FRT") that did not repeat.

The decrease in selling, general and administrative expenses in the three months ended September 25, 2021 when compared to the corresponding period in the prior year was primarily driven by decreased information technology security remediation costs that were incurred during the three months ended September 26, 2020 that did not repeat.

This decrease was partially offset by higher stock-based compensation.

The increase in selling, general and administrative expenses in the nine months ended September 25, 2021 when compared to the corresponding period in the prior year was primarily driven by our recent acquisitions of Baldwin Park and HPD, which increased headcount and general operational costs.

Annual salary increases and higher stock-based compensation also contributed to the increases.

These increases were partially offset by the benefit in the prior year related to adjustments to contingent consideration for the acquisition of FRT GmbH ("FRT") and information technology security remediation costs that both did not repeat.

A detail of the changes is as follows (in thousands):

Three Months Ended June 26, 2021 compared to Three Months Ended June 27, 2020 Six Months Ended June 26, 2021 compared to Six Months Ended June 27, 2020

Gain on contingent consideration $ 3,605 $ 3,605

Three Months Ended September 25, 2021 compared to Three Months Ended September 26, 2020 Nine Months Ended September 25, 2021 compared to Nine Months Ended September 26, 2020

Employee compensation costs $ 331 $ 5,235

Gain on contingent consideration 71 3,676

Consulting fees (3,368) (3,402)

Stock-based compensation 1,297 2,597

General operating expenses 562 1,066

Consulting fees 145 (34)

Travel related costs 156 (341)

2 unchanged sentences

Selling, general and administrative included stock-based compensation expense as follows (in thousands):

Three Months Ended Six Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Three Months Ended Nine Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

Stock-based compensation $ 4,518 $ 3,221 $ 12,417 $ 9,820

Interest Income and Interest Expense

Three Months Ended Six Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Three Months Ended Nine Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

(Dollars in thousands)

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Interest income is earned on our cash, cash equivalents, restricted cash and marketable securities.

The decrease in interest income for the three and six months ended June 26, 2021 compared with the corresponding period of the prior year was attributable to lower investment yields due to the low interest rate environment, despite higher invested balances.

The decrease in interest income for the three and nine months ended September 25, 2021 compared with the corresponding period of the prior year was attributable to lower investment yields due to the low interest rate environment, despite higher invested balances.

Interest expense primarily includes interest on our term loans, interest rate swap derivative contracts, and term loan issuance costs amortization charges.

The decrease in interest expense for the three and six months ended June 26, 2021 compared to the same period of the prior year was primarily due to lower outstanding debt balances due to the pay-off of the term loan acquired when we purchased Cascade Microtech, Inc, and subsequently paid off on June 30, 2020, partially offset by the Building Term Loan that originated in the second quarter of 2020.

The decrease in interest expense for the three and nine months ended September 25, 2021 compared to the same period of the prior year was primarily due to lower outstanding debt balances due to the June 30, 2020 pay-off of the term loan originated to acquire Cascade Microtech, Inc, partially offset by the Building Term Loan originated in the second quarter of 2020.

Interest expense was also lower due to lower average interest rates on the outstanding debt.

2 unchanged sentences

Provision for Income Taxes

Three Months Ended Six Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Three Months Ended Nine Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

(In thousands, except percentages)

Provision for income taxes $ 2,283 $ 2,162 $ 5,489 $ 4,978

Provision (benefit) for income taxes $ 2,784 $ (499) $ 8,273 $ 4,479

Effective tax rate 12.0 % (2.2) % 12.5 % 7.0 %

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statutory rate and included in our worldwide effective tax rate for the year ending December 25, 2021.

The increase in the effective tax rate in the nine months ended September 25, 2021 when compared to the corresponding period in the prior year was primarily driven by the cumulative effect of adjustments made related to final and proposed Treasury regulations during the third quarter ended September 26, 2020.

The regulations under Sections 951A and 954 provided final global intangible low-taxed income (GILTI) high-tax exclusion and proposed changes to the existing subpart F income high-tax exception, respectively.

The impact of those adjustments provided a significant one time tax benefit during 2020.

Liquidity and Capital Resources

Capital Resources

Our working capital was $343.6 million at June 26, 2021, compared to $332.5 million at December 26, 2020.

Cash and cash equivalents primarily consist of deposits held at banks and money market funds.

Our working capital was $346.5 million at September 25, 2021, compared to $332.5 million at December 26, 2020.

Cash and cash equivalents primarily consist of deposits held at banks, money market funds, and U.S.

Marketable securities primarily consist of U.S.

treasuries, corporate bonds, and commercial paper.

We typically invest in highly-rated securities with low probabilities of default.

We typically invest in highly-rated

securities with low probabilities of default.

Our investment policy requires investments to be rated single A or better, and limits the types of acceptable investments, issuer concentration and duration of the investment.

Our cash, cash equivalents and marketable securities totaled approximately $256.2 million at June 26, 2021, compared to $255.0 million at December 26, 2020.

Our cash, cash equivalents and marketable securities totaled approximately $264.7 million at September 25, 2021, compared to $255.0 million at December 26, 2020.

We believe that we will be able to satisfy our working capital requirements and scheduled term loan repayments for at least the next twelve months with the liquidity provided by our existing cash, cash equivalents, marketable securities and cash provided by operations.

8 unchanged sentences

The following table sets forth our net cash flows from operating, investing and financing activities:

Six Months Ended

2021 June 27,

Nine Months Ended

September 25,

2021 September 26,

(In thousands)

3 unchanged sentences

Operating Activities

Net cash provided by operating activities for the six months ended June 26, 2021 was primarily attributable to net income of $37.5 million and net non-cash expenses of $51.9 million, further impacted by changes in operating assets and liabilities, as explained below.

Inventories, net, increased $12.7 million to $111.9 million at June 26, 2021, compared to $99.2 million at December 26, 2020, as a result of anticipated projected customer demand.

Due to provisions for excess and obsolete inventories of $6.9 million, the change in Inventories, net, was further impacted.

Operating lease liabilities increased $7.4 million to $42.1 million at June 26, 2021, compared to $34.7 million at December 26, 2020 as a result of additional right-of-use assets obtained in exchange for lease obligations of $11.6 million offset by lease payments.

Net cash provided by operating activities for the nine months ended September 25, 2021 was primarily attributable to net income of $58.0 million and net non-cash expenses of $77.4 million, further impacted by changes in operating assets and liabilities, as explained below.

Inventories, net, increased $15.9 million to $115.1 million at September 25, 2021, compared to $99.2 million at December 26, 2020, as a result of anticipated projected customer demand.

Due to provisions for excess and obsolete inventories of $11.6 million and non-cash restructuring charges to record inventory impairments of $1.3 million, the change in Inventories, net, was further impacted.

Operating lease liabilities increased $5.7 million to $40.4 million at September 25, 2021, compared to $34.7 million at December 26, 2020 as a result of additional right-of-use assets obtained in exchange for lease obligations of $11.7 million offset by lease payments.

Investing Activities

Net cash used in investing activities for the six months ended June 26, 2021 was primarily related to $31.3 million property, plant and equipment acquisitions, and $28.5 million net cash used to purchase marketable securities.

Net cash used in investing activities for the nine months ended September 25, 2021 was primarily related to $51.4 million property, plant and equipment acquisitions, and $43.6 million net cash used to purchase marketable securities.

Financing Activities

Net cash used in financing activities for the six months ended June 26, 2021 primarily related to $24.0 million used to purchase common stock under our stock repurchase program, $5.3 million related to tax withholding associated with the net share settlements of our equity awards, and $4.7 million of principal payments made towards the repayment of our term loans, partially offset by $5.9 million of proceeds received from issuances of common stock under our employee stock purchase plan and stock option plans, and $3.9 million paid to settle the contingent consideration from the acquisition of FRT.

Net cash used in financing activities for the nine months ended September 25, 2021 primarily related to $24.0 million used to purchase common stock under our stock repurchase program, $12.6 million related to tax withholding associated with the net share settlements of our equity awards, $7.0 million of principal payments made towards the repayment of our term loans, and $3.9 million paid to settle the contingent consideration from the acquisition of FRT, partially offset by $10.6 million of proceeds received from issuances of common stock under our employee stock purchase plan and stock option plans.

FRT Term Loan

1 unchanged sentence

The FRT Term Loan bears interest at a rate equal to the Euro Interbank Offered Rate (“EURIBOR”) plus 1.75% per annum and will be repaid in quarterly installments of approximately $2.0 million plus interest.

The interest rate at June 26, 2021 was 1.21%.

As of June 26, 2021, the balance outstanding pursuant to the FRT term loan was $12.5 million.

The interest rate at September 25, 2021 was 1.20%.

As of September 25, 2021, the balance outstanding pursuant to the FRT term loan was $10.3 million.

Building Term Loan

3 unchanged sentences

Interest payments are payable in monthly installments over a fifteen-year period.

The interest rate at June 26, 2021 was 1.84%.

As of June 26, 2021, the balance outstanding pursuant to the Building Term Loan was $17.0 million.

The interest rate at September 25, 2021 was 1.84%.

As of September 25, 2021, the balance outstanding pursuant to the Building Term Loan was $16.8 million.

On March 17, 2020, we entered into a forward starting interest rate swap agreement to hedge the interest payments on the Building Term Loan for the notional amount of $18.0 million, and an amortization period that matches the debt.

As future levels of LIBOR over the life of the loan are uncertain, we entered into this interest-rate swap agreement to hedge the exposure in interest rate risks associated with movement in LIBOR rates.

By entering into the agreement, we convert a floating rate interest at one-month LIBOR plus 1.75% into a fixed rate interest at 2.75%.

As of June 26, 2021, the notional amount of the loan that is subject to this interest rate swap is $17.0 million.

By entering into the agreement, we converted a floating rate interest at one-month LIBOR plus 1.75% into a fixed rate interest at 2.75%.

As of September 25, 2021, the notional amount of the loan that is subject to this interest rate swap is $16.8 million.

Stock Repurchase Program

1 unchanged sentence

The share repurchase program will expire on October 28, 2022.

During the six months ended June 26, 2021, we repurchased 620,200 shares of common stock for $24.0 million and, as of June 26, 2021, $26.0 million remained available for future repurchases.

During the nine months ended September 25, 2021, we repurchased 620,200 shares of common stock for $24.0 million and, as of September 25, 2021, $26.0 million remained available for future repurchases.

Contractual Obligations and Commitments

The following table summarizes our significant contractual commitments to make future payments in cash under contractual obligations as of June 26, 2021:

The following table summarizes our significant contractual commitments to make future payments in cash under contractual obligations as of September 25, 2021:

Payments Due In Fiscal Year

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Historically, we have not participated in transactions that have generated relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

As of June 26, 2021, we were not involved in any such off-balance sheet arrangements.

As of September 25, 2021, we were not involved in any such off-balance sheet arrangements.

Recent Accounting Pronouncements

1 unchanged sentence

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 2. Management’s Discussion and Analysis