What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-11-16 compared with 2022-11-17 · 98 added, 119 removed, 222 unchanged (49% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In addition to historical information, this filing contains statements relating to future events or our future results.

These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are subject to the safe harbor provisions created by statute.

Such forward-looking statements include, but are not limited to, statements with respect to our future revenue increasing, continuing or strengthening, or decreasing or weakening;

our capital allocation strategies, including any share repurchases;

demand for our products, including replacement demand;

our research and development efforts;

our ability to identify and realize new growth opportunities;

our ability to control costs;

and our operational flexibility as a result of (among other factors):

• our expectations regarding the potential impacts on our business of the novel coronavirus (“COVID-19”) pandemic, including supply chain disruptions, the economic and public health effects, and governmental and other responses to these impacts;

• our expectations regarding the potential impacts on our business of actual or potential inflationary pressures, interest rate and risk premium adjustments, falling consumer sentiment, or economic recession caused, directly or indirectly, by the prolonged Ukraine/Russia conflict, the COVID-19 pandemic, geopolitical tensions, catastrophic events including as a result of climate change and other macroeconomic factors;

• our expectations regarding our effective tax rate and our unrecognized tax benefit;

• our ability to operate our business in accordance with our business plan;

• risks inherent in doing business on an international level, including currency risks, regulatory requirements, political risks, export restrictions and other trade barriers;

• projected growth rates in the overall semiconductor industry, the semiconductor assembly equipment market, and the market for semiconductor packaging materials;

• projected demand for our products and services.

Generally, words such as “may,” “will,” “should,” “could,” “anticipate,” “expect,” “intend,” “estimate,” “plan,” “continue,” “goal” and “believe,” or the negative of or other variations on these and other similar expressions identify forward-looking statements.

These forward-looking statements are made only as of the date of this filing.

We do not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Forward-looking statements are based on current expectations and involve risks and uncertainties.

Our future results could differ significantly from those expressed or implied by our forward-looking statements.

These risks and uncertainties include, without limitation, those described below and under the heading “Risk Factors” in this Annual Report on Form 10-K and our other reports and registration statements filed from time to time with the Securities and Exchange Commission.

This discussion should be read in conjunction with our audited financial statements included in this Annual Report.

We operate in a rapidly changing and competitive environment.

New risks emerge from time to time and it is not possible for us to predict all risks that may affect us.

Future events and actual results, performance and achievements could differ materially from those set forth in, contemplated by or underlying the forward-looking statements, which speak only as of the date on which they were made.

Except as required by law, we assume no obligation to update or revise any forward-looking statement to reflect actual results or changes in, or additions to, the factors affecting such forward-looking statements.

Given those risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictions of actual results.

This section of this Form 10-K generally discusses fiscal 2023 and 2022 items and year-to-year comparisons between fiscal 2023 and 2022.

Discussions of fiscal 2020 items and year-to-year comparisons between fiscal 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended October 2, 2021, which was filed with the SEC on November 18, 2021.

Discussions of fiscal 2021 items and year-to-year comparisons between fiscal 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the 2022 Annual Report filed on November 17, 2022, and amended on August 8, 2023 (the “2022 Annual Report”).

Our Management’s Discussion and Analysis (“MD&A”) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows.

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• Other Obligations and Contingent Payments

For an overview of our business, see “Part I – Item 1.

For an overview of our business, please see “Part I, Item 1 — Business”.

Critical Accounting Policies and Estimates

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Results of Operations for fiscal 2023 and 2022

The following table reflects our income from operations for fiscal 2022 and 2021:

The following table reflects the income from operations for fiscal 2023 and 2022:

(dollar amounts in thousands) 2023 2022 $ Change % Change

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Research and development 144,701 136,852 7,849 5.7 %

Impairment charges 21,535 1,346 20,189 1,499.9 %

Operating expenses 319,218 278,248 40,970 14.7 %

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Because of the volatility of customer demand, possibility of customer changes in delivery schedules or cancellations and potential delays in product shipments, our backlog as of any particular date may not be indicative of net revenue for any succeeding period.

The following tables reflect our bookings and backlog for fiscal 2022 and 2021:

The following tables reflect the bookings and backlog for fiscal 2023 and 2022:

(in thousands) 2023 2022

Bookings $ 656,170 $ 1,226,524

(in thousands) October 1, 2022 October 2, 2021

(in thousands) September 30, 2023 October 1, 2022

Backlog $ 423,824 $ 510,145

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These have resulted in uncertainties in the semiconductor, LED, memory and automotive markets.

While the Company anticipates long-term growth in semiconductor consumption, we observed trade-related adverse impacts in demand from China from the fourth quarter of fiscal 2018 through fiscal 2022, and such impacts may increase in severity in fiscal 2023 and/or beyond.

While the Company anticipates long-term growth in semiconductor consumption, we observed trade-related adverse impacts in demand from China, which continues to persist in fiscal 2023 and beyond.

Our net revenues for fiscal 2023 decreased as compared to our net revenues for fiscal 2022.

The decrease in net revenue is primarily due to lower volume in both Capital Equipment and APS.

The following table reflects net revenue by business segment for fiscal 2022 and 2021:

The decrease in net revenue is primarily due to lower volume in Ball Bonding Equipment, Wedge Bonding Equipment, Advanced Solutions, APS and All Others, as further outlined in the tables presented immediately below.

The following table reflects the net revenue by reportable segment for fiscal 2023 and 2022:

(dollar amounts in thousands) 2023 2022 $ Change % Change

Net revenue % of total net revenue Net revenue % of total net revenue

Capital Equipment $ 1,306,468 86.9 % $ 1,312,576 86.5 % $ (6,108) (0.5) %

Ball Bonding Equipment $ 287,465 38.7 % $ 909,428 60.5 % $ (621,963) (68.4) %

Wedge Bonding Equipment 175,550 23.6 % 194,086 12.9 % (18,536) (9.6) %

Advanced Solutions 72,256 9.7 % 94,683 6.3 % (22,427) (23.7) %

APS 160,718 21.7 % 197,152 13.1 % (36,434) (18.5) %

All Others 46,502 6.3 % 108,271 7.2 % (61,769) (57.1) %

Total net revenue $ 742,491 100.0 % $ 1,503,620 100.0 % $ (761,129) (50.6) %

Capital Equipment

For fiscal 2022, the lower Capital Equipment net revenue as compared to fiscal 2021 was due to lower volume.

The lower volume was due to a decrease in customer investments as a result of uncertainties in the overall macroeconomic environment, partially offset by favorable price variance due to product mix.

For fiscal 2022, the lower APS net revenue as compared to fiscal 2021 was primarily due to lower volume in spares, services and bonding tools.

The lower volume was due to a decrease in customer utilization.

Ball Bonding Equipment

For fiscal 2023, the lower Ball Bonding Equipment net revenue as compared to fiscal 2022 was due to lower volume of customer purchases primarily in the General Semiconductor and Memory markets.

The lower volume in these end markets was a result of uncertainties in the overall macroeconomic environment, leading to a decline in consumer and industrial purchases.

This was exacerbated by the high semiconductor supply chain inventories, which contributed to low utilization of our equipment by our customers, resulting in lower demand for our products.

Wedge Bonding Equipment

For fiscal 2023, the lower Wedge Bonding Equipment net revenue as compared to fiscal 2022 was due to lower volume of customer purchases primarily in the General Semiconductor market due to the lower power discrete devices demand, which was partially offset by the higher volume of customer purchases in the automotive and renewable energy market.

Advanced Solutions

For fiscal 2023, the lower Advanced Solutions net revenue as compared to fiscal 2022 was due to timing of revenue recognition for certain customer contracts, which was partially offset by the higher volume of customer purchases in the General Semiconductor market.

For fiscal 2023, the lower APS net revenue as compared to fiscal 2022 was primarily due to lower volume of customer purchases primarily in spares, services and bonding tools.

The lower volume was also due to low utilization of our equipment resulting from the decline in consumer and industrial purchases and high semiconductor supply chain inventories.

For fiscal 2023, the lower net revenue in the “All Others” category as compared to fiscal 2022 was primarily due to lower volume of customer purchases in the General Semiconductor market and mini LED transfer solutions market.

The lower volume was a result of uncertainties in the overall macroeconomic environment, leading to a decline in consumer purchases.

Gross Profit Margin

The following table reflects gross profit as a percentage of net revenue by business segment for fiscal 2022 and 2021:

The following table reflects the gross profit as a percentage of net revenue by reportable segment for fiscal 2023 and 2022:

2023 2022 Basis point

Capital Equipment 48.2 % 44.0 % 420

Ball Bonding Equipment 45.6 % 49.0 % (340)

Wedge Bonding Equipment 52.1 % 48.1 % 400

Advanced Solutions 37.4 % 33.7 % 370

APS 55.2 % 60.5 % (530)

All Others 44.4 % 54.5 % (1,010)

Total gross margin 48.3 % 49.8 % (150)

Capital Equipment

For fiscal 2022, the higher Capital Equipment gross profit margin as compared to fiscal 2021 was primarily driven by favorable price variance due to product mix.

For fiscal 2022, the higher APS gross profit margin as compared to fiscal 2021 was primarily driven by favorable product mix in spares and services offset by less favorable price variance in bonding tools.

Ball Bonding Equipment

For fiscal 2023, the lower Ball Bonding Equipment gross profit margin as compared to fiscal 2022 was primarily driven by lower volume of customer purchases resulting from uncertainties in the overall macroeconomic environment and high semiconductor supply chain inventories, less favorable product mix, including lower sales of higher margin products, and less favorable customer mix.

Wedge Bonding Equipment

For fiscal 2023, the higher Wedge Bonding Equipment gross profit margin as compared to fiscal 2022 was primarily driven by favorable product mix, including higher sales of higher margin products.

Advanced Solutions

For fiscal 2023, the higher Advanced Solutions gross profit margin as compared to fiscal 2022 was primarily due to the reversal of previously accrued customer credit program due to the change in accounting estimates resulting from new information.

For fiscal 2023, the lower APS gross profit margin as compared to fiscal 2022 was primarily driven by lower volume, less favorable product mix among the spares, services and bonding tools, and lower average selling prices of bonding tools.

For fiscal 2023, the lower All Others gross profit margin as compared to fiscal 2022 was primarily due to less favorable product mix.

This was partially offset by the reversal of previously accrued customer credit program due to the change in accounting estimates resulting from new information.

Operating Expenses

The following table reflects operating expenses for fiscal 2022 and 2021:

The following table reflects the operating expenses for fiscal 2023 and 2022:

(dollar amounts in thousands) 2023 2022 $ Change % Change

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Research and development 144,701 136,852 $ 7,849 5.7 %

Impairment charges 21,535 1,346 $ 20,189 1499.9 %

Total $ 319,218 $ 278,248 $ 40,970 14.7 %

Selling, General and Administrative (“SG&A”)

For fiscal 2022, the lower SG&A expenses as compared to fiscal 2021 was primarily due to $7.1 million net favorable variance in foreign exchange.

This was partially offset by a $2.0 million COVID-19 related grant received from the Singapore government in the prior year period.

For fiscal 2023, the higher SG&A expenses as compared to fiscal 2022 was primarily due to $15.4 million net unfavorable variance in foreign exchange, $2.7 million higher staff costs due to an increase in headcount, $1.7 million higher professional services and $1.2 million higher amortization.

These were partially offset by $10.5 million lower sales representative commissions.

Research and Development (“R&D”)

For fiscal 2022, the lower R&D expenses as compared to fiscal 2021 was primarily due to lower staff costs related to incentive compensation.

This is partially offset by higher spending on prototype materials.

For fiscal 2023, the higher R&D expenses as compared to fiscal 2022 was primarily due to $4.2 million higher prototype material costs and $3.3 million higher staff costs related to an increase in headcount.

Impairment Charges

For fiscal 2023, the Company recognized a non-cash impairment charge of $21.5 million related to goodwill and intangible assets in the Lithography reporting unit, as well as on an investment in a non-marketable equity security.

The impairment charge in the prior year period relates to the impairment on an investment in a non-marketable equity security.

Goodwill and Intangible Assets and Note 6:

Equity Investments of the Notes to the Consolidated Financial Statements for further information.

Income from Operations

For fiscal 2022, total income from operations was higher as compared to fiscal 2021.

This was primarily due to higher gross profit and lower operating expenses in fiscal 2022.

The following tables reflect income from operations by business segment for fiscal 2022 and 2021:

For fiscal 2023, total income from operations was lower as compared to fiscal 2022.

This was primarily due to lower gross profit and higher operating expenses in fiscal 2023.

The following tables reflect the income/(loss) from operations by reportable segment for fiscal 2023 and 2022:

(dollar amounts in thousands) 2023 2022 $ Change % Change

Capital Equipment $ 397,920 $ 355,982 $ 41,938 11.8 %

Ball Bonding Equipment $ 81,929 $ 385,276 $ (303,347) (78.7) %

Wedge Bonding Equipment 63,088 66,649 (3,561) (5.3) %

Advanced Solutions (32,530) (15,389) (17,141) (111.4) %

APS 47,654 82,473 (34,819) (42.2) %

All Others (36,797) 25,732 (62,529) (243.0) %

Corporate expenses (83,907) (74,669) (9,238) (12.4) %

Total income from operations $ 39,437 $ 470,072 $ (430,635) (91.6) %

Capital Equipment

For fiscal 2022, the higher Capital Equipment income from operations as compared to fiscal 2021 was primarily due to a higher gross profit as explained under “Gross Profit Margin” above.

For fiscal 2022, the higher APS income from operations as compared to fiscal 2021 was primarily due to lower operating expenses as explained under “Operating Expenses” above.

Ball Bonding Equipment, Wedge Bonding Equipment, Advanced Solutions, APS and All Others

For fiscal 2023, the lower Ball Bonding Equipment, Wedge Bonding Equipment, and APS income from operations as compared to the prior year period was primarily due to the decrease in revenue and changes in operating expenses as explained under “Net Revenue” and “Operating Expenses” above.

For fiscal 2023, the higher Advanced Solutions loss from operations as compared to the prior year period was primarily due to the decrease in revenue and changes in operating expenses as explained under “Net Revenue” and “Operating Expenses” above.

For fiscal 2023, the loss from operations in the “All Others” category as compared to the income from operations in prior year period was primarily due to decrease in revenue as explained under “Net Revenue” above, the goodwill impairment charge, integration of newly acquired business and net unfavorable variance in foreign exchange.

Interest Income and Expense

The following table reflects interest income and interest expense for fiscal 2022 and 2021:

The following table reflects the interest income and interest expense for fiscal 2023 and 2022:

(dollar amounts in thousands) 2023 2022 $ Change % Change

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For fiscal 2023, the higher interest income as compared to fiscal 2022 was primarily due to higher weighted average interest rates on cash, cash equivalents and short-term investments.

Interest expense

For fiscal 2022, the lower interest expense as compared to fiscal 2021 was primarily due to lower levels of average short-term debt outstanding.

Please refer to Note 10:

Debt and Other Obligations to our consolidated financial statements in Item 8 for a discussion of the Overdraft Facility.

Provision for Income Taxes

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Effective tax rate 20.8 % 9.1 % 11.7 %

For fiscal 2022, the lower effective tax rate as compared to fiscal 2021 is primarily due to tax benefits from foreign exchange losses and increase in tax credits generated during the fiscal year.

For fiscal 2023, the decrease in provision for income taxes as compared to fiscal 2022 was primarily due to a decrease in profitability and the increase in effective tax rate was primarily related to the increase in the Global Intangible Low-Taxed Income (“GILTI”), resulting from the capitalization of research and development expenditures as mandated by the U.S.

Tax Cuts and Jobs Act of 2017 (“TCJA”) effective in fiscal 2023 and the net release of valuation allowances recorded against certain loss and credit carryforwards in fiscal 2022, partially offset by tax benefits from changes jurisdictional mix of profitability.

Please refer to “Note 15:

Income Taxes to our consolidated financial statements in Item 8.

Income Taxes” to our consolidated financial statements in Item 8 for additional information.

LIQUIDITY AND CAPITAL RESOURCES

The following table reflects total cash, cash equivalents and short-term investments as of October 1, 2022 and October 2, 2021:

(dollar amounts in thousands) October 1, 2022 October 2, 2021 Change

The following table reflects the total cash, cash equivalents and short-term investments as of September 30, 2023 and October 1, 2022:

(dollar amounts in thousands) September 30, 2023 October 1, 2022 Change

Cash and cash equivalents $ 529,402 $ 555,537 $ (26,135)

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Percentage of total assets 50.6 % 48.8 %

The following table reflects summary Consolidated Statements of Cash Flows information for fiscal 2022 and 2021:

The following table reflects the summarized Consolidated Statements of Cash Flows information for fiscal 2023 and 2022:

(in thousands) 2023 2022

Net cash provided by operating activities $ 173,404 $ 390,188

Net cash provided by / (used in) investing activities 133,799 (81,707)

Net cash (used in) / provided by investing activities (91,338) 133,799

Net cash used in financing activities (111,876) (321,191)

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Cash and cash equivalents, end of period $ 529,402 $ 555,537

Net cash provided by operating activities consisted of net income of $57.1 million, non-cash adjustments of $73.8 million and a net favorable change in operating assets and liabilities of $42.4 million.

The net change in operating assets and liabilities was primarily driven by a decrease in accounts and notes receivable of $152.7 million and prepaid expenses and other current assets of $8.6 million.

This was partially offset by a decrease in accounts payable and accrued expenses and other current liabilities of $52.3 million, and income tax payable of $29.3 million, and an increase in inventories of $35.8 million.

The decrease in accounts and other receivable was primarily due to lower sales in fiscal 2023.

The decrease in accounts payable and accrued expenses and other current liabilities was primarily due to higher payments to suppliers, lower material purchases and lower accrued employee compensation that was paid out in the period.

The increase in inventories was due to slower utilization in the period and buildup of long lead time materials to fulfill certain customer purchase orders.

The decrease in income tax payable was primarily due to lower profitability.

The net cash used in investing activities was due to net purchase of short-term investments of $10.0 million, cash outflow for the AJA acquisition of $36.9 million and capital expenditures of $44.4 million.

The net cash used in financing activities was primarily due to common stock repurchases of $69.2 million and dividend payments of $42.0 million.

Net cash provided by operating activities consisted of net income of $433.5 million, non-cash adjustments of $22.6 million and a net unfavorable change in operating assets and liabilities of $65.9 million.

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The net cash used in financing activities was primarily due to common stock repurchases of $281.3 million and dividend payments of $39.4 million.

Net cash provided by operating activities consisted of net income of $367.2 million, non-cash adjustments of $21.2 million and a net unfavorable change in operating assets and liabilities of $88.3 million.

The net change in operating assets and liabilities was primarily driven by an increase in accounts and notes receivable of $221.9 million, inventories of $52.7 million, and prepaid expenses and other current assets of $4.6 million.

This was partially offset by an increase in accounts payable and accrued expenses and other current liabilities of $182.0 million, and income tax payable of $7.7 million.

The increase in accounts payable and accrued expenses and other current liabilities was primarily due to higher purchases due to higher manufacturing activities.

The increase in inventories was due to increased manufacturing activities in fiscal 2021 in response to increased sales.

The increase in accounts receivable was due to higher sales.

The net cash used in investing activities was primarily due to net purchases of short-term investments of $35.0 million, the Uniqarta acquisition of $26.3 million, and capital expenditures of $22.8 million, partially offset by proceeds from the sale of an equity-method investment of $2.1 million.

The net cash used in financing activities was primarily due to dividend payments of $33.5 million, and common stock repurchases of $10.4 million.

Fiscal 2024 Liquidity and Capital Resource Outlook

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The actual amounts for fiscal 2024 will vary depending on market conditions.

Expenditures are anticipated to be primarily used for research and development projects, enhancements to our manufacturing operations, improvements to our information technology security, implementation of an enterprise resource planning system and leasehold improvements for our facilities.

Our ability to make these expenditures will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing macroeconomic conditions, including the impact from the COVID-19 pandemic, inflationary pressures, geopolitical tensions including the prolonged Ukraine/Russia conflict and other factors, some of which are beyond our control.

As of October 1, 2022 and October 2, 2021, approximat ely $499.8 million and $724.5 million of cash, cash equivalents, and short-term investments were held by the Company’s foreign subsidiaries, respectively, with a large portion of the cash amounts expected to be available for use in the U.S.

Expenditures are anticipated to be primarily used for research and development projects, enhancements to our manufacturing operations, improvements to our information technology security, implementation of our enterprise resource planning system and leasehold improvements for our facilities.

Our ability to make these expenditures will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing macroeconomic conditions, trade tensions, inflationary pressures, geopolitical tensions, including the ongoing Israel-Hamas war, tensions in the Middle East, and the prolonged Ukraine/Russia conflict, and other factors, some of which are beyond our control.

As of September 30, 2023 and October 1, 2022, approximat e ly $576.9 million and $499.8 million of cash, cash equivalents, and short-term investments were held by the Company’s foreign subsidiaries, respectively, with a large portion of the cash amounts expected to be available for use in the U.S.

without incurring additional U.S.

The decrease is primarily due to the repatriation of cash held by the Company’s foreign subsidiaries to the U.S.

The Company’s international operations and capital requirements are funded primarily by cash generated by foreign operating activities and cash held by foreign subsidiaries.

In fiscal 2022, the Company’s U.S.

operations and capital requirements have been funded primarily by cash generated from U.S.

operating activities, cash held by U.S.

entities, and cash previously held by foreign subsidiaries that was repatriated to the U.S.

entities during the fiscal year.

In the future, the Company may repatriate additional cash held by foreign subsidiaries that has already been subject to U.S.

income tax or drawdown cash from our existing Facility Agreements.

We believe these sources of cash and liquidity are sufficient to meet our additional liquidity needs for the foreseeable future including repayment of outstanding balances under the Facility Agreements, as well as payment of dividends, share repurchases and income taxes.

Should the Company’s U.S.

cash needs exceed its funds generated by U.S.

and foreign operations due to changing business conditions or transactions outside the ordinary course, such as acquisitions of large capital assets, businesses or any other capital appropriation in the U.S., the Company may require additional financing in the U.S.

In this event, the Company could seek U.S.

borrowing alternatives.

We believe that our existing cash, cash equivalents, short-term investments, existing Facility Agreements, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the COVID-19 pandemic and macroeconomic headwinds, for the next twelve months and beyond.

Our liquidity is affected by many factors, some based on normal operations of our business and others related to macroeconomic conditions including inflationary pressures, industry-related uncertainties, effects arising from the prolonged Ukraine/Russia conflict, which we cannot predict.

The Company’s operations and capital requirements are funded primarily by cash on hand, cash generated by foreign operating activities and cash from our existing Facility Agreements.

We believe these sources of cash and liquidity are sufficient to meet our additional liquidity needs for the foreseeable future including repayment of any outstanding balances under our existing Facility Agreements, as well as payment of dividends, share repurchases and income taxes.

We believe that our existing cash, cash equivalents, short-term investments, existing Facility Agreements, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the macroeconomic headwinds, for the next twelve months and beyond.

Our liquidity is affected by many factors, some based on normal operations of our business and others related to macroeconomic conditions including inflationary pressures, industry-related uncertainties, and effects arising from the ongoing Israel-Hamas war and the prolonged Ukraine/Russia conflict, which we cannot predict.

We also cannot predict economic conditions and industry downturns or the timing, strength or duration of recoveries.

We intend to continue to use our cash for working capital needs and for general corporate purposes.

In this unprecedented environment, as a result of the COVID-19 pandemic, the prolonged Ukraine/Russia conflict or for other reasons, we may seek, as we believe appropriate, additional debt or equity financing which would provide capital for corporate purposes, working capital funding, additional liquidity needs or to fund future growth opportunities, including possible acquisitions.

In this unprecedented macroeconomic environment, and as a result of the ongoing Israel-Hamas war and the prolonged Ukraine/Russia conflict or for other reasons, we may seek, as we believe appropriate, additional debt or equity financing which would provide capital for corporate purposes, working capital funding, additional liquidity needs or to fund future growth opportunities, including possible acquisitions.

The timing and amount of potential capital requirements cannot be determined at this time and will depend on a number of factors, including our actual and projected demand for our products, semiconductor and semiconductor capital equipment industry conditions, competitive factors, the condition of financial markets and the global economic situation.

Share Repurchase Program

On August 15, 2017, the Company’s Board of Directors authorized a program (the “Program”) to repurchase up to $100 million of the Company’s common stock on or before August 1, 2020.

On August 15, 2017, the Company’s Board of Directors authorized the Program to repurchase up to $100 million of the Company’s common stock on or before August 1, 2020.

In 2018, 2019 and 2020, the Board of Directors increased the share repurchase authorization under the Program to $200 million, $300 million and $400 million, respectively.

On March 3, 2022, the Board of Directors increased the share repurchase authorization under the Program by an additional $400 million to $800 million, and extended its duration through August 1, 2025.

The Company has entered into a written trading plan under Rule 10b5-1 of the Exchange Act to facilitate repurchases under the Program.

On May 7, 2022, the Company entered into a written trading plan under Rule 10b5-1 of the Exchange Act to facilitate repurchases under the Program.

This trading plan was most recently modified on May 29, 2023.

The Program may be suspended or discontinued at any time and is funded using the Company’s available cash, cash equivalents and short-term investments.

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The timing and amount of repurchase transactions under the Program depend on market conditions as well as corporate and regulatory considerations.

During the fiscal year ended October 1, 2022, the Company repurchased a total of approximately 2,782.1 thousand shares of common stock at a cost of approximately $132.8 million.

During the fiscal year ended September 30, 2023, the Company repurchased a total of approximately 1,515.0 thousand shares of common stock at a cost of approximately $68.1 million.

The stock repurchases were recorded in the periods they were delivered and accounted for as treasury stock in the Company’s Consolidated Balance Sheets.

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If the Company reissues treasury stock at an amount below its acquisition cost and additional paid-in capital associated with prior treasury stock transactions is insufficient to cover the difference between acquisition cost and the reissue price, this difference is recorded against retained earnings.

Accelerated Share Repurchase (“ASR”)

In addition to the 2,782.1 thousand shares of common stock repurchased under the Program during the fiscal year ended October 1, 2022, on March 9, 2022, the Company entered into an ASR agreement (the “March 2022 ASR Agreement”) with an investment bank counterparty (“Dealer”) to repurchase $150 million of the Company’s common stock.

The March 2022 ASR Agreement was entered into pursuant to the Company’s current $800 million share repurchase authorization.

Under the March 2022 ASR Agreement, the Company made an up-front payment of $150 million to the Dealer and received an initial delivery of 2,449.9 thousand shares of common stock at a cost of approximately $120 million on March 10, 2022.

The final number of shares to be repurchased will be based on the volume-weighted average price of the Company’s common stock during the term of the transaction, less a discount and subject to adjustments pursuant to the terms and conditions of the March 2022 ASR Agreement.

For accounting purposes, the March 2022 ASR Agreement is evaluated as an unsettled forward contract indexed to the Company’s own stock, with $30 million being classified within common stock.

At settlement, the Dealer may be required to deliver additional shares of common stock to the Company, or, under certain circumstances, the Company may be required to deliver shares of its common stock or may elect to make a cash payment to the Dealer.

The March 2022 ASR Agreement was settled between the Company and the Dealer on April 22, 2022 and the Company received an additional 344.5 thousand shares of common stock from the Dealer.

In total, an aggregate of 2,794.4 thousand shares of common stock were delivered by the Dealer under the March 2022 ASR Agreement at an average price of $53.68 per share, which was then reclassified as treasury stock from common stock in shareholder’s equity.

As of October 1, 2022, our remaining stock repurchase authorization under the Program was approximately $249.2 million.

On August 30, 2022, June 8, 2022, March 3, 2022 and October 18, 2021, the Board of Directors declared a quarterly dividend $0.17 per share of common stock.

During the fiscal year ended October 1, 2022, the Company declared dividends of $0.68 per share of common stock.

As of September 30, 2023, our remaining stock repurchase authorization under the Program was approximately $181.0 million.

On August 23, 2023, June 8, 2023, March 2, 2023 and November 16, 2022, the Board of Directors declared a quarterly dividend $0.19 per share of common stock.

During the fiscal year ended September 30, 2023, the Company declared dividends of $0.76 per share of common stock.

The declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on the Company’s financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that such dividends are in the best interests of the Company’s stockholders.

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In accordance with U.S.

generally accepted accounting principles, certain obligations and commitments as of October 1, 2022 are appropriately not included in the Consolidated Balance Sheets and Statements of Operations in this Form 10-K.

generally accepted accounting principles, certain obligations and commitments as of September 30, 2023 are appropriately not included in the Consolidated Balance Sheets and Statements of Operations in this Form 10-K.

However, because these obligations and commitments are entered into in the normal course of business and because they may have a material impact on our liquidity, we have disclosed them in the table below.

Additionally, as of October 1, 2022, the Company had deferred tax liabilities of $34.0 million and unrecognized tax benefit recorded within the income tax payable for uncertain tax positions of $16.9 million, including related accrued interest of $2.0 million.

Additionally, as of September 30, 2023, the Company had deferred tax liabilities of $37.3 million and unrecognized tax benefit recorded within the income tax payable for uncertain tax positions of $17.7 million, including related accrued interest of $2.8 million.

These amounts are not included in the contractual obligation table below because we are unable to reasonably estimate the timing of these payments at this time.

The following table presents certain payments due by the Company under contractual obligations with minimum firm commitments as of October 1, 2022:

The following table presents certain payments due by the Company under contractual obligations with minimum firm commitments as of September 30, 2023:

Payments due in

18 unchanged sentences

The Facility Agreements also contain customary events of default, including, without limitation, non-payment of financial obligations when due, cross defaults to other material indebtedness of the Company and any breach of a representation or warranty under the Facility Agreements.

As of October 1, 2022, there were no outstanding amounts under the Overdraft Facility.

As of October 1, 2022, other than the bank guarantee disclosed in Note 10, we did not have any other off-balance sheet arrangements, such as contingent interests or obligations associated with variable interest entities.

As of September 30, 2023, there were no outstanding amounts under the Overdraft Facility.

As of September 30, 2023, other than the bank guarantee disclosed in Note 10, we did not have any other off-balance sheet arrangements, such as contingent interests or obligations associated with variable interest entities.

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-K

Item 7. Management’s Discussion and Analysis