What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-02-01 compared with 2021-10-26 · 198 added, 123 removed, 586 unchanged (35% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

Three Months Ended

September 26,

2021 September 27,

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

Revenue $ 4,226,604 $ 3,456,237 $ 8,531,069 $ 6,633,317

5 unchanged sentences

Operating income 1,338,139 1,009,724 2,710,372 1,970,788

Other expense, net ( 28,857 ) ( 38,792 )

Other income (expense), net 17,999 ( 29,941 ) ( 10,858 ) ( 68,733 )

Income before income taxes 1,356,138 979,783 2,699,514 1,902,055

11 unchanged sentences

(in thousands)

Three Months Ended

September 26,

2021 September 27,

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

Net income $ 1,194,830 $ 869,229 $ 2,374,574 $ 1,692,680

2 unchanged sentences

Cash flow hedges:

Net unrealized losses during the period ( 9,005 ) ( 350 )

Net unrealized gains during the period 12,792 4,872 3,787 4,522

Net (gains) losses reclassified into net income ( 7,904 ) 283 ( 11,446 ) 1,050

11 unchanged sentences

(in thousands, except per share data)

September 26,

2021 June 27,

2 unchanged sentences

Investments 242,590 1,310,872

Accounts receivable, less allowance of $ 5,361 as of September 26, 2021, and $ 5,255 as of June 27, 2021

Accounts receivable, less allowance of $ 5,379 as of December 26, 2021, and $ 5,255 as of June 27, 2021

3,402,840 3,026,430

23 unchanged sentences

Common stock, at par value of $ 0.001 per share;

authorized, 400,000 shares as of September 26, 2021 and June 27, 2021;

issued and outstanding, 140,811 shares as of September 26, 2021, and 142,501 shares as of June 27, 2021

authorized, 400,000 shares as of December 26, 2021 and June 27, 2021;

issued and outstanding, 140,275 shares as of December 26, 2021, and 142,501 shares as of June 27, 2021

Additional paid-in capital 7,220,359 7,052,962

Treasury stock, at cost;

152,503 shares as of September 26, 2021, and 150,766 shares as of June 27, 2021

153,091 shares as of December 26, 2021, and 150,766 shares as of June 27, 2021

( 17,294,255 ) ( 15,646,701 )

8 unchanged sentences

(in thousands) (unaudited)

Three Months Ended

September 26,

2021 September 27,

Six Months Ended

2021 December 27,

CASH FLOWS FROM OPERATING ACTIVITIES:

18 unchanged sentences

Dividends paid ( 396,647 ) ( 355,056 )

Reissuance of treasury stock related to employee stock purchase plan 46,380 41,434

Proceeds from issuance of common stock 4,193 13,646

2 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 8,454 ) 12,269

Net decrease in cash, cash equivalents, and restricted cash ( 377,151 ) ( 786,558 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 666,657 ( 1,229,111 )

Cash, cash equivalents, and restricted cash at beginning of period 4,670,750 5,169,083

5 unchanged sentences

Transfers of finished goods inventory to property and equipment 55,322 49,748

Reconciliation of cash, cash equivalents, and restricted cash September 26,

2021 September 27,

Reconciliation of cash, cash equivalents, and restricted cash December 26,

2021 December 27,

Cash and cash equivalents $ 5,086,544 $ 3,687,165

6 unchanged sentences

Three Months Ended

September 26, 2021

December 26, 2021

Shares Common

5 unchanged sentences

Earnings Total

Balance at September 26, 2021 140,811 $ 141 $ 7,111,803 $ ( 16,863,573 ) $ ( 81,768 ) $ 15,653,440 $ 5,820,043

Issuance of common stock 52 — 3,451 — — — 3,451

Purchase of treasury stock ( 685 ) ( 1 ) — ( 434,791 ) — — ( 434,792 )

Reissuance of treasury stock 97 — 42,271 4,109 — — 46,380

Equity-based compensation expense — — 62,834 — — — 62,834

Net income — — — — — 1,194,830 1,194,830

Other comprehensive loss — — — — ( 6,378 ) — ( 6,378 )

Cash dividends declared ($ 1.50 per common share)

— — — — — ( 210,587 ) ( 210,587 )

Balance at December 26, 2021 140,275 $ 140 $ 7,220,359 $ ( 17,294,255 ) $ ( 88,146 ) $ 16,637,683 $ 6,475,781

Six Months Ended

December 26, 2021

Shares Common

Stock Additional

Capital Treasury

Stock Accumulated

Comprehensive

Loss Retained

Earnings Total

Balance at June 27, 2021 142,501 $ 143 $ 7,052,962 $ ( 15,646,701 ) $ ( 64,128 ) $ 14,684,912 $ 6,027,188

1 unchanged sentence

Purchase of treasury stock ( 2,422 ) ( 3 ) — ( 1,651,663 ) — — ( 1,651,666 )

Reissuance of treasury stock 97 — 42,271 4,109 — — 46,380

Equity-based compensation expense — — 120,933 — — — 120,933

3 unchanged sentences

— — — — — ( 421,803 ) ( 421,803 )

Balance at September 26, 2021 140,811 $ 141 $ 7,111,803 $ ( 16,863,573 ) $ ( 81,768 ) $ 15,653,440 $ 5,820,043

Balance at December 26, 2021 140,275 $ 140 $ 7,220,359 $ ( 17,294,255 ) $ ( 88,146 ) $ 16,637,683 $ 6,475,781

See Notes to Condensed Consolidated Financial Statements

Three Months Ended

September 27, 2020

December 27, 2020

Shares Common

5 unchanged sentences

Earnings Total

Balance at September 27, 2020 144,593 $ 145 $ 6,761,545 $ ( 13,416,986 ) $ ( 82,672 ) $ 12,157,153 $ 5,419,185

Issuance of common stock 100 — 8,108 — — — 8,108

Purchase of treasury stock ( 1,796 ) ( 2 ) — ( 727,742 ) — — ( 727,744 )

Reissuance of treasury stock 207 — 32,261 9,173 — — 41,434

Equity-based compensation expense — — 52,109 — — — 52,109

Effect of conversion of convertible notes 101 — ( 134 ) — — — ( 134 )

Reclassification from temporary to permanent equity — — 792 — — — 792

Net income — — — — — 869,229 869,229

Other comprehensive income — — — — 26,546 — 26,546

Cash dividends declared ($ 1.30 per common share)

— — — — — ( 186,492 ) ( 186,492 )

Balance at December 27, 2020 143,205 $ 143 $ 6,854,681 $ ( 14,135,555 ) $ ( 56,126 ) $ 12,839,890 $ 5,503,033

Six Months Ended

December 27, 2020

Shares Common

Stock Additional

Capital Treasury

Stock Accumulated

Comprehensive

Loss Retained

Earnings Total

Balance at June 28, 2020 145,331 $ 145 $ 6,695,858 $ ( 12,949,889 ) $ ( 94,211 ) $ 11,520,591 $ 5,172,494

1 unchanged sentence

Purchase of treasury stock ( 3,156 ) ( 3 ) — ( 1,194,839 ) — — ( 1,194,842 )

Reissuance of treasury stock 207 — 32,261 9,173 — — 41,434

Equity-based compensation expense — — 108,097 — — — 108,097

6 unchanged sentences

— — — — — ( 374,538 ) ( 374,538 )

Balance at September 27, 2020 144,593 $ 145 $ 6,761,545 $ ( 13,416,986 ) $ ( 82,672 ) $ 12,157,153 $ 5,419,185

Balance at December 27, 2020 143,205 $ 143 $ 6,854,681 $ ( 14,135,555 ) $ ( 56,126 ) $ 12,839,890 $ 5,503,033

See Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 26, 2021

December 26, 2021

NOTE 1 — BASIS OF PRESENTATION

12 unchanged sentences

The Company’s current fiscal year will end June 26, 2022 and includes 52 weeks.

The quarters ended September 26, 2021 (the “September 2021 quarter”) and September 27, 2020 (the “September 2020 quarter”) included 13 weeks.

The quarters ended December 26, 2021 (the “December 2021 quarter”) and December 27, 2020 included 13 weeks.

NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS

2 unchanged sentences

Updates Not Yet Adopted or Effective

There are no new accounting pronouncements not yet adopted or effective that are expected to have a material impact on the Company’s Condensed Consolidated Financial Statements.

In November 2021, the Financial Accounting Standards Board issued Accounting Standards Update 2021-10, “Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance,” which requires business entities to make annual disclosures, including the nature of transactions and the related accounting policy used to account for the transactions, significant terms and conditions, and line items affected, about transactions with a government (including government assistance) that are accounted for by analogizing to a grant or contribution accounting model.

The guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, with early adoption permitted.

The Company is required to adopt this standard in the first quarter of fiscal year 2023 for the annual reporting period ending June 25, 2023.

The guidance may be applied either prospectively to all in-scope transactions at the date of initial application or retrospectively.

The Company is currently in the process of evaluating the impact of adoption on its Consolidated Financial Statements.

NOTE 3 — REVENUE

Deferred Revenue

Revenue of $ 565.7 million included in deferred revenue as of June 27, 2021 was recognized during the three months ended September 26, 2021.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of September 26, 2021 and when the Company expects to recognize the amounts as revenue:

Revenue of $ 191.0 million and $ 756.7 million included in deferred revenue as of June 27, 2021 was recognized during the three and six months ended December 26, 2021.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of December 26, 2021 and when the Company expects to recognize the amounts as revenue:

Less than 1 Year 1-3 Years More than 3 Years Total

13 unchanged sentences

The following table presents the Company’s revenues disaggregated between system and its customer support-related revenue:

Three Months Ended

September 26,

2021 September 27,

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

(In thousands)

5 unchanged sentences

The following table presents the Company’s revenues disaggregated by geographic region:

Three Months Ended

September 26,

2021 September 27,

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

(In thousands)

8 unchanged sentences

The following table presents the percentages of leading- and non-leading-edge equipment and upgrade revenue to each of the primary markets the Company serves:

Three Months Ended

September 26,

2021 September 27,

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

Memory 58 % 68 % 61 % 63 %

9 unchanged sentences

The Company recognized the following equity-based compensation expense (including expense related to the employee stock purchase plan) and related income tax benefit in the Condensed Consolidated Statements of Operations:

Three Months Ended

September 26,

2021 September 27,

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

(in thousands)

1 unchanged sentence

Income tax benefit recognized related to equity-based compensation expense $ 9,014 $ 9,911 $ 17,222 $ 19,788

NOTE 5 — OTHER EXPENSE, NET

The significant components of other expense, net, are as follows:

Three Months Ended

September 26,

2021 September 27,

NOTE 5 — OTHER INCOME (EXPENSE), NET

The significant components of other income (expense), net, are as follows:

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

(in thousands)

1 unchanged sentence

Interest expense ( 46,765 ) ( 52,551 ) ( 91,821 ) ( 104,666 )

Gains on deferred compensation plan-related assets, net 7,437 12,927

Foreign exchange losses, net ( 17 ) ( 1,375 )

(Losses) Gains on deferred compensation plan-related assets, net ( 56 ) 24,207 7,381 37,134

Foreign exchange gains (losses), net 731 ( 3,763 ) 714 ( 5,138 )

Other, net 61,717 ( 2,630 ) 65,818 ( 7,818 )

$ 17,999 $ ( 29,941 ) $ ( 10,858 ) $ ( 68,733 )

Other, net includes an unrealized gain totaling $ 46.6 million associated with an equity investee that became publicly traded during the three and six months ended December 26, 2021.

Refer to Note 8 - Financial Instruments for additional information regarding the Company’s investments.

NOTE 6 — INCOME TAX EXPENSE

The Company’s provision for income taxes and effective tax rate are as follows:

Three Months Ended

September 26,

2021 September 27,

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

(in thousands, except percentages)

2 unchanged sentences

The difference between the U.S.

federal statutory tax rate of 21% and the Company’s effective tax rate for the three months ended September 26, 2021 and the three months ended September 27, 2020 was primarily due to income in lower tax jurisdictions.

federal statutory tax rate of 21% and the Company’s effective tax rate for the three and six months ended December 26, 2021 and December 27, 2020 was primarily due to income in lower tax jurisdictions.

The Company transferred its international sales operations from Switzerland to Malaysia, effective from fiscal year 2022.

2 unchanged sentences

federal income tax return for the fiscal year ended June 24, 2018.

As of September 26, 2021, no significant adjustments have been proposed by the IRS.

As of December 26, 2021, no significant adjustments have been proposed by the IRS.

The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the IRS will occur.

6 unchanged sentences

The following table reconciles the inputs to the basic and diluted computations for net income per share.

Three Months Ended

September 26,

2021 September 27,

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

(in thousands, except per share data)

8 unchanged sentences

For purposes of computing diluted net income per share, weighted-average common shares do not include potentially dilutive securities that are anti-dilutive under the treasury stock method.

The impact from potentially dilutive securities, including options and RSUs, was not material for the three months ended September 26, 2021 and September 27, 2020.

The impact from potentially dilutive securities, including options and RSUs, was not material for the three and six months ended December 26, 2021 and December 27, 2020.

NOTE 8 — FINANCIAL INSTRUMENTS

2 unchanged sentences

Investments classified as trading securities are recorded at fair value based upon quoted market prices.

Differences between the cost and fair value of trading securities are recognized as other expense, net in the Condensed Consolidated Statements of Operations.

All of the Company’s other investments are classified as available-for-sale and consequently are recorded in the Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses associated with market valuation changes, unrelated to credit losses, reported as a separate component of accumulated other comprehensive income (loss), net of tax;

and credit losses, if any, recognized as other expense, net in the Condensed Consolidated Statements of Operations.

Differences between the cost and fair value of trading securities are recognized as other income (expense), net in the Condensed Consolidated Statements of Operations.

All of the Company’s debt securities are classified as available-for-sale and consequently are recorded in the Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses associated with market valuation changes, unrelated to credit losses, reported as a separate component of accumulated other comprehensive income (loss), net of tax;

and credit losses, if any, recognized as other income (expense), net in the Condensed Consolidated Statements of Operations.

The Company periodically invests in equity securities.

For equity investments that do not have a readily determinable fair value, the Company records them using either 1) the measurement alternative which measures the equity investments at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes;

or 2) the equity method

whereby the Company recognizes its proportional share of the income or loss from the equity method investment on a one-quarter lag.

The equity method is utilized when the Company does not have the ability to control the investee but is deemed to have the ability to exercise significant influence over the investee’s operating or financial policies.

For equity investments that have a readily determinable fair value, the Company records them at fair market value on a recurring basis based upon quoted market prices.

Realized and unrealized gains and losses resulting from application of the measurement alternative, the impact of the application of the equity method to the Company’s equity investments, and recognition of changes in fair market value, as applicable, are recognized as other income (expense), net in the Condensed Consolidated Statements of Operations.

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

14 unchanged sentences

Refer to Note 12 - Long-Term Debt and Other Borrowings for additional information regarding the fair value of the Company’s senior notes.

The following tables set forth the Company’s cash, cash equivalents, investments, restricted cash and investments, and other assets measured at fair value on a recurring basis as of September 26, 2021, and June 27, 2021:

September 26, 2021

Equity Investments measured at fair value on a non-recurring basis

As of December 26, 2021, and June 27, 2021, equity investments of $ 141.1 million and $ 117.3 million, respectively, were recognized in other assets in the Condensed Consolidated Balance Sheets.

With the exception of one equity investee that became publicly traded during the three and six months ended December 26, 2021, net gains resulting from the application of the measurement alternative to the Company’s equity investments were immaterial for the three and six months ended December 26, 2021, and December 27, 2020.

Refer to Note 5 - Other Income (Expense), net for additional information regarding the gain associated with an equity investee that became publicly traded in the three and six months ended December 26, 2021.

Additionally, following the equity investee becoming publicly traded, the Company began measuring the investment at fair market value on a recurring basis in the category corporate equities.

Debt and Equity Investments measured at fair value on a recurring basis

December 26, 2021

(Reported Within)

8 unchanged sentences

Money market funds 2,071,421 — — 2,071,421 2,071,421 — — —

Treasury and agencies 1,850 — ( 1 ) 1,849 — 1,849 — —

Corporate equities 3,000 46,633 — 49,633 — — — 49,633

Mutual funds 89,524 19,236 ( 126 ) 108,634 — — — 108,634

Level 1 Total 2,163,945 65,869 ( 126 ) 2,229,688 2,071,421 — — 158,267

Foreign government bonds 15,119 14 — 15,133 — 15,133 — —

Corporate notes and bonds 301,790 13 ( 126 ) 301,677 63,380 238,297 — —

31 unchanged sentences

All other differences between fair value and amortized cost are recognized in other comprehensive income.

No such losses were recognized through the income statement during the three months ended September 26, 2021 and September 27, 2020.

Gross realized gains/(losses) from sales of investments were insignificant in the three months ended September 26, 2021 and September 27, 2020.

No such losses were recognized through the income statement during the three and six months ended December 26, 2021 and December 27, 2020.

Gross realized gains/(losses) from sales of investments were insignificant in the three and six months ended December 26, 2021 and December 27, 2020.

The following is an analysis of the Company’s cash, cash equivalents, investments, and restricted cash and investments in unrealized loss positions:

September 26, 2021

December 26, 2021

Unrealized Losses

5 unchanged sentences

(in thousands)

Treasury and agencies $ 1,848 $ ( 1 ) $ — $ — $ 1,848 $ ( 1 )

Municipal notes and bonds 2,082 ( 27 ) — — 2,082 ( 27 )

Mutual funds 7,408 ( 55 ) 1,998 ( 71 ) 9,406 ( 126 )

Corporate notes and bonds 180,892 ( 126 ) — — 180,892 ( 126 )

1 unchanged sentence

$ 191,297 $ ( 182 ) $ 1,998 $ ( 71 ) $ 193,295 $ ( 253 )

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of September 26, 2021:

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of December 26, 2021:

(in thousands)

12 unchanged sentences

However, the Company has elected to present the derivative assets and derivative liabilities on a gross basis on its balance sheet.

As of September 26, 2021 and June 27, 2021, the potential effect of rights of offset associated with the above foreign exchange and interest rate contracts would be immaterial to the Condensed Consolidated Balance Sheets.

As of December 26, 2021 and June 27, 2021, the potential effect of rights of offset associated with the above foreign exchange and interest rate contracts would be immaterial to the Condensed Consolidated Balance Sheets.

Cash Flow Hedges

18 unchanged sentences

Additionally, related amounts previously recorded in other comprehensive income would be reclassified to earnings immediately.

As of September 26, 2021 and June 27, 2021, the fair value of outstanding cash flow hedges was not material.

Additionally, as of September 26, 2021, the Company had an immaterial net gain or loss accumulated in other comprehensive income, net of tax, related to foreign exchange cash flow hedges and interest rate contracts which it expects to reclassify from other comprehensive income into earnings over the next 12 months.

The following table provides the total notional value of cash flow hedge instruments outstanding as of September 26, 2021:

September 26,

As of December 26, 2021 and June 27, 2021, the fair value of outstanding cash flow hedges was not material.

Additionally, as of December 26, 2021, the Company had an immaterial net gain or loss accumulated in other comprehensive income, net of tax, related to foreign exchange cash flow hedges and interest rate contracts which it expects to reclassify from other comprehensive income into earnings over the next 12 months.

The following table provides the total notional value of cash flow hedge instruments outstanding as of December 26, 2021:

(In thousands)

2 unchanged sentences

The effect of derivative instruments designated as cash flow hedges on the Company’s Condensed Consolidated Statements of Operations, including accumulated other comprehensive income (“AOCI”), was as follows:

Three Months Ended

September 26, 2021

Three Months Ended Six Months Ended

December 26, 2021 December 26, 2021

Gain or (Loss)

Recognized in or Reclassified into Net Income Loss

Recognized in or Reclassified into Net Income Gain (Loss)

into Net Income Gain (Loss)

in AOCI Gain (Loss)

5 unchanged sentences

Foreign Exchange Contracts Selling, general, and administrative ( 2,097 ) ( 521 ) ( 3,411 ) ( 547 )

Interest Rate Contracts Other expense, net — ( 1,051 )

Interest Rate Contracts Other income (expense), net — ( 1,057 ) — ( 2,108 )

$ 11,909 $ 7,302 $ ( 351 ) $ 10,845

Three Months Ended

September 27, 2020

Three Months Ended Six Months Ended

December 27, 2020 December 27, 2020

Gain or (Loss)

1 unchanged sentence

in AOCI (Loss) Gain

into Net Income (Loss) Gain

in AOCI (Loss) Gain

into Net Income

4 unchanged sentences

Foreign Exchange Contracts Selling, general, and administrative 4,157 1,018 5,797 1,323

Interest Rate Contracts Other expense, net — ( 952 )

Interest Rate Contracts Other income (expense), net — ( 957 ) — ( 1,909 )

$ 6,785 $ ( 221 ) $ 6,631 $ ( 1,143 )

2 unchanged sentences

These forward contracts are not designated for hedge accounting treatment.

Therefore, the change in the carrying value of these derivatives is recorded as a component of other expense, net and offsets the change in fair value of the foreign currency denominated assets and liabilities related to remeasurement, which are also recorded in other expense, net.

As of September 26, 2021 and June 27, 2021, the fair value of outstanding balance sheet hedges was not material.

The following table provides the total notional value of balance sheet hedge instruments outstanding as of September 26, 2021:

September 26,

Therefore, the change in the carrying value of these derivatives is recorded as a component of other income (expense), net and offsets the change in fair value of the foreign currency denominated assets and liabilities related to remeasurement, which are also recorded in other income (expense), net.

As of December 26, 2021 and June 27, 2021, the fair value of outstanding balance sheet hedges was not material.

The following table provides the total notional value of balance sheet hedge instruments outstanding as of December 26, 2021:

(In thousands)

2 unchanged sentences

The effect of the Company’s balance sheet hedge derivative instruments on the Company’s Condensed Consolidated Statements of Operations was as follows:

Three Months Ended

September 26,

2021 September 27,

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

Derivatives Not Designated as Hedging Instruments:

2 unchanged sentences

in Net Income Gain

in Net Income

(in thousands)

Foreign Exchange Contracts Other expense, net $ 6,520 $ 2,747

Foreign Exchange Contracts Other income (expense), net $ 3,417 $ 1,156 $ 9,937 $ 3,903

Concentrations of Credit Risk

13 unchanged sentences

Inventories consist of the following:

September 26,

2021 June 27,

5 unchanged sentences

NOTE 10 — GOODWILL AND INTANGIBLE ASSETS

The balance of goodwill is approximately $ 1.5 billion as of September 26, 2021 and June 27, 2021.

As of September 26, 2021 and June 27, 2021, $ 61.1 million of the goodwill balance is tax deductible and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law.

The balance of goodwill is approximately $ 1.5 billion as of December 26, 2021 and June 27, 2021.

As of December 26, 2021 and June 27, 2021, $ 61.1 million of the goodwill balance is tax deductible and the remaining balance is not tax deductible due to purchase accounting and applicable foreign law.

Intangible Assets

The following table provides the Company’s intangible assets, other than goodwill:

September 26, 2021 June 27, 2021

December 26, 2021 June 27, 2021

Gross Accumulated

6 unchanged sentences

Total intangible assets $ 1,450,430 $ ( 1,338,353 ) $ 112,077 $ 1,432,436 $ ( 1,300,071 ) $ 132,365

The Company recognized $ 19.1 million and $ 16.8 million in intangible asset amortization expense during the three months ended September 26, 2021 and September 27, 2020, respectively.

The estimated future amortization expense of intangible assets as of September 26, 2021, is reflected in the table below.

The Company recognized $ 19.5 million and $ 17.6 million in intangible asset amortization expense during the three months ended December 26, 2021 and December 27, 2020, respectively.

The Company recognized $ 38.6 million and $ 34.5 million in intangible asset amortization expense during the six months ended December 26, 2021 and December 27, 2020, respectively.

The estimated future amortization expense of intangible assets as of December 26, 2021, is reflected in the table below.

The table excludes $ 17.5 million of capitalized costs for internal-use software that have not been placed into service.

5 unchanged sentences

Accrued expenses and other current liabilities consist of the following:

September 26,

2021 June 27,

7 unchanged sentences

NOTE 12 — LONG-TERM DEBT AND OTHER BORROWINGS

As of September 26, 2021, and June 27, 2021, the Company’s outstanding debt consisted of the following:

September 26, 2021 June 27, 2021

As of December 26, 2021, and June 27, 2021, the Company’s outstanding debt consisted of the following:

December 26, 2021 June 27, 2021

(in thousands) Effective Interest Rate Amount

6 unchanged sentences

1,000,000 4.09 % 1,000,000 4.09 %

Fixed-rate 1.90 % Senior Note Due June 15, 2030 ("2030 Notes")

Fixed-rate 1.90 % Senior Notes Due June 15, 2030 ("2030 Notes")

750,000 2.01 % 750,000 2.01 %

1 unchanged sentence

750,000 4.93 % 750,000 4.93 %

Fixed-rate 2.875 % Senior Note Due June 15, 2050 ("2050 Notes")

Fixed-rate 2.875 % Senior Notes Due June 15, 2050 ("2050 Notes")

750,000 2.93 % 750,000 2.93 %

Fixed-rate 3.125 % Senior Note Due June 15, 2060 ("2060 Notes")

Fixed-rate 3.125 % Senior Notes Due June 15, 2060 ("2060 Notes")

500,000 3.18 % 500,000 3.18 %

16 unchanged sentences

In addition, upon the occurrence of certain events, as described in the indenture, the Company will be required to make an offer to repurchase the Senior Notes at a price equal to 101 % of the principal amount of the respective note, plus accrued and unpaid interest.

Selected additional information regarding the Senior Notes outstanding as of September 26, 2021, is as follows:

Selected additional information regarding the Senior Notes outstanding as of December 26, 2021, is as follows:

Remaining Amortization period Fair Value of Notes (Level 2)

18 unchanged sentences

The Second Amended and Restated Credit Agreement contains affirmative covenants, negative covenants, financial covenants, and events of default.

As of September 26, 2021, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants.

As of December 26, 2021, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants.

Commercial Paper Program

4 unchanged sentences

The CP Program is backstopped by the Company’s Revolving Credit Arrangement.

As of September 26, 2021 and June 27, 2021, the Company had no outstanding borrowings under the CP Program.

As of December 26, 2021 and June 27, 2021, the Company had no outstanding borrowings under the CP Program.

Interest Cost

The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, and the revolving credit facility during the three months ended September 26, 2021 and September 27, 2020.

Three Months Ended

September 26,

2021 September 27,

The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, and the revolving credit facility during the three and six months ended December 26, 2021 and December 27, 2020.

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

(in thousands)

13 unchanged sentences

The Company is required to maintain cash collateral in an aggregate of approximately $ 250.0 million in separate interest-bearing accounts as security for the Company’s obligations.

These amounts are recorded with other restricted cash and investments in the Company’s Condensed Consolidated Balance Sheet as of September 26, 2021.

These amounts are recorded with other restricted cash and investments in the Company’s Condensed Consolidated Balance Sheet as of December 26, 2021.

During the seven-year term of the California Facility Leases and when the terms of the California Facility Leases expire, the property subject to the California Facility Leases may be re-marketed.

6 unchanged sentences

The Company has entered into insurance contracts that are intended to limit its exposure to such indemnifications.

As of September 26, 2021, the Company had not recorded any liability on its Condensed Consolidated Financial Statements in connection with these indemnifications, as it does not believe that it is probable that any material amounts will be paid under these guarantees.

As of December 26, 2021, the Company had not recorded any liability on its Condensed Consolidated Financial Statements in connection with these indemnifications, as it does not believe that it is probable that any material amounts will be paid under these guarantees.

Generally, the Company indemnifies, under pre-determined conditions and limitations, its customers for infringement of third-party intellectual property rights by the Company’s products or services.

2 unchanged sentences

The Company provides guarantees and standby letters of credit to certain parties as required for certain transactions initiated during the ordinary course of business.

As of September 26, 2021, the maximum potential amount of future payments that the Company could be required to make under these arrangements and letters of credit was $ 74.1 million.

As of December 26, 2021, the maximum potential amount of future payments that the Company could be required to make under these arrangements and letters of credit was $ 82.2 million.

The Company does not

6 unchanged sentences

The liability amount is based on actual historical warranty spending activity by type of system, customer, and geographic region, modified for any known differences such as the impact of system reliability improvements.

As of September 26, 2021, warranty reserves totaling $ 15.6 million were recognized in other long-term liabilities, the remainder were included in accrued expenses and other current liabilities in the Company’s Condensed Consolidated Balance Sheets.

As of December 26, 2021, warranty reserves totaling $ 18.8 million were recognized in other long-term liabilities, the remainder were included in accrued expenses and other current liabilities in the Company’s Condensed Consolidated Balance Sheets.

Changes in the Company’s product warranty reserves were as follows:

Three Months Ended

September 26,

2021 September 27,

Three Months Ended Six Months Ended

2021 December 27,

2020 December 26,

2021 December 27,

(in thousands)

23 unchanged sentences

Quarter ended September 26, 2021 1,725 $ 1,209,744 $ 608.98 $ 3,012,476

Quarter ended December 26, 2021 677 $ 429,983 $ 634.74 $ 2,582,493

(1) Average price paid per share excludes the effect of accelerated share repurchase activities.

See additional disclosure below regarding the Company’s accelerated share repurchase activity during the three months ended September 26, 2021.

In addition to the shares repurchased under the Board-authorized repurchase program shown above, during the three months ended September 26, 2021, the Company acquired 12 thousand shares at a total cost of $ 7.1 million, which the Company withheld through net settlements to cover minimum tax withholding obligations upon the vesting of restricted stock unit awards granted under the Company’s equity compensation plans.

See additional disclosure below regarding the Company’s accelerated share repurchase activity during the six months ended December 26, 2021.

In addition to the shares repurchased under the Board-authorized repurchase program shown above, during the three and six months ended December 26, 2021, the Company acquired 8 thousand shares at a total cost of $ 4.8 million and 20 thousand shares at a total cost of $ 11.9 million, respectively, which the Company withheld through net settlements to cover minimum tax withholding obligations upon the vesting of restricted stock unit awards granted under the Company’s equity compensation plans.

The shares retained by the Company through these net share settlements are not a part of the Board-authorized repurchase program but instead are authorized under the Company’s equity compensation plan.

Accelerated Share Repurchase Agreements

On August 31, 2021, the Company entered into an accelerated share repurchase agreement (the “September 2021 ASR") with two financial institutions to repurchase a total of $ 650 million of Common Stock.

On August 31, 2021, the Company entered into an accelerated share repurchase agreement (the “August 2021 ASR") with two financial institutions to repurchase a total of $ 650 million of Common Stock.

The Company took an initial delivery of approximately 806 thousand shares, which represented 75 % of the prepayment amount divided by the Company’s closing stock price on August 31, 2021.

The total number of shares received under the September 2021 ASR will be based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount.

Final settlement of the September 2021 ASR will occur no later than January 6, 2022.

The total number of shares received under the August 2021 ASR was based upon the average daily volume weighted average price of the Company’s Common Stock during the repurchase period, less an agreed upon discount.

Final settlement of the August 2021 ASR occurred in January 2022, subsequent to the Company’s December 26, 2021 fiscal quarter end, resulting in the receipt of approximately 265 thousand additional shares, which yielded a weighted-average share price of $ 606.71 for the transaction period.

NOTE 16 — ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss, net of tax at September 26, 2021, as well as the activity for the three months ending September 26, 2021, were as follows:

The components of accumulated other comprehensive loss, net of tax at December 26, 2021, as well as the activity for the six months ending December 26, 2021, were as follows:

Accumulated Foreign Currency Translation Adjustment Accumulated

9 unchanged sentences

1,490 — ( 9,956 )

Net current-period other comprehensive (loss) income ( 4,032 ) ( 12,547 ) ( 1,260 ) 199 ( 17,640 )

Balance at September 26, 2021 $ ( 35,445 ) $ ( 26,672 ) $ 351 $ ( 20,002 ) $ ( 81,768 )

Net current-period other comprehensive loss ( 13,852 ) ( 7,659 ) ( 1,700 ) ( 807 ) ( 24,018 )

Balance at December 26, 2021 $ ( 45,265 ) $ ( 21,784 ) $ ( 89 ) $ ( 21,008 ) $ ( 88,146 )

(1) Amount of after-tax gains reclassified from AOCI into net income is not material in the aggregate, or to any individual location in our Condensed Consolidated Statements of Operations.

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