What changed in this filing

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Item 1. Financial Statements

2022-05-12 compared with 2021-11-09 · 143 added, 264 removed, 420 unchanged (49% of the section changed)

3 unchanged sentences

(in thousands, except par value)

September 30,

Current assets:

38 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Integrated Yield Ramp

4 unchanged sentences

Selling, general and administrative

Amortization of other acquired intangible assets

Amortization of acquired intangible assets

Interest and other expense (income), net

Loss before income taxes

Income tax expense (benefit)

Other comprehensive income (loss):

Income tax expense

Other comprehensive loss:

Foreign currency translation adjustments, net of tax

8 unchanged sentences

(in thousands)

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Treasury Stock

10 unchanged sentences

Balances, March 31, 2022

Issuance of common stock in connection with exercise of options

Vesting of restricted stock units

Purchases of treasury stock in connection with tax withholdings on restricted stock grants

Stock-based compensation expense

Comprehensive income (loss)

Balances, June 30, 2021

Issuance of common stock in connection with employee stock purchase plan

Issuance of common stock in connection with exercise of options

Vesting of restricted stock units

Purchases of treasury stock in connection with tax withholdings on restricted stock grants

Stock-based compensation expense

Comprehensive loss

Balances, September 30, 2021

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

PDF SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Treasury Stock

6 unchanged sentences

Purchases of treasury stock in connection with tax withholdings on restricted stock grants

Repurchase of common stock

Stock-based compensation expense

1 unchanged sentence

Balances, March 31, 2021

Issuance of common stock in connection with exercise of options

Vesting of restricted stock units

Purchases of treasury stock in connection with tax withholdings on restricted stock grants

Stock-based compensation expense

Comprehensive income (loss)

Balances, June 30, 2020

Issuance of common stock, net of issuance of $ 0.1 million

Issuance of common stock in connection with employee stock purchase plan

Issuance of common stock in connection with exercise of options

Vesting of restricted stock units

Purchases of treasury stock in connection with tax withholdings on restricted stock grants

Stock-based compensation expense

Comprehensive income (loss)

Balances, September 30, 2020

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

2 unchanged sentences

Amortization of costs capitalized to obtain revenue contracts

Loss on disposal and write-down in value of property and equipment

Deferred taxes

10 unchanged sentences

Operating lease liabilities

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Proceeds from maturities of short-term investments

Proceeds from maturities and sales of short-term investments

Purchases of short-term investments

Purchases of property and equipment

Prepayment for the purchase of property and equipment

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities:

3 unchanged sentences

Repurchases of common stock

Proceeds from issuance of common stock, net of issuance costs paid

Net cash provided by (used in) financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

10 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Supplemental disclosure of cash flow information:

2 unchanged sentences

Supplemental disclosure of noncash information:

Stock-based compensation capitalized as software development costs

Property and equipment received and accrued in accounts payable and accrued and other liabilities

1 unchanged sentence

Release of restricted cash reducing goodwill due to the acquisition purchase price adjustment

Operating lease liabilities arising from obtaining right-of-use assets

Issuance costs for common stock included in accounts payable and accrued other liabilities

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

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GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates in these financial statements include revenue recognition, assumptions made in analysis of allowance for doubtful accounts, impairment of goodwill and long-lived assets, realization of deferred tax assets (“DTAs”), and accounting for lease obligations, stock-based compensation expense, and income taxes.

Actual results could differ from those estimates.

Significant estimates in these financial statements include revenue recognition, the estimated useful lives of property and equipment and intangible assets, assumptions made in analysis of allowance for doubtful accounts, fair values of assets acquired and liabilities assumed in business combinations, impairment of goodwill and long-lived assets, valuation for deferred tax assets, and accounting for lease obligations, stock-based compensation expense, and income tax uncertainties and contingencies.

Actual results could differ from those estimates and may result in material effects on the Company’s operating results and financial position.

The global COVID-19 pandemic has impacted the operations and purchasing decisions of companies worldwide.

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Accounting Standards Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, related to simplifying the accounting for income taxes.

The guidance eliminates certain exceptions from Accounting Standards Codification (“ASC”) 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The guidance also clarifies and simplifies other aspects of the accounting for income taxes.

The guidance became effective for the Company beginning in the first quarter of 2021 on a

prospective basis.

The Company adopted this standard on January 1, 2021, and it did not have a material impact on the Company’s condensed consolidated financial statements or the related disclosures.

In January 2020, the FASB issued ASU No.

2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.

This ASU clarifies the interaction between accounting standards related to equity securities (ASC 321), equity method investments (ASC 323), and certain derivatives (ASC 815).

The amendments in this ASU are effective for fiscal years beginning after December 15, 2020.

The Company adopted this standard on January 1, 2021, and it did not have a material impact on the Company’s condensed consolidated financial statements or the related disclosures.

Management has reviewed recently issued accounting pronouncements and has determined there are not any that would have a material impact on the condensed consolidated financial statements.

Accounting Standards Not Yet Adopted

44 unchanged sentences

The Company enters into contracts that can include various combinations of licenses, products and services, some of which are distinct and are accounted for as separate performance obligations.

For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the standalone selling price.

For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the standalone selling price (“SSP”).

Analytics Revenue

7 unchanged sentences

For contracts with any combination of licenses, support, and other services, distinct performance obligations are accounted for separately.

For contracts with multiple performance obligations, we allocate the transaction price of the contract to each performance obligation on a relative basis using the standalone selling price (“SSP”) attributed to each performance obligation.

For contracts with multiple performance obligations, we allocate the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation.

Revenue from SaaS arrangements, which allow for the use of a cloud-based software product or service over a contractually determined period of time without the customer having to take possession of software, is accounted for as a subscription and is recognized as revenue ratably, on a straight-line basis, over the subscription period beginning on the date the service is first made available to customers.

For contracts with any combination of SaaS and related services, distinct performance obligations are accounted for separately.

For contracts with multiple performance obligations, we allocate the transaction price of the contract to each performance obligation on a relative basis using SSP attributed to each performance obligation.

Revenue from DFI systems and CV systems that do not include performance incentives based on customers’ yield achievement is recognized primarily as services are performed.

Where there are distinct performance obligations, the Company allocates revenue to all deliverables based on their SSPs.

For those contracts with multiple performance obligations,

the Company allocates the transaction price of the contract to each performance obligation on a relative basis using SSP attributed to each performance obligation.

For those contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation.

Where there are not discrete performance obligations, historically, revenue is primarily recognized as services are performed using a percentage of completion method based on costs or labor-hours inputs, whichever is the most appropriate measure of the progress towards completion of the contract.

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The following table represents a disaggregation of revenue by timing of revenue:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Point-in-time

International revenues accounted for approximately 53 % and 57 % of our total revenues during the three and nine months ended September 30, 2021, respectively, compared to 67 % and 60 % of our total revenues during the three and nine months ended September 30, 2020, respectively.

International revenues accounted for approximately 48 % and 65 % of our total revenues during the three months ended March 31, 2022 and March 31, 2021, respectively.

See Note 10, Customer and Geographic Information .

5 unchanged sentences

Key factors reviewed by the Company to estimate costs to complete each contract are future labor and product costs and expected productivity efficiencies.

If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made.

If circumstances arise that change the original estimates of revenues,

costs, or extent of progress toward completion, revisions to the estimates are made.

These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known.

15 unchanged sentences

contract liabilities) at the contract level.

The total contract assets included in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets was immaterial as of September 30, 2021 and $ 3.7 million as of December 31, 2020.

At March 31, 2022 and December 31, 2021, the total contract assets included in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets $ 0.4 million and $ 0.4 million, respectively.

The Company did no t record any asset impairment charges related to contract assets for the periods presented.

1 unchanged sentence

Deferred revenues that will be recognized during the succeeding twelve-month period are recorded as current deferred revenues and the remaining portion is recorded in the other non-current liabilities in the Condensed Consolidated Balance Sheets.

At September 30, 2021 and December 31, 2020, the non-current portion of deferred revenues included in non-current liabilities was $ 2.5 million and $ 1.2 million, respectively.

Revenue recognized that was included in the deferred revenues and billings in excess of recognized revenues balances at the beginning of each reporting period was $ 7.0 million and $ 4.7 million during the three months ended September 30, 2021 and 2020, respectively, and $ 13.8 million and $ 9.5 million during the nine months ended September 30, 2021 and 2020, respectively.

At September 30, 2021, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied was approximately $ 180.9 million.

At March 31, 2022 and December 31, 2021, the non-current portion of deferred revenues included in non-current liabilities was $ 2.0 million and $ 2.4 million, respectively.

Revenue recognized that was included in the deferred revenues and billings in excess of recognized revenues balances at the beginning of each reporting period was $ 6.9 million and $ 6.3 million during the three months ended March 31, 2022 and 2021, respectively.

At March 31, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied was approximately $ 196.8 million.

Given the applicable contract terms with customers, the majority of this amount is expected to be recognized as revenue over the next two years , with the remainder in the following three years .

1 unchanged sentence

This amount is subject to change due to future revaluations of variable consideration, terminations, other contract modifications, or currency adjustments.

The estimated timing of the recognition of remaining unsatisfied performance obligations is subject to change and is affected by changes to the scope, change in timing of delivery of products and services, or contract modifications.

The adjustment to revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was a decrease of $ 0.2 million and $ 1.2 million during the three months ended September 30, 2021 and 2020, respectively, and an increase of $ 34,000 and $ 0.4 million during the nine months ended September 30, 2021 and 2020, respectively.

The estimated timing of the recognition of remaining unsatisfied performance

obligations is subject to change and is affected by changes to the scope, change in timing of delivery of products and services, or contract modifications.

The adjustment to revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was an increase of $ 0.2 million and a decrease $ 0.3 million during the three months ended March 31, 2022 and 2021, respectively.

These amounts primarily represent changes in estimated percentage-of-completion based contracts and changes in actual versus estimated Gainshare royalty.

2 unchanged sentences

Amortization expense related to these capitalized costs is recognized over the period associated with the revenue from which the cost was incurred.

Total capitalized direct sales commission costs included in prepaid expenses and other current assets in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2021, and December 31, 2020 were $ 0.8 million and $ 0.8 million, respectively.

Total capitalized direct sales commission costs included in other non-current assets in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2021, and December 31, 2020 were $ 1.8 million and $ 0.9 million, respectively.

Amortization of these assets were $ 0.2 million and $ 0.1 million during the three months ended September 30, 2021 and 2020, respectively, and $ 0.5 million and $ 0.4 million during the nine months ended September 30, 2021 and 2020, respectively.

Total capitalized direct sales commission costs included in prepaid expenses and other current assets in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2022, and December 31, 2021, were $ 0.9 million and $ 0.6 million, respectively.

Total capitalized direct sales commission costs included in other non-current assets in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2022, and December 31, 2021, were $ 2.1 million and $ 2.1 million, respectively.

Amortization of these assets were $ 0.2 million and $ 0.2 million during the three months ended March 31, 2022 and 2021, respectively.

There was no impairment loss in relation to the costs capitalized for the periods presented.

Practical expedient

The Company does not adjust the transaction price for the effects of a significant financing component when the period between the transfers of the promised good or service to the customer and payment for that good or service by the customer is expected to be one year or less.

The Company assessed each of its revenue generating arrangements in order to determine whether a significant financing component exists, and determined its contracts did not include a significant financing component during the three and nine months ended September 30, 2021 and 2020.

STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS

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● A Securities Purchase Agreement for the purchase by Advantest of an aggregate of 3,306,924 shares of the Company’s common stock for aggregate gross proceeds of $ 65.2 million and a related Stockholder Agreement.

● An Amendment #1 to that certain Software License and Related Services Agreement, dated as of March 25, 2020, for an exclusive commercial arrangement in which the Company and Advantest will collaborate on, and the Company will initially host, develop and maintain, an Advantest-specific cloud layer on the Exensio platform.

● An Amendment #1 to that certain Software License and Related Services Agreement, dated as of March 25, 2020, for an exclusive commercial arrangement in which the Company and Advantest collaborate on, and the Company initially hosts, develops and maintains, an Advantest-specific cloud layer on the Exensio platform.

● An Amended and Restated Master Development Agreement with Advantest, pursuant to which the Company and Advantest agreed to collaborate on extensions to or combinations of both of their existing technology and new technology to address mutual customers’ needs through one or more development phases subject to certain conditions as set forth therein.

Costs and expenses incurred related to this agreement have not been significant for the three and nine months ended September 30, 2021.

Costs and expenses incurred related to this agreement have not been significant for the three months ended March 31, 2022 and 2021.

● A Master Commercial Terms and Support Services Agreement for the commercialization and support of integrated products of the Company and Advantest that are the outcome of the above development agreement.

No material costs and expenses were incurred related to the Commercial Agreement with Advantest during the three and nine months ended September 30, 2021.

Analytics revenue recognized from Advantest were $ 2.7 million and $ 7.9 million during the three and nine months ended September 30, 2021, respectively, and $ 1.0 million during each of the three and nine months ended September 30, 2020.

There was no outstanding accounts receivable from Advantest as of September 30, 2021 and December 31, 2020, and deferred revenue amounted to $ 9.6 million and nil as of September 30, 2021 and December 31, 2020, respectively.

No material costs and expenses were incurred related to the Commercial Agreement with Advantest during the three months ended March 31, 2022 and 2021.

Analytics revenue recognized from Advantest was $ 2.6 million during the three months ended March 31, 2022 and $ 2.6 million during the three months ended March 31, 2021.

There were no outstanding accounts receivable from Advantest as of March 31, 2022, and December 31, 2021, and deferred revenue amounted to $ 4.2 million and $ 6.8 million as of March 31, 2022 and December 31, 2021, respectively.

There was no occurrence of any termination events under these agreements as of the issuance of these condensed consolidated financial statements.

The Company carries out transactions with Advantest on arm’s length commercial customary terms.

For more information about these agreements with Advantest, see Note 3, Strategic Partnership Agreement with Advantest and Related Party Transactions , of Part II, Item 8.

“Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

BUSINESS COMBINATION

On December 1, 2020 (the “Acquisition Date”), the Company acquired all the stock of Cimetrix Incorporated (“Cimetrix”).

Total payment made for this acquisition in 2020 amounted to $ 28.6 million, net of cash acquired, and was funded from the available cash of the Company.

In 2020, the Company held back $ 3.5 million of the purchase price (the “Holdback Amount”) to satisfy adjustments and claims for indemnity arising out of breaches of certain representations, warranties and covenants, and certain other enumerated items in the merger agreement.

During the first quarter of 2021, the Company recorded a measurement period adjustment as described below which reduced the Holdback Amount to $ 3.0 million.

This reduction was released from the restricted cash on the Company’s Condensed Consolidated Balance Sheet.

The Holdback Amount, as adjusted, is expected to be paid to the participating equity holders on approximately the twelve-month anniversary of the Acquisition Date.

The Holdback Amount is recorded under accrued and other current liabilities account in the Condensed Consolidated Balance Sheets.

The Company is required to maintain cash specifically designated to pay for the Holdback Amount, which the Company has classified as restricted cash.

Restricted cash amounted to $ 3.0 million and $ 3.5 million as of September 30, 2021 and December 31, 2020, respectively, and is included in the “Prepaid expenses and other current assets” account in the Company’s Condensed Consolidated Balance Sheets.

The Company is still finalizing the allocation of the purchase price to the individual assets acquired.

Accordingly, the estimates set forth below are preliminary and are subject to change during the measurement period, which is not to exceed one year from the acquisition date.

During the measurement period, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

During the first quarter of 2021, the Company recorded a measurement period adjustment to the estimated fair values initially recorded in 2020, which resulted in a reduction in Holdback Amount of $ 0.5 million with a corresponding change to goodwill.

The measurement period adjustment did not have an impact on the Company’s Condensed Consolidated Statements of Comprehensive Loss during the three and nine months ended September 30, 2021.

As of September 30, 2021, the allocation of the purchase price for this acquisition is as follows (in thousands, except amortization period):

Period (Years)

Fair value of tangible assets (including cash of $ 5,900 )

Fair value of intangible assets:

Developed technology

In-process R&D

Customer relationships

Noncompetition agreements

Tradenames and trademarks

Total assets acquired

Accounts payable and accrued expenses

Deferred revenue

Operating lease liabilities

Deferred tax liabilities

Total liabilities assumed

Total purchase price allocation

Pursuant to the merger agreement, the Company will also pay approximately $ 1.4 million to certain employees, subject to their continued employment with Cimetrix or the Company, at various scheduled payout dates through the second quarter of 2024.

This amount will be recognized as compensation expense over the period as services are rendered.

As of September 30, 2021, the estimated remaining total cash payout is approximately $ 0.9 million.

The accrued compensation balance included under accrued compensation and related benefits account in the Company’s Condensed Consolidated Balance Sheet was $ 0.4 million and $ 0.3 million as of September 30, 2021 and December 31, 2020, respectively.

Transaction expenses related to the acquisition of Cimetrix amounted to $ 1.6 million in 2020.

These costs consist of professional fees and administrative costs and were expensed as incurred in the Company’s Condensed Consolidated Statement of Comprehensive Loss.

No transaction costs were incurred during the three months ended September 30, 2021.

Transaction costs were immaterial during the nine months ended September 30, 2021.

The financial results of the acquisition of Cimetrix were considered immaterial for purposes of unaudited pro forma financial disclosures.

BALANCE SHEET COMPONENTS

1 unchanged sentence

Accounts receivable include amounts that are unbilled at the end of the period that are expected to be billed and collected within a 12-month period.

Unbilled accounts receivable, included in accounts receivable, totaled $ 8.6 million and $ 7.2 million as of September 30, 2021, and December 31, 2020, respectively.

Unbilled accounts receivable that are not expected to be billed and collected during the succeeding 12-month period is recorded in other non-current assets and totaled $ 1.6 million and $ 2.0 million as of September 30, 2021, and December 31, 2020, respectively.

Unbilled accounts receivable, included in accounts receivable, totaled $ 10.8 million and $ 11.8 million as of March 31, 2022, and December 31, 2021, respectively.

Unbilled accounts receivable that are not expected to be billed and collected during the succeeding 12-month period is recorded in other non-current assets and totaled $ 1.3 million and $ 1.3 million as of March 31, 2022, and December 31, 2021, respectively.

The Company performs ongoing credit evaluations of its customers’ financial condition.

An allowance for doubtful accounts is maintained for probable credit losses based upon the Company’s assessment of the expected collectability of the accounts receivable.

The allowance for doubtful accounts is reviewed on a quarterly basis to assess the adequacy of the allowance.

Property and equipment

Property and equipment, net consist of the following (in thousands):

September 30,

Computer equipment

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accumulated depreciation and amortization

Test equipment includes systems assets at customer sites that are contributing to DFI™ systems revenues.

The construction-in-progress balance related to construction of DFI™ systems assets totaled $ 21.5 million and $ 18.9 million as of September 30, 2021, and December 31, 2020, respectively.

Depreciation and amortization expense was $ 1.5 million and $ 1.7 million during the three months ended September 30, 2021 and 2020, respectively, and $ 4.8 million and $ 5.0 million during the nine months ended September 30, 2021 and 2020, respectively.

Test equipment includes DFI systems assets at customer sites that are contributing to revenue.

The construction-in-progress balance related to construction of DFI™ systems assets totaled $ 18.5 million and $ 20.0 million as of March 31, 2022, and December 31, 2021, respectively.

Depreciation and amortization expense was $ 1.4 million and $ 1.7 million during the three months ended March 31, 2022 and 2021, respectively.

In the fourth quarter of 2021, the Company wrote down the value of its property and equipment by $ 3.2 million related to its first-generation of e-beam tools for DFI™ systems wherein carrying values may not be fully recoverable due to lack of market demand and future needs of our customers for these tools.

Goodwill and Intangible Assets, Net

The change in the carrying amount of goodwill during the nine months ended September 30, 2021, was as follows (in thousands):

Balance at beginning of period, January 1, 2021

Measurement period acquisition adjustment (1)

Balance at end of period, September 30, 2021

(1) Goodwill adjustment was recorded within the measurement period with a corresponding reduction in the Holdback Amount.

See Note 4, Business Combination .

There were no impairments to goodwill during the nine months ended September 30, 2021.

As of March 31, 2022, and December 31, 2021, the carrying amount of goodwill was $ 14.1 million.

Intangible assets, net, consisted of the following (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

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Noncompetition agreements

In-process R&D

* Non-amortizing intangible asset

The weighted average amortization period for acquired identifiable intangible assets was 6.6 years as of March 31, 2022.

The following table summarizes intangible assets amortization expense in the Condensed Consolidated Statements of Comprehensive Loss (in thousands):

Three Months Ended March 31,

Amortization of acquired technology included under Costs of Revenues

Amortization of acquired intangible assets presented separately under Costs and Expenses

Total amortization of acquired intangible assets

The Company expects annual amortization of acquired identifiable intangible assets to be as follows (in thousands):

Year Ending December 31,

2021 (remaining three months)

2022 (remaining nine months)

2027 and thereafter

Total future amortization expense

Intangible assets are amortized over their useful lives unless these lives are determined to be indefinite.

The weighted average amortization period for acquired identifiable intangible assets was 5.7 years as of September 30, 2021.

Intangible assets amortization expense included under “Cost of revenues” and “Amortization of other intangible assets” account in the Condensed Consolidated Statements of Comprehensive Loss was $ 0.8 million and $ 0.3 million during the three months ended September 30, 2021 and 2020, respectively, and $ 2.5 million and $ 1.0 million during the nine months ended September 30, 2021 and 2020, respectively.

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

During the three and nine months ended September 30, 2021, there were no indicators of impairment related to the Company’s intangible assets.

There were no impairment charges for goodwill and intangible assets during the three months ended March 31, 2 0 22 or 2021.

The Company leases administrative and sales offices and certain equipment under non-cancellable operating leases, which contain various renewal options and, in some cases, require payment of common area costs, taxes and utilities.

These operating leases expire at various dates through 2028.

The Company had no leases that were classified as a financing lease as of September 30, 2021, and December 31, 2020.

The Company had no leases that were classified as a financing lease as of March 31, 2022, and December 31, 2021.

In the first quarter of 2022, the Company early terminated an office lease contract.

The termination of this lease reduces the Company’s operating lease right-of-use assets and lease liabilities by approximately $ 0.5 million and $ 0.6 million, respectively.

The gain from the lease termination of approximately $ 0.1 million was recorded under selling, general and administrative expense in the Condensed Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2022.

Lease expense was comprised of the following (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating lease expense (1)

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Total lease expense

(1) Net of gain recognized upon lease termination of $ 0.1 million in three month ended March 31, 2022.

(2) Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Variable lease expense for the periods presented primarily included common area maintenance charges.

Supplemental information related to operating leases was as follows:

September 30,

Supplemental balance sheets information related to operating leases was as follows:

Weighted average remaining lease term under operating ROU leases (in years)

Weighted average discount rate for operating lease liabilities

Maturities of operating lease liabilities as of September 30, 2021, were as follows (in thousands):

Maturities of operating lease liabilities as of March 31, 2022, were as follows (in thousands):

Year Ending December 31,

2021 (remaining three months)

2022 (remaining nine months)

2027 and thereafter

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Present value of future minimum lease payments under operating lease liabilities (3)

(1) As of September 30, 2021, the total operating lease liability includes approximately $ 1.1 million related to an option to extend a lease term that is reasonably certain to be exercised.

(1) As of March 31, 2022, the total operating lease liability includes approximately $ 1.1 million related to an option to extend a lease term that is reasonably certain to be exercised.

(2) Calculated using incremental borrowing interest rate for each lease.

(3) Includes the current portion of operating lease liabilities of $ 1.7 million as of September 30, 2021.

(3) Includes the current portion of operating lease liabilities of $ 1.2 million as of March 31, 2022.

STOCKHOLDERS’ EQUITY

Issuance of Common Stock

On July 30, 2020, the Company issued 3,306,924 shares of common stock, at a purchase price of $ 19.7085 per share, for aggregate gross proceeds of $ 65.2 million pursuant to a Securities Purchase Agreement with Advantest dated July 29, 2020.

Issuance costs related to this private placement aggregated $ 0.1 million.

Stock Repurchase Program

On May 28, 2020, the Company’s 2018 stock repurchase program (the “2018 Program”) that was originally adopted on May 29, 2018, expired.

Through May 28, 2020, approximately 786,000 shares had been repurchased at an average price of $ 12.43 per share, for a total price of $ 9.8 million under the 2018 Program.

On June 4, 2020, the Company’s Board of Directors adopted a new stock repurchase program (the “2020 Program”) to repurchase up to $ 25.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, over the next two years .

During the nine months ended September 30, 2021 , 251,212 shares were repurchased under the 2020 Program at an average price of $ 18.01 per share for an aggregate total price of $ 4.5 million.

On June 4, 2020, the Company’s Board of Directors adopted a stock repurchase program (the “2020 Program”) to repurchase up to $ 25.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, over the next two years .

During the three months ended March 31, 2022 , 218,858 shares were repurchased under the 2020 Program at an average price of $ 26.40 per share for an aggregate total price of $ 5.8 million.

During the three months ended March 31, 2021, approximately 251,000 shares were repurchased under the 2020 Program at an average price of $ 18.01 per share for an aggregate total price of $ 4.5 million.

Through March 31, 2022, approximately 470,000 shares had been repurchased at an average price of $ 21.91 per share, for a total price of $ 10.3 million under the 2020 Program.

On April 11, 2022, the Board of Directors terminated that 2020 Program, and adopted a new program (the “2022 Program”) to repurchase up to $ 35.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, from time to time, over the next two year s.

EMPLOYEE BENEFIT PLANS

On September 30, 2021, the Company had the following stock-based compensation plans:

On March 31, 2022, the Company had the following stock-based compensation plans:

Employee Stock Purchase Plan

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The 2010 Purchase Plan expired on May 17, 2020.

Existing offering periods will continue until they expire in accordance with their terms, and

participation in such offering periods will continue through the applicable expiration date.

The final offering period under the 2010 Purchase Plan expires on January 31, 2022.

Existing offering periods under the 2010 Plan continued through the applicable expiration date and the final offering period expired on January 31, 2022.

On June 15, 2021, the Company’s stockholders approved the 2021 Employee Stock Purchase Plan, which has a ten-year term (the “2021 Purchase Plan”).

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2010 Purchase Plan

Nine Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Expected life (in years)

2 unchanged sentences

Weighted average fair value of purchase rights granted during the period

During the three months ended September 30, 2021 and 2020, a total of approximately 9,000 and 93,000 shares were issued under the 2010 Purchase Plan.

During the nine months ended September 30, 2021 and 2020, a total of approximately 109,000 and 183,000 shares, respectively, were issued under the 2010 Purchase Plan, at a weighted-average purchase price of $ 9.53 per share and $ 9.12 per share, respectively.

As of September 30, 2021, unrecognized compensation cost related to the 2021 Purchase Plan was $ 2.0 million and there was a negligible amount of unrecognized compensation cost related to the 2010 Purchase Plan.

During the three months ended March 31, 2022, a total of approximately 95,243 shares were issued at a weighted-average purchase price of $ 15.77 per share.

During the three months ended March 31, 2021, a total of approximately 99,674 shares were issued at a weighted-average purchase price of $ 9.24 per share.

As of March 31, 2022, unrecognized compensation cost related to the 2021 Purchase Plan was $ 1.9 million.

These costs are expected to be recognized over a weighted average period of 1.4 years.

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The aggregate number of shares reserved for awards under this plan is 11,550,000 shares, plus up to 3,500,000 shares previously issued under the 2001 Stock Plan adopted by the Company in 2001, which expired in 2011 (the “2001 Plan”) that are either (i) forfeited or (ii) repurchased by the Company or are shares subject to awards previously issued under the 2001 Plan that expire or that terminate without having been exercised or settled in full on or after November 16, 2011.

In case of awards other than options or SARs, the aggregate number of shares reserved under the 2011 Plan will be decreased at a rate of 1.33 shares issued pursuant to such awards.

In case of awards other than options or SARs, the aggregate number of shares reserved under the 2011 Plan will be decreased at a rate of 1.33

shares issued pursuant to such awards.

The exercise price for stock options must generally be at prices no less than the fair market value at the date of grant.

Stock options generally expire ten years from the date of grant and become vested and exercisable over a four-year period.

Stock options granted under the 2001 Plan generally expire ten years from the date of grant and become vested and exercisable over a four-year period.

Although no new awards may be granted under the 2001 Plan, awards made under the 2001 Plan that are currently outstanding remain subject to the terms of each such plan.

As of September 30, 2021, 12.1 million shares of common stock were reserved to cover stock-based awards under the 2011 Plan, of which 3.4 million shares were available for future grant.

The number of shares reserved and available under the 2011 Plan includes 0.5 million shares that were subject to awards previously made under the 2001 Plan and were forfeited, expired or repurchased by the Company after the adoption of the 2011 Plan through September 30, 2021.

As of September 30, 2021, there were no outstanding awards that had been granted outside of the 2011 or 2001 Plans (collectively, the “Stock Plans”).

On April 26, 2022, the Company’s Board of Directors amended the 2011 Plan, subject to stockholder approval, to increase the number of shares reserved for awards under it to a total of 12,800,000 shares, which is an increase of an additional 1,250,000 shares.

As of March 31, 2022, 12.1 million shares of common stock were reserved to cover stock-based awards under the 2011 Plan, of which 3.2 million shares were available for future grant.

As of March 31, 2022, there were no outstanding awards that had been granted outside of the 2011 or 2001 Plans (collectively, the “Stock Plans”).

The Company estimated the fair value of share-based awards granted under the 2011 Stock Plan during the period using the Black-Scholes-Merton option-pricing model.

There were no stock options granted during the three and nine months ended September 30, 2021.

The fair value of stock options granted during the three and nine months ended September 30, 2020, was estimated as of the grant-date using the following assumptions:

Three Months Ended September 30,

Nine Months Ended September 30,

Expected life (in years)

Risk-free interest rate

Expected dividend

Weighted average fair value per share of options granted during the period

There were no stock options granted during the three months ended March 31, 2022 and 2021.

Stock-Based Compensation

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Stock-based compensation expense before taxes related to the Company’s stock plans and employee stock purchase plan was allocated as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Costs of revenues

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Stock-based compensation expenses

(1) The stock-based compensation expense during the three and nine months ended September 30, 2020, includes immaterial expense or credit adjustments related to cash-settled SARs granted to certain employees.

The Company accounted for these awards as liability awards and the amount was included in accrued compensation and related benefits.

All remaining outstanding SARs were fully exercised in the third quarter of 2020.

Stock-based compensation expense that was recorded as capitalized software development costs under property and equipment, net, was nil during the three and nine months ended September 30, 2021, and nil and $ 0.2 million during the three and nine months ended September 30, 2020, respectively.

Additional information with respect to options under the Stock Plans during the nine months ended September 30, 2021, is as follows:

Additional information with respect to options under the Stock Plans during the three months ended March 31, 2022, is as follows:

Outstanding Options

(in thousands)

Outstanding, January 1, 2022

Outstanding, September 30, 2021

Vested and expected to vest, September 30, 2021

Exercisable, September 30, 2021

The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $ 23.04 per share as of September 30, 2021.

The total intrinsic value of options exercised was $ 1.9 million during the nine months ended September 30, 2021.

As of September 30, 2021, there was $ 0.2 million of total unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted average period of 2.0 years.

The total fair value of shares vested was $ 0.1 million during the nine months ended September 30, 2021.

Non-vested restricted stock unit activity during the nine months ended September 30, 2021, was as follows:

Outstanding, March 31, 2022

Vested and expected to vest, March 31, 2022

Exercisable, March 31, 2022

The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $ 27.87 per share as of March 31, 2022.

The total intrinsic value of options exercised was $ 1.3 million during the three months ended March 31, 2022.

As of March 31, 2022, there was $ 0.1 million of total unrecognized compensation cost, net of forfeiture, related to unvested stock options, which is expected to be recognized over a weighted average period of 1.5 years.

The total fair value of shares vested was immaterial during the three months ended March 31, 2022.

Nonvested restricted stock unit activity during the three months ended March 31, 2022, was as follows:

Average Grant

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(in thousands)

Non-vested, January 1, 2021

Non-vested, September 30, 2021

As of September 30, 2021, there was $ 27.1 million of total unrecognized compensation cost related to non-vested restricted stock units.

Nonvested, January 1, 2022

Nonvested, March 31, 2022

As of March 31, 2022, there was $ 27.2 million of total unrecognized compensation cost related to restricted stock units.

That cost is expected to be recognized over a weighted average period of 2.4 years.

Restricted stock units do not have rights to dividends prior to vesting.

Income tax expense increased $ 5.7 million for the nine months ended September 30, 2021, to a $ 1.5 million income tax expense as compared to an income tax benefit of $ 4.1 million for the nine months ended September 30, 2020.

The Company’s effective tax rate (expense) benefit was ( 12 %) and 37 % for the nine months ended September 30, 2021 and 2020, respectively.

The Company’s effective tax rate increased in the nine months ended September 30, 2021, as compared to the same period in 2020, primarily due to a full valuation allowance against U.S.

net deferred tax assets in the fourth quarter of 2020 as well as a one-time benefit in the first quarter of 2020 pursuant to the provisions of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) passed on March 27, 2020.

The Company’s total amount of unrecognized tax benefits, excluding interest and penalties, as of September 30, 2021, was $ 14.7 million, of which $ 1.9 million, if recognized, would affect the Company’s effective tax rate.

Income tax expense increased $ 0.2 million for the three months ended March 31, 2022, to a $ 1.2 million income tax expense as compared to an income tax expense of $ 1.0 million for the three months ended March 31, 2021.

The Company’s effective tax rate expense was ( 40 %) and ( 14 %) for the three months ended March 31, 2022 and 2021, respectively.

The Company’s effective tax rate expense increased in the three months ended March 31, 2022, as compared to the same period in 2021, primarily due to increases in foreign withholding taxes and changes in the geographic mix of worldwide income, which is subject to taxation at different statutory tax rates.

The Company’s total amount of unrecognized tax benefits, excluding interest and penalties, as of March 31, 2022, was $ 15.0 million, of which $ 2.0 million, if recognized, would affect the Company’s effective tax rate.

The Company’s total amount of unrecognized tax benefits, excluding interest and penalties, as of December 31, 2021, was $ 14.7 million, of which $ 1.9 million, if recognized, would affect the Company’s effective tax rate.

As of September 30, 2021, the Company has recorded unrecognized tax benefits of $ 2.5 million, including interest and penalties of $ 0.7 million, as long-term taxes payable in its Condensed Consolidated Balance Sheet.

As of March 31, 2022, the Company has recorded unrecognized tax benefits of $ 2.6 million, including interest and penalties of $ 0.7 million, as long-term taxes payable in its Condensed Consolidated Balance Sheet.

The remaining $ 13.1 million has been recorded net of the Company’s DTAs, which is subject to a full valuation allowance.

The valuation allowance was approximately $ 41.9 million as of September 30, 2021, and December 31, 2020, which was related to U.S.

The valuation allowance was approximately $ 51.6 million as of March 31, 2022 and December 31, 2021, which was related to U.S.

net federal and state DTAs.

The net deferred tax assets balance as of September 30, 2021, and December 31, 2020, was $ 0.2 million and $ 0.2 million, respectively.

The worldwide net deferred tax assets balance as of March 31, 2022 and December 31, 2021 were not significant.

The Company conducts business globally and, as a result, files numerous consolidated and separate income tax returns in the U.S.

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The Company is not subject to income tax examinations in any other of its major foreign subsidiaries’ jurisdictions.

On March 11, 2021, the American Rescue Plan Act of 2021 (“American Rescue Plan”) was signed into law to provide additional relief in connection with the ongoing COVID-19 pandemic.

The American Rescue Plan includes, among other things, provisions relating to Paycheck Protection Program (PPP) loan expansion, defined pension contributions, excessive employee remuneration, and the repeal of the election to allocate interest expense on a worldwide basis.

Under ASC 740 the effects of new legislation are recognized upon enactment.

Accordingly, the American Rescue Plan became effective beginning in the quarter ended March 31, 2021.

Such provisions did not have a material impact on the Company’s condensed consolidated financial statements.

NET LOSS PER SHARE

Basic net loss per share is computed by dividing net loss by weighted average number of common shares outstanding for the period (excluding outstanding stock options and shares subject to repurchase).

Diluted net loss per share is computed using the weighted-average number of common shares outstanding for the period plus the potential effect of dilutive securities which are convertible into common shares (using the treasury stock method), except in cases in which the effect would be anti-dilutive.

Diluted net loss per share is computed using

the weighted-average number of common shares outstanding for the period plus the potential effect of dilutive securities which are convertible into common shares (using the treasury stock method), except in cases in which the effect would be anti-dilutive.

The following is a reconciliation of the numerators and denominators used in computing basic and diluted net loss per share (in thousands except per share amount):

Three Months Ended September 30,

Nine Months Ended December 31,

Three Months Ended March 31,

Basic weighted-average shares outstanding

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Net loss per share, basic and diluted

For the three and nine months ended September 30, 2021 and 2020, because the Company was in a loss position, basic net loss per share is the same as diluted net loss per share as the inclusion of the potential common shares would have been anti-dilutive.

For the three months ended March 31, 2022 and 2021, because the Company was in a loss position, basic net loss per share is the same as diluted net loss per share as the inclusion of the potential common shares would have been anti-dilutive.

The following table sets forth potential shares of common stock that were not included in the diluted net loss per share calculation above because to do so would be anti-dilutive for the periods indicated (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Outstanding options

Non-vested restricted stock units

Nonvested restricted stock units

Employee Stock Purchase Plan

3 unchanged sentences

Accordingly, the Company considers itself to be in one operating and reporting segment, specifically the provision of services for differentiated data and analytics solutions to the semiconductor and electronics industries.

The Company had revenues from individual customers in excess of 10% of total revenues as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

The Company had revenues from individual customers that are approximately 10% or more of the Company’s consolidated total revenues as follows:

Three Months Ended March 31,

* represents less than 10%

The Company had gross accounts receivable from individual customers in excess of 10% of gross accounts receivable as follows:

September 30,

Gross accounts receivable balances (including amounts that are unbilled) from individual customers that are approximately 10% or more of the Company’s gross accounts receivable balance as follows:

* represents less than 10%

Revenues from customers by geographic area based on the location of the customers’ work sites are as follows (amounts in thousands):

Three Months Ended September 30,

United States

Rest of the world

Total revenue

Nine Months Ended September 30,

Three Months Ended March 31,

United States

2 unchanged sentences

Long-lived assets, net by geographic area are as follows (in thousands):

September 30,

United States (1)

1 unchanged sentence

Total long-lived assets, net

(1) Includes assets deployed at customer sites which could be outside the U.S.

FAIR VALUE MEASUREMENTS

6 unchanged sentences

Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table represents the Company’s assets measured at fair value on a recurring basis as of September 30, 2021, and December 31, 2020, and the basis for those measurements (in thousands):

The following table represents the Company’s assets measured at fair value on a recurring basis as of March 31, 2022, and December 31, 2021, and the basis for those measurements (in thousands):

Fair Value Measurements Using

September 30,

Inputs (Level 3)

2 unchanged sentences

Short-term investments (available-for-sale debt securities)

Treasury bills

Government securities (1)

Fair Value Measurements Using

Cash equivalents

1 unchanged sentence

Short-term investments (available-for-sale debt securities)

Treasury bills

As of September 30, 2021, and December 31, 2020, the amortized cost of the Company’s cash equivalents and short-term investments approximated their fair value due to their short-term maturities, and there have been no events or changes in circumstances that would have had a significant effect on the fair value of these securities in the periods presented.

There were no material realized or unrealized gains or losses, either individually or in the aggregate.

From time to time, the Company enters into foreign currency forward contracts to reduce the exposure to foreign currency exchange rate fluctuations on certain foreign currency denominated monetary assets and liabilities, primarily on third-party accounts payables and intercompany balances.

The primary objective of the Company’s hedging program is to reduce volatility of earnings related to foreign currency exchange rate fluctuations.

The counterparty to these foreign currency forward contracts is a financial institution that the Company believes is creditworthy, and therefore, the Company believes the credit risk of counterparty nonperformance is not significant.

These foreign currency forward contracts are not designated for hedge accounting treatment.

Therefore, the change in fair value of these contracts is recorded into earnings as a component of other expense (income), net, and offsets the change in fair value of the foreign currency denominated assets and liabilities, which is also recorded in other expense (income), net in the Company’s Condensed Consolidated Statements of Comprehensive Loss.There was no realized gain or loss from foreign currency forward contracts during the three and nine months ended September 30, 2021, or the three months ended September 30, 2020.

The Company recognized a net realized loss of $ 0.2 million from foreign currency forward contracts during the nine months ended September 30, 2020.

As applicable, the Company carries these derivatives financial instruments on its Condensed Consolidated Balance Sheets at their fair values.

The Company’s foreign currency forward contracts are classified as Level 2 because they are not actively

traded and the valuation inputs are based on quoted prices and market observable data of similar instruments.

As of September 30, 2021, and December 31, 2020, the Company had no outstanding forward contracts.

Government securities (1)

(1) As of March 31, 2022, and December 31, 2021, the amortized cost of the Company’s investments in U.S Government Securities approximated their fair value due to their short-term maturities, and there have been no events or changes

in circumstances that would have had a significant effect on the fair value of these securities in the periods presented.

There was no material realized or unrealized gains or losses, either individually or in the aggregate.

COMMITMENTS AND CONTINGENCIES

Strategic Partnership with Advantest — See Note 4, Business Combination , for the discussion about the Company’s commitments under the strategic partnership with Advantest.

Strategic Partnership with Advantest — See Note 3, Strategic Partnership Agreement with Advantest And Related Party Transactions , for the discussion about the Company’s commitments under the strategic partnership with Advantest.

Operating Leases — Refer to Note 5, Leases , for the discussion about the Company’s lease commitments.

The Company entered into lease agreements with total future minimum lease payments of $ 0.7 million over the next three years that will commence subsequent to March 31, 2022.

Indemnifications — The Company generally provides a warranty to its customers that its software will perform substantially in accordance with documented specifications typically for a period of 90 days following initial delivery of its products.

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Purchase Obligations — The Company has purchase obligations with certain suppliers for the purchase of goods and services entered in the ordinary course of business.

As of September 30, 2021, total outstanding purchase obligations were $ 11.3 million, the majority of which is due within the next 24 months .

As of March 31, 2022, total outstanding purchase obligations were $ 12.8 million, the majority of which is due within the next 12 months .

Indemnification of Officers and Directors — As permitted by the Delaware general corporation law, the Company has included a provision in its certificate of incorporation to eliminate the personal liability of its officers and directors for monetary damages for breach or alleged breach of their fiduciary duties as officers or directors, other than in cases of fraud or other willful misconduct.

6 unchanged sentences

The Company accrues for losses related to litigation when a potential loss is probable, and the loss can be reasonably estimated in accordance with FASB requirements.

As of September 30, 2021, the Company was not a party to any material legal proceedings where a loss was probable, and thus no amount was accrued.

As of March 31, 2022, except as disclosed below, the Company was not party to any material legal proceedings, thus no loss was probable and no amount was accrued.

On May 6, 2020, the Company initiated an arbitration proceeding with the Hong Kong International Arbitration Center against SMIC New Technology Research & Development (Shanghai) Corporation (“SMIC”) due to SMIC’s failure to pay fees due to PDF under a series of contracts.

The Company seeks to recover the unpaid fees, a declaration requiring SMIC to pay fees under the contracts in the future, and costs associated with bringing the arbitration proceeding.

The arbitration is on-going.

SMIC denies liability and the arbitration is on-going.

SUBSEQUENT EVENTS

Refer to Note 7, Employee Benefits Plans , for the discussion about the amendment to the 2011 Stock Incentive Plan.

Refer to Note 6, Stockholder’s Equity , for the discussion about the adoption of the 2022 Stock Repurchase Program.

On April 12, 2022, the Company repurchased approximately 715,000 shares of its common stock in a privately negotiated transaction for $ 16.7 million under the 2022 Stock Repurchase Program.

The stock repurchase was made in a block trade in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the Exchange Act).

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