MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: The following discussion and analysis of our financial condition and our results of operations should be read in conjunction with the condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q, and with the consolidated financial statements and management’s discussion and analysis of our financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 5, 2021.
+Added: The following discussion and analysis has been prepared as an aid to understanding our financial condition and results of operations.
+Added: It should be read in conjunction with the condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q, and with the consolidated financial statements and management’s discussion and analysis of our financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 7, 2022.
This discussion contains forward-looking statements that involve risks and uncertainties.
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In addition to the environmental benefits of reduced energy usage, our energy-saving technologies provide a number of benefits to our customers;
−Removed: these include helping them meet the increasingly stringent efficiency standards now in effect for many electronic products, and enabling the elimination of bulky heatsinks used to dissipate heat produced by wasted electricity.
+Added: these include helping them meet the increasingly stringent efficiency standards now in effect for many electronic products, and enabling the elimination of bulky heatsinks used to dissipate the heat produced by wasted electricity.
While the size of our addressable market fluctuates with changes in macroeconomic and industry conditions, the market has generally exhibited a modest growth rate over time as growth in the unit volume of power converters has been offset to a large degree by reductions in the average selling price of components in this market.
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Through our research and development efforts, we seek to introduce more advanced products for these markets offering higher levels of integration and performance compared to earlier products.
−Removed: We also continue to expand our sales and application-engineering staff and our network of distributors, as well as our offerings of technical documentation and design-support tools and services to help customers use our products.
−Removed: and services include our PI Expert™ design software, which we offer free of charge, and our transformer-sample service.
+Added: We also continue to expand our sales and application-engineering staff and our network of distributors, as well as our offerings of technical
+Added: documentation and design-support tools and services to help customers use our products.
+Added: These tools and services include our PI Expert™ design software, which we offer free of charge, and our transformer-sample service.
Our market-penetration strategy also includes capitalizing on the importance of energy efficiency and renewable energy in the power conversion market.
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In 2016 we introduced the SCALE-iDriver TM family of ICs, broadening the range of gate-driver applications we can address, and in 2018 we introduced our BridgeSwitch™ motor-driver ICs, addressing BLDC motors, as described above.
−Removed: We have recently introduced a series of automotive-qualified versions of our products, including SCALE-iDriver, InnoSwitch TM and LinkSwitch™ ICs, targeting the EV market;
+Added: We have recently introduced a series of automotive-qualified versions of our products, including SCALE-iDriver, InnoSwitch™ and LinkSwitch™ ICs, targeting the EV market;
we expect to introduce additional products targeting EVs in the future, and expect automotive applications to become a significant portion of our SAM over time.
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For example, applications such as “smart” utility meters, battery-powered lawn equipment and bicycles, and USB power receptacles (often installed alongside traditional AC wall outlets) can incorporate our products.
−Removed: The increased use of electronic intelligence and connectivity in consumer appliances has also enhanced our SAM.
−Removed: Finally, we have enhanced our SAM through the development of new technologies that increase the value (and therefore the average selling prices) of our products.
+Added: The increased use of connectivity, LED lighting and other power-consuming electronic features in consumer appliances has also enhanced our SAM.
+Added: Finally, we have expanded our SAM through the development of new technologies that increase the value (and therefore the average selling prices) of our products.
For example, our InnoSwitch™ ICs integrate circuitry from the secondary, or low-voltage, side of AC-DC power supplies, whereas earlier product families integrated circuitry only on the primary, or high-voltage side.
−Removed: In 2019, we began incorporating proprietary gallium-nitride (GaN) transistors in some products, enabling a higher level of energy efficiency than ICs with traditional silicon transistors.
+Added: In 2019 we began incorporating proprietary gallium-nitride (GaN) transistors in some our products, enabling a higher level of energy efficiency than ICs with silicon transistors.
+Added: Since then, we have introduced a variety of new products utilizing GaN technology and we expect to address a wider range of applications with GaN-based products in the years ahead.
We intend to continue expanding our SAM in the years ahead through all of the means described above.
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Recent Results
−Removed: Our net revenues were $176.8 million and $121.1 million for the three months ended September 30, 2021 and 2020, respectively, and $530.6 million and $337.6 million for the nine months ended September 30, 2021 and 2020, respectively.
−Removed: The increase in revenues reflects the strong demand conditions currently prevalent across the semiconductor industry, as well as market-share gains for our products in a broad range of applications including consumer appliances,
−Removed: advanced chargers for mobile devices such as smartphones, tablets and notebook computers and a range of industrial applications including home-and-building automation, electronic utility meters, battery-operated tools and broad-based industrial applications.
−Removed: Our top ten customers, including distributors that resell to original equipment manufacturers, or OEMs, and merchant power supply manufacturers, accounted for 76% and 79% of net revenues in the three and nine months ended September 30, 2021, and 65% and 56% of net revenues in the corresponding periods of 2020.
−Removed: In the three and nine months ended September 30, 2021, two customers, distributors of our products, each accounted for more than 10% of our net revenues.
−Removed: These customers each accounted for more than 10% of our net revenues in the corresponding three-month period of 2020, while only one accounted for more than 10% in the corresponding nine-month period of 2020.
−Removed: International sales accounted for 97% and 98% of our net revenues in the three and nine months ended September 30, 2021, respectively, and 98% of our net revenues in each of the corresponding periods of 2020.
−Removed: Our gross margin was 51.9% and 49.2% in the three months ended September 30, 2021 and 2020, respectively, and 50.4% and 50.2% in the nine months ended September 30, 2021 and 2020, respectively.
−Removed: Our gross margin increased in the three-month period due primarily to a favorable change in end-market mix, with a greater percentage of revenues coming from higher-margin end markets, as well as manufacturing efficiencies, partially offset by increased equipment-related charges.
−Removed: Our gross margin increased slightly in the nine-month period as manufacturing efficiencies were mostly offset by an unfavorable change in end-market mix and increased equipment-related expenses.
−Removed: Total operating expenses were $46.1 million and $44.8 million for the three months ended September 30, 2021 and 2020, respectively, and $136.7 million and $126.8 million for the nine months ended September 30, 2021 and 2020, respectively.
−Removed: The increases in operating expenses for the three- and nine-month periods were due primarily to higher salary and related expenses driven by increased headcount and annual merit increases, higher stock-based compensation expense related to performance-based awards, as well as increased materials engineering and equipment-related expenses in support of our product development efforts.
+Added: Our net revenues were $182.1 million and $173.7 million for the three months ended March 31, 2022 and 2021, respectively.
+Added: Revenues from industrial, consumer and computer applications increased substantially compared to the prior-year period, reflecting market-share gains for our products in a broad range of applications including consumer appliances, adapters for notebook computers and a range of industrial applications including home-and-building automation, electronic utility meters, battery-operated tools and broad-based industrial applications.
+Added: Revenues from communications applications decreased year-over-year reflecting very strong demand in the prior-year period from the cellphone market, as customers attempted to capitalize on economic sanctions affecting the mobile-phone business of a key competitor.
+Added: Our top ten customers, including distributors that resell to original equipment manufacturers, or OEMs, and merchant power supply manufacturers, accounted for 77% and 79% of net revenues in the three months ended March 31, 2022 and 2021, respectively.
+Added: In the three months ended March 31, 2022 and 2021, two customers, which are distributors of our products, each accounted for more than 10% of our net revenues .
+Added: International sales accounted for 96% and 98% of our net revenues in the three months ended March 31, 2022 and 2021, respectively.
+Added: Our gross margin was 55.3% and 48.6% in the three months ended March 31, 2022 and 2021, respectively.
+Added: Our gross margin increased primarily due to favorable end-market mix, with a greater percentage of revenues coming from higher-margin end markets, as well as manufacturing efficiencies.
+Added: Total operating expenses were $49.6 million and $44.2 million for the three months ended March 31, 2022 and 2021, respectively.
+Added: The increase in operating expenses was due primarily to higher salary and related expenses driven by increased headcount and annual merit increases, higher stock-based compensation expense and product development expenses.
COVID-19 Pandemic
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other locations around the world have also been subject to such restrictions.
−Removed: With high employee-vaccination rates and an ease in restrictions, we have begun a phased reopening of our San Jose headquarters.
−Removed: Our employee health and well-being is a top priority.
−Removed: We are actively monitoring the situation and expect most employees to return to the office as restrictions are further lifted.
−Removed: Some of our employees in other locations around the world have also returned to the office under a phased reopening plan.
−Removed: We have implemented a variety of measures to protect the health and safety of our employees, including the provision of masks, gloves and sanitizers, social-distancing rules, and regular deep cleaning of our facilities.
+Added: A large percentage of our employees continued to work remotely throughout 2021 and into 2022.
+Added: However, following the relaxation of local regulations and taking into account the high vaccination rate among our employees, our San Jose headquarters reopened on April 4, 2022 with employees returning to the office.
+Added: Our employee health and well-being are top priorities;
+Added: we continue to monitor the situation and will adjust working conditions again should the need arise.
While we have been able to conduct our day-to-day operations effectively in spite of the restrictions caused by the pandemic, the pandemic has caused disruptions in our supply chain.
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These disruptions have not materially affected our results due to a variety of mitigation measures including higher-than-normal inventories of wafers and finished goods in the early stages of the pandemic, safety stocks of certain key inputs and multiple sources for components for most of our products.
−Removed: Although there are signs of improvement in many areas around the world, the potential for new lockdowns and other mitigation efforts to deal with an increase in infection rates in certain areas remains a key risk for our supply chain and the results of our business.
+Added: Although there are signs of improvement in the US and many areas around the world, the potential for new lockdowns and other mitigation efforts to deal with an increase in infection rates due to the emergence of new variants in certain areas remains a key risk for our supply chain and the results of our business.
While the continuing pandemic brings a greater-than-normal level of uncertainty with respect to the demand for our products, we believe our business is fundamentally sound with strong, long-term growth prospects.
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The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“U.S.
−Removed: GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
+Added: GAAP”) requires management to make estimates and assumptions that
+Added: affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
On an ongoing basis, we evaluate our estimates, including those listed below.
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● revenue recognition.
−Removed: ● income taxes.
Our critical accounting policies are important to the portrayal of our financial condition and results of operations, and require us to make judgments and estimates about matters that are inherently uncertain.
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Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Cost of revenues
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Provision for income taxes
−Removed: Comparison of the Three and Nine Months Ended September 30, 2021 and 2020
+Added: Comparison of the Three Months Ended March 31, 2022 and 2021
Net revenues.
Net revenues consist of revenues from product sales, which are calculated net of returns and allowances.
−Removed: Net revenues for the three and nine months ended September 30, 2021 were $176.8 million and $530.6 million, respectively, and $121.1 million and $337.6 million, respectively, for the corresponding periods of 2020.
−Removed: The increase in revenues reflects the strong demand conditions currently prevalent across the semiconductor industry, as well as market-share gains for our products in a broad range of applications including consumer appliances, advanced chargers for mobile devices such as smartphones, tablets and notebook computers and a range of industrial applications including home-and-building automation, electronic utility meters, battery-operated tools and broad-based industrial applications.
−Removed: Our revenue mix by end market for the three and nine months ended September 30, 2021 and 2020 was as follows:
+Added: Net revenues for the three months ended March 31, 2022 and 2021 were $182.1 million and $173.7 million, respectively.
+Added: Revenues from industrial, consumer and computer applications increased substantially compared to the prior-year period, reflecting market-share gains for our products in a broad range of applications including consumer appliances, adapters for notebook computers and a range of industrial applications including home-and-building automation, electronic utility meters, battery-operated tools and broad-based industrial applications.
+Added: Revenues from communications applications decreased year-over-year reflecting very strong demand in the prior-year period from the cellphone market, as customers attempted to capitalize on economic sanctions affecting the mobile-phone business of a key competitor.
+Added: Our revenue mix by end market for the three months ended March 31, 2022 and 2021 was as follows:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Communications
−Removed: International sales, consisting of sales outside of the United States of America based on “bill to” customer locations, were $171.7 million and $517.7 million in the three and nine months ended September 30, 2021, respectively, and $118.7 million and $329.6 million, respectively, in corresponding periods of 2020.
+Added: International sales, consisting of sales outside of the United States of America based on “bill to” customer locations, were $175.2 million and $169.6 million in the three months ended March 31, 2022 and 2021, respectively.
Although power converters using our products are distributed to end markets worldwide, most are manufactured in Asia.
−Removed: As a result, sales to this region represented 80% and 83% of our net revenues in the three and nine months ended September 30, 2021, and 82% and 80%, respectively, in the corresponding periods of 2020.
+Added: As a result, sales to this region represented 80% and 85% of our net revenues in the three months ended March 31, 2022 and 2021, respectively.
We expect international sales, and sales to the Asia region in particular, to continue to account for a large portion of our net revenues in the future.
−Removed: Sales to distributors accounted for 72% and 75% in the three and nine months ended September 30, 2021, respectively, and 70% and 76%, respectively, in the corresponding periods of 2020.
+Added: Sales to distributors accounted for 75% and 77% in the three months ended March 31, 2022 and 2021, respectively.
Direct sales to OEMs and power-supply manufacturers accounted for the remainder.
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Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Honestar Technologies Co., Ltd.
−Removed: Total customer revenue was less than 10% of net revenues.
No other customers accounted for 10% or more of our net revenues in these periods.
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Gross margin is gross profit divided by net revenues.
−Removed: The table below compares gross profit and gross margin for the three and nine months ended September 30, 2021 and 2020:
+Added: The table below compares gross profit and gross margin for the three months ended March 31, 2022 and 2021:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
(dollars in millions)
−Removed: Our gross margin increased in the three-month period due primarily to a favorable change in end-market mix, with a greater percentage of revenues coming from higher-margin end markets, as well as manufacturing efficiencies, partially offset by increased equipment-related expenses.
−Removed: Our gross margin increased slightly in the nine-month period as manufacturing efficiencies were mostly offset by an unfavorable change in end-market mix and increased equipment-related expenses.
+Added: Our gross margin increased primarily due to favorable end-market mix, with a greater percentage of revenues coming from higher-margin end markets, as well as manufacturing efficiencies.
Research and development expenses.
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We also record R&D expenses for prototype wafers related to new products until such products are released to production.
−Removed: The table below compares R&D expenses for the three and nine months ended September 30, 2021 and 2020:
+Added: The table below compares R&D expenses for the three months ended March 31, 2022 and 2021:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
(dollars in millions)
−Removed: Percentage of net revenues
−Removed: R&D expenses increased for the three and nine months ended September 30, 2021, as compared to the corresponding periods of 2020, primarily due to higher salary and related expenses driven by increased headcount and annual merit increases, higher stock-based compensation expense related to performance-based awards and increased equipment-related expenses partially offset by lower outside-service expenses.
+Added: Headcount (at period end)
+Added: R&D expenses increased for the three months ended March 31, 2022, as compared to the corresponding period of 2021, primarily due to higher salary and related expenses driven by increased headcount and annual merit increases, product development expenses and higher stock-based compensation expense.
Sales and marketing expenses.
Sales and marketing (“S&M”) expenses consist primarily of employee-related expenses, including stock-based compensation, commissions to sales representatives, amortization of intangible assets and facilities expenses, including expenses associated with our regional sales and support offices.
−Removed: The table below compares S&M expenses for the three and nine months ended September 30, 2021 and 2020:
+Added: The table below compares S&M expenses for the three months ended March 31, 2022 and 2021:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
(dollars in millions)
Sales and marketing expenses
−Removed: Percentage of net revenues
−Removed: S&M expenses increased in the three and nine months ended September 30, 2021, as compared to the corresponding periods of 2020, due primarily to increased commission expense driven by increased sales, higher salary and related expenses stemming from annual merit increases, and higher stock-based compensation expense primarily related to performance-based awards.
+Added: Headcount (at period end)
+Added: S&M expenses increased in the three months ended March 31, 2022, as compared to the corresponding period of 2021, due primarily to higher salary and related expenses stemming from higher headcount and annual merit increases in addition to higher stock-based compensation expense.
General and administrative expenses.
General and administrative (“G&A”) expenses consist primarily of employee-related expenses, including stock-based compensation expenses, for administration, finance, human resources and general management, as well as consulting, professional services, legal and audit expenses.
−Removed: The table below compares G&A expenses for the three and nine months ended September 30, 2021 and 2020:
+Added: The table below compares G&A expenses for the three months ended March 31, 2022 and 2021:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
(dollars in millions)
−Removed: Percentage of net revenues
−Removed: G&A expenses decreased for the three months ended September 30, 2021, as compared to the corresponding period of 2020, due to lower patent-litigation and bad-debt expenses.
−Removed: G&A expenses increased for the nine months ended September 30, 2021, as compared to the corresponding period of 2020, primarily due to higher stock-based compensation expense related to performance-based awards, partially offset by lower patent-litigation expenses.
+Added: Headcount (at period end)
+Added: G&A expenses decreased for the three months ended March 31, 2022, as compared to the corresponding period of 2021, due to lower professional services.
Other income .
Other income consists primarily of interest income earned on cash and cash equivalents, marketable securities and other investments, and the impact of foreign exchange gains or losses.
−Removed: The table below compares other income for the three and nine months ended September 30, 2021 and 2020:
+Added: The table below compares other income for the three months ended March 31, 2022 and 2021:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
(dollars in millions)
−Removed: Percentage of net revenues
−Removed: Other income decreased for the three and nine months ended September 30, 2021, as compared to the corresponding periods of 2020, due primarily to lower interest income, as lower yields on our cash and investments more than offset the impact of higher cash and investment balances .
Provision for income taxes .
Provision for income taxes represents federal, state and foreign taxes.
−Removed: The table below compares income-tax expense for the three and nine months ended September 30, 2021 and 2020:
+Added: The table below compares income-tax expense for the three months ended March 31, 2022 and 2021:
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
(dollars in millions)
−Removed: Income before income taxes
Provision for income taxes
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Accordingly, the interim effective tax rate may not be reflective of the annual estimated effective tax rate.
−Removed: Our effective tax rates for the three and nine months ended September 30, 2021 were 8.2% and 6.1%, respectively, and 5.1% and 6.4%, respectively, for the corresponding periods of 2020.
−Removed: The effective tax rate in these periods was lower than the statutory federal income-tax rate of 21% due to the geographic distribution of our world-wide earnings in lower-tax jurisdictions, the impact of federal research tax credits and the recognition of excess tax benefits related to share-based payments.
−Removed: Additionally, in the nine months ended September 30, 2021, our effective tax rate was favorably impacted by a discrete item associated with the release of an unrecognized tax benefit.
+Added: Our effective tax rates for the three months ended March 31, 2022 and 2021 were 10.4% and 2.4%, respectively.
+Added: The effective tax rate in these periods was lower than the statutory federal income-tax rate of 21% due to the geographic distribution of our world-wide earnings in lower-tax jurisdictions and the impact of federal research tax credits.
+Added: Additionally, in the three months ended March 31, 2021, our effective tax rate was favorably impacted by a discrete item associated with the release of an unrecognized tax benefit and the recognition of excess tax benefits related to share-based payments.
These benefits were partially offset by U.S.
tax on foreign income, known as global intangible low-taxed income.
−Removed: The primary jurisdiction from which our foreign earnings are derived is the Cayman Islands, which is a non-taxing jurisdiction.
+Added: The primary jurisdiction from which our foreign earnings are derived is the Cayman Islands, which is a non-taxing
+Added: jurisdiction.
Income earned in other foreign jurisdictions was not material.
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Liquidity and Capital Resources
−Removed: As of September 30, 2021, we had $548.9 million in cash, cash equivalents and short-term marketable securities, an increase of approximately $99.7 million from $449.2 million as of December 31, 2020.
−Removed: As of September 30, 2021, we had working capital, defined as current assets less current liabilities, of $637.3 million, an increase of approximately $98.6 million from $538.7 million as of December 31, 2020.
+Added: As of March 31, 2022, we had $444.0 million in cash, cash equivalents and short-term marketable securities, an decrease of approximately $86.4 million from $530.4 million as of December 31, 2021.
+Added: As of March 31, 2022, we had working capital, defined as current assets less current liabilities, of $523.3 million, a decrease of approximately $91.2 million from $614.5 million as of December 31, 2021.
We have a Credit Agreement with Wells Fargo Bank, National Association (the "Credit Agreement") that provides us with a $75.0 million revolving line of credit to use for general corporate purposes with a $20.0 million sub-limit for the issuance of standby and trade letters of credit.
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all advances under the revolving line of credit will become due on such date, or earlier in the event of a default.
−Removed: No advances were outstanding under the agreement as of September 30, 2021.
+Added: No advances were outstanding under the agreement as of March 31, 2022.
Cash From Operating Activities
−Removed: Operating activities generated cash of $183.7 million in the nine months ended September 30, 2021.
+Added: Operating activities generated $74.6 million of cash in the three months ended March 31, 2022.
Net income for this period was $46.2 million;
−Removed: we also incurred non-cash stock-based compensation expense, depreciation and amortization of $27.3 million, $23.4 million and $2.7 million, respectively.
−Removed: Sources of cash also included an $11.1 million decrease in inventory reflecting strong demand for the period and a $6.6 million increase in accounts payable (excluding payables related to property and equipment) due to the timing of payments.
−Removed: These sources of cash were partially offset by a $6.2 million decrease in taxes payable and accrued liabilities, a $5.0 million increase in prepaid expenses and other assets, primarily due to prepaid income taxes, and a $3.0 million increase in accounts receivable due to increased customer shipments.
−Removed: Operating activities generated cash of $79.3 million in the nine months ended September 30, 2020.
+Added: we also incurred non-cash stock-based compensation expense, depreciation and intangibles amortization of $9.0 million, $8.4 million and $0.7 million, respectively.
+Added: Sources of cash also included a $10.7 million decrease in accounts receivable due to timing of collections, a $3.4 million increase in taxes payable and accrued liabilities and a $1.6 million decrease in prepaid expenses and other assets.
+Added: These sources of cash were partially offset by a $3.8 million increase in inventories, a $1.7 million decrease in accounts payable (excluding payables related to property and equipment).
+Added: Operating activities generated $58.1 million of cash in the three months ended March 31, 2021.
Net income for this period was $39.8 million;
−Removed: we also incurred non-cash stock-based compensation expense, depreciation, amortization and deferred income taxes of $22.0 million, $17.1 million, $3.3 million and $0.1 million, respectively.
−Removed: Sources of cash also included an $6.4 million increase in accounts payable (excluding payables related to property and equipment) due primarily to the timing of payments and a $6.1 million decrease in prepaid expenses and other assets, primarily driven by taxes refunded.
−Removed: These sources of cash were partially offset by a $14.4 million increase in inventories in order to support the demand environment, a $5.3 million increase in accounts receivable due to the increase and timing of customer shipments and a $0.9 million decrease in taxes payable and accrued liabilities.
+Added: we also incurred non-cash stock-based compensation expense, depreciation, deferred income taxes and intangibles amortization of $8.5 million, $7.5 million, $1.4 million and $1.0 million, respectively.
+Added: Sources of cash also included an $12.4 million decrease in inventory reflecting strong demand for the period and a $3.3 million increase in accounts payable (excluding payables related to property and equipment) due to the timing of payments.
+Added: These sources of cash were partially offset by $6.3 million decrease in taxes payable and accrued liabilities, $6.3 million increase in accounts receivable due to increased customer shipments, and a $3.3 million increase in prepaid expense and other assets, primarily due to prepaid insurances and income taxes.
Cash From Investing Activities
−Removed: Our investing activities in the nine months ended September 30, 2021, resulted in a $128.1 million net use of cash, primarily consisting of $97.8 million for the purchase of marketable securities, net of sales and maturities, and $30.3 million for purchases of property and equipment, primarily production-related machinery and equipment as well as construction of a new office building in Switzerland.
−Removed: Our investing activities in the nine months ended September 30, 2020, resulted in a $14.5 million net use of cash, primarily consisting of $35.7 million for purchases of property and equipment, primarily production-related machinery and equipment as well as construction of our offices in Switzerland and Germany, partially offset by $20.9 million from sales and maturities of marketable securities, net of purchases.
+Added: Our investing activities in the three months ended March 31, 2022, generated $80.2 million of cash, primarily consisting of $93.7 million from sales and maturities of marketable securities, net of purchases, offset by $14.7 million for purchases of property and equipment, primarily production-related machinery and equipment, partially offset by proceeds of $1.2 million from the sale of an office building.
+Added: Our investing activities provided $30.5 million of cash in the three months ended March 31, 2021, primarily consisting of $41.5 million from sales and maturities of marketable securities, net of purchases, offset by $11.1 million for purchases of property and equipment, primarily production-related machinery and equipment as well as construction of a new office building in Switzerland.
Cash From Financing Activities
−Removed: Our financing activities in the nine months ended September 30, 2021, resulted in a $52.0 million net use of cash, consisting of $36.2 million for the repurchase of our common stock and $23.5 million for the payment of dividends to stockholders, partially offset by $7.7 million from the issuance of common stock from the exercise of employee stock options and the issuance of shares through our employee stock purchase plan.
−Removed: Our financing activities in the nine months ended September 30, 2020, resulted in an $11.5 million net use of cash, consisting of $18.5 million for the payment of dividends to stockholders and $2.6 million for the repurchase of our common stock.
−Removed: These uses of cash were offset in part by $9.7 million from the issuance of common stock from the exercise of employee stock options and the issuance of shares through our employee stock purchase plan.
−Removed: Credit Agreement
−Removed: On July 27, 2016, we entered into the Credit Agreement with Wells Fargo Bank, National Association that provides us with a $75.0 million revolving line of credit to use for general corporate purposes with a $20.0 million sub-limit for the issuance of standby and trade letters of credit.
−Removed: We amended the Credit Agreement on April 30, 2018, to extend the termination date from July 26, 2019, to April 30, 2022, with all other terms remaining the same.
−Removed: On June 7, 2021, we signed the second amendment to the Credit Agreement to provide an alternate borrowing rate as a replacement for LIBOR and extend the termination date from April 30, 2022, to June 7, 2026, with all other terms remaining the same.
−Removed: Our ability to borrow under the revolving line of credit is conditioned upon our compliance with specified covenants, including reporting and financial covenants, primarily a minimum liquidity measure and a debt to earnings ratio, with which we are currently in compliance.
−Removed: The Credit Agreement terminates on June 7, 2026;
−Removed: all advances under the revolving line of credit
−Removed: will become due on such date, or earlier in the event of a default.
−Removed: No advances were outstanding under the agreement as of September 30, 2021.
−Removed: In October 2019, our board of directors declared four quarterly cash dividends of $0.095 per share to be paid to stockholders of record at the end of each quarter in 2020.
−Removed: In April 2020, our board of directors raised the cash dividend with the declaration of three cash dividends of $0.105 per share (in lieu of the $0.095 per share previously announced in October 2019) to be paid to stockholders of record at the end of each of the second, third and fourth quarter in 2020.
−Removed: In July 2020, our board of directors raised the cash dividends further with the declaration of two cash dividends of $0.11 per share (in lieu of the $0.105 per share announced in April 2020) to be paid to stockholders of record at the end of each of the third and fourth quarter in 2020.
+Added: Our financing activities in the three months ended March 31, 2022, resulted in a $142.3 million net use of cash, consisting of $134.7 million for the repurchase of our common stock and $10.7 million for the payment of dividends to stockholders, partially offset by $3.1 million from the issuance of common stock from the exercise of employee stock options and the issuance of shares through our employee stock purchase plan.
+Added: Our financing activities in the three months ended March 31, 2021, resulted in a $4.2 million net use of cash, consisting of $7.8 million for the payment of dividends to stockholders, partially offset by $3.7 million from the issuance of common stock, including the exercise of employee stock options and the issuance of shares through our employee stock purchase plan.
In January 2021, our board of directors raised the quarterly cash dividend by an additional $0.02 per share with the declaration of four cash dividends of $0.13 per share to be paid to stockholders of record at the end of each quarter in 2021.
In October 2021, our board of directors raised the quarterly cash dividend again with the declaration of five cash dividends of $0.15 per share (in lieu of the $0.13 per share announced in January 2021) to be paid to stockholders of record at the end of the fourth quarter in 2021 and at the end of each quarter in 2022.
−Removed: Dividends payouts of $7.8 million, $7.9 million and $7.8 million occurred on March 31, 2021, June 30, 2021 and September 30, 2021, respectively.
+Added: In January 2022, our board of directors raised the quarterly cash dividend by an additional $0.03 per share with the declaration of four cash dividends of $0.18 per share (in lieu of the $0.15 per share announced in October 2021) to be paid to stockholders of record at the end of each quarter in 2022.
+Added: A dividend payout of $10.7 million occurred on March 31, 2022.
The declaration of any future cash dividend is at the discretion of the board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that cash dividends are in the best interests of our stockholders.
Stock Repurchases
−Removed: As of December 31, 2020, we had approximately $41.3 million remaining under our stock-repurchasing program.
+Added: As of December 31, 2021, we had $67.3 million remaining under our stock-repurchase program .
+Added: In January and February 2022, our board of directors authorized the use of an additional $100 million and $50 million, respectively, for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines.
+Added: In the three months ended March 31, 2022, we repurchased 1,584,340 shares of our common stock for $134.7 million, leaving $82.7 million remaining on the repurchase authorization as of March 31, 2022.
+Added: The program has no expiration date.
In April 2022, our board of directors authorized the use of an additional $75 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines.
−Removed: In the nine months ended September 30, 2021, we repurchased approximately 455,000 shares of our common stock for $36.2 million .
−Removed: As of September 30, 2021, we had approximately $55.1 million remaining under our stock-repurchase program, which has no expiration date.
−Removed: In October 2021, our board of directors authorized the use of an additional $50.0 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines.
Authorization of future repurchase programs is at the discretion of the board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors.
Contractual Commitments
−Removed: As of September 30, 2021 we had a contractual obligation related to income tax, which consisted primarily of unrecognized tax benefits of approximately $20.9 million.
+Added: As of March 31, 2022 we had a contractual obligation related to income tax, which consisted primarily of unrecognized tax benefits of approximately $21.1 million.
A portion of the tax obligation is classified as long-term income taxes payable and a portion is recorded in deferred tax assets in our condensed consolidated balance sheet.
−Removed: As of September 30, 2021, there were no material changes in our contractual commitments from those reported in our Annual Report on Form 10-K for the year ended December 31, 2020.
+Added: As of March 31, 2022, there were no material changes in our contractual commitments from those reported in our Annual Report on Form 10-K for the year ended December 31, 2021.
Other Information
2 unchanged sentences
federal taxes.
−Removed: Accordingly, as of September 30, 2021, our worldwide cash and marketable securities are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring additional U.S.
+Added: Accordingly, as of March 31, 2022, our worldwide cash and marketable securities are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring additional U.S.
federal income taxes.
3 unchanged sentences
Off-Balance-Sheet Arrangements
−Removed: As of September 30, 2021, we did not have any off-balance-sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which are typically established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
+Added: As of March 31, 2022, we did not have any off-balance-sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which are typically established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Recent Accounting Pronouncements
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.