What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-01 compared with 2022-02-02 · 76 added, 117 removed, 199 unchanged (49% of the section changed)

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Our fiscal year-end financial reporting periods are a 52- or 53-week fiscal year that ends on the Saturday closest to December 31.

Fiscal 2021 had 52 weeks.

Fiscal 2022 and 2021 had 52 weeks.

Fiscal 2020 had 53 weeks with the extra week occurring in the first quarter of the year.

Fiscal 2019 had 52 weeks.

Fiscal 2021, 2020 and 2019 ended on January 1, 2022, January 2, 2021 and December 28, 2019, respectively.

Fiscal 2022, 2021 and 2020 ended on December 31, 2022, January 1, 2022 and January 2, 2021, respectively.

Impact of COVID-19

A new strain of novel coronavirus which causes a severe respiratory disease (“COVID-19”) was identified in 2019, and subsequently declared a worldwide pandemic by the World Health Organization.

The COVID-19 pandemic has impacted the global economy, disrupting our operations, global supply chains and the operations of our customers.

We implemented a response plan and continued operations while largely transitioning our global workforce to a remote work model.

We have reopened offices in all of our locations, subject to local regulations.

The third parties that perform our semiconductor manufacturing, assembly, packaging and testing have generally remained operational.

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We provide analog-intensive, mixed-signal solutions for use in a variety of electronic products in a broad range of applications for the Internet of Things (IoT) including connected home and security, industrial automation and control, smart metering, smart lighting, commercial building automation, consumer electronics, asset tracking and medical instrumentation.

We group our products as Industrial & Commercial or Home & Life based on the target markets they address.

As a fabless semiconductor company, we rely on third-party semiconductor fabricators in Asia, and to a lesser extent the United States and Europe, to manufacture the silicon wafers that reflect our IC designs.

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Discontinued Operations

On April 22, 2021, we entered into an Asset Purchase Agreement pursuant to which Skyworks Solutions, Inc.

agreed to acquire certain assets, rights, and properties, and assume certain liabilities, comprising our infrastructure and automotive business for $2.75 billion in cash.

The sale was completed pursuant to the terms of the Agreement on July 26, 2021.

The results of operations of the sold component have been presented in the accompanying consolidated financial statements as discontinued operations and, therefore, are excluded from the following discussion of the results of our continuing operations.

On July 26, 2021, we sold our infrastructure and automotive business to Skyworks Solutions, Inc.

for $2.75 billion in cash.

The prior year comparable period results of operations of the sold component have been presented in the accompanying Consolidated Financial Statements as discontinued operations and, therefore, are excluded from the following discussion of the results of our continuing operations.

Current Period Highlights of Continuing Operations

Revenues increased $209.9 million in fiscal 2021 compared to fiscal 2020 due to increased demand for our products.

Gross profit increased $130.6 million during the same period due primarily to increased product sales.

Gross margin increased to 59.0% in fiscal 2021 compared to 57.7% in fiscal 2020 primarily due to variations in product mix.

Operating expenses increased $56.3 million in fiscal 2021 compared to fiscal 2020 due primarily to increased personnel-related expenses, new product introduction costs, occupancy costs and amortization of intangible assets.

Operating loss in fiscal 2021 was $32.8 million compared to $107.1 million in fiscal 2020.

Revenues increased $303.2 million in fiscal 2022 compared to fiscal 2021 due to increased revenues from both our Industrial & Commercial products and Home & Life products.

Gross margin increased to 62.7% in fiscal 2022 compared to 59.0% in fiscal 2021 primarily due to increases in the price of our products and variations in product mix.

Operating expenses increased $65.1 million in fiscal 2022 compared to fiscal 2021 due primarily to increased personnel-related expenses, outside services, new product introduction costs, depreciation expense, and sales commissions offset in part by a decrease in the amortization of intangible assets.

Operating income (loss) in fiscal 2022 was $119.3 million compared to $(32.8) million in fiscal 2021.

We ended fiscal 2022 with $1.2 billion in cash, cash equivalents and short-term investments.

Net cash provided by operating activities was $141.3 million during fiscal 2022.

Accounts receivable were $98.3 million at January 1, 2022, representing 42 days sales outstanding (DSO).

Inventory was $49.3 million at January 1, 2022, representing 55 days of inventory (DOI).

In fiscal 2021, we repurchased 6.5 million shares of our common stock for an aggregate cost of $1.15 billion, including 4.0 million shares through a tender offer, 1.7 million shares through an ASR agreement and 0.8 million shares through our existing share repurchase program.

During fiscal 2021, we paid $140.6 million in cash and issued 528,022 shares of common stock in connection with the redemption of the remaining principal of our 2022 convertible senior notes.

Through acquisitions and internal development efforts, we have continued to diversify our portfolio and introduce new products and solutions with added functionality and integration.

In fiscal 2021, we introduced a 3D virtual smart home platform that takes users through innovative smart home solutions, various applicable protocols, and ecosystem connections;

Z-Wave 800 system-on-chips (SoCs) and modules for the Z-Wave smart home and automation ecosystem;

Custom Part Manufacturing Service (CPMS) to support IoT companies with the implementation of ‘Zero Trust’ security architectures to meet emerging cybersecurity standards;

the Unify Software Development Kit (SDK), which provides the common building blocks for connectivity across IoT ecosystems;

new sub-1-GHz SoCs delivering wireless solutions that combine long-range RF and energy efficiency with certified ARM PSA Level 3 security;

a fully integrated, certified Wi-SUN® solution simplifying Low Power Wide Area Network (LPWAN) deployment for smart cities;

wireless solutions for development of Matter end products that support Thread, Wi-Fi, and Bluetooth protocols;

and a new 32-bit MCU on our award-winning xG22 platform for IoT edge applications.

Accounts receivable were $71.4 million at December 31, 2022, representing 25 days sales outstanding (DSO).

Inventory was $100.4 million at December 31, 2022, representing 90 days of inventory (DOI).

In fiscal 2022, we acquired 6.9 million shares of our common stock for $887.6 million.

Through acquisitions and internal development efforts, we have continued to diversify our product portfolio and introduce new products and solutions with added functionality and integration.

In fiscal 2022, we introduced a portfolio of Matter development solutions providing support for Matter over Wi-Fi, Matter over Thread, Bluetooth Low Energy (LE) commissioning, and Matter bridges to Zigbee and Z-Wave;

an end-to-end development platform with complete connectivity support for Amazon Sidewalk;

a new flagship SoC and power amplifier for Wi-SUN®, the FG25 SoC and EFF01 Front End Module designed to provide a sub-gigahertz transmission range of up to 3 kilometers in dense urban environments with no data loss;

our first Wi-Fi 6 and Bluetooth LE SoC family ideal for battery-powered or energy-efficient IoT devices with always-on cloud connectivity;

a Bluetooth Location Services solution using accurate, low-power Bluetooth devices to simplify Angle of Arrival (AoA) and Angle of Departure (AoD) location services;

and a family of 2.4 GHz wireless SoCs for Bluetooth and multi-protocol operations with a built-in AI and Machine Learning (ML) accelerator, improving performance for AI and ML applications on battery-powered edge devices.

We plan to continue introducing products that increase the content we provide for existing applications, thereby enabling us to serve markets we do not currently address and expand our total available market opportunity.

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Although we actually sell the products to, and are paid by, the distributors and contract manufacturers, we refer to such end customer as our customer.

Three of our distributors who sell to our customers, Arrow Electronics, Edom Technology and Sekorm, each represented 28%, 18% and 12% of our revenues during fiscal 2021, 28%, 19% and 14% of our revenues during fiscal 2020, and 26%, 18% and 10% of our revenues during fiscal 2019, respectively.

Two of our distributors who sell to our customers, Arrow Electronics and Edom Technology, represented 33% and 17% during fiscal 2022, respectively.

Three of our distributors, Arrow Electronics, Edom Technology and Sekorm, represented 28%, 18% and 12% of our revenues during fiscal 2021, and 28%, 19% and 14% of our revenues during fiscal 2020, respectively.

The percentage of our revenues derived from outside of the United States was 83% in fiscal 2022, 86% in fiscal 2021 and 88% in fiscal 2020.

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Interest expense consists of interest on our short and long-term obligations, including our convertible senior notes and credit facility.

Interest expense on our convertible senior notes includes contractual interest, amortization of the debt discount and amortization of debt issuance costs.

Equity-method Earnings.

Equity-method earnings represents income or loss on our equity-method investment.

Interest expense on our convertible senior notes includes contractual interest, amortization of debt issuance costs, and for periods prior to fiscal 2022, amortization of the debt discount.

Provision (Benefit) for Income Taxes.

Provision (benefit) for income taxes includes both domestic and foreign income taxes at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits and other permanent differences.

Equity-method Earnings.

Equity-method earnings represents income or loss on our equity-method investment.

Income from discontinued operations, net of income taxes.

Income from discontinued operations, net of income taxes includes the results of operations of our former infrastructure and automotive business.

The following table sets forth our Consolidated Statements of Income data as a percentage of revenues for the periods indicated:

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Operating expenses

Operating loss

Operating income (loss)

Other income (expense):

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Interest expense

Loss from continuing operations before income taxes

Income (loss) from continuing operations before income taxes

Provision (benefit) for income taxes

Equity-method earnings

Loss from continuing operations

Income (loss) from continuing operations

Income from discontinued operations, net of income taxes

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(in millions)

The change in revenues in fiscal 2021 was due to increased demand for our IoT products.

Unit shipment volumes of our products increased by 37.1% while average selling prices increased by 2.7% compared to fiscal 2020.

Industrial & Commercial

The increase in revenues in fiscal 2022 was due to increased revenues of $196.3 million from our Industrial & Commercial products and $106.9 million from our Home & Life products.

Unit volumes of our products increased while average selling prices increased substantially compared to fiscal 2021.

The average selling prices of our products may fluctuate significantly from period to period due to changes in product mix, pricing decisions and other factors.

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Gross profit increased in fiscal 2022 due primarily to increased product sales.

Gross margin increased in fiscal 2021 primarily due to variations in product mix.

The increase in gross profit in fiscal 2022 was due to increases in gross profit for both of our product groups.

Gross margin increased primarily due to increases in the price of our products and variations in product mix.

Increased product demand and production capacity constraints have increased the selling price and costs of our products, and has resulted in period-to-period fluctuations in our gross margin.

We expect the prices we pay for inventory to continue to increase in future periods and that this will reduce our gross margins.

We may experience variations in the average selling prices of certain of our products.

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Percent of revenue

The increase in research and development expense in fiscal 2021 was primarily due to increases of $23.9 million for personnel-related expenses, $8.8 million for new product introduction costs, $2.1 million for occupancy costs and $1.0 million for the amortization of intangible assets.

The increase in research and development expense in fiscal 2022 was primarily due to increases of $48.6 million for personnel-related expenses, $2.6 million for new product introduction costs and $2.3 million for depreciation expense.

The decrease in research and development expense as a percent of revenues in fiscal 2022 was due to our increased revenues.

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Percent of revenue

The increase in selling, general and administrative expense in fiscal 2021 was primarily due to an increase of $18.9 million for personnel-related expenses.

The increase in selling, general and administrative expense in fiscal 2022 was primarily due to increases of $5.1 million for personnel-related expenses, $4.0 million for outside services, and $1.3 million for sales commissions offset in part by a decrease of $7.1 million for the amortization of intangible assets.

The decrease in selling, general and administrative expense as a percent of revenues in fiscal 2022 was due to our increased revenues.

We expect that selling, general and administrative expense will decrease in absolute dollars in the first quarter of 2022 compared to the fourth quarter of 2021.

Interest Income and Other, Net

Interest income and other, net in fiscal 2021 was $5.7 million compared to $9.0 million in fiscal 2020.

The decrease in interest income and other, net in fiscal 2021 was primarily due to lower interest rates on the underlying instruments.

Interest Expense

Interest expense in fiscal 2021 was $31.0 million compared to $34.1 million in fiscal 2020.

The decrease in interest expense in fiscal 2021 was primarily due to a net decrease of $2.7 million in interest resulting from the reduction in the aggregate balance of convertible notes outstanding and a decrease in borrowings from our existing credit facility.

Provision (Benefit) for Income Taxes

(in millions)

Provision (benefit) for income taxes

Effective tax rate

The provision for income taxes for fiscal 2021 compared to the benefit from income taxes in fiscal 2020 was primarily due to the reallocation of income tax benefit from continuing operations to discontinued operations under Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2019-12, Simplifying the Accounting for Income Taxes, and an increase in the beginning of year valuation allowance on deferred tax assets for state attribute carryforwards.

Additionally, tax expense on the gain from the divestiture of the infrastructure and automotive business to Skyworks Solutions of $346.9 million was recorded in discontinued operations for the period, net of tax benefits associated with discontinued operations before the gain on sale of $7.2 million for fiscal 2021.

Equity-method Earnings

Equity-method earnings in fiscal 2021 were $13.7 million compared to $2.1 million in fiscal 2020.

The increase in equity-method earnings in fiscal 2021 was due to an increase in the unrealized gain on an equity-method investment.

Income from discontinued operations, net of income taxes

(in millions)

Income from discontinued operations, net of income taxes

The increase in income from discontinued operations, net of income taxes in fiscal 2021 was primarily due to a gain on sale of $2.1 billion, net of tax, in fiscal 2021.

See Note 3, Discontinued Operations , to the Consolidated Financial Statements for additional information.

Comparison of Fiscal 2020 to Fiscal 2019

(in millions)

The change in revenues in fiscal 2020 was due to increased demand for our IoT products.

Unit shipment volumes of our products increased by 17.0% while average selling prices decreased by 7.4% compared to fiscal 2019.

(in millions)

Gross profit increased in fiscal 2020 due primarily to increased product sales.

Gross margin decreased in fiscal 2020 primarily due to variations in product mix.

Research and Development

(in millions)

Research and development

Percent of revenue

The increase in research and development expense in fiscal 2020 was primarily due to increases of $18.0 million for personnel-related expenses, including costs associated with increased headcount and an acquisition, $5.2 million for new product introduction costs, $3.5 million for the amortization of intangible assets and $1.1 million for occupancy costs.

Selling, General and Administrative

(in millions)

Selling, general and administrative

Percent of revenue

The increase in selling, general and administrative expense in fiscal 2020 was primarily due to an increase of $3.3 million for personnel-related expenses, including costs associated with increased headcount.

We expect that selling, general and administrative expense will remain relatively stable in absolute dollars in the first quarter of 2023 compared to the fourth quarter of 2022.

Interest Income and Other, Net

Interest income and other, net in fiscal 2022 was $13.9 million compared to $5.7 million in fiscal 2021.

The decrease in interest income and other, net in fiscal 2020 was primarily due to lower interest rates on the underlying instruments.

The increase in interest income and other, net in fiscal 2022 was primarily due to increased interest income earned as a result of higher market interest rates.

Interest Expense

Interest expense in fiscal 2022 was $6.7 million compared to $31.0 million in fiscal 2021.

The increase in interest expense in fiscal 2020 was primarily due to a net increase of $8.0 million in interest resulting from an increase in the aggregate balance of notes outstanding and a loss of $4.1 million recorded on the early extinguishment of a portion of the 2022 Notes.

The decrease in interest expense in fiscal 2022 was primarily due to a decrease of $20.9 million in amortization of debt discount in fiscal 2022 and a loss of $3.4 million recorded on the early extinguishment of our remaining 2022 convertible senior notes in fiscal 2021.

See Note 11, Debt , to the Consolidated Financial Statements for additional information.

Provision (Benefit) for Income Taxes

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Effective tax rate

The decrease in the provision for income taxes for fiscal 2020 as compared to fiscal 2019 was primarily due to the impact in fiscal 2019 of a change in our position related to the treatment of stock-based compensation within our intercompany cost-sharing arrangement offset by the increased impact of fiscal 2020 permanent tax differences.

The incremental, discrete income tax expense recognized in fiscal 2019 for the cost-sharing change was $18.4 million.

The increase in the effective tax rate for fiscal 2022 was primarily due to the recognition of certain tax benefits for fiscal 2021 in discontinued operations under the FASB ASU 2019-12, Simplifying the Accounting for Income Taxes, and the required adoption of new U.S.

tax rules regarding the capitalization of research and experimental costs in fiscal 2022.

Equity-method Earnings

Equity-method earnings in fiscal 2022 were $3.4 million compared to $13.7 million in fiscal 2021.

The increase in equity-method earnings in fiscal 2020 was due to an increase in the unrealized gain on an equity-method investment.

The decrease in equity-method earnings in fiscal 2022 was due to a decrease in the unrealized gains on an equity-method investment.

Income from discontinued operations, net of income taxes

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Income from discontinued operations, net of income taxes

The increase in income from discontinued operations, net of income taxes in fiscal 2020 was primarily due to a decrease in the provision for income taxes in fiscal 2020.

There was no income from prior year discontinued operations in fiscal 2022.

Income from discontinued operations in fiscal 2021 was $2.2 billion, including a gain on sale of $2.1 billion, net of tax.

Business Outlook

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Liquidity and Capital Resources

Our principal sources of liquidity as of January 1, 2022 consisted of $2.0 billion in cash, cash equivalents and short-term investments, of which approximately $730.7 million was held by our U.S.

Our principal sources of liquidity as of December 31, 2022 consisted of $1.2 billion in cash, cash equivalents and short-term investments, of which $0.9 billion was held by our U.S.

The remaining balance was held by our foreign subsidiaries.

Our cash equivalents and short-term investments consisted of government debt securities, which include agency bonds, agency discount notes, municipal bonds and U.S.

Our cash equivalents and short-term investments consisted of government debt securities, which include agency bonds, municipal bonds, variable rate demand notes and U.S.

government securities;

corporate debt securities, which include asset-backed securities, corporate bonds, certificates of deposit and commercial paper;

corporate debt securities, which include asset-backed securities, corporate bonds, commercial paper and Yankee bonds;

and money market funds.

Our long-term investments consisted of auction-rate securities.

Operating Activities

Net cash provided by operating activities was $91.2 million during fiscal 2021, compared to net cash used of $8.8 million during fiscal 2020.

Operating cash flows during fiscal 2021 reflect our net income of $2.1 billion, adjustments of $(2.0) billion for income from discontinued operations, depreciation, amortization, stock-based compensation, equity-method earnings and deferred income taxes, and a net cash inflow of $20.7 million due to changes in our operating assets and liabilities.

Net cash used in operating activities was $8.8 million during fiscal 2020, compared to net cash provided of $22.1 million during fiscal 2019.

Operating cash flows during fiscal 2020 reflect our net income of $12.5 million, adjustments of $(2.8) million for income from discontinued operations, depreciation, amortization, stock-based compensation, equity-method earnings and deferred income taxes, and a net cash outflow of $18.5 million due to changes in our operating assets and liabilities.

Accounts receivable increased to $98.3 million at January 1, 2022 from $95.2 million at January 2, 2021.

The increase in accounts receivable resulted primarily from normal variations in the timing of collections and billings.

Our average DSO was 42 days at January 1, 2022 and 35 days at January 2, 2021.

Inventory increased to $49.3 million at January 1, 2022 from $47.9 million at January 2, 2021.

Net cash provided by operating activities was $141.3 million during fiscal 2022, compared to net cash provided of $91.2 million during fiscal 2021.

Operating cash flows during fiscal 2022 reflect our net income of $91.4 million, adjustments of $97.5 million for depreciation, amortization, stock-based compensation, equity-method earnings and deferred income taxes, and a net cash outflow of $47.6 million due to changes in our operating assets and liabilities.

Accounts receivable decreased to $71.4 million at December 31, 2022 from $98.3 million at January 1, 2022.

The decrease in accounts receivable resulted primarily from normal variations in the timing of collections and billings.

Our DSO was 25 days at December 31, 2022 and 42 days at January 1, 2022.

Inventory increased to $100.4 million at December 31, 2022 from $49.3 million at January 1, 2022.

Our inventory levels will vary based on the availability of supply, and to a lesser extent, the impact of variations between forecasted demand used for purchasing inventory and actual demand.

Our DOI was 55 days at January 1, 2022 and 70 days at January 2, 2021.

Increased product demand and higher product costs have increased the value of the inventory we hold.

Our DOI was 90 days at December 31, 2022 and 55 days at January 1, 2022.

Investing Activities

Net cash used in investing activities was $476.7 million during fiscal 2021, compared to net cash used of $358.3 million during fiscal 2020.

The increase in cash outflows was principally due to an increase in cash outflows of $424.7 million from net purchases and sales of marketable securities in fiscal 2021, offset by a cash payment of $316.8 million for the acquisition of the Wi-Fi and Bluetooth business of Redpine Signals in fiscal 2020.

Net cash used in investing activities was $358.3 million during fiscal 2020, compared to net cash used of $102.8 million during fiscal 2019.

The increase in cash outflows was principally due a cash payment of $316.8 million for the acquisition of a business in fiscal 2020, offset by a decrease in cash outflows of $57.4 million from net purchases and sales of marketable securities in fiscal 2019.

Net cash provided by investing activities was $240.5 million during fiscal 2022, compared to net cash used of $476.7 million during fiscal 2021.

The increase in cash inflows was principally due to a decrease in cash outflows of $714.0 million from net purchases, sales and maturities of marketable securities in 2022.

Financing Activities

Net cash used in financing activities was $1.3 billion during fiscal 2021, compared to cash provided of $200.9 million during fiscal 2020.

The increase in cash outflows was principally due to an increase of $1.1 billion for repurchases of our common stock in fiscal 2021 and $845.0 million in proceeds from the issuance of debt in fiscal 2020, offset by a decrease of $484.2 million in payments on debt in fiscal 2021.

During fiscal 2021, we repurchased 6.5 million shares, including purchases of 4.0 million shares through a tender offer, 1.7 million shares through an ASR agreement and 0.8 million shares through our existing share repurchase program.

Net cash provided by financing activities was $200.9 million during fiscal 2020, compared to cash used of $29.6 million during fiscal 2019.

The increase in cash inflows was principally due to $845.0 million in proceeds from the issuance of debt and a decrease of $10.4 million for repurchases of our common stock, offset by $623.6 million in payments on debt in fiscal 2020.

Net cash used in financing activities was $887.1 million during fiscal 2022, compared to cash used of $1.3 billion during fiscal 2021.

The decrease in cash outflows was principally due to a decrease of $266.6 million for repurchases of our common stock and a decrease of $140.6 million in payments on debt in fiscal 2022.

Discontinued Operations

Net cash provided by discontinued operations was $2.6 billion during fiscal 2021, compared to net cash provided of $141.9 million during fiscal 2020.

The increase in cash inflows was principally due to $2.75 billion in proceeds from the sale of our infrastructure and automotive business, offset by a payment of $252.8 million for incomes taxes on the gain on sale.

Net cash provided by discontinued operations was $141.9 million during fiscal 2020, compared to net cash provided of $140.4 million during fiscal 2019.

As of January 1, 2022, our debt included $535 million principal amount of convertible senior notes (the “2025 Notes”).

Net cash used in discontinued operations was $69.5 million during fiscal 2022 related to income tax payments, compared to net cash provided of $2.6 billion during fiscal 2021.

The decrease in cash inflows was principally due to $2.75 billion in proceeds from the sale of our infrastructure and automotive business in fiscal 2021, offset by a decrease of $183.3 million for incomes tax payments on the gain on sale.

As of December 31, 2022, our debt included $535 million principal amount of convertible senior notes (the “2025 Notes”).

On January 2, 2022, we irrevocably elected cash settlement for the principal amount of the 2025 Notes.

We also had an undrawn $400 million revolving credit facility.

We have an option to increase the size of the borrowing capacity of the revolving credit facility by up to the greater of an aggregate of $250 million and 100% of EBITDA, plus an amount that would not cause a secured leverage ratio to exceed 3.25 to 1.00, subject to certain conditions.

On January 1, 2022, a condition regarding early conversion of the 2025 Notes was met, and as a result, holders have the right to convert their notes at any time during the quarter ending March 31, 2022.

On January 2, 2022, we irrevocably elected cash settlement for the principal amount of the 2025 Notes.

On January 6, 2021, we issued a notice of redemption for the remaining 2022 convertible senior notes (the “2022 Notes”).

During fiscal 2021, we paid $140.6 million in cash and issued 528,022 shares of common stock in connection with the redemption of the remaining 2022 Notes.

See Note 11, Debt , to the Consolidated Financial Statements for additional information.

Capital Requirements

Our future capital requirements will depend on many factors, including the rate of sales growth, market acceptance of our products, the timing and extent of research and development projects, potential acquisitions of companies or technologies and the expansion of our sales and marketing activities.

We believe our existing cash, cash equivalents, investments, credit under our Credit Facility, and cash generated from operations are sufficient to meet our short-term and long-term capital requirements, although we could be required, or could elect, to seek additional funding prior to that time.

We believe our existing cash, cash equivalents, investments, credit under our credit facility, and cash generated from operations are sufficient to meet our short-term (i.e., over at least the next twelve months) and long-term capital requirements, although we could be required, or could elect, to seek additional funding prior to that time.

We may enter into acquisitions or strategic arrangements in the future which also could require us to seek additional equity or debt financing.

Contractual Obligations

Our purchase obligations primarily include contractual arrangements in the form of purchase orders with suppliers.

As of January 1, 2022, such purchase obligations were $190.2 million.

Our purchase obligations primarily include contractual arrangements in the form of purchase orders and purchase commitments with suppliers.

As of December 31, 2022, such purchase obligations were $134.2 million.

For a description of other contractual obligations, see Note 11, Debt , and Note 12, Leases , to the Consolidated Financial Statements.

Critical Accounting Policies and Estimates

Comparison of Fiscal 2021 to Fiscal 2020

A discussion of changes in our results of operations and liquidity and capital resources from fiscal 2020 to fiscal 2021 has been omitted from this Form 10-K, but may be found in “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K filed with the Securities and Exchange Commission on February 2, 2022.

Critical Accounting Estimates

The preparation of financial statements and accompanying notes in conformity with U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis