What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2021-02-04 · 141 added, 118 removed, 183 unchanged (59% of the section changed)

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Forward-Looking Statements and Factors That May Affect Results

This Quarterly Report on Form 10-Q for the quarter ended December 26, 2020 (this “Report”) contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

This Quarterly Report on Form 10-Q for the quarter ended March 27, 2021 (this “Report”) contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business, including our expectations regarding the potential impacts on our business of the COVID-19 pandemic, and can be identified by the fact that they do not relate strictly to historical or current facts.

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All forward-looking statements reflect our best judgment and are based on several factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control.

Such factors include, but are not limited to following:

Such factors include, but are not limited to the following:

our dependence on our solutions for the mobile product applications market and the PC product applications market for a substantial portion of our revenue;

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Impact of COVID-19

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, which continues to rapidly spread broadly in the U.S.

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, which rapidly spread broadly in the U.S.

and globally.

In response to the outbreak, governmental authorities implemented numerous containment measures, including travel bans and restrictions, quarantines, shelter-in-place orders, and business restrictions and shutdowns, resulting in rapidly changing market and economic conditions.

In certain countries in which we operate governments took rapid and effective measures to stem the spread, while in other countries in which we operate governments were slow to react or have missed opportunities to effectively contain the spread.

In certain countries in which we operate governments took swift and effective measures to stem the spread, while in other countries in which we operate governments were slow to react or missed opportunities to effectively contain the spread.

Although some of these restrictions and other containment measures have since been lifted or scaled back, ongoing surges of COVID-19 have resulted in the re-imposition of certain restrictions and containment measures and may lead to other restrictions being re-implemented in the future in response to efforts to reduce the rapid spread of COVID-19.

The health and wellbeing of our workforce is our highest priority.

Many of our employees are able to work from home to minimize the potential risk of spread of COVID-19 in our office environment.

For those employees that are comfortable returning to an office work environment, we implemented various return to work protocols, based on guidance from local and global health organizations, to monitor and assess the health of our employees, including temperature checks and risk assessments, and further require all employees that do work in the office to wear face coverings and social distance while in communal locations in the office.

While the severity and duration of business disruption to our customers and suppliers due to the COVID-19 pandemic remains uncertain, we expect that it will continue to weigh on our business and consolidated results of operations in the near term and may further impact our financial condition (including liquidity) in the future.

The full extent of the impact of the COVID-19 pandemic to our business, operations and financial results will depend on numerous evolving factors that we may not be able to anticipate.

While we have not incurred significant disruptions thus far from the COVID-19 outbreak, we are unable to accurately predict the full impact COVID-19 will have on our future results due to numerous uncertainties, including the effectiveness of recently approved vaccines against the virus and its mutations, timing and effectiveness of the broad deployment of vaccines to mitigate or stem the spread of the virus, severity of the disease, the duration of the current outbreak, the severity and duration of future surges of the outbreak, further containment actions that may be taken by governmental authorities, the impact to the businesses of our customers and suppliers and other factors.

We will continue to evaluate the nature and scope of the impact to our business, consolidated results of operations, and financial condition, and may take actions altering our business operations and managing our costs and liquidity that we deem necessary or

appropriate to respond to this fast moving and uncertain global health crisis and the resulting global economic consequences .

We are optimistic that the recent changes in the United States to a more science-based, disciplined, and deliberate approach to addressing the virus and the ancillary effects of steps taken to slow the spread may temper the potential mid- to longer-term negative economic impact.

Many of our employees worked from home since the COVID-19 outbreak was declared a pandemic in order to minimize the potential risk of spread of COVID-19 in our office environment.

However, as the broad roll out of vaccines continues in many countries in which we operate, we anticipate employees will begin to return to the office environment on a part- or full-time basis.

As more employees return to the office, we will continue to adhere to return to work protocols, based on guidance from local and global health organizations, designed to monitor and assess the health of our employees, which include temperature checks and risk assessments, and requires all employees to wear face coverings and social distance while moving about in the office.

While the severity and duration of business disruption to our customers and suppliers due to the COVID-19 pandemic continues to remain uncertain, we expect that the ongoing global vaccination programs will moderate the overall severity and duration and are cautiously optimistic the most significant impact has passed.

Certainly, our optimism could change if more infectious variants of COVID-19 become resistant to the existing vaccines.

To date, we have not incurred significant disruptions to our business or a materially negative impact on our condensed consolidated results of operations and financial condition from the COVID-19 outbreak, and at this time do not believe our business will be severely impacted as steps continue to be taken globally to disrupt the spread, vaccinate large portions of the population and achieve herd immunity.

We are a leading worldwide developer and supplier of custom-designed human interface semiconductor product solutions that enable people to interact more easily and intuitively with a wide variety of mobile computing, communications, entertainment, and other electronic devices.

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Gain on sale of audio technology assets includes the sale of certain intangible assets related to our audio business.

See below under “Divestiture s ”.

See below under “Divestitures”.

Interest and other expense, net, primarily reflects interest expense on our convertible notes and revolving line of credit as well as the amortization of debt issuance costs and discount on our convertible notes, partially offset by interest income earned on our cash, cash equivalents and short-term investments.

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The acquisition closed on July 31, 2020.

As of December 26, 2020, our preliminary purchase consideration was $442.8 million, subject to certain additional post-closing adjustments.

The results of DisplayLink are included in our condensed consolidated financial statements for the period from August 1, 2020 through December 26, 2020.

As of March 27, 2021, our purchase consideration was $444.0 million.

The results of DisplayLink are included in our condensed consolidated financial statements for the period from August 1, 2020 through March 27, 2021.

For further discussion of the DisplayLink acquisition, see Note 6 included in the condensed consolidated financial statements contained elsewhere in this Report.

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We also entered into certain transition agreements with Broadcom for a period of three years.

The results of the Broadcom Business Acquisition are included in our condensed consolidated financial statements for the period from July 24, 2020 through December 26, 2020.

The results of the Broadcom Business Acquisition are included in our condensed consolidated financial statements for the period from July 24, 2020 through March 27, 2021.

For further discussion of the Broadcom Business Acquisition, see Note 6 included in the condensed consolidated financial statements contained elsewhere in this Report.

In December 2019, we entered into an asset purchase agreement with a third party to sell the assets of our LCD Touch Controller and Display Driver Integration, or TDDI, product line for LCD mobile displays.

We retained our automotive TDDI product line and our discrete touch and discrete display driver product lines supporting LCD and OLED for the mobile market.

The assets sold under the asset purchase agreement for cash consideration of $138.7 million and had a carrying value of approximately $33.6 million as of the closing date of the transaction in April 2020.

The gain on sale of this business component was $105.1 million.

In December 2020, we completed the sale of limited audio technology intangible assets, received a fully-paid up perpetual license back from the buyer and, as an element of the transaction licensed other audio technology intangible assets to the buyer under a fully-paid up perpetual license arrangement.

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The gain on the sale of the audio technology assets was $34.2 million.

We retained our automotive TDDI product line and our discrete touch and discrete display driver product lines supporting LCD and OLED for the mobile market.

The gain on sale of this portion of a product line was $105.1 million.

In December 2020, we invested $5.0 million in Eta Compute in exchange for preferred stock.

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If actual results are not consistent with our estimates, judgments, or assumptions, or if additional or new information arises in the future that affects our fair value estimates, then adjustments to our initial fair value estimates may have a material impact to our purchase accounting or our results of operations.

Other than the above item, there have been no significant changes in our critical accounting policies and estimates during the six months ended December 26, 2020, compared with our critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended June 27, 2020.

Other than the above item, there have been no significant changes in our critical accounting policies and estimates during the nine months ended March 27, 2021, compared with our critical accounting policies and estimates disclosed in Management’s

Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended June 2 7 , 20 20 .

Results of Operations

Certain of the data used in our condensed consolidated statements of income for the periods indicated, together with comparative absolute and percentage changes in these amounts, were as follows (in millions, except percentages):

Three Months Ended December

Six Months Ended December

Three Months Ended March

Nine Months Ended March

IoT product applications

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Three Months Ended

Six Months Ended

Nine Months Ended

Percentage Point

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Equity investment loss

Net revenue was $357.6 million for the three months ended December 26, 2020, compared with $388.3 million for the three months ended December 28, 2019, a decrease of $30.7 million, or 7.9%.

Net revenue was $325.8 million for the three months ended March 27, 2021, compared with $328.1 million for the three months ended March 28, 2020, a decrease of $2.3 million, or 0.7%.

Of this net revenue, $146.0 million, or 44.8%, was from IoT product applications, and $98.4 million, or 30.2%, was from PC product applications, and $81.4 million, or 25.0%, was from Mobile product applications.

The decrease in net revenue for the three months ended December 26, 2020 was primarily attributable to a decrease in net revenue from Mobile product applications, partially offset by an increase in net revenue from IoT product applications and PC product applications.

The decrease in net revenue for the three months ended March 27, 2021 was primarily attributable to a decrease in net revenue from Mobile product applications, partially offset by an increase in net revenue from IoT product applications and PC product applications.

Net revenue from Mobile product applications decreased as a result of a decline in units sold (which decreased 47%) as well as lower average selling prices due to product sales mix (which declined 13%) for Mobile product applications.

The decline in unit sales in Mobile product applications was primarily due to the divestiture of our TDDI business in the fourth quarter of fiscal 2020.

The decline in unit sales in Mobile product applications was primarily due to the overall reduction in our display driver product applications and the divestiture of a portion of our TDDI product line in the fourth quarter of fiscal 2020.

Net revenue from IoT product applications, which includes products from both acquisitions that closed in July 2020, increased as a result of higher average selling prices for IoT product applications due to our product sales mix (which increased 72%) and an increase in units sold (which increased 17%).

Net revenue from PC product applications increased due to a growth in units sold (which increased 12%) for PC product applications.

Net revenue was $686.0 million for the six months ended December 26, 2020, compared with $728.2 million for the six months ended December 28, 2019, a decrease of $42.2 million, or 5.8%.

Net revenue from PC product applications increased due to a growth in units sold (which increased 34%) for PC product applications partially offset by lower average selling prices due to our product sales mix (which decreased 7%).

Net revenue was $1,011.8 million for the nine months ended March 27, 2021, compared with $1,056.3 million for the nine months ended March 28, 2020, a decrease of $44.5 million, or 4.2%.

Of this net revenue, $415.5 million, or 41.1%, was from IoT product applications, and $270.4 million, or 26.7%, was from PC product applications, and $325.9 million, or 32.2%, was from Mobile product applications.

The decrease in net revenue for the three months ended December 26, 2020 was attributable to a decrease in net revenue from Mobile product applications, partially offset by an increase in net revenue from IoT product applications and PC product applications.

Net revenue from Mobile product applications decreased as a result of a decline in units sold (which decreased 30%) as well as lower average selling prices (a decline of 13%) for Mobile product applications.

The decline in unit sales in Mobile product applications was primarily due to the divestiture of our TDDI business in the fourth quarter of fiscal 2020.

The decrease in net revenue for the nine months ended March 27, 2021 was attributable to a decrease in net revenue from Mobile product applications, partially offset by an increase in net revenue from IoT product applications and PC product applications.

Net revenue from Mobile product applications decreased as a result of a decline in units sold (which decreased 35%) as well as lower average selling prices due to product sales mix (a decline of 13%) for Mobile product applications.

The decline in unit sales in Mobile product applications was primarily due to the divestiture of a portion of our TDDI product line in the fourth quarter of fiscal 2020.

Net revenue from IoT product applications, which includes products from both acquisitions that closed in July 2020, increased as a result of higher average selling prices for IoT product applications due to our product sales mix (which increased 47%) and an increase in units sold (which increased 13%).

Net revenue from PC product applications increased due to a growth in units sold (which increased 10%) for PC product applications as well as slightly higher average selling prices.

Gross margin as a percentage of net revenue was 42.1%, or $150.4 million, for the three months ended December 26, 2020, compared with 41.0%, or $159.3 million, for the three months ended December 28, 2019.

The 110 basis point increase in gross margin for the three months ended December 26, 2020, was primarily due to a favorable product mix and product cost reductions, partially

offset by a $ 20.5 million in crease in amortization for amortizable intangibles primarily related to the acquisition of DisplayLink and the Broadcom Business Acquisition and $ 11.9 million of inventory fair value adjustments associated with the DisplayLink a cquisition .

Gross margin as a percentage of net revenue was 41.5%, or $284.9 million, for the six months ended December 26, 2020, compared with 39.2%, or $285.5 million, for the six months ended December 28, 2019.

The 230 basis point increase in gross margin for the six months ended December 28, 2019, was primarily due to a favorable product mix and product cost reductions, partially offset by a $27.7 million increase in amortization for amortizable intangibles primarily related to the acquisition of DisplayLink and the Broadcom Business Acquisition and $21.7 million of inventory fair value adjustments associated with the DisplayLink acquisition

Net revenue from PC product applications increased due to a growth in units sold (which increased 18%) for PC product applications.

Gross margin as a percentage of net revenue was 47.7%, or $155.5 million, for the three months ended March 27, 2021, compared with 41.3%, or $135.6 million, for the three months ended March 28, 2020.

The 640 basis point increase in gross margin for the three months ended March 27, 2021, was primarily due to a favorable product mix and product cost reductions, partially offset by a $10.8 million increase in amortization for amortizable intangibles primarily related to the acquisition of DisplayLink and the Broadcom Business Acquisition and $4.3 million of inventory fair value adjustments associated with the DisplayLink acquisition.

Gross margin as a percentage of net revenue was 43.5%, or $440.4 million, for the nine months ended March 27, 2021, compared with 39.9%, or $421.1 million, for the nine months ended March 28, 2020.

The 360 basis point increase in gross margin for the nine months ended March 28, 2020, was primarily due to a favorable product mix and product cost reductions, partially offset by a $28.9 million increase in amortization for amortizable intangibles primarily related to the acquisition of DisplayLink and the Broadcom Business Acquisition and $26.0 million of inventory fair value adjustments associated with the DisplayLink acquisition.

We continuously introduce new product solutions, that may have life cycles of less than one year.

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Research and Development Expenses .

Research and development expenses remained flat at $77.3 million for the three months ended December 26, 2020, compared with $77.0 million for the three months ended December 28, 2019.

A majority of expenses have declined from the three months ended December 28, 2019 to the three months ended December 26, 2020, as a result of a reduction in average headcount.

However, the declines in other expenses have been offset by acquisition related product development services.

Research and development expenses decreased $4.8 million to $158.2 million for the six months ended December 26, 2020, compared with the six months ended December 28, 2019.

The decrease in research and development expenses reflected a net $3.6 million decrease in personnel-related costs, which was due to a reduction in average headcount for the six months ended December 26, 2020 as compared to the six months ended December 28, 2019, as a result of restructuring activities to reduce operating costs, partially offset by increased headcount as a result of recent acquisitions;

a $3.7 million decrease due to acquired in-process research and development recorded in the first quarter of fiscal 2020;

a $2.0 million decrease in travel related costs;

Research and development expenses increased slightly to $77.5 million for the three months ended March 27, 2021, compared with $75.8 million for the three months ended March 28, 2020.

A majority of expenses have declined from the three months ended March 28, 2020 to the three months ended March 27, 2021, as a result of a reduction in average headcount.

However, the declines in other expenses have been offset by acquisition related product development services and phantom stock expense.

Research and development expenses decreased $3.1 million to $235.7 million for the nine months ended March 27, 2021, compared with the nine months ended March 28, 2020.

The decrease in research and development expenses reflected a net $9.0 million decrease in personnel-related costs, which was due to a reduction in average headcount for the nine months ended March 27, 2021 as compared to the nine months ended March 28, 2020, as a result of restructuring activities to reduce operating costs, partially

offset by increased headcount as a result of recent acquisitions;

a $5.0 million decrease in software license and maintenance costs;

and a $1.3 million decrease in facilities and infrastructure costs;

partially offset by an increase of $3.5 million in project related costs and a $3.0 million increase in intellectual property amortization.

a $3.7 million decrease due to acquired in-process research and development recorded in the first quarter of fiscal 2020;

6 million decrease in travel related costs and a $ 1.5 million decrease in facilities and infrastructure costs;

partially offset by a n $8.7 million increase in stock based compensation (primarily related to phantom stock expense ) , an increase of $ 5.8 million in project related costs and a $ 2.6 million increase in intellectual property amortization .

Selling, General, and Administrative Expenses .

Selling, general, and administrative expenses increased $8.0 million to $39.5 million for the three months ended December 26, 2020, compared with the three months ended December 28, 2019.

The increase in selling, general, and administrative expenses primarily reflected a $6.5 million increase in stock based compensation costs which were incurred in connection with grants of awards primarily to new employees in fiscal 2020 and the first half of fiscal 2021, as well as a $1.4 million increase in legal and accounting fees related to recent acquisitions.

Selling, general, and administrative expenses increased $15.8 million to $74.8 million for the six months ended December 26, 2020, compared with the six months ended December 28, 2019.

The increase in selling, general, and administrative expenses primarily reflected a $13.2 million increase in stock based compensation costs which were incurred in connection with grants of awards primarily to new employees in fiscal 2020 and the first half of fiscal 2021, as well as a $1.1 million increase in foreign exchange losses.

Selling, general, and administrative expenses increased $5.2 million to $36.8 million for the three months ended March 27, 2021, compared with the three months ended March 28, 2020.

The increase in selling, general, and administrative expenses primarily reflected a $3.4 million increase in stock based compensation costs which were incurred in connection with grants of awards primarily to new employees in fiscal 2020 and the first nine months of fiscal 2021, as well as a $2.1 million increase in personnel and related costs due to an increase in headcount related to recent acquisitions.

Selling, general, and administrative expenses increased $21.0 million to $111.6 million for the nine months ended March 27, 2021, compared with the nine months ended March 28, 2020.

The increase in selling, general, and administrative expenses primarily reflected a $16.6 million increase in stock based compensation costs which were incurred in connection with grants of awards primarily to new employees in fiscal 2020 and the first nine months of fiscal 2021 and a $3.9 million increase in personnel and related costs due to an increase in headcount related to recent acquisitions.

Acquired Intangibles Amortization.

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Restructuring Costs.

Restructuring costs of $6.2 million in the six months ended December 26, 2020 reflect severance costs for restructuring of our operations to reduce ongoing operating costs.

Restructuring activities commenced in each of fiscal 2020 and the first half of fiscal 2021 and are all expected to be complete by the end of fiscal 2021.

Restructuring costs of $7.1 million in the nine months ended March 27, 2021 reflect severance costs for restructuring of our operations to reduce ongoing operating costs.

Restructuring activities commenced in each of fiscal 2020 and the first nine months of fiscal 2021 are all expected to be complete by the end of fiscal 2021.

See Note 16 Restructuring Activities included in the condensed consolidated financial statements contained elsewhere in this Report.

Gain on sale of audio technology assets .

Gain on sale of audio technology assets includes the sale of certain intangible assets related to our audio business.

Gain on sale of audio technology assets includes the sale of certain intangible assets related to our audio products.

See Note 6 Acquisitions, Divestiture and Investment included in the condensed consolidated financial statements contained elsewhere in this Report.

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Interest and other expense, net primarily includes the amortization of debt discount and issuance costs, as well as interest on our debt, partially offset by interest income earned on our cash, cash equivalents and short-term investments.

Interest and other expense, net increased $3.7 million to $6.0 million for the three months ended December 26, 2020, as compared to $2.3 million for the three months ended December 28, 2019.

The increase in interest and other expense, net is primarily

due to a decrease in interest income as a result of lower cash balances and interest rates and higher interest expense on our debt due to borrowings under our revolving line of credit.

I nterest and other expense, net in c reased $ 4.8 million to $ 10.7 million for the six months ended December 26, 2020 , as compared to $ 5.9 million for the six months ended December 28, 2019 .

The in c rease in interest and other expense, net is primarily due to a de crease in interest income as a result of lower cash balances and interest rates and higher interest expense on our debt due to borrowings under our revolving line of credit .

Provision for Income Taxes On March 27, 2020, the Coronavirus Aid, Relief and Economic Security, or CARES, Act was enacted and signed into law.

The CARES Act did not have a material impact on the income tax provision for the three and six months ended December 26, 2020.

Interest and other expense, net increased $3.8 million to $7.0 million for the three months ended March 27, 2021, as compared to $3.2 million for the three months ended March 28, 2020.

The increase in interest and other expense, net is primarily due to a decrease in interest income as a result of lower cash balances through most of the quarter and lower interest rates as well as higher interest expense on our debt due to borrowings under our revolving line of credit and our new Senior Notes issued during the quarter.

Interest and other expense, net increased $8.6 million to $17.7 million for the nine months ended March 27, 2021, as compared to $9.1 million for the nine months ended March 28, 2020.

The increase in interest and other expense, net is primarily due to a decrease in interest income as a result of lower cash balances during most of the first nine months of fiscal 2021 and lower interest rates, as well as higher interest expense on our debt due to borrowings under our revolving line of credit and our new Senior Notes issued during the quarter .

Provision for Income Taxes.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security, or CARES, Act was enacted and signed into law.

The CARES Act did not have a material impact on the income tax provision for the three and nine months ended March 27, 2021.

We account for income taxes under the asset and liability method.

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Our quarterly tax provision and our quarterly estimate of the annual effective tax rate can be subject to volatility due to several factors, including our ability to accurately forecast annual income before provision for income taxes in each of the tax jurisdictions in which we operate.

The provision for income taxes of $2.4 million and $12.0 million for the three months ended December 26, 2020 and December 28, 2019, respectively, represented estimated federal, foreign, and state income taxes.

The effective tax rate for the three months ended December 26, 2020 diverged from the combined U.S.

federal and state statutory tax rate primarily because of foreign withholding taxes, non-deductible officer compensation, the impact of accounting for qualified stock options and GILTI, partially offset by the benefit of income taxed at lower rates, research credits and foreign tax credits.

The effective tax rate for the three months ended December 28, 2019, diverged from the combined U.S.

federal and state statutory tax rate, primarily because of foreign withholding taxes and GILTI partially offset by the benefit of research credits, foreign tax credits and income taxed at lower tax rates.

The provision for income taxes of $6.0 million and $7.1 million for the six months ended December 26, 2020 and December 28, 2019, respectively, represented estimated federal, foreign, and state income taxes.

The effective tax rate for the three months ended December 26, 2020 diverged from the combined U.S.

The effective tax rate for the six months ended December 28, 2019, diverged from the combined U.S.

The provision for income taxes of $ 10.4 million and $1 0.

2 million for the three months ended March 27, 2021 and March 28, 2020 , respectively, represented estimated federal, foreign, and state income taxes.

The effective tax rate for the three months ended March 27, 2021 diverged from the combined U.S.

federal and state statutory tax rate primarily because of foreign withholding taxes, non-deductible officer compensation, non-deductible stock-based compensation and global intangible low-taxed income, or GILTI, partially offset by the benefit of income taxed at lower rates, research credits and foreign tax credits.

The effective tax rate for the three months ended March 28, 2020 , diverged from the combined U.S.

federal and state statutory tax rate, primarily because of foreign withholding taxes, income taxed at higher tax rates, non-deductible stock-based compensation and GILTI, partially offset by the benefit of research credits and foreign tax credits .

The provision for income taxes of $16.4 million and $17.3 million for the nine months ended March 27, 2021 and March 28, 2020, respectively, represented estimated federal, foreign, and state income taxes.

The effective tax rate for the nine months ended March 28, 2020 diverged from the combined U.S.

federal and state statutory tax rate primarily because of foreign withholding taxes, non-deductible officer compensation, non-deductible stock-based compensation and GILTI, partially offset by the benefit of income taxed at lower rates, research credits and foreign tax credits.

The effective tax rate for the nine months ended March 28, 2020 diverged from the combined U.S.

Liquidity and Capital Resources

Our cash and cash equivalents were $309.9 million as of December 26, 2020, compared with $763.4 million as of June 27, 2020, representing a decrease of $453.5 million.

The decrease primarily reflected $623.0 million used for the acquisition of businesses, net of cash and cash equivalents acquired, $25.8 million used for payroll taxes for restricted stock units, market stock units and performance stock units, and $12.2 million used for purchases of property and equipment, partially offset by $88.0 million of proceeds from maturities of investments, $77.9 million of net cash provided by operating activities, $34.2 million of proceeds from sale of audio technology assets and $11.2 of proceeds from issuance of shares.

Our cash and cash equivalents were $756.2 million as of March 27, 2021, compared with $763.4 million as of June 27, 2020, representing a decrease of $7.2 million.

The decrease primarily reflected $626.5 million used for the acquisition of businesses, net of cash and cash equivalents acquired, a $100.0 million payment on line of credit borrowings, $27.0 million used for payroll taxes for restricted stock units, market stock units and performance stock units, and $15.5 million used for purchases of property and equipment, partially offset by $400.0 million of proceeds from issuance of debt, $95.8 million of proceeds from maturities of investments, $214.3 million of net cash provided by operating activities, $34.2 million of proceeds from the sale of audio technology assets and $26.9 of proceeds from issuance of shares.

At this time, we consider earnings of our foreign subsidiaries indefinitely invested overseas and have made no provision for income or withholding taxes, other than the one-time transition tax incurred as part of the Tax Cuts and Jobs Act, that may result from a future repatriation of those earnings.

As of December 26, 2020, $198.4 million of cash, cash equivalents and short-term investments was held by our foreign subsidiaries.

As of March 27, 2021, $257.1 million of cash, cash equivalents and short-term investments was held by our foreign subsidiaries.

If these funds are needed for our operations in the United States, we would be required to accrue and pay foreign withholding taxes to repatriate certain of these funds.

Cash Flows from Operating Activities.

Operating activities during the six months ended December 26, 2020 generated $77.9 million compared with $120.0 million net cash generated during the six months ended December 28, 2019.

For the six months ended December 26, 2020, the primary operating activities were adjustments for non-cash charges of $75.2 million and a net change in operating assets and liabilities of $44.1 million.

The net change in operating assets and liabilities was primarily attributable to a $46.9 million increase in accounts receivable, net, a $24.6 million decrease in accrued compensation, $15.3 million decrease in income taxes payable and a $11.9 million decrease in other accrued liabilities, partially offset by a $62.0 million decrease in inventories.

From June 27, 2020 to December 26, 2020, our days sales outstanding remained flat at 63 days.

Operating activities during the nine months ended March 27, 2021 generated $214.3 million compared with $168.3 million net cash generated during the nine months ended March 28, 2020.

For the nine months ended March 27, 2021, the primary operating activities were adjustments for non-cash charges of $126.3 million and a net change in operating assets and liabilities of $27.4 million.

The net change in operating assets and liabilities was primarily attributable to a $65.8 million decrease in inventories and a $37.9 increase in accounts payable, partially offset by a $31.3 million increase in accounts receivable, net, a $19.3 million decrease in other accrued liabilities, a $11.8 million decrease in income taxes payable, and a $7.9 increase in prepaid expenses and other current assets.

From June 27, 2020 to March 27, 2021, our days sales outstanding increased slightly from 63 days to 65 days.

Our annual inventory turns increased from six to nine over the same time period.

Cash Flows from Investing Activities.

Cash used in investing activities during the six months ended December 26, 2020 primarily consisted of $623.0 million used for the acquisition of businesses and $12.2 million for purchases of property and equipment, partially offset by $88.0 million in proceeds from maturities of investments and $34.2 million of proceeds from sale of audio technology assets.

Cash used in investing activities during the nine months ended March 27, 2021 primarily consisted of $626.5 million used for the acquisition of businesses and $15.5 million for purchases of property and equipment, partially offset by $95.8 million in proceeds from maturities of investments and $34.2 million of proceeds from sale of audio technology assets.

Cash Flows from Financing Activities.

Net cash used in financing activities for the six months ended December 26, 2020 was $14.6 million compared with $12.2 million for the six months ended December 28, 2019 .

Net cash used in financing activities for the six months ended December 26, 2020 consisted of $25.8 million used for payroll taxes on RSUs , MSUs and PSUs , partially offset by $1 1.2 of proceeds from issuance of shares .

Net cash provided by financing activities for the nine months ended March 27, 2021 was $294.0 million compared with $9.6 million cash used in financing activities for the nine months ended March 28, 2020.

Net cash provided by financing activities for the nine months ended March 27, 2021 consisted of $400.0 million of proceeds from issuance of debt and $26.9 of proceeds from issuance of shares, partially offset by primarily a $100.0 million payment on line of credit borrowings and $27.0 million used for payroll taxes on RSUs, MSUs and PSUs.

Common Stock Repurchase Program.

As of December 26, 2020, our board has cumulatively authorized $1.4 billion for our common stock repurchase program, which will expire in July 2021.

As of March 27, 2021, our board has cumulatively authorized $1.4 billion for our common stock repurchase program, which will expire in July 2021.

The program authorizes us to purchase our common stock in the open market or in privately negotiated transactions, depending upon market conditions and other factors.

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Common stock purchased under this program is held as treasury stock.

From April 2005 through December 26, 2020, we purchased 31,749,195 shares of our common stock in the open market for an aggregate cost of $1.2 billion.

During the three months ended December 26, 2020, we did not repurchase any shares of our common stock.

As of December 26, 2020, the remaining available authorization under our common stock repurchase program was $177.4 million.

From April 2005 through March 27, 2021, we purchased 31,749,195 shares of our common stock in the open market for an aggregate cost of $1.2 billion.

During the three months ended March 27, 2021, we did not repurchase any shares of our common stock.

As of March 27, 2021, the remaining available authorization under our common stock repurchase program was $177.4 million.

On March 11, 2021, we completed an offering of $400.0 million aggregate principal amount of 4.000% senior notes due 2029, or the Senior Notes, in a private offering.

The Notes were issued pursuant to the Indenture, dated as of March 11, 2021, by and among our company, the guarantors named therein and Wells Fargo Bank, National Association, as trustee.

The Indenture provides that the Senior Notes will bear interest at a rate of 4.000% per annum, payable in cash semi-annually in arrears on December 15 and June 15 of each year, commencing on June 15, 2021.

The Senior Notes will mature on June 15, 2029 and are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our current and future domestic restricted subsidiaries that guarantee our obligations under our senior secured credit facilities.

Prior to June 15, 2024, we may redeem the Senior Notes, in whole or in part, at a redemption price of 100% of the principal amount thereof, plus a make-whole premium set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

We may redeem some or all of the Senior Notes on or after June 15, 2024 at the redemption prices specified below, plus accrued and unpaid interest, if any, to, but excluding, the redemption date:

2026 and thereafter

In addition, at any time prior to June 15, 2024, we may redeem up to 40% of the aggregate principal amount of the Senior Notes at a redemption price equal to 104% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date with the net cash proceeds from one or more equity offerings by us.

The Senior Notes are the general unsecured obligations of our company.

The Senior Note guarantees are the senior unsecured obligations of each guarantor.

Under certain circumstances, the guarantors may be released from their Senior Note guarantees without consent of the holders of Senior Notes.

Under the terms of the Indenture, the Senior Notes rank equally in right of payment with all of our and the guarantors’ existing and future senior indebtedness, and rank contractually senior in right of payment to our and the guarantors’ future indebtedness and other obligations that are, by their terms, expressly subordinated in right of payment to the Senior Notes.

The Senior Notes are effectively subordinated to our and the guarantors’ existing and future secured indebtedness, including secured indebtedness under our senior secured credit facilities, to the extent of the value of the assets securing such indebtedness.

The Senior Notes and guarantees are structurally subordinated to all existing and future indebtedness and liabilities (including trade payables) of our subsidiaries that do not guarantee the Senior Notes.

The Indenture contains covenants that, subject to exceptions and qualifications, among other things, limit our ability and the ability of our Restricted Subsidiaries (as defined in the Indenture) to (i) incur additional indebtedness and guarantee indebtedness;

(ii) pay dividends or make other distributions or repurchase or redeem our company’s or any parent’s capital stock;

(iii) prepay, redeem or repurchase certain indebtedness;

(iv) issue certain preferred stock or similar equity securities;

(v) make loans and investments;

(vi) dispose of assets;

(vii) incur liens;

(viii) enter into transactions with affiliates;

(ix) enter into agreements restricting its subsidiaries’ ability to pay dividends;

and (x) consolidate, merge or sell all or substantially all of its assets.

The Indenture contains customary events of default including, without limitation, failure to make required payments, failure to comply with certain agreements or covenants, cross-acceleration to certain other indebtedness in excess of specified amounts, certain events of bankruptcy and insolvency, and failure to pay certain judgments.

An event of default under the Indenture will allow either the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Senior Notes to accelerate, or in certain cases, will automatically cause the acceleration of, the maturity of the principal, and accrued and unpaid interest, if any, on all outstanding Senior Notes.

Convertible Debt

On June 20, 2017, we entered into a purchase agreement, or the Purchase Agreement, with Wells Fargo Securities, LLC, as representative of the initial purchasers named therein, collectively, the Initial Purchasers, pursuant to which we agreed to issue and sell, and the Initial Purchasers agreed to purchase, $500 million aggregate principal amount of our 0.50% convertible senior notes due 2022, or the Notes, in a private placement transaction.

Pursuant to the Purchase Agreement, we also granted the Initial Purchasers a 30-day option to purchase up to an additional $25 million aggregate principal amount of Notes, which was exercised in full on June 21, 2017.

The net proceeds, after deducting the Initial Purchasers’ discounts, were $514.5 million, which included proceeds from the Initial Purchasers’ exercise of their option to purchase additional Notes.

We received the net proceeds on June 26, 2017, which we used to repurchase shares of our common stock, retire our outstanding bank debt, and provide additional cash resources to fund the acquisition of Conexant Systems, LLC and the assets of Marvell Technology Group, Ltd.’s multimedia solutions business.

The Notes bear interest at a rate of 0.50% per year.

We received the net proceeds on June 26, 2017, after deducting the Initial Purchasers’ discounts, of $514.5 million, which included proceeds from the Initial Purchasers’ exercise of their option to purchase additional Convertible Notes.

The Convertible Notes bear interest at a rate of 0.50% per year.

Interest has accrued since June 26, 2017 and is payable semi-annually in arrears, on June 15 and December 15 of each year, beginning on December 15, 2017.

The Notes are senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Notes;

The Convertible Notes are senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Convertible Notes;

equal in right of payment to any our liabilities that are not so subordinated;

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and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.

The Notes mature on June 15, 2022, or the Maturity Date, unless earlier repurchased, redeemed or converted.

Holders may convert all or any portion of their Notes, in multiples of $1,000 principal amounts, at their option at any time prior to the close of business on the business day immediately preceding March 15, 2022 under certain defined circumstances, including (1) if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter or (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day.

On or after March 15, 2022 until the close of business on the business day immediately preceding the Maturity Date, holders may convert all or any portion of their Notes, in multiples of $1,000 principal amounts, at the option of the holder.

The Convertible Notes mature on June 15, 2022, or the Maturity Date, unless earlier repurchased, redeemed or converted.

Holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amounts, at their option at any time prior to the close of business on the business day immediately preceding March 15, 2022 under certain defined circumstances, including (1) if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter or (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day.

On or after March 15, 2022 until the close of business on the business day immediately preceding the Maturity Date, holders may convert all or any portion of their Convertible Notes, in multiples of $1,000 principal amounts, at the option of the holder.

Upon conversion, we will pay or deliver, at our election, shares of common stock, cash, or a combination of cash and shares of common stock.

The conversion rate for the Notes is initially 13.6947 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $73.02 per share of common stock).

The conversion rate for the Convertible Notes is initially 13.6947 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $73.02 per share of common stock).

The conversion rate is subject to adjustment in certain circumstances.

Upon the occurrence of a fundamental change (as defined in the Notes indenture), holders of the Notes may require us to repurchase for cash all or a portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the fundamental change repurchase date.

Commencing June 20, 2020, we may redeem for cash all or any portion of the Notes, at our option, if the last reported sale price of our common stock, as determined by us, has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal

to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date.

Our policy is to settle the principal amount of our Notes with cash upon conversion or redemption.

Upon the occurrence of a fundamental change (as defined in the Notes indenture), holders of the Convertible Notes may require us to repurchase for cash all or a portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the fundamental change repurchase date.

Commencing June 20, 2020, we may redeem for cash all or any portion of the Convertible Notes, at our option, if the last reported sale price of our common stock, as determined by us, has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date.

This criteria has been met as of March 27, 2021.

Our policy is to settle the principal amount of our Convertible Notes with cash upon conversion or redemption.

Bank Credit Facility.

We have a $200.0 million revolving credit facility, pursuant to that certain Amended and Restated Credit Agreement, dated September 27, 2017, or the Credit Agreement, which includes a $20 million sublimit for letters of credit and a $20 million sublimit for swingline loans.

On March 11, 2021, we amended and restated our Amended and Restated Credit Agreement, with the lenders and Wells Fargo Bank, National Association, as administrative agent, or the Credit Agreement, to, among other changes, extend the maturity date of our senior secured revolving credit facility, to five years from the closing date of the amendment, increase the facility size from $200.0 million to $250.0 million, and replace the requirement to maintain a total debt to Consolidated EBITDA ratio (as defined in the Credit Agreement) of not more than 4.75 to 1.00 with a requirement to maintain a net total debt to Consolidated EBITDA ratio of not more than 3.75 to 1.00 provided that for the four fiscal quarters ending after the date of a material acquisition, such maximum leverage ratio shall be adjusted to 4.25 to 1.00, and thereafter 3.75 to 1.00, provided further, that such deemed increase pursuant to the foregoing shall not apply to more than two material acquisitions consummated during the term of the Credit Agreement.

The Credit Agreement provides for a revolving credit facility in a principal amount of up to $250 million, which includes a $20 million sublimit for letters of credit and a $25 million sublimit for swingline loans.

Under the terms of the Credit Agreement, we may, subject to the satisfaction of certain conditions, request increases in the revolving credit facility commitments in an aggregate principal amount of up to $150 million to the extent existing or new lenders agree to provide such increased or additional commitments, as applicable.

Proceeds under the revolving credit facility are available for working capital and general corporate purposes.

In February 2020, we entered into the First Amendment to the Amended and Restated Credit Agreement, or the Amendment, with the lenders that are party thereto, or the Lenders, and Wells Fargo Bank, National Association, as administrative agent for the Lenders.

Pursuant to the Amendment, the Credit Agreement was amended to, among other things, (i) modify the definition of Consolidated EBITDA (as defined in the Credit Agreement) to increase the maximum limit on the add back of certain restructuring and integration cost and expenses to 30% from 15% of Consolidated EBITDA, (ii) modify the negative covenant for Consolidated Total Leverage Ratio (as defined in the Credit Agreement) at the end of any fiscal quarter to 4.75:1.00 from 3.50:1.00, and for any four quarter period following a Material Acquisition (as defined in the Credit Agreement) to 5:00:1.00 from 3.75:1.00, (iii) modify the circumstances under which the maturity date of the Credit Agreement would be accelerated in advance of the maturity date of the Notes to eliminate the acceleration of the maturity date of the Credit Agreement if we meet certain specified leverage and liquidity covenants, (iv) add a minimum liquidity covenant for each two-week period beginning on the date that is 120 days prior to the maturity date of the Company’s existing convertible senior notes, (v) add certain technical amendments to address LIBOR transition matters, and (vi) include or revise certain definitions and certain customary representation, warranties and acknowledgments.

As of December 26, 2020, there was $100.0 million balance outstanding under the revolving credit facility.

The weighted average annualized interest rate on these borrowings for the three months ended December 26, 2020 was 2.73%.

The revolving credit facility is required to be repaid in full on the earlier of (i) September 27, 2022, and (ii) the date 91 days prior to the Maturity Date of the Notes if the Notes have not been refinanced in full by such date, subject to certain exceptions based on specific covenant calculations.

Debt issuance costs of $2.3 million relating to the revolving credit facility will be amortized over 60 months

Future proceeds under the revolving credit facility are available for working capital and general corporate purposes.

In March 2021 we used a portion of the proceeds from the Senior Notes described above to repay the $100.0 million outstanding borrowings on this revolving credit facility.

As of March 27, 2021, there was no balance outstanding under the revolving credit facility.

The weighted average annualized interest rate on these borrowings for the three months ended March 27, 2021 was 2.5%.

Borrowings under t he revolving credit facility are required to be repaid in full by March 11 , 202 6.

Debt issuance costs relating to the revolving credit facility of $ 1.6 million, included in non-current other assets on our consolidated balance sheet, are being amortized over 60 months .

Our obligations under the Credit Agreement are guaranteed by the material domestic subsidiaries of our company, subject to certain exceptions (such material subsidiaries, together with our company, collectively, the Credit Parties).

The obligations of the Credit Parties under the Credit Agreement and the other loan documents delivered in connection therewith are secured by a first priority security interest in substantially all of the existing and future personal property of the Credit Parties, including, without limitation, 65% of the voting capital stock of certain of the Credit Parties’ direct foreign subsidiaries, subject to certain exceptions.

The obligations of the Credit Parties under the Credit Agreement and the other loan documents delivered in connection therewith are secured by a first priority security interest in substantially all of the existing and future personal property of the Credit Parties, including, without limitation, 65% of the voting capital stock and 100% of the non-voting capital stock of certain of the Credit Parties’ direct foreign subsidiaries, subject to certain exceptions.

The revolving credit facility bears interest at our election of a Base Rate plus an Applicable Margin or LIBOR plus an Applicable Margin.

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The LIBOR index is expected to be discontinued at the end of 2021.

Under our credit facility, when the LIBOR index is discontinued, we will switch to a comparable or successor rate as selected by the Administrative Agent and the Company, which may include the Secured Overnight Financing Rate, or SOFR.

Under the Credit Agreement, there are various restrictive covenants, including three financial covenants which limit the consolidated total leverage ratio, or leverage ratio, the consolidated interest coverage ratio, or interest coverage ratio, a restriction which places a limit on the amount of capital expenditures that may be made in any fiscal year, a restriction that permits up to $50 million per fiscal quarter of accounts receivable financings, and sets the Specified Leverage Ratio.

The leverage ratio is the ratio of debt as of the measurement date to earnings before interest, taxes, depreciation and amortization, or EBITDA, for the four consecutive quarters ending with the quarter of measurement.

Under our credit facility, when the LIBOR index is discontinued, we will switch to a comparable or successor rate as selected by us and the administrative agent, which may include the Secured Overnight Financing Rate, or SOFR.

Under the Credit Agreement, there are various restrictive covenants, including two financial covenants which limit the consolidated total leverage ratio, or leverage ratio, the consolidated interest coverage ratio, or interest coverage ratio, a restriction that permits accounts receivable financings provided that the aggregate unpaid amount of permitted accounts receivable financings are no more than the greater of $100 million and 50% of the amount of all accounts receivable of the company and specified subsidiaries, and other specific items.

The leverage ratio is the ratio of debt as of the measurement date to Consolidated EBITDA, for the four consecutive quarters ending with the quarter of measurement.

The current leverage ratio shall not exceed 3.75 to 1.00 provided that for the four fiscal quarters ending after the date of a material acquisition, such maximum leverage ratio shall be adjusted to 4.25 to 1.00, and thereafter 3.75 to 1.0.

The interest coverage ratio is EBITDA to interest expense for the four consecutive quarters ending with the quarter of measurement.

The interest coverage ratio is Consolidated EBITDA to interest expense for the four consecutive quarters ending with the quarter of measurement.

The interest coverage ratio must not be less than 3.50 to 1.0 during the term of the Credit Agreement.

The Specified Leverage Ratio is the ratio used in determining, among other things, whether we are permitted to make dividends and/or prepay certain indebtedness, at a fixed ratio of 2.25 to 1.00.

As of March 27, 2021, we remain in compliance with the restrictive covenants.

$100 Million Shelf Registration.

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Liquidity and Capital Resources.

Although consequences of the COVID-19 pandemic and resulting economic uncertainty could adversely affect our liquidity and capital resources in the future, we believe our existing cash and cash equivalents, anticipated cash flows from operating activities, and available credit under our revolving credit facility will be sufficient to meet our working capital and other cash requirements, including the DisplayLink acquisition, the Broadcom Business Acquisition, and our debt service obligations, for at least the next 12 months.

On April 2, 2020, the Company borrowed $100 million under the Credit Agreement in order to increase its cash position and preserve financial flexibility out of an abundance of caution as a result of the ongoing uncertainty and volatility in the global markets driven by the COVID-19 pandemic.

Our future capital requirements will depend on many factors, including our revenue, the effectiveness of recently approved vaccines including the deployment of those vaccines to help reduce the length, duration and severity of the COVID-19 pandemic, the timing and extent of spending to support product development efforts, costs associated with restructuring activities net of projected savings from those activities, costs related to protecting our intellectual property, the expansion of sales and marketing activities, timing of introduction of new products and enhancements to existing products, costs to ensure access to adequate manufacturing, costs of maintaining sufficient space for our workforce, the continuing market acceptance of our product solutions, our common stock repurchase program, and the amount and timing of our investments in, or acquisitions of, other technologies or companies.

We believe our existing cash and cash equivalents, anticipated cash flows from operating activities, and available credit under our revolving credit facility will be sufficient to meet our working capital and other cash requirements, including the DisplayLink acquisition, the Broadcom Business Acquisition, and our debt service obligations, for at least the next 12 months.

Our future capital requirements will depend on many factors, including our revenue, the effectiveness of vaccines on variants of COVID-19, including the deployment of those vaccines to help reduce the length, duration and severity of the COVID-19 pandemic, the timing and extent of spending to support product development efforts, costs associated with restructuring activities net of projected savings from those activities, costs related to protecting our intellectual property, the expansion of sales and marketing activities, timing of introduction of new products and enhancements to existing products, costs to ensure access to adequate manufacturing, costs of maintaining sufficient space for our workforce, the continuing market acceptance of our product solutions, our common stock repurchase program, and the amount and timing of our investments in, or acquisitions of, other technologies or companies.

Further equity or debt financing may not be available to us on acceptable terms or at all.

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Contractual Obligations and Commercial Commitments

Our material contractual obligations and commercial commitments as of December 26, 2020 were as follows (in millions):

Our material contractual obligations and commercial commitments as of March 27, 2021 were as follows (in millions):

Long-term debt (1)

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The amounts in the table above exclude unrecognized tax benefits of $22.9 million.

As of December 26, 2020, we were unable to make a reasonably reliable estimate of when cash settlement with a taxing authority may occur in connection with our gross unrecognized tax benefit.

As of March 27, 2021, we were unable to make a reasonably reliable estimate of when cash settlement with a taxing authority may occur in connection with our gross unrecognized tax benefit.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of December 26, 2020, our market risk related to interest rates on our cash and cash equivalents, and foreign currency exchange risks has not changed materially from the risks disclosed in Item 7A of our Annual Report on Form 10-K for the fiscal year ended June 27, 2020.

As of March 27, 2021, our market risk related to interest rates on our cash and cash equivalents, and foreign currency exchange risks has not changed materially from the risks disclosed in Item 7A of our Annual Report on Form 10-K for the fiscal year ended June 27, 2020.

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 2. Management’s Discussion and Analysis