What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-02-05 compared with 2020-11-06 · 89 added, 71 removed, 195 unchanged (45% of the section changed)

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We have taken and will continue to take precautionary measures intended to help minimize the risk of COVID-19 to our employees.

our facilities, we may, among other issues, experience delays in product development, a decreased ability to support our customers, disruptions in sales and an overall lack of productivity.

While we have not yet experienced a significant disruption to the productivity of our employees as a result of the COVID-19 pandemic, if the stay-at-home orders or work remote or from home conditions in any of our facilities continue for an extended period of time, or if we have an outbreak in any of our facilities, we may, among other issues, experience delays in product development, a decreased ability to support our customers, disruptions in sales and an overall lack of productivity.

We have experienced a disruption in our supply chain as a result of the COVID-19 related restrictions that have impacted our suppliers’ ability to manufacture or provide key components or services, and we have incurred, and continue to incur, additional cost to expedite deliveries of components and services.

While our ability to procure components and services has improved, the disruptions in our supply chain have not been fully remediated.

While our ability to procure components and services has improved since the initial outbreak of the pandemic, the disruptions in our supply chain have not been fully remediated.

The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict, including further disruptions to our supply chain, reductions in demand due to disruptions in the operations of our customers or their end customers, disruptions in local and global economies, volatility in the global financial markets, overall reductions in demand, restrictions on the export or shipment of our products or other COVID-19-related events.

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Service Provider Technology and Enterprise Technology.

• Service Provider Technology includes our airMAX, EdgeMAX, UFiber, and airFiber platforms, as well as embedded radio products and other 802.11 standard products including base stations, radios, backhaul equipment and CPE.

• Service Provider Technology includes the Company’s airMAX, EdgeMAX, UFiber, and airFiber platforms, as well as embedded radio products and other 802.11 standard products including base stations, radios, backhaul equipment and CPE.

Additionally, Service Provider Technology includes antennas and other products primarily in the 0.9 to 6.0 GHz spectrum and miscellaneous products such as mounting brackets, cables and power over Ethernet adapters.

• Enterprise Technology includes our UniFi platforms, including UniFi enterprise Wi-Fi, UniFi Protect, UniFi switching and routing solutions and our AmpliFi platform.

• Enterprise Technology includes the Company’s UniFi platforms, including UniFi enterprise Wi-Fi, UniFi Protect, UniFi Access, UniFi switching and routing solutions and the Company’s AmpliFi platform.

We sell our products and solutions globally to service providers and enterprises primarily through our extensive network of distributors, and, to a lesser extent, through direct sales.

Sales to distributors accounted for 89% of our revenues during the three months ended September 30, 2020.

Direct sales accounted for 11% of our revenue during the three months ended September 30, 2020.

Sales to distributors accounted for 87% of our revenues during the six months ended December 31, 2020.

Direct sales accounted for 13% of our revenue during the six months ended December 31, 2020.

Cost of Revenues

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For so long as such tariffs are in effect, we expect it will continue to affect our operating results and margins.

As a result, our historical and current gross profit margins may not be indicative

of our gross profit margins for future periods.

As a result, our historical and current gross profit margins may not be indicative of our gross profit margins for future periods.

Refer to “Part II—Item 1A.

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Results of Operations

Comparison of Three Months Ended September 30, 2020 and 2019

Three Months Ended September 30,

Comparison of Three and Six Months Ended December 31, 2020 and 2019

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

(In thousands, except percentages)

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Total stock-based compensation 750 730 1,490 1,419

Total revenues increased $150.3 million, or 46%, from $323.3 million in the three months ended September 30, 2019 to $473.5 million in the three months ended September 30, 2020.

During the three months ended September 30, 2020, there were no material price changes in the Company’s products sold.

Total revenues increased $171.2 million, or 56%, from $308.3 million in the three months ended December 31, 2019 to $479.4 million in the three months ended December 31, 2020.

Total revenues increased $321.4 million, or 51%, from $631.6 million in the six months ended December 31, 2019 to $953.0 million in the six months ended December 31, 2020.

During the three and six months ended December 31, 2020, there were no material price changes in the Company’s products sold.

However, the Company continues to introduce new products which may have average selling prices and margins different than our legacy products.

Revenues by Product Type

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

(in thousands, except percentages)

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Total revenues $ 479,436 100 % $ 308,284 100 % $ 952,969 100 % $ 631,561 100 %

Service Provider Technology revenue increased $41.5 million, or 36%, from $115.9 million in the three months ended September 30, 2019 to $157.5 million in the three months ended September 30, 2020.

The increase in Service Provider Technology revenue during the three months ended September 30, 2020 as compared to the same period in the prior year, was primarily due to increased revenue in all regions across all platforms.

Enterprise Technology revenue increased $108.7 million, or 52%, from $207.4 million in the three months ended September 30, 2019 to $316.1 million in the three months ended September 30, 2020.

The increase in Enterprise Technology revenue during the three months ended September 30, 2020 as compared to the same period in the prior year, was primarily due to product expansion and further adoption of our UniFi technology platform across all regions.

Service Provider Technology revenue increased $52.2 million, or 53%, from $97.7 million in the three months ended December 31, 2019 to $149.9 million in the three months ended December 31, 2020 and increased $93.7 million, or 44%, from $213.6 million in the six months ended December 31, 2019 to $307.3 million in the six months ended December 31, 2020.

The increase in Service Provider Technology revenue during the three and six months ended December 31, 2020 as compared to the same periods in the prior year, was primarily due to increased revenue in all regions across all the platforms.

Enterprise Technology revenue increased $119.0 million, or 57%, from $210.6 million in the three months ended December 31, 2019 to $329.6 million in the three months ended December 31, 2020 and increased $227.7 million, or 54%, from $417.9 million in the six months ended December 31, 2019 to $645.6 million in the six months ended December 31, 2020.

The increase in Enterprise Technology revenue during the three and six months ended December 31, 2020 as compared to the same periods in the prior year, was primarily due to product expansion and further adoption of our UniFi technology platform across all regions except South America.

Revenues by Geography

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A majority of our sales are to distributors who either sell to resellers or directly to end customers, who may be located in different countries than the initial ship-to destination.

The following are our revenues by geography for the three months ended September 30, 2020 and 2019 (in thousands, except percentages):

Three Months Ended September 30,

The following are our revenues by geography for the three and six months ended December 31, 2020 and 2019 (in thousands, except percentages):

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

(in thousands, except percentages)

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Total revenues $ 479,436 100 % $ 308,284 100 % $ 952,969 100 % $ 631,561 100 %

(1) Revenue for the United States was $209.8 million and $141.9 million for the three months ended September 30, 2020 and 2019, respectively.

(1) Revenue for the United States was $179.1 million and $121.7 million for the three months ended December 31, 2020 and 2019, respectively.

Revenue for the United States was $388.9 million and $263.6 million for the six months ended December 31, 2020 and 2019, respectively.

North America

Revenues in North America increased $72.9 million, or 49%, from $148.0 million in the three months ended September 30, 2019 to $220.9 million in the three months ended September 30, 2020.

The increase in North America revenues during the three months ended September 30, 2020 as compared to the same period in the prior year, was due to increased revenues from our Enterprise Technology products and Service Provider Technology products.

South America

Revenues in South America increased $11.8 million, or 59%, from $19.8 million in the three months ended September 30, 2019 to $31.5 million in the three months ended September 30, 2020.

The increase in South America revenues during the three months ended September 30, 2020 as compared to the same period in the prior year, was due to increased revenues from our Enterprise Technology products and Service Provider Technology products.

Revenues in North America increased $63.5 million, or 49%, from $130.0 million in the three months ended December 31, 2019 to $193.4 million in the three months ended December 31, 2020 and increased $136.4 million, or 49%, from $277.9 million in the six months ended December 31, 2019 to $414.3 million in the six months ended December 31, 2020.

The increase in North America revenues during the three and six months ended December 31, 2020 as compared to the same periods in the prior year, was primarily due to increased revenues from both our Enterprise Technology products and Service Provider Technology products.

Europe, the Middle East, and Africa (EMEA)

Revenues in EMEA increased $53.3 million, or 42%, from $125.8 million in the three months ended September 30, 2019 to $179.2 million in the three months ended September 30, 2020.

The increase in EMEA revenues during the three months ended September 30, 2020 as compared to the same period in the prior year was due to increased revenues from our Enterprise Technology products and Service Provider Technology products.

Revenues in the Asia Pacific region increased $12.2 million, or 41%, from $29.7 million in the three months ended September 30, 2019 to $41.9 million in the three months ended September 30, 2020.

The increase in Asia Pacific revenues during the three months ended September 30, 2020 as compared to the same period in the prior year, was due to increased revenue from our Enterprise Technology and Service Provider Technology products.

Revenues in EMEA increased $98.1 million, or 81%, from $120.6 million in the three months ended December 31, 2019 to $218.8 million in the three months ended December 31, 2020 and increased $151.5 million, or 61% from $246.4 million in the six months ended December 31, 2019 to $397.9 million in the six months ended December 31, 2020.

The increase in EMEA revenues during the three and six months ended December 31, 2020 as compared to the same periods in the prior year, was primarily due to increased revenues from both our Enterprise Technology products and Service Provider Technology products.

Revenues in the Asia Pacific region increased $4.6 million, or 14%, from $32.8 million in the three months ended December 31, 2019 to $37.4 million in the three months ended December 31, 2020 and increased $16.8 million, or 27%, from $62.5 million in the six months ended December 31, 2019 to $79.3 million in the six months ended December 31, 2020.

The increase in Asia Pacific revenues during the three and six months ended December 31, 2020 as compared to the same periods in the prior year was primarily due to increased revenues from both our Enterprise Technology products and Service Provider Technology products.

South America

Revenues in South America increased $5.0 million, or 20%, from $24.9 million in the three months ended December 31, 2019 to $29.9 million in the three months ended December 31, 2020 and increased $16.7 million, or 37%, from $44.7 million in the six months ended December 31, 2019 to $61.4 million in the six months ended December 31, 2020.

The increase in South America revenues during the three and six months ended December 31, 2020 as compared to the same periods in the prior year was primarily due to increased revenues from our Service Provider Technology products, partially offset by decreased revenues from our Enterprise Technology products.

Cost of Revenues and Gross Profit

Cost of revenues increased $73.5 million, or 43%, from $171.9 million in the three months ended September 30, 2019 to $245.4 million in the three months ended September 30, 2020.

The increase in cost of revenue during the three months ended September 30, 2020 was primarily due to cost increase associated with an overall increase in revenue, higher tariffs-related costs, expedited shipping costs and inventory write-offs.

Gross profit margin increased to 48.2% during the three months ended September 30, 2020 as compared to 46.8% during the three months ended September 30, 2019, primarily driven by higher revenue and favorable product mix, partially offset by higher tariff-related costs, expedited shipping costs and inventory reserves.

Cost of revenues increased $85.6 million, or 52%, from $163.2 million in the three months ended December 31, 2019 to $248.8 million in the three months ended December 31, 2020.

The increase is primarily due to cost increase associated with an overall increase in revenue and higher shipping costs, partially offset by lower other indirect costs.

Cost of revenues increased $159.1 million, or 47%, from $335.1 million in the six months ended December 31, 2019 to $494.2 million in the six months ended December 31, 2020.

The increase is primarily due to cost increases associated with an overall increase in revenue, higher tariff-related costs and shipping costs, partially offset by lower other indirect costs.

Gross profit margin increased to 48.1% in the three months ended December 31, 2020 compared to 47.1% in the three months ended December 31, 2019.

Gross profit margin increased to 48.1% in the six months ended December 31, 2020 compared to 46.9% in the six months ended December 31, 2019.

The increase in gross profit margin during the three months ended December 31, 2020 was primarily driven by higher revenue and other indirect cost being lower as a percentage of overall revenue partially offset by higher shipping costs as a percentage of revenue.

The increase in gross profit margin during the six months ended December 31, 2020 was primarily driven by higher revenue and favorable changes in product mix, and other indirect cost being lower as a percentage of overall revenue partially offset by higher shipping costs and higher tariff-related costs as a percentage of revenue.

Operating Expenses

Research and Development

Research and development (“R&D”) expenses increased $5.6 million, or 27%, from $20.3 million in the three months ended September 30, 2019 to $25.8 million in the three months ended September 30, 2020.

As a percentage of revenues, R&D expenses decreased from 6.3% for the three months ended September 30, 2019 to 5.5% for the three months ended September 30, 2020.

The increase in R&D expenses in absolute dollars for both the three months ended September 30, 2020 as compared to the same period in the prior year was primarily due to higher employee related expenses and development activities.

Research and development (“R&D”) expenses increased $4.9 million, or 20%, from $24.0 million in the three months ended December 31, 2019 to $28.9 million in the three months ended December 31, 2020.

As a percentage of revenues, R&D expenses decreased from 8% for the three months ended December 31, 2019 to 6% for the three months ended December 31, 2020.

R&D expenses increased $10.4 million, or 24%, from $44.3 million in the six months ended December 31, 2019 to $54.7 million in the six months ended December 31, 2020.

As a percentage of revenues, R&D expenses decreased from 7% for the six months ended December 31, 2019 to 6% for the six months ended December 31, 2020.

The increase in R&D expenses in absolute dollars for the both the three and six months ended December 31, 2020 as compared to the same periods in the prior year was primarily due to higher employee related expenses and professional and service related fees.

Sales, General and Administrative

Sales, general and administrative expenses increased $1.9 million, or 18%, from $10.5 million in the three months ended September 30, 2019 to $12.4 million in the three months ended September 30, 2020.

As a percentage of revenues, sales, general and administrative expenses decreased from 3.2% for the three months ended September 30, 2019 to 2.6% for the three months ended September 30, 2020.

The increase in sales, general and administrative expense in absolute dollars during the three months ended September 30, 2020 as compared to the same period in the prior year was primarily due to higher depreciation expense and higher professional and service fees offset, in part, by lower employee-related costs, lower marketing expenses and lower bad debt expense.

Sales, general and administrative (“SG&A”) expenses increased $2.0 million, or 22%, from $9.0 million in the three months ended December 31, 2019 to $11.0 million in the three months ended December 31, 2020.

As a percentage of revenues, SG&A expenses decreased from 3% for the three months ended December 31, 2019 to 2% for the three months ended December 31, 2020.

SG&A expenses increased $3.9 million, or 20%, from $19.4 million in the six months ended December 31, 2019 to $23.3 million for the six months ended December 31, 2020.

As a percentage of revenues, SG&A expenses decreased from 3% for the six months ended December 31, 2019 to 2% for the six months ended December 31, 2020.

The increase in SG&A expenses in absolute dollars for three months ended December 31, 2020 as compared to the same period in the prior year was primarily due to higher professional and service fees and higher depreciation expense offset, in part by legal settlement

received and lower payroll and marketing expense.

The increase in SG&A expenses in absolute dollars for the six months ended December 31, 2020 as compared to the same period in the prior year was primarily due to higher professional and service fees and higher depreciation expense offset, in part by legal settlement received, lower marketing expense and lower bad debt expense.

Provision for Income Taxes

Our provision for income taxes increased $11.6 million or 65%, from $17.9 million for the three months ended September 30, 2019 to $29.5 million for the three months ended September 30, 2020.

Our effective tax rate increased to 16% for the three months ended September 30, 2020 as compared to 15% for the three months ended September 30, 2019.

The change in effective tax rate for the three months ended September 30, 2020 as compared to the same period in the prior year was primarily due to the increase in overall taxable income in higher tax jurisdictions.

Our provision for income taxes increased $13.4 million, or 94.5%, from $14.2 million for the three months ended December 31, 2019 to $27.5 million for the three months ended December 31, 2020.

Our effective tax rate increased to 14.7% for the three months ended December 31, 2020 as compared to 14.2% for the three months ended December 31, 2019.

Our provisions for income taxes increased $25.0 million, or 78%, from $32.0 million for the six months ended December 31, 2019 to $57.1 million for the six months ended December 31, 2020.

Our effective tax rate increased to 15.3% for the six months ended December 31, 2020 as compared to 14.8% for the six months ended December 31, 2019.

The change in effective tax rates for the three and six months ended December 31, 2020 as compared to the same periods in the prior year was primarily due to the increase in overall taxable income in jurisdictions with higher tax rates.

Liquidity and Capital Resources

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Our principal source of liquidity are cash and cash equivalents, cash generated by operations, the availability of additional funds under the Facilities and short-term and long-term investments.

We had cash and cash equivalents of $128.4 million and $142.6 million as of September 30, 2020 and June 30, 2020, respectively.

We had cash and cash equivalents of $189.1 million and $142.6 million as of December 31, 2020 and June 30, 2020, respectively.

Consolidated Cash Flow Data

The following table sets forth the major components of our consolidated statements of cash flows data for the periods presented:

Three Months Ended September 30,

Six Months Ended December 31,

(In thousands)

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Net cash (used in) financing activities (251,504) (436,794)

Net (decrease) in cash and cash equivalents $ (14,190) $ (118,406)

Net increase (decrease) in cash and cash equivalents $ 46,497 $ (138,143)

Cash Flows from Operating Activities

Net cash provided by operating activities in the three months ended September 30, 2020 consisted primarily of net income of $156.5 million, partially offset by changes in operating assets and liabilities that resulted in net cash outflows of $46.9 million.

This net change consisted primarily of a $30.0 million decrease in inventory and $0.6 million decrease in vendor deposits, a $53.9 million

increase in accounts receivable due to overall higher revenues for the period, a $25.9 million decrease in net accounts payable and accrued liabilities, a $3.2 million increase in taxes payable due to the timing of federal tax payments and a $3.9 million increase in prepaid expense and other assets.

Net cash provided by operating activities in the three months ended September 30, 2019 consisted primarily of net income of $98.1 million in addition to the changes in operating assets and liabilities that results in net cash inflows of $15.6 million.

This net change consisted primarily of a $19.6 million decrease in inventory and 3.8 million decrease in vendor deposits, a $18.7 million increase in accounts receivable due to overall higher revenues for the period, a $25.2 million increase in net accounts payable and accrued liabilities, a $7.2 million decrease in taxes payable due to the timing of federal tax payments and a $8.0 million increase in prepaid expense and other assets.

Net cash provided by operating activities in the six months ended December 31, 2020 consisted primarily of net income of $316.2 million partially offset by changes in operating assets and liabilities that resulted in net cash outflows of $21.5 million.

This net change consisted primarily of a $53.0 million decrease in inventory offset by $1.2 million increase in vendor deposits, a $21.5 million increase in accounts receivable due to higher revenue for the period, a $21.8 million decrease in net accounts payable and accrued liabilities, a $27.6 million decrease in taxes payable due to the timing of federal tax payments and a $8.3 million increase in prepaid expense and other assets.

Net cash provided by operating activities in the six months ended December 31, 2019 consisted primarily of net income of $184.0 million, in addition to the changes in operating assets and liabilities that resulted in net cash inflows of $40.5 million.

This net change consisted primarily of a $11.3 million decrease in inventory and $4.4 million decrease in vendor deposit, $8.7 million decrease in accounts receivable due to increased collections for the period, $36.4 million increase in net accounts payable and accrued liabilities, a $24.4 million decrease in taxes payable due to the timing of federal tax payments and $3.2 million decrease in prepaid expense and other assets.

Cash Flows from Investing Activities

We used $4.9 million of cash in investing activities during the three months ended September 30, 2020.

Our investing activities consisted of $2.8 million of capital expenditures, $2.5 million loan advanced to a third party, partially offset by maturities of investment securities of $0.4 million.

Net cash provided by investing activities in the three months ended September 30, 2019 was $31.6 million.

Our investing activities consisted primarily of cash inflows of $49.9 million net proceeds from our available-for-sale securities, partially offset by cash outflows of $18.3 million of capital expenditures.

We used $10.9 million of cash in investing activities during the six months ended December 31, 2020.

Our investing activities consisted primarily of $11.9 million of capital expenditures and purchase of intangible assets, partially offset by maturities of investment securities of $0.9 million.

Net cash provided by investing activities in the six months ended December 31, 2019 was $55.3 million.

Our investing activities consisted primarily of cash inflows of $75.5 million net proceeds from our available-for-sale securities offset, in part by cash outflows of $20.2 million of capital expenditures.

Cash Flows from Financing Activities

We used $126.2 million of cash in financing activities during the three months ended September 30, 2020.

During the three months ended September 30, 2020, we had financing outflows of $83.9 million related to the repurchase of our common stock, $25.5 million related to dividends paid on our common stock and $16.3 million of repayments under the Company’s credit facilities.

We used $269.7 million of cash in financing activities during the three months ended September 30, 2019.

During the three months ended September 30, 2019, we generated $151.3 million of net funds from borrowing and repayments under the Company's credit facilities offset, in part by financing cash outflows of $396.6 million related to the repurchase of our common stock, $20.7 million related to dividends paid on our common stock $3.1 million of debt issuance costs.

The Company used $251.5 million of cash in financing activities during the six months ended December 31, 2020.

During the six months ended December 31, 2020, we used $47.5 million of net funds for repayments under the Facilities, used $152.6 million related

to the repurchase of our common stock, and used $50.6 million related to dividends paid on our common stock.

See Note 8- Debt of the Notes to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information regarding the Facilities.

The Company used $436.8 million of cash in financing activities during the six months ended December 31, 2019.

During the six months ended December 31, 2019, we received $145.0 million of net funds from borrowing and repayments under the Company's credit facilities, used $538.0 million related to the repurchase of our common stock, and used $40.1 million related to dividends paid on our common stock and $3.1 million of debt issuance costs.

We believe our existing cash and cash equivalents, cash provided by operations and the availability of additional fund, under our Facilities will be sufficient to meet our working capital, future stock repurchases, dividends, and capital expenditure needs for the next twelve months.

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Warranties and Indemnifications

Our products are generally accompanied by a twelve-month warranty from date of purchase, which covers both parts and labor.

Our products are generally accompanied by a twelve to twenty- four-month warranty from date of purchase, which covers both parts and labor.

Generally, the distributor is responsible for the freight costs associated with warranty returns, and we absorb the freight costs of replacing items under warranty.

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We believe the fair value of these indemnification agreements is minimal.

We have not recorded any liabilities for these agreements as of September 30, 2020.

Based upon our historical experience and information known as of the date of this report, we do not believe it is likely that we have a material liability for the above indemnities as of September 30, 2020.

We have not recorded any liabilities for these agreements as of December 31, 2020.

Contractual Obligations and Off-Balance Sheet Arrangements

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We believe that we will be able to fund these obligations through our existing cash and cash equivalents, cash generated from operations and the availability of additional funds, under the Facilities.

The following table summarizes the Company’s contractual obligations as of September 30, 2020 for the remainder of fiscal 2021 and future fiscal years (in thousands):

The following table summarizes the Company’s contractual obligations as of December 31, 2020 for the remainder of fiscal 2021 and future fiscal years (in thousands):

2021 (remainder) 2022 2023 2024 2025 Thereafter Total

Operating Leases 4,722 8,897 7,769 7,331 6,776 7,755 43,250

Debt Payments 18,750 25,000 595,000 — — — 638,750

Debt payment obligations 12,500 25,000 570,000 — — — 607,500

Interest and other payments on debt payment obligations 6,465 12,679 6,774 — — — 25,918

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If we cancel all or part of the orders, we may still be liable to the contract manufacturers for the cost of the components purchased by the subcontractors to manufacture our products.

We periodically review the potential liability, and as of September 30, 2020, we have recorded a purchase obligation liability of $5.2 million related to component purchase commitments.

There have been no other significant liabilities for cancellations recorded as of September 30, 2020.

We periodically review the potential liability, and as of December 31, 2020, we have recorded a purchase obligation liability of $7.6 million related to component purchase commitments.

There have been no other significant liabilities for cancellations recorded as of December 31, 2020.

Our consolidated financial position and results of operations could be negatively impacted if we were required to compensate the contract manufacturers for any unrecorded liabilities incurred.

We may be subject to additional purchase obligations for supply agreements and components ordered by our contract manufacturers based on manufacturing forecasts we provide them each month.

We estimate the amount of these additional purchase obligation to range from $148.7 million to $427.0 million as of September 30, 2020, depending upon the timing of orders placed for these components by our manufacturers.

We estimate the amount of these additional purchase obligations to range from $149.8 million to $617.6 million as of December 31, 2020, depending upon the timing of orders placed for these components by our contract manufacturers.

Transition Tax

The Company also had obligations of $85.5 million as of September 30, 2020, related to Transition Tax.

The Company also had obligations of $85.5 million as of December 31, 2020, related to Transition Tax.

These obligations are included within Income taxes payable and Long-term taxes payable on our Consolidated Balance Sheets.

Other Obligations

As of September 30, 2020, the Company has other obligations of $64.2 million which consisted primarily of commitments related to raw materials and research and development projects.

The Company had other obligations of $57.9 as of December 31, 2020, which consisted primarily of commitments related to raw materials and research and development projects.

Unrecognized Tax Benefits

As of September 30, 2020, we had $32.7 million and an additional $5.0 million for accrued interest, classified as non-current liabilities.

As of December 31, 2020, we had $32.5 million and an additional $4.4 million for accrued interest, classified as non-current liabilities.

At this time, we are unable to make a reasonably reliable estimate of timing of payments in individual years in connection with these tax liabilities;

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When used in this Report, the words “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and negatives of those terms are intended to identify forward-looking statements.

These are statements that relate to future periods and include statements about our future results, sources of revenue, our continued growth, our gross margins, market trends, our product development, our introduction of new products, technological developments, the features, benefits and performance of our current and future products, the ability of our products to address a variety of markets, the anticipated growth of demand for connectivity worldwide, our growth strategies, future price reductions, our competitive status, our dependence on our senior management and our ability to attract and retain key personnel, dependency on and concentration of our distributors, our employee relations, current and potential litigation, current or potential indemnification liabilities, the effects of government regulations, the impact of tariffs, the expected impact of taxes on our liquidity and results of operations, our compliance with laws and regulations, our expected future operating costs and expenses and expenditure levels for research and development, selling, general and administrative expenses, fluctuations in operating results, fluctuations in our stock price, our payment of dividends, our future liquidity and cash needs, and the adequacy of and our reliance on our source of liquidity to meet such needs, our Facilities, future acquisitions of and investments in complimentary businesses and the expected impact of various accounting policies and rules adopted by the Financial Accounting Standards Board and the impact of COVID-19 pandemic on our business.

These are statements that relate to future periods and include statements about our future results, sources of revenue, our dividend, our continued growth, our gross margins, market trends, our product development, our introduction of new products, technological developments, the features, benefits and performance of our current and future products, the ability of our products to address a variety of markets, the anticipated growth of demand for connectivity worldwide, our growth strategies, future price reductions, our competitive status, our dependence on our senior management and our ability to attract and retain key personnel, dependency on and concentration of our distributors, our employee relations, current and potential litigation, current or potential indemnification liabilities, the effects of government regulations, the impact of tariffs, the expected impact of taxes on our liquidity and results of operations, our compliance with laws and regulations, our expected future operating costs and expenses and expenditure levels for research and development, selling, general and administrative expenses, fluctuations in operating results, fluctuations in our stock price, our payment of dividends, our future liquidity and cash needs, and the adequacy of and our reliance on our source of liquidity to meet such needs, our Facilities, future acquisitions of and investments in complimentary businesses and the expected impact of various accounting policies and rules adopted by the Financial Accounting Standards Board and the impact of COVID-19 pandemic on our business.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These risks and uncertainties include, but are not limited to, the impact of U.S.

tariffs on results of operations, our ability to manage our growth, our ability to sustain or increase profitability, demand for our products, our ability to compete, our ability to rapidly develop new technology and introduce new products, our ability to safeguard our intellectual property, trends in the networking industry and fluctuations in general economic conditions, the impact of COVID-19 pandemic on our business, results and liquidity, volatility in our short-term investments, and the risks set forth throughout this Report, including under Part II:

COVID-19 pandemic on our business, results and liquidity, volatility in our short-term investments, and the risks set forth throughout this Report, including under Part II:

“Other Information”, Item 1, “Legal Proceedings” and under Item 1A, “Risk Factors.” These forward-looking statements speak only as of the date hereof.

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis