SYNAPTICS Inc

Previous wording

This Quarterly Report on Form 10-Q for the quarter ended December 30, 2023 (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, can be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements may include words such as “expect,” “anticipate,” “intend,” “believe,” “estimate,” “plan,” “target,” “strategy,” “continue,” “may,” “will,” “should,” variations of such words, or other words and terms of similar meaning. 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 the following: our dependence on our solutions for the Core IoT and Enterprise and Automotive product applications market for a substantial portion of our revenue; risks related to the volatility of our net revenue from our solutions for Core IoT and Enterprise and Automotive product applications; our dependence on one or more large customers; our exposure to industry downturns and cyclicality in our target markets; the risk that our product solutions for new markets will not be successful; our ability to maintain and build relationships with our customers; our dependence on third parties to maintain satisfactory manufacturing yields and deliverable schedule; regional instabilities and hostilities (including the war in Israel) and the risks as identified in the “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” sections of our Annual Report on Form 10-K for the fiscal year ended June 24, 2023, and other risks as identified from time to time in our SEC reports. Forward-looking statements are based on information available to us on the date hereof, and we do not have, and expressly disclaim, any obligation to publicly release any updates or any changes in our expectations, or any change in events, conditions, or circumstances on which any forward-looking statement is based. Our actual results and the timing of certain events could differ materially from the forward-looking statements. These forward-looking statements do not reflect the potential impact of any mergers, acquisitions, or other business combinations that have not been completed as of the date of this filing.

Current wording

This Quarterly Report on Form 10-Q for the quarter ended March 30, 2024 (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, can be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements may include words such as “expect,” “anticipate,” “intend,” “believe,” “estimate,” “plan,” “target,” “strategy,” “continue,” “may,” “will,” “should,” variations of such words, or other words and terms of similar meaning. 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 the following: our dependence on our solutions for the Core IoT and Enterprise and Automotive product applications market for a substantial portion of our revenue; risks related to the volatility of our net revenue from our solutions for Core IoT and Enterprise and Automotive product applications; our dependence on one or more large customers; our exposure to industry downturns and cyclicality in our target markets; the risk that our product solutions for new markets will not be successful; our ability to maintain and build relationships with our customers; our dependence on third parties to maintain satisfactory manufacturing yields and deliverable schedule; regional instabilities and hostilities (including the Israel-Hamas war) and the risks as identified in the “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” sections of our Annual Report on Form 10-K for the fiscal year ended June 24, 2023, and other risks as identified from time to time in our SEC reports. Forward-looking statements are based on information available to us on the date hereof, and we do not have, and expressly disclaim, any obligation to publicly release any updates or any changes in our expectations, or any change in events, conditions, or circumstances on which any forward-looking statement is based. Our actual results and the timing of certain events could differ materially from the forward-looking statements. These forward-looking statements do not reflect the potential impact of any mergers, acquisitions, or other business combinations that have not been completed as of the date of this filing.

Previous wording

Our manufacturing operations are based on a variable cost model in which we outsource all of our production requirements and generally drop ship our products directly to our customers from our contract manufacturers’ facilities, eliminating the need for significant capital expenditures and allowing us to minimize our investment in inventories. This approach requires us to work closely with our contract manufacturers and semiconductor fabricators to ensure adequate production capacity to meet our forecasted volume requirements. In the past, when supply constraints and capacity shortages have impacted the global semiconductor industry, we have entered into long-term capacity and pricing agreements with some suppliers. We use third-party wafer manufacturers to supply wafers and third-party packaging manufacturers to package our proprietary ASICs. In certain cases, we rely on a single source or a limited number of suppliers to provide other key components of our products. Our cost of revenue includes all costs associated with the production of our products, including materials; logistics; amortization of intangibles related to acquired developed technology;

Current wording

Our manufacturing operations are based on a variable cost model in which we outsource all of our production requirements and generally drop ship our products directly to our customers from our contract manufacturers’ facilities, eliminating the need for significant capital expenditures and allowing us to minimize our investment in inventories. This approach requires us to work closely with our contract manufacturers and semiconductor fabricators to ensure adequate production capacity to meet our forecasted volume requirements. We use third-party wafer manufacturers to supply wafers and third-party packaging manufacturers to package our proprietary ASICs. In certain cases, we rely on a single source, or a limited number of suppliers, to provide other key components of our products. Our cost of revenue includes all costs associated with the production of our products, including materials; logistics; amortization of intangibles related to acquired developed technology; backlog; supplier arrangements; manufacturing, assembly, royalties paid to third-party intellectual property providers and test costs paid to third-party manufacturers; and related overhead costs associated with our indirect manufacturing operations personnel. Additionally, we charge all warranty costs, losses on inventory purchase obligations, and the provision for excess and obsolete inventories to cost of revenue.

Previous wording

Acquired intangibles amortization, included in operating expenses, consists primarily of amortization of developed technology, customer relationship and tradenames intangible assets recognized under the purchase method for business combinations.

Current wording

Acquired intangibles amortization, included in operating expenses, consists primarily of amortization of customer relationship and tradename intangible assets recognized under the purchase method for business combinations.

Previous wording

There have been no significant changes in our critical accounting policies and estimates during the six months ended December 2023, 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 24, 2023.

Current wording

There have been no significant changes in our critical accounting policies and estimates during the nine months ended March 2024, 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 24, 2023.

Previous wording

The frequency and amplitude in which central banks raise interest rates has subsided relative to the first half of calendar year 2023, but the impact has had a material effect on many sectors of the economy leading to broad-based workforce reductions, a slowing or deferral of investment in information technology spending, and increased concern of a global recession. We believe the threat of global recession is the primary driver for the slowdown in orders from our customer base. During the quarter, we continued to experience a broad reduction in demand in most of our product applications as many customers and channel partners continue to consume their accumulation of inventories, combined with customer requests to delay orders. We continue to believe any rebound in demand is likely to extend into late calendar 2024, and potentially beyond 2024. In addition, although we currently do not believe inflation in the costs of goods and services will have a material impact on our results of operations, it is possible that elevated inflation could increase our cost of goods sold and/or operating expenses and reduce our net income. Further, interest rates remain elevated and have increased our borrowing costs on our variable rate Term Loan Facility and could potentially limit our borrowing capacity if a future acquisition opportunity requiring financing presents itself.

Current wording

As a majority of our sales and manufacturing occurs outside of the United States, we are exposed to and impacted by global macroeconomic factors, U.S. and foreign government policies and foreign exchange fluctuations. There is uncertainty surrounding macroeconomic factors in the U.S., and globally, characterized by the supply chain environment, inflationary pressure, rising interest rates, and workforce reductions. We believe these macroeconomic conditions, including soft corporate spending on information technology hardware, coupled with the global political climate and unrest, including the ongoing Israel-Hamas war, continue to be the primary drivers for the overall reduction in orders from our customer base. We continue to believe a rebound in demand is likely to extend into late calendar 2024, and potentially beyond 2024. In addition, although we currently do not believe inflation in the costs of goods will have a material impact on our results of operations, it is possible that elevated inflation could increase our cost of goods sold and/or operating expenses and reduce our net income. Further, interest rates remain elevated and have increased our borrowing costs on our variable rate Term Loan Facility and could potentially limit our borrowing capacity if a future acquisition opportunity requiring financing presents itself.

Previous wording

The uncertainty resulting from the war in Israel and the threat for expansion of the war could result in some of our customers delaying purchases from us. Although our employees in our Israel office have the ability to work remotely and business continuity plans are in place to address any medium- or long-term disruptions that could result from the closure of this office, the office closure and general effects of employees operating in a region at war could have a negative impact on our operations. Further, a number of our employees in Israel are members of the military reserves subject to activation in response to the war. Following the terrorist attacks in Israel, a number of our employees have been activated for military duty. As of this filing, many have rejoined the Company full-time, but it is possible that additional employees may be activated if the war in Israel continues. While we also have business continuity plans in place to address the safety of our employees and to continue product development in the event of reduced employee availability in the region during the war, it could affect the timing of projects in the short-term as work is shifted to other team members where necessary.

Current wording

Although our employees in our Israel office have the ability to work remotely and business continuity plans are in place to address any medium- or long-term disruptions that could result from the closure of this office, the office closure and general effects of employees operating in a region at war could have a negative impact on our operations. Further, a number of our employees in Israel are members of the military reserves who have been subject to activation in response to the war, and it is possible that these employees may be re-activated if the Israel-Hamas war continues. While we also have business continuity plans in place to address the safety of our employees and continue product development in the event of reduced employee availability in the region during the war, it could affect the timing of projects in the short-term as work is shifted to other team members where necessary.

Previous wording

Net revenue was $237.0 million for the three months ended December 2023, compared with $353.1 million for the three months ended December 2022, a decrease of $116.1 million, or 32.9%. Of this net revenue, $136.6 million, or 57.6%, was from Enterprise and Automotive product applications, $62.9 million, or 26.6%, was from Mobile product applications, and $37.5 million, or 15.8%, was from Core IoT product applications. Revenue decreased in most of our product applications for the three months ended December 2023. Net revenue from Enterprise and Automotive product applications decreased as a result of lower average selling prices (which decreased 15.9%) due to product sales mix and a decrease in units sold (which decreased 28.1%). The decrease in revenue from Enterprise and Automotive product applications was partially offset by $3.0 million in revenue from the licensing of certain of our IP. Net revenue from Mobile product applications increased due to an increase in units sold (which increased 54.6%), as demand increased for our products in the mobile market and an increase of $6.0 million in revenue from the licensing of certain of our IP, partially offset by a decrease in average selling prices (which decreased 29.0%) due to our product sales mix. Net revenue from Core IoT product applications decreased due to a decline in units sold (which decreased 39.1%) related to certain end customers' decline in demand and desire to reduce their inventory holdings and a decrease in average selling prices (which decreased 11.8%) due to our product sales mix.

Current wording

Net revenue was $237.3 million for the three months ended March 2024, compared with $326.6 million for the three months ended March 2023, a decrease of $89.3 million, or 27.3%, as customers continue to exercise caution in their overall spend amidst the current global macroeconomic environment. Of this net revenue, $134.7 million, or 56.8%, was from Enterprise and Automotive product applications, $55.3 million, or 23.3%, was from Mobile product applications, and $47.3 million, or 19.9%, was from Core IoT product applications. Revenue decreased in most of our product applications for the three months ended March 2024. Net revenue from Enterprise and Automotive product applications decreased as a result of lower average selling prices (which decreased 13.3%) due to product sales mix and a decrease in units sold (which decreased 19.0%). Net revenue from Mobile product applications increased due to an increase in units sold (which increased 67.5%), as demand increased for our products in the mobile market, partially offset by a decrease in average selling prices (which decreased 20.6%) due to our product sales mix. Net revenue from Core IoT product applications decreased due to a decline in units sold (which decreased 35.7%) related to certain end customers' decline in demand and desire to reduce their inventory holdings and a net decrease of $32.0 million in revenue from the licensing of certain of our IP, partially offset by an increase in average selling prices (which increased 19.1%) due to our product sales mix compared to the same period a year ago.

Previous wording

Net revenue was $474.7 million for the six months ended December 2023, compared with $801.2 million for the six months ended December 2022, a decrease of $326.5 million, or 40.8%. Of this net revenue, $291.4 million, or 61.4%, was from Enterprise and Automotive product applications, $107.3 million, or 22.6% was from Mobile product applications, and $76.0 million, or 16.0%, was from Core IoT product applications. Revenue decreased in most of our product applications for the six months ended December 2023. Net revenue from Enterprise and Automotive product applications decreased as a result of lower average selling prices (which decreased 16.1%) due to product sales mix and a decrease in units sold (which decreased 33.3%). The decrease in revenue from Enterprise and Automotive product applications was partially offset by $30.0 million in revenue from the licensing of certain of our IP. Net revenue from Mobile product applications increased due to an increase in units sold (which increased 79.7%), as demand increased for our products in the mobile market and an increase of $6.0 million in revenue from the licensing of certain of our IP, partially offset by a decrease in average selling prices (which decreased 38.8%) due to our product sales mix. Net revenue from Core IoT product applications decreased due to a decline in units sold (which decreased 57.2%) related to certain end customers' decline in demand and desire to reduce their inventory holdings and a decrease in average selling prices (which decreased 3.1%) due to our product sales mix.

Current wording

Net revenue was $712.0 million for the nine months ended March 2024, compared with $1,127.8 million for the nine months ended March 2023, a decrease of $415.8 million, or 36.9%, as customers continue to exercise caution in their overall spend amidst the current global macroeconomic environment. Of this net revenue, $426.1 million, or 59.9%, was from Enterprise and Automotive product applications, $162.6 million, or 22.8% was from Mobile product applications, and $123.3 million, or 17.3%, was from Core IoT product applications. Revenue decreased in most of our product applications for the nine months ended March 2024. Net revenue from Enterprise and Automotive product applications decreased as a result of lower average selling prices (which decreased 21.5%) due to product sales mix and a decrease in units sold (which decreased 29.1%). This decrease in revenue from Enterprise and Automotive product applications was partially offset by $30.0 million in revenue from the licensing of certain of our IP. Net revenue from Mobile product applications increased due to an increase in units sold (which increased 75.0%), as demand increased for our products in the mobile market, partially offset by a decrease in average selling prices (which decreased 35.7%) due to our product sales mix. Net revenue from Core IoT product applications decreased due to a decline in units sold (which decreased 50.5%) related to certain end customers' decline in demand and desire to reduce their inventory holdings and a net decrease of $32.0 million in revenue from the licensing of certain of our IP, partially offset by an increase in average selling prices (which increased 1.3%) due to our product sales mix compared to the same period a year ago.

Previous wording

Gross margin as a percentage of net revenue was 46.0%, or $109.0 million, for the three months ended December 2023, compared with 52.9%, or $186.7 million, for the three months ended December 2022. The net 690 basis point decrease in gross margin for the three months ended December 2023 was primarily due to product sales mix and an overall decline in average sales prices across many of our product applications, partially offset by revenue from the licensing of certain of our IP.

Current wording

Gross margin as a percentage of net revenue was 46.5%, or $110.3 million, for the three months ended March 2024, compared with 52.8%, or $172.3 million, for the three months ended March 2023. The net 630 basis point decrease in gross margin for the three months ended March 2024 was primarily due to product sales mix and a decrease in revenue from the licensing of certain of our IP.

Previous wording

Gross margin as a percentage of net revenue was 45.5% or $216.1 million, for the six months ended December 2023, compared with 55.2%, or $442.4 million, for the six months ended December 2022. The net 970 basis point decrease in gross margin for the six months ended December 2023 was primarily due an increase in the excess obsolescence reserve, product sales mix and an overall decline in average sales prices across many of our product applications, partially offset by revenue from the licensing of certain of our IP.

Current wording

Gross margin as a percentage of net revenue was 45.8% or $326.4 million, for the nine months ended March 2024, compared with 54.5%, or $614.7 million, for the nine months ended March 2023. The net 870 basis point decrease in gross margin for the nine months ended March 2024 was primarily due an increase in the excess obsolescence reserve and product sales mix, partially offset by an increase in revenue from the licensing of certain of our IP.

Previous wording

Because we sell our technology solutions in designs that are generally unique or specific to an OEM customer’s application, gross margin varies on a product-by-product basis, making our cumulative gross margin a blend of our product specific designs. As a fabless manufacturer, our gross margin percentage is generally not materially impacted by our shipment volume. Under most circumstances, revenue from license-based arrangements are accretive to our gross margin.

Current wording

Because we sell our technology solutions in designs that are generally unique or specific to an OEM customer’s application, gross margin varies on a product-by-product basis, making our cumulative gross margin a blend of our product specific designs. As a fabless manufacturer, our gross margin percentage is generally not materially impacted by our shipment volume. Under most circumstances, revenue from license-based arrangements are fully accretive to our gross margin.

Previous wording

Research and development expenses decreased $10.3 million to $168.5 million for the six months ended December 2023, compared with $178.8 million for the six months ended December 2022. The decrease in research and development expenses was primarily driven by a $5.0 million decrease in amortization of prepaid development costs that were fully amortized at the end of fiscal 2023, a $4.5 million decrease in variable compensation costs, a $3.9 million decrease in wages and related costs as a result of the impact of the restructuring action we initiated during the first quarter of fiscal 2024 and a $3.4 million increase in software license and maintenance fees, partially offset by an increase in stock-based compensation charges of $3.3 million and a $1.9 million increase in product development spend.

Current wording

Research and Development Expenses. Research and development expenses decreased $4.5 million to $83.4 million for the three months ended March 2024, compared with $87.9 million for the three months ended March 2023. The decrease in research and development expenses was primarily driven by a $4.3 million decrease in wages and related costs as a result of the restructuring action initiated during the first quarter of fiscal 2024, a $1.4 million decrease in variable compensation costs and a $0.8 million decrease in amortization of prepaid development costs, partially offset by an increase in stock-based compensation charges of $2.9 million.

Previous wording

Research and Development Expenses. Research and development expenses decreased $7.3 million to $82.0 million for the three months ended December 2023, compared with $89.3 million for the three months ended December 2022. The decrease in research and development expenses was primarily driven by a $5.4 million decrease in wages and related costs as a result of the restructuring action we initiated during the first quarter of fiscal 2024, a $1.1 million decrease in variable compensation costs, and a $2.5 million decrease in amortization of prepaid development costs that were fully amortized at the end of fiscal 2023, partially offset by an increase in product development spend of $1.6 million.

Current wording

Research and development expenses decreased $14.8 million to $251.9 million for the nine months ended March 2024, compared with $266.7 million for the nine months ended March 2023. The decrease in research and development expenses was primarily driven by a $8.2 million decrease in wages and related costs as a result of the restructuring action initiated during the first quarter of fiscal 2024, a $5.8 million decrease in amortization of prepaid development costs that were fully amortized at the end of fiscal 2023, and a $5.8 million decrease in variable compensation cost, partially offset by an increase in stock-based compensation of $6.2 million.

Previous wording

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses decreased $2.7 million to $39.7 million for the three months ended December 2023, compared with $42.4 million for the three months ended December 2022. The decrease in selling, general, and administrative expenses primarily driven by a $3.1 million decrease in stock-based compensation charges related to the departure of certain executive officers from the Company during the second quarter of fiscal 2024.

Current wording

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses decreased $1.2 million to $40.5 million for the three months ended March 2024, compared with $41.7 million for the three months ended March 2023. The decrease in selling, general, and administrative expenses was primarily driven by a $2.9 million decrease in stock-based compensation charges relating to our performance-based stock awards granted during the first quarter of fiscal 2024, partially offset by a $1.6 million increase in professional services.

Previous wording

Selling, general, and administrative expenses decreased $5.1 million to $82.0 million for the six months ended December 2023, compared with $87.1 million for the six months ended December 2022. The decrease in selling, general, and administrative expenses primarily reflected a $3.6 million decreased in stock-based compensation charges related to the departure of certain executive officers from the Company during the second quarter of fiscal 2024, a $2.3 million decrease in variable compensation and a $2.1 million favorable impact from exchange rates on foreign currencies, partially offset by a $1.1 million increase in professional services.

Current wording

Selling, general, and administrative expenses decreased $6.3 million to $122.5 million for the nine months ended March 2024, compared with $128.8 million for the nine months ended March 2023. The decrease in selling, general, and administrative expenses was primarily driven by a $6.5 million decrease in stock-based compensation charges related to forfeitures of equity awards of certain executive officers and a $2.5 million decrease in variable compensation costs, partially offset by a $2.5 million increase in professional services.

Previous wording

Interest and other expense, net, decreased by $3.5 million to $11.5 million for the six months ended December 2023, as compared to $15.0 million for the six months ended December 2022. Interest expense on the $600 million incremental Term Loan Facility increased by $8.9 million in the second quarter of fiscal 2024 compared to the same period a year ago, as the interest rate on the Term Loan Facility increased by approximately 355 basis points period-over-period. The interest expense and amortization of debt issuance costs on the Term Loan Facility for the six months ended December 2023 and 2022 were $23.9 million and $15.1 million, respectively. The increase in interest expense was partially offset by an increase of $11.9 million in interest income compared to the same period a year ago and is due to the rise in interest rates period-over-period.

Current wording

Interest and other expense, net, decreased by $1.1 million to $5.9 million for the three months ended March 2024, as compared to $7.0 million for the three months ended March 2023. Interest income of $9.8 million for the three months ended March 2024 increased by $1.4 million and is due to the rise in interest rates period-over-period. Interest expense and the amortization of debt issuance costs on the $600 million incremental Term Loan Facility of $11.9 million for three months ended March 2024 increased by $0.5 million compared to $11.4 million for the same period a year ago.

Previous wording

Interest and other expense, net, decreased by $0.6 million to $6.1 million for the three months ended December 2023, as compared to $6.7 million for the three months ended December 2022. Interest expense on the $600 million incremental Term Loan Facility increased by $3.9 million in the second quarter of fiscal 2024 compared to the same period a year ago, as the interest rate on the Term Loan Facility increased by approximately 355 basis points period-over-period. The interest expense and amortization of debt issuance costs on the Term Loan Facility for the three months ended December 2023 and 2022 were $12.0 million and $8.1 million, respectively. The increase in interest expense was partially offset by an increase of $4.2 million in interest income compared to the same period a year ago and is due to the rise in interest rates period-over-period.

Current wording

Interest and other expense, net, decreased by $4.6 million to $17.4 million for the nine months ended March 2024, as compared to $22.0 million for the nine months ended March 2023. Interest income of $30.8 million for the nine months ended March 2024 increased by $13.3 million and is due to the rise in interest rates period-over-period. Interest expense and the amortization of debt issuance costs on the $600 million incremental Term Loan Facility of $35.9 million for the nine months ended March 2024 increased by $9.5 million, primarily driven by an increase in the average interest rate of approximately 215 basis points during the first nine months in fiscal 2024 compared to the same period a year ago.

Previous wording

Our cash and cash equivalents were $846.1 million as of December 2023, compared with $924.7 million as of June 2023, representing a decrease of $78.6 million. The decrease is primarily related to a prepayment of intangible assets of $130.0 million paid to Broadcom, partially offset by cash provided by operating activities of $84.6 million.

Current wording

Our cash and cash equivalents were $828.1 million as of March 2024, compared with $924.7 million as of June 2023, representing a decrease of $96.6 million. The decrease is primarily related to a $130.0 million payment to Broadcom for the purchase and prepayment of intangible assets, partially offset by cash provided by operating activities of $70.9 million.

Previous wording

We consider almost all of the earnings of our foreign subsidiaries as not indefinitely invested overseas and have made appropriate provisions for income or withholding taxes that may result from a future repatriation of those earnings. As of December 2023, $792.7 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 able to repatriate substantially all of these funds without impacting our provision for income taxes.

Current wording

We consider almost all of the earnings of our foreign subsidiaries as not indefinitely invested overseas and have made appropriate provisions for income or withholding taxes that may result from a future repatriation of those earnings. As of March 2024, $504.7 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 able to repatriate substantially all of these funds without a material impact on our provision for income taxes.

Previous wording

Cash Flows from Operating Activities. Operating activities during the six months ended December 2023 generated $84.6 million compared with $128.5 million net cash generated during the six months ended December 2022. For the six months ended December 2023, the primary operating activities were adjustments for non-cash charges of $128.3 million and a net change in operating assets and liabilities of $20.9 million. The net change in operating assets and liabilities was primarily attributable to a $38.1 million decrease in accounts receivable primarily related to a decrease in sales and shorter payment terms from some of our customers, a $6.1 million decrease in gross inventories as we continue our efforts to control inventory spend while turning over the inventories we accumulated during the first half of fiscal 2023 and a $23.4 million decrease in accrued compensation primarily related to payment of our annual bonus in the second quarter of fiscal 2024, partially offset by a $35.7 million increase in accounts payable due to the timing of payments made to our vendors.

Current wording

Cash Flows from Operating Activities. Operating activities during the nine months ended March 2024 generated $70.9 million compared with $237.0 million net cash generated during the nine months ended March 2023. For the nine months ended March 2024, the primary operating activities were adjustments for non-cash charges of $176.8 million and a net change in operating assets and liabilities of $23.2 million. The net change in operating assets and liabilities was primarily attributable to a $20.1 million decrease in accounts receivable primarily related to the normal variations in the timing of collections and billings, an $8.7 million decrease in gross inventories as we continue our efforts to control inventory investment while turning over the inventories we accumulated during the first half of fiscal 2023 and a $22.8 million increase in accounts payable due to the timing of payments made to our vendors, partially offset by a $20.3 million decrease in accrued compensation primarily related to the payment of our annual bonus in the first quarter of fiscal 2024 and a $46.9 million decrease in income taxes payable.

Previous wording

During the three months ended December 2023, our days sales outstanding was 48 days compared to 65 days at the same period a year ago. Our annual inventory turns increased from three to four over the same time period.

Current wording

During the three months ended March 2024, our days sales outstanding was 55 days compared to 60 days at the same period a year ago. Our annual inventory turns stayed consistent at four period over period.

Previous wording

Cash Flows from Investing Activities. Cash used in investing activities during the six months ended December 2023 was $139.8 million compared with cash used by investing activities of $18.8 million during the six months ended December 2022. Net cash used in investing activities for the six months ended December 2023 consisted of $130.0 million paid to Broadcom as a prepayment to acquire developed technologies and to extend the exclusivity for certain products for an additional three-year period, $16.6 million to purchase short-term investments and $17.1 million for purchases of property and equipment, partially offset by $23.9 million in proceeds from the maturities of our short-term investments.

Current wording

Cash Flows from Investing Activities. Cash used in investing activities during the nine months ended March 2024 was $146.7 million compared with cash used by investing activities of $28.1 million during the nine months ended March 2023. Net cash used in investing activities for the nine months ended March 2024 consisted of $130.0 million paid to Broadcom as a prepayment to acquire developed technologies and to extend the exclusivity for certain products for an additional three-year period, $16.6 million to purchase short-term investments and $26.1 million for purchases of property and equipment, partially offset by $26.0 million in proceeds from the maturities of our short-term investments.

Previous wording

Cash used in investing activities during the six months ended December 2022 was $18.8 million and consisted of $11.9 million proceeds from the maturities of investments, partially offset by $15.5 million net cash paid to acquire Emza and $15.3 million for purchases of property and equipment.

Current wording

Cash used in investing activities during the nine months ended March 2023 was $28.1 million and consisted of $15.5 million net cash paid to acquire Emza and $29.0 million for purchases of property and equipment, partially offset by $16.3 million proceeds from the maturities of our short-term investments.

Previous wording

Cash Flows from Financing Activities. Cash used in financing activities for the six months ended December 2023 was $23.9 million compared with $115.0 million used by financing activities for the six months ended December 2022. Net cash used by financing activities for the six months ended December 2023 consisted of $29.6 million used for payroll taxes on the delivery of the underlying shares for share-based awards, partially offset by $8.5 million proceeds from issuance of shares.

Current wording

Cash Flows from Financing Activities. Cash used in financing activities for the nine months ended March 2024 was $20.4 million compared with $134.2 million used by financing activities for the nine months ended March 2023. Net cash used by financing activities for the nine months ended March 2024 consisted of $33.7 million used for payroll taxes on the delivery of the underlying shares for share-based awards, partially offset by $15.9 million proceeds from issuance of shares.

Previous wording

Cash used in financing activities for the six months ended December 2022 was $115.0 million and consisted of $8.8 million proceeds from issuance of shares, offset by $49.1 million used for payroll taxes on the delivery of the underlying shares for share-based awards, and $74.5 million used to repurchase our common stock.

Current wording

Cash used in financing activities for the nine months ended March 2023 was $134.2 million and consisted of $52.2 million used for payroll taxes on the delivery of the underlying shares for share-based awards, and $100.1 million used to repurchase our common stock, partially offset by $17.6 million proceeds from issuance of shares.

Previous wording

Common Stock Repurchase Program. As of April 2023, our board had cumulatively authorized $2.3 billion for our common stock repurchase program, which will expire in July 2025. 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. The number of shares purchased, and the timing of purchases, are based on the level of our cash balances, general business and market conditions, and other factors. Common stock purchased under this program is held as treasury stock. From April 2005 through December 2023, we purchased, net of issuances for settlement of our convertible notes, 30,116,439 shares of our common stock in the open market for an aggregate cost of $878.0 million. During the six months ended December 2023, we did not repurchase shares of our common stock. As of December 2023, the remaining available authorization under our common stock repurchase program was $893.9 million.

Current wording

Common Stock Repurchase Program. As of April 2023, our board had cumulatively authorized $2.3 billion for our common stock repurchase program, which will expire in July 2025. 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. The number of shares purchased, and the timing of purchases, are based on the level of our cash balances, general business and market conditions, and other factors. Common stock purchased under this program is held as treasury stock. From April 2005 through March 2024, we purchased, net of issuances for settlement of our convertible notes, 30,116,439 shares of our common stock in the open market for an aggregate cost of $878.0 million. During the nine months ended March 2024, we did not repurchase shares of our common stock. As of March 2024, the remaining available authorization under our common stock repurchase program was $893.9 million.

Previous wording

Senior Notes. In March 2021, we completed an offering of $400.0 million aggregate principal amount of 4.0% senior notes due 2029, or the Senior Notes, in a private offering. The Senior Notes were issued pursuant to an 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 Senior Notes requires bi-annual interest only payments in June and December of each year. For the six months ended December 2023, we paid interest expense of $8.0 million on the Senior Notes.

Current wording

Senior Notes. In March 2021, we completed an offering of $400.0 million aggregate principal amount of 4.0% senior notes due 2029, or the Senior Notes, in a private offering. The Senior Notes were issued pursuant to an 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 Senior Notes requires bi-annual interest only payments in June and December of each year. For the nine months ended March 2024, we paid interest expense of $8.0 million on the Senior Notes.

Previous wording

Term Loan Facility. In December 2021, we entered into that certain First Amendment and Lender Joinder Agreement to the Credit Agreement, to, among other things, establish a new $600.0 million incremental term loan facility, or the Term Loan Facility. The Term Loan Facility was advanced under the Credit Agreement to finance our DSPG acquisition. The Term Loan Facility matures on December 2, 2028. Principal on the Term Loan Facility is payable in equal quarterly installments on the last day of each March, June, September and December of each year, beginning December 31, 2021, at a rate of 1.00% per annum. For six months ended December 2023, we repaid $4.5 million of the principal outstanding on the Term Loan Facility.

Current wording

Term Loan Facility. In December 2021, we entered into that certain First Amendment and Lender Joinder Agreement to the Credit Agreement, to, among other things, establish a new $600.0 million incremental term loan facility, or the Term Loan Facility. The Term Loan Facility was advanced under the Credit Agreement to finance our DSPG acquisition. The Term Loan Facility matures on December 2, 2028. Principal on the Term Loan Facility is payable in equal quarterly installments on the last day of each March, June, September and December of each year, beginning December 31, 2021, at a rate of 1.00% per annum. For nine months ended March 2024, we repaid $6.0 million of the principal outstanding on the Term Loan Facility.

Previous wording

The amounts in the table above exclude gross unrecognized tax benefits related to uncertain tax positions of $41.6 million. As of December 2023, 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.

Current wording

The amounts in the table above exclude gross unrecognized tax benefits related to uncertain tax positions of $43.6 million. As of March 2024, 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.