SYNAPTICS Inc

Previous 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.

Current wording

This Quarterly Report on Form 10-Q for the quarter ended September 28, 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; risks related to our expectations regarding technology and strategic investments and the anticipated timing or benefits thereof; our ability to execute on our cost reduction initiatives and to achieve expected synergies and expense reductions; our ability to maintain and build relationships with our customers; our dependence on third parties to maintain satisfactory manufacturing yields and deliverable schedule; the risk that our indemnification obligations for third party claims could result in substantial costs; uncertainty surrounding macroeconomic factors in the U.S., and globally, impacting the supply chain environment, inflationary pressure, workforce reductions, regional instabilities and hostilities (including the Israel-Hamas war) and the other 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 29, 2024, 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 act…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We are a leading worldwide developer and fabless supplier of premium mixed signal semiconductor solutions changing the way humans engage with connected devices and data, engineering exceptional experiences throughout the home, at work, in the car and on the go. We believe our results to date reflect the combination of our customer focus and the strength of our intellectual property and our engineering know-how, which allow us to develop or engineer products that meet the demanding design specifications of our Original Equipment Manufacturers, or OEMs.

Current wording

We are a leading worldwide developer and fabless supplier of premium mixed signal semiconductor solutions that enable people to engage with connected devices and data, engineering exceptional experiences throughout the home, at work, in the car and on the go. We provide our customers with sensing, processing, and connecting solutions, which represent the three foundational elements of the Internet of Things, or IoT. We supply connectivity, sensors, and artificial intelligence, or AI, enhanced processor solutions to original equipment manufacturers, or OEMs, that design IoT products and devices for automobiles, enterprise workspace devices, virtual reality, smartphones, tablets, and notebook computers. Our currently served markets include IoT, personal computer, or PC, Enterprise and Automotive, and Mobile. Our solutions either contain or consist of our wireless, voice and speech, video processing, fingerprint, authentication, display driver, or touch semiconductor solutions, which include our hardware, and, where applicable, firmware and software.

Previous wording

Many of our customers have manufacturing operations in China, and many of our OEM customers have established design centers in Asia. With our global presence, including offices in China, France, Germany, Hong Kong, India, Israel, Japan, Korea, Poland, Switzerland, Taiwan, the U.K., and the U.S., we are well positioned to provide local sales, operational, and engineering support services to our existing customers, as well as potential new customers, on a global basis.

Current wording

India, Israel, Japan, Korea, Poland, Switzerland, Taiwan, the U.K., and the U.S., we are well positioned to provide local sales, operational, and engineering support services to our existing customers, as well as potential new customers, on a global basis.

Previous wording

Our gross margin generally reflects the combination of the added value we bring to our OEM customers’ products by meeting their custom design requirements and the impact of our ongoing cost-improvement programs. These cost-improvement programs include reducing materials and component costs and implementing design and process improvements. Our newly introduced products may have lower margins than our more mature products, which have realized greater benefits associated with our ongoing cost-improvement programs. As a result, new product introductions may initially negatively impact our gross margin.

Current wording

Our gross margin generally reflects the combination of the added value we bring to our OEM customers’ products by meeting their custom design requirements and the impact of our ongoing cost-improvement programs. These cost-improvement programs include reducing materials and component costs and implementing design and process improvements.

Previous wording

Interest and other expense, net, primarily reflects interest expense on our Senior Notes (as defined herein), Term Loan Facility (as defined herein) and revolving line of credit as well as the amortization of debt issuance costs and discount on our debt, partially offset by interest income earned on our cash, cash equivalents and short-term investments.

Current wording

Interest and other expense, net, primarily reflects interest expense on our Senior Notes (as defined herein), Term Loan Facility (as defined herein) and revolving line of credit as well as the amortization of debt issuance costs and discount on our debt, partially offset by interest income earned on our cash and cash equivalents.

Previous 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.

Current wording

There have been no significant changes in our critical accounting policies and estimates during the three months ended September 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 29, 2024.

Previous 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.

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, higher interest rates, and workforce reductions. We believe these macroeconomic conditions, including conservative 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 slowdown in orders from our customer base. We continue to believe a rebound in demand is likely to extend into late calendar 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 gross profit and net income. Further, despite the recent downward trend in interest rates, they remain elevated and may fluctuate, continuing to impact 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

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.

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 or expands further throughout the Middle East region. 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. If these conditions continue or worsen, they could adversely impact our future financial and operating results.

Previous wording

In the first quarter of fiscal 2024, we changed the classification of our product categories to more closely align with the strategic focus of the Company. Certain reclassifications have been made to the prior period revenue presentation to conform to the current period revenue presentation. Certain of the data used in our condensed consolidated statements of operations for the periods indicated, together with comparative absolute and percentage changes in these amounts, were as follows (in millions, except percentages):

Current wording

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

Previous 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.

Current wording

Net revenue was $257.7 million for the three months ended September 2024, compared with $237.7 million for the three months ended September 2023, an increase of $20.0 million, or 8.4%. Of this net revenue, $147.6 million, or 57.3%, was from Enterprise and Automotive product applications, $50.5 million, or 19.6%, was from Mobile product applications, and $59.6 million, or 23.1%, was from Core IoT product applications. Revenue increased in most of our product applications for the three months ended September 2024. Net revenue from Mobile product applications increased due to an increase in units sold (which increased 1.5%) and $10.5 million in revenue from a license of certain of our IP, or the IP license, partially offset by a decrease in average selling prices (which decreased 11.3%), as overall demand increased for our products in the mobile market. Net revenue from Core IoT product applications increased due to an increase in units sold (which increased 90.2%), partially offset by a decrease in average selling prices (which decreased 18.6%) due to our product sales mix compared to the same period a year ago. Net revenue from Enterprise and Automotive product applications decreased as a result of a decrease in units sold (which decreased 1.5%), partially offset by an increase in average selling prices (which increased 17.3%) due to our product sales mix compared to the same period a year ago and a decrease of $27.0 million in revenue from a license of certain of our IP.

Previous 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.

Current wording

Gross margin as a percentage of net revenue was 46.9%, or $120.9 million, for the three months ended September 2024, compared with 45.1%, or $107.1 million, for the three months ended September 2023. The net 180 basis point increase in gross margin for the three months ended September 2024 was primarily due to favorable changes in product mix and lower costs related to excess obsolescence reserve charges and share-based compensation charges partially offset by a net decrease in revenue from our IP licenses.

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 fully 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 accretive to our gross margin.

Previous 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.

Current wording

Research and Development Expenses. Research and development expenses decreased $5.2 million to $81.3 million for the three months ended September 2024, compared with $86.5 million for the three months ended September 2023. The decrease in research and development expenses was primarily driven by a $4.9 million decrease in wages and related costs as a result of the restructuring action initiated during the first quarter of fiscal 2025.

Previous wording

Provision for Income Taxes. We account for income taxes under the asset and liability method. The provision for income taxes recorded in interim periods is based on our estimate of the annual effective tax rate applied to year-to-date income before provision for income taxes, adjusted for discrete items required to be recognized in the period in which they are incurred. In each quarter, we update our estimate of the annual effective tax rate, and if the estimated annual tax rate changes, we make a cumulative adjustment in that quarter. 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.

Current wording

(Benefit)/Provision for Income Taxes. We account for income taxes under the asset and liability method. The (benefit)/provision for income taxes recorded in interim periods is based on our estimate of the annual effective tax rate applied to year-to-date (loss)/income before (benefit)/provision for income taxes, adjusted for discrete items required to be recognized in the period in which they are incurred. In each quarter, we update our estimate of the annual effective tax rate, and if the estimated annual tax rate changes, we make a cumulative adjustment in that quarter. Our quarterly tax (benefit)/provision for income taxes 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 (loss)/income before (benefit)/provision for income taxes in each of the tax jurisdictions in which we operate.

Previous wording

See “Note 14. Income Taxes” in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information on our provision for income taxes.

Current wording

See Note 14. Income Taxes in the Notes to the Unaudited Condensed Consolidated Financial Statements for additional information on our (benefit)/provision for income taxes.

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 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.

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 September 2024, $405.7 million of cash and cash equivalents 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 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.

Current wording

Cash Flows from Operating Activities. Cash used by operating activities during the three months ended September 2024 was $11.4 million compared with cash provided by operating activities of $45.4 million during same period a year ago. For the three months ended September 2024, the primary operating activities were adjustments for non-cash charges of $47.5 million and a net change in operating assets and liabilities of $35.8 million. The net change in operating assets and liabilities was attributable to a decrease in income taxes payable primarily related to tax payments of approximately $31.2 million made to various tax jurisdictions, the payment of our annual bonus of approximately $11.5 million and payments of approximately $10.6 million related to the restructuring actions we initiated during the first quarter of fiscal 2025 and in the fourth quarter of fiscal 2024.

Previous 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.

Current wording

During the three months ended September 2024, our days sales outstanding was 47 days compared to 42 days at the same period a year ago. Our annual inventory turns was four compared to three during the same period a year ago.

Previous 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.

Current wording

Cash Flows from Investing Activities. Cash used by investing activities during the three months ended September 2024 and September 2023 was $9.1 million and $150.1 million, respectively. Net cash used in investing activities for the three months ended September 2024 consisted of $9.1 million for purchases of property and equipment.

Previous 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.

Current wording

Cash Flows from Financing Activities. Cash used by financing activities for the three months ended September 2024 and September 2023 was $3.5 million and $18.1 million, respectively. Net cash used by financing activities for the three months ended September 2024 consisted of $11.3 million used for payroll taxes on the delivery of the underlying shares for share-based awards, partially offset by $7.7 million proceeds from issuance of shares primarily under the employee stock purchase plan.

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 nine months ended March 2024, 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 three months ended September 2024, we did not pay any interest on the Senior Notes.

Previous wording

Bank Credit Facility. On March 16, 2023, we entered into the Second Amendment, and on July 28, 2023, we entered into the Third Amendment to our Credit Agreement, dated March 11, 2021. The Second Amendment replaces the LIBOR-based interest rate applicable to borrowings under the Credit Agreement with SOFR-based interest rate. The Third Amendment provides that the consolidated interest coverage ratio financial covenant only applies if, as of the last day of any fiscal quarter, our aggregate cash and cash equivalents balance is less than $450 million. 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. Future proceeds under the revolving credit facility are available for working capital and general corporate purposes. As of March 2024, there was no balance outstanding under the revolving credit facility.

Current wording

Bank Credit Facility. On March 16, 2023, we entered into the Second Amendment, and on July 28, 2023, we entered into the Third Amendment to our Credit Agreement, dated March 11, 2021. The Second Amendment replaces the LIBOR-based interest rate applicable to borrowings under the Credit Agreement with SOFR-based interest rate. The Third Amendment provides that the consolidated interest coverage ratio financial covenant only applies if, as of the last day of any fiscal quarter, our aggregate cash and cash equivalents balance is less than $450.0 million. The Credit Agreement provides for a revolving credit facility in a principal amount of up to $250.0 million, which includes a $20.0 million sublimit for letters of credit and a $25.0 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 $150.0 million to the extent existing or new lenders agree to provide such increased or additional commitments, as applicable. Future proceeds under the revolving credit facility are available for working capital and general corporate purposes. As of September 2024, there was no balance outstanding under the revolving credit facility.

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 nine months ended March 2024, we repaid $6.0 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 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, 2001, at a rate of 1.00% per annum. For three months ended September 2024, we repaid $1.5 million of the principal outstanding on the Term Loan Facility.

Previous wording

Working Capital Needs. We believe our existing cash and cash equivalents, anticipated cash flows from operating activities, anticipated cash flows from financing activities, and available credit under our revolving credit facility, will be sufficient to meet our working capital and other cash requirements, including small tuck-in acquisitions, 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 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. If sufficient funds are not available or are not available on acceptable terms, our ability to fund our future long-term working capital needs, take advantage of business opportunities or to respond to competitive pressures could be limited or severely constrained.

Current wording

Working Capital Needs. We believe our existing cash and cash equivalents, anticipated cash flows from operating activities, anticipated cash flows from financing activities, and available credit under our revolving credit facility, will be sufficient to meet our working capital and other cash requirements, including small tuck-in acquisitions, 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 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. If sufficient funds are not available or are not available on acceptable terms, our ability to fund our future long-term working capital needs, take advantage of business opportunities or to respond to competitive pressures could be limited or severely constrained.

Previous wording

Represents the principal and interest payable through the maturity date of the underlying contractual obligation.

Current wording

(1)Represents the principal and interest payable through the maturity date of the underlying contractual obligation.

Previous wording

Purchase obligations and other commitments include payments due for inventory purchase obligations with contract manufacturers, long-term software tool licenses, and other licenses.

Current wording

(2)Purchase obligations and other commitments include payments due for inventory purchase obligations with contract manufacturers, long-term software tool licenses, and other licenses.

Previous 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.

Current wording

The amounts in the table above exclude gross unrecognized tax benefits related to uncertain tax positions of $44.6 million. As of September 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.