ALIGN TECHNOLOGY, INC. Forward-Looking Statements
In addition to historical information, this quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements include, among other things, our expectations and intentions regarding our strategic objectives and the means to achieve them; our beliefs regarding digital dentistry and its potential to impact our business; our intentions regarding expanding our business; our expectations regarding the utilization rates for our products, including the impact of marketing on those rates and causes for periodic fluctuations of the rates; our expectation regarding customer and consumer purchasing behavior, including expectations related to consumer demand for digital solutions; our expectations for future investments in and benefits from sales and marketing activities; our expectations regarding the near and long-term implications of the COVID-19 pandemic on the global economy, including global supply chain issues; our preparedness and our customers' preparedness to react to changing circumstances and demand, results of operations and financial condition; our expectations for our expenses and capital obligations and expenditures in particular; our intentions to control spending and for investments; our intentions regarding the investment of our international earnings from operations; our belief regarding the sufficiency of our cash balances and borrowing capacity; our judgments regarding the estimates used in our revenue recognition, and assessment of goodwill and intangible assets; our expectations regarding our tax positions and the judgments we make related to our tax obligations; our predicted level of operating expenses and gross margins and other factors beyond our control; our expectations regarding staying in compliance with laws and regulations currently applicable to, or which may become applicable to, our business both inthe United States and internationally; as well as other statements regarding our future operations, financial condition and prospects and business strategies. These statements may contain words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," or other words indicating future results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in particular, the risks discussed below in Part II, Item 1A "Risk Factors." We undertake no obligation to revise or update these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 as filed with theSecurities and Exchange Commission (the "SEC").
Executive Overview of Results
COVID-19 Update
The outbreak of COVID-19 virus in late 2019 and the pandemic that followed has
caused significant volatility and uncertainty in the global and regional
economies. This has led to changes in consumer and business behavior, fear and
market fluctuations, and restrictions on business and individual activities, all
of which has materially impacted supply and demand in broad sectors of the world
markets. For us, sales and results of operations were initially materially
impacted by the preventative measures implemented to slow the spread, including
the complete closure or significantly reduced operations of dental practices. In
subsequent quarters, our business rebounded sharply, although the inconsistent
pace and scale of recovery generally continues to reverberate throughout global
markets, evidenced by significant shortages of raw materials, energy,
components, transportation and delivery services, and labor. Additionally,
variants of the COVID-19 virus continue to drive unpredictability and hamper the
normalization of supply and demand as businesses react to new or renewed
localized preventative measures intended to slow the spread of the virus.
Notwithstanding these setbacks, in general, the scale and time during which
these additional measures are implemented are less impactful on our customers
and their patients than the most drastic measures imposed in 2020. For instance,
globally both public and private dental practices largely remain open, although
many continue to operate at less than pre-pandemic capacities.
Conversely, as a result of the restrictive measures imposed to contain the
spread of the virus, the demand for digital solutions has increased as society
and businesses have adapted to practices such as social distancing and remote
working. Our efforts to promote the digital transformation of dental practices
with our clear aligners, intraoral scanners, clinical treatment planning and
other offerings has allowed us to quickly respond to increased demand in the
dental field. We expect the number of customers that realize the efficiencies
and benefits of our digital solutions for their practices and patients to
continue to grow even as the pandemic-related restrictions remain unpredictable.
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To address the increasing demand for digital solutions, we intend to continue
targeting our investment plans in sales, marketing and innovation as well as our
capital expenditures, particularly as we expand our manufacturing operations in
locations such as Europe , in order to meet the anticipated demand for our
solutions.
Nevertheless, the continuing evolution of the pandemic, including the setbacks
occurring as a result of new virus strains and the continuing business
restrictions and lockdowns, supply chain shortages and delays, the positive
impacts of vaccinations, the uncertainties regarding consumer spending as demand
for entertainment, dining, and travel returns and remote working diminishes,
remains highly fluid and unpredictable. Consequently, the COVID-19 pandemic has
caused, and is expected to continue causing for an unknown period of time,
disruptions to many of the norms we have historically experienced in the cadence
of our quarterly results of operations. As such, our recent operating results
and levels of growth may not be indicative of our future performance.
Ultimately, however, we believe the digital transition to dentistry that began
before the pandemic will continue to be positive for our business, results of
operations, cash flows, and financial condition, and we intend to adjust
spending to coincide with the pace of recovery and changes in demand.
Further discussion of the impact of the COVID-19 pandemic on our business may be found in Part II, Item 1A of this Quarterly Report on Form 10-Q under the heading "Risk Factors."
Key financial and operating metrics
Our business strategic priorities remain focused on four principal pillars of
growth: (i) international expansion; (ii) general practitioners ("GP") adoption;
(iii) patient demand & conversion; and (iv) orthodontic utilization. We measure
our performance against these strategic priorities by the achievement of key
financial and operating metrics.
For the three months ended September 30, 2021 , we achieved the following, taking
into consideration that percentage changes from prior year financial results
include the impact of COVID-19 and do not necessarily reflect our future growth
rates:
•Revenues of $1.0 billion , an increase of 38.4% year-over-year;
•Clear Aligner revenues of $837.6 million , an increase of 34.9% year-over-year
reflecting the expanding opportunity for Invisalign treatment among adults
globally, as well as the underlying orthodontic market as we continue to build
awareness of the Invisalign brand and drive utilization among teens and younger
patients through increased consumer marketing.
•Americas Clear Aligner revenues of $408.4 million , an increase of 34.3%
year-over-year;
•International Clear Aligner revenues of $375.5 million , an increase of 33.5%
year-over-year;
•Clear Aligner volume increase of 32.1% year-over-year and Clear Aligner volume
for teenage patients increase of 26.6% year-over-year;
•Imaging Systems and CAD/CAM Services revenues of $178.3 million , an increase of
57.3% year-over-year reflecting strong growth across all regions with continued
adoption of the iTero Element 5D and 5D Plus Series of next generation scanners
and imaging systems launched in February 2021 , as well as increased average
selling prices ("ASP") predominately due to favorable product mix shift towards
higher priced scanners;
•Income from operations of $261.2 million and operating margin of 25.7%;
•Effective tax rate of 30.9%;
•Net income of $181.0 million with diluted net income per share of $2.28 ;
•Cash and cash equivalents of $1.2 billion as of September 30, 2021 ;
•Operating cash flow of $355.0 million ;
•Capital expenditures of $124.3 million , predominantly related to increases to
our manufacturing capacity and facilities; and
•Number of employees was 21,590 as of September 30, 2021 , an increase of 25.4%
year-over-year.
Other Statistical Data and Trends
•Digital Scanner Case Submissions. For the third quarter of 2021, total Invisalign cases submitted with a digital scanner in theAmericas increased to 87.9%, up from 83.2% in the third quarter of 2020 and international scans increased to 79.3%, up from 72.1% in the third quarter of 2020. For the third quarter of 2021, 96.1% of Invisalign cases submitted by North American orthodontists were submitted digitally. Our quarterly utilization rates for the last five quarters are as follows: 25
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* Invisalign utilization rates are calculated by the number of cases shipped
divided by the number of doctors to whom cases were shipped. Our International
region includes Europe , Middle East and Africa ("EMEA") and Asia Pacific
("APAC"). Latin America ("LATAM") is excluded from the International region
based on its immateriality to the quarter, however is included in the Total
utilization.
•Total utilization rate in the third quarter of 2021 increased to 7.7 cases per doctor compared to 7.1 cases per doctor in the third quarter of 2020.
?North America : Utilization rate among our North American orthodontist customers increased to 29.7 cases per doctor in the third quarter of 2021 compared to 24.1 cases per doctor in the third quarter of 2020 and the utilization rate among our North American GP customers increased to 5.0 cases per doctor in the third quarter of 2021 compared to 4.2 cases per doctor in the third quarter of 2020.
?International: International doctor utilization rate was 6.5 cases per doctor in the third quarter of 2021 compared to 6.4 cases in the third quarter of 2020.
Results of Operations
Net Revenues by Reportable Segment
We group our operations into two reportable segments: Clear Aligner segment and Systems and Services segment.
•Our Clear Aligner segment consists of Comprehensive Products, Non-Comprehensive Products and Non-Case revenues as defined below:
?Comprehensive Products include, but are not limited to, Invisalign Comprehensive and Invisalign First.
?Non-Comprehensive Products include, but are not limited to, Invisalign Moderate, Lite and Express packages and Invisalign Go.
?Non-Case includes, but is not limited to, Vivera retainers along with our training and ancillary products for treating malocclusion.
•Our Systems and Services segment consists of our iTero intraoral scanning
systems, which includes a single hardware platform and restorative or
orthodontic software options, OrthoCAD services and ancillary products, as well
as exocad's CAD/CAM software solution that integrates workflows to dental labs
and dental practices.
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Net revenues for our Clear Aligner and Systems and Services segments by region
for the three and nine months ended September 30, 2021 and 2020 are as follows
(in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
Net Revenues 2021 2020 Change 2021 2020 Change
Clear Aligner net revenues:
Americas $ 408.4 $ 304.1 $ 104.3 34.3 % $ 1,166.4 $ 683.0 $ 483.4 70.8 %
International 375.5 281.2 94.3 33.5 % 1,118.5 632.3 486.2 76.9 %
Non-case 53.7 35.4 18.3 51.6 % 146.9 85.4 61.5 72.1 %
Total Clear Aligner net revenues
34.9 % $ 2,431.8 $ 1,400.7 $ 1,031.1 73.6 %
Systems and Services net revenues 178.3 113.4 64.9 57.3 % 489.7 236.7 253.0 106.9 %
Total net revenues $ 1,015.9 $ 734.1 $ 281.8 38.4 % $ 2,921.5 $ 1,637.4 $ 1,284.1 78.4 %
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Clear Aligner Case Volume
Case volume data which represents Clear Aligner case shipments for the three and
nine months ended
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 Change 2021 2020 Change
Total case volume 655.1 496.1 159.1 32.1 % 1,916.5 1,077.4 839.2 77.9 %
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
For the three and nine months endedSeptember 30, 2021 , total net revenues increased by$281.8 million and$1.3 billion , respectively, as compared to the same periods in 2020 primarily as a result of increases in Clear Aligner volume of 32.1% and 77.9%, respectively, and an increase in the number of scanners recognized across most regions.
Clear Aligner -
For the three months endedSeptember 30, 2021 ,Americas net revenues increased by$104.3 million as compared to the same period in 2020 primarily due to a 36.4% increase in Clear Aligner volume which resulted in higher net revenues of$110.7 million , partially offset by lower Clear Aligner ASP that decreased net revenues by$6.4 million . Lower ASP was mostly due to higher promotional discounts which decreased net revenues by$8.5 million and higher net deferrals which decreased net revenues by$4.2 million . The decreases in ASP were partially offset by favorable foreign exchange which increased net revenues by$5.0 million . For the nine months endedSeptember 30, 2021 ,Americas net revenues increased by$483.4 million , as compared to the same period in 2020, primarily due to a 81.6% increase in Clear Aligner volume which resulted in higher net revenues of$557.3 million , partially offset by lower Clear Aligner ASP that decreased net revenues by$73.9 million . Lower ASP was mostly due to higher net deferrals which decreased revenues by$55.4 million and higher promotional discounts which decreased net revenues by$42.5 million . The decreases in ASP were partially offset by favorable product mix shift which increased net revenues by$22.4 million .
Clear Aligner - International
For the three months endedSeptember 30, 2021 , International net revenues increased by$94.3 million , as compared to the same period in 2020, primarily due to a 27.0% increase in Clear Aligner volume which resulted in higher net revenues of$75.8 million . Higher Clear Aligner ASP increased net revenues by$18.5 million mostly due to lower promotional discounts and favorable exchange rates. For the nine months endedSeptember 30, 2021 , International net revenues increased by$486.2 million , as compared to the same period in 2020, primarily due to a 73.5% increase in Clear Aligner volume which resulted in higher net revenues of$464.8 million . Higher Clear Aligner ASP increased net revenues by$21.4 million mostly due to favorable exchange rates 27 -------------------------------------------------------------------------------- Table of Contents which increased net revenues by$65.3 million and favorable product mix shift which increased net revenues by$18.3 million . The increases in ASP were partially offset by higher net deferrals which decreased net revenues by$62.6 million . Clear Aligner - Non-Case For the three and nine months endedSeptember 30, 2021 , non-case net revenues increased by$18.3 million and$61.5 million , as compared to the same periods in 2020, due to increased Vivera volume across all regions.
Systems and Services
For the three months endedSeptember 30, 2021 , Systems and Services net revenues increased by$64.9 million , as compared to the same period in 2020, due to a higher number of scanners recognized which increased net revenues by$27.0 million . Higher scanner ASP increased net revenues by$16.4 million mostly due to favorable product mix shift towards higher priced scanners. Additionally, net revenues increased by$21.5 million primarily as a result of higher iTero service revenues mostly due to a larger scanner install base. For the nine months endedSeptember 30, 2021 , Systems and Services net revenues increased by$253.0 million , as compared to the same period in 2020, due to a higher number of scanners recognized which increased net revenues by$138.3 million . Higher scanner ASP increased net revenues by$39.1 million mostly due to favorable product mix shift towards higher priced scanners. Additionally, net revenues increased by$75.5 million as a result of higher iTero service revenues mostly due to a larger scanner install base and additional exocad CAD/CAM revenues.
Cost of net revenues and gross profit (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 Change 2021 2020 Change
Clear Aligner
Cost of net revenues $ 199.4 $ 157.0 $ 42.4 $ 562.5 $ 393.1 $ 169.4
% of net segment revenues 23.8 % 25.3 % 23.1 % 28.1 %
Gross profit $ 638.2 $ 463.7 $ 174.4 $ 1,869.4 $ 1,007.6 $ 861.8
Gross margin % 76.2 % 74.7 % 76.9 % 71.9 %
Systems and Services
Cost of net revenues $ 61.3 $ 43.0 $ 18.3 $ 168.2 $ 91.5 $ 76.7
% of net segment revenues 34.4 % 38.0 % 34.4 % 38.7 %
Gross profit $ 117.0 $ 70.3 $ 46.6 $ 321.4 $ 145.2 $ 176.3
Gross margin % 65.6 % 62.0 % 65.6 % 61.3 %
Total cost of net revenues $ 260.8 $ 200.1 $ 60.7 $ 730.7 $ 484.6 $ 246.0
% of net revenues 25.7 % 27.3 % 25.0 % 29.6 %
Gross profit $ 755.2 $ 534.1 $ 221.1 $ 2,190.8 $ 1,152.8 $ 1,038.0
Gross margin % 74.3 % 72.7 % 75.0 % 70.4 %
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Cost of net revenues includes personnel-related costs including payroll and stock-based compensation for staff involved in the production process, the cost of materials, packaging, shipping costs, depreciation on capital equipment and facilities used in the production process, amortization of acquired intangible assets and training costs. Clear Aligner
For the three and nine months ended
Systems and Services
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For the three and nine months ended September 30, 2021 , our gross margin
percentage increased, as compared to the same period in 2020, as a result of
higher ASP from a product mix shift and an increase in service revenues which
was partially offset by higher freight costs.
Selling, general and administrative (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 Change 2021 2020 Change
Selling, general and administrative
$ 115.9 $ 1,257.4 $ 852.4 $ 405.1 % of net revenues 42.2 % 42.6 % 43.0 % 52.1 %
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Selling, general and administrative expense generally includes personnel-related
costs including payroll, stock-based compensation and commissions for our sales
force, marketing and advertising expenses including media, public relations,
marketing materials, clinical education, trade shows and industry events, legal
and outside service costs, equipment, software and maintenance costs,
depreciation and amortization expense and allocations of corporate overhead
expenses including facilities and Information Technology ("IT").
For the three months ended September 30, 2021 , selling, general and
administrative expense increased, compared to the same period in 2020, primarily
due to higher compensation related costs of $41.5 million from higher salaries,
fringe benefits, commissions, incentive bonuses and stock-based compensation
mainly due to increased headcount. Additionally, we also incurred higher
advertising and marketing costs of $53.4 million during the three months ended
September 30, 2021 .
For the nine months ended September 30, 2021 , selling, general and
administrative expense increased, compared to the same period in 2020, primarily
due to higher compensation related costs of $191.5 million from higher salaries,
fringe benefits, commissions, incentive bonuses and stock-based compensation due
to increased headcount as we continue to invest in sales and marketing to
penetrate into new markets. We also incurred higher advertising and marketing
costs of $147.2 million during the nine months ended September 30, 2021 .
Research and development (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 Change 2021 2020 Change
Research and development $ 65.6 $ 44.5 $ 21.1 $ 177.8 $ 126.4 $ 51.4
% of net revenues 6.5 % 6.1 % 6.1 % 7.7 %
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Research and development expense generally includes personnel-related costs, including payroll and stock-based compensation, outside service costs associated with the research and development of new products and enhancements to existing products, software, equipment, material and maintenance costs, depreciation and amortization expense and allocations of corporate overhead expenses including facilities and IT. For the three and nine months endedSeptember 30, 2021 , research and development expense increased, compared to the same periods in 2020, primarily due to higher compensation costs including higher salaries, fringe benefits, and incentive bonuses mainly from increased headcount as we continue to focus our investments in innovation and research. 29 -------------------------------------------------------------------------------- Table of Contents Income from operations (in millions): Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 Change 2021 2020 Change Clear Aligner Income from operations$ 347.0 $ 261.8 $ 85.2 $ 1,022.0 $ 467.1 $ 555.0 Operating margin % 41.4 % 42.2 % 42.0 % 33.3 % Systems and Services Income from operations$ 65.8 $ 34.9 $ 30.9 $ 177.7 $ 52.2 $ 125.5 Operating margin % 36.9 % 30.8 % 36.3 % 22.1 % Total income from operations 1$ 261.2 $ 177.1 $ 84.1 $ 755.5 $ 174.0 $ 581.5 Operating margin % 25.7 % 24.1 %
25.9 % 10.6 %
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
1 Refer to Note 13 "Segments and Geographical Information" of the Notes to Condensed Consolidated Financial Statements for details on unallocated corporate expenses and the reconciliation to Condensed Consolidated Income from Operations.
Clear Aligner
For the three months endedSeptember 30, 2021 , our operating margin decreased slightly, compared to the same period in 2020, due to higher operating expenses which were partially offset by higher gross margins. For the nine months endedSeptember 30, 2021 , our operating margin increased, compared to the same period in 2020, due to higher gross margins and operating leverage on higher net revenues.
Systems and Services
For the three and nine months endedSeptember 30, 2021 , our operating margin percentage increased, compared to the same periods in 2020, due to operating leverage on higher net revenues and higher gross margins due to a favorable mix shift towards higher priced scanners.
Interest income (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 Change 2021 2020 Change
Interest income $ 0.4 $ 0.3 $ 0.1 $ 2.4 $ 2.8 $ (0.4)
% of net revenues - % - % 0.1 % 0.2 %
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Interest income generally includes interest earned on cash, cash equivalents and investment balances.
For the three months ended
For the nine months endedSeptember 30, 2021 , interest income decreased slightly, compared to the same period in 2020, mainly due to the divestiture of our marketable securities portfolio during the first quarter of 2020 offset by interest income recognized during the nine months endedSeptember 30, 2021 from the SDC arbitration award regarding the value of Align's capital account balance. 30 -------------------------------------------------------------------------------- Table of Contents Other income (expense), net (in millions): Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 Change 2021 2020 Change Other income (expense), net$ 0.4 $ 7.1 $ (6.7) $ 34.5 $ (12.4) $ 46.8 % of net revenues - % 1.0 % 1.2 % (0.8) %
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Other income (expense), net, generally includes foreign exchange gains and losses, gains and losses on foreign currency forward contracts, interest expense, gains and losses on equity investments and other miscellaneous charges.
For the three months endedSeptember 30, 2021 , other income (expense), net decreased, compared to the same period in 2020, primarily due to net foreign exchange losses in the three months endedSeptember 30, 2021 as compared to net foreign exchange gains in the same period in 2020. This was partially offset by an unrealized gain on investment held in a private company recognized in the three months endedSeptember 30, 2021 . For the nine months endedSeptember 30, 2021 , other income (expense), net increased, compared to the same period in 2020, primarily due to a$43.4 million gain related to the SDC arbitration award recognized in the first quarter of 2021, a$10.2 million loss on a foreign currency forward contract related to the exocad acquisition recognized in 2020 and an increase due to fair value changes relating to an investment held in a private company recognized in the nine months endedSeptember 30, 2021 compared to 2020. These increases were partially offset by net foreign exchange losses in the nine months endedSeptember 30, 2021 as compared to net foreign exchange gains in the same period in 2020.
Provision for (benefit from) income taxes (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 Change 2021 2020 Change
Provision for (benefit from)
income taxes $ 81.0 $ 45.2 $ 35.8 $ 211.4 $ (1,452.5) $ 1,663.8
Effective tax rates 30.9 % 24.5 % 26.7 % (883.5) %
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Our effective tax rate differs from the statutory federal income tax rate of 21% for the three and nine months endedSeptember 30, 2021 primarily due to foreign income taxed at different rates, state income taxes, and non-deductible expenses in theU.S. , partially offset by the recognition of excess tax benefits related to stock-based compensation. Our effective tax rate differs from the statutory federal income tax rate of 21% for the three months endedSeptember 30, 2020 primarily due to state income taxes and non-deductible expenses in theU.S. , partially offset by tax benefit resulting from settlement of an income tax audit. Our effective tax rate differs from the statutory federal income tax rate of 21% for the nine months endedSeptember 30, 2020 mainly as a result of the recognition of tax benefits associated with the intra-entity transfer of certain intellectual property rights and fixed assets completed last year. The increase in our effective tax rate for the three months endedSeptember 30, 2021 , compared to the same period in 2020, is primarily attributable to foreign income taxed at different rates and a tax benefit recognized last year resulting from settlement of an income tax audit. The increase in our effective tax rate for the nine months endedSeptember 30, 2021 , compared to the same period in 2020, is primarily attributable to the recognition of tax benefits associated with the intra-entity transfer of certain intellectual property rights and fixed assets during the nine months endedSeptember 30, 2020 . During the nine months endedSeptember 30, 2020 , we completed an intra-entity transfer of certain intellectual property rights and fixed assets to our Swiss entity. The transfer of intellectual property rights did not result in a taxable gain; however, it did result in a step-up of the Swiss tax deductible basis in the transferred assets, and accordingly, created a temporary difference between the book basis and the tax basis of such intellectual property rights. Consequently, this transaction resulted in the recognition of a deferred tax asset and related one-time tax benefit of approximately$1,493.5 million during the nine months endedSeptember 30, 2020 , which is the net impact of the deferred tax asset recognized as a result of the additional Swiss tax deductible basis in the transferred assets and certain costs related to the transfer of fixed assets and inventory. The amortization of this deferred tax asset depends on the profitability of our Swiss headquarters and the recognition of this tax benefit is allowed for a maximum recovery period of 15 years. 31 -------------------------------------------------------------------------------- Table of Contents Liquidity and Capital Resources
Liquidity and Trends
We fund our operations from product sales. As of
As ofSeptember 30, 2021 andDecember 31, 2020 , approximately$630.3 million and$412.5 million of cash and cash equivalents was held by our foreign subsidiaries, respectively. Our intent is to permanently reinvest our earnings from our international operations going forward, and our current plans do not require us to repatriate them to fund ourU.S. operations as we generate sufficient domestic operating cash flow and have access to external funding under our$300.0 million revolving line of credit. We believe that our current cash balances and the borrowing capacity under our credit facility, if necessary, will be sufficient to fund our business for at least the next 12 months. For 2021, we expect our investments in capital expenditures to exceed$400.0 million . Capital expenditures primarily relate to building construction and improvements as well as additional manufacturing capacity to support our international expansion. This includes our planned investment in a new manufacturing facility in Wroclaw,Poland , our first one in the EMEA region. As we expand our manufacturing operations and penetrate into newer markets, we also expect to invest significantly in sales, marketing and innovation to meet the growing demand for our solutions. As ofSeptember 30, 2021 , we have$825.0 million available for repurchase under the stock repurchase program authorized by our Board of Directors inMay 2021 . Subsequent to the third quarter, onOctober 29, 2021 , we entered into an accelerated stock repurchase agreement to repurchase$100.0 million under the program. Additional information regarding the impact of COVID-19 on our liquidity and capital resources may be found in Part II, Item 1A of this Quarterly Report on Form 10-Q under the heading "Risk Factors".
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