MAXLINEAR, INC. Forward-Looking Statements
The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included in Part II, Item1A in this report.
Overview
We are a provider of communications systems-on-chip solutions used in broadband, mobile and wireline infrastructure, data center, and industrial and multi-market applications. We are a fabless integrated circuit design company whose products integrate all or substantial portions of a high-speed communication system, including radio frequency (RF), high-performance analog, mixed-signal, digital signal processing, security engines, data compression and networking layers, and power management. In most cases, these products are designed on a single silicon-die, using standard digital complementary metal oxide semiconductor (CMOS) processes and conventional packaging technologies. We believe this approach enables our solutions to achieve superior power, performance, and cost relative to our industry competition. Our customers include electronics distributors, module makers, original equipment manufacturers (OEMs), and original design manufacturers (ODMs), who incorporate our products in a wide range of electronic devices. Examples of such devices include cable Data Over Cable Service Interface Specifications (DOCSIS), fiber and DSL broadband modems and gateways; Wi-Fi and wireline routers for home networking; radio transceivers and modems for 4G/5G base-station and backhaul infrastructure; fiber-optic modules for data center, metro, and long-haul transport networks; as well as power management and interface products used in these and many other markets. Our highly integrated semiconductor devices and platform-level solutions are primarily manufactured using low-cost CMOS process technology. CMOS processes are ideally suited for large digital logic implementations targeting high-volume and low-cost consumer applications. Importantly, our ability to design analog and mixed-signal circuits in CMOS allows us to efficiently combine analog functionality and complex digital signal processing logic in the same integrated circuit. As a result, our solutions have exceptional levels of functional integration and performance, low manufacturing cost, and reduced power consumption. In addition, our proprietary CMOS-based radio and digital system architectures also enable shorter design cycles, significant design flexibility and low system-level cost across a wide range of broadband communications, wired and wireless infrastructure, and industrial and multi-market customer applications. In the three months endedMarch 31, 2022 , revenues were$263.9 million derived from sales of RF receivers and RF receiver systems-on-chip and connectivity solutions into broadband operator voice and data modems and gateways and connectivity adapters, global analog and digital RF receiver products, radio and modem solutions into wireless carrier access and backhaul infrastructure platforms, high-speed optical interconnect solutions sold into optical modules for data-center, metro and long-haul networks, and high-performance interface and power management solutions into a broad range of communications, industrial, automotive and multi-market applications. Our ability to achieve revenue growth in the future will depend, among other factors, on our ability to further penetrate existing markets; our ability to expand our target addressable markets by developing new and innovative products; changes in government trade policies; and our ability to obtain design wins with device manufacturers, in particular manufacturers of set-top boxes, data modems, and gateways for the broadband service provider, storage networking market, cable infrastructure market, industrial and automotive markets, and optical module and telecommunications infrastructure markets. Products shipped toAsia accounted for 80% and 82% of net revenue during the three months endedMarch 31, 2022 and 2021, respectively, including 38% from products shipped toHong Kong , 11% from products shipped to mainlandChina , and 13% from products shipped toVietnam during the three months endedMarch 31, 2022 and 37% from products shipped toHong Kong , 14% from products shipped to mainlandChina , and 12% from products shipped toVietnam during the three months endedMarch 31, 2021 . Although a large percentage of our products is shipped toAsia , we believe that a significant number of the systems designed by these customers and incorporating our semiconductor products are then sold outsideAsia . For example, revenue generated from sales of our products during the three months endedMarch 31, 2022 and 2021 related principally to sales to Asian ODMs and contract manufacturers delivering products into European and North American markets. To date, all of our sales have been denominated inUnited States dollars. 31
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A significant portion of our net revenue has historically been generated by a limited number of customers. Sales to customers comprise both direct sales to customers and indirect sales through distributors. In the three months endedMarch 31, 2022 , our top three customers accounted for 37% of our net revenue, and our ten largest customers collectively accounted for 71% of our net revenue, of which distributor customers accounted for 32% of our net revenue. For certain customers, we sell multiple products into disparate end user applications such as cable modems, satellite set-top boxes and broadband gateways. Our business depends on winning competitive bid selection processes, known as design wins, to develop integrated circuits for use in our customers' products. These selection processes are typically lengthy, and as a result, our sales cycles will vary based on the specific market served, whether the design win is with an existing or a new customer and whether our product being designed in our customer's device is a first generation or subsequent generation product. Our customers' products can be complex and, if our engagement results in a design win, can require significant time to define, design and result in volume production. Because the sales cycle for our products is long, we can incur significant design and development expenditures in circumstances where we do not ultimately recognize any revenue. We do not have any long-term purchase commitments with any of our customers, all of whom purchase our products on a purchase order basis. Once one of our products is incorporated into a customer's design, however, we believe that our product is likely to remain a component of the customer's product for its life cycle because of the time and expense associated with redesigning the product or substituting an alternative chip. Product life cycles in our target markets will vary by application. For example, in the cable operator modem and gateway sectors, a design-in can have a product life cycle of 24 to 48 months. In the industrial and wired and wireless infrastructure markets, a design-in can have a product life cycle of 24 to 60 months and beyond.
Impact of COVID-19 and the Global Semiconductor Supply Shortage
During the COVID-19 global pandemic, which is still ongoing, various restrictions were put in place causing a temporary decline in demand for certain items such as automobiles. As restrictions began easing across the world, a sudden increase in demand for electronics containing semiconductor chips and stockpiling of chips by certain firms inChina blacklisted by theU.S. has exacerbated bottlenecks in the supply chain, resulting in a global semiconductor supply shortage impacting our industry. Some chip manufacturers are estimating this supply shortage may continue into 2023. While these chip manufacturers are working to increase capacity in the future, and we are continuing to work closely with our suppliers and customers to minimize the potential adverse impacts of the supply shortage, such shortage may have a near-term impact on our ability to meet increased demand on certain products which may continue into 2023. Global supply shortages, and uncertainty in customer demand and the worldwide economy has continued as a result of the COVID-19 pandemic and may be further exacerbated by the impacts of high inflation, and we may experience increased volatility in our sales and revenues in the near future. However, the magnitude of such volatility on our business and its duration is uncertain and cannot be reasonably estimated at this time.
Critical Accounting Policies and Estimates
Management's discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements which are prepared in accordance with accounting principles that are generally accepted inthe United States of America . The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, related disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. We continually evaluate our estimates and judgments, the most critical of which are those related to business combinations, revenue recognition, inventory valuation, production masks, goodwill and other intangible assets valuation, and income taxes. We base our estimates and judgments on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known. We believe that accounting policies we have identified as critical involve a greater degree of judgment and complexity than our other accounting policies. Accordingly, those are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations. For a summary of our critical accounting policies and estimates, refer to Management's Discussion and Analysis section of our Annual Report on Form 10-K for the year endedDecember 31, 2021 , which we filed with the Securities and Exchange 32
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Commission, orSEC , onFebruary 2, 2022 , or our Annual Report. There have been no material changes to our critical accounting policies and estimates during the three months endedMarch 31, 2022 .
Recently Issued Accounting Pronouncements
InOctober 2021 , the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilties from Contracts with Customers, to provide specific guidance to eliminate diversity in practice on how to recognize and measure acquired contract assets and contract liabilities from revenue contracts from customers in a business combination consistent with revenue contracts with customers not acquired in an acquisition. The amendments in this update provide that the acquirer should consider the terms of the acquired contracts, such as timing of payment, identify each performance obligation in the contracts, and allocate the total transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception (that is, the date the acquiree entered into the contracts) or contract modification to determine what should be recorded at the acquisition date. These amendments are effective for us beginning with fiscal year 2023. The impact of the adoption of the amendments in this update will depend on the magnitude of any customer contracts assumed in a business combination in 2023 and beyond.
Results of Operations
The following describes the line items set forth in our unaudited consolidated statements of income.
Net Revenue. Net revenue is generated from sales of radio-frequency, analog, digital, and mixed-signal integrated circuits for access and connectivity, wired and wireless infrastructure, and industrial and multi-market applications. A significant portion of our sales are to distributors, who then resell our products. Cost of Net Revenue. Cost of net revenue includes the cost of finished silicon wafers processed by third-party foundries; costs associated with our outsourced packaging and assembly, test and shipping; costs of personnel, including stock-based compensation, and equipment associated with manufacturing support, logistics and quality assurance; amortization of acquired developed technology intangible assets; amortization of certain production mask costs; cost of production load boards and sockets; and an allocated portion of our occupancy costs. Research and Development. Research and development expense includes personnel-related expenses, including stock-based compensation, new product engineering mask costs, prototype integrated circuit packaging and test costs, computer-aided design software license costs, intellectual property license costs, reference design development costs, development testing and evaluation costs, depreciation expense and allocated occupancy costs. Research and development activities include the design of new products, refinement of existing products and design of test methodologies to ensure compliance with required specifications. All research and development costs are expensed as incurred. Selling, General and Administrative. Selling, general and administrative expense includes personnel-related expenses, including stock-based compensation, amortization of certain acquired intangible assets, merger, acquisition and integration costs, third-party sales commissions, field application engineering support, travel costs, professional and consulting fees, legal fees, depreciation expense and allocated occupancy costs.
Restructuring Charges. Restructuring charges consist of severance, lease and leasehold impairment charges, and other charges related to restructuring plans.
Interest and Other Income (Expense), Net. Interest and other income (expense),
net includes interest income, interest expense and other income (expense).
Interest income consists of interest earned on our cash, cash equivalents and
restricted cash balances. Interest expense consists of interest accrued on debt
and amortization of discounts on debt and other liabilities. Other income
(expense) generally consists of income (expense) generated from non-operating
transactions and unrealized holding gains (losses) from certain investments
required to be marked to market value.
Income Tax Provision. We make certain estimates and judgments in determining
income taxes for financial statement purposes. These estimates and judgments
occur in the calculation of certain tax assets and liabilities, which arise from
differences in the timing of recognition of revenue and expenses for tax and
financial statement purposes and the realizability of assets in future years.
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The following table sets forth our consolidated statement of income data as a percentage of net revenue for the periods indicated:
Three Months Ended March 31,
2022 2021
Net revenue 100 % 100 %
Cost of net revenue 41 47
Gross profit 59 53
Operating expenses:
Research and development 25 30
Selling, general and administrative 15 17
Restructuring charges - 1
Total operating expenses 40 49
Income from operations 18 5
Interest income - -
Interest expense (1) (3)
Other income (expense), net - -
Total other income (expense), net (1) (2)
Income before income taxes 17 3
Income tax provision 4 1
Net income 13 % 2 %
Net Revenue
Three Months Ended March 31,
2022 2021 $ Change % Change
(dollars in thousands)
Broadband $ 134,556 $ 124,190 $ 10,366 8 %
% of net revenue 51 % 59 %
Connectivity 60,179 27,449 32,730 119 %
% of net revenue 23 % 13 %
Infrastructure 33,181 28,792 4,389 15 %
% of net revenue 12 % 14 %
Industrial and multi-market 36,011 28,928 7,083 24 %
% of net revenue 14 % 14 %
Total net revenue $ 263,927 $ 209,359 $ 54,568 26 %
Net revenue increased $54.6 million to $263.9 million for the three months ended
March 31, 2022 , as compared to $209.4 million for the three months ended March
31, 2021 , due to improvement in supply and market strength attributed to the
work-from-home environment. The increase in broadband net revenue of $10.4
million was primarily from gateway revenues and, to a lesser extent,
improvements in satellite and tuner shipments. The increase in connectivity
revenue of $32.7 million was primarily driven by higher Wi-Fi and ethernet
revenues as our supply improved and an increase in MoCA product shipments. The
increase in infrastructure revenues of $4.4 million was primarily driven by an
increase in 5G wireless access product shipments and, to a lesser extent,
increased shipments of wireless backhaul, high-performance analog, and G.hn and
MoCA last-mile access products in this category. The increase in industrial and
multi-market revenue of $7.1 million was related to increased shipments of
component and high-performance analog products.
We currently expect that revenue will fluctuate in the future, from
period-to-period, based on evolving customer demand for existing products, the
pace of adoption of newer products, and macroeconomic conditions. Further, due
to heightened volatility and uncertainty in customer demand resulting from the
COVID-19 pandemic, as well as uncertainty in supply from the global
semiconductor chip shortage, we may experience increased volatility in our sales
and revenues.
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Cost of Net Revenue and Gross Profit
Three Months Ended March 31,
2022 2021 $ Change % Change
(dollars in thousands)
Cost of net revenue $ 109,337 $ 97,640 $ 11,697 12 %
% of net revenue 41 % 47 %
Gross profit 154,590 111,719 42,871 38 %
% of net revenue 59 % 53 %
Cost of net revenue increased $11.7 million to $109.3 million for the three
months ended March 31, 2022 , as compared to $97.6 million for the three months
ended March 31, 2021 . The increase was primarily driven by higher sales and
incremental expenses. Gross profit percentage improved for the three months
ended March 31, 2022 , as compared to the three months ended March 31, 2021 , due
primarily to improved absorption of amortization of intangible assets.
We currently expect that gross profit percentage will fluctuate in the future,
from period-to-period, based on changes in product mix, average selling prices,
and average manufacturing costs. Further, due to heightened volatility and
uncertainty in customer demand resulting from the COVID-19 pandemic and global
semiconductor supply shortages, we may experience increased volatility in our
cost of net revenues as a result.
Research and Development
Three Months Ended March 31,
2022 2021 $ Change % Change
(dollars in thousands)
Research and development $ 65,886 $ 63,166 $ 2,720 4 %
% of net revenue 25 % 30 %
Research and development expense increased $2.7 million to $65.9 million for the
three months ended March 31, 2022 from $63.2 million in the three months ended
March 31 , 2021.There were increases in computer aided design expense of $0.9
million , equipment and tools expense of $0.8 million , and occupancy expense of
$0.4 million .
We expect our research and development expenses to increase in future years as we continue to expand our product portfolio and enhance existing products.
Selling, General and Administrative
Three Months Ended March 31,
2022 2021 $ Change % Change
(dollars in thousands)
Selling, general and administrative $ 40,577 $ 36,469 $ 4,108 11 %
% of net revenue 15 % 17 %
Selling, general and administrative expense increased $4.1 million to $40.6
million for the three months ended March 31, 2022 , as compared to $36.5 million
for the three months ended March 31, 2021 . The increase was primarily due to
increases in headcount. There were increases in personnel expense of $4.6
million , including $3.3 million from performance-based bonus accruals and
stock-based compensation.
We expect selling, general and administrative expenses to increase in future
years as we grow our sales and marketing organization to expand into existing
and new markets.
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Restructuring Charges
Three Months Ended March 31,
2022 2021 $ Change % Change
(dollars in thousands)
Restructuring charges $ - $ 2,166 $ (2,166) (100) %
% of net revenue - % 1 %
Restructuring charges decreased $2.2 million to $0 for the three months ended
March 31, 2022 , compared to $2.2 million for the three months ended March 31,
2021 . Restructuring charges in the three months ended March 31, 2021 primarily
consisted of $1.3 million in employee severance-related charges and $0.6 million
of lease-related charges, which primarily consisted of impairment of leased
right-of-use assets and leasehold improvements.
Interest and Other Income (Expense)
Three Months Ended March 31,
2022 2021 $ Change % Change
(dollars in thousands)
Interest and other income (expense), net $ (3,088) $ (4,310) $ 1,222 (28) %
% of net revenue (1) % (2) %
Interest and other income (expense), net changed by $1.2 million from a net
expense of $4.3 million in the three months ended March 31, 2021 to a net
expense of $3.1 million for the three months ended March 31, 2022 . The change in
interest and other income (expense), net was primarily due to the impact of a
$1.6 million decrease in interest expense on outstanding debt, mostly related to
a lower average balance of term loan debt outstanding. The remaining change
included a $0.7 million increase in other income (expense), net, from expense of
$0.1 million in the 2021 period to expense of $0.8 million in the 2022 period
primarily related to $1.0 million in unrealized holding losses on equity
securities that are marked to market value on the balance sheet, partially
offset by the impact of foreign currency fluctuations.
Income Tax Provision
Three Months Ended March 31,
2022 2021 $ Change % Change
(dollars in thousands)
Income tax provision $ 11,453 $ 1,806 $ 9,647 534 %
The income tax provision for the three months ended March 31, 2022 was $11.5
million compared to an income tax provision of $1.8 million for the three months
ended March 31, 2021 .
The difference between our effective tax rate and the 21.0% U.S. federal
statutory rate for the three months ended March 31, 2022 primarily related to
the mix of pre-tax income among jurisdictions, permanent tax items including a
tax on global intangible low-taxed income, stock based compensation, excess tax
benefits related to stock-based compensation, release of uncertain tax positions
under ASC 740-10, and release of the valuation allowance on certain federal R&D
credits. The permanent tax item related to global intangible low-taxed income
also reflects recent legislative changes requiring the capitalization of
research and experimentation costs, as well as limitations on the creditability
of certain foreign income taxes.
The difference between our effective tax rate and the 21.0% U.S. federal
statutory rate for the three months ended March 31, 2021 primarily related to
the mix of pre-tax income among jurisdictions, permanent tax items including the
tax on global intangible low-taxed income, stock based compensation, excess tax
benefits related to stock-based compensation, and release of certain reserves
for uncertain tax positions under ASC 740-10.
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We continue to maintain a valuation allowance to offset state and certain federal and foreign deferred tax assets, as realization of such assets does not meet the more-likely-than-not threshold required under accounting guidelines. In making such determination, we consider all available positive and negative evidence quarterly, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based upon our review of all positive and negative evidence, we continue to have a valuation allowance on state deferred tax assets, certain federal deferred tax assets, and certain foreign deferred tax assets in jurisdictions where we have cumulative losses or otherwise are not expected to utilize certain tax attributes. We do not incur income tax expense or benefit in certain tax-free jurisdictions in which we operate. Our subsidiary inSingapore operates under certain tax incentives inSingapore , which are effective throughMarch 2027 . Under these incentives, qualifying income derived from certain sales of our integrated circuits is taxed at a concessionary rate over the incentive period. We also receive a reduced withholding tax rate on certain intercompany royalty payments made by ourSingapore subsidiary during the incentive period. We recorded a tax provision in the three months endedMarch 31, 2022 at the incentive rate. In the three months endedMarch 31, 2021 , due to ourSingapore net operating losses and a full valuation allowance inSingapore , the incentives did not have a material impact on our income tax provision. The incentives are conditional upon our meeting certain minimum employment and investment thresholds withinSingapore over time, and we may be required to return certain tax benefits in the event we do not achieve compliance related to that incentive period. We currently believe that we will be able to satisfy these conditions without material risk.
Liquidity and Capital Resources
As of
Our primary uses of cash are to fund operating expenses and purchases of inventory, property and equipment, and from time to time, the acquisition of businesses. We also use cash to pay down outstanding debt, repurchase our common stock under our stock repurchase plan, and from time to time, make investments. As ofMarch 31, 2022 ,$290.0 million of principal was outstanding under a senior secured term B loan facility or the "Initial Term Loan under theJune 23, 2021 Credit Agreement." The Company also has available a senior secured revolving credit facility, in an aggregate principal amount of up to$100.0 million which remained undrawn as ofMarch 31, 2022 . The proceeds of the revolving facility may be used to finance the working capital needs and other general corporate purposes of the Company and its subsidiaries. Commencing onSeptember 30, 2021 , the Initial Term Loan under theJune 23, 2021 Credit Agreement has amortized in equal quarterly installments equal to 0.25% of the original principal amount of the Initial Term Loan under theJune 23, 2021 Credit Agreement, with the balance payable onJune 23, 2028 . Heightened volatility, global semiconductor supply shortages, and uncertainty in customer demand and the worldwide economy in general continues to impact business and financial markets as a result of the COVID-19 pandemic and may be further exacerbated by the impacts of high inflation, and we may experience decreased sales and revenues in the near future. A material adverse impact from COVID-19 and the global semiconductor supply shortage could result in a need to raise additional capital or incur additional indebtedness to fund strategic initiatives or operating activities, particularly if we pursue additional acquisitions. Our future capital requirements will depend on many factors, including changes in revenue, the expansion of our engineering, sales and marketing activities, the timing and extent of our expansion into new territories, the timing of introductions of new products and enhancements to existing products, the continuing market acceptance of our products and potential material investments in, or acquisitions of, complementary businesses, services or technologies. Additional funds may not be available on terms favorable to us or at all. If we are unable to raise additional funds when needed, we may not be able to sustain our operations or execute our strategic plans. Our cash and cash equivalents are impacted by the timing of when we pay expenses as reflected in the change in our outstanding accounts payable and accrued expenses. Cash used to fund operating expenses in our consolidated statements of cash flows excludes the impact of non-cash items such as amortization and depreciation of acquired intangible assets and leased right-of-use assets and property and equipment, stock-based compensation, impairment of leased right-of-use assets and related leasehold improvements and unrealized holding gains or losses on marketable equity securities. Cash used to fund capital purchases and acquisitions of businesses and investments are included in investing activities in our consolidated statements of cash flows. Cash proceeds from issuance of common stock and cash used to pay down outstanding debt or repurchase common stock is included in financing activities in our consolidated statements of cash flows. 37
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As of
Payments due
Less than 1 More than 5
Total year 1-3 years 3-5 years years
(in thousands)
Long-term debt obligations $ 290,000 $ - $ - $ - $ 290,000
Operating lease obligations 42,388 7,243 17,831 12,984 4,330
Inventory purchase obligations 183,300 176,447 6,853 - -
Other obligations 34,084 17,858 16,115 111 -
Total $ 549,772 $ 201,548 $ 40,799 $ 13,095 $ 294,330
Our planned capital expenditures as of March 31, 2022 were not material. Our
consolidated balance sheet at March 31, 2022 included $7.7 million in other
long-term liabilities for uncertain tax positions, some of which may result in
cash payment. The future payments related to uncertain tax positions recorded as
other long-term liabilities have not been presented in the table above due to
the uncertainty of the amounts and timing of cash settlement with the taxing
authorities.
Our primary sources of cash are cash receipts on accounts receivable from our
shipment of products to distributors and direct customers. Aside from the
amounts billed to our customers, net cash collections of accounts receivable are
impacted by the efficiency of our cash collections process, which can vary from
period to period depending on the payment cycles of our major distributor
customers, and relative linearity of shipments period-to-period. The June 23,
2021 Credit Agreement, under which we entered into a senior secured term B loan
facility and a revolving credit facility, permits us to request incremental
loans in an aggregate principal amount not to exceed the sum of an amount equal
to the greater of (x) $175.0 million and (y) 100% of "Consolidated EBITDA" (as
defined in such agreement), plus the amount of certain voluntary prepayments,
plus an unlimited amount that is subject to pro forma compliance with certain
first lien net leverage ratio, secured net leverage ratio and total net leverage
ratio tests.
Following is a summary of our working capital, cash and cash equivalents, and restricted cash for the periods indicated:
March 31, December 31,
2022 2021
(in thousands)
Working capital $ 219,781 $ 196,709
Cash and cash equivalents $ 151,111 $ 130,572
Short-term restricted cash 105 105
Long-term restricted cash 1,037 1,061
Total cash, cash equivalents, and restricted cash
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Following is a summary of our cash flows provided by (used in) operating
activities, investing activities and financing activities for the periods
indicated:
Three Months Ended March 31,
2022 2021
(in thousands)
Net cash provided by operating activities $ 134,166 $ 40,272
Net cash used in investing activities (42,762) (12,264)
Net cash used in financing activities (70,659) (28,817)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(230) (32)
Increase (decrease) in cash, cash equivalents and restricted cash
$
20,515
Cash Flows from Operating Activities
Net cash provided by operating activities was$134.2 million for the three months endedMarch 31, 2022 . Net cash provided by operating activities consisted of positive impact of net income of$33.6 million , non-cash items of$43.7 million , and changes in operating assets and liabilities of$57.1 million , partially offset by excess tax benefits and deferred income taxes totaling$0.3 million . Non-cash items included in net income for the three months endedMarch 31, 2022 primarily consisted of depreciation and amortization of property, equipment, acquired intangible assets and leased right-of-use assets of$23.9 million and stock-based compensation of$18.6 million . Net cash provided by operating activities was$40.3 million for the three months endedMarch 31, 2021 . Net cash used in operating activities consisted of the positive impact of non-cash items of$37.2 million and net income of$3.8 million , partially offset by the negative impact of deferred income taxes and excess tax benefits totaling$1.3 million and changes in operating assets and liabilities of$0.6 million . Non-cash items included in net income for the three months endedMarch 31, 2021 primarily consisted of depreciation and amortization of property, equipment, acquired intangible assets and leased right-of-use assets of$22.3 million and stock-based compensation of$13.0 million .
Cash Flows from Investing Activities
Net cash used in investing activities was$42.8 million for the three months endedMarch 31, 2022 and consisted of purchases of investments of$23.3 million , proceeds loaned under notes receivable of$10.0 million , purchases of property and equipment of$4.8 million and purchases of intangible assets of$4.6 million .
Net cash used in investing activities was
Cash Flows from Financing Activities
Net cash used in financing activities was$70.7 million for the three months endedMarch 31, 2022 . Net cash used in financing activities consisted primarily of common stock repurchases of$26.3 million , minimum tax withholding paid on behalf of employees for restricted stock units of$24.4 million , and repayments of debt of$20.0 million . Net cash used in financing activities was$28.8 million for the three months endedMarch 31, 2021 . Net cash used in financing activities consisted primarily of repayments of debt of$20.0 million , minimum tax withholding paid on behalf of employees for restricted stock units of$7.4 million , and common stock repurchases of$2.7 million , partially offset by net proceeds from issuance of common stock upon exercise of stock options of$1.3 million . 39
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We believe that our$151.1 million of cash and cash equivalents atMarch 31, 2022 will be sufficient to fund our projected operating requirements for at least the next twelve months. As ofMarch 31, 2022 , our indebtedness totaled$290.0 million , which consists of outstanding principal under the Initial Term Loan under theJune 23, 2021 Credit Agreement. TheJune 23, 2021 Credit Agreement also provides the Company with the Revolving Facility in an aggregate principal amount of up to$100.0 million . The Initial Term Loan under theJune 23, 2021 Credit Agreement has a seven-year term expiring inJune 2028 and bears interest, at the Company's option, at a per annum rate equal to either (i) a base rate equal to the highest of (x) the federal funds rate, plus 0.50%, (y) the prime rate then in effect and (z) an adjusted LIBOR rate determined on the basis of a one-month interest period plus 1.00%, in each case, plus an applicable margin of 1.25% or (ii) an adjusted LIBOR rate, subject to a floor of 0.50%, plus an applicable margin of 2.25%. Loans under the Revolving Facility initially bear interest, at a per annum rate equal to either (i) a base rate (as calculated above) plus an applicable margin of 0.00%, or (ii) an adjusted LIBOR rate (as calculated above) plus an applicable margin of 1.00%. Following delivery of financial statements for the Company's fiscal quarter endingJune 30, 2021 , the applicable margin for loans under the Revolving Facility will range from 0.00% to 0.75% in the case of base rate loans and 1.00% to 1.75% in the case of LIBOR rate loans, in each case, depending on the Company's secured net leverage ratio as of the most recently ended fiscal quarter. The Company is required to pay commitment fees ranging from 0.175% to 0.25% per annum on the daily undrawn commitments under the Revolving Facility, depending on the Company's secured net leverage ratio as of the most recently ended fiscal quarter. Commencing onSeptember 30, 2021 , the Initial Term Loan under theJune 23, 2021 Credit Agreement amortizes in equal quarterly installments equal to 0.25% of the original principal amount, with the balance payable at maturity onJune 23, 2028 . TheJune 23, 2021 Credit Agreement contains customary provisions specifying alternative interest rate calculations to be employed at such time as LIBOR ceases to be available as a benchmark for establishing the interest rate on floating interest rate borrowings. Our cash and cash equivalents in recent years have been favorably affected by our implementation of an equity-based bonus program for our employees, including executives. In connection with that bonus program, inFebruary 2022 , we issued 0.5 million freely-tradable shares of our common stock in settlement of bonus awards for the 2021 performance period. We expect to implement a similar equity-based plan for fiscal 2022, but our compensation committee retains discretion to effect payment in cash, stock, or a combination of cash and stock.
Warranties and Indemnifications
In connection with the sale of products in the ordinary course of business, we often make representations affirming, among other things, that our products do not infringe on the intellectual property rights of others, and agree to indemnify customers against third-party claims for such infringement. Further, our certificate of incorporation and bylaws require us to indemnify our officers and directors against any action that may arise out of their services in that capacity, and we have also entered into indemnification agreements with respect to all of our directors and certain controlling persons.
Off-Balance Sheet Arrangements
As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, or SPEs, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As ofMarch 31, 2022 , we were not involved in any unconsolidated SPE transactions.
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