NOVOCURE LIMITED

(NVCR)
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NOVOCURE LTD Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

04/28/2022 | 07:07am EDT
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is intended to provide information to assist you in better
understanding and evaluating our financial condition and results of operations.
We encourage you to read this MD&A in conjunction with our unaudited
consolidated financial statements and the notes thereto for the period ended
March 31, 2022 included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
This discussion contains forward-looking statements that involve risks and
uncertainties. Please refer to the information under the heading "Cautionary
Note Regarding Forward-Looking Statements" elsewhere in this report. References
to the words "we," "our," "us," and the "Company" in this report refer to
NovoCure Limited, including its consolidated subsidiaries.

Critical Accounting Policies and Estimates


In accordance with U.S. generally accepted accounting principles ("GAAP"), in
preparing our financial statements, we must make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities as of the date of the financial statements and
the reported amounts of net revenues and expenses during the reporting period.
We develop and periodically change these estimates and assumptions based on
historical experience and on various other factors that we believe are
reasonable under the circumstances. Actual results may differ from these
estimates.

The critical accounting policies requiring estimates, assumptions and judgments
that we believe have the most significant impact on our consolidated financial
statements can be found in our 2021 10-K. For additional information, see Note 1
to our unaudited consolidated financial statements in Part I, Item 1 of this
Quarterly Report. There were no other material changes to our critical
accounting policies and estimates as compared to the critical accounting
policies and estimates described in our 2021 10-K.

Overview


We are a global oncology company with a proprietary platform technology called
Tumor Treating Fields ("TTFields"), which are electric fields tuned to specific
frequencies that disrupt cancer cell division. Our key priorities are to drive
commercial adoption of Optune and Optune Lua, our commercial TTFields devices,
and to advance clinical and product development programs intended to extend
overall survival in some of the most aggressive forms of cancer.

Optune is approved by the U.S. Food and Drug Administration ("FDA") under the
Premarket Approval ("PMA") pathway for the treatment of adult patients with
newly diagnosed glioblastoma ("GBM") together with temozolomide, a chemotherapy
drug, and for adult patients with GBM following confirmed recurrence after
chemotherapy as monotherapy treatment. We also have a CE certificate to market
Optune for the treatment of GBM in the European Union ("EU"), as well as
approval or local registration in the United Kingdom ("UK"), Japan and certain
other countries. Optune Lua is approved by the FDA under the Humanitarian Device
Exemption ("HDE") pathway to treatment malignant pleural mesothelioma ("MPM")
together with standard chemotherapies. We have also received CE certification in
the EU and approval or local registration to market Optune Lua in certain other
countries. We market Optune and Optune Lua in multiple countries around the
globe with the majority of our revenues coming from the use of Optune in the
U.S., Germany and Japan. We are actively evaluating opportunities to expand our
international footprint.

We believe the physical mechanism of action behind TTFields therapy may be
broadly applicable to solid tumor cancers. Currently, we are conducting phase 3
pivotal studies evaluating the use of TTFields in non-small cell lung cancer
("NSCLC"), ovarian cancer, brain metastases from non-small cell lung cancer
("brain metastases") and pancreatic cancer. In 2021, we completed patient
enrollment in our phase 3 pivotal NSCLC and ovarian cancer studies with data
anticipated in 2022 and 2023, respectively. Additionally, we have multiple
ongoing phase 2 pilot studies evaluating the use of TTFields. These studies are
in gastric cancer, for which patient enrollment is complete, and stage 3 NSCLC,
as well as testing the potential incremental survival benefit of TTFields
delivered using high-intensity arrays versus standard arrays. We are also
currently conducting a global phase 4 post-marketing study testing the potential
survival benefit of initiating Optune concurrent with radiation therapy versus
following radiation therapy in patients with newly diagnosed GBM. We anticipate
expanding our clinical pipeline over time to study the safety and efficacy of
TTFields for additional solid tumor indications and combinations with other
cancer treatment modalities.


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In March 2022, we announced that an independent data monitoring committee
("DMC") conducted a pre-specified interim analysis for the phase 3 pivotal
INNOVATE-3 study for the treatment of platinum-resistant ovarian cancer. As part
of the interim analysis, the DMC reviewed the safety data for all enrolled
patients and completed an analysis of overall survival on the first 540 patients
randomized in the study. The interim analysis did not indicate a need to
increase the patient sample size and the DMC recommended that the study should
continue to final analysis as planned. The INNOVATE-3 study accrued 540 patients
as of October 2021 and data will be reviewed in 2023, following an 18 month
follow-up period.

The table below presents the current status of the ongoing clinical studies in our oncology pipeline and anticipated timing of final data.

[[Image Removed: nvcr-20220331_g1.jpg]]


Our therapy is delivered through a medical device and we continue to advance our
Products with the intention to extend survival and maintain quality of life for
patients. We have several product development programs underway that are
designed to optimize TTFields delivery to the target tumor and enhance patient
ease of use. Our intellectual property portfolio contains hundreds of issued
patents and numerous patent applications pending worldwide. We believe we
possess global commercialization rights to our Products in oncology and are
well-positioned to extend those rights into the future as we continue to find
innovative ways to improve our Products.

In 2018, we granted Zai Lab (Shanghai) Co., Ltd. ("Zai") a license to
commercialize Optune in China, Hong Kong, Macau and Taiwan ("Greater China")
under a License and Collaboration Agreement (the "Zai Agreement"). The Zai
Agreement also establishes a development partnership intended to accelerate the
development of TTFields in multiple solid tumor cancer indications. For
additional information, see Note 12 to the Consolidated Financial Statements in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2021 (the "2021 10-K").

We view our operations and manage our business in one operating segment. For the
three months ended March 31, 2022, our net revenues were $137.5 million. Our net
loss for the three months ended March 31, 2022 was $4.6 million. As of March 31,
2022, we had an accumulated deficit of $690.6 million. Our net loss resulted
primarily from net revenue growth which was more than offset by increasing
investments in sales and marketing initiatives that support our growing
commercial business, geographic expansion and pre-commercial activities
associated with potential future indication launches.

Impact of COVID-19


In March 2020, the World Health Organization ("WHO") declared COVID-19 a global
pandemic. Since the pandemic began, we have been following the guidance of the
WHO, the U.S. Centers for Disease Control and Prevention, and local health
authorities in all of our active markets and we have adjusted the way we conduct
business to adapt to
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the evolving situation. The COVID-19 pandemic did not have a material impact on
our financial results through the first quarter of 2022. The pandemic has had
and is having an impact on our day-to-day operations, which varies by region
based on factors such as geographical spread, stage of containment and
recurrence of the pandemic in each region. We believe the prolonged disruption
caused by COVID-19 is resulting in increased volatility across global health
care systems, such as fluctuations in patient volumes and changes in patterns of
care in certain regions, which is currently impacting and might continue to
impact our business and clinical studies in the future. For example, outside the
U.S., localized lockdowns are causing disruptions in the ability to monitor
clinical studies. In the first quarter of 2022 we were impacted by staff
disruptions and turnover internally and at treatment sites, clinical study sites
and third-party providers, either directly as a result of illness or indirectly
as a result of vaccine mandates and other changes in terms of employment.
TTFields is an emerging modality in cancer care and requires significant
educational effort to drive awareness and acceptance of our therapy. We have
relied heavily on virtual engagement to manage these educational efforts since
the onset of the pandemic, which poses challenges to our ability to effectively
communicate and engage with our customers and partners around the world.

Given the aggressive nature of the cancers that we treat, we believe that the
fundamental value proposition of the TTFields platform remains unchanged. We
continue to evaluate and plan for the potential effects of COVID-19 on our
business moving forward. The extent to which the COVID-19 pandemic may impact
our business and clinical studies in the future will depend on further
developments, which are highly uncertain and cannot be predicted with
confidence. The COVID-19 pandemic may also have the effect of heightening many
of the other risks described in our risk factors disclosed in our 2021 10-K.

Commentary on Results of Operations


Net revenues. Our revenues are primarily derived from patients using our
Products in our active markets. We charge for treatment with our Products on a
monthly basis. Our potential net revenues per patient are determined by our
ability to secure payment, the monthly fee we collect and the number of months
that the patient remains on therapy.

We also receive revenues pursuant to the Zai Agreement. For additional information regarding the Zai Agreement, see Note 12 to the Consolidated Financial Statements in our 2021 10-K.

Cost of revenues. We contract with third parties to manufacture our Products. Our cost of revenues is primarily comprised of the following:

•disposable arrays;

•depreciation expense for the field equipment, including the electric field generator used by patients; and

•personnel and overhead costs such as facilities, freight and depreciation of property, plant and equipment associated with managing our inventory, warehousing and order fulfillment functions.


Operating expenses. Our operating expenses consist of research, development and
clinical studies, sales and marketing and general and administrative expenses.
Personnel costs are a significant component for each category of operating
expenses and consist of wages, benefits and bonuses. Personnel costs also
include share-based compensation.

Financial expenses, net. Financial expenses, net primarily consists of credit
facility interest expense and related debt issuance costs, interest income from
cash balances and short-term investments and gains (losses) from foreign
currency transactions. Our reporting currency is the U.S. dollar. We have
historically held substantially all of our cash balances in U.S. dollar
denominated accounts to minimize the risk of translational currency exposure.


Results of Operations

The following discussion provides an analysis of our results of operations and
reasons for material changes therein for the three months ended March 31, 2022
as compared to the three months ended March 31, 2021. The tables contained in
this section report U.S. dollars in thousands (except share, patient, and
prescription data).
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The following table sets forth our consolidated statements of operations data:

                                                                            Three months ended
                                                                                March 31,
                                                                                      2022                   2021
                                                                                Unaudited
Net revenues                                                                    $     137,547          $     134,695
Cost of revenues                                                                       27,727                 26,385
Gross profit                                                                          109,820                108,310

Operating costs and expenses:
Research, development and clinical studies                                             42,234                 45,916
Sales and marketing                                                                    37,884                 31,357
General and administrative                                                             30,508                 31,125
Total operating costs and expenses                                                    110,626                108,398

Operating income (loss)                                                                  (806)                   (88)
Financial expenses (income), net                                                        1,709                  2,646

Income (loss) before income taxes                                                      (2,515)                (2,734)
Income taxes                                                                            2,132                  1,394
Net income (loss)                                                               $      (4,647)         $      (4,128)

Basic net income (loss) per ordinary share                                  

$ (0.04) $ (0.04) Weighted average number of ordinary shares used in computing basic net income (loss) per share

                                                       104,186,120            102,633,545
Diluted net income (loss) per ordinary share                                

$ (0.04) $ (0.04) Weighted average number of ordinary shares used in computing diluted net income (loss) per share

                                               104,186,120            102,633,545


The following table details the share-based compensation expense included in
costs and expenses:

                                                       Three months ended March 31,
                                                                                2022          2021
                                                                Unaudited
Cost of revenues                                                             $    952      $    733
Research, development and clinical studies                                      6,801         5,124
Sales and marketing                                                             6,655         4,471
General and administrative                                                     10,637         8,535
Total share-based compensation expense                                       $ 25,045      $ 18,863



Key performance indicators

We believe certain commercial operating statistics are useful to investors in evaluating our commercial business as they help our management team and investors evaluate and compare the adoption of our Products from period to period. The number of active patients on therapy is our principal revenue driver. An "active patient" is a patient who

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is receiving treatment under a commercial prescription order as of the
measurement date, including patients who may be on a temporary break from
treatment and who plan to resume treatment in less than 60 days. Prescriptions
are a leading indicator of demand. A "prescription received" is a commercial
order for Optune or Optune Lua that is received from a physician certified to
treat patients with our Products for a patient not previously on Optune or
Optune Lua. Orders to renew or extend treatment are not included in this total.

The following table includes certain commercial operating statistics for and as of the end of the periods presented.

                                         March 31,
Operating statistics               2022            2021
Active patients at period end
North America (1)                 2,257           2,183
EMEA:
Germany                             529             594
Other EMEA                          436             406
Japan                               327             271
Total                             3,549           3,454


                                              Three months ended March 31,
                                                                         2022        2021
Prescriptions received in period
North America (1)                                                         935         917
EMEA:
Germany                                                                   220         248
Other EMEA                                                                127         134
Japan                                                                     102         103
Total                                                                   1,384       1,402

(1) North America includes data for the United States and Canada for the first quarter of 2022 and the United States only for all other periods.

There were 10 active MPM patients on therapy as of March 31, 2022 and 9 MPM prescriptions were received in the three months ended March 31, 2022.


Three months ended March 31, 2022 compared to three months ended March 31, 2021

                            Three months ended March 31,
                                                       2022           2021         % Change
Net revenues                                        $ 137,547      $ 134,695            2  %


Net revenues. Net revenues increased 2% to $137.5 million for the three-month
period ended March 31, 2022 from $134.7 million for the same period in 2021. The
increase resulted primarily from an increase of 95 active patients in our
currently active markets, representing 3% growth. Additionally, for the quarter
ended March 31, 2022, net revenue per active patient per month was positively
impacted by increased collections for previously denied and appealed claims in
the U.S., offset by a negative impact in Germany following contract negotiations
with several large German payers. We continue to actively appeal and pursue
previously denied claims, but the cadence and size of these collections are
impossible to predict.

                                  Three months ended March 31,
                                                              2022          2021        % Change
Cost of revenues                                           $ 27,727      $ 26,385            5  %

Cost of revenues. Our cost of revenues increased by 5% to $27.7 million for the three months ended March 31, 2022 from $26.4 million for the same period in 2021. For the three month period, the increase in cost of revenues

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was primarily due to the cost of shipping transducer arrays to a higher volume
of commercial patients and increasing shipments of equipment to Zai Lab. We
continue to focus on opportunities to increase efficiencies and scale within our
supply chain. This includes evaluating new materials, manufacturers, and
processes that could lead to lower costs.

Gross margin was 80% for the three months ended March 31, 2022 and 80% for the
three months ended March 31, 2021. Excluding sales to Zai, cost of revenues per
active patient per month was $2,413 for the three months ended March 31, 2022,
virtually unchanged from $2,415 for the same period in 2021, with increasing
supply chain efficiencies offsetting the impact of broader economic challenges.
Cost of revenues per active patient is calculated by dividing the cost of
revenues for the quarter less equipment sales to Zai for the quarter by the
average of the active patients at the end of the prior quarter and the ending
active patients in the current quarter. This quarterly figure is then divided by
three to estimate the monthly cost of revenues per active patient. Sales to Zai
are deducted because they are sold at cost and in anticipation of future
royalties from Zai, and Zai patient counts are not included in our active
patient population. Product sales to Zai totaled $1.9 million for the three
months ended March 31, 2022 compared to $1.5 million for the three months ended
March 31, 2021.

Operating Expenses.

                                                                 Three months ended March
                                                                           31,
                                                                                 2022               2021              % Change
Research, development and clinical studies                                   $  42,234          $  45,916                    (8) %
Sales and marketing                                                             37,884             31,357                    21  %
General and administrative                                                      30,508             31,125                    (2) %
Total operating expenses                                                     $ 110,626          $ 108,398                     2  %


Research, development and clinical study expenses. Research, development and
clinical study expenses decreased 8% to $42.2 million for the three-month period
ended March 31, 2022 from $45.9 million in the same period in 2021, primarily
driven by a reduction in direct clinical study costs. Direct clinical study
costs historically represent approximately 30% of total research and development
expenses and can fluctuate quarter-to-quarter, dependent on the amount of
clinical research organization services delivered and clinical materials
procured within a given quarter.

Sales and marketing expenses. Sales and marketing expenses increased 21% to
$37.9 million for the three-month periods ended March 31, 2022 from $31.4
million for the same period in 2021. For the three month period, the change was
primarily due to an increase in market research and strategic planning
activities intended to enhance our commercial capabilities in anticipation of
potential future approvals in new indications, including NSCLC and ovarian
cancer. Additionally, we are investing in market access capabilities in order to
evaluate opportunities, identify optimal access pathways, and successfully gain
reimbursement in new geographies.

General and administrative expenses. General and administrative expenses decreased 2% to $30.5 million for the three months ended March 31, 2022 from $31.1 million for the same period in 2021. For the three month periods, the change was primarily due to a decrease in personnel costs.


                                                 Three months ended March 

31,

                                                                             2022         2021        % Change
Financial expenses (income), net                                           

$ 1,709 $ 2,646 (35) %



Financial expenses, net. Financial expenses decreased 35% to $1.7 for the three
months ended March 31, 2022 from $2.6 for the same period in 2021. For the three
month periods, the decrease was primarily due to increased interest income and
foreign exchange rate fluctuations.
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                            Three months ended March 31,
                                                        2022         2021        % Change
Income taxes                                          $ 2,132      $ 1,394           53  %


Income taxes. Income taxes increased by $0.7 million, or 53% to $2.1 million for
the three months ended March 31, 2022 compared to a tax expense of $1.4 million
for the same period in 2021. For the three months ended March 31, 2022 the
increase reflects a change in the mix of applicable statutory tax rates in
active jurisdictions.

Non-GAAP financial measures


We also measure our performance using a non-GAAP measurement of earnings before
interest, taxes, depreciation, amortization and shared-based compensation
("Adjusted EBITDA"). We believe Adjusted EBITDA is useful to investors in
evaluating our operating performance because it helps investors evaluate and
compare the results of our operations from period to period by removing the
impact of earnings attributable to our capital structure, tax rate and material
non-cash items, specifically share-based compensation.

We calculate Adjusted EBITDA as operating income before financial expenses and
income taxes, net of depreciation, amortization and share-based compensation.
The following table reconciles net income (loss), which is the most directly
comparable GAAP operating performance measure, to Adjusted EBITDA.

                                                                  Three months ended
                                                                       March 31,
                                                                               2022              2021              % Change
Net income (loss)                                                           $ (4,647)         $ (4,128)                   13  %
Add: Income tax                                                                2,132             1,394                    53  %
Add: Financial expenses (income), net                                          1,709             2,646                   (35) %
Add: Depreciation and amortization                                             2,610             2,370                    10  %
EBITDA                                                                      $  1,804          $  2,282                   (21) %
Add: Share-based compensation                                                 25,045            18,863                    33  %
Adjusted EBITDA                                                             $ 26,849          $ 21,145                    27  %


Adjusted EBITDA for the three months ended March 31, 2022 was $26.8 million. Net
income was roughly flat compared to the same period in 2021, which reflects an
increase in net revenue generated in the period, offset by investments in
research and development, sales and marketing, and other operational activities
intended to maximize future growth opportunities. Adjusted EBITDA increased by
27% from $21.1 million for the same period in 2021, which was primarily driven
by a change in the mix of cash and non-cash based expenses in the form of
share-based compensation.

Liquidity and Capital Resources

We have incurred significant losses and cumulative negative cash flows from operations since our founding in 2000. As of March 31, 2022, we had an accumulated deficit of $690.6 million. To date, we have primarily financed our operations through the issuance and sale of equity and the proceeds from long-term loans.


At March 31, 2022, we had $932.3 million in cash, cash equivalents and
short-term investments, a decrease of $5.4 million compared to $937.7 million at
December 31, 2021. We believe our cash, cash equivalents and short-term
investments as of March 31, 2022 are sufficient for our operations for at least
the next 12 months based on our existing business plan and our ability to
control the timing of significant expense commitments. We expect that our
research, development and clinical study expenses, sales and marketing expenses
and general and administrative expenses will continue to increase over the next
several years and may outpace our gross profit. As a result, we may need to
raise additional capital to fund our operations.
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The following summary of our cash flows for the periods indicated has been derived from our unaudited consolidated financial statements, which are included elsewhere in this Quarterly Report:


                                              Three months ended March 31,
                                                 2022               2021              Change              % Change
Net cash provided by (used in) operating
activities                                   $   (3,687)         $ 17,780          $ (21,467)                   (121) %
Net cash provided by (used in) investing
activities                                      (17,410)           54,171            (71,581)                   (132) %
Net cash provided by financing activities         3,141             7,955             (4,814)                    (61) %
Effect of exchange rate changes on cash and
cash equivalents                                    (25)             (102)                77                     (75) %
Net increase (decrease) in cash, cash
equivalents and restricted cash              $  (17,981)         $ 79,804          $ (97,785)                   (123) %


Operating activities. Net cash used in or provided by operating activities represents our net income (loss) for the periods presented, share-based compensation and depreciation and amortization. Operating cash flows are also impacted by changes in working capital.


Net cash provided by operating activities decreased by $21.5 million from $17.8
million net cash provided by operating activities for the three months ended
March 31, 2021 to $3.7 million net cash used in operating activities for the
three months ended March 31, 2022. This decrease was a result of net income
being roughly flat compared to the same period in 2021, with a $27.8 million
increase in working capital, including a $12.2 million decrease in accounts
payables and accrued expenses, $12.1 million increase in accounts receivables
and $3.5 million increase in inventories, partially offset by a $6.2 million
change in the mix from cash to non-cash based expenses.

Investing activities. Our investing activities consist primarily of investments in and redemptions of our short-term investments as well as investments in property and equipment.


Net cash used in investing activities was $17.4 million for the three months
ended March 31, 2022, compared to $54.2 million provided by investing activities
for the three months ended March 31, 2021. The net cash used in investing
activities for the three months ended March 31, 2022 was primarily attributable
to $12.3 million of net purchase of short-term investments, and the purchase of
$5.1 million of property and equipment. The net cash provided by investing
activities for the three months ended March 31, 2021 was primarily attributable
to $58.2 million of net proceeds from maturity of short-term investments,
partially offset by the purchase of $4.0 million of property and equipment.

Financing activities. To date, our primary financing activities have been the
sale of equity and the proceeds from long-term loans. Net cash provided by
financing activities was $3.1 million for the three months ended March 31, 2022,
as compared to $8.0 million provided by financing activities for the three
months ended March 31, 2021. The net cash provided by financing activities for
the three months ended March 31, 2022 and March 31, 2021 included proceeds from
the exercise of options under the Company's stock option plan.

Convertible Notes


On November 5, 2020, we issued $575.0 million aggregate principal amount of 0%
Convertible Senior Notes due 2025 (the "Notes"). The Notes are senior unsecured
obligations. The Notes do not bear regular interest, and the principal amount of
the Notes will not accrete. The Notes are convertible at an initial conversion
rate of 5.9439 ordinary shares per $1,000 principal amount of the Notes, which
is equivalent to an initial conversion price of approximately $168.24 per
ordinary share. The Notes are convertible at the option of the holders upon the
satisfaction of certain other conditions and during certain periods, and if the
Company exercises its right to redeem the Notes as permitted or required by the
indenture. On or after August 1, 2025 until the close of the business on the
business day immediately preceding the maturity date, holders may convert all or
any portion of their Notes at the conversion rate at any time irrespective of
the foregoing conditions.

In January 2021, we irrevocably elected to settle all conversions of Notes by a
combination of cash and our ordinary shares and that the cash portion per $1,000
principal amount of Notes for all conversion settlements shall be $1,000.
Accordingly, from and after the date of the election, upon conversion of any
Notes, holders of Notes will
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receive, with respect to each $1,000 principal amount of Notes converted, cash
in an amount up to $1,000 and the balance of the conversion value, if any, in
our ordinary shares

For more information, see Note 10a. to the Consolidated Financial Statements in the 2021 10-K.


Term loan credit facility

On November 6, 2020, we entered into a new three-year $150.0 million senior
secured revolving credit facility with a syndicate of relationship banks (the
"2020 Credit Facility"). We may, subject to certain conditions and limitations,
increase the revolving credit commitments outstanding under the 2020 Credit
Facility or incur new incremental term loans in an aggregate principal amount
not to exceed an additional $100.0 million.

The commitments under the 2020 Credit Facility are guaranteed by certain of our
subsidiaries and secured by a first lien on our and certain of our subsidiaries'
assets. Outstanding loans bear interest per annum at a sliding scale based on
the our secured leverage ratio from 2.75% to 3.25% above the applicable
interbank borrowing reference rate for the currency in which the loan is
denominated. Additionally, the 2020 Credit Facility contains a fee for the
unused revolving credit commitments at a sliding scale based on our secured
leverage ratio from 0.35% to 0.45%. The 2020 Credit Facility contains financial
covenants requiring maintenance of a minimum fixed charge coverage ratio and
specifying a maximum senior secured net leverage ratio, as well as customary
events of default which include a change of control. As of March 31, 2022, we
were in compliance with such covenants.

As of March 31, 2022, we had no outstanding balance borrowed under the 2020 Credit Facility.

Contractual Obligations and Commitments

There have been no material changes from the information disclosed in our 2021 10-K.

Off-Balance Sheet Arrangements


We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements as defined under U.S. Securities and Exchange
Commission ("SEC") rules.

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