SEMTECH CORPORATION The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with our interim unaudited condensed consolidated financial statements and the accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q (this "Quarterly Report"),"Risk Factors" and "Special Note Regarding Forward-Looking and Cautionary Statements" in this Quarterly Report.
Overview
Semtech Corporation (together with its consolidated subsidiaries, the "Company", "we", "our", or "us") designs, develops, manufactures and markets high-performance analog and mixed signal semiconductors and advanced algorithms. We account for results in two reportable segments-theHigh-Performance Analog Group and theSystem Protection Group .The High-Performance Analog Group is comprised of our Signal Integrity and Wireless and Sensing product lines, which represent two operating segments.The System Protection Group is comprised of our Protection product line, which represents a separate operating segment. Signal Integrity. We design, develop, manufacture and market a portfolio of optical data communications and video transport products used in a wide variety of infrastructure and industrial applications. Our comprehensive portfolio of integrated circuits ("ICs") for data centers, enterprise networks, passive optical networks ("PON"), and wireless base station optical transceivers and high-speed interfaces ranges from 100Mbps to 400Gbps and supports key industry standards such as Fibre Channel, Infiniband, Ethernet, PON and synchronous optical networks. Our video products offer advanced solutions for next generation high-definition broadcast applications, as well as highly differentiated video-over-IP technology for professional audio video applications. Wireless and Sensing. We design, develop, manufacture and market a portfolio of specialized radio frequency products used in a wide variety of industrial, medical and communications applications, and specialized sensing products used in industrial and consumer applications. Our wireless products, which include our LoRa® devices and wireless radio frequency technology, feature industry leading and longest range industrial, scientific and medical radio, enabling a lower total cost of ownership and increased reliability in all environments. These features make these products particularly suitable for machine to machine and Internet-of-Things ("IoT") applications. Our unique sensing technology enables proximity sensing and advanced user interface solutions for our mobile and consumer products. Our wireless and sensing products can be found in a broad range of applications in the industrial, medical, and consumer markets. We also design, develop, and market power product devices that control, alter, regulate, and condition the power within electronic systems focused on the LoRa and IoT infrastructure segment. The highest volume product types within this category are switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging. Protection. We design, develop, manufacture and market high-performance protection devices, which are often referred to as transient voltage suppressors ("TVS"). TVS devices provide protection for electronic systems where voltage spikes (called transients), such as electrostatic discharge, electrical over stress or secondary lightning surge energy, can permanently damage sensitive ICs. Our portfolio of protection solutions include filter and termination devices that are integrated with the TVS device. Our products provide robust protection while preserving signal integrity in high-speed communications, networking and video interfaces. These products also operate at very low voltage. Our protection products can be found in a broad range of applications including smart phones, LCD and organic light-emitting diode TVs and displays, set-top boxes, monitors and displays, tablets, computers, notebooks, base stations, routers, automobile and industrial systems.
Our interim unaudited condensed consolidated balance sheets are referred to herein as the "Balance Sheets" and interim unaudited condensed consolidated statements of income are referred to herein as the "Statements of Income."
Our net sales by product line were as follows:
Three Months Ended Nine Months Ended
October 30, October 31, October 30, October 31,
(in thousands) 2022 2021 2022 2021
Signal Integrity $ 76,705 $ 75,405 $ 243,362 $ 215,187
Wireless and Sensing 61,059 63,123 195,998 184,223
Protection 39,854 56,404 149,661 150,898
Total $ 177,618 $ 194,932 $ 589,021 $ 550,308 We design, develop and market a wide range of products for commercial applications, the majority of which are sold into the infrastructure, high-end consumer and industrial end markets.
Infrastructure: data centers, PON, base stations, optical networks, servers, carrier networks, switches and routers, cable modems, wireless local area network ("LAN") and other communication infrastructure equipment.
High-End Consumer: smartphones, tablets, wearables, desktops, notebooks, and
other handheld products, wireless charging, set-top boxes, digital televisions,
monitors and displays, digital video recorders and other consumer equipment.
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Industrial: IoT applications, analog and digital video broadcast equipment,
video-over-IP solutions, automated meter reading, smart grid, wireless charging,
medical, security systems, automotive, industrial and home automation and other
industrial equipment.
Our end customers are primarily original equipment manufacturers that produce and sell electronics.
Recent Developments
Proposed Transaction with Sierra Wireless, Inc.
Arrangement Agreement
OnAugust 2, 2022 , we entered into an Arrangement Agreement (the "Arrangement Agreement") with Sierra Wireless, Inc., a corporation existing under theCanada Business Corporations Act ("Sierra Wireless "), and 13548597Canada Inc. , a corporation formed under the Canada Business Corporations Act, and our wholly owned subsidiary ("Purchaser"), pursuant to which, among other things, Purchaser will acquire all of the issued and outstanding common shares of Sierra Wireless (the "Arrangement"). The Arrangement will be implemented by way of a plan of arrangement (the "Plan of Arrangement") in accordance with the Canada Business Corporations Act. On the terms and subject to the conditions of the Arrangement Agreement and the Plan of Arrangement, at the effective date of the Arrangement (the "Effective Date"), each common share of Sierra Wireless that is issued and outstanding immediately prior to the Effective Date will be transferred to the Purchaser in consideration for the right to receive$31.00 USD per share of Sierra Wireless' common shares, in an all-cash transaction representing total purchase consideration of approximately$1.2 billion . OnSeptember 27, 2022 , the securityholders of Sierra Wireless approved the Arrangement and onSeptember 29, 2022 , theSupreme Court of British Columbia issued its final order approving the Arrangement. In addition, onOctober 3, 2022 , we received a no action letter from theCanadian Competition Bureau satisfying the Competition Act approval condition to closing. The closing of the Arrangement remains subject to customary closing conditions, including: (i) receipt of applicable regulatory approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), from theU.S. Department of Justice (the "DOJ"); (ii) the absence of any law, injunction or other governmental order that prohibits the consummation of the Arrangement; and (iii) other customary closing conditions, including the accuracy of the other party's representations and warranties (subject to certain materiality qualifications), and each party's compliance with its covenants and agreements contained in the Arrangement Agreement. OnOctober 17, 2022 , Sierra Wireless and we each received a request for additional information and documentary material (commonly known as a "second request") from theDOJ in connection with the proposed transaction. The second requests were issued under notification requirements of the HSR Act. Issuance of the second requests extends the waiting period under the HSR Act until 30 days after Sierra Wireless and we have substantially complied with the second requests, unless that period is extended voluntarily by the parties or otherwise terminated by theDOJ . The parties are working to close the transaction as expeditiously as possible, within the timeframe initially provided under the Arrangement Agreement, which (inclusive of extensions) ends no later thanMarch 3, 2023 , unless extended further by mutual agreement of the parties. Until closing of the Arrangement, we and Sierra Wireless will remain separate independent companies.
Revolving Facility
OnSeptember 26, 2022 , we entered into the third amendment and restatement (the "Restatement Agreement") to that certain amended and restated credit agreement, dated as ofNovember 7, 2019 , by and among us, with certain of our domestic subsidiaries as guarantors, the lender party thereto andHSBC Bank USA, National Association , as administrative agent, swing line lender and letter of credit issuer (as amended or otherwise modified from time to time, the "Credit Agreement"), which substantially concurrently with the consummation of the Arrangement at the Effective Date will, among other things, (i) extend the maturity date of$405.0 million of the$600.0 million in aggregate principal amount of revolving commitments thereunder fromNovember 7, 2024 to the fifth anniversary of the Effective Date (subject to, in certain circumstances, an earlier springing maturity), (ii) provide for incurrence by us on the Effective Date of a new five-year term loan facility in an aggregate principal amount of$895.0 million , intended to be used to fund a portion of the cash consideration for the Arrangement and related fees and expenses, (iii) provide forJPMorgan Chase Bank, N.A . to succeedHSBC Bank USA, National Association as administrative agent and collateral agent under the Credit Agreement on the Effective Date, (iv) modify the maximum consolidated leverage covenant as set forth in the Restatement Agreement and (v) make certain other changes as set forth in the Restatement Agreement, including changes consequential to the incorporation of the new term loan facility. For additional information on the Restatement Agreement and Credit Agreement, see Note 9, Long-Term Debt to our interim unaudited condensed consolidated financial statements. 34 --------------------------------------------------------------------------------
Convertible Senior Notes
OnOctober 6, 2022 andOctober 21, 2022 , we issued and sold$300 million and$19.5 million , respectively, in aggregate principal amount of our 1.625% Convertible Senior Notes due 2027 (the "Notes") in a private placement. The Notes were issued pursuant to an indenture, datedOctober 12, 2022 , by and among us, the Subsidiary Guarantors (as defined below) party thereto andU.S. Bank Trust Company, National Association , as trustee. The Notes will be jointly and severally and fully and unconditionally guaranteed by each of our current and future direct and indirect wholly-owned domestic subsidiaries that guarantee our borrowings under the Credit Agreement. The Notes will bear interest at a rate of 1.625% per year, payable semi-annually in arrears onMay 1 andNovember 1 of each year, beginning onMay 1, 2023 . The Notes will mature onNovember 1, 2027 , unless earlier converted, redeemed or repurchased. The Notes were initially issued pursuant to an exemption from the registration requirements of the Securities Act, as amended (the "Securities Act"), afforded by Section 4(a)(2) of the Securities Act. For additional information on the Notes, see Note 9, Long-Term Debt to our interim unaudited condensed consolidated financial statements.
Debt Commitment Letter
In connection with the entry into the Arrangement Agreement, we entered into a commitment letter, dated as ofAugust 2, 2022 (the "Commitment Letter") withJPMorgan Chase Bank, N.A . ("JPM"), pursuant to which JPM has committed to provide (a) a backstop of certain amendments to our existing Credit Agreement (defined below) and (b) a 364-day bridge loan facility in the aggregate principal amount of$1.2 billion (the "Bridge Commitment"), subject to certain mandatory commitment reductions customary for a bridge loan facility. During the third quarter of fiscal year 2023, the amendments and restatement of the Credit Agreement and the issuance of the Notes occurred to replace the backstop commitment and the Bridge Commitment. For additional information on the Commitment Letter, see Note 9, Long-Term Debt to our interim unaudited condensed consolidated financial statements.
Divestiture
OnMay 3, 2022 , we completed the divestiture of our high reliability discrete diodes and assemblies business (the "Disposal Group ") toMicross Components, Inc. for$26.3 million , net of cash disposed, in an all-cash transaction. For additional information on the divestiture, see Note 2, Acquisition and Divestiture to our interim unaudited condensed consolidated financial statements.
Impact of COVID-19 and Macroeconomic Conditions
The COVID-19 pandemic has significantly affected health and economic conditions throughoutthe United States ("U.S.") and the rest of the world includingAsia , where a significant percentage of our customers, suppliers, third party foundries and subcontractors are located. As a result of the pandemic, certain of our facilities and the third-party foundries and assembly and test contractors to which we outsource our manufacturing functions, have had to periodically reduce or suspend operations. The disruption experienced during such closures has resulted in reduced production of our products, delays for delivery of our products to our customers, and reduced ability to receive supplies, which have had and may continue to have, individually and in the aggregate, an adverse effect on our results. Inventory levels increased slightly in the third quarter of fiscal year 2023 as the decrease in demand occurred faster than actions could be taken to reduce inventory spend. We expect to see supply constraints ease for some products in the fourth quarter of fiscal year 2023 due to changes in anticipated demand and other macroeconomic conditions. We will continue to take appropriate actions to align inventory levels with current macroeconomic conditions and customer demand profiles. In addition, the prices to obtain raw materials and convert them into the necessary inventory have increased in certain cases due to inflationary pressures and supply chain shortages and prices may continue to increase.
Factors Affecting Our Performance
Most of our sales to customers are made on the basis of individual customer purchase orders. Many customers include cancellation provisions in their purchase orders. We rely on orders received and shipped within the same quarter for a portion of our sales. Orders received and shipped in the third quarters of fiscal years 2023 and 2022 represented 23% and 3% of net sales, respectively. Macro conditions in which supply chain constraints caused an increase in advance orders resulted in fewer orders that were shipped and received in the same quarter for the third quarter of fiscal year 2022. Sales made directly to customers during the third quarters of fiscal years 2023 and 2022 were 17% and 12% of net sales, respectively. The remaining sales were made through independent distributors. Our business relies on foreign-based entities. Many of our third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located in foreign countries or territories includingTaiwan ,China andJapan . Foreign sales constituted approximately 86% and 90% of our net sales during the third quarters of fiscal years 2023 and 2022, respectively. Approximately 71% and 78% of our sales during the third quarters of fiscal years 2023 and 2022, respectively, were to customers located in theAsia-Pacific region . The remaining foreign sales were primarily to customers inEurope . Doing 35 --------------------------------------------------------------------------------
business in foreign locations also subjects us to export restrictions and trade laws, which may limit our ability to sell to certain customers.
We use several metrics as indicators of future potential growth. The indicators that we believe best correlate to potential future sales growth are design wins and new product releases. There are many factors that may cause a design win or new product release not to result in sales, including a customer's decision not to go to system production, a change in a customer's perspective regarding a product's value or a customer's product failing in the end market. As a result, although a design win or new product introduction is an important step towards generating future sales, it does not automatically result in us being awarded business or receiving a purchase commitment. Inflationary factors have not had a significant effect on our performance over the past several years. A significant increase in inflation would affect our future performance if we were unable to pass these higher costs on to our customers.
Results of Operations
The following table sets forth, for the periods indicated, our interim unaudited
condensed consolidated statements of income expressed as a percentage of net
sales.
Three Months Ended Nine Months Ended
October 30, 2022 October 31, 2021 October 30, 2022 October 31, 2021
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 34.9 % 36.5 % 35.2 % 37.5 %
Gross profit 65.1 % 63.5 % 64.8 % 62.5 %
Operating costs and expenses, net:
Selling, general and administrative 23.9 % 24.4 % 22.7 % 23.3 %
Product development and engineering 19.8 % 19.2 % 19.4 % 19.9 %
Intangible amortization 0.6 % 0.7 % 0.5 % 0.7 %
Gain on sale of business (0.2) % - % (3.1) % - %
Total operating costs and expenses, net 44.0 % 44.3 % 39.6 % 44.0 %
Operating income 21.0 % 19.2 % 25.2 % 18.5 %
Interest expense (5.1) % (0.6) % (1.9) % (0.7) %
Non-operating income, net 0.4 % 0.1 % 0.2 % 0.1 %
Investment impairments and credit loss reserves,
net - % (0.1) % 0.1 % (0.2) %
Income before taxes and equity in net (losses)
gains of equity method investments 16.4 % 18.5 % 23.5 % 17.8 %
Provision for income taxes 3.6 % 1.5 % 4.5 % 1.7 %
Net income before equity in net (losses) gains of
equity method investments 12.8 % 17.0 % 19.0 % 16.1 %
Equity in net (losses) gains of equity method
investments - % 0.7 % - % 0.4 %
Net income 12.8 % 17.7 % 19.1 % 16.5 %
Net loss attributable to noncontrolling interest - % - % - % - %
Net income attributable to common stockholders 12.8 % 17.7 % 19.1 % 16.5 %
Percentages may not add precisely due to
rounding.
Our regional mix of income (loss) before taxes and equity in net gains (losses) of equity method investments was as follows:
Three Months Ended Nine Months Ended
October 31, October 30, October 31,
(in thousands) October 30, 2022 2021 2022 2021
Domestic $ (52,087) $ (5,358) $ (39,084) $ (17,466)
Foreign 81,193 41,438 177,615 115,384
Total $ 29,106 $ 36,080 $ 138,531 $ 97,918 Domestic performance includes higher levels of share-based compensation compared to foreign operations.
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Comparison of the Three Months Ended
The following table summarizes our net sales by major end market:
Three Months Ended
(in thousands, except percentages) October 30, 2022 October 31, 2021
Net Sales % Net Sales Net Sales % Net Sales Change
Infrastructure $ 70,475 39 % $ 66,804 34 % 5 %
High-End Consumer 34,662 20 % 60,309 31 % (43) %
Industrial 72,481 41 % 67,819 35 % 7 %
Total $ 177,618 100 % $ 194,932 100 % (9) %
Net sales for the third quarter of fiscal year 2023 were $177.6 million , a
decrease of 8.9% compared to $194.9 million for the third quarter of fiscal year
2022. Net sales from our high-end consumer end market decreased $25.6 million
for the third quarter of fiscal year 2023 compared to the third quarter of
fiscal year 2022 primarily driven by an approximately $13 million decrease in
our proximity sensing products and an approximately $13 million decrease in TVS
consumer product sales. Net sales from our industrial end market increased $4.7
million during the third quarter of fiscal year 2023 versus the same period in
the prior year primarily due to an approximately $12 million increase in
LoRa-enabled product sales including an increase in pico gateways, partially
offset by approximately $4 million in sales from the Disposal Group in the prior
year period, which was divested in May 2022 , and an approximately $3 million
decrease in industrial automation and automotive sales. We experienced an
increase of $3.7 million in net sales from our infrastructure end market for the
third quarter of fiscal year 2023 compared to the third quarter of fiscal year
2022, primarily driven by an approximately $10 million increase in PON sales,
partially offset by an approximately $4 million decrease in Data Center sales
and an approximately $2 million decrease in 4G wireless sales.
Based on booking trends and our backlog entering the quarter, we estimate net
sales for the fourth quarter of fiscal year 2023 to be between $145.0 million
and $155.0 million . The range of guidance does not take into account the results
of Sierra Wireless and reflects continued uncertainty regarding macro-related
events and those associated with the COVID-19 pandemic discussed above.
The following table summarizes our net sales by reportable segment:
Three Months Ended
(in thousands, except percentages) October 30, 2022 October 31, 2021
Net Sales % Net Sales Net Sales % Net Sales Change
High-Performance Analog Group $ 137,764 78 % $ 138,528 71 % (1) %
System Protection Group 39,854 22 % 56,404 29 % (29) %
Total $ 177,618 100 % $ 194,932 100 % (9) %
Net sales from our High-Performance Analog Group decreased $0.8 million in the
third quarter of fiscal year 2023 compared to the third quarter of fiscal year
2022 primarily driven by an approximately $13 million decrease in proximity
sensing products, an approximately $4 million decrease in Data center sales,
approximately $4 million in sales from the Disposal Group in the prior year
period, which was divested in May 2022 , and an approximately $2 million decrease
in 4G wireless sales, partially offset by an approximately $12 million increase
in LoRa-enabled product sales, including an increase in pico gateways, and an
approximately $10 million increase in PON sales. Net sales from our System
Protection Group decreased $16.6 million in the third quarter of fiscal year
2023 compared to the third quarter of fiscal year 2022 primarily driven by an
approximately $13 million decrease in TVS consumer product sales and an
approximately $3 million decrease in industrial automation and automotive sales.
Gross Profit
The following table summarizes our gross profit and gross margin by reportable
segment:
Three Months Ended
(in thousands, except percentages) October 30, 2022 October 31, 2021
Gross Profit Gross Margin Gross Profit Gross Margin
High-Performance Analog Group $ 94,938 68.9 % $ 94,384 68.1 %
System Protection Group 21,484 53.9 % 29,836 52.9 %
Unallocated costs, including share-based compensation (853) (531)
Total $ 115,569 65.1 % $ 123,689 63.5 %
37-------------------------------------------------------------------------------- In the third quarter of fiscal year 2023, gross profit decreased$8.1 million to$115.6 million from$123.7 million in the third quarter of fiscal year 2022 as a result of lower sales. This decrease was primarily the result of an$8.4 million decrease from ourSystem Protection Group , which experienced lower consumer demand due to macro-economic conditions, partially offset by a$0.6 million increase from ourHigh-Performance Analog Group primarily driven by a favorable LoRa-enabled products mix. Our gross margin was 65.1% in the third quarter of fiscal year 2023, compared to 63.5% in the third quarter of fiscal year 2022. Gross margin in ourHigh-Performance Analog Group was 68.9% in the third quarter of fiscal year 2023, compared to 68.1% in the third quarter of fiscal year 2022, reflecting higher margins in LoRa-enabled products, as well as a favorable mix in 2.5G PON. Gross margin in ourSystem Protection Group was 53.9% in the third quarter of fiscal year 2023, compared to 52.9% in the third quarter of fiscal year 2022, reflecting a favorable industrial automation and automotive product mix. The majority of our manufacturing is outsourced, resulting in relatively low fixed manufacturing costs and variable costs that highly correlate with volume. For the fourth quarter of fiscal year 2023, we expect our gross margins to be in the range of 63.6% to 64.6%, and we expect overall gross profit for the fourth quarter of fiscal year 2023 to benefit from a favorable mix of high margin products.
Operating Costs and Expenses, net
Three Months Ended
(in thousands, except percentages) October 30, 2022 October 31, 2021 Change
Selling, general and administrative $ 42,366 54 % $ 47,621 55 % (11) %
Product development and engineering 35,161 45 % 37,346 43 % (6) %
Intangible amortization 1,000 1 % 1,298 2 % (23) %
Gain on sale of business (327) - % - - % 100 %
Total operating costs and expenses, net $ 78,200 100 % $ 86,265 100 % (9) %
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses decreased $5.3 million in
the third quarter of fiscal year 2023 compared to the third quarter of fiscal
year 2022 primarily as a result of an $11.2 million decrease in staffing-related
costs, which was driven by a $13.6 million decrease in share-based compensation
caused by the impact of the lower closing stock price as of period-end on the
cash-settled awards, and a $0.5 million decrease in legal expenses driven by
legal recoveries, partially offset by $4.8 million in transaction costs related
to the Arrangement Agreement and $2.1 million in restructuring expenses.
Product Development and Engineering Expenses
Product development and engineering expenses decreased$2.2 million in the third quarter of fiscal year 2023 compared to the third quarter of fiscal year 2022 primarily as a result of a$2.7 million decrease in staffing-related costs, including performance-based compensation, partially offset by a$0.6 million increase in depreciation expense.
Intangible Amortization
Intangible amortization was$1.0 million and$1.3 million for the third quarters of fiscal years 2023 and 2022, respectively. The decrease in the third quarter of fiscal year 2023 compared to the third quarter of fiscal year 2022 was primarily due to certain finite-lived intangible assets associated with the acquisition ofTrackio International AG , which became fully amortized during fiscal year 2022. Gain on Sale of Business
Gain on sale of business was
Interest Expense
Interest expense, including amortization of debt discounts and issuance costs, was$9.0 million and$1.2 million for the third quarters of fiscal years 2023 and 2022. The increase in the third quarter of fiscal year 2023 compared to the third quarter of fiscal year 2022 was primarily due to a$7.3 million debt commitment fee related to financing for the proposed acquisition of Sierra Wireless, as well as higher interest rates on the portion of our outstanding debt that was unhedged during the period.
Investment Impairments and Credit Loss Reserves, net
During the third quarter of fiscal year 2023, investment impairments and credit loss reserves, net totaled a loss of$0.03 million primarily due to adjustments to our reserve for our available-for-sale debt securities. During the third quarter of fiscal year 2022, investment impairments and credit loss reserves, net totaled a loss of$0.2 million due to adjustments to our reserve for our available-for-sale debt securities. 38 --------------------------------------------------------------------------------
Provision for Income Taxes
The effective tax rates for the third quarters of fiscal years 2023 and 2022 were provision rates of 21.7% and 8.4%, respectively. In the third quarter of fiscal year 2023, we recorded income tax expense of$6.3 million , compared to$3.0 million in the third quarter of fiscal year 2022. The increase to our effective tax rate for the third quarter of fiscal year 2023 compared to the third quarter of fiscal year 2022 was mainly due to an increase in global intangible low-taxed income ("GILTI"), driven by the capitalization of research and development ("R&D") costs as mandated by The Tax Cuts and Jobs Act and our divestiture of theDisposal Group inMay 2022 . The effective tax rates in the third quarters of fiscal years 2023 and 2022 differ from the statutory federal income tax rate of 21% primarily due to a regional mix of income, impact of GILTI and R&D tax credits. We have elected to treat GILTI as a period cost and the additional capitalization of R&D costs within GILTI increases our provision for income taxes. As a global organization, we are subject to audit by taxing authorities in various jurisdictions. To the extent that an audit, or the closure of a statute of limitations, results in adjusting our reserves for uncertain tax positions, our effective tax rate could experience extreme volatility since any adjustment would be recorded as a discrete item in the period of adjustment.
Comparison of the Nine Months Ended
The following table summarizes our net sales by major end market:
Nine Months Ended
(in thousands, except percentages) October 30, 2022 October 31, 2021
Net Sales % Net Sales Net Sales % Net Sales Change
Infrastructure $ 231,202 39 % $ 195,737 36 % 18 %
High-End Consumer 123,497 21 % 173,337 31 % (29) %
Industrial 234,322 40 % 181,234 33 % 29 %
Total $ 589,021 100 % $ 550,308 100 % 7 %
Net sales for the first nine months of fiscal year 2023 were $589.0 million , an
increase of 7.0% compared to $550.3 million for the first nine months of fiscal
year 2022. Net sales from our industrial end market increased $53.1 million for
the first nine months of fiscal year 2023 versus the same period in the prior
year primarily due to an approximately $54 million increase in LoRa-enabled
product sales including an increase in pico gateways. We experienced an increase
of $35.5 million in net sales from our infrastructure end market during the
first nine months of fiscal year 2023 compared to the first nine months of
fiscal year 2022, primarily driven by an approximately $37 million increase in
PON sales. Net sales from our high-end consumer end market decreased $49.8
million during the first nine months of fiscal year 2023 compared to the first
nine months of fiscal year 2022 primarily driven by an approximately $42 million
decrease in our proximity sensing products and an approximately $12 million
decrease in TVS consumer product sales.
The following table summarizes our net sales by reportable segment:
Nine Months Ended
(in thousands, except percentages) October 30, 2022 October 31, 2021
Net Sales % Net Sales Net Sales % Net Sales Change
High-Performance Analog Group $ 439,360 75 % $ 399,410 73 % 10 %
System Protection Group 149,661 25 % 150,898 27 % (1) %
Total $ 589,021 100 % $ 550,308 100 % 7 %
Net sales from our High-Performance Analog Group increased $40.0 million in the
first nine months of fiscal year 2023 compared to the first nine months of
fiscal year 2022 primarily driven by an approximately $54 million increase in
LoRa-enabled product sales, including an increase in pico gateways, and an
approximately $37 million increase in PON sales, partially offset by an
approximately $42 million decrease in proximity sensing sales, an approximately
$6 million decrease in sales from the Disposal Group , which was divested in May
2022 , and an approximately $5 million decrease in Data center sales. Net sales
from our System Protection Group decreased $1.2 million in the first nine months
of fiscal year 2023 compared to the first nine months of fiscal year 2022
primarily driven by an approximately $12 million decrease in TVS consumer
products, partially offset by an approximately $11 million increase in
industrial automation and automotive sales.
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The following table summarizes our gross profit and gross margin by reportable
segment:
Nine Months Ended
(in thousands, except percentages) October 30, 2022 October 31, 2021
Gross Profit Gross Margin Gross Profit Gross Margin
High-Performance Analog Group $ 304,223 69.2 % $ 268,816 67.3 %
System Protection Group 80,074 53.5 % 78,039 51.7 %
Unallocated costs, including share-based compensation (2,656)
(2,873)
Total $ 381,641 64.8 % $ 343,982 62.5 %
In the first nine months of fiscal year 2023, gross profit increased $37.7
million to $381.6 million from $344.0 million in the first nine months of fiscal
year 2022 mainly driven by a favorable mix in our LoRa-enabled products as well
as a favorable mix in our industrial automation and automotive products. This
increase included a $35.4 million increase from our High-Performance Analog
Group and a $2.0 million increase from our System Protection Group , both of
which implemented price increases to offset higher manufacturing costs during
the first nine months of fiscal year 2023.
Our gross margin was 64.8% in the first nine months of fiscal year 2023,
compared to 62.5% in the first nine months of fiscal year 2022. Gross margin in
our High-Performance Analog Group was 69.2% in the first nine months of fiscal
year 2023, compared to 67.3% in the first nine months of fiscal year 2022,
reflecting higher margins in LoRa-enabled products, as well as a favorable mix
in 10G PON. Gross margin in our System Protection Group was 53.5% in the first
nine months of fiscal year 2023, compared to 51.7% in the first nine months of
fiscal year 2022, reflecting a more favorable industrial automation and
automotive product mix.
Operating Costs and Expenses, net
Nine Months Ended
(in thousands, except percentages) October 30, 2022 October 31, 2021 Change
Selling, general and administrative $ 133,849 58 % $ 128,402 53 % 4 %
Product development and engineering 114,551 49 % 109,633 45 % 4 %
Intangible amortization 3,096 1 % 3,894 2 % (20) %
Gain on sale of business (18,313) (8) % - - % 100 %
Total operating costs and expenses, net $ 233,183 100 % $ 241,929 100 % (4) %
Selling, General and Administrative Expenses
SG&A expenses increased$5.4 million in the first nine months of fiscal year 2023 compared to the first nine months of fiscal year 2022 primarily as a result of$8.7 million in transaction costs related to the Arrangement Agreement,$2.1 million of restructuring expenses,$1.4 million of higher travel costs, a$1.0 million increase in outside sales commissions and$1.0 million of higher marketing costs, partially offset by an$8.5 million decrease in staffing-related costs, which was driven by a$13.3 million decrease in share-based compensation caused by the impact of the lower closing stock price as of period-end on the cash-settled awards.
Product Development and Engineering Expenses
Product development and engineering expenses increased$4.9 million in the first nine months of fiscal year 2023 compared to the first nine months of fiscal year 2022 primarily as a result of a$3.0 million increase in staffing-related costs, including performance-based compensation,$1.2 million of higher depreciation expense and a$0.4 million increase in new product introduction expenses. The levels of product development and engineering expenses reported in a fiscal period can be significantly impacted, and therefore experience period over period volatility, by the number of new product tape-outs and by the timing of recoveries from non-recurring engineering services, which are typically recorded as a reduction to product development and engineering expense.
Intangible Amortization
Intangible amortization was$3.1 million and$3.9 million for the first nine months of fiscal years 2023 and 2022, respectively. This decrease was primarily due to certain finite-lived intangible assets associated with the acquisition ofTrackio International AG , which became fully amortized during fiscal year 2022.
Gain on Sale of Business
Gain on sale of business was
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Interest expense, including amortization of debt discounts and issuance costs, was$11.5 million and$3.6 million for the first nine months of fiscal years 2023 and 2022, respectively. This increase was primarily due to a$7.3 million debt commitment fee related to financing for the proposed acquisition of Sierra Wireless, as well as higher interest rates on the portion of our outstanding debt that was unhedged during the period.
Investment Impairments and Credit Loss Reserves, net
During the first nine months of fiscal year 2023, investment impairments and credit loss reserves, net totaled a gain of$0.4 million primarily due to a recovery of credit loss reserve on one of our held-to-maturity debt securities. During the first nine months of 2022, investment impairments and credit loss reserves, net totaled a loss of$0.9 million due to adjustments to our credit loss reserve for our available-for-sale debt securities.
Provision for Income Taxes
The effective tax rates for the first nine months of fiscal years 2023 and 2022 were provision rates of 19.1% and 9.4%, respectively. In the first nine months of fiscal year 2023, we recorded income tax expense of$26.4 million , compared to$9.2 million in the first nine months of fiscal year 2022. The increase to our effective tax rate for the first nine months of fiscal year 2023 compared to the first nine months of fiscal year 2022 was mainly due to an increase in GILTI, driven by the capitalization of R&D costs as mandated by The Tax Cuts and Jobs Act and our divestiture of theDisposal Group inMay 2022 . The effective tax rates in the first nine months of fiscal years 2023 and 2022 differ from the statutory federal income tax rate of 21% primarily due to a regional mix of income, impact of GILTI and R&D tax credits.
Liquidity and Capital Resources
Our capital requirements depend on a variety of factors including, but not limited to, the rate of increase or decrease in our existing business base; the success, timing and amount of investment required to bring new products to market; sales growth or decline; potential acquisitions; the general economic environment in which we operate; and our ability to generate cash flow from operations, which are more uncertain as a result of the ongoing effect of the COVID-19 pandemic and its impact on the general economy. Our liquidity needs during this uncertain time will depend on multiple factors, including our ability to continue operations and production of our products, given the COVID-19 pandemic's direct and indirect effect on our customers, inflationary pressures, rising interest rates, the availability of sufficient amounts of financing and our operating performance. We believe that our cash on hand, cash available from future operations and available borrowing capacity under our Revolving Facility (as defined below) are sufficient to meet liquidity requirements for at least the next 12 months, including funds needed for our material cash requirements and to fund the portion of the purchase price of the Arrangement not being funded from other sources. As ofOctober 30, 2022 , we had$617.8 million in cash and cash equivalents and$450.0 million of undrawn capacity on our Revolving Facility. Over the longer-term, we believe our strong cash-generating business model will continue to provide adequate liquidity to fund our normal operations, which have minimal capital intensity. To the extent that we enter into acquisitions or strategic partnerships, we may be required to raise additional capital through debt issuances or equity offerings. While we have not had issues securing favorable financing historically, there is no assurance that we will be able to refinance or secure additional capital at favorable terms, or at all in the future. A meaningful portion of our capital resources, and the liquidity they represent, are held by our foreign subsidiaries. As ofOctober 30, 2022 , our foreign subsidiaries held approximately$283.9 million of cash and cash equivalents, compared to$221.9 million atJanuary 30, 2022 . Our liquidity may be impacted by fluctuating exchange rates. For additional information on exchange rates, see Item 3 - Quantitative and Qualitative Disclosures About Market Risk. We expect our future cash uses will be for capital expenditures, repurchases of our common stock, debt repayment and potentially, acquisitions (including the Arrangement) and other investments that support achievement of our business strategies. We expect to fund those cash requirements through our cash from operations and borrowings against our Revolving Facility.
Credit Agreement
OnNovember 7, 2019 , we, with certain of our domestic subsidiaries as guarantors, entered into the Credit Agreement. The Credit Agreement provides$600.0 million in borrowing capacity of revolving loans under the senior secured first lien revolving credit facility (the "Revolving Facility"). The Revolving Facility matures onNovember 7, 2024 . In the first nine months of fiscal year 2023, we borrowed$10.0 million and repaid$33.0 million on our Revolving Facility. In the first nine months of fiscal year 2022, we borrowed$20.0 million and repaid$24.0 million on our Revolving Facility. As ofOctober 30, 2022 , we had$150.0 million of outstanding borrowings against our Revolving Facility, which had$450.0 million of undrawn capacity.
The Credit Agreement provides that, subject to certain customary conditions, including obtaining commitments with respect thereto, we may request the establishment of one or more term loan facilities and/or increases to the revolving loans in a
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principal amount not to exceed (a) $300.0 million , plus (b) an unlimited amount,
so long as our consolidated leverage ratio, determined on a pro forma basis,
does not exceed 3.00 to 1.00. However, the lenders are not required to provide
such increase upon our request.
Interest on loans made under the Revolving Facility in U.S. Dollars accrues, at
our option, at a rate per annum equal to (1) the Base Rate (as defined below)
plus a margin ranging from 0.25% to 1.25% depending upon our consolidated
leverage ratio or (2) LIBOR (determined with respect to deposits in U.S.
Dollars) for an interest period to be selected by us plus a margin ranging from
1.25% to 2.25% depending upon our consolidated leverage ratio (such margin, the
"Applicable Margin"). The "Base Rate" is equal to a fluctuating rate equal to
the highest of (a) the prime rate of the administrative agent, (b) 0.50% above
the federal funds effective rate published by the Federal Reserve Bank of New
York and (c) one-month LIBOR (determined with respect to deposits in U.S.
Dollars), plus 1.00%. Interest on loans made under the Revolving Facility in
Alternative Currencies (as defined in the Credit Agreement) accrues at a rate
per annum equal to a customary benchmark rate for an interest period to be
selected by us plus the Applicable Margin.
In the first quarter of fiscal year 2021, we entered into an interest rate swap
agreement with a three-year term to hedge the variability of interest payments
on the first $150.0 million of debt outstanding under our Revolving Facility.
Interest payments on the first $150.0 million of debt outstanding under our
Revolving Facility were at a rate of 1.9775% during the third quarter of fiscal
year 2023. Based on our consolidated leverage ratio as of October 30, 2022 , the
rate will increase to 2.2275% during the fourth quarter of fiscal year 2023.
All of our obligations under the Credit Agreement are unconditionally guaranteed
by all of our direct and indirect domestic subsidiaries, other than certain
excluded subsidiaries, including, but not limited to, any domestic subsidiary
the primary assets of which consist of equity or debt of non-U.S. subsidiaries,
certain immaterial non-wholly-owned domestic subsidiaries and subsidiaries that
are prohibited from providing a guarantee under applicable law or that would
require governmental approval to provide such guarantee. We and the guarantors
have also pledged substantially all of their assets to secure their obligations
under the Credit Agreement.
No amortization is required with respect to the revolving loans and we may voluntarily prepay borrowings at any time and from time to time, without premium or penalty, other than customary "breakage costs" and fees for LIBOR-based loans.
The Credit Agreement as presently in effect contains customary covenants, including limitations on our ability to, among other things, incur indebtedness, create liens on assets, engage in certain fundamental corporate changes, make investments, repurchase stock, pay dividends or make similar distributions, engage in certain affiliate transactions, or enter into agreements that restrict our ability to create liens, pay dividends or make loan repayments. In addition, we must comply with financial covenants, including (a) maintaining a maximum consolidated leverage ratio, determined as of the last day of each fiscal quarter, of 3.50 to 1.00, provided that (i) such maximum consolidated leverage ratio will be increased to 4.00 to 1.00 for the four consecutive fiscal quarters ending following the consummation of a permitted acquisition that constitutes a "Material Acquisition" under the Credit Agreement, and (ii) such maximum consolidated leverage ratio will be increased to 4.75 to 1.00 for the four consecutive fiscal quarters ending following the consummation of the Arrangement, followed by 4.25 to 1.00 for the following two consecutive fiscal quarters, in each case subject to the satisfaction of certain conditions. and (b) maintaining a minimum consolidated interest coverage ratio, determined as of the last day of each fiscal quarter, of 3.50 to 1.00. However, the leverage financial covenant will be further modified, effective upon consummation of the Arrangement, in the manner set forth in the Restatement Agreement described below. As ofOctober 30, 2022 , we were in compliance with the financial covenants in our Credit Agreement. The Credit Agreement also contains customary provisions pertaining to events of default. If any event of default occurs, the obligations under the Credit Agreement may be declared due and payable, terminated upon written notice to us and existing letters of credit may be required to be cash collateralized. OnAugust 11, 2021 , we entered into an amendment to the Credit Agreement in order to, among other things, (i) provide for contractual fallback language for LIBOR replacement to reflect the Alternative Reference Rates Committee hardwired approach and (ii) incorporate certain provisions that clarify the rights of the administrative agent to recover from lenders or other secured parties erroneous payments made to such lenders or secured parties. OnSeptember 1, 2022 , we entered into the second amendment to the Credit Agreement in order to, among other things, (i) permit the consummation of, and certain transactions in connection with the Arrangement, (ii) revise the financial maintenance covenant by increasing the maximum consolidated leverage ratio permitted for the six successive fiscal quarters following consummation of the Arrangement (as set forth above), (iii) permit the incurrence of up to$1.2 billion (plus the amount of fees and expenses related to the Arrangement) in additional secured debt in connection with the Arrangement, (iv) provide for limited conditions precedent in the event of a borrowing to finance the Arrangement and (v) make certain other changes as set forth in the amendment.
As discussed above, on
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million of the $600.0 million in aggregate principal amount of revolving
commitments thereunder from November 7, 2024 to the fifth anniversary of the
Effective Date (subject to, in certain circumstances, an earlier springing
maturity), (ii) provide for incurrence by us on the Effective Date of a new
five-year term loan facility in an aggregate principal amount of $895.0 million ,
intended to be used to fund a portion of the cash consideration for the
Arrangement and related fees and expenses, (iii) provide for JPMorgan Chase
Bank, N.A . to succeed HSBC Bank USA, National Association as administrative
agent and collateral agent under the Credit Agreement on the Effective Date,
(iv) modify the maximum consolidated leverage covenant as set forth in the
Restatement Agreement such that the maximum consolidated leverage ratio will be
(1) 4.75 to 1.00 for the four consecutive full fiscal quarters ending following
the consummation of the Arrangement, (2) 4.50 to 1.00 for the fifth and sixth
full fiscal quarters ending following the consummation of the Arrangement and
(3) 3.75 to 1.00 thereafter, subject to increase to 4.25 to 1.00 for the four
full fiscal quarters following the consummation of a permitted acquisition that
constitutes a "Material Acquisition" under the Credit Agreement, and (v) make
certain other changes as set forth in the Restatement Agreement, including
changes consequential to the incorporation of the new term loan facility.
Convertible Senior Notes
As discussed above, onOctober 6, 2022 andOctober 21, 2022 , we issued and sold$300 million and$19.5 million , respectively, in aggregate principal amount of the Notes in a private placement. The Notes were issued pursuant to an indenture, datedOctober 12, 2022 , by and among us, the subsidiary guarantors party thereto (the "Subsidiary Guarantors") andU.S. Bank Trust Company, National Association , as trustee. The Notes will bear interest at a rate of 1.625% per year, payable semi-annually in arrears onMay 1 andNovember 1 of each year, beginning onMay 1, 2023 . The Notes will mature onNovember 1, 2027 , unless earlier converted, redeemed or repurchased. The Notes were initially issued pursuant to an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act. We used approximately$72.6 million of the net proceeds from the Notes to pay for the cost of the Convertible Note Hedge Transactions, after such cost was partially offset by approximately$42.9 million of proceeds to us from the sale of Warrants in connection with the issuance of the Notes, all as described in Note 9, Long-Term Debt to our interim unaudited condensed consolidated financial statements. The Convertible Note Hedge Transactions and Warrants transactions are indexed to, and potentially settled in, our common stock and the net cost of$29.7 million has been recorded as a reduction to additional paid-in capital in the consolidated statement of shareholders' equity. We intend to use the remaining net proceeds to fund a portion of the consideration in the Arrangement, if consummated, and to pay related fees and expenses. For additional information on the Convertible Note Hedge Transactions and the Warrants, see Note 9, Long-Term Debt to our interim unaudited condensed consolidated financial statements.
Debt Commitment Letter
In connection with the entry into the Arrangement Agreement, we entered into the Commitment Letter with JPM pursuant to which JPM has committed to provide (a) a backstop of certain amendments to our Credit Agreement and (b) the Bridge Commitment. During the third quarter of fiscal year 2023, the amendments and restatement of the Credit Agreement and the issuance of the Notes occurred to replace the backstop commitment and the Bridge Commitment. For additional information on the Commitment Letter, see Note 9, Long-Term Debt to our interim unaudited condensed consolidated financial statements.
Capital Expenditures and Research and Development
We incur significant expenditures in order to fund the development, design and manufacture of new products. We intend to continue to focus on those areas that have shown potential for viable and profitable market opportunities, which may require additional investment in equipment and the hiring of additional design and application engineers aimed at developing new products. Certain of these expenditures, particularly the addition of design engineers, do not generate significant payback in the short-term. We plan to finance these expenditures with cash generated by our operations and our existing cash balances.
Purchases under our Stock Repurchase Program
We currently have in effect a stock repurchase program that was initially approved by our Board of Directors inMarch 2008 . OnMarch 11, 2021 , our Board of Directors approved the expansion of the stock repurchase program by an additional$350.0 million . This program represents one of our principal efforts to return value to our stockholders. Under the program, we may repurchase our common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations. Our repurchases may be made through Rule 10b5-1 and/or Rule 10b-18 or other trading plans, open market purchases, privately negotiated transactions, block purchases or other transactions. We repurchased 762,093 shares of our common stock under this program in the first nine months of fiscal year 2023 for$50.0 million . In the first nine months of fiscal year 2022, we repurchased 1,387,624 shares under this program for$97.0 million . As ofOctober 30, 2022 , the remaining authorization under this program was$209.4 million . We intend to fund repurchases under the program from cash on hand and borrowings on our Revolving Facility. We have no obligation to repurchase any shares under the program and may suspend or discontinue it at any time. 43 --------------------------------------------------------------------------------
Working Capital
Working capital, defined as total current assets less total current liabilities, fluctuates depending on end-market demand and our effective management of certain items such as receivables, inventory and payables. In times of escalating demand, our working capital requirements may increase as we purchase additional manufacturing materials and increase production. In addition, our working capital may be affected by potential acquisitions and transactions involving our debt instruments. Although investments made to fund working capital will reduce our cash balances, these investments are necessary to support business and operating initiatives. Our working capital, excluding cash and cash equivalents, was$77.3 million and$94.3 million as ofOctober 30, 2022 andJanuary 30, 2022 , respectively. Our working capital, including cash and cash equivalents, was$695.1 million and$373.9 million as ofOctober 30, 2022 andJanuary 30, 2022 , respectively.
Other than as disclosed above, there have been no material changes to our cash requirements from those disclosed in our Annual Report on Form 10-K.
Cash Flows
One of our primary goals is to continually improve the cash flows from our existing operating activities. Additionally, we will continue to seek to maintain and improve our existing business performance with capital expenditures and, potentially, acquisitions and other investments that support achievement of our business strategies. Acquisitions may be made for either cash or stock consideration, or a combination of both.
In summary, our cash flows for each period were as follows:
Nine Months Ended
October 30, October 31,
(in thousands) 2022 2021
Net cash provided by operating activities $ 145,510 $ 152,137
Net cash used in investing activities (761) (29,831)
Net cash provided by (used in) financing activities 193,451 (114,598)
Net increase in cash and cash equivalents $ 338,200 $ 7,708
Operating Activities
Net cash provided by operating activities is driven by net income adjusted for non-cash items and fluctuations in operating assets and liabilities.
Operating cash flows for the first nine months of fiscal year 2023 compared to the first nine months of fiscal year 2022 were unfavorably impacted by a$7.3 million debt commitment fee and favorably impacted by a 7.0% increase in net sales and by a$14.2 million incremental decrease in inventory spend.
Investing Activities
Net cash used in investing activities is primarily attributable to capital expenditures, purchases of investments and premiums paid for corporate-owned life insurance, offset by proceeds from the divestiture of theDisposal Group , proceeds from corporate-owned life insurance and proceeds from sales of investments.
In the first nine months of fiscal year 2023, we received
Capital expenditures were$22.6 million for the first nine months of fiscal year 2023, compared to$18.1 million for the first nine months of fiscal year 2022. In the first nine months of fiscal years 2023 and 2022, we made significant investments to update and expand our production capabilities. In the first nine months of fiscal year 2023, we paid$6.7 million for strategic investments, including investments in companies that are enabling the LoRa and LoRaWAN-based ecosystem, compared to$5.8 million of investments in the first nine months of fiscal year 2022. In the first nine months of fiscal year 2023, we received$5.1 million of proceeds from corporate-owned life insurance death benefits, which included a$2.5 million gain. All$5.1 million of the proceeds were re-invested into our corporate-owned life insurance policy in order to provide substantive coverage for our deferred compensation liability. In the first nine months of fiscal year 2022, we paid$6.0 million for premiums on corporate-owned life insurance policy in order to provide substantive coverage for our deferred compensation liability. 44 --------------------------------------------------------------------------------
Financing Activities
Net cash provided by financing activities is primarily attributable to proceeds from the Notes, our Revolving Facility, sale of the Warrants and stock option exercises, offset by the purchase of the convertible note hedge, repurchases of outstanding common stock, payments on our Revolving Facility, deferred financing costs and payments related to employee share-based compensation payroll taxes. In the first nine months of fiscal year 2023, we paid$13.8 million for employee share-based compensation payroll taxes and received$0.6 million in proceeds from the exercise of stock options, compared to payments of$17.9 million for employee share-based compensation payroll taxes and proceeds of$4.3 million from the exercise of stock options in the first nine months of fiscal year 2022. We do not directly control the timing of the exercise of stock options. Such exercises are independent decisions made by grantees and are influenced most directly by the stock price and the expiration dates of stock option awards. Such proceeds are difficult to forecast, resulting from several factors that are outside our control. We believe that such proceeds will remain a nominal source of cash in the future. Critical Accounting Estimates Our critical accounting estimates are disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Item 7 of our Annual Report on Form 10-K. There have been no significant changes to our policies during the nine months endedOctober 30, 2022 . For a discussion of recent accounting pronouncements, see Note 1, Organization and Basis of Presentation to our interim unaudited condensed consolidated financial statements.
Available Information
General information about us can be found on our website at www.semtech.com. The information on our website is for informational purposes only and should not be relied on for investment purposes. The information on our website is not incorporated by reference into this Quarterly Report and should not be considered part of this or any other report filed with theSEC . We make available free of charge, either by direct access on our website or by a link to theSEC website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or as soon as reasonably practicable after such reports are electronically filed with, or furnished to, theSEC . Our reports filed with, or furnished to, theSEC are also available directly at theSEC's website at www.sec.gov.
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