10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to .

Commission file number 000-49602

SYNAPTICS INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware

77-0118518

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1109 McKay Drive

San Jose, California 95131

(Address of principal executive offices) (Zip code)

(408) 904-1100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $.001 per share

SYNA

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of November 2, 2023, the Company had 39,199,945 shares of Common Stock outstanding.

 

 


 

SYNAPTICS INCORPORATED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS

Page

Part I. Financial Information

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited):

 

 

 

 

 

Condensed Consolidated Balance Sheets—September 30, 2023 and June 24, 2023

3

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations—Three Months Ended September 30, 2023 and September 24, 2022

 

4

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive (Loss) Income—Three Months Ended September 30, 2023 and September 24, 2022

 

5

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity—Three Months Ended September 30, 2023 and September 24, 2022

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows—Three Months Ended

September 30, 2023 and September 24, 2022

8

 

 

 

 

Notes to Condensed Consolidated Financial Statements

9

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32

 

 

 

 

Item 4.

Controls and Procedures

32

 

 

Part II. Other Information

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

33

 

 

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

33

 

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46

 

 

 

 

Item 6.

Exhibits

47

 

 

 

 

 

 

 

Signatures

48

 

 

 

 


 

PART I—FINANCIAL INFORMATION

 

 

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except par value and share amounts)

(unaudited)

 

 

September

 

 

June

 

 

 

2023

 

 

2023

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

801.3

 

 

$

924.7

 

Short-term investments

 

 

23.1

 

 

 

9.6

 

Accounts receivable, net

 

 

111.2

 

 

 

163.9

 

Inventories, net

 

131.7

 

 

 

137.2

 

Prepaid expenses and other current assets

 

 

41.3

 

 

 

36.6

 

Total current assets

 

 

1,108.6

 

 

 

1,272.0

 

Property and equipment, net

 

 

67.4

 

 

 

66.4

 

Goodwill

 

 

816.4

 

 

 

816.4

 

Acquired intangibles, net

 

 

288.7

 

 

 

298.5

 

Right-of-use assets

 

 

47.8

 

 

 

49.0

 

Non-current other assets

 

 

219.8

 

 

 

109.1

 

 

$

2,548.7

 

 

$

2,611.4

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

63.9

 

 

$

45.8

 

Accrued compensation

 

 

23.5

 

 

 

45.9

 

Income taxes payable

 

 

49.1

 

 

 

54.0

 

Other accrued liabilities

 

 

103.0

 

 

 

108.4

 

Current portion of long-term debt

 

 

6.0

 

 

 

6.0

 

Total current liabilities

 

 

245.5

 

 

 

260.1

 

Long-term debt

 

 

969.6

 

 

 

972.0

 

Other long-term liabilities

 

 

129.3

 

 

 

135.9

 

Total liabilities

 

1,344.4

 

 

 

1,368.0

 

Stockholders' Equity:

 

 

 

 

 

 

Preferred stock:

 

 

 

 

 

 

$0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

$0.001 par value; 120,000,000 shares authorized, 69,299,794 and 68,687,511 shares issued,
39,183,355 and 38,571,072 shares outstanding, at September 2023 and June 2023, respectively

 

0.1

 

 

 

0.1

 

Additional paid-in capital

 

 

1,025.6

 

 

 

1,009.2

 

Treasury stock: 30,116,439 common shares at September 2023 and June 2023, at cost

 

 

(878.0

)

 

 

(878.0

)

Accumulated other comprehensive loss

 

 

0.1

 

 

 

 

Retained earnings

 

 

1,056.5

 

 

 

1,112.1

 

Total stockholders' equity

 

 

1,204.3

 

 

 

1,243.4

 

 

 

$

2,548.7

 

 

$

2,611.4

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

3


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

 

September

 

 

 

2023

 

 

2022

 

Net revenue

 

$

237.7

 

 

$

448.1

 

Cost of revenue

 

 

130.6

 

 

 

192.4

 

Gross margin

 

 

107.1

 

 

 

255.7

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

86.5

 

 

 

89.5

 

Selling, general, and administrative

 

 

42.3

 

 

 

44.7

 

Acquired intangibles amortization

 

5.5

 

 

 

9.5

 

Restructuring costs

 

 

8.0

 

 

 

 

Total operating expenses

 

 

142.3

 

 

 

143.7

 

Operating (loss) income

 

 

(35.2

)

 

 

112.0

 

Interest and other expense, net

 

 

(5.4

)

 

 

(8.3

)

(Loss) income before provision for income taxes

 

 

(40.6

)

 

 

103.7

 

Provision for income taxes

 

 

15.0

 

 

 

39.1

 

Net (loss) income

 

$

(55.6

)

 

$

64.6

 

Net (loss) income per share:

 

 

 

 

 

 

Basic

 

$

(1.43

)

 

$

1.62

 

Diluted

 

$

(1.43

)

 

$

1.59

 

Shares used in computing net (loss) income :

 

 

 

 

 

 

Basic

 

 

38.8

 

 

 

39.8

 

Diluted

 

 

38.8

 

 

 

40.7

 

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

4


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in millions)

(unaudited)

 

 

 

 

Three Months Ended

 

 

 

September

 

 

 

2023

 

 

2022

 

Net (loss) income

 

$

(55.6

)

 

$

64.6

 

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

Unrealized income (loss) on available-for-sale-securities

 

 

0.1

 

 

 

(0.1

)

Comprehensive (loss) income

 

$

(55.5

)

 

$

64.5

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

5


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Treasury Stock

 

 

Accumulated Other Comprehensive Income

 

 

Retained Earnings

 

 

Total Stockholders' Equity

 

Balance at June 2023

 

 

68,687,511

 

 

$

0.1

 

 

$

1,009.2

 

 

$

(878.0

)

 

$

 

 

$

1,112.1

 

 

$

1,243.4

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55.6

)

 

 

(55.6

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

0.1

 

Issuance of common stock for share-based award compensation plans

 

 

612,283

 

 

 

 

 

 

8.5

 

 

 

 

 

 

 

 

 

 

 

 

8.5

 

Payroll taxes related to net share settlement of share-based awards

 

 

 

 

 

 

 

 

(25.3

)

 

 

 

 

 

 

 

 

 

 

 

(25.3

)

Share-based compensation

 

 

 

 

 

 

 

 

33.2

 

 

 

 

 

 

 

 

 

 

 

 

33.2

 

Balance at September 2023

 

 

69,299,794

 

 

$

0.1

 

 

$

1,025.6

 

 

$

(878.0

)

 

$

0.1

 

 

$

1,056.5

 

 

$

1,204.3

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

6


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Treasury Stock

 

 

Accumulated Other Comprehensive Loss

 

 

Retained Earnings

 

 

Total Stockholders' Equity

 

Balance at June 2022

 

 

67,745,800

 

 

$

0.1

 

 

$

924.1

 

 

$

(694.5

)

 

$

(1.8

)

 

$

1,038.5

 

 

$

1,266.4

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64.6

 

 

 

64.6

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

 

 

 

(0.1

)

Issuance of common stock for share-based award compensation plans

 

 

483,713

 

 

 

 

 

 

8.5

 

 

 

 

 

 

 

 

 

 

 

 

8.5

 

Payroll taxes related to net share settlement of share-based awards

 

 

 

 

 

 

 

 

(31.4

)

 

 

 

 

 

 

 

 

 

 

 

(31.4

)

Common stock repurchased

 

 

 

 

 

 

 

 

 

 

 

(13.4

)

 

 

 

 

 

 

 

 

(13.4

)

Share-based compensation

 

 

 

 

 

 

 

 

30.5

 

 

 

 

 

 

 

 

 

 

 

 

30.5

 

Balance at September 2022

 

 

68,229,513

 

 

$

0.1

 

 

$

931.7

 

 

$

(707.9

)

 

$

(1.9

)

 

$

1,103.1

 

 

$

1,325.1

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

7


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

 

 

 

Three Months Ended

 

 

 

September

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net (loss) income

 

$

(55.6

)

 

$

64.6

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Share-based compensation costs

 

33.2

 

 

 

30.5

 

Depreciation and amortization

 

7.2

 

 

 

6.2

 

Acquired intangibles amortization

 

23.3

 

 

 

33.0

 

Deferred taxes

 

 

(1.1

)

 

 

5.9

 

Other

 

 

12.6

 

 

 

5.1

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable, net

 

 

53.6

 

 

 

37.7

 

Inventories

 

 

(6.8

)

 

 

(9.7

)

Prepaid expenses and other current assets

 

 

(4.8

)

 

 

(3.2

)

Other assets

 

 

0.9

 

 

 

3.1

 

Accounts payable

 

 

16.7

 

 

 

(17.6

)

Accrued compensation

 

 

(22.0

)

 

 

(38.2

)

Income taxes payable

 

 

(6.6

)

 

 

(18.9

)

Other accrued liabilities

 

 

(5.2

)

 

 

(20.0

)

Net cash provided by operating activities

 

45.4

 

 

 

78.5

 

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from maturity of investments

 

 

3.2

 

 

 

7.7

 

Purchases of short-term investments

 

 

(16.6

)

 

 

 

Purchases of property and equipment

 

 

(6.7

)

 

 

(6.2

)

Purchase of intangible assets

 

 

(13.5

)

 

 

 

Advance payment on intangible assets

 

 

(116.5

)

 

 

 

Other

 

 

 

 

 

0.8

 

Net cash provided by (used in) investing activities

 

 

(150.1

)

 

 

2.3

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuance of shares

 

 

8.5

 

 

 

8.5

 

Payroll taxes related to net share settlement of share-based awards

 

 

(25.3

)

 

 

(31.4

)

Repurchases of common stock

 

 

 

 

 

(13.4

)

Repayment of debt

 

 

(3.0

)

 

 

(1.5

)

Other

 

 

1.7

 

 

 

2.8

 

Net cash used in financing activities

 

 

(18.1

)

 

 

(35.0

)

Effect of exchange rate changes on cash and cash equivalents

 

(0.6

)

 

 

(2.0

)

Net increase (decrease) in cash and cash equivalents

 

 

(123.4

)

 

 

43.8

 

Cash and cash equivalents, beginning of period

 

 

924.7

 

 

 

824.0

 

Cash and cash equivalents, end of period

 

$

801.3

 

 

$

867.8

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

8


SYNAPTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

 

1. Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, and United States generally accepted accounting principles, or U.S. GAAP. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to SEC rules and regulations. In our opinion, the financial statements include all adjustments, which are of a normal and recurring nature and necessary for the fair presentation of the results of the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future period. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended June 24, 2023.

The condensed consolidated financial statements include our financial statements and those of our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation. Certain reclassifications have been made to the amounts for prior years in order to conform to the current year’s presentation.

Our fiscal year is the 52- or 53-week period ending on the last Saturday in June. Our fiscal 2024 is a 53-week period ending June 29, 2024, and our fiscal 2023 was a 52-week period ending on June 24, 2023. The fiscal periods presented in this report are 14-week and 13-week periods for the three months ended September 30, 2023 and September 24, 2022, respectively. For simplicity, the accompanying condensed consolidated financial statements have been shown as ending on calendar quarter end dates as of and for all periods presented, unless otherwise indicated.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates including, but not limited to, those estimates related to revenue recognition, allowance for credit losses, cost of revenue, inventories, loss on purchase commitments, product warranty, accrued liabilities, share-based compensation costs, provision for income taxes, deferred tax assets and the associated valuation allowance, uncertain tax positions, goodwill, intangible assets, investments and loss contingencies. We base our estimates on historical experience, current period developments, applicable laws and regulations, and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Prepayment of Intangible Assets and Asset Acquisition

During the first quarter of fiscal 2024, we entered into an amendment to our wireless license agreement with Avago Technologies (“Broadcom”), to license four developed technology products and to extend the exclusivity period of certain developed technologies that were previously licensed from Broadcom in July 2020. As of September 2023, we have not obtained control of the four technology products and, accordingly, the relative fair value of these technology products are presented as a non-current asset in our condensed consolidated balance sheet.

The technologies included in the agreement do not constitute a business and, as such, we accounted for this transaction as an acquisition of an asset in accordance with the applicable guidance when we receive control of the developed technology. Refer to “Note 4. Prepayment of Intangible Assets and Asset Acquisition” for further discussion of the transaction.

Accounting Pronouncements Recently Adopted

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities” which improves comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination by providing consistent recognition guidance. This standard is effective for fiscal years beginning after December 15, 2022. We adopted this standard in the first quarter of our fiscal 2024 and it did not have any impact on our consolidated financial statements.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. We early adopted this standard in the first quarter of fiscal 2024 and it did not have any impact on our consolidated financial statements.

9


SYNAPTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

2. Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services. Most of our revenue, except an inconsequential amount, is recognized at a point in time, either on shipment or delivery of the product, depending on customer terms and conditions.

Rights to our intellectual property, or IP, are either sold or licensed to customers. Revenue recognition from the licensing of our IP is dependent on the nature and terms of each agreement. We recognize revenue from the licensing of our IP upon delivery of the IP if there are no substantive future obligations to perform under the arrangement. Sales-based or usage-based royalties from the license of IP are recognized at the later of the period the sale or usage occurs, or the satisfaction of the performance obligation to which some or all of the sales-based or usage-based royalties have been allocated.

Our accounts receivable balance is from contracts with customers and represents our unconditional right to receive consideration from customers. To date, there have been no material credit loss charges recorded on accounts receivable. As of September 2023, and June 2023, contract assets recorded on our condensed consolidated balance sheets were $8.2 million and $1.3, respectively. Contract assets are presented as part of prepaid expenses and other current assets.

Contract liabilities and refund liabilities were $18.7 million and $37.2 million, respectively, as of September 2023, and $18.7 million and $39.8 million, respectively, as of June 2023. Both contract liabilities and refund liabilities are presented as customer obligations in Note 10 Balance Sheet Components. During the three months ended September 2023 and September 2022, we recognized $2.4 million and $1.8 million, respectively, in revenue related to contract liabilities, which was outstanding as of the beginning of such fiscal year.

Revenue from contracts with customers disaggregated by geographic area based on customer location and product category is presented in Note 15. Segment, Customers, and Geographical Information.

 

3. Net Income Per Share

The computation of basic and diluted net income per share was as follows (in millions, except per share data):

 

 

Three Months Ended

 

 

 

September

 

 

 

2023

 

 

2022

 

Numerator:

 

 

 

 

 

 

Net (loss) income

 

$

(55.6

)

 

$

64.6

 

Denominator:

 

 

 

 

 

 

Shares, basic

 

 

38.8

 

 

 

39.8

 

Effect of dilutive share-based awards and convertible notes

 

 

-

 

 

 

0.9

 

Shares, diluted

 

 

38.8

 

 

 

40.7

 

Net (loss) income per share:

 

 

 

 

 

 

Basic

 

$

(1.43

)

 

$

1.62

 

Diluted

 

$

(1.43

)

 

$

1.59

 

Our basic net income per share amounts for each period presented have been computed using the weighted average number of shares of common stock, $0.001 par value, or the common stock, outstanding over the period measured. Our diluted net income per share amounts for each period presented include the weighted average effect of potentially dilutive shares. We use the "treasury stock" method to determine the dilutive effect of our stock options, restricted stock units, or RSUs, market stock units, or MSUs, and performance stock units, or PSUs. Potentially dilutive shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share.

 

4. Prepayment of Intangible Assets and Asset Acquisition

During the fourth quarter of fiscal 2023, we paid an aggregate consideration of $130.0 million to Broadcom to extend the exclusivity period of certain previously acquired intangible assets for an additional three-year period and to license certain developed technology intangible assets. The developed technologies are expected to be delivered at various dates through August 2025.

The purchase consideration allocated to the extension of the exclusivity period was $13.5 million and was recorded as a developed technology intangible asset in the first quarter of fiscal 2024. This intangible asset is being amortized over its estimated economic useful life of three years. The remaining balance of the purchase consideration, totaling $116.5 million relating to the four technology products to be received at future dates, has been recorded as a prepayment of intangible assets. This prepayment is

10


SYNAPTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

classified under non-current other assets in our condensed consolidated balance sheets. Upon obtaining control of the developed technologies, the amounts recorded under non-current other assets will be reclassified as intangible assets based on their respective fair values determined as of the agreement date.

 

5. Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value and consisted of the following (in millions):

 

 

September

 

 

June

 

 

 

2023

 

 

2023

 

Raw materials and work-in-progress

 

$

75.4

 

 

$

70.5

 

Finished goods

 

 

56.3

 

 

 

66.7

 

 

 

$

131.7

 

 

$

137.2

 

 

Inventories are recorded at standard cost, which approximates actual cost computed on a first-in, first-out basis. We record a write-down, if necessary, to reduce the carrying value of inventory to its net realizable value. The effect of these write-downs is to establish a new cost basis in the related inventory, which we do not subsequently write up. We also record a liability and charge to cost of revenue for estimated losses on inventory we are obligated to purchase from our contract manufacturers when such losses become probable from customer delays, order cancellations, or other factors. The following factors influence our estimates: changes to or cancellations of customer orders, unexpected or sudden decline in demand, rapid product improvements, technological advances, and termination or changes by our original equipment manufacturers, or OEM, customers of any product offerings incorporating our product solutions.

6. Cash, Cash Equivalents and Short-Term Investments

The following table summarizes our cash, cash equivalents and short-term investments by category at September 2023 and June 2023 (in millions):

 

 

September 2023

 

 

 

Amortized Cost

 

 

Gross unrealized loss

 

 

Fair Value

 

Cash

 

$

323.6

 

 

$

 

 

$

323.6

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

Money market funds

 

 

426.7

 

 

 

 

 

 

426.7

 

Certificates of deposit

 

 

51.0

 

 

 

 

 

 

51.0

 

Total cash and cash equivalents

 

$

801.3

 

 

$

 

 

$

801.3

 

Short-term investments:

 

 

 

 

 

 

 

 

 

Treasury bills

 

$

16.6

 

 

$

 

 

$

16.6

 

Corporate debt securities