See accompanying notes to condensed consolidated financial statements (unaudited).
See accompanying notes to condensed consolidated financial statements (unaudited).
See accompanying notes to condensed consolidated financial statements (unaudited).
See accompanying notes to condensed consolidated financial statements (unaudited).
See accompanying notes to condensed consolidated financial statements (unaudited).
See accompanying notes to condensed consolidated financial statements (unaudited)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
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 U.S. 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 30, 2018.
The 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.
Our fiscal year is the 52- or 53-week period ending on the last Saturday in June. Our fiscal 2019 is a 52-week period ending June 29, 2019, and our fiscal 2018 was a 53-week period ending on June 30, 2018. The fiscal periods presented in this report are 13-week and 39-week periods for the three and nine months ended March 30, 2019, respectively, and 13-week and 40-week periods for the three and nine months ended March 31, 2018, 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 those related to revenue recognition, allowance for doubtful accounts, cost of revenue, inventories, loss on purchase commitments, product warranty, accrued liabilities, share-based compensation costs, provision for income taxes, deferred income tax asset valuation allowances, uncertain tax positions, goodwill, intangible assets, investments and loss contingencies. We base our estimates on historical experience, 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.
Foreign Currency Transactions and Foreign Exchange Contracts
The U.S. dollar is our functional and reporting currency. We remeasure our monetary assets and liabilities not denominated in the functional currency into U.S. dollar equivalents at the rate of exchange in effect on the balance sheet date. We measure and record non-monetary balance sheet accounts at the historical rate in effect at the date of transaction. We remeasure foreign currency expenses at the weighted average exchange rate in the month that the transaction occurred. Our foreign currency transactions and remeasurement gains and losses are included in selling, general, and administrative expenses in the condensed consolidated statements of operations and resulted in net losses of $0.1 million and $0.7 million in the three and nine months ended March 31, 2019 and net losses of $0.3 million and $0.8 million in the three and nine months ended March 31, 2018, respectively.
2. Revenue Recognition
Change in Accounting Policy
In May 2014, the Financial Accounting Standards Board, or FASB, issued an Accounting Standards Update, or ASU, on revenue from contracts with customers, ASU No. 2014-09, Revenue from Contracts with Customers, or the new revenue standard. The new revenue standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.
9
We adopted the new revenue standard at the beginning of our fiscal 2019, using the modified retrospective method applied to all contracts not completed as of the adoption date.
Results for reporting periods ending after our fiscal 2018 are presented under the new revenue standard, while prior reporting periods are not adjusted and continue to be reported in accordance with the previous revenue standard. Recognition of revenue ha
s remained substantially unchanged under the new revenue standard as
compared to t
he previous revenue standard. Accordingly, there was no
adjustment to the fiscal 2019 opening retained earnings. However,
due to the adoption of the new revenue standard,
we
reclassified certain amounts of incentive items to other accrued liabilities in our condensed consolidated balance sheet as of
March 31, 2019
, and presented them as part of customer obligations, from the contra accounts receivable. Such information is as f
ollows (in millions):
Condensed Consolidated Balance Sheets
|
|
As of March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma as if
|
|
|
|
As reported under
|
|
|
|
|
|
|
previous standard
|
|
|
|
new standard
|
|
|
Adjustments
|
|
|
was in effect
|
|
Accounts receivable, net
|
|
$
|
266.8
|
|
|
$
|
(4.8
|
)
|
|
$
|
262.0
|
|
Total assets
|
|
|
1,468.6
|
|
|
|
(4.8
|
)
|
|
|
1,463.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other accrued liabilities
|
|
|
99.1
|
|
|
|
(4.8
|
)
|
|
|
94.3
|
|
Total liabilities and stockholders' equity
|
|
|
1,468.6
|
|
|
|
(4.8
|
)
|
|
|
1,463.8
|
|
Condensed Consolidated Statement of Cash Flows
|
|
Nine Months Ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma as if
|
|
|
|
As reported under
|
|
|
|
|
|
|
previous standard
|
|
|
|
new standard
|
|
|
Adjustments
|
|
|
was in effect
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
$
|
27.5
|
|
|
$
|
(0.4
|
)
|
|
$
|
27.1
|
|
Other accrued liabilities
|
|
|
13.6
|
|
|
|
0.4
|
|
|
|
14.0
|
|
Revenue Recognition
Our revenue is primarily generated from the sale of ASIC chips, either directly to a customer or to a distributor. Revenues are 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. All 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. We generally warrant our products for a period of 12 months from the date of sale and estimate probable product warranty costs at the time we recognize revenue as the warranty is considered an assurance warranty and not a performance obligation.
Non-product revenue is recognized over the same period of time such performance obligations are satisfied. We then select an appropriate method for measuring satisfaction of the performance obligations.
Revenue from sales to distributors is recognized upon shipment of the product to the distributors (sell-in basis). Master sales agreements are in place with certain customers, and these agreements typically contain terms and conditions with respect to payment, delivery, warranty and supply. In the absence of a master sales agreement, we consider a customer's purchase order or our standard terms and conditions to be the contract with the customer.
10
Our pricing terms are negotiated independently, on a stand-alone basis. In determining the transaction price, we evaluate whether
the price is subject to refund or adjustment to determine the net consideration which we expect to receive for the sale of such products. In limited situations, we make sales to certain customers under arrangements where we grant stock rotation rights, pr
ice protection and price allowances; variable consideration associated with these rights is expected to be inconsequential. These adjustments and incentives are accounted for as variable consideration, classified as other current liabilities under
the new
revenue standard
and are shown as customer obligations in Note 7 Other Accrued Liabilities. We estimate the amount of variable consideration for such arrangements based on the expected value to be provided to customers, and we do not believe that there wil
l be significant changes to our estimates of variable consideration. When incentives, stock rotation rights, price protection, volume discounts, or price allowances are applicable, they are estimated and recorded in the period the related revenue is recog
nized. Stock rotation reserves are based on historical return rates and recorded as a reduction to revenue with a corresponding reduction to cost of goods sold for the estimated cost of inventory that is expected to be returned
and recorded as prepaid expe
nses and other current assets
. In limited circumstances
,
we enter into volume based tiered pricing arrangements and we estimate total unit volumes under such arrangement to determine the expected transaction price for the units expected to be transferred.
Such arrangements are accounted for as contract liabilities within other accrued liabilities. Sales returns liabilities are recorded as refund liabilities within other accrued liabilities.
Our accounts receivable balance is from contracts with customers and represents our unconditional right to receive consideration from customers. Payments are generally due within
three months
upon completion of the performance obligation and subsequent invoicing and, therefore, do not include significant financing components. To date, there have been no material impairment losses on accounts receivable. There were no contract assets (i.e., unbilled accounts receivable, deferred commissions) recorded on the condensed consolidated balance sheets in the periods presented. Contract liabilities and refund liabilities were $5.5 million and $42.3 million, respectively, as of March 31, 2019 and $1.1 million and $31.6 million, respectively, as of the beginning of fiscal 2019. Both contract liabilities and refund liabilities are presented as part of customer obligations in Note 7 Other Accrued Liabilities. During the nine months ended March 31, 2019, we recognized $0.3 million in revenue related to contract liabilities outstanding as of the beginning of fiscal 2019.
We invoice customers for each delivery upon shipment and recognize revenue in accordance with delivery terms. As of March 31, 2019, we did not have any remaining unsatisfied performance obligations with an original duration greater than one year. Accordingly, under the optional exception provided by ASC 606-10-50-14, we do not disclose revenues allocated to future performance obligations of partially completed contracts.
We have elected to account for shipping and handling costs as fulfillment costs before the customer obtains control of the goods.
We continue to classify shipping and handling costs as a cost of revenue. We have elected to continue to account for collection of all taxes on a net basis.
We incur commission expense that is incremental to obtaining contracts with customers. Sales commissions (which are recorded in the selling, general and administrative expense line item in the condensed consolidated statements of operations) are expensed when the product is shipped because such commissions are owed after shipment.
Revenue from contracts with customers disaggregated by geographic area based on customer location and groups of similar products is presented in Note 12 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
|
|
|
Nine Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
|
|
$
|
6.7
|
|
|
$
|
(13.7
|
)
|
|
$
|
23.3
|
|
|
$
|
(122.6
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares, basic
|
|
|
34.4
|
|
|
|
34.5
|
|
|
|
34.7
|
|
|
|
34.0
|
|
Effect of dilutive share-based awards
|
|
|
0.6
|
|
|
|
—
|
|
|
|
0.8
|
|
|
|
—
|
|
Shares, diluted
|
|
|
35.0
|
|
|
|
34.5
|
|
|
|
35.5
|
|
|
|
34.0
|
|
Net income/(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.19
|
|
|
$
|
(0.40
|
)
|
|
$
|
0.67
|
|
|
$
|
(3.61
|
)
|
Diluted
|
|
$
|
0.19
|
|
|
$
|
(0.40
|
)
|
|
$
|
0.66
|
|
|
$
|
(3.61
|
)
|
11
Our basic net income per share amounts for each period presented have been computed using the weighted average number of shares of 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, deferred stock units, or DSUs, market stock units, or MSUs, performance stock units, or PSUs, and our conve
rtible notes.
Dilutive net income per share amounts do not include the potential weighted average effect of 1,558,936 and 2,818,358 shares of common stock related to certain share-based awards that were outstanding during the three months ended March 31, 2019 and 2018, respectively, and 1,434,049 and 2,427,566 shares of common stock related to certain share-based awards that were outstanding during the nine months ended March 31, 2019, and 2018, respectively. These share-based awards were not included in the computation of diluted net income per share because their effect would have been antidilutive.
4. Fair Value
Financial assets measured at fair value on a recurring basis by level within the fair value hierarchy, consisted of the following (in millions):
|
|
March 31,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
309.5
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
275.2
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Auction rate securities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1.5
|
|
Total available-for-sale securities
|
|
$
|
309.5
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
275.2
|
|
|
$
|
-
|
|
|
$
|
1.5
|
|
In our condensed consolidated balance sheets, as of March 31, 2019 and June 30, 2018, money market balances were included in cash and cash equivalents and as of June 30, 2018, auction rate securities, or ARS investments, were included in non-current other assets.
During the nine months ended March 31, 2019, we converted our ARS investments to senior surplus notes, under an offering memorandum, which also included a receipt of a small amount of cash and warrants. We sold the senior surplus notes during the nine months ended March 31, 2019, resulting in a gain of $2.8 million. There were no transfers in or out of our Level 1, 2, or 3 assets during the nine months ended March 31, 2019 and 2018.
The fair values of our accounts receivable and accounts payable approximate their carrying values because of the short-term nature of those instruments. Intangible assets, property and equipment, and goodwill are measured at fair value on a non-recurring basis if impairment is indicated.
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):
|
|
March 31,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Raw materials and work-in-progress
|
|
$
|
121.8
|
|
|
$
|
105.0
|
|
Finished goods
|
|
|
31.3
|
|
|
|
26.2
|
|
|
|
$
|
153.1
|
|
|
$
|
131.2
|
|
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.
12
6. Acquired Intangib
les and Goodwill
Acquired Intangibles
The following table summarizes the life, the gross carrying value and the related accumulated amortization of our acquired intangible assets as of March 31, 2019 and June 30, 2018 (in millions):
|
|
|
|
|
|
March 31, 2019
|
|
|
June 30, 2018
|
|
|
|
Weighted Average
Life in Years
|
|
|
Gross Carrying
Value
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
|
|
Gross Carrying
Value
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
|
Display driver technology
|
|
|
5.3
|
|
|
$
|
164.0
|
|
$
|
(140.2
|
)
|
$
|
23.8
|
|
|
$
|
164.0
|
|
$
|
(116.5
|
)
|
$
|
47.5
|
|
Audio and video
technology
|
|
|
5.3
|
|
|
|
138.6
|
|
|
(42.5
|
)
|
|
96.1
|
|
|
|
133.9
|
|
|
(22.8
|
)
|
|
111.1
|
|
Customer relationships
|
|
|
4.1
|
|
|
|
81.8
|
|
|
(47.1
|
)
|
|
34.7
|
|
|
|
81.8
|
|
|
(38.5
|
)
|
|
43.3
|
|
Fingerprint authentication
technology
|
|
|
4.7
|
|
|
|
47.2
|
|
|
(47.2
|
)
|
|
-
|
|
|
|
55.7
|
|
|
(53.7
|
)
|
|
2.0
|
|
Licensed technology
and other
|
|
|
4.2
|
|
|
|
7.7
|
|
|
(3.1
|
)
|
|
4.6
|
|
|
|
9.0
|
|
|
(3.0
|
)
|
|
6.0
|
|
Patents
|
|
|
8.1
|
|
|
|
4.4
|
|
|
(1.9
|
)
|
|
2.5
|
|
|
|
4.6
|
|
|
(1.7
|
)
|
|
2.9
|
|
Tradename
|
|
|
7.0
|
|
|
|
1.8
|
|
|
(0.4
|
)
|
|
1.4
|
|
|
|
1.9
|
|
|
(0.2
|
)
|
|
1.7
|
|
Backlog
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
0.5
|
|
|
(0.5
|
)
|
|
-
|
|
In-process research and
development
|
|
Not applicable
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
4.7
|
|
|
-
|
|
|
4.7
|
|
Acquired intangibles,
gross
|
|
|
4.4
|
|
|
$
|
445.5
|
|
$
|
(282.4
|
)
|
$
|
163.1
|
|
|
$
|
456.1
|
|
$
|
(236.9
|
)
|
$
|
219.2
|
|
The total amortization expense for the acquired intangible assets was $18.1 million and $18.7 million for the three months ended March 31, 2019 and 2018, respectively, and $56.1 million and $62.0 million for the nine months ended March 31, 2019 and 2018, respectively. During the three months ended March 31, 2019 and 2018, $15.2 million and $17.2 million, respectively, and $47.3 million and $53.4 million for the nine months ended March 31, 2019 and 2018, respectively, of amortization expense was included in our condensed consolidated statements of operations in cost of revenue; the remainder was included in acquired intangibles amortization.
The following table presents expected annual fiscal year aggregate amortization expense as of March 31, 2019 (in millions):
Remainder of 2019
|
|
$
|
18.3
|
|
2020
|
|
|
51.4
|
|
2021
|
|
|
37.5
|
|
2022
|
|
|
32.9
|
|
2023
|
|
|
20.4
|
|
2024
|
|
|
2.5
|
|
Thereafter
|
|
|
0.1
|
|
Future amortization
|
|
$
|
163.1
|
|
Goodwill
Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired. There were no changes in our goodwill balance for the nine months ended March 31, 2019.
13
7. Other Accrued Liabilities
Other accrued liabilities consisted of the following (in millions):
|
|
March 31,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Customer Obligations
|
|
$
|
47.8
|
|
|
$
|
26.4
|
|
Inventory obligations
|
|
|
30.1
|
|
|
|
28.8
|
|
Warranty
|
|
|
4.0
|
|
|
|
5.5
|
|
Other
|
|
|
17.2
|
|
|
|
19.0
|
|
|
|
$
|
99.1
|
|
|
$
|
79.7
|
|
Our customer obligations included $5.5 million of contract liabilities and $42.3 million of refund liabilities as of March 31, 2019, each as defined under revenue recognition guidance in
the new revenue standard
(see Note 2 Revenue Recognition). We reclassified certain amounts of incentive items to other current liabilities in our condensed consolidated balance sheet as of March 31, 2019, and presented them as part of customer obligations, from the contra accounts receivable due to the adoption of
the new revenue standard
.
8. Indemnifications,
Contingencies
and Legal Proceedings
Indemnifications
In connection with certain agreements, we are obligated to indemnify the counterparty against third party claims alleging infringement of certain intellectual property rights by us. We have also entered into indemnification agreements with our officers and directors. Maximum potential future payments under these agreements cannot be estimated because these agreements generally do not have a maximum stated liability. However, historical costs related to these indemnification provisions have not been significant. We have not recorded any liability in our condensed consolidated financial statements for such indemnification obligations.
Contingencies
We have in the past, and may in the future, receive notices from third parties that claim our products infringe their intellectual property rights. We cannot be certain that our technologies and products do not and will not infringe issued patents or other proprietary rights of third parties.
Any infringement claims, with or without merit, could result in significant litigation costs and diversion of management and financial resources, including the payment of damages, which could have a material adverse effect on our business, financial condition, and results of operations.
9. Debt
Convertible Debt
Our convertible debt consists of an original $525 million aggregate principal amount of 0.50% convertible senior notes due 2022, or the Notes, which were issued in a private placement transaction. The net proceeds from the Notes, after deducting discounts, were $514.5 million.
The Notes bear interest at a rate of 0.50% per year, which is payable semi-annually in arrears, on June 15 and December 15 of each year. The Notes are senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any our liabilities that are not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.
The Notes mature on June 15, 2022, or the Maturity Date, unless earlier repurchased, redeemed or converted.
Holders may convert all or any portion of their Notes, in multiples of $1,000 principal amounts, at their option at any time prior to the close of business on the business day immediately preceding March 15, 2022 under certain defined circumstances.
On or after March 15, 2022 until the close of business on the business day immediately preceding the Maturity Date, holders may convert all or any portion of their Notes, in multiples of $1,000 principal amounts, at the option of the holder. Upon conversion, we will pay or deliver, at our election, shares of common stock, cash, or a combination of cash and shares of common stock.
14
The
conversion rate for the Notes is initially 13.6947 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $73.02 per share of common stock). T
he conversion rate is subject to adjustment in certain circumstances.
Upon the occurrence of a fundamental change (as defined in the Notes indenture), holders of the Notes may require us to repurchase for cash all or a portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the fundamental change repurchase date.
We
may not redeem the Notes prior to June 20, 2020. We may redeem for cash all or any portion of the Notes, at our option, on or after June 20, 2020, if the last reported sale price of our common stock, as determined by us, has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date. Our policy is to settle the principal amount of our Notes with cash upon conversion or redemption.
As of the issuance date of the Notes, we recorded $82.1 million of the principal amount to equity, representing the debt discount for the difference between our estimated nonconvertible debt borrowing rate of 4.39% and the coupon rate of the Notes of 0.50% using a five-year life, which coincides with the term of the Notes. In addition, we allocated the total of $11.1 million of debt issuance costs, consisting of the initial purchaser’s discount of $10.5 million and legal, accounting, and printing costs of $579,000, pro rata, to the equity and debt components of the Notes, or $1.9 million and $9.2 million, respectively. The debt discount and the debt issuance costs allocated to the debt component of the Notes are amortized as interest expense using the effective interest method over five years.
The contractual interest expense and amortization of discount on the Notes for the nine months ended March 31, 2019, were as follows (in millions):
|
|
Nine Months Ended
|
|
|
|
March 31,
|
|
|
|
2019
|
|
Interest expense
|
|
$
|
2.0
|
|
Amortization of discount and debt issuance costs
|
|
|
13.1
|
|
Total interest
|
|
$
|
15.1
|
|
|
|
|
|
|
The unamortized amounts of the debt issuance costs and discount associated with the Notes as of March 31, 2019 were $6.1 million and $55.0 million, respectively.
Revolving Credit Facility
In September 2017, we entered into an Amendment and Restatement Agreement, or the Agreement, with the lenders that are party thereto, or the Lenders, and Wells Fargo Bank, National Association, as administrative agent for the Lenders. The Agreement terminated our prior term loan arrangement and provides for a revolving credit facility in a principal amount of up to $200 million, which includes a $20 million sublimit for letters of credit and a $20 million sublimit for swingline loans. Under the terms of the Agreement, we may, subject to the satisfaction of certain conditions, request increases in the revolving credit facility commitments in an aggregate principal amount of up to $100 million to the extent existing or new lenders agree to provide such increased or additional commitments, as applicable. Proceeds under the revolving credit facility are available for working capital and general corporate purposes. As of March 31, 2019, there was no balance outstanding under the revolving credit facility.
The revolving credit facility is required to be repaid in full on the earlier of (i) September 27, 2022, and (ii) the date 91 days prior to the Maturity Date of the Notes if the Notes have not been refinanced in full by such date. Debt issuance costs of $2.3 million relating to the revolving credit facility will be amortized over 60 months.
Our obligations under the Agreement are guaranteed by the material domestic subsidiaries of our company, subject to certain exceptions (such material subsidiaries, together with our company, collectively, the Credit Parties). The obligations of the Credit Parties under the Agreement and the other loan documents delivered in connection therewith are secured by a first priority security interest in substantially all of the existing and future personal property of the Credit Parties, including, without limitation, 65% of the voting capital stock of certain of the Credit Parties’ direct foreign subsidiaries, subject to certain exceptions.
15
The revolving credit facility bears interest at our election of a Base
Rate plus an Applicable Margin or LIBOR plus an Applicable Margin. Swingline loans bear interest at a Base Rate plus an Applicable Margin. The Base Rate is a floating rate that is the greater of the Prime Rate, the Federal Funds Rate plus 50 basis points,
or LIBOR plus 100 basis points. The Applicable Margin is based on a sliding scale which ranges from 0.25 to 100 basis points for Base Rate loans and 100 basis points to 175 basis points for LIBOR loans. We are required to pay a commitment fee on any unus
ed commitments under the Agreement which is determined on a leverage-based sliding scale ranging from 0.175% to 0.25% per annum. Interest and fees are payable on a quarterly basis.
Under the Agreement, there are various restrictive covenants, including three financial covenants which limit the consolidated total leverage ratio, or leverage ratio, the consolidated interest coverage ratio, or interest coverage ratio, a restriction which places a limit on the amount of capital expenditures that may be made in any fiscal year, a restriction that permits up to $50 million per fiscal quarter of accounts receivable financings, and sets the Specified Leverage Ratio. The leverage ratio is the ratio of debt as of the measurement date to earnings before interest, taxes, depreciation and amortization, or EBITDA, for the four consecutive quarters ending with the quarter of measurement. The current leverage ratio shall not exceed 3.50 to 1.00 provided that for the four fiscal quarters ending after the date of a material acquisition, such maximum leverage ratio shall be adjusted to 3.75 to 1.00, and thereafter, shall not be more than 3.50 to 1.00. The interest coverage ratio is EBITDA to interest expense for the four consecutive quarters ending with the quarter of measurement. The interest coverage ratio must not be less than 3.50 to 1.0 during the term of the Agreement. The Specified Leverage Ratio is the ratio used in determining, among other things, whether we are permitted to make dividends and/or prepay certain indebtedness, at a fixed ratio of 3.00 to 1.00. As of the end of the fiscal quarter, we were in compliance with the restrictive covenants.
10. Share-Based Compensation
Share-based compensation and the related tax benefit recognized in our condensed consolidated statements of operations were as follows (in millions):
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Cost of revenue
|
|
$
|
0.7
|
|
|
$
|
0.9
|
|
|
$
|
2.4
|
|
|
$
|
2.3
|
|
Research and development
|
|
|
8.6
|
|
|
|
10.0
|
|
|
|
25.4
|
|
|
|
28.9
|
|
Selling, general, and administrative
|
|
|
6.5
|
|
|
|
7.9
|
|
|
|
20.9
|
|
|
|
21.9
|
|
Total
|
|
$
|
15.8
|
|
|
$
|
18.8
|
|
|
$
|
48.7
|
|
|
$
|
53.1
|
|
Income tax benefit on share-based compensation
|
|
$
|
1.8
|
|
|
$
|
3.7
|
|
|
$
|
4.2
|
|
|
$
|
6.4
|
|
Historically, we have issued new shares in connection with our share-based compensation plans, however, treasury shares are also available for issuance. Any additional shares repurchased under our common stock repurchase program will be available for issuance under our share-based compensation plans.
Stock Options
Stock option activity, including stock options granted, exercised, and forfeited, weighted average exercise prices for stock options outstanding and exercisable, and the aggregate intrinsic value were as follows:
|
|
Stock
|
|
|
Weighted
|
|
|
Aggregate
|
|
|
|
Option
|
|
|
Average
|
|
|
Intrinsic
|
|
|
|
Awards
|
|
|
Exercise
|
|
|
Value
|
|
|
|
Outstanding
|
|
|
Price
|
|
|
(in millions)
|
|
Balance as of June 30, 2018
|
|
|
1,618,209
|
|
|
$
|
57.14
|
|
|
|
|
|
Granted
|
|
|
-
|
|
|
-
|
|
|
|
|
|
Exercised
|
|
|
(167,663
|
)
|
|
|
29.34
|
|
|
|
|
|
Forfeited
|
|
|
(137,323
|
)
|
|
|
66.93
|
|
|
|
|
|
Balance as of March 31, 2019
|
|
|
1,313,223
|
|
|
|
59.67
|
|
|
$
|
2.2
|
|
Exercisable at March 31, 2019
|
|
|
1,231,738
|
|
|
|
60.09
|
|
|
$
|
2.2
|
|
The aggregate intrinsic value was determined using the closing price of our common stock on March 29, 2019 of $39.75 and excludes the impact of stock options that were not in-the-money.
16
Deferred Stock Units
DSU activity, including DSUs granted, delivered, and forfeited, and the balance and aggregate intrinsic value of DSUs were as follows:
|
|
|
|
|
|
Aggregate
|
|
|
|
DSU
|
|
|
Intrinsic
|
|
|
|
Awards
|
|
|
Value
|
|
|
|
Outstanding
|
|
|
(in millions)
|
|
Balance as of June 30, 2018
|
|
|
1,853,558
|
|
|
|
|
|
Granted
|
|
|
1,227,652
|
|
|
|
|
|
Delivered
|
|
|
(670,770
|
)
|
|
|
|
|
Forfeited
|
|
|
(288,773
|
)
|
|
|
|
|
Balance as of March 31, 2019
|
|
|
2,121,667
|
|
|
$
|
84.3
|
|
The aggregate intrinsic value was determined using the closing price of our common stock on March 29, 2019 of $39.75.
Of the shares delivered, 158,868 shares valued at $6.2 million were withheld to meet statutory tax withholding requirements.
Market Stock Units
Our Amended and Restated 2010 Incentive Compensation Plan provides for the grant of MSU awards to our employees, consultants, and directors. An MSU is a promise to deliver shares of our common stock at a future date based on the achievement of market-based performance requirements in accordance with the terms of the MSU grant agreement.
We have granted MSUs to our executive officers and other management members, which are designed to vest in three tranches with the target quantity for each tranche equal to one-third of the total MSU grant. The first tranche vests based on a one-year performance period; the second tranche vests based on a two-year performance period; and the third tranche vests based on a three-year performance period. Performance is measured based on the achievement of a specified level of total stockholder return, or TSR, relative to the TSR of the S&P Semiconductor Select Industry Index, or SPSISC Index, for grants made beginning in fiscal 2018, and relative to the Philadelphia Semiconductor Index, or SOX Index, for grants made prior to fiscal 2018. The potential payout ranges from 0% to 200% of the grant target quantity and is adjusted on a two-to-one ratio based on our TSR performance relative to the SPSISC Index TSR or SOX Index TSR using the following formula:
(100% + ([Synaptics TSR — {SPSISC Index TSR or SOX Index TSR}] x 2))
The payout for the first tranche and the second tranche will not exceed 100% and the payout for the third tranche will be calculated based on the total target quantity for the entire grant multiplied by the payout factor, based on performance for the three-year performance period, less shares issued for the first tranche and the second tranche.
Delivery of shares earned, if any, will take place on the dates provided in the applicable MSU grant agreement, assuming the grantee is still an employee, consultant, or director of our company at the end of the applicable performance period. On the delivery date, we withhold shares to cover statutory tax withholding requirements and deliver a net quantity of shares to the employee, consultant, or director after such withholding. Until delivery of shares, the grantee has no rights as a stockholder with respect to any shares underlying the MSU award.
17
Dur
ing the
nine
months ended
March 31, 2019
, MSU activity, including MSUs granted, delivered, and forfeited, and the balance and aggregate intrinsic value of MSUs as of
March 31, 2019
was as
follows
:
|
|
|
|
|
|
Aggregate
|
|
|
|
MSU
|
|
|
Intrinsic
|
|
|
|
Awards
|
|
|
Value
|
|
|
|
Outstanding
|
|
|
(in millions)
|
|
Balance as of June 30, 2018
|
|
|
354,726
|
|
|
|
|
|
Granted
|
|
|
163,059
|
|
|
|
|
|
Performance adjustment
|
|
|
(46,663
|
)
|
|
|
|
|
Delivered
|
|
|
(92,202
|
)
|
|
|
|
|
Forfeited
|
|
|
(53,115
|
)
|
|
|
|
|
Balance as of March 31, 2019
|
|
|
325,805
|
|
|
$
|
13.0
|
|
The aggregate intrinsic value was determined using the closing price of our common stock on March 29, 2019 of $39.75. Of the shares delivered, 33,981 shares valued at $1.3 million were withheld to meet statutory tax withholding requirements.
We value MSUs using the Monte Carlo simulation model on the date of grant and amortize the compensation expense over the three-year performance and service period on a straight-line basis. The unrecognized share-based compensation cost of our outstanding MSUs was approximately $13.0 million as of March 31, 2019, which will be recognized over a weighted average period of approximately 1.2 years.
Performance Stock Units
Our Amended and Restated 2010 Incentive Compensation Plan provides for the grant of PSU awards to our employees, consultants, and directors. A PSU is a promise to deliver shares of our common stock at a future date based on the achievement of performance-based requirements in accordance with the terms of the PSU grant agreement.
We have granted PSUs to our executive officers and other management members, which are designed to vest in three tranches with the target quantity for each tranche equal to one-third of the total PSU grant. The grants have a specific one-year performance period and vesting occurs over three service periods with the final service period ending approximately three years from the grant date. Performance is measured based on the achievement of a specified level of non-GAAP earnings per share. The potential payout ranges from 0% to 200% of the grant target quantity and is adjusted on a linear basis with a payout triggering if our non-GAAP earnings per share equals greater than 65% of the target with a maximum payout achieved at 135% of target.
Delivery of shares earned, if any, will take place on the dates provided in the applicable PSU grant agreement, assuming the grantee is still an employee, consultant, or director of our company at the end of the applicable service period. On the delivery date, we withhold shares to cover statutory tax withholding requirements and deliver a net quantity of shares to the employee, consultant, or director after such withholding. Until delivery of shares, the grantee has no rights as a stockholder with respect to any shares underlying the PSU award.
During the nine months ended March 31, 2019, PSU activity, including PSUs granted, delivered, and forfeited, and the balance and aggregate intrinsic value of PSUs as of March 31, 2019 was as follows:
|
|
|
|
|
|
Aggregate
|
|
|
|
PSU
|
|
|
Intrinsic
|
|
|
|
Awards
|
|
|
Value
|
|
|
|
Outstanding
|
|
|
(in millions)
|
|
Balance as of June 30, 2018
|
|
|
294,541
|
|
|
|
|
|
Granted
|
|
|
147,005
|
|
|
|
|
|
Performance adjustment
|
|
|
1,065
|
|
|
|
|
|
Delivered
|
|
|
(92,470
|
)
|
|
|
|
|
Forfeited
|
|
|
(54,383
|
)
|
|
|
|
|
Balance as of March 31, 2019
|
|
|
295,758
|
|
|
$
|
11.8
|
|
|
|
|
|
|
|
|
|
|
18
The aggregate intrinsic value was determined using the closing price of our common stock on March 29, 2019 of $39.75. Of the shares delivered, 36,332 shares valued at $1.4 million were withheld to meet statutory tax withholding requirements.
We value PSUs using the aggregate intrinsic value on the date of grant adjusted for estimated performance achievement during the performance period and amortize the compensation expense over the three-year service period on a ratable basis. The unrecognized share-based compensation cost of our outstanding PSUs was approximately $4.6 million as of March 31, 2019, which will be recognized over a weighted average period of approximately 1.3 years.
Employee Stock Purchase Plan
Shares purchased, weighted average purchase price, cash received, and the aggregate intrinsic value for employee stock purchase plan purchases during the nine-month period ended March 31, 2019 were as follows (in millions, except for shares purchased and weighted average purchase price):
.
Shares purchased
|
|
|
258,563
|
|
Weighted average purchase price
|
|
$
|
31.60
|
|
Cash received
|
|
$
|
8.2
|
|
Aggregate intrinsic value
|
|
$
|
1.4
|
|
11. Income Taxes
On December 22, 2017, the U.S. government enacted comprehensive tax legislation, commonly known as the Tax Cuts and Jobs Act of 2017, or the Act, which significantly reformed the Internal Revenue Code of 1986, as amended. The Act contains broad and complex changes to corporate taxation, including, in part, reduction of the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously considered permanently reinvested, and creates new taxes on certain foreign-sourced earnings. U.S. federal tax law requires that taxpayers with a fiscal year that spans the effective date of a tax rate change to calculate a blended tax rate based on the pro rata number of days in the fiscal year before and after the effective date. As our accounting and tax year is the fiscal period ending on the last Saturday in June, our U.S. federal tax rate for fiscal 2018 was a days-weighted blended tax rate of 28.17%. For fiscal 2019 and subsequent tax years, our U.S. federal tax rate is 21%.
In fiscal 2018, we recognized a provisional tax expense of $41.4 million, related to the tax impact of the Act, of which an expense of $44.1 million relates to the one-time transition tax and a benefit of $2.7 million relates to remeasurement of deferred tax at the new tax rate. The one-time transition tax is based on our post-1986 foreign earnings and profits, or E&P, which we previously excluded from U.S. income taxes as we considered such earnings to be indefinitely reinvested overseas. The one-time transition tax is applied at a 15.5% tax rate on cash assets and an 8% tax rate for other specified assets. We were able to utilize the research credit carryforward, resulting in a net one-time transition tax impact of $11.9 million on the income tax payable. During the quarter ended December 31, 2018, based on additional analysis of technical guidance, we recognized a non-discrete tax expense of $1.4 million, which is included in the annual effective tax rate, and a discrete benefit of $0.2 million, both of which relate to the limitation on deduction of executive officer compensation.
Staff Accounting Bulletin 118 allows companies to record provisional amounts and recognize the effect of the tax law during a measurement period. The measurement period ended in the second quarter of our fiscal 2019. As of March 31, 2019, we have finalized our accounting for the tax impact of the Act and there were no material adjustments recorded to our provisional amounts. However, further technical guidance related to the Act, including final regulations on a broad range of topics, is expected to be issued and, as such, if our interpretation and final accounting are inconsistent with future regulations and guidance, we will recognize the impact as a discrete item in the period that such guidance is issued.
The Global Intangible Low-Tax Income, or GILTI, which is a provision under the Act, imposes a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. GILTI requires an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred, or (2) factoring such amounts into the measurement of deferred taxes. We elected to treat GILTI as a period cost and recognize the impact in the period when it is incurred.
19
We account for income taxes under the asset and liab
ility method. The provision for income taxes recorded in interim periods is recorded by applying the estimated annual effective tax rate to year-to-date income before provision for income taxes, excluding the effects of significant unusual or infrequently
occurring discrete items. The tax effects of discrete items are recorded in the same period that the related discrete items are reported and results in a difference between the actual effective tax rate and the estimated annual effective tax rate.
The benefit for income taxes of $15.3 million and $3.9 million for the three months ended March 31, 2019 and 2018, respectively, represented estimated federal, foreign, and state income taxes. The effective tax rate for the three months ended March 31, 2019 diverged from the combined U.S. federal and state statutory tax rate primarily because of foreign withholding taxes, the impact of accounting for qualified stock options, foreign deemed-paid taxes, foreign income taxed at higher tax rates, and GILTI, partially offset by the benefit of research credits, foreign tax credits and foreign-derived intangible income deduction. The effective tax rate for the three months ended March 31, 2018, diverged from the combined U.S. federal and state statutory tax rate, primarily because of the impact of the benefit of research credits and excess share-based compensation deductions, partially offset by foreign withholding taxes, nondeductible amortization, the impact of accounting for qualified stock options, and foreign income taxed at higher tax rates.
The benefit for income taxes of $8.1 million and provision for income taxes of $52.6 million for the nine months ended March 31, 2019, and 2018, respectively, represented estimated federal, foreign, and state income taxes. The effective tax rate for the nine months ended March 31, 2019 diverged from the combined U.S. federal and state statutory tax rate primarily because of foreign withholding taxes, the impact of accounting for qualified stock options, foreign deemed-paid taxes, foreign income taxed at higher tax rates and GILTI, partially offset by the benefit of research credits, release of reserves related to uncertain tax positions, the impact of net shortfalls in share-based compensation deduction, foreign tax credits and foreign-derived intangible income deduction. The effective tax rate for the nine months ended March 31, 2018 diverged from the combined U.S. federal and state statutory tax rate primarily because of the impact of the one-time transition tax on E&P, the impact of the reduction in the U.S. federal tax rate on our net deferred tax assets, foreign withholding taxes, nondeductible amortization, the impact of accounting for qualified stock options, and foreign income taxed at higher tax rates, partially offset by benefits from research credits.
The total liability for gross unrecognized tax benefits related to uncertain tax positions increased $0.5 million during the nine months ended March 31, 2019, to $25.3 million from $24.8 million at June 30, 2018, and was included in other long-term liabilities on our condensed consolidated balance sheets. If recognized, the total gross unrecognized tax benefits would reduce the effective tax rate on income from continuing operations. Accrued interest and penalties related to unrecognized tax benefits as of March 31, 2019 were $2.7 million; this balance increased by $0.8 million compared to June 30, 2018. We classify interest and penalties as components of income tax expense. It is reasonably possible that the amount of the liability for unrecognized tax benefits may change within the next twelve months and an estimate of the range of possible changes includes an increase in our liability of up to $3.9 million.
In July 2018, the U.S. Ninth Circuit Court of Appeals reversed the 2015 decision of the U.S. Tax Court in Altera Corp. v. Commissioner which found that the Treasury regulations addressing the treatment of stock-based compensation in a cost-sharing arrangement with a related party were invalid. In August 2018, the U.S. Ninth Circuit Court of Appeals withdrew its July 2018 opinion. The reconstituted panel has not issued an opinion on this appeal. As our tax filing position is consistent with the Treasury regulations, we determined no adjustment to our financial statements is required, however, due to the uncertainties with respect to the ultimate resolution, we will continue to monitor developments in this case.
Our major tax jurisdictions are the United States, Hong Kong SAR, and Japan. From fiscal 2013 onward, we remain subject to examination by one or more of these jurisdictions. In August 2018, we received the revenue agent’s report resolving the fiscal 2014 and 2015 examination by the Internal Revenue Service with no material impact on our consolidated financial statements. Our case is pending review by the Joint Committee on Taxation, which we anticipate will conclude in June 2019. Any prospective adjustments to our unrecognized tax benefits will be recorded as an increase or decrease to income tax expense and cause a corresponding change to our effective tax rate. Accordingly, our effective tax rate could fluctuate materially from period to period.
20
12. Segment, Customers, and Geographic Information
We operate in one segment: the development, marketing, and sale of semiconductor products used in electronic devices and products. We generate our revenue from three broad product categories: the Mobile product market, the personal computing, or PC, product market, and the Internet of Things, or IoT, product market. We sell our products to original equipment manufacturers, or OEMs, and to contract manufacturers that provide manufacturing services to OEMs.
Net revenue within geographic areas based on our customers’ locations for the periods presented was as follows (in millions):
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
China
|
|
$
|
190.0
|
|
|
$
|
204.9
|
|
|
$
|
669.5
|
|
|
$
|
624.6
|
|
Japan
|
|
|
58.4
|
|
|
|
87.6
|
|
|
|
204.9
|
|
|
|
275.9
|
|
Taiwan
|
|
|
47.6
|
|
|
|
53.2
|
|
|
|
185.0
|
|
|
|
156.5
|
|
Other
|
|
|
19.6
|
|
|
|
18.7
|
|
|
|
48.9
|
|
|
|
56.5
|
|
South Korea
|
|
|
13.8
|
|
|
|
15.5
|
|
|
|
45.6
|
|
|
|
49.2
|
|
United States
|
|
|
4.6
|
|
|
|
14.1
|
|
|
|
23.2
|
|
|
|
79.1
|
|
|
|
$
|
334.0
|
|
|
$
|
394.0
|
|
|
$
|
1,177.1
|
|
|
$
|
1,241.8
|
|
Net revenue from our customers for each group of similar products was as follows (in millions):
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Mobile product applications
|
|
$
|
204.7
|
|
|
$
|
244.8
|
|
|
$
|
741.8
|
|
|
$
|
799.5
|
|
PC product applications
|
|
|
66.2
|
|
|
|
60.2
|
|
|
|
198.7
|
|
|
|
187.2
|
|
IoT product applications
|
|
|
63.1
|
|
|
|
89.0
|
|
|
|
236.6
|
|
|
|
255.1
|
|
|
|
$
|
334.0
|
|
|
$
|
394.0
|
|
|
$
|
1,177.1
|
|
|
$
|
1,241.8
|
|
Net revenue from major customers as a percentage of total net revenue for the periods presented was as follows:
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Customer A
|
|
17%
|
|
|
17%
|
|
|
18%
|
|
|
16%
|
|
Customer B
|
|
10%
|
|
|
11%
|
|
|
*
|
|
|
11%
|
|
Customer C
|
|
16%
|
|
|
11%
|
|
|
14%
|
|
|
*
|
|
We extend credit based on evaluation of a customer’s financial condition, and we generally do not require collateral. Major customer accounts receivable as a percentage of total accounts receivable were as follows:
|
|
March 31,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Customer A
|
|
20%
|
|
|
13%
|
|
Customer B
|
|
19%
|
|
|
10%
|
|
Customer C
|
|
*
|
|
|
11%
|
|
13. Comprehensive Income/(Loss)
Our comprehensive income/(loss) generally consists of net income/(loss) plus the effect of unrealized gains and losses on our investments, primarily due to temporary changes in market value of certain of our ARS investments. In addition, we recognize the noncredit portion of other-than-temporary impairment on debt securities in other comprehensive income/(loss). We recognize foreign
21
currency remeasurement adjustments and foreign currency transaction gains and losses in our condensed consolidated statements
of operations as the U.S. dollar is the functional currency of our foreign entities.
14. Restructuring Activities
In November 2017, we committed to and initiated a restructuring action intended to streamline and reduce our operating cost structure and capitalize on acquisition synergies. These costs primarily related to severance costs for a reduction in headcount, facility consolidation and related costs. In April 2018, we committed to and initiated a restructuring to close a research and development facility. These costs included employee severance and related benefits and facility closure charges. Restructuring costs related to the November 2017 and April 2018 restructuring activities were recorded to the restructuring costs line item within our condensed consolidated statements of operations and are complete as of March 31, 2019.
The restructuring liability for these fiscal 2018 initiated activities during the nine months ended March 31, 2019 were as follows (in millions):
|
|
Employee Severance
|
|
|
Facility Consolidation
|
|
|
|
|
|
|
|
and Benefits
|
|
|
and Related Charges
|
|
|
Total
|
|
Balance as of June 30, 2018
|
|
$
|
2.2
|
|
|
$
|
0.1
|
|
|
$
|
2.3
|
|
Accruals
|
|
|
0.2
|
|
|
|
-
|
|
|
|
0.2
|
|
Cash payments
|
|
|
(2.4
|
)
|
|
|
(0.1
|
)
|
|
|
(2.5
|
)
|
Balance as of March 31, 2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
In August 2018, we committed to and initiated a restructuring of our mobile fingerprint optical business. These costs primarily related to severance costs for a reduction in headcount and related costs. Restructuring costs related to the fiscal 2019 restructuring activities were recorded to the restructuring costs line item within our condensed consolidated statements of operations. These activities are complete as of March 31, 2019.
The restructuring liability for the fiscal 2019 initiated activity during the nine months ended March 31, 2019 were as follows (in millions):
|
|
Employee Severance
|
|
|
|
and Benefits
|
|
Accruals
|
|
$
|
10.4
|
|
Cash payments
|
|
|
(10.4
|
)
|
Balance as of March 31, 2019
|
|
$
|
—
|
|
22