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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 26, 2021

OR

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: 001-37961

 

ICHOR HOLDINGS, LTD.

(Exact Name of Registrant as Specified in its Charter)

 

 

Cayman Islands

Not Applicable

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

3185 Laurelview Ct.

Fremont, CA

94538

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (510) 897-5200

 

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Ordinary Shares, par value $0.0001

ICHR

The NASDAQ Stock Market LLC

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

 

  

Small 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 April 29, 2021, the registrant had 28,079,224 ordinary shares, $0.0001 par value per share, outstanding.

 


 

TABLE OF CONTENTS

 

PART I

 

 

ITEM 1.

FINANCIAL STATEMENTS (UNAUDITED)

1

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

11

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

17

ITEM 4.

CONTROLS AND PROCEDURES

17

 

 

 

PART II

 

 

ITEM 1.

LEGAL PROCEEDINGS

18

ITEM 1A.

RISK FACTORS

18

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

18

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

18

ITEM 4.

MINE SAFETY DISCLOSURES

18

ITEM 5.

OTHER INFORMATION

18

ITEM 6.

EXHIBITS

18

 

 

SIGNATURES

19

 

 

 


 

PART I

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

ICHOR HOLDINGS, LTD.

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)

 

 

 

March 26,

2021

 

 

December 25,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

242,946

 

 

$

252,899

 

Accounts receivable, net

 

 

108,674

 

 

 

100,977

 

Inventories

 

 

144,062

 

 

 

134,756

 

Prepaid expenses and other current assets

 

 

7,347

 

 

 

7,082

 

Total current assets

 

 

503,029

 

 

 

495,714

 

Property and equipment, net

 

 

46,849

 

 

 

41,811

 

Operating lease right-of-use assets

 

 

9,378

 

 

 

10,088

 

Other noncurrent assets

 

 

5,800

 

 

 

5,503

 

Deferred tax assets, net

 

 

5,812

 

 

 

6,324

 

Intangible assets, net

 

 

36,454

 

 

 

39,845

 

Goodwill

 

 

174,887

 

 

 

174,887

 

Total assets

 

$

782,209

 

 

$

774,172

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

140,669

 

 

$

116,664

 

Accrued liabilities

 

 

16,992

 

 

 

20,792

 

Other current liabilities

 

 

11,778

 

 

 

10,700

 

Current portion of long-term debt

 

 

8,750

 

 

 

8,750

 

Current portion of lease liabilities

 

 

4,895

 

 

 

5,128

 

Total current liabilities

 

 

183,084

 

 

 

162,034

 

Long-term debt, less current portion, net

 

 

159,576

 

 

 

191,522

 

Lease liabilities, less current portion

 

 

4,804

 

 

 

5,272

 

Deferred tax liabilities, net

 

 

109

 

 

 

109

 

Other non-current liabilities

 

 

3,574

 

 

 

3,546

 

Total liabilities

 

 

351,147

 

 

 

362,483

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Preferred shares ($0.0001 par value; 20,000,000 shares authorized; zero shares issued and outstanding)

 

 

 

 

 

 

Ordinary shares ($0.0001 par value; 200,000,000 shares authorized; 28,070,251 and 27,907,077 shares outstanding, respectively; 32,507,690 and 32,344,516 shares issued, respectively)

 

 

3

 

 

 

3

 

Additional paid in capital

 

 

404,046

 

 

 

399,311

 

Treasury shares at cost (4,437,439 shares)

 

 

(91,578

)

 

 

(91,578

)

Retained earnings

 

 

118,591

 

 

 

103,953

 

Total shareholders’ equity

 

 

431,062

 

 

 

411,689

 

Total liabilities and shareholders’ equity

 

$

782,209

 

 

$

774,172

 

 

See accompanying notes.

1


ICHOR HOLDINGS, LTD.

Consolidated Statements of Operations

(dollars in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 26,

2021

 

 

March 27,

2020

 

Net sales

 

$

264,566

 

 

$

220,028

 

Cost of sales

 

 

225,054

 

 

 

191,254

 

Gross profit

 

 

39,512

 

 

 

28,774

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

3,515

 

 

 

3,322

 

Selling, general, and administrative

 

 

14,349

 

 

 

16,618

 

Amortization of intangible assets

 

 

3,391

 

 

 

3,334

 

Total operating expenses

 

 

21,255

 

 

 

23,274

 

Operating income

 

 

18,257

 

 

 

5,500

 

Interest expense

 

 

1,919

 

 

 

2,374

 

Other expense (income), net

 

 

185

 

 

 

(31

)

Income before income taxes

 

 

16,153

 

 

 

3,157

 

Income tax expense (benefit)

 

 

1,515

 

 

 

(242

)

Net income

 

$

14,638

 

 

$

3,399

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.52

 

 

$

0.15

 

Diluted

 

$

0.51

 

 

$

0.15

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

Basic

 

 

28,004,248

 

 

 

22,737,163

 

Diluted

 

 

28,729,112

 

 

 

23,181,127

 

See accompanying notes.

2


ICHOR HOLDINGS, LTD.

Consolidated Statements of Shareholders’ Equity

(dollars in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Treasury

 

 

 

 

 

 

Total

 

For the three months ending March 26, 2021

 

Ordinary Shares

 

 

Paid-In

 

 

Shares

 

 

Retained

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Equity

 

Balance at December 25, 2020

 

 

27,907,077

 

 

$

3

 

 

$

399,311

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

103,953

 

 

$

411,689

 

Ordinary shares issued from exercise of stock options

 

 

105,600

 

 

 

 

 

 

2,381

 

 

 

 

 

 

 

 

 

 

 

 

2,381

 

Ordinary shares issued from vesting of restricted share units

 

 

30,423

 

 

 

 

 

 

(667

)

 

 

 

 

 

 

 

 

 

 

 

(667

)

Ordinary shares issued from employee share purchase plan

 

 

27,151

 

 

 

 

 

 

606

 

 

 

 

 

 

 

 

 

 

 

 

606

 

Share-based compensation expense

 

 

 

 

 

 

 

 

2,415

 

 

 

 

 

 

 

 

 

 

 

 

2,415

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,638

 

 

 

14,638

 

Balance at March 26, 2021

 

 

28,070,251

 

 

$

3

 

 

$

404,046

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

118,591

 

 

$

431,062

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Treasury

 

 

 

 

 

 

Total

 

For the three months ending March 27, 2020

 

Ordinary Shares

 

 

Paid-In

 

 

Shares

 

 

Retained

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Earnings

 

 

Equity

 

Balance at December 27, 2019

 

 

22,618,708

 

 

$

2

 

 

$

242,318

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

70,674

 

 

$

221,416

 

Ordinary shares issued from exercise of stock options

 

 

113,539

 

 

 

 

 

 

2,483

 

 

 

 

 

 

 

 

 

 

 

 

2,483

 

Ordinary shares issued from vesting of restricted share units

 

 

57,912

 

 

 

 

 

 

(993

)

 

 

 

 

 

 

 

 

 

 

 

(993

)

Ordinary shares issued from employee share purchase plan

 

 

16,520

 

 

 

 

 

 

350

 

 

 

 

 

 

 

 

 

 

 

 

350

 

Share-based compensation expense

 

 

 

 

 

 

 

 

2,865

 

 

 

 

 

 

 

 

 

 

 

 

2,865

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,399

 

 

 

3,399

 

Balance at March 27, 2020

 

 

22,806,679

 

 

$

2

 

 

$

247,023

 

 

 

4,437,439

 

 

$

(91,578

)

 

$

74,073

 

 

$

229,520

 

 

See accompanying notes.

3


ICHOR HOLDINGS, LTD.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 26,

2021

 

 

March 27,

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

14,638

 

 

$

3,399

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

5,657

 

 

 

5,737

 

Share-based compensation

 

 

2,415

 

 

 

2,865

 

Deferred income taxes

 

 

512

 

 

 

722

 

Amortization of debt issuance costs

 

 

242

 

 

 

243

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(7,697

)

 

 

(2,724

)

Inventories

 

 

(9,306

)

 

 

(16,684

)

Prepaid expenses and other assets

 

 

512

 

 

 

(868

)

Accounts payable

 

 

22,101

 

 

 

(12,380

)

Accrued liabilities

 

 

(3,467

)

 

 

(568

)

Other liabilities

 

 

41

 

 

 

(778

)

Net cash provided by (used in) operating activities

 

 

25,648

 

 

 

(21,036

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(5,400

)

 

 

(2,470

)

Net cash used in investing activities

 

 

(5,400

)

 

 

(2,470

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Issuance of ordinary shares under share-based compensation plans

 

 

2,654

 

 

 

2,658

 

Employees' taxes paid upon vesting of restricted share units

 

 

(667

)

 

 

(993

)

Borrowings on revolving credit facility

 

 

 

 

 

5,000

 

Repayments on revolving credit facility

 

 

(30,000

)

 

 

 

Repayments on term loan

 

 

(2,188

)

 

 

(2,188

)

Net cash provided by (used in) financing activities

 

 

(30,201

)

 

 

4,477

 

Net decrease in cash

 

 

(9,953

)

 

 

(19,029

)

Cash at beginning of period

 

 

252,899

 

 

 

60,612

 

Cash at end of period

 

$

242,946

 

 

$

41,583

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

1,842

 

 

$

2,136

 

Cash paid during the period for taxes, net of refunds

 

$

667

 

 

$

34

 

Supplemental disclosures of non-cash activities:

 

 

 

 

 

 

 

 

Capital expenditures included in accounts payable

 

$

2,273

 

 

$

652

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

364

 

 

$

328

 

See accompanying notes.

 

 

4


 

 

ICHOR HOLDINGS, LTD.

Notes to Consolidated Financial Statements

(dollar figures in tables in thousands, except per share amounts)

(unaudited)

Note 1 – Basis of Presentation and Selected Significant Accounting Policies

Basis of Presentation

These consolidated unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). All intercompany balances and transactions have been eliminated upon consolidation. All dollar figures presented in tables in the notes to consolidated financial statements are in thousands, except per share amounts. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by the SEC's rules and regulations for interim reporting. These consolidated financial statements should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10‑K for the year ended December 25, 2020.

Year End

We use a 52- or 53-week fiscal year ending on the last Friday in December. The three months ended March 26, 2021 and March 27, 2020 were both 13 weeks. References to the first quarter of 2021 and 2020 refer to the three-month periods then ended. References to fiscal year 2021 and 2020 refer to our fiscal years ending December 31, 2021 and December 25, 2020, respectively.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods presented. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from the estimates made by management. Significant estimates include inventory valuation, uncertain tax positions, fair value assigned to stock options granted, and impairment analysis for both definite‑lived intangible assets and goodwill.

Revenue Recognition

We recognize revenue when control of promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. This amount is recorded as net sales in our consolidated statements of operations.

Transaction price – In most of our contracts, prices are generally determined by a customer-issued purchase order and generally remain fixed over the duration of the contract. Certain contracts contain variable consideration, including early-payment discounts and rebates. When a contract includes variable consideration, we evaluate the estimate of the variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal will not occur. Variable consideration estimates are updated at each reporting date. Historically, we have not incurred significant costs to obtain a contract. All amounts billed to a customer relating to shipping and handling are classified as net sales, while all costs incurred by us for shipping and handling are classified as cost of sales.

Performance obligations – Substantially all of our performance obligations pertain to promised goods (“products”), which are primarily comprised of fluid delivery subsystems, weldments, and other components. Most of our contracts contain a single performance obligation and are generally completed within twelve months. Product sales are recognized at a point-in-time, generally upon delivery, as such term is defined within the contract, as that is when control of the promised good has transferred. Products are covered by a standard assurance warranty, generally extended for a period of one to two years depending on the customer, which promises that delivered products conform to contract specifications. As such, we account for such warranties under ASC 460, Guarantees, and not as a separate performance obligation.

Contract balances – Accounts receivable represents our unconditional right to receive consideration from our customers. Accounts receivable are carried at invoice price less an estimate for doubtful accounts and estimated payment discounts. Payment terms vary by customer but are generally due within 15‑60 days. Historically, we have not incurred significant payment issues with our customers. We had no significant contract assets or liabilities on our consolidated balance sheets in any of the periods presented.

5


 

Accounting Pronouncements Recently Adopted

In December 2019, the FASB issued ASU 2019‑12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in the ASU include removing exceptions to incremental intraperiod tax allocation of losses and gains from different financial statement components, exceptions to the method of recognizing income taxes on interim period losses, and exceptions to deferred tax liability recognition related to foreign subsidiary investments. In addition, the ASU requires that entities recognize franchise tax based on an incremental method and requires an entity to evaluate the accounting for step-ups in the tax basis of goodwill as inside or outside of a business combination. We adopted the standard on the first day of 2021, and it did not have a significant impact on our financial statements.

Note 2 – Inventories

Inventories consist of the following:

 

 

 

March 26,

2021

 

 

December 25,

2020

 

Raw materials

 

$

91,470

 

 

$

88,015

 

Work in process

 

 

43,869

 

 

 

38,184

 

Finished goods

 

 

20,932

 

 

 

21,299

 

Excess and obsolete adjustment

 

 

(12,209

)

 

 

(12,742

)

Total inventories

 

$

144,062

 

 

$

134,756

 

 

Note 3 – Property and Equipment and Other Noncurrent Assets

Property and equipment consist of the following:

 

 

 

March 26,

2021

 

 

December 25,

2020

 

Machinery

 

$

36,828

 

 

$

37,196

 

Leasehold improvements

 

 

29,612

 

 

 

29,616

 

Computer software, hardware, and equipment

 

 

6,531

 

 

 

6,501

 

Office furniture, fixtures and equipment

 

 

1,166

 

 

 

1,166

 

Vehicles

 

 

90

 

 

 

75

 

Construction-in-process

 

 

12,878

 

 

 

5,483

 

 

 

 

87,105

 

 

 

80,037

 

Less accumulated depreciation

 

 

(40,256

)

 

 

(38,226

)

Total property and equipment, net

 

$

46,849

 

 

$

41,811

 

 

Depreciation expense was $2.3 million and $2.4 million for the first quarter of 2021 and 2020, respectively.

Cloud Computing Implementation Costs

We capitalize implementation costs associated with hosting arrangement that are service contracts. These costs are recorded to prepaid expenses or other noncurrent assets. To-date, these costs are those incurred to implement a new company-wide ERP system.

The following table summarizes capitalized cloud computing implementation costs:

 

Capitalized cloud computing implementation costs as of December 25, 2020

 

$

4,366

 

Costs capitalized during the period

 

 

325

 

Capitalized costs amortized during the period

 

 

 

Capitalized cloud computing implementation costs as of March 26, 2021

 

$

4,691

 

 

6


 

 

Note 4 – Intangible Assets

Definite‑lived intangible assets consist of the following:

 

 

 

March 26, 2021

 

 

Gross value

 

 

Accumulated

amortization

 

 

Accumulated

impairment

charges

 

 

Carrying

amount

 

 

Weighted

average

useful life

Trademarks

 

$

9,690

 

 

$

(8,959

)

 

$

 

 

$

731

 

 

10.0 years

Customer relationships

 

 

84,169

 

 

 

(56,824

)

 

 

 

 

 

27,345

 

 

7.7 years

Developed technology

 

 

11,047

 

 

 

(2,669

)

 

 

 

 

 

8,378

 

 

10.0 years

Total intangible assets

 

$

104,906

 

 

$

(68,452

)

 

$

 

 

$

36,454

 

 

 

 

 

 

December 25, 2020

 

 

Gross value

 

 

Accumulated

amortization

 

 

Accumulated

impairment

charges

 

 

Carrying

amount

 

 

Weighted

average

useful life

Trademarks

 

$

9,690

 

 

$

(8,717

)

 

$

 

 

$

973

 

 

10.0 years

Customer relationships

 

 

84,169

 

 

 

(53,946

)

 

 

 

 

 

30,223

 

 

7.8 years

Developed technology

 

 

11,047

 

 

 

(2,398

)

 

 

 

 

 

8,649

 

 

10.0 years

Total intangible assets

 

$

104,906

 

 

$

(65,061

)

 

$

 

 

$

39,845

 

 

 

 

 

Note 5 – Leases

Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For purposes of calculating operating lease ROU assets and operating lease liabilities, we use the non-cancellable lease term plus options to extend that we are reasonably certain to take. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Our leases generally do not provide an implicit rate. As such, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

We lease facilities under various non-cancellable operating leases expiring through 2026. In addition to base rental payments, we are generally responsible for our proportionate share of operating expenses, including facility maintenance, insurance, and property taxes. As these amounts are variable, they are not included in lease liabilities. As of March 26, 2021, we had one operating lease executed for which the rental period had not yet commenced.

The components of lease expense are as follows:

 

 

 

Three Months Ended

 

 

 

March 26,

2021

 

 

March 27,

2020

 

Operating lease cost

 

$

1,381

 

 

$

1,320

 

 

Supplemental cash flow information related to leases is as follows:

 

 

 

Three Months Ended

 

 

 

March 26,

2021

 

 

March 27,

2020

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

1,376

 

 

$

1,284

 

 

Supplemental balance sheet information related to leases is as follows:

 

 

 

March 26,

2021

 

 

March 27,

2020

 

Weighted-average remaining lease term of operating leases

 

2.2 years

 

 

2.9 years

 

Weighted-average discount rate of operating leases

 

4.4%

 

 

4.5%

 

 

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Future minimum lease payments under non-cancelable leases as of March 26, 2021 are as follows:

 

2021, remaining

 

$

3,786

 

2022

 

 

4,370

 

2023

 

 

1,395

 

2024

 

 

448

 

2025

 

 

225

 

Thereafter

 

 

49

 

Total future minimum lease payments

 

 

10,273

 

Less imputed interest

 

 

(574

)

Total lease liabilities

 

$

9,699

 

 

Note 6 – Income Taxes

Income tax information for the periods reported are as follows:

 

 

 

Three Months Ended

 

 

 

March 26,

2021

 

 

March 27,

2020

 

Income tax expense (benefit)

 

$

1,515

 

 

$

(242

)

Income before income taxes

 

$

16,153

 

 

$

3,157

 

Effective income tax rate

 

 

9.4

%

 

 

-7.7

%

 

Our effective tax rate for the first quarter of 2021 differs from the statutory rate due to taxes on foreign income that differ from the U.S. tax rate, including a tax holiday in Singapore, and the impact of share-based compensation activity during the quarter.

Our effective tax rate for first quarter of 2020 differs from the statutory rate due to taxes on foreign income that differ from the U.S. tax rate and the release of the certain tax reserves related to statute of limitation expirations and settlements, excess tax benefits from share-based compensation and the impact of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act.

The ending balance for the unrecognized tax benefits for uncertain tax positions was approximately $3.0 million at March 26, 2021. The related interest and penalties were insignificant. The uncertain tax positions that are reasonably possible to decrease in the next twelve months are insignificant.

As of March 26, 2021, we were not under examination by tax authorities.

Note 7 – Employee Benefit Programs

401(k) Plan

We sponsor a 401(k) plan available to employees of our U.S.‑based subsidiaries. Participants may make salary deferral contributions not to exceed 50% of a participant’s annual compensation or the maximum amount otherwise allowed by law. Eligible employees receive a discretionary matching contribution equal to 50% of a participant’s deferral, up to an annual maximum of 4% of a participant’s annual compensation. Matching contributions were $0.6 million and $0.5 million for the first quarter of 2021 and 2020, respectively.

Note 8 – Long-Term Debt

Long‑term debt consists of the following:

 

 

 

March 26,

2021

 

 

December 25,

2020

 

Term loan

 

$

150,937

 

 

$

153,125

 

Revolving credit facility

 

 

19,162

 

 

 

49,162

 

Total principal amount of long-term debt

 

 

170,099

 

 

 

202,287

 

Less unamortized debt issuance costs

 

 

(1,773

)

 

 

(2,015

)

Total long-term debt, net

 

 

168,326

 

 

 

200,272

 

Less current portion

 

 

(8,750

)

 

 

(8,750

)

Total long-term debt, less current portion, net

 

$

159,576

 

 

$

191,522

 

8


 

 

 

On February 15, 2018, we entered into an amended and restated credit agreement, which includes a $175.0 million term loan and a $125.0 million revolving credit facility. We incurred debt issuance costs of $2.1 million in connection with the amendment. The amendment did not meet the definition of an extinguishment and was accounted for as a modification. Term loan principal payments of $2.2 million are due on a quarterly basis. The credit facilities mature on February 15, 2023.

Interest is charged at either the Base Rate or the Eurodollar rate (as such terms are defined in the credit agreement) at our option, plus an applicable margin. The Base Rate is equal to the higher of i) the Prime Rate, ii) the Federal Funds Rate plus 0.5%, or iii) the Eurodollar Rate plus 1.00%. The Eurodollar rate is equal to LIBOR, subject to a 1.00% floor for the term loan. The applicable margin on Base Rate and Eurodollar Rate loans is 0.751.50% and 1.752.50% per annum, respectively, depending on our leverage ratio. We are also charged a commitment fee of 0.20%-0.35% on the unused portion of our revolving credit facility. Base Rate interest payments and commitment fees are due quarterly. Eurodollar interest payments are due on the last day of the applicable interest period. At March 26, 2021, the term loan and revolving credit facility bore interest at the Eurodollar rate option of 3.25% and 2.50%, respectively.

Note 9 – Share‑Based Compensation

The 2016 Omnibus Incentive Plan (the “2016 Plan”) provides for grants of share‑based awards to employees, directors, and consultants. Awards may be in the form of stock options (“options”), tandem and non‑tandem stock appreciation rights, restricted share awards or restricted share units (“RSUs”), performance awards, and other share‑based awards. Forfeited or expired awards are returned to the incentive plan pool for future grants. Awards generally vest over four years, 25% on the first anniversary of the date of grant and quarterly thereafter over the remaining 3 years. Upon vesting of RSUs, employees may elect to have shares withheld to cover statutory minimum withholding taxes. Shares withheld are not reflected as an issuance of ordinary shares within our consolidated statements of shareholders’ equity, as the shares were never issued, and the associated tax payments are reflected as financing activities within our consolidated statements of cash flows.

Share‑based compensation expense across all plans for options, RSUs, and employee share purchase rights was $2.4 million and $2.9 million for the first quarter of 2021 and 2020, respectively.

Stock Options

The following table summarizes option activity:

 

 

 

Number of Stock Options

 

 

 

 

 

 

 

 

 

 

 

 

 

Time

vesting

 

 

Performance

vesting

 

 

Weighted average exercise price per share

 

 

Weighted average remaining contractual term

 

Aggregate intrinsic value

(in thousands)

 

Outstanding, December 25, 2020

 

 

1,325,826

 

 

 

65,908

 

 

$

22.22

 

 

 

 

 

 

 

Granted