Accuray(ARAY) - 2022 Q4 - Annual Report

PART I Business Overview Accuray develops, manufactures, and supports CyberKnife and TomoTherapy platforms for cancer and neurologic disorders, focusing on market expansion and innovation - Accuray develops, manufactures, sells, and supports radiation therapy solutions designed for accuracy, flexibility, and control, offering fewer and shorter treatments for complex cases and expanding beyond cancer[8] - Key product platforms include CyberKnife® and TomoTherapy® (Radixact® System), delivering advanced treatments such as stereotactic radiosurgery (SRS), stereotactic body radiation therapy (SBRT), intensity modulated radiation therapy (IMRT), image-guided radiation therapy (IGRT), and adaptive radiation therapy (ART)[11] - Strategic goals include increasing physician adoption and patient awareness, expanding the radiosurgery market, continuous innovation through clinical development and collaboration, and expanding sales in international markets, including through strategic partnerships and joint ventures[29][30][34] - The global cancer treatment market faces increasing incidence rates, with an estimated shortage of over 15,000 linear accelerators (linacs) globally in 2015, projected to grow to over 21,000 by 2035, particularly in low and middle-income countries like China[16] - The COVID-19 pandemic has caused widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices, affecting the company's operations, supply chain, and financial results[13] Risk Factors The company faces significant risks from global economic conditions, intense competition, international operations, supply chain dependencies, regulatory compliance, and financial factors - Risks related to the current global economic environment, including the COVID-19 pandemic, inflation, and potential recession, could adversely affect business by delaying customer financing and facility implementation[171][172][176] - The medical device industry is subject to intense competition and rapid technological change, with major competitors like Varian and Elekta, which could render Accuray's products obsolete if the company fails to keep pace with market changes and customer demands[207][209][210] - International operations, which account for a significant portion of revenue, expose the company to risks such as economic/political instability, import delays, changes in foreign regulations, tariffs (e.g., US-China trade war), and foreign currency fluctuations[214][219] - Reliance on single-source suppliers for critical components (robot, couch, magnetron) and potential manufacturing problems could harm the ability to meet demand, increase costs, and disrupt operations, exacerbated by global supply chain disruptions[243][244] - The company is subject to extensive federal, state, and foreign laws and regulations, including FDA requirements for product modifications, anti-kickback laws, physician self-referral laws, transparency laws (Sunshine Act), and data privacy laws (HIPAA, GDPR, PIPL), with violations potentially leading to substantial penalties and harm to the business[330][338][346] Unresolved Staff Comments There are no unresolved staff comments to report - No unresolved staff comments[379] Properties Accuray leases primary facilities in Sunnyvale, California, and Madison, Wisconsin, along with international offices, and expects future needs for manufacturing growth - Leases approximately 124,000 sq ft for headquarters and R&D in Sunnyvale, California, with leases expiring December 2023[380] - Leases approximately 158,000 sq ft for product development, manufacturing, administration, and warehouse space in Madison, Wisconsin, with leases expiring June 2025 for main facilities[381] - International facilities include an office in Morges, Switzerland (~21,000 sq ft, lease until Dec 2024) and a manufacturing facility in Chengdu, China (~42,000 sq ft, lease until July 2023)[381] - Maintains additional offices in Pennsylvania, Durham (NC), Solon (OH), Hong Kong, Japan, Spain, India, Russia, Germany, Brazil, and the United Arab Emirates[382] - Current facilities are deemed adequate for present needs, but additional space, including radiation-shielded areas, may be required for anticipated manufacturing growth[382] Legal Proceedings Accuray is involved in ordinary course legal proceedings, but management believes no material adverse financial impact is probable or estimable - The Company is involved in various lawsuits, claims and proceedings that arise in the ordinary course of business[383][664] - Management believes there are no probable and reasonably estimable losses related to any current legal proceedings and claims as of June 30, 2022[664] Mine Safety Disclosures This item is not applicable to Accuray Incorporated - Not applicable[383] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Accuray's common stock trades on Nasdaq under "ARAY," with 176 stockholders as of August 2022, no cash dividends, and no repurchases in Q4 FY2022 - Accuray's common stock trades on the Nasdaq Global Select Market under the symbol "ARAY."[385] - As of August 9, 2022, the number of outstanding shares of common stock was 93,499,500[2] - As of August 15, 2022, there were 176 stockholders of record[385] - The company has never paid cash dividends and does not anticipate declaring or paying cash dividends in the foreseeable future, intending to retain all future earnings for business operations and expansion[377][385] - In May 2022, 312,500 restricted stock units (RSUs) were granted to an employee, with a grant-date fair value of $2.08 per RSU, vesting annually over four years[386] - The company had no repurchases of its common stock during the quarter ended June 30, 2022[387] RESERVED This item is reserved and contains no content - This item is reserved[393] Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Accuray's FY2022 financial condition and results, detailing business performance, COVID-19 impacts, key financial metrics, backlog, and critical accounting estimates Overview Accuray develops and supports advanced radiosurgery and radiation therapy systems, focusing on market adoption, innovation, and international expansion, while managing ongoing COVID-19 impacts - Accuray develops, manufactures, sells, and supports market-changing radiation therapy solutions for complex and common cases, aiming for better accuracy, flexibility, control, and shorter treatment times[396] - Key product platforms include CyberKnife® and TomoTherapy® (Radixact® System), delivering advanced treatments like SRS, SBRT, IMRT, IGRT, and ART[397] - The CyberKnife S7 System is a robotic, full-body SRS/SBRT device with AI-driven motion tracking and synchronized treatment delivery, capable of treatments in as little as 15 minutes, and enhanced by the VOLO Optimizer for faster planning[398][402] - The Radixact System, the next-generation TomoTherapy platform, offers integrated treatment planning, delivery, and data management, featuring ClearRT helical kVCT high-fidelity imaging and Synchrony real-time motion tracking for adaptive radiation therapy[403][405][406] - Accuray systems were named in 100 out of 118 Class A user licenses in China's 13th five-year plan, generating approximately $65.1 million in system revenue from Class A devices in FY2022[412] - The joint venture (JV) with CNNC High Energy Equipment (Tianjin) Co., Ltd. (Accuray Asia holds 49%) aims to manufacture and sell locally branded radiotherapy devices in China, with NMPA submission for the Class B device expected in Q4 2022[413][415] - The COVID-19 pandemic continues to adversely impact backlog conversion, deliveries, installations, sales, customer payments, and the global supply chain, leading to increased material costs and freight expenses that affect gross margins and net income[420] Backlog Accuray's backlog decreased to $563.7 million as of June 30, 2022, from $616.4 million in the prior year, primarily due to increased age-outs and unfavorable foreign currency impacts, despite an increase in gross orders Order Backlog Summary (in thousands) | Metric | June 30, 2022 | June 30, 2021 | | :----- | :------------ | :------------ | | Backlog | $563,684 | $616,399 | - Backlog conversion to revenue is impacted by factors outside of control, including cancellations, age-outs (contracts not recognized after 2.5 years), and foreign currency fluctuations[424] - The COVID-19 pandemic has adversely impacted the pace of new orders and backlog conversion, leading to a higher than normal level of age-outs[425] Gross Orders, Net Age-outs, Cancellations, and Net Orders (in thousands) | Metric | 2022 | 2021 | 2020 | | :------------------------ | :----------- | :----------- | :----------- | | Gross orders | $332,268 | $325,929 | $377,295 | | Net age-outs | $(148,869) | $(122,132) | $(81,073) | | Cancellations | $(11,348) | $(15,119) | $(13,939) | | Currency impacts and other | $(4,735) | $3,203 | $(1,746) | | Net orders | $167,316 | $191,881 | $280,537 | - Gross orders increased by $6.3 million (2%) in FY2022 compared to FY2021, driven by CyberKnife platform orders and upgrades, but decreased by $51.4 million (14%) in FY2021 compared to FY2020 due to a decline in China Class A system orders and COVID-19 impacts[428][429] - Net orders decreased by $24.6 million in FY2022 compared to FY2021, primarily due to an increase in age-outs ($35.0 million) and unfavorable foreign currency impacts ($7.9 million)[430] - International orders from distribution partners represented 71% of gross orders in FY2022, down from 82% in FY2021[436] Results of Operations In fiscal year 2022, Accuray's net revenue increased by 8% to $429.9 million, driven by strong product sales, partially offset by decreased service revenue, resulting in a net loss of $5.3 million, an improvement from the prior year Consolidated Statements of Operations (in thousands, except percentages) | Metric | 2022 Amount | % of Total Net Revenue | 2021 Amount | % of Total Net Revenue | Change $ | Change % | | :---------------------------------- | :---------- | :--------------------- | :---------- | :--------------------- | :--------- | :--------- | | Products Net Revenue | $214,715 | 50% | $176,647 | 45% | $38,068 | 22% | | Services Net Revenue | $215,194 | 50% | $219,642 | 55% | $(4,448) | (2)% | | Total Net Revenue | $429,909 | 100% | $396,289 | 100% | $33,620 | 8% | | Gross Profit | $159,955 | 37% | $159,507 | 40% | $448 | 0% | | Products Gross Profit | $87,428 | 41% | $74,547 | 42% | $12,881 | 17% | | Services Gross Profit | $72,527 | 34% | $84,960 | 39% | $(12,433) | (15)% | | Research and development expenses | $57,752 | 13% | $52,729 | 13% | $5,023 | 10% | | Selling and marketing expenses | $49,664 | 12% | $42,820 | 11% | $6,844 | 16% | | General and administrative expenses | $44,391 | 10% | $41,723 | 11% | $2,668 | 6% | | (Gain) loss on equity method investment | $(241) | (0)% | $(872) | 0% | $631 | (72)% | | Other expense, net | $10,391 | 2% | $27,666 | 7% | $(17,275) | (62)% | | Provision for income taxes | $3,345 | 1% | $1,752 | 0% | $1,593 | 91% | | Net income (loss) | $(5,347) | (1)% | $(6,311) | (2)% | $964 | (15)% | - Product net revenue increased by $38.1 million (22%) in FY2022, driven by higher unit volume sales and increased system average product revenue, particularly in the Americas, EMEA, and China regions[441] - Service net revenue decreased by $4.4 million (2%) in FY2022, primarily due to the strong US dollar reducing the dollar value of foreign currency service contract revenue, mainly in Japan and Europe, partially offset by increased installation revenue[442] Net Revenue by Geographic Region (in thousands, except percentages) | Net revenue | 2022 | 2021 | | :---------- | :--- | :--- | | Americas | 29% | 27% | | Europe, Middle East, India and Africa | 31% | 31% | | Asia Pacific, excluding Japan and China | 7% | 7% | | Japan | 13% | 15% | | China | 20% | 20% | - Research and development expenses increased by $5.0 million (10%) in FY2022, mainly due to higher compensation and employee benefits (additional headcount) and increased outside services[445] - Selling and marketing expenses increased by $6.8 million (16%) in FY2022, driven by increased headcount, a greater number of in-person tradeshows, and higher travel expenses[446] - Other expense, net, decreased by $17.3 million (62%) in FY2022, primarily due to lower interest costs on debt and the absence of a loss on extinguishment of old convertible notes recorded in FY2021[450] Liquidity and Capital Resources As of June 30, 2022, Accuray had $88.7 million in cash and cash equivalents, believing it has sufficient liquidity for the next 12 months despite economic uncertainties, with net cash used in operating activities of $2.4 million in FY2022 - Cash and cash equivalents totaled $88.7 million as of June 30, 2022[467] - The company believes it has sufficient cash resources and anticipated cash flows to fund operations for at least the next 12 months, but this is subject to significant uncertainty from COVID-19, supply chain disruptions, rising interest rates, and geopolitical events[467] - Outstanding debt includes $2.9 million of 3.75% Convertible Senior Notes due 2022 (repaid post-June 30, 2022) and $100.0 million of 3.75% Convertible Senior Notes due 2026, along with New Credit Facilities comprising an $80 million Term Loan Facility ($76.0 million outstanding) and a $40 million Revolving Credit Facility ($5.0 million outstanding) as of June 30, 2022[468][665][672][693] - Compliance with debt covenants (fixed charge coverage ratio and consolidated senior net leverage ratio) under the New Credit Facilities is critical; failure could lead to default and accelerated debt maturity[471] - As of June 30, 2022, $55.1 million of cash and cash equivalents were held at foreign subsidiaries; undistributed earnings from Japan, France, and Switzerland are subject to income taxes upon repatriation[472] Cash Flows Summary (in thousands) | Metric | 2022 | 2021 | 2020 | | :-------------------------------------------------------------------------------- | :--------- | :--------- | :--------- | | Net cash provided by (used in) operating activities | $(2,400) | $38,512 | $(1,469) | | Net cash used in investing activities | $(4,717) | $(2,399) | $(3,728) | | Net cash provided by (used in) financing activities | $(15,369) | $(28,805) | $26,696 | | Effect of exchange rate changes on cash, cash equivalents and restricted cash | $(5,561) | $982 | $234 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(28,047) | $8,290 | $21,733 | - Net cash used in operating activities was $2.4 million in FY2022, primarily due to increases in inventories ($22.9 million) and accounts receivable ($12.5 million), offset by non-cash items[475] Critical Accounting Estimates Accuray's financial statements rely on significant management estimates for revenue recognition, goodwill, inventory, convertible notes, investments, and credit losses, with economic uncertainty potentially affecting their accuracy - Critical accounting policies and estimates include revenue recognition, assessment of goodwill recoverability, valuation of inventories, convertible notes, impairment of investments, and allowance for credit losses[491] - Revenue is recognized for products upon transfer of control (generally delivery) and for services over the contractual period or when performed. For bundled arrangements, transaction price is allocated based on standalone selling price (SSP), which is determined from observable prices or estimated considering market conditions[494][495][568][569] - Inventory valuation requires estimating obsolete or excess inventory based on historical usage rates and future product demand[501] - Goodwill is evaluated for impairment annually; no impairment was identified in fiscal years 2022, 2021, and 2020[500][579] - Convertible notes are accounted for as a single liability at amortized cost following the adoption of ASU 2020-06[502] - The equity method investment in the China JV is monitored for impairment based on financial condition, business outlook, and other relevant factors[503][596] - Allowance for credit losses is evaluated quarterly based on customer creditworthiness and contractual terms[506] Quantitative and Qualitative Disclosure About Market Risk Accuray is exposed to foreign currency, interest rate, and equity price risks, using forward contracts to mitigate foreign exchange risk, with variable interest rates on debt, and conditional conversion features on Convertible Senior Notes - Accuray is exposed to foreign currency exchange rate risk, primarily from the Euro and Japanese Yen, and uses foreign currency forward contracts (notional value ~$68.3 million as of June 30, 2022) to mitigate this risk[508][644] - The company is exposed to interest rate risk due to variable rates on its New Credit Facilities (tied to LIBOR); a 50 basis point change would impact annual interest expense by approximately $0.4 million[511] - Equity price risk arises from the conditional conversion features of the 3.75% Convertible Notes due 2022 (conversion price ~$5.72/share) and 3.75% Convertible Notes due 2026 (conversion price ~$5.86/share)[514][515] - The company does not believe inflation has had a material effect on its business, but an inability to offset higher costs from significant inflationary pressures could harm its financial condition[513] Financial Statements and Supplementary Data This section presents Accuray's audited consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes for fiscal years 2020-2022 Report of Independent Registered Public Accounting Firm Grant Thornton LLP issued an unqualified opinion on Accuray's FY2022 and FY2021 consolidated financial statements and internal control over financial reporting, identifying standalone selling price as a critical audit matter - Grant Thornton LLP issued an unqualified opinion on Accuray's consolidated financial statements for the fiscal years ended June 30, 2022 and 2021[521] - An unqualified opinion was also expressed on the effectiveness of the company's internal control over financial reporting as of June 30, 2022[522] - The determination of standalone selling price (SSP) of performance obligations was identified as a critical audit matter due to the significant judgments and high degree of auditor judgment required in evaluating these estimates[526][528] Consolidated Balance Sheets As of June 30, 2022, Accuray reported total assets of $472.8 million, a slight decrease from 2021, with total liabilities increasing to $419.7 million, and total stockholders' equity decreasing to $53.2 million Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2022 | June 30, 2021 | Change | | :-------------------------------- | :------------ | :------------ | :------- | | ASSETS | | | | | Cash and cash equivalents | $88,737 | $116,369 | $(27,632) | | Accounts receivable, net | $94,442 | $85,360 | $9,082 | | Inventories | $142,254 | $125,929 | $16,325 | | Total current assets | $350,890 | $352,773 | $(1,883) | | Property and equipment, net | $12,685 | $12,332 | $353 | | Investment in joint venture | $13,879 | $15,935 | $(2,056) | | Goodwill | $57,840 | $57,960 | $(120) | | Total assets | $472,849 | $480,098 | $(7,249) | | LIABILITIES | | | | | Accounts payable | $31,337 | $19,467 | $11,870 | | Accrued compensation | $29,441 | $26,865 | $2,576 | | Short-term debt | $8,563 | $3,790 | $4,773 | | Total current liabilities | $208,858 | $192,359 | $16,499 | | Long-term debt | $171,907 | $170,007 | $1,900 | | Total liabilities | $419,660 | $411,258 | $8,402 | | STOCKHOLDERS' EQUITY | | | | | Accumulated deficit | $(492,522) | $(488,024) | $(4,498) | | Total stockholders' equity | $53,189 | $68,840 | $(15,651) | Consolidated Statements of Operations and Comprehensive Income (Loss) For fiscal year 2022, Accuray reported a net loss of $5.3 million, an improvement from 2021, with total net revenue increasing by 8% to $429.9 million, driven by product sales and lower other expenses Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | 2022 | 2021 | 2020 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Products Net Revenue | $214,715 | $176,647 | $167,302 | | Services Net Revenue | $215,194 | $219,642 | $215,626 | | Total Net Revenue | $429,909 | $396,289 | $382,928 | | Cost of products | $127,287 | $102,100 | $95,882 | | Cost of services | $142,667 | $134,682 | $137,325 | | Total Cost of Revenue | $269,954 | $236,782 | $233,207 | | Gross Profit | $159,955 | $159,507 | $149,721 | | Research and development | $57,752 | $52,729 | $49,784 | | Selling and marketing | $49,664 | $42,820 | $47,254 | | General and administrative | $44,391 | $41,723 | $40,144 | | Total Operating Expenses | $151,807 | $137,272 | $137,182 | | Income from operations | $8,148 | $22,235 | $12,539 | | Income (loss) on equity method investment | $241 | $872 | $(149) | | Other expense, net | $(10,391) | $(27,666) | $(6,700) | | Provision for income taxes | $3,345 | $1,752 | $1,863 | | Net income (loss) | $(5,347) | $(6,311) | $3,827 | | Net income (loss) per share - basic | $(0.06) | $(0.07) | $0.04 | | Net income (loss) per share - diluted | $(0.06) | $(0.07) | $0.04 | | Comprehensive income (loss) | $(5,034) | $(3,734) | $3,353 | Consolidated Statements of Stockholders' Equity Accuray's total stockholders' equity decreased to $53.2 million at June 30, 2022, primarily due to a net loss, a cumulative adjustment from ASU 2020-06 adoption, and negative foreign currency translation Consolidated Stockholders' Equity (in thousands) | Metric | June 30, 2022 | June 30, 2021 | June 30, 2020 | | :------------------------------------------ | :------------ | :------------ | :------------ | | Common Stock | $94 | $91 | $91 | | Additional Paid-in Capital | $543,211 | $554,680 | $545,741 | | Accumulated Other Comprehensive Income | $2,406 | $2,093 | $(484) | | Accumulated Deficit | $(492,522) | $(488,024) | $(481,713) | | Total Stockholders' Equity | $53,189 | $68,840 | $63,635 | | Cumulative adjustment due to adoption of ASU No. 2020-06 | $(24,784) | N/A | N/A | | Net loss | $(5,347) | $(6,311) | $3,827 | | Share-based compensation | $10,535 | $9,385 | $8,166 | | Foreign currency translation adjustment | $(3,998) | $1,705 | $(238) | Consolidated Statements of Cash Flows In fiscal year 2022, Accuray experienced net cash used in operating activities of $2.4 million, a shift from cash provided in 2021, primarily due to increased working capital needs and debt repayments Consolidated Statements of Cash Flows (in thousands) | Metric | 2022 | 2021 | 2020 | | :-------------------------------------------------------------------------------- | :--------- | :--------- | :--------- | | Net cash provided by (used in) operating activities | $(2,400) | $38,512 | $(1,469) | | Net cash used in investing activities | $(4,717) | $(2,399) | $(3,728) | | Net cash provided by (used in) financing activities | $(15,369) | $(28,805) | $26,696 | | Effect of exchange rate changes on cash, cash equivalents and restricted cash | $(5,561) | $982 | $234 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(28,047) | $8,290 | $21,733 | | Cash, cash equivalents and restricted cash at beginning of period | $118,201 | $109,911 | $88,178 | | Cash, cash equivalents and restricted cash at end of period | $90,154 | $118,201 | $109,911 | - Net cash used in operating activities was $2.4 million in fiscal 2022, primarily due to increases of $22.9 million in inventories and $12.5 million in accounts receivable, offset by $25.5 million of non-cash items[475] - Net cash used in investing activities was $4.7 million in fiscal 2022, primarily related to the purchase of property and equipment[480] - Net cash used in financing activities was $15.4 million in fiscal 2022, primarily due to $15.0 million of repayments under the Revolving Credit Facility and $4.0 million paydown in debt[481] Notes to Consolidated Financial Statements These notes provide detailed disclosures on Accuray's accounting policies, revenue recognition, financial information, leases, debt, equity, and other critical areas, offering comprehensive context to the financial statements The Company and its Significant Accounting Policies Accuray designs and sells advanced radiation therapy systems globally, with financial statements prepared under U.S. GAAP, highlighting ongoing COVID-19 risks and key accounting estimates, including a full valuation allowance against deferred tax assets - Accuray designs, develops, and sells advanced radiosurgery and radiation therapy systems for tumor treatment throughout the body, operating globally[546] - The COVID-19 pandemic continues to adversely impact backlog conversion, deliveries, installations, sales, customer payments, and the global supply chain, leading to increased material costs and freight expenses that affect gross margins and net income[549][550][552] - Key accounting estimates and assumptions include revenue recognition (especially standalone selling price), goodwill recoverability, valuation of the JV equity method investment, inventory valuation, annual performance bonuses, allowance for credit losses, and loss contingencies[554] - Revenue is recognized for products upon transfer of control (generally delivery) and for services over the contractual period or when performed, with transaction prices allocated based on standalone selling price (SSP) for bundled arrangements[564][565][568][569] - The company has recorded a full valuation allowance against its domestic and certain foreign net deferred tax assets due to the uncertainty of their realization[599] Recent Accounting Pronouncements Accuray adopted ASU 2020-06 in FY2022, which increased debt by $24.8 million and decreased additional paid-in capital by $25.6 million, and is evaluating other ASUs related to reference rate reform and contract assets/liabilities - Adopted ASU No. 2020-06, "Debt with Conversion and Other Options," effective July 1, 2021, using a modified retrospective method[601] - Upon adoption of ASU 2020-06, the company recorded an increase to Accumulated Deficit of $0.8 million, a decrease to Additional Paid-in Capital of $25.6 million, and an increase to Debt of $24.8 million, with no impact on diluted loss per share[601] - Currently evaluating the impact of ASU 2020-04 (Reference Rate Reform) on debt, leases, and derivatives, particularly the transition from LIBOR to SOFR for the New Credit Facility[602][604] - Also evaluating ASU 2021-04 (Earnings Per Share) and ASU 2021-08 (Accounting for Contract Assets and Contract Liabilities from Contracts with Customers), with the latter effective for fiscal years beginning after December 15, 2022[605][606] Revenue Accuray's revenue recognition involves managing contract balances and allocating transaction prices using standalone selling price, with total remaining performance obligations of $1,104.4 million as of June 30, 2022, and 16% of open system sales contracts potentially not converting to revenue - Contract balances include trade receivables, unbilled receivables (contract assets), and deferred revenues (contract liabilities), with payment terms varying from 30 to 90 days or longer[607] Changes in Contract Assets and Liabilities (in thousands) | Metric | June 30, 2022 | June 30, 2021 | Change | Change % | | :------------------------------------ | :------------ | :------------ | :------- | :------- | | Unbilled accounts receivable – current | $13,325 | $12,354 | $971 | 8% | | Long-term accounts receivable | $5,301 | $4,970 | $331 | 7% | | Customer advances | $25,290 | $24,937 | $353 | 1% | | Deferred revenue – current | $75,375 | $81,660 | $(6,285) | (8)% | | Deferred revenue – non-current | $24,694 | $23,685 | $1,009 | 4% | - Total remaining performance obligations amounted to $1,104.4 million as of June 30, 2022, with $69.1 million related to long-term warranty and service[610] - For the remaining $1,035.3 million of performance obligations, 25% to 28% is estimated to be recognized in the next 12 months, with the remainder thereafter[612] - Approximately 16% of the company's $983.2 million open system sales contracts may never result in revenue due to long sales cycles and factors outside of its control[612] - Capitalized contract costs were $11.4 million as of June 30, 2022, with $3.3 million in amortization expense recognized during the year[613][615] Supplemental Financial Information This note details accounts receivable ($94.4 million), inventories ($142.3 million), property and equipment ($12.7 million), and accumulated other comprehensive income, which shifted from a loss to a gain, primarily due to pension obligations Accounts Receivable, Net (in thousands) | Metric | June 30, 2022 | June 30, 2021 | | :-------------------------- | :------------ | :------------ | | Accounts receivable | $82,117 | $74,054 | | Unbilled fees and services | $13,325 | $12,354 | | Less: Allowance for credit losses | $(1,000) | $(1,048) | | Accounts receivable, net | $94,442 | $85,360 | Inventories (in thousands) | Metric | June 30, 2022 | June 30, 2021 | | :-------------- | :------------ | :------------ | | Raw materials | $61,871 | $45,301 | | Work-in-process | $16,367 | $22,014 | | Finished goods | $64,016 | $58,614 | | Total Inventories | $142,254 | $125,929 | Property and Equipment, Net (in thousands) | Metric | June 30, 2022 | June 30, 2021 | | :-------------------------- | :------------ | :------------ | | Total gross property & equipment | $91,895 | $90,507 | | Less: Accumulated depreciation | $(79,210) | $(78,175) | | Property and equipment, net | $12,685 | $12,332 | Accumulated Other Comprehensive Income (Loss) (in thousands) | Metric | June 30, 2022 | June 30, 2021 | June 30, 2020 | | :------------------------------------------ | :------------ | :------------ | :------------ | | Foreign Currency Items | $(1,541) | $2,457 | $752 | | Change in Defined Pension Benefit Obligation | $3,947 | $(364) | $(1,236) | | Total | $2,406 | $2,093 | $(484) | Other Expense, Net (in thousands) | Metric | 2022 | 2021 | 2020 | | :-------------------------------- | :---------- | :---------- | :---------- | | Interest expense | $(8,129) | $(16,893) | $(18,080) | | Foreign currency transaction loss | $(2,618) | $(1,953) | $(2,343) | | Gain on contribution to joint venture | — | — | $12,964 | | Loss on Debt Extinguishment | — | $(9,948) | — | | Other expense, net | $356 | $1,128 | $759 | | Total other expense, net | $(10,391) | $(27,666) | $(6,700) | Leases Accuray's operating lease costs were $9.2 million in FY2022, with right-of-use assets of $16.8 million and obligations of $19.0 million as of June 30, 2022, reflecting a weighted average remaining lease term of 2.59 years - Operating lease costs for the twelve months ended June 30, 2022, were $9.2 million, with cash paid for operating lease liabilities totaling $9.8 million[631][632] Operating Lease Right-of-Use Assets (in thousands) | Metric | June 30, 2022 | June 30, 2021 | | :------------------------------------------ | :------------ | :------------ | | Beginning balance | $22,522 | $28,647 | | Lease asset added | $3,522 | $1,069 | | Amortization for the year | $(9,246) | $(7,194) | | Ending balance | $16,798 | $22,522 | Operating Lease Obligation (in thousands) | Metric | June 30, 2022 | June 30, 2021 | | :------------------------------------------ | :------------ | :------------ | | Beginning balance | $25,609 | $32,397 | | Lease liability added | $3,209 | $1,069 | | Repayment and interest accretion | $(9,798) | $(7,857) | | Ending balance | $19,020 | $25,609 | | Current portion | $8,567 | $8,169 | | Noncurrent portion | $10,453 | $17,441 | - As of June 30, 2022, the weighted average remaining lease term for operating leases was 2.59 years, and the weighted average discount rate was 6.07%[635] Maturities of Operating Lease Liabilities (in thousands) | Year Ending June 30, | Amount | | :------------------- | :----- | | 2023 | $9,554 | | 2024 | $6,770 | | 2025 | $3,631 | | 2026 | $354 | | 2027 | $197 | | Total | $20,506 | Goodwill and Purchased Intangible Assets Accuray's goodwill remained stable at $57.8 million as of June 30, 2022, with no impairment, and purchased intangible assets had a net carrying amount of $0.25 million, with $0.1 million in amortization expense in FY2022 Goodwill Carrying Amount (in thousands) | Metric | June 30, 2022 | June 30, 2021 | | :-------------------------------- | :------------ | :------------ | | Balance at beginning of period | $57,960 | $57,717 | | Currency translation adjustment | $(120) | $243 | | Balance at end of period | $57,840 | $57,960 | - No impairment to goodwill was identified in fiscal years ended June 30, 2022, 2021, and 2020[637][579] Purchased Intangible Assets, Net (in thousands) | Metric | June 30, 2022 (Net) | June 30, 2021 (Net) | | :------------ | :------------------ | :------------------ | | Patent license | $250 | $435 | - Amortization expense related to purchased intangible assets was $0.1 million in FY2022, $0.2 million in FY2021, and $0.2 million in FY2020[638] Estimated Future Amortization Expense of Purchased Intangible Assets (in thousands) | Year Ending June 30, | Amount | | :------------------- | :----- | | 2023 | $100 | | 2024 | $150 | | Total | $250 | Derivative Financial Instruments Accuray uses foreign currency forward contracts, with a notional value of approximately $68.3 million as of June 30, 2022, to manage foreign exchange rate risk, with fair value changes reported in earnings - The company utilizes foreign currency forward contracts to manage exposure to fluctuations in foreign currency exchange rates on intercompany balances, customer receivables, and liabilities[642] - These forward contracts are not designated as hedging instruments for accounting purposes, and all changes in fair value are reported in earnings as part of other expenses, net[509][642] Outstanding Forward Currency Exchange Contracts (Notional Amount in thousands of U.S. dollars) | Currency | June 30, 2022 | June 30, 2021 | | :-------------- | :------------ | :------------ | | Swiss Franc | $27,910 | $8,891 | | Chinese Yuan | $2,524 | $1,927 | | Euro | $16,307 | $19,037 | | British Pound | $3,699 | $3,191 | | Indian Rupee | $3,728 | $7,825 | | Japanese Yen | $14,167 | $12,803 | | Total | $68,335 | $54,201 | Gain (Loss) from Derivative Financial Instruments (in thousands) | Metric | 2022 | 2021 | 2020 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Foreign currency exchange gain (loss) on forward contracts | $(2,045) | $(2,349) | $744 | | Foreign currency transactions gain (loss) | $(887) | $396 | $(3,087) | Fair Value Measurements Accuray categorizes fair value measurements into a three-level hierarchy, with foreign currency forward contracts and debt instruments, including Convertible Notes, classified as Level 2 measurements - Fair value measurements are categorized into a three-level hierarchy: Level 1 (unadjusted quoted prices in active markets), Level 2 (other observable inputs), and Level 3 (unobservable inputs)[647][648] - Foreign currency forward contracts, with a notional value of approximately $68.3 million at June 30, 2022, are considered Level 2 fair value measurements[649] - The carrying value of the company's debt (Term Loan, Revolving Credit Facility, 3.75% Convertible Notes due 2022 and 2026) approximates its estimated fair value, which is also considered a Level 2 fair value measurement[650] Carrying Value and Estimated Fair Value of Debt (in thousands) | Metric | June 30, 2022 (Carrying Value) | June 30, 2022 (Fair Value) | June 30, 2021 (Carrying Value) | June 30, 2021 (Fair Value) | | :-------------------------------- | :----------------------------- | :--------------------------- | :----------------------------- | :--------------------------- | | 3.75% Convertible Notes Due 2022 | $2,863 | $2,729 | $2,712 | $3,164 | | 3.75% Convertible Notes Due 2026 | $97,619 | $78,561 | $72,388 | $108,163 | | Term Loan Facility | $74,988 | $74,988 | $78,697 | $78,697 | | Revolving Credit Facility | $5,000 | $5,000 | $20,000 | $20,000 | | Total | $180,470 | $161,278 | $173,797 | $210,024 | Commitments and Contingencies Accuray has long-term debt commitments, purchase commitments, indemnification agreements, and bank guarantees, and is involved in ordinary course legal proceedings, with no material adverse financial impact currently anticipated Future Minimum Long-Term Principal and Interest on Debt (in thousands) | Year Ending June 30, | Long-Term Debt (Principal & Interest) | | :------------------- | :------------------------------------ | | 2023 | $16,266 | | 2024 | $13,138 | | 2025 | $14,827 | | 2026 | $116,777 | | Total | $161,008 | - The company has open purchase commitments and contractual obligations in the ordinary course of business, with a majority due within a year, and terms generally allowing cancellation or rescheduling[657] - Standard indemnification agreements are in place with landlords and mortgagees; no liability has been recorded as of June 30, 2022, as no probable losses are identified[658] - Bank guarantees totaled approximately $1.2 million as of June 30, 2022 and 2021, related to customer bidding processes[659] - Royalty costs of $1.9 million were recorded in FY2022 and FY2021 related to software license agreements with third parties[660] - The company is involved in ordinary course legal proceedings but believes there are no probable and reasonably estimable losses that would materially affect its financial condition or operating results[664] Debt Accuray's debt includes Convertible Senior Notes due 2022 (repaid post-FY2022) and 2026, and New Credit Facilities, with the adoption of ASU 2020-06 changing convertible note accounting to a single liability, and the company subject to financial covenants - The $2.9 million aggregate principal amount of 3.75% Convertible Senior Notes due 2022 outstanding as of June 30, 2022, was repaid in cash subsequent to the fiscal year-end[665] - The $100.0 million aggregate principal amount of 3.75% Convertible Senior Notes due 2026 was outstanding as of June 30, 2022, with an initial conversion rate of 170.5611 shares per $1,000 principal amount (conversion price ~$5.86 per share)[672][671] - Upon adoption of ASU No. 2020-06 on July 1, 2021, the 3.75% Convertible Notes due 2026 are accounted for wholly as debt, reversing the prior separation of debt and equity components[673] - New Credit Facilities, entered into in May 2021, include an $80 million Term Loan Facility ($76.0 million outstanding) and a $40 million Revolving Credit Facility ($5.0 million outstanding) as of June 30, 2022[688][693] - Interest on the New Credit Facilities is variable, tied to 90-day LIBOR (with a 0.50% floor) plus a margin ranging from 2.50% to 3.25% based on the Consolidated Senior Net Leverage Ratio[689] - The New Credit Agreement contains financial covenants, including a Fixed Charge Coverage Ratio and Consolidated Senior Net Leverage Ratio, which the company must meet[691] Carrying Value of New Credit Facilities and Notes (in thousands) | Metric | June 30, 2022 | | :-------------------------------- | :------------ | | Revolving Credit Facility | $5,000 | | 3.75% Convertible Notes Due 2022 | $2,864 | | 3.75% Convertible Notes Due 2026 | $97,619 | | Term Loan Facility | $74,987 | | Net Carrying Amount | $180,470 | | Short-term debt | $8,563 | | Long-term debt | $171,907 | Interest Expense on New Credit Facilities and Notes (in thousands) | Metric | 2022 | 2021 | 2020 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Contractual interest coupon | $7,233 | $10,590 | $12,373 | | Amortization of debt discount | — | $4,887 | $4,168 | | Amortization of debt issuance costs | $909 | $1,356 | $1,350 | | Extinguishment of debt | — | $9,948 | — | | Total | $8,142 | $26,781 | $17,891 | Shareholders' Equity As of June 30, 2022, 1.6 million shares of common stock were reserved for issuance under Accuray's stock incentive plans, and the company repurchased 3,108,369 shares for $14.1 million in May 2021 - As of June 30, 2022, 1.6 million shares of common stock were reserved for issuance under stock incentive plans and the employee stock purchase plan[696] - In May 2021, the company repurchased 3,108,369 shares of its common stock for an aggregate amount of $14.1 million[697] Stock Incentive Plan and Employee Stock Purchase Plan Accuray operates equity incentive plans, with share-based compensation expense of $10.6 million in FY2022, and $14.5 million in unrecognized compensation expense related to unvested awards as of June 30, 2022 - The company operates the 2016 Equity Incentive Plan and the 2007 Incentive Award Plan (no new grants under 2007 Plan), granting stock options, restricted stock awards (RSUs), performance units (PSUs), market stock units (MSUs), and Employee Stock Purchase Plan (ESPP) awards[698][700] Share-Based Compensation Expense (in thousands) | Metric | 2022 | 2021 | 2020 | | :-------------------------- | :--------- | :--------- | :--------- | | Cost of revenue | $1,584 | $1,296 | $1,244 | | Research and development | $1,371 | $1,348 | $1,457 | | Selling and marketing | $2,213 | $1,457 | $1,159 | | General and administrative | $5,432 | $5,231 | $4,292 | | Total | $10,600 | $9,332 | $8,152 | - As of June 30, 2022, approximately $14.5 million of unrecognized compensation expense, net of estimated forfeitures, related to unvested stock options, ESPP, and restricted stock units, is expected to be recognized over a weighted average period of 0.6 to 2.4 years[466][710][724] - The fair value of stock options and ESPP awards is estimated using the Black-Scholes option-pricing model, while MSUs use a Monte Carlo simulation model[706][722][585] Stock Options Activity (in thousands, except per share and term) | Metric | Options Outstanding (June 30, 2022) | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | | :------------------------------------------ | :-------------------------------- | :------------------------------ | :-------------------------------------------------- | | Balance at June 30, 2022 | 7,053 | $3.73 | 7.05 | | Exercisable at June 30, 2022 | 4,576 | $4.00 | 6.27 | Unvested Restricted Stock (RSUs, PSUs, MSUs) Activity (in thousands, except fair value per share) | Metric | Total Number of Shares Underlying Stock Awards (June 30, 2022) | Weighted Average Grant Date Fair Value Per Share | | :------------------------------------------ | :--------------------------------------------------- | :----------------------------------------------- | | Unvested at June 30, 2022 | 5,136 | $3.74 | Joint Venture Accuray Asia holds a 49% equity interest in a China JV, accounted for using the equity method, with a carrying value of $13.9 million as of June 30, 2022, and the JV reported $55.2 million in revenue for the twelve months ended March 31, 2022 - Accuray Asia holds a 49% equity interest in the joint venture (JV) with CNNC High Energy Equipment (Tianjin) Co., Ltd., formed in January 2019 to manufacture and sell radiation oncology systems in China[725] - The JV is accounted for using the equity method, with Accuray recognizing its proportionate share of income or loss on a one-quarter lag and eliminating intra-entity profits on sales until realized[726] - As of June 30, 2022, the carrying value of Accuray's investment in the JV was $13.9 million, and equity method goodwill was $4.7 million, with no impairment identified[727] Summarized Financial Information of the JV (in thousands) | Metric | 12 Months Ended March 31, 2022 | 12 Months Ended March 31, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $55,190 | $33,054 | | Gross Profit | $15,915 | $10,578 | | Net income | $422 | $1,785 | | Net income attributable to the Company | $241 | $872 | | Balance Sheet Data (in thousands): | | | | Current assets | $71,730 | $24,703 | | Non current assets | $21,754 | $23,089 | | Current liabilities | $61,877 | $16,854 | | Non current liabilities | $1,055 | $1,467 | | Stockholder's equity | $30,552 | $29,471 | Income Taxes Accuray reported a loss before income taxes of $2.0 million in FY2022, with a provision of $3.3 million, and holds significant NOL carryforwards and R&D tax credits, but a full valuation allowance is recorded against deferred tax assets Income (Loss) Before Provision for Income Taxes (in thousands) | Metric | 2022 | 2021 | 2020 | | :-------------- | :--------- | :--------- | :--------- | | Domestic | $(14,092) | $(8,448) | $(1,811) | | Foreign | $12,090 | $3,889 | $7,501 | | Total | $(2,002) | $(4,559) | $5,690 | Provision for Income Taxes (in thousands) | Metric | 2022 | 2021 | 2020 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Total current | $1,560 | $1,866 | $1,510 | | Total deferred | $1,785 | $(114) | $353 | | Total provision for income taxes | $3,345 | $1,752 | $1,863 | Significant Components of Net Deferred Tax Assets (Liabilities) (in thousands, June 30, 2022) | Metric | Amount | | :-------------------------------- | :------- | | Federal and state net operating losses | $75,450 | | R&D Credits | $25,146 | | Total deferred tax assets | $123,366 | | Total deferred tax liabilities | $(5,768) | | Valuation allowance | $(119,115) | | Net deferred tax assets (liabilities) | $(1,517) | - As of June 30, 2022, the company had approximately $324.0 million in federal and $131.1 million in state net operating loss carryforwards, expiring in varying amounts starting in 2025 and 2023, respectively[738] - As of June 30, 2022, federal R&D tax credits were approximately $25.5 million (expiring 2023+) and state R&D tax credits were $22.1 million (California credits have no expiration date)[739] - A 100% valuation allowance is established against combined domestic net deferred tax assets due to uncertainty surrounding their realization[740] - The company had $19.8 million in gross unrecognized tax benefits as of June 30, 2022, with no material changes anticipated in the next 12 months[743] Employee Benefit Plan Accuray sponsors a 401(k) Plan in the United States, allowing voluntary employee contributions, with discretionary matching contributions totaling $2.3 million in fiscal year 2022 - The company's employee savings and retirement plan is a 401(k) Plan, allowing voluntary, tax-deferred contributions up to statutory limits[747] - Discretionary matching contributions to the 401(k) Plan were $2.3 million in FY2022, $1.1 million in FY2021, and $2.0 million in FY2020[747] Defined Benefit Pension Obligation Accuray maintains an unfunded defined benefit pension plan for its Switzerland subsidiary, with an unfunded liability of $0.1 million as of June 30, 2022, and an actuarial gain of $4.3 million recognized in other comprehensive loss - The company has an unfunded defined benefit pension plan for its Switzerland subsidiary, providing benefits upon retirement, death, or disability[748] - As of June 30, 2022, the unfunded liability was $0.1 million, recognized in long-term other liabilities, and an actuarial gain of $4.3 million was recognized in other comprehensive loss[748] Funded Status of Defined Benefit Pension Plan (in thousands) | Metric | 2022 | 2021 | | :------------------------------------------ | :--------- | :--------- | | Benefit obligation—end of fiscal year | $17,453 | $18,705 | | Plan assets—end of fiscal year | $17,350 | $14,419 | | Funded status | $(103) | $(4,286) | Estimated Future Benefit Payments (in thousands) | Year Ending June 30, | Amount | | :------------------- | :----- | | 2023 | $1,001 | | 2024 | $1,015 | | 2025 | $1,212 | | 2026 | $1,054 | | 2027 | $1,218 | | Thereafter | $8,605 | | Total | $14,105 | - Plan assets are invested in insurance contracts with Copré Collective Foundation in Lausanne, Switzerland, with a guaranteed interest rate for mandatory retirement savings of 1.00% in FY2022 and FY2021[763] Segment Disclosure Accuray operates as a single oncology systems segment, with revenue attributed by customer shipping address, primarily from Americas, EMEA, and China, and long-lived tangible assets mainly located in the Americas - The company has one operating and reporting segment: the oncology systems group, which develops, manufactures, and markets proprietary medical devices for radiation therapy[766] Revenue by Geographic Region (in thousands) | Region | 2022 | 2021 | 2020 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Americas | $126,005 | $105,878 | $128,562 | | Europe, Middle East, India and Africa | $134,640 | $121,568 | $119,989 | | Asia Pacific, excluding Japan and China | $28,953 | $26,425 | $31,297 | | Japan | $53,376 | $62,636 | $72,688 | | China | $86,935 | $79,782 | $30,392 | | Total | $429,909 | $396,289 | $382,928 | Long-Lived Tangible Assets by Geographic Area (in thousands) | Region | June 30, 2022 | June 30, 2021 | | :------------------------------------------ | :------------ | :------------ | | Americas | $11,251 | $10,588 | | Europe, Middle East, India and Africa | $228 | $265 | | Asia Pacific, excluding Japan and China | $272 | $170 | | Japan | $265 | $701 | | China | $669 | $608 | | Total | $12,685 | $12,332 | Restructuring Charges Accuray incurred no restructuring charges in fiscal years 2022 and 2021, but recorded $1.1 million in FY2020 due to a cost-saving initiative involving a 3% reduction in its global workforce - No restructuring charges were incurred for the years ended June 30, 2022, and 2021[770] - In fiscal 2020, $1.1 million in restructuring charges were recorded due to a cost-saving initiative involving the elimination of approximately 3% of the global workforce[770] Subsequent Events No subsequent events requiring adjustments to financial statement disclosures were identified through the filing date of the Annual Report on Form 10-K - No subsequent events requiring adjustments to financial statement disclosures were identified through the filing date of the Annual Report on Form 10-K[771] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There were no changes in or disagreements with accountants on accounting and financial disclosure to report - None[773] Controls and Procedures Management concluded that Accuray's disclosure controls and internal control over financial reporting were effective as of June 30, 2022, with no material changes during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2022, providing reasonable assurance for timely and accurate information disclosure[775] - Management concluded that internal control over financial reporting was effective as of June 30, 2022, based on the COSO 2013 framework[776] - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2022[777] Other Information There is no other information to report under this item - None[779] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections There are no disclosures regarding foreign jurisdictions that prevent inspections - None[779] PART III Directors, Executive Officers and Corporate Governance This section incorporates by reference information from the 2022 Proxy Statement regarding directors, executive officers, and corporate governance matters - Information regarding directors, executive officers, corporate governance, director nomination process, Audit Committee financial expert, and Audit Committee members is incorporated by reference from the 2022 Proxy Statement[787] Executive Compensation This section incorporates by reference information from the 2022 Proxy Statement concerning executive compensation and related committee reports - Information on executive compensation, Compensation Committee Report, Compensation Discussion and Analysis, Compensation of Non-Employee Directors, and Compensation Committee Interlocks and Insider Participation is incorporated by reference from the 2022 Proxy Statement[788] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section incorporates by reference information from the 2022 Proxy Statement regarding security ownership of beneficial owners, management, and equity compensation plans - Information regarding security ownership of certain beneficial owners and management, and Equity Compensation Plan Information is incorporated by reference from the 2022 Proxy Statement[789] Certain Relationships and Related Transactions, and Director Independence This section incorporates by reference information from the 2022 Proxy Statement regarding certain relationships, related transactions, and director independence - Information on Certain Relationships and Related Transactions, and Director Independence is incorporated by reference from the 2022 Proxy Statement[790] Principal Accountant Fees and Services This section incorporates by reference information from the 2022 Proxy Statement regarding principal accountant fees, services, and Audit Committee pre-approval policies - Information regarding Principal Accountant Fees and Services and Audit Committee Pre-Approval Policies and Procedures is incorporated by reference from the 2022 Proxy Statement[791] PART IV Exhibits and Financial Statement Schedules This item lists all documents filed as part of the report, including consolidated financial statements, omitted schedules, and a detailed list of exhibits - The report includes consolidated financial statements as set forth in Item 8[793] - All financial statement schedules have been omitted as the required information is not applicable or is included in the consolidated financial statements and notes[794] - A detailed list of exhibits, incorporated by reference or filed herewith, is provided[795] 10-K Summary This item is marked as "None," indicating no 10-K summary is provided in the report - None[807] Signatures The Annual Report on Form 10-K was duly signed on August 17, 2022, by key executives and Board members, certifying compliance with the Securities Exchange Act of 1934 - The report was signed on August 17, 2022, by Suzanne Winter (President and CEO), Ali Pervaiz (CFO), Franco Palomba (Chief Accounting Officer), and members of the Board of Directors[808][809][813](index=81