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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 31, 2023

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: 000-32259

____________________________

ALIGN TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

____________________________ 

Delaware			94-3267295
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

410 North Scottsdale Road, Suite 1300

Tempe, Arizona 85288

(Address of principal executive offices, including zip code)

(602) 742-2000

(Registrant’s telephone number, including area code)

 ____________________________

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

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, $0.0001 par value			ALGN			The NASDAQ Stock Market LLC
						(NASDAQ Global Select Market)

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

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

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

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

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

The number of shares outstanding of the registrant’s Common Stock, $0.0001 par value, as of April 28, 2023 was 76,516,951.

1

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Table of Contents

ALIGN TECHNOLOGY, INC.

TABLE OF CONTENTS

 

PART I			FINANCIAL INFORMATION			3
Item 1.			Financial Statements (Unaudited):			3
			Condensed Consolidated Statements of Operations			3
			Condensed Consolidated Statements of Comprehensive Income			4
			Condensed Consolidated Balance Sheets			5
			Condensed Consolidated Statements of Stockholders’ Equity			6
			Condensed Consolidated Statements of Cash Flows			7
			Notes to Condensed Consolidated Financial Statements			8
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			33
Item 4.			Controls and Procedures			34
PART II			OTHER INFORMATION			34
Item 1.			Legal Proceedings			34
Item 1A.			Risk Factors			34
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			51
Item 3.			Defaults Upon Senior Securities			52
Item 4.			Mine Safety Disclosures			52
Item 5.			Other Information			52
Item 6.			Exhibits			53
Signatures						55

Invisalign, Align, the Invisalign logo, ClinCheck, Invisalign Assist, Invisalign Teen, Invisalign Go, Vivera, SmartForce, SmartTrack, SmartStage, SmileView, iTero, iTero Element, Orthocad, iCast, iRecord and exocad, among others, are trademarks and/or service marks of Align Technology, Inc. or one of its subsidiaries or affiliated companies and may be registered in the United States and/or other countries.

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PART I—FINANCIAL INFORMATION

Item 1.        Financial Statements.

ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

						Three Months Ended March 31,
						2023						2022
Net revenues						$	943,147					$	973,219
Cost of net revenues						282,493						263,873
Gross profit						660,654						709,346
Operating expenses:
Selling, general and administrative						439,691						439,457
Research and development						87,447						71,807
Total operating expenses						527,138						511,264
Income from operations						133,516						198,082
Interest income and other income (expense), net:
Interest income						2,337						677
Other income (expense), net						(1,229)						(11,273)
Total interest income and other income (expense), net						1,108						(10,596)
Net income before provision for income taxes						134,624						187,486
Provision for income taxes						46,826						53,188
Net income						$	87,798					$	134,298
Net income per share:
Basic						$	1.14					$	1.71
Diluted						$	1.14					$	1.70
Shares used in computing net income per share:
Basic						76,921						78,742
Diluted						77,111						79,193

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

 

						Three Months Ended March 31,
						2023						2022
Net income						$	87,798					$	134,298
Other comprehensive income (loss):
Change in foreign currency translation adjustment, net of tax						10,474						(7,311)
Change in unrealized gains (losses) on investments, net of tax						1,645						(2,728)
Other comprehensive income (loss)						12,119						(10,039)
Comprehensive income						$	99,917					$	124,259

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

						March 31, 2023						December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents						$	832,383					$	942,050
Marketable securities, short-term						51,644						57,534
Accounts receivable, net of allowance for doubtful accounts of $11,192 and $10,343, respectively						884,430						859,685
Inventories						311,885						338,752
Prepaid expenses and other current assets						251,540						226,370
Total current assets						2,331,882						2,424,391
Marketable securities, long-term						37,379						41,978
Property, plant and equipment, net						1,262,815						1,231,855
Operating lease right-of-use assets, net						117,889						118,880
Goodwill						414,222						407,551
Intangible assets, net						93,320						95,720
Deferred tax assets						1,589,640						1,571,746
Other assets						54,301						55,826
Total assets						$	5,901,448					$	5,947,947
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable						$	130,561					$	127,870
Accrued liabilities						497,248						454,374
Deferred revenues						1,376,789						1,343,643
Total current liabilities						2,004,598						1,925,887
Income tax payable						126,541						124,393
Operating lease liabilities						99,002						100,334
Other long-term liabilities						191,258						195,975
Total liabilities						2,421,399						2,346,589
Commitments and contingencies (Notes 6 and 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value (5,000 shares authorized; none issued)						—						—
Common stock, $0.0001 par value (200,000 shares authorized; 76,516 and 77,267 issued and outstanding, respectively)						8						8
Additional paid-in capital						1,104,693						1,044,946
Accumulated other comprehensive income (loss), net						1,835						(10,284)
Retained earnings						2,373,513						2,566,688
Total stockholders’ equity						3,480,049						3,601,358
Total liabilities and stockholders’ equity						$	5,901,448					$	5,947,947

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

						Common Stock												Additional Paid-In Capital						Accumulated Other Comprehensive Income (Loss), Net						Retained Earnings						Total
Three Months Ended March 31, 2023						Shares						Amount
Balance as of December 31, 2022						77,267						$	8					$	1,044,946					$	(10,284)					$	2,566,688					$	3,601,358
Net income						—						—						—						—						87,798						87,798
Net change in unrealized gains (losses) from investments						—						—						—						1,645						—						1,645
Net change in foreign currency translation adjustment						—						—						—						10,474						—						10,474
Issuance of common stock relating to employee equity compensation plans						191						—						14,256						—						—						14,256
Tax withholdings related to net share settlements of equity awards						—						—						(20,857)						—						—						(20,857)
Common stock repurchased and retired						(942)						—						(11,387)						—						(280,973)						(292,360)
Equity forward contract related to accelerated stock repurchase						—						—						40,000						—						—						40,000
Stock-based compensation						—						—						37,735												—						37,735
Balance as of March 31, 2023						76,516						$	8					$	1,104,693					$	1,835					$	2,373,513					$	3,480,049

						Common Stock												Additional Paid-In Capital						Accumulated Other Comprehensive Income (Loss), Net						Retained Earnings						Total
Three Months Ended March 31, 2022						Shares						Amount
Balance as of December 31, 2021						78,710						$	8					$	999,006					$	4,326					$	2,619,374					$	3,622,714
Net income						—						—						—						—						134,298						134,298
Net change in unrealized gains (losses) from investments						—						—						—						(2,728)						—						(2,728)
Net change in foreign currency translation adjustment						—						—						—						(7,311)						—						(7,311)
Issuance of common stock relating to employee equity compensation plans						239						—						14,827						—						—						14,827
Tax withholdings related to net share settlements of equity awards						—						—						(51,533)						—						—						(51,533)
Common stock repurchased and retired						(144)						—						(1,634)						—						(73,402)						(75,036)
Stock-based compensation						—						—						31,621						—						—						31,621
Balance as of March 31, 2022						78,805						$	8					$	992,287					$	(5,713)					$	2,680,270					$	3,666,852

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ALIGN TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

						Three Months Ended March 31,
						2023						2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income						$	87,798					$	134,298
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes						(18,417)						17,464
Depreciation and amortization						35,820						29,626
Stock-based compensation						37,735						31,621
Non-cash operating lease cost						7,755						7,526
Other non-cash operating activities						11,586						8,612
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable						(32,734)						(55,543)
Inventories						24,008						(49,455)
Prepaid expenses and other assets						(26,850)						(48,665)
Accounts payable						5,993						7,025
Accrued and other long-term liabilities						37,420						(126,400)
Long-term income tax payable						2,119						5,405
Deferred revenues						27,662						68,984
Net cash provided by operating activities						199,895						30,498
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment						(64,119)						(87,328)
Purchase of marketable securities						(2,371)						(15,041)
Proceeds from maturities of marketable securities						10,870						6,095
Proceeds from sales of marketable securities						2,785						8,528
Other investing activities						6						(2,452)
Net cash used in investing activities						(52,829)						(90,198)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock						14,256						14,827
Common stock repurchases						(292,360)						(75,036)
Payments for equity forward contracts related to accelerated share repurchase agreements						40,000						—
Payroll taxes paid upon the vesting of equity awards						(20,857)						(51,533)
Net cash used in financing activities						(258,961)						(111,742)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash						2,221						(1,826)
Net decrease in cash, cash equivalents, and restricted cash						(109,674)						(173,268)
Cash, cash equivalents, and restricted cash at beginning of the period						942,355						1,100,139
Cash, cash equivalents, and restricted cash at end of the period						$	832,681					$	926,871

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ALIGN TECHNOLOGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Align Technology, Inc. (“we”, “our”, "Company", or “Align”) on a consistent basis with the audited Consolidated Financial Statements for the year ended December 31, 2022, and contains all adjustments, including normal recurring adjustments, necessary to fairly state the information set forth herein. The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and, therefore, omit certain information and footnote disclosures necessary to present the unaudited Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“U.S.”).

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and notes thereto included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any other future period, and we make no representations related thereto. 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the U.S. requires our management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, useful lives of intangible assets and property and equipment, long-lived assets and goodwill, income taxes, contingent liabilities, the fair values of financial instruments, stock-based compensation and the valuation of investments in privately held companies among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Certain Risks and Uncertainties

Our business has been materially impacted by fluctuations in macroeconomic conditions and exacerbated by ongoing geopolitical issues. While the situation is highly uncertain and evolving, we have been and continue to be impacted by factors such as inflation, supply chain challenges, rising interest rates, volatilities in the financial market, foreign currency exchange rate fluctuations, impacts on consumer confidence and purchasing power, and global recession concerns which could further subject our business to materially adverse consequences should any portion of its impacts become prolonged or escalate beyond its current scope. Additionally, we could also be materially adversely affected by uncertain or reduced demand, labor shortages, delays in collection of outstanding receivables and the impact of any initiatives or programs that we may undertake to address financial and operational challenges faced by our customers.

While the overall impact of the COVID-19 pandemic is gradually declining, we continue to be exposed to risks and uncertainties posed by it which varies by geographic regions at different levels. The extent to which our business could be impacted in the future by the pandemic is highly uncertain and difficult to predict.

Recent Accounting Pronouncements

(i) Recent Accounting Pronouncements Not Yet Effective

We continue to monitor new accounting pronouncements issued by the FASB and do not believe any of the recently issued accounting pronouncements will have a material impact on our consolidated financial statements or related disclosures.

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Note 2. Financial Instruments

Cash, Cash Equivalents and Marketable Securities

The following tables summarize our cash and cash equivalents, and marketable securities on our Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 (in thousands):

																														Reported as:
March 31, 2023						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value						Cash and Cash Equivalents						Marketable securities, short-term						Marketable securities, long-term
Cash						$	650,946					$	—					$	—					$	650,946					$	650,946					$	—					$	—
Money market funds						181,437						—						—						181,437						181,437						—						—
Corporate bonds						62,003						—						(2,187)						59,816						—						35,284						24,532
U.S. government treasury bonds						17,057						7						(356)						16,708						—						12,039						4,669
Asset-backed securities						4,859						2						(24)						4,837						—						1,887						2,950
Municipal bonds						2,470						—						(36)						2,434						—						2,434						—
U.S. government agency bonds						5,280						2						(54)						5,228						—						—						5,228
Total						$	924,052					$	11					$	(2,657)					$	921,406					$	832,383					$	51,644					$	37,379

																														Reported as:
December 31, 2022						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value						Cash and Cash Equivalents						Marketable securities, short-term						Marketable securities, long-term
Cash						$	712,921					$	—					$	—					$	712,921					$	712,921					$	—					$	—
Money market funds						229,129						—						—						229,129						229,129						—						—
Corporate bonds						69,390						—						(2,915)						66,475						—						36,510						29,965
U.S. government treasury bonds						20,559						—						(549)						20,010						—						15,404						4,606
Asset-backed securities						4,514						1						(37)						4,478						—						2,909						1,569
Municipal bonds						3,447						—						(61)						3,386						—						2,711						675
U.S. government agency bonds						5,231						1						(69)						5,163						—						—						5,163
Total						$	1,045,191					$	2					$	(3,631)					$	1,041,562					$	942,050					$	57,534					$	41,978

The following table summarizes the fair value of our available-for-sale marketable securities classified by contractual maturity as of March 31, 2023 and December 31, 2022 (in thousands):

						March 31, 2023						December 31, 2022
Due in 1 year or less						$	45,512					$	51,037
Due in 1 year through 5 years						43,511						48,475
Total						$	89,023					$	99,512

The securities that we invest in are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss. Our unrealized losses as of March 31, 2023 and December 31, 2022 are primarily due to changes in interest rates and credit spreads.

The following tables summarize the gross unrealized losses as of March 31, 2023 and December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous loss position (in thousands):

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						As of March 31, 2023
						Less than 12 months												12 Months of Greater												Total
March 31, 2023						Fair Value						Unrealized Loss						Fair Value						Unrealized Loss									Fair Value						Unrealized Loss
Corporate bonds						$	1,793					$	(9)					$	58,022					$	(2,178)								$	59,815					$	(2,187)
U.S. government treasury bonds						—						—						14,698						(356)									14,698						(356)
Asset-backed securities						2,780						(13)						1,053						(11)									3,833						(24)
Municipal bonds						—						—						2,154						(36)									2,154						(36)
U.S. government agency bonds						2,037						(1)						1,150						(53)									3,187						(54)
Total						$	6,610					$	(23)					$	77,077					$	(2,634)								$	83,687					$	(2,657)

						As of December 31, 2022
						Less than 12 months												12 Months of Greater												Total
December 31, 2022						Fair Value						Unrealized Loss						Fair Value						Unrealized Loss									Fair Value						Unrealized Loss
Corporate bonds						$	10,639					$	(440)					$	54,634					$	(2,475)								$	65,273					$	(2,915)
U.S. government treasury bonds						5,262						(177)						14,748						(372)									20,010						(549)
Asset-backed securities						2,636						(17)						1,275						(20)									3,911						(37)
Municipal bonds						—						—						2,412						(61)									2,412						(61)
U.S. government agency bonds						3,017						(5)						1,136						(64)									4,153						(69)
Total						$	21,554					$	(639)					$	74,205					$	(2,992)								$	95,759					$	(3,631)

Accounts Receivable Factoring

We enter into factoring transactions on a non-recourse basis with financial institutions to sell certain of our non-U.S. accounts receivable. We account for these transactions as sales of accounts receivables and include the cash proceeds as a part of our cash flows from operations in the Condensed Consolidated Statements of Cash Flows. Total accounts receivable sold under the factoring arrangements was $8.0 million during the three months ended March 31, 2023. Factoring fees on the sales of receivables were recorded in other income (expense), net in our Condensed Consolidated Statement of Operations and were not material.

Fair Value Measurements

Fair value is an exit price, representing the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. We obtain fair values for our Level 2 investments. Our custody bank and asset managers independently use professional pricing services to gather pricing data which may include quoted market prices for identical or comparable financial instruments, or inputs other than quoted prices that are observable either directly or indirectly, and we are ultimately responsible for these underlying estimates.

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

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The following tables summarize our financial assets measured at fair value as of March 31, 2023 and December 31, 2022 (in thousands):

Description						Balance as of March 31, 2023						Level 1						Level 2
Cash equivalents:
Money market funds						$	181,437					$	181,437					$	—
Short-term investments:
U.S. government treasury bonds						12,039						12,039						—
Corporate bonds						35,284						—						35,284
Municipal bonds						2,434						—						2,434
Asset-backed securities						1,887						—						1,887
Long-term investments:
U.S. government treasury bonds						4,669						4,669						—
Corporate bonds						24,532						—						24,532
Municipal bonds						—						—						—
U.S. government agency bonds						5,228						—						5,228
Asset-backed securities						2,950						—						2,950
						$	270,460					$	198,145					$	72,315

Description						Balance as of December 31, 2022						Level 1						Level 2
Cash equivalents:
Money market funds						$	229,129					$	229,129					$	—
Corporate bonds						—						—						—
Municipal bonds						—						—						—
Short-term investments:
U.S. government treasury bonds						15,404						15,404						—
Corporate bonds						36,510						—						36,510
Municipal bonds						2,711						—						2,711
Asset-backed securities						2,909						—						2,909
Long-term investments:
U.S. government treasury bonds						4,606						4,606						—
Corporate bonds						29,965						—						29,965
Municipal bonds						675						—						675
U.S. government agency bonds						5,163						—						5,163
Asset-backed securities						1,569						—						1,569
						$	328,641					$	249,139					$	79,502

Investments in Privately Held Companies

Our investments in privately held companies in which we cannot exercise significant influence and do not own a majority equity interest or otherwise control are accounted for under the measurement alternative. Under the measurement alternative, the carrying value of our equity investment is adjusted to fair value for observable transactions for identical or similar investments of the same issuer. Investments in equity securities are reported on our Consolidated Balance Sheet as other assets, and we periodically evaluate them for impairment. We record any change in carrying value of our equity securities, in other income (expense), net in our Consolidated Statement of Operations. The carrying value of our equity investments in privately held companies without readily determinable fair values were not material as of March 31, 2023 or 2022 and the associated adjustments to the carrying values of the investments were not material during the quarter ended March 31, 2023 and 2022.

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Derivatives Not Designated as Hedging Instruments

We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations on certain trade and intercompany receivables and payables. These forward contracts are classified within Level 2 of the fair value hierarchy. As a result of the settlement of foreign currency forward contracts, we recognized a net loss of $6.4 million during the three months ended March 31, 2023 and the net losses we recognized during the three months ended March 31, 2022 were not material. As of March 31, 2023 and December 31, 2022, the fair value of foreign exchange forward contracts outstanding was not material.

The following tables present the gross notional value of all our foreign exchange forward contracts outstanding as of March 31, 2023 and December 31, 2022 (in thousands):

			March 31, 2023
			Local Currency Amount						Notional Contract Amount (USD)
Euro			€203,780						$	222,215
Canadian Dollar			C$97,500						72,007
Chinese Yuan			¥478,805						69,842
Polish Zloty			PLN277,000						64,459
British Pound			£42,920						53,198
Japanese Yen			¥6,170,000						46,513
Brazilian Real			R$158,800						31,055
Swiss Franc			CHF25,600						28,081
Israeli Shekel			ILS53,600						14,864
Mexican Peso			M$230,000						12,744
New Zealand Dollar			NZ$10,500						6,575
Korean Won			₩6,400,000						4,946
New Taiwan Dollar			NT$83,000						2,737
Australian Dollar			A$3,900						$	2,615
Czech Koruna			Kč56,000						2,589
									$	634,440

			December 31, 2022
			Local Currency Amount						Notional Contract Amount (USD)
Euro			€186,900						$	200,010
Polish Zloty			PLN365,988						83,307
Canadian Dollar			$109,000						80,514
Chinese Yuan			¥471,000						68,223
British Pound			£41,200						49,677
Japanese Yen			¥6,200,000						47,196
Israeli Shekel			ILS110,030						31,383
Swiss Franc			CHF25,000						27,165
Brazilian Real			R$141,200						26,839
Mexican Peso			M$230,000						11,746
New Zealand Dollar			NZ$6,000						3,806
Australian Dollar			A$4,000						2,721
Czech Koruna			Kč56,000						2,469
New Taiwan Dollar			NT$60,000						1,959
									$	637,015

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Note 3. Balance Sheet Components

Inventories consist of the following (in thousands):

						March 31, 2023						December 31, 2022
Raw materials						$	146,435					$	172,758
Work in process						91,325						96,558
Finished goods						74,125						69,436
Total inventories						$	311,885					$	338,752

Prepaid expenses and other current assets consist of the following (in thousands):

						March 31, 2023						December 31, 2022
Value added tax receivables						$	144,668					$	140,484
Prepaid expenses						84,363						69,124
Other current assets						22,509						16,762
Total prepaid expenses and other current assets						$	251,540					$	226,370

Accrued liabilities consist of the following (in thousands): 

						March 31, 2023						December 31, 2022
Accrued payroll and benefits						$	171,354					$	149,508
Accrued income taxes						105,038						74,323
Accrued expenses						51,212						64,341
Accrued sales and marketing expenses						36,227						36,407
Current operating lease liabilities						27,776						26,574
Accrued property, plant and equipment						18,186						19,922
Other accrued liabilities						87,455						83,299
Total accrued liabilities						$	497,248					$	454,374

Accrued warranty, which is included in the "Other accrued liabilities" category of the accrued liabilities table above, consists of the following activity (in thousands):

						Three Months Ended March 31,
						2023						2022
Balance at beginning of period						$	17,873					$	16,169
Charged to cost of net revenues						4,532						3,536
Actual warranty expenditures						(3,476)						(3,612)
Balance at end of period						$	18,929					$	16,093

Deferred revenues consist of the following (in thousands):

						March 31, 2023						December 31, 2022
Deferred revenues - current						$	1,376,789					$	1,343,643
Deferred revenues - long-term 1						$	157,341					$	160,662

1 Included in Other long-term liabilities within our Condensed Consolidated Balance Sheet

During the three months ended March 31, 2023 and 2022, we recognized $943.1 million and $973.2 million of net revenues, respectively, of which $205.7 million and $184.9 million was included in the deferred revenues balance at December 31, 2022 and 2021, respectively.

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Our unfulfilled performance obligations, including deferred revenues and backlog, as of March 31, 2023 were $1,540.9 million. These performance obligations are expected to be fulfilled over six months to five years.

Note 4. Goodwill and Intangible Assets

Goodwill