What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-05-18 compared with 2021-05-19 · 243 added, 280 removed, 481 unchanged (52% of the section changed)

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Our actual results could differ materially from such forward-looking statements.

Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Annual Report.

Statements” included elsewhere in this Annual Report.

Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.

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All references to “2021,” “fiscal year 2021” or similar references relate to the 52-week period ended March 26, 2021.

This section discusses items pertaining to and comparisons of financial results between 2022 and 2021.

A discussion of 2020 items and comparisons between 2021 and 2020 financial results can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended March 26, 2021 (the “2021 MD&A”), filed with the SEC on May 19, 2021.

Management’s Discussions and Analysis (“MD&A”) is divided into the following sections:

• Our Growth Strategies and Outlook

• Recent Initiative to Improve Results of Operations

• Impact of the COVID-19 Pandemic

• Other Key Factors and Trends Affecting our Operating Results

• Components of Our Results of Operations

• Results of Operations

• Non-GAAP Financial Measures

• Liquidity and Capital Resources

• Recent Accounting Pronouncements

• Critical Accounting Policies and Estimates

Allegro MicroSystems is a leading global designer, developer, manufacturer and marketer of sensor ICs and application-specific analog power ICs enabling the most important emerging technologies in the automotive and industrial markets.

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We focus on providing complete IC solutions to sense, regulate and drive a variety of mechanical systems.

This includes sensing angular or linear position of a shaft or actuator, driving an electric motor or actuator, and regulating the power applied to sensing and driving circuits so they operate safely and efficiently.

This includes sensing the angular or linear position of a shaft or actuator, driving an electric motor or actuator, and regulating the power applied to sensing and driving circuits so they operate safely and efficiently.

We are headquartered in Manchester, New Hampshire and have a global footprint with 17 locations across four continents.

Our portfolio includes more than 1,000 products, and we ship over one billion units annually to more than 10,000 customers worldwide.

During fiscal years 2021 and 2020, we generat ed $591.2 million and $650.1 million in total net sales, respectively, with $18.1 million and $37.1 million in net income and $144.8 million and $132.2 million in Adjusted EBITDA in such fiscal years, respectively.

During fiscal years 2022 and 2021, we generated $768.7 million and $591.2 million in total net sales, respectively, with $119.6 million and $18.1 million in net income, respectively, and $226.1 million and $144.8 million in Adjusted EBITDA in such fiscal years, respectively.

On November 2, 2020, we completed our IPO of 28,750,000 shares of our common stock at an offering price of $14.00 per share, of which 25,000,000 shares were sold by us and 3,750,000 shares were sold by selling stockholders, resulting in net proceeds to us of approximately $321.4 million, after deducting $20.1 million of underwriting discounts and $8.5 million of offering costs.

Our common stock is now listed on the Nasdaq Global Select Market under the ticker symbol “ALGM.”

Our common stock is listed on the Nasdaq Global Select Market under the ticker symbol “ALGM.”

Our Growth Strategies and Outlook

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• Invest in research and development that is market-aligned and focused on targeted portfolio expansion.

We believe that our investments in research and development in the areas of product design, automotive-grade wafer fabrication technology and IC packaging development are critical to maintaining our competitive advantage.

In both the automotive and industrial markets, major technology shifts driven by disruptive technologies are creating high-growth opportunities in areas such as xEVs, ADAS, Industry 4.0, data centers and green energy applications.

We believe that our investments in research and development in the areas of product design, automotive-grade wafer fabrication

technology and IC packaging development are critical to maintaining our competitive advantage.

In both the automotive and industrial markets, major technology shifts driven by disruptive technologies are creating high-growth opportunities in areas such as electrified vehicles (“xEVs”), advanced driver assistance systems (“ADAS”), Industry 4.0, data centers and green energy applications.

Our knowledge of customers’ end systems has driven an expansion of our sensor IC and power solutions to enable these new technologies.

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We believe our focus on meeting or exceeding industry standards as the baseline for product development increases our opportunity in the automotive market as customers look for trusted suppliers to deliver highly reliable solutions for rapidly growing emerging markets, and that our philosophy of designing for automotive safety and reliability gives us a meaningful lead over new entrants attempting to enter the automotive market.

For example, we will apply this philosophy of innovation, quality and reliability to our new photonics portfolio which supplies components into safety-critical LiDAR applications.

For example, we will apply this philosophy of innovation, quality and reliability to our new photonics portfolio which supplies components into safety-critical Light Detection and Ranging (“LiDAR”) applications.

We also believe we can use our expertise in designing for the automotive market and our expanding product portfolio to capitalize on increasing demand among industrial customers for ruggedized solutions that meet the highest quality and reliability standards.

Additionally, in our experience, demand for solutions that meet or exceed stringent safety and reliability specifications supports higher ASPs and lower ASP declines over time than are typical for our industry.

Additionally, in our experience, demand for solutions that meet or exceed stringent safety and reliability specifications supports higher average sales prices (“ASP”) and lower ASP declines over time than are typical for our industry.

• Invest to lead in chosen markets and apply our intellectual property and technology to pursue adjacent growth markets.

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• Expand our sales channels and enhance our sales operations and customer relationships.

teams, providing us with key insights into product requirements and accelerating the adoption and ramp up of our products in customer designs.

Our global sales infrastructure is optimized to support customers through a combination of key account managers and regional technical and support centers near customer locations that enable us to act as an extension of our customers’ design teams, providing us with key insights into product requirements and accelerating the adoption and ramp up of our products in customer designs.

We intend to continue strengthening our relationships with our existing customers while also enabling our channel partners to support demand creation and fulfillment for smaller broad-based industrial customers.

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From time to time, we acquire companies, technologies or assets and participate in joint ventures when we believe they will cost effectively and rapidly improve our product development or manufacturing capabilities or complement our existing product offerings.

For example, our August 2020 acquisition of Voxtel and its affiliate, LadarSystems, Inc., brings together Voxtel’s laser and imaging expertise and our automotive leadership and scale to enable what we believe will be the next generation of ADAS.

• Maintain commitment to sustainability.

We intend to continue to innovate with purpose, addressing critical global challenges related to energy efficiency, vehicle emissions and clean and renewable energy with our sensing and power management product portfolio.

In addition, we strive to operate our business in a socially responsible and environmentally sustainable manner, and we strive to maintain a commitment to social responsibility in our supply chain and disclosure of the environmental impact of our business operations.

• Maintain sustainability efforts.

We intend to continue to innovate with purpose, aiming to address critical global challenges related to energy efficiency, vehicle emissions and clean and renewable energy with our sensing and power management product portfolio.

In addition, we strive to operate our business in a socially responsible and environmentally sustainable manner, and with goals of maintaining dedication to social responsibility in our supply chain and disclosing the environmental impact of our business operations.

The secular trends that drive our long-term trajectory–including vehicle electrification, advanced driver assistance systems, data center efficiency and efficient motion control–continue to see strong adoption in the market.

In addition, our design win momentum and record backlog will continue to serve as significant growth drivers for fiscal 2023, contributing to an increase in our full year revenue growth outlook.

Recent Initiatives to Improve Results of Operations

We have recently implemented several initiatives designed to improve our operating results.

On August 28, 2020, we acquired Voxtel, a privately-held technology company located in Beaverton, Oregon that specializes in components for eye-safe LiDAR used in ADAS, fully autonomous vehicles, and industrial automation.

The total preliminary purchase price of the acquisition was $35.0 million , including certain earnouts that have a potential payout of $15.0 million.

The fair value of these earn-outs at acquisition date was $7.3 million.

I n addition to the laser technology, Voxtel’s capabilities include its Indium Gallium Arsenide (“InGaAs”) Avalanche Photodiode (“APDs”) and APD photoreceivers—highly sensitive in the important eye-safe region around 1550 nanometers (“nm”).

This technology enables images to be obtained over a wide range of weather conditions and over a long-distance or a wide field of view using a laser that doesn’t pose an ocular hazard.

The combination of these highly-sensitive detectors and high-peak-power eye-safe lasers, combined with Voxtel’s custom integrated circuits and electro-optical packaging expertise, allows for cost-effective, compact laser-ranging and 3D-image sensing.

In addition, Voxtel holds more than 38 US patents, representing a comprehensive laser detection and ranging (“LADAR”)/LiDAR photonic technology suite.

Through the end of fiscal year 2020, we held a 100% ownership interest in PSL, a semiconductor wafer fabricator engaged in the manufacturing and testing of foundry wafers.

Prior to the divestiture transaction of PSL, PSL accounted for 11.1% of our net sales and supplied 44.2% of our wafer requirements in fiscal year 2020, respectively.

In addition, through end of fiscal year 2020, we acted as a distributor of Sanken products in North America, South America and Europe on a low-margin, buy-resale basis pursuant to the Sanken Products Distribution Agreement and Sanken.

Our net sales from the distribution of Sanken products in fiscal year 2020 were $35.4 million.

On March 28, 2020, in order to further our strategy for developing a flexible and efficient manufacturing model that minimizes capital requirements, lowers operating costs, enhances reliability of supply and supports our growth going forward:

• We divested a majority of our ownership interest in PSL to Sanken in the PSL Divestiture, in connection with which:

• Our equity interests in PSL were recapitalized in exchange for (i) the contribution by us to PSL of $15.0 million of intercompany debt, representing a portion of the aggregate principal amount of debt owed by PSL to us under the Existing Allegro Loans, (ii) the assumption by us of $42.7 million in aggregate principal amount of debt owed by PSL to Sanken under the PSL-Sanken Loans, that was subsequently forgiven in exchange for our transfer to Sanken of 70% of the issued and outstanding equity interests in PSL, and (iii) the termination of the Existing Allegro Loans and the issuance, pursuant to the Consolidated Loan Agreement, of a note payable to us in an aggregate principal amount of $51.4 million (representing the aggregate principal amount of debt outstanding under the Existing Allegro Loans prior to their termination);

• In exchange for the extinguishment of all outstanding indebtedness owed by us to Sanken under the PSL-Sanken Loans, we (i) divested 70% of the issued and outstanding equity interests in PSL to Sanken, as a result of which Sanken holds a 70% majority share in PSL and we hold a 30% interest, and (ii) amended and restated the existing limited liability company agreement of PSL to admit Sanken as a member, reflect the recapitalization of our equity interests and otherwise reflect the rights and obligations of us and Sanken thereunder;

• AML entered into a letter agreement with Sanken providing for, among other things, the termination of AML’s services under the Sanken Products Distribution Agreement, and Sanken and PSL entered into a new distribution agreement providing for PSL to serve as a distributor of Sanken products in North America, South America and Europe;

• We entered into certain other agreements and transactions with Sanken and PSL as more fully described under “PSL Divestiture” Item 1.

As a result of the PSL Divestiture and the transfer of the Sanken products distribution business to PSL, we were able to materially improve gross profit, operating income and net income, as well as reduce capital expenditures and increase cash flow from operations.

Strategically, we believe these changes better enable us to focus solely on our core business in sensor and power applications for the automotive and industrial end markets.

• PSL foundry revenue is no longer consolidated in our results in fiscal year 2021, however, PSL did supply 36.1% of our wafer requirements in fiscal year 2021.

• Net sales from the distribution of Sanken products are also no longer consolidated in our results in fiscal year 2021.

In February 2020, we announced that we would consolidate our assembly and test facilities into a single site, located at the AMPI Facility.

We completed this transition and closed the AMTC Facility as of March 2021.

We expect to realize a significant reduction in cost of goods sold in subsequent periods.

We implemented several initiatives over the fiscal year 2022 designed to improve our operating results.

In February 2020, we announced that we would consolidate our assembly and test facilities into a single site, located at our manufacturing facility in the Philippines (the “AMPI Facility”).

We completed this transition and closed our manufacturing facility in Thailand (the “AMTC Facility”) as of March 2021, and the AMTC Facility was sold in August 2021.

Consequently, we realized an improvement in profitability in fiscal year 2022.

We continue to implement initiatives to improve gross margins.

Our gross margin improved from 47.2% in fiscal year 2021 to 53.0% in fiscal year 2022.

This gross margin improvement was a result of our operational transformation, improved product mix of higher ASPs on more value-added products, increased leverage of our distribution channel, and continued efficiency and leverage on higher volumes.

The closure of the AMTC Facility significantly reduced our cost of goods sold and fixed overhead costs associated with operating this location.

By centralizing this portion of our assembly and test facilities at the AMPI Facility, we expect to continue to realize this lower level of cost of goods for the immediate future.

Additionally, we will continue to the leverage our facility to increase production where demand for our products warrants.

We have been successful in increasing our average selling prices through a focus on higher value-added products and selective price increases.

Increased ASPs and manufacturing efficiencies have allowed us to continue to improve gross margin in an environment of limited capacity at our suppliers and rising input costs.

Limited supply and increased demand for many of our products and applications, as well as supply chain disruptions related to the COVID-19 pandemic, have contributed to input cost increases on the components needed to manufacture our products.

We will continue to consider opportunities for strategic price increases and process efficiencies to offset input cost increases on the materials and supplies that we use in production.

With the consolidation of our facilities as discussed above, we have attained efficiencies through cost structure improvements, streamlining of manufacturing and support processes, and further utilization of excess capacity.

These manufacturing efficiencies allowed us to leverage higher volumes to keep pace with increasing demand across most of our applications, while reducing cost of goods sold and increasing the absorption of fixed costs.

Although these initiatives have resulted in gross margin and operating income improvements over the previous quarters, we cannot ensure that these trends will continue over the long-term.

Impact of the COVID-19 Pandemic

On March 11, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization.

The pandemic has resulted in governments around the world implementing increasingly stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments, school closures and other measures.

In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impacts of the COVID-19 pandemic.

We continue to monitor the rapidly evolving conditions and circumstances as well as guidance from international and domestic authorities, including public health authorities, and we may need to take additional actions based on their recommendations.

There is considerable uncertainty regarding the impact on our business stemming from current measures and potential future measures that could restrict access to our facilities, limit manufacturing and support operations and place restrictions on our workforce and suppliers.

The measures implemented by various authorities related to the COVID-19 pandemic have caused us to change our business practices including those related to where employees work, the distance between employees in our facilities, limitations on in-person meetings between employees and with customers, suppliers, service providers and stakeholders, as well as restrictions on business travel to domestic and international locations or to attend trade shows, investor conferences and other events.

The full extent to which the ongoing COVID-19 pandemic adversely affects our financial performance will depend on future developments, many of which are outside of our control, are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the effectiveness of actions to contain the virus or treat its impact and how quickly and to what extent normal economic and operating conditions can resume.

The COVID-19 pandemic could also result in additional governmental restrictions and regulations, which could adversely affect our business and financial results.

In addition, a recession, depression or other sustained adverse market impact resulting from COVID-19 could materially and adversely affect our business and our access to needed capital and liquidity.

Even after the COVID-19 pandemic has lessened or subsided, we may continue to experience adverse impacts on our business and financial performance as a result of its global economic impact.

The COVID-19 pandemic may also heighten other risks, including if the business impacts of COVID-19 carry on for an extended period, we may be required to recognize impairments for goodwill and certain long-lived assets including amortizable intangible assets.

We have taken actions to mitigate our financial risk given the uncertainty in global markets caused by the COVID-19 pandemic.

In March 2020, we borrowed $43.0 million under our credit facilities (including $10.0 million borrowed by PSL under its revolving credit facility (the “PSL Revolver”), the proceeds of which were retained by PSL and are no longer available for use by us following the consummation of the PSL Divestiture).

The borrowing was made as part of our ongoing efforts to preserve financial flexibility considering the current uncertainty in the global markets and related effects on our business resulting from the COVID-19 pandemic.

While we do not currently expect to use the remaining proceeds from these borrowings following the consummation of the PSL Divestiture for any near-term liquidity needs, we may use the proceeds for working capital and other general corporate purposes.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law.

The CARES Act contains numerous tax provisions including a correction to the applicable depreciation rates available in the original Tax Cuts and Jobs Act (“TCJA”) for Qualified Improvement Property (“QIP”), temporarily establishes a five-year carryback period for current net operating losses (“NOL”), and contains a provision for deferred payment of 2020 employer payroll taxes.

The Company currently estimates cash tax benefits of the NOL to be $9.1 million.

The QIP change is estimated to result in an incremental cash tax benefit of $1.7 million.

Additionally, the Company plans to defer payment of $2.8 million of payroll taxes, with $1.4 million to be paid back in the third quarter of fiscal year 2022 and the remainder in the third quarter of fiscal year 2023.

Additional income tax provisions of the CARES Act are currently being evaluated and not expected to have material impacts.

The Company currently estimates cash tax benefits of the QIP adjustment and NOL carryback period to be $12.8 million.

The COVID-19 pandemic continued during fiscal year 2022, and various authorities instituted measures related to the COVID-19 pandemic that have caused us to change our business practices, including those related to where employees work, the distance between employees in our facilities, limitations on in-person meetings between employees and with customers, suppliers, service providers and stakeholders, as well as restrictions on business travel to domestic and international locations or to attend trade shows, investor conferences and other events.

As the COVID-19 pandemic continues, the timing and overall demand from customers, the efficiency in our supply chain, the availability of logistical services and component supply, and the impact of rising inflation may have a material net negative impact on our business and financial results.

Other Key Factors and Trends Affecting our Operating Results

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As a result, our future revenue is highly dependent on our continued success at winning design mandates from our customers.

Further, because we expect the ASPs of our products to decline over time, we consider design wins to be critical to our future success and anticipate being increasingly dependent on revenue from newer design wins for our newer products.

Further, despite current inflationary and pricing conditions, we expect the ASPs of our products to decline over time, and we consider design wins to be critical to our future success and anticipate being increasingly dependent on revenue from newer design wins for our newer products.

The selection process is typically lengthy and may require us to incur significant design and development expenditures in pursuit of a design win with no assurance that our solutions will be selected.

As a result, the loss of any key design win or any significant delay in the ramp-up of volume production of the customer’s products into which our product is designed could adversely affect our business.

In addition, volume production is contingent upon the successful introduction and acceptance of our customers’ end products, which may be affected by several factors beyond our control.

In addition, volume production is contingent upon the successful introduction and market acceptance of our customers’ end products, which may be affected by several factors beyond our control.

Customer Demand, Orders and Forecasts

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These customers generally provide periodic forecasts of their requirements, but these forecasts do not commit such customers to minimum purchases, and customers can revise these forecasts without penalty.

In addition, as is customary in the semiconductor industry,

customers are generally permitted to cancel orders for our products within a specified period.

In addition, as is customary in the semiconductor industry, customers are generally permitted to cancel orders for our products within a specified period.

Cancellations of orders could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses.

In addition, changes in forecasts or the timing of orders from customers exposes us to the risks of inventory shortages or excess inventory.

We continue to see demand for our products exceed supply and we are currently operating in an inflationary environment.

Manufacturing Costs and Product Mix

Gross margin, or gross profit as a percentage of total net sales, has been, and will continue to be, affected by a variety of factors, including the ASPs of our products, product mix in a given period, material costs, yields, manufacturing costs and efficiencies.

Gross margin has been, and will continue to be, affected by a variety of factors, including the ASPs of our products, product mix in a given period, material costs, yields, manufacturing costs and efficiencies.

We believe the primary driver of gross margin is the ASP negotiated between us and our customers relative to material costs and yields.

Our pricing and margins depend on the volumes and the features of the products we produce and sell to our customers.

As our products mature and unit volumes increase, we expect their ASPs to decline.

As our products mature and unit volumes increase, despite current price leverage, we expect their ASPs to decline in the long term.

We continually monitor and work to reduce the cost of our products and improve the potential value our solutions provide to our customers as we target new design win opportunities and manage the product life-cycles of our existing customer designs.

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During an expansion cycle, we may increase capital spending and hiring to add to our production capacity.

During periods of slower growth or industry contractions, our sales, production and productivity suffer and margins generally decline.

periods of slower growth or industry contractions, our sales, production and productivity suffer and margins generally decline.

Components of Our Results of Operations

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Sales are derived from products for different applications.

Shutdowns of third-party factories, in connection with COVID-19 or other factors beyond our control, have affected, and are expected to continue to affect our product sales in the next fiscal quarter.

Our core applications are focused on the automotive, industrial and other industries.

Additionally, until the consummation of the PSL Divestiture following the end of fiscal year 2020, we also manufactured products for other applications such as wafer foundry products and acted as a distributor of Sanken products in North America, South America and Europe.

We sell magnetic sensor ICs, power ICs and photonics, and until the consummation of the PSL Divestiture following the end of fiscal year 2020, we also sold wafer foundry products and acted as a distributor for Sanken products in North America, South America and Europe.

We sell magnetic sensor ICs, power ICs and photonics.

Revenue is generally recognized when control of the products is transferred to the customer, which typically occurs at a point in time upon shipment or delivery, depending on the terms of the contract.

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We recognize revenue net of sales returns, price protection adjustments, stock rotation rights and any other discounts or credits offered to our customers.

For the consignment arrangements with distributors, delivery occurs and revenue is recognized when the distributor pulls product from consignment inventory that it is stored at designated distributor locations.

Recognition is not contingent upon resale of the products to the distributors’ customers.

Until the products are pulled for use or sale by the distributor, we retain control over the products’ disposition, including the right to pull back or relocate the products.

Stock-based compensation

In addition to the ratable vesting of our stock-based compensation, upon completion of our IPO, we recognized one-time stock-based compensation charges of $40.4 million in connection with the vesting of all outstanding shares of Class A common stock, $1.6 million in connection with the automatic acceleration of 25% of the standard vesting term of shares of Class L common stock and $1.0 million through the LTCIP/TRIP Award RSU Conversion Program (the “RSU Conversion Program”).

In fiscal 2021, these one-time stock-based compensation charges were allocated to cost of goods sold, research and development expenses and selling, general and administrative expenses in the amounts of $4.4 million, $2.3 million and $36.3 million, respectively.

In addition to the ratable vesting of our stock-based compensation, upon completion of our IPO during the third fiscal quarter of 2021, we recognized (i) one-time stock-based compensation charges of $40.4 million consisting of $4.1 million within cost of goods sold, $1.8 million within R&D expenses, and $34.5 million within SG&A expenses in connection with the vesting of all outstanding shares of Class A common stock, (ii) $1.6 million consisting of $0.2 million within cost of goods sold, $0.1 million within R&D expenses, and $1.3 million within SG&A expenses in connection with the automatic acceleration of 25% of the standard vesting term of shares of Class L common stock and (iii) $1.0 million consisting of $0.1 million within cost of goods sold, $0.4 million within R&D expenses, and $0.5 million within SG&A expenses through the conversion of awards granted under our pre-IPO cash incentive plans into restricted stock units of the Company at the time of the IPO (the “RSU Conversion Program”).

Cost of goods sold, gross profit and gross margin

Cost of goods sold consists primarily of costs of purchasing raw materials, costs associated with probe, assembly, test and shipping our products, costs of personnel, including stock-based compensation, costs of equipment associated with manufacturing, procurement, planning and management of these processes, costs of depreciation and amortization, costs of logistics and quality assurance, and costs of royalties, value-added taxes, utilities, repairs and maintenance of equipment, and an allocated portion of our occupancy costs.

In addition, prior to the PSL Divestiture, costs of goods sold also consisted of finished silicon wafers processed by internal and independent foundries.

Gross profit is calculated as total net sales less cost of goods sold.

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As a result, gross profit varies from period to period and year to year.

We expect cost of goods sold to decrease in absolute dollars and as a percentage of total net sales in the future, primarily due to the PSL Divestiture and as a result of the closure of the AMTC Facility and the transfer of the Sanken products distribution business to PSL.

A significant portion of our costs are fixed and, as a result, costs are generally difficult to adjust or may take time to adjust in response to changes in demand.

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Research and development (“R&D”) expenses

R&D expenses consist primarily of personnel-related costs of our research and development organization, including stock-based compensation, costs of development of wafers and masks, license fees for computer-aided design software, costs of development testing and evaluation, costs of developing automated test programs, equipment depreciation and related occupancy and equipment costs.

of development testing and evaluation, costs of developing automated test programs, equipment depreciation and related occupancy and equipment costs.

While most of the costs incurred are for new product development, a significant portion of these costs are related to process technology development, and proprietary package development.

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We anticipate our selling and marketing expenses to increase in absolute terms as we expand our sales force and increase our sales and marketing activities.

We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with being a public company.

In connection with the closing of our IPO during the third fiscal quarter of 2021, we recognized one-time stock-based compensation expense of $40.4 million, consisting of $4.1 million within cost of goods sold, $1.8 million within R&D expenses, and $34.5 million within SG&A expenses, in connection with the vesting of all outstanding shares of our Class A

common stock.

We also recognized one-time stock-based compensation expense of $1.6 million, consisting of $0.2 million within cost of goods sold, $0.1 million within R&D expenses, and $1.3 million within SG&A expenses, in connection with the automatic acceleration of 25% of the standard vesting term of shares of our Class L common stock at that time.

In addition, we recognized one-time stock-based compensation expense of $1.0 million, consisting of $0.1 million within cost of goods sold, $0.4 million within R&D expenses, and $0.5 million within SG&A expenses, in connection with the RSU Conversion Program.

We also anticipate that we will continue to incur accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with being a public company.

Impairment of long-lived assets

Impairment of long-lived assets reflects a $7.1 million expense in the fiscal year ended March 26, 2021, representing impairment charges on the sale of the AMTC Facility.

No impairment expense was recorded for the fiscal year ended March 27, 2020.

No impairment expense was recorded for the fiscal years ended March 25, 2022 and March 27, 2020.

Change in fair value of contingent consideration

The change in fair value of contingent consideration represents the gain recorded in the fiscal year ended March 26, 2021 resulting from the write-down in contingent consideration related to the Voxtel acquisition.

The change in fair value of contingent consideration represents the gains and losses recorded in the fiscal years ended March 25, 2022 and March 26, 2021, resulting from the adjustment in contingent consideration related to the Voxtel Acquisition .

There were no amounts recorded for the fiscal year ended March 27, 2020.

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Loss on debt extinguishment represents the loss associated with the partial repayment of our Term Loan Facility on November 25, 2020.

There were no amounts recorded for the fiscal year ended March 27, 2020.

There were no amounts recorded for the fiscal years ended March 25, 2022 and March 27, 2020.

Interest (expense) income, net

Interest (expense) income, net is comprised of interest expense from term loan debt and credit facilities we maintain with various financial institutions and previously on borrowings under the PSL-Sanken Loans (which were forgiven in connection with the PSL Divestiture).

Interest (expense) income, net is comprised of interest expense from term loan debt and credit facilities we maintain with various financial institutions.

Current expense is partially mitigated by income earned on our cash and cash equivalents, consisting primarily of certain investments that have contractual maturities no greater than three months at the time of purchase.

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We incur transaction gains and losses resulting from intercompany transactions as well as transactions with customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded.

The largest contributor of the foreign currency transaction (loss) gain is the result of an intercompany loan to our subsidiary that operates the AMTC Facility where at the end of each reporting period we revalue the amounts due under the loan to the U.S.

Income in earnings of equity investment

Income in earnings of equity investment represents our equity investment in connection with the PSL Divestiture.

There were no amounts recorded for the fiscal year ended March 27, 2020.

Income in earnings of equity investment is related to our equity investment in PSL subsequent to the PSL Divestiture.

Other, net primarily consists of miscellaneous income and expense items unrelated to our core operations.

Income tax provision (benefit)

Our provision for income taxes is comprised of the year-to-date taxes based on an estimate of the annual effective tax rate plus the tax impact of discrete items.

Our provision, or benefit, for income taxes is based on an estimate of the annual effective tax rate plus the tax impact of discrete items.

We are subject to tax in the U.S.

and various foreign jurisdictions.

Our effective income tax rate (“ETR”) fluctuates primarily because of:

Our effective income tax rate fluctuates primarily because of:

the change in the mix of our U.S.

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the impact of discrete transactions and law changes;

and the difference between the amount of tax benefits generated by the foreign derived intangible income deduction (“FDII”) offset by the additional tax costs associated with global intangible low-tax income (“GILTI”) and the base erosion tax (“BEAT”).

and the difference between the amount of tax benefits generated by the foreign derived intangible income deduction (“FDII”) and

research credits, offset by the additional tax costs associated with global intangible low-tax income (“GILTI”), the base erosion tax (“BEAT”) and non-deductible stock-based compensation charges.

We regularly assess the likelihood of outcomes that could result from the examination of our tax returns by the IRS, and other tax authorities to determine the adequacy of our income tax reserves and expense.

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The following table summarizes our results of operations for the fiscal years ended March 25, 2022 and March 26, 2021.

Fiscal Year Ended Change Change

Attributable to

Divestiture Operational Change

after Divestiture

Fiscal Year Ended Change

2022 March 26,

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Total net sales (1)

$ 768,674 $ 591,207 $ 177,467 30.0 %

Cost of goods sold 361,214 312,305 48,909 15.7 %

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Operating income 136,650 12,158 124,492 1,024.0 %

Other (expense) income, net:

Other income (expense), net:

Loss on debt extinguishment — (9,055) 9,055 (100.0) %

Interest expense, net (1,057) (2,603) 1,546 (59.4) %

Foreign currency transaction (loss) gain (2,889) 1,391 (4,280) (307.7) % 2 (4,278) (307.5 %)

Foreign currency transaction loss (568) (2,889) 2,321 (80.3) %

Income in earnings of equity investment 1,007 1,413 (406) (28.7) %

Other expense, net (475) (831) 356 (42.8) % (279) 77 (9.3 %)

Total other (expense) income, net (13,609) 450 (14,059) (3124.2) % (3,619) (17,678) (3928.4 %)

(Loss) income before income taxes (1,451) 53,278 (54,729) (102.7) % (7,700) (62,429) (117.2 %)

(Benefit) provision for income taxes (19,552) 16,173 (35,725) (220.9) % 540 (35,185) (217.6 %)

Other, net 4,714 (475) 5,189 (1,092.4) %

Total other income (expense), net 4,096 (13,609) 17,705 (130.1) %

Income (loss) before income tax provision (benefit) 140,746 (1,451) 142,197 (9,799.9) %

Income tax provision (benefit) 21,191 (19,552) 40,743 (208.4) %

Net income 119,555 18,101 101,454 560.5 %

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(1) Our total net sales for the periods presented above include related party net sales generated through our distribution agreement with Sanken.

Our total net sales for the fiscal year ended March 27, 2020 also include related party net sales

related to the sale of wafer foundry products to Sanken by PSL and net sales related to our distribution of Sanken products in North America, South America and Europe which, in each case, we did not recognize during the fiscal year ended March 26, 2021 and will not recognize in any future period due to our consummation of the PSL Divestiture.

See our consolidated financial statements included elsewhere in this Annual Report for additional information regarding our related party net sales for the periods set forth above.

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Interest expense, net (0.1) % (0.4) %

Foreign currency transaction (loss) gain (0.5) % 0.2 %

Foreign currency transaction loss (0.1) % (0.5) %

Income in earnings of equity investment 0.1 % 0.2 %

Other expense, net (0.1) % (0.1) %

Other, net 0.6 % (0.1) %

Total other income (expense), net 0.5 % (2.3) %

Income before provision for income taxes (0.3) % 8.2 %

Provision for income taxes (2.8) % 2.5 %

Income (loss) before income tax provision (benefit) 18.3 % (0.3) %

Income tax provision (benefit) 2.8 % (3.3) %

Net income 15.5 % 3.0 %

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Total net sales

Total net sales decreased by $58.9 million, or 9.1%, to $591.2 million in the fiscal year ended March 26, 2021 from $650.1 million in the fiscal year ended March 27, 2020.

Of this decrease, $107.8 million was attributable to the PSL Divestiture, which was partially offset by increased net sales to our core end markets of $48.9 million, due primarily to increased demand in industrial automation applications and data center applications and a COVID-related increase in demand for printers and other peripherals.

Sales Trends by Core End Market and Application

The following table summarizes net sales by core end market and other applications.

Total net sales increased by $177.5 million, or 30.0%, to $768.7 million in the fiscal year ended March 25, 2022 from $591.2 million in the fiscal year ended March 26, 2021.

This increase was primarily due to the continued economic recovery and increases in demand for ADAS, safety, comfort and convenience, internal combustion engine (“ICE”) applications, xEV, wireless infrastructure, personal mobility, industrial automation, cloud computing/data center and gaming applications, partially offset by declines in personal electronics and PC printers and peripherals.

Sales Trends by Market

The following table summarizes total net sales by market.

The categorization of net sales by market is based on the characteristics of the end product and application into which our product will be designed.

applications include wafer foundry and distribution sales unrelated to and no longer part of our core business in fiscal year 2021.

Fiscal Year Ended Change

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(Dollars in thousands)

Core end markets:

Automotive $ 531,564 $ 398,298 $ 133,266 33.5 %

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Other 103,923 98,037 5,886 6.0 %

Total core end markets 591,207 542,298 48,909 9.0 %

Other applications:

Wafer foundry products — 72,370 (72,370) (100.0) %

Distribution of Sanken products — 35,421 (35,421) (100.0) %

Total net sales $ 768,674 $ 591,207 $ 177,467 30.0 %

Net sales to our core end markets increased by $48.9 million, or 9.0%, to $591.2 million in the fiscal year ended March 26, 2021 from $542.3 million in the fiscal year ended March 27, 2020, driven by an increase in automotive of $3.0 million, or 0.8%, an increase in industrial of $16.5 million, or 21.0%, and other of $29.4 million, or 42.9%.

Automotive net sales increased in the fiscal year ended March 26, 2021 compared to the fiscal year ended March 27, 2020 primarily due to our customers’ increased vehicle production in Greater China, partially offset by slowed vehicle production in the rest of the world reflecting factory closures and demand uncertainty related to the COVID-19 pandemic.

Content in xEV continued to increase compared to a weaker ICE.

Industrial and other net sales improved in the fiscal year ended March 26, 2021 compared to the fiscal year ended March 27, 2020 due primarily to the continued demand in data center applications, grid infrastructure that includes renewable energy and EV charging, as well as a COVID-related increase in demand for printers and other peripherals.

The increase in net sales to our end markets was driven by an increase in automotive of $133.3 million, or 33.5%, an increase in industrial of $38.3 million, or 40.4%, and an increase in other of $5.9 million, or 6.0%.

Automotive net sales increased in the fiscal year ended March 25, 2022 compared to the fiscal year ended March 26, 2021 due to the continued higher demand across all of our major applications, primarily our ADAS, safety, and comfort and convenience.

Industrial net sales improved in the fiscal year ended March 25, 2022 compared to the fiscal year ended March 26, 2021 primarily due to increased demand in industrial automation, cloud computing/data center, wireless infrastructure and personal mobility.

Other net sales improved in the fiscal year ended March 25, 2022 compared to the fiscal year ended March 26, 2021 primarily attributable to increased demand in gaming applications of approximately $27.0 million, partially offset by declines in personal electronics and PC printer and peripherals of approximately $21.0 million.

Sales Trends by Product

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Photonics 1,732 1,235 497 40.2 %

Wafer foundry products — 72,370 (72,370) (100.0) %

Distribution of Sanken products — 35,421 (35,421) (100.0) %

Total net sales $ 768,674 $ 591,207 $ 177,467 30.0 %

The decrease in net sales by product in fiscal year 2021 was driven by decreases of $72.4 million and $35.4 million in net sales related to wafer foundry products and Sanken distribution products, respectively, as a result of the PSL Divestiture.

These decreases were partially offset by an increase of $37.7 million in power IC product sales driven primarily by growth in data center and grid infrastructure demand, a $10.0 million increase in magnetic sensor IC product sales consistent with the demand increase in automotive production in Greater China compared to the weakness in automotive production related to the COVID-19 pandemic in the rest of the world, and a $1.2 million increase in Photonics product sales resulting from the Voxtel acquisition during the period.

The growth in net sales by product was driven by increases in MS product sales of $112.2 million and in PIC product sales of $64.8 million, as well as a $0.5 million increase in Photonics product sales.

Sales Trends by Geographic Location

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Total net sales $ 768,674 $ 591,207 $ 177,467 30.0 %

The decrease in net sales across geographic locations in the fiscal year ended March 26, 2021 compared to the fiscal year ended March 27, 2020 was due primarily to wafer foundry and distribution sales totaling $107.8 million that were divested and are unrelated to and no longer a part of our core business, partially offset by automotive recovery in Asia and increased data center and other customer and peripherals revenue growth globally.

Net sales in Americas declined $41.3 million, or 29.5%, to $98.7 million in the fiscal year ended March 26, 2021, compared to $140.0 million in the fiscal year ended March 27, 2020.

Excluding the net sales associated with the PSL Divestiture of $35.8 million, net sales declined $5.5 million, or 3.9%, in the United States and Other Americas, primarily driven by a decrease in demand for our core application products sold in the automotive end market resulting from the factory shutdowns and demand weakness related to the COVID-19 pandemic.

The predominant country comprising Other Americas is Mexico.

The decrease in net sales of $7.0 million, or 6.4%, in Europe was primarily driven by a decrease in demand for our core application products sold in the automotive end market and some weakness in traditional industrial markets.

The predominant countries comprising Europe are Germany and France.

Net sales in Asia declined $10.6 million, or 2.6%, to $389.4 million in the fiscal year ended March 26, 2021, compared to $399.9 million in the fiscal year ended March 27, 2020.

Excluding net sales associated with the PSL Divestiture of $72.0 million in Japan, net sales increased $61.4 million, or 15.4%, primarily driven by increases in Greater China for automotive and other products and Other Asia for automotive and industrial products, partially offset by a decrease in Japan related to automotive demand weakness.

The increase in net sales across geographic locations in the fiscal year ended March 25, 2022 compared to the fiscal year ended March 26, 2021 was primarily due to content and market share gains, as many countries continue to experience economic expansion coming out of the COVID-19 pandemic, and demand for many of our products and applications rose year-over-year.

The increase in net sales in Japan of $44.1 million, or 42.2%, was primarily driven by higher demand for our xEV, ADAS, personal mobility and cloud computing/data center offerings.

The increases in net sales of $34.4 million, or 21.8%, in Greater China and $32.7 million, or 33.2%, in the Americas each related to higher automotive demand, primarily in our

ADAS, ICE, safety, and comfort and convenience applications, as well as increased demand in our industrial sectors.

Higher year-over-year net sales of $31.4 million, or 30.5%, in Europe, predominantly comprised of Germany and France, was driven by increases in our ADAS, ICE, safety, comfort and convenience and grid infrastructure offerings.

South Korea and Other Asia experienced sales growth of $18.4 million, or 29.6%, and $16.5 million, or 25.3%, respectively, mainly due to higher automotive demand, specifically in ADAS, safety, and comfort and convenience applications, as well as growth in our industrial applications, especially in our cloud computing/data center offerings.

Cost of goods sold, gross profit and gross margin

Cost of goods sold decreased by $76.5 million, or 19.7%, to $312.3 million in the fiscal year ended March 26, 2021 from $388.8 million in the fiscal year ended March 27, 2020.

The decrease in cost of goods sold was primarily due to a $101.5 million decrease in cost of goods sold attributable to the PSL Divestiture and a combined $2.5 million of decreases related to returns and quality, amortization of manufacturing cost absorptions, manufacturing efficiencies, currency and other costs.

These increases were partially offset by $21.7 million of increased standard costs, a $4.8 million increase in stock-based compensation expense and an increase associated with $1.0 million of Voxtel acquisition operating impacts, mostly attributable to the Photonics net sales and amortization of acquired intangible assets during the period.

Cost of goods sold increased by $48.9 million, or 15.7%, to $361.2 million in the fiscal year ended March 25, 2022 from $312.3 million in the fiscal year ended March 26, 2021.

The increase in cost of goods sold was primarily attributable to higher production volume, partially offset by decreases in amortization of manufacturing cost absorptions and lower cost of goods sold related to our photonics product line attributable to the discontinuation of a legacy Voxtel product line during 2022.

Gross profit increased by $128.6 million, or 46.1%, to $407.5 million in the fiscal year ended March 25, 2022 from $278.9 million in the fiscal year ended March 26, 2021.

The increase was partially due to the impacts in cost of goods sold

discussed above, including the $24.0 million increase in gross profit which was driven by a $48.9 million operational increase in net sales to core end markets, partially offset by $6.3 million attributable to the PSL Divestiture.

The increase in gross profit was driven by a $177.5 million increase in net sales in all markets, partially offset by the impacts to cost of goods sold discussed above.

R&D expenses increased by approximately $13.2 million, or 12.2%, to $121.9 million in the fiscal year ended March 25, 2022 from $108.6 million in the fiscal year ended March 26, 2021.

This increase was primarily due to a $3.0 million increase in stock-based compensation expense, of which $2.3 million related to the IPO and accelerated vesting of the Class A and L common stock and RSU Conversion Program, $1.9 million of increases in inventory and supplies, and an impact of $4.3 million related to the Voxtel acquisition, mostly related to an increase in total employee salaries of $5.5 million.

These increases were partially offset by a $1.0 million decrease in office and business expenses and a reduction of $3.3 million of expenses related to the PSL Divestiture.

R&D expenses represented 18.4% of our total net sales for the fiscal year ended March 26, 2021, an increased from 15.7% of our total net sales for the fiscal year ended March 27, 2020.

This percentage increase was primarily due to a reduction in our total net sales.

This increase was primarily due to higher employee-related personnel costs of $10.1 million and a combined $5.1 million increase in general operating expenses, partially offset by a combined $2.6 million decrease in inventory and supplies and contract labor costs.

R&D expenses represented 15.9% of our total net sales for the fiscal year ended March 25, 2022, a decrease from 18.4% of our total net sales for the fiscal year ended March 26, 2021.

This percentage decrease was primarily due to the growth in our net sales in 2022.

SG&A expenses

SG&A expenses increased by $47.1 million, or 44.2%, to $153.5 million in the fiscal year ended March 26, 2021 from $106.4 million in the fiscal year ended March 27, 2020.

This increase was primarily due to a $39.0 million increase in stock-based compensation expense, of which $36.3 million related to the IPO and accelerated vesting of the Class A and L common stock and RSU Conversion Program, an increase of $9.4 million in employee salaries, an increase of $4.5 million of professional fees, and increased expenses of $12.0 million consisting of increased D&O insurance as a result becoming a publicly traded company, office supplies, corporate allocations, and other expenses.

These are partially offset by a reduction of $7.1 million of expenses related to the PSL Divestiture, a reduction of $6.8 million in severance and a combined reduction of $4.9 million related to travel and outside service costs.

SG&A expenses represented 26.0% of our total net sales for the fiscal year ended March 26, 2021 and increased from 16.4% of our total net sales for the fiscal year ended March 27, 2020.

This percentage increase was primarily due to stock-based compensation expenses recorded and the other items noted above for the fiscal year ended March 26, 2021.

SG&A expenses decreased by $2.6 million, or 1.7%, to $150.9 million in the fiscal year ended March 25, 2022 from $153.5 million in the fiscal year ended March 26, 2021.

This decrease was primarily due to a $14.7 million decrease in stock-based compensation expense and a combined $8.0 million decrease in general operating expenses, partially offset by an increase of $19.9 million in combined employee-related personnel costs, contract labor, insurance and general expenses.

SG&A expenses represented 19.6% of our total net sales for the fiscal year ended March 25, 2022, representing a decrease from 26.0% of our total net sales for the fiscal year ended March 26, 2021.

This percentage decrease was primarily due to the growth in net sales in the fiscal year ended March 25, 2022.

In addition, the percentage decrease represents the lower SG&A expenses as discussed above, as those costs were incrementally higher for the fiscal year ended March 26, 2021 due in large part to IPO-related costs and accelerated vesting of the Class A and L common stock and RSU Conversion Program incurred during that period.

For details, see Note 12, “Management Long-Term Cash Incentive Plan” to the audited consolidated financial statements.

Impairment of long-lived assets

Impairment of long-lived assets reflected a $7.1 million expense in the fiscal year ended March 26, 2021, representing impairment charges on the held for sale AMTC Facility.

No impairment loss occurred in the fiscal year ended March 25, 2022.

Change in fair value of contingent consideration

The change in fair value of contingent consideration reflected a $2.5 million gain in the fiscal year ended March 26, 2021, resulting from the write-down in contingent consideration related to the Voxtel acquisition.

The change in fair value of contingent consideration reflected a $0.5 million decrease in gains in the fiscal year ended March 25, 2022, resulting from the write-down in contingent consideration related to the acquisition of Voxtel in 2021.

Loss on debt extinguishment

Loss on debt extinguishment reflected a $9.1 million loss in the fiscal year ended March 26, 2021, representing the write-off of unamortized balances of previously deferred financing costs as a result of the $300.0 million Term Loan Facility principal balance repayment on November 25, 2020.

No loss occurred in the fiscal year ended March 25, 2022.

Interest expense, net

Interest expense, net increased by $2.5 million to interest expense, net of $2.6 million in the fiscal year ended March 26, 2021 from interest expense, net of $0.1 million in the fiscal year ended March 27, 2020.

The increase in interest expense was primarily due to mandatory interest payments on the Term Loan Facility in the fiscal year ended March 26, 2021.

Foreign currency transaction (loss) gain

We recorded a foreign currency transaction loss of $2.9 million in the fiscal year ended March 26, 2021 compared to a gain of $1.4 million in the fiscal year ended March 27, 2020.

The foreign currency transaction loss recorded in the fiscal year ended March 26, 2021 was primarily due to $3.5 million of realized and unrealized losses from our UK location, partially

offset by $1.3 million of realized and unrealized gains from our Thailand location.

The currency gain recorded in the fiscal year ended March 27, 2020 was primarily attributable to $2.4 million of realized and unrealized gains from our UK location, partially offset by $1.0 million realized and unrealized losses from our Thailand location.

Interest expense, net decreased by $1.5 million to $1.1 million in the fiscal year ended March 25, 2022 from $2.6 million in the fiscal year ended March 26, 2021.

The decrease in interest expense, net was primarily due to lower outstanding debt balances during the fiscal year ended March 25, 2022.

Foreign currency transaction loss

We recorded a foreign currency transaction loss of $0.6 million in the fiscal year ended March 25, 2022 compared to a loss of $2.9 million in the fiscal year ended March 26, 2021.

The foreign currency transaction loss recorded in the fiscal year ended March 25, 2022 was primarily due to $0.9 million of realized and unrealized losses from our UK location, partially offset by $0.3 million of realized and unrealized gains from our Philippines location.

The foreign currency transaction loss recorded in the fiscal year ended March 26, 2021 was primarily attributable to $3.5 million of realized and unrealized losses from our UK location, partially offset by $1.3 million realized and unrealized gains from our Thailand location.

Income in earnings of equity investment

Income in earnings of equity investment reflected a $1.4 million gain in the fiscal year ended March 26, 2021, representing the earnings on our 30% investment in PSL during fiscal year 2021.

Other expense, net

Other expense, net decreased by approximately $0.4 million to $0.5 million of loss in the fiscal year ended March 26, 2021 from $0.8 million of loss in the fiscal year ended March 27, 2020.

Income in earnings of equity investment reflected gains of $1.0 million and $1.4 million in the fiscal years ended March 25, 2022 and March 26, 2021, respectively, representing the earnings on our 30% investment in PSL.

Other, net increased by approximately $5.2 million to $4.7 million of gains in the fiscal year ended March 25, 2022 from $0.5 million of loss in the fiscal year ended March 26, 2021.

The increase in the fiscal year ended March 25, 2022 was primarily due to the $3.7 million unrealized gains on marketable securities and a $0.4 million gain related to the sale of the AMTC Facility.

The loss in the fiscal year ended March 26, 2021 was primarily due to disposals of equipment from various facilities.

The loss in the fiscal year ended March 27, 2020 was primarily due to expenses incurred associated with a settlement to terminate a relationship with a distributor and disposal of equipment from the prior Worcester Facility that sold during the first three-month period in fiscal year 2020.

Income tax (benefit) provision

The provision for income taxes was a benefit of $19.6 million for the fiscal year ended March 26, 2021 as compared to a $16.2 million expense for the fiscal year ended March 27, 2020.

The decrease in income tax expense was primarily attributable to excess tax over financial reporting deductions related to the following IPO transaction:

the $40.4 million stock-based compensation charge (and the related incremental tax deductions), the $16.0 million one-time dividend treated as compensation expense for tax purposes, and the tax loss on the divestiture of PSL.

The tax impacts of these transaction and other discrete transactions caused an overall U.S.

NOL that will be carried back five years.

Income tax provision (benefit)

The provision for income taxes was $21.2 million for the fiscal year ended March 25, 2022 as compared to a benefit of $19.6 million for the fiscal year ended March 26, 2021.

The increase in income tax expense in fiscal year 2022 as compared to fiscal year 2021 relates primarily to tax impacts of the fiscal year 2021 IPO transaction.

The fiscal year 2021 IPO transaction resulted in excess tax over financial reporting deductions related to a $40.4 million stock-based compensation charge (and the related incremental tax deductions), a $16.0 million one-time dividend treated as compensation expense for tax purposes, as well as a tax loss on the divestiture of PSL.

The tax impacts of these transactions and other discrete transactions caused an overall U.S.

NOL for fiscal year 2021 that will be carried back five years.

Additional fluctuations in our effective income tax rate relate primarily to differences in our U.S.

taxable income, estimated FDII benefits, GILTI income, research credits, non-deductible stock-based compensation charges, and discrete tax items.

Non-GAAP Financial Measures

In addition to the measures presented in our consolidated financial statements, we regularly review other metrics, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions.

The key metrics we consider are non-GAAP Gross Profit, non-GAAP Gross Margin, non-GAAP Operating Expenses, non-GAAP Operating Income, non-GAAP Operating Margin, non-GAAP Profit before Tax, non-GAAP Provision for Income Tax, non-GAAP Net Income, non-GAAP Net Income per Share, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin (collectively, the “Non-GAAP Financial Measures”).

In addition to the measures presented in our consolidated financial statements, we regularly review other measures, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions.

The key measures we consider are non-GAAP Gross Profit, non-GAAP Gross Margin, non-GAAP Operating Expenses, non-GAAP Operating Income, non-GAAP Operating Margin, non-GAAP Profit before Tax, non-GAAP Provision for Income Tax, non-GAAP Net Income, non-GAAP Net Income per Share, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin (collectively, the “Non-GAAP Financial Measures”).

These Non-GAAP Financial Measures provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations, and in the case of non-GAAP Provision for Income Tax, management believes that this non-GAAP measure of income taxes provides it with the ability to evaluate the non-GAAP Provision for Income Taxes across different reporting periods on a consistent basis, independent of special items and discrete items, which may vary in size and frequency.

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and the underlying business trends that are affecting our performance.

These Non-GAAP Financial Measures are used by both management and our board of directors, together with the comparable GAAP information, in evaluating our current performance and planning our future business activities.

GAAP Financial Measures are used by both management and our board of directors, together with the comparable GAAP information, in evaluating our current performance and planning our future business activities.

In particular, management finds it useful to exclude non-cash charges in order to better correlate our operating activities with our ability to generate cash from operations and to exclude certain cash charges as a means of more accurately predicting our liquidity requirements.

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These Non-GAAP Financial Measures should not be considered as substitutes for GAAP financial measures such as gross profit, gross margin, net income or any other performance measures derived in accordance with GAAP.

Also, in the future we may incur expenses or charges such as those added back in the calculation of these Non-GAAP Financial Measures.

Also, in the future we may incur expenses or charges such as those being adjusted in the calculation of these Non-GAAP Financial Measures.

Our presentation of these Non-GAAP Financial Measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items.

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We calculate non-GAAP Gross Profit and non-GAAP Gross Margin excluding the items below from cost of goods sold in applicable periods, and we calculate non-GAAP Gross Margin as non-GAAP Gross Profit divided by total net sales.

• PSL and Sanken Distribution Agreement—Represents the elimination of inventory cost amortization and foundry service payment related to one-time costs incurred in connection with the disposition of Polar Semiconductor, LLC (“PSL”) during the fiscal year ended March 26, 2021 (the “PSL Divestiture”).

• Voxtel inventory impairment—Represents costs related to the discontinuation of one of our product lines manufactured by Voxtel.

• Inventory cost amortization—Represents intercompany inventory transactions incurred from purchases made from PSL in fiscal year 2020.

Such costs are one-time incurred expenses impacting our operating results during fiscal year 2021 following the disposition of PSL during the fiscal year ended March 26, 2021 (the “PSL Divestiture”).

Such costs did not have a continuing impact on our operating results after our second fiscal quarter of fiscal year 2021.

• Foundry service payment—Represents foundry service payments incurred under our Price Support Agreement with PSL in respect to the guaranteed capacity at PSL to support our production forecast and are one-time costs incurred impacting our operating results during fiscal year 2021 following the PSL Divestiture.

Such costs did have a continuing impact on our operating results after fiscal year 2021.

• Stock-based compensation—Represents non-cash expenses arising from the grant of stock-based awards.

• AMTC Facility consolidation one-time costs—Represents one-time costs incurred in connection with closing of our manufacturing facility in Thailand (the “AMTC Facility”) and transitioning of test and assembly functions to our manufacturing facility in the Philippines (the “AMPI Facility”) announced in fiscal year 2020, consisting of:

• AMTC Facility consolidation one-time costs—Represents one-time costs incurred in connection with closing of the AMTC Facility and transitioning of test and assembly functions to the AMPI Facility announced in fiscal year 2020, consisting of:

moving equipment between facilities, contract terminations and other non-recurring charges.

The closure and transition of the AMTC Facility was substantially completed as of the end of March 2021.

closure and transition of the AMTC Facility was substantially completed as of the end of March 2021, and we sold the AMTC Facility in August 2021.

These costs are in addition to, and not duplicative of, the adjustments noted in note (*) below.

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• COVID-19 related expenses—Represents expenses attributable to the COVID-19 pandemic primarily related to increased purchases of masks, gloves and other protective materials, and overtime premium compensation paid for maintaining 24-hour service at the AMPI Facility.

(*) Non-GAAP Gross Profit and the corresponding calculation of non-GAAP Gross Margin in this release do not include adjustments consisting of:

• Additional AMTC-related costs—Represents costs relating to the closing of the AMTC Facility and the transitioning of test and assembly functions to the AMPI Facility in the Philippines announced in fiscal year 2020 consisting of the net savings expected to result from the movement of work to the AMPI Facility, which facility had duplicative capacity based on the buildouts of the AMPI Facility in fiscal year s 2019 and 2018.

The elimination of these costs

did not reduce our production capacity and therefore did not have direct effects on our ability to generate revenue.

(*) Non-GAAP Gross Profit and the corresponding calculation of non-GAAP Gross Margin do not include adjustments consisting of:

• Additional AMTC-related costs—Represents costs relating to the closing of the AMTC Facility and the transitioning of test and assembly functions to the AMPI Facility in the Philippines announced in fiscal year 2020 consisting of the net savings resulted from or expected to result from the movement of work to the AMPI Facility, which facility had duplicative capacity based on the buildouts of the AMPI Facility in fiscal year s 2019 and 2018.

The elimination of these costs did not reduce our production capacity and therefore did not have direct effects on our ability to generate revenue.

The closure and transition of the AMTC Facility was substantially completed as of the end of March 2021.

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We calculate non-GAAP Operating Margin as non-GAAP Operating Income divided by total net sales.

• Transaction fees—Represents transaction-related legal and consulting fees incurred primarily in connection with (i) the unsuccessful acquisition of a competitor in fiscal y ear 2019, (ii ) the acquisition of Voxtel in fiscal year 2020, (iii) the PSL Divestiture and the transfer of the Sanken products distribution business to PSL in fiscal year 2020, and (iv) one-time transaction-related legal and consulting fees in fiscal 2021.

• Impairment of long-lived assets—Represents impairment charge incurred in connection with the planned sale of the AMTC Facility.

• Transaction fees—Represents transaction-related legal and consulting fees incurred primarily in connection with (i ) the acquisition of Voxtel in fiscal year 2020, (ii) one-time transaction-related legal and consulting fees in fiscal 2021, (iii) one-time transaction-related legal, consulting and registration fees related to a secondary offering on behalf of certain stockh olders in fiscal 2022, and (iv) one-time transaction-related legal and consulting fees in fiscal 2022 not related to (iii).

• Severance—Represents severance costs associated with (i) labor savings initiatives to manage overall compensation expense as a result of the declining sales volume during the applicable period, including a voluntary separation incentive payment plan for employees near retirement and a reduction in force, (ii) the closing of the AMTC Facility and the transitioning of test and assembly functions to the AMPI Facility announced and initiated in fiscal year 2020, (iii) costs related to the discontinuation of one of our product lines manufactured by Voxtel in fiscal year 2022, and (iv) nonrecurring separation costs related to the departure of an officer in fiscal year 2022.

• Impairment of long-lived assets—Represents impairment charge incurred in connection with the sale of the AMTC Facility.

• Change in fair value of contingent consideration—Represents the change in fair value of contingent consideration payable in connection with the acquisition of Voxtel.

(**) Non-GAAP Operating Income in this release does not include adjustments consisting of those set forth in note (*) to the calculation of non-GAAP Gross Profit, and the corresponding calculation of non-GAAP Gross Margin, above or:

(**) Non-GAAP Operating Income does not include adjustments consisting of those set forth in note (*) to the calculation of non-GAAP Gross Profit, and the corresponding calculation of non-GAAP Gross Margin, above or:

• Labor savings—Represents salary and benefit costs related to employees whose positions were eliminated through voluntary separation programs or other reductions in force (not associated with the closure of the AMTC Facility or any other plant or facility) and a restructuring of overhead positions from high-cost to low-cost jurisdictions net of costs for newly hired employees in connection with such restructuring.

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We calculate EBITDA as net income minus interest income (expense), tax provision (benefit), and depreciation and amortization expenses.

We calculate Adjusted EBITDA as EBITDA excluding the same items excluded above and also excluding the items below in applicable periods.

We calculate Adjusted EBITDA as EBITDA excluding the same items excluded above and also

excluding the items below in applicable periods.

We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total net sales.

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• Miscellaneous legal judgment charge—Represents a one-time charge associated with the final payment of the previously accrued amount payable with respect to a VAT dispute related to the construction of the AMPI Facility.

• Loss on debt extinguishment – Represents one-time costs representing deferred financing costs associated with the $300.0 million of our term loan facility repaid during the year ended March 26, 2021.

• Foreign currency translation loss (gain)—Represents losses and gains resulting from the remeasurement and settlement of intercompany debt and operational transactions, as well as transactions with external customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded.

• Loss on debt extinguishment—Represents one-time costs representing deferred financing costs associated with the $300.0 million of our term loan facility repaid during the fiscal year ended March 26, 2021.

• Foreign currency translation loss—Represents losses and gains resulting from the remeasurement and settlement of intercompany debt and operational transactions, as well as transactions with external customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded.

• Income in earnings of equity investment—Represents our equity method investment in PSL.

• Inventory cost amortization—Represents intercompany inventory transactions incurred from purchases made from PSL in fiscal year 2020.

Such costs are one-time incurred expenses impacting our operating results during fiscal year

2021 following the PSL Divestiture.

Such costs are not expected to have a continuing impact on our operating results after our second fiscal quarter of fiscal year 2021.

Such costs are not expected to have a continuing impact on our operating results after fiscal year 2021.

Non-GAAP Profit before Tax and Non-GAAP Net Income

We calculate non-GAAP Profit before Tax as Profit before Tax excluding the same items excluded above and also excluding the item below in applicable periods.

• Unrealized losses (gains) on investments—Represents mark-to-market adjustments on equity investments with readily determinable fair values.

Non-GAAP Profit before Tax, Non-GAAP Net Income, and Non-GAAP Basic and Diluted Earnings Per Share

We calculate non-GAAP Profit before Tax as Income (Loss) before Income Taxes excluding the same items excluded above and also excluding the item below in applicable periods.

We calculate non-GAAP Net Income as Net Income excluding the same items excluded above and also excluding the item below in applicable periods.

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Non-GAAP Provision for Income Tax

In calculating non-GAAP Provision for Income Tax, we have added back the following to GAAP Provision for Income Taxes:

In calculating non-GAAP Provision for Income Tax, we have added back the following to GAAP Income Tax Provision (Benefit):

• Tax effect of adjustments to GAAP results—Represents the estimated income tax effect of the adjustments to non-GAAP Profit Before Tax described above and elimination of discrete tax adjustments.

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(Dollars in thousands)

Reconciliation of Gross Profit

Reconciliation of Non-GAAP Gross Profit

GAAP Gross Profit $ 109,603 $ 101,165 $ 87,006 $ 407,460 $ 278,902

PSL and Sanken distribution agreement 930 1,500 — 8,628 —

Voxtel inventory impairment — — — 3,106 —

Inventory cost amortization — — — — 2,698

Foundry service payment — — 930 — 5,930

Stock-based compensation 1,184 742 314 3,176 5,158

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* Non-GAAP Gross Profit and the corresponding calculation of non-GAAP Gross Margin do not include adjustments for the following components of our net income:

(i) additional AMTC related costs of $—, $1,198, and $2,290 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and (ii) additional AMTC related costs of $6,553 and $9,361 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and out-of-period adjustment for depreciation expense of GMR assets of $768 and $— for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

additional AMTC related costs of $— and $6,553 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, and out-of-period adjustment for depreciation expense of GMR assets of $— and $768 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

Three-Month Period Ended Fiscal Year Ended

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(Dollars in thousands)

Reconciliation of Operating Expenses

Reconciliation of Non-GAAP Operating Expenses

GAAP Operating Expenses $ 79,354 $ 65,560 $ 67,558 $ 270,810 $ 266,744

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* Non-GAAP Operating Expenses do not include adjustments for the following components of our net income:

(i) additional AMTC related costs of $—, $19, and $2,621 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and labor savings costs of $—, $109, and $289 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and (ii) additional AMTC related costs of $723 and $11,224 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and labor savings costs of $218 and $6,173 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

additional AMTC related costs of $— and $723 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, and labor savings costs of $— and $218 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

Three-Month Period Ended Fiscal Year Ended

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(Dollars in thousands)

Reconciliation of Operating Income

GAAP Operating Income (Loss) $ 19,448 $ (24,224) $ 18,905 $ 12,158 $ 52,828

PSL and Sanken distribution agreement 930 1,500 — 8,628 —

Reconciliation of Non-GAAP Operating Income

GAAP Operating Income $ 30,249 $ 35,605 $ 19,448 $ 136,650 $ 12,158

Voxtel inventory impairment — — — 3,106 —

Inventory cost amortization — — — — 2,698

Foundry service payment — — 930 — 5,930

Stock-based compensation 14,901 7,620 2,969 33,548 49,870

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Non-GAAP Operating Income* $ 46,522 $ 43,091 $ 34,438 $ 178,156 $ 96,683

% of net sales 19.7 % 16.8 % 14.7 % 16.4 % 10.4 %

Non-GAAP Operating Margin* (% of net sales) 23.2% 23.1% 19.7% 23.2% 16.4%

* Non-GAAP Operating Income and the corresponding calculation of non-GAAP Operating Margin do not include adjustments for the following components of our net income:

(i) additional AMTC related costs of $—, $1,217, and $4,911 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and labor savings costs of $—, $109, and $289 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and (ii) additional AMTC related costs of $7,276 and $11,224 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, labor savings costs of $218 and $6,173 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and out-of-period adjustment for depreciation expense of GMR assets of $768 and $— for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

additional AMTC related costs of $— and $7,276 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, labor savings costs of $— and $218 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, and out-of-period adjustment for depreciation expense of GMR assets of $— and $768 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

Three-Month Period Ended Fiscal Year Ended

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2022 March 26,

Reconciliation of EBITDA and Adjusted EBITDA (Dollars in thousands)

GAAP Net Income (Loss) $ 8,689 $ (5,060) $ 13,329 $ 18,101 $ 37,105

Interest expense, net 668 2,598 50 2,603 110

(Dollars in thousands)

Reconciliation of EBITDA and Adjusted EBITDA

GAAP Net Income $ 25,652 $ 32,973 $ 8,689 $ 119,555 $ 18,101

Interest (income) expense, net (707) 269 668 1,057 2,603

Income tax provision (benefit) 4,504 6,281 8,361 21,191 (19,552)

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Non-core loss (gain) on sale of equipment 1 (19) 156 (349) 442

Miscellaneous legal judgement charge — 574 — 574 —

Voxtel inventory impairment — — — 3,106 —

Miscellaneous legal judgment charge — — — — 574

Loss on debt extinguishment — — — — 9,055

Foreign currency translation loss (gain) 1,558 145 1,409 2,889 (1,391)

Income in earnings of equity method investment (6) (949) — (1,413) —

Foreign currency translation loss 513 3 1,558 568 2,889

Income in earnings of equity investment (215) (287) (6) (1,007) (1,413)

Unrealized losses (gains) on investments 760 (3,504) — (3,722) —

Stock-based compensation 14,901 7,620 2,969 33,548 49,870

AMTC Facility consolidation one-time costs 74 108 2,113 803 7,812

COVID-19 related costs 322 435 581 5,228 581

COVID-19 related expenses 514 499 322 2,618 5,228

Impairment of long-lived assets — — 7,119 — 7,119

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Severance — 578 — 746 156

PSL and Sanken distribution agreement 930 1,500 — 8,628 —

Inventory cost amortization — — — — 2,698

Foundry service payment — — 930 — 5,930

Adjusted EBITDA* $ 58,492 $ 54,917 $ 46,188 $ 226,144 $ 144,763

% of sales 26.4 % 24.1 % 24.5 % 24.5 % 20.3 %

Adjusted EBITDA Margin* (% of net sales) 29.2% 29.4% 26.4% 29.4% 24.5%

* Adjusted EBITDA and the corresponding calculation of Adjusted EBITDA Margin do not include adjustments for the following components of our net income:

AMTC additional costs of $— and $7,276 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively, and labor savings costs of $— and $218 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

Three-Month Period Ended Fiscal Year Ended

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(Dollars in thousands)

Reconciliation of Profit (Loss) before Tax

GAAP Profit (Loss) before Tax $ 17,050 $ (35,583) $ 17,792 $ (1,451) $ 53,278

Reconciliation of Non-GAAP Profit before Tax

GAAP Income (Loss) before Tax Provision (Benefit) $ 30,156 $ 39,254 $ 17,050 $ 140,746 $ (1,451)

Non-core loss (gain) on sale of equipment 1 (19) 156 (349) 442

Voxtel inventory impairment — — — 3,106 —

Miscellaneous legal judgment charge — — — — 574

Loss on debt extinguishment — — — — 9,055

Foreign currency translation loss (gain) 1,558 145 1,409 2,889 (1,391)

Foreign currency translation loss 513 3 1,558 568 2,889

Income in earnings of equity investment (215) (287) (6) (1,007) (1,413)

PSL and Sanken distribution agreement 930 1,500 — 8,628 —

Unrealized losses (gains) on investments 760 (3,504) — (3,722) —

Inventory cost amortization — — — — 2,698

Foundry service payment — — 930 — 5,930

Stock-based compensation 14,901 7,620 2,969 33,548 49,870

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* Non-GAAP Profit before Tax does not include adjustments for the following components of our net income:

Three-Month Period Ended Fiscal Year Ended

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(Dollars in thousands)

Reconciliation of Provision for Income Taxes

GAAP Provision (Benefit) for Income Taxes $ 8,361 $ (30,523) $ 4,463 $ (19,552) $ 16,173

Reconciliation of Non-GAAP Provision for Income Taxes

GAAP Income Tax Provision (Benefit) $ 4,504 $ 6,281 $ 8,361 $ 21,191 $ (19,552)

GAAP effective tax rate 14.9% 16.0% 49.0% 15.1% 1,347.5%

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additional AMTC related costs, labor savings costs, and out-of-period adjustment for depreciation expense of GMR assets.

The related tax effect of those adjustments to GAAP results were $—, $297 and $652 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and $1,851 and $3,897 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

The related tax effect of those adjustments to GAAP results were $— and $1,851 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

Three-Month Period Ended Fiscal Year Ended

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(Dollars in thousands)

Reconciliation of Net Income

GAAP Net Income (Loss) $ 8,689 $ (5,060) $ 13,329 $ 18,101 $ 37,105

Reconciliation of Non-GAAP Net Income

GAAP Net Income $ 25,652 $ 32,973 $ 8,689 $ 119,555 $ 18,101

GAAP Basic Earnings per Share $ 0.14 $ 0.17 $ 0.05 $ 0.63 $ 0.22

GAAP Diluted Earnings per Share $ 0.13 $ 0.17 $ 0.05 $ 0.62 $ 0.10

Non-core loss (gain) on sale of equipment 1 (19) 156 (349) 442

Miscellaneous legal judgement charge — 574 — 574 —

Voxtel inventory impairment — — — 3,106 —

Miscellaneous legal judgment charge — — — — 574

Loss on debt extinguishment — — — — 9,055

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Income in earnings of equity investment (215) (287) (6) (1,007) (1,413)

PSL and Sanken distribution agreement 930 1,500 — 8,628 —

Unrealized losses (gains) on investments 760 (3,504) — (3,722) —

Inventory cost amortization — — — — 2,698

Foundry service payment — — 930 — 5,930

Stock-based compensation 14,901 7,620 2,969 33,548 49,870

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* Non-GAAP Net Income does not include adjustments for the following components of our net income:

(i) additional AMTC related costs of $—, $1,217, and $4,911 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and labor savings costs of $—, $109, and $289 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, (ii) additional AMTC related costs of $7,276 and $11,224 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, labor savings costs of $218 and $6,173 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and out-of-period adjustment for depreciation expense of GMR assets of $768 and $— for the fiscal years ended March 26, 2021 and March 27, 2020, respectively, and (iii) the related tax effect of adjustments to GAAP results of $—, $297 and $652 for the three months ended March 26, 2021, December 25, 2020, and March 27, 2020, respectively, and $1,851 and $3,897 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

Liquidity and Capital Resources

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Our primary requirements for liquidity and capital are working capital, capital expenditures, principal and interest payments on our outstanding debt and other general corporate needs.

Historically, these cash requirements have been met through cash provided by operating activities and cash and cash equivalen ts.

Our current capital deployment strategy for 2022 is to utilize excess cash on hand to support our growth initiatives into select markets and planned capital expenditures.

Historically, these cash requirements have been met through cash provided by operating activities and cash and cash equivalents.

Our current capital deployment strategy for 2023 is to utilize excess cash on hand to support our continued growth initiatives into select markets, planned capital expenditures and strategic arrangements, as well as consider potential acquisitions.

As of March 25, 2022, the Company is not party to any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.

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For information regarding the Company’s expected cash requirements and timing of payments related to leases and noncancellable purchase commitments, see Note 17, “Commitments and Contingencies” to the audited consolidated financial statements.

Additionally, refer to Note 14, “Retirement Plans” for more information related to the Company’s pension and defined contribution plans.

In March 2020, we borrowed an aggregate of $43.0 million under our revolving credit facilities (including $10.0 million that was borrowed by PSL under the PSL Revolver, representing substantially all of our available capacity, in order to increase our cash position and help maintain financial flexibility in light of the continued uncertainty surrounding the COVID-19 pandemic.

Of this $43.0 million, the $10.0 million of debt borrowed under the PSL Revolver is the obligation of PSL and is no longer included on our consolidated balance sheet as of March 26, 2021.

In addition, the proceeds from such borrowings were retained by PSL and are no longer available for use by us following the consummation of the PSL Divestiture.

Additionally, refer to Note 16, “Retirement Plans” to the audited consolidated financial statements for more information related to the Company’s pension and defined contribution plans.

On September 30, 2020, we (i) entered into a term loan credit agreement with Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and the other agents, arrangers and lenders party thereto, providing for a $325.0 million senior secured term loan facility due in fiscal 2028 (the “Term Loan Facility”), (ii) entered into a revolving facility credit agreement with Mizuho Bank, Ltd., as administrative agent and collateral agent, and the other agents, arrangers and lenders party thereto, providing for a $50.0 million senior secured revolving credit facility expiring in 2023 (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facilities”), and (iii) used cash on hand to repay all amounts outstanding under AML’s revolving credit agreement with Mizuho Bank, Ltd.

(the “AML Revolver”) and AML’s line of credit with Bank of Mitsubishi UFJ (the “AML Line of Credit”) and terminated all commitments thereunder.

On November 25, 2020, we repaid $300.0 million of the outstanding $325.0 million Term Loan Facility using proceeds from our recently completed IPO.

On November 25, 2020, we repaid $300.0 million of the outstanding $325.0 million Term Loan Facility using proceeds from our completed IPO.

Refer to the “Debt Obligations” section below for additional information regarding our credit facilities.

We are obligated to pay interest on the outstanding debt balances, and the principal outstanding is due in fiscal year 2028.

We anticipate a significant increase in accounting, legal and professional fees and other costs associated with being a public company.

We believe that our existing cash resources, together with the proceeds from our IPO and our access to the capital markets, will be sufficient to finance our continued operations, growth strategy, planned capital expenditures and the additional expenses we expect to incur as a public company for at least the next 12 months.

As expected with our IPO, we experienced a significant increase in accounting, legal and professional fees and other costs associated with being a public company.

However, we believe that our existing cash resources and our access to the capital markets will be sufficient to finance our continued operations, growth strategy, planned capital expenditures and the additional expenses that we expect to incur during the next 12 months.

In order to support and achieve our future growth plans, we may need or seek advantageously to obtain additional funding through equity or debt financing.

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Net cash used in investing activities (66,271) (68,245)

Net cash (used in) provided by financing activities (72,186) 82,500

Net cash used in financing activities (5,307) (72,186)

Effect of exchange rate changes on cash and cash equivalents 1,373 3,860

Net (decrease) increase in cash and cash equivalents and restricted cash $ (16,001) $ 116,619

Net increase (decrease) in cash and cash equivalents and restricted cash $ 85,924 $ (16,001)

Operating Activities

Net cash provided by operating activities was $156.1 million in fiscal year 2022, resulting primarily from our net income of $119.6 million and non-cash charges of $89.9 million, partially offset by a net decrease in operating assets and liabilities of $53.3 million.

Net changes in operating assets and liabilities consisted mostly of a $19.5 million increase in prepaid expenses and other assets, an $18.3 million increase in trade accounts receivable, net, a $4.5 million increase in inventories, a $4.3 million decrease in trade accounts payable, and a $3.4 million decrease in accrued expenses and other current and long-term liabilities.

The increase in prepaid expenses and other assets was primarily due to higher long-term deposits and income taxes receivable, partially offset by lower prepayments of taxes, including VAT receivables.

The increase in trade accounts receivable, net was primarily a result of increased sales year-over-year, as well as the timing of receipts.

The increase in inventories was primarily a result of raw materials purchases and inventory builds to support anticipated sales growth in 2023.

The decreases in trade accounts payable and accrued expenses and other current and long-term liabilities were primarily due to the release of deposits related to the sale of our AMTC Facility and the reduction of the balance due on the Voxtel acquisition, as well as the timing of payments of purchases.

These decreases were partially offset by higher accrued personnel costs, particularly for management incentive bonuses, higher operating purchases, including unpaid capital expenditures of $2.0 million, and higher income taxes due.

Net cash provided by operating activities was $120.6 million in fiscal year 2021, resulting primarily from our net income of $18.1 million and non-cash charges of $98.4 million, partially offset by a net increase in operating assets and liabilities of $4.0 million.

Net changes in operating assets and liabilities consisted of a $15.1 million increase in trade accounts payable, a $14.8 million increase in accrued expenses and other current and long-term liabilities, a $7.6 million decrease in inventories, and a $4.9 million decrease in due from/to related parties, partially offset by increases of $29.0 million and $9.3 million in prepaid expenses and other assets and trade accounts receivable, net, respectively.

T he increase in trade accounts receivable, net was primarily a result of increased sales year-over-year.

The increase in trade accounts receivable, net was primarily a result of increased sales year-over-year.

The increase in trade accounts payable and the increase in accrued expenses and other current and long-term liabilities was primarily the result of the deposits related to the sale of our AMTC facility, higher operating purchases, including unpaid capital expenditures of $3.2 million, and the timing of payments of purchases, partially offset by lower severance costs, income taxes and professional fees.

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The increases in prepaid expenses and other assets and trade accounts receivable, net were primarily due to higher prepayments of taxes, including VAT receivables, insurance and contract costs, as well as the timing of receipts of trade accounts receivable.

Net cash provided by operating activities was $81.4 million in fiscal year 2020, resulting primarily from our net income of $37.1 million and noncash charges of $65.2 million, partially offset by net changes in operating assets and liabilities of $20.8 million.

Net changes in operating assets and liabilities consisted of a $13.5 million decrease in accrued expenses and other current and long-term liabilities, a $3.1 million decrease in trade accounts payable and a $23.9 million increase in due from/to related parties, partially offset by a $16.4 million decrease in trade accounts receivable, net and a $2.6 million decrease in prepaid expenses and other assets.

The increases in accrued expenses and other current and long-term liabilities, trade accounts payable and due from/to related parties were primarily due to variations in the timing of such payments in the ordinary course of business.

The decrease in trade accounts receivable, net is primarily due to the decrease in net sales.

The decrease in prepaid expenses and other assets is primarily due to refunds obtained from value added taxes paid at one of our foreign locations.

Investing Activities

Net cash used in investing activities primarily consists of purchases and sales of property, plant and equipment, partially offset by proceeds from sales of property, plant and equipment.

We expect our multi-year transition from an integrated device manufacturer to our current fabless, asset-lite manufacturing model, including the completion of the PSL Divestiture following the end of fiscal year 2020, will result in a decrease in capital expenditures in the future.

Net cash used in investing activities was $68.2 million in fiscal year 2021, consistin g of $40.7 million of purchases of property, plant and equipment, $11.6 million of cash expended for the acquisition of Voxtel and $16.3 million of cash removed as a result of the PSL Divestiture, partially offset by $0.3 million of proceeds from sales of property, pl ant and equipment.

Net cash used in investing activities was $41.7 million in fiscal year 2020, consisting of $45.6 million of purchases of property, plant and equipment, partially offset by $3.9 million of proceeds obtained from the sale of property, plant and

The $3.9 million of proceeds from sales of property, plant and equipment during fiscal year 2020 were mainly attributable to the sale of our Worcester Facility.

Net cash used in investing activities primarily consists of purchases of property, plant and equipment, partially offset by proceeds from sales of property, plant and equipment.

Net cash used in investing activities was $66.3 million in fiscal year 2022, consisting of $69.9 million of purchases of property, plant and equipment, $14.5 million of cash expended for the acquisition of Voxtel and purchases of marketable securities of $9.2 million, partially offset by $27.4 million of cash received for the sale of the AMTC Facility.

Net cash used in investing activities was $68.2 million in fiscal year 2021, consisting of $40.7 million of purchases of property, plant and equipment, $11.6 million of cash expended for the acquisition of Voxtel and $16.3 million of cash removed as a result of the PSL Divestiture, partially offset by $0.3 million of proceeds from sales of property, plant and equipment.

Financing Activities

Net cash used in financing a ctivities was $72.2 million in fiscal year 2021 , consisting of $400.0 million of dividends paid prior to our IPO, $300.0 million for repayment of senior secured debt, $27.7 million of payments for taxes related to net share settlement of equity awards, and $33.0 million for repayment of unsecured credit facilities, partially offset by $315.7 million of borrowing of senior secured debt, net of deferred financing costs, $321.4 million of proceeds from our IPO, net of underwriting discounts and other offering costs, and a $51.4 million related party note receivable repayment.

Net cash provided by financing activities was $82.5 million in fiscal year 2020, consisting of the repayment of a $30.0 million short-term loan issued to Sanken in fiscal y ear 2019, $43.0 million in borrowings under our credit facilities, and a $9.5 million capital contribution from Sanken to offset a one-time tax settlement from prior year IRS tax audits.

Net cash used in financing activities was $5.3 million in fiscal year 2022, consisting of funds loaned to PSL of $7.5 million, partially offset by $2.2 million of proceeds received in connection with the issuance of common stock under the 2020 ESPP, net of payments for taxes related to the net settlement of equity awards.

Net cash used in financing activities was $72.2 million in fiscal year 2021, consisting of $400.0 million of dividends paid prior to our IPO, $300.0 million for repayment of senior secured debt, $27.7 million of payments for taxes related to net share settlement of equity awards, and $33.0 million for repayment of unsecured credit facilities, partially offset by $315.7 million of borrowing of senior secured debt, net of deferred financing costs, $321.4 million of proceeds from our IPO, net of underwriting discounts and other offering costs, and a $51.4 million related party note receivable repayment.

Debt Obligations

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We incurred financing costs of $0.3 million in connection with the Revolving Credit Facility, which we classified the related short-term and long-term portions within “Prepaid expenses and other current assets” and “Other assets” on our consolidated balance sheet, and are amortizing these costs over the term of the facility.

The unamortized portion of the deferred financing costs associated with the Revolving Credit Facility was $0.2 million at March 26, 2021.

The unamortized portion of the deferred financing costs associated with the Revolving Credit Facility was $0.1 million and $0.2 million at March 25, 2022 and March 26, 2021, respectively.

The Revolving Credit Facility contains certain financial and non-financial covenants, including a maximum net leverage ratio applicable to the Revolving Credit Facility in the event that utilization exceeds 35% of the revolving loan commitment.

Borrowings under the Revolving Credit Facility are secured by 100% of the stock of our domestic subsidiaries, portions of the stock of certain of our foreign subsidiaries, and substantially all of our subsidiaries’ other property and assets, in each case subject to various exceptions.

On January 22 , 2019 , AML entered into a revolving credit agreement with Mizuho Bank, Ltd., as lender, that provided for a revolving credit facility with a maximum borrowing capacity of $25.0 million (the “AML Revolver”).

On January 22, 2020, AML and the lender amended the AML Revolver to extend the termination date for commitments thereunder from January 22, 2020 to January 22, 2021 (the “Commitment Termination Date”).

On September 30, 2020, we repaid in full and terminated the AML Revolver.

Borrowings under the AML Revolver bore interest at a rate per year equal to, at AML’s option, either (i) LIBOR, or (ii) the Cost of Funds Rate, plus, in each case, a spread of 0.4%.

In addition, AML was required to pay, on a quarterly basis in arrears, a non-refundable commitment fee of 0.2% per year on the average daily unused commitments under the AML Revolver during such quarterly period.

AML was also required to pay, on the closing date of the AML Revolver, a non-refundable up-front fee of $25 thousand.

AML Line of Credit

AML had a line of credit with the Bank of Mitsubishi UFJ that provided for a maximum borrowing capacity of $8.0 million at an interest rate of 1.9%.

On October 1, 2020, we repaid this line of credit in full and in conjunction, terminated it.

AMPI Credit Facilities

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that provides for a maximum borrowing capacity of 60.0 million Philippine pesos (approximately $1.1 million ) at the bank’s prevailing interest rate.

The line of credit expires on August 31, 2021.

While this line of credit initially expired on August 31, 2021 (in connection with certain delays as a result of the COVID-19 pandemic and its impact on bank operations), the line of credit was extended in September 2021 and is now expected to expire on August 21, 2022.

There were no borrowings outstanding under this line of credit as of March 25, 2022 and March 26, 2021 .

On November 20, 2019, AMPI entered into a line of credit agreement with BDO Unibank that provides for a maximum borrowing capacity of 75.0 million Philippine pesos (approximately $1.4 million ) at the bank’s prevailing interest rate.

The line of credit expires on June 30, 2021.

While this line of credit initially expired on June 30, 2021 (in connection with certain delays as a result of the COVID-19 pandemic and its impact on bank operations), the line of credit was extended in September 2021 and is now expected to expire on June 30, 2022.

There were no borrowings outstanding under this line of credit as of March 25, 2022 and March 26, 2021.

Recent Accounting Pronouncements

Refer to Note 2 of the audited consolidated financial statements included elsewhere in this Annual Report for information regarding recent accounting pronouncements.

Critical Accounting Policies and Estimates

Refer to Note 2, “Summary of Significant Accounting Policies” to the audited consolidated financial statements included elsewhere in this Annual Report for information regarding recent accounting pronouncements.

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

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Such estimates could also relate to the net realizable value of inventory, accrued liabilities, and deferred tax valuation allowances.

We base our estimates and assumptions on historical experience and other factors that we believe to be

reasonable under the circumstances.

We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances.

On an ongoing basis, management evaluates its estimates.

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Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

See Note 2 to the consolidated financial statements included elsewhere in this Annual Report for additional information regarding these and our other significant accounting policies.

See Note 2, “Summary of Significant Accounting Policies” to the consolidated financial statements included elsewhere in this Annual Report for additional information regarding these and our other significant accounting policies.

Revenue Recognition

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We estimate potential future sales allowances based on historical data from prior sales adjustments.

See Note 6 to the consolidated financial statements for information regarding the change in sales allowances.

Contingent Consideration

In connection with the Voxtel acquisition, the Company was required to make contingent payments, subject to the entity achieving certain sales and revenue thresholds.

The fair value of the liabilities for the contingent payments recognized as part of the purchase accounting opening balance sheet totaled $7.3 million and was estimated by discounting to present value the probability-weighted contingent payments expected to be made.

Assumptions used in this calculation were units sold, expected revenue, discount rate and various probability factors.

The ultimate settlement of contingent consideration could deviate from current estimates based on the actual results of these financial measures.

During the fourth quarter, the Company determined that certain sales and revenue thresholds were less likely to be met for Voxtel as a result of its remeasurement exercise and updated associated forecasted data.

A fair value adjustment of $2.5 million was recorded during the year ended March 26, 2021, which reduced the amount of contingent payments still expected to be paid.

Refer to Note 3 to the consolidated financial statements included elsewhere in this Annual Report for more information on the acquisition of Voxtel and the contingent consideration.

Stock-based Compensation

We recognize compensation cost relating to share-based payment transactions in the financial statements based on the estimated grant date fair value of the equity instrument issued.

Critical is the fair value of the performance-based stock units (“PSUs”), which are based on the fair value of the underlying shares on the date of grant under the provisions of ASC Topic 718, Compensation — Stock Compensation (“ASC 718”).

Additionally, the fair value of the portion of the PSUs that relate to a relative TSR (“rTSR”) performance objective was determined using a Monte Carlo simulation analysis to estimate the total shareholder return ranking of the Company among the Philadelphia Semiconductor Sector Index over the remaining performance periods.

It also incorporates weighted-average assumptions such as volatility, risk free rate, dividend yield, and correlation coefficient.

In addition to the rTSR, we have two internal metrics to track on such performances.

If factors change causing different assumptions to be made in future periods, estimated compensation expense may differ significantly from that recorded in the current period.

See Note 2 and Note 17 to the consolidated financial statements included elsewhere in this Annual Report for more information regarding the assumptions used in estimating the fair value of our awards.

Historical experience can change over time.

As a result, estimated sales allowances may differ significantly from that recorded in the current and historical periods.

See Note 5, “Trade Accounts Receivable, net” to the consolidated financial statements for information regarding the change in sales allowances.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis