What changed in this filing

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Item 9A. Controls and Procedures

2022-05-18 compared with 2021-05-19 · 617 added, 499 removed, 1285 unchanged (46% of the section changed)

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Based on the evaluation of our disclosure controls and procedures as of March 25, 2022, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Annual Report on Internal Control over Financial Reporting

This Annual Report does not include a report of management’s assessment regarding our internal control over financial reporting or an attestation report of our independent registered accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

Additionally, our independent registered accounting firm will not be required to opine on the effectiveness of our internal control over financial reporting pursuant to Section 404 of Sarbanes-Oxley Act of 2002 until we are no longer an “emerging growth company” as defined in the JOBS Act.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the three months ended March 25, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

With the participation of the Chief Executive Officer and the Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control—Integrated Framework (2013) , issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of March 25, 2022.

Our independent auditor, Grant Thornton LLP, an independent registered public accounting firm, has issued an attestation report on the effectiveness of our internal control over financial reporting.

This attestation report appears below on page F-4.

Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Directors, Executive Officers and Corporate Governance.

Certain of the information required hereunder is incorporated herein by reference to our definitive proxy statement to be filed pursuant to Regulation 14A, which proxy statement is anticipated to be filed with the SEC within 120 days after March 25, 2022.

Pursuant to General Instruction G(3) of Form 10-K, additional information required hereunder relating to our executive officers is contained in Part I of this Annual Report on Form 10-K under the caption "Information about our Executive Officers."

Our board of directors has adopted a written Code of Business Conduct and Ethics that applies to our directors, officers and employees (including our principal executive officer, principal financial officer, principal accounting officer or

controller, or persons performing similar functions).

Pursuant to General Instruction G(3) of Form 10-K, additional information required hereunder relating to

our executive officers is contained in Part I of this Annual Report on Form 10-K under the caption "Information about our Executive Officers."

A copy of the Code is posted on our website, www.allegromicro.com/en.

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The following table sets forth information with respect to securities authorized for issuance under our equity compensation plans as of March 25, 2022:

Plan Category Number of Securities to be issued upon Exercise of Outstanding RSUs, PSUs and Restricted Common Stock

Weighted-Average Exercise Price of Outstanding RSUs, PSUs and Restricted Common Stock 3

Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

Plan Category Number of Securities to be issued upon Exercise of Outstanding Options, Warrants, and Rights

Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights

(b) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

Equity Compensation Plans Approved by Security Holders 1

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Total 2,656,090 3,887,023

1 As of March 26, 2021, there were 3,791,879 shares available for future issuance under the 2020 Omnibus Incentive Compensation Plan (the “2020 Plan”), 832,400 under the 2020 Employee Stock Purchase Plan (the “2020 ESPP”).

1 As of March 25, 2022, there were 3,180,390 shares available for future issuance under the 2020 Omnibus Incentive Compensation Plan (the “2020 Plan”), 706,633 under the 2020 ESPP.

2 As of March 25, 2022, there were 465,732 PSUs issued at target and 1,344,717 RSUs included in this amount.

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The information required hereunder is incorporated herein by reference to our definitive proxy statement to be filed pursuant to Regulation 14A, which proxy statement is anticipated to be filed with the SEC within 120 days after March 25, 2022.

Principal Accounting Fees and Services.

Principal Accountant Fees and Services.

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Financial Statements.

See Index to Financial Statements on page F-1.

The following financial statements are included in this Form 10-K from page F-1 to page F-50:

Reports of Independent Public Accounting Firm (PCAOB ID Number 248)

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Financial Statement Schedules.

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2.1 Master Transaction Agreement, dated as of March 25, 2020, by and among Polar Semiconductor, LLC, Allegro MicroSystems, Inc., Allegro MicroSystems, LLC and Sanken Electric Co., Ltd.

(incorporated by reference from Exhibit 2.1 to the Company ’ s Registration State ment on Form S-1/A filed on October 13 , 2020)

(incorporated by reference from Exhibit 2.1 to the Company’s Registration Statement on Form S-1/A filed on October 13, 2020)

3.1 Third Amended and Restated Certificate of Incorporation of Allegro MicroSystems, Inc.

(incorporated by reference from Exhibit 3 .1 to the Company’s Current Report on Form 8-K filed on Novem ber 2 , 2020)

(incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 2, 2020)

3.2 Amended and Restated Bylaws of Allegro MicroSystems, Inc.

(incorporated by reference from Exhibit 3.

2 to the Company’s Current Report on Form 8-K filed on November 2, 2020)

(incorporated by reference from Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on November 2, 2020)

4.1 Specimen Stock Certificate evidencing the shares of common stock (incorporated by reference from Exhibit 4.1 to the Company’s Registration Statement on Form S-1/A filed on October 21, 2020)

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and OEP SKNA, L.P.

(incorporated by reference from Exhibit 4 .

3 to the Company’s Registration Statement on Form S-1/A filed on October 1 3 , 2020)

(incorporated by reference from Exhibit 4.3 to the Company’s Registration Statement on Form S-1/A filed on October 13, 2020)

4.3 Addendum to Stockholders Agreement of Allegro MicroSystems, Inc., dated as of June 30, 2021, by and among Allegro MicroSystems, Inc., OEP SKNA, L.P.

and Sanken Electric Co., Ltd.

(incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 1, 2021)

4.4 Amended and Restated Registration Rights Agreement, by and among the Company, Sanken Electric Co.

and OEP SKNA, L.P.

(incorporated by reference from Exhibit 10 .

1 to the Company’s Current Report on Form 8-K filed on November 2, 2020)

4.4 Description of securities

10.1 Consolidated and Restructured Loan Agreement, dated as of March 28, 2020, by and between Polar Semiconductor, LLC and Allegro MicroSystems, Inc.

(incorporated by reference from Exhibit 2 .

1 ( Exhibit A) to the Company’s Registration Statement on Form S-1/A filed on October 13 , 2020)

(incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 2, 2020)

4.5 Description of securities (incorporated by reference from Exhibit 4.4 to the Company’s Annual Report on Form 10-K on May 19, 2021)

4.6 Form of Indenture (incorporated by reference from Exhibit 4.3 to the Company’s Registration Statement on Form S-3ASR filed on November 1, 2021)

10.1 Amended and Restated Limited Liability Company Agreement of Polar Semiconductor, LLC, dated as of March 28, 2020, by and among Polar Semiconductor, LLC, Allegro MicroSystems, Inc.

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10.4 Letter Agreement regarding FY21 Price Support, dated as of March 28, 2020, by and between Allegro MicroSystems, LLC and Polar Semiconductor, LLC (incorporated by reference from Exhibit 2.1 (Exhibit D) to the Company’s Registration Statement on Form S-1/A filed on October 13, 2020)

10.6 Transition Services Agreement, dated as of March 28, 2020, by and among Polar Semiconductor, LLC, Sanken Electric Co., Ltd.

and Allegro MicroSystems, Inc.

(incorporated by reference from Exhibit 2.1 (Exhibit E ) to the Company’s Registration Statement on Form S-1/A filed on October 13 , 2020)

10.7 IC Technology Development Agreement, dated as of May 28, 2009, by and among Sanken Electric Co., Ltd., Polar Semiconductor, LLC and Allegro MicroSystems, Inc.

(incorporated by reference from Exhibit 10 .

9 to the Company’s Registration Statement on Form S-1/A filed on October 13 , 2020)

10.8 SG8 Collaboration Agreement, dated as of July 5, 2014, by and between Sanken Electric Co., Ltd., Polar Semiconductor, LLC and Allegro MicroSystems, LLC (incorporated by reference from Exhibit 10.

10 to the Company’s Registration Statement on Form S-1/A filed on October 13 , 2020)

10.9 Discrete Technology Development Agreement, dated as of April 1, 2015, by and among Polar Semiconductor, LLC, Allegro MicroSystems, Inc.

and Sanken Electric Co., Ltd.

(incorporated by reference from Exhibit 10.1 1 to the Company’s Registration Statement on Form S-1 filed on October 6 , 2020)

10.10 Amendment No.

1 to Discrete Technology Development Agreement, dated as of June 15, 2018, by and among Polar Semiconductor, LLC, Allegro MicroSystems, Inc.

and Sanken Electric Co., Ltd .

(incorporated by reference from Exhibit 10.1 2 to the Company’s Registration Statement on Form S-1 filed on October 6 , 2020)

10.5 Letter Agreement regarding Consolidation of Technology Agreements, by and among Allegro MicroSystems, LLC, Sanken Electric Co., Ltd.

and Polar Semiconductor, LLC (incorporated by reference from Exhibit 2.1 (Exhibit F) to the Company’s Registration Statement on Form S-1/A filed on October 13, 2020)

10.12 Letter Agreement regarding Termination of Distribution Agreement, dated as of March 28, 2020, by and between Allegro MicroSystems, LLC and Sanken Electric Co., Ltd.

(incorporated by reference from Exhibit 2.1 (Exhibit H ) to the Company’s Registration Statement on Form S-1/A filed on October 13 , 2020)

10.6 Distribution Agreement, dated as of July 5, 2007, by and between Allegro MicroSystems, Inc.

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and Allegro MicroSystems Philippines, Inc.

(incorporated by reference from Exhibit 10.

20 to the Company’s Registration Statement on Form S-1 filed on October 6 , 2020)

(incorporated by reference from Exhibit 10.20 to the Company’s Registration Statement on Form S-1 filed on October 6 , 2020)

10.12 Contract of Lease, dated as of May 23, 2008, by and between Allegro MicroSystems Phils.

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and Reza Kazerounian (incorporated by reference from Exhibit 10.26 to the Company’s Registration Statement on Form S-1 filed on October 6 , 2020) *

10.25 Form of Class A Restricted Stock Award Agreement (incorporated by reference from Exhibit 10.2 7 to the Company’s Registration Statement on Form S-1/A filed on October 13 , 2020)

10.26 Form of Amendment to Class A Restricted Stock Award Agreement (incorporated by reference from Exhibit 10.2 8 to the Company’s Registration Statement on Form S-1/A filed on October 1 3 , 2020)

10.27 Form of Class L Restricted Stock Award Agreement (incorporated by reference from Exhibit 10.2 9 to the Company’s Registration Statement on Form S-1/A filed on October 1 3 , 2020)

10.28 Amended and Restated Allegro MicroSystems, LLC Executive Deferred Compensation Plan, dated as of September 15, 2015 (incorporated by reference from Exhibit 10.

30 to the Company’s Registration Statement on Form S-1/A filed on October 1 3 , 2020)

10.29 Allegro MicroSystems, Inc.

Long-Term Cash Incentive Plan (incorporated by reference from Exhibit 10.3 1 to the Company’s Registration Statement on Form S-1/A filed on October 1 3 , 2020)

10.18 Amended and Restated Allegro MicroSystems, LLC Executive Deferred Compensation Plan, dated as of September 15, 2015 (incorporated by reference from Exhibit 10.30 to the Company’s Registration Statement on Form S-1/A filed on October 1 3 , 2020) *

10.19 Form of Allegro MicroSystems, Inc.

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10.20 Form of Restricted Stock Unit Agreement under Allegro MicroSystems, Inc.

2020 Omnibus Incentive Compensation Plan (Employees)

2020 Omnibus Incentive Compensation Plan (Employees) (incorporated by reference from Exhibit 10.

31 to the Company’s Annual Report on Form 10- K filed on May 19 , 202 1 ) *

10.21 Form of Restricted Stock Unit Agreement under Allegro MicroSystems, Inc.

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10.22 Form of Performance Stock Unit Agreement under Allegro MicroSystems, Inc.

2020 Omnibus Incentive Compensation Plan

2020 Omnibus Incentive Compensation Plan (incorporated by reference from Exhibit 10.3 3 to the Company’s Annual Report on Form 10-K filed on May 19, 2021) *

10.23 Form of Allegro MicroSystems, Inc.

2020 Employee Stock Purchase Plan (incorporated by reference from Exhibit 99.

5 to the Company’s Registration Statement on Form S-8 filed on October 30, 2020)

10.35 Amended and Restated Severance Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, LLC, Allegro MicroSystems, Inc.

and Ravi Vig (incorporated by reference from Exhibit 10.3 7 to the Company’s Registration Statement on Form S-1/A filed on October 1 3 , 2020)

2020 Employee Stock Purchase Plan (incorporated by reference from Exhibit 99.5 to the Company’s Registration Statement on Form S-8 filed on October 30, 2020) *

10.24 Amended and Restated Severance Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, LLC, Allegro MicroSystems, Inc.

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10.26 Amended and Restated Severance Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, LLC, Allegro MicroSystems, Inc.

Glover (incorporated by reference from Exhibit 10.

40 to the Company’s Registration Statement on Form S-1/A filed on October 13 , 2020)

Glover (incorporated by reference from Exhibit 10.40 to the Company’s Registration Statement on Form S-1/A filed on October 13 , 2020) *

10.27 Offer Letter, dated as of June 21, 2019, by and between Allegro MicroSystems, Inc.

Glover (incorporated by reference from Exhibit 10.41 to the Company’s Registration Statement on Form S-1/A filed on October 13, 2020) *

10.40 Allegro MicroSystems, Inc.

Non-Employee Director Compensation Program (incorporated by reference from Exhibit 10.4 2 to the Company’s Registration Statement on Form S-1/A filed on October 21, 2020)

10.28 Offer Letter, dated as of October 15, 2021, by and between Allegro MicroSystems, Inc.

and Sharon Briansky (incorporated by reference from Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on February 2, 2022) *

10.29 Offer Letter, dated January 6, 2022, by and between Allegro MicroSystems, Inc.

and Derek D’Antilio (incorporated by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on February 2, 2022) *

10.30 Severance Agreement, dated as of January 10, 2022, by and between Allegro MicroSystems, Inc.

and Derek D’Antilio (incorporated by reference from Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on February 2, 2022) *

10.31 Severance Agreement, dated as of dated as of December 6, 2021, by and between Allegro MicroSystems, Inc.

and Sharon S.

Briansky (incorporated by reference from Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed on February 2, 2022) *

10.32 Consulting Agreement, dated as of January 10, 2022, by and between Allegro MicroSystems, Inc.

(incorporated by reference from Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed on February 2, 2022) *

10.33 Summary of Allegro MicroSystems, Inc.

Non-Employee Director Compensation *

10.34 Employment Agreement, dated May 2, 2022, by and between Allegro MicroSystems, Inc.

and Vineet Nargolwala (incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on May 9, 2022) *

10.35 Second Amended and Restated Severance Agreement, dated May 6, 2022, by and between Allegro MicroSystems, Inc.

and Ravi Vig (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 9, 2022) *

10.36 Letter Agreement, dated May 6, 2022, between Allegro MicroSystems, Inc.

and Ravi Vig (incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 9, 2022) *

10.37 Form of Indemnification Agreement between Allegro MicroSystems, Inc.

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10.41 Revolving Facility Security Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, Inc., the other grantors party thereto from time to time, and Mizuho Bank, Ltd., as collateral agent (incorporated by reference from Exhibit 10.47 to the Company’s Registration Statement on Form S-1/A filed on October 13, 2020)

10.46 Form of Class A Share Repurchase Agreement (incorporated by reference from Exhibit 10.4 8 to the Company’s Registration Statement on Form S-1/A filed on October 13 , 2020)

10.47 Form of Class L Share Repurchase Agreement (incorporated by reference from Exhibit 10.4 9 to the Company’s Registration Statement on Form S-1/A filed on October 13 , 2020)

10.42 Loan Agreement, dated as of December 2, 2021, by and between Allegro MicroSystems, Inc.

and Polar Semiconductor, LLC (incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on February 2, 2022)

21.1 Subsidiaries of Allegro MicroSystems, Inc.

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104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 filed herewith)

*Indicates management contract or compensatory plan, contract or arrangement.

** Certification is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section.

Such certification is not deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent that the registrant specifically incorporates it by reference.

Form 10-K Summary.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on May 19, 2021.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on May 18, 2022.

ALLEGRO MICROSYSTEMS, INC.

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and the capacities and on the dates indicated.

Each person whose signature appears below constitutes and appoints Derek P.

D'Antilio and Sharon S.

Briansky, and each or any of them, his or her true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments or supplements (including post-effective amendments) to this report, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Signature Title Date

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Ravi Vig Executive Officer) and Director

Chief Financial Officer (Principal Financial and May 19, 2021

Accounting Officer)

D’Antilio Chief Financial Officer (Principal Financial and May 18, 2022

D’Antilio Accounting Officer)

/s/ Yoshihiro (Zen) Suzuki Chairman of the Board of Directors May 18, 2022

Yoshihiro (Zen) Suzuki

/s/ David Aldrich Director May 18, 2022

David Aldrich

/s/ Andrew Dunn Director May 18, 2022

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Reza Kazerounian

/s/ Christine King Director May 19, 2021

Christine King

/s/ Richard Lury Director May 19, 2021

/s/ Richard R.

Lury Director May 18, 2022

/s/ Susan Lynch Director May 18, 2022

/s/ Joseph Martin Director May 18, 2022

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Paul Carl (Chip) Schorr IV

/s/ Hideo Takani Director May 19, 2021

Index to Consolidated Financial Statements

Report of an Indep endent Re gi s tered Public Accounting Firm

Consolidated Balance Sheets as of March 26, 2021 and March 27, 2020

Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248 )

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements in Changes of Equity

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

1 unchanged sentence

Report of Independent Public Accounting Firm

Board of Directors and Stockholders

Board of Directors and Shareholders

Allegro MicroSystems, Inc.

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We have audited the accompanying consolidated balance sheets of Allegro MicroSystems, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of March 26, 2021 and March 27, 2020, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the two years in the fiscal period ended March 26, 2021 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 26, 2021 and March 27, 2020, and the results of its operations and its cash flows for each of the two years in the fiscal period ended March 26, 2021, in conformity with accounting principles generally accepted in the United States of America.

(a Delaware corporation) and subsidiaries (the “Company”) as of March 25, 2022 and March 26, 2021, the related consolidated statements of operations, comprehensive income, changes of equity, and cash flows for each of the three years in the fiscal period ended March 25, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 25, 2022 and March 26, 2021, and the results of its operations and its cash flows for each of the three years in the fiscal period ended March 25, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of March 25, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated May 18, 2022 expressed an unqualified opinion.

Basis for opinion

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for limited price concession provisions provided to distributors

As described further in note 2 to the consolidated financial statements, sales recorded during the year include an estimate of the allowance for limited price protection provisions provided to distributors.

The Company estimates potential future credits based on historical data from prior sales adjustments.

We identified the estimate of the allowance as a critical audit matter.

The principal considerations for our determination that the allowance for the limited price protection provisions provided to distributors is a critical audit matter is the significant judgment by management in estimating the mix of pre-approved price concessions on future claims.

Changes in that assumption can have a material effect on the amount of revenue recognized, which in turn led to high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s assumption.

Our audit procedures related to the allowance included the following, among others:

• Tested the design and operating effectiveness of controls relating to establishing the allowance,

• Evaluated management’s process for determining the expected value estimate for the allowance,

• Evaluated the reasonableness of management’s estimate of the mix of approved price concessions on future claims in comparison to historical mix of price concessions through inspection of historical sales and claims data, and

• Assessed the reasonableness of management’s estimated price concessions on future claims from prior periods by comparing to subsequent actual claim activity.

/s/ GRANT THORNTON LLP

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Boston, Massachusetts

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Allegro MicroSystems, Inc.

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Allegro MicroSystems, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of March 25, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 25, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the fiscal period ended March 25, 2022, and our report dated May 18, 2022 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ GRANT THORNTON LLP

Boston, Massachusetts

ALLEGRO MICROSYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

4 unchanged sentences

Restricted cash 7,416 6,661

Trade accounts receivable, net of allowances for doubtful accounts of $ 138 and $ 288 at March 26, 2021 and March 27, 2020, respectively

Trade accounts receivable, net of provision for expected credit losses of $ 105 at March 25, 2022 and allowances for doubtful accounts $ 138 at March 26, 2021

87,359 69,500

3 unchanged sentences

Prepaid expenses and other current assets 14,995 18,374

Current portion of related party note receivable 1,875 —

Assets held for sale — 25,969

1 unchanged sentence

Property, plant and equipment, net 210,028 192,393

Operating lease right-of-use assets 16,049 —

Deferred income tax assets 17,967 26,972

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Intangible assets, net 35,970 36,366

Related party note receivable, less current portion 5,625 —

Equity investment in related party 27,671 26,664

6 unchanged sentences

Accrued expenses and other current liabilities 65,459 78,932

Current portion of related party debt — 25,000

Bank lines-of-credit — 43,000

Current portion of operating lease liabilities 3,706 —

Total current liabilities 104,223 116,674

Obligations due under Senior Secured Credit Facilities 25,000 25,000

Related party notes payable, less current portion — 17,700

Operating lease liabilities, less current portion 12,748 —

Other long-term liabilities 15,286 19,133

Total liabilities 157,257 160,807

Commitments and contingencies (Note 15)

Commitments and contingencies

Stockholders' Equity:

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1,000,000,000 shares authorized, 190,473,595 shares issued and outstanding at March 25, 2022;

no shares authorized, issued or outstanding at March 27, 2020

Class A, $ 0.01 par value;

No shares authorized, issued or outstanding at March 26, 2021;

12,500,000 shares authorized;

10,000,000 shares issued and outstanding at March 27, 2020

Class L, $ 0.01 par value;

No shares authorized, issued or outstanding at March 26, 2021;

1,000,000 shares authorized;

622,470 shares issued and outstanding at March 27, 2020

1,000,000,000 shares authorized, 189,588,161 issued and outstanding at March 26, 2021

Additional paid-in capital 627,792 592,170

12 unchanged sentences

2022 March 26,

2021 March 27,

Net sales $ 619,861 $ 486,546 $ 465,532

10 unchanged sentences

Operating income 136,650 12,158 52,828

Other (expense) income:

Other income (expense):

Loss on debt extinguishment — ( 9,055 ) —

3 unchanged sentences

Other, net 4,714 ( 475 ) ( 831 )

(Loss) income before income taxes ( 1,451 ) 53,278

Income tax (benefit) provision ( 19,552 ) 16,173

Income (loss) before income taxes 140,746 ( 1,451 ) 53,278

Income tax provision (benefit) 21,191 ( 19,552 ) 16,173

Net income 119,555 18,101 37,105

3 unchanged sentences

Net income attributable to Allegro MicroSystems, Inc.

per share (Note 16):

Basic $ 0.63 $ 0.22 $ 3.70

9 unchanged sentences

2022 March 26,

2021 March 27,

Net income $ 119,555 $ 18,101 $ 37,105

4 unchanged sentences

Foreign currency translation adjustment ( 8,110 ) 9,304 ( 3,153 )

Net actuarial loss amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax of $ 391 and $ 233 in 2021 and 2020, respectively

Net actuarial gain (loss) amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax of $( 472 ), $ 391 and $ 233 in 2022, 2021 and 2020, respectively

1,416 ( 1,172 ) ( 543 )

Total other comprehensive income (loss) 8,132 ( 3,696 )

Total other comprehensive (loss) income ( 6,694 ) 8,132 ( 3,696 )

Comprehensive income 112,713 26,085 33,275

Comprehensive income attributable to non-controlling interest ( 21 ) ( 2 )

Comprehensive income (loss) attributable to non-controlling interest 111 ( 21 ) ( 2 )

Comprehensive income attributable to Allegro MicroSystems, Inc.

1 unchanged sentence

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

ALLEGRO MICROSYSTEMS, INC.

Consolidated Statements of Changes in Equity

27 unchanged sentences

Balance at March 26, 2021 — $ — — $ — — $ — 189,588,161 $ 1,896 $ 592,170 $ 3,551 $ ( 11,865 ) $ 1,119 $ 586,871

Net income — — — — — — — — — 119,407 — 148 119,555

Employee stock purchase plan issuances — — — — — — 125,767 1 2,831 — — — 2,832

Stock-based compensation, net of forfeitures — — — — — — 759,667 8 33,429 — — — 33,437

Payments of taxes withheld on net settlement of equity awards — — — — — — — — ( 638 ) — — — ( 638 )

Foreign currency translation adjustment — — — — — — — — — — ( 7,999 ) ( 111 ) ( 8,110 )

Net actuarial gain and amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax — — — — — — — — — — 1,416 — 1,416

Balance at Balance at March 25, 2022 — $ — — $ — — $ — 190,473,595 $ 1,905 $ 627,792 $ 122,958 $ ( 18,448 ) $ 1,156 $ 735,363

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

4 unchanged sentences

2022 March 26,

2021 March 27,

CASH FLOWS FROM OPERATING ACTIVITIES:

5 unchanged sentences

Stock-based compensation 33,548 49,870 1,435

Loss on disposal of assets 269 698

(Gain) loss on disposal of assets ( 349 ) 269 698

Loss on debt extinguishment — 9,055 —

1 unchanged sentence

Impairment of long-lived assets — 7,119 —

Provisions for inventory and bad debt 5,019 3,891

Provisions for inventory and credit losses/bad debt 6,297 5,019 3,891

Unrealized gains on marketable securities ( 3,722 ) — —

Changes in operating assets and liabilities:

11 unchanged sentences

Proceeds from sales of property, plant and equipment 27,408 318 3,936

Investments in marketable securities ( 9,189 ) — —

Contribution of cash balances due to divestiture of subsidiary

— ( 16,335 ) —

Net cash used in investing activities ( 66,271 ) ( 68,245 ) ( 41,679 )

2 unchanged sentences

Proceeds from initial public offering, net of underwriting discounts and other offering costs — 321,425 —

Payments for taxes related to net share settlement of equity awards ( 27,707 ) —

Proceeds from issuance of common stock under equity award and purchase plans less payments for taxes related to net share settlement of equity awards 2,193 ( 27,707 ) —

Dividends paid — ( 400,000 ) —

5 unchanged sentences

Effect of exchange rate changes on Cash and cash equivalents and Restricted cash 1,373 3,860 ( 5,621 )

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 ) 116,619

Cash and cash equivalents and Restricted cash at beginning of period 203,875 219,876 103,257

9 unchanged sentences

ALLEGRO MICROSYSTEMS, INC.

Consolidated Statements of Cash Flows (cont.)

Consolidated Statements of Cash Flows - continued

(in thousands)

6 unchanged sentences

Loans to cover purchase of common stock under employee stock plan $ — $ 171 $ 232

Deconsolidation related to the PSL Divestiture (Note 1) $ — $ —

Recognition of right of use assets and lease liability upon adoption of new accounting standard $ 356 $ — $ —

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

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

Notes to Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts)

14 unchanged sentences

The investment was recorded for the 30 %, totaling $ 25,250 at the divestiture date.

Beginning with reporting periods on and after March 28, 2020, the investment is included on the Company’s balance sheet as an equity investment in a related party, including $ 1,413 of income earned during the year ended March 26, 2021.

Beginning with reporting periods on and after March 28, 2020, the investment is included on the Company’s balance sheet as an equity investment in a related party, including $ 1,007 and $ 1,413 of income earned during the fiscal years ended March 25, 2022 and March 26, 2021.

In addition, the difference between the fair value contributed by both parties at the consummation of this transaction and the book value was treated as an adjustment of capitalization changes related to organizational structure of affiliates and direct and indirect interests in subsidiaries within additional paid-in capital of $ 19,165 at March 26, 2021.

This amount includes an estimated tax effect of $ 1,552 for the year ended March 26, 2021.

This amount includes an estimated tax effect of $ 1,552 for the fiscal year ended March 26, 2021.

On March 28, 2020, in connection with the divestiture described above, the Company also formally terminated its distribution agreement with Sanken to distribute Sanken’s products and entered into a transitional services agreement with PSL, which contracted with Sanken as its new channel for fulfillment of Sanken product sales in North America and Europe.

1 unchanged sentence

See Note 21, “Related Party Transactions” for further discussion.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

In accordance with the divestiture transactions noted above, the following non-cash assets and liabilities and related equity impacts attributable to the statement of cash flows are summarized below:

Cash and cash equivalents $ ( 15,332 )

Restricted cash ( 1,013 )

Trade accounts receivable, net of allowances 37

Accounts receivable – other ( 308 )

Inventories ( 32,250 )

Prepaid expenses and other current assets ( 376 )

Property, plant and equipment, net ( 115,341 )

Related party note receivable 51,377

Equity investment in related party 25,462

Other assets, net 5,609

Trade accounts payable 4,176

Accrued expenses and other current liabilities 7,150

Current portion of related party debt 25,000

Bank lines-of-credit 10,000

Related party notes payable, less current portion 17,700

Other long-term liabilities ( 1,247 )

Additional paid-in capital 19,165

Impact of the COVID-19 Pandemic

5 unchanged sentences

The measures implemented by various authorities related to the COVID-19 pandemic have caused the Company to change its business practices, including those related to where employees work, the distance between employees in the Company’s facilities, limitations on the 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 the Company’s financial performance will depend on future developments, many of which are outside of the Company’s 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 the Company’s business and financial results.

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

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

ALLEGRO MICROSYSTEMS, INC.

1 unchanged sentence

(Amounts in thousands, except share and per share amounts)

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 the Company’s business and financial results.

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

The COVID-19 pandemic may also heighten other risks.

6 unchanged sentences

The CARES Act contains numerous tax provisions including a correction to the applicable depreciation rates available in the original Tax Cuts and Jobs Act of 2017 (“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 $ 9,069 .

The QIP change is estimated to result in an incremental cash tax benefit of $ 1,680 .

Additionally, the Company plans to defer payment of $ 2,766 of payroll taxes, with $ 1,383 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.

Financial Periods

The Company’s fiscal year is the 52-week or 53-week period ending on the Friday closest to the last day in March.

The Company’s 2021 fiscal year ended March 26, 2021 (“fiscal year 2021”) and 2020 fiscal year ended March 27, 2020 (“fiscal year 2020”) were 52-week periods.

The Company’s 2022 fiscal year ended March 25, 2022 (“fiscal year 2022”), 2021 fiscal year ended March 26, 2021 (“fiscal year 2021”) and 2020 fiscal year ended March 27, 2020 (“fiscal year 2020”) were 52-week periods.

Summary of Significant Accounting Policies

7 unchanged sentences

Certain reclassifications have been made to prior-period amounts to conform to current-period reporting classifications.

The carrying value of assets held for sale related to the planned disposition of the Company’s AMTC Facility were reclassified from Property, plant and equipment, net to Assets held for sale in fiscal year 2021.

Impairment of long-lived assets related to the Company’s Thailand-based facility (the “AMTC Facility”).

The AMTC facility was reported separately in the consolidated financial statements during fiscal year 2021.

Business Segment Information

3 unchanged sentences

Throughout the year, the chief operating decision maker allocates capital resources on a project-by-project basis across the Company’s entire asset base to maximize profitability without regard to legal entity or end market basis.

The Company operates in a number of countries throughout the world in a variety of product lines through its business unit structure.

ALLEGRO MICROSYSTEMS, INC.

1 unchanged sentence

(Amounts in thousands, except share and per share amounts)

Company operates in a number of countries throughout the world in a variety of product lines through its business unit structure.

Foreign Currency Translation and Transactions

12 unchanged sentences

Because of the investment’s short term to maturity and the investment’s relative price insensitivity to changes in market interest rates, the Company notes that cost approximates fair value for this investment.

As a result, there were no realized or unrealized gains or losses for the fiscal years ended March 26, 2021 and March 27, 2020.

As a result, there were no realized or unrealized gains or losses for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020.

The Company has restricted cash, the use of which is restricted to the benefit of employees through a deferred compensation program.

12 unchanged sentences

The carrying value of outstanding borrowings under the line of credit agreements approximates fair value as it bears interest at a rate approximating a market interest rate.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Related party note receivable was classified as held-for-investment based on management’s intent and ability to hold the loan for the foreseeable future or to maturity.

1 unchanged sentence

The Company recognizes interest income on loans, including the amortization of discounts and premiums, loan fees paid and received, using the interest method.

The interest method is applied on a loan-by-loan basis when collectability of the future payments is reasonably assured.

The interest method is

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

applied on a loan-by-loan basis when collectability of the future payments is reasonably assured.

Premiums and discounts are recognized as yield adjustments over the term of the related loans.

4 unchanged sentences

Accounts receivables are presented net of an allowance for doubtful accounts, which is an estimate of amounts that may not be collectible.

The Company manages the collectability of accounts receivable primarily through its review of the accounts receivable aging.

When facts and circumstances dictate the collection of a specific invoice amount or the balance relating to a customer is in doubt, the Company assesses the impact on amounts recorded for doubtful accounts and, if necessary, records a charge in the fiscal period that such assessment is determined.

The allowance for doubtful accounts is our estimate of current expected credit losses (“CECL”) based on historical loss experience.

The Company periodically performs detailed reviews to assess the adequacy of the allowance.

The Company exercises judgment in estimating the timing, frequency and severity of losses.

The Company uses an aging schedule method to estimate current expected credit losses based on days of delinquency, including information about past events and current economic conditions, as well as future forecasts of economic conditions.

The Company’s accounts receivable is separated int o two categories using a portfolio methodology to evaluate the allowance under the CECL impairment model based on sales categorization and similar credit quality and worthiness of the customers:

original equipment manufacturers (“OEMs”) and distributors.

The receivables in each category share similar risk characteristics.

The Company increases the allowance for expected credits losses when the Company determines all or a portion of a receivable is uncollectible.

The Company recognizes recoveries as a decrease to the allowance for expected credit losses.

Adjustments to the allowance for doubtful accounts are recorded as selling, general and administrative expenses in the consolidated statements of operations.

Account balances are written off after all means of collection are exhausted and the potential for non-recovery is determined to be probable.

Inventories are stated at the lower of cost or net realizable value, with cost being determined on a first-in, first-out basis.

15 unchanged sentences

The AMTC Facility met the criteria to be classified as held for sale, and the Company was required to record these assets at the lower of carrying value or fair value less any costs to sell based on the agreed-upon sales price.

The sale of the AMTC Facility is expected to close within the calendar year, subject to government approvals in Thailand and customary closing conditions.

Deferred Offering Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated.

After consummation of the equity financing, these costs are recorded in stockholders’ equity as a reduction of the additional paid-in capital generated as a result of the offering.

As of March 26, 2021 and March 27, 2020, the Company had no deferred offering costs.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The sale of the AMTC Facility closed in August 2021 upon receipt of the necessary government approvals in Thailand and customary closing conditions.

Property, Plant and Equipment, Net

4 unchanged sentences

Estimated useful lives of the respective property, plant and equipment assets are as follows:

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Asset Useful Life

16 unchanged sentences

Indefinite-lived intangible assets are reviewed for impairment at least annually or whenever events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

The impairment test consists of a comparison of the fair value of the intangible asset with its carrying value.

The impairment test consists of a qualitative assessment to determine if events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable.

Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets.

If events occur, a comparison of the fair value of the intangible asset with its carrying value is performed.

If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

1 unchanged sentence

The results of the annual impairment test did not indicate any impairments of indefinite-lived intangible assets for fiscal years 2022, 2021 and 2020.

The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and concluded that there was a triggering event during the fourth quarter of fiscal year 2020.

As a result, management performed an impairment evaluation of its long-lived asset balances as of March 27, 2020.

This did not lead to the Company recording an impairment charge at that time.

The full extent to which COVID-19 will impact the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the virus and the actions to contain or treat its impact.

In the fourth quarter of fiscal year 2020, the Company initiated a process to conclude its operations at the AMTC facility with the intention of selling the AMTC Facility.

1 unchanged sentence

As a result of the execution of the definitive agreement, the Company reclassified the AMTC assets within its “Property, plant and equipment, net” to “Assets held for sale” and incurred an impairment charge to the book value of those assets of $ 7,119 in its fiscal fourth quarter ended March 26, 2021.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Goodwill represents the excess purchase price over the estimated fair value of net assets acquired as of the acquisition date.

3 unchanged sentences

In testing goodwill for impairment, the Company has the option to first consider qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

Such qualitative factors include industry and market considerations, economic conditions, entity-specific financial performance and other events, such as changes in management, strategy and primary customer base.

Such qualitative factors

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

include industry and market considerations, economic conditions, entity-specific financial performance and other events, such as changes in management, strategy and primary customer base.

If based on the Company’s qualitative assessment it is more likely than not that the fair value of the reporting unit is less than its carrying amount, quantitative impairment testing is required.

However, if the Company concludes otherwise, quantitative impairment testing is not required.

The results of the Company’s qualitative goodwill impairment test performed on the first business day of fourth quarter for fiscal year 2021 and fiscal year 2020 did not indicate any impairments.

The results of the Company’s qualitative goodwill impairment test performed on the first business day of fourth quarter for fiscal years 2022, 2021 and 2020 did not indicate any impairments.

Product Warranties

4 unchanged sentences

If there is a material increase in the rate of customer claims, or the Company’s estimates of probable losses relating to specifically identified warranty exposures are inaccurate, the Company may need to record a charge against future cost of goods sold.

There were minimal costs accrued in the fiscal years ended March 26, 2021 and March 27, 2020.

There were minimal costs accrued in the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020.

Deferred Rent

3 unchanged sentences

Revenue Recognition

Effective March 30 , 2019, the Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09” or “ASC 606”) using the modified retrospective method.

ASC 606 superseded the guidance of Revenue Recognition (Topic 605) formerly followed by the Company.

The adoption of ASC 606 had no impact on the Company’s consolidated financial statements.

The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The Company expects the new standard to be immaterial to net income on an ongoing basis.

Under the guidance of ASC 606, revenue is recognized when transfer of control to the customer occurs in an amount reflecting the consideration that the Company expects to be entitled.

Revenue is recognized on contracts with customers when transfer of control to the customer occurs in exchange for an amount reflecting the consideration that the Company expects to be entitled.

In order to achieve this core principle, the Company applies the following five step approach:

2 unchanged sentences

The Company uses judgement in determining the customer’s ability and intent to pay, which is based on factors such as the customer’s historical payment experience or, for new customers, credit and financial information pertaining to the customers.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

(2) Identify the performance obligations in the contract —Performance obligations are identified as products and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the products or services is separately identifiable from other promises in the contract.

Substantially, all of the Company’s contracts with customers contain single performance obligation, such as the sale of mixed-signal integrated circuit products or the sale of wafer fabricators.

Substantially, all of the Company’s contracts with customers contain a single performance obligation, such as the sale of mixed-signal integrated circuit products or the sale of wafer fabricators.

(3) Determine the transaction price —The transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for transferring products to the customer.

3 unchanged sentences

(5) Recognize revenue when a performance obligation is satisfied —Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs point in time at shipment.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Sales channels

16 unchanged sentences

Practical expedients elected

The Company elected certain practical expedients with the adoption of the new revenue recognition standard.

Revenue recognized is adjusted based on allowances, which are prepared on a portfolio basis using a most likely amount methodology.

The length of time between revenue recognition and payment is not significant under any of the Company’s payment terms.

However, if the period between revenue recognition and when the customer pays is one year or less, the Company elected not to account for the significant financing component.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Moreover, if the period between revenue recognition and when the customer pays is one year or less, the Company elected not to account for the significant financing component.

Other Revenue Recognition Policies

Prior to the end of fiscal year 2020, the Company acted as a distributor of Sanken products in North America, South America and Europe.

The Company evaluated whether it is acting as the principal (i.e., report net sales on a gross basis) or agent (i.e.

report net sales on a net basis) in these transactions.

The Company evaluated whether it is acting as the principal (i.e., report net sales on a gross basis) or agent (i.e., report net sales on a net basis) in these transactions.

In doing so, the Company evaluated whether it controls the good or service before it is transferred to the customer.

If the Company controls the good or service before it is transferred to the customer, it is acting as principal in the transaction.

Generally, the Company controls the promised products before transferring the products to the customer and act as the principal to the transaction, therefore the Company recognizes net sales gross.

Generally, the Company controls the promised products before transferring the products to the customer and acts as the principal to the transaction, therefore the Company recognizes net sales gross.

Shipping and handling activities are not considered a contract performance obligation.

4 unchanged sentences

Contract assets are transferred to accounts receivable when the rights become unconditional.

The Company had no contract assets at March 26, 2021 and March 27, 2020.

The Company had no contract assets as of March 25, 2022 and March 26, 2021.

Contract Liabilities (Deferred Revenue)—Deferred revenue typically results from billings in excess of revenues recognized and relate to products shipped near the end of the reporting period for which the required revenue recognition criteria were not met.

The Company had no contract liabilities at March 26, 2021 and March 27, 2020.

The Company had no significant contract liabilities as of March 25, 2022 and March 26, 2021.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Contract costs

Following the Company’s adoption of ASC 606, certain costs, such as cost to obtain a contract or cost to fulfill a contract are required to be capitalized.

The Company has immaterial contract costs, as such, no amounts were capitalized at March 26, 2021 and March 27, 2020.

Certain costs, such as cost to obtain a contract or cost to fulfill a contract are required to be capitalized.

The Company has immaterial contract costs, as such, no amounts were capitalized as of March 25, 2022 and March 26, 2021.

Stock-Based Compensation

The Company recognizes compensation costs for all stock-based compensation awards made to employees based upon the awards’ grant-date fair value.

The Company estimates the fair value of stock-based compensation awards granted using a discounted cash flow model to determine the fair value of the awards.

The Company estimates the fair value of stock-based compensation awards granted using the grant date fair value of the awards.

Stock-based compensation expense is recognized evenly over the vesting period.

12 unchanged sentences

In addition, the Company measures defined benefit plan assets and obligations as of the date of the employer’s fiscal year-end consolidated balance sheets and discloses in the notes to the consolidated financial statements the gains or losses, prior service costs or credits and transition asset or obligation.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax basis of assets and liabilities, as measured by enacted tax rates anticipated to be in effect when these differences are expected to reverse.

12 unchanged sentences

Accrued interest and penalties are included in accrued income taxes in the consolidated balance sheets.

Except for our AMTC Facility, all undistributed earnings of our foreign subsidiaries are permanently reinvested.

Except for our AMTC Facility prior to its sale, all undistributed earnings of our foreign subsidiaries are permanently reinvested.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Accordingly, the Company does not provide for U.S.

5 unchanged sentences

The Company computes net income per share in accordance with ASC 260, Earnings Per Share (“ASC 260”).

Basic net income per share is computed by dividing net income attributable to shareholders of the Company by the weighted-average number of common shares outstanding during the reporting period.

Basic net income per share is computed by dividing net income attributable to stockholders of the Company by the weighted-average number of common shares outstanding during the reporting period.

Diluted net income per share is computed similarly to basic net income per share, except that it includes the potential dilution that could occur if dilutive securities were exercised.

3 unchanged sentences

Earnings per diluted share is computed on the basis of the weighted-average number of common shares outstanding during the period plus the dilutive effect of any potential common shares outstanding during the period using the more dilutive of the two-class method or another dilutive method.

For the fiscal years ended March 27, 2020, the Company did not allocate income to the Class L shares in accordance with ASC 260, because such classes of shares would not have shared in the distribution had all of the income for the periods been distributed.

For the fiscal year ended March 27, 2020, the Company did not allocate income to the Class L shares in accordance with ASC 260, because such classes of shares would not have shared in the distribution had all of the income for the periods been distributed.

Accordingly, earnings per share calculations were provided only for the class A shares.

2 unchanged sentences

The Company maintains its cash and cash equivalents with financial institutions, which management believes to be of a high credit quality.

To manage credit risk related to accounts receivables, the

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Company evaluates its creditworthiness of its customers and maintains allowances, to the extend necessary, for potential credit losses based upon the aging of its accounts receivable balances and known collection issues.

To manage credit risk related to accounts receivables, the Company evaluates its creditworthiness of its customers and maintains allowances, to the extend necessary, for potential credit losses based upon the aging of its accounts receivable balances and known collection issues.

The Company has not experienced any significant credit losses to date.

As of March 26, 2021 and March 27, 2020, Sanken accounted for 22.7 % a nd 33.8 % of the Company’s outstanding trade accounts receivable, net, respectively, including related party trade accounts receivable.

As of March 25, 2022 and March 26, 2021, Sanken accounted for 23.8 % and 23.2 % of the Company’s outstanding trade accounts receivable, net, respectively, including related party trade accounts receivable.

No other customers accounted for 10% or more of outstanding trade accounts receivable, net as of such dates.

For the fiscal years ended March 26, 2021 and March 27, 2020, Sanken accounted fo r 17.7 % and 28.4 % of total net sales, respectively.

For the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, Sanken accounted for 19.4 %, 17.7 % and 28.4 % of total net sales, respectively.

No other customers accounted for 10% or more of total net sales for any of these periods.

1 unchanged sentence

No other countries accounted for greater than 10.0% of total net sales for the fiscal year ended March 25, 2022.

During the fiscal year ended March 27, 2020, sales from customers located outside of the United States accounted in the aggregate for 81.7 % of the Company’s total net sales, with Japan accounting for 28.4 % and Greater China accounting for 18.7 %.

During the fiscal year ended March 26, 2021, sales from customers located outside of the United States in the aggregate accounted for 86.1 % of the Company’s total net sales, with Japan accounting for 17.7 %, Greater China accounting for 26.6 % and South Korea accounting for 10.5 %.

No other countries accounted for greater than 10.0% of total net sales for the fiscal year ended March 26, 2021.

During the fiscal year ended March 27, 2020, sales from customers located outside of the United States in the aggregate accounted for 81.7 % of the Company’s total net sales, with Japan accounting for 28.4 % and Greater China accounting for 18.7 %.

No other countries accounted for greater than 10.0% of total net sales for the fiscal year ended March 27, 2020.

Recently Adopted Accounting Standards

The Company qualifies as “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to “opt in” to the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company.

The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for nonpublic companies.

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2018-13, “Fair Value Measurement” (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, regarding transfers between levels of financial instruments, amounts of unrealized gains and losses included in other comprehensive (loss) income for Level 3 fair value measurements and the information used to determine the fair value of Level 3 fair value measurements.

The Company adopted the disclosure requirements of this standard update on December 26, 2020 and determined that there was no material impact to its consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20):

Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans” (“ASU 2018-14”), which modifies the disclosure requirements for defined benefit pension plans and other post-retirement plans.

The Company adopted ASU 2018-14 retrospectively on December 26, 2020 and determined that the disclosure requirements had no material impact to its consolidated financial statements.

In December 2019, the FASB issued ASU No.

2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes” (“ASU 2019-12”).

ASU 2019-1 2 simplifies the accounting for income taxes by removing certain exceptions for intraperiod tax allocations and deferred tax liabilities for equity method investments and adds guidance on whether a step-up in tax basis of goodwill relates to a business combination or a separate transaction.

The Company adopted this standard update on December 26, 2020 and determined that there was no material impact to its consolidated financial statements and related disclosures.

In January 2020, the FASB issued ASU No.

2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)” (“ASU 2020-01”), which addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities.

The Company adopted this standard update on December 26, 2020 and determined that there was no material impact to its consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”) to provide temporary optional expedients and exceptions to the contract modifications, hedge relationships, and other transactions affected by reference rate reform if

In February 2016, the Financial Accounting Standards Board (“FASB”) issued its new lease accounting guidance in Accounting Standards Update (“ASU”) 2016‑02, “Leases (Topic 842)” (“ASU 2016-02”), which is codified as Accounting

ALLEGRO MICROSYSTEMS, INC.

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(Amounts in thousands, except share and per share amounts)

certain criteria are met.

This ASU, which was effective for all entities upon issuance on March 12, 2020 and may be applied through December 31, 2022, is applicable to all contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or any other reference rate expected to be discontinue d.

The Company has assessed the potential impact of ASU 2020-04 and determined that the standard update would have no material impact to its consolidated financial statements due to the Company’s option to use an alternative rate other than LIBOR on its senior secured credit facilities.

The utilization of another allowable interest rate would be commensurate with LIBOR and would not preclude the need to modify or cancel its current financing arrangements.

Recently Issued Accounting Standards Not Yet Adopted

In February 2016, the FASB issued its new lease accounting guidance in ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”).

Topic 842 and all subsequent amendments requires lessees to recognize the following for all leases, with the exception of short-term leases if an accounting policy election is made, at the lease commencement date:

a lease liability, which is the lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis;

and a right-of-use asset, which represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

Lease expense is recognized in the income statement in a manner similar to current U.S.

Lessees will no longer be provided with a source of off-balance sheet financing.

The new lease standard also requires entities to disclose key quantitative and qualitative information about its leasing arrangements.

The Company will adopt the new lease standard on March 27, 2021 using the optional transition method to the modified retrospective approach.

Under this transition provision, the Company will not apply the new lease standard to comparative periods presented or provide the incremental disclosure requirements for periods before the Company’s adoption of Topic 842.

The Company has identified and evaluated its lease population, including leases embedded within service arrangement, and is currently finalizing business processes and controls to support the ongoing recognition and disclosure requirements after adoption.

The Company has also implemented a new software to manage the lease portfolio and perform the accounting required under Topic 842.

The Company does not expect the adoption of the new lease standard to have a significant impact on its consolidated statements of operations and cash flows.

However, the Company expects that the ad option of the new lease standard will result in the recognition of right-of-use lease assets and lease liabilities between $ 16.6 million and $ 20.6 million as of March 27, 2021.

Standard Codification (“ASC”) Topic 842 (“ASC 842”) and replaces ASC Topic 840, Leases (“ASC 840”).

ASU 2016-02 and all subsequent amendments amend various aspects of existing guidance for leases and require significant additional quantitative and qualitative disclosures about lease arrangements.

ASU 2016-02 requires lessees to recognize lease assets representing the right to use an underlying asset and lease liabilities representing the obligation to make lease payments over the lease term, measured on a discounted basis, for substantially all leases.

ASU 2016-02 retains a distinction between finance leases and operating leases using classification criteria that are substantially similar to the previous lease guidance.

Although the Company has elected to opt-in to the extended transition dates for new or revised accounting standards to align with nonpublic companies, the Company elected to early adopt ASU 2016-02 effective March 27, 2021.

The Company used the optional transition method to the modified retrospective approach, which eliminates the requirement to restate the prior period financial statements.

Under this transition provision, the Company has applied ASU 2016-02 to reporting periods beginning on March 27, 2021, while prior periods continue to be reported and disclosed in accordance with the legacy guidance under ASC 840.

A number of practical expedients and policy elections are available under the new guidance to reduce the burden of adoption and ongoing compliance with ASC 842.

The Company elected the “package of practical expedients,” which permitted the Company to retain lease classification and initial direct costs for any identified leases that existed prior to adoption of ASC 842.

Under this transition guidance, the Company also did not reassess whether any existing contracts at March 27, 2021 are, or contain, leases and carried forward its initial determination under legacy lease guidance.

The Company has elected not to adopt the “hindsight” practical expedient and, therefore, will measure the right-of-use (“ROU”) asset and lease liability using the remaining portion of the lease term at adoption on March 27, 2021.

The Company made an accounting policy election available under the new lease standard to not recognize lease assets and lease liabilities for leases with a term of 12 months or less.

For all other leases, the initial measurement of the lease liability is based on the present value of future lease payments over the lease term at the application date or the commencement date of the lease.

Lease payments may include fixed rent escalation clauses or payments that depend on an index or a rate (such as the consumer price index) measured using the index or applicable rate at lease commencement.

Subsequent changes in the index or rate and any other variable payments, such as market-rate base rent adjustments, are recognized as variable lease expense in the period incurred.

Payments for terminating a lease are included in lease payments only when it is probable they will be incurred.

To determine the present value of lease payments, the Company uses its incremental borrowing rate, as the leases generally do not have a readily determinable implicit discount rate.

The Company applies judgment in assessing factors such as Company-specific credit risk, lease term, nature and quality of the underlying collateral, currency and economic environment in determining the lease-specific incremental borrowing rate.

The carrying value of the ROU assets at the application date equals the lease liability adjusted for any initial direct costs incurred and lease payments made at or before the commencement date and for any lease incentives.

The Company’s leases generally include a non-lease component representing additional services transferred to the Company.

The Company has made an accounting policy election to account for lease and non-lease components in its contacts as a single lease component for all asset classes.

The non-lease components are usually variable in nature and recorded in variable lease expense in the period incurred.

Adoption of ASC 842 resulted in ROU assets of $ 18,403 and lease liabilities of $ 18,759 related to the Company’s operating leases at March 27, 2021.

The Company does not have any leases classified as finance leases.

The adoption of ASC 842 did not materially impact the Company’s consolidated net income or consolidated cash flows and did not result in a cumulative-effect adjustment to the opening balance of retained earnings.

In June 2016, the FASB issued ASU No.

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Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses.

The ASU is also intended to reduce the complexity by decreasing the number of credit impairment models that entities use to account for debt instruments.

ASU 2016-03, along with its subsequent clarifications, was effective for public companies beginning after December 15 , 2019.

The Company is evaluating the new guidance and the expected effect on its consolidated financial statements and related disclosures.

In November 2019, the FASB issued ASU No.

2019-10 delaying the effective date for all entities.

For public entities, this guidance was effective for annual periods beginning after December 15, 2019 , including interim periods within those fiscal years.

For nonpublic entities, this guidance is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years.

On August 28, 2020, the Company closed on its purchase of Voxtel, Inc.

(“Voxtel”), a privately-held technology company located in Beaverton, Oregon that develops, manufactures and supplies photonic and advanced 3D imaging technologies (the “Acquisition”).

The total preliminary purchase price was $ 34,980 , including certain earn-outs that have a potential payout of $ 15,000 .

The fair value of these earn-outs at acquisition date was $ 7,300 .

The Acquisition has been accounted for as a business combination and, in accordance with ASC 805, Business Combinations , the Company has recorded the assets acquired and liabilities assumed at their respective fair values as of the date of the Acquisition.

The allocation of purchase consideration to assets and liabilities is not yet finalized.

The preliminary allocation of the purchase price was based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date).

The primary areas of the preliminary purchase price allocation that are not yet finalized are the determination of the tax basis of certain assets and liabilities, the determination of certain tax carry forwards, and residual goodwill.

The preliminary fair values of the assets acquired and liabilities assumed by major class of the acquisition of Voxtel were recognized as follows :

The ASU is also intended to reduce complexity by decreasing the number of credit impairment models that entities use to account for debt instruments.

The Company adopted ASU 2016-13 effective March 27, 2021 and concluded that adoption of this standard update did not have a material impact on either the financial position, results of operations, cash flows, or related disclosures.

There was no impact on beginning balance retained earnings upon adoption of this ASU.

The Company is exposed to credit losses primarily through trade and other financing receivables arising from revenue transactions.

The Company uses an aging schedule method to estimate current expected credit losses based on days of delinquency, including information about past events and current economic conditions.

original equipment manufacturers

ALLEGRO MICROSYSTEMS, INC.

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(Amounts in thousands, except share and per share amounts)

Estimated fair value of consideration:

Base purchase price $ 27,680

Contingent consideration 7,300

Total estimated fair value of consideration $ 34,980

Estimated fair value of assets acquired and liabilities assumed:

Net working capital $ 4,064

Property and equipment 57

Finite-life intangible assets 13,600

Indefinite-life intangible assets 2,400

Deferred tax liability ( 3,843 )

Goodwill 18,702

Allocated purchase price $ 34,980

The significant intangible assets identified in the preliminary purchase price allocation discussed above include completed technology, in-process research and development, customer relationships and trademarks.

Completed technology, customer relationships and trademarks are amortized over their respective useful lives on a straight-line basis.

An estimated fair value of $ 2,400 was assigned to acquired in-process research and development costs with an indefinite life.

Amortization of completed technology is included within cost of goods sold, and amortization of customer relationships and trademarks is included within selling, general and administrative expense.

To value the completed technology and the in-process research and development assets, the Company utilized the income approach, specifically a discounted cash flow method known as the multi-period excess earnings method.

Customer relationships represent the underlying relationships with certain customers to provide ongoing services for products sold.

The Company utilized the income approach, specifically the distribution method, a subset of the excess-earnings method, to value the customer relationships and trademarks.

The following table presents the estimated fair values and useful lives of the identifiable finite-life intangible assets acquired:

Useful Life Fair value

Completed technology 12 years $ 13,100

Customer relationships 6 years 300

Trademarks 5 years 200

Goodwill was recognized as the excess purchase price over the fair value of the net assets acquired.

The goodwill reflects the value of the synergies the Company expects to realize and the assembled workforce.

Goodwill from the Acquisition is included within the Company’s one reporting unit and is included in the Company’s enterprise-level annual review for impairment.

Goodwill resulting from the Acquisition is not deductible for tax purposes.

The revenues were $ 1,235 and loss of $ 4,998 before income taxes from the Acquisition to the Company’s consolidated results for the year ended March 26, 2021.

The Company has not presented pro forma results of operations for the Acquisition because it is not material to the Company's consolidated results of operations, financial position, or cash flows.

(“OEMs”) and distributors.

The receivables in each category share similar risk characteristics.

The change to the CECL impairment model resulted in an immaterial increase in the provision for expected credit losses compared to the allowance for doubtful accounts under the previous incurred loss method.

The Company increases the allowance for expected credits losses when the Company determines all or a portion of a receivable is uncollectible.

The Company recognizes recoveries as a decrease to the allowance for expected credit losses.

For the fiscal year ended March 25, 2022, no material changes in the allowance occurred.

Recently Issued Accounting Standards Not Yet Adopted

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which eliminates the diversity in practice and inconsistency related to the accounting for acquired revenue contracts with customers in a business combination.

The amendments in ASU 2021-08 require an acquiring entity to apply ASC Topic 606, Contracts with Customers (“ASC 606”), to recognize and measure contract assets and contract liabilities in a business combination as if the acquired contracts with customers were originated by the acquiring entity at the acquisition date.

An acquirer may assess how the acquiree applied ASC 606 and generally should recognize and measure the acquired contract assets and contract liabilities consistent with the recognition and measurement in the acquiree’s financial statements as prepared in accordance with U.S.

If unable to rely on the acquiree’s accounting due to errors, noncompliance with U.S.

GAAP, or differences in accounting policies, the acquirer should consider the terms of the acquired contracts, such as timing of payment, identify each performance obligation in the contracts, and allocate the total transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception (that is, the date the acquiree entered into the contracts) or contract modification to determine what should be recorded at the acquisition date.

The guidance is effective prospectively for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including in an interim period as of the beginning of the fiscal year that includes that interim period.

An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application.

The Company is currently in the process of evaluating the impact of this new guidance on the consolidated financial statements and the related disclosures, which will be dependent on the consummation of any future business combination.

In May 2021, the FASB issued ASU No.

2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2021-04”).

ASU 2021-04 outlines how an entity should account for modifications made to equity-classified written call options, including stock options and warrants to purchase the entity’s own common stock.

The guidance in the ASU requires an entity to treat a modification of an equity-classified written call option that does not cause the option to become liability-classified as an exchange of the original option for a new option.

This guidance applies whether the modification is structured as an amendment to the terms and conditions of the equity-classified written call option or as termination of the original option and issuance of a new option.

The guidance is effective prospectively for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted, including in an interim period as of the beginning of the fiscal year that includes that interim period.

The Company does not expect this new guidance to have an impact on the consolidated financial statements and the related disclosures at this time.

Additionally, if the Company issues stock options under its 2020 Omnibus Incentive Compensation Plan (the “2020 Plan”) and subsequently makes modifications, the Company anticipates no material impact in future periods.

Revenue from Contracts with Customers

The Company generates revenue from the sale of magnetic sensor integrated circuits (“ICs”), application-specific analog power semiconductors, wafer foundry products and from the sale of Sanken related products.

The following tables summarize net sales disaggregated by core end market and application, by product and by geography for the fiscal years ended March 26, 2021 and March 27, 2020.

The Company generates revenue from the sale of magnetic sensor integrated circuits (“ICs”), application-specific analog power semiconductors and photonics, for the year ended March 27, 2020, also from wafer foundry products and from the sale of Sanken related products.

The following tables summarize net sales disaggregated by core end market and application, by product and by geography for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020.

The categorization of net sales by core end market and application is determined using various characteristics of the product and the application into which the Company’s product will be incorporated.

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2022 March 26,

2021 March 27,

Core end market:

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2022 March 26,

2021 March 27,

Power integrated circuits (“PIC”) $ 268,381 $ 203,600 165,911

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2022 March 26,

2021 March 27,

United States $ 108,396 $ 82,165 119,139

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The Company recognizes sales net of returns, credits issued, price protection adjustments and stock rotation rights.

At March 26, 2021 and March 27, 2020, these adjustments were $ 15,412 and $ 17,473 , respectively, and were netted against trade accounts receivable in the consolidated balance sheets.

These amounts represent activity of income and charges of $ 2,061 and $ 423 , respectively, for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

As of March 25, 2022 and March 26, 2021, these adjustments were $ 14,924 and $ 15,412 , respectively, and were netted against trade accounts receivable in the consolidated balance sheets.

These amounts represent activity of income of $ 488 , income of $ 2,061 and charges of $ 423 for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, respectively.

Unsatisfied performance obligations primarily represent contracts for products with future delivery dates.

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Money market fund deposits 7,416 — — 7,416

Other assets, net (long-term):

Investments in marketable securities 12,346 — — 12,346

Total assets $ 36,689 $ — $ — $ 36,689

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Total assets $ 22,988 $ — $ — $ 22,988

The following table shows the change in fair value of Level 3 contingent consideration:

Consideration

Balance at March 27, 2020 $ —

Purchase price contingent consideration (Note 3) 7,300

Change in fair value of contingent consideration ( 2,500 )

Balance at March 26, 2021 $ 4,800

Assets and liabilities measured at fair value on a recurring basis also consist of marketable securities, unit investment trust funds, loans, bonds, stock and other investments which are the Company’s defined benefit plan assets.

Fair value information for those assets and liabilities, including their classification in the fair value hierarchy, is included in Note 14, “Retirement Plans.”

In connection with the Acquisition discussed in Note 3, “Acquisition,” the Company is required to make contingent payments, subject to the entity achieving certain sales and revenue thresholds.

Other long-term liabilities:

Contingent consideration $ — $ — $ 4,800 $ 4,800

Total liabilities $ — $ — $ 4,800 $ 4,800

The following table represents the unrealized gains and losses on investments in marketable securities held with a readily determinable fair value for the fiscal year ended March 25, 2022:

Net gains and losses recognized during the period on equity securities $ 3,722

Net gains and losses recognized during the period on equity securities sold during the period —

Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date $ 3,722

In addition to the unrealized gains in the table above, the change in fair value of the equity securities was impacted by unrealized foreign currency exchange losses of $ 565 for the fiscal year ended March 25, 2022.

In connection with the fiscal year 2021 purchase of Voxtel, Inc.

(“Voxtel”), a privately held technology company located in Beaverton, Oregon, that develops, manufactures and supplies photonic and advanced 3D imaging technologies (the “Voxtel Acquisition”), the Company is required to make contingent payments, subject to the entity achieving certain sales and revenue thresholds.

The contingent consideration payments are up to $ 15,000 .

The fair value of the liabilities for the contingent payments recognized upon the Acquisition as part of the purchase accounting opening balance sheet totaled $ 7,300 and was estimated by discounting to present value the probability-weighted contingent payments expected to be made.

The fair value of the liabilities for the contingent payments recognized upon the Voxtel Acquisition as part of the purchase accounting opening balance sheet totaled $ 7,300 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.

This liability is considered to be a Level 3 financial liability that is re-measured each reporting period.

The change in fair value of contingent consideration for the Acquisition is included in change in fair value of contingent consideration in the consolidated statements of operations.

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.

The fair value adjustment of

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

ALLEGRO MICROSYSTEMS, INC.

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(Amounts in thousands, except share and per share amounts)

$ 2,500 is recorded within operating cash flows as it represents the change in the fair value of the consideration liability that is less than the amount of the contingent consideration liability recognized at the acquisition date.

During the fiscal years ended March 26, 2021 and March 27, 2020, there were no transfers between Level 1, Level 2 and Level 3.

of these financial measures.

This liability is considered to be a Level 3 financial liability that is remeasured during each reporting period.

The change in fair value of contingent consideration for the Acquisition is included in change in fair value of contingent consideration in the consolidated statements of operations.

The following table shows the change in fair value of Level 3 contingent consideration for the fiscal years ended March 25, 2022 and March 26, 2021:

Consideration

Balance at March 27, 2020 $ —

Purchase price contingent consideration 7,300

Change in fair value of contingent consideration ( 2,500 )

Balance at March 26, 2021 $ 4,800

Change in fair value of contingent consideration ( 2,000 )

Balance at March 25, 2022 $ 2,800

Assets and liabilities measured at fair value on a recurring basis also consist of marketable securities, unit investment trust funds, loans, bonds, stock and other investments, which constitute the Company’s defined benefit plan assets.

Fair value information for those assets and liabilities, including their classification in the fair value hierarchy, is included in Note 16, “Retirement Plans.”

During the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, there were no transfers between Level 1, Level 2 and Level 3.

Trade Accounts Receivable, net

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Trade accounts receivable $ 129,539 $ 108,546

Allowance for doubtful accounts ( 138 ) ( 288 )

Provision for expected credit losses and allowance for doubtful accounts ( 105 ) ( 138 )

Returns and sales allowances ( 14,819 ) ( 15,274 )

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Total $ 87,359 $ 69,500

Changes in the Company’s allowance for doubtful accounts and returns and sales allowances were as follows:

Changes in the Company’s provision for expected credit losses/allowance for doubtful accounts and returns and sales allowances were as follows:

Description Allowance for

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Balance at March 26, 2021 138 15,274 15,412

Charged to costs and expenses or revenue ( 33 ) 144,318 144,285

Write-offs, net of recoveries — ( 144,773 ) ( 144,773 )

Balance at March 25, 2022 $ 105 $ 14,819 $ 14,924

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Inventories include material, labor and overhead and consisted of the following:

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Finished goods 18,364 27,774

Finished goods – consigned — 2,551

Total $ 86,160 $ 87,498

In connection with the Acquisition, the Company acquired inventory with a stepped-up basi s of $ 3,120 , for which $ 1,083 w as on-hand at March 26, 2021.

The Company recorded inventory provisions totaling $ 4,464 and $ 3,345 for the years ended March 26, 2021 and March 27, 2020, respectively.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The Company recorded inventory provisions totaling $ 5,809 , $ 4,464 and $ 3,345 for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, respectively.

The Company discontinued a product line manufactured by Voxtel and subsequently recognized impairment charges, which represented much of the increase in inventory provisions, for the related inventory of $ 3,106 for the fiscal year ended March 25, 2022.

Assets Held for Sale

As of March 26, 2021, the Company had entered into a definitive agreement to sell its Thailand-based facility (the “AMTC Facility”) as it had already transferred production to the Manila, Philippines facility, which was reclassified from Property, plant and equipment, net to Assets held for sale in fiscal year 2021.

The total amount of Assets held for sale was related to the AMTC Facility.

The sale of the AMTC Facility was completed on August 3, 2021 following receipt of government approvals in Thailand and the fulfillment of customary closing conditions.

The Company received cash of $ 27,405 , which with related selling costs, resulted in a gain on the final disposition of $ 370 during the fiscal year ended March 25, 2022.

Property, Plant and Equipment, net

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Total $ 210,028 $ 192,393

The Company retired $ 63 and $ 9,418 of fully depreciated assets during the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

Total depreciation expense amounted to $ 44,845 and $ 62,118 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

The Company retired $ 10,976 , $ 63 and $ 9,418 of fully depreciated assets during the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, respectively.

Total depreciation expense amounted to $ 44,178 , $ 44,845 and $ 62,118 for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, respectively.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Long-lived assets include property, plant and equipment and related deposits on such assets, and capitalized tooling costs.

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Total $ 210,455 $ 193,791

Amortization of prepaid tooling costs amounted to $ 130 and $ 125 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

Amortization of prepaid tooling costs amounted to $ 130 , $ 130 and $ 125 for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, respectively.

Goodwill and Intangible Assets

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Balance at March 27, 2020 $ 1,285

Goodwill arising from acquisition 18,702

Currency translation 119

Balance at March 26, 2021 $ 20,106

Goodwill arising from acquisition 18,702

Currency translation ( 97 )

Balance at March 25, 2022 $ 20,009

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Intangible assets, net is as follows:

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Customer relationships 6,193 5,865 328 9 years

Process technology 1,650 1,650 —

Process technology 13,100 651 12,449 12 years

Indefinite-lived and legacy process technology 4,050 1,650 2,400

Trademarks 200 24 176 5 years

Legacy trademarks 627 58 569

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Total $ 56,953 $ 20,587 $ 36,366

As summarized in Note 3, “Acquisition,” the Company completed the Acquisition during the fiscal year ended March 26, 2021.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The Company completed the Voxtel Acquisition during the fiscal year ended March 26, 2021.

The Company paid an amount of $ 34,980 to acquire Voxtel, which represents its fair value on that date.

Any excess of the Acquisition consideration over the fair value of the assets acquired and liabilities assumed was allocated to goodwill, which amounted to $ 18,702 .

As a result of the Acquisition, the Company recorded finite-life intangible assets of $ 13,600 , the types and lives of which are detailed in the above-referenced financial note.

Any excess of the Voxtel Acquisition consideration over the fair value of the assets acquired and liabilities assumed was allocated to goodwill, which amounted to $ 18,702 .

As a result of the Acquisition, the Company recorded finite-life intangible assets of $ 13,600 .

In addition, as a result of the Acquisition, the Company recorded indefinite-life intangible assets of $ 2,400 .

Intangible assets amortization expense was $ 3,332 and $ 1,805 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

Intangible assets amortization expense was $ 4,219 , $ 3,332 and $ 1,805 for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, respectively.

The majority of the Company’s intangible assets are related to patents as noted above.

1 unchanged sentence

When the Company capitalizes patent defense costs it amortizes these costs over the remaining estimated useful life of the patent, which is generally ten years .

There were no such costs capitalized during either of the fiscal years 2021 or 2020.

There were no significant costs capitalized during either of the fiscal years 2022 or 2021.

As of March 25, 2022, annual amortization expense of intangible assets for the next five fiscal years is expected to be as follows:

1 unchanged sentence

Total $ 35,970

Other Assets, net

The composition of other assets, net is as follows:

2022 March 26,

VAT receivables long-term, net $ 6,386 $ 8,177

Income taxes receivable long-term 15,763 —

Investments in marketable securities (1)

Deposits 10,525 3,573

Prepaid contracts long-term 1,236 1,295

Deferred financing costs 49 149

Other 1,304 1,419

Total $ 47,609 $ 14,613

(1) Represents equity investments in an entity whose equity securities have a readily determinable fair value.

These strategic investments represent less than a 20% ownership interest in the entity, and the Company does not maintain power over or control of the entity.

These investments are measured at fair value with unrealized gains and losses related to changes in the entity’s stock price and the impact of changes in foreign exchange rates each included in the consolidated statements of operations.

ALLEGRO MICROSYSTEMS, INC.

4 unchanged sentences

2022 March 26,

Accrued management incentive (LTCIP) $ 58 $ 11,488

Accrued management incentive (non-LTCIP) 21,480 6,273

Accrued management incentives 33,607 21,538

Accrued salaries and wages 14,699 15,060

12 unchanged sentences

The Company had executed individual agreements with employees to pay certain incentives upon achievement of the plan conditions at the end of each three-year performance period.

In connection with its IPO, the Company offered certain employees (excluding its named executive officers) who were eligible to receive cash bonuses under the Company’s LTCIP and/or Talent Retention Incentive Program (as amended, the “TRIP”) the opportunity to elect to receive restricted stock units (“RSUs”) under its 2020 Omnibus Incentive Compensation Plan in lieu of cash payouts under the LTCIP and/or TRIP, through the LTCIP/TRIP Award RSU Conversion Program (the “RSU Conversion Program”).

In connection with its IPO, the Company offered certain employees (excluding its then named executive officers) who were eligible to receive cash bonuses under the Company’s LTCIP and/or Talent Retention Incentive Program (as amended, the “TRIP”) the opportunity to elect to receive restricted stock units (“RSUs”) under its 2020 Omnibus Incentive Compensation Plan in lieu of cash payouts under the LTCIP and/or TRIP, through the LTCIP/TRIP Award RSU Conversion Program (the “RSU Conversion Program”).

The expense related to the LTCIP and TRIP awards elected to be exchanged in the RSU Conversion Program amounted to $ 607 and $ 421 , respectively.

The number of RSUs granted to employees that elected to participate in the RSU Conversion Program is determined as a percentage of the employee’s target bonus under the LTCIP or TRIP, and amounted to 602,490 and 348,911 RSUs on behalf of the LTCIP and TRIP conversion, respectively, at a grant date fair value of $ 14.00 .

If an employee elected not to to participate in the RSU Conversion Program, the LTCIP or TRIP award will continue under its existing terms and conditions.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

grant date fair value of $ 14.00 .

If an employee elected not to participate in the RSU Conversion Program, the LTCIP or TRIP award will continue under its existing terms and conditions.

The accrual activity, payments, removal due to divestitures and balances related to the LTCIP are as follows:

Description Current

Balance at March 29, 2019 $ 17,115 $ 11,104

9 unchanged sentences

Balance at March 26, 2021 58 258

Payments ( 58 ) —

Accruals — 259

Balance at March 25, 2022 $ — $ 517

The current and long-term portion of the liabilities associated with the LTCIP is included within accrued expenses and other current liabilities and other long-term liabilities in the Company’s consolidated balance sheets, respectively.

The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations.

The Company also considers whether its service arrangements include the right to control the use of an asset.

The Company leases real estate, equipment and vehicles under operating lease agreements that have initial terms ranging from one to ten years .

The Company does not have any leases classified as finance leases.

Some leases include one or more options to exercise renewal terms, generally at the Company’s sole discretion, that can extend the lease term.

Certain leases contain rights to terminate whereby those termination options are held by either the Company, the lessor, or both parties.

These options to extend or terminate a lease are included in the lease term only when it is reasonably certain that the Company will exercise that option.

The Company’s leases generally do not contain any material restrictive covenants.

Operating lease cost is recognized on a straight-line basis over the lease term.

Information regarding the Company’s leases are as follows:

Fiscal Year Ended

March 25, 2022

Operating lease expense $ 4,648

Short term lease expense 584

Other information:

Operating cash flows from operating leases $ 5,289

Noncash lease liabilities arising from obtaining right-of-use assets 3,159

Weighted-average remaining lease term – operating leases 5.17 years

Weighted-average discount rate – operating leases 4.5 %

ALLEGRO MICROSYSTEMS, INC.

1 unchanged sentence

(Amounts in thousands, except share and per share amounts)

Rent expense incurred under operating leas e agree ments was $ 5,720 , $ 4,385 and $ 5,456 for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020 , respectively.

As of March 25, 2022, expirations of lease obligations by fiscal year are expected as follows:

Thereafter 2,602

Total undiscounted lease payments $ 18,573

present value adjustment ( 2,119 )

Total operating lease liabilities $ 16,454

Information as Lessee under ASC 840

Future minimum lease payments by fiscal year for noncancellable operating leases as reported under the previous lease guidance as of March 26, 2021 were as follows:

Thereafter 3,713

Total $ 15,915

Debt and Other Borrowings

Components of Debt

The following is a summary of obligations under the Company’s Senior Secured Credit Facilities and other borrowings at March 26, 2021 and March 27, 2020:

The following is a summary of obligations under the Company’s Senior Secured Credit Facilities and other borrowings as of March 25, 2022 and March 26, 2021:

2022 March 26,

9 unchanged sentences

The Revolving Credit Facility is secured by a lien on the same collateral and on the same basis as the Term Loan Facility.

Interest on the Term Loan Facility is calculated at LIBOR plus 3.75 % to 4.00 % based on the Company’s net leverage ratio, and LIBOR is subject to a 0.5 % floor.

Interest on the Term Loan Facility is calculated at LIBOR plus 3.75 % to 4.00 % based on the

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Company’s net leverage ratio, and LIBOR is subject to a 0.5 % floor.

The Company’s outstanding borrowings bore an interest rate of 4.25 % at March 25, 2022.

The Company had no outstanding borrowings on the Revolving Credit Facility at March 26, 2021.

In connection with entering into the Revolving Credit Facility, the Company used cash on hand to repay all prior amounts outstanding under AML’s $ 25,000 and $ 8,000 line-of-credit agreements and terminated all commitments thereunder.

The Company had no outstanding borrowings on the Revolving Credit Facility as of March 25, 2022.

Included in the Term Loan Facility were deferred financing costs of $ 9,374 , which the Company has deducted from the carrying amount presented on its consolidated balance sheet and amortized into interest expense or recognized as loss on debt extinguishment.

Included in the Revolving Credit Facility were deferred financing costs of $ 300 , which the Company classified the related short-term and long-term portions within “Prepaid expenses and other current assets” and “Other assets” on its consolidated balance sheet and is amortizing those costs over the term of the facility.

The unamortized portion of the deferred financing costs associated with the Revolving Credit Facility was $ 249 a t March 26, 2021 .

On November 25, 2020, the Company repaid $ 300,000 of the outstanding $ 325,000 Term Loan Facility using proceeds from the Company’s recently completed IPO.

The unamortized portion of the deferred financing costs associated with the Revolving Credit Facility was $ 149 and $ 249 as of March 25, 2022 and March 26, 2021, respectively .

On November 25, 2020, the Company repaid $ 300,000 of the outstanding $ 325,000 Term Loan Facility using proceeds from the Company’s IPO.

The repayment was accounted for as a debt extinguishment in accordance with provisions of ASC Topic 470-50, Debt Modifications and Extinguishments.

The Company recognized a loss on partial debt extinguishment of $ 9,055 which was included within “Other (expense) income” in the consolidated statements of operations for the year ended March 26, 2021.

The Company recognized a loss on partial debt extinguishment of $ 9,055 which was included within “Other (expense) income” in the consolidated statements of operations for the fiscal year ended March 26, 2021.

The loss on debt extinguishment consisted of the unamortized balances of previously deferred original issue discount (“OID”) and debt issuance costs which the Company wrote off.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Unsecured Revolving Credit Facilities

On January 22, 2019, the Company, through its subsidiaries, entered into a revolving line-of-credit agreement, with a financial institution, that provided for a maximum borrowing capacity of $ 25,000 .

The revolving line-of-credit bore interest at LIBOR on the day of the advance plus a 0.4 % spread payable upon maturity of the draws, and expires on January 22, 2021.

The revolving line-of-credit bore interest at LIBOR on the day of the advance plus a 0.4 % spread payable upon maturity of the draws, and expired on January 22, 2021.

During fiscal year 2021, the Company borrowed $ 25,000 under the revolving line-of-credit.

17 unchanged sentences

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

On Nove mber 20, 2019, the Company, through its subsidiaries, entered into a line-of-credit agreement with a financial institution that provides for a maximum capacity of 75,000 Philippine pesos (approximately $ 1,541 at March 26, 2021) at the bank’s prevailing interest rate.

The line-of-credit is due to expire on June 30, 2021.

There were no borrowings outstanding under this line-of-credit as of March 26, 2021 and March 27, 2020.

Given the continued uncertainty surrounding COVID-19, during the month of March 2020, the Company executed a $ 43,000 drawdown of the majority of its remaining available lines-of-credit under its existing agreements, as noted above.

The Company took this action as a precautionary measure to increase its cash position and help maintain financial flexibility.

The proceeds from the drawdown were used for working capital, general corporate or other purposes during the COVID-19 pandemic into fiscal year 2021.

On November 20, 2019, the Company, through its subsidiaries, entered into a line-of-credit agreement with a financial institution that provides for a maximum capacity of 75,000 Philippine pesos (approximately $ 1,431 at March 25, 2022) at the

ALLEGRO MICROSYSTEMS, INC.

1 unchanged sentence

(Amounts in thousands, except share and per share amounts)

bank’s prevailing interest rate.

The line-of-credit is due 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.

Other Long-Term Liabilities

1 unchanged sentence

2022 March 26,

Accrued management incentive (LTCIP) $ 258 $ 2,439

Accrued management incentive (non-LTCIP) 370 2,304

Accrued management incentives 826 628

Accrued retirement 8,903 10,656

1 unchanged sentence

Provision for uncertain tax positions (net) 2,757 2,774

Other 275 275

Total $ 15,286 $ 19,133

15 unchanged sentences

2022 March 26,

2021 March 27,

Service cost $ 1,554 $ 1,454 $ 961

16 unchanged sentences

Interest cost 637 628

Prior service cost ( 108 ) —

Benefits paid ( 1,180 ) ( 633 )

18 unchanged sentences

Accumulated benefit obligations 9,216 10,353

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The amounts recorded in AOCI for the non-U.S.

14 unchanged sentences

As of March 25, 2022, the Company does not expect a return of plan assets during the next 12 months.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Assumptions and Investment Policies

4 unchanged sentences

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost

March 26, 2021 March 27, 2020

March 25, 2022 March 26, 2021 March 27, 2020

assumed discount rate 5.58 % 4.00 % 4.98 %

3 unchanged sentences

The table below sets forth the fair value of the entity’s plan assets as of March 25, 2022 and March 26, 2021, using the same three-level hierarchy of fair value inputs described in Note 2, “Summary of Significant Accounting Policies”:

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Fair Value at March 25,

18 unchanged sentences

Total $ 7,644 $ 3,593 $ 2,334 $ 1,717

The following table shows the change in fair value of Level 3 plan assets for the fiscal years ended March 26, 2021 and March 27, 2020:

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The following table shows the change in fair value of Level 3 plan assets for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020:

Level 3 Non-U.S.

9 unchanged sentences

Balance at March 26, 2021 $ 584 $ 1,133

Additions during the year 308 —

Redemptions during the year ( 289 ) —

Revaluation of equity securities ( 5 ) 13

Change in foreign currency exchange rates ( 45 ) ( 81 )

Balance at March 25, 2022 $ 553 $ 1,065

The investments in the Company’s major benefit plans largely consist of low-cost, broad-market index funds to mitigate risks of concentration within the market sectors.

1 unchanged sentence

The appropriate mix of equity and bond investments is determined primarily through the use of detailed asset-liability modeling studies that look to balance the impact of changes in the discount rate against the need to provide asset growth to cover future service cost.

The Company, through its wholly-owned subsidiary, Allegro MicroSystems, LLC’s (“AML”), non-U.S.

defined benefit plan, has added a greater proportion of fixed income securities with return characteristics that are more closely aligned with changes in liabilities caused by discount rate volatility.

The Company, through its wholly-owned subsidiary, Allegro MicroSystems, LLC’s (“AML”), has added a greater proportion of fixed income securities to the non-U.S.

defined benefit plan with return characteristics that are more closely aligned with changes in liabilities caused by discount rate volatility.

There are no significant restrictions on the amount or nature of the investments that may be acquired or held by the plans.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

During the fiscal years ended March 26, 2021 and March 27, 2020, the Company contributed approximately $ 986 and $ 943 to its non-U.S.

During the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, the Company contributed approximately $ 1,369 , $ 986 and $ 943 to its non-U.S.

pension plan, respectively.

6 unchanged sentences

Total $ 14,698

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Other Defined Benefit Plan

1 unchanged sentence

The employee was the only eligible participant of the Pension Promise.

The impact associated with the expense and related other income with the Pension Promise was insignificant in fiscal years 2021 and 2020, respectively.

The total values of the Pension Promise in the amounts o f 928 an d 903 British Pounds Sterling at March 26, 2021 and March 27, 2020, respectively (approximate ly $ 1,272 and $ 978 at March 26, 2021 and March 27, 2020, respectively), were classified with other in other assets, net and accrued retirement in other long-term liabilities in the Company’s consolidated balance sheets.

The impact associated with the expense and related other income with the Pension Promise was insignificant in fiscal years 2022, 2021 and 2020.

The total values of the Pension Promise in the amounts of 661 and 928 British Pounds Sterling at March 25, 2022 and March 26, 2021, respectively (approximately $ 875 and $ 1,272 at March 25, 2022 and March 26, 2021, respectively), were classified with other in other assets, net and accrued retirement in other long-term liabilities in the Company’s consolidated balance sheets.

Defined Contribution Plan

1 unchanged sentence

employees may contribute up to 50 % of their pretax compensation to a defined contribution plan, subject to certain limitations, and AML may match, at its discretion, 100 % of the participants’ pretax contributions, up to a maximum of 5 % of their eligible compensation.

Matching contributions by AML totaled $ 3,687 and $ 3,792 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

Matching contributions by AML totaled $ 4,074 , $ 3,687 and $ 3,792 for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, respectively.

The Company, through its AML subsidiary, Allegro MicroSystems Europe, Ltd.

(“Allegro Europe”), also has a defined contribution plan (the “AME Plan”) covering substantially all employees of Allegro Europe.

Contributions to the AME Plan by the Company totaled approximatel y $ 507 and $ 372 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

The Company has a 401(k) plan that covers all employees meeting certain service and age requirements.

Contributions to the AME Plan by the Company totaled approximately $ 1,065 , $ 507 and $ 372 for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, respectively.

The Company has a 401(k) plan that covers all U.S.

employees meeting certain service and age requirements.

Employees are eligible to participate in the plan upon hire when the service and age requirements are met.

3 unchanged sentences

As of January 1, 2015, PSL may match, at its discretion, 100 % of the employee’s contribution, up to a maximum of 5 % of their eligible compensation.

PSL’s matching contributions were $ 1,828 for the fiscal year ended March 27, 2020.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Commitments and Contingencies

Operating Leases

The Company, through its subsidiaries, leases certain real estate property and equipment under operating lease agreements that expire at various dates between one and eleven years .

The leases generally require the Company to pay for utilities, insurance, taxes and maintenance.

Some leases contain escalation clauses, renewal options and purchase options.

Future minimum lease payments for noncancelable operating leases as of March 26, 2021 are as follows:

Thereafter 3,713

Total $ 15,915

Rent expense was $ 4,385 and $ 5,456 for the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

The Company enters into noncancelable contractual obligations with suppliers related to the purchase of certain inventory components, equipment and other services that require minimum firm purchase commitments.

Noncancellable purchase obligations

Future minimum payments under purchase obligations with suppliers as of March 25, 2022 totaled $ 53,717 , which are all expected to be procured in fiscal year 2023.

7 unchanged sentences

The Company records an accrual for legal contingencies when it is determined that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

In making such determinations, the Company evaluates, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, and the ability to make a reasonable estimate of the loss.

In making such determinations, the Company evaluates, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, the ability to make a reasonable estimate of the loss.

If the occurrence of liability is probable, the Company will disclose the nature of the contingency, and if estimable, will provide the likely amount of such loss or range of loss.

Furthermore, the Company does not believe there are any matters that could have a material adverse effect on financial position, results of operations or cash flows.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Indemnification

4 unchanged sentences

The Company establishes accrued liabilities for environmental matters when it is probable that a liability has been incurred, and the amount of the liability can be reasonably estimated.

If the contingency is resolved for an amount greater or

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

less than the accrual, or the Company’s share of the contingency increases or decreases or other assumptions relevant to the development of the estimate were to change, the Company would recognize an additional expense or benefit in the consolidated statements of operations during the period such determination was made.

No environmental accruals were established at March 26, 2021 or March 27, 2020.

If the contingency is resolved for an amount greater or less than the accrual, or the Company’s share of the contingency increases or decreases or other assumptions relevant to the development of the estimate were to change, the Company would recognize an additional expense or benefit in the consolidated statements of operations during the period such determination was made.

No significant environmental accruals were established at March 25, 2022 or March 26, 2021.

Net Income per Share

5 unchanged sentences

Accordingly, earnings per share calculations were provided only for the Class A shares with a weighted average of 10,000,000 shares for the fiscal year ended March 27, 2020.

The following table sets forth the basic and diluted net (loss) income attributable to Allegro MicroSystems, Inc.

The following table sets forth the basic and diluted net income attributable to Allegro MicroSystems, Inc.

The number of shares of common stock reflected in the calculation is the total shares of common stock (vested and unvested) held on the IPO date, after the Common Stock Conversion.

1 unchanged sentence

2022 March 26,

2021 March 27,

Net income attributable to Allegro MicroSystems, Inc.

10 unchanged sentences

Diluted net income attributable to common stockholders per share $ 0.62 $ 0.10 $ 3.71

The computed net income per share for the fiscal years ended March 26, 2021 and March 27, 2020 does not assume conversion of securities that would have an antidilutive effect on income per share.

There were 273 RSUs excluded for fiscal year ended March 26, 2021 as conversion of such securities would have an antidilutive effect on income per share.

The computed net income per share for the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020 does not assume conversion of securities that would have an antidilutive effect on income per share.

There were 3,622 contingently issuable shares under the employee stock purchase plan excluded for the fiscal year ended March 25, 2022, as such securities would have an antidilutive effect on net income per share.

There were 273 RSUs excluded for fiscal year ended March 26, 2021 as conversion of such securities would have an antidilutive effect on net income per share.

There were no such convertible securities to consider for the fiscal year ended March 27, 2020.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The following represents issued and issuable weighted average share information for the respective periods:

1 unchanged sentence

2022 March 26,

2021 March 27,

Restricted stock units 1,066,406 308,811 —

3 unchanged sentences

Total 2,062,778 92,968,590 —

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Common Stock and Stock-Based Compensation

24 unchanged sentences

As a result of the Company’s IPO closing on November 2, 2020, the unvested shares of Class A common stock immediately become vested and the Company recognized $ 40,440 of one-time stock-based compensation ( 400,000 shares to management at $ 101.10 per share) at that time.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The Class L unvested shares vested on a straight-line basis over a service period of four years .

4 unchanged sentences

Prior to the IPO, the Company issued 17,203 shares of Class L common stock with a weighted average price per share of $ 33.83 during fiscal 2021 and issued 30,300 shares of Class L common stock with a weighted average price per share of $ 26.93 during fiscal 2020.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

(ii) in the case of such non-executive employee, to satisfy certain withholding tax obligations triggered by the vesting of such shares in accordance with the terms of the applicable award agreement.

On October 2, 2020, the Company repurchased an aggregate of 1,997 shares of its Class L common stock from certain of its directors and one of its non-executive employees for an aggregate purchase price of $ 408 in connection with, (i) in the case of such directors, the settlement of certain outstanding promissory notes issued by the Company to such directors, and (ii) in the case of such non-executive employee, to satisfy certain withholding tax obligations triggered by the vesting of such shares in accordance with the terms of the applicable award agreement.

Immediately following the pricing of the IPO on November 2, 2020, all outstanding shares of Class A common stock and Class L common stock were automatically converted into an aggregate of 166,500,000 shares of common stock.

13 unchanged sentences

Refer to Note 12, “Management Long-Term Cash Incentive Plan” for more details.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The following table summarizes RSU activity for the fiscal years ended March 25, 2022 and March 26, 2021:

2 unchanged sentences

Outstanding - March 27, 2020 — $ — — $ —

Granted 1,428,932 14.06

Vested ( 160,063 ) 14.00

Canceled ( 43,713 ) 14.00

Outstanding - March 26, 2021 1,225,156 $ 14.07 1.70 $ 30,960

10 unchanged sentences

The performance objectives include achieving certain revenue improvement and cumulative EBITDA levels for the performance period, and also include a performance objective relating to relative total shareholder return (“TSR”).

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Depending on the results achieved during the three-year performance period, the actual number of shares that a grant recipient may receive at the end of the period ranges from 0 % to 200 % of the Target Shares granted.

The weighted-average fair value of the PSUs was determined using the Monte Carlo simulation model incorporating the following weighted-average assumptions:

Fiscal Year 2021

Fiscal Year Ended

Performance term 2.42 years

3 unchanged sentences

Weighted-average fair value per share $ 14.00

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The following table summarizes PSU activity for the fiscal years ended March 25, 2022 and March 26, 2021:

2 unchanged sentences

Outstanding - March 27, 2020 — $ — — $ —

Granted 650,302 15.05

Outstanding - March 26, 2021 650,302 $ 15.05 2.65 $ 16,433

Granted 465,732 27.08

Canceled ( 160,951 ) 19.19

Outstanding - March 25, 2022 955,083 $ 20.22 1.51 $ 27,869

PSUs are included at 100 % - 200 % of target goals.

The intrinsic value of the PSU’s vested during the fiscal year ended March 26, 2021 was $ 16,433 .

The total compensation cost related to non-vested awards not yet recorded at March 26, 2021 was $ 8,519 , which is expected to be recognized over a weighted average of 2.65 years.

The intrinsic value of the unvested PSUs during the fiscal year ended March 25, 2022 was $ 27,869 .

The total compensation cost related to unvested awards not yet recorded at March 25, 2022 was $ 12,893 , which is expected to be recognized over a weighted average of 1.51 years.

No shares were vested during fiscal year ended March 25, 2022.

2 unchanged sentences

Outstanding - March 27, 2020 — — — —

Common stock conversion 459,749 14.00

2 unchanged sentences

Outstanding - March 26, 2021 406,327 $ 14.00 1.79 $ —

Vested ( 241,787 ) 14.00

Canceled ( 24,014 ) —

Outstanding - March 25, 2022 140,526 $ 14.00 1.07 $ 4,101

In connection with the Company’s IPO, the Company had filed a registration statement on Form S-8 registering 1,545,891 shares of the Company’s common stock available for future issuance under an employee stock purchase plan (“ESPP”), which number consists of (a) 832,400 shares of common stock initially available for issuance under the ESPP, and (b) an additional 713,491 shares of common stock that may become issuable under the ESPP pursuant to its terms.

1 unchanged sentence

Each offering period is six months in length.

The Company’s first offering period started on January 1, 2021 and continues until June 30, 2021.

The weighted-average fair value of the ESPP shares was determined using the Black-Scholes model incorporating the following weighted-average assumptions:

The Company’s first offering period started on January 1, 2021 and continued until June 30, 2021.

ALLEGRO MICROSYSTEMS, INC.

1 unchanged sentence

(Amounts in thousands, except share and per share amounts)

Fiscal Year 2021

Performance term 0.50 years

The weighted-average fair value of the ESPP shares was determined using the Black-Scholes model incorporating the following weighted-average assumptions:

Fiscal Year Ended

2022 March 26,

Performance term 0.50 years 0.50 years

Volatility 48.10 % 55.02 %

2 unchanged sentences

Weighted-average fair value per share $ 8.25 $ 7.77

As of March 26, 2021, the total unrecognized compensation cost related to ESPP was $ 247 and this amount is expected to be recognized over 0.25 years.

As of March 25, 2022, the total unrecognized compensation cost related to the ESPP was $ 272 and this amount is expected to be recognized over 0.27 years.

For the fiscal year ended March 25, 2022, the Company recognized stock-based compensation charges of $ 19,918 , $ 11,997 , $ 424 , $ 1,099 and $ 110 for it s RSUs, PSUs, restricted common stock, ESPP and phantom stock, respectively.

Upon completion of its IPO, the Company recognized one-time stock-based compensation charges of $ 40,440 in connection with the vesting of all outstanding shares of Class A common stock, $ 1,610 in connection with the automatic acceleration of 25 % of the standard vesting term of shares of Class L common stock an d $ 1,028 with the RSU Conversion Program (see above and Note 12, “Management Long-Term Cash Incentive Plan”).

4 unchanged sentences

2022 March 26,

2021 March 27,

Cost of sales $ 3,176 $ 5,158 $ 183

2 unchanged sentences

Total stock-based compensation $ 33,548 $ 49,870 $ 1,435

Phantom Stock Grants

On January 1, 2022, the Company issued an award of 5,733 restricted cash units to an employee of a professional employer organization that provides services to the Company.

Each restricted cash unit represents the right of the grantee to receive cash payment, upon time-based vesting, equal to the market price of the Company’s common stock.

The restricted cash units do not possess the rights of common stockholders of the Company, including voting and dividend rights, and cannot be exercised or traded for the Company’s common stock.

Additionally, the carrying value of the restricted cash units fluctuates with the market price of the Company’s common stock and represents the expected cash value of the units at a point in time.

Due to the cash settlement feature, the restricted cash units are classified as liabilities in accrued expenses and other current liabilities and other long-term liabilities in the consolidated balance sheets for the current and long-term portions of the obligations, respectively.

As of March 25, 2022, the restricted cash units will vest over a remaining period of 2.15 years.

As of March 25, 2022, no restricted cash units had fully vested.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The components of income before income taxes include the following:

1 unchanged sentence

2022 March 26,

Income before provision for incomes attributable to:

2021 March 27,

Income before provision for income taxes attributable to:

Domestic operations $ 121,883 $ ( 2,288 ) $ 34,425

1 unchanged sentence

Total $ 140,746 $ ( 1,451 ) $ 53,278

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Significant components of the provision (benefit) for income tax are as follows:

Significant components of the provision (benefit) for income taxes are as follows:

Fiscal Year Ended

2022 March 26,

2021 March 27,

Federal $ 7,779 $ ( 3,821 ) $ 15,146

7 unchanged sentences

Total income tax provision $ 21,191 $ ( 19,552 ) $ 16,173

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The difference between the tax provision at the statutory federal tax rate and the provision for income taxes is as follows:

1 unchanged sentence

2022 March 26,

2021 March 27,

Tax provision at U.S.

statutory rate $ 29,557 $ ( 305 ) $ 11,189

162(m) limitation 3,988 — —

Stock based compensation ( 230 ) ( 13,303 ) —

3 unchanged sentences

FDII ( 9,066 ) — ( 1,188 )

BEAT — — 1,694

Transaction costs 307 1,498 —

5 unchanged sentences

Provision for IRS audit settlement — — 5,491

Transition tax — —

Gain on contingent purchase price reduction ( 420 ) ( 525 ) —

2 unchanged sentences

Total income tax provision $ 21,191 $ ( 19,552 ) $ 16,173

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

the $ 40,440 stock-based compensation charge (and the related incremental tax deductions), the $ 16,000 one-time dividend treated as compensation expense for tax purposes, and the tax loss on the divestiture of PSL.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

The increase in income tax expense in fiscal year 2022 as compared to fiscal year 2021 relates primary 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 $ 40,440 stock-based compensation charge (and the related incremental tax deductions), a $ 16,000 one-time dividend treated as compensation expense for tax purposes, and the tax loss on the divestiture of PSL.

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

loss (“NOL”) that will be carried back to five years.

On December 22, 2017 the TCJA legislation was enacted.

The TCJA significantly changed U.S.

tax law by lowering the U.S.

corporate income tax rate to 21%, implementing a territorial tax system, imposing a one-time tax on deemed repatriated earnings of foreign subsidiaries (“Transition Tax”), generally eliminating U.S.

federal income taxes on dividends from foreign subsidiaries, providing a benefit for Foreign Derived Intangible Income (“FDII”), increasing U.S.

taxable income to include all income earned by foreign subsidiaries in excess of ten percent of the fixed assets in those entities which is defined as Global Intangible Low-taxed Income (“GILTI”), providing a minimum tax on “base erosion payments” (“BEAT”), limiting interest expense deduction, and allowing companies to elect to expense qualified asset purchases.

The TCJA’s annual impact on our tax provision are detailed in the table above.

Except for AMTC, the Company has the ability and intent to permanently reinvest its foreign earnings based on expected future 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.

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

Except for AMTC prior to its sale, the Company has the ability and intent to permanently reinvest its foreign earnings based on expected future U.S.

cash flows and specific and measurable plans to use its existing foreign cash to fund its working capital needs, invest in short-term and long-term capital projects, and to make investments and acquisitions.

3 unchanged sentences

Therefore, no deferred tax liability has been established with respect to outside basis difference in its foreign subsidiaries.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

7 unchanged sentences

Stock-based compensation 2,837 821

Capitalized transaction costs — 259

Right-of-use liability 2,221 —

Other accruals and reserves 2,067 2,050

4 unchanged sentences

Fixed assets and intangibles ( 4,720 ) ( 4,366 )

Equity method investment in PSL ( 1,868 ) —

Stock-based compensation — ( 679 )

Equity method and other investments ( 2,801 ) ( 1,868 )

Right-of-use asset ( 2,156 ) —

Total deferred income tax liabilities ( 9,677 ) ( 6,234 )

Net deferred income tax assets $ 17,967 $ 26,972

As of March 26, 2021, the Company has $ 8,185 of federal NOLs that can be carried back five years under the CARES Act to reduce prior year taxes.

Additionally, the Company has state NOLs of $ 550 , U.S.

research credit carryovers of $ 2,162 and foreign tax credit carryovers of $ 232 , and its French subsidiary has $ 3,598 of refundable research credits.

As of March 25, 2022, the Company has $ 2,106 in NOLs related to our Thailand operations.

Additionally, the Company has $ 3,490 and $ 2,964 in research credits related to its French subsidiary and state filings, respectively.

In assessing the realizability of its deferred tax assets, the Company considered whether it was more likely than not that some portion or all of the deferred tax assets would not be realized.

The realization of deferred tax assets depends upon the generation of future taxable income during the periods in which these temporary differences become deductible.

The Company established a valuation allowance for its AMTC NOLs of $ 2,319 and state research credits of $ 2,706 because such assets will not to be utilized by the Company prior to expiration.

The Company established a valuation allowance for its Thailand NOLs of $ 2,106 and state research credits of $ 2,964 because such assets will not to be utilized by the Company prior to expiration.

The Company is completing carryback claim filings allowable under the CARES Act to utilize NOLs and carryover credits generated during fiscal year 2021.

The filings will carryback $ 8,364 in Federal NOLs, $ 2,631 in U.S.

research credits, and $ 305 in foreign tax credits to prior taxable periods.

These amounts, along with an estimated rate benefit of $ 4,463 have all been classified as a long-term tax receivable as of March 25, 2022.

Uncertain Tax Positions

A s of March 25, 2022, the Compan y had $ 2,459 of gross unrecognized tax benefits, of which $ 2,433 would im pact the effective tax rate, if recognized.

As of March 26, 2021, the Company had $ 2,554 of gross unrecognized tax benefits, of which $ 2,542 would impact the effective tax rate, if recognize d.

As of March 27, 2020, the Company had $ 2,559 of gross unrecognized tax benefits, of which $ 2,501 would impact the effective tax rate, if recognized.

ALLEGRO MICROSYSTEMS, INC.

1 unchanged sentence

(Amounts in thousands, except share and per share amounts)

The Company operates under tax holiday in Thailand, which is effective through fiscal year 2024, and may be extended if certain additional requirements are satisfied.

The tax holidays are conditional upon the Company meeting certain production thresholds.

The impact of this tax holiday does not have a material impact on net income.

Uncertain Tax Positions

A s of March 26, 2021, the Company had $ 2,554 of gross unrecognized tax benefits, of which $ 2,542 would impact the effective tax rate, if recognized.

As of March 27, 2020, the Company had $ 2,559 of gross unrecognized tax benefits, of which $ 2,501 would impact the effective tax rate, if recognized.

Fiscal Year Ended

2022 March 26,

2021 March 27,

Beginning balance $ 2,554 $ 2,559 $ 6,264

9 unchanged sentences

The Company’s policy is to classify interest expense and penalties, if any, as components of the income tax provision in the consolidated statements of operations.

The Company recorded net increases $ 73 and $ 841 in interest and penalties during fiscal years 2021 and 2020, respectively.

The Company recorded net increases of $ 58 , $ 73 and $ 841 in interest, penalties and releases during fiscal years 2022, 2021 and 2020, respectively.

As of March 25, 2022 and March 26, 2021, the amount of accrued interest and penalties totaled approximately $ 324 and $ 232 , respectively.

10 unchanged sentences

All ownership parties have agreed that this contribution would not result in an incremental ownership percentage change or increase in shares by Sanken.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Related Party Transactions

Public Offering of the Company’s Common Stock by Certain Shareholders

On February 2, 2021, the Company filed a Registration Statement on Form S-1 for the public offering of shares owned by certain selling shareholders, including Sanken, OEP and certain of the Company’s officers and directors.

Public Offering of the Company’s Common Stock by Certain Stockholders

On February 2, 2021, the Company filed a Registration Statement on Form S-1 for the public offering of shares owned by certain selling stockholders, including Sanken, OEP and certain of the Company’s officers and directors.

The selling stockholders sold 19,332,852 shares of the Company’s common stock, including 1,832,852 shares of common stock sold by OEP in connection with the underwriters’ exercise of their over-allotment option.

The Company did no t sell any shares of its common stock and did no t receive any of the proceeds from the offering.

However, the Company incurred expenses, costs and fees in connection with the offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, in the amount of $ 1,790 for the year ended March 26, 2021, which are included in selling, general and administrative expense in the accompanying consolidated statements of operations and comprehensive income.

The Company did not sell any shares of its common stock and did not receive any of the proceeds from the offering.

However, the Company incurred expenses, costs and fees in connection with the offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, in the amount of $ 1,790 for the fiscal year ended March 26, 2021, which are included in selling, general and administrative expense in the accompanying consolidated statements of operations and comprehensive income.

Transactions Involving Sanken

1 unchanged sentence

In addition, prior to March 28, 2020, the Company also sold products for Sanken.

Net sales of the Company’s products to Sanken totaled $ 104,661 and $ 184,557 during the fiscal years ended March 26, 2021 and March 27, 2020, respectively.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Net sales of the Company’s products to Sanken totaled $ 148,813 , $ 104,661 and $ 184,557 during the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020, respectively.

Trade accounts receivables, net of allowances from Sanken totaled $ 27,256 and $ 21,595 as of March 25, 2022 and March 26, 2021, respectively.

5 unchanged sentences

Accounts payable to Sanken totaled $ 4,494 as of March 27, 2020 .

Termination of Sanken Distribution Agreement

In May 2022, the Company issued a letter of intent with Sanken to develop a plan to transition the supply chain and sales activity in Japan from Sanken to the Company.

During the planning process, both parties will define the transition timeline and method for customer communication, supply chain transfer and sales coverage.

Parties will also define a method to continue engagement with Sanken on the support of select customers.

Joint Development Agreement (“Development Agreement”)

1 unchanged sentence

Sanken reimbursed $ 1,440 in fiscal year ended March 27, 2020 .

Sanken reimbursed no amounts in the fiscal years ended March 25, 2022 and March 26, 2021.

Short-term Bridge Loan Receivable to Sanken

6 unchanged sentences

Related party interest expense consisting of amounts due to Sanken for intercompany notes payable, lines-of-credit and miscellaneous charges for the fiscal year ended March 27, 2020 amounted to $ 1,444 , and related party interest paid for the same period amounted to $ 1,538 .

As of March 27, 2020, the related party notes payable balance of $ 17,700 was classified in the consolidated balance sheets as long-term, with various maturity dates through March 14, 2025.

The line of credit agreements of $ 25,000 were classified as current at March 27, 2020.

In connection with the PSL Divestiture, the total $ 42,700 balance was contributed in-kind for the fair value of the 70 % interest that Sanken acquired.

2 unchanged sentences

The previous intercompany receivable balance of $ 3,368 was moved into trade and other accounts receivable due from related party as of March 28, 2020.

In addition, as a result of PSL taking over the Sanken distribution business, at March 26, 2021, the Company reflected a related accounts

In addition, as a result of PSL taking over the Sanken distribution business, as of March 26, 2021, the Company reflected a related accounts receivable balance of $ 767 .

This amount includes reductions of $ 767 and $ 2,601 from payments made by PSL during the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

No accounts receivable balance was recorded as of March 25, 2022.

In May 2009, the Company entered into a technology development agreement (the “IC Technology Development Agreement”) with Polar Semiconductor, Inc.

(“PSI”) (subsequently changed to Polar Semiconductor, LLC), and Sanken, pursuant to which the parties agreed upon the general terms under which they may, from time to time, undertake certain activities (the “IC Process Development Activities”) to develop new technologies to be used by PSI to manufacture products for the Company and Sanken, as well as the ownership and use of such technologies following their development.

The IC Technology Development Agreement provides that the expenses for all IC Process Development Activities will be shared equally by the Company and Sanken on an annual basis (subject to any exceptions upon which the parties may agree from time to time), with such expenses being paid to PSL by Sanken in the form of an up-front annual fee, with PSL being

ALLEGRO MICROSYSTEMS, INC.

1 unchanged sentence

(Amounts in thousands, except share and per share amounts)

receivable balance of $ 767 .

This amount includes a reduction of the $ 2,601 from payments made by PSL during the fiscal year ended March 26, 2021.

responsible for any expenses that exceed the amount of such fee.

The IC Technology Development Agreement will continue in effect until such time as the Company, PSL and Sanken mutually agree to its termination or adopt a successor agreement, or in the event that the companies fail to agree upon the annual fee for that fiscal year within three months after the commencement of such fiscal year.

During the fiscal year ended March 25, 2022 , the Company (through PSL) received no fees from Sanken and paid no fees to PSL pursuant to the IC Technology Development Agreement.

During each of the fiscal years ended March 26, 2021 and March 27, 2020 , the Company (through PSL) received fees of $ 1,200 from Sanken pursuant to the IC Technology Development Agreement, and during the same periods the Company paid fees of $ 1,200 to PSL pursuant to the IC Technology Development Agreement.

In April 2015, PSL and Sanken entered into a discrete technology development agreement (as amended, the “Discrete Technology Development Agreement”), pursuant to which the parties agreed upon the general terms under which they, from time to time, undertook certain activities (the “Discrete Development Activities”) to develop new technologies to be used by PSL to manufacture products for Sanken, as well as the ownership and use of such technologies following their development.

1 unchanged sentence

The Discrete Technology Development Agreement provided that the expenses for all Discrete Development Activities to be shared equally by the Company and Sanken on an annual basis (subject to any exceptions upon which the parties agreed to from time to time).

At March 26, 2021, the Company had accrued $ 614 included in amounts due to related party under this agreement, which is expected to paid in the first quarter of fiscal year 2022.

As previously noted above, the Company, through PSL, entered into a Development Agreement with Sanken whereby the Company and Sanken jointly own a specific wafer technology and share the reimbursement of development costs incurred by the Company.

Sanken reimbursed no amounts in the fiscal year ended March 26, 2021 and $ 1,440 in the fiscal year ended March 27, 2020.

In May 2009, the Company entered into a technology development agreement (the “IC Technology Development Agreement”) with Polar Semiconductor, Inc., the predecessor of PSL (“PSI”) and Sanken, pursuant to which the parties agreed upon the general terms under which they may, from time to time, undertake certain activities (the “IC Process Development Activities”) to develop new technologies to be used by PSI to manufacture products for the Company and Sanken, as well as the ownership and use of such technologies following their development.

The IC Technology Development Agreement provides that the expenses for all IC Process Development Activities will be shared equally by the Company and Sanken on an annual basis (subject to any exceptions upon which the parties may agree from time to time), with such expenses being paid to PSI by Sanken in the form of an up-front annual fee, with PSI being responsible for any expenses that exceed the amount of such fee.

The IC Technology Development Agreement will continue in effect until such time as the Company, PSL and Sanken mutually agree to its termination or adopt a successor agreement, or in the event the companies fail to agree upon the annual fee for a fiscal year within three months after the commencement of such fiscal year.

During each of the fiscal years ended March 26, 2021 and March 27, 2020, the Company (through PSL) received fees of $ 1,200 from Sanken pursuant to the IC Technology Development Agreement, and during the same periods the Company paid fees of $ 1,200 to PSL pursuant to the IC Technology Development Agreement.

As of March 26, 2021, the Company had accrued $ 614 included in amounts due to related party under this agreement, which was paid in the first quarter of fiscal year 2022.

The Discrete Technology Development Agreement terminated on March 31, 2021 in accordance with its terms.

The Company continues to purchase in-process products from PSL.

Purchases of various products from PSL totaled $ 42,196 for the fiscal year ended March 26, 2021.

This amount includes $ 5,930 of price support payments made for the fiscal year ended March 26, 2021.

Purchases of various products from PSL totaled $ 55,297 and $ 42,196 for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

This amount includes none and $ 5,930 of price support payments made for the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

In accordance with the PSL Divestiture, the Company had intercompany accounts payable of $ 1,198 that was previously eliminated in consolidation.

The previous intercompany payable balance of $ 1,198 was moved into amounts due to related party as of March 28, 2020.

Accounts payable to PSL included in amounts due to related party totaled $ 1,739 as of March 26, 2021.

This amount includes a reduction of the $ 1,198 from payments made to PSL during the fiscal year ended March 26, 2021.

In July 2014, AML entered into a technology collaboration agreement (the “SG8 Collaboration Agreement”) with PSL and Sanken, pursuant to which the parties agreed to establish a joint technology development team for the purpose of developing certain IC manufacturing technologies (the “SG8 Technology”).

The SG8 Collaboration Agreement provides that AML and Sanken will be equally responsible for the costs of developing the SG8 Technology, with Sanken to reimburse AML for 50 % of our incurred costs.

No reimbursements were received from Sanken pursuant to the SG8 Collaboration Agreement in fiscal years ended March 26, 2021 and March 27, 2020.

Note Receivable from PSL

Accounts payable to PSL included in amounts due to related party totaled $ 5,222 and $ 1,739 as of March 25, 2022 and March 26, 2021, respectively.

These amounts include reductions of $ 5,222 and $ 1,198 from payments made to PSL during the fiscal years ended March 25, 2022 and March 26, 2021, respectively.

Notes Receivable from PSL

On March 28, 2020, in connection with the PSL Divestiture, the Company contributed the forgiveness of the fair value of $ 15,000 out of the $ 66,377 total debt owed by PSL to the Company, which was previously eliminated in consolidation as of March 27, 2020 .

As a result of the PSL Divestiture, on March 28, 2020, the $ 51,377 note receivable from PSL was classified on the Company’s balance sheet as related party note receivable.

The related party note receivable held by the Company had a maturity date of March 28, 2027 and bore interest at a rate of 2.70 %, which was a market rate determined by

The related party note receivable held by the Company had a maturity date of March 28, 2027 and bore interest at a rate of 2.70 %, which was a market rate determined by IRS guidance at the time of the divestiture.

The entire receivable of $ 51,377 plus accrued interest of $ 762 was repaid on October 14, 2020.

On December 2, 2021, AML entered into a loan agreement with PSL wherein PSL provided an initial promissory note to AML for a principal amount of $ 7,500 (the “Initial PSL Loan”).

The Initial PSL Loan will be repaid in equal installments, comprising of principal and interest accrued at 1.26 % per annum, over a term of four years with payments due on the first day of each calendar year quarter (April 1 st , July 1 st , October 1 st , and January 1 st ).

In addition, PSL has the option of borrowing up to an additional $ 7,500 on or around January 1, 2023 under the same terms of the PSL Loan (the “Secondary PSL Loan” and, together with the Initial PSL Loan, the “PSL Promissory Notes”).

PSL has informed the Company of its intent to elect its option of the Secondary PSL Loan during fiscal year 2023.

The loan funds will be used by PSL to procure a deep ultraviolet scanner and other associated manufacturing tools necessary to increase wafer fabrication capacity in support of the Company’s increasing wafer demand.

As of March 25, 2022, the outstanding balance of the PSL Promissory Notes was $ 7,500 .

On April 1, 2022, PSL made a quarterly payment to AML of $ 500 , which included $ 31 of interest income.

Transition Services Agreement

As part of the PSL Divestiture, the Company, PSL and Sanken entered into the Transition Services Agreement (“TSA”), pursuant to which the Company agreed, among other things, to provide certain human resources, legal and distribution support services to PSL following the consummation of the PSL Divestiture.

The TSA provides that the

ALLEGRO MICROSYSTEMS, INC.

1 unchanged sentence

(Amounts in thousands, except share and per share amounts)

IRS guidance at the time of the divestiture.

The entire receivable of $ 51,377 plus accrued interest of $ 762 was repaid on October 14, 2020.

Transition Services Agreement

As part of the PSL Divestiture, the Company, PSL and Sanken entered into the “TSA, pursuant to which the Company agreed, among other things, to provide certain human resources, legal and distribution support services to PSL following the consummation of the PSL Divestiture.

The TSA provides that the Company and its wholly owned subsidiaries AML and Allegro MicroSystems Europe Ltd.

Company and its wholly owned subsidiaries AML and Allegro MicroSystems Europe Ltd.

will provide such services in a manner generally consistent with the manner in which they were provided during the 12 months prior to the date of the TSA, and will not be obligated to perform any service in a manner that is materially more burdensome than the analogous services provided for or within its own organization or group during such 12 -month period.

3 unchanged sentences

All distribution support services are to be provided on a cost plus 10 % basis.

The Company received $ 25 under the TSA during the fiscal year ended March 26, 2021.

The Company received $ 25 under the TSA during each of the fiscal years ended March 25, 2022 and March 26, 2021.

The TSA has an initial term of 12 months and may be extended for additional 12 -month terms on an annual basis if the parties so agree prior to the expiration of the then-current term.

3 unchanged sentences

During fiscal year ended March 26, 2021 and after the PSL Divestiture, Sanken, through PSL formed SEEL to cover its distribution business in Europe.

The Company in connection with the TSA agreement with Sanken and PSL paid certain costs on behalf of them, and as such, had related party accounts receivable from SEEL of $ 1,272 as of the fiscal year ended March 26, 2021.

The Company in connection with the TSA agreement with Sanken and PSL paid certain costs on behalf of them, and, as such, had related party accounts receivable from SEEL of none and $ 1,272 as of March 25, 2022 and March 26, 2021, respectively.

Sublease Agreement

3 unchanged sentences

Consulting Agreement

The Company entered into a board executive advisor agreement (the “Consulting Agreement”) with Reza Kazerounian in March 2018, before Mr.

Kazerounian became a member of the Company’s board of directors, pursuant to which the Company engaged Mr.

In September 2017 and prior to Reza Kazerounian becoming a member of the Company’s board of directors, the Company entered into a board executive advisor agreement, as amended in June 2018 (the “Consulting Agreement”), with Mr.

Kazerounian, pursuant to which the Company engaged Mr.

Kazerounian to serve as executive advisor to the board of directors and the office of Chief Executive Officer.

3 unchanged sentences

The Consulting Agreement provides that if Mr.

Kazerounian is terminated by the board of directors, he will be entitled to a severance payment in the amount of $ 180 as well as a six-month vesting acceleration of his shares of Class L common stock.

Kazerounian’s employment is terminated by the board of directors, he will be entitled to a severance payment in the amount of $ 180 as well as a six-month vesting acceleration of his shares of Class L common stock.

The board of directors and Mr.

Kazerounian each have the right to terminate the Consulting Agreement at any time.

During the fiscal years ended March 26, 2021 and March 27, 2020, the Company paid aggregate fees of $ 318 and $ 494 , respectively, to Mr.

During the fiscal years ended March 25, 2022, March 26, 2021 and March 27, 2020 , the Company paid aggregate fees of $ 260 , $ 318 and $ 494 , respectively, to Mr.

Kazerounian pursuant to the Consulting Agreement.

Director and Executive Officer Promissory Notes

From time to time, the Company has entered into promissory notes with certain of its directors and executive officers to finance all or a part of the income and employment taxes payable by them in connection with grants of the Company’s Class A common stock and/or Class L common stock.

The Company had no amount and $ 506 of promissory notes outstanding as of as of March 26, 2021 and March 27, 2020, respectively.

Subsequent Events

Chief Executive Officer Transition

On May 9, 2022, the Company announced via press release and a Current Report on Form 8-K that its President and Chief Executive Officer, Ravi Vig, provided notice of his retirement from the Company and its Board of Directors on May 6, 2022.

Vig’s retirement will become effective on June 13, 2022.

On May 7, 2022, the Board of Directors of the Company appointed Vineet Nargolwala to serve as President and Chief Executive Officer of the Company effective June 13, 2022.

In addition, the Company’s Board of Directors elected Mr.

Nargolwala as a Class I director of the Board to serve until the Company’s 2024 annual meeting of stockholders and until his successor is elected or appointed and qualified or until his earlier death, resignation, disqualification or removal.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

work closely with Mr.

Nargolwala and will consult with the Company up to six months after his retirement date to ensure a smooth and orderly transition of responsibilities.

Nargolwala is a technology executive with over 25 years of global executive leadership experience.

Prior to joining Allegro, Mr.

Nargolwala previously served as Executive Vice President of Sensing Solutions at Sensata Technologies (NYSE:

ST), a leading industrial technology company that develops sensors and sensor-based solutions for the automotive, heavy vehicle and off-road, industrial, and aerospace industries, from March 2020 to May 2022.

Nargolwala joined Sensata as Vice President, Sensors Americas in February 2013 and was later promoted to Senior Vice President, Performance Sensing, North America, Japan and Korea in April 2016.

In February 2019, he was appointed Senior Vice President, General Manager, Global Safety & Mobility, and in September 2019, he was appointed Senior Vice President, Sensing Solutions.

Prior to Sensata, he was with Honeywell International Inc.

for over nine years in business strategy and P&L leadership roles of increasing responsibility.

Prior to Honeywell, Mr.

Nargolwala was at Nortel Networks in product management and engineering roles.

Nargolwala holds a Bachelor’s degree in Electrical Engineering from Maharaja Sayajirao University in Baroda, India, a Master’s degree in Electrical Engineering from the University of Texas and a Master of Business Administration from Cornell University.

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 9A. Controls and Procedures