What changed in this filing

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Item 9A. Controls and Procedures

2023-05-25 compared with 2022-05-18 · 495 added, 842 removed, 1060 unchanged (56% of the section changed)

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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.

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 using the 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 31, 2023.

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.

The effectiveness of the Company’s internal control over financial reporting as of March 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on page F-2 .

Other Information.

On May 24, 2023, the Board of Directors of the Company (the “Board”) adopted and approved amended and restated bylaws (as so amended and restated, the “Bylaws”) of the Company, effective immediately.

Among other things, the amendments to the Bylaws:

• Address the universal proxy rules adopted by the SEC, by clarifying that no person may solicit proxies in support of a director nominee other than the Board’s nominees unless such person has complied with Rule 14a-19 under the Exchange Act, including applicable notice and solicitation requirements;

• Require that any stockholder soliciting proxies from other stockholders must use a proxy card color other than white, with the white proxy card reserved for exclusive use by the Board;

• Revise the advance notice disclosure requirements contained in the Bylaws to require a stockholder proposing business or nominating directors to provide additional information and permit the Company reasonably to request additional information;

• Update provisions related to the preparation and availability of the list of stockholders entitled to vote at a meeting to align with changes made to Section 219 of the General Corporation Law of the State of Delaware;

• Clarify the process for calling a special meeting of stockholders;

• Clarify that the existing Federal forum selection provision is intended to benefit third parties, in addition to the Company and its officers and directors.

The amendments also include certain technical, conforming, modernizing or clarifying changes to the Bylaws.

The foregoing description of the changes to the Bylaws does not purport to be complete and is qualified in its entirety by reference to the complete text of the Bylaws, a copy of which is filed as Exhibit 3.2 hereto and is incorporated herein by reference.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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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 31, 2023.

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."

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).

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

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

We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics by posting such information on our website at the address specified above.

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

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, with the exception of the information regarding securities authorized for issuance under our equity compensation plans, which is set forth below.

2023, with the exception of the information regarding securities authorized for issuance under our equity compensation plans, which is set forth below.

Equity Compensation Plan Information

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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))

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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Exhibit and Financial Statement Schedules.

Exhibits and Financial Statement Schedules.

The following documents are filed as part of this Annual Report on Form 10-K:

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The following financial statements are included in this Form 10-K from page F-1 to page F-38 :

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

Reports of Independent Public Accounting Firms (PCAOB ID Numbers 238 and 248 )

Consolidated Balance Sheets

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Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Equity

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

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(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)

3.2 Second Amended and Restated Bylaws of Allegro MicroSystems, Inc.

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)

4.2 Stockholders Agreement, dated as of September 30, 2020, by and among Allegro MicroSystems, Inc., Sanken Electric Co., Ltd.

4.2 Amended and Restated Stockholders Agreement, dated as of June 16 , 202 2 , by and among Allegro MicroSystems, Inc., Sanken Electric Co., Ltd.

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 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)

(incorporated by reference from Exhibit 10 .

1 to the Company’s Current Report on Form 8-K filed on June 21 , 202 2 )

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

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(incorporated by reference from Exhibit 10.23 to the Company’s Registration Statement on Form S-1 filed on October 6 , 2020)

10.15 Board Executive Advisor Agreement, dated as of September 28, 2017, by and between Allegro MicroSystems, Inc.

and Reza Kazerounian (incorporated by reference from Exhibit 10.24 to the Company’s Registration Statement on Form S-1 filed on October 6 , 2020)

10.16 Amendment to Board Executive Advisor Agreement, dated as of June 28, 2018, by and between Allegro MicroSystems, Inc.

and Reza Kazerounian (incorporated by reference from Exhibit 10.25 to the Company’s Registration Statement on Form S-1 filed on October 6 , 2020)

10.15 Director Offer Letter, dated as of June 28, 2018, by and between Allegro MicroSystems, Inc.

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

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 ) *

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, 2021) *

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

2020 Omnibus Incentive Compensation Plan (Executives) *

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

2020 Omnibus Incentive Compensation Plan (Board of Directors) (incorporated by reference from Exhibit 10.34 to the Company’s Registration Statement on Form S-1/A filed on October 21, 2020) *

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2020 Omnibus Incentive Compensation Plan (incorporated by reference from Exhibit 10.33 to the Company’s Annual Report on Form 10-K filed on May 19, 2021) *

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

2020 Omnibus Incentive Compensation Plan *

10.23 Form of Allegro MicroSystems, Inc.

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

(incorporated by reference from Exhibit 10.38 to the Company’s Registration Statement on Form S-1/A filed on October 13 , 2020) *

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

and Michael C.

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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) *

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

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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) *

10.29 Amendment to Severance Agreement, dated as of May 15, 2023, by and between Allegro MicroSystems, Inc.

and Derek D’Antilio *

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

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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) *

10.31 Amendment to Severance Agreement, dated as of May 15, 2023, by and between Allegro MicroSystems, Inc.

and Sharon S.

10.32 Form of Severance Agreement between Allegro MicroSystems, Inc.

and its executive officers *

10.33 Summary of Allegro MicroSystems, Inc.

Non-Employee Director Compensation *

Non-Employee Director Compensation (incorporated by reference from Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on February 1, 2023) *

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

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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)

10.43 Wafer Foundry Agreement, effective January 26, 2023, by and between Allegro MicroSystems, Inc.

and Polar Semiconductor, LLC (incorporated by reference from Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q filed on February 1, 2023) †

10.44 Amended and Restated Severance Agreement, dated as of February 15, 2021, by and between Allegro MicroSystems, LLC, Allegro MicroSystems, Inc.

and Suman Narayan (incorporated by reference from Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed on February 1, 2023) *

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

and Thomas Teebagy, Sr (incorporated by reference from Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q filed on February 1, 2023) *

10.46 Retirement Separation Letter Agreement between Allegro MicroSystems, LLC and Thomas C.

Teebagy, Jr., dated February 16, 2023 (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 22, 2023) *

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

and Joanne Valente (incorporated by reference from Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q filed on February 1, 2023) *

10.48 Transition Agreement by and among Allegro MicroSystems, Inc.

and Sanken Electric Co., Ltd., dated as of September 29, 2022 (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on Oct ober 3 , 202 2 ) †

10.49 Termination of the Distribution Agreement by and between Allegro MicroSystems, Inc.

and Sanken Electric Co., Ltd., effective March 31, 2023 (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 5, 2023)

10.50 Distribution Agreement by and between Allegro MicroSystems, LLC and Sanken Electric Co., Ltd., effective April 1, 2023 (incorporated by reference from Exhibit 10.

2 to the Company’s Current Report on Form 8-K filed on April 5, 2023) †

10.51 Consulting Agreement by and between Allegro MicroSystems, LLC and Sanken Electric Co., Ltd., effective April 1, 2023 (incorporated by reference from Exhibit 10.

3 to the Company’s Current Report on Form 8-K filed on April 5, 2023) †

21.1 Subsidiaries of Allegro MicroSystems, Inc.

23.1 Consent of Grant Thornton LLP

23.2 Consent of PricewaterhouseCoopers LLP

31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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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.

† Portions of this exhibit (indicated by “[XXX]”) have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K under the Securities Act of 1933, as amended, because they are both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

Form 10-K Summary.

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ALLEGRO MICROSYSTEMS, INC.

Chief Executive Officer (Principal Executive Officer)

/s/ Vineet Nargolwala

Vineet Nargolwala

President, Chief Executive Officer (Principal Executive Officer)

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.

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Signature Title Date

/s/ Ravi Vig President, Chief Executive Officer (Principal

Ravi Vig Executive Officer) and Director

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

D’Antilio Accounting Officer)

/s/ Vineet Nargolwala President, Chief Executive Officer (Principal

Vineet Nargolwala Executive Officer) and Director

D’Antilio Chief Financial Officer (Principal Financial Officer) May 25, 2023

Webster Vice President, Chief Accounting Officer May 25, 2023

/s/ Yoshihiro (Zen) Suzuki Chairman of the Board of Directors May 25, 2023

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/s/ Andrew Dunn Director May 25, 2023

/s/ Noriharu Fujita Director May 18, 2022

Noriharu Fujita

/s/ Kojiro Hatano

Director May 25, 2023

Kojiro Hatano

/s/ Katsumi Kawashima

Director May 25, 2023

Katsumi Kawashima

/s/ Reza Kazerounian Director May 25, 2023

Reza Kazerounian

/s/ Richard R.

Lury Director May 18, 2022

/s/ Richard Lury Director May 25, 2023

/s/ Susan Lynch Director May 25, 2023

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Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 238 )

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

Consolidated Balance Sheets

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Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Equity

Consolidated Statements of Changes in Stockholders' Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Report of Independent Public Accounting Firm

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Allegro MicroSystems, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

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

and its subsidiaries (the “Company”) as of March 31, 2023, and the related consolidated statements of operations, of comprehensive income, of changes in stockholders’ equity and of cash flows for the year ended March 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of March 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2023 and the results of its operations and its cash flows for the year ended March 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audit.

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.

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 the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

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

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

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

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 (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) 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 (iii) 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.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated 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.

Revenue Recognition – Sales Allowance

As described in Notes 2 and 4 to the consolidated financial statements, variable consideration such as sales allowance includes sales in which the amount of consideration that the Company will receive is unknown as of the end of the reporting period.

Such consideration primarily includes limited price protection provisions provided to distributors, sales under agreements that allow rights of return, referred to as stock rotation, provided to distributors, discounts and credits provided to distributors and returns provisions offered to direct customers, which make up a portion of total net sales of $973.7 million for the year ended March 31, 2023.

The liability associated with the sales allowance makes up a significant portion of returns and sales allowances, which was $30.6 million as of March 31, 2023.

Management estimates potential future returns, credits and sales allowances based on historical data from prior sales returns and credits issued and changes in product sales to customers.

The principal considerations for our determination that performing procedures relating to revenue recognition - sales allowance is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to the sales allowance and the liability related to the sales allowance transactions.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to sales allowances and the liability related to the sales allowance transactions.

These procedures also included, among others, evaluating a sample of sales allowance and the liability related to the sales allowance transactions by obtaining and inspecting source documents, including invoices and invoice credits related to the sales allowance program, and customer arrangements or promotional practices, where applicable.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

We have served as the Company’s auditor since 2022.

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

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Opinion on the financial statements

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

(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.

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

(a Delaware corporation) and subsidiaries (the “Company”) as of March 25, 2022, the related consolidated statements of operations, comprehensive income, changes of equity, and cash flows for the fiscal periods ended March 25, 2022 and 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 25, 2022 and the results of its operations and its cash flows for the fiscal periods ended March 25, 2022 and March 26, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

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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

We have served as the Company’s auditor since 2020.

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 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.

/s/ GRANT THORNTON LLP

Boston, Massachusetts

ALLEGRO MICROSYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

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Restricted cash 7,129 7,416

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

Trade accounts receivable, net of provision for expected credit losses of $ 102 and $ 105 at March 31, 2023 and March 25, 2022, respectively

111,290 87,359

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Prepaid expenses and other current assets 25,346 14,995

Current portion of related party note receivable 1,875 —

Assets held for sale — 25,969

Current portion of related party notes receivable 3,750 1,875

Total current assets 665,829 511,692

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Intangible assets, net 52,378 35,970

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

Related party notes receivable, less current portion 8,438 5,625

Equity investment in related party 27,265 27,671

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Total assets $ 1,181,155 $ 892,620

Liabilities, Non-Controlling Interest and Stockholders' Equity

Liabilities, Non-Controlling Interests and Stockholders' Equity

Current liabilities:

Trade accounts payable $ 56,256 $ 29,836

Amounts due to related party 5,222 2,353

Amounts due to related parties 9,682 5,222

Accrued expenses and other current liabilities 94,894 65,459

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Total liabilities 214,340 157,257

Commitments and contingencies

Commitments and contingencies (Note 16)

Stockholders' Equity:

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Total stockholders' equity 966,815 735,363

Total liabilities, non-controlling interest and stockholders' equity $ 892,620 $ 747,678

Total liabilities, non-controlling interests and stockholders' equity $ 1,181,155 $ 892,620

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

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Cost of goods sold 348,390 286,855 254,285

Cost of goods sold to related party 79,184 74,359 58,020

Gross profit 546,079 407,460 278,902

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Loss on debt extinguishment — — ( 9,055 )

Interest expense, net ( 1,057 ) ( 2,603 ) ( 110 )

Foreign currency transaction (loss) gain ( 568 ) ( 2,889 ) 1,391

Income in earnings of equity investment 1,007 1,413 —

Interest expense ( 2,336 ) ( 2,499 ) ( 3,828 )

Interest income 1,724 1,442 1,225

Foreign currency transaction gain (loss) 980 ( 568 ) ( 2,889 )

(Loss) income in earnings of equity investment ( 406 ) 1,007 1,413

Unrealized gains on marketable securities 7,471 3,722 —

Other, net 606 992 ( 475 )

19 unchanged sentences

Net income $ 187,494 $ 119,555 $ 18,101

Net income attributable to non-controlling interest 148 148 134

Net income attributable to non-controlling interests 137 148 148

Net income attributable to Allegro MicroSystems, Inc.

6 unchanged sentences

Comprehensive income 184,957 112,713 26,085

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

Comprehensive income (loss) attributable to non-controlling interests 64 111 ( 21 )

Comprehensive income attributable to Allegro MicroSystems, Inc.

2 unchanged sentences

ALLEGRO MICROSYSTEMS, INC.

Consolidated Statements of Changes in Equity

Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share amounts)

9 unchanged sentences

Issuance of Class L shares, net of forfeitures — — 15,828 — — — — — — — — — —

Capital contribution — — — — — — — — 9,500 — — — 9,500

Stock-based compensation — — — — — — — — 1,435 — — — 1,435

Foreign currency translation adjustment — — — — — — — — — — ( 3,155 ) 2 ( 3,153 )

Net actuarial loss and amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax — — — — — — — — — — ( 543 ) — ( 543 )

Balance at March 27, 2020 10,000,000 $ 100 622,470 $ 6 — $ — — $ — $ 458,697 $ 194,355 $ ( 19,976 ) $ 950 $ 634,132

Net income — — — — — — — — — 17,953 — 148 18,101

Issuance of Class L shares, net of forfeitures — — 15,828 — — — — — — — — — —

Capitalization changes related to organizational structure of affiliates and direct and indirect interests in subsidiaries — — — — — — — — ( 19,165 ) — — — ( 19,165 )

15 unchanged sentences

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

Net income — — — — — — — — — 187,357 — 137 187,494

Cash dividends to non-controlling interest — — — — — — — — — — — ( 42 ) ( 42 )

Employee stock purchase plan issuances — — — — — — 161,726 2 2,791 — — — 2,793

Stock-based compensation, net of forfeitures — — — — — — 1,118,971 11 61,657 — — — 61,668

Payments of taxes withheld on net settlement of equity awards — — — — — — — — ( 18,061 ) — — — ( 18,061 )

Foreign currency translation adjustment — — — — — — — — — — ( 2,828 ) ( 64 ) ( 2,892 )

Net actuarial gain and amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax — — — — — — — — — — 492 — 492

Balance at Balance at March 31, 2023 — $ — — $ — — $ — 191,754,292 $ 1,918 $ 674,179 $ 310,315 $ ( 20,784 ) $ 1,187 $ 966,815

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

9 unchanged sentences

Depreciation and amortization 50,808 48,527 48,307

Amortization of debt issuance costs 101 226 —

Amortization of deferred financing costs 99 101 226

Deferred income taxes ( 40,116 ) 7,498 ( 18,931 )

Stock-based compensation 61,798 33,548 49,870

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

Loss (gain) on disposal of assets 285 ( 349 ) 269

Loss on debt extinguishment — — 9,055

1 unchanged sentence

Impairment of long-lived assets — — 7,119

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

Provisions for inventory writedowns and receivables reserves ( 1,438 ) 6,297 5,019

Unrealized gains on marketable securities ( 7,471 ) ( 3,722 ) —

17 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Related party note receivable ( 7,500 ) 51,377 30,000

Loans made to related party ( 7,500 ) ( 7,500 ) —

Receipts on related party notes receivable 2,812 — 51,377

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

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 ) —

Payments for taxes related to net share settlement of equity awards ( 18,061 ) ( 638 ) —

Proceeds from issuance of common stock under equity award and purchase plans awards 2,793 2,831 ( 27,707 )

Dividends paid to non-controlling interest ( 42 ) — —

Dividends paid — — ( 400,000 )

2 unchanged sentences

Repayment of unsecured credit facilities — — ( 33,000 )

Capital contribution — — 9,500

Net cash (used in) provided by financing activities ( 5,307 ) ( 72,186 ) 82,500

Net cash used in financing activities ( 19,998 ) ( 5,307 ) ( 72,186 )

Effect of exchange rate changes on Cash and cash equivalents and Restricted cash ( 4,606 ) 1,373 3,860

15 unchanged sentences

Cash paid for interest $ 1,923 $ 813 $ 2,746

Cash paid for income taxes $ 22,195 $ 8,908 $ 15,873

Cash paid for income taxes, net of refunds $ 58,209 $ 22,195 $ 8,908

Non-cash transactions:

Changes in Trade accounts payable related to Property, plant and equipment, net $ ( 2,021 ) $ ( 3,226 ) $ ( 1,542 )

Property, plant and equipment purchases included in trade accounts payable $ ( 16,369 ) $ ( 2,021 ) $ ( 3,226 )

Assets held for sale transferred from property, plant and equipment, net $ — $ — $ 25,969

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

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

Noncash lease liabilities arising from obtaining right-of-use assets $ 4,870 $ 3,159 $ —

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

3 unchanged sentences

Nature of the Business and Basis of Presentation

Allegro MicroSystems, Inc., together with its consolidated subsidiaries (“AMI” or the “Company”), is a global leader in designing, developing and manufacturing sensing and power solutions for motion control and energy-efficient systems in automotive and industrial markets.

The Company was incorporated under the laws of Delaware on March 30, 2013 under the name of Sanken North America, Inc.

(“SKNA”) as a wholly owned subsidiary of Sanken Electric Co., Ltd.

In October 2017, Sanken sold 28.8 % of the common stock of SKNA to One Equity Partners (“OEP”).

In April 2018, SKNA filed a certificate of amendment in the state of Delaware to change its name to Allegro MicroSystems, Inc.

Allegro MicroSystems, Inc., together with its consolidated subsidiaries (the “Company”), is a global leader in designing, developing and manufacturing sensing and power solutions for motion control and energy-efficient systems in automotive and industrial markets.

The Company is incorporated under the laws of Delaware.

The Company is headquartered in Manchester, New Hampshire and has a global footprint, with 26 locations across four continents.

On November 2, 2020, the Company completed its Initial Public Offering (“IPO”) of 28,750,000 shares of its common stock at an offering price of $ 14.00 per share, of which 25,000,000 shares were sold by the Company and 3,750,000 shares were sold by selling stockholders, resulting in net proceeds to the Company of approximately $ 321,425 after deducting $ 20,125 of underwriting discounts and $ 8,450 of offering costs.

The Company’s common stock is now listed on the Nasdaq Global Select Market under the ticker symbol “ALGM.”

On March 28, 2020, the Company entered into an agreement to divest a majority of its ownership interest in Polar Semiconductor, Inc.

(“PSL”) to Sanken, in order to better align with its fabless, asset-lite scalable manufacturing strategy (the “PSL Divestiture”).

In order to affect this in-kind, non-cash transaction, Sanken contributed the forgiveness of the fair value of the entire related party notes payable of $ 42,700 owed to Sanken and 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.

The entire net receivable balance of $ 51,377 plus accrued interest of $ 762 was repaid on October 14, 2020.

Following the divestiture, Sanken held a 70 % majority share in PSL with the Company retaining a 30 % minority shareholder interest.

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 $ 1,007 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 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.

Sanken will continue to provide distribution support for the Company’s products in Japan.

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

Impact of the COVID-19 Pandemic

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

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

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

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

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

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

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(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.

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.

The COVID-19 pandemic may also heighten other risks.

For example, if the business impacts of COVID-19 are prolonged, this could cause the Company to recognize impairments for goodwill and certain long-lived assets including amortizable intangible assets.

The Company has taken actions to mitigate its financial risk given the uncertainty in global markets caused by the COVID-19 pandemic.

During the fourth quarter of fiscal year 2020, the Company borrowed $ 43,000 under its revolving credit facilities.

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

In connection with entering into a new revolving credit facility on September 30, 2020, the Company used cash on hand to repay all amounts outstanding under the line of credit and terminated all commitments thereunder.

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

The CARES Act contains numerous tax provisions including a correction to the applicable depreciation rates available in the original Tax Cuts and Jobs Act 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 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 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.

The Company’s 2023 fiscal year ended March 31, 2023 (“fiscal year 2023”) was a 53-week period, while the 2022 fiscal year ended March 25, 2022 (“fiscal year 2022”) and 2021 fiscal year ended March 26, 2021 (“fiscal year 2021”) were 52-week periods.

Summary of Significant Accounting Policies

Basis of Presentation

We prepare our financial statements in accordance with U.S.

generally accepted accounting principles (“GAAP”).

These principles are established primarily by the Financial Accounting Standards Board (“FASB”).

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and those entities required to be consolidated under GAAP.

All material intercompany profits, transactions, and balances among the consolidated entities have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingencies at the date of the consolidated financial statements and the reported amounts of net sales and expenses during the reporting period.

Such estimates relate to useful lives of fixed and intangible assets, allowances for doubtful accounts and customer returns and sales allowances.

Such estimates could also relate to the net realizable value of inventory, accrued liabilities, the valuation of stock-based awards, deferred tax valuation allowances, and other reserves.

Such estimates relate to useful lives of fixed and intangible assets, provisions for expected credit losses and customer returns and sales allowances.

Such estimates also relate to accrued liabilities, the valuation of stock-based awards, deferred tax valuation allowances, the net realizable value of inventory, and other reserves.

On an ongoing basis, management evaluates its estimates.

5 unchanged sentences

The Company has a single, company-wide management team that administers all properties as a whole rather than as discrete operating segments.

The chief operating decision maker, who is the Company’s chief executive officer, measures financial performance as a single enterprise and not on legal entity or end market basis.

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 chief operating decision maker, who is the Company’s Chief Executive Officer, measures financial performance as a single enterprise and not on a 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.

Notes to Consolidated Financial Statements – (continued)

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

Foreign Currency Translation and Transactions

3 unchanged sentences

The functional currency for the Company’s international subsidiaries is considered to be the local currency for each entity, and, accordingly, translation adjustments for these entities are included as a component of accumulated other comprehensive loss in the Company’s consolidated balance sheets.

Non-Controlling Interest

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

Non-Controlling Interests

The Company, through one of its wholly owned subsidiaries, established an affiliated entity in Philippines for the primary purpose of purchasing, selling, leasing, developing and otherwise managing real estate acquired by the Company in the Philippines.

The Company owns 40 % of the equity interest in this entity, and the remaining 60 % is held in a trust for the benefit of its employee retirement fund.

The portion of the results of operations of this entity is shown as net income attributable to the non-controlling interest in the Company’s consolidated statements of operations for fiscal 2022, 2021 and 2020.

Additionally, the cumulative portion of the results of operations of this entity along with the interest in the net assets is shown as a component of non-controlling interest in the Company’s consolidated balance sheets.

The portion of the results of operations of this entity is shown as net income attributable to the non-controlling interests in the Company’s consolidated statements of operations for fiscal 2023, 2022 and 2021.

Additionally, the cumulative portion of the results of operations of this entity along with the interest in the net assets is shown as a component of non-controlling interests in the Company’s consolidated balance sheets.

Cash Equivalents and Restricted Cash

1 unchanged sentence

At March 31, 2023 and March 25, 2022, the Company maintained investments in an interest-bearing cash account.

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.

Because of the investment’s short term to maturity and the investment’s relative price insensitivity to changes in market interest rates, 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 31, 2023, March 25, 2022 and March 26, 2021.

16 unchanged sentences

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

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.

The interest method is 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.

1 unchanged sentence

defined benefit plan is included in Note 15, “Retirement Plans.”

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

Trade accounts receivable, net

A receivable is a right to consideration that is unconditional (i.e., only the passage of time is required before payment is due).

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

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

Accounts receivables are presented net of a provision for expected credit losses, which is an estimate of amounts that may not be collectible.

The provision for expected credit losses 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.

2 unchanged sentences

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.

original equipment manufacturers and distributors.

The receivables in each category share similar risk characteristics.

1 unchanged sentence

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.

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

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

Inventories are stated at the lower of cost or net realizable value, with cost being determined using a standard costing system that approximates actual costs, based on a first-in, first-out method.

Inventory costs include materials, labor and manufacturing overhead.

The Company records inventory provisions when conditions exist that suggest that inventory may be in excess of anticipated demand, is obsolete based upon expected future demand for products and market conditions, or quality-related rejections.

3 unchanged sentences

Although the Company performs a detailed review of its forecasts of future product demand, any significant unanticipated changes in demand could have a significant impact on the value of the Company’s inventory and reported operating results.

Assets Held for Sale

The Company classifies assets as held for sale when all of the following are met:

(i) management has committed to a plan to sell the assets;

(ii) the assets are available for immediate sale in their present condition;

(iii) an active program to locate a buyer has been initiated;

(iv) it is probable that a sale will occur within one year;

(v) the assets are being actively marketed for sale at a price that is reasonable in relation to their current fair value;

and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

If all held for sale criteria are met, the assets are reclassified and presented separately in the consolidated balance sheets as assets held for sale at the lower of the carrying value or the fair value, less cost to sell, and no longer depreciated or amortized.

During the fourth quarter of fiscal year 2021, the Company entered into an agreement to sell the AMTC Facility in connection with its previously announced back-end facility consolidation plan.

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 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

5 unchanged sentences

Intangible assets, net

Intangible assets, net primarily consist of capitalized costs to acquire and defend patent and trademark related awards.

Intangible assets, net primarily consist of identified intangible assets related to previous acquisitions, as well as capitalized costs to acquire and defend patent and trademark related awards.

In addition, the Company holds technology, customer relationships, and non-compete agreements.

The Company’s intangible assets are amortized using the straight-line method over their estimated useful lives, ranging from three to ten years .

The Company’s intangible assets are amortized using the straight-line method over their estimated useful lives (approximating their economic benefit) ranging from three to twelve years .

Impairment of Long-Lived Assets

Long-lived assets consist of property, plant and equipment, finite-lived intangibles, such as patents and customer relationships and indefinite-lived intangible assets such as process technology and trademarks.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

Property, plant and equipment and finite-lived assets are tested for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.

5 unchanged sentences

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.

Factors that the Company considers in deciding when to perform a quantitative 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.

2 unchanged sentences

The results of the annual impairment test did not indicate any impairments of indefinite-lived intangible assets for fiscal years 2023, 2022 and 2021.

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.

On March 3, 2021, the Company entered into a definitive agreement to sell its AMTC facility for approximately $ 30,000 before fees and expenses.

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.

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

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.

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.

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.

1 unchanged sentence

The results of the Company’s qualitative goodwill impairment test performed on the first business day of fourth quarter for fiscal years 2023, 2022 and 2021 did not indicate any impairments.

The Company accounts for leases in accordance with GAAP.

At the inception of an arrangement, the Company determines whether the arrangement is a lease arrangement or contains a lease based on the unique facts and circumstances present.

Leases with a term greater than 12 months are recognized on the balance sheet as right-of-use (“ROU”) assets with a corresponding lease liability.

The Company has elected not to recognize on the consolidated balance sheets leases with an initial term of 12 months or less.

Leases with an initial term of 12 months or less are directly expensed as incurred.

Leases are classified as either operating or finance depending on the specific terms of the arrangement.

The Company’s leases mainly consist of facilities, office equipment, and vehicles.

The majority of leases are classified as operating leases.

Certain lease agreements contain provisions for future rent increases.

Lease payments included in the measurement of the lease liability comprise fixed payments and future rent increases tied to an index or rate.

Future rent increases dependent on an index or rate are initially measured at the index or rate at the commencement date.

The Company’s leases typically do not contain residual value guarantees.

At the commencement date, operating and finance lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term.

The lease term includes the non-cancelable period of the lease, plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

interest rate implicit in a lease contract is typically not readily determinable, therefore an incremental borrowing rate is used to calculate the lease liability.

The incremental borrowing rate is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Certain adjustments to the ROU asset may be required for items such as prepayments, lease incentives received or initial direct costs paid.

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

Deferred Rent

The Company records rent expense on a straight-line basis using a constant periodic rate over the term of its lease agreements.

The excess of the cumulative rent expense incurred over the cumulative amounts due under the lease agreements is deferred and recognized over the term of the leases.

Leasehold improvement reimbursements from landlords are recorded as deferred rent and amortized as reductions to lease expense over the lease term.

There were $ 4,327 and $ 541 accrued as of March 31, 2023 and March 25, 2022, respectively.

Revenue Recognition

3 unchanged sentences

A contract exists when it is approved by both parties, each party’s rights and obligations are identified, payment terms are known, customer has the ability and intent to pay and the contract has commercial substance.

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.

The Company uses judgment 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.

(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.

3 unchanged sentences

(4) Allocate the transaction price to the performance obligations in the contract —If the contract contains a single performance obligation, the entire transaction price is allocated to that performance obligation.

Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligations based on a relative standalone selling price (“SSP”).

(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)

Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligations based on a relative standalone selling price.

Sales channels

3 unchanged sentences

Whether the Company transacts business with and receives the order from a distributor or directly from an end customer, its revenue recognition policy and resulting pattern of revenue recognition for the order are the same.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

The Company also uses independent sales representatives to assist in the sales process with certain customers.

2 unchanged sentences

The Company pays a commission to the sales representative, calculated as a percentage of the related customer payment.

Sales representatives commissions are recorded as expenses when incurred and are classified as sales and marketing expenses in the Company’s consolidated statements of operations.

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

Sales representatives’ commissions are recorded as expenses when incurred and are classified as selling, general and administrative expenses in the Company’s consolidated statements of operations.

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

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

9 unchanged sentences

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.

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 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.

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

The Company records shipping and handling costs billed to customers as revenue with offsetting costs recorded as cost of sale.

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The Company had no contract assets as of March 31, 2023 and March 25, 2022.

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.

Contract liabilities typically result 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 significant contract liabilities as of March 31, 2023 and March 25, 2022.

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

Contract costs

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 the grant date fair value of the awards.

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

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

Typically, stock-based compensation expense is recognized evenly over the vesting period.

However, stock-based compensation expense related to performance-based awards is recognized relative to the probability of achievement of the requisite milestones during the vesting period.

The Company accounts for forfeitures as they occur.

Determining the fair value of the stock-based compensation awards at the grant date requires judgment, including estimating the expected life of the stock awards and the volatility of the underlying market-based and projected future cash flow assumptions.

Determining the fair value of certain stock-based compensation awards at the grant date requires judgment, including estimating the expected life of the stock awards and the volatility of the underlying market-based and projected future cash flow assumptions.

Any changes to those estimates that the Company makes from time to time may have a significant impact on the stock-based compensation expense recorded and could materially impact the Company’s results of operations.

Research and Development

The Company commits substantial capital and resources to internal and collaborative research and development projects in order to provide innovative products and solutions to its customers.

The Company conducts research primarily to develop new technologies, enhance current product performance, improve the functionality and reliability of existing products, and develop revolutionary new products and solutions.

Research and development costs are expensed as incurred

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

and include salaries, wages and other personnel related costs, material costs and depreciation, consulting costs, software licensing costs, maintenance costs and facility costs.

Pension Obligations

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These assumptions are reviewed annually, based on current plan information and consultations with independent investment advisors and actuaries.

The selection of assumptions requires a high degree of judgment and may materially change from period to period.

The Company does not offer other defined benefits associated with postretirement benefit plans other than pensions.

14 unchanged sentences

The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax provision in the consolidated statements of operations.

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

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)

Accrued interest and penalties are included in accrued expenses and other current liabilities in the consolidated balance sheets.

All undistributed earnings of our foreign subsidiaries are permanently reinvested.

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

income taxes on such undistributed earnings.

Advertising Costs

Advertising costs are expensed, as incurred, as a component of sales expense.

Advertising expense was $ 452 , $ 331 and $ 273 in fiscal years 2022, 2021 and 2020, respectively.

Net Income Per Share

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 stockholders of the Company by the weighted-average number of common shares outstanding during the reporting period.

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Information about potentially dilutive and antidilutive shares for the reporting period is provided in Note 17, “Net Income per Share.”

As the Company maintained two classes of Common stock (Class A and Class L) in fiscal year 2020, earnings per basic and diluted shares were calculated under the two-class method.

The two-class method includes an earnings allocation formula that determines earnings per share for each participating security according to dividends declared on undistributed earnings for the period.

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 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.

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivable.

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 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 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.

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

To manage credit risk related to accounts receivables, the Company

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

evaluates the 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 during the prior two years.

As of March 31, 2023, Sanken and our largest, non-affiliated distributor accounted for 10.6 % and 17.3 %, respectively, of the Company’s outstanding trade accounts receivable, net, respectively, including related party trade accounts receivable.

As of March 25, 2022, Sanken and our largest, non-affiliated distributor accounted for 23.8 % and 12.0 %, respectively, 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 31, 2023, March 25, 2022 and March 26, 2021, Sanken accounted for 16.5 %, 19.4 % and 17.7 % of total net sales, respectively.

For the same periods, sales to our largest, non-affiliated distributor accounted for 10.8 %, 11.0 %, and 11.4 % of total net sales, respectively.

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

During the fiscal year ended March 25, 2022, sales from customers located outside of the United States in the aggregate accounted for 85.9 % of the Company’s total net sales, with Japan accounting for 19.4 %, Greater China accounting for 25.0 % and South Korea accounting for 10.5 %.

See Note 20, “Related Party Transactions” for a discussion of the termination, distribution and consulting agreements between Sanken and the Company to transition the marketing and sale of the Company’s products in Japan from Sanken to the Company.

During the fiscal year ended March 31, 2023, sales from customers located outside of the United States in the aggregate accounted for 86.5 % of the Company’s total net sales, with Japan accounting for 16.5 % and Greater China accounting for 26.1 %.

No other countries accounted for greater than 10.0% of total net sales for the fiscal year ended March 31, 2023.

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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 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 %.

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.

Recently Adopted Accounting Standards

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.

Notes to Consolidated Financial Statements – (continued)

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

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.

2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which adds an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses.

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 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.

Notes to Consolidated Financial Statements – (continued)

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

(“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.

In October 2021, the FASB issued Accounting Standards Update (“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.

The amendments in ASU 2021-08 require an acquiring entity to apply Accounting Standards Codification (“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.

If unable to rely on the acquiree’s accounting due to errors, noncompliance with 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 Company early adopted ASU 2021-08, effective March 26, 2022, and concluded that adoption of this ASU did not have a material impact on its financial position, results of operations, cash flows, or related disclosures.

In May 2021, the FASB issued ASU No.

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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 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.

The categorization of net sales by geography is determined based on the location the products are being shipped to.

The Company adopted

ALLEGRO MICROSYSTEMS, INC.

1 unchanged sentence

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

Net sales by core end market and application:

ASU 2021-04, effective March 26, 2022, and concluded that it did not have a material impact on its financial position, results of operations, cash flows, or related disclosures.

Recently Issued Accounting Standards Not Yet Adopted

In December 2022, the FASB issued ASU No.

2022-06, Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”).

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, which provided temporary relief when transitioning from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate or another applicable rate during the original transition period ending on December 31, 2022.

In March 2021, the UK Financial Conduct Authority announced that the intended cessation date of the overnight 1-, 3-, 6-, and 12-month tenors of U.S.

dollar LIBOR would be June 30, 2023, which is beyond the current sunset date of Topic 848.

In light of this development, the FASB issued this update to defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

The Company does not anticipate this new guidance to have a material impact on its financial position, results of operations, cash flows, or related disclosures.

Heyday Acquisition

On September 1, 2022, the Company completed its purchase of all of the equity interests in Heyday Integrated Circuits (“Heyday”), a privately held company specializing in compact, fully integrated isolated gate drivers that enable energy conversion in high-voltage gallium nitride and silicon carbide wide-bandgap semiconductor designs (the “Heyday Acquisition”).

The Heyday Acquisition was undertaken to bring together Heyday’s isolated gate drivers and the Company’s isolated current sensors to enable potential development and commercialization of small high-voltage and high-efficiency power systems.

Additionally, this acquisition is expected to increase the Company’s addressable market for electric vehicles (“EV”), solar inverters, data center and 5G power supplies, and broad-market industrial applications.

The total purchase price, as updated for measurement period adjustments, was $ 20,245 , consisting of cash consideration paid directly to the owners of Heyday and paid on their behalf for the settlement of certain outstanding debts and other obligations.

The Heyday Acquisition was accounted for as a business combination, and the Company recorded the assets acquired and liabilities assumed at their respective fair values as of the date of acquisition.

The allocation of the purchase price was based upon a valuation, and the Company’s estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date) which is not yet finalized.

During the fiscal year ended March 31, 2023, the Company recorded measurement period adjustments to various accounts resulting in a decrease in goodwill of $ 1,133 .

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date, updated for the measurement period adjustments above:

March 31, 2023

Property and equipment 16

Completed technology 15,100

In-process research and development 1,600

Assets acquired $ 17,040

Current liabilities assumed ( 282 )

Net deferred tax liability ( 3,609 )

Net assets acquired $ 13,149

Total estimated fair value of consideration ( 20,245 )

Goodwill $ 7,096

Completed technology assets are amortized over an estimated useful life of 12 years.

The acquired in-process research and development costs were determined to have an indefinite useful life.

Amortization of completed technology is included within cost of goods sold and consists of PowerThru technology that accomplishes gate driver power and signal transmission through an integrated transformer, reducing the size and complexity of the gate drive solution.

The in-process research and development assets represent efforts to expand the power

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

capability of these gate drivers for wide-bandgap semiconductor technology.

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.

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

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

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

The income before income taxes from the Heyday Acquisition were immaterial to the Company’s consolidated results for the fiscal year ended March 31, 2023.

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

Revenue from Contracts with Customers

The following tables summarize net sales disaggregated by application, by product and by geography for the fiscal years ended March 31, 2023, March 25, 2022 and March 26, 2021.

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

The categorization of net sales by geography is determined based on the location to which the products are shipped.

Net sales by application:

Fiscal Year Ended

1 unchanged sentence

2022 March 26,

Core end market:

Automotive $ 657,479 $ 531,564 $ 398,298

1 unchanged sentence

Other 119,469 103,923 98,037

Other applications:

Wafer foundry products — — 72,370

Distribution of Sanken products — — 35,421

Total net sales $ 973,653 $ 768,674 $ 591,207

5 unchanged sentences

Magnetic sensors (“MS”) 598,579 500,293 387,607

Photonics 1,732 1,235 —

Wafer foundry products — — 72,370

Distribution of Sanken products — — 35,421

Total net sales $ 973,653 $ 768,674 $ 591,207

11 unchanged sentences

Total net sales $ 973,653 $ 768,674 $ 591,207

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

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.

The Company elected not to disclose the amount of unsatisfied performance obligations as these contracts have original expected durations of less than one year.

ALLEGRO MICROSYSTEMS, INC.

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

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

As of March 31, 2023 and March 25, 2022, the liability associated with returns and sales allowances, inclusive of related party adjustments, was $ 30,571 and $ 14,924 , respectively, and were netted against trade accounts receivable in the consolidated balance sheets.

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

The Company elected not to disclose the amount of unsatisfied performance obligations as these contracts have original expected durations of less than one year.

Fair Value Measurements

The following tables present information about the Company’s financial assets and liabilities as of March 25, 2022 and March 26, 2021 measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

The following tables present information about the Company’s financial assets and liabilities as of March 31, 2023 and March 25, 2022 measured at fair value on a recurring basis:

Fair Value Measurement at March 31, 2023 Using:

7 unchanged sentences

Total assets $ 129,077 $ — $ — $ 129,077

Other long-term liabilities:

Contingent consideration $ — $ — $ 2,800 $ 2,800

Total liabilities $ — $ — $ 2,800 $ 2,800

Fair Value Measurement at March 25, 2022 Using:

4 unchanged sentences

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

2 unchanged sentences

Total liabilities $ — $ — $ 2,800 $ 2,800

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:

The following table represents the unrealized gains and losses on investments in marketable securities held with a readily determinable fair value for the fiscal years ended March 31, 2023 and March 25, 2022:

Fiscal Year Ended

2023 March 25,

Net gains and losses recognized during the period on equity securities $ 7,471 $ 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 $ 7,471 $ 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 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

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 gains of $ 112 and losses of $ 565 for the fiscal years ended March 31, 2023 and March 25, 2022, respectively.

ALLEGRO MICROSYSTEMS, INC.

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

of these financial measures.

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 was required to make contingent payments, subject to the entity achieving certain sales and revenue thresholds.

The contingent consideration payments were, in the aggregate, $ 15,000 .

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 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:

The change in fair value of contingent consideration for the Voxtel 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:

Consideration

Balance at March 26, 2021 $ 4,800

Purchase price contingent consideration 7,300

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

9 unchanged sentences

Trade accounts receivable $ 150,914 $ 129,539

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

Provision for expected credit losses ( 102 ) ( 105 )

Returns and sales allowances ( 26,269 ) ( 14,819 )

Related party trade accounts receivable ( 27,256 ) ( 23,634 )

Related party trade accounts receivable, net of returns and sales allowances ( 13,253 ) ( 27,256 )

Total $ 111,290 $ 87,359

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

Accounts Returns

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

Changes in the Company’s expected credit losses and returns and sales allowances, exclusive of related party adjustments, were as follows:

Description Provision for

Expected Credit Losses Returns

Allowances Total

Balance at March 27, 2020 $ 288 $ 17,185 $ 17,473

Charged to costs and expenses or revenue 262 118,719 118,981

Write-offs, net of recoveries ( 386 ) ( 119,141 ) ( 119,527 )

Provisions ( 150 ) 147,026 146,876

Deductions — ( 148,937 ) ( 148,937 )

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

Charged to costs and expenses or revenue ( 150 ) 147,026 146,876

Write-offs, net of recoveries — ( 148,937 ) ( 148,937 )

Provisions ( 33 ) 144,318 144,285

Deductions — ( 144,773 ) ( 144,773 )

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

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

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

Provisions ( 3 ) 129,504 129,501

Deductions — ( 118,054 ) ( 118,054 )

Balance at March 31, 2023 $ 102 $ 26,269 $ 26,371

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:

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

2023 March 25,

3 unchanged sentences

Total $ 151,301 $ 86,160

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.

The Company recorded inventory write-offs totaling $ 10,009 , $ 5,809 and $ 4,464 for the fiscal years ended March 31, 2023, March 25, 2022 and March 26, 2021, respectively.

Property, Plant and Equipment, net

19 unchanged sentences

Philippines 207,671 167,488

Thailand — 1,698

Other 21,359 7,746

Total $ 265,267 $ 210,455

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

1 unchanged sentence

Balance at March 26, 2021 $ 20,106

Goodwill arising from acquisition 18,702

Currency translation 119

Foreign currency translation ( 97 )

Balance at March 25, 2022 $ 20,009

Currency translation ( 97 )

Goodwill arising from acquisition 7,096

Foreign currency translation 586

Balance at March 31, 2023 $ 27,691

Intangible assets, net is as follows:

Intangible assets, net were as follows:

March 31, 2023

5 unchanged sentences

Process technology 28,508 2,963 25,545 12 years

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

Trademarks 200 64 136 5 years

Legacy trademarks 627 58 569

Other 32 32 —

Indefinite-lived process technology and trademarks 4,696 — 4,696

Trademarks and other 287 194 93 5 years

Total $ 76,985 $ 24,607 $ 52,378

6 unchanged sentences

Process technology 14,750 3,463 11,287 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

Other 32 32 —

Indefinite-lived process technology and trademarks 3,168 — 3,168

Trademarks and other 83 83 — 5 years

Total $ 61,168 $ 25,198 $ 35,970

Intangible assets amortization expense was $ 5,209 , $ 4,219 and $ 3,332 for the fiscal years ended March 31, 2023, March 25, 2022 and March 26, 2021, respectively.

ALLEGRO MICROSYSTEMS, INC.

1 unchanged sentence

(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 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 $ 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.

The Company capitalizes external legal costs incurred in the defense of its patents when it believes that a significant, discernible increase in value will result from the defense and a successful outcome of the legal action is probable.

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 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:

As of March 31, 2023, amortization expense of intangible assets for the next five fiscal years is expected to be as follows:

Thereafter 23,120

1 unchanged sentence

Other Assets, net

The composition of other assets, net is as follows:

The composition of other assets, net was as follows:

2023 March 25,

1 unchanged sentence

Income taxes receivable long-term 13,133 15,763

Investments in marketable securities (1)

Investments in equity securities (1)

19,929 12,346

Deposits 17,319 10,525

Prepaid contracts long-term 1,236 1,295

Deferred financing costs 49 149

Long-term prepaid contracts 436 1,236

Other 4,780 1,353

3 unchanged sentences

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.

Notes to Consolidated Financial Statements – (continued)

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

Accrued Expenses and Other Current Liabilities

The composition of accrued expenses and other current liabilities is as follows:

The composition of accrued expenses and other current liabilities was as follows:

2023 March 25,

1 unchanged sentence

Accrued salaries and wages 20,205 14,699

Base acquisition purchase price due — 14,588

Deposits on AMTC facility — 14,531

Accrued warranty costs 4,327 541

Accrued vacation 8,178 5,715

Accrued severance 839 572

Accrued professional fees 6,243 1,252

Accrued income taxes 5,625 1,831

Accrued utilities 607 623

Other current liabilities 9,832 7,814

Total $ 94,894 $ 65,459

Management Long-Term Cash Incentive Plan

On August 28, 2015 the Company’s Board of Directors approved a Long-Term Cash Incentive Plan (“LTCIP”) for certain employees.

Under the LTCIP, employees receive cash payments upon achievement of certain performance metrics determined based on a three-year rolling performance period.

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 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

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:

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

Reclassification 9,707 ( 9,706 )

Payments ( 17,836 ) —

Accruals 2,502 1,041

Balance at March 27, 2020 $ 11,488 $ 2,439

Reclassification 1,004 ( 1,004 )

Payments ( 11,267 ) ( 111 )

RSU conversion ( 640 ) —

Removal due to divestiture ( 378 ) ( 398 )

Accruals ( 149 ) ( 668 )

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 leases real estate, equipment and vehicles under operating lease agreements that have initial terms ranging from one to 10 years.

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

3 unchanged sentences

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

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

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

5 unchanged sentences

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

Cash paid for operating leases $ 5,034 $ 5,289

Weighted-average remaining lease term – operating leases 4.57 years 5.17 years

Weighted-average discount rate – operating leases 5.3 % 4.5 %

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

(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:

As of March 31, 2023, future minimum lease payments under the lease agreements were as follows:

Thereafter 2,818

Total undiscounted lease payments $ 18,573

present value adjustment ( 2,119 )

Total lease payments $ 23,151

imputed interest ( 5,610 )

Total operating lease liabilities $ 17,541

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 as of March 25, 2022 and March 26, 2021:

2022 March 26,

Senior Secured Term Loan $ 25,000 $ 25,000

Unsecured Revolving Credit Facilities — —

Total Debt 25,000 25,000

Less debt payable within one year — —

Debt payable after one year $ 25,000 $ 25,000

As of March 25, 2022, the principal maturities of debt obligations outstanding of $ 25,000 are due for repayment in fiscal year 2028.

Senior Secured Credit Facilities

As of March 31, 2023, the principal maturities of debt obligations outstanding of $ 25,000 will be due for repayment in fiscal year 2028.

On September 30, 2020, the Company entered into a term loan credit agreement with Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and the other agents, arrangers and lenders party thereto, providing for a $ 325,000 senior secured term loan facility due in fiscal year 2028 (the “Term Loan Facility”).

1 unchanged sentence

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

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.

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.

The Company’s outstanding borrowings bore an interest rate of 8.38 % at March 31, 2023.

The Company had no outstanding borrowings on the Revolving Credit Facility as of March 31, 2023.

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 as discussed below.

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 $ 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 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.

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 expired on January 22, 2021.

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

As of March 27, 2020, the Company had a $ 25,000 outstanding balance under the revolving line-of-credit agreement with an original repayment date of June 19, 2020 at an interest rate of 1.7 %.

In the first quarter of fiscal 2021, repayment of the $ 25,000 borrowings under the revolving line-of-credit was extended to December 18, 2020.

The revolving line of credit was secured, for a one year period, by a non-refundable fee of $ 25 that w as paid to the financial institution.

In connection with entering into a new revolving credit facility on September 30, 2020, the Company used cash on hand to repay all amounts outstanding under the line-of-credit and terminated all commitments thereunder.

On March 27, 2006, the Company, through its PSL subsidiary, entered into a revolving line-of-credit agreement, with a financial institution, that provides for a maximum borrowing capacity of $ 10,000 .

The revolving line-of-credit bore interest at LIBOR on the day of the advance plus 1.0 % spread payable upon maturity of the draws and was guaranteed by Sanken.

Under the terms of the revolving line-of-credit agreement, the principal was due at various times during fiscal year 2021.

During fiscal year 2020, the Company borrowed $ 10,000 under the revolving line of credit.

As of March 27, 2020 , the Company had a $ 10,000 outstanding balance under the revolving line-of-credit agreement maturing on September 16, 2020, at an interest rate of 2.5 %.

On March 28, 2020, in conjunction with the PSL Divestiture, the debt was deconsolidated.

On December 5, 2001, the Company, through its subsidiaries, entered into a line-of-credit agreement with a financial institution that provides for a maximum borrowing capacity of $ 8,000 .

On March 18, 2020, the Company borrowed $ 8,000 under the line-of-credit.

As of March 27, 2020 , the Company had an $ 8,000 outstanding balance under the line-of-credit agreement maturing on June 18, 2020 at an interest rate of 1.9 %.

In the first quarter of fiscal 2021, repayment of the $ 8,000 borrowings under the line-of-credit was extended to December 21, 2020.

On November 26, 2019, t he Company, through its subsidiaries, entered into a line-of-credit agreement with a financial institution that provides for a maximum borrowing capacity of 60,000 Philippine pesos (approximately $ 1,145 at March 25, 2022) at the bank’s prevailing interest rate.

The line-of-credit is due to expire on August 21, 2022.

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

On November 20, 2019, 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.

Notes to Consolidated Financial Statements – (continued)

(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

2023 March 25,

Accrued management incentives 826 628

Accrued retirement 8,032 8,903

Accrued contingent consideration 2,800 4,800

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

Provision for uncertain tax positions 2,837 2,757

Other long-term liabilities 98 3,626

Total $ 10,967 $ 15,286

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

Retirement Plans

The Company recognizes the funded status (i.e., the difference between the fair value of plan assets and the benefit obligations) of its defined benefit pension plans in its consolidated balance sheets with a corresponding adjustment to accumulated other comprehensive income (“AOCI”), net of tax.

These amounts will continue to be recognized as a component of future net periodic benefit costs consistent with the Company’s past practice.

Further, actuarial gains and losses and prior service costs that arise in future periods and are not recognized as net periodic benefit costs in the same periods will be recognized as a component of other comprehensive income.

3 unchanged sentences

Defined Benefit Plan

The Company, through its wholly owned subsidiary, Allegro MicroSystems Philippines, Inc.

(“AMPI”), has a defined benefit pension plan, which is a noncontributory plan that covers substantially all employees of the respective subsidiary.

The plan’s assets are invested in common trust funds, bonds and other debt instruments and stocks.

The Company, through its wholly owned subsidiary, Allegro MicroSystems Philippines, Inc., has a defined benefit pension plan, which is a noncontributory plan that covers substantially all employees of this subsidiary.

The plan’s assets are invested in government securities, common trust funds, bonds and other debt instruments and stocks.

Effect on the consolidated statements of operations

11 unchanged sentences

Net periodic pension expense $ 1,889 $ 2,093 $ 1,969

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

Changes in the benefit obligations and plan assets for the non-U.S.

8 unchanged sentences

Benefits paid ( 1,014 ) ( 1,180 )

Actuarial loss ( 1,822 ) 2,502

Actuarial gain ( 908 ) ( 1,822 )

Foreign currency exchange rate changes ( 549 ) ( 1,181 )

8 unchanged sentences

Underfunded status at end of year $ ( 7,562 ) $ ( 7,983 )

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

The underfunded plan amounts are recognized as a component of other long-term liabilities in the consolidated balance sheets.

20 unchanged sentences

Balance, March 31, 2023, net of tax $ 129 $ 1,449 $ ( 68 ) $ 1,510

There is no actuarial net gain or loss included in AOCI as of March 25, 2022 that is expected to be amortized into net periodic benefit cost over the next fiscal year.

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)

There is no significant actuarial net gain or loss included in AOCI as of March 31, 2023 that is expected to be amortized into net periodic benefit cost over the next fiscal year.

As of March 31, 2023, the Company does not expect a significant return of plan assets during the next 12 months.

Assumptions and Investment Policies

8 unchanged sentences

rate of compensation increase 5.50 % 5.50 % 5.00 %

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

Information on Plan Assets

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”:

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

Fair Value at March 31,

18 unchanged sentences

Total $ 7,097 $ 3,636 $ 1,843 $ 1,618

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:

The following table shows the change in fair value of Level 3 plan assets:

Level 3 Non-U.S.

2 unchanged sentences

Redemptions during the year ( 531 ) —

Revaluation of equity securities — 753

Change in foreign currency exchange rates 34 16

12 unchanged sentences

In recent years, the Company’s investment policy has shifted toward a closer matching of the interest-rate sensitivity of the plan assets and liabilities.

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”), has added a greater proportion of fixed income securities to the non-U.S.

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

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

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 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.

6 unchanged sentences

The following table projects the benefits expected to be paid to participants from the plans in each of the following fiscal years.

The majority of the payments will be paid from plan assets, not company assets.

The majority of the payments will be paid from Company assets.

Thereafter 8,914

Total $ 14,964

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

Other Defined Benefit Plan

In December 1993, the Company commenced with a rollover pension promise agreement (“Pension Promise”) to offer a then European employee an insured annuity upon their retirement at age 65.

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 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

Eligible AML U.S.

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.

The Company maintains a 401(k) retirement savings plan (the “401(k) Plan”) for our U.S.-based employees who satisfy certain eligibility requirements.

Eligible employees may defer a portion of their eligible compensation, within prescribed limits, through contributions to the 401(k) Plan.

The Company matches participants’ contributions, up to a maximum of 5 % of a participant’s eligible compensation, up to the statutory compensation limit, and these matching contributions are fully vested as of the date they are made.

Matching contributions by AML totaled $ 4,708 , $ 4,074 and $ 3,687 for the fiscal years ended March 31, 2023, March 25, 2022 and March 26, 2021, respectively.

2 unchanged sentences

Contributions to the AME Plan by the Company totaled approximately $ 1,248 , $ 1,065 and $ 507 for the fiscal years ended March 31, 2023, March 25, 2022 and March 26, 2021, 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.

Employees may contribute up to 35 % of their compensation, subject to the maximum contribution allowed by the Internal Revenue Service (“IRS”).

All employees are 100 % vested in their contributions at the time of plan entry.

As of January 1, 2008, and until January 1, 2015, the Company’s former wholly-owned subsidiary, PSL, adopted and used a Safe Harbor provision, whereby PSL contributed 3 % of compensation each pay period for all eligible employees meeting the Safe Harbor criteria.

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.

Commitments and Contingencies

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.

The Company, through its subsidiaries, utilizes self-insured employee health programs for employees in the United States.

Future minimum payments under purchase obligations with suppliers as of March 31, 2023 totaled $ 56,322 , substantially all of which all expected to be procured in fiscal year 2024.

The Company, through its subsidiaries, utilizes self-insured employee health programs for employees in the U.S.

The Company records estimated liabilities for its self-insured health programs based on information provided by the third-party plan administrators, historical claims experience and expected costs of claims incurred but not reported.

1 unchanged sentence

As facts change, it may become necessary to make adjustments that could be material to the Company’s consolidated financial position and results of operations.

The accrued liability related to self-insurance wa s $ 417 and $ 1,518 as of March 25, 2022 and March 26, 2021, respectively, and was included in accrued expenses and other current liabilities in the Company’s consolidated balance sheets.

Legal proceedings

The Company is subject to various legal proceedings and claims, the outcomes of which are subject to significant uncertainty.

The Company is subject to various legal proceedings, and claims, and regulatory examinations or investigations arising in the normal course of business, the outcomes of which are subject to significant uncertainty, and the Company’s ultimate liability, if any, is difficult to predict.

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, 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.

In making such

ALLEGRO MICROSYSTEMS, INC.

1 unchanged sentence

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

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 and estimable, the Company will disclose the nature of the contingency and, if estimable, will provide the likely amount of such loss or range of loss.

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

Indemnification

From time to time, the Company has agreed to indemnify and hold harmless certain customers for potential allegations of infringement of intellectual property rights and patents arising from the use of its products.

To date, the Company has not incurred any costs in connection with such indemnification arrangements;

To date, the Company has not recognized or incurred any costs in connection with such indemnification arrangements;

therefore, there was no accrual of such amounts at March 31, 2023 or March 25, 2022.

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Net Income per Share

In connection with completion of the Company’s IPO on November 2, 2020 and immediately following the pricing of the IPO, 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 (the “Common Stock Conversion”).

Additional detailed discussion is included in Note 19, “Common Stock and Stock-Based Compensation.”

Prior to the Company’s IPO, Class A shares were entitled to a priority dividend of 8 %.

After Class A shareholders received an annualized return on capital of 8 %, distributions of the remaining value were split between Class A and Class L shareholders based on the achievement of certain return targets.

In determining income attributable to the Class A stockholders for computing basic and diluted earnings per share for the fiscal year ended March 27, 2020, the Company did not allocate income to the shares of Class L common stock 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 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 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.

Fiscal Year Ended

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The computed net income per share for the fiscal years ended March 31, 2023, March 25, 2022 and March 26, 2021 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:

The following represents contingently issuable shares under the employee stock purchase plan (“ESPP”) and restricted stock units (“RSUs”) excluded from the computation of net income per share, as such securities would have an antidilutive effect on net income per share:

Fiscal Year Ended

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2022 March 26,

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

Performance stock units 996,372 218,678 —

Employee stock purchase plan — 2,914 —

Shares related to Common Stock Conversion — 92,438,187 —

RSUs 17,586 — 273

ESPP — 3,622 —

Total 17,586 3,622 273

Common Stock and Stock-Based Compensation

On November 2, 2020, the Company closed its IPO of 28,750,000 shares of its common stock at an offering price of $ 14.00 per share, of which 25,000,000 shares were sold by the Company and 3,750,000 shares were sold by selling stockholders, resulting in net proceeds to the Company of approximately $ 321,425 , after deducting $ 20,125 of underwriting discounts and $ 8,450 of estimated offering costs.

The Company’s common stock is now listed on the Nasdaq Global Select Market under the ticker symbol “ALGM.”

Prior to the IPO, the Company had two classes of common stock, Class A common stock and Class L common stock.

The Company’s Board of Directors authorized 12,500,000 shares of Class A common stock at par value of $ 0.01 , out of which the Company issued 6,720,000 to Sanken in exchange for its previous common shares.

The previous single class of common stock was retired in full.

The Company sold 2,880,000 of newly issued shares of Class A common stock, representing a 28.8 % ownership interest, to OEP SKNA, L.P.

(the “OEP Investor”) for cash consideration of $ 291,000 .

The stock issuance proceeds were recorded net of $ 9,260 of related transaction costs.

The Company’s Board of Directors authorized 1,000,000 shares of Class L common stock at a par value of $ 0.01 .

Both Class A and Class L common stock were entitled to dividends, when, and if declared by the Board of Directors.

Holders of shares of Class A common stock were entitled to a priority dividend of 8 %.

After holders of shares of Class A common stock receive an annualized return on capital of 8 %, distributions of the remaining value were split between holders of shares of Class A common stock and Class L common stock based on the achievement of certain return targets.

Concurrent with the issuance of the Term Loan Facility on September 30, 2020 (as defined in Note 14, “Debt and Other Borrowings”), the Company paid a cash dividend in the aggregate amount of $ 400,000 to holders of the Company’s Class A common stock.

Each outstanding share of Class A common stock entitled the holder to one vote on each matter submitted to a vote of the stockholders of the Company, including the election of the Board of Directors.

Holders of Class L common stock were not entitled to vote.

In the event of voluntary or involuntary liquidation, dissolution or winding-up of the Company, any amounts available for distribution by the Company were to be paid to the holders of Class A common stock and Class L common stock, as if such distribution were a dividend paid, factoring in the priorities as described above.

Upon the earliest of (i) an IPO;

(ii) change of control;

(iii) the date OEP and its affiliates cease to own any shares of capital stock of the Company;

or (iv) at the election of the Board of Directors, any merger transaction involving the Company or its subsidiaries, each outstanding share of Class L common stock would convert into Class A common stock.

Also, in connection with the OEP transaction, the Company granted 400,000 unvested Class A shares and 597,400 of unvested Class L shares to certain Company employees.

The Class A shares vest to the grantees over a service period of 60 months.

However, they remain subject to the Company’s repurchase right at par value in the event that either (i) a change in control has not occurred or (ii) the Company has not consummated an IPO by the seventh anniversary of the OEP transaction.

As of March 27, 2020, the Company was not able to determine whether such a change in control or IPO was probable, and therefore no amount of stock-based compensation was recognized for the unvested shares of Class A common stock at that time.

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.

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(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 .

Class L unvested shares had no other vesting conditions.

If an IPO occurred, 25 % of the unvested awards would accelerate vesting if 25 % or more of the awards are unvested at the time of the IPO.

If a change in control occurs, 100 % of the then unvested awards would accelerate vesting.

Accordingly, based on the Company’s IPO closing on November 2, 2020, the Company accelerated the vesting of the 25 % unvested awards at that time.

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.

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.

Outstanding shares of Class A and Class L common stock were converted to common stock in the Common Stock Conversion at conversion rates of approximately 15.822 and 13.010 shares of common stock to each share of Class A and Class L common stock, respectively.

As part of the Common Stock Conversion, 2,066,468 and 1,766 shares of common stock were returned to the Company for tax payments made on behalf of holders of Class A common stock and Class L common stock, respectively, to withhold to cover tax transactions.

Outstanding loan amounts related to Class L common stock in the aggregate amount of $ 753 were extinguished on October 2, 2020.

The following table presents the respective number of shares of common stock and unvested restricted common stock issued in the Common Stock Conversion.

The number of shares of common stock and unvested restricted common stock issuable are based upon the vesting provisions of the outstanding shares and reflect the shares vested and unvested at the date of conversion.

Common Stock Shares of Unvested

Common Stock Total Shares of

Class A common stock 156,155,403 — 156,155,403

Class L common stock 7,816,614 459,749 8,276,363

The following represents issued and issuable weighted average share information underlying our outstanding RSUs, performance-based restricted stock units (“PSUs”) and participation in the ESPP for the respective periods:

Fiscal Year Ended

2023 March 25,

2022 March 26,

RSUs 1,039,547 1,066,406 308,811

PSUs 1,435,883 996,372 218,678

ESPP 15,220 — 2,914

Shares related to Common Stock Conversion — — 92,438,187

Total 2,490,650 2,062,778 92,968,590

Prior to the IPO, there were 638,298 shares of Class L common stock outstanding at a weighted average price per share of $ 11.99 .

As noted in the above table, as part of the Common Stock Conversion, the Class L common stock was converted to 7,816,614 shares of common stock and 459,749 of unvested restricted common stock at weighted average prices per share of $ 14.00 .

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 TRIP the opportunity to elect to receive RSUs under its 2020 Omnibus Incentive Compensation Plan in lieu of cash payouts under the LTCIP and/or TRIP, through the RSU Conversion Program.

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:

Stock-Based Compensation

The Company accounts for stock-based compensation through the measurement and recognition of compensation expense for share-based payment awards made to employees over the related requisite service period, including PSUs, RSUs and restricted shares (all part of our equity incentive plan).

Upon meeting the time-based vesting and, if applicable, any performance conditions, common shares of the Company (net of applicable tax withholding) are issued to the employee in exchange for each share-based unit.

RSUs granted to management generally have time-based vesting requirements with equal and annual graded vesting over approximately four years subsequent to the grant date, but also generally vest upon voluntary termination of employment by any employee who is “retirement eligible” as of his or her termination date.

In order to be retirement eligible, an employee must be at least 62 years old, has completed a minimum of five years of service with the Company, and has provided at least three months' prior written notice of termination of employment.

All of our outstanding employee and director RSU awards are eligible for dividend equivalents regardless of vesting status.

The following table summarizes RSU activity for the fiscal year ended March 31, 2023:

Shares Weighted-Average Grant-Date Fair Value Weighted-Average Remaining Contractual Life

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Outstanding - March 31, 2023 2,251,224 $ 23.85 1.27 $ 108,036

Granted 1,344,717 26.00

Vested ( 622,508 ) 20.33

Canceled ( 246,358 ) 19.02

Outstanding - March 25, 2022 1,701,007 $ 20.50 1.27 $ 49,635

The weighted-average grant fair value per share for RSUs granted during the fiscal year ended March 25, 2022 was $ 26.00 , and the stock-based compensation expense related to non-vested awards not yet recorded at March 25, 2022 was $ 22,790 , which is expected to be recognized over a weighted-average of 1.27 years.

During the fiscal year ended March 25, 2022, 622,508 shares vested.

The Company also awards PSUs to its senior executive officers based on achievement of medium-term plans (“MTP”) approved in meetings of its Board of Directors for establishing target performances.

The weighted-average grant fair value per share for RSUs granted during the fiscal years ended March 31, 2023, March 25, 2022 and March 26, 2021 was $ 23.65 , $ 26.00 , $ 14.06 , respectively.

The stock-based compensation expense related to non-vested awards not yet recorded at March 31, 2023 was $ 37,490 , which is expected to be recognized over a weighted-average of 1.27 years.

The total fair value of RSUs vested was $ 29,732 , $ 12,650 and $ 2,241 the fiscal years ended March 31, 2023, March 25, 2022 and March 26, 2021, respectively.

The Company also awards PSUs to its senior executive officers based on achievement of metrics tied to financial plans approved in meetings of its Board of Directors for establishing target performances.

Each award reflects a target number of shares (“Target Shares”) that may be issued to the award recipient.

In fiscal year 2021, these awards are earned upon the completion of a three-year performance period ending March 31, 2023.

Whether units are earned at the end of the performance period will be determined based on the achievement of certain performance objectives over the performance period.

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”).

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.

In fiscal year 2021, these awards were earned upon the completion of a three-year performance period ended March 31, 2023.

Whether units are earned at the end of the performance period is determined based on the achievement of certain performance objectives over the performance period.

The performance objectives include achieving certain revenue targets and cumulative earnings before income taxes, depreciation and amortization (“EBITDA”) levels for the performance period, and also include a performance objective relating to relative total shareholder return (“TSR”).

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

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

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

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Weighted-average fair value per share $ 30.69

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:

The following table summarizes PSU activity for the fiscal year ended March 31, 2023:

Shares Weighted-Average Grant-Date Fair Value Weighted-Average Remaining Contractual Life

2 unchanged sentences

Granted 2,805,698 $ 24.64

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

Granted 465,732 27.08

Vested ( 855,916 ) $ 28.01

Canceled ( 552,689 ) $ 21.45

1 unchanged sentence

PSUs are included at 10 % - 200 % of target goals.

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 31, 2023 was $ 19,282 , which is expected to be recognized over a weighted average of 2.64 years.

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

The following table summarizes unvested restricted common stock activity for the fiscal years ended March 25, 2022 and March 26, 2021:

The following table summarizes unvested restricted common stock activity for the fiscal year ended March 31, 2023:

Shares Weighted-Average Grant-Date Fair Value Weighted-Average Remaining Contractual Life Aggregate

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

Common stock conversion 459,749 14.00

Vested ( 117,096 ) $ 14.00

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Outstanding - March 31, 2023 21,804 $ 14.00 0.16 $ 1,046

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.

The ESPP, which is maintained by the Company, allows employees to purchase the Company’s common stock at 85 % of the lesser of the stock price at the beginning or end of the offering period.

Each offering period is six months in length.

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

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

2,685,528 shares of the Company’s common stock are available for future issuance under the ESPP, which includes (a) 832,400 shares of common stock initially available for issuance under the ESPP, and (b) an additional 1,852,958 shares of common stock that may become issuable under the ESPP pursuant to its terms.

The ESPP allows employees to purchase the Company’s common stock at 85 % of the lesser of the stock price at the beginning or end of the offering period.

Each offering period is six months .

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

1 unchanged sentence

2023 March 25,

Performance term 0.50 years 0.50 years

2022 March 26,

Expected performance term 0.50 years 0.50 years 0.50 years

Volatility 44.99 % 48.10 % 55.02 %

2 unchanged sentences

Weighted-average fair value per share $ 6.83 $ 8.25 $ 7.77

ALLEGRO MICROSYSTEMS, INC.

Notes to Consolidated Financial Statements – (continued)

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

As of March 31, 2023, the total unrecognized compensation cost related to the ESPP was $ 252 , and this amount is expected to be recognized over 0.25 years.

For the fiscal year ended March 31, 2023, the Company recognized stock-based compensation charges of $ 33,708 , $ 26,890 , $ 146 , $ 921 and $ 133 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”).

In addition, the Company recognized stock-based compensation charges of $ 1,169 for i ts Class L common stock for the fiscal year ended March 26, 2021 and stock-based compensation charges of $ 5,729 , $ 1,269 , $ 174 and $ 247 for it s RSUs, PSUs, restricted common stock and ESPP, respectively, for the fiscal year ended March 26, 2021.

All stock-based compensation charges in fiscal 2020 related to expensing of the Company’s Class L common stock.

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations:

6 unchanged sentences

Total stock-based compensation $ 61,798 $ 33,548 $ 49,870

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:

28 unchanged sentences

statutory rate $ 44,383 $ 29,557 $ ( 305 )

162(m) limitation 3,988 — —

Stock based compensation ( 230 ) ( 13,303 ) —

CARES carryback claim and amended returns ( 2,031 ) ( 3,834 ) —

PSL Divestiture — ( 2,009 ) —

Research and development tax credit ( 2,823 ) ( 2,162 ) ( 1,841 )

FDII ( 9,066 ) — ( 1,188 )

BEAT — — 1,694

Transaction costs 307 1,498 —

Foreign tax rate ( 157 ) 1,279 283

State income taxes, net of federal benefit 1,027 2,370 356

Deferred tax remeasurement — 309 —

FDII ( 25,391 ) ( 9,066 ) —

Research and development tax credit ( 3,641 ) ( 2,823 ) ( 2,162 )

Stock-based compensation ( 1,025 ) ( 230 ) ( 13,303 )

Cumulative provision-to-return ( 914 ) ( 590 ) ( 862 )

Gain on contingent purchase price reduction ( 588 ) ( 420 ) ( 525 )

Subpart F income, net of credits ( 307 ) 283 43

Provision for uncertain tax positions ( 81 ) ( 17 ) 26

Provision for IRS audit settlement — — 5,491

Gain on contingent purchase price reduction ( 420 ) ( 525 ) —

Cumulative provision-to-return ( 590 ) ( 862 ) ( 186 )

162(m) limitation 8,931 3,988 —

Foreign tax rate 954 ( 157 ) 1,279

Deferred tax remeasurement 651 — 309

Transaction costs 338 307 1,498

CARES carryback claim and amended returns — ( 2,031 ) ( 3,834 )

PSL Divestiture — — ( 2,009 )

Other ( 485 ) 20 ( 63 )

Total income tax provision $ 23,852 $ 21,191 $ ( 19,552 )

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.

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.

Since AMTC’s operations have ceased, the Company may receive future liquidating distributions;

however, such distributions are estimated to result in no material incremental U.S.

or local tax.

Therefore, no deferred tax liability has been established with respect to outside basis difference in its foreign subsidiaries.

ALLEGRO MICROSYSTEMS, INC.

5 unchanged sentences

Deferred income tax assets:

Net operating loss $ 2,106 $ 11,054

Capitalized research and development costs $ 30,582 $ —

Bonuses, commissions and other compensation 11,506 11,137

Tax credits 6,454 8,698

Inventory and sales related 8,730 5,892

Stock-based compensation 3,842 2,837

Tax credits 3,220 6,454

Right-of-use liability 2,479 2,221

Other accruals and reserves 2,803 2,067

Net operating loss carryforward 361 2,106

Gross deferred income tax assets 63,523 32,714

2 unchanged sentences

Deferred income tax liabilities:

Fixed assets and intangibles ( 4,720 ) ( 4,366 )

Equity method and other investments ( 4,172 ) ( 2,801 )

Fixed assets and intangibles ( 3,020 ) ( 4,720 )

Right-of-use asset ( 2,391 ) ( 2,156 )

1 unchanged sentence

Net deferred income tax assets $ 50,359 $ 17,967

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 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.

The Company established a valuation allowance for state research credits and state net operating losses (“NOLs”) of $ 3,581 , which will begin to expire between fiscal year 2024 and 2037 and are not expected to be utilized by the Company prior to expiration.

Pursuant to the 2017 Tax Cuts and Jobs Act (the “Jobs Act”), beginning in fiscal year 2023, U.S.

tax law now requires us to capitalize and amortize domestic and foreign research and development expenditures over five and fifteen years, respectively (“174 Capitalization”).

The impact of 174 Capitalization to our deferred tax assets is $ 30,582 .

The Company’s intent is to permanently reinvest and use its existing foreign cash to fund its subsidiaries’ working capital needs, short-term and long-term capital projects, and to make investments and acquisitions.

Therefore, no deferred tax liability has been established with respect to outside basis difference in its foreign subsidiaries.

The Company filed carryback claims allowable under the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”) to utilize NOLs and carryover credits generated during fiscal year 2021.

As of March 31, 2023, the Company has an outstanding receivable of $ 13,133 related to these filings that are classified as a long-term tax receivable.

Uncertain Tax Positions

2 unchanged sentences

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 recognized.

These amounts are recorded as a long-term liability, as the Company does not anticipate payment within one year.

ALLEGRO MICROSYSTEMS, INC.

9 unchanged sentences

Balance at end of period $ 2,408 $ 2,459 $ 2,554

The Company classifies uncertain tax positions as a current liability, or as a reduction of the amount of a net operating loss carryforward or amount refundable, to the extent that the Company anticipates payment or receipt of cash for income taxes within one year.

Likewise, the amount is classified as a long-term liability if the Company anticipates payment or receipt of cash for income taxes during a period beyond one year.

The Company believes that all tax positions are adequately provided for;

5 unchanged sentences

Examinations by Tax Authorities

The Company, through its subsidiaries, is subject to examination by taxing authorities in the United States, the Philippines, United Kingdom, Thailand, and the states in which the Company does business.

The statute of limitations remains open for U.S.

federal tax returns for 2017 and the following years.

Audit activities related to the U.S.

federal tax returns for 2016 and 2017 concluded during fiscal year 2020 resulting in a settlement related to transfer pricing for fiscal years 2016, 2017 and 2018 in the amount of $ 9,482 including interest.

jurisdictions, the years open to audit represent the years still open under the respective statute of limitations.

With respect to the major jurisdictions outside the U.S., the subsidiaries are no longer subject to income tax audits for years before 2014.

Capital Contribution

In connection with the settlement noted above, Sanken agreed to make a one-time capital contribution in the amount of $ 9,500 to neutralize the cash impact to the Company.

All ownership parties have agreed that this contribution would not result in an incremental ownership percentage change or increase in shares by Sanken.

The Company and its subsidiaries are routinely subject to examination by taxing authorities in the United States and the foreign jurisdictions in which it does business.

Currently, the Internal Revenue Service is auditing the CARES Act carryback claim for fiscal year 2016 through 2021, and the Bureau of Internal Revenue is auditing our Philippine subsidiary for tax year 2019.

and material foreign jurisdictions statutes of limitation remain open as of 2016.

Related Party Transactions

6 unchanged sentences

The Company sells products to and purchases in-process products from Sanken.

In addition, prior to March 28, 2020, the Company also sold products for Sanken.

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.

Other accounts receivable from Sanken totaled $ 104 and $ 198 as of March 25, 2022 and March 26, 2021, respectively.

During fiscal year 2020, the Company acted as a distributor of Sanken’s products.

Net sales of Sanken’s products by the Company to third parties totaled $ 35,421 during the fiscal year ended March 27, 2020 .

On March 28, 2020, the Company formally terminated its distribution agreement with Sanken to distribute Sanken’s products.

Purchases of various products from Sanken totaled $ 31,917 for the fiscal year ended March 27, 2020 .

Accounts payable to Sanken totaled $ 4,494 as of March 27, 2020 .

As of March 31, 2023, Sanken held approximately 51.4 % of the Company’s outstanding common stock.

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”)

The Company, through its former wholly owned subsidiary, 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 $ 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

I n March 2019, the Company entered into a short-term bridge loan to Sanken in the amount of $ 30,000 .

The loan bore interest of 2.52 % and was repaid in April 2019.

Inte rest income related to the loan to Sanken was $ 55 in the fiscal year ended March 27, 2020 .

Notes Payable and Line-of credit from Sanken

The Company, through PSL, its former wholly owned subsidiary, had related party debt owed to Sanken that includes three notes payable in the aggregate amount of $ 17,700 and two lines-of-credit agreements in the aggregate amount of $ 25,000 at March 27, 2020 .

The interest rates on the related party debt were reset at the beginning of each calendar quarter to LIBOR on the last trading day of the previous month, plus a 1.0 % spread.

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 .

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.

Transactions involving PSL

In accordance with the PSL Divestiture, the Company had both intercompany accounts payable of $ 1,198 and accounts receivable of $ 3,368 that were previously eliminated in consolidation.

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, 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

On March 30, 2023, the Company entered into a termination of the distribution agreement with Sanken (the “Termination Agreement”).

The Termination Agreement formally terminated the distribution agreement dated as of July 5, 2007, by and between the Company and Sanken (the “Distribution Agreement”), effective March 31, 2023.

The Distribution Agreement provided Sanken the exclusive right to distribute the Company’s products in Japan.

In connection with the termination of the Distribution Agreement, and, as provided for in the Termination Agreement, the Company made a one-time payment of $ 5,000 to Sanken in exchange for the cancellation of Sanken’s exclusive distribution rights in Japan, which was recorded in selling, general and administrative expenses in the consolidated statements of operations.

Concurrent with the Termination Agreement, AML and Sanken also entered into a short-term, nonexclusive distribution agreement (the “Short-Term Distribution Agreement”) and a consulting agreement (the “Consulting Agreement”), each of which were effective April 1, 2023.

In addition, the Company allowed a one-time sales return from Sanken of resalable inventory of $ 4,200 .

The Short-Term Distribution Agreement provides for the management and sale of Company product inventory for a period of twenty-four months .

Under the terms of the Consulting Agreement, Sanken agreed to continue to provide transition

ALLEGRO MICROSYSTEMS, INC.

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

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.

In June 2018, the Company, PSL and Sanken entered into an amendment to the Discrete Technology Development Agreement pursuant to which the parties agreed to the assignment of all rights and obligations of PSL under such agreement to the Company and to certain amendments to the terms of such agreement.

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).

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.

services for a period of six months to a strategic customer as orders for the customer are transitioned from Sanken to the Company, and the Company agreed to pay Sanken for providing these transition services.

Transactions involving Polar Semiconductor, LLC ( “ PSL ” )

The Company purchases in-process products from PSL, which is 70 % owned by Sanken and 30 % owned by the Company.

Purchases of various products from PSL totaled $ 58,056 and $ 55,297 for the fiscal years ended March 31, 2023 and March 25, 2022, 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 $ 4,682 and $ 5,222 as of March 31, 2023 and March 25, 2022, 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.

Effective January 26, 2023, the Company and PSL entered into a new Wafer Foundry Agreement (“WFA”) for the fabrication of wafers.

The WFA replaces the previous Wafer Foundry Agreement with PSL, dated April 12, 2013, which was due to expire on March 31, 2023.

The WFA has a three-year term, and auto renews for subsequent one-year terms, unless terminated by either party providing two years notice.

Pursuant to the WFA, the Company will provide a rolling annual forecast for three years , the first two years of which will be binding.

The Company plans to purchase the forecast volume of wafers;

however, if the Company fails to purchase the forecasted number of wafers for either of the first two years , it will pay a penalty for any shortfall for the given year.

The parties also agreed upon production lead-times, as well as wafer, alignment, and mask pricing for the first two years of the term.

Any changes to such pricing are subject to mutual agreement.

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 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.

On July 1, 2022, PSL borrowed an additional $ 7,500 under the same terms of the PSL Loan (the “Secondary PSL Loan” and, together with the Initial PSL Loan, the “PSL Promissory Notes”).

The loan funds were 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 31, 2023, the outstanding balance of the PSL Promissory Notes was $ 12,188 .

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.

Notes to Consolidated Financial Statements – (continued)

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

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.

The services contemplated by the TSA include human resources, legal and distribution support services.

The applicable service period for human resources and legal services is 12 months, and fees payable for such services are $ 50 per year, invoiced on a quarterly basis.

The applicable service period for distribution support services is six months with respect to services provided in North America and South America, and nine months with respect to services provided in Europe.

All distribution support services are to be provided on a cost plus 10 % basis.

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.

Unless the TSA otherwise provides, PSL may terminate a specific service prior to the end of the term by providing at least 60 days’ prior written notice.

The North America and South America portion of this agreement was terminated as of March 26, 2021.

Transactions involving Sanken Electric Europe Ltd.

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 none and $ 1,272 as of March 25, 2022 and March 26, 2021, respectively.

Sublease Agreement

In 2014, the Company, through one of its subsidiaries, entered into a sublease agreement with Sanken pursuant to which it subleases certain office building space in Japan from Sanken.

The sublease automatically renews on an annual basis unless either party provides notice to the other party otherwise and can be terminated by either party upon providing six months ’ notice.

The Company made aggregate payments of approximately $ 200 to Sanken under the sublease agreement during each of the fiscal years 2022, 2021 and 2020.

Consulting Agreement

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.

The Consulting Agreement provides for a fee payable to Mr.

Kazerounian on a monthly basis in exchange for his services (which fee was reduced from $ 30 per month to $ 19 per month in connection with Mr.

Kazerounian’s appointment to the board of directors in June 2018), as well as a grant of 12,000 shares of the Company’s Class L common stock and a signing bonus of $ 54 in connection with the execution of the Consulting Agreement.

The Consulting Agreement provides that if Mr.

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 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.

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.

During the year ended March 31, 2023, PSL made quarterly payments to AML totaling $ 3,014 , which included $ 202 of interest income.

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