What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2023-08-18 compared with 2022-08-22 · 144 added, 162 removed, 261 unchanged (54% of the section changed)

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Issuer Purchases of Equity Securities

From April 2005 through July 2021, our Board of Directors cumulatively authorized the repurchase of up to $1.8 billion for our common stock under our stock repurchase program, which expires in July 2025.

From April 2005 through April 2023, our Board of Directors cumulatively authorized the repurchase of up to $2.3 billion for our common stock under our stock repurchase program, which expires in July 2025.

As of the end of fiscal 2023, the remaining amount authorized for repurchase under our stock repurchase program was $893.9 million.

During fiscal 2022, there were no repurchases under our stock repurchase program.

During the three-month period ended June 24, 2023, repurchases under the stock repurchase program were as follows:

March 26, 2023 - April 22, 2023

April 23, 2023 - May 20, 2023

May 21, 2023 - June 24, 2023

Performance Graph

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Impact of COVID-19

Although many of these restrictions and other containment measures implemented by governmental authorities in response to the COVID-19 pandemic have since been lifted or scaled back, ongoing surges of COVID-19 and its variants have resulted in a variety of responses in the many geographic locations in which we do business, from no actions taken to and up to and including the re-imposition of lockdowns and containment measures designed to mitigate or reduce the rapid spread of COVID-19 and its variants.

The health and wellbeing of our workforce is our highest priority, and a large number of our workforce has been vaccinated.

Many of our employees that worked from home at the onset of COVID-19, or during subsequent lockdowns, have returned full-time or on a hybrid basis to our office environment.

For those employees that have returned to the office, we continue to adhere to return to work protocols, based on guidance from local and global health organizations and applicable laws and regulations.

To date, we have not incurred significant disruptions to our business or a materially negative impact on our consolidated results of operations and financial condition from the COVID-19 outbreak and continue to believe our business will not be severely impacted as steps continue to be taken globally to mitigate the spread and vaccinate large portions of the population.

However, if more infectious COVID-19 variants become resistant to the existing vaccines, we, our customer, and our suppliers could experience renewed and sustained business disruption.

We will continue to evaluate the impact to our business, consolidated results of operations, and financial condition and may take actions that we deem necessary or appropriate to respond to the ongoing pandemic.

Many of the restrictions and other containment measures implemented by governmental authorities in response to the COVID-19 pandemic have since been lifted or scaled back.

We did not incur significant disruptions to our business or a materially negative impact on our consolidated results of operations and financial condition from the COVID-19 pandemic and our business was not severely impacted.

We are a leading worldwide developer and fabless supplier of premium mixed signal semiconductor solutions changing the way humans engage with connected devices and data, engineering exceptional experiences throughout the home, at work, in the car and on the go.

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We recognize revenue when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to receive in exchange for those goods or services.

All of our revenue, except an inconsequential amount, is recognized at a point in time, either on shipment or delivery of the product, depending on customer terms and conditions.

Most of our revenue is recognized at a point in time, either on shipment or delivery of the product, depending on customer terms and conditions.

We also generate revenue from license-based arrangements.

We license the rights to certain of our intellectual properties to customers granting them the right to manufacture and sell licensed products.

For fiscal 2023, revenue from the IoT product applications market accounted for 70.0% of our net revenue, revenue from the PC product applications market accounted for 16.0% of our net revenue, and revenue from the mobile product applications market accounted for 14.0% of our net revenue.

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We use third-party wafer manufacturers to supply wafers and third-party packaging manufacturers to package our proprietary ASICs.

In certain cases, we rely on a single source or a limited number of suppliers to provide other key components

of our products.

In certain cases, we rely on a single source or a limited number of suppliers to provide other key components of our products.

Our cost of revenue includes all costs associated with the production of our products, including materials;

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See Note 16 Restructuring Activities to the consolidated financial statements contained elsewhere in this report.

Gain on sale of audio technology assets includes the sale of limited audio technology intangible assets.

See below under “Divestiture”.

Interest and other expense, net, primarily reflects interest expense on our Senior Notes, Term Loan Facility and revolving line of credit as well as the amortization of debt issuance costs and discount on our debt, partially offset by interest income earned on our cash, cash equivalents and short-term investments.

Gain from sale of equity investment relates to our sale of our equity method investment in OXi Technology Ltd.

See Note 1 Organization and Summary of Significant Accounting Policies to the consolidated financial statements contained elsewhere in this report.

DSP Group, Inc.

On August 30, 2021, we entered into an agreement and plan of merger with DSPG to acquire all of the equity of DSPG for $22.00 per share of common stock.

The transaction closed on December 2, 2021, for an aggregate purchase consideration of $543.3 million.

We financed the transaction through a combination of cash on hand and the Term Loan Facility.

The results of DSPG are included in our consolidated financial statements for the period from December 3, 2021 through June 25, 2022.

For further discussion of the DSPG acquisition, see Note 4 Acquisitions, Divestiture and Investment included in the consolidated financial statements contained elsewhere in this report.

On July 17, 2020, we entered into a definitive agreement to acquire all of the equity interests in DisplayLink Corporation, or DisplayLink, a leader in high-performance video compression technology.

The acquisition closed on July 31, 2020 for an aggregate purchase consideration of $444.0 million.

For further discussion of the DisplayLink acquisition, see Note 4 Acquisitions, Divestiture and Investment included in the consolidated financial statements contained elsewhere in this report.

On July 2, 2020, we entered into definitive agreements with Broadcom to acquire certain assets and assume certain liabilities of, and obtain non-exclusive licenses relating to, Broadcom’s existing Wi-Fi, Bluetooth and GPS/global navigation satellite system, or GNSS, products and business in the IoT market, or the Broadcom Business Acquisition, for an aggregate purchase consideration of $250.0 million in cash that closed on July 23, 2020.

We also entered into certain transition agreements with Broadcom for a period of three years.

For further discussion of the Broadcom Business Acquisition, see Note 4 Acquisitions, Divestiture and Investment included in the consolidated financial statements contained elsewhere in this report.

In December 2020, we completed the sale of limited audio technology intangible assets, received a fully-paid up perpetual license back from the buyer and, as an element of the transaction, licensed other audio technology intangible assets to the buyer under a fully-paid up perpetual license arrangement.

Under the asset purchase agreement and the intellectual property license agreement, we received $35.0 million in cash.

The gain on the sale of the audio technology assets was $34.2 million.

In December 2019, we entered into an asset purchase agreement with a third-party to sell the assets of our LCD, Touch Controller and Display Driver Integration, or TDDI, product line for LCD mobile displays.

We retained our automotive TDDI product line and our discrete touch and discrete display driver product lines supporting LCD and organic light-emitting diode, or OLED, for the mobile market.

The assets sold under the asset purchase agreement for cash consideration of $138.7 million and had a carrying value of approximately $33.6 million as of the closing date of the transaction in April 2020.

The gain on sale of this portion of a product line was $105.1 million.

In February 2023, we completed the acquisition of certain GPS developed technology intangible assets from Broadcom for an aggregate consideration of $30.0 million, which was paid in cash in the previous fiscal year.

On October 2022, we completed the acquisition of Emza Visual Sense, Ltd., or Emza, for total purchase consideration of $15.8 million.

Emza is a developer of ultra-low-power artificial intelligence visual sensing solutions.

Emza's technology extends our position in Edge AI and allows us to serve the personal computing market with a solution for human presence detection, or HPD.

For further discussion of the Emza acquisition, see Note 4 Acquisitions, Divestiture and Investment included in the consolidated financial statements contained elsewhere in this report.

Critical Accounting Policies and Estimates

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Revenue Recognition

Inventory Valuation

Business Combinations

Revenue Recognition

Our revenue is primarily generated from the sale of ASIC chips, either directly to a customer or to a distributor.

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All of our revenue, except an inconsequential amount, is recognized at a point in time, either on shipment or delivery of the product, depending on customer terms and conditions.

We generally warrant our products for a period of 12 months from the date of sale and estimate probable product warranty costs at the time we recognize revenue as the warranty is considered an assurance warranty and not a performance

Non-product revenue is recognized over the same period of time such performance obligations are satisfied.

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In the absence of a master sales agreement, we consider a customer's purchase order or our standard terms and conditions to be the contract with the customer.

Rights to our intellectual property, or IP, are either sold or licensed to customers.

Revenue recognition from the licensing of our IP is dependent on the nature and terms of each agreement.

We recognize revenue from the licensing of our IP upon delivery of the IP if there are no substantive future obligations to perform under the arrangement.

Sales-based or usage-based royalties from the license of IP are recognized at the later of the period the sale or usage occurs, or the satisfaction of the performance obligation to which some or all of the sales-based or usage-based royalties have been allocated.

Our pricing terms are negotiated independently, on a stand-alone basis.

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Sales commissions (which are recorded in the selling, general and administrative expense line item in the consolidated statements of operations) are expensed when the product is shipped because such commissions are owed after shipment.

Inventory Valuation

We state our inventories at the lower of cost or net realizable value.

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The valuation of intangible assets requires that we use valuation techniques such as the income approach that includes the use of a discounted cash flow model, which includes discounted cash flow scenarios and requires the following significant estimates:

future expected revenue, expenses, capital expenditures and other costs, and discount rates.

future expected revenue, expenses, capital expenditures and other costs, and

discount rates.

We estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

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Acquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred.

We estimate our income taxes in each of the jurisdictions in which we operate.

This process involves estimating our actual tax exposure together with assessing temporary differences resulting from the differing treatment of certain items for tax return and financial statement purposes.

These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets.

We recognize income taxes using an asset and liability approach.

This approach requires the recognition of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns.

The measurement of current and deferred taxes is based on the provisions of enacted tax law and the effects of future changes in tax laws or rates are not anticipated.

Taxes payable on Global Intangible Low-Taxed Income, or GILTI, inclusions in the U.S.

are recognized as a current period expense when incurred.

Evaluating the need for a valuation allowance for deferred tax assets requires judgment and analysis of all positive and negative evidence available, including recent earnings history and taxable income in recent years, reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies to determine whether all or some portion of the deferred tax assets will not be realized.

Using available evidence and judgment, we establish a valuation allowance for deferred tax assets when it is determined that it is more likely than not that they will not be realized.

Valuation allowances have been provided primarily against state research and development credits and certain capital losses of foreign subsidiaries.

A change in the assessment of the realizability of deferred tax assets may materially impact our tax provision in the period in which a change of assessment occurs.

As a multinational corporation, we conduct our business in many countries and are subject to taxation in many jurisdictions.

The taxation of our business is subject to the application of various and sometimes conflicting tax laws and regulations as well as multinational tax conventions.

Our effective tax rate is highly dependent upon the geographic distribution of our worldwide earnings or losses, tax laws and regulations in various jurisdictions, tax incentives, the availability of tax credits and loss carryforwards, and the effectiveness of our tax planning strategies, which includes our estimates of the fair value of our intellectual property.

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty.

Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation, and the evolution of regulations and court rulings and tax audits.

There can be no assurance that we will accurately predict the outcome of audits, and the amounts ultimately paid on resolution of audits could be materially different than the amounts previously included in our income tax expense and therefore, could have a material impact on our tax provision, results of operations, and cash flows.

Consequently, taxing authorities may impose tax assessments or judgments against us that could materially impact our tax liability and/or our effective income tax rate.

We are subject to income tax audits by the respective tax authorities in the jurisdictions in which we operate.

We recognize the effect of income tax positions only if these positions are more likely than not to be sustained.

Recognized income tax positions are measured at the largest amount that is more than 50% likely to be realized.

Changes in recognition or measurement with respect to our uncertain tax positions are reflected in the period in which a change in judgment occurs.

We record interest and penalties related to unrecognized tax benefits in income tax expense.

The calculation of our tax liabilities involves the inherent uncertainty associated with complex tax laws.

We believe we have adequately provided for in our financial statements additional taxes that we estimate to be required as a result of such examinations.

While we believe that we have adequately provided for all tax positions, amounts asserted by tax authorities could be greater or less than our accrued position.

Any unpaid tax liabilities, including the interest and penalties, are released pursuant to a final settlement with tax authorities, completion of audit or expiration of various statutes of limitation.

The material jurisdictions in which we are subject to potential examination by tax authorities throughout the world include Japan, India, Hong Kong, Israel and the United States.

The recognition and measurement of income taxes payable or refundable, and deferred tax assets and liabilities require that we make certain estimates and judgments.

Changes to these estimates or judgments may have a material effect on our income tax provision in a future period.

Goodwill is the excess of the aggregate of the consideration transferred over the identifiable assets acquired and liabilities assumed in connection with business combinations.

Our reporting units are at the operating segment level.

Our goodwill is contained within two reporting units:

IoT, and Mobile/PC.

We perform our goodwill impairment analysis in the fourth quarter of each year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more frequent basis.

The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment, which occurs when the carrying value of a reporting unit exceeds its fair value.

Significant judgment is required in estimating the fair value of our reporting units to determine if the fair values of those units exceed their carrying values and an impairment to goodwill is required when a quantitative goodwill impairment test is performed.

The fair values of our reporting units are estimated using a combination of the income approach, which requires estimating the present value of expected future cash flows of a reporting unit, and the market approach, which uses various financial data and ratios of comparable companies to arrive at an estimated value for the reporting unit.

Significant estimates and assumptions used in the income approach include assessments of macroeconomic conditions, projected growth rates of our reporting units in the near and long-term, expectations of our ability to execute on our roadmap, and the discount rate applied to cash flows.

Significant estimates used in the market approach include the identification of comparable companies for each reporting unit, the determination of an appropriate control premium that a market participant would apply to a reporting unit, and the determination of appropriate multiples to apply to a reporting unit based on adjustments and consideration of specific attributes of that reporting unit.

Our quantitative assessment for the current year indicated that the fair value of our reporting units substantially exceeded their carrying value.

Trends and Uncertainties

Current Economic Conditions

The impact of rising rates over the course of the past 18 months has had a material impact on many sectors of the economy leading to broad-based workforce reductions, a slowing or deferral of investment in information technology spending, and increased concern of a global recession.

We believe the threat of global recession is the primary driver for the slowdown in orders from our customer base that we have experienced.

During fiscal 2023, we experienced a broad reduction in demand in most of our product applications as many customers and channel partners continue to consume their accumulation of inventories, combined with customer requests to delay orders.

Inflation in the costs of goods and services has not had a material impact on our results of operations, but rising inflation could increase our operating expenses and reduce our net income.

Further, rising interest rates have increased our borrowing costs on our variable rate Term Loan Facility, which will continue to drive an increase in interest costs in future accounting periods and potentially limit our borrowing capacity if a future acquisition opportunity requiring financing presents itself.

Results of Operations

The following sets forth certain of our consolidated statements of income data for fiscal 2022 and 2021 along with comparative information regarding the absolute and percentage changes in these amounts (in millions, except percentages):

The following sets forth certain of our consolidated statements of operations data for fiscal 2023 and 2022 along with comparative information regarding the absolute and percentage changes in these amounts (in millions, except percentages):

IoT product applications

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Restructuring costs

Gain on sale of audio technology assets

Operating income

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Restructuring costs

Gain on sale of audio technology assets

Operating income

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Fiscal 2023 Compared with Fiscal 2022

Net revenue was $1,739.7 million for fiscal 2022 compared with $1,339.6 million for fiscal 2021, an increase of $400.1 million, or 29.9%.

Net revenue was $1,355.1 million for fiscal 2023 compared with $1,739.7 for fiscal 2022, a decrease of $384.6 million, or 22.1%.

Of our fiscal 2023 net revenue, $946.3 million, or 69.8%, of net revenue was from the IoT product applications market, $217.3 million, or 16.0%, of net revenue was from the PC product applications market, and $191.5 million, or 14.2%, of net revenue was from the mobile product applications market.

The overall increase in net revenue for fiscal 2022 was attributable to an increase of $488.0 million, or 79.6%, in net revenue from IoT product applications partially offset by a decrease of $11.7 million, or 3.3%, in net revenue from PC product applications and a decrease of $76.2 million, or 20.5%, in net revenue from mobile product applications.

The increase in net revenue from IoT product applications was primarily driven by a 45% increase in the units sold as well as a 23.9% increase in average selling prices.

The overall decrease in net revenue for fiscal 2023 was due to demand and inventory corrections in our market areas resulting in a decrease in revenues in all our product applications.

Net revenue from IoT product applications decreased $154.6 million, or 14.0%, net revenue from PC product applications decreased $125.7 million, or 36.6%, and net revenue from mobile product applications decreased $104.3 million, or 35.3%.

The decrease in net revenue from IoT product applications was primarily driven by a 11.6% decrease in the units sold as well as a 2.7% decrease in average selling prices.

The decrease in net revenue from PC product applications was driven by a 38.3% decrease in the units sold, partially offset by a 2.7% increase in average selling prices.

The decrease in mobile product applications was driven by a 21.4% decrease in the units sold, partially offset by a 1.2% increase in average selling prices.

The decrease in mobile product applications was driven by a 29.3% decrease in the units sold as well as a 8.4% decrease in average selling prices.

The overall decrease in our revenues in fiscal 2023 compared to fiscal 2022 is the result of a broad reduction in demand in most of our product applications as many customers and channel partners continued to consume their accumulation of inventories, combined with customer requests to delay orders and downward pressure on product pricing.

Gross Margin.

Gross margin as a percentage of net revenue was 52.8%, or $715.9 million, for fiscal 2023 compared with 54.2%, or $943.1 million, for fiscal 2022.

The 860 basis point increase in gross margin was primarily due to a favorable product mix, product cost reductions, and a decrease in inventory fair value adjustments of $13.8 million, partially offset by a $7.5 million increase in acquired intangibles amortization charged to cost of revenue largely related to the acquisition of DSPG.

The 140 basis point decrease in gross margin was primarily due to a decrease in units sold as well as an overall decline in average selling prices in all our product applications.

Because we sell our technology solutions in designs that are generally unique or specific to an OEM customer’s application, gross margin varies on a product-by-product basis, making our cumulative gross margin a blend of our product specific designs.

As a fabless manufacturer, our gross margin percentage is generally not materially impacted by our shipment volume.

We charge losses on inventory purchase obligations and write-downs to reduce the carrying value of obsolete, slow moving, and non-usable inventory to net realizable value (including warranty costs) to cost of revenue.

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Research and Development Expenses.

Research and development expenses increased $53.9 million, to $367.3 million, for fiscal 2022 compared with fiscal 2021.

The increase in research and development expenses primarily reflected a $24.3 million increase in share-based compensation primarily due to a substantial increase in our stock price during the first three quarters of fiscal 2022, which also increased the share-based compensation associated with our phantom stock plan.

Payroll and variable compensation costs increased by $22.6 million, which includes costs associated with research and development headcount from our DSPG acquisition, which closed on December 2, 2021.

Research and development expenses decreased $16.1 million, to $351.2 million, for fiscal 2023 compared with fiscal 2022.

The decrease in research and development expenses primarily reflected a $21.8 million decrease in variable compensation and a $17.0 million decrease in share-based compensation costs primarily related to our phantom stock awards.

The final vesting of our phantom stock awards occurred in the second quarter of fiscal 2023 and there are no phantom stock awards outstanding.

Total compensation costs associated with our phantom stock awards for fiscal 2023 and 2022 were $0.3 million and $27.2 million, respectively.

These decreases were partially offset by an increase in payroll related costs of $17.8 million as a result of increases in headcount and an increase of $3.9 million in new product development activities.

Selling, General, and Administrative Expenses.

Selling, general, and administrative expenses increased $6.6 million, to $175.0 million, for fiscal 2023 compared with fiscal 2022.

The increase in selling, general and administrative expenses primarily reflected a $14.7 million increase in share-based compensation primarily due to a substantial increase in our stock price during the first three quarters of fiscal 2022, which also increased the share-based compensation associated with our phantom stock plan.

Payroll and variable compensation costs increased by $11.1 million, which includes costs associated with selling, general and administrative headcount from our DSPG acquisition, which closed on December 2, 2021.

The increase in selling, general, and administrative expenses primarily reflected a net increase of $6.8 million in share-based compensation costs.

The net increase in share-based compensation was a combination of increases in share-based compensation from equity awards granted during fiscal 2023, partially offset by decreases in phantom stock and performance-based stock awards year over year.

Payroll related costs increased $4.1 million as a result of increases in headcount.

The increase in selling, general and administrative expense was partially offset by a decrease of $11.2 million in variable compensation costs.

Acquired Intangibles Amortization.

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These headcount-related costs included personnel in operations, research and development, and selling, general and administrative functions.

Restructuring costs incurred in fiscal 2022 and 2021 were $18.3 million and $7.4 million, respectively.

There were no restructuring costs incurred during fiscal 2023.

Restructuring costs incurred in fiscal 2022 were $18.3 million.

See Note 16 Restructuring Activities to the consolidated financial statements contained elsewhere in this report.

Gain on Sale of Audio Technology Assets.

Gain on sale of audio technology assets includes the sale of certain intangible assets related to our audio products.

See Note 1 Organization and Summary of Significant Accounting Policies to the consolidated financial statements contained elsewhere in this report.

Non-Operating Income.

Interest and Other Income, Net.

Interest and other income, net was $3.0 million for fiscal 2022 compared with $2.9 million for fiscal 2021.

Interest and other income, net increased $24.2 million, to $27.2 million for fiscal 2023 compared with fiscal 2022.

The increase is due to higher interest rates on our cash, cash equivalents and short-term investments.

Interest Expense.

Interest expense was $30.2 million and $29.5 million, in fiscal 2022 and 2021, respectively, which represents interest and amortization of debt issuance costs and discount on the $600 million Term Loan Facility issued in December 2021, interest and amortization of debt issuance costs on the $400.0 million principal amount of the Senior Notes issued in March 2021, as well as interest and amortization of debt issuance costs and discount on our $525 million principal amount convertible notes issued in June 2017 and settled in August 2021.

See Note 8 Debt to the consolidated financial statements contained elsewhere in this report.

Interest expense and amortization of debt issuance costs increased $25.3 million to $55.5 million during fiscal 2023 as compared to $30.2 million during fiscal 2022.

Interest expense on the $600 million incremental Term Loan Facility increased by $26.0 million during fiscal 2023 compared to the same period a year ago, as the interest rate on the Term Loan Facility increased by approximately 340 basis points period-over-period.

Additionally, the Term Loan Facility was funded in December 2021 and included approximately seven months of interest expense during fiscal 2022.

The interest expense on the Term Loan Facility during fiscal 2023 and 2022 was $36.2 million and $10.2 million, respectively.

Loss on redemption of convertible notes .

Loss on redemption of convertible notes represents the difference between fair value and the carrying value as of the redemption date of the convertible notes.

The loss on redemption of convertible notes for fiscal years 2022 and 2021 was $8.1 million and $0.3 million, respectively.

The loss on redemption of convertible notes for fiscal 2022 was $8.1 million.

Gain from sale and leaseback transaction .

Gain from sale and leaseback transaction represents the gain from the sale of our headquarters buildings and properties located at 1109-1251 McKay Drive and 1140-1150 Ringwood Court, San Jose, California in the third quarter of fiscal 2022.

Gain from sale and leaseback transaction represents the gain from the sale of our headquarters buildings and properties located San Jose, California in fiscal 2022.

The gain from the sale and leaseback transaction for fiscal 2022 was $5.4 million.

Provision for Income Taxes.

Our income tax provision was $64.6 million in fiscal 2022 and $31.4 million in fiscal 2021.

The increase in our income tax provision in fiscal 2022 was primarily due to an increase in foreign profits and associated taxes, offset by the increase in tax benefits associated with stock-based compensation deductions and research and development credits.

The provision for income taxes was $52.4 million and $64.6 million in fiscal 2023 and 2022, respectively, represented estimated federal, foreign, and state income taxes.

The effective tax rate for fiscal 2023 diverged from the combined U.S.

federal and state statutory tax rate primarily due to tax law changes becoming effective in our fiscal 2023, including non-creditable foreign withholding taxes resulting from the final foreign tax credit regulations published in January 2022 and the research and development capitalization rules increasing our GILTI, resulting from the U.S.

Tax Cuts and Jobs Act of 2017, and non-deductible officer compensation, partially offset by the benefit of foreign income taxed at lower rates, and research credits.

See “Note 14 Income Taxes”

to the consolidated financial statements contained elsewhere in this report for the table reconciling the provision for income taxes from the federal statutory rate for fiscal 2023, 2022 and 2021.

It is reasonably possible that the amount of liability for unrecognized tax benefits may change within the next 12 months;

an estimate of the range of possible changes could result in a decrease of $0.9 million to an increase of $6.9 million.

Fiscal 2022 Compared with Fiscal 2021.

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Liquidity and Capital Resources

Our cash and cash equivalents were $824.0 million as of the end of fiscal 2022 compared with $836.3 million as of the end of fiscal 2021, a decrease of $12.3 million.

This decrease reflected cash flows provided by operating activities of $462.7 million and $14.3 million of cash provided by financing activities, offset by $482.7 million of cash used in investing activities.

Our cash and cash equivalents were $924.7 million as of the end of fiscal 2023 compared with $824.0 million as of the end of fiscal 2022, an increase of $100.7 million.

The increase primarily reflected cash flows provided by operating activities of $331.5 million, offset by $221.3 million of cash used by financing activities.

We consider almost all earnings of our foreign subsidiaries as not indefinitely reinvested overseas and have made appropriate provisions for income or withholding taxes, that may result from a future repatriation of those earnings.

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Cash Flows from Operating Activities.

amortization of $123.5 million, share-based compensation costs of $100.8 million, depreciation and amortization of $24.0 million, as well as other non-cash adjustments of $24.1 million, and a net change in operating assets and liabilities of $19.0 million.

For fiscal 2023, the $331.5 million in net cash provided by operating activities was primarily attributable to net income of $73.6 million plus adjustments for non-cash charges, including acquired intangibles amortization of $130.4 million, share-based compensation costs of $122.0 million, depreciation and amortization of $27.4 million, as well as other non-cash adjustments of $1.5 million, and a net change in operating assets and liabilities of $23.4 million.

The net change in operating assets and liabilities related primarily to a $161.3 million decrease in accounts receivable primarily related to a decrease in sales, a decrease of $24.6 million in inventories as we continued our efforts to control inventory spend while turning over the inventories we accumulated during the first half of fiscal 2023, a decrease of $95.6 million in accounts payable due to timing of payments and a decrease of $45.4 in accrued compensation primarily related to decreases in our annual bonus accrual.

Our days sales outstanding was 65 days in fiscal 2023 as compared to 61 days in fiscal 2022.

Our inventory turns decreased to three times in fiscal 2023 from four times in fiscal 2022.

For fiscal 2022, the $462.7 million in net cash provided by operating activities was primarily attributable to net income of $257.5 million plus adjustments for non-cash charges, including acquired intangibles amortization of $123.5 million, share-based compensation costs of $100.8 million, depreciation and amortization of $24.0 million, as well as other non-cash adjustments of $24.2 million, and a net change in operating assets and liabilities of $18.9 million.

The net change in operating assets and liabilities related primarily to an $81.1 million increase in accounts receivable, an increase of $54.2 million in inventories, an increase of $23.2 million in accounts payable, an increase of $48.6 million in income taxes payable and an increase of $17.4 million in other accrued liabilities.

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Our inventory turns decreased to four times in fiscal 2022 from seven times from fiscal 2021.

For fiscal 2021, the $319.2 million in net cash provided by operating activities was primarily attributable to net income of $79.6 million plus adjustments for non-cash charges, including acquired intangibles amortization of $110.1 million, share-based compensation costs of $66.1 million, depreciation and amortization of $21.6 million, and a reduction of $34.2 million for gain on sale of audio technology assets, as well as other non-cash adjustments of $30.4 million, and a net change in operating assets and liabilities of $45.6 million.

The net change in operating assets and liabilities related primarily to a $53.1 million decrease in inventories, a $32.2 million increase in accounts payable, and a $14.9 million increase in accrued compensation;

partially offset by a $25.9 million increase in accounts receivable, a $17.2 million decrease in other accrued liabilities, and a $9.4 million increase in prepaid expenses and other current assets.

Cash Flows from Investing Activities.

Net cash used in investing activities for fiscal 2022 was $482.7 million and net cash provided by investing activities in 2021 was $522.6 million.

Net cash used in investing activities for fiscal 2022 consisted primarily of $501.1 million used for the acquisition of businesses, net of cash and cash equivalents acquired, and $31.1 million used for the purchases of property and equipment;

Net cash used in investing activities for fiscal 2023 was $6.0 million and consisted primarily of $15.5 million used for the acquisition of businesses, net of cash and cash equivalents acquired, and $34.2 million used for the purchases of property and equipment;

partially offset by $43.6 in proceeds from maturities and sales of our short-term investments.

Net cash used in investing activities for fiscal 2022 was $482.7 million and consisted primarily of $501.1 million used for the acquisition of businesses, net of cash and cash equivalents acquired, and $31.1 million used for the purchases of property and equipment;

partially offset by proceeds from sale and leaseback transaction of $55.9 million and $24.4 million in proceeds from sales of investments.

Net cash used in investing activities for fiscal 2021 consisted primarily of $626.5 million used for the acquisition of businesses, net of cash and cash equivalents acquired, and $21.1 million used for the purchases of capital assets;

partially offset by $95.8 million in proceeds from sales of investments and $34.2 million in proceeds from sale of audio technology assets.

Net cash provided by investing activities for fiscal 2020 consisted primarily of $138.7 million of proceeds from the sale of assets, partially offset by $16.3 million used for the purchases of capital assets.

Cash Flows from Financing Activities.

Net cash provided by financing activities for fiscal 2022 was $14.3 million and for fiscal 2021 was $274.1 million.

Our net cash provided by financing activities for fiscal 2022 was primarily attributable to $600.0 million in proceeds from issuance of debt and $15.2 million in proceeds from issuance of shares, partially offset by $3.0 million of payment on debt, $67.3 million used for payroll taxes for restricted stock units, or RSUs, market stock units, or MSUs, and performance stock units, or PSUs, and $505.6 million used for payment for redemption of convertible notes.

Our net cash provided by financing activities for fiscal 2021 was primarily attributable to $400.0 million in proceeds from issuance of debt and $27.8 million in proceeds from issuance of shares, partially offset by $100.0 million of payment on the line-of-credit borrowings, $28.2 million used for payroll taxes for restricted stock units, or RSUs, market stock units, or MSUs, and performance stock units, or PSUs, and $19.4 million used for payment for redemption of convertible notes.

Our net cash provided by financing activities for fiscal 2020 was primarily attributable to $100.0 million proceeds from borrowing under the line-of-credit and $34.5 million of proceeds from issuance of shares, partially offset by $30.2 million used to repurchase shares of our common stock in the open market and $9.7 million used for payroll taxes for RSUs, MSUs and PSUs.

Net cash used in financing activities for fiscal 2023 was $221.3 million and was primarily attributable to $183.5 million in repurchases of our common stock, $6.0 in debt repayments and $54.5 million used for payroll taxes for restricted stock units, or RSUs, market stock units, or MSUs, and performance stock units, or PSUs, partially offset by $17.6 million in proceeds from issuance of shares.

Our net cash provided by financing activities for fiscal 2022 was $14.3 million and was primarily attributable to $600.0 million in proceeds from issuance of debt and $15.2 million in proceeds from issuance of shares, partially offset by $3.0 million of payment on debt, $67.3 million used for payroll taxes for restricted stock units, or RSUs, market stock units, or MSUs, and performance stock units, or PSUs, and $505.6 million used for payment for redemption of convertible notes.

For discussion related to the statement of cash flows for fiscal 2021, please refer to “Part II, Item 7.

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Common stock purchased under this program is held as treasury stock.

From April 2005 through the end of fiscal 2022, we purchased 31,749,195 shares of our common stock in the open market for an aggregate cost of $1.2 billion.

As of the end of fiscal 2022, we had $577.4 million, respectively, remaining under our common stock repurchase program.

From April 2005 through the end of fiscal 2023, we purchased, net of issuances for settlement of our convertible notes, 30,116,439 shares of our common stock in the open market for an aggregate cost of $878.0 million.

As of the end of fiscal 2023, the remaining available authorization under our common stock repurchase program was $893.9 million.

Senior Notes.

On March 11, 2021, we completed an offering of $400.0 million aggregate principal amount of 4.0% senior notes due 2029, or the Senior Notes, in a private offering.

The Senior Notes were issued pursuant to an Indenture, dated as of March 11, 2021, or the Indenture, by and among our company, the guarantors named therein and Wells Fargo Bank, National Association, as trustee.

The Indenture provides that the Senior Notes will bear interest at a rate of 4.000% per annum, payable in cash semi-annually in arrears on December 15 and June 15 of each year, commencing on June 15, 2021.

The Senior Notes will mature on June 15, 2029 and are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our current and future domestic restricted subsidiaries that guarantee our obligations under our senior secured credit facilities.

Prior to June 15, 2024, we may redeem the Senior Notes, in whole or in part, at a redemption price of 100% of the principal amount thereof, plus a make-whole premium set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

We may redeem some or all of the Senior Notes on or after June 15, 2024 at the redemption prices specified below, plus accrued and unpaid interest, if any, to, but excluding, the redemption date:

2026 and thereafter

In addition, at any time prior to June 15, 2024, we may redeem up to 40% of the aggregate principal amount of the Senior Notes at a redemption price equal to 104% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date with the net cash proceeds from one or more equity offerings by us.

The Senior Notes are the general unsecured obligations of our company.

The Senior Note guarantees are the senior unsecured obligations of each guarantor.

Under certain circumstances, the guarantors may be released from their Senior Note guarantees without consent of the holders of Senior Notes.

Under the terms of the Indenture, the Senior Notes rank equally in right of payment with all of our and the guarantors’

existing and future senior indebtedness, and rank contractually senior in right of payment to our and the guarantors’

future indebtedness and other obligations that are, by their terms, expressly subordinated in right of payment to the Senior Notes.

The Senior Notes are effectively subordinated to our and the guarantors’

existing and future secured indebtedness, including secured indebtedness under our senior secured credit facilities, to the extent of the value of the assets securing such indebtedness.

The Senior Notes and guarantees are structurally subordinated to all existing and future indebtedness and liabilities (including trade payables) of our subsidiaries that do not guarantee the Senior Notes.

The Indenture contains covenants that, subject to exceptions and qualifications, among other things, limit our ability and the ability of our Restricted Subsidiaries (as defined in the Indenture) to (i) incur additional indebtedness and guarantee indebtedness;

(ii) pay dividends or make other distributions or repurchase or redeem our company’s or any parent’s capital stock;

(iii) prepay, redeem or repurchase certain indebtedness;

(iv) issue certain preferred stock or similar equity securities;

(v) make loans and investments;

(vi) dispose of assets;

(vii) incur liens;

(viii) enter into transactions with affiliates;

(ix) enter into agreements restricting its subsidiaries’

ability to pay dividends;

and (x) consolidate, merge or sell all or substantially all of its assets.

The Indenture contains customary events of default including, without limitation, failure to make required payments, failure to comply with certain agreements or covenants, cross-acceleration to certain other indebtedness in excess of specified amounts, certain events of bankruptcy and insolvency, and failure to pay certain judgments.

An event of default under the Indenture will allow either the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Senior Notes to accelerate, or in certain cases, will automatically cause the acceleration of, the maturity of the principal, and accrued and unpaid interest, if any, on all outstanding Senior Notes.

Revolving Credit Facility.

On March 11, 2021, we entered into a Second Amended and Restated Credit Agreement, or the Credit Agreement, with the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent to, among other changes, extend the maturity date of our senior secured revolving credit facility, to five years from the closing date of the amendment, increase the facility size from $200.0 million to $250.0 million, and replace the requirement to maintain a total debt to Consolidated EBITDA ratio (as defined in the Credit Agreement) of not more than 4.75 to 1.00 with a requirement to maintain a net total debt to Consolidated EBITDA ratio of not more than 3.75 to 1.00 provided that for the four fiscal quarters ending after the date of a material acquisition, such maximum leverage ratio shall be adjusted to 4.25 to 1.00, and thereafter 3.75 to 1.00, provided further, that such deemed increase pursuant to the foregoing shall not apply to more than two material acquisitions consummated during the term of the Credit Agreement.

The Senior Notes requires bi-annual interest only payments.

In fiscal 2023, we paid interest expense of $16.0 million on the Senior Notes.

Bank Credit Facility.

On March 16, 2023, we entered into the Second Amendment to our Credit Agreement, dated March 11, 2021.

The Second Amendment replaces the LIBOR-based interest rate applicable to borrowings under the Credit Agreement with SOFR-based interest rate .

On July 28, 2023, we entered into the Third Amendment to our Credit Agreement, which provides that the consolidated interest coverage ratio financial covenant will only apply if, as of the last day of any fiscal quarter, our aggregate cash and cash equivalents are less than $450 million.

The Credit Agreement provides for a revolving credit facility in a principal amount of up to $250 million, which includes a $20 million sublimit for letters of credit and a $25 million sublimit for swingline loans.

Under the terms of the Credit Agreement, we may, subject to the satisfaction of certain conditions, request increases in the revolving credit facility commitments in an aggregate principal amount of up to $150 million to the extent existing or new lenders agree to provide such increased or additional commitments, as applicable.

Future proceeds under the revolving credit facility are available for

working capital and general corporate purposes.

In March 2021 we used a portion of the proceeds from the Senior Notes described above to repay the $100.0 million outstanding borrowings on this revolving credit facility.

As of the end of fiscal 2022, there was no balance outstanding under the revolving credit facility.

Borrowings under the revolving credit facility are required to be repaid in full by March 11, 2026.

Debt issuance costs relating to the revolving credit facility of $1.6 million, included in non-current other assets on our consolidated balance sheet, are being amortized over 60 months.

Our obligations under the Credit Agreement are guaranteed by the material domestic subsidiaries of our company, subject to certain exceptions, who collectively with our company are referred to as the Credit Parties.

The obligations of the Credit Parties under the Credit Agreement and the other loan documents delivered in connection therewith are secured by a first priority security interest in substantially all of the existing and future personal property of the Credit Parties, including, without limitation, 65% of the voting capital stock and 100% of the non-voting capital stock of certain of the Credit Parties’

direct foreign subsidiaries, subject to certain exceptions.

The revolving credit facility bears interest at our election of a Base Rate plus an Applicable Margin or LIBOR plus an Applicable Margin.

Swingline loans bear interest at a Base Rate plus an Applicable Margin.

The Base Rate is a floating rate that is the greater of the Prime Rate, the Federal Funds Rate plus 50 basis points, or LIBOR plus 100 basis points.

The Applicable Margin is based on a sliding scale that ranges from 0.25 to 100 basis points for Base Rate loans and 100 basis points to 175 basis points for LIBOR loans.

We are required to pay a commitment fee on any unused commitments under the Credit Agreement which is determined on a leverage-based sliding scale ranging from 0.175% to 0.25% per annum.

Interest and fees are payable on a quarterly basis.

The LIBOR index is expected to be discontinued at the end of June 2023.

Under our credit facility, when the LIBOR index is discontinued, we will switch to a comparable or successor rate as selected by us and the administrative agent, which may include the Secured Overnight Financing Rate, or SOFR.

Under the Credit Agreement, there are various restrictive covenants, including two financial covenants that limit the consolidated total leverage ratio, or leverage ratio, the consolidated interest coverage ratio, or interest coverage ratio, a restriction that permits accounts receivable financings provided that the aggregate unpaid amount of permitted accounts receivable financings are no more than the greater of $100 million and 50% of the amount of all accounts receivable of the company and specified subsidiaries, and other specific items.

The leverage ratio is the ratio of debt as of the measurement date to Consolidated EBITDA, for the four consecutive quarters ending with the quarter of measurement.

The current leverage ratio shall not exceed 3.75 to 1.00 provided that for the four fiscal quarters ending after the date of a material acquisition, such maximum leverage ratio shall be adjusted to 4.25 to 1.00, and thereafter 3.75 to 1.0.

The interest coverage ratio is Consolidated EBITDA to interest expense for the four consecutive quarters ending with the quarter of measurement.

The interest coverage ratio must not be less than 3.50 to 1.0 during the term of the Credit Agreement.

As of the end of fiscal 2022, we remain in compliance with the restrictive covenants.

Future proceeds under the revolving credit facility are available for working capital and general corporate purposes.

As of June 2023, there was no balance outstanding under the revolving credit facility.

Term Loan Facility .

In December 2021, we entered into that certain First Amendment and Lender Joinder Agreement to the Credit Agreement, to, among other things, establish a new $600.0 million incremental term loan facility, or the Term Loan Facility.

The Term Loan Facility was advanced by certain existing and new lenders under the Credit Agreement to finance our DSPG acquisition and general corporate purposes.

The Term Loan Facility was advanced under the Credit Agreement to finance our DSPG acquisition.

The Term Loan Facility matures on December 2, 2028.

Principal on the Term Loan Facility is payable in equal quarterly installments on the last day of each March, June, September and December of each year, beginning December 31, 2021, at a rate of 1.00% per annum.

Borrowings under the Term Loan Facility will accrue interest at the London Interbank Offered Rate, or LIBOR, plus 2.25% or at the base rate plus 1.50%, subject to a 25 basis point step-down based on total gross leverage, and subject to a LIBOR floor of 50 basis points.

The base rate is the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the Wells Fargo Bank, National Association prime rate and (iii) the one-month LIBOR plus 1.00%.

The Term Loan Facility contains customary representations and warranties, affirmative and negative covenants and events of default, in each case consistent with the Credit Agreement.

The Term Loan Facility does not contain any financial covenant.

The Term Loan Facility is subject to a 1.00% prepayment premium in the event all or any portion of the Term Loan Facility is prepaid within the first 6 months in connection with a repricing transaction only.

The Term Loan Facility is subject to customary mandatory prepayments, including, commencing June 30, 2023, an excess cash flow sweep, subject to customary step-downs and thresholds.

For the year-ended June 2023, we repaid $6.0 million of the principal outstanding on the Term Loan Facility.

See “Note 8.

in the Notes to the Condensed Consolidated Financial Statements for additional information on our outstanding debt obligations.

$100 Million Shelf Registration.

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Working Capital Needs.

We believe our existing cash and cash equivalents, anticipated cash flows from operating activities, and available credit under our revolving credit facility will be sufficient to meet our working capital and other cash requirements and our debt service obligations, for at least the next 12 months.

Our future capital requirements will depend on many factors, including our revenue, the effectiveness of vaccines on COVID-19 variants, including the deployment of those vaccines to help reduce the length, duration and severity of the COVID-19 pandemic, the timing and extent of spending to support product development efforts, costs associated with restructuring activities net of projected savings from those activities, costs related to protecting our intellectual property, the expansion of sales and marketing activities, timing of introduction of new products and enhancements to existing products, costs to ensure access to adequate manufacturing, costs of maintaining sufficient space for our workforce, the continuing market acceptance of our product solutions, our common stock repurchase program, and the amount and timing of our investments in, or acquisitions of, other technologies or companies.

We believe our existing cash and cash equivalents, anticipated cash flows from operating activities, anticipated cash flows from financing activities, and available credit under our revolving credit facility, will be sufficient to meet our working capital and other cash requirements, including small tuck-in acquisitions, and our debt service obligations for at least the next 12 months.

Our future capital requirements will depend on many factors, including our revenue, the timing and extent of spending to support product development efforts, costs associated with restructuring activities net of projected savings from those activities, costs related to protecting our intellectual property, the expansion of sales and marketing activities, timing of introduction of new products and enhancements to existing products, costs to ensure access to adequate manufacturing, costs of maintaining sufficient space for our workforce, the continuing market acceptance of our product solutions, our common stock repurchase program, and the amount and timing of our investments in, or acquisitions of, other technologies or companies.

Further equity or debt financing may not be available to us on acceptable terms or at all.

If sufficient funds are not available or are not available on acceptable terms, our ability to fund our future long-term working capital needs, take advantage of business opportunities or to respond to competitive pressures could be limited or severely constrained.

Based on our ability to access our cash and cash equivalents, our expected operating cash flows, and our other sources of cash, we do not currently anticipate the need to remit undistributed earnings of our foreign subsidiaries to meet our working capital and other cash requirements.

While we have accrued taxes on almost all of our undistributed earnings of our foreign subsidiaries, if we did remit such earnings, we may be required to pay certain state and foreign taxes to repatriate these funds, which would impact our operating cash flows.

The undistributed earnings of our foreign subsidiaries are not currently required to meet our United States working capital and other cash requirements, but should we repatriate a portion of these earnings, we may be required to pay certain previously accrued state and foreign taxes, which would impact our cash flows.

Contractual Obligations and Commercial Commitments.

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As of the end of fiscal 2023, we were unable to make a reasonably reliable estimate of when cash settlement with a taxing authority may occur in connection with our gross unrecognized tax benefit.

Off-Balance Sheet Arrangements

We do not have any transactions, arrangements, or other relationships with unconsolidated entities that are reasonably likely to materially affect our financial condition, revenues or expenses, results of operations, liquidity, or capital resources.

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or have other relationships that expose us to liability that is not reflected in our financial statements.

Recently Issued Accounting Pronouncements Not Yet Effective

In October 2021, the FASB issued ASU No.

2021-08 “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.”

This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.

2021-08 is effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2022, with early

application permitted.

This ASU is applicable to the Company's fiscal year beginning June 25, 2023, and the impact of its adoption on the Company’s consolidated financial statements will depend on the contract assets and liabilities acquired in business combinations after that date.

Recent Accounting Pronouncements

Please see "Note 1 - Organization and Summary of Significant Accounting Policies - Accounting Pronouncements Issued But Not Yet Adopted”

in our Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K.

QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK

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Our total net revenue for fiscal 2023 and 2022 was denominated in U.S.

Costs denominated in foreign currencies were approximately 13% of our total costs in each of fiscal 2022 and 2021.

Costs denominated in foreign currencies were approximately 13% of our total costs in each of fiscal years 2023 and 2022.

We face the risk that our accounts payable and acquisition-related liabilities denominated in foreign currencies will increase if such foreign currencies strengthen quickly and significantly against the U.S.

Approximately 2% of our accounts payable were denominated in foreign currencies at June 25, 2022 and June 26, 2021.

Approximately 12% and 2% of our accounts payable were denominated in foreign currencies in June 2023 and June 2022, respectively.

To provide an assessment of the foreign currency exchange risk associated with our foreign currency exposures within revenue, cost, and operating expenses, we performed a sensitivity analysis to determine the impact that an adverse change in exchange rates would have on our financial statements.

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Interest Rate Risk on Debt

With our outstanding debt, we are exposed to various forms of market risk, including the potential losses arising from adverse changes in interest rates on our outstanding Term Loan, including changes that may result from implementation of new benchmark rates that replace LIBOR.

With our outstanding debt, we are exposed to various forms of market risk, including the potential losses arising from adverse changes in interest rates on our outstanding Term Loan.

See “Note 8.

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A hypothetical increase in the interest rate by 1% would result in an increase in annual interest expense by approximately $6.0 million.

We currently carry debt that relies on the six-month LIBOR as the benchmark rate.

The six-month LIBOR is expected to cease publication after June 30, 2023.

To the extent the six-month LIBOR ceases to exist, the Term Loan agreement contemplates an alternative benchmark rate without the need for any amendment thereto.

FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA

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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 5. Market for Registrant’s Common Equity