NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Organization and Basis of Presentation
Nature of Business
Semtech Corporation (together with its consolidated subsidiaries, the "Company" or "Semtech") is a leading provider of high-performance semiconductors powering data center networking, Internet of Things ("IoT") connectivity and cellular infrastructure solutions. The end customers for the Company's silicon solutions are primarily original equipment manufacturers that produce and sell technology solutions. The Company's IoT module, router, gateway and managed connectivity solutions ship to IoT device makers, enterprises and solution providers to provide IoT connectivity to end devices.
The Company designs, develops, manufactures and markets a diverse portfolio of products for commercial applications, addressing the global infrastructure, high-end consumer and industrial end markets.
Basis of Presentation
The Company reports results on the basis of 52 and 53-week periods and ends its fiscal year on the last Sunday in January. The other quarters generally end on the last Sunday of April, July and October. All quarters consist of 13 weeks except for one 14-week period in the fourth quarter of 53-week years. The first quarter of fiscal years 2027 and 2026 each consisted of 13 weeks. Fiscal year 2027 will consist of 53 weeks and will end on January 31, 2027.
Principles of Consolidation
The accompanying interim unaudited condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries and have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and on the same basis as the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended January 25, 2026 ("Annual Report"). The Company's interim unaudited condensed consolidated statements of operations are referred to herein as the "Statements of Operations," the Company's interim unaudited condensed consolidated balance sheets are referred to herein as the "Balance Sheets," and the Company's interim unaudited condensed consolidated statements of cash flows are referred to herein as the "Statements of Cash Flows." In the opinion of the Company, these interim unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, the financial position and results of operations of the Company for the interim periods presented. All intercompany balances have been eliminated. Because the interim unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for a complete set of consolidated financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in the Company's Annual Report. The results reported in these interim unaudited condensed consolidated financial statements should not be regarded as indicative of results that may be expected for any subsequent period or for the entire year.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recently Adopted Accounting Standards
In July 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows public business entities a practical expedient. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for the Company for fiscal years beginning after December 15, 2025, and interim reporting periods in those years. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. Entities that elect the practical expedient are required to apply the amendments prospectively. The Company adopted ASU 2025-05 on a prospective basis during the fiscal quarter ended April 26, 2026. While this ASU was adopted, the Company did not elect the practical expedient permitted under the ASU. Therefore, the adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
Future Accounting Standards
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes all references to prescriptive and sequential software development stages, or "project stages", throughout Subtopic 350-40, and instead specifies that an entity is
required to start capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. The amendments are effective for the Company for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted. ASU 2025-06 may be applied using the prospective, modified, or retrospective transition methods. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to expand disclosures about specific expense categories. The amendments in this ASU require a public entity to disclose, in tabular format, in the notes to the financial statements, specific information about certain costs and expenses. Although the ASU does not change the expense captions an entity presents on the face of the income statement, it requires disaggregation of certain expense captions into specified categories. The amendments are effective for the Company for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its disclosures within the consolidated financial statements.
Note 2: Earnings per Share
The computation of basic and diluted earnings per share was as follows:
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| | Three Months Ended | | |
| (in thousands, except per share data) | April 26, 2026 | | April 27, 2025 | | | | |
| Net income | $ | 26,563 | | | $ | 19,345 | | | | | |
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| Weighted-average shares outstanding–basic | 92,905 | | | 86,441 | | | | | |
| Dilutive effect of share-based compensation | 2,479 | | | 1,430 | | | | | |
| Dilutive effect of 2027 Notes | 1,538 | | | 276 | | | | | |
| Dilutive effect of 2028 Notes | — | | | 1,432 | | | | | |
| Dilutive effect of Warrants | 1,106 | | | — | | | | | |
| Weighted-average shares outstanding–diluted | 98,028 | | | 89,579 | | | | | |
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| Earnings per share: | | | | | | | |
| Basic | $ | 0.29 | | | $ | 0.22 | | | | | |
| Diluted | $ | 0.27 | | | $ | 0.22 | | | | | |
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| Anti-dilutive shares not included in the above calculations: | | | | | | | |
| Share-based compensation | — | | | 391 | | | | | |
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| Warrants | — | | | 8,573 | | | | | |
| Total anti-dilutive shares | — | | | 8,964 | | | | | |
Basic earnings or loss per share is computed by dividing net income or loss available to common stockholders by the weighted-average number of shares of common stock outstanding during the reporting period. Diluted earnings or loss per share incorporates the incremental shares issuable, calculated using the treasury stock method, upon the assumed exercise of non-qualified stock options and the vesting of restricted stock units, market-condition restricted stock units and financial metric-based restricted stock units if certain conditions have been met, but excludes such incremental shares that would have an anti-dilutive effect.
Any dilutive effect of the 2027 Notes, 2028 Notes and 2030 Notes (as defined in Note 8, Long-Term Debt) is calculated using the if-converted method. For the three months ended April 26, 2026, the 2030 Notes were excluded from diluted shares outstanding because the conversion price exceeded the average market price of the Company's common stock for the reporting periods.
Any dilutive effect of the Warrants (as defined in Note 8, Long-Term Debt) is calculated using the treasury-stock method. For the three months ended April 27, 2025, the Warrants were excluded from diluted shares outstanding because the exercise price exceeded the average market price of the Company's common stock for the reporting periods.
Note 3: Share-Based Compensation
Financial Statement Effects and Presentation
Pre-tax share-based compensation was included in the Statements of Operations as follows:
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| Three Months Ended | | |
| (in thousands) | April 26, 2026 | | April 27, 2025 | | | | |
| Cost of sales | $ | 1,161 | | | $ | 705 | | | | | |
| Product development and engineering | 6,428 | | | 3,745 | | | | | |
| Selling, general and administrative | 18,857 | | | 2,385 | | | | | |
| Total share-based compensation | $ | 26,446 | | | $ | 6,835 | | | | | |
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Restricted Stock Units, Employees
The Company grants restricted stock units to certain employees which are expected to be settled with shares of the Company's common stock. The restricted stock units that are to be settled with shares are accounted for as equity. The grant date for these awards is equal to the measurement date and they are valued as of the measurement date, based on the fair value of the Company's common stock at the grant date, and recognized as share-based compensation expense over the requisite vesting period (typically between 1 and 4 years). In the three months ended April 26, 2026, the Company granted to certain employees 333,952 restricted stock units that settle in shares with a weighted-average grant date fair value of $86.68.
Restricted Stock Units, Non-Employee Directors
The Company maintains a compensation program pursuant to which restricted stock units are granted to the Company's directors who are not employed by the Company or any of its subsidiaries. Under the Company's director compensation program in effect prior to the Company's 2025 annual meeting of stockholders, a portion of the restricted stock units granted under the program would be settled in cash and a portion would be settled in shares of the Company's common stock. Restricted stock units granted under the program in connection with and following the Company's 2025 annual meeting of stockholders will be settled in shares of the Company's common stock. Restricted stock units awarded under the program are generally scheduled to vest on the earlier of (i) one year after the grant date or (ii) the day immediately preceding the first annual meeting of the Company's stockholders following the grant. Restricted stock units awarded under the program that are to be settled in cash will, subject to vesting, be settled when the director who received the award separates from service. Restricted stock units awarded under the program that are to be settled in shares of stock will, subject to vesting, be settled promptly following vesting; provided that a director may elect to defer the settlement date to the director's separation from service pursuant to the Company's Director Deferred Compensation Plan. The Company did not grant any restricted stock unit awards to non-employee directors in the three months ended April 26, 2026.
The restricted stock units that are to be settled in cash are accounted for as liabilities. The value of both the unvested and vested but unsettled awards are re-measured at the end of each reporting period until settlement. As of April 26, 2026, the total number of vested, but unsettled, shares subject to cash-settled restricted stock unit awards was 133,457 and the liability associated with these awards was $15.0 million, of which $4.8 million was included in "Accrued liabilities" in the Balance Sheets relating to a previous non-employee director currently serving a short-term non-employee consultancy for the Company. The remaining $10.2 million was included in "Other long-term liabilities" in the Balance Sheets as of April 26, 2026. As of January 25, 2026, the total number of vested, but unsettled, shares subject to cash-settled restricted stock unit awards was 133,457 and the liability associated with these awards was $11.3 million, of which $3.8 million was included in "Accrued liabilities" in the Balance Sheets relating to a previous non-employee director serving a short-term non-employee consultancy for the Company. The remaining $7.5 million was included in "Other long-term liabilities" in the Balance Sheets as of January 25, 2026.
Total Stockholder Return ("TSR") Market-Condition Restricted Stock Units
The Company grants TSR market-condition restricted stock units (the "TSR Awards") to certain executives of the Company, which are settled in shares and accounted for as equity awards. The TSR Awards have a pre-defined market-condition, which determines the number of shares that ultimately vest, as well as a service condition. The TSR Awards are valued as of the grant date using a Monte Carlo simulation, which takes into consideration the possible outcomes pertaining to the TSR market condition and expense is recognized on a straight-line basis over the requisite service periods and is adjusted for any actual forfeitures.
In the three months ended April 26, 2026, the Company granted 84,962 TSR Awards. The market condition is determined based upon the Company’s TSR benchmarked against the TSR of the Russell 3000 Index over one-, two- and three-year performance periods (one-third of the awards vesting each performance period). Generally, the award recipients must be employed for the entire performance period and be an active employee at the time of vesting of the awards. The grant-date fair value per unit of the TSR Awards granted in the three months ended April 26, 2026 for each one-, two- and three-year
performance period was $132.99, $138.06 and $143.47, respectively. Under the terms of these awards, assuming the highest performance level of 200% with no cancellations due to forfeitures, the maximum potential number of shares that can be earned in aggregate for the cumulative fiscal years 2027, 2028 and 2029 performance periods would be 169,923 shares.
Financial Metric-Based Restricted Stock Units
The Company grants financial metric-based restricted stock units to certain executives of the Company, which are settled in shares and accounted for as equity awards. These awards have a performance condition in addition to a service condition. The number of vested shares for each performance period is determined based on the Company’s attainment of pre-established revenue and non-GAAP operating income targets for the respective performance period. The vesting for tranches after the initial performance period is dependent on revenue and non-GAAP operating income for the preceding performance period. The financial metric-based restricted stock units are valued as of the measurement date and compensation cost is recognized using the accelerated attribution method over the requisite service period based on the number of shares that are probable of attainment for each fiscal year.
In the three months ended April 26, 2026, the Company granted 84,962 financial metric-based restricted stock units with a weighted-average grant date fair value of $87.58 that vest over one-, two- and three-year performance periods (one-third of the awards vesting each performance period). Generally, the award recipients must be employed for the entire performance period and be an active employee at the time of vesting of the awards. Under the terms of these awards, assuming the highest performance level of 200% with no cancellations due to forfeitures, the maximum potential number of shares that can be earned in aggregate for the cumulative fiscal years 2027, 2028 and 2029 performance periods would be 169,923 shares.
Note 4: Available-for-sale securities
The following table summarizes the values of the Company's available-for-sale securities:
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| | April 26, 2026 | | January 25, 2026 |
| (in thousands) | Fair Value | | Amortized
Cost | | Gross
Unrealized Loss | | Fair Value | | Amortized
Cost | | Gross
Unrealized Loss |
| Convertible debt investments | $ | — | | | $ | 4,519 | | | $ | (4,519) | | | $ | — | | | $ | 5,205 | | | $ | (5,205) | |
| Total available-for-sale securities | $ | — | | | $ | 4,519 | | | $ | (4,519) | | | $ | — | | | $ | 5,205 | | | $ | (5,205) | |
The Company's available-for-sale securities consist of investments in convertible debt instruments issued by privately-held companies and are recorded at fair value. The available-for-sale securities with maturities within one year are included in "Other current assets". Unrealized gains or losses, net of tax, are recorded in "Accumulated other comprehensive loss, net" in the Balance Sheets, and realized gains or losses, as well as current expected credit loss reserves were recorded in "Non-operating income (expense), net" in the Statements of Operations.
Note 5: Fair Value Measurements
The following fair value hierarchy is applied for disclosure of the inputs used to measure fair value and prioritizes the inputs into three levels as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets and liabilities in active markets or other inputs that are observable for the assets or liabilities, either directly or indirectly.
Level 3—Unobservable inputs based on the Company's own assumptions, requiring significant management judgment or estimation.
Instruments Measured at Fair Value on a Recurring Basis
The Company does not have any financial liabilities measured and recorded at fair value. The fair values of financial assets measured and recorded at fair value on a recurring basis were presented in the Balance Sheets as follows:
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| | April 26, 2026 | | January 25, 2026 |
| (in thousands) | Total | | (Level 1) | | (Level 2) | | (Level 3) | | Total | | (Level 1) | | (Level 2) | | (Level 3) |
| Financial assets: | | | | | | | | | | | | | | | |
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| Foreign currency forward contracts | $ | 138 | | | $ | — | | | $ | 138 | | | $ | — | | | $ | 474 | | | $ | — | | | $ | 474 | | | $ | — | |
| Total financial assets | $ | 138 | | | $ | — | | | $ | 138 | | | $ | — | | | $ | 474 | | | $ | — | | | $ | 474 | | | $ | — | |
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During the three months ended April 26, 2026, the Company had no transfers of financial assets between Level 1, Level 2 or Level 3. As of April 26, 2026 and January 25, 2026, the Company had not elected the fair value option for any financial assets for which such an election would have been permitted.
The foreign currency forward contracts are measured at fair value using readily available foreign currency forward and interest rate curves (Level 2 inputs). The fair value of each contract is determined by comparing the contract rate to the forward rate and discounting to the present value. Contracts in a gain position are recorded in "Other current assets" in the Balance Sheets and the value of contracts in a loss position are recorded in "Accrued liabilities" in the Balance Sheets.
See Note 16, Derivatives and Hedging Activities, for further discussion of the Company's derivative instruments.
Instruments Not Recorded at Fair Value
Some of the Company's financial instruments are not measured at fair value, but are recorded at amounts that approximate fair value due to their liquid or short-term nature. Such financial assets and financial liabilities include: cash and cash equivalents including money market deposits, net receivables, certain other assets, accounts payable, accrued expenses, accrued personnel costs, and other current liabilities. The Company's revolving loans are recorded at cost, which approximates fair value as the debt instruments bear interest at a floating rate. The 2027 Notes and 2030 Notes (as defined in Note 8, Long-Term Debt) are carried at face value less unamortized debt issuance costs, with interest expense reflecting the cash coupon plus the amortization of the capitalized issuance costs. The estimated fair values are determined based on the actual bid prices of the 2027 Notes and 2030 Notes as of the last business day of the period.
The following table displays the carrying values and fair values of the 2027 Notes and 2030 Notes:
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| | | | | April 26, 2026 | | January 25, 2026 |
| (in thousands) | | Fair Value Hierarchy | | Carrying Value | | Fair Value | | Carrying Value | | Fair Value |
1.625% convertible senior notes due 2027, net (1) | | Level 2 | | $ | 99,370 | | | $ | 298,336 | | | $ | 99,176 | | | $ | 221,095 | |
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0% convertible senior notes due 2030, net (2) | | Level 2 | | 392,612 | | | 544,624 | | | 392,058 | | | 441,537 | |
| Total long-term debt, net of debt issuance costs | | | | $ | 491,982 | | | $ | 842,960 | | | $ | 491,234 | | | $ | 662,632 | |
(1) The 1.625% convertible senior notes due 2027, net, are reflected net of $1.1 million and $1.3 million of unamortized debt issuance costs as of April 26, 2026 and January 25, 2026, respectively.
(2) The 0% convertible senior notes due 2030, net, are reflected net of $9.9 million and $10.4 million of unamortized debt issuance costs as of April 26, 2026 and January 25, 2026, respectively.
Assets and Liabilities Recorded at Fair Value on a Non-Recurring Basis
The Company reduces the carrying amounts of its intangible assets, long-lived assets and non-marketable equity securities to fair value when it determines they are impaired.
Investment Impairments and Credit Loss Reserves
The total credit loss reserve for the Company's held-to-maturity debt securities and available-for-sale debt securities was $3.8 million and $4.5 million as of April 26, 2026 and January 25, 2026, respectively. During the three months ended April 26, 2026, the Company decreased its expected credit loss reserves by $0.7 million due to the sale of one of its available-for-sale debt securities. Credit loss reserves related to the Company's available-for-sale debt securities are included in "Other current assets" in the Balance Sheets.
Note 6: Inventories
Inventories, consisting of material, material overhead, labor, and manufacturing overhead, are stated at the lower of cost (first-in, first-out) or net realizable value and consisted of the following:
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| (in thousands) | April 26, 2026 | | January 25, 2026 |
| Raw materials and electronic components | $ | 30,948 | | | $ | 31,924 | |
| Work in progress | 128,753 | | | 119,319 | |
| Finished goods | 45,014 | | | 44,494 | |
| Total inventories | $ | 204,715 | | | $ | 195,737 | |
Note 7: Goodwill and Intangible Assets
Goodwill
The following table summarizes goodwill by applicable operating segments:
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| Balance as of April 26, 2026 | | Balance as of January 25, 2026 |
| (in thousands) | Goodwill | | Accumulated Impairment Losses | | Carrying Value | | Goodwill | | Accumulated Impairment Losses | | Carrying Value |
| Signal Integrity | $ | 280,781 | | | $ | — | | | $ | 280,781 | | | $ | 267,205 | | | $ | — | | | $ | 267,205 | |
Analog Mixed Signal and Wireless | 91,068 | | | — | | | 91,068 | | | 91,068 | | | — | | | 91,068 | |
| IoT Systems and Connectivity | 946,897 | | | (847,896) | | | 99,001 | | | 947,548 | | | (847,896) | | | 99,652 | |
| Total goodwill | $ | 1,318,746 | | | $ | (847,896) | | | $ | 470,850 | | | $ | 1,305,821 | | | $ | (847,896) | | | $ | 457,925 | |
The following table summarizes the change in goodwill by applicable operating segments:
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| (in thousands) | Signal Integrity | | Analog Mixed Signal and Wireless | | IoT Systems and Connectivity | | | | | | | | | | | | Total |
| Balance at January 25, 2026 | $ | 267,205 | | | $ | 91,068 | | | $ | 99,652 | | | | | | | | | | | | | $ | 457,925 | |
| Addition from acquisition | 13,576 | | | — | | | — | | | | | | | | | | | | | 13,576 | |
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| Cumulative translation adjustment | — | | | — | | | (651) | | | | | | | | | | | | | (651) | |
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| Balance at April 26, 2026 | $ | 280,781 | | | $ | 91,068 | | | $ | 99,001 | | | | | | | | | | | | | $ | 470,850 | |
During the first quarter of fiscal year 2027, the Company completed an immaterial acquisition, which resulted in the addition of $13.6 million in the carrying value of goodwill.
Goodwill is not amortized, but is tested for impairment at the reporting unit level using either a qualitative or quantitative assessment on an annual basis during the fourth quarter of each fiscal year, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment of goodwill is measured at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair market value of the reporting unit. As of April 26, 2026, there was no indication of impairment of the Company's goodwill balances.
Purchased and Other Intangibles
The following table sets forth the Company's finite-lived intangible assets, which are amortized over their estimated useful lives:
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| | | April 26, 2026 |
| (in thousands, except estimated useful life) | Estimated
Useful Life | | Gross
Carrying
Amount | | Accumulated
Amortization | | Accumulated Impairment | | Net Carrying
Amount |
| Core technologies | 1-8 years | | $ | 178,683 | | | $ | (55,925) | | | $ | (91,792) | | | $ | 30,966 | |
| Customer relationships | 1-10 years | | 60,068 | | | (15,757) | | | (34,777) | | | 9,534 | |
| Trade name | 2-10 years | | 9,000 | | | (3,290) | | | (4,816) | | | 894 | |
| Capitalized development costs | 3-7 years | | 3,912 | | | (1,164) | | | (1,777) | | | 971 | |
| Software licenses | 7-10 years | | 4,840 | | | (447) | | | — | | | 4,393 | |
| Total finite-lived intangible assets | | | $ | 256,503 | | | $ | (76,583) | | | $ | (133,162) | | | $ | 46,758 | |
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| | | January 25, 2026 |
| (in thousands, except estimated useful life) | Estimated
Useful Life | | Gross
Carrying
Amount | | Accumulated
Amortization | | Accumulated Impairment | | Net Carrying
Amount |
| Core technologies | 1-8 years | | $ | 167,178 | | | $ | (54,383) | | | $ | (91,792) | | | $ | 21,003 | |
| Customer relationships | 1-10 years | | 53,248 | | | (15,265) | | | (34,777) | | | 3,206 | |
| Trade name | 2-10 years | | 9,000 | | | (3,257) | | | (4,816) | | | 927 | |
| Capitalized development costs | 3-7 years | | 3,912 | | | (1,023) | | | (1,777) | | | 1,112 | |
| Software licenses | 7-10 years | | 3,740 | | | (312) | | | — | | | 3,428 | |
| Total finite-lived intangible assets | | | $ | 237,078 | | | $ | (74,240) | | | $ | (133,162) | | | $ | 29,676 | |
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Amortization expense of finite-lived intangible assets was as follows:
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| Three Months Ended | | |
| (in thousands) | April 26, 2026 | | April 27, 2025 | | | | |
| Core technologies | $ | 1,750 | | | $ | 2,205 | | | | | |
| Customer relationships | 295 | | | 113 | | | | | |
| Trade name | 33 | | | 33 | | | | | |
| Capitalized development costs | 141 | | | 127 | | | | | |
| Software licenses | 135 | | | 10 | | | | | |
| Total amortization expense | $ | 2,354 | | | $ | 2,488 | | | | | |
Amortization expense of finite-lived intangible assets related to core technologies was recorded in "Amortization of acquired technology" within "Total cost of sales" in the Statements of Operations, and amortization expense of finite-lived intangible assets related to customer relationships and trade name was recorded in "Intangible amortization" within "Total operating expenses, net" in the Statements of Operations. Amortization expense of finite-lived intangible assets related to software licenses was recorded in "Cost of sales" in the Statements of Operations and amortization expense of finite-lived intangible assets related to capitalized development costs was recorded in "Product development and engineering" in the Statements of Operations.
Future amortization expense of finite-lived intangible assets is expected as follows:
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| (in thousands) | Core Technologies | | Customer Relationships | | Trade Name | | Capitalized Development Costs | | Software Licenses | | Total |
| 2027 (remaining nine months) | $ | 5,601 | | | $ | 1,090 | | | $ | 100 | | | $ | 424 | | | $ | 406 | | | $ | 7,621 | |
| 2028 | 6,230 | | | 1,261 | | | 133 | | | 287 | | | 541 | | | 8,452 | |
| 2029 | 5,744 | | | 1,261 | | | 133 | | | 57 | | | 541 | | | 7,736 | |
| 2030 | 3,040 | | | 1,261 | | | 133 | | | 57 | | | 541 | | | 5,032 | |
| 2031 | 3,040 | | | 1,261 | | | 133 | | | 57 | | | 541 | | | 5,032 | |
| Thereafter | 7,311 | | | 3,400 | | | 262 | | | 89 | | | 1,823 | | | 12,885 | |
| Total expected amortization expense | $ | 30,966 | | | $ | 9,534 | | | $ | 894 | | | $ | 971 | | | $ | 4,393 | | | $ | 46,758 | |
Also in "Other intangible assets, net" in the Balance Sheets, are finite-lived intangible assets to be amortized upon placement in service. The following table sets forth the Company's finite-lived intangible assets not yet placed in service:
| | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Capitalized Development Costs | | Software Licenses | | Total |
| Balance at January 25, 2026 | | $ | 2,414 | | | $ | 7,925 | | | $ | 10,339 | |
| Additions | | 788 | | | 2,500 | | | 3,288 | |
| Placed in service | | — | | | (1,100) | | | (1,100) | |
| Balance at April 26, 2026 | | $ | 3,202 | | | $ | 9,325 | | | $ | 12,527 | |
Note 8: Long-Term Debt
Long-term debt and the current period interest rates were as follows:
| | | | | | | | | | | |
| (in thousands, except percentages) | April 26, 2026 | | January 25, 2026 |
| | | |
| | | |
1.625% convertible senior notes due 2027 | $ | 100,500 | | | $ | 100,500 | |
| | | |
0% convertible senior notes due 2030 | 402,500 | | | 402,500 | |
| Total debt | $ | 503,000 | | | $ | 503,000 | |
| | | |
| Debt issuance costs | (11,018) | | | (11,766) | |
| Total long-term debt, net of debt issuance costs | $ | 491,982 | | | $ | 491,234 | |
Weighted-average effective interest rate (1) | 0.55 | % | | 0.55 | % |
(1) The revolving loans bear interest at variable rates based on Adjusted Term SOFR or a Base Rate (as defined in the Credit Agreement), at the Company’s option, plus an applicable margin that varies based on the Company's consolidated leverage ratio. As of April 26, 2026, the effective interest rate was a weighted-average rate that represented (a) interest on the remaining debt under the 2027 Notes outstanding at a fixed rate of 1.625%, and (b) interest on the 2030 Notes outstanding at a fixed rate of 0%. As of January 25, 2026, the effective interest rate was a weighted average-rate that represented (a) interest on the 2027 Notes outstanding at a fixed rate of 1.625%, and (b) interest on the 2030 Notes outstanding at a fixed rate of 0%.
Credit Agreement
On November 7, 2019, we, with certain of our domestic subsidiaries as guarantors, entered into a credit agreement with the lenders party thereto and HSBC Bank USA, National Association ("HSBC Bank"), as administrative agent, swing line lender and letter of credit issuer. On September 26, 2022 (the "Third Restatement Effective Date"), the Company entered into a third amendment and restatement agreement (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement") with the lenders party thereto, HSBC Bank, as resigning administrative agent, and JPMorgan Chase Bank, N.A. ("JPM"), as successor administrative agent, swing line lender and letter of credit issuer. Beginning in February 2023, the Company entered into a series of amendments to the Credit Agreement including, on April 24, 2025, a fourth amendment (the "Fourth Amendment") to the Credit Agreement, in order to, among other things, increase the total available borrowing capacity under the Revolving Credit Facility (as defined below) by $117.5 million increasing the total facility size to $455.0 million. Other than the foregoing, the material terms of the Credit Agreement remain unchanged. See Note 9, Long-Term Debt included in the Annual Report on Form 10-K for the fiscal year ended January 25, 2026 for more information regarding the amendments to the Credit Agreement.
After effectiveness of the Fourth Amendment, the borrowing capacity on the revolving credit facility under the Credit Agreement (the "Revolving Credit Facility") is $455.0 million, which is scheduled to mature on January 12, 2028 (subject to, in certain circumstances, an earlier springing maturity), and the term loans thereunder (the "Term Loans") were scheduled to mature on January 12, 2028 (subject to, in certain circumstances, an earlier springing maturity).
In fiscal year 2025, the Company repaid the outstanding amount of $68.3 million on the Revolving Credit Facility which matured on November 7, 2024 by borrowing against the remaining Revolving Credit Facility scheduled to mature on January 12, 2028. In fiscal year 2025, the Company repaid an additional $215.0 million on the Revolving Credit Facility and repaid $441.4 million on the Term Loans.
In fiscal year 2026, the Company made early repayments of $181.2 million on the remaining balance of the Term Loans.
As of April 26, 2026, the Company had no amounts outstanding under the Term Loans and no revolving loans outstanding under the Revolving Credit Facility, which had available undrawn borrowing capacity of $451.6 million, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults.
Up to $40.0 million of the Revolving Credit Facility may be used to obtain letters of credit, up to $25.0 million of the Revolving Credit Facility may be used to obtain swing line loans, and up to $75.0 million of the Revolving Credit Facility may be used to obtain revolving loans and letters of credit in certain currencies other than U.S. Dollars ("Alternative Currencies"). The proceeds of the Revolving Credit Facility may be used by the Company for capital expenditures, permitted acquisitions, permitted dividends, working capital and general corporate purposes.
All of the Company's obligations under the Credit Agreement are unconditionally guaranteed by all of the Company's direct and indirect domestic subsidiaries, other than certain excluded subsidiaries, including, but not limited to, any domestic subsidiary the primary assets of which consist of equity or debt of non-U.S. subsidiaries, certain immaterial non-wholly-owned domestic subsidiaries and subsidiaries that are prohibited from providing a guarantee under applicable law or that would require governmental approval to provide such guarantee. The Company and the guarantors have also pledged substantially all of their assets to secure their obligations under the Credit Agreement.
No amortization is required with respect to the revolving loans. The Credit Agreement contains customary representation and warranties, and affirmative and negative covenants, including limitations on the Company's ability to, among other things, incur
indebtedness, create liens on assets, engage in certain fundamental corporate changes, make investments, repurchase stock, pay dividends or make similar distributions, engage in certain affiliate transactions, or enter into agreements that restrict the Company's ability to create liens, pay dividends or make loan repayments. In addition, the Company must comply with financial covenants which are as follows:
•maintaining a maximum consolidated leverage ratio, determined as of the last day of each fiscal quarter, of 3.75 to 1.00 for the fiscal quarter ending on or around October 31, 2025 and each fiscal quarter thereafter, subject to increase to 4.25 to 1.00 for the four full consecutive fiscal quarters ending on or after the date of consummation of a permitted acquisition that constitutes a "Material Acquisition" under the Credit Agreement, subject to the satisfaction of certain conditions; and
•maintaining a minimum consolidated interest expense coverage ratio, determined as of the last day of each fiscal quarter, of 3.50 to 1.00 for the fiscal quarter ending on or around October 31, 2025 and each fiscal quarter thereafter.
Compliance with the leverage and interest expense coverage financial covenants is measured quarterly based upon the Company's performance over the most recent four quarters, and compliance with the liquidity covenant is measured as of the last day of each monthly accounting period. As of April 26, 2026, the Company was in compliance with the financial covenants in the Credit Agreement.
The Credit Agreement also contains customary provisions pertaining to events of default. If any event of default occurs, the obligations under the Credit Agreement may be declared due and payable, terminated upon written notice to us and existing letters of credit may be required to be cash collateralized.
In the first quarter of fiscal year 2024, the Company entered into an interest rate swap agreement with a 2.75 year term to hedge the variability of interest payments on $150.0 million of debt outstanding on the Term Loans at a Term SOFR rate of 3.58%, plus a variable margin and spread based on the Company's consolidated leverage ratio. This interest rate swap agreement was partially terminated in the second quarter and fully terminated in the third quarter of fiscal year 2026.
Convertible Senior Notes Due 2027
On October 12, 2022 and October 21, 2022, the Company issued and sold $300.0 million and $19.5 million, respectively, in aggregate principal amount of 1.625% Convertible Senior Notes due 2027 (the "2027 Notes") in a private placement. The 2027 Notes were issued pursuant to an indenture, dated October 12, 2022, by and among the Company, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee (the "2027 Indenture"). The 2027 Notes are jointly and severally and fully and unconditionally guaranteed by each of the Company's current and future direct and indirect wholly-owned domestic subsidiaries that guarantee its borrowings under its Credit Agreement. The 2027 Notes bear interest at a rate of 1.625% per year, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2023. The 2027 Notes will mature on November 1, 2027, unless earlier converted, redeemed or repurchased. As of April 26, 2026, $100.5 million of the 2027 Notes remained outstanding.
The initial conversion rate of the 2027 Notes is 26.8325 shares of the Company's common stock per $1,000 principal amount of 2027 Notes (which is equivalent to an initial conversion price of approximately $37.27 per share). The conversion rate is subject to adjustment upon the occurrence of certain events specified in the 2027 Indenture but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a Make-Whole Fundamental Change (as defined in the 2027 Indenture) or if the Company delivers a Notice of Sale Price Redemption (as defined in the 2027 Indenture), the Company will, in certain circumstances, increase the conversion rate by a number of additional shares of common stock as described in the 2027 Indenture for a holder who elects to convert its 2027 Notes in connection with such Make-Whole Fundamental Change or to convert its 2027 Notes called (or deemed called as provided in the 2027 Indenture) for redemption in connection with such Notice of Sale Price Redemption, as the case may be.
Prior to the close of business on the business day immediately preceding July 1, 2027, the 2027 Notes are convertible at the option of the holders thereof only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ended on January 29, 2023 (and only during such fiscal quarter), if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day (the "Market Price Condition"); (2) during the five business day period after any ten consecutive trading day period in which, for each trading day of that period, the Trading Price (as defined in the 2027 Indenture), as determined following a request by a holder of the 2027 Notes in accordance with the procedures described in the 2027 Indenture, per $1,000 principal amount of the 2027 Notes for such trading day was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; (3) if the Company calls such 2027 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2027 Notes called (or deemed called as provided in the 2027 Indenture) for redemption; or (4) upon the occurrence of specified corporate events described in the 2027 Indenture. As of April 26, 2026, the Market Price Condition was satisfied, allowing holders of the 2027 Notes to convert their 2027 Notes beginning on April 27,
2026 through July 24, 2026 (the last trading day of the fiscal quarter ending July 26, 2026). Should the holders of the 2027 Notes elect to convert some or all of the outstanding 2027 Notes, the Company intends to draw on its Revolving Credit Facility to settle the obligation. On or after July 1, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2027 Notes, holders of the 2027 Notes may convert all or a portion of their 2027 Notes, regardless of the foregoing conditions. Upon conversion, the 2027 Notes will be settled in cash up to the aggregate principal amount of the 2027 Notes to be converted, and in cash, shares of the Company's common stock or any combination thereof, at the Company's option, in respect of the remainder, if any, of the Company's conversion obligation in excess of the aggregate principal amount of the 2027 Notes being converted.
The Company may redeem for cash all or any portion of the 2027 Notes (subject to the limitation described below), at the Company's option, before the 61st scheduled trading day immediately preceding the maturity date if the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides the related notice of sale price redemption, at a redemption price equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company redeems less than all the outstanding 2027 Notes, at least $75.0 million aggregate principal amount of the 2027 Notes must be outstanding and not subject to redemption as of the relevant redemption notice date. No sinking fund is provided for the 2027 Notes.
Upon the occurrence of a Fundamental Change (as defined in the 2027 Indenture) prior to the maturity date of the 2027 Notes, holders of the 2027 Notes may require the Company to repurchase all or a portion of the 2027 Notes for cash at a price equal to 100% of the principal amount of the 2027 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the Fundamental Change Repurchase Date (as defined in the 2027 Indenture).
Convertible Note Hedge Transactions
On October 6, 2022 and October 19, 2022, the Company entered into privately negotiated convertible note hedge transactions (the "Convertible Note Hedges") with an affiliate of one of the initial purchasers of the 2027 Notes and another financial institution (collectively, the "Counterparties") whereby the Company has the option to purchase the same number of shares of the Company's common stock initially underlying the 2027 Notes in the aggregate for approximately $37.27 per share, which is subject to anti-dilution adjustments substantially similar to those in the 2027 Notes. The Convertible Note Hedges will expire upon the maturity of the 2027 Notes, if not earlier exercised. The Convertible Note Hedges are expected to reduce the potential dilution to the common stock upon the conversion of the 2027 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2027 Notes, as the case may be, in the event that the market price per share of common stock, as measured under the terms of the Convertible Note Hedges, is greater than the strike price of the Convertible Note Hedges, which initially corresponds to the initial conversion price of the 2027 Notes, or approximately $37.27 per share of the common stock. The Convertible Note Hedges are separate transactions, entered into by the Company with each of the Counterparties, and are not part of the terms of the 2027 Notes. Holders of the 2027 Notes do not have any rights with respect to the Convertible Note Hedges. The Company used approximately $72.6 million of the net proceeds from the offering of the 2027 Notes to pay the cost of the Convertible Note Hedges. The Convertible Note Hedges are recorded in additional paid-in capital in the Balance Sheets as they do not require classification outside of equity pursuant to Accounting Standards Codification ("ASC") 480 and qualify for equity classification pursuant to ASC 815.
Warrant Transactions
On October 6, 2022 and on October 19, 2022, the Company separately entered into privately negotiated warrant transactions (the "Warrants") with the Counterparties whereby the holders of the Warrants have the option to acquire, collectively, subject to customary adjustments, approximately 8.6 million shares of the Company's common stock at an initial strike price of approximately $51.15 per share. The Warrants were sold in private placements to the Counterparties pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), afforded by Section 4(a)(2) of the Securities Act. If the market price per share of the common stock, as measured under the terms of the Warrants, exceeds the strike price of the Warrants, the Warrants could have a dilutive effect on the common stock, unless the Company elects, subject to certain conditions, to settle the Warrants in cash. The Warrants will expire over a period beginning in February 2028.
The Warrants are separate transactions, entered into by the Company with each of the Counterparties, and are not part of the terms of the 2027 Notes. Holders of the 2027 Notes do not have any rights with respect to the Warrants. The Company received aggregate proceeds of approximately $42.9 million from the sale of the Warrants to the Counterparties. The Warrants are recorded in additional paid-in capital in the Balance Sheets as they do not require classification outside of equity pursuant to ASC 480 and qualify for equity classification pursuant to ASC 815.
In combination, the Convertible Note Hedges and the Warrants are intended to synthetically increase the strike price of the conversion option of the 2027 Notes from approximately $37.27 to $51.15 (subject to adjustment in accordance with the terms
of the agreements governing such transactions), with the expected result of reducing the dilutive effect of the 2027 Notes in exchange for a net cash premium of $29.7 million.
Exchange of 2027 Notes and Related Unwinding of Convertible Note Hedges and Warrants
On October 7, 2025, the Company entered into separate, privately-negotiated exchange agreements with certain holders of the 2027 Notes (the "2025 Exchange of 2027 Notes"). Pursuant to the 2025 Exchange of 2027 Notes, on October 14, 2025, the Company used approximately $220.6 million of the net proceeds from the 2030 Notes (discussed below), together with the issuance of 3,036,192 shares of the Company's common stock as consideration for the exchange of approximately $219.0 million aggregate principal amount of the 2027 Notes and accrued interest. The Company accounted for these exchange transactions as an induced conversion. In fiscal year 2026, in connection with the exchange transactions, the Company recognized an induced conversion expense of $17.6 million recorded in "Interest expense" on the Statements of Operations and an increase to "Additional paid-in capital" of $14.3 million on the Balance Sheets, which included $3.3 million from the write-off of deferred financing costs.
In connection with the 2025 Exchange of 2027 Notes, the Company also terminated a portion of the Convertible Note Hedges and the Warrants corresponding to the number of 2027 Notes exchanged. The Company received approximately $24.5 million in connection with the termination, which was recorded as an increase to additional paid-in capital on the Balance Sheets.
Convertible Senior Notes Due 2028
On October 26, 2023, the Company issued and sold $250.0 million in aggregate principal amount of 4.00% Convertible Senior Notes due 2028 (the "2028 Notes") in a private placement. The 2028 Notes were issued pursuant to an indenture, dated October 26, 2023, by and among the Company, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee (the "2028 Indenture"). The 2028 Notes were jointly and severally and fully and unconditionally guaranteed by each of the Company's current and future direct and indirect wholly-owned domestic subsidiaries that guaranteed its borrowings under its Credit Agreement. The 2028 Notes bore interest at a rate of 4.00% per year, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2024. The 2028 Notes were scheduled to mature on November 1, 2028, unless earlier converted, redeemed or repurchased. As of April 26, 2026, as a result of certain exchange transactions, no amounts remain outstanding under the 2028 Notes.
Exchanges of 2028 Notes
In fiscal year 2025, in connection with the exchange transactions, the Company recognized $144.7 million of loss included in "Loss on extinguishment of debt" in the Statements of Operations and $5.5 million of loss resulting from the write-off of deferred financing costs included in "Interest expense" in the Statements of Operations.
In fiscal year 2026, in connection with the exchange transactions, the Company recognized an induced conversion expense of $3.6 million recorded in "Interest expense" on the Statements of Operations and an increase to "Additional paid-in capital" of $2.2 million on the Balance Sheets, which included $1.3 million from the write-off of deferred financing costs.
Convertible Senior Notes Due 2030
On October 10, 2025, the Company issued and sold $402.5 million in aggregate principal amount of 0% Convertible Senior Notes due 2030 (the "2030 Notes") in a private placement. The 2030 Notes were issued pursuant to an indenture, dated October 10, 2025, by and among the Company, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee (the "2030 Indenture"). The 2030 Notes are jointly and severally and fully and unconditionally guaranteed by each of the Company's current and future direct and indirect wholly-owned domestic subsidiaries that guarantee its borrowings under its Credit Agreement. The 2030 Notes do not bear any interest and will mature on October 15, 2030, unless earlier converted, redeemed or repurchased. As of April 26, 2026, $402.5 million of the 2030 Notes remain outstanding.
The initial conversion rate of the 2030 Notes is 9.8964 shares of the Company's common stock per $1,000 principal amount of 2030 Notes (which is equivalent to an initial conversion price of approximately $101.05 per share). The conversion rate is subject to adjustment upon the occurrence of certain events specified in the 2030 Indenture. In addition, upon the occurrence of a Make-Whole Fundamental Change (as defined in the 2030 Indenture) or if the Company delivers a Notice of Redemption (as defined in the 2030 Indenture), the Company will, in certain circumstances, increase the conversion rate by a number of additional shares of common stock as described in the 2030 Indenture for a holder who elects to convert its 2030 Notes in connection with such Make-Whole Fundamental Change or to convert its 2030 Notes called (or deemed called as provided in the 2030 Indenture) for redemption in connection with such Notice of Redemption, as the case may be.
Prior to the close of business on the business day immediately preceding July 15, 2030, the 2030 Notes are convertible at the option of the holders thereof only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on January 25, 2026 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day
period in which the trading price per $1,000 principal amount of the 2030 Notes for each trading day of that period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate for the 2030 Notes on each such trading day; (3) if the Company calls such 2030 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date, but only with respect to the 2030 Notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events described in the 2030 Indenture. As of April 26, 2026, none of the conditions allowing holders of the 2030 Notes to convert had been met. On or after July 15, 2030, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2030 Notes, regardless of the foregoing circumstances. Upon conversion, the Company will settle conversions by paying cash up to the aggregate principal amount of the 2030 Notes being converted and paying or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the 2030 Notes being converted.
The 2030 Notes will not be redeemable before October 20, 2028. The 2030 Notes will be redeemable, in whole or in part (subject to certain limitations), for cash at the Company’s option at any time, and from time to time, on or after October 20, 2028, and prior to the 21st scheduled trading day immediately preceding the maturity date, but only if the last reported sale price per share of the Company’s common stock has been at least 130% of the conversion price for the 2030 Notes then in effect on (i) each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption and (ii) the trading day immediately preceding the date the Company sends such notice, at a redemption price equal to 100% of the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date. If the Company elects to redeem fewer than all of the outstanding 2030 Notes, at least $75.0 million aggregate principal amount of 2030 Notes must be outstanding and not subject to redemption as of the relevant redemption date. No sinking fund is provided for the 2030 Notes, which means that the Company is not required to redeem or retire the 2030 Notes periodically.
Capped Call Transactions
On October 7, 2025 and on October 8, 2025, the Company entered into privately negotiated capped call transactions (the "Capped Calls") with various financial institutions (collectively, the "Option Counterparties"). The Capped Calls cover, subject to customary adjustments, the number of shares of common stock that initially underlie the 2030 Notes sold. The Capped Calls have an initial strike price of approximately $101.05 per share, subject to adjustments, which corresponds to the approximate initial conversion price of the 2030 Notes. The Capped Calls are expected generally to reduce potential dilution to the common stock upon any conversion of 2030 Notes and/or offset any cash payments the Company would be required to make in excess of the principal amount of converted 2030 Notes, as the case may be, with such reduction and/or offset subject to a cap based on the cap price. If, however, the market price per share of common stock exceeds the cap price of the Capped Calls, there would be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that the then-market price per share of the common stock exceeds the cap price. The cap price of the Capped Calls is initially approximately $141.82 per share, which represents a premium of 100% over the last reported sale price of the common stock of $70.91 per share on October 7, 2025, and is subject to certain customary adjustments under the terms of the Capped Calls.
The Capped Calls are separate transactions, entered into by the Company with each of the Option Counterparties, and are not part of the terms of the 2030 Notes. Holders of the 2030 Notes do not have any rights with respect to the Capped Calls. The Company paid approximately $31.4 million for the Capped Calls. The Capped Calls are recorded in additional paid-in capital in the Balance Sheets as they do not require classification outside of equity pursuant to ASC 480 and qualify for equity classification pursuant to ASC 815.
Interest Expense
Interest expense was comprised of the following components for the periods presented:
| | | | | | | | | | | | | | | |
| | Three Months Ended | | |
| (in thousands) | April 26, 2026 | | April 27, 2025 | | | | |
| Contractual interest | $ | 766 | | | $ | 5,440 | | | | | |
| Amortization of deferred financing costs | 1,090 | | | 1,254 | | | | | |
| Write-off of deferred financing costs | — | | | 152 | | | | | |
| Interest swap agreement | — | | | (108) | | | | | |
| Interest rate swap termination | — | | | (156) | | | | | |
| | | | | | | |
| | | | | | | |
| Total interest expense | $ | 1,856 | | | $ | 6,582 | | | | | |
As of April 26, 2026 and January 25, 2026, there was $3.4 million outstanding under the letters of credit under the Revolving Credit Facility.
Note 9: Income Taxes
The Company's effective tax rate differs from the statutory federal income tax rate of 21% primarily due to the regional mix of income, changes in valuation allowance, research and development ("R&D") tax credits, tax benefit of investment impairment losses and impact of global intangible low-taxed income ("GILTI"). The Tax Cuts and Jobs Act ("TCJA") requires R&D costs incurred for tax years beginning after December 31, 2021 to be capitalized and amortized ratably over five or fifteen years for tax purposes, depending on where the research activities are conducted. The Company has elected to treat GILTI as a period cost and the additional capitalization of foreign R&D costs within GILTI increases the Company's provision for income taxes. On July 4, 2025, the One Big Beautiful Bill Act ("OB3") was enacted into law in the U.S. The OB3 modifies certain elements of the TCJA, including permanently changing the limitation on the deduction of business interest expense, as well as making permanent the immediate deduction for domestic R&D expenses. The remaining provisions of the OB3 have multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. As the Company maintains a full valuation allowance on its U.S. deferred tax assets, the enactment of the legislation did not have a material impact on the Company's effective tax rate as of April 26, 2026. This legislation may be subject to further clarification and the issuance of interpretive guidance; however, the remaining provisions of the OB3 are not expected to have a material effect on the Company’s consolidated financial statements. The Company will continue to monitor the potential future impacts of the OB3, including provisions that become effective in subsequent periods, and will reflect any material changes in its financial statements when appropriate.
The Company evaluates its deferred tax assets ("DTAs") on a quarterly basis to determine whether a valuation allowance is required based on the weight of all available positive and negative evidence. As of April 26, 2026, the Company continues to maintain full valuation allowance on DTAs in the U.S. and France, as well as a partial valuation allowance on DTAs in Canada. As a result of the Company’s recent performance, there is a reasonable possibility that a portion of the Company’s valuation allowance will no longer be needed in future periods. A release of the valuation allowance will likely result in a material tax benefit recognized in the quarter of the release.
The Company uses a two-step approach to recognize and measure uncertain tax positions ("UTP"). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (before the federal impact of state items) is as follows:
| | | | | |
| (in thousands) | |
| Balance at January 25, 2026 | $ | 20,514 | |
Additions based on tax positions related to the current fiscal year | 1,159 | |
| |
| Reductions for settlements with tax authorities or expiration of statutes | (422) | |
| Balance at April 26, 2026 | $ | 21,251 | |
Included in the balance of gross unrecognized tax benefits at April 26, 2026 and January 25, 2026 are $5.1 million and $4.6 million, respectively, of net tax benefits (after the federal impact of state items), that, if recognized, would impact the effective tax rate, prior to consideration of any required valuation allowance. The Company believes that it is reasonably possible that its balance of gross unrecognized tax benefits may decrease by approximately $2.1 million within the next twelve months due to statutes of limitations.
The liability for UTP is reflected in the Balance Sheets as follows:
| | | | | | | | | | | |
| (in thousands) | April 26, 2026 | | January 25, 2026 |
| Deferred tax assets - non-current | $ | 14,187 | | | $ | 13,943 | |
| Other long-term liabilities | 5,115 | | | 4,625 | |
| Total accrued taxes | $ | 19,302 | | | $ | 18,568 | |
The Company's policy is to include net interest and penalties related to unrecognized tax benefits in the "Provision (benefit) for income taxes" in the Statements of Operations.
Tax years prior to 2021 (the Company's fiscal year 2022) are generally not subject to examination by the U.S. Internal Revenue Service ("IRS") except for items involving tax attributes that have been carried forward to tax years whose statute of limitations remains open. The Company's fiscal year 2023 federal income tax return is currently in the final stages of examination by the IRS, and the Company is not expecting any material adjustments at this time. For state returns in the U.S., the Company is generally not subject to income tax examinations for calendar years prior to 2020 (the Company's fiscal year 2021). The Company has a significant tax presence in Switzerland for which Swiss tax filings have been examined through fiscal year 2020. The Company is also subject to routine examinations by various foreign tax jurisdictions in which it operates. The
Company believes that adequate provisions have been made for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. If any issues addressed in the Company's tax examinations are resolved in a manner not consistent with the Company's expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.
The Company's regional income or loss before taxes and equity method income or loss was as follows:
| | | | | | | | | | | | | | | |
| | Three Months Ended | | |
| (in thousands) | April 26, 2026 | | April 27, 2025 | | | | |
| Domestic | $ | (6,272) | | | $ | 11,851 | | | | | |
| Foreign | 31,326 | | | 15,101 | | | | | |
| Total | $ | 25,054 | | | $ | 26,952 | | | | | |
Note 10: Leases
The Company has operating leases for real estate, vehicles, and office equipment, which are accounted for in accordance with ASC 842, "Leases." Real estate leases are used to secure office space for the Company's administrative, engineering, production support and manufacturing activities. The Company's leases have remaining lease terms of up to approximately seven years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year.
The components of lease expense were as follows:
| | | | | | | | | | | | | | | |
| Three Months Ended | | |
| (in thousands) | April 26, 2026 | | April 27, 2025 | | | | |
| Operating lease cost | $ | 2,038 | | | $ | 1,769 | | | | | |
| Short-term lease cost | 48 | | | 17 | | | | | |
| Sublease income | (133) | | | (127) | | | | | |
| Total lease cost | $ | 1,953 | | | $ | 1,659 | | | | | |
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | |
| Three Months Ended |
| (in thousands) | April 26, 2026 | | April 27, 2025 |
| Cash paid for amounts included in the measurement of lease liabilities | $ | 2,055 | | | $ | 1,953 | |
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 505 | | | $ | 2,517 | |
| | | |
| | | | | |
| April 26, 2026 |
| Weighted-average remaining lease term–operating leases (in years) | 4.6 |
| Weighted-average discount rate on remaining lease payments–operating leases | 6.9 | % |
| |
| |
Supplemental balance sheet information related to leases was as follows:
| | | | | | | | | | | |
| |
| (in thousands) | April 26, 2026 | | January 25, 2026 |
| Operating lease right-of-use assets in "Other assets" | $ | 22,387 | | | $ | 23,455 | |
| | | |
| Operating lease liabilities in "Accrued liabilities" | $ | 6,076 | | | $ | 6,063 | |
| Operating lease liabilities in "Other long-term liabilities" | 19,559 | | | 20,697 | |
| Total operating lease liabilities | $ | 25,635 | | | $ | 26,760 | |
Maturities of lease liabilities as of April 26, 2026 are as follows:
| | | | | |
| (in thousands) | |
| Fiscal Year Ending: | |
| 2027 (remaining nine months) | $ | 5,856 | |
| 2028 | 7,218 | |
| 2029 | 6,074 | |
| 2030 | 4,036 | |
| 2031 | 3,465 | |
| Thereafter | 3,441 | |
| Total lease payments | 30,090 | |
| Less: imputed interest | (4,455) | |
| Total | $ | 25,635 | |
Note 11: Commitments and Contingencies
Legal Matters
From time to time, the Company is involved in various claims, litigation, and other legal actions that are normal to the nature of its business, including with respect to intellectual property, contract, product liability, employment, and environmental matters. In accordance with ASC 450-20, "Loss Contingencies," the Company accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. The Company also discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if material and if the amount can be reasonably estimated. The Company does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. However, for liabilities that are reasonably possible but not probable, the Company discloses the amount of reasonably possible loss or range of reasonably possible loss, if material and if the amount can be reasonably estimated. The Company evaluates, at least quarterly, developments in its legal matters that could affect the amount of liability that has been previously accrued, and makes adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount. The Company may be unable to estimate a possible loss or range of possible loss due to various reasons, including, among others: (i) if the damages sought are indeterminate, (ii) if the proceedings are in early stages, (iii) if there is uncertainty as to the outcome of pending appeals, motions or settlements, (iv) if there are significant factual issues to be determined or resolved, and (v) if there are novel or unsettled legal theories presented. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any.
Because the outcomes of litigation and other legal matters are inherently unpredictable, the Company's evaluation of legal matters or proceedings often involves a series of complex assessments by management about future events and can rely heavily on estimates and assumptions. While the consequences of certain unresolved matters and proceedings are not presently determinable, and an estimate of the probable and reasonably possible loss or range of loss for such proceedings cannot be reasonably made, an adverse outcome from such proceedings could have a material adverse effect on the Company's financial condition and results of operations in any given reporting period. In the opinion of management, after consulting with legal counsel, any ultimate liability related to current outstanding claims and lawsuits, individually or in the aggregate, is not expected to have a material adverse effect on the Company's financial condition, results of operations or cash flows. However, legal matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond the Company's control.
As such, even though the Company intends to vigorously defend itself with respect to its legal matters, there can be no assurance that the final outcome of these matters will not materially and adversely affect the Company's business, financial condition, operating results, or cash flows.
On March 25, 2022, Harman Becker Automotive Systems GmbH and several of its affiliates (collectively "Harman") filed a complaint against certain Sierra Entities in the District Court of Munich, Germany. Harman asserted claims that the Sierra Entities, in connection with the delivery of certain modules by the Sierra Entities, violated a frame supply agreement, a quality assurance agreement and the United Nations Convention on Contracts for the International Sales of Goods. Harman alleged that it incurred approximately $16 million in damages and costs, the bulk of which amount related to settling with a customer that had to implement a firmware update provided by Sierra Entities' supplier in late 2018, before Sierra Wireless disposed of the automotive business, to address the alleged product defect. At this stage, the Company is unable to form a conclusion as to the likelihood of an unfavorable outcome or an estimate of the amount or range of any possible loss resulting from the alleged claims. The Company intends to defend the claims vigorously.
On February 20, 2025, February 25, 2025 and March 7, 2025, three Company stockholders filed separate, but substantively identical, putative class action complaints against the Company and certain of its current officers, Hong Q. Hou and Mark Lin, in the U.S. District Court for the Central District of California on behalf of persons and entities that purchased or otherwise acquired Company securities between August 27, 2024 and February 7, 2025. On June 9, 2025, the court entered an order consolidating the three actions (the "Securities Action"), appointing Luis Collazos as Lead Plaintiff, and Block & Leviton, LLP as Lead Counsel. On July 14, 2025, Lead Plaintiff filed a consolidated putative class action complaint (the "Consolidated Complaint") against the Company, Dr. Hou and Mr. Lin, on behalf of persons and entities that purchased or otherwise acquired Company securities between October 10, 2024 and February 7, 2025. The Consolidated Complaint asserts Exchange Act violations related to the Company’s disclosure surrounding its CopperEdgeTM products. Lead Plaintiff seeks compensatory damages and other relief. The Company, Dr. Hou and Mr. Lin filed a motion to dismiss the Consolidated Complaint on August 11, 2025, which the Court granted in part, and denied in part on October 8, 2025. By virtue of the ruling, Mr. Lin is no longer a defendant. On May 20, 2026, the Court granted Lead Plaintiff's motion for class certification for the period November 25, 2024 to February 7, 2025. At this stage, the Company is unable to form a conclusion as to the likelihood of an unfavorable outcome or an estimate of the amount or range of any possible loss resulting from the alleged claims.
On May 9, 2025 and August 12, 2025, other Company stockholders filed separate derivative actions in the U.S. District Court for the Central District of California against certain of the Company's directors and officers, which were subsequently
consolidated ("Federal Derivative Action"). On June 6, 2025 and November 24, 2025, other Company stockholders filed separate derivative actions in the Superior Court of the State of California for the County of Ventura against certain of the Company's directors and officers, which were also subsequently consolidated ("Ventura County Derivative Action" and together with the complaints filed in federal court, the "Derivative Actions"). The Derivative Actions assert breach of fiduciary duty and other claims based on factual allegations similar to those raised in the Securities Action. The plaintiffs in the Derivative Actions seek damages payable to the Company and declaratory, injunctive and other relief. On March 13, 2026, the court in the Ventura County Derivative Action entered an order staying the case pending final resolution of the forthcoming motion to dismiss in the Federal Derivative Action. On May 1, 2026, defendants filed a motion to dismiss the Amended Complaint in the Federal Derivative Action.
Environmental Matters
The Company vacated a former facility in Newbury Park, California in 2002, but continues to address groundwater and soil contamination at the site. The Company's efforts to address site conditions have been at the direction of the Los Angeles Regional Water Quality Control Board ("RWQCB"). In October 2013, an order was issued including a scope of proposed additional site work, monitoring, and remediation activities. The Company has been complying with RWQCB orders and direction, and continues to implement an approved remedial action plan addressing the soil, groundwater, and soil vapor at the site.
The Company has accrued liabilities where it is probable that a loss will be incurred and the cost or amount of loss can be reasonably estimated. Based on the latest determinations by the RWQCB and the most recent actions taken pursuant to the remedial action plan, the Company estimates the total range of probable loss to be between $9.1 million and $9.4 million. To date, the Company has made $8.1 million in payments towards the remedial action plan. As of April 26, 2026, the estimated range of probable loss remaining was between $1.0 million and $1.3 million. Given the uncertainties associated with environmental assessment and the remediation activities, the Company is unable to determine a best estimate within the range of loss. Therefore, the Company has recorded the minimum amount of probable loss and as of April 26, 2026, has a remaining accrual of $1.0 million related to this matter. These estimates could change as a result of changes in planned remedial actions, further actions from the regulatory agency, remediation technology, and other factors.
Indemnification
The Company has entered into agreements with its current and former executives and directors indemnifying them against certain liabilities incurred in connection with the performance of their duties. The Company's Certificate of Incorporation and Bylaws also contain indemnification obligations with respect to the Company's current directors and employees.
The Company is a party to a variety of agreements in the ordinary course of business under which the Company may be obligated to indemnify a third party with respect to certain matters. The impact on the Company's future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the final outcome of any claims and whether claims will be made.
Product Warranties
The Company's general warranty policy provides for repair or replacement of defective parts. In some cases, a refund of the purchase price is offered. In certain instances, the Company has agreed to other or additional warranty terms, including indemnification provisions.
The product warranty accrual reflects the Company's best estimate of probable liability under its product warranties. The Company accrues for known warranty issues if a loss is probable and can be reasonably estimated, and accrues for estimated incurred but unidentified issues based on historical experience. Historically, warranty expense and the related accrual has been immaterial to the Company's consolidated financial statements.
Licenses
Under certain license agreements, the Company is committed to make royalty payments based on the sales of products using certain technologies. The Company recognizes royalty obligations as determinable in accordance with agreement terms.
Deferred Compensation
The Company maintains a deferred compensation plan for certain officers and key executives that allows participants to defer a portion of their compensation for future distribution at various times permitted by the plan. This plan provides for a discretionary Company match up to a defined portion of the employee's deferral, with any match subject to a defined vesting schedule.
The Company's liability for the deferred compensation plan is presented below:
| | | | | | | | | | | |
| (in thousands) | April 26, 2026 | | January 25, 2026 |
| Accrued liabilities | $ | 3,419 | | | $ | 3,529 | |
| Other long-term liabilities | 47,172 | | | 42,535 | |
| Total deferred compensation liabilities under this plan | $ | 50,591 | | | $ | 46,064 | |
The Company has purchased whole life insurance on the lives of certain current deferred compensation plan participants. This corporate-owned life insurance is held in a grantor trust and is intended to cover a majority of the Company's costs of the deferred compensation plan.
The cash surrender value of the corporate-owned life insurance was $48.9 million and $46.2 million as of April 26, 2026 and January 25, 2026, respectively, and is included in "Other assets" in the Balance Sheets.
Note 12: Restructuring
From time to time, the Company takes steps to realign the business to focus on high-growth areas, provide customer value and make the Company more efficient. As a result, the Company has re-aligned resources and infrastructure, which resulted in restructuring charges related to one-time employee termination benefits of $1.2 million in the three months ended April 26, 2026 and the three months ended April 27, 2025. Restructuring related liabilities are included in "Accrued liabilities" in the Balance Sheets and restructuring charges were included in "Restructuring" in the Statements of Operations.
Restructuring activity is summarized as follows:
| | | | | | | | | | | | | | | | | |
| (in thousands) | One-time employee termination benefits | | Other restructuring | | Total |
| Balance at January 25, 2026 | $ | 697 | | | $ | — | | | $ | 697 | |
| Charges | 1,177 | | | — | | | 1,177 | |
| Cash payments | (1,649) | | | — | | | (1,649) | |
| Balance at April 26, 2026 | $ | 225 | | | $ | — | | | $ | 225 | |
Note 13: Concentration of Risk
The following significant customers accounted for at least 10% of the Company's net sales in one or more of the periods indicated:
| | | | | | | | | | | | | | | |
| Three Months Ended | | |
(percentage of net sales) (1) | April 26, 2026 | | April 27, 2025 | | | | |
| Customer A | 17% | | * | | | | |
| Customer B | 14% | | 12% | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
(1) In each period with an asterisk, the customer represented less than 10% of the Company's net sales.
The following table shows the customers that have an outstanding receivable balance that represents at least 10% of the Company's total net receivables as of one or more of the dates indicated:
| | | | | | | | | | | |
(percentage of net receivables) (1) | April 26, 2026 | | January 25, 2026 |
| Customer A | 23% | | 13% |
| Customer B | * | | 12% |
| Customer C | * | | 12% |
| Customer D | * | | 10% |
(1) In each period with an asterisk, the customer represented less than 10% of the Company's total net receivables.
Outside Subcontractors and Suppliers
The Company relies on a limited number of third-party subcontractors and suppliers for the supply of silicon wafers, chipsets and other electronic components, and for product manufacturing, packaging, testing and certain other tasks. Disruption or termination of supply sources or subcontractors have delayed and could in the future delay shipments and could have a material adverse effect on the Company. Although there are generally alternate sources for these materials and services, qualification of the alternate sources could cause delays sufficient to have a material adverse effect on the Company. A significant amount of the Company's third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located in the U.S., China, Israel, Japan, Taiwan and Vietnam. A significant amount of the Company's assembly and test operations are conducted by third-party contractors in China, Malaysia, Taiwan and Vietnam.
Note 14: Segment Information
The Company's Chief Executive Officer functions as the chief operating decision maker ("CODM"). The CODM makes operating decisions and assesses performance based on the net sales and gross profit of the Company's major product lines, which represent its operating segments, to allocate resources (including employees, property, and financial or capital resources) for each segment predominantly in the annual budget and forecasting process. The Company currently has three operating segments—Signal Integrity ("SIP"), Analog Mixed Signal and Wireless ("AMW"), and IoT Systems and Connectivity ("ISC")—that represent three separate reportable segments. The SIP reportable segment consists of a portfolio of optical and copper data communications and video transport products used in a wide variety of infrastructure and industrial applications. The AMW reportable segment provides infrastructure, industrial and high-end customers with high-performance protection devices and a portfolio of specialized radio frequency products. The SIP and AMW reportable segments together constitute our Semiconductor Products business. The ISC reportable segment provides industrial customers with an IoT solutions portfolio that includes a wide range of modules, gateways, routers, and connected services.
The Company’s assets are commingled among the various operating segments and the CODM does not use asset information in making operating decisions or assessing performance. Therefore, the Company has not included asset information by reportable segment in the segment disclosures below.
Net sales and gross profit by reportable segment were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended April 26, 2026 |
| (in thousands) | Signal Integrity | | Analog Mixed Signal and Wireless | | Total Semiconductor Products | | IoT Systems and Connectivity | | Unallocated(1) | | Total |
| Net sales | $ | 102,003 | | $ | 100,755 | | $ | 202,758 | | $ | 88,260 | | $ | — | | | $ | 291,018 |
| Segment cost of sales | 38,010 | | 41,600 | | 79,610 | | 56,694 | | 3,250 | | | 139,554 |
| Segment gross profit | $ | 63,993 | | $ | 59,155 | | $ | 123,148 | | $ | 31,566 | | $ | (3,250) | | | $ | 151,464 |
| | | | | | | | | | | |
| Segment gross margin | 62.7 | % | | 58.7 | % | | 60.7 | % | | 35.8 | % | | NM(2) | | |
| Gross margin | | | | | | | | | | | 52.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended April 27, 2025 |
| (in thousands) | Signal Integrity | | Analog Mixed Signal and Wireless | | Total Semiconductor Products | | IoT Systems and Connectivity | | Unallocated(1) | | Total |
| Net sales | $ | 73,521 | | $ | 90,623 | | $ | 164,144 | | $ | 86,916 | | $ | — | | | $ | 251,060 |
| Segment cost of sales | 25,357 | | 34,178 | | 59,535 | | 56,993 | | 3,243 | | | 119,771 |
| Segment gross profit | $ | 48,164 | | $ | 56,445 | | $ | 104,609 | | $ | 29,923 | | $ | (3,243) | | | $ | 131,289 |
| | | | | | | | | | | |
| Segment gross margin | 65.5 | % | | 62.3 | % | | 63.7 | % | | 34.4 | % | | NM(2) | | |
| Gross margin | | | | | | | | | | | 52.3 | % |
(1) Unallocated includes share-based compensation and amortization of acquired technology
(2) Not meaningful
Geographic Information
Net sales activity by geographic region was as follows:
| | | | | | | | | | | | | | | |
| | Three Months Ended | | |
| (percentage of total net sales) | April 26, 2026 | | April 27, 2025 | | | | |
| Asia-Pacific | 72% | | 63% | | | | |
| North America | 19% | | 22% | | | | |
| Europe | 9% | | 15% | | | | |
| 100% | | 100% | | | | |
The Company attributes sales to a country based on the ship-to address. The table below summarizes sales activity to geographies that represented greater than 10% of total sales for at least one of the periods presented:
| | | | | | | | | | | | | | | |
| | Three Months Ended | | |
| (percentage of total net sales) | April 26, 2026 | | April 27, 2025 | | | | |
| China (including Hong Kong) | 56% | | 44% | | | | |
| United States | 14% | | 18% | | | | |
| | | | | | | |
| | | | | | | |
Although a large percentage of the Company's products is shipped into the Asia-Pacific region, a significant number of products produced by these customers and incorporating the Company's semiconductor products are then sold outside this region.
Note 15: Stock Repurchase Program
The Company maintains a stock repurchase program that was initially approved by its board of directors (the "Board of Directors") in March 2008. The stock repurchase program does not have an expiration date and the Board of Directors has authorized expansion of the program over the years. On March 11, 2021, the Board of Directors approved the expansion of the stock repurchase program by an additional $350.0 million. There was no activity under the stock repurchase program during the three months ended April 26, 2026 and April 27, 2025. As of April 26, 2026, the remaining authorization under the program was $209.4 million. Under the program, the Company may repurchase its common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations. The Company's repurchases may be made through Rule 10b5-1 and/or Rule 10b-18 or other trading plans, open market purchases, privately negotiated transactions, block purchases or other transactions. To the extent the Company repurchases any shares of its common stock under the program in the future, the Company expects to fund such repurchases from cash on hand and borrowings on its Revolving Credit Facility. The Company has no obligation to repurchase any shares under the program and may suspend or discontinue it at any time.
Note 16: Derivatives and Hedging Activities
The Company is exposed to certain risks arising from both its business operations and economic conditions and principally manages its exposures to such risks through management of its core business activities. The Company, on a routine basis and in the normal course of business, experiences expenses denominated in foreign currencies, which include, but are not limited to, the Canadian Dollar ("CAD"), Swiss Franc ("CHF") and Great British Pound ("GBP"). Such expenses expose the Company to exchange rate fluctuations between these foreign currencies and the U.S. Dollar ("USD"). The Company occasionally uses derivative financial instruments, in the form of forward contracts, to mitigate a portion of the risk associated with adverse movements in these foreign currency exchange rates during a twelve-month window. Currency forward contracts involve fixing the exchange rate for delivery of a specified amount of foreign currency on a specified date. The Company's accounting treatment for these instruments is based on whether or not the instruments are designated as a hedging instrument. The Company applied hedge accounting to all foreign currency derivatives and designated these hedges as cash flow hedges.
The Company's foreign exchange contracts had the following outstanding balances:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | April 26, 2026 | | January 25, 2026 |
| (in thousands, except number of instruments data) | | Number of Instruments | | Sell Notional Value | | Buy Notional Value | | Number of Instruments | | Sell Notional Value | | Buy Notional Value |
| Sell USD/Buy CAD Forward Contract | | 18 | | $ | 22,471 | | | $ | 30,750 | | | 24 | | $ | 32,270 | | | $ | 44,250 | |
| Sell USD/Buy CHF Forward Contract | | 18 | | 6,682 | | | Fr. | 5,175 | | | 24 | | 8,868 | | | Fr. | 6,900 | |
| Sell USD/Buy GBP Forward Contract | | 18 | | 10,249 | | | £ | 7,575 | | | 24 | | 13,666 | | | £ | 10,100 | |
| Total | | 54 | | | | | | 72 | | | | |
These foreign currency forward contracts were designated as cash flow hedges and the unrealized gains or losses, net of tax, were recorded as a component of "Accumulated other comprehensive loss, net" ("AOCI") in the Balance Sheets. The effective portions of the cash flow hedges were recorded in AOCI until the hedged items were recognized in either "Product development and engineering expense" or "Selling, general and administrative expense" in the Statements of Operations once the foreign exchange contract matured, offsetting the underlying hedged expenses. Any ineffective portions of the cash flow hedges were recorded in "Non-operating income (expense), net" in the Statements of Operations. The Company presents its derivative assets and liabilities at their gross fair values in the Balance Sheets.
In the first quarter of fiscal year 2024, the Company entered into an interest rate swap agreement with a 2.75 year term to hedge the variability of interest payments on $150.0 million of debt outstanding on the Term Loans at a Term SOFR rate of 3.58%, plus a variable margin and spread based on the Company's consolidated leverage ratio. This interest rate swap agreement was partially terminated in the second quarter of fiscal year 2026 and fully terminated in the third quarter of fiscal year 2026.
The interest rate swap agreements have been designated as cash flow hedges and unrealized gains or losses, net of income tax, are recorded as a component of AOCI in the Balance Sheets. As the various settlements are made on a monthly basis, the realized gain or loss on the settlements are recorded in "Interest expense" in the Statements of Operations. There were no interest rate swap agreements for the three months ended April 26, 2026. The interest rate swap agreements resulted in a realized gain of $0.1 million for the three months ended April 27, 2025.