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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
____________________________________
FORM 10-Q
____________________________________
(Mark One)
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended July 31, 2022
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from             to             
Commission File Number 001-06395
____________________________________ 
SEMTECH CORPORATION
(Exact name of registrant as specified in its charter)
 ____________________________________
Delaware 95-2119684
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)

200 Flynn Road, Camarillo, California, 93012-8790
(Address of principal executive offices, Zip Code)

Registrant’s telephone number, including area code: (805498-2111
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s) Name of each exchange on which registered
Common Stock par value $0.01 per shareSMTC The Nasdaq Global Select Market
____________________________________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   x   No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x  Accelerated filer  
Non-accelerated filer 
  Smaller reporting company  
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  x 
Number of shares of common stock, $0.01 par value per share, outstanding at August 26, 2022: 63,516,341



SEMTECH CORPORATION
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JULY 31, 2022
 
2


Unless the context otherwise requires, the use of the terms "Semtech," "the Company," "we," "us" and "our" in this Quarterly Report on Form 10-Q refers to Semtech Corporation and, as applicable, its consolidated subsidiaries. This Quarterly Report on Form 10-Q may contain references to the Company’s trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q, including logos, artwork and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies' trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company.
Special Note Regarding Forward-Looking and Cautionary Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, as amended, based on our current expectations, estimates and projections about our operations, industry, financial condition, performance, results of operations, and liquidity. Forward-looking statements are statements other than historical information or statements of current condition and relate to matters such as future financial performance, future operational performance, the anticipated impact of specific items on future earnings, and our plans, objectives and expectations. Statements containing words such as "may," "believe," "anticipate," "expect," "intend," "plan," "project," "estimate," "should," "will," "designed to," "projections," or "business outlook," or other similar expressions constitute forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that could cause actual results and events to differ materially from those projected. Potential factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the failure of Sierra Wireless, Inc. (“Sierra Wireless”) to obtain shareholder approval as required for the proposed acquisition; the failure to obtain regulatory approvals required for the closing of the proposed acquisition, including the approval of the Supreme Court of British Columbia; the failure to satisfy the conditions to the closing of the proposed acquisition; the effect of the announcement of the proposed acquisition on the ability of the Company or Sierra Wireless to retain and hire key personnel and maintain business relationships with customers, suppliers and others with whom they each do business, or on the Company’s or Sierra Wireless’ operating results, the market price of common stock and business generally; potential legal proceedings relating to the proposed acquisition and the outcome of any such legal proceeding; the inherent risks, costs and uncertainties associated with integrating the businesses successfully and risks of not achieving all or any of the anticipated benefits of the proposed acquisition, or the risk that the anticipated benefits of the proposed acquisition may not be fully realized or take longer to realize than expected; the occurrence of any event, change or other circumstances that could give rise to the termination of the arrangement agreement; the risk that the proposed acquisition will not be consummated within the expected time period, or at all; the uncertainty surrounding the impact and duration of supply chain constraints and any associated disruptions; the uncertainty surrounding the impact and duration of the COVID-19 pandemic; export restrictions and laws affecting the Company's trade and investments and tariffs or the occurrence of trade wars; worldwide economic and political disruptions, including as a result of inflation and the current conflict between Russia and Ukraine; competitive changes in the marketplace including, but not limited to, the pace of growth or adoption rates of applicable products or technologies; downturns in the business cycle; decreased average selling prices of the Company’s products; the Company’s reliance on a limited number of suppliers and subcontractors for components and materials; changes in projected or anticipated end-user markets; and the Company's ability to forecast and achieve anticipated net sales and earnings estimates in light of periodic economic uncertainty, including impacts arising from Asian, European and global economic dynamic; and those factors set forth under "Risk Factors" in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2022 and under “Risk Factors” in this Quarterly Report on Form 10-Q, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with SEC. In light of the significant risks and uncertainties inherent in the forward-looking information included herein that may cause actual performance and results to differ materially from those predicted, any such forward-looking information should not be regarded as representations or guarantees by the Company of future performance or results, or that its objectives or plans will be achieved, or that any of its operating expectations or financial forecasts will be realized. Reported results should not be considered an indication of future performance. Investors are cautioned not to place undue reliance on any forward-looking information contained herein, which reflect management’s analysis only as of the date hereof. Except as required by law, the Company assumes no obligation to publicly release the results of any update or revision to any forward-looking statement that may be made to reflect new information, events or circumstances after the date hereof or to reflect the occurrence of unanticipated or future events, or otherwise.
In addition to regarding forward-looking statements with caution, you should consider that the preparation of the consolidated financial statements requires us to draw conclusions and make interpretations, judgments, assumptions and estimates with respect to certain factual, legal, and accounting matters. Our consolidated financial statements might have been materially impacted if we had reached different conclusions or made different interpretations, judgments, assumptions or estimates.
3


PART I - FINANCIAL INFORMATION
 
ITEM 1.Financial Statements

SEMTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
 
 Three Months EndedSix Months Ended
 July 31, 2022August 1, 2021July 31, 2022August 1, 2021
Net sales$209,254 $185,004 $411,403 $355,376 
Cost of sales73,435 69,572 145,331 135,083 
Gross profit135,819 115,432 266,072 220,293 
Operating costs and expenses, net:
Selling, general and administrative48,119 41,977 91,483 80,781 
Product development and engineering40,601 35,497 79,390 72,287 
Intangible amortization1,048 1,298 2,096 2,596 
Gain on sale of business(17,986) (17,986) 
Total operating costs and expenses, net71,782 78,772 154,983 155,664 
Operating income64,037 36,660 111,089 64,629 
Interest expense(1,259)(1,185)(2,456)(2,384)
Non-operating income, net125 213 387 307 
Investment impairments and credit loss reserves, net429 (468)405 (714)
Income before taxes and equity in net gains of equity method investments63,332 35,220 109,425 61,838 
Provision for income taxes12,019 2,963 20,088 6,161 
Net income before equity in net gains of equity method investments51,313 32,257 89,337 55,677 
Equity in net gains of equity method investments283 674 307 752 
Net income51,596 32,931 89,644 56,429 
Net loss attributable to noncontrolling interest(2)(2)(3)(4)
Net income attributable to common stockholders$51,598 $32,933 $89,647 $56,433 
Earnings per share:
Basic$0.81 $0.51 $1.41 $0.87 
Diluted$0.81 $0.50 $1.39 $0.86 
Weighted-average number of shares used in computing earnings per share:
Basic63,500 64,721 63,725 64,905 
Diluted63,977 65,584 64,270 65,849 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.
4


SEMTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 
  Three Months EndedSix Months Ended
 July 31, 2022August 1, 2021July 31, 2022August 1, 2021
Net income $51,596 $32,931 $89,644 $56,429 
Other comprehensive income, net:
Unrealized gain on foreign currency cash flow hedges, net546  546  
Reclassifications of realized gain on foreign currency cash flow hedges, net to net income(142) (142) 
Unrealized gain on interest rate cash flow hedges, net307 265 1,564 729 
Reclassifications of realized gain on interest rate cash flow hedges, net to net income(174)(187)(54)(366)
Reclassification of cumulative translation gain to net income(48) (48) 
Change in defined benefit plans, net23 159 46 314 
Other comprehensive income, net512 237 1,912 677 
Comprehensive income52,108 33,168 91,556 57,106 
Comprehensive loss attributable to noncontrolling interest(2)(2)(3)(4)
Comprehensive income attributable to common stockholders$52,110 $33,170 $91,559 $57,110 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.









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SEMTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
July 31, 2022January 30, 2022
Assets
Current assets:
Cash and cash equivalents$362,150 $279,601 
Accounts receivable, less allowances of $748 and $747, respectively
71,105 71,507 
Inventories107,628 114,003 
Prepaid taxes2,298 5,983 
Other current assets33,905 31,201 
Total current assets577,086 502,295 
Non-current assets:
Property, plant and equipment, net of accumulated depreciation of $253,583 and $254,764, respectively
134,015 134,940 
Deferred tax assets26,977 27,803 
Goodwill350,306 351,141 
Other intangible assets, net4,708 6,804 
Other assets106,740 107,928 
TOTAL ASSETS$1,199,832 $1,130,911 
Liabilities and Equity
Current liabilities:
Accounts payable$53,759 $50,695 
Accrued liabilities86,370 77,704 
Total current liabilities140,129 128,399 
Non-current liabilities:
Deferred tax liabilities1,159 1,132 
Long term debt171,917 171,676 
Other long-term liabilities87,581 91,929 
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.01 par value, 250,000,000 shares authorized, 78,136,144 issued and 63,516,341 outstanding and 78,136,144 issued and 64,098,565 outstanding, respectively
785 785 
Treasury stock, at cost, 14,619,803 shares and 14,037,579 shares, respectively
(594,449)(549,942)
Additional paid-in capital506,178 491,956 
Retained earnings886,507 796,860 
Accumulated other comprehensive loss(163)(2,075)
Total stockholders’ equity798,858 737,584 
Noncontrolling interest188 191 
Total equity799,046 737,775 
TOTAL LIABILITIES AND EQUITY$1,199,832 $1,130,911 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.
6


SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
Three Months Ended July 31, 2022
Common StockAccumulated Other Comprehensive Loss
Number of Shares OutstandingAmountTreasury Stock, at CostAdditional Paid-in CapitalRetained EarningsStockholders’ EquityNoncontrolling InterestTotal Equity
Balance at May 1, 202263,466,933 $785 $(596,187)$496,151 $834,909 $(675)$734,983 $190 $735,173 
Net income— — — — 51,598 — 51,598 (2)51,596 
Other comprehensive income— — — — — 512 512 — 512 
Share-based compensation— — — 12,608 — — 12,608 — 12,608 
Treasury stock reissued49,408 — 1,738 (2,581)— — (843)— (843)
Balance at July 31, 202263,516,341 $785 $(594,449)$506,178 $886,507 $(163)$798,858 $188 $799,046 

Six Months Ended July 31, 2022
Common StockAccumulated Other Comprehensive Loss
Number of Shares OutstandingAmountTreasury Stock, at CostAdditional Paid-in CapitalRetained EarningsStockholders’ EquityNoncontrolling InterestTotal Equity
Balance at January 30, 202264,098,565 $785 $(549,942)$491,956 $796,860 $(2,075)$737,584 $191 $737,775 
Net income— — — — 89,647 — 89,647 (3)89,644 
Other comprehensive income— — — — — 1,912 1,912 — 1,912 
Share-based compensation— — — 24,711 — — 24,711 — 24,711 
Repurchase of common stock(762,093)— (50,000)— — — (50,000)— (50,000)
Treasury stock reissued179,869 — 5,493 (10,489)— — (4,996)— (4,996)
Balance at July 31, 202263,516,341 $785 $(594,449)$506,178 $886,507 $(163)$798,858 $188 $799,046 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.






7



SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)

Three Months Ended August 1, 2021
Common StockAccumulated Other Comprehensive Loss
Number of Shares OutstandingAmountTreasury Stock, at CostAdditional Paid-in CapitalRetained EarningsStockholders’ EquityNoncontrolling InterestTotal Equity
Balance at May 2, 202164,897,920 $785 $(460,249)$476,773 $694,696 $(7,728)$704,277 $208 $704,485 
Net income— — — — 32,933 — 32,933 (2)32,931 
Other comprehensive income— — — — — 237 237 — 237 
Share-based compensation— — — 12,334 — — 12,334 — 12,334 
Repurchase of common stock(639,519)— (42,000)— — — (42,000)— (42,000)
Treasury stock reissued138,340 — 3,050 (2,414)— — 636 — 636 
Balance at August 1, 202164,396,741 $785 $(499,199)$486,693 $727,629 $(7,491)$708,417 $206 $708,623 

Six Months Ended August 1, 2021
Common StockAccumulated Other Comprehensive Loss
Number of Shares OutstandingAmountTreasury Stock, at CostAdditional Paid-in CapitalRetained EarningsStockholders’ EquityNoncontrolling InterestTotal Equity
Balance at January 31, 202165,098,379 $785 $(438,798)$473,728 $671,196 $(8,168)$698,743 $210 $698,953 
Net income— — — — 56,433 — 56,433 (4)56,429 
Other comprehensive income— — — — — 677 677 — 677 
Share-based compensation— — — 24,530 — — 24,530 — 24,530 
Repurchase of common stock(1,000,461)— (67,000)— — — (67,000)— (67,000)
Treasury stock reissued298,823 — 6,599 (11,565)— — (4,966)— (4,966)
Balance at August 1, 202164,396,741 $785 $(499,199)$486,693 $727,629 $(7,491)$708,417 $206 $708,623 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

8


SEMTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
 July 31, 2022August 1, 2021
Cash flows from operating activities:
Net income$89,644 $56,429 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization14,998 15,221 
Amortization of right-of-use assets2,302 2,182 
Investment impairments and credit loss reserves, net(405)714 
Accretion of deferred financing costs and debt discount241 241 
Deferred income taxes261 719 
Share-based compensation24,143 23,356 
(Gain) loss on disposition of business operations and assets(17,978)2 
Equity in net gains of equity method investments(307)(752)
Corporate-owned life insurance, net831 3,626 
Changes in assets and liabilities:
Accounts receivable, net402 (2,629)
Inventories(15)(15,537)
Other assets2,836 2,434 
Accounts payable5,676 2,274 
Accrued liabilities7,230 2,874 
Other liabilities(2,530)(5,555)
Net cash provided by operating activities127,329 85,599 
Cash flows from investing activities:
Proceeds from sales of property, plant and equipment 42 
Purchase of property, plant and equipment(15,583)(12,732)
Proceeds from sale of investments2,275  
Purchase of investments(3,288)(3,177)
Proceeds from sale of business, net of cash disposed26,812  
Proceeds from corporate-owned life insurance2,676  
Premiums paid for corporate-owned life insurance(2,676) 
Net cash provided by (used in) investing activities10,216 (15,867)
Cash flows from financing activities:
Proceeds from revolving line of credit10,000  
Payments of revolving line of credit(10,000)(4,000)
Payment for employee share-based compensation payroll taxes(5,616)(7,289)
Proceeds from exercise of stock options620 2,323 
Repurchase of common stock(50,000)(67,000)
Net cash used in financing activities(54,996)(75,966)
Net increase (decrease) in cash and cash equivalents82,549 (6,234)
Cash and cash equivalents at beginning of period279,601 268,891 
Cash and cash equivalents at end of period$362,150 $262,657 
Supplemental disclosure of cash flow information:
Interest paid$1,931 $2,120 
Income taxes paid$5,375 $3,163 
Non-cash investing and financing activities:
Accounts payable related to capital expenditures$3,384 $2,872 
Conversion of notes into equity$ $626 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.
9


SEMTECH CORPORATION AND SUBSIDIARIES
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 global supplier of high performance analog and mixed-signal semiconductors and advanced algorithms. The end customers for the Company’s products are primarily original equipment manufacturers that produce and sell electronics.
Fiscal Year
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 second quarters of fiscal years 2023 and 2022 each consisted of 13 weeks.
Principles of Consolidation
The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company, in accordance with accounting principles generally accepted 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 30, 2022 ("Annual Report"). The Company’s interim unaudited condensed consolidated statements of income are referred to herein as the "Statements of Income." The Company’s interim unaudited condensed consolidated balance sheets are referred to herein as the "Balance Sheets" and interim unaudited condensed consolidated statements of cash flows 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 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 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.
Accounting Guidance Issued, but not yet Adopted as of July 31, 2022
In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2021-08, “Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistencies related to recognition of an acquired contract liability, and to payment terms and their effect on subsequent revenue recognized by the acquirer. Among other changes, this ASU requires that an acquirer account for acquired revenue contracts in accordance with Accounting Standards Codification ("ASC") 606, "Revenue from Contracts with Customers," as if it had originated the contracts. If the acquirer is unable to assess or rely on how the acquiree applied ASC 606, the acquirer should consider the terms of the acquired contracts as of the contract inception or contract modification date in applying ASC 606 to determine what should be recorded at the acquisition date. The amendments also provide certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination. The guidance is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.


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Note 2: Acquisition and Divestiture
Proposed Transaction with Sierra Wireless, Inc.
Arrangement Agreement
On August 2, 2022, the Company entered into an Arrangement Agreement (the “Arrangement Agreement”) with Sierra Wireless, Inc., a corporation existing under the Canada Business Corporations Act (“Sierra Wireless”), and 13548597 Canada Inc., a corporation formed under the Canada Business Corporations Act, and the Company's wholly owned subsidiary (“Purchaser”), pursuant to which, among other things, Purchaser will acquire all of the issued and outstanding common shares of Sierra Wireless (the “Arrangement”). The Arrangement will be implemented by way of a plan of arrangement (the “Plan of Arrangement”) in accordance with the Canada Business Corporations Act. On the terms and subject to the conditions of the Arrangement Agreement and the Plan of Arrangement, at the effective time of the Arrangement (the “Effective Time”), each common share of Sierra Wireless that is issued and outstanding immediately prior to the Effective Time will be transferred to the Purchaser in consideration for the right to receive $31.00 USD per share of Sierra Wireless’ common shares, in an all-cash transaction representing total purchase consideration of approximately $1.2 billion.
The closing of the Arrangement is subject to customary closing conditions, including: (i) approval by the securityholders of Sierra Wireless; (ii) receipt of applicable regulatory approvals, including approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), from the Federal Trade Commission and the U.S. Department of Justice and approval under the Competition Act (Canada); (iii) approval by the Supreme Court of British Columbia; (iv) the absence of any law, injunction or other governmental order that prohibits the consummation of the Arrangement; and (v) other customary closing conditions, including the accuracy of the other party’s representations and warranties (subject to certain materiality qualifications), and each party’s compliance with its covenants and agreements contained in the Arrangement Agreement.
Assuming the timely satisfaction of the conditions to closing, the Company expects the Arrangement will close during its fiscal year 2023. Until close, the Company and Sierra Wireless will remain separate independent companies.
Divestiture
On May 3, 2022, the Company completed the divestiture of its high reliability discrete diodes and assemblies business (the “Disposal Group”) to Micross Components, Inc. for $26.8 million, net of cash disposed, in an all-cash transaction. The divestiture resulted in a gain of $18.0 million for the three and six months ended July 31, 2022, which was recorded in "Gain on sale of business" in the Statements of Income. As a result of the transaction, the Company disposed of $0.8 million of goodwill based on the relative fair value of the Disposal Group and the portion of the Wireless and Sensing reporting unit that will be retained. The estimated fair value of the Disposal Group less estimated costs to sell exceeded its carrying amount as of the transaction date. As the sale of the Disposal Group is not considered a strategic shift that will have a major effect on the Company’s operations or financial results, it is not reported as discontinued operations.

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Note 3: Earnings per Share
The computation of basic and diluted earnings per share was as follows:
 Three Months EndedSix Months Ended
(in thousands, except per share data)July 31, 2022August 1, 2021July 31, 2022August 1, 2021
Net income attributable to common stockholders$51,598 $32,933 $89,647 $56,433 
Weighted-average shares outstanding–basic63,500 64,721 63,725 64,905 
Dilutive effect of share-based compensation477 863 545 944 
Weighted-average shares outstanding–diluted63,977 65,584 64,270 65,849 
Earnings per share:
Basic$0.81 $0.51 $1.41 $0.87 
Diluted$0.81 $0.50 $1.39 $0.86 
Anti-dilutive shares not included in the above calculations210 4 83  
Diluted earnings 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 and market-condition restricted stock unit awards if certain conditions have been met, but excludes such incremental shares that would have an anti-dilutive effect.
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Note 4: Share-Based Compensation
Financial Statement Effects and Presentation
Pre-tax share-based compensation was included in the Statements of Income as follows:
Three Months EndedSix Months Ended
(in thousands)July 31, 2022August 1, 2021July 31, 2022August 1, 2021
Cost of sales$610 $651 $1,385 $1,369 
Selling, general and administrative8,588 7,098 14,720 14,457 
Product development and engineering4,052 3,768 8,038 7,530 
Total share-based compensation$13,250 $11,517 $24,143 $23,356 
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 grant date for these awards is equal to the measurement date. These awards 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 4 years). In the six months ended July 31, 2022, the Company granted 245,851 restricted stock units to employees.
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 that are not employed by the Company or any of its subsidiaries. Under the Company's director compensation program, a portion of the restricted stock units granted under the program will be settled in cash and a portion will be settled in shares of the Company's common stock. Restricted stock units awarded under the program are scheduled to vest on the earlier of (i) one year after the grant date or (ii) the day immediately preceding the Company's annual meeting of stockholders in the year following the grant. The portion of a restricted stock unit award under the program that is to be settled in cash will, subject to vesting, be settled when the director who received the award separates from the board of directors. The portion of a restricted stock unit award under the program that is to be settled in shares of the Company's common stock will, subject to vesting, be settled promptly following vesting. In the six months ended July 31, 2022, the Company granted to the non-employee directors 15,579 restricted stock units that settle in cash and 15,579 restricted stock units that settle in shares.
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. 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 six months ended July 31, 2022, the Company granted 125,399 TSR Awards, which are accounted for as equity awards. The market condition is determined based upon the Company’s TSR benchmarked against the TSR of the S&P SPDR Semiconductor ETF (NYSE:XSD) over one, two and three year periods (one-third of the awards vesting each performance period). Generally, the fiscal year 2023 TSR 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 six months ended July 31, 2022 for each one, two and three year performance period was $57.92, $68.94 and $75.69, respectively.

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Note 5: Available-for-sale securities
The following table summarizes the values of the Company’s available-for-sale securities:
 July 31, 2022January 30, 2022
(in thousands)Fair ValueAmortized
Cost
Gross
Unrealized Gain/(Loss)
Fair ValueAmortized
Cost
Gross
Unrealized Gain/(Loss)
Convertible debt$13,403 $14,983 $(1,580)$12,872 $14,401 $(1,529)
Total available-for-sale securities$13,403 $14,983 $(1,580)$12,872 $14,401 $(1,529)
The following table summarizes the maturities of the Company’s available-for-sale securities:
July 31, 2022
(in thousands)Fair ValueAmortized Cost
Within 1 year$11,766 $12,593 
After 1 year through 5 years1,637 2,390 
Total available-for-sale securities$13,403 $14,983 
The Company's available-for-sale securities consist of investments in convertible debt instruments issued by privately-held companies. The available-for-sale securities with maturities within one year were included in "Other current assets" and maturities greater than one year were included in "Other assets" in the Balance Sheets.






14


Note 6: 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 fair values of financial assets and liabilities measured and recorded at fair value on a recurring basis were presented in the Balance Sheets as follows:
 July 31, 2022January 30, 2022
(in thousands)Total(Level 1)(Level 2)(Level 3)Total(Level 1)(Level 2)(Level 3)
Financial assets:
Interest rate swap agreement$2,152 $ $2,152 $ $229 $ $229 $ 
Total return swap contracts400  400      
Convertible debt13,403   13,403 12,872   12,872 
Foreign currency forward contracts539  539      
Total financial assets$16,494 $ $3,091 $13,403 $13,101 $ $229 $12,872 
Financial liabilities:
Foreign currency forward contracts$42 $