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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 October 29, 2023
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: (805) 498-2111
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 December 1, 2023: 64,284,760


SEMTECH CORPORATION
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 29, 2023
 
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 Company's ability to comply with, or pursue business strategies due to, the covenants under the agreements governing its indebtedness; the Company's ability to forecast and achieve anticipated net sales and earnings estimates in light of periodic economic uncertainty; the inherent risks, costs and uncertainties associated with integrating Sierra Wireless, Inc. successfully and risks of not achieving all or any of the anticipated benefits or the risk that the anticipated benefits may not be fully realized or take longer to realize than expected; the uncertainty surrounding the impact and duration of supply chain constraints and any associated disruptions; 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 current geopolitical conflicts; tightening credit conditions related to the United States banking system concerns; 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; future responses to and effects of public health crises; and those factors set forth under "Risk Factors" in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2023 filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2023, 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.
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PART I - FINANCIAL INFORMATION
 
ITEM 1.Financial Statements

SEMTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 Three Months EndedNine Months Ended
 October 29, 2023October 30, 2022October 29, 2023October 30, 2022
Net sales$200,899 $177,618 $675,810 $589,021 
Cost of sales97,925 62,049 347,734 207,380 
Amortization of acquired technology10,008 1,000 31,436 3,096 
Total cost of sales107,933 63,049 379,170 210,476 
Gross profit92,966 114,569 296,640 378,545 
Operating costs and expenses, net:
Selling, general and administrative47,663 40,227 165,022 131,710 
Product development and engineering46,911 35,056 144,945 114,446 
Intangible amortization4,853 — 14,606 — 
Restructuring3,646 2,244 14,608 2,244 
Gain on sale of business— (327)— (18,313)
Goodwill impairment2,266 — 281,821 — 
Total operating costs and expenses, net105,339 77,200 621,002 230,087 
Operating (loss) income(12,373)37,369 (324,362)148,458 
Interest expense(28,305)(9,009)(72,986)(11,465)
Interest income574 839 2,317 1,758 
Non-operating income (expense), net3,542 (64)1,503 (596)
Investment impairments and credit loss reserves, net(1,990)(29)(2,250)376 
(Loss) income before taxes and equity method (loss) income(38,552)29,106 (395,778)138,531 
(Benefit) provision for income taxes(311)6,327 53,864 26,415 
Net (loss) income before equity method (loss) income(38,241)22,779 (449,642)112,116 
Equity method (loss) income(11)(36)(30)271 
Net (loss) income(38,252)22,743 (449,672)112,387 
Net loss attributable to noncontrolling interest(2)(3)(5)(6)
Net (loss) income attributable to common stockholders$(38,250)$22,746 $(449,667)$112,393 
(Loss) earnings per share:
Basic$(0.60)$0.36 $(7.02)$1.76 
Diluted$(0.60)$0.36 $(7.02)$1.76 
Weighted-average number of shares used in computing (loss) earnings per share:
Basic64,216 63,764 64,048 63,738 
Diluted64,216 63,855 64,048 64,040 
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 STATEMENTS OF COMPREHENSIVE INCOME AND LOSS
(in thousands)
(unaudited)

  Three Months EndedNine Months Ended
 October 29, 2023October 30, 2022October 29, 2023October 30, 2022
Net (loss) income$(38,252)$22,743 $(449,672)$112,387 
Other comprehensive (loss) income, net:
Unrealized (loss) gain on foreign currency cash flow hedges, net(65)(382)(92)164 
Reclassifications of realized (gain) loss on foreign currency cash flow hedges, net, to net (loss) income(165)72 (441)(69)
Unrealized gain on interest rate cash flow hedges, net7,713 505 21,900 2,069 
Reclassifications of realized gain on interest rate cash flow hedges, net, to net loss(2,163)(625)(5,755)(680)
Cumulative translation adjustment(5,664)— (13,362)(48)
Change in defined benefit plans, net(51)22 (153)68 
Other comprehensive (loss) income, net(395)(408)2,097 1,504 
Comprehensive (loss) income(38,647)22,335 (447,575)113,891 
Comprehensive loss attributable to noncontrolling interest(2)(3)(5)(6)
Comprehensive (loss) income attributable to common stockholders$(38,645)$22,338 $(447,570)$113,897 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.









5

SEMTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
October 29, 2023January 29, 2023
Assets
Current assets:
Cash and cash equivalents$123,820 $235,510 
Accounts receivable, less allowances of $3,657 and $3,881, respectively
156,613 161,695 
Inventories160,586 207,704 
Prepaid taxes10,193 6,243 
Other current assets121,192 111,634 
Total current assets572,404 722,786 
Non-current assets:
Property, plant and equipment, net of accumulated depreciation of $279,147 and $257,978, respectively
158,834 169,293 
Deferred tax assets13,597 63,783 
Goodwill1,013,679 1,281,703 
Other intangible assets, net168,230 215,102 
Other assets111,385 116,961 
TOTAL ASSETS$2,038,129 $2,569,628 
Liabilities and Equity
Current liabilities:
Accounts payable$55,008 $100,676 
Accrued liabilities183,989 253,075 
Current portion of long-term debt— 43,104 
Total current liabilities238,997 396,855 
Non-current liabilities:
Deferred tax liabilities4,526 5,065 
Long-term debt1,373,618 1,296,966 
Other long-term liabilities86,549 114,707 
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.01 par value, 250,000,000 shares authorized, 78,136,144 issued and 64,284,760 outstanding and 78,136,144 issued and 63,870,581 outstanding, respectively
785 785 
Treasury stock, at cost, 13,851,384 shares and 14,265,563 shares, respectively
(560,894)(577,907)
Additional paid-in capital480,340 471,374 
Retained earnings408,573 858,240 
Accumulated other comprehensive income5,457 3,360 
Total stockholders’ equity334,261 755,852 
Noncontrolling interest178 183 
Total equity334,439 756,035 
TOTAL LIABILITIES AND EQUITY$2,038,129 $2,569,628 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.
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SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
Three Months Ended October 29, 2023
Common StockAccumulated Other Comprehensive Income
Number of Shares OutstandingAmountTreasury Stock, at CostAdditional Paid-in CapitalRetained EarningsStockholders’ EquityNoncontrolling InterestTotal Equity
Balance at July 30, 202364,030,212 $785 $(572,990)$486,365 $446,823 $5,852 $366,835 $180 $367,015 
Net loss— — — — (38,250)— (38,250)(2)(38,252)
Other comprehensive loss— — — — — (395)(395)— (395)
Share-based compensation— — — 9,132 — — 9,132 — 9,132 
Treasury stock reissued to settle share-based awards254,548 — 12,096 (15,157)— — (3,061)— (3,061)
Balance at October 29, 202364,284,760 $785 $(560,894)$480,340 $408,573 $5,457 $334,261 $178 $334,439 
Nine Months Ended October 29, 2023
Common StockAccumulated Other Comprehensive Income
Number of Shares OutstandingAmountTreasury Stock, at CostAdditional Paid-in CapitalRetained EarningsStockholders’ EquityNoncontrolling InterestTotal Equity
Balance at January 29, 202363,870,581 $785 $(577,907)$471,374 $858,240 $3,360 $755,852 $183 $756,035 
Net loss— — — — (449,667)— (449,667)(5)(449,672)
Other comprehensive income— — — — — 2,097 2,097 — 2,097 
Share-based compensation— — — 31,455 — — 31,455 — 31,455 
Treasury stock reissued to settle share-based awards414,179 — 17,013 (22,489)— — (5,476)— (5,476)
Balance at October 29, 202364,284,760 $785 $(560,894)$480,340 $408,573 $5,457 $334,261 $178 $334,439 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

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SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)
(in thousands, except share data)
(unaudited)
Three Months Ended October 30, 2022
Common StockAccumulated Other Comprehensive Loss
Number of Shares OutstandingAmountTreasury Stock, at CostAdditional Paid-in CapitalRetained EarningsStockholders’ EquityNoncontrolling InterestTotal Equity
Balance at July 31, 202263,516,341 $785 $(594,449)$506,178 $886,507 $(163)$798,858 $188 $799,046 
Net income— — — — 22,746 — 22,746 (3)22,743 
Other comprehensive loss— — — — — (408)(408)— (408)
Sale of warrants (see Note 9)
— — — 42,909 — — 42,909 — 42,909 
Purchase of convertible note hedge (see Note 9)
— — — (72,559)— — (72,559)— (72,559)
Share-based compensation— — — 9,016 — — 9,016 — 9,016 
Treasury stock reissued to settle share-based awards321,388 — 15,181 (23,331)— — (8,150)— (8,150)
Balance at October 30, 202263,837,729 $785 $(579,268)$462,213 $909,253 $(571)$792,412 $185 $792,597 
Nine Months Ended October 30, 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— — — — 112,393 — 112,393 (6)112,387 
Other comprehensive income— — — — — 1,504 1,504 — 1,504 
Sale of warrants (see Note 9)
— — — 42,909 — — 42,909 — 42,909 
Purchase of convertible note hedge (see Note 9)
— — — (72,559)— — (72,559)— (72,559)
Share-based compensation— — — 33,727 — — 33,727 — 33,727 
Repurchase of common stock(762,093)— (50,000)— — — (50,000)— (50,000)
Treasury stock reissued to settle share-based awards501,257 — 20,674 (33,820)— — (13,146)— (13,146)
Balance at October 30, 202263,837,729 $785 $(579,268)$462,213 $909,253 $(571)$792,412 $185 $792,597 
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)
Nine Months Ended
 October 29, 2023October 30, 2022
Cash flows from operating activities:
Net (loss) income$(449,672)$112,387 
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization69,104 22,321 
Amortization of right-of-use assets4,954 3,475 
Investment impairments and credit loss reserves, net2,250 (376)
Accretion of deferred financing costs4,940 520 
Write-off of deferred financing costs4,446 — 
Deferred income taxes56,355 2,383 
Share-based compensation28,341 27,228 
Gain on disposition of business operations and assets(259)(18,256)
Equity method loss (income)30 (271)
Corporate-owned life insurance, net2,797 23 
Goodwill impairment281,821 — 
Amortization of inventory step-up3,314 — 
Changes in assets and liabilities:
Accounts receivable, net5,016 (9,032)
Inventories41,631 (3,470)
Other assets(13,203)4,170 
Accounts payable(33,768)(3,430)
Accrued liabilities(109,127)12,127 
Other liabilities(6,809)(4,289)
Net cash (used in) provided by operating activities(107,839)145,510 
Cash flows from investing activities:
Proceeds from sales of property, plant and equipment408 33 
Purchase of property, plant and equipment(27,473)(22,643)
Proceeds from sale of investments— 2,275 
Purchase of investments(930)(6,748)
Purchase of intangibles(771)— 
Proceeds from sale of business, net of cash disposed— 26,322 
Proceeds from corporate-owned life insurance2,500 5,065 
Premiums paid for corporate-owned life insurance— (5,065)
Net cash used in investing activities(26,266)(761)
Cash flows from financing activities:
Proceeds from revolving line of credit70,000 10,000 
Payments of revolving line of credit— (33,000)
Payments of term loans(272,375)— 
Proceeds from convertible senior notes250,000 319,500 
Proceeds from sale of warrants— 42,909 
Purchase of convertible note hedge— (72,559)
Deferred financing costs(17,812)(10,253)
Payments for employee share-based compensation payroll taxes(5,476)(13,766)
Proceeds from exercise of stock options— 620 
Repurchase of common stock— (50,000)
Net cash provided by financing activities24,337 193,451 
Effect of foreign exchange rate changes on cash and cash equivalents(1,922)— 
Net (decrease) increase in cash and cash equivalents(111,690)338,200 
Cash and cash equivalents at beginning of period235,510 279,601 
Cash and cash equivalents at end of period$123,820 $617,801 

9

SEMTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands)
(unaudited)
Nine Months Ended
 October 29, 2023October 30, 2022
Supplemental disclosure of cash flow information:
Interest paid$63,525 $10,267 
Income taxes paid$19,655 $8,749 
Non-cash investing and financing activities:
Accounts payable related to capital expenditures$281 $3,803 
Accrued deferred financing costs$8,418 $3,330 
Conversion of notes into equity$1,271 $— 
The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.
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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 high-performance semiconductor, Internet of things ("IoT") systems and cloud connectivity service provider. 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 and enterprises to provide IoT connectivity to end devices.
The Company designs, develops and markets a wide range of products for commercial applications, the majority of which are sold into the 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 third quarters of fiscal years 2024 and 2023 each consisted of 13 weeks.
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 29, 2023 ("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 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.
Reclassifications
In fiscal year 2023, the Company reclassified amounts recorded for amortization of acquired technology intangible assets as a component of cost of sales. This was applied retrospectively and resulted in the reclassification of $1.0 million and $3.1 million of amortization of acquired technology intangible assets for the three and nine months ended October 30, 2022, respectively, from "Intangible amortization" within "Total operating costs and expenses, net" to "Amortization of acquired technology" within "Total cost of sales" in the Statements of Operations, which also had the impact of reducing gross profit by the same amount. This reclassification did not impact the Company's operating income, net income or earnings per share for any historical periods and also did not impact the Balance Sheets or Statements of Cash Flows.
During the third quarter of fiscal year 2024, the Company reclassified restructuring costs that were included in "Selling, general and administrative" and "Product development and engineering" within "Total operating costs and expenses, net" in the Statements of Operations to be separately presented in "Restructuring" within "Total operating costs and expenses, net" in the Statements of Operations. This was applied retrospectively and resulted in the reclassification of $2.1 million of restructuring costs for each of the three and nine months ended October 30, 2022 from "Selling, general and administrative" and $0.1 million of restructuring costs for each of the three and nine months ended October 30, 2022 from "Product development and engineering" to "Restructuring" in the Statements of Operations. This reclassification did not impact the Company's gross
11

profit, operating income, net income or earnings per share for any historical periods and also did not impact the Balance Sheets or Statements of Cash Flows.
Liquidity
The accompanying interim unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Management evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern over the next twelve months from the issuance of the accompanying interim unaudited condensed consolidated financial statements.
Compliance with the financial covenants in the Company’s Credit Agreement (as defined in Note 9, Long-Term Debt) is measured quarterly and failure to meet the covenant requirements would constitute an event of default under the Credit Agreement. There is no certainty the Company would be able to obtain waivers or amendments with the requisite lenders party thereto in order to maintain compliance. Due to risks and uncertainties with regards to forecasts and projections about our operations, industry, financial condition, performance, operating results and liquidity, the Company may not maintain compliance with the financial covenants over the next twelve months from the issuance of the accompanying interim unaudited condensed consolidated financial statements, which noncompliance would raise substantial doubt about the Company’s ability to continue as a going concern. If an event of default occurs and the Company is unable to obtain necessary waivers or amendments, the requisite lenders may elect to declare all outstanding borrowings, together with accrued and unpaid interest and other amounts payable thereunder, to be immediately due and payable. Further, if an event of default occurs, the lenders will have the right to proceed against the collateral granted to them to secure that debt. If the debt under the Credit Agreement were to be accelerated, the Company’s assets may not be sufficient to repay in full the debt that may become due as a result of that acceleration. The Company could seek replacement financing at prevailing market rates or raise additional capital by issuing equity or debt securities; however, this may not be on terms favorable to the Company, or available at all.
As of October 29, 2023, the Company was in compliance with the financial covenants in the Credit Agreement. In response to adverse market demand conditions, the Company has taken actions to reduce expenses and maintain compliance with its financial covenants. During the third quarter of fiscal year 2024, the Company entered into the Third Amendment (as defined in Note 9, Long-Term Debt) to extend and temporarily expand financial covenant relief under the Credit Agreement.
Based on the Company’s current projections, management believes the Company will maintain compliance with its financial covenants and the Company’s existing cash, projected operating cash flows and available borrowing capacity under its Revolving Credit Facility (as defined in Note 9, Long-Term Debt) are adequate to meet its operating needs, liabilities and commitments over the next twelve months from the issuance of the accompanying interim unaudited condensed consolidated financial statements.
Recent Accounting Pronouncements
The Company has considered all recent accounting pronouncements issued, but not yet effective, and does not expect any to have a material effect on the Company’s financial statements or results of operations.


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Note 2: Acquisition and Divestiture
Acquisition of Sierra Wireless, Inc.
On January 12, 2023 (the "Acquisition Date"), the Company completed the acquisition of all of the issued and outstanding common shares of Sierra Wireless, Inc. ("Sierra Wireless") in an all-cash transaction representing a total purchase consideration of approximately $1.3 billion (the "Sierra Wireless Acquisition"). The results of operations of Sierra Wireless have been included in the Statements of Operations since the Acquisition Date.
The transaction was accounted for as a business combination in accordance with Accounting Standards Codification ("ASC") 805, "Business Combinations." The purchase price allocation for the Sierra Wireless Acquisition was completed during the third quarter of fiscal year 2024. The fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company. In the fourth quarter of fiscal year 2023, a preliminary goodwill balance of $931.4 million was recognized for the excess of the consideration transferred over the net assets acquired and represented the expected revenue and cost synergies of the combined company and assembled workforce. In the nine months ended October 29, 2023, the Company finalized measurement period adjustments related to identifiable intangible assets, inventories, property, plant, and equipment, income and non-income based taxes, legal matters, and other assets and liabilities, which have been recorded to reflect facts and circumstances that existed as of the Acquisition Date. These adjustments increased the goodwill balance by $23.9 million to $955.3 million. In the nine months ended October 29, 2023, the Company also finalized its determination of the reporting units related to the Sierra Wireless Acquisition and completed an allocation of the goodwill balance to these reporting units. See Note 8, Goodwill and Intangible Assets, for additional information.
The following table presents the fair values of assets and liabilities assumed on the Acquisition Date based on valuations and management's estimates:
(in thousands)Amounts recognized as of Acquisition Date (as initially reported)Measurement period adjustmentAmounts recognized as of Acquisition Date (as adjusted)
Total purchase price consideration, net of cash acquired $68,794
$1,240,757 $1,240,757 
Assets:— 
Accounts receivable, net92,633 — 92,633 
Inventories96,339 (1,899)94,440 
Other current assets72,724 5,003 77,727 
Property, plant and equipment29,086 (2,628)26,458 
Intangible assets214,780 — 214,780 
Prepaid taxes3,001 — 3,001 
Deferred tax assets22,595 285 22,880 
Other assets14,878 — 14,878 
Liabilities:— 
Accounts payable50,413 210 50,623 
Accrued liabilities148,654 26,232 174,886 
Deferred tax liabilities4,824 350 5,174 
Other long-term liabilities32,785 (2,106)30,679 
Net assets acquired, excluding goodwill$309,360 $(23,925)$285,435 
Goodwill$931,397 $23,925 $955,322 
See Note 8, Goodwill and Intangible Assets, for additional information about goodwill impairments recorded in the three and nine months ended October 29, 2023 related to the Sierra Wireless Acquisition.
The following table provides a summary of the pro forma unaudited consolidated results of operations as if the Sierra Wireless Acquisition had been completed on February 1, 2021 (the first day of fiscal year 2022):
Three Months EndedNine Months Ended
October 30, 2022October 30, 2022
(in thousands)(unaudited)(unaudited)
Total revenues$343,674 $1,115,985 
Net loss$(5,806)$34,768 
The unaudited pro forma information presented does not purport to be indicative of the results that would have been achieved had the acquisition been consummated at the beginning of the period presented nor of the results which may occur in the future. The pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. The unaudited pro forma information does not include any adjustments for any restructuring activities, operating efficiencies or cost savings. The Company ends its fiscal year on the last Sunday in January. Prior to the transaction, Sierra
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Wireless's fiscal year ended on December 31. To comply with SEC rules and regulations for companies with different fiscal year ends, the pro forma combined financial information has been prepared utilizing periods that differ by up to a month.
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 $26.2 million, net of cash disposed, in an all-cash transaction. The divestiture resulted in a gain of $0.3 million and $18.3 million for the three and nine months ended October 30, 2022, respectively, which was recorded in "Gain on sale of business" in the Statements of Operations. As a result of the transaction, the Company disposed of $0.8 million of goodwill based on the relative fair value of the Disposal Group and the portion of the applicable reporting unit that was retained. The estimated fair value of the Disposal Group less estimated costs to sell exceeded its carrying amount as of the transaction date. As the sale of the Disposal Group was not considered a strategic shift that would have a major effect on the Company’s operations or financial results, it was not reported as discontinued operations.
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Note 3: (Loss) Earnings per Share
The computation of basic and diluted (loss) earnings per share was as follows:
 Three Months EndedNine Months Ended
(in thousands, except per share data)October 29, 2023October 30, 2022October 29, 2023October 30, 2022
Net (loss) income attributable to common stockholders$(38,250)$22,746 $(449,667)$112,393 
Weighted-average shares outstanding–basic64,216 63,764 64,048 63,738 
Dilutive effect of share-based compensation— 91 — 302 
Weighted-average shares outstanding–diluted64,216 63,855 64,048 64,040 
(Loss) earnings per share:
Basic$(0.60)$0.36 $(7.02)$1.76 
Diluted$(0.60)$0.36 $(7.02)$1.76 
Anti-dilutive shares not included in the above calculations:
Share-based compensation2,034 1,229 2,179 759 
Warrants8,573 8,573 8,573 8,573 
Total anti-dilutive shares10,607 9,802 10,752 9,332 
Basic earnings or loss per share is computed by dividing 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. Due to the Company's net loss for the three and nine months ended October 29, 2023, all shares underlying stock options and restricted stock units are considered anti-dilutive.
Any dilutive effect of the Warrants (as defined in Note 9, Long-Term Debt) is calculated using the treasury-stock method. During the three and nine months ended October 29, 2023, 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 period and due to net loss.
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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 Operations as follows:
Three Months EndedNine Months Ended
(in thousands)October 29, 2023October 30, 2022October 29, 2023October 30, 2022
Cost of sales$507 $633 $1,395 $2,018 
Selling, general and administrative3,059 (1,028)16,970 13,692 
Product development and engineering2,972 3,480 9,976 11,518 
Total share-based compensation$6,538 $3,085 $28,341 $27,228 
Restricted Stock Units, Employees
The Company grants restricted stock units to certain employees of which a portion are expected to be settled with shares of the Company's common stock and a portion are expected to be settled in cash. 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 3 or 4 years). The restricted stock units that are to be settled in cash are accounted for as liabilities and the value of the awards is re-measured at the end of each reporting period until settlement at the end of the requisite vesting period (typically 3 years). In the nine months ended October 29, 2023, the Company granted to certain employees 1,016,388 restricted stock units that settle in shares with a weighted-average grant date fair value of $27.27, including 123,652 restricted stock units granted to the current Chief Executive Officer ("CEO") that vest quarterly over a 3-year period and 232,635 restricted stock units granted to the former CEO ("Former CEO") prior to his retirement that vest quarterly over an 18-month period. In the nine months ended October 29, 2023, the Company granted to certain employees 9,432 restricted stock units that settle in cash.
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 would be settled in cash and a portion would 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. 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 service. The portion of a restricted stock unit award under the program that is to be settled in shares of stock will, subject to vesting, be settled promptly following vesting. In the nine months ended October 29, 2023, the Company granted to certain non-employee directors 37,116 restricted stock units that settle in cash and 37,116 restricted stock units that settle in shares with a weighted-average grant date fair value of $25.28.
The restricted stock units that are to be settled in cash are accounted for as liabilities. These awards are not typically settled until a non-employee director’s separation from service. 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 October 29, 2023, the total number of vested, but unsettled awards was 227,109 units and the liability associated with these awards was $3.0 million, of which $1.3 million was included in "Accrued liabilities" in the Balance Sheets relating to two previous non-employee directors currently serving short-term non-employee consultancies for the Company. The remaining $1.7 million was included in "Other long-term liabilities" in the Balance Sheets.
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 nine months ended October 29, 2023, the Company granted 202,951 TSR Awards, including 109,107 TSR Awards granted in the first quarter of fiscal year 2024, 61,827 TSR Awards granted in the second quarter of fiscal year 2024 and 32,017 TSR Awards granted in the third quarter of fiscal year 2024. 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
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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 values per unit of the TSR Awards granted in the first quarter of fiscal year 2024 for each one, two and three year performance period were $39.47, $45.36 and $49.79, respectively. The grant-date fair values per unit of the TSR Awards granted in the second quarter of fiscal year 2024 for each one, two and three year performance period were $23.65, $32.78 and $38.65, respectively. The grant-date fair values per unit of the TSR Awards granted in the third quarter of fiscal year 2024 for each one, two and three year performance period were $24.05, $32.09 and $37.51, 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 2024, 2025 and 2026 performance periods would be 405,902 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 nine months ended October 29, 2023, the Company granted 109,107 financial metric-based restricted stock units with a weighted-average grant date fair value of $30.21 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 2024, 2025 and 2026 performance periods would be 218,214 shares.
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Note 5: Available-for-sale securities
The following table summarizes the values of the Company’s available-for-sale securities:
 October 29, 2023January 29, 2023
(in thousands)Fair ValueAmortized
Cost		Gross
Unrealized Loss		Fair ValueAmortized
Cost		Gross
Unrealized Loss
Convertible debt investments$12,725 $14,259 $(1,534)$13,995 $15,635 $(1,640)
Total available-for-sale securities$12,725 $14,259 $(1,534)$13,995 $15,635 $(1,640)
The following table summarizes the maturities of the Company’s available-for-sale securities:
October 29, 2023
(in thousands)Fair ValueAmortized Cost
Within 1 year$12,725 $14,259 
Total available-for-sale securities$12,725 $14,259 
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. See Note 6, Fair Value Measurements, for further discussion of the valuation of the available-for-sale securities. The available-for-sale securities with maturities within one year were included in "Other current assets" and with maturities greater than one year were included in "Other assets" in the Balance Sheets. Unrealized gains or losses, net of tax, were recorded in "Accumulated other comprehensive income (loss)" in the Balance Sheets, and realized gains or losses as well as current expected credit loss reserves were recorded in "Non-operating income, net" in the Statements of Operations.






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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:
 October 29, 2023January 29, 2023
(in thousands)Total(Level 1)(Level 2)(Level 3)Total(Level 1)(Level 2)(Level 3)
Financial assets:
Interest rate swap agreement$20,603 $— $20,603 $— $6,067 $— $6,067 $— 
Total return swap contracts— — — — 91 — 91 — 
Convertible debt investments12,725 — — 12,725 13,995 — — 13,995 
Foreign currency forward contracts— — — — 717 — 717 — 
Total financial assets$33,328 $— $20,603 $12,725 $20,870 $— $6,875 $13,995 
Financial liabilities:
Interest rate swap agreement— — — — 6,432 — 6,432 — 
Total return swap contracts419 — 419 — — — — — 
Total financial liabilities$419 $— $419 $— $6,432 $— $6,432 $— 
During the nine months ended October 29, 2023, the Company had no transfers of financial assets or liabilities between Level 1, Level 2 or Level 3. As of October 29, 2023 and January 29, 2023, the Company had not elected the fair value option for any financial assets and liabilities for which such an election would have been permitted.
The convertible debt investments are valued utilizing a combination of estimates that are based on the estimated discounted cash flows associated with the debt and the fair value of the equity into which the debt may be converted, all of which are Level 3 inputs.
The following table presents a reconciliation of the changes in convertible debt investments in the nine months ended October 29, 2023:
(in thousands)
Balance at January 29, 2023$13,995 
Increase in credit loss reserve(610)
Interest accrued611 
Conversion to equity(1,271)
Balance at October 29, 2023$12,725 
The interest rate swap agreements are measured at fair value using readily available interest rate curves (Level 2 inputs). The fair value of each agreement is determined by comparing, for each settlement, the contract rate to the forward rate and discounting to the present value. Contracts in a gain position are recorded in "Other current assets" and "Other assets" in the Balance Sheets and the value of contracts in a loss position are recorded in "Accrued liabilities" and "Other long-term liabilities" in the Balance Sheets. See Note 17, Derivatives and Hedging Activities, for further discussion of the Company’s derivative instruments.
The foreign currency forward contracts were measured at fair value using readily available foreign currency forward and interest rate curves (Level 2 inputs). The fair value of each contract was determined by comparing the contract rate to the forward rate and discounting to the present value. Contracts in a gain position were recorded in "Other current assets" in the
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Balance Sheets and the value of contracts in a loss position were recorded in "Accrued liabilities" in the Balance Sheets. See Note 17, Derivatives and Hedging Activities, for further discussion of the Company’s derivative instruments.
The total return swap contracts are measured at fair value using quoted prices of the underlying investments (Level 2 inputs). The fair values of the total return swap contracts are recognized in the Balance Sheets in "Other Current Assets" if the instruments are in a gain position and in "Accrued Liabilities" if the instruments are in a loss position. See Note 17, 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 and Term Loans (as defined in Note 9, Long-Term Debt) are recorded at cost, which approximates fair value as the debt instruments bear interest at a floating rate. The 2027 Notes and 2028 Notes (as defined in Note 9, 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 2028 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 2028 Notes:
 October 29, 2023January 29, 2023
(in thousands)Fair Value HierarchyCarrying ValueFair ValueCarrying ValueFair Value
1.625% convertible senior notes due 2027, net (1)
Level 2309,961 309,961 308,150 345,075 
4.00% convertible senior notes due 2028, net (2)
Level 2241,448 228,606 — — 
Total long-term debt, net of debt issuance costs$551,409 $538,567 $308,150 $345,075 
(1) The 1.625% convertible senior notes due 2027, net, are reflected net of $9.5 million and $11.4 million of unamortized debt issuance costs as of October 29, 2023 and January 29, 2023, respectively.
(2) The 4.00% convertible senior notes due 2028, net, are reflected net of $8.6 million of unamortized debt issuance costs as of October 29, 2023.
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 decreased to $4.0 million as of October 29, 2023 from $4.2 million as of January 29, 2023. Additionally, in the three and nine months ended October 29, 2023, the Company recorded an other-than-temporary impairment of $1.6 million on one of its non-marketable equity investments. Credit loss reserves related to the Company’s available-for-sale debt securities and held-to-maturity debt securities with maturities within one year were included in “Other current assets” and with maturities greater than one year were included in “Other assets” in the Balance Sheets.





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Note 7: Inventories