CIRRUS LOGIC, INC.

1. Description of Business

Description of Business

Cirrus Logic, Inc. (“Cirrus Logic,” “We,” “Us,” “Our,” or the “Company”) is a leader in low-power, high-precision mixed-signal processing solutions that create innovative user experiences for the world’s top mobile and consumer applications.

We were incorporated in California in 1984, became a public company in 1989, and were reincorporated in the State of Delaware in February 1999. Our primary facility housing engineering, sales and marketing, and administration functions is located in Austin, Texas. We also have offices in various other locations in the United States, United Kingdom, and Asia, including the People’s Republic of China, South Korea, Japan, Singapore, and Taiwan. Our common stock, which has been publicly traded since 1989, is listed on the NASDAQ's Global Select Market under the symbol CRUS.

Basis of Presentation

We prepare financial statements on a 52- or 53-week year that ends on the last Saturday in March. Fiscal years 2025 and 2023 were 52-week years. Fiscal year 2024 was a 53-week year.

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires the use of management estimates. These estimates are subjective in nature and involve judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at fiscal year-end and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of money market funds, U.S. Government Treasury and Agency instruments with original maturities of three months or less at the date of purchase.

Leases

We account for leases under ASC 842, Leases. Our leases generally contain fixed rental payments, with additional variable payments linked to actual common area maintenance costs incurred by the landlord. These variable payments are not included within the lease liability and right-of-use ("ROU") asset, but are recognized as an expense when incurred. As our leases typically do not provide an implicit rate, the Company determines the Incremental Borrowing Rate ("IBR") for each lease based on the information available at the commencement date, taking into consideration necessary adjustments for collateral, currency, and lease term.

Operating leases in excess of 12 months are recognized on the balance sheet, with future lease payments recognized as a liability, measured at present value, and the ROU asset recognized for the lease term. Lease expense is recognized in the income statement over the lease term.

Inventories

Inventories are stated at the lower of cost or net realizable value on a first-in, first-out basis. Cost is computed using standard costs, which approximate actual cost. One of the factors we consistently evaluate in the application of this method is the extent to which products are accepted into the marketplace. By policy, we evaluate market acceptance based on known business factors and conditions by comparing forecasted customer unit demand for our products over a specific future period, or demand horizon, to quantities on hand at the end of each accounting period.

On a quarterly and annual basis, we analyze inventories on a part-by-part basis. Product life cycles and the competitive nature of the industry are factors considered in the evaluation of customer unit demand at the end of each quarterly accounting period. Inventory on-hand in excess of forecasted demand is considered to have reduced market value and, therefore, the cost basis is adjusted to net realizable value. Typically, market values for excess or obsolete inventories are considered to be zero. Inventory charges recorded for excess and obsolete inventory, including scrapped inventory, were $4.2 million in fiscal year 2025, related to a combination of quality issues and inventory exceeding demand. Net inventory reserve releases of $1.0 million in fiscal year 2024, primarily related to the sale of previously reserved inventory, offset by charges for excess and obsolete inventory.

Inventories were comprised of the following (in thousands):

Property, Plant and Equipment, net

Property, plant and equipment is recorded at cost, net of depreciation and amortization. Depreciation and amortization is calculated on a straight-line basis over estimated economic lives, ranging from 3 to 39 years. Leasehold improvements are depreciated over the shorter of the term of the lease or the estimated useful life. Furniture, fixtures, machinery, and equipment are all depreciated over a useful life of 3 to 10 years, while buildings are depreciated over a period of up to 39 years. In general, our capitalized software is amortized over a useful life of 3 years, with capitalized enterprise resource planning software being amortized over a useful life of 10 years. Gains or losses related to retirements or dispositions of fixed assets are recognized in the period incurred. Additionally, if impairment indicators exist, the Company will assess the carrying value in relation to the calculated fair value of the associated asset. There wereno material disposal charges for property, plant and equipment in fiscal years 2025 or 2024.

Property, plant and equipment was comprised of the following (in thousands):

Depreciation and amortization expense on property, plant, and equipment for fiscal years 2025, 2024, and 2023 was $31.1 million, $28.1 million, and $27.1 million, respectively.

Goodwill

Goodwill is recorded at the time of an acquisition and is calculated as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. The Company tests goodwill for impairment on an annual basis or more frequently if the Company believes indicators of impairment exist. Impairment evaluations involve management’s assessment of qualitative factors to determine whether it is more likely than not that goodwill is impaired. If management concludes from its assessment of qualitative factors that it is more likely than not that impairment exists, then a quantitative impairment test will be performed involving management estimates of future cash flows. Significant management judgment is required in the forecasts of future operating results that are used in these evaluations. Following the quantitative test, an impairment charge would be recorded for the amount the carrying value exceeds the calculated fair value. We elected to perform the qualitative assessment of impairment for fiscal year 2025, and based on this assessment, we concluded it was not more likely than not that the fair value of the reporting unit was less than its carrying amount. The Company has recordedno goodwill impairment in fiscal years 2025, 2024, and 2023.

Long-Lived Assets

Intangible assets include purchased technology licenses and patents that are reported at cost and are amortized on a straight-line basis over their useful lives, generally ranging from 1 to 5 years. Acquired intangibles include existing technology, core technology or patents, license agreements, in-process research & development, trademarks, tradenames, customer relationships, and non-compete agreements. These assets are amortized on a straight-line basis over lives ranging from 1 to 15 years.

We regularly review whether facts or circumstances exist that indicate the carrying values of property, plant and equipment or other long-lived assets, including intangible assets, are impaired. We assess the recoverability of assets by comparing the projected undiscounted net cash flows associated with those assets to their respective carrying amounts. We measure any impairment loss by comparing the fair value of the asset to its carrying amount. We estimate fair value based on discounted future cash flows, quoted market prices, or independent appraisals. See Note 7 — Intangibles, net and Goodwill for further detail. There wereno material intangible asset impairments recorded in fiscal years 2025 or 2024.

Foreign Currency Translation

Some of the Company's subsidiaries utilize the local currency as the functional currency. The Company’s main entities, including the entities that generate the majority of sales and employ the majority of employees, are U.S. dollar functional.

Concentration of Credit Risk

Financial instruments that potentially subject us to material concentrations of credit risk consist primarily of cash equivalents, marketable securities, long-term marketable securities, and trade accounts receivable. We are exposed to credit risk to the extent of the amounts recorded on the balance sheet. By policy, our cash equivalents, marketable securities, and long-term marketable securities are subject to certain nationally recognized credit standards, issuer concentrations, sovereign risk, and marketability or liquidity considerations.

In evaluating our trade receivables, we perform credit evaluations of our major customers’ financial condition and monitor closely all of our receivables to limit our financial exposure by limiting the length of time and amount of credit extended. In certain situations, we may require payment in advance or utilize letters of credit to reduce credit risk. By policy, we establish a reserve for trade accounts receivable based on the type of business in which a customer is engaged, the length of time a trade account receivable is outstanding, and other knowledge that we may possess relating to the probability that a trade receivable is at risk for non-payment.

We had two contract manufacturers aggregated at their parent level, Foxconn and Luxsan, who represented 41 percent and 21 percent, respectively, of our consolidated gross trade accounts receivable as of the end of fiscal year 2025. We had three contract manufacturers aggregated at their parent level, Foxconn, Luxshare Precision, and Pegatron, who represented 43 percent,11 percent, and 10 percent, respectively, of our consolidated gross trade accounts receivable as of the end of fiscal year 2024. No other distributor or contract manufacturer had receivable balances that represented more than 10 percent of consolidated gross trade accounts receivable as of the end of fiscal year 2025 or 2024.

Since the components we produce are largely proprietary and generally not available from second sources, we consider our end customer to be the entity specifying the use of our component in their design. These end customers may then purchase our products directly from us, from a distributor, or through a third-party manufacturer contracted to produce their end product. For fiscal years 2025, 2024 and 2023, our ten largest end customers represented approximately 96 percent,95 percent and 92 percent of our net sales, respectively. For fiscal years 2025, 2024, and 2023, we had one end customer, Apple Inc., who purchased through multiple contract manufacturers and represented approximately 89 percent,87 percent, and 83 percent, of the Company’s total net sales, respectively. No other customer or distributor represented more than 10 percent of net sales in fiscal years 2025, 2024, or 2023.

Revenue Recognition

We recognize revenue upon the transfer of promised goods or services to customers, in an amount that reflects the consideration the Company expects to be entitled in exchange for those goods or services.

Performance Obligations

The Company’s single performance obligation is the delivery of promised goods to the customer. The promised goods are explicitly stated in the customer contract and are comprised of a single type of good. This performance obligation is satisfied upon transfer of control of the promised goods to the customer, as defined per the shipping terms within the customer’s contract. The vast majority of the Company’s contracts with customers have an original expected term of one year or less.

Contract balances

Payments are typically due within 30 to 60 days of invoicing and terms do not include a significant financing component ornoncash consideration. There have been no material impairment losses on accounts receivable. There are no material contract liabilities recorded on the consolidated balance sheets.

Transaction price

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised goods to the customer. Fixed pricing is the consideration that is agreed upon in the customer contract. Variable pricing includes rights of return, price protection and stock rotation. Rights of return costs are estimated using the "most likely amount" method by reviewing historical returns to determine the most likely customer return rate and applying materiality thresholds. Price protection includes price adjustments available to certain distributors based upon established book price and a stated adjustment period. Stock rotation is also available to certain distributors based on a stated maximum of prior billings.

The Company estimates all variable consideration at the most likely amount which it expects to be entitled. The estimate is based on current and historical information available to the Company, including recent sales activity and pricing. Variable consideration is only included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company defers all variable consideration that does not meet the revenue recognition criteria.

Shipping Costs

Our shipping and handling costs are included in cost of sales for all periods presented in the consolidated statements of income.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs were $0.3 million, $0.3 million, and $0.5 million, in fiscal years 2025, 2024, and 2023, respectively.

Stock-Based Compensation

Stock-based compensation is measured at the grant date based on the grant-date fair value of the awards and is recognized as an expense, on a ratable basis, over the vesting period, which is generally between 1 and 4 years. Determining the amount of stock-based compensation to be recorded requires the Company to develop estimates used in calculating the grant-date fair value of stock options and market stock units. The Company calculates the grant-date fair value for stock options and market stock units ("MSUs") using the Black-Scholes valuation model and the Monte Carlo simulation, respectively. The use of valuation models requires the Company to make estimates of assumptions such as expected volatility, expected term, risk-free interest rate, expected dividend yield, and forfeiture rates. The grant-date fair value of restricted stock units ("RSUs") is the market value at grant date multiplied by the number of units. The grant-date fair value of performance stock units ("PSUs") is the market value at grant date multiplied by the target number of award units.

Income Taxes

We are required to calculate income taxes in each of the jurisdictions in which we operate. This process involves calculating the actual current tax liability as well as assessing temporary differences in the recognition of income or loss for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheet. We record a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company evaluates the ability to realize its deferred tax assets based on all the facts and circumstances, including projections of future taxable income and expiration dates of carryover tax attributes.

The calculation of our tax liabilities involves assessing uncertainties with respect to the application of complex tax rules and the potential for future adjustment of our uncertain tax positions by the U.S. Internal Revenue Service or other taxing jurisdiction. We recognize liabilities for uncertain tax positions based on the required two-step process. The first step requires us to determine if the weight of available evidence indicates that the tax position has met the threshold for recognition; therefore, we must evaluate whether it is more likely than not that the position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step requires us to measure the tax benefit of the tax position taken, or expected to be taken, in an income tax return as the largest amount that is more than 50 percent likely of being realized upon ultimate settlement. We reevaluate the uncertain tax positions each quarter based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, expirations of statutes of limitation, effectively settled issues under audit, and new audit activity. A change in the recognition step or measurement step would result in the recognition of a tax benefit or an additional charge to the tax provision in the period.

Although we believe the measurement of our liabilities for uncertain tax positions is reasonable, we cannot assure that the final outcome of these matters will not be different than what is reflected in the historical income tax provisions and accruals. If additional taxes are assessed as a result of an audit or litigation, it could have a material effect on our income tax provision and net income in the period or periods for which that determination is made. We operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues which may require an extended period of time to resolve and could result in additional assessments of income tax. We believe adequate provisions for income taxes have been made for all periods. See Note 17 - Income Taxes for further detail.

Government Assistance

The Company benefits from the Research and Development Expenditure Credit (“RDEC”) program in the United Kingdom. The RDEC is recorded as an offset to research and development expenses in theconsolidated statements of income, $43.0 million, $40.9 million, and $26.2 million in fiscal years 2025, 2024, and 2023, respectively. The RDEC is first settled against the Company's United Kingdom quarterly income tax payments with any remainder paid in cash on an annual basis. The RDEC receivable as of March 30, 2024 totaled $27.9 million, presented within "Other current Assets" on the consolidated balance sheets. There wasno RDEC receivable as of March 29, 2025. While the duration of RDEC benefits is indefinite, the program is subject to future policy changes and RDEC claims are subject to regular audits by the United Kingdom government.

Net Income Per Share

Basic net income per share is based on the weighted effect of common shares issued and outstanding and is calculated by dividing net income by the basic weighted average shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average number of common shares used in the basic net income per share calculation, plus the equivalent number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding. These potentially dilutive items consist primarily of outstanding stock options and restricted stock grants.

The following table details the calculation of basic and diluted earnings per share for fiscal years 2025, 2024, and 2023, (in thousands, except per share amounts):

The weighted outstanding shares excluded from our diluted calculation for the years ended March 29, 2025, March 30, 2024, and March 25, 2023 were 225 thousand,325 thousand, and 268 thousand, respectively, as the exercise price of certain outstanding stock options exceeded the average market price during the period.

Accumulated Other Comprehensive Loss

Our accumulated other comprehensive loss is comprised of foreign currency translation adjustments and unrealized gains and losses on investments classified as available-for-sale. See Note 16 — Accumulated Other Comprehensive Loss for additional discussion.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU requires interim and annual disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually and requires disclosure of the position and title of the CODM and how the CODM uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. In the event the CODM uses more than one measure of a segment's profit or loss in assessing performance and allocation of resources, clarification of disclosure requirements is provided. Additionally, a company with a single reportable segment is required to provide all the disclosures prescribed under this ASU. The guidance is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, to be applied retrospectively to all periods presented. The Company retrospectively adopted this standard for the fiscal year ending March 29, 2025. See Note 18 - Segment Information. The adoption of this standard had no impact on our results of operations, cash flows or financial position.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The guidance provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, requiring more consistent categories and greater disaggregation of information by jurisdiction. This ASU is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted, to be applied on a prospective basis, although retrospective application is also permitted. The Company is currently evaluating the impact of this guidance on financial statement disclosures.

In November 2024, FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregation of certain expense categories in the notes to the financial statements in order to provide enhanced transparency into the expense captions presented on the face of the income statement. The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption and prospective or retrospective application permitted. The Company is currently evaluating the impact of this guidance on financial statement disclosures.

3. Marketable Securities

The Company’s investments have been classified as available-for-sale securities in accordance with U.S. GAAP. Marketable securities are categorized on the consolidated balance sheet as “Marketable securities” within the short-term or long-term classification, as appropriate.

The following table is a summary of available-for-sale securities (in thousands):

The Company typically invests in highly-rated securities with original maturities generally ranging fromone tothree years. The Company's specifically identified gross unrealized losses of $0.1 million related to securities with total amortized costs of approximately $29.8 million at March 29, 2025. Securities in a continuous unrealized loss position for more than 12 months as of March 29, 2025 had an aggregate amortized cost of $1.9 million and an immaterial aggregate unrealized loss. The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipated or actual changes in credit rating and duration management. The Company records an allowance for credit loss when a decline in investment market value is due to credit-related factors. When evaluating an investment for impairment, the Company reviews factors including the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, changes in market interest rates and whether it is more likely than not the Company will be required to sell the investment before recovery of the investment’s cost basis. As of March 29, 2025, the Company does not consider any of its investments to be impaired.

The Company’s specifically identified gross unrealized losses of $1.0 million related to securities with total amortized costs of approximately $172.1 million at March 30, 2024. Securities in a continuous unrealized loss position for more than 12 months as of March 30, 2024 had an aggregate amortized cost of $25.0 million and an aggregate unrealized loss of $0.3 million as of March 30, 2024. As of March 30, 2024, the Company did not consider any of its investments to be impaired.

The cost and estimated fair value of available-for-sale investments by contractual maturity were as follows:

4. Fair Value of Financial Instruments

The Company has determined that the assets and liabilities in the Company’s financial statements that are required to be measured at fair value on a recurring basis are the Company’s cash equivalents and marketable securities portfolio. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

▪Level 1 — Quoted prices in active markets for identical assets or liabilities.

▪Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

▪Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s cash equivalents and marketable securities portfolio consist of money market funds, commercial paper, debt securities, non-U.S government securities, U.S Treasury securities, and securities of U.S. government-sponsored enterprises, and are reflected on our consolidated balance sheet under the headings cash and cash equivalents, marketable securities, and long-term marketable securities. The Company determines the fair value of its marketable securities portfolio by obtaining non-binding market prices from its third-party pricing providers on the last day of the quarter, whose sources may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value.

The Company’s long-term revolving facility, described in Note 8 - Revolving Credit Facility, bears interest at a base rate plus applicable margin or forward-looking secured overnight financing rate ("Term SOFR") plus 10 basis points plus applicable margin. As of March 29, 2025, there areno amounts drawn under the facility and the fair value iszero.

As of March 29, 2025 and March 30, 2024, the Company has no material Level 3 assets or liabilities. There were no transfers between Level 1, Level 2, or Level 3 measurements for the years ending March 29, 2025 and March 30, 2024.

The following summarizes the fair value of our financial instruments at March 29, 2025 (in thousands):

The following summarizes the fair value of our financial instruments at March 30, 2024 (in thousands):

5. Derivative Financial Instruments

Foreign Currency Forward Contracts

The Company uses foreign currency forward contracts to reduce the earnings impact that exchange rate fluctuations have on non-functional currency balance sheet exposures. The Company recognizes both the gains and losses on foreign currency forward contracts and the gains and losses on the remeasurement of non-functional currency assets and liabilities within "Other income (expense)" in the consolidated statements of income. The Company does not apply hedge accounting to these foreign currency derivative instruments.

As of March 29, 2025, the Company heldone foreign currency forward contract denominated in British Pound Sterling with a notional value of $21.5 million. The fair value of this contract was not material as of March 29, 2025.

The before-tax effect of derivative instruments not designated as hedging instruments was as follows (in thousands):

6. Accounts Receivable, net

The following are the components of accounts receivable, net (in thousands):

The Company regularly evaluates the collectability of accounts receivable based on age, historical customer payment trends and ongoing customer relations. The allowance for doubtful accounts and recoveries on bad debt were immaterial for fiscal years 2025, 2024, and 2023.

7. Intangibles, net and Goodwill

The following information details the gross carrying amount, accumulated amortization, and net carrying value of our intangible assets subject to amortization (in thousands):

(a)Intangible assets are fully amortized as of March 29, 2025.

Amortization expense for intangibles in fiscal years 2025, 2024, and 2023 was $7.6 million, $9.0 million, and $33.7 million, respectively. The following table details the estimated aggregate amortization expense for all intangibles owned as of March 29, 2025, for each of the five succeeding fiscal years and in the aggregate thereafter (in thousands):

The goodwill balance included on the consolidated balance sheet was $435.9 million and $435.9 million at March 29, 2025 and March 30, 2024, respectively.

8. Revolving Credit Facility

On July 8, 2021, the Company entered into a second amended and restated credit agreement (the “Second Amended Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. The Second Amended Credit Agreement provides for a $300 million senior secured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility matures on July 8, 2026 (the “Maturity Date”). The Revolving Credit Facility is required to be guaranteed by all of Cirrus Logic’s material domestic subsidiaries (the "Subsidiary Guarantors"). The Revolving Credit Facility is secured by substantially all the assets of Cirrus Logic and any Subsidiary Guarantors, except for certain excluded assets.

On March 20, 2023, the Company, entered into the First Amendment (the "Amendment") to its Second Amended Credit Agreement, with the lending institutions party thereto and Wells Fargo Bank, National Association, as administrative agent. The Amendment updates the benchmark interest rate provisions to replace the London interbank offered rate ("LIBOR") with the forward-looking secured overnight financing rate ("Term SOFR"), for the purposes of calculating interest under the terms of the Second Amended Credit Agreement.

Borrowings under the Revolving Credit Facility may, at Cirrus Logic’s election, bear interest at either (a) a base rate plus the applicable margin ("Base Rate Loans") or (b) a Term SOFR rate plus a 10 basis point credit spread adjustment plus the applicable margin. The applicable margin ranges from 0% to 0.75% per annum for Base Rate Loans and 1.00% to 1.75% per annum for SOFR Loans based on the ratio of consolidated funded indebtedness to consolidated EBITDA for the most recently ended period of four consecutive fiscal quarters (the “Consolidated Leverage Ratio”). A Commitment Fee accrues at a rate per annum ranging from 0.175% to 0.275% (based on the Consolidated Leverage Ratio) on the average daily unused portion of the commitment of the lenders.

The Revolving Credit Facility contains certain financial covenants providing that (a) the ratio of consolidated funded indebtedness (minus up to $200 million of unrestricted cash and cash equivalents available on such date) to consolidated EBITDA for the prior four consecutive quarters must not be greater than 3.00 to 1.00 (the “Consolidated Net Leverage Ratio”) and (b) the ratio of consolidated EBITDA for the prior four consecutive quarters to consolidated interest expense paid or payable in cash for the prior four consecutive quarters must not be less than 3.00 to 1.00 (the “Consolidated Interest Coverage Ratio”). The Second Amended Credit Agreement also contains negative covenants limiting the Company's or any Subsidiary's ability to, among other things, incur debt, grant liens, make investments, effect certain fundamental changes, make certain asset dispositions, and make certain restricted payments. Further, the Second Amended Credit Agreement contains customary affirmative covenants, including, among others, covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements, and compliance with applicable laws and regulations.

As of March 29, 2025, the Company hadno amounts outstanding under the Revolving Credit Facility and was in compliance with all covenants under the Second Amended Credit Agreement.

As of March 29, 2025, future interest payment obligations based on forecasted commitment fees under the Revolving Credit Facility were as follows (in thousands):

9. Revenues

Disaggregation of revenue

We disaggregate revenue from contracts with customers by product line and ship to location of the customer. Sales are designated in the product line categories of Audio and High-Performance Mixed-Signal ("HPMS").

Total net sales based on the product line disaggregation criteria described above are shown in the table below (in thousands).

The geographic regions that are reviewed are China, the United States, and the rest of the world.

Total net sales based on the geographic disaggregation criteria described are as follows (in thousands):

See Note 2 - Summary of Significant Accounting Policies for additional discussion surrounding revenue recognition considerations.

10. Leases

The Company has operating leases for corporate offices and certain office equipment. Our leases have remaining lease terms of 1 year to 24 years, some of which include options to extend the leases that are considered reasonably certain to be exercised. There are no residual value guarantees in any of our leases. No restrictions or covenants have been imposed on the Company as a result of the lease agreements in place. All of the Company’s leases have been classified as operating leases.

The components of net operating lease expense were as follows (in thousands):

Supplemental operating lease information:

As of March 29, 2025, we have an additional operating lease that has not yet commenced with an estimated lease obligation of approximately $5 million. This operating lease will commence in fiscal year 2026 with a lease term of approximately 10 years.

Future lease commitments and income under non-cancellable leases, including extension options reasonably anticipated to be exercised as of March 29, 2025, are as follows (in thousands):

Operating lease liabilities consisted of the following (in thousands):

11. Postretirement Benefit Plans

We have Defined Contribution Plans (“the Plans”) covering all of our qualifying employees. Under the Plans, employees may elect to contribute any percentage of their annual compensation up to the annual regulatory limits. The Company made matching employee contributions of $11.3 million, $11.0 million, and $10.2 million during fiscal years 2025, 2024, and 2023, respectively.

12. Equity Compensation

The Company is currently granting equity awards from the 2018 Long Term Incentive Plan (the “Plan”), which was approved by stockholders in August 2018 and subsequently amended and restated on July 26, 2024. The Plan provides for granting of stock options, restricted stock awards, restricted stock units, performance awards, and bonus stock awards, or any combination of the foregoing. To date, the Company has granted stock options, restricted stock units, and performance awards (including market stock units and performance stock units). Each stock option granted reduces the total shares available for grant under the Plan by one share. Each full value award granted (including restricted stock awards, restricted stock units, market stock units, and performance stock units) reduces the total shares available for grant under the Plan by 1.5 shares. Stock options generally vest betweenone andfour years, and are exercisable for a period often years from the date of grant. Restricted stock units are generally subject to vesting fromone tothree years, depending upon the terms of the grant. Market stock units are subject to a vesting schedule ofthree years. Performance stock units are generally subject to vesting fromone tothree years, depending upon the terms of the grant.

The following table summarizes the activity in total shares available for grant (in thousands):

Stock-based Compensation Expense

The following table summarizes the effects of stock-based compensation on cost of goods sold, research and development, sales, general and administrative, pre-tax income, and net income after taxes for shares granted under the Plan (in thousands, except per share amounts):

The total stock-based compensation expense included in the table above and which is attributable to restricted stock units, performance based stock units, and market stock units was $80.7 million, $85.1 million, $78.0 million, for fiscal years 2025, 2024, and 2023, respectively. Stock-based compensation expense is presented within operating activities in the consolidated statement of cash flows.

As of March 29, 2025, there was $138.7 million of compensation costs related to non-vested stock options, restricted stock units, market stock units, and performance stock units granted under the Company’s equity incentive plans not yet recognized in the Company’s financial statements. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.48 years for stock options,1.45 years for restricted stock units,1.92 years for market stock units, and 2.16 years for performance stock units.

In addition to the income tax benefit of stock-based compensation expense shown in the table above, the Company recognized excess tax benefits of $9.4 million, $0.2 million and $1.4 million in fiscal years 2025, 2024, and 2023 respectively.

Stock Options

We estimate the fair value of each stock option on the date of grant using the Black-Scholes option-pricing model using a dividend yield ofzero and the following additional assumptions:

The Black-Scholes valuation calculation requires us to estimate key assumptions such as stock price volatility, expected term, risk-free interest rate and dividend yield. The expected stock price volatility is based upon implied volatility from traded options on our stock in the marketplace. The expected term of options granted is derived from an analysis of historical exercises and remaining contractual life of stock options, and represents the period of time that options granted are expected to be outstanding after becoming vested. The risk-free interest rate reflects the yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term assumption. Finally, we have never paid cash dividends, do not currently intend to pay cash dividends, and thus have assumed a zero percent dividend yield.

Using the Black-Scholes option valuation model, the weighted average estimated fair values of stock options granted in fiscal years 2025, 2024, and 2023, were $54.04, $39.61, and $42.37, respectively.

During fiscal years 2025, 2024, and 2023, we received a net $15.4 million, $3.3 million, and $10.1 million, respectively, from the exercise of 0.3 million,0.1 million, and 0.2 million, respectively, stock options granted under the Company’s Stock Plan.

The total intrinsic value of stock options exercised during fiscal year 2025, 2024, and 2023, was $14.7 million, $2.8 million, and $11.4 million, respectively. Intrinsic value represents the difference between the market value of the Company’s common stock at the time of exercise and the strike price of the stock option.

Additional information with respect to stock option activity is as follows (in thousands, except per share amounts):

Additional information with regards to outstanding options that are vesting, expected to vest, or exercisable as of March 29, 2025 is as follows (in thousands, except years and per share amounts):

In accordance with U.S. GAAP, stock options outstanding that are expected to vest are presented net of estimated future option forfeitures, which are estimated as compensation costs are recognized. Options with a fair value of $4.3 million, $4.2 million, and $3.0 million, became vested during fiscal years 2025, 2024, and 2023, respectively.

The following table summarizes information regarding outstanding and exercisable options as of March 29, 2025 (in thousands, except per share amounts):

As of March 29, 2025, March 30, 2024, and March 25, 2023, the number of options exercisable was 0.3 million,0.5 million, and 0.5 million respectively.

Restricted Stock Units

Restricted stock units (“RSUs”) are valued as of the grant date and amortized over the requisite vesting period. Generally, RSUs vest 100 percent on the first to third anniversary of the grant date depending on the vesting specifications. A summary of the activity for RSUs in fiscal year 2025, 2024, and 2023 is presented below (in thousands, except per share amounts):

The aggregate intrinsic value of RSUs outstanding as of March 29, 2025, March 30, 2024, and March 25, 2023 was $252.0 million, $286.9 million, and $326.3 million, respectively. Intrinsic value is calculated using the closing stock price on the last day of trading in fiscal 2025. Additional information with regards to outstanding RSUs that are expected to vest as of March 29, 2025, is as follows (in thousands, except year and per share amounts):

RSUs outstanding that are expected to vest are presented net of estimated future forfeitures, which are estimated as compensation costs are recognized. RSUs with a fair value of $94.7 million, $64.6 million, and $61.4 million became vested during fiscal years 2025, 2024, and 2023, respectively. The majority of RSUs that vested in 2025, 2024 and 2023 were net settled such that the Company withheld a portion of the shares to satisfy tax withholding requirements. In fiscal years 2025, 2024, and 2023 the vesting of RSUs reduced the authorized and unissued share balance by approximately 1.2 million,0.9 million, and 0.9 million, respectively. Total shares withheld and subsequently retired out of the Plan were approximately 0.3 million,0.3 million, and 0.2 million and total payments for the employees’ tax obligations to taxing authorities were $36.4 million, $18.9 million, and $18.0 million for fiscal years 2025, 2024, and 2023, respectively.

Market Stock Units

Market stock units (“MSUs”) granted prior to February 2024 vest based upon the relative total shareholder return (“TSR”) of the Company as compared to that of the Philadelphia Semiconductor Index, while MSUs granted after February 2024 vest based on the TSR of the Company as compared to that of the Russell 3000 Index (collectively referred to as the "Indexes". The requisite service period for these MSUs is also the vesting period, which isthree years. The fair value of each MSU granted was determined on the date of grant using the Monte Carlo simulation, which calculates the present value of the potential outcomes of future stock prices of the Company and the Indexes over the requisite service period. The fair value is based on the risk-free rate of return, the volatility of the stock price of the Company and the Indexes, the correlation of the stock price of the Company with the Indexes, and the dividend yield.

The fair values estimated from the Monte Carlo simulation were calculated using a dividend yield ofzero and the following additional assumptions:

Using the Monte Carlo simulation, the weighted average estimated fair value of the MSUs granted in fiscal year 2025 was $151.8. A summary of the activity for MSUs in fiscal year 2025, 2024, and 2023 is presented below (in thousands, except per share amounts):

The aggregate intrinsic value of MSUs outstanding as of March 29, 2025, March 30, 2024, and March 25, 2023 was $10.4 million, $9.4 million, and $9.3 million, respectively. Intrinsic value is calculated using the closing stock price on the last day of trading in fiscal 2025. Additional information with regard to outstanding MSUs that are expected to vest as of March 29, 2025 is as follows (in thousands, except year and per share amounts):

MSUs with a fair value of $5.1 million, $0.8 million, and $0.8 million became vested during fiscal year 2025, 2024, and 2023 respectively.

Performance Stock Units

Performance stock units ("PSUs") consist of performance-based restricted stock units subject to a three-fiscal-year performance period, with annual vesting based on performance achieved each fiscal year. The number of shares earned is based on the Company’s strategic revenue during fiscal year 2026 and the year-over-year growth of such strategic revenue over fiscal years 2027 and 2028 relative to goals established by the Compensation Committee. PSUs are valued at the Company's closing stock price on the date of grant.

A summary of the activity for PSUs in fiscal year 2025 is presented below (in thousands, except per share amounts):

The aggregate intrinsic value of PSUs outstanding as of March 29, 2025 was $10.9 million, which is calculated using the closing stock price on the last day of trading in fiscal 2025. Additional information with regard to outstanding PSUs that are expected to vest as of March 29, 2025 is as follows (in thousands, except year and per share amounts):

No PSUs vested during fiscal year 2025.

13. Commitments and Contingencies

Facilities and Equipment Under Operating Lease Agreements

We currently own our corporate headquarters and select surrounding properties. We lease certain of our other facilities and certain equipment under operating lease agreements, some of which have renewal options. Certain of these arrangements provide for lease payment increases based upon future fair market rates. As of March 29, 2025, our principal facilities are located in Austin, Texas and Edinburgh, Scotland, United Kingdom.

Total rent expense under operating leases was approximately $26.2 million, $23.6 million, and $24.4 million, for fiscal years 2025, 2024, and 2023, respectively. Rental income was $0.9 million, $0.2 million, and $0.5 million, for fiscal years 2025, 2024, and 2023, respectively.

See Note 10 - Leases for minimum future rental commitments and income under all operating leases as of March 29, 2025.

Capacity Reservation Agreement

On July 28, 2021, the Company entered into a Capacity Reservation and Wafer Supply Commitment Agreement (the “Capacity Reservation Agreement”) with GLOBALFOUNDRIES Singapore Pte. Ltd. (“GlobalFoundries”) to provide the Company a wafer capacity commitment and wafer pricing for Company products for calendar years 2022-2026 (the “Commitment Period”). On February 18, 2025, the Capacity Reservation Agreement was amended (the "Amendment") to define the quarterly spread of the remaining wafer quantities under the agreement.

The Capacity Reservation Agreement requires GlobalFoundries to provide, and the Company to purchase, a defined number of wafers on a quarterly basis for the Commitment Period, subject to shortfall payments. In exchange for GlobalFoundries’ capacity commitment, the Company paid a $60 million non-refundable capacity reservation fee, which is amortized over the Commitment Period. The balance of this reservation fee is $16 million as of March 29, 2025, and is recorded in "Other current assets" and "Other assets" on the consolidated balance sheets within the short-term or long-term classification, as appropriate. In addition, the Company pre-paid GlobalFoundries $195 million for future wafer purchases, which are credited back to the Company as a portion of the price of wafers purchased, which began in the Company's second fiscal quarter of 2024. The balance of the prepayment is $68 million at March 29, 2025, and is currently recorded in "Prepaid wafers" and "Long-term prepaid wafers" on the consolidated balance sheets. As of March 29, 2025, the Company estimates its remaining purchase obligation to be approximately $450 million of wafers from GlobalFoundries under the Capacity Reservation Agreement.

Purchase Commitments

We rely primarily on third-party foundries for our wafer manufacturing needs. With the exception of the terms of the Capacity Reservation Agreement described above, generally, our foundry agreements do not have volume purchase commitments and primarily provide for purchase commitments based on purchase orders. Cancellation fees or other charges may apply and are generally dependent upon whether wafers have been started or the stage of the manufacturing process at which the notice of cancellation is given.

In addition to our wafer supply arrangements, we contract with third-party assembly vendors to package the wafer die into finished products. Assembly and test vendors provide fixed-cost-per-unit pricing, as is common in the semiconductor industry.

The Company's purchase commitments primarily include the Company's obligations to purchase wafers and related assembly and testing services described above, in addition to future payments related to multi-year tool commitments.

Total future unconditional purchase commitments as of March 29, 2025 were as follows (in thousands):

14. Legal Matters

From time to time, we are involved in legal proceedings concerning matters arising in connection with the conduct of our business activities. We regularly evaluate the status of legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss or additional loss may have been incurred and to determine if accruals are appropriate. We further evaluate each legal proceeding to assess whether an estimate of possible loss or range of loss can be made. Based on current knowledge, management does not believe that there are any pending matters that could potentially have a material adverse effect on our business, financial condition, results of operations or cash flows.

15. Stockholders' Equity

Share Repurchase Program

Beginning in fiscal year 2024, the Company's net stock repurchases are subject to a 1 percent excise tax under the Inflation Reduction Act, included as a reduction to accumulated earnings in the Consolidated Statements of Stockholders' Equity. As of March 29, 2025, the Company has accrued approximately $1.4 million related to this excise tax. Disclosure of repurchased amounts and related average costs below exclude the impact of excise taxes.

In July 2022, the Company announced that the Board of Directors authorized the repurchase of up to $500 million of the Company's common stock. During the fiscal year ended March 29, 2025, the Company repurchased 2.3 million shares of its common stock under the 2022 authorization for $261.0 million, at an average cost of $112.33 per share. All of these shares were repurchased in the open market and were funded from existing cash. All shares of our common stock that were repurchased were retired as of March 29, 2025. As of March 29, 2025, $54.1 million remains available for repurchase under the 2022 authorization. Additionally, in March 2025, the Board of Directors authorized the repurchase of up to an additional $500 million of the Company's common stock. No shares have been repurchased under the 2025 authorization as of March 29, 2025.

Preferred Stock

We have 5.0 million shares of Preferred Stock authorized. As of March 29, 2025, we havenot issued any of the authorized shares.

16. Accumulated Other Comprehensive Loss

Our accumulated other comprehensive loss is comprised of foreign currency translation adjustments, unrealized gains and losses on investments classified as available-for-sale, and cumulative effects of adopting new accounting standards.

The following table summarizes the changes in the components of accumulated other comprehensive loss, net of tax (in thousands):

17. Income Taxes

Income (loss) before income taxes consisted of (in thousands):

The provision (benefit) for income taxes consists of (in thousands):

The effective income tax rates differ from the rates computed by applying the statutory federal rate to pretax income as follows (in percentages):

Under the legislation commonly referred to as the Tax Cuts and Jobs Act ("Tax Act"), research and development expenses incurred for tax years beginning after December 31, 2021 must be capitalized and amortized over five or fifteen years for tax purposes, depending on where the research activities are conducted. Because the Company elected to treat global intangible low-taxed income ("GILTI") as a period cost, the capitalization of research and development costs in the computation of GILTI resulted in an increase in the Company's provision for income taxes in fiscal years 2023, 2024 and 2025.

The Tax Act also required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax-deferred. We elected to pay the transition tax over the eight-year period provided in the Tax Act. As of March 29, 2025, the remaining balance of our transition tax obligation was $10.7 million, which will be paid as the final installment in fiscal year 2026.

Significant components of our deferred tax assets and liabilities as of March 29, 2025 and March 30, 2024 are (in thousands):

Deferred tax assets and liabilities are recorded for the estimated tax impact of temporary differences between the tax basis and book basis of assets and liabilities. A valuation allowance is established against a deferred tax asset when it is more likely than not that the deferred tax asset will not be realized.

At March 29, 2025, the Company had gross federal net operating loss carryforwards of $1.5 million, all of which are subject to certain limitations under Section 382 of the Internal Revenue Code and expire in fiscal years 2026 through 2031. At March 29, 2025 the Company had gross foreign net operating loss carryforwards of $0.2 million that do not expire and gross state net operating loss carryforwards of $6.2 million that expire in fiscal years 2026 through 2030. In addition, the Company had $12.1 million of state business tax, minimum tax, and research and development tax credit carryforwards. Certain of these state tax credits will expire in fiscal years 2026 through 2034, and others do not expire.

The Company maintains a valuation allowance for certain deferred tax assets primarily relating to certain state net operating loss and state tax credit carryforwards due to the likelihood that they will expire or go unutilized. Our valuation allowance decreased by $33 thousand in fiscal year 2025, which was the net effect of a gross increase of $206 thousand that affected the effective tax rate and a gross decrease of $239 thousand that was offset by a corresponding reduction in deferred tax assets on the balance sheet. Management believes that the Company’s results from future operations will generate sufficient taxable income in the appropriate jurisdictions and of the appropriate character such that it is more likely than not that the remaining deferred tax assets will be realized.

At March 29, 2025, unremitted earnings of our foreign subsidiaries that can be distributed without tax consequence, other than withholding taxes that may apply based on the jurisdiction of the subsidiary, are not expected to be indefinitely reinvested. We accrued an immaterial amount of withholding taxes on foreign earnings expected to be remitted in the next year due to the planned liquidation of a foreign entity. No other taxes have been accrued for potential foreign withholding taxes on other foreign earnings as these amounts are not material. We have not provided additional income taxes for other outside basis differences inherent in our foreign entities, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to all other outside basis differences in these entities is not practicable at this time.

On July 27, 2015, the U.S. Tax Court issued an opinion in Altera Corp. et al. v. Commissioner which concluded that the regulations relating to the treatment of stock-based compensation expense in intercompany cost-sharing arrangements were invalid. In 2016 the U.S. Internal Revenue Service appealed the decision to the U.S. Court of Appeals for the Ninth Circuit (the “Ninth Circuit”). On July 24, 2018, the Ninth Circuit issued a decision that was subsequently withdrawn and a reconstituted panel conferred on the appeal. On June 7, 2019, the Ninth Circuit reversed the decision of the U.S. Tax Court and upheld the cost-sharing regulations. On February 10, 2020, Altera Corp. filed a Petition for a Writ of Certiorari with the Supreme Court of the United States, which was denied by the Supreme Court on June 22, 2020. Although the issue is now resolved within the Ninth Circuit, the Ninth Circuit's opinion is not binding in other circuits. The potential impact of this issue on the Company, which is not located within the jurisdiction of the Ninth Circuit, is unclear at this time. We will continue to monitor developments related to this issue and the potential impact of those developments on the Company's current and prior fiscal years.

The following table summarizes the changes in the unrecognized tax benefits (in thousands):

At March 29, 2025, the Company had gross unrecognized tax benefits of $32.1 million, all of which would impact the effective tax rate if recognized. The Company’s unrecognized tax benefits are classified as “Non-current income taxes” in the consolidated balance sheet. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. During fiscal years 2025 and 2024 we recognized interest expense, net of tax, of approximately $2.8 million and $2.4 million, respectively. The total amount of interest accrued as of March 29, 2025 was $12.0 million.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions including the United Kingdom. Fiscal years 2017 through 2019 and 2022 through 2025 remain open to examination by the major taxing jurisdictions in which the Company operates.

The Company's fiscal year 2017, 2018, and 2019 federal income tax returns are under examination by the U.S. Internal Revenue Service ("IRS"). The IRS has proposed adjustments that would increase U.S. taxable income related to transfer pricing matters with respect to our U.S. and U.K. affiliated companies. The final Revenue Agent’s Report asserted additional tax of approximately $168.3 million, excluding interest, and imposed penalties of approximately $63.7 million. We do not agree with the IRS's positions and have not accrued an additional liability. We intend to vigorously dispute the proposed adjustments. We are pursuing resolution through the administrative process with the IRS Independent Office of Appeals and, if necessary, through judicial remedies. We expect it could take a number of years to reach resolution on these matters. Although the final resolution of these matters is uncertain, the Company believes adequate amounts have been reserved for any adjustments to the provision for income taxes that may ultimately result. However, if the IRS prevails in these matters, the assessed tax, interest, and penalties, if any, could have an adverse impact on our financial position, results of operations, and cash flows in future periods. The Company is not under an income tax audit in any other major taxing jurisdiction.

18. Segment Information

We determine our operating segments in accordance with Financial Accounting Standards Board (“FASB”) guidelines. Our Chief Executive Officer (“CEO”) has been identified as the CODM under these guidelines.

The Company operates and tracks its results inone reportable segment, but reports revenue performance intwo product lines: Audio and HPMS. Our CEO receives and uses enterprise-wide financial information to assess financial performance and allocate resources. Our product lines have similar characteristics and customers and share operations support functions such as sales, public relations, supply chain management, various research and development and engineering support, in addition to the general and administrative functions of human resources, legal, finance and information technology. Therefore, there is no complete, discrete financial information maintained for these product lines. Revenue by product line is disclosed in Note 9 - Revenues.

The CODM allocates resources and evaluates Company performance based on net income. This information is used to measure profitability, make budgeting and forecasting decisions, monitor performance trends, and to compare actual results to forecasts. The CODM regularly reviews the consolidated statement of income and a disaggregation of operating expenses, with a focus on personnel-related and product development costs. The measure of segment assets is reported on the balance sheet as total consolidated assets.

The table below presents the Company's significant segment operating expenses (in thousands):

(1) Personnel-related expenses include employee base pay, benefits, variable compensation and other employee-related expenses.

(2) Product development costs include software, engineering mask sets, wafers, and boards, as well as outside design services.

(3) Other segment items primarily include stock-based compensation, facilities-related costs, depreciation and amortization, and non-recurring charges, offset by the benefit received from research and development expenditure credits.

Geographic Area

The Company's geographic details of revenue and property, plant and equipment are included below.

The following illustrates net sales by ship to location of the customer (in thousands):

The following illustrates property, plant and equipment, net, by geographic locations, based on physical location (in thousands):