SEMTECH CORP
For the period ended Oct 27, 2024. Filed Dec 3, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Oct 27, 2024 · Filed Dec 3, 2024
SMTC$103.21+12.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-07-28; filed 2024-08-28.
0000088941-24-000118
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-10-27; filed 2024-12-03.
0000088941-24-000131
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 147 previous paragraphs and 143 current paragraphs.
89 unchanged; 49 reworded; 3 added; 5 removed; 4 previous and 2 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
Selling, general and administrative expenses increased $12.1 million in the third quarter of fiscal year 2025 compared to the third quarter of fiscal year 2024 primarily as a result of a $13.9 million net increase in staffing-related costs, which reflects higher share-based and supplemental compensation, a $0.8 million increase in litigation expenses, and a $0.5 million increase in depreciation, partially offset by a decrease of $2.7 million in transaction and integration costs primarily related to the Sierra Wireless Acquisition.
Current report
Interest expense, including amortization and write-off of deferred financing costs, remained relatively consistent at $72.6 million and $73.0 million for the first nine months of fiscal years 2025 and 2024, respectively.
Current report
Material Cash Requirements
Removed paragraphs (5)
Previous report
Leadership Changes
Previous report
Effective June 6, 2024, our board of directors (the “Board” or “Board of Directors”) appointed Hong Q. Hou, a current member of our Board, to serve as our President and Chief Executive Officer. Mr. Hou succeeded Paul Pickle as our President and Chief Executive Officer on such date.
Previous report
Selling, general and administrative expenses decreased $3.8 million in the second quarter of fiscal year 2025 compared to the second quarter of fiscal year 2024 primarily as a result of a $5.8 million decrease in transaction and integration costs primarily related to the Sierra Wireless Acquisition and $1.0 million lower net staffing-related costs, which reflects lower headcount due to recent restructuring, offset by an increase in share-based compensation, partially offset by $1.8 million higher depreciation and a $0.8 million increase in facilities expenses.
Previous report
Interest expense, including amortization and write-off of deferred financing costs, was $51.8 million and $44.7 million for the first six months of fiscal years 2025 and 2024, respectively. The increase was primarily due to a $5.5 million write-off of deferred financing costs as a result of approximately $188.1 million of 2028 Notes extinguished in exchange for common stock in the second quarter of fiscal year 2025.
Previous report
Loss on Extinguishment of Debt
Reworded paragraphs (49)
Previous wording
Our end customers for our silicon solutions are primarily original equipment manufacturers that produce and sell technology solutions. Our IoT module, router, gateways and managed connectivity solutions ship to IoT device makers and enterprises to provide IoT connectivity to end devices.
Current wording
Our end customers for our silicon solutions are primarily original equipment manufacturers that produce and sell technology solutions. Our IoT module, router, gateway (together "IoT Hardware") and managed connectivity solutions ship to IoT device makers and enterprises to provide IoT connectivity to end devices.
Previous wording
On July 11, 2024 and July 15, 2024, we entered into separate, privately negotiated exchange agreements (the “Exchange Agreements”) with certain holders of our 4.00% Convertible Senior Notes due 2028 (the “2028 Notes”). Pursuant to the Exchange Agreements, on July 24, 2024 certain holders exchanged with us approximately $188.1 million in aggregate principal amount of the 2028 Notes held by them for an aggregate of 10,378,431 shares of our common stock, which number of shares was determined over an averaging period that commenced on July 12, 2024. We accounted for these exchange transactions as a partial debt extinguishment and recognized a loss on extinguishment of debt equal to the difference between the fair value of our common stock delivered to certain holders of the 2028 Notes and the carrying value of the outstanding debt, accrued interest and third-party fees related to the Exchange Agreements. In the three and six months ended July 28, 2024, in connection with the exchange transactions, we recognized $144.7 million of loss included in "Loss on extinguishment of debt" in the Statements of Operations and $5.5 million of loss resulting from the write-off of deferred financing costs included in "Interest expense" in the Statements of Operations.
Current wording
On July 11, 2024 and July 15, 2024, we entered into separate, privately negotiated exchange agreements (the "Exchange Agreements") with certain holders of our 4.00% Convertible Senior Notes due 2028 (the "2028 Notes"). Pursuant to the Exchange Agreements, on July 24, 2024 certain holders exchanged with us approximately $188.1 million in aggregate principal amount of the 2028 Notes held by them for an aggregate of 10,378,431 shares of our common stock, which number of shares was determined over an averaging period that commenced on July 12, 2024. We accounted for these exchange transactions as a partial debt extinguishment and recognized a loss on extinguishment of debt equal to the difference between the fair value of our common stock delivered to certain holders of the 2028 Notes and the carrying value of the outstanding debt, accrued interest and third-party fees related to the Exchange Agreements. In the nine months ended October 27, 2024, in connection with the exchange transactions, we recognized $144.7 million of loss included in "Loss on extinguishment of debt" in the Statements of Operations and $5.5 million of loss resulting from the write-off of deferred financing costs included in "Interest expense" in the Statements of Operations.
Previous wording
Most of our sales to customers are made on the basis of individual customer purchase orders and many customers include cancellation provisions in their purchase orders. We rely on orders received and shipped within the same quarter for a meaningful portion of our sales. Net sales made through independent distributors during the second quarters of fiscal years 2025 and 2024 were 74% and 64%, respectively, of net sales and the remainder were made directly to customers. The higher percentage of distributor sales in the second quarter of fiscal year 2025 was primarily due to product mix as certain of our products are shipped in higher volume to distributors.
Current wording
Most of our sales to customers are made on the basis of individual customer purchase orders and many customers include cancellation provisions in their purchase orders. We rely on orders received and shipped within the same quarter for a meaningful portion of our sales. Net sales made through independent distributors during the third quarters of fiscal years 2025 and 2024 were each 72% of net sales and the remainder were made directly to customers.
Previous wording
We are a global business with customers and suppliers around the world. A significant amount of our third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located outside the United States, including China and Taiwan. A significant amount of our assembly and test operations are conducted by third-party contractors located outside the United States, including China, Malaysia, Mexico, Taiwan and Vietnam. Net sales outside the United States constituted 80% and 77% during the second quarters of fiscal years 2025 and 2024, respectively. Approximately 65% and 62% of our net sales during the second quarters of fiscal years 2025 and 2024, respectively, were to customers located in the Asia-Pacific region. We are subject to export restrictions and trade regulations, which have limited our ability to sell to certain customers in certain regions.
Current wording
We are a global business with customers and suppliers around the world. A significant amount of our third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located outside the United States, including China and Taiwan. A significant amount of our assembly and test operations are conducted by third-party contractors located outside the United States, including China, Malaysia, Mexico, Taiwan and Vietnam. Net sales outside the United States constituted
Previous wording
Inflationary factors have in the past and could continue to affect our future performance if we are unable to pass higher costs on to our customers.
Current wording
Inflationary factors have in the past affected, and could continue to affect, our performance if we are unable to pass higher costs on to our customers.
Previous wording
Net sales in the second quarter of fiscal year 2025 were $215.4 million, a decrease of 9.7% compared to $238.4 million in the second quarter of fiscal year 2024, which was primarily driven by lower net sales from our industrial end market related to decreased sales volume and pricing pressures, offset by higher net sales in our infrastructure and high-end consumer end markets due to stronger demand. Net sales from our infrastructure end market increased $10.6 million in the second quarter of fiscal year 2025 compared to the second quarter of fiscal year 2024, primarily driven by a $7.3 million increase in data center sales and a $6.7 million increase in PON sales, partially offset by a $2.9 million decrease in TVS infrastructure product sales. Net sales from our high-end consumer end market increased $3.1 million in the second quarter of fiscal year 2025 compared to the second quarter of fiscal year 2024, primarily driven by an increase in TVS consumer product sales. Net sales from our industrial end market decreased $36.7 million in the second quarter of fiscal year 2025 compared to the second quarter of fiscal year 2024, primarily driven by a $43.3 million decrease in module sales, a $2.8 million decrease in router sales and a $1.5 million decrease in TVS industrial product sales, partially offset by a $12.0 million increase in LoRa-enabled sales in industrial applications.
Current wording
Net sales in the third quarter of fiscal year 2025 were $236.8 million, an increase of 17.9% compared to $200.9 million in the third quarter of fiscal year 2024, which was primarily driven by higher net sales from our infrastructure and industrial end markets due to stronger demand and increased sales volume. Net sales from our infrastructure end market increased $22.6 million in the third quarter of fiscal year 2025 compared to the third quarter of fiscal year 2024, primarily driven by a $18.8 million increase in data center sales and a $4.5 million increase in telecommunications sales, partially offset by a $0.7 million decrease in TVS infrastructure and other product sales. Net sales from our industrial end market increased $10.9 million in the third quarter of fiscal year 2025 compared to the third quarter of fiscal year 2024, primarily driven by a $14.8 million increase in LoRa-enabled sales in industrial applications, partially offset by a $1.4 million decrease in IoT Hardware sales. Net sales from our high-end consumer end market increased $2.5 million in the third quarter of fiscal year 2025 compared to the third quarter of fiscal year 2024, primarily driven by an increase in TVS consumer product sales.
Previous wording
Net sales in the second quarter of fiscal year 2025, as compared to the second quarter of fiscal year 2024, were impacted by softer demand in the IoT Systems and Connectivity reportable segment, which contributed to lower sales volume and pricing pressures, but benefited from stronger demand in the Signal Integrity and Analog Mixed Signal and Wireless reportable segments. Net sales from Signal Integrity increased $13.3 million in the second quarter of fiscal year 2025 compared to the second quarter of fiscal year 2024 primarily driven by a $7.3 million increase in data center sales and a $6.7 million increase in PON sales, partially offset by a $0.5 million decrease in wireless sales and a $0.5 million decrease in broadcast sales. Net sales from Analog Mixed Signal and Wireless increased $9.3 million in the second quarter of fiscal year 2025 compared to the second quarter of fiscal year 2024, primarily driven by a $10.3 million increase in LoRa-enabled product sales. Net sales from IoT Systems and Connectivity decreased $45.6 million in the second quarter of fiscal year 2025 compared to the second quarter of fiscal year 2024 primarily driven by a $43.3 million decrease in module sales and a $2.8 million decrease in router sales, partially offset by a $0.9 million increase in managed connectivity sales.
Current wording
Net sales in the third quarter of fiscal year 2025, as compared to the third quarter of fiscal year 2024, benefited from stronger demand and increased sales volumes in the Signal Integrity and Analog Mixed Signal and Wireless reportable segments. Net sales from Signal Integrity increased $24.3 million in the third quarter of fiscal year 2025 compared to the third quarter of fiscal year 2024, primarily driven by a $18.8 million increase in data center sales, a $4.5 million increase in telecommunications sales and a $1.2 million increase in broadcast sales. Net sales from Analog Mixed Signal and Wireless increased $12.6 million in the third quarter of fiscal year 2025 compared to the third quarter of fiscal year 2024, primarily driven by a $13.5 million increase in LoRa-enabled product sales, partially offset by a $1.0 million decrease in Pro-AV product sales. Net sales from IoT Systems and Connectivity decreased $1.0 million in the third quarter of fiscal year 2025 compared to the third quarter of fiscal year 2024 primarily driven by a $1.4 million decrease in IoT Hardware sales.
Previous wording
In the second quarter of fiscal year 2025, gross profit increased $4.7 million to $105.5 million from $100.7 million in the second quarter of fiscal year 2024. This increase was primarily driven by a $9.2 million increase from Signal Integrity, which experienced higher sales led by data center and 10G PON due to stronger demand, offset by pricing pressures, a $8.3 million decrease in the amortization of acquired technology intangible assets related to the acquisition of all of the issued and outstanding common shares of Sierra Wireless, Inc. on January 12, 2023 (the "Sierra Wireless Acquisition") due to impairments in the fourth quarter of fiscal year 2024, a $3.3 million decrease in amortization of inventory step-up due to the finalization of measurement period adjustments in the second quarter of fiscal year 2024 related to the Sierra Wireless Acquisition, a $2.7 million decrease for transaction and integration costs related to the Sierra Wireless Acquisition, and a $2.3 million increase from Analog Mixed Signal and Wireless, which experienced higher sales led by LoRa-enabled product due to stronger demand, offset by pricing pressures, partially offset by a $20.2 million decrease from IoT Systems and Connectivity due to lower module and router sales primarily driven by soft demand causing decreased sales volume and pricing pressures.
Current wording
In the third quarter of fiscal year 2025, gross profit increased $28.0 million to $121.0 million from $93.0 million in the third quarter of fiscal year 2024. This increase was primarily driven by a $20.8 million increase from Signal Integrity, which experienced higher sales led by data center and 10G PON due to stronger demand, a $11.9 million increase from Analog Mixed Signal and Wireless, which experienced higher sales led by LoRa-enabled product due to stronger demand, a $7.7 million decrease in the amortization of acquired technology intangible assets related to the acquisition of all of the issued and outstanding common shares of Sierra Wireless, Inc. on January 12, 2023 (the "Sierra Wireless Acquisition") due to impairments in the fourth quarter of fiscal year 2024, partially offset by a $8.6 million decrease from IoT Systems and Connectivity due to royalty expense recoveries in the third quarter of fiscal year 2024.
Previous wording
Our gross margin was 49.0% in the second quarter of fiscal year 2025, compared to 42.3% inthe second quarter of fiscal year 2024. Gross margin for our Signal Integrity segment was 61.9% inthe second quarter of fiscal year 2025, compared to 59.8% inthe second quarter of fiscal year 2024, primarily due to higher volume reducing overhead. Gross margin for our Analog Mixed Signal and Wireless segmentwas 57.2% inthe second quarter of fiscal year 2025, compared to 61.6% inthe second quarter of fiscal year 2024, primarily due to unfavorable product mix, partially offset by higher overhead absorption. Gross margin for our IoT Systems and Connectivity segment was 35.4% inthe second quarter of fiscal year 2025, compared to 38.7% inthe second quarter of fiscal year 2024, primarily due to pricing pressures.
Current wording
Our gross margin was 51.1% in the third quarter of fiscal year 2025, compared to 46.3% inthe third quarter of fiscal year 2024. Gross margin for our Signal Integrity segment was 63.1% inthe third quarter of fiscal year 2025, compared to 51.6% inthe third quarter of fiscal year 2024, primarily due to higher volume reducing overhead. Gross margin for our Analog Mixed Signal and Wireless segmentwas 57.2% inthe third quarter of fiscal year 2025, compared to 50.5% inthe third quarter of fiscal year 2024, primarily due to higher overhead absorption and favorable product mix. Gross margin for our IoT Systems and Connectivity segment was 41.0% inthe third quarter of fiscal year 2025, compared to 50.9% inthe third quarter of fiscal year 2024, primarily due to royalty expense recoveries in the third quarter of fiscal year 2024.
Previous wording
Product development and engineering expenses decreased $7.3 million in the second quarter of fiscal year 2025 compared to the second quarter of fiscal year 2024 primarily as a result of a $6.3 million net decrease in staffing-related costs due to lower headcount and a $2.1 million decrease in new product introduction expenses, partially offset by a $1.4 million increase in depreciation. The levels of product development and engineering expenses reported in a fiscal period can be significantly impacted, and therefore experience period over period volatility, by the number of new product tape-outs and by the timing of recoveries from non-recurring engineering services, which are typically recorded as a reduction to product development and engineering expense.
Current wording
Product development and engineering expenses decreased $4.3 million in the third quarter of fiscal year 2025 compared to the third quarter of fiscal year 2024 primarily as a result of a $6.3 million decrease in new product introduction expenses and a $0.5 million decrease in facilities expenses, partially offset by a $2.5 million net increase in staffing-related costs, which reflects higher supplemental compensation. The levels of product development and engineering expenses reported in a fiscal period can be significantly impacted, and therefore experience period over period volatility, by the number of new product tape-outs and by the timing of recoveries from engineering services, which are typically recorded as a reduction to product development and engineering expense.
Previous wording
Intangible amortization decreased by $4.6 million in the second quarter of fiscal year 2025 compared to the second quarter of fiscal year 2024 due to impairment of intangible assets acquired in the Sierra Wireless Acquisition related to customer relationships and trade name in the fourth quarter of fiscal year 2024. The amortization of acquired technology intangible assets is reflected in cost of sales.
Current wording
Intangible amortization decreased by $4.7 million in the third quarter of fiscal year 2025 compared to the third quarter of fiscal year 2024 due to impairment of intangible assets acquired in the Sierra Wireless Acquisition related to customer relationships and trade name in the fourth quarter of fiscal year 2024. The amortization of acquired technology intangible assets is reflected in cost of sales.
Previous wording
Restructuring decreased by $7.9 million in the second quarter of fiscal year 2025 compared to the second quarter of fiscal year 2024 due to the structural reorganization actions primarily in the prior year period to reduce our workforce as a result of cost-saving measures and internal resource alignment including from the realization of synergies of the Sierra Wireless Acquisition.
Current wording
Restructuring decreased by $3.0 million in the third quarter of fiscal year 2025 compared to the third quarter of fiscal year 2024 due to the structural reorganization actions primarily in the prior year period to reduce our workforce as a result of cost-saving measures and internal resource alignment including from the realization of synergies of the Sierra Wireless Acquisition.
Previous wording
There was no goodwill impairment in the second quarter of fiscal year 2025 compared to $279.6 million of goodwill impairment in the second quarter of fiscal year 2024 due to valuation adjustments of goodwill related to the Sierra Wireless Acquisition. See Note 8, Goodwill and Intangible Assets, to our interim unaudited condensed consolidated financial statements for additional information.
Current wording
There was no goodwill impairment in the third quarter of fiscal year 2025 compared to $2.3 million of goodwill impairment in the third quarter of fiscal year 2024 due to valuation adjustments of goodwill related to the Sierra Wireless Acquisition. See Note 8, Goodwill and Intangible Assets, to our interim unaudited condensed consolidated financial statements for additional information.
Previous wording
Interest expense, including amortization and a write-off of deferred financing costs, was $28.6 million and $24.2 million for the second quarters of fiscal years 2025 and 2024, respectively. The increase was primarily due to a $5.5 million write-off of deferred financing costs as a result of approximately $188.1 million of 2028 Notes extinguished in exchange for common stock in the second quarter of fiscal year 2025.
Current wording
Interest expense, including amortization and a write-off of deferred financing costs, was $20.8 million and $28.3 million for the third quarters of fiscal years 2025 and 2024, respectively. The decrease was primarily due to interest savings as a result of approximately $188.1 million of 2028 Notes extinguished in exchange for common stock in the second quarter of fiscal year 2025.
Previous wording
During the second quarter of fiscal year 2025, we did not record any investment impairments and credit loss reserves. During the second quarter of fiscal year 2024, investment impairments and credit loss reserves, net totaled a loss of $0.2 million due to adjustments to our credit loss reserve for our available-for-sale debt securities.
Current wording
During the third quarter of fiscal year 2025, we did not record any investment impairments and credit loss reserves. During the third quarter of fiscal year 2024, investment impairments and credit loss reserves, net totaled a loss of $2.0 million due to adjustments to our credit loss reserve for our available-for-sale debt securities.
Previous wording
We recorded income tax expense of $4.2 million in the second quarter of fiscal year 2025, compared to income tax expense of $56.6 million in the second quarter of fiscal year 2024. The effective tax rates for the second quarters of fiscal years 2025 and 2024 were provision rates of 2.5% and 17.4%, respectively. The effective tax rates in the second quarters of fiscal years 2025 and 2024 differ from the statutory federal income tax rate of 21% primarily due to a regional mix of income, changes in valuation allowance, impact of global intangible low-taxed income ("GILTI"), research and development ("R&D") credits and nondeductible loss on extinguishment of debt. The Tax Cuts and Jobs Act ("Tax Act") requires R&D costs incurred for tax years beginning after December 31, 2021 to be capitalized and amortized ratably over five or fifteen years for tax purposes, depending on where the research activities are conducted. We have elected to treat GILTI as a period cost and the additional capitalization of R&D costs within GILTI increases our provision for income taxes.
Current wording
We recorded income tax expense of $4.0 million in the third quarter of fiscal year 2025, compared to income tax benefit of $0.3 million in the third quarter of fiscal year 2024. The change in our tax provision for the three months ended October 27, 2024, compared to the three months ended October 29, 2023 was primarily due to a regional mix of income, nondeductible loss on extinguishment of debt and changes in valuation allowance. The effective tax rates in the third quarters of fiscal years 2025 and 2024 differ from the statutory federal income tax rate of 21% primarily due to a regional mix of income, changes in valuation allowance, impact of global intangible low-taxed income ("GILTI"), research and development ("R&D") credits and nondeductible loss on extinguishment of debt. The Tax Cuts and Jobs Act ("Tax Act") requires R&D costs incurred for tax years beginning after December 31, 2021 to be capitalized and amortized ratably over five or fifteen years for tax purposes, depending on where the research activities are conducted. We have elected to treat GILTI as a period cost and the additional capitalization of R&D costs within GILTI increases our provision for income taxes.
Previous wording
Comparison of the Six Months Ended July 28, 2024 and July 30, 2023
Current wording
Comparison of the Nine Months Ended October 27, 2024 and October 29, 2023
Previous wording
Net sales for the first six months of fiscal year 2025 were $421.5 million, a decrease of 11.3% compared to $474.9 million for the first six months of fiscal year 2024 primarily driven by lower net sales from our industrial end market related to decreased sales volume and pricing pressures. Comparing the same periods, our infrastructure and high-end consumer end markets had stronger demand and resulting net sales. Net sales from our infrastructure end market increased $27.6 million in the first six months of fiscal year 2025 compared to the first six months of fiscal year 2024, primarily driven by a $17.3 million increase in PON sales and a $15.3 million increase in data center sales, partially offset by a $4.4 million decrease in TVS infrastructure product sales. Net sales from our high-end consumer end market increased $16.0 million in the first six months of fiscal year 2025 compared to the first six months of fiscal year 2024, primarily driven by a $16.9 million increase in TVS consumer product sales and a $3.3 million increase in proximity sensing sales, partially offset by a $2.8 million decrease in LoRa-enabled sales in consumer applications. Net sales from our industrial end market decreased $97.0 million in the first six months of fiscal year 2025 compared to the first six months of fiscal year 2024, primarily driven by an $89.9 million decrease in module sales, a $19.6 million decrease in router sales and a $3.0 million decrease in TVS industrial product sales, partially offset by a $15.4 million increase in LoRa-enabled sales in industrial applications.
Current wording
Net sales for the first nine months of fiscal year 2025 were $658.3 million, a decrease of 2.6% compared to $675.8 million for the first nine months of fiscal year 2024 primarily driven by lower net sales from our industrial end market related to decreased sales volume and pricing pressures, offset by higher demand. Comparing the same periods, our infrastructure and high-end consumer end markets had stronger demand and resulting net sales. Net sales from our infrastructure end market increased $50.2 million in the first nine months of fiscal year 2025 compared to the first nine months of fiscal year 2024, primarily driven by a $34.2 million increase in data center sales and a $20.9 million increase in telecommunications sales, partially offset by a $5.0 million decrease in TVS infrastructure product sales. Net sales from our high-end consumer end market increased $18.5 million in the first nine months of fiscal year 2025 compared to the first nine months of fiscal year 2024, primarily driven by a $19.2 million increase in TVS consumer product sales and a $4.7 million increase in proximity sensing sales, partially offset by a $4.2 million decrease in LoRa-enabled sales in consumer applications. Net sales from our industrial end market decreased $86.2 million in the first nine months of fiscal year 2025 compared to the first nine months of fiscal year 2024, primarily driven by a $110.9 million decrease in IoT Hardware sales and a $3.9 million decrease in TVS industrial product sales, partially offset by a $30.2 million increase in LoRa-enabled sales in industrial applications.
Previous wording
Net sales in the first six months of fiscal year 2025, compared to the first six months of fiscal year 2024, were impacted by softer demand in the IoT Systems and Connectivity reportable segment, which contributed to lower sales volume and pricing pressures, but benefited from stronger demand in the Signal Integrity and Analog Mixed Signal and Wireless reportable segments. Net sales from Signal Integrity increased $30.7 million in the first six months of fiscal year 2025 compared to the first six months of fiscal year 2024, primarily driven by a $17.3 million increase in PON sales and a $15.3 million increase in data center sales, partially offset by a $1.7 million decrease in broadcast sales. Net sales from Analog Mixed Signal and Wireless increased $25.0 million in the first six months of fiscal year 2025 compared to the first six months of fiscal year 2024, primarily driven by a $12.6 million increase in LoRa-enabled sales, a $9.4 million increase in TVS product sales, and a $3.3 million increase in proximity sensing sales. Net sales from IoT Systems and Connectivity decreased $109.2 million in the first six months of fiscal year 2025 compared to the first six months of fiscal year 2024, primarily driven by a $89.9 million decrease in module sales and a $19.6 million decrease in router sales, partially offset by a $0.6 million increase in managed connectivity sales.
Current wording
Net sales in the first nine months of fiscal year 2025, compared to the first nine months of fiscal year 2024, were impacted by softer demand in the IoT Systems and Connectivity reportable segment, which contributed to lower sales volume and pricing pressures, but benefited from stronger demand in the Signal Integrity and Analog Mixed Signal and Wireless reportable segments. Net sales from Signal Integrity increased $55.0 million in the first nine months of fiscal year 2025 compared to the first nine months of fiscal year 2024, primarily driven by a $34.2 million increase in data center sales and a $20.9 million increase in telecommunications sales. Net sales from Analog Mixed Signal and Wireless increased $37.6 million in the first nine months of fiscal year 2025 compared to the first nine months of fiscal year 2024, primarily driven by a $26.0 million increase in LoRa-enabled sales, a $10.2 million increase in TVS product sales, and a $4.7 million increase in proximity sensing sales. Net sales from IoT Systems and Connectivity decreased $110.2 million in the first nine months of fiscal year 2025 compared to the first nine months of fiscal year 2024, primarily driven by a $110.9 million decrease in IoT Hardware sales, partially offset by a $0.6 million increase in managed connectivity sales.
Previous wording
In the first six months of fiscal year 2025, gross profit increased $1.4 million to $205.1 million from $203.7 million in the first six months of fiscal year 2024. This increase was primarily driven by a $19.4 million increase from Signal Integrity, which experienced higher sales led by 10G PON and data center due to stronger demand, offset by pricing pressures, a $16.9 million decrease in the amortization of acquired technology intangible assets related to the Sierra Wireless Acquisition due to impairments in the fourth quarter of fiscal year 2024, a $6.5 million increase from Analog Mixed Signal and Wireless, which experienced higher sales due to stronger demand, particularly with TVS consumer products, a $3.3 million decrease for amortization of inventory step-up due to the finalization of measurement period adjustments in the second quarter of fiscal year 2024 related to the Sierra Wireless Acquisition, and a $2.7 million decrease for transaction and integration costs related to the Sierra Wireless Acquisition, partially offset by a $47.0 million decrease from IoT Systems and Connectivity due to lower module and router sales primarily driven by soft demand causing decreased sales volume and pricing pressures.
Current wording
In the first nine months of fiscal year 2025, gross profit increased $29.4 million to $326.0 million from $296.6 million in the first nine months of fiscal year 2024. This increase was primarily driven by a $40.2 million increase from Signal Integrity, which experienced higher sales led by data center and 10G PON due to stronger demand, a $24.6 million decrease in the amortization of acquired technology intangible assets related to the Sierra Wireless Acquisition due to impairments in the fourth quarter of fiscal year 2024, a $18.4 million increase from Analog Mixed Signal and Wireless, which experienced higher sales due to stronger demand, particularly with TVS consumer products, a $3.3 million decrease for amortization of inventory step-up due to the finalization of measurement period adjustments in the second quarter of fiscal year 2024 related to the Sierra Wireless Acquisition, partially offset by a $55.6 million decrease from IoT Systems and Connectivity due to lower IoT Hardware sales primarily driven by soft demand causing decreased sales volume and pricing pressures.
Previous wording
Our gross margin was 48.7% in the first six months of fiscal year 2025, compared to 42.9% inthe first six months of fiscal year 2024. Gross margin from Signal Integrity was 60.8% inthe first six months of fiscal year 2025, compared to 59.9% inthe first six months of fiscal year 2024, primarily due to higher volume reducing overhead. Gross margin from Analog Mixed Signal and Wireless was 55.7% inthe first six months of fiscal year 2025, compared to 61.4% inthe first six months of fiscal year 2024, primarily due to unfavorable product mix, partially offset by higher overhead absorption. Gross margin from IoT Systems and Connectivity was 36.4% in the first six months of fiscal year 2025, compared to 39.2% in the first six months of fiscal year 2024, primarily driven by softer demand in market and pricing pressures.
Current wording
Our gross margin was 49.5% in the first nine months of fiscal year 2025, compared to 43.9% inthe first nine months of fiscal year 2024. Gross margin from Signal Integrity was 61.6% inthe first nine months of fiscal year 2025, compared to 57.0% inthe first nine months of fiscal year 2024, primarily due to higher volume reducing overhead. Gross margin from Analog Mixed Signal and Wireless was 56.2% inthe first nine months of fiscal year 2025, compared to 57.6% inthe first nine months of fiscal year 2024, primarily due to higher overhead and price erosion. Gross margin from IoT Systems and Connectivity was 38.0% in the first nine months of fiscal year 2025, compared to 42.0% in the first nine months of fiscal year 2024, primarily driven by softer demand and pricing pressures.
Previous wording
Product development and engineering expenses decreased $16.3 million in the first six months of fiscal year 2025 compared to the first six months of fiscal year 2024 primarily as a result of an $11.1 million net decrease in staffing-related costs due to lower headcount, a decrease of $3.8 million from new product introduction expenses, a $1.7 million decrease in facilities expenses, and a $1.6 million decrease in transaction and integration expenses primarily related to the Sierra Wireless Acquisition, partially offset by a $1.6 million decrease in tax credits and a $0.4 million increase in depreciation.
Current wording
Product development and engineering expenses decreased $20.7 million in the first nine months of fiscal year 2025 compared to the first nine months of fiscal year 2024 primarily as a result of a $10.0 million decrease in new product introduction expenses, a $9.5 million net decrease in staffing-related costs due to lower headcount and a $2.3 million decrease in facilities expenses, partially offset by a $1.6 million reduction in tax credits.
Previous wording
SG&A expenses decreased $9.3 million in the first six months of fiscal year 2025 compared to the first six months of fiscal year 2024 primarily as a result of an $11.0 million decrease in transaction and integration expenses primarily related to the Sierra Wireless Acquisition, a $1.4 million reduction in travel expenses, and a $0.5 million net decrease in staffing-related costs, which reflects lower headcount due to recent restructuring offset by an increase in share-based and other supplemental compensation, partially offset by a $3.4 million increase in depreciation.
Current wording
Selling, general and administrative expenses increased $2.8 million in the first nine months of fiscal year 2025 compared to the first nine months of fiscal year 2024 primarily as a result of a $12.7 million net increase in staffing related costs, which reflects higher share-based and other supplemental compensation offset by lower headcount from restructuring, a $3.0 million increase in consulting expenses, a $2.0 million increase in depreciation and a $1.2 million increase in bad debt expense, partially offset by a $13.7 million decrease in transaction and integration expenses primarily related to the Sierra Wireless Acquisition and a $1.0 million reduction in travel expenses.
Previous wording
Intangible amortization decreased by $9.2 million for the first six months of fiscal year 2025 compared to the same period in fiscal year 2024 due to impairment of intangible assets acquired in the Sierra Wireless Acquisition related to customer relationships and trade name in the fourth quarter of fiscal year 2024. The amortization of acquired technology intangible assets is reflected in cost of sales.
Current wording
Intangible amortization decreased by $13.9 million for the first nine months of fiscal year 2025 compared to the same period in fiscal year 2024 due to impairment of intangible assets acquired in the Sierra Wireless Acquisition related to customer relationships and trade name in the fourth quarter of fiscal year 2024. The amortization of acquired technology intangible assets is reflected in cost of sales.
Previous wording
Restructuring decreased by $7.2 million for the first six months of fiscal year 2025 compared to the same period in fiscal year 2024 primarily due to structural reorganization actions primarily in the prior year period to reduce our workforce as a result of cost-saving measures and internal resource alignment including from the realization of synergies of the Sierra Wireless Acquisition.
Current wording
Restructuring decreased by $10.1 million for the first nine months of fiscal year 2025 compared to the same period in fiscal year 2024 primarily due to structural reorganization actions primarily in the prior year period to reduce our workforce as a result of cost-saving measures and internal resource alignment including from the realization of synergies of the Sierra Wireless Acquisition.
Previous wording
There was no goodwill impairment for the first six months of fiscal year 2025 compared to $279.6 million of goodwill impairment for the same period in fiscal year 2024 due to valuation adjustments of goodwill related to the Sierra Wireless Acquisition. See Note 8, Goodwill and Intangible Assets, to our interim unaudited condensed consolidated financial statements for additional information.
Current wording
There was no goodwill impairment for the first nine months of fiscal year 2025 compared to $281.8 million of goodwill impairment for the same period in fiscal year 2024 due to valuation adjustments of goodwill related to the Sierra Wireless Acquisition. See Note 8, Goodwill and Intangible Assets, to our interim unaudited condensed consolidated financial statements for additional information.
Previous wording
In addition to the write-off of $5.5 million of deferred financing costs as a result of approximately $188.1 million of 2028 Notes extinguished in exchange for common stock in the first six months of fiscal year 2025, which was recorded in "Interest expense" in the Statements of Operations, we recognized a loss on extinguishment of debt equal to the difference between the fair value of our common stock delivered to certain holders of the 2028 Notes and the carrying value of the outstanding debt, accrued interest and third-party fees related to the Exchange Agreements. In the first six months of fiscal year 2025, in connection with the exchange transactions, we recognized $144.7 million of loss included in "Loss on extinguishment of debt" in the Statements of Operations.
Current wording
In addition to the write-off of $5.5 million of deferred financing costs as a result of approximately $188.1 million of 2028 Notes extinguished in exchange for common stock in the first nine months of fiscal year 2025, which was recorded in "Interest expense" in the Statements of Operations, we recognized a loss on extinguishment of debt equal to the difference between the fair value of our common stock delivered to certain holders of the 2028 Notes and the carrying value of the outstanding debt, accrued interest and third-party fees related to the Exchange Agreements. In the first nine months of fiscal year 2025, in connection with the exchange transactions, we recognized $144.7 million of loss included in "Loss on extinguishment of debt" in the Statements of Operations.
Previous wording
During the first six months of fiscal year 2025, investment impairments and credit loss reserves, net totaled a loss of $1.1 million due to an other-than-temporary impairment on one of our non-marketable equity investments. During the first six months of 2024, investment impairments and credit loss reserves, net totaled a loss of $0.3 million due to adjustments to our credit loss reserve for our available-for-sale debt securities.
Current wording
During the first nine months of fiscal year 2025, investment impairments and credit loss reserves, net totaled a loss of $1.1 million due to an other-than-temporary impairment on one of our non-marketable equity investments. During the first nine months of 2024, investment impairments and credit loss reserves, net totaled a loss of $2.3 million due to adjustments to our credit loss reserve for our available-for-sale debt securities.
Previous wording
In the first six months of fiscal year 2025, we recorded income tax expense of $7.2 million, compared to income tax expense of $54.2 million in the first six months of fiscal year 2024. The effective tax rates for the first six months of fiscal years 2025 and 2024 were provision rates of 3.8% and 15.2%, respectively. The change in our effective tax rate for the first six months of fiscal year 2025 compared to the first six months of fiscal year 2024 was primarily due to a regional mix of income and changes in valuation allowance. The effective tax rates in the first six months of fiscal years 2025 and 2024 differ from the statutory federal income tax rate of 21% primarily due to a regional mix of income, changes in valuation allowance, non-deductibility of goodwill impairment, impact of GILTI, R&D credits and nondeductible loss on extinguishment of debt.
Current wording
In the first nine months of fiscal year 2025, we recorded income tax expense of $11.2 million, compared to income tax expense of $53.9 million in the first nine months of fiscal year 2024. The change in our tax provision for the first nine months of fiscal year 2025 compared to the first nine months of fiscal year 2024 was primarily due to a regional mix of income, nondeductible loss on extinguishment of debt and changes in valuation allowance. The effective tax rates in the first nine months of fiscal years 2025 and 2024 differ from the statutory federal income tax rate of 21% primarily due to a regional mix of income, changes in valuation allowance, non-deductibility of goodwill impairment, impact of GILTI, R&D credits and nondeductible loss on extinguishment of debt.
Previous wording
During the second quarter of fiscal year 2024, we recorded a valuation allowance against our U.S. deferred tax assets of approximately $52.8 million. We are required to assess whether a valuation allowance should be recorded against our DTAs based on the consideration of all available evidence, using a "more likely than not" realization standard. The four sources of taxable income that must be considered in determining whether DTAs will be realized are: (1) future reversals of existing taxable temporary differences (i.e. offset of gross deferred tax assets against gross deferred tax liabilities); (2) taxable income in prior carryback years, if carryback is permitted under the tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards.
Current wording
During the second quarter of fiscal year 2024, we recorded a valuation allowance against our U.S. deferred tax assets of approximately $52.8 million. We are required to assess whether a valuation allowance should be recorded against our deferred tax assets ("DTAs") based on the consideration of all available evidence, using a "more likely than not" realization standard. The four sources of taxable income that must be considered in determining whether DTAs will be realized are: (1) future reversals of existing taxable temporary differences (i.e. offset of gross deferred tax assets against gross deferred tax liabilities); (2) taxable income in prior carryback years, if carryback is permitted under the tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards.
Previous wording
We believe that our cash on hand, cash available from future operations and available borrowing capacity under our Revolving Credit Facility (as defined below) are sufficient to meet liquidity requirements for at least the next 12 months, including funds needed for our material cash requirements. As of July 28, 2024, we had $115.9 million in cash and cash equivalents and $282.2 million of available undrawn borrowing capacity on our Revolving Credit Facility, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults. Over the longer-term, we expect to fund our business using cash flows from operating activities.
Current wording
We believe that our cash on hand, cash available from future operations and available borrowing capacity under our Revolving Credit Facility (as defined below) are sufficient to meet liquidity requirements for at least the next 12 months, including funds needed for our material cash requirements. As of October 27, 2024, we had $136.5 million in cash and cash equivalents and $287.2 million of available undrawn borrowing capacity on our Revolving Credit Facility, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults. Over the longer-term, we expect to fund our business using cash flows from operating activities.
Previous wording
A meaningful portion of our capital resources, and the liquidity they represent, are held by our subsidiaries outside of the U.S. As of July 28, 2024, our foreign subsidiaries held $102.7 million of cash and cash equivalents, compared to $104.6 million at January 28, 2024. Our liquidity may be impacted by fluctuating exchange rates. For additional information on exchange rates, see Item 3–Quantitative and Qualitative Disclosures About Market Risk.
Current wording
A meaningful portion of our capital resources, and the liquidity they represent, are held by our subsidiaries outside of the U.S. As of October 27, 2024, our foreign subsidiaries held $119.1 million of cash and cash equivalents, compared to $104.6 million at January 28, 2024. Our liquidity may be impacted by fluctuating exchange rates. For additional information on exchange rates, see Item 3–Quantitative and Qualitative Disclosures About Market Risk.
Previous wording
In connection with the enactment of the Tax Act, all historic and current foreign earnings are taxed in the U.S. Depending on the jurisdiction, these foreign earnings are potentially subject to a withholding tax, if repatriated. As of July 28, 2024, our historical undistributed earnings prior to fiscal year 2023 of our foreign subsidiaries are intended to be permanently reinvested outside of the U.S. With the enactment of the Tax Act, all post-1986 previously unremitted earnings for which no U.S. deferred tax liability had been accrued were subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, we have determined that none of our foreign earnings for fiscal years 2023 and 2024 will be permanently reinvested. If we needed to remit all or a portion of our historical undistributed earnings to the U.S. for investment in our domestic operations, any such remittance could result in increased tax liabilities and a higher effective tax rate. Determination of the amount of the unrecognized potential deferred tax liability on these unremitted earnings is not practicable.
Current wording
In connection with the enactment of the Tax Act, all historic and current foreign earnings are taxed in the U.S. Depending on the jurisdiction, these foreign earnings are potentially subject to a withholding tax, if repatriated. As of October 27, 2024, our historical undistributed earnings prior to fiscal year 2023 of our foreign subsidiaries are intended to be permanently reinvested outside of the U.S. With the enactment of the Tax Act, which amended the Internal Revenue Code of 1986, all post-1986 previously unremitted earnings for which no U.S. deferred tax liability had been accrued were subject to U.S. tax. As a result of the U.S. taxation of these amounts, we have determined that none of the foreign earnings from fiscal year 2023 onward will be permanently reinvested outside of the U.S. If we needed to remit all or a portion of our historical undistributed earnings to the U.S. for investment in our domestic operations, any such remittance could result in increased tax liabilities and a higher effective tax rate. Determination of the amount of the unrecognized potential deferred tax liability on these unremitted earnings is not practicable.
Previous wording
As of July 28, 2024, the borrowing capacity on the revolving credit facility under the Credit Agreement (the "Revolving Credit Facility") is $500.0 million, of which $162.5 million is scheduled to mature on November 7, 2024 and $337.5 million is scheduled to mature on January 12, 2028 (subject to, in certain circumstances, an earlier springing maturity), and the term loans thereunder (the "Term Loans") are scheduled to mature on January 12, 2028 (subject to, in certain circumstances, an earlier springing maturity).
Current wording
As of October 27, 2024, the borrowing capacity on the revolving credit facility under the Credit Agreement (the "Revolving Credit Facility") is $500.0 million, of which $162.5 million matured on November 7, 2024 and $337.5 million is scheduled to mature on January 12, 2028 (subject to, in certain circumstances, an earlier springing maturity), and the term loans thereunder (the "Term Loans") are scheduled to mature on January 12, 2028 (subject to, in certain circumstances, an earlier springing maturity).
Previous wording
As of July 28, 2024, we had $622.6 million outstanding under the Term Loans and $215.0 million outstanding under the Revolving Credit Facility, which had available undrawn borrowing capacity of $282.2 million, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults.
Current wording
As of October 27, 2024, we had $622.6 million outstanding under the Term Loans and $210.0 million outstanding under the Revolving Credit Facility, which had available undrawn borrowing capacity of $287.2 million, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults.
Previous wording
The 2028 Notes are not currently redeemable. The 2028 Notes may be converted at the option of the holders at the times and under the circumstances and at the conversion rate described in Note 9, Long-Term Debt, to our interim unaudited condensed consolidated financial statements. As of July 28, 2024, one of the conditions allowing holders of the 2028 Notes to convert had been met. The trading price of our common stock remained above 130% of the applicable $20.37 conversion price for at least 20 trading days during the 30 consecutive trading-day period ending on, and including, July 26, 2024 (the last trading day of the quarter ended July 28, 2024), holders of the 2028 Notes would have the right to convert their 2028 Notes beginning July 29, 2024 through October 25, 2024 (the last trading day of the quarter ending October 27, 2024). If converted, we will settle in cash the aggregate principal amount of the 2028 Notes to be converted, and for the remainder of the conversion obligations in excess of the aggregate principal amount of the notes being converted, we will settle the obligations in either cash, shares of our common stock, or any combination thereof, at our option.
Current wording
The 2028 Notes are not currently redeemable. The 2028 Notes may be converted at the option of the holders at the times and under the circumstances and at the conversion rate described in Note 9, Long-Term Debt, to our interim unaudited condensed consolidated financial statements. As of October 27, 2024, one of the conditions allowing holders of the 2028 Notes to convert had been met. The trading price of our common stock remained above 130% of the applicable $20.37 conversion price for at least 20 trading days during the 30 consecutive trading-day period ending on, and including, October 25, 2024 (the last trading day of the quarter ended October 27, 2024), resulting in the right of the holders of the 2028 Notes to convert their 2028 Notes beginning October 28, 2024 through January 24, 2025 (the last trading day of the quarter ending January 26, 2025). If converted, we will settle in cash the aggregate principal amount of the 2028 Notes to be converted, and for the remainder of the conversion obligations in excess of the aggregate principal amount of the notes being converted, we will settle the obligations in either cash, shares of our common stock, or any combination thereof, at our option.
Previous wording
On July 11, 2024 and July 15, 2024, we entered into the Exchange Agreements with certain holders of the 2028 Notes. Pursuant to the Exchange Agreements, certain holders of the 2028 Notes exchanged with us approximately $188.1 million in aggregate principal amount of 2028 Notes held by them for an aggregate of 10,378,431 shares of our common stock, which number of shares was determined over an averaging period that commenced on July 12, 2024. We accounted for these exchange transactions as a partial debt extinguishment and recognized a loss on extinguishment of debt equal to the difference between the fair value of our common stock delivered to certain holders of the 2028 Notes and the carrying value of the outstanding debt, accrued interest and third-party fees related to the Exchange Agreements. In the three and six months ended July 28, 2024, in connection with the exchange transactions, we recognized $144.7 million of loss included in "Loss on extinguishment of debt" in the Statements of Operations and $5.5 million of loss resulting from the write-off of deferred financing costs included in "Interest expense" in the Statements of Operations.
Current wording
On July 11, 2024 and July 15, 2024, we entered into the Exchange Agreements with certain holders of the 2028 Notes. Pursuant to the Exchange Agreements, certain holders of the 2028 Notes exchanged with us approximately $188.1 million in aggregate principal amount of 2028 Notes held by them for an aggregate of 10,378,431 shares of our common stock, which number of shares was determined over an averaging period that commenced on July 12, 2024. We accounted for these exchange transactions as a partial debt extinguishment and recognized a loss on extinguishment of debt equal to the difference between the fair value of our common stock delivered to certain holders of the 2028 Notes and the carrying value of the outstanding debt, accrued interest and third-party fees related to the Exchange Agreements. In the nine months ended October 27, 2024, in connection with the exchange transactions, we recognized $144.7 million of loss included in "Loss on extinguishment of debt" in the Statements of Operations and $5.5 million of loss resulting from the write-off of deferred financing costs included in "Interest expense" in the Statements of Operations.
Previous wording
We currently have in effect a stock repurchase program that was initially approved by our Board of Directors in March 2008. On March 11, 2021, the Board of Directors approved the expansion of the stock repurchase program by an additional $350.0 million. This program represents one of our principal efforts to return value to our stockholders. Under the program, subject to the terms of the Credit Agreement, we may repurchase our common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations. Our repurchases may be made through Rule 10b5-1 and/or Rule 10b-18 or other trading plans, open market purchases, privately negotiated transactions, block purchases or other transactions.
Current wording
We currently have in effect a stock repurchase program that was initially approved by our Board of Directors in March 2008. On March 11, 2021, the Board of Directors approved the expansion of the stock repurchase program by an additional $350.0 million. Under the program, subject to the terms of the Credit Agreement, we may repurchase our common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations. Our repurchases may be made through Rule 10b5-1 and/or Rule 10b-18 or other trading plans, open market purchases, privately negotiated transactions, block purchases or other transactions.
Previous wording
We did not repurchase any shares of our common stock under the program in the first six months of fiscal year 2025 or in the first six months of fiscal year 2024. As of July 28, 2024, the remaining authorization under the program was $209.4 million. To the extent we repurchase any shares of our common stock under the program in the future, we expect to fund such repurchases from cash on hand and borrowings on our Revolving Credit Facility. We have no obligation to repurchase any shares under the program and may suspend or discontinue it at any time.
Current wording
We did not repurchase any shares of our common stock under the program in the first nine months of fiscal year 2025 or in the first nine months of fiscal year 2024. As of October 27, 2024, the remaining authorization under the program was $209.4 million. To the extent we repurchase any shares of our common stock under the program in the future, we expect to fund such repurchases from cash on hand and borrowings on our Revolving Credit Facility. We have no obligation to repurchase any shares under the program and may suspend or discontinue it at any time.
Previous wording
There have been no material changes to our cash requirements from those disclosed in our Annual Report on Form 10-K for the fiscal year ended January 28, 2024.
Current wording
Except as disclosed above, there have been no material changes to our cash requirements from those disclosed in our Annual Report on Form 10-K for the fiscal year ended January 28, 2024.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
79% and 78% during the third quarters of fiscal years 2025 and 2024, respectively. Approximately 63% and 59% of our net sales during the third quarters of fiscal years 2025 and 2024, respectively, were to customers located in the Asia-Pacific region. We are subject to export restrictions and trade regulations, which have limited our ability to sell to certain customers in certain regions.
Current report — wording carried from elsewhere
Acquisition, and were unfavorably impacted by an 2.6% decrease in net sales, higher restructuring payments related to employee termination benefits and an incremental increase in inventory spend.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
In addition to the write-off of $5.5 million of deferred financing costs as a result of approximately $188.1 million of 2028 Notes extinguished in exchange for common stock in the second quarter of fiscal year 2025, which was recorded in "Interest expense" in the Statements of Operations, we recognized a loss on extinguishment of debt equal to the difference between the fair value of our common stock delivered to certain holders of the 2028 Notes and the carrying value of the outstanding debt, accrued interest and third-party fees related to the Exchange Agreements. In the second quarter of fiscal year 2025, in connection with the exchange transactions, we recognized $144.7 million of loss included in "Loss on extinguishment of debt" in the Statements of Operations.
Previous report — wording carried elsewhere
During the second quarter of fiscal year 2024, we recorded a valuation allowance against our U.S. deferred tax assets of approximately $52.8 million. We are required to assess whether a valuation allowance should be recorded against our deferred tax assets ("DTAs") based on the consideration of all available evidence, using a "more likely than not" realization standard. The four sources of taxable income that must be considered in determining whether DTAs will be realized are: (1) future reversals of existing taxable temporary differences (i.e. offset of gross deferred tax assets against gross deferred tax liabilities); (2) taxable income in prior carryback years, if carryback is permitted under the tax law; (3) tax planning strategies; and (4)
Previous report — wording carried elsewhere
future taxable income exclusive of reversing temporary differences and carryforwards.
Previous report — wording carried elsewhere
After a review of the four sources of taxable income described above and in view of our three-year cumulative loss, we were not able to conclude that it is more likely than not that our DTAs will be realized. As a result, we recorded an additional valuation allowance on our DTAs, with a corresponding charge to our income tax provision, of approximately $52.8 million during the second quarter of fiscal year 2024.