MACOM Technology Solutions Holdings Inc

Previous wording

This Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10-Q contain “forward-looking statements.” In addition, we may make other written and oral communications from time to time that contain such statements. Forward-looking statements include statements regarding our business outlook, strategic plans and priorities, expectations, anticipated drivers of future revenue growth, our ability to develop new products, achieve market acceptance of those products and better address certain markets, expand our capabilities and extend our product offerings, including through the Linearizer Acquisition, the MESC Acquisition and the RF Business Acquisition, industry trends, our estimated annual effective tax rate, our plans for use of our cash and cash equivalents and short-term investments, interest rate and foreign currency risks, our ability to meet working capital requirements, estimates and objectives for future operations, our future results of operations and our financial position, including liquidity, and other matters that do not relate strictly to historical facts. Forward-looking statements generally may be identified by terms such as “anticipates,” “believes,” “could,” “continue,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “targets,” “will,” “would” or similar expressions or variations or the negatives of those terms. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in the section entitled “Risk Factors” in this Quarterly Report on Form 10-Q and the 2023 Annual Report on Form 10-K. We caution the reader to carefully consider such factors. Furthermore, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Current wording

This Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10-Q contain “forward-looking statements.” In addition, we may make other written and oral communications from time to time that contain such statements. Forward-looking statements include statements regarding our business outlook, strategic plans and priorities, expectations, anticipated drivers of future revenue growth, our ability to develop new products, achieve market acceptance of those products and better address certain markets, expand our capabilities and extend our product offerings, including through the RF Business Acquisition and the ENGIN-IC acquisition, industry trends, our strategic investment plan, including negotiation and finalization of a definitive agreement with, and receipt of funding from the Federal and State governments, our estimated annual effective tax rate, our plans for use of our cash and cash equivalents and short-term investments, interest rate and foreign currency risks, our ability to meet working capital requirements, estimates and objectives for future operations, our future results of operations and our financial position, including liquidity, and other matters that do not relate strictly to historical facts. Forward-looking statements generally may be identified by terms such as “anticipates,” “believes,” “could,” “continue,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “targets,” “will,” “would” or similar expressions or variations or the negatives of those terms.

Previous wording

We design and manufacture semiconductor products for the Industrial and Defense (“I&D”), Data Center and Telecommunications (“Telecom”) industries. Headquartered in Lowell, Massachusetts, with operational facilities throughout North America, Europe and Asia, we design, develop and manufacture differentiated semiconductor products for customers who demand high performance, quality and reliability. We have more than 70 years of application expertise, combined with expertise in analog and mixed signal circuit design, compound semiconductor fabrication (including GaAs, GaN, indium phosphide (InP) and specialized silicon), advanced packaging and back-end assembly and test. We offer a broad portfolio of thousands of standard and custom devices, which include integrated circuits (IC), multi-chip modules (MCM), diodes, amplifiers, switches and switch limiters, passive and active components and radio frequency (RF) and optical subsystems, which make up dozens of product lines that service over 6,000 end customers in our three primary markets. Our products are electronic components that our customers generally incorporate into larger electronic systems, such as wireless basestations, high-capacity optical networks, data center networks, radar, medical systems and test and measurement applications. Our primary end markets are: (1) I&D, which includes military and commercial radar, RF jammers, electronic countermeasures, communication data links, satellite communications and various wired and wireless multi-market applications, which include industrial, medical, test and measurement and scientific applications; (2) Data Center, which includes intra-Data Center, Data Center Interconnect (DCI) applications, at 100G, 200G, 400G, 800G and higher speeds, enabled by our broad portfolio of analog ICs and photonic components for high speed connectivity customers; and (3) Telecom, which includes carrier infrastructure such as long-haul/metro, 5G and 6G infrastructure, satellite communications and Fiber-to-the-X (FTTx)/passive optical network (“PON”), among others.

Current wording

We design, develop and manufacture differentiated semiconductor products and solutions for the Industrial and Defense (“I&D”), Data Center and Telecommunications (“Telecom”) industries for customers who demand high performance, quality and reliability. We are headquartered in Lowell, Massachusetts, with operational facilities throughout North America, Europe and Asia. We have more than 70 years of application expertise, combined with expertise in analog and mixed signal circuit design, compound semiconductor fabrication (including gallium arsenide (GaAs), gallium nitride (GaN), indium phosphide (InP) and specialized silicon), advanced packaging and back-end assembly and test. We offer a broad portfolio of thousands of standard and custom devices, which include integrated circuits (IC), multi-chip modules (MCM), diodes, amplifiers, switches and switch limiters, passive and active components and radio frequency (RF) and optical subsystems, which make up dozens of product lines that service over 6,000 end customers in our three primary markets. Our products are electronic components that our customers generally incorporate into larger electronic systems, such as wireless basestations, high-capacity optical networks, data center networks, radar, medical systems, satellite networks and test and measurement applications. Our primary end markets are: (1) I&D, which includes military and commercial radar, RF jammers, electronic countermeasures, communication data links, satellite communications (“SATCOM”) and various wired and wireless multi-market applications, which include industrial, medical, test and measurement and scientific applications; (2) Data Center, which includes intra-Data Center, Data Center Interconnect (DCI) applications, at 100G, 200G, 400G, 800G, 1.6T and higher speeds, enabled by our broad portfolio of analog ICs and photonic components for high speed connectivity customers; and (3) Telecom, which includes carrier infrastructure such as long-haul/metro, 5G and 6G infrastructure, satellite communications and Fiber-to-the-X (FTTx)/passive optical network (PON), among others.

Previous wording

We expect our revenue in the Data Center market to be driven by the adoption of cloud-based services and the upgrade of data center architectures to 100G, 200G, 400G and 800G interconnects, which we expect will drive adoption of higher speed optical and photonic components.

Current wording

We expect our revenue in the Data Center market to be driven by the adoption of higher speed processing technologies and the upgrade of data center architectures to 100G, 200G, 400G, 800G and 1.6T interconnects, which we expect will drive adoption of higher speed optical and photonic components.

Previous wording

Significant management judgment is required in our valuation of goodwill and intangible assets, many of which are based on the creation of forecasts of future operating results that are used in the valuation, including (i) estimation of future cash flows, (ii) estimation of the long-term rate of growth for our business, (iii) estimation of the useful life over which cash flows will occur, (iv) terminal values, if applicable, and (v) the determination of our weighted average cost of capital, which helps determine the discount rate. It is possible that these forecasts may change, and our performance projections included in our forecasts of future results may prove to be inaccurate. The value of our goodwill and purchased intangible assets could also be impacted by future adverse changes, such as a decline in the valuation of technology company stocks, including the valuation of our common stock, or a significant slowdown in the worldwide economy or in the optical communications equipment or semiconductor industry.

Current wording

Significant management judgment is required in our valuation of goodwill and intangible assets, many of which are based on the creation of forecasts of future operating results that are used in the valuation, including (i) estimation of future cash flows, (ii) estimation of the long-term rate of growth for our business, (iii) estimation of the useful life over which cash flows will occur, (iv) terminal values, if applicable, and (v) the determination of our weighted average cost of capital, which helps determine the discount rate. It is possible that these forecasts may change, and our performance projections included in our forecasts of future results may prove to be inaccurate. The value of our goodwill and purchased intangible assets could also be impacted by future adverse changes, such as a decline in the valuation of technology company stocks, including the valuation of our common stock, or a significant slowdown in the worldwide economy or in the semiconductor industry.

Previous wording

(2) The three months ended June 30, 2023 includes $3.2 million of acquisition transaction costs. The nine months ended June 28, 2024 and June 30, 2023 include $7.7 million and $6.7 million, respectively, of acquisition transaction costs.

Current wording

(2) The three months ended January 3, 2025 and December 29, 2023 include less than $0.1 million and $8.4 million, respectively, of acquisition-related transaction costs.

Previous wording

Comparison of the Three and Nine Months Ended June 28, 2024 to the Three and Nine Months Ended June 30, 2023

Current wording

Comparison of the Three Months Ended January 3, 2025 to the Three Months Ended December 29, 2023

Previous wording

Revenue. Our revenue increased by $42.0 million, or 28.3%, to $190.5 million for the three months ended June 28, 2024, from $148.5 million for the three months ended June 30, 2023, and our revenue increased by $30.8 million, or 6.2%, to $528.9 million for the nine months ended June 28, 2024, from $498.0 million for the nine months ended June 30, 2023. The increase in revenue in the three and nine months ended June 28, 2024 is described by end market in the following paragraphs.

Current wording

Revenue. Our revenue increased by $61.0 million, or 38.8%, to $218.1 million for the three months ended January 3, 2025, from $157.1 million for the three months ended December 29, 2023. The increase in revenue in the three months ended January 3, 2025 is described by end market in the following paragraphs.

Previous wording

In the three months ended June 28, 2024, our I&D market revenue increased by $7.4 million, or 8.8%, compared to the three months ended June 30, 2023. In the nine months ended June 28, 2024, our I&D market revenue increased by $20.9 million, or 8.8%, compared to the nine months ended June 30, 2023. The increase in the three and nine months ended June 28, 2024 was primarily driven by revenue from recent acquisitions, partially offset by lower sales of legacy products for industrial markets and timing of defense program shipments.

Current wording

In the three months ended January 3, 2025, our I&D market revenue increased by $20.4 million, or 26.5%, compared to the three months ended December 29, 2023. The increase in the three months ended January 3, 2025 was primarily driven by incremental revenue from the RF Business Acquisition, partially offset by lower sales of legacy products for industrial markets.

Previous wording

In the three months ended June 28, 2024, our Data Center market revenue increased by $22.4 million, or 83.9%, compared to the three months ended June 30, 2023. In the nine months ended June 28, 2024, our Data Center market revenue increased by $35.2 million, or 33.1%, compared to the nine months ended June 30, 2023. The increase in the three and nine months ended June 28, 2024 was primarily driven by an increase in sales of 400G and 800G high-performance analog Data Center products, partially offset by a decrease in sales of our legacy connectivity products.

Current wording

In the three months ended January 3, 2025, our Data Center market revenue increased by $15.8 million, or 31.9%, compared to the three months ended December 29, 2023. The increase in the three months ended January 3, 2025 was primarily driven by an increase in sales of high-performance analog Data Center products, including legacy 100G as well as high speed 400G, 800G and 1.6T data rates.

Previous wording

In the three months ended June 28, 2024, our Telecom market revenue increased by $12.2 million, or 31.9%, compared to the three months ended June 30, 2023. In the nine months ended June 28, 2024, our Telecom market revenue decreased by $25.3 million, or 16.4%, compared to the nine months ended June 30, 2023. The increase in the three months ended June 28, 2024 was primarily driven by incremental revenue from recent acquisitions, partially offset by a decrease in sales in broadband access, PON and other telecom markets. The decrease in the nine months ended June 28, 2024 was primarily driven by a decrease in sales in broadband access, PON, carrier-based optical semiconductor products and other telecom markets, partially offset by incremental revenue from recent acquisitions.

Current wording

In the three months ended January 3, 2025, our Telecom market revenue increased by $24.8 million, or 80.9%, compared to the three months ended December 29, 2023. The increase in the three months ended January 3, 2025 was primarily driven by an increase in sales in 5G applications, primarily driven by incremental revenue from recent acquisitions, and SATCOM.

Previous wording

We continue to be negatively impacted by the current macroeconomic conditions, which we expect may result in weaker near-term demand for our products across all three of our primary markets.

Current wording

Certain sectors of our end markets continue to be negatively impacted by macroeconomic and geopolitical conditions, which we expect may result in weaker near-term demand for our products across all three of our primary markets.

Previous wording

Gross profit. Gross margin was 53.2% and 58.0% for the three months ended June 28, 2024 and June 30, 2023, respectively, and 53.7% and 60.1% for the nine months ended June 28, 2024 and June 30, 2023. Gross profit was $101.4 million and $86.1 million for the three months ended June 28, 2024 and June 30, 2023, respectively, and $283.9 million and $299.2 million for the nine months ended June 28, 2024 and June 30, 2023, respectively. Gross profit increased for the three months ended June 28, 2024 as compared to the three months ended June 30, 2023 primarily as a result of higher sales primarily driven by the RF Business Acquisition, partially offset by increases in employee-related costs, headcount from acquisitions, product mix and higher intangible asset amortization. Gross profit decreased for the nine months ended June 28, 2024 as compared to the nine months ended June 30, 2023 primarily as a result of product mix, increased employee-related costs, primarily driven by headcount from acquisitions, higher intangible asset amortization and depreciation expense, partially offset by higher revenue.

Current wording

Gross profit. Gross margin was 53.7% and 55.6% for the three months ended January 3, 2025 and December 29, 2023, respectively. Gross profit was $117.1 million and $87.3 million for the three months ended January 3, 2025 and December 29, 2023, respectively. Gross profit increased for the three months ended January 3, 2025 as compared to the three months ended December 29, 2023 primarily as a result of higher sales from the RF Business Acquisition, partially offset by increases in employee-related costs, product mix, higher intangible asset amortization and share-based compensation expense.

Previous wording

Research and development. Research and development expense increased by $10.9 million, or 29.6%, to $47.5 million, or 25.0% of our revenue, for the three months ended June 28, 2024, compared to $36.7 million, or 24.7% of our revenue, for the three months ended June 30, 2023. Research and development expense increased by $21.5 million, 19.4%, to $132.6 million, or 25.1% of our revenue, for the nine months ended June 28, 2024, compared to $111.0 million, or 22.3% of our revenue, for the nine months ended June 30, 2023. Research and development expense increased in the three and nine months ended June 28, 2024 primarily as a result of increases in employee-related costs, driven by higher headcount associated with acquisitions, higher intangible asset amortization and share-based compensation expense.

Current wording

Research and development. Research and development expense increased by $21.0 million, or 53.2%, to $60.4 million, or 27.7% of our revenue, for the three months ended January 3, 2025, compared to $39.4 million, or 25.1% of our revenue, for the three months ended December 29, 2023. Research and development expense increased in the three months ended January 3, 2025 primarily as a result of increases in employee-related costs due to acquisitions, higher share-based compensation expense and supplies expense.

Previous wording

Selling, general and administrative. Selling, general and administrative expense increased by $2.0 million, or 6.3%, to $34.2 million, or 17.9% of our revenue, for the three months ended June 28, 2024, compared to $32.2 million, or 21.6% of our revenue, for the three months ended June 30, 2023. Selling, general and administrative expense increased by $8.9 million, or 9.2%, to $105.2 million, or 19.9% of our revenue, for the nine months ended June 28, 2024, compared to $96.3 million, or 19.3% of our revenue, for the nine months ended June 30, 2023. Selling, general and administrative expense increased in the three months ended June 28, 2024 primarily due to an increase in employee-related costs, primarily driven by headcount from acquisitions and share-based compensation, partially offset by decreases in professional fees. Selling, general and administrative expense increased in the nine months ended June 28, 2024 primarily due to increases in employee-related costs, primarily driven by headcount from acquisitions, acquisition-related costs and share-based compensation, partially offset by lower intangible amortization.

Current wording

Selling, general and administrative. Selling, general and administrative expense increased by $2.3 million, or 6.3%, to $39.2 million, or 18.0% of our revenue, for the three months ended January 3, 2025, compared to $36.9 million, or 23.5% of our revenue, for the three months ended December 29, 2023. Selling, general and administrative expense increased in the three months ended January 3, 2025 primarily due to an increase in employee-related costs and share-based compensation, partially offset by decreases in acquisition-related transaction costs and intangible asset amortization.

Previous wording

Interest income. In the three months ended June 28, 2024, interest income was $5.8 million, compared to $6.0 million for the three months ended June 30, 2023. In the nine months ended June 28, 2024, interest income was $16.7 million, compared to $14.8 million for the nine months ended June 30, 2023. The decrease for the three months ended June 28, 2024 is primarily due to the decrease in our short-term investments. The increase for the nine months ended is primarily due to the general increase in interest rates on our short-term investments.

Current wording

Interest income. In the three months ended January 3, 2025, interest income was $7.0 million, compared to $5.6 million for the three months ended December 29, 2023. The increase for the three months ended January 3, 2025 is primarily due to the increase in our short-term investments.

Previous wording

The primary driver for the rate reduction for the three and nine months ended June 28, 2024 as compared to the three and nine months ended June 30, 2023 is the tax benefit relating to a partial deduction attributable to the inclusion of GILTI income.

Current wording

The primary driver for the rate reduction for the three months ended January 3, 2025 as compared to the three months ended December 29, 2023 is the non-deductibility of the loss on extinguishment of debt.

Previous wording

The difference between the U.S. federal statutory income tax rate of 21% and our effective income tax rate for the three and nine months ended June 28, 2024 was primarily driven by favorable stock based compensation and R&D tax credits, partially offset by GILTI. The difference between the U.S. federal statutory income tax rate of 21% and our effective income tax rate for the three and nine months ended June 30, 2023, was primarily driven by tax on GILTI, including the required capitalization of R&D expenses, non-deductible compensation and state income taxes partially offset by income taxed in foreign jurisdictions generally at lower tax rates, and R&D tax credits.

Current wording

The difference between the U.S. federal statutory income tax rate of 21% and our effective income tax rate for the three months ended January 3, 2025 was primarily driven by the non-deductibility of the loss on extinguishment of debt and favorable stock based compensation and R&D tax credits, partially offset by GILTI. The difference between the U.S. federal statutory income tax rate of 21% and our effective income tax rate for the three months ended December 29, 2023, was primarily driven by favorable stock based compensation and R&D tax credits, partially offset by foreign withholding taxes and GILTI.

Previous wording

Our estimated annual effective tax rate for the year ending September 27, 2024 is expected to be approximately 20%, adjusted for discrete taxation matters arising during the interim periods.

Current wording

Our estimated annual effective tax rate for the year ending October 3, 2025 is expected to be approximately 16%, adjusted for discrete taxation matters arising during the interim periods, primarily the removal of the loss on extinguishment of debt of $193.1 million.

Previous wording

Our cash flow from operating activities for the nine months ended June 28, 2024 of $100.3 million consisted of a net income of $47.4 million plus adjustments of $89.0 million, to reconcile our net income to cash provided by operating activities, less cash used in operating assets and liabilities of $36.1 million. Adjustments to reconcile our net income to cash provided by operating activities primarily included depreciation and intangible amortization expense of $49.4 million and share-based compensation expense of $34.1 million. In addition, cash used in operating assets and liabilities was $36.1 million for the nine months ended June 28, 2024, primarily driven by an increase in accounts receivables of $17.9 million, an increase in inventories of $25.1 million, a decrease of $6.1 million inaccrued and other liabilities, partially offset byan increase of $14.7 million in accounts payable. The increase in inventory is primarily due to timing of certain program shipments and inventory builds to support future revenue. The increases in accounts receivable and accounts payable were primarily a result of the integration of the RF Business during the nine months ended June 28, 2024.

Current wording

Our cash flow from operating activities for the three months ended January 3, 2025 of $66.7 million consisted of a net loss of $167.5 million plus adjustments of $225.3 million, to reconcile our net loss to cash provided by operating activities, less cash provided by operating assets and liabilities of $8.9 million. Adjustments to reconcile our net loss to cash provided by operating activities primarily included loss on extinguishment of debt of $193.1 million, share-based compensation expense of $25.5 million and depreciation and intangible amortization expense of $16.0 million. In addition, cash provided by operating assets and liabilities was $8.9 million for the three months ended January 3, 2025, primarily driven by a decrease in accounts receivables of $14.9 million, partially offset by an increase in inventories of $4.6 million. The decrease in accounts receivable is primarily due to improved revenue linearity during the three months ended January 3, 2025.

Previous wording

Our cash flow from operating activities for the nine months ended June 30, 2023 of $116.6 million consisted of net income of $67.1 million plus adjustments of $89.3 million, to reconcile our net income to cash provided by operating activities less cash used in operating assets and liabilities of $39.9 million. Adjustments to reconcile our net income to cash provided by operating activities primarily included depreciation and intangible amortization expense of $38.4 million, share-based compensation expense of $28.8 million and deferred income tax expense of $27.4 million. In addition, cash used in operating assets and liabilities was $39.9 million for the nine months ended June 30, 2023, primarily driven by an increase in inventories of $12.2 million and a decrease of $16.6 million in accrued and other liabilities.

Current wording

Our cash flow from operating activities for the three months ended December 29, 2023 of $33.1 million consisted of a net income of $12.5 million plus adjustments of $21.5 million, to reconcile our net income to cash provided by operating activities, less cash used in operating assets and liabilities of $0.9 million. Adjustments to reconcile our net income to cash provided by operating activities primarily included depreciation and intangible amortization expense of $14.3 million and share-based compensation expense of $8.7 million. In addition, cash used in operating assets and liabilities was $0.9 million for the three months ended December 29, 2023, primarily driven by an increase in accounts receivables of $12.2 million, partially offset by an increase of $6.6 million in accrued and other liabilities, an increase of $2.1 million in accounts payable and a decrease in inventories of $1.6 million.

Previous wording

Our cash flow used in investing activities for the nine months ended June 28, 2024 of $148.6 million consisted primarily of cash paid for acquisitions, net of cash acquired of $72.6 million for acquisitions, capital expenditures of $17.3 million and purchases of $330.7 million of short-term investments, offset by proceeds of $274.1 million for the sale and maturity of short-term investments. For additional information on the consideration paid for our acquisitions, see Note 3 - Acquisitionsto our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Current wording

Our cash flow used in investing activities for the three months ended January 3, 2025 of $10.2 million consisted primarily of cash paid for acquisitions, net of cash acquired of $12.5 million for acquisitions, capital expenditures of $5.3 million and purchases of $61.4 million of short-term investments and other investing activities of $3.4 million, offset by proceeds of $72.4 million for the sale and maturity of short-term investments. For additional information on the consideration paid for our acquisitions, see Note 3 - Acquisitionsto our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Previous wording

Our cash flow used in investing activities for the nine months ended June 30, 2023 of $87.4 million consisted primarily of $87.7 million for acquisitions, net of cash acquired, capital expenditures of $18.9 million and purchases of $352.9 million of short-term investments, offset by proceeds of $364.1 million for the sale and maturity of short-term investments and proceeds from the sale of equipment of$8.0 million. For additional information on the cash paid for our acquisitions, see Note 3 - Acquisitionsto our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Current wording

Our cash flow used in investing activities for the three months ended December 29, 2023 of $34.8 million consisted primarily of $75.0 million for acquisitions, capital expenditures of $4.7 million and purchases of $55.4 million of short-term investments, offset by proceeds of $100.3 million for the sale and maturity of short-term investments. For additional information on the cash paid for our acquisitions, see Note 3 - Acquisitions to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Previous wording

During the nine months ended June 30, 2023, our cash used in financing activities of $27.8 million was primarily related to $32.5 million of common stock withheld associated with employee taxes on vested equity awards, partially offset by $5.6 million of proceeds from employee stock purchases.

Current wording

During the three months ended January 3, 2025, our cash provided by financing activities of $30.1 million was primarily related to $86.6 million of proceeds from convertible notes and $4.5 million of proceeds from stock option exercises and employee stock purchases, partially offset by $37.9 million of common stock withheld associated with employee taxes on vested equity awards and $22.9 million of fees for the convertible note exchange and payments for debt issuance costs.

Previous wording

During the nine months ended June 28, 2024, our cash used in financing activities of $8.4 million was primarily related to $13.9 million of common stock withheld associated with employee taxes on vested equity awards, partially offset by $6.5 million of proceeds from stock option exercises and employee stock purchases.

Current wording

During the three months ended December 29, 2023, our cash used in financing activities of $9.1 million was primarily related to $11.6 million of common stock withheld associated with employee taxes on vested equity awards, partially offset by $2.8 million of proceeds from stock option exercises and employee stock purchases.

Previous wording

As of June 28, 2024, we held $117.3 million of cash and cash equivalents, primarily deposited with financial institutions, as well as $404.2 million of liquid short-term investments. The undistributed earnings of certain foreign subsidiaries are considered indefinitely reinvested for the periods presented and we do not intend to repatriate such earnings. We believe the decision to reinvest these earnings will not have a significant impact on our liquidity. As of June 28, 2024, cash held by our indefinitely reinvested foreign subsidiaries was $6.4 million, which, along with cash generated from foreign operations, is expected to be used in the support of international growth and working capital requirements as well as the repayment of certain intercompany loans.

Current wording

As of January 3, 2025, we held $232.7 million of cash and cash equivalents, primarily deposited with financial institutions, as well as $423.8 million of liquid short-term investments. The undistributed earnings of certain foreign subsidiaries are considered indefinitely reinvested for the periods presented and we do not intend to repatriate such earnings. We believe the decision to reinvest these earnings will not have a significant impact on our liquidity. As of January 3, 2025, cash held by our indefinitely reinvested foreign subsidiaries was $9.0 million, which, along with cash generated from foreign operations, is expected to be used in the support of international growth and working capital requirements as well as the repayment of certain intercompany loans.

Previous wording

Holders of the 2026 Convertible Notes may convert their notes at their option at any time prior to the close of business on the business day immediately preceding December 15, 2025 in multiples of $1,000 principal amount, if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to $106.76 for the notes on each applicable trading day. We made an irrevocable election to pay cash for the principal amount of notes to be converted. The aggregate principal balance of the 2026 Convertible Notes is $450.0 million.

Current wording

During the fiscal quarter ended January 3, 2025, our common stock price for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending January 3, 2025 was greater than $106.76 on each applicable trading day. Therefore, holders of our 2026 Convertible Notes may convert their notes at their option at any time during thesubsequent second fiscal quarter ended April 4, 2025 in multiples of $1,000 principal amount. For additional information on the 2026 Convertible Notes, see Note 9 - Debt to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Previous wording

We plan to use our remaining available cash and cash equivalents and short-term investments for general corporate purposes, including working capital, payment on the 2026 Convertible Notes, or for the acquisition of or investment in complementary technologies, design teams, products and businesses. We believe that our cash and cash equivalents, short-term investments and cash generated from operations will be sufficient to meet our working capital requirements for at least the next twelve months. We may need to raise additional capital from time to time through the issuance and sale of equity or debt securities, and there is no assurance that we will be able to do so on favorable terms or at all.

Current wording

We plan to use our remaining available cash and cash equivalents and short-term investments for general corporate purposes, including working capital, payment on the 2026 Convertible Notes and 2029 Convertible Notes, or for the acquisition of or investment in complementary technologies, design teams, products and businesses. We believe that our cash and cash equivalents, short-term investments and cash generated from operations will be sufficient to meet our working capital requirements for at least the next twelve months. We may need to raise additional capital from time to time through the issuance and sale of equity or debt securities, and there is no assurance that we will be able to do so on favorable terms or at all.