UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_________________

FORM 10-Q

_________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December ~~25, 2020~~24, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39675

_________________

ALLEGRO MICROSYSTEMS, INC.

(Exact Name of Registrant as Specified in its Charter)

_________________



Delaware			46-2405937
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

955 Perimeter Road		~~03103~~
Manchester,	New Hampshire		~~(Zip Code)~~03103
(Address of principal executive offices)			(Zip Code)

(603) 626-2300

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

_________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

ALGM

The Nasdaq Global Select Market

Indicate by check mark whether the ~~registrant:~~registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐☒ No ☒☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~February 1, 2021,~~January 19, 2022, the registrant had ~~189,433,744 shares~~189,913,804 shares of common stock, $0.01 par value per share, outstanding.

TABLE OF CONTENTS


		Page

	~~Forward~~-~~Looking~~Forward-Looking Statements	2
PART I.	Financial Information	4
Item 1.	~~Condensed Consolidated~~ Financial Statements	4
	Condensed Consolidated Balance Sheets as of December ~~25, 2020~~ 24, 2021 (Unaudited) and March ~~27, 2020~~ 26, 2021	4
	Condensed Consolidated Statements of Operations for the three- and ~~nine-month~~nine-month periods ended December 24, 2021 and December 25, 2020 ~~and~~ ~~December~~ ~~27,~~ ~~2019~~ (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive ~~(Loss)~~ Income for the three- and ~~nine-month~~ nine-month periods ended December ~~25,2020~~ 24, 2021 and December ~~27,~~ ~~2019~~ 25, 2020 (Unaudited)	6
	Condensed Consolidated Statements of Changes in Equity for the three- and ~~nine-month~~ nine-month periods ended December ~~25,2020~~ 24, 2021 and December ~~27,~~ ~~2019~~ 25, 2020 (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the ~~nine-month~~nine-month periods ended December ~~25,2020~~ 24, 2021 and December ~~27,~~ ~~2019~~ 25, 2020 (Unaudited)	11
	Notes to Unaudited Condensed Consolidated Financial Statements	1213
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3832
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7060
Item 4.	Controls and Procedures	7160
PART II.	Other Information	7161
Item 1.	Legal Proceedings	7262
Item 1A.	Risk Factors	7262
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7262
Item 3.	Defaults Upon Senior Securities	7262
Item 4.	Mine Safety Disclosures	7262
Item 5.	Other Information	7262
Item 6.	Exhibits	7363
Signatures		7464

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, the impact of the ongoing and global COVID-19 pandemic on our business, prospective products and the plans and objectives of management for future operations, may be forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding the liquidity, growth and profitability strategies and factors and trends affecting our business are forward-looking statements. Without limiting the foregoing, in some cases, you can identify forward-looking statements by terms such as “aim,” “may,” “will,” “should,” “expect,” “exploring,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seek,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. No forward-looking statement is a guarantee of future results, performance, or achievements, and one should avoid placing undue reliance on such statements.

Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such beliefs and assumptions may or may not prove to be correct. Additionally, such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified in Part ~~I.,~~I, Item 2., “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report and Part II, Item 1A1A., “Risk Factors” in ~~this~~our Annual Report on Form 10-K for the year ended March 26, 2021 (the “2021 Annual Report”) and Part II, Item 1A., “Risk Factors” of our subsequently filed Quarterly ~~Report.~~Reports on Form 10-Q. These risks and uncertainties include, but are not limited to:

•downturns or volatility in general economic conditions, including as a result of the COVID-19 pandemic, particularly in the automotive market;

•our ability to compete effectively, expand our market share and increase our net sales and profitability;

•our ability to compensate for decreases in average selling prices of our products;

•the cyclical nature of the analog semiconductor industry;

•shifts in our product mix or customer mix, which could negatively impact our gross margin;

•our ability to manage any sustained yield problems or other delays at our third-party wafer fabrication facilities or in the final assembly and test of our products;

•any disruptions at our primary third-party wafer fabrication facilities;

•our ability to fully realize the benefits of past and potential future initiatives designed to improve our competitiveness, growth and profitability;

•our ability to accurately predict our quarterly net sales and operating results;

•our ability to adjust our supply chain volume to account for changing market conditions and customer demand;

•our reliance on a limited number of third-party wafer fabrication facilities and suppliers of other materials;

•our dependence on manufacturing operations in the Philippines;

•our reliance on distributors to generate sales;

•our indebtedness may limit our flexibility to operate our business;

•the loss of one or more significant end customers;

•our ability to develop new product features or new products in a timely and cost-effective manner;

•our ability to meet customers’ quality requirements;

•uncertainties related to the design win process and our ability to recover design and development expenses and to generate timely or sufficient net sales or margins;

•changes in government trade policies, including the imposition of tariffs and export restrictions;

•our exposures to warranty claims, product liability claims and product recalls;

•our ability to protect our proprietary technology and inventions through patents or trade secrets;

•our ability to commercialize our products without infringing third-party intellectual property rights;

•disruptions or breaches of our information technology systems;

•risks related to governmental regulation and other legal obligations, including privacy, data protection, information security, consumer protection, environmental and occupational health and safety, anti-corruption and anti-bribery, and trade controls;

•our dependence on international customers and operations;

•the availability of rebates, tax credits and other financial incentives on end-user demands for certain products;

•the volatility of currency exchange rates;

•risks related to acquisitions of and investments in new businesses, products or technologies, joint ventures and other strategic transactions;

•our ability to raise capital to support our growth strategy;

•our ability to effectively manage our growth and to retain key and highly skilled personnel;

•changes in tax rates or the adoption of new tax legislation;

•risks related to litigation, including securities class action litigation; and

•our ability to accurately estimate market opportunity and growth forecasts.

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of any new information, future events or otherwise.

Unless the context otherwise requires, references to “we,” “us,” “our,” the “Company” and “Allegro” refer to the operations of Allegro MicroSystems, Inc. and its consolidated subsidiaries.

PART I – FINANCIAL INFORMATION

Item 1. ~~Condensed Consolidated~~ Financial Statements

ALLEGRO MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share amounts)


		December 25, 2020 (Unaudited)		March 27, 2020			December 24, 2021 (Unaudited)		March 26, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	157,653	$	214,491	Cash and cash equivalents	$	259,208	$	197,214
Restricted cash	Restricted cash	6,520		5,385		Restricted cash	7,497		6,661
Trade accounts receivable, net of allowances for doubtful accounts of $138 and $288 at December 25, 2020 and March 27, 2020, respectively		67,334		59,457
Trade accounts receivable, net of provision for expected credit losses of $70 at December 24, 2021 and allowance for doubtful accounts of $138 at March 26, 2021						Trade accounts receivable, net of provision for expected credit losses of $70 at December 24, 2021 and allowance for doubtful accounts of $138 at March 26, 2021	76,235		69,500
Trade and other accounts receivable due from related party	Trade and other accounts receivable due from related party	20,153		30,851		Trade and other accounts receivable due from related party	28,305		23,832
Accounts receivable - other		1,373		1,796
Accounts receivable – other						Accounts receivable – other	1,485		1,516
Inventories	Inventories	94,021		127,227		Inventories	78,858		87,498
Prepaid expenses and other current assets	Prepaid expenses and other current assets	31,476		9,014		Prepaid expenses and other current assets	16,198		18,374
Current portion of related party note receivable						Current portion of related party note receivable	1,406		—
Assets held for sale						Assets held for sale	—		25,969
Total current assets	Total current assets	378,530		448,221		Total current assets	469,192		430,564
Property, plant and equipment, net	Property, plant and equipment, net	214,372		332,330		Property, plant and equipment, net	207,705		192,393
Operating lease right-of-use assets						Operating lease right-of-use assets	15,922		—
Deferred income tax assets	Deferred income tax assets	23,188		7,217		Deferred income tax assets	20,942		26,972
Goodwill	Goodwill	20,249		1,285		Goodwill	20,043		20,106
Intangible assets, net	Intangible assets, net	36,420		19,958		Intangible assets, net	35,985		36,366
Related party note receivable, less current portion						Related party note receivable, less current portion	6,094		—
Equity investment in related party	Equity investment in related party	26,657		0		Equity investment in related party	27,456		26,664
Other assets, net	Other assets, net	12,482		8,810		Other assets, net	48,078		14,613
Total assets	Total assets	$	711,898	$	817,821	Total assets	$	851,417	$	747,678
Liabilities, Non-Controlling Interest and Stockholders' Equity
Liabilities, Non-Controlling Interest and Stockholders’ Equity						Liabilities, Non-Controlling Interest and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Trade accounts payable	Trade accounts payable	$	20,262	$	20,762	Trade accounts payable	$	34,189	$	35,389
Amounts due to related party	Amounts due to related party	2,078		4,494		Amounts due to related party	4,051		2,353
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	66,779		56,855		Accrued expenses and other current liabilities	59,262		78,932
Current portion of operating lease liabilities						Current portion of operating lease liabilities	3,339		—

Current portion of related party debt		0		25,000
Bank lines-of-credit		0		43,000

Total current liabilities	Total current liabilities	89,119		150,111		Total current liabilities	100,841		116,674
Obligations due under Senior Secured Credit Facilities	Obligations due under Senior Secured Credit Facilities	25,000		0		Obligations due under Senior Secured Credit Facilities	25,000		25,000
Related party notes payable, less current portion		0		17,700
Operating lease liabilities, less current portion						Operating lease liabilities, less current portion	12,907		—

Other long-term liabilities	Other long-term liabilities	20,861		15,878		Other long-term liabilities	16,830		19,133
Total liabilities	Total liabilities	134,980		183,689		Total liabilities	155,578		160,807
Commitments and contingencies (Note 16)	Commitments and contingencies (Note 16)	0		0		Commitments and contingencies (Note 16)	0		0
Stockholders' Equity:
Stockholders’ Equity:						Stockholders’ Equity:

Preferred Stock, $0.01 par value; 20,000,000 shares authorized, 0 shares issued or outstanding at December 25, 2020 and March 27, 2020		0		0
Common stock, $0.01 par value; 1,000,000,000 shares authorized, 189,431,726 shares issued and outstanding at December 25, 2020; NaN shares authorized, issued or outstanding at March 27, 2020		1,894		0
Class A, $0.01 par value; NaN shares authorized, issued or outstanding at December 25, 2020; 12,500,000 shares authorized; 10,000,000 shares issued and outstanding at March 27, 2020		0		100
Class L, $0.01 par value; NaN shares authorized, issued or outstanding at December 25, 2020; 1,000,000 shares authorized; 622,470 shares issued and outstanding at March 27, 2020		0		6
Preferred Stock, $0.01 par value; 20,000,000 shares authorized, no shares issued or outstanding at December 24, 2021 and March 26, 2021						Preferred Stock, $0.01 par value; 20,000,000 shares authorized, no shares issued or outstanding at December 24, 2021 and March 26, 2021	—		—
Common stock, $0.01 par value; 1,000,000,000 shares authorized, 189,797,145 shares issued and outstanding at December 24, 2021; 1,000,000,000 shares authorized, 189,588,161 issued and outstanding at March 26, 2021						Common stock, $0.01 par value; 1,000,000,000 shares authorized, 189,797,145 shares issued and outstanding at December 24, 2021; 1,000,000,000 shares authorized, 189,588,161 issued and outstanding at March 26, 2021	1,898		1,896

Additional paid-in capital	Additional paid-in capital	589,202		458,697		Additional paid-in capital	612,106		592,170
(Accumulated deficit) / retained earnings		(5,094)		194,355
Retained earnings						Retained earnings	97,342		3,551
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(10,171)		(19,976)		Accumulated other comprehensive loss	(16,677)		(11,865)
Equity attributable to Allegro MicroSystems, Inc.	Equity attributable to Allegro MicroSystems, Inc.	575,831		633,182		Equity attributable to Allegro MicroSystems, Inc.	694,669		585,752
Non-controlling interests	Non-controlling interests	1,087		950		Non-controlling interests	1,170		1,119
Total stockholders' equity		576,918		634,132
Total liabilities, non-controlling interest and stockholders' equity		$	711,898	$	817,821
Total stockholders’ equity						Total stockholders’ equity	695,839		586,871
Total liabilities, non-controlling interest and stockholders’ equity						Total liabilities, non-controlling interest and stockholders’ equity	$	851,417	$	747,678

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALLEGRO MICROSYSTEMS, INC.

~~Consolidated Statements of Operations~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(Unaudited)

Three-Month Period Ended Nine-Month Period Ended
December 25,
2020 December 27,
2019 December 25,
2020 December 27,
2019
Net sales $ 138,010 $ 143,267 $ 343,529 $ 426,158
Net sales to related party 26,439 16,535 72,570 49,327
Total net sales 164,449 159,802 416,099 475,485
Cost of goods sold 90,024 98,277 224,203 285,967
Gross profit 74,425 61,525 191,896 189,518
Operating expenses:
Research and development 30,999 25,485 80,509 77,565
Selling, general and administrative 67,650 24,909 118,677 78,030
Total operating expenses 98,649 50,394 199,186 155,595
Operating (loss) income (24,224) 11,131 (7,290) 33,923
Other (expense) income:
Loss on debt extinguishment (9,055) 0 (9,055) 0
Interest (expense) income, net (2,598) 10 (1,935) (60)
Foreign currency transaction (loss) gain (145) (560) (1,331) 2,800
Income in earnings of equity investment 949 0 1,407 0
Other, net (510) (81) (297) (1,177)
(Loss) income before income tax (benefit) provision (35,583) 10,500 (18,501) 35,486
Income tax (benefit) provision (30,523) 1,542 (27,913) 11,710
Net (loss) income (5,060) 8,958 9,412 23,776
Net income attributable to non-controlling interests 35 32 103 101
Net (loss) income attributable to Allegro MicroSystems, Inc. $ (5,095) $ 8,926 $ 9,309 $ 23,675
Net (loss) income attributable to Allegro MicroSystems, Inc. per share (Note 17):
Basic $ (0.04) $ 0.89 $ 0.19 $ 2.37
Diluted $ (0.04) $ 0.89 $ 0.05 $ 2.37
Weighted average shares outstanding:
Basic 124,363,078 10,000,000 48,121,026 10,000,000
Diluted 124,363,078 10,000,000 171,638,787 10,000,000


	Three-Month Period Ended				Nine-Month Period Ended
	December 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
Net sales	$	147,168	$	138,010	$	456,302	$	343,529
Net sales to related party	39,461		26,439		112,079		72,570
Total net sales	186,629		164,449		568,381		416,099
Cost of goods sold	85,464		90,024		270,524		224,203
Gross profit	101,165		74,425		297,857		191,896
Operating expenses:
Research and development	30,297		30,999		89,441		80,509
Selling, general and administrative	37,963		67,650		104,115		118,677

Change in fair value of contingent consideration	(2,700)		—		(2,100)		—
Total operating expenses	65,560		98,649		191,456		199,186
Operating income (loss)	35,605		(24,224)		106,401		(7,290)
Other income (expense):
Loss on debt extinguishment	—		(9,055)		—		(9,055)
Interest expense, net	(269)		(2,598)		(1,764)		(1,935)
Foreign currency transaction loss	(3)		(145)		(55)		(1,331)
Income in earnings of equity investment	287		949		792		1,407
Other, net	3,634		(510)		5,216		(297)
Income (loss) before income tax provision (benefit)	39,254		(35,583)		110,590		(18,501)
Income tax provision (benefit)	6,281		(30,523)		16,687		(27,913)
Net income (loss)	32,973		(5,060)		93,903		9,412
Net income attributable to non-controlling interests	37		35		112		103
Net income (loss) attributable to Allegro MicroSystems, Inc.	$	32,936	$	(5,095)	$	93,791	$	9,309
Net income (loss) attributable to Allegro MicroSystems, Inc. per share (Note 17):
Basic	$	0.17	$	(0.04)	$	0.49	$	0.19
Diluted	$	0.17	$	(0.04)	$	0.49	$	0.05
Weighted average shares outstanding:
Basic	189,736,901		124,363,078		189,665,324		48,121,026
Diluted	192,068,222		124,363,078		191,678,951		171,638,787

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALLEGRO MICROSYSTEMS, INC.

~~Consolidated Statements of Comprehensive (Loss) Income~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)

Three-Month Period Ended Nine-Month Period Ended
December 25,
2020 December 27,
2019 December 25,
2020 December 27,
2019
Net (loss) income $ (5,060) $ 8,958 $ 9,412 $ 23,776
Foreign currency translation adjustment 3,972 2,886 10,152 1,869
Net actuarial loss amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax 0 0 (313) 0
Comprehensive (loss) income $ (1,088) $ 11,844 $ 19,251 $ 25,645
Comprehensive expense attributable to non-controlling interest (10) (23) (34) (5)
Comprehensive (loss) income attributable to Allegro MicroSystems, Inc. $ (1,098) $ 11,821 $ 19,217 $ 25,640


	Three-Month Period Ended				Nine-Month Period Ended
	December 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
Net income (loss)	$	32,973	$	(5,060)	$	93,903	$	9,412
Net income attributable to non-controlling interest	37		35		112		103
Net income (loss) attributable to Allegro MicroSystems, Inc.	32,936		(5,095)		93,791		9,309
Other comprehensive (loss) income:
Foreign currency translation adjustment	(1,306)		3,972		(4,873)		10,152
Net actuarial loss amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax	—		—		—		(313)
Comprehensive income (loss)	31,630		(1,123)		$	88,918	$	19,148
Other comprehensive (income) loss attributable to non-controlling interest	(3)		(10)		61		(34)
Comprehensive income (loss) attributable to Allegro MicroSystems, Inc.	$	31,627	$	(1,133)	$	88,979	$	19,114

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALLEGRO MICROSYSTEMS, INC.

~~Consolidated Statements of Changes in Equity~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands, except share amounts)

(Unaudited)

Common Stock, Class A Common Stock, Class L Preferred Stock Common Stock
Additional
Paid-In Capital
Retained Earnings / Accum. Deficit
Accumulated
Other
Comprehensive
Loss
Non-Controlling Interests Total Equity
Shares Amount Shares Amount Shares Amount Shares Amount
Balance at
September 25, 2020 10,000,000 $ 100 638,298 $ 6 — $ — 0 $ 0 $ 439,732 $ 208,759 $ (14,133) $ 1,042 $ 635,506
Net income — — — — — — — — — (5,095) — 35 (5,060)
Capitalization changes related to organizational structure of affiliates and direct and indirect interests in subsidiaries — — — — — — — — 527 — — — 527
Reclassification of certain class L shares — — — — — — — — 298 — — — 298
Stock-based compensation — — — — — — — — 45,876 — — — 45,876
Issuance of common stock in connection with IPO, net of underwriting discounts and other offering costs — — — — — — 25,000,000 250 321,175 — — — 321,425
Conversion of Class A and Class L common stock into common stock in connection with the IPO (10,000,000) (100) (636,301) (6) — — 166,500,000 1,665 (1,559) — — — 0
Repurchase of Class A and Class L common stock to cover related taxes — — (1,997) — — — (2,068,274) (21) (27,686) — — — (27,707)
Conversion of LTCIP/TRIP awards into restricted stock units in connection with the IPO — — — — — — — — 2,081 — — — 2,081
Cash dividend paid to holders of Class A common stock — — — — — — — — (191,242) (208,758) — — (400,000)
Foreign currency translation adjustment — — — — — — — — — — 3,962 10 3,972
Balance at
December 25, 2020 0 $ 0 0 $ 0 — $ — 189,431,726 $ 1,894 $ 589,202 $ (5,094) $ (10,171) $ 1,087 $ 576,918


	Common Stock, Class A			Common Stock, Class L			Preferred Stock			Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Non-Controlling Interests		Total Equity
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance at September 25, 2020	10,000,000	$	100	638,298	$	6	—	$	—	—	$	—	$	439,732	$	208,759	$	(14,133)	$	1,042	$	635,506
Net (loss) income	—	—		—	—		—	—		—	—		—		(5,095)		—		35		(5,060)

Capitalization changes related to organizational structure of affiliates and direct and indirect interests in subsidiaries	—	—		—	—		—	—		—	—		527		—		—		—		527
Reclassification of certain class L shares	—	—		—	—		—	—		—	—		298		—		—		—		298
Stock-based compensation	—	—		—	—		—	—		—	—		45,876		—		—		—		45,876
Issuance of common stock in connection with IPO, net of underwriting discounts and other offering costs	—	—		—	—		—	—		25,000,000	250		321,175		—		—		—		321,425
Conversion of Class A and Class L common stock into common stock in connection with the IPO	(10,000,000)	(100)		(636,301)	(6)		—	—		166,500,000	1,665		(1,559)		—		—		—		—
Repurchase of Class A and Class L common stock to cover related taxes	—	—		(1,997)	—		—	—		(2,068,274)	(21)		(27,686)		—		—		—		(27,707)
Conversion of LTCIP/TRIP awards into restricted stock units in connection with the IPO	—	—		—	—		—	—		—	—		2,081		—		—		—		2,081
Cash dividend paid to holders of Class A common stock	—	—		—	—		—	—		—	—		(191,242)		(208,758)		—		—		(400,000)
Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—		—		3,962		10		3,972

Balance at December 25, 2020	—	$	—	—	$	—	—	$	—	189,431,726	$	1,894	$	589,202	$	(5,094)	$	(10,171)	$	1,087	$	576,918

ALLEGRO MICROSYSTEMS, INC.

~~Consolidated Statements of Changes in Equity~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - (continued)

(in thousands, except share amounts)

(Unaudited)

Common Stock, Class A Common Stock, Class L Preferred Stock Common Stock
Additional
Paid-In Capital
Retained Earnings
Accumulated
Other
Comprehensive
Loss
Non-Controlling Interests Total Equity
Shares Amount Shares Amount Shares Amount Shares Amount
Balance at
September 27, 2019 10,000,000 $ 100 607,620 $ 6 — $ — — $ — $ 448,510 $ 172,134 $ (17,277) $ 865 $ 604,338
Net income — — — — — — — — — 8,926 — 32 8,958
Stock-based compensation — — — — — — — — 303 — — — 303
Foreign currency translation adjustment — — — — — — — — — — 2,863 23 2,886
Balance at
December 27, 2019 10,000,000 $ 100 607,620 $ 6 — $ — — $ — $ 448,813 $ 181,060 $ (14,414) $ 920 $ 616,485


	Preferred Stock	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Non-Controlling Interests		Total Equity
		Shares	Amount			Shares					Amount
Balance at September 24, 2021		—	$	—	189,702,550		$	1,897	$	604,488		$	64,406	$	(15,368)	$	1,130	$	656,553
Net income		—	—		—		—		—			32,936		—		37		32,973

Stock-based compensation, net of forfeitures		—	—		94,595		1		7,618			—		—		—		7,619
Foreign currency translation adjustment		—	—		—		—		—			—		(1,309)		3		(1,306)

Balance at December 24, 2021		—	$	—	189,797,145		$	1,898	$	612,106		$	97,342	$	(16,677)	$	1,170	$	695,839

ALLEGRO MICROSYSTEMS, INC.

~~Consolidated Statements of Changes in Equity~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - (continued)

(in thousands, except share amounts)

(Unaudited)


		Common Stock, Class A			Common Stock, Class L			Preferred Stock			Common Stock			Additional Paid-In Capital				Retained Earnings / Accum. Deficit			Accumulated Other Comprehensive Loss			Non-Controlling Interests				Total Equity				Common Stock, Class A									Common Stock, Class L										Preferred Stock							Common Stock						Additional Paid-In Capital					Retained Earnings					Accumulated Other Comprehensive Loss					Non-Controlling Interests					Total Equity
		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount											Shares								Amount				Shares				Amount							Shares			Amount				Shares				Amount
Balance at March 27, 2020	Balance at March 27, 2020	10,000,000	$	100	622,470	$	6	—	$	—	0	$	0			$	458,697				$	194,355				$	(19,976)			$	950			$	634,132	Balance at March 27, 2020		10,000,000				$	100				622,470			$	6					—			$	—			—				$	—				$	458,697				$	194,355				$	(19,976)				$	950	$	634,132
Net income	Net income	—	—		—	—		—	—		—	—		—				9,309			—			103				9,412			Net income	—				—					—				—						—			—				—			—					—					9,309					—					103					9,412
Issuance of Class L shares, net of forfeitures	Issuance of Class L shares, net of forfeitures	—	—		15,828	—		—	—		—	—		—				—			—			—				—			Issuance of Class L shares, net of forfeitures	—				—					15,828				—						—			—				—			—			—					—					—					—					—
Capitalization changes related to organizational structure of affiliates and direct and indirect interests in subsidiaries	Capitalization changes related to organizational structure of affiliates and direct and indirect interests in subsidiaries	—	—		—	—		—	—		—	—		(19,165)				—			—			—				(19,165)			Capitalization changes related to organizational structure of affiliates and direct and indirect interests in subsidiaries	—				—					—				—						—			—				—			—			(19,165)					—					—					—					(19,165)
Reclassification of certain class L shares																				Reclassification of certain class L shares		—			—				—				—							—				—				—				—				—			—				—			—					—
Stock-based compensation	Stock-based compensation	—	—		—	—		—	—		—	—		46,901				—			—			—				46,901			Stock-based compensation	—				—					—				—						—			—				—			—			46,901					—					—					—					46,901
Issuance of common stock in connection with IPO, net of underwriting discounts and other offering costs	Issuance of common stock in connection with IPO, net of underwriting discounts and other offering costs	—	—		—	—		—	—		25,000,000	250		321,175				—			—			—				321,425			Issuance of common stock in connection with IPO, net of underwriting discounts and other offering costs	—				—					—				—						—			—				25,000,000			250			321,175					—					—					—					321,425
Conversion of Class A and Class L common stock into common stock in connection with the IPO	Conversion of Class A and Class L common stock into common stock in connection with the IPO	(10,000,000)	(100)		(636,301)	(6)		—	—		166,500,000	1,665		(1,559)				—			—			—				0			Conversion of Class A and Class L common stock into common stock in connection with the IPO	(10,000,000)				(100)					(636,301)				(6)						—			—				166,500,000			1,665			(1,559)					—					—					—					—
Repurchase of Class A and Class L common stock to cover related taxes	Repurchase of Class A and Class L common stock to cover related taxes	—	—		(1,997)	—		—	—		(2,068,274)	(21)		(27,686)				—			—			—				(27,707)			Repurchase of Class A and Class L common stock to cover related taxes	—				—					(1,997)				—						—			—				(2,068,274)			(21)			(27,686)					—					—					—					(27,707)
Conversion of LTCIP/TRIP awards into restricted stock units in connection with the IPO	Conversion of LTCIP/TRIP awards into restricted stock units in connection with the IPO	—	—		—	—		—	—		—	—		2,081				—			—			—				2,081			Conversion of LTCIP/TRIP awards into restricted stock units in connection with the IPO	—				—					—				—						—			—				—			—			2,081					—					—					—					2,081
Cash dividend paid to holders of Class A common stock	Cash dividend paid to holders of Class A common stock	—	—		—	—		—	—		—	—		(191,242)				(208,758)			—			—				(400,000)			Cash dividend paid to holders of Class A common stock	—				—					—				—						—			—										(191,242)					(208,758)					—					—					(400,000)
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—	—		—	—		—	—		—				—			10,118			34				10,152			Foreign currency translation adjustment	—				—					—				—						—			—				—			—			—					—					10,118					34					10,152
Net actuarial loss and amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax	Net actuarial loss and amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax	—	—		—	—		—	—		—	—		—				—			(313)			—				(313)			Net actuarial loss and amortization of net transition obligation and prior service costs related to defined benefit plans, net of tax	—				—					—				—						—			—				—			—			—					—					(313)					—					(313)
Balance at December 25, 2020	Balance at December 25, 2020	0	$	0	0	$	0	—	$	—	189,431,726	$	1,894	$	589,202			$	(5,094)		$	(10,171)		$	1,087			$	576,918		Balance at December 25, 2020	—		—		$	—				—				$	—					—			$	—			189,431,726			$	1,894		$	589,202				$	(5,094)				$	(10,171)				$	1,087				$	576,918

ALLEGRO MICROSYSTEMS, INC.

~~Consolidated Statements of Changes in Equity~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - (continued)

(in thousands, except share amounts)

(Unaudited)

Common Stock, Class A Common Stock, Class L Preferred Stock Common Stock
Additional
Paid-In Capital
Retained Earnings
Accumulated
Other
Comprehensive
Loss
Non-Controlling Interests Total Equity
Shares Amount Shares Amount Shares Amount Shares Amount
Balance at
March 29, 2019 10,000,000 $ 100 607,620 $ 6 — $ — — $ — $ 447,762 $ 157,385 $ (16,278) $ 814 $ 589,789
Net income — — — — — — — — — 23,675 — 101 23,776
Stock-based compensation — — — — — — — — 1,051 — — — 1,051
Foreign currency translation adjustment — — — — — — — — — — 1,864 5 1,869
Balance at
December 27, 2019 10,000,000 $ 100 607,620 $ 6 — $ — — $ — $ 448,813 $ 181,060 $ (14,414) $ 920 $ 616,485


	Preferred Stock	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Non-Controlling Interests		Total Equity
		Shares	Amount			Shares					Amount
Balance at March 26, 2021		—	$	—	189,588,161		$	1,896	$	592,170		$	3,551	$	(11,865)	$	1,119	$	586,871
Net income		—	—		—		—		—			93,791		—		112		93,903
Employee stock purchase plan issuances		—	—		59,563		—		1,291			—		—		—		1,291
Stock-based compensation, net of forfeitures		—	—		149,421		2		18,645			—		—		—		18,647
Foreign currency translation adjustment		—	—		—		—		—			—		(4,812)		(61)		(4,873)

Balance at December 24, 2021		—	$	—	189,797,145		$	1,898	$	612,106		$	97,342	$	(16,677)	$	1,170	$	695,839

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALLEGRO MICROSYSTEMS, INC.

~~Consolidated Statements of Cash Flows~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Nine-Month Period Ended
December 25,
2020 December 27,
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,412 $ 23,776
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 36,225 47,608
Amortization of deferred financing costs 226 0
Deferred income taxes (17,526) (288)
Stock-based compensation 46,901 1,051
Loss on disposal of assets 272 718
Loss on debt extinguishment 9,055 0
Provisions for inventory and bad debt 3,857 3,353
Changes in operating assets and liabilities:
Trade accounts receivable (5,975) 15,540
Accounts receivable - other 115 657
Inventories 1,118 (341)
Prepaid expenses and other assets (29,655) (6,165)
Trade accounts payable 2,411 1,100
Due to/from related parties 8,283 (20,969)
Accrued expenses and other current and long-term liabilities (1,185) (17,270)
Net cash provided by operating activities 63,534 48,770
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (25,880) (34,997)
Acquisition of business, net of cash acquired (8,500) 0
Proceeds from sales of property, plant and equipment 314 3,936
Contribution of cash balances due to divestiture of subsidiary (16,335) 0
Net cash used in investing activities (50,401) (31,061)
CASH FLOWS FROM FINANCING ACTIVITIES:
Related party note receivable 51,377 30,000
Proceeds from initial public offering, net of underwriting discounts and other offering costs 321,425 0
Payments for taxes related to net share settlement of equity awards (27,707) 0
Dividends paid (400,000) 0
Borrowings of senior secured debt, net of deferred financing costs 315,719 0
Repayment of senior secured debt (300,000) 0
Repayment of unsecured credit facilities (33,000) 0
Net cash (used in) provided by financing activities (72,186) 30,000
Effect of exchange rate changes on Cash and cash equivalents and Restricted cash 3,350 (6,452)
Net (decrease) increase in Cash and cash equivalents and Restricted cash (55,703) 41,257
Cash and cash equivalents and Restricted cash at beginning of period 219,876 103,257
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD: $ 164,173 $ 144,514
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents at beginning of period $ 214,491 $ 99,743
Restricted cash at beginning of period 5,385 3,514
Cash and cash equivalents and Restricted cash at beginning of period $ 219,876 $ 103,257
Cash and cash equivalents at end of period 157,653 139,306
Restricted cash at end of period 6,520 5,208
Cash and cash equivalents and Restricted cash at end of period $ 164,173 $ 144,514
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 2,559 $ 872
Cash paid for income taxes $ 7,568 $ 12,937
Noncash transactions:
Changes in Trade accounts payable related to Property, plant and equipment, net $ (786) $ (2,663)
Loans to cover purchase of common stock under employee stock plan $ 171 $ 232
Deconsolidation related to PSL Divestiture (Note 1) $ 0 $ 0


	Nine-Month Period Ended
	December 24, 2021		December 25, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	93,903	$	9,412
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	36,522		36,225
Amortization of deferred financing costs	75		226
Deferred income taxes	(3,061)		(17,526)
Stock-based compensation	18,647		46,901
(Gain) loss on disposal of assets	(349)		272
Loss on debt extinguishment	—		9,055
Gain on contingent consideration change in fair value	(2,100)		—

Provisions for inventory and credit losses/bad debt	4,787		3,857
Unrealized gains on marketable securities	(4,482)		—
Changes in operating assets and liabilities:
Trade accounts receivable	(6,133)		(5,975)
Accounts receivable - other	(9)		115
Inventories	3,251		1,118
Prepaid expenses and other assets	(11,870)		(29,655)
Trade accounts payable	2,026		2,411
Due to/from related parties	(2,775)		8,283
Accrued expenses and other current and long-term liabilities	(9,874)		(1,185)

Net cash provided by operating activities	118,558		63,534
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(55,792)		(25,880)
Acquisition of business, net of cash acquired	(12,549)		(8,500)
Proceeds from sales of property, plant and equipment	27,407		314
Investments in marketable securities	(9,189)		—
Contribution of cash balances due to divestiture of subsidiary	—		(16,335)
Net cash used in investing activities	(50,123)		(50,401)
CASH FLOWS FROM FINANCING ACTIVITIES:
Related party note receivable	(7,500)		51,377
Proceeds from initial public offering, net of underwriting discounts and other offering costs	—		321,425
Payments for taxes related to net share settlement of equity awards	—		(27,707)
Proceeds from issuance of common stock under employee stock purchase plan	1,291		—
Dividends paid	—		(400,000)
Borrowings of senior secured debt, net of deferred financing costs	—		315,719
Repayment of senior secured debt	—		(300,000)
Repayment of unsecured credit facilities	—		(33,000)
Net cash used in financing activities	(6,209)		(72,186)
Effect of exchange rate changes on Cash and cash equivalents and Restricted cash	604		3,350
Net increase in Cash and cash equivalents and Restricted cash	62,830		(55,703)
Cash and cash equivalents and Restricted cash at beginning of period	203,875		219,876
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD:	$	266,705	$	164,173
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents at beginning of period	$	197,214	$	214,491
Restricted cash at beginning of period	6,661		5,385
Cash and cash equivalents and Restricted cash at beginning of period	$	203,875	$	219,876
Cash and cash equivalents at end of period	259,208		157,653
Restricted cash at end of period	7,497		6,520
Cash and cash equivalents and Restricted cash at end of period	$	266,705	$	164,173

ALLEGRO MICROSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued)

(in thousands)

(Unaudited)


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	$	541	$	2,559
Cash paid for income taxes	16,635		7,568
Noncash transactions:
Changes in Trade accounts payable related to Property, plant and equipment, net	$	(4,934)	$	(786)
Loans to cover purchase of common stock under employee stock plan	—		171

Recognition of right of use assets and lease liability upon adoption of new accounting standard	356		—

The accompanying notes are an integral part of these condensed consolidated financial statements.

1112

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements ~~– (continued)~~

(Amounts in thousands, except share and per share amounts)

1. Nature of the Business and Basis of Presentation

Allegro MicroSystems, Inc., together with its consolidated subsidiaries (“AMI” or the “Company”), is a global leader in designing, developing and manufacturing sensing and power solutions for motion control and energy-efficient systems in automotive and industrial markets. The Company was incorporated under the laws of Delaware on March 30, 2013 under the name of Sanken North America, Inc. (“SKNA”) as a wholly owned subsidiary of Sanken Electric Co., Ltd. (“Sanken”). In October 2017, Sanken sold 28.8% of the common stock of SKNA to One Equity Partners (“OEP”). In April 2018, SKNA filed a certificate of amendment in the state of Delaware to change its name to Allegro MicroSystems, Inc. The Company is headquartered in Manchester, New Hampshire, and has a global footprint with 16 locations across 4 continents.

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements include the ~~Company's~~Company’s accounts and those of its subsidiaries. All intercompany balances have been eliminated in consolidation. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s ~~Registration Statement~~Annual Report on Form ~~S-1~~10-K filed with the SEC on ~~February 2,~~May 19, 2021 (the ~~“Registration Statement”~~“2021 Annual Report”). In the opinion of the ~~Company's~~Company’s management, the financial information for the interim periods presented reflects all adjustments necessary for a fair presentation of the ~~Company's~~Company’s financial position, results of operations and cash. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year.

On November 2, 2020, the Company completed its initial public offering (“IPO”). Refer to Note 1, “Nature of ~~28,750,000 shares~~Business and Basis of its common stock at an offering price of $14.00 per share, of which 25,000,000 shares were sold by the Company and 3,750,000 shares were sold by selling stockholders, resulting in net proceeds to the Company of approximately, $321,425 after deducting $20,125 of underwriting discounts and $8,450 of offering costs. The Company’s common stock is now listed on the Nasdaq Global Select Market under the ticker symbol “ALGM.”

On March 28, 2020, the Company entered into an agreement to divest a majority of its ownership interest in Polar Semiconductor, Inc. (“PSL”) to Sanken, in order to better align with its fabless, asset-lite scalable manufacturing strategy (the “PSL Divestiture”). In order to affect this in-kind, noncash transaction, Sanken contributed the forgiveness of the fair value of the entire related party notes payable of $42,700 owed by PSL to Sanken and the Company contributed the forgiveness of the fair value of $15,000 out of the $66,377 total debt owed by PSL to the Company, which was previously eliminated in consolidation. The entire net receivable balance of $51,377 plus accrued interest of $762 was repaid on October 14, 2020. Following the divestiture, Sanken held a 70% majority share in PSL with the Company retaining a 30% minority shareholder interest. The investment was recorded for the 30%, totaling $25,250 at the divestiture date. Beginning with reporting periods on and after March 28, 2020, the investment is included on the Company’s balance sheet as an equity investment in a related party, including $949 and $1,407 of income earned during the three- and nine-month periods ended December 25, 2020.

In addition, the difference between the fair value contributed by both parties at the consummation of this transaction and the book value was treated as an adjustment of capitalization changes related to organizational structure of affiliates and direct and indirect interests in subsidiaries within additional paid-in capital of $19,165 at December 25, 2020. This amount includes an estimated tax effect of $1,552 for the nine-month period ended December 25, 2020.

On March 28, 2020, in connection with the divestiture described above, the Company also formally terminated its distribution agreement with Sanken to distribute Sanken’s products and entered into a transitional services agreement with PSL, which contracted with Sanken as its new channel for fulfillment of Sanken product sales in North America and Europe. Sanken will continue to provide distribution support for the Company’s products in Japan. See Note 20, “Related party transactions,” for further discussion.

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

~~In accordance with the PSL Divestiture noted above, the following noncash assets and liabilities and related equity impacts attributable to the unaudited statement of cash flows are summarized below:~~


	March 28, 2020
~~Cash and cash equivalents~~	$	~~(15,332)~~
~~Restricted cash~~	~~(1,013)~~
~~Trade accounts receivable, net of allowances~~	37
~~Accounts receivable – other~~	~~(308)~~
~~Inventories~~	~~(32,250)~~
~~Prepaid expenses and other current assets~~	~~(376)~~
~~Property, plant and equipment, net~~	~~(115,341)~~
~~Related party note receivable~~	~~51,377~~
~~Equity investment in related party~~	~~25,462~~
~~Other assets, net~~	~~5,609~~
~~Trade accounts payable~~	~~4,176~~
~~Accrued expenses and other current liabilities~~	~~7,150~~
~~Current portion of related party debt~~	~~25,000~~
~~Bank lines-of-credit~~	~~10,000~~
~~Related party notes payable, less current portion~~	~~17,700~~
~~Other long-term liabilities~~	~~(1,247)~~
~~Additional paid-in capital~~	~~19,165~~

~~Impact of the COVID-19 Pandemic~~

On March 11, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization. The pandemic has resulted in governments around the world implementing increasingly stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments, school closures and other measures. In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impacts of the COVID-19 pandemic.

The Company continues to monitor the rapidly evolving conditions and circumstances as well as guidance from international and domestic authorities, including public health authorities, and the Company may need to take additional actions based on their recommendations. There is considerable uncertainty regarding the impact on the Company’s business stemming from current measures and potential future measures that could restrict accessPresentation” to the Company’s facilities, limit manufacturing and support operations and place restrictions on the Company’s workforce and suppliers. The measures implemented by various authorities related to the COVID-19 pandemic have caused the Company to change its business practices, including those related to where employees work, the distance between employees in the Company’s facilities, limitations on the in-person meetings between employees and with customers, suppliers, service providers, and stakeholders, as well as restrictions on business travel to domestic and international locations or to attend trade shows, investor conferences and other events.

The full extent to which the ongoing COVID-19 pandemic adversely affects the Company’s financial performance will depend on future developments, many of which are outside of the Company’s control, are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the effectiveness of actions to contain the virus or treat its impact and how quickly and to what extent normal economic and operating conditions can resume. The COVID-19 pandemic could also result in additional governmental restrictions and regulations, which could adversely affect the Company’s business and financial results. In addition, a recession, depression or other sustained adverse market impact resulting from COVID-19 could materially and adversely affect the Company’s business and its access to needed capital and liquidity. Even after the COVID-19 pandemic has lessened or subsided, the Company may continue to experience adverse impacts on its business and financial performance as a result of its global economic impact.

To the extent that the COVID-19 pandemic adversely affects the Company’s business, results of operations, financial condition or liquidity, it also may heighten many of the other risks. For example, if the business impacts of COVID-19 are

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

~~prolonged, this could cause the Company to recognize impairments~~2021 Annual Report for ~~goodwill and certain long-lived assets including amortizable intangible assets.~~

The Company has taken actions to mitigate its financial risk given the uncertainty in global markets caused by the COVID-19 pandemic. During the fourth quarter of fiscal year 2020, the Company borrowed $43,000 under its revolving credit facilities. The borrowing was made as part of the Company’s ongoing efforts to preserve financial flexibility in light of the current uncertainty in the global markets and related effects on the Company’s business resulting from the COVID-19 pandemic. In connection with entering into a new revolving credit facility on September 30, 2020, the Company used cash on hand to repay all amounts outstanding under the line of credit and terminated all commitments thereunder.

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”). The CARES Act contains numerous tax provisions including a correction to the applicable depreciation rates available in the original Tax Cuts and Jobs Act (“TCJA”) for Qualified Improvement Property (“QIP”), temporarily establishes a five year carryback period for current net operating losses (“NOL”), and contains a provision for deferred payment of 2020 employer payroll taxes. The Company currently estimates cash tax benefits of the NOL and QIP changes to be $8,963 and $1,680, respectively. Additionally, the Company plans to defer payment of $2,766 of payroll taxes, with $1,383 to be paid back in the third quarter of fiscal year 2022 and the remainder in the third quarter of fiscal year 2023. Additional income tax provisions of the Act are currently being evaluated and not expected to have material impacts.details.

Financial Periods

The Company’s third quarter three-month period is a 13-week period ending on the Friday closest to the last ~~Friday~~day in December. The Company’s third quarter of fiscal 2022 ended December 24, 2021, and the Company’s third quarter of fiscal ~~three- and nine-month periods~~2021 ended December 25, ~~2020, and the Company’s 2020 three- and nine-month periods ended December 27, 2019.~~2020.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingencies at the date of the unaudited consolidated financial statements and the reported amounts of net sales and expenses during the reporting period. Such estimates relate to useful lives of fixed and intangible assets, current expected credit losses/allowances for doubtful accounts and customer returns and sales allowances. Such estimates could also relate to the fair value of acquired assets and liabilities, including goodwill and intangible assets, net realizable value of inventory, accrued liabilities, the valuation of stock-based awards, deferred tax valuation allowances, and other reserves. On an ongoing basis, management evaluates its estimates. Actual results could differ from those estimates, and such differences may be material to the unaudited condensed consolidated financial statements.

~~Deferred Offering Costs~~Reclassifications

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholder’s equity as a reduction of the additional paid-in capital generated as a result of the offering. As of December 25, 2020 and March 27, 2020, the Company had $0 and $0 of deferred offering costs, respectively.Certain reclassifications have been made to prior-period amounts to conform to current-period reporting classifications.

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with financial institutions ~~which~~that management believes to be of a high credit quality. To manage credit risk related to accounts receivables, the Company evaluates the creditworthiness of its customers and maintains allowances, to the extent necessary, for potential credit losses based upon the aging of its accounts receivable balances and known collection issues. The Company has not experienced any significant credit losses to date.

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

As of December ~~25, 2020~~24, 2021 and March ~~27, 2020,~~26, 2021, Sanken Electric Co., Ltd. (“Sanken”) accounted for ~~19.8%~~27.0% and ~~33.8%~~22.7% of the Company’s outstanding trade accounts receivable, net, respectively, including related party trade accounts receivable. No other customers accounted for 10% or more of outstanding trade accounts receivable, net during those periods.

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

For the three- and nine-month periods ended December 24, 2021, Sanken accounted for 21.1% and 19.7% of total net sales, respectively. No other customers accounted for 10% or more of total net sales for either of the three- and nine-month periods ended December 24, 2021. For the three- and nine-month periods ended December 25, 2020, Sanken accounted for 16.1% and 17.4% of total net sales, respectively. No other customers accounted for 10% or more of total net sales for either of the three- and nine-month periods ended December 25, 2020. ~~For~~

During the three-month period ended December 24, 2021, sales from customers located outside of the United States accounted for, in the aggregate, 85.9% of the Company’s total net sales, with Greater China accounting for 26.1%, Japan accounting for 21.1% and South Korea accounting for 10.7%. During the nine-month period ended December 24, 2021, sales from customers located outside of the United States accounted for, in the aggregate, 85.8% of the Company’s total net sales, with Greater China accounting for 25.0%, Japan accounting for 19.7% and South Korea accounting for 10.8%. No other countries accounted for greater than 10% of total net sales for the three- and nine-month periods ended December 27, 2019, Sanken accounted for 10.3% and 10.4% of total net sales, respectively. No other customers accounted for 10% or more of total net sales for either of the three- and nine-month periods ended December 27, 2019.24, 2021.

During the three-month period ended December 25, 2020, sales from customers located outside of the United States, ~~accounted for,~~ in the aggregate, accounted for 85.4% of the Company’s total net sales, with Greater China accounting for 28.1%, Japan accounting for 16.0% and South Korea accounting for 10.7%. ~~No other countries accounted for greater than 10% of total net sales for the three-month period ended December 25, 2020.~~ During the nine-month period ended December 25, 2020, sales from customers located outside of the United States, in the aggregate, accounted for 86.1% of the Company’s total net sales, with Greater China accounting for 27.9%, Japan accounting for 17.4% and South Korea accounting for 10.5%. No other countries accounted for greater than 10% of total net sales for the three- and nine-month ~~period~~periods ended December 25, ~~2020.~~2020.

During the three-month period ended December 27, 2019, sales from customers located outside of the United States, in the aggregate, accounted for 82.8% of the Company’s total net sales, with Japan accounting for 28.8% and Greater China accounting for 22.1%. No other countries accounted for greater than 10% of total net sales for the three-month period ended December 27, 2019. During the nine-month period ended December 27, 2019, sales from customers located outside of the United States, in the aggregate, accounted for 81.8% of the Company’s total net sales, with Japan accounting for 27.8% and Greater China accounting for 20.0%. No other countries accounted for greater than 10% of total net sales for the nine-month period ended December 27, 2019.

~~Impact of~~ Recently ~~Issued~~Adopted Accounting Standards

The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to “opt in” to the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for nonpublic companies.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued its new lease accounting guidance in ~~ASU~~ ~~No. 2016-02,~~ “~~Leases~~Accounting Standards Update (“ASU”) 2016‑02, “Leases (Topic 842)” (“ASU 2016-02” ~~or “the new~~), which is codified as Accounting Standard Codification (“ASC”) Topic 842 (“ASC 842”) and replaces ASC Topic 840, Leases (“ASC 840”). ASU 2016-02 and all subsequent amendments amend various aspects of existing guidance for leases and require significant additional quantitative and qualitative disclosures about lease ~~standard”),~~ ~~subsequently amended by~~arrangements. ASU ~~2018-11,Leases (Topic 842): Targeted Improvements. Under the new guidance,~~2016-02 requires lessees ~~will be required~~ to recognize lease assets representing the ~~following for all leases (with~~right to use an underlying asset and lease liabilities representing the ~~exception of short-term leases) at the commencement date: a lease liability, which is a lessee’s~~ obligation to make lease payments ~~arising from a~~over the lease term, measured on a discounted ~~basis;~~basis, for substantially all leases. ASU 2016-02 retains a distinction between finance leases and a operating leases using classification criteria that are substantially similar to the previous lease guidance. Although the Company has elected to opt-in to the extended transition dates for new or revised accounting standards to align with nonpublic companies, the Company elected to early adopt ASU 2016-02 effective March 27, 2021. The Company used the optional transition method to the modified retrospective approach, which eliminates the requirement to restate the prior period financial statements. Under this transition provision, the Company has applied ASU 2016-02 to reporting periods beginning on March 27, 2021, while prior periods continue to be reported and disclosed in accordance with the legacy guidance under ASC 840.

A number of practical expedients and policy elections are available under the new guidance to reduce the burden of adoption and ongoing compliance with ASC 842. The Company elected the “package of practical expedients”, which permitted the Company to retain lease classification and initial direct costs for any identified leases that existed prior to adoption of ASC 842. Under this transition guidance, the Company also did not reassess whether any existing contracts at March 27, 2021 are, or contain, leases and carried forward its initial determination under legacy lease guidance. The Company has elected not to adopt the “hindsight” practical expedient and, therefore, will measure the right-of-use (“ROU”) asset ~~which is an asset that represents~~and lease liability using the ~~lessee’s right to use, or control the use~~remaining portion of ~~a specified asset for~~ the lease ~~term. Lessees will no longer be provided with a source of~~ ~~off-balance~~ ~~sheet financing.~~ term at adoption on March 27, 2021.

The Company made an accounting policy election available under the new lease ~~guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must~~standard to not recognize lease assets and lease liabilities. The standard is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar-year entity). Early application is permitted. Entities have the option of using either a modified retrospective approachliabilities for leases ~~existing at,~~with a term of 12 months or ~~entered into after,~~less. For all other leases, the ~~beginning~~initial measurement of the ~~earliest comparative period presented in~~lease liability is based on the ~~financial statements,~~present value of future lease payments over the lease term at the application date or ~~else a transition option (which~~ the Company expects to use) allowing lessees to not apply the new lease standard in comparative periods but instead recognize a cumulative-effect adjustment to retained earnings as of the date of adoption. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach.

~~In May 2020, FASB issued ASU No. 2020-05 delaying the effective~~commencement date of the ~~new~~lease. Lease payments may include fixed rent escalation clauses or payments that depend on an index or a rate (such as the consumer price index) measured using the index or applicable rate at lease ~~standard~~commencement. Subsequent changes in the index or rate and any other variable payments, such as market-rate base rent adjustments, are recognized as variable lease expense in the period incurred. Payments for nonpublic companies to fiscal years beginning after December 15, 2021 and interim periods within those fiscal years beginning after December 15, 2022. The Company expects to adopt this guidance during fiscal year 2022 and its assessment of the impact of adopting this standard is underway, including cataloging all leases, performingterminating a ~~preliminary analysis of the amounts of~~ lease ~~liabilities and~~ ~~right-of-use~~ ~~assets to be recorded and reviewing potential changes to the disclosures on leases. Based on this~~are included in lease payments

1514

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

only when it is probable they will be incurred. To determine the present value of lease payments, the Company uses its incremental borrowing rate, as the leases generally do not have a readily determinable implicit discount rate. The Company applies judgment in assessing factors such as Company-specific credit risk, lease term, nature and quality of the underlying collateral, currency and economic environment in determining the lease-specific incremental borrowing rate. The carrying value of the ROU assets at the application date equals the lease liability adjusted for any initial direct costs incurred and lease payments made at or before the commencement date and for any lease incentives.

The Company’s leases generally include a non-lease component representing additional services transferred to the Company. The Company has made an accounting policy election to account for lease and non-lease components in its contacts as a single lease component for all asset classes. The non-lease components are usually variable in nature and recorded in variable lease expense in the period incurred.

~~preliminary assessment,~~Adoption of ASC 842 resulted in ROU assets of $18,403 and lease liabilities of $18,759 related to the Company’s operating leases at March 27, 2021. The Company does not ~~expect the~~have any leases classified as finance leases. The adoption of ~~this standard~~ASC 842 did not materially impact the Company’s consolidated net income or consolidated cash flows and did not result in a cumulative-effect adjustment to ~~have a significant impact on its consolidated statement~~the opening balance of ~~operations. However, the Company expects that the recognition of~~ ~~right-of-use~~ ~~assets and corresponding lease liabilities will have a significant impact on its consolidated balance sheet.~~retained earnings.

In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which adds an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The ASU is also intended to reduce ~~the~~ complexity by decreasing the number of credit impairment models that entities use to account for debt instruments. The Company adopted ASU ~~2016-03, along with its subsequent clarifications,~~2016-13 effective March 27, 2021 and concluded that the standard update did not have a material impact on either the financial position, results of operations, cash flows, or related disclosures. There was ~~effective for public companies~~no impact on beginning ~~after December 15, 2019 and is effective for nonpublic companies for fiscal years beginning after December 15, 2021.~~ balance retained earnings upon adoption of this ASU.

The Company is ~~evaluating~~exposed to credit losses primarily through trade and other financing receivables arising from revenue transactions. The Company uses an aging schedule method to estimate current expected credit losses based on days of delinquency, including information about past events and current economic conditions. The Company’s accounts receivable is separated into two categories using a portfolio methodology to evaluate the ~~new guidance~~allowance under the CECL impairment model based on sales categorization and similar credit quality and worthiness of the customers: original equipment manufacturers (“OEMs”) and distributors. The receivables in each category share similar risk characteristics. The change to the CECL impairment model resulted in an immaterial increase in the provision for expected ~~effect on its consolidated financial statements~~credit losses compared to the allowance for doubtful accounts under the previous incurred loss method.

The Company increases the allowance for expected credits losses when the Company determines all or a portion of a receivable is uncollectible. The Company recognizes recoveries as a decrease to the allowance for expected credit losses. For the three- and ~~related disclosures.~~ nine-month periods ended December 24, 2021, no material changes in the allowance occurred.

Recently Issued Accounting Standards Not Yet Adopted

In ~~November 2019,~~October 2021, the FASB issued ASU No. ~~2019-10 delaying~~2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which eliminates the ~~effective~~diversity in practice and inconsistency related to the accounting for acquired revenue contracts with customers in a business combination. The amendments in ASU 2021-08 require an acquiring entity to apply ASC Topic 606, Contracts with Customers (“ASC 606”), to recognize and measure contract assets and contract liabilities in a business combination as if the acquired contracts with customers were originated by the acquiring entity at the acquisition date. An acquirer may assess how the acquiree applied ASC 606 and generally should recognize and measure the acquired contract assets and contract liabilities consistent with the recognition and measurement in the acquiree’s financial statements as prepared in accordance with U.S. GAAP. If unable to rely on the acquiree’s accounting due to errors, noncompliance with U.S. GAAP, or differences in accounting policies, the acquirer should consider the terms of the acquired contracts, such as timing of payment, identify each performance obligation in the contracts, and allocate the total transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception (that is, the date for all entities. For public entities, this guidance was effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. For nonpublic entities, thisthe acquiree entered into the contracts) or contract modification to determine what should be recorded at the acquisition date. The guidance is effective prospectively for ~~annual periods~~fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

In August 2018, the FASB issued ASU No. 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans” (“ASU 2018-14”), which modifies the disclosure requirements for defined benefit pension plans and other postretirement plans. ASU 2018-14 should be applied on a retrospective transition basis, and it is effective for public companies beginning after December 15, 2020 and for nonpublic companies beginning after December 15, 2021. The Company is evaluating the new guidance and the expected effect on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement” (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, regarding transfers between levels of financial instruments, amounts of unrealized gains and losses included in other comprehensive (loss) income for Level 3 fair value measurements and the information used to determine the fair value of Level 3 fair value measurements. The standard is effective for both public and nonpublic companies, for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is ~~permitted.~~permitted, including in an interim period as of the beginning of the fiscal year that includes that interim period. An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. The Company is currently ~~assessing~~in the ~~potential impact that the adoption~~process of ~~ASU 2018-13 will have on its consolidated financial statements.~~

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions for intraperiod tax allocations and deferred tax liabilities for equity method investments and adds guidance on whether a step-up in tax basis of goodwill relates to a business combination or a separate transaction. This ASU is effective for fiscal years beginning after December 15, 2020 for public companies and for fiscal years beginning after December 15, 2021 for nonpublic companies, with early adoption permitted. The Company is evaluating the new guidance and the expected effect on its consolidated financial statements and related disclosures.

In January 2020, the FASB issued ASU No. 2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)” (“ASU 2020-01”), which addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 for public companies and beginning after December 15, 2021 for nonpublic entities with early adoption permitted. The Company is currently assessing the potential impact that the adoption of ASU 2020-01 will have on its consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”) to provide temporary optional expedients and exceptions to the contract modifications, hedge relationships, and other transactions affected by reference rate reform if certain criteria are met. This ASU, which was effective for all entities upon issuance on March 12, 2020 and may be applied through December 31, 2022, is applicable to all contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or any other reference rate expected to be discontinued. The Company is still assessing the impact that the adoption of ASU 2020-04 will have on its consolidated financial statements.

1615

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

~~3. Acquisition~~

~~On August 28, 2020,~~evaluating the ~~Company closed~~impact of this new guidance on ~~its purchase~~the consolidated financial statements and the related disclosures, which will be dependent on the consummation of Voxtel, Inc. (the “Acquisition”), a privately-held technology company located in Beaverton, Oregon that develops, manufactures and supplies photonic and advanced 3D imaging technologies. The total preliminary purchase price was $35,081, including certain earn-outs that have the potential payout of $15,000. The fair value of these earn-outs at acquisition date was $7,800.any future business combination.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2021-04”). ASU 2021-04 outlines how an entity should account for modifications made to equity-classified written call options, including stock options and warrants to purchase the entity’s own common stock. The ~~Acquisition has been accounted~~guidance in the ASU requires an entity to treat a modification of an equity-classified written call option that does not cause the option to become liability-classified as an exchange of the original option for a new option. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the equity-classified written call option or as termination of the original option and issuance of a ~~business combination and,~~new option. The guidance is effective prospectively for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, including in ~~accordance with ASC 805,~~ ~~Business Combinations, the Company has recorded the assets acquired and liabilities assumed at their respective fair values~~an interim period as of the ~~date~~beginning of the ~~Acquisition.~~fiscal year that includes that interim period. The ~~following table summarizes the preliminary purchase price allocation recorded:~~


~~Estimated fair value of consideration:~~
~~Base purchase price~~	$	~~27,281~~
~~Contingent Consideration~~	~~7,800~~
~~Total estimated fair value of consideration~~	$	~~35,081~~
~~Estimated fair value of assets acquired and liabilities assumed:~~
~~Net working capital~~	$	~~4,064~~
~~Property and equipment~~	57
~~Finite-life intangible assets~~	~~13,600~~
~~Indefinite-life intangible assets~~	~~2,400~~
~~Deferred tax liability~~	~~(3,843)~~
~~Goodwill~~	~~18,803~~
~~Allocated purchase price~~	$	~~35,081~~

~~The significant intangible assets identified~~Company is currently in the preliminary purchase price allocation discussed above include completed technology, in-process research and development, customer relationships and trademarks. Completed technology, customer relationships and trademarks are amortized over their respective useful livesprocess of evaluating the impact of this new guidance on ~~a straight-line basis. An estimated fair value of $2,400 was assigned to acquired in-process research and development costs with an indefinite life.~~

Amortization of completed technology is included within cost of revenue, and amortization of customer relationships and trademarks is included within selling, general and administrative expense. To value the ~~completed technology~~consolidated financial statements and the in-process research and development assets, the Company utilized the income approach, specifically a discounted cash-flow method known as the multi-period excess earnings method. Customer relationships represent the underlying relationships with certain customers to provide ongoing services for products sold. The Company utilized the income approach, specifically the distribution method, a subset of the excess-earnings method to value the customer relationships and trademarks.

~~The following table presents the estimated fair values and useful lives of the identifiable finite-life intangible assets acquired:~~


	~~Useful Life~~related disclosures.	~~Fair value~~
~~Completed technology~~	~~12 years~~	$	~~13,100~~
~~Customer relationships~~	~~6 years~~	~~300~~
~~Trademarks~~	~~5 years~~	~~200~~
		$	~~13,600~~

Goodwill was recognized for the excess purchase price over the fair value of the net assets acquired. The goodwill reflects the value of the synergies the Company expects to realize and the assembled workforce. Goodwill from the Acquisition is included within the Company’s 1 reporting unit and is included in the Company’s enterprise-level annual review for impairment. Goodwill resulting from the Acquisition is not deductible for tax purposes.

The purchase price has been allocated to the tangible and intangible assets acquired and liabilities assumed based upon the respective estimates of fair value as of the date of the Acquisition, which remains preliminary, and using assumptions that the Company’s management believes are reasonable given the information then available. The final allocation of the purchase price may differ materially from the information presented in these condensed consolidated financial statements. Any

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

changes to the preliminary estimates of the fair value of the assets acquired and liabilities assumed will be recorded as adjustments to those assets and liabilities and residual amounts will be allocated to goodwill.

The revenues and loss before income taxes from the Acquisition were immaterial to the Company’s consolidated results for the three- and nine-month periods ended December 25, 2020. The Company has not presented pro forma results of operations for the Acquisition because it is not material to the Company's consolidated results of operations, financial position, or cash flows.

4.3. Revenue from Contracts with Customers

The Company generates revenue from the sale of magnetic sensor integrated circuits (“ICs”), and application-specific analog power ~~semiconductors, wafer foundry products and from the sale of Sanken-related products.~~semiconductors. The following tables summarize net sales disaggregated by ~~core end market and~~ application, by product and by geography for the three- and nine-month periods ended December ~~25, 2020~~24, 2021 and December ~~27, 2019.~~25, 2020. The categorization of net sales by ~~core end market and~~ application is determined using various characteristics of the product and the application into which the Company’s product will be incorporated. The categorization of net sales by geography is determined based on the location the products are being shipped to.

Net sales by ~~core end market and~~ application:


		Three-Month Period Ended				Nine-Month Period Ended					Three-Month Period Ended				Nine-Month Period Ended
		December 25, 2020		December 27, 2019		December 25, 2020		December 27, 2019			December 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
Core end market:

Automotive	Automotive	$	113,902	$	99,074	$	279,759	$	289,681	Automotive	$	130,797	$	113,902	$	390,351	$	279,759
Industrial	Industrial	23,654		21,358		65,710		56,095		Industrial	31,903		23,654		98,533		65,710
Other	Other	26,893		15,070		70,630		53,399		Other	23,929		26,893		79,497		70,630
Other applications:
Wafer foundry products		0		16,634		0		49,622
Distribution of Sanken products		0		7,666		0		26,688

Total net sales	Total net sales	$	164,449	$	159,802	$	416,099	$	475,485	Total net sales	$	186,629	$	164,449	$	568,381	$	416,099

Net sales by product:

Three-Month Period Ended Nine-Month Period Ended
December 25,
2020 December 27,
2019 December 25,
2020 December 27,
2019
Power integrated circuits (“PIC”) $ 54,406 $ 43,665 $ 146,276 $ 123,900
Magnetic sensors (“MS”) 109,457 91,837 268,956 275,275
Photonics 586 0 867 0
Wafer foundry products 0 16,634 0 49,622
Distribution of Sanken products 0 7,666 0 26,688
Total net sales $ 164,449 $ 159,802 $ 416,099 $ 475,485


	Three-Month Period Ended				Nine-Month Period Ended
	December 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
Power integrated circuits	$	62,859	$	54,406	$	195,054	$	146,276
Magnetic sensors	123,543		109,457		371,806		268,956
Photonics	227		586		1,521		867


Total net sales	$	186,629	$	164,449	$	568,381	$	416,099

1816

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Net sales by geography:


		Three-Month Period Ended				Nine-Month Period Ended					Three-Month Period Ended				Nine-Month Period Ended
		December 25, 2020		December 27, 2019		December 25, 2020		December 27, 2019			December 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
Americas:	Americas:									Americas:
United States	United States	$	23,934	$	27,498	$	57,892	$	86,746	United States	$	26,228	$	23,934	$	80,854	$	57,892
Other Americas	Other Americas	5,620		4,722		10,797		15,930		Other Americas	4,921		5,620		16,697		10,797
EMEA:	EMEA:									EMEA:
Europe	Europe	28,239		24,341		70,459		76,622		Europe	29,891		28,239		97,108		70,459
Asia:	Asia:									Asia:
Japan	Japan	26,439		46,010		72,570		131,950		Japan	39,461		26,439		112,079		72,570
Greater China	Greater China	46,172		35,284		116,178		95,244		Greater China	48,696		46,172		142,158		116,178
South Korea	South Korea	17,606		14,119		43,733		41,413		South Korea	19,935		17,606		61,614		43,733
Other Asia	Other Asia	16,439		7,828		44,470		27,580		Other Asia	17,497		16,439		57,871		44,470
Total net sales	Total net sales	$	164,449	$	159,802	$	416,099	$	475,485	Total net sales	$	186,629	$	164,449	$	568,381	$	416,099

The Company recognizes sales net of returns, credits issued, price protection adjustments and stock rotation rights. At December ~~25, 2020~~24, 2021 and March ~~27, 2020,~~26, 2021, these adjustments and current expected credit losses were ~~$16,574~~$16,014 and ~~$17,473,~~$15,412, respectively, and were netted against trade accounts receivable in the unaudited consolidated balance sheets. These amounts represent activity of ~~credits~~net charges and income of ~~$899~~ $602 and ~~$815~~$898, respectively, for the nine-month periods ended December 24, 2021 and December 25, 2020, respectively. Refer to Note 5, “Trade Accounts Receivable, net” for details of these adjustments and ~~December 27, 2019, respectively.~~allowances.

Unsatisfied performance obligations primarily represent contracts for products with future delivery dates. The Company elected to not disclose the amount of unsatisfied performance obligations, as these contracts have original expected durations of less than one year.

5.4. Fair Value Measurements

The following tables present information about the Company’s financial assets and liabilities as of December ~~25, 2020~~24, 2021 and March ~~27, 2020~~26, 2021 measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:


		Fair Value Measurement at December 25, 2020 Using:									Fair Value Measurement at December 24, 2021 Using:
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash equivalents:	Cash equivalents:									Cash equivalents:
Money market fund deposits	Money market fund deposits	$	16,320	$	0	$	0	$	16,320	Money market fund deposits	$	16,348	$	—	$	—	$	16,348
Restricted cash:	Restricted cash:									Restricted cash:
Money market fund deposits	Money market fund deposits	6,520		0		0		6,520		Money market fund deposits	7,497		—		—		7,497
Other assets, net (long-term):										Other assets, net (long-term):
Investments in marketable securities										Investments in marketable securities	$	13,393	$	—	$	—	$	13,393
Total assets	Total assets	$	22,840	$	0	$	0	$	22,840	Total assets	$	37,238	$	—	$	—	$	37,238
Liabilities:	Liabilities:									Liabilities:
Other long-term liabilities:	Other long-term liabilities:									Other long-term liabilities:
Contingent consideration	Contingent consideration	$	0	$	0	$	7,800	$	7,800	Contingent consideration	$	—	$	—	$	2,700	$	2,700
Total liabilities	Total liabilities	$	0	$	0	$	7,800	$	7,800	Total liabilities	$	—	$	—	$	2,700	$	2,700

1917

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)


		Fair Value Measurement at March 27, 2020 Using:									Fair Value Measurement at March 26, 2021 Using:
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash equivalents:	Cash equivalents:									Cash equivalents:
Money market fund deposits	Money market fund deposits	$	46,337	$	0	$	0	$	46,337	Money market fund deposits	$	16,327	$	—	$	—	$	16,327
Restricted cash:	Restricted cash:									Restricted cash:
Money market fund deposits	Money market fund deposits	5,385		0		0		5,385		Money market fund deposits	6,661		—		—		6,661
Total assets	Total assets	$	51,722	$	0	$	0	$	51,722	Total assets	$	22,988	$	—	$	—	$	22,988
Liabilities:										Liabilities:
Other long-term liabilities:										Other long-term liabilities:
Contingent consideration										Contingent consideration	—		—		4,800		4,800
Total liabilities										Total liabilities	$	—	$	—	$	4,800	$	4,800

The following table represents the unrealized gains and losses on investments in marketable securities held with a readily determinable fair value for the nine-month period ended December 24, 2021:



Net gains and losses recognized during the period on equity securities	$	4,482
Less: Net gains and losses recognized during the period on equity securities sold during the period	—
Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date	$	4,482

In addition to the unrealized gains in the table above, the change in fair value of the equity securities was impacted by unrealized foreign currency exchange losses of $278 for the nine-month period ended December 24, 2021.

The following table shows the change in fair value of Level 3 contingent consideration in connection with the ~~Acquisition~~fiscal year 2021 purchase of Voxtel, Inc. (“Voxtel”), a privately-held technology company located in Beaverton, Oregon that develops, manufactures and supplies photonic and advanced 3D imaging technologies (the “Voxtel Acquisition”), for the nine-month period ended December ~~25, 2020:~~24, 2021:


	Level 3 Contingent Consideration
Balance at March ~~27, 2020~~26, 2021	$	04,800
~~Additions during the year~~Change in fair value of contingent consideration	~~7,800~~ (2,100)

Balance at December ~~25, 2020~~24, 2021	$	~~7,800~~2,700

Assets and liabilities measured at fair value on a recurring basis also consist of marketable securities, unit investment trust fund, loans, bonds, stock and other investments which are the Company’s defined benefit plan assets. Fair value information for those assets and liabilities, including their classification in the fair value hierarchy, is included in Note 15, “Retirement Plans.”

During the nine-month periods ended December 24, 2021 and December 25, 2020, ~~and December 27, 2019,~~ there were no transfers among Level 1, Level 2 and Level 3.3 asset or liabilities.

~~6. Trade Accounts Receivable, net~~

~~Trade accounts receivable, net (including related party trade accounts receivable) consisted of the following:~~

December 25,
2020 March 27,
2020
Trade accounts receivable $ 103,687 $ 107,223
Less:
Allowance for doubtful accounts (138) (288)
Returns and sales allowances (16,437) (17,185)
Related party trade accounts receivable (19,778) (30,293)
Total $ 67,334 $ 59,457

~~Changes in the Company’s allowance for doubtful accounts and returns and sales allowances were as follows:~~

Description Allowance for
Doubtful
Accounts Returns
and Sales
Allowances Total
Balance at March 27, 2020 $ 288 $ 17,185 $ 17,473
Charged to costs and expenses or revenue (150) 103,660 103,510
Write-offs, net of recoveries 0 (104,408) (104,408)
Balance at December 25, 2020 $ 138 $ 16,437 $ 16,575

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Description Allowance for
Doubtful
Accounts Returns
and Sales
Allowances Total
Balance at March 29, 2019 $ 412 $ 17,607 $ 18,019
Charged to costs and expenses or revenue (175) 91,690 91,515
Write-offs, net of recoveries 0 (92,330) (92,330)
Balance at December 27, 2019 $ 237 $ 16,967 $ 17,204
5. Trade Accounts Receivable, net

Trade accounts receivable, net (including related party trade accounts receivable) consisted of the following:


	December 24, 2021		March 26, 2021
Trade accounts receivable	$	120,500	$	108,546
Less:
Provision for expected credit losses and allowance for doubtful accounts	(70)		(138)
Returns and sales allowances	(15,944)		(15,274)
Related party trade accounts receivable	(28,251)		(23,634)
Total	$	76,235	$	69,500

Changes in the Company’s provision for expected credit losses / allowance for doubtful accounts and returns and sales allowances were as follows:


Description	Provision for Expected Credit Losses / Allowance for Doubtful Accounts		Returns and Sales Allowances		Total
Balance at March 26, 2021	$	138	$	15,274	$	15,412
Charged to costs and expenses or revenue	(68)		114,047		113,979
Write-offs, net of recoveries	—		(113,377)		(113,377)
Balance at December 24, 2021	$	70	$	15,944	$	16,014


Description	Allowance for Doubtful Accounts		Returns and Sales Allowances		Total
Balance at March 27, 2020	$	288	$	17,185	$	17,473
Charged to costs and expenses or revenue	(150)		103,660		103,510
Write-offs, net of recoveries	—		(104,408)		(104,408)
Balance at December 25, 2020	$	138	$	16,437	$	16,575

7.6. Inventories

Inventories include material, labor and overhead and consisted of the following:


		December 25, 2020		March 27, 2020			December 24, 2021		March 26, 2021
Raw materials and supplies	Raw materials and supplies	$	8,689	$	12,411	Raw materials and supplies	$	11,751	$	9,629
Work in process	Work in process	57,477		87,606		Work in process	45,089		50,095
Finished goods	Finished goods	24,451		24,659		Finished goods	22,018		27,774
Finished goods – consigned		3,404		2,551

Total	Total	$	94,021	$	127,227	Total	$	78,858	$	87,498

~~In connection with the Acquisition, the Company acquired inventory with a stepped-up basis of $3,120, for which $1,245 was on-hand at~~ ~~December 25, 2020.~~ The Company recorded inventory provisions totaling $348 and $5,389 for the three- and nine-month periods ended December 24, 2021, respectively, and $885 and $2,958 for the three- and nine-month periods ended December 25, 2020, ~~respectively,~~respectively.

The Company discontinued a product line manufactured by Voxtel and ~~$1,008~~subsequently recognized impairment charges, which represented much of the increase in inventory provisions, for the related inventory of $— and ~~$2,538~~$3,106 for the three- and nine-month periods ended December ~~27, 2019,~~24, 2021, respectively.

7. Assets Held for Sale

As of March 26, 2021, the Company had entered into a definitive agreement to sell its Thailand-based facility (the “AMTC Facility”) as it had already transferred production to the Manila, Philippines facility, which was reclassified from

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Property, plant and equipment, net to Assets held for sale in fiscal year 2021. The sale of the AMTC Facility was completed on August 3, 2021 following receipt of government approvals in Thailand and the fulfillment of customary closing conditions. The Company received cash of $27,405, which with related selling costs, resulted in a gain on the final disposition of $370.

8. Property, Plant and Equipment, net

Property, plant and equipment, net is stated at cost, and consisted of the following:


		December 25, 2020		March 27, 2020			December 24, 2021		March 26, 2021
Land	Land	$	23,829	$	27,898	Land	$	16,257	$	16,602
Buildings, building improvements and leasehold improvements	Buildings, building improvements and leasehold improvements	91,535		150,402		Buildings, building improvements and leasehold improvements	57,282		56,911
Machinery and equipment	Machinery and equipment	488,796		694,215		Machinery and equipment	528,786		491,025
Office equipment	Office equipment	6,643		7,517		Office equipment	6,252		6,281
Construction in progress	Construction in progress	10,956		27,919		Construction in progress	27,971		29,201
Total	Total	621,759		907,951		Total	636,548		600,020
Less accumulated depreciation	Less accumulated depreciation	(407,387)		(575,621)		Less accumulated depreciation	(428,843)		(407,627)
Total	Total	$	214,372	$	332,330	Total	$	207,705	$	192,393

Total depreciation expense amounted to $10,893 and $33,235 for the three- and nine-month periods ended December 24, 2021, respectively, and $11,255 and $33,861 infor the three- and nine-month periods ended December 25, 2020, ~~respectively, and $15,677 and $46,247 in the three- and nine-month periods ended December 27, 2019,~~ respectively.

Long-lived assets include property, plant and equipment and related deposits on such assets, and capitalized tooling costs. The geographic locations of the ~~Company's~~Company’s long-lived assets, net, based on physical location of the assets, as of December ~~25, 2020~~24, 2021 and March ~~27, 2020~~26, 2021 are as follows:


		December 25, 2020		March 27, 2020			December 24, 2021		March 26, 2021
United States	United States	$	35,894	$	152,536	United States	$	34,793	$	36,529
Philippines	Philippines	136,284		106,618		Philippines	166,087		148,374
Thailand	Thailand	34,226		62,380		Thailand	—		1,698
Other	Other	9,306		12,112		Other	7,328		7,190
Total	Total	$	215,710	$	333,646	Total	$	208,208	$	193,791

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

Amortization of prepaid tooling costs amounted to$31 and $97 for the three- and nine-month periods ended December 24, 2021, respectively, and $18 and $54 for the three- and nine-month periods ended December 25, 2020, ~~respectively, and $32 and $94 in the three- and nine-month periods ended December 27, 2019,~~ respectively.

9. Goodwill and Intangible Assets

The table below summarizes the changes in the carrying amount of goodwill as follows:


	Total
Balance at March ~~27, 2020~~26, 2021	$	~~1,285~~20,106
~~Goodwill arising from Acquisition~~	~~18,803~~
Currency translation	~~161~~ (63)
Balance at December ~~25, 2020~~24, 2021	$	~~20,249~~20,043

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Intangible assets, net is as follows:


		December 25, 2020								December 24, 2021
Description	Description	Gross		Accumulated Amortization		Net Carrying Amount		Weighted- Average Lives	Description	Gross		Accumulated Amortization		Net Carrying Amount		Weighted- Average Lives
Patents	Patents	$	31,852	$	11,661	$	20,191	10 years	Patents	$	35,558	$	14,580	$	20,978	10 years
Customer relationships	Customer relationships	6,193		5,823		370		9 years	Customer relationships	6,899		6,640		259		9 years
Process technology	Process technology	17,150		2,028		15,122		12 years	Process technology	13,100		1,470		11,630		12 years
Indefinite-lived and legacy process technology									Indefinite-lived and legacy process technology	4,050		1,650		2,400
Trademarks	Trademarks	810		73		737		5 years	Trademarks	200		54		146		5 years
Legacy trademarks									Legacy trademarks	629		57		572
Other	Other	32		32		0			Other	32		32		—
Total	Total	$	56,037	$	19,617	$	36,420		Total	$	60,468	$	24,483	$	35,985


		March 27, 2020								March 26, 2021
Description	Description	Gross		Accumulated Amortization		Net Carrying Amount		Weighted- Average Lives	Description	Gross		Accumulated Amortization		Net Carrying Amount		Weighted- Average Lives
Patents	Patents	$	29,115	$	9,834	$	19,281	10 years	Patents	$	32,751	$	12,307	$	20,444	10 years
Customer relationships	Customer relationships	5,462		5,335		127		9 years	Customer relationships	6,193		5,865		328		9 years
Process technology	Process technology	1,650		1,650		0			Process technology	13,100		651		12,449		12 years
Indefinite-lived and legacy process technology									Indefinite-lived and legacy process technology	4,050		1,650		2,400
Trademarks	Trademarks	608		58		550			Trademarks	200		24		176		5 years
Legacy trademarks									Legacy trademarks	627		58		569
Other	Other	32		32		0			Other	32		32		—
Total	Total	$	36,867	$	16,909	$	19,958		Total	$	56,953	$	20,587	$	36,366

As summarized in Note 3, “Acquisition,” the Company completed its acquisition of Voxtel, Inc. during the nine-month period ended December 25, 2020. The Company paid an amount of $35,081 to acquire Voxtel, which represents its fair value on that date. Any excess of the Acquisition consideration over the fair value of the assets acquired and liabilities assumed was allocated to goodwill, which amounted to $18,803. As a result of the Acquisition, the Company recorded finite-life intangible assets of $13,600, the types and lives of which are detailed in the above-referenced financial note. In addition, as a result of the Acquisition, the Company recorded indefinite-life intangible assets of $2,400.

Intangible assets amortization expense was$1,087 and $3,190 for the three- and nine-month periods ended December 24, 2021, respectively, and $926 and $2,310 for the three- and nine-month periods ended December 25, 2020, ~~respectively, and $422 and $1,267 for the three- and nine-month periods ended December 27, 2019,~~ respectively. The majority of the Company’s intangible assets are related to patents as noted above. The Company capitalizes external legal costs incurred in the defense of its patents when it believes that a significant, discernible increase in value will result from the defense and a successful outcome of the legal action is probable. When the Company capitalizes patent defense costs, it amortizes these costs over the remaining estimated useful life of the patent, which is generally 10 years. There were no ~~such~~ significant costs capitalized during either of the first nine months of fiscal years ~~2021~~2022 or ~~2020.~~2021.

As of December ~~25, 2020,~~24, 2021, annual amortization expense of intangible assets for the next five fiscal years is expected to be as follows:


Remainder of 2022	$	935
2023	3,612
2024	3,480
2025	3,260
2026	3,032
Thereafter	21,666
Total	$	35,985

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Remainder of 2021 $ 850
2022 3,293
2023 3,139
2024 3,003
2025 2,709
Thereafter 23,426
Total $ 36,420

10. Other Assets, net

The composition of other assets, net is as follows:


		December 25, 2020		March 27, 2020			December 24, 2021		March 26, 2021
VAT receivables long-term, net	VAT receivables long-term, net	$	6,662	$	3,039	VAT receivables long-term, net	$	10,659	$	8,177
Income taxes receivable long-term						Income taxes receivable long-term	11,462		—
Investments in marketable securities (1)						Investments in marketable securities (1)	13,393		—
Deposits	Deposits	2,414		2,399		Deposits	9,680		3,573
Prepaid contracts long-term	Prepaid contracts long-term	1,478		1,282		Prepaid contracts long-term	1,466		1,295

Deferred financing costs						Deferred financing costs	74		149
Other	Other	1,928		2,090		Other	1,344		1,419
Total	Total	$	12,482	$	8,810	Total	$	48,078	$	14,613

(1) Represents equity investments in an entity whose equity securities have a readily determinable fair value. These strategic investments represent less than a 20% ownership interest in the entity, and the Company does not maintain power over or control of the entity. These investments are measured at fair value with unrealized gains and losses related to changes in the entity’s stock price and the impact of changes in foreign exchange rates each included in the consolidated statements of operations.

11. Accrued Expenses and Other Current Liabilities

The composition of accrued expenses and other current liabilities is as follows:


		December 25, 2020		March 27, 2020			December 24, 2021		March 26, 2021
Accrued management incentive (LTCIP)		$	94	$	11,488
Accrued management incentive (non-LTCIP)		14,143		6,273

Accrued management incentives						Accrued management incentives	$	24,927	$	21,538
Accrued salaries and wages	Accrued salaries and wages	18,603		12,069		Accrued salaries and wages	16,639		15,060
Base acquisition purchase price due	Base acquisition purchase price due	17,244		0		Base acquisition purchase price due	2,000		14,588
Deposits on AMTC Facility						Deposits on AMTC Facility	—		14,531
Accrued vacation	Accrued vacation	5,534		7,146		Accrued vacation	5,423		5,739
Accrued severance	Accrued severance	2,643		6,065		Accrued severance	709		572
Accrued professional fees	Accrued professional fees	1,057		4,036		Accrued professional fees	1,949		2,029
Accrued income taxes	Accrued income taxes	1,803		3,408		Accrued income taxes	2,096		514
Accrued utilities	Accrued utilities	628		1,114		Accrued utilities	604		623
Other current liabilities	Other current liabilities	5,030		5,256		Other current liabilities	4,915		3,738
Total	Total	$	66,779	$	56,855	Total	$	59,262	$	78,932

12. ~~Management Long-Term Cash Incentive Plan~~Leases

~~On August 28, 2015,~~The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. The Company also considers whether its service arrangements include the right to control the use of an asset.

The Company leases real estate, equipment and vehicles under operating lease agreements that have initial terms ranging from 1 to 10 years. The Company does not have any leases classified as finance leases. Some leases include one or more options to exercise renewal terms, generally at the Company’s ~~Board of Directors approved~~sole discretion, that can extend the lease term. Certain leases contain rights to terminate whereby those termination options are held by either the Company, the lessor, or both parties. These options to extend or terminate a ~~Long-Term Cash Incentive Plan (“LTCIP”) for~~lease are included in the lease term only when it is reasonably certain ~~employees. Under~~that the ~~LTCIP, employees receive cash payments upon achievement of certain performance metrics determined based~~Company will exercise that option. The Company’s leases generally do not contain any material restrictive covenants.

Operating lease cost is recognized on a ~~three-year rolling performance period. The Company had executed individual agreements with employees to pay certain incentives upon achievement of~~straight-line basis over the ~~plan conditions at the end of each three-year performance period.~~

~~In connection with its IPO, the Company offered certain employees (excluding its named executive officers) who were eligible to receive cash bonuses under~~lease term. Information regarding the Company’s LTCIP and/or Talent Retention Incentive Program (as amended, the “TRIP”) the opportunity to elect to receive restricted stock units (“RSUs”) under its 2020 Omnibus Incentive Compensation Plan in lieu of cash payouts under the LTCIP and/or TRIP, through the LTCIP/TRIP Award RSU Conversion Program (the “RSU Conversion Program”). The expense related to the LTCIP and TRIP awards elected to be exchanged in the RSU Conversion Program amounted to $607 and $421, respectively. The number of RSUs granted to employees that elected to participate in the RSU Conversion Program is determinedleases are as ~~a percentage of the employee’s target bonus under the LTCIP or~~follows:

2322

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

~~TRIP,~~


	Three-Month Period Ended			Nine-Month Period Ended
	December 24, 2021				December 24, 2021
Lease costs:
Operating lease expense	$	1,075			$	3,378
Short term lease expense	190				332

Other information:
Operating cash flows from operating leases	$	1,259			$	3,733
Weighted-average remaining lease term – operating leases	5.53 years				5.53 years
Weighted-average discount rate – operating leases	4.5		%		4.5		%

Rent expense incurred under operating lease agreements was $1,454 and ~~amounted to 602,490~~$4,226 for the three- and ~~348,911 RSUs on behalf~~nine-month periods ended December 24, 2021, respectively, and $1,172 and $3,477 for the three- and nine-month periods ended December 25, 2020.

As of December 24, 2021, expirations of lease obligations by fiscal year were as follows:


Remainder of 2022	$	1,056
2023	3,886
2024	3,503
2025	3,070
2026	2,597
Thereafter	4,406
Total undiscounted lease payments	$	18,518
Less: present value adjustment	(2,272)
Total operating lease liabilities	$	16,246

Information as Lessee under ASC 840

Future minimum lease payments for noncancellable operating leases as reported under the ~~LTCIP and TRIP conversion, respectively, at a grant date fair value~~previous lease guidance as of ~~$14.00. If an employee elected not to participate in the RSU Conversion Program, the LTCIP or TRIP award will continue under its existing terms and conditions.~~

~~The accrual activity, payments, removal due to divestitures and balances related to the LTCIP~~March 26, 2021 are as follows:

Description
Current
Liabilities
Long-Term
Liabilities
Balance at March 27, 2020 $ 11,488 $ 2,439
Reclassification 1,004 (1,004)
Payments (11,096) 0
RSU conversion (640) 0
Removal due to divestiture (378) (398)
Accruals (284) (843)
Balance at December 25, 2020 $ 94 $ 194


2022	$	2,887
2023	2,726
2024	2,644
2025	2,172
2026	1,773
Thereafter	3,713
Total	$	15,915

The current and long-term portion of the liabilities associated with the LTCIP is included within accrued expenses and other current liabilities and other long-term liabilities in the Company’s unaudited consolidated balance sheets, respectively.

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

13. Debt and Other Borrowings

~~Components of Debt~~

~~The following is a summary of obligations under the Company’s Senior Secured Credit Facilities and other borrowings at December 25, 2020 and March 27, 2020:~~

December 25,
2020 March 27,
2020
Senior Secured Term Loan $ 25,000 $ 0
Unsecured Revolving Credit Facilities 0 43,000
Total Debt 25,000 43,000
Less debt payable within one year 0 43,000
Debt payable after one year $ 25,000 $ 0

~~The principal maturities of debt obligations outstanding were as follows at December 25, 2020:~~

Remainder of 2021 $ 0
2022 0
2023 0
2024 0
2025 0
Thereafter 25,000
Total $ 25,000

~~Senior Secured Credit Facilities:~~

On September 30, 2020, the Company entered into a term loan credit agreement with Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and the other agents, arrangers and lenders party thereto, providing for a $325,000 senior secured term loan facility due in 2027 (the “Term Loan Facility”). On September 30, 2020, the Company also entered into a revolving facility credit agreement with Mizuho Bank, Ltd., as administrative agent and collateral agent, and the other agents, arrangers and lenders party thereto, providing for a $50,000 senior secured revolving credit facility expiring in 2023 (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facilities”). The Revolving Credit Facility is secured by a lien on the same collateral and on the same basis as the Term Loan Facility. Interest on the Term Loan Facility is calculated at LIBOR plus 3.75% to 4.00% based on the

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

Company’s net leverage ratio, and LIBOR is subject to a 0.5% floor. The Company’s outstanding borrowings bore an interest rate of ~~4.5%~~4.25% at December ~~25, 2020. The~~24, 2021. As of both December 24, 2021 and March 26, 2021, the Company ~~has 0t~~had $25,000 outstanding under the Term Loan Facility and had not borrowed on the Revolving Credit ~~Facility at December 25, 2020.~~

In connection with entering into the Revolving Credit Facility, the Company used cash on hand to repay all prior amounts outstanding under AML’s $25,000 and $8,000 line of credit agreements and terminated all commitments thereunder.Facility.

Included in the Term Loan Facility were deferred financing costs of $9,374, which the Company has deducted from the carrying amount presented on its unaudited consolidated balance sheet and amortized into interest expense or recognized as loss on debt extinguishment. Included in the Revolving Credit Facility were deferred financing costs of $300, which the Company classified the related short-term and long-term portions within “Prepaid expenses and other current assets” and “Other assets” on its unaudited consolidated balance sheet and is amortizing those costs over the term of the facility. The unamortized portion of the deferred financing costs associated with the Revolving Credit Facility was ~~$254~~$174 and $249 at December ~~25, 2020.~~24, 2021 and March 26, 2021, respectively.

On November 25, 2020, the Company repaid $300,000 of the outstanding $325,000 Term Loan Facility using proceeds from the Company’s recently completed IPO. The repayment was accounted for as a debt extinguishment in accordance with provisions of ASC Topic 470-50, ~~Debt Modifications and Extinguishments.~~The Company recognized a loss on debt extinguishment of $9,055, which was included within “Other (expense) income” in the unaudited consolidated statement of operations at December 25, 2020. The loss on debt extinguishment consisted of the unamortized balances of previously deferred financing costs which the Company wrote off.

~~Unsecured Revolving Credit Facilities:~~

On January 22, 2019, the Company, through its subsidiaries, entered into a revolving line of credit agreement, with a financial institution, that provided for a maximum borrowing capacity of $25,000. The revolving line of credit bore interest at LIBOR on the day of the advance plus a 0.4% spread payable upon maturity of the draws, and expired on January 22, 2021. During fiscal year 2020, the Company borrowed $25,000 under the revolving line of credit. As of March 27, 2020, the Company had a $25,000 outstanding balance under the revolving line of credit agreement with an original repayment date of June 19, 2020 at an interest rate of 1.7%. In the first quarter of fiscal 2021, repayment of the $25,000 borrowings under the revolving line of credit was extended to December 18, 2020. The revolving line of credit was secured, for a one-year period, by a non-refundable fee of $25 that was paid to the financial institution. In connection with entering into a new revolving credit facility on September 30, 2020, the Company used cash on hand to repay all amounts outstanding under the line of credit and terminated all commitments thereunder.

On March 27, 2006, the Company, through its PSL subsidiary, entered into a revolving line of credit agreement, with a financial institution, that provides for a maximum borrowing capacity of $10,000. The revolving line of credit bore interest at LIBOR on the day of the advance plus 1.0% spread payable upon maturity of the draws and was guaranteed by Sanken. Under the terms of the revolving line of credit agreement, the principal was due at various times during fiscal year 2021. During fiscal year 2020, the Company borrowed $10,000 under the revolving line of credit. As of March 27, 2020, the Company had a $10,000 outstanding balance under the revolving line of credit agreement maturing on September 16, 2020, at an interest rate of 2.5%. On March 28, 2020, in conjunction with the divestiture of PSL, the debt was deconsolidated.

On December 5, 2001, the Company, through its subsidiaries, entered into a line of credit agreement with a financial institution that provided for a maximum borrowing capacity of $8,000. On March 18, 2020, the Company borrowed $8,000 under the line of credit. As of March 27, 2020, the Company had an $8,000 outstanding balance under the line of credit agreement maturing on June 18, 2020 at an interest rate of 1.9%. In the first quarter of fiscal 2021, repayment of the $8,000 borrowings under the line of credit was extended to December 21, 2020. In connection with entering into a new revolving credit facility on September 30, 2020, the Company used cash on hand to repay all amounts outstanding under the line of credit and terminated all commitments thereunder.

On November 26, 2019, the Company, through its subsidiaries, entered into a line of credit agreement with a financial institution that provides for a maximum borrowing capacity of 60,000 Philippine pesos (approximately ~~$1,247~~ $1,196 at December ~~25, 2020)~~24, 2021) at the bank’s prevailing interest rate. ~~The~~While this line of credit initially expired on August 21, 2021 (in connection with certain delays as a result of the COVID-19 pandemic and its impact on bank operations), the line of credit was ~~due~~extended in September 2021 and is now expected to expire on August ~~31, 2021.~~21, 2022. There were 0no borrowings outstanding under this line of credit as of December ~~25, 2020~~24, 2021 and March ~~27, 2020.~~26, 2021.

On November 20, 2019, the Company, through its subsidiaries, entered into a line of credit agreement with a financial institution that provides for a maximum capacity of 75,000 Philippine pesos (approximately ~~$1,559~~$1,495 at December ~~25, 2020)~~24, 2021) at the bank’s prevailing interest rate. ~~The~~While this line of credit initially expired on June 30, 2021 (in connection with certain delays as a result of the COVID-19 pandemic and its impact onbank operations), the line of credit was ~~due~~extended in September 2021 and is now expected to expire on June 30, ~~2021.~~2022. There were 0no borrowings outstanding under this line of credit as of December ~~25, 2020~~24, 2021 and March ~~27, 2020.~~

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

Given the continued uncertainty surrounding COVID-19, during the month of March 2020, the Company executed a $43,000 drawdown of the majority of its remaining available lines-of-credit under its existing agreements, as noted above. The Company took this action as a precautionary measure to increase its cash position and help maintain financial flexibility. The proceeds from the drawdown were used for working capital, general corporate or other purposes during the COVID-19 pandemic into fiscal year26, 2021.

14. Other Long-Term Liabilities

The composition of other long-term liabilities is as follows:


		December 25, 2020		March 27, 2020			December 24, 2021		March 26, 2021
Accrued management incentive (LTCIP)		$	194	$	2,439
Accrued management incentive (non-LTCIP)		318		2,304

Accrued management incentives						Accrued management incentives	$	734	$	628
Accrued retirement	Accrued retirement	9,516		8,005		Accrued retirement	10,655		10,656
Accrued contingent consideration	Accrued contingent consideration	7,800		0		Accrued contingent consideration	2,700		4,800
Provision for uncertain tax positions (net)	Provision for uncertain tax positions (net)	2,758		2,855		Provision for uncertain tax positions (net)	2,741		2,774
Other	Other	275		275		Other	—		275
Total	Total	$	20,861	$	15,878	Total	$	16,830	$	19,133

15. Retirement Plans

The Company recognizes the funded status (i.e., the difference between the fair value of plan assets and the benefit obligations) of its defined benefit pension plans in its unaudited consolidated balance sheets with a corresponding adjustment to accumulated other comprehensive income, ~~(“AOCI”),~~ net of tax. These amounts will continue to be recognized as a component of future net periodic benefit costs consistent with the Company’s past practice. Further, actuarial gains and losses and prior service costs that arise in future periods and are not recognized as net periodic benefit costs in the same periods will be

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

recognized as a component of other comprehensive income. Those amounts will also be recognized as a component of future net periodic benefit costs consistent with the Company’s past practice. The Company uses a measurement date for its defined benefit pension plans and other postretirement benefit plans that is equivalent to its fiscal year-end.

Plan Descriptions

Non-U.S. Defined Benefit Plan

The Company, through its wholly owned subsidiary, Allegro MicroSystems Philippines, Inc. (“AMPI”), has a defined benefit pension plan, which is a noncontributory plan that covers substantially all employees of the respective subsidiary. The plan’s assets are invested in common trust funds, bonds and other debt instruments and stocks.

Effect on the unaudited statements of operations

Expense related to the ~~non-U.S.~~non-United States (“U.S.”). defined benefit plan was as follows:


		Three-Month Period Ended				Nine-Month Period Ended					Three-Month Period Ended				Nine-Month Period Ended
		December 25, 2020		December 27, 2019		December 25, 2020		December 27, 2019			December 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
Service cost	Service cost	$	296	$	242	$	843	$	717	Service cost	$	365	$	296	$	1,119	$	843
Interest cost	Interest cost	166		169		474		503		Interest cost	158		166		485		474
Expected return on plan assets	Expected return on plan assets	(79)		(83)		(231)		(247)		Expected return on plan assets	(75)		(79)		(230)		(231)

Amortization of net transition asset		0		(4)		0		(10)

Amortization of prior service cost	Amortization of prior service cost	2		2		6		6		Amortization of prior service cost	1		2		1		6
Actuarial loss	Actuarial loss	47		24		126		72		Actuarial loss	51		47		156		126
Net periodic pension expense	Net periodic pension expense	$	432	$	350	$	1,218	$	1,041	Net periodic pension expense	$	500	$	432	$	1,531	$	1,218

Information on Plan Assets

The table below sets forth the fair value of the entity’s plan assets as of December 24, 2021 and March 26, 2021, using the same three-level hierarchy of fair value inputs described in the significant accounting policies included in the Company’s 2021 Annual Report.


	Fair Value at December 24, 2021		Level 1		Level 2		Level 3
Assets of non-U.S. defined benefit plan:
Government securities	$	2,005	$	2,005	$	—	$	—
Unit investment trust fund	1,217		—		1,217		—
Loans	578		—		—		578
Bonds	706		—		706		—
Stocks and other investments	2,338		1,224		2		1,112
Total	$	6,844	$	3,229	$	1,925	$	1,690


	Fair Value at March 26, 2021		Level 1		Level 2		Level 3
Assets of non-U.S. defined benefit plan:
Government securities	$	1,646	$	1,646	$	—	$	—
Unit investment trust fund	1,221		—		1,221		—
Loans	584		—		—		584
Bonds	1,112		—		1,112		—
Stocks and other investments	3,081		1,947		1		1,133
Total	$	7,644	$	3,593	$	2,334	$	1,717

2625

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

~~Information on Plan Assets~~

The table below sets forth the fair value of the entity’s plan assets as of December 25, 2020 and March 27, 2020, using the same three-level hierarchy of fair value inputs described in the significant accounting policies included in the audited consolidated financial statements as of March 27, 2020 and for the year then ended, which are included in the previously filed Registration Statement.

Fair Value at December 25,
2020 Level 1 Level 2 Level 3
Assets of non-U.S. defined benefit plan:
Government securities $ 1,826 $ 1,826 $ 0 $ 0
Unit investment trust fund 1,155 0 1,155 0
Loans 562 0 0 562
Bonds 1,193 0 1,193 0
Stocks and other investments 2,353 1,205 1 1,147
Total $ 7,089 $ 3,031 $ 2,349 $ 1,709

Fair Value at March 27,
2020 Level 1 Level 2 Level 3
Assets of non-U.S. defined benefit plan:
Government securities $ 1,260 $ 1,260 $ 0 $ 0
Unit investment trust fund 897 0 897 0
Loans 756 0 0 756
Bonds 1,094 0 1,094 0
Stocks and other investments 1,572 1,207 1 364
Total $ 5,579 $ 2,467 $ 1,992 $ 1,120

The following table shows the change in fair value of Level 3 plan assets for the ~~nine-month period~~nine months ended December ~~25, 2020:~~24, 2021:


		Level 3 Non-U.S. Defined Plan Assets					Level 3 Non-U.S. Defined Plan Assets
		Loans		Stocks			Loans		Stocks
Balance at March 27, 2020		$	756	$	364
Balance at March 26, 2021						Balance at March 26, 2021	$	584	$	1,133
Additions during the year	Additions during the year	207		0		Additions during the year	308		—
Redemptions during the year	Redemptions during the year	(440)		0		Redemptions during the year	(289)		—
Revaluation of equity securities	Revaluation of equity securities	0		753		Revaluation of equity securities	(5)		13
Change in foreign currency exchange rates	Change in foreign currency exchange rates	39		30		Change in foreign currency exchange rates	(20)		(34)
Balance at December 25, 2020		$	562	$	1,147
Balance at December 24, 2021						Balance at December 24, 2021	$	578	$	1,112

The investments in the Company’s major benefit plans largely consist of low-cost, broad-market index funds to mitigate risks of concentration within the market sectors. In recent years, the Company’s investment policy has shifted toward a closer matching of the interest-rate sensitivity of the plan assets and liabilities. The appropriate mix of equity and bond investments is determined primarily through the use of detailed asset-liability modeling studies that look to balance the impact of changes in the discount rate against the need to provide asset growth to cover future service cost. The Company, through its wholly owned subsidiary, Allegro MicroSystems, LLC’s (“AML”), non-U.S. defined benefit plan, has added a greater proportion of fixed income securities with return characteristics that are more closely aligned with changes in liabilities caused by discount rate volatility. There are no significant restrictions on the amount or nature of the investments that may be acquired or held by the plans.

During the three- and nine-month periods ended December 24, 2021, the Company contributed a

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes~~pproximately $344 and $1,040 to ~~Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

its non-U.S. pension plan, respectively. During the three- and nine-month periods ended December 25, 2020, the Company contributed approximately ~~$249~~$249 and $736~~to its non-U.S. pension plan, respectively, and during the three- and nine-month periods ended December 27, 2019 the Company contributed approximately $235 and $698~~ to its non-U.S. pension plan, respectively. The Company expects to contribute ~~approximately $943~~approximately $1,425 to ~~its~~its non-U.S. pension plan in fiscal year ~~2021.~~2022.

Other Defined Benefit ~~Plan~~Plans

In December 1993, the Company commenced with a rollover pension promise agreement (“Pension Promise”) to offer a then European employee an insured annuity upon their retirement at age 65. The employee was the only eligible participant of the Pension Promise. The impact associated with the expense and related other income with the Pension Promise was insignificant in fiscal years ~~2020~~2021 and ~~2019,~~2020, respectively. The total values of the Pension Promise in the amounts of ~~827 and 866~~of 663 and 928 British Pounds Sterling at December ~~25, 2020~~24, 2021 and March ~~27, 2020,~~26, 2021, respectively ~~(approximately $1,112~~(approximately $882 and ~~$975~~$1,272 at December ~~25, 2020~~24, 2021 and March ~~27, 2020,~~26, 2021, respectively), were classified with other in other assets, net and accrued retirement in other long-term liabilities in the Company’s unaudited consolidated balance sheets.

Defined Contribution Plan

Eligible AML U.S. employees may contribute up to 50% of their pretax compensation to a defined contribution plan, subject to certain limitations, and AML may match, at its discretion, 100% of the participants’ pretax contributions, up to a maximum of 5% of their eligible compensation. Matching contributions by AML totaled approximatel~~y $1,112 and $3,181~~ ~~for the three- and nine-month periods ended December 25, 2020, respectively, and approximately $833~~ ~~and $2,840 for the three- and nine-month periods ended December 27, 2019, respectively.~~

The Company, through its AML subsidiary, Allegro MicroSystems Europe, Ltd. (“Allegro Europe”), also has a defined contribution plan (the “AME Plan”) covering substantially all employees of Allegro Europe. Contributions to the AME Plan by the Company totaled approximately $207 and ~~$592 for the three- and nine-month periods ended December 25, 2020, respectively, and approximately $201 and $560 for the three- and nine-month periods ended December 27, 2019, respectively.~~

The Company has a 401(k) plan that covers all employees meeting certain service and age requirements. Employees are eligible to participate in the plan upon hire when the service and age requirements are met. Employees may contribute up to 35% of their compensation, subject to the maximum contribution allowed by the Internal Revenue Service. All employees are 100% vested in their contributions at the time of plan entry. As

Eligible AML U.S. employees may contribute up to 50% of ~~January 1, 2008,~~their pretax compensation to a defined contribution plan, subject to certain limitations, and until January 1, 2015, the Company’s former wholly owned subsidiary, PSL, adopted and used a Safe Harbor provision, whereby PSL contributed 3% of compensation each pay period for all eligible employees meeting the Safe Harbor criteria. As of January 1, 2015, PSLAML may match, at its discretion, 100% of the ~~employee’s contribution,~~participants’ pretax contributions, up to a maximum of 5% of their eligible compensation. ~~PSL’s matching~~Matching contributions inby AML totaled approximately $655 and $3,000 for the three- and nine-month periods ended December ~~27, 2019 was $376~~24, 2021, respectively, and ~~$1,310,~~approximately $1,112 and $3,181 for the three- and nine-month periods ended December 25, 2020, respectively.

The Company, through its AML subsidiary, Allegro MicroSystems Europe, Ltd. (“Allegro Europe”), also has a defined contribution plan (the “AME Plan”) covering substantially all employees of Allegro Europe. Contributions to the AME Plan by the Company totaled approximately $209 and $639 for the three- and nine-month periods ended December 24, 2021, respectively, and approximately $207 and $592 for the three- and nine-month periods ended December 25, 2020, respectively.

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

16. Commitments and Contingencies

~~Operating Leases~~Insurance

~~The Company, through its subsidiaries, leases certain real estate property and equipment under operating lease agreements that expire at various dates between~~ ~~one~~ and seven years. The leases generally require the Company to pay for utilities, insurance, taxes and maintenance. Some leases contain escalation clauses, renewal options and purchase options. There have been no material changes to these lease commitments since March 27, 2020.

~~Insurance~~

The Company, through its subsidiaries, utilizes self-insured employee health programs for employees in the United States. The Company records estimated liabilities for its self-insured health programs based on information provided by the third-party plan administrators, historical claims experience and expected costs of claims incurred but not reported. The Company monitors its estimated liabilities on a quarterly basis. As facts change, it may become necessary to make adjustments that could be material to the Company’s unaudited consolidated financial position and results of operations. The accrued liability related to self-insurance was $863 and $1,518 as of December 24, 2021 and March 26, 2021, respectively, and was included in accrued expenses and other current liabilities in the Company’s unaudited consolidated balance sheets.

Legal proceedings

The Company is subject to various legal proceedings and claims, the outcomes of which are subject to significant uncertainty. The Company does not believe there are any such matters that could have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company records an accrual for legal contingencies when it is determined that it is probable that a liability

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, the Company evaluates, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, and ~~its~~the ability to make a reasonable estimate of the loss. If the occurrence of liability is probable, the Company will disclose the nature of the contingency, and if estimable, will provide the likely amount of such loss or range of loss. ~~Furthermore, the Company does not believe there are any matters that could have a material adverse effect on financial position, results of operations or cash flows.~~

Indemnification

From time to time, the Company has agreed to indemnify and hold harmless certain customers for potential allegations of infringement of intellectual property rights and patents arising from the use of its products. To date, the Company has not incurred any costs in connection with such indemnification arrangements; therefore, there was 0no accrual of such amounts at December ~~25, 2020~~24, 2021 or March ~~27, 2020.~~26, 2021.

Environmental Matters

The Company establishes accrued liabilities for environmental matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. If the contingency is resolved for an amount greater or less than the accrual, or the Company’s share of the contingency increases or decreases or other assumptions relevant to the development of the estimate were to change, the Company would recognize an additional expense or benefit in the unaudited consolidated statements of operations during the period such determination was made. ~~NaN~~No significant environmental accruals were established at December ~~25, 2020 or~~24, 2021 and March ~~27, 2020.~~26, 2021.

17. Net ~~(Loss)~~ Income per Share

In connection with completion of the Company’s IPO on November 2, 2020 and immediately following the pricing of the IPO, all outstanding shares of Class A common stock and Class L common stock were automatically converted into an aggregate of 166,500,000 shares of common stock (the “Common Stock Conversion”). Outstanding shares of Class A and Class L common stock were converted to common stock in the Common Stock Conversion at conversion rates of approximately 15.822 and 13.010 shares of common stock to each share of Class A and Class L common stock, respectively. As part of the Common Stock Conversion, 2,066,508 and 1,766 shares of common stock were returned to the Company for tax payments made on behalf of holders of Class A common stock and Class L common stock, respectively, in withhold to cover tax transactions.

Prior to the Company’s IPO, shares of Class A common stock were entitled to a priority dividend of 8%. After Class A shareholders received an annualized return on capital of 8%, distributions of the remaining value were split between Class A and Class L shareholders based on the achievement of certain return targets. In determining income to the Class A stockholders for computing basic and diluted earnings per share for the three- and nine-month periods ended December ~~27, 2019,~~25, 2020, the Company did not allocate income to the shares of Class L common stock in accordance with ASC 260, because such classes of shares would not have shared in the distribution had all of the income for the periods been distributed. Accordingly, earnings per share calculations were provided only for the Class A shares with a weighted average of ~~10,000,000~~124,363,078 shares for the ~~three-~~three-month period ended December 25, 2020.

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and ~~nine-month periods ended December 27, 2019.~~per share amounts)

The following table sets forth the basic and diluted net ~~(loss)~~ income attributable to Allegro MicroSystems, Inc. per share. The number of shares of common stock reflected in the calculation is the total shares of common stock (vested and unvested) held on the IPO date, after the Common Stock Conversion.


	Three-Month Period Ended				Nine-Month Period Ended
	December 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
Net income attributable to Allegro MicroSystems, Inc.	$	32,936	$	(5,095)	$	93,791	$	9,309
Net income attributable to common stockholders	32,973		(5,060)		93,903		9,412
Basic weighted average shares of common stock	189,736,901		124,363,078		189,665,324		48,121,026
Dilutive effect of common stock equivalents	2,331,321		—		2,013,627		123,517,761
Diluted weighted average shares of common stock	192,068,222		124,363,078		191,678,951		171,638,787
Basic net income attributable to Allegro MicroSystems, Inc. per share	$	0.17	$	(0.04)	$	0.49	$	0.19
Basic net income attributable to common stockholders per share	$	0.17	$	(0.04)	$	0.50	$	0.20
Diluted net income attributable to Allegro MicroSystems, Inc. per share	$	0.17	$	(0.04)	$	0.49	$	0.05
Diluted net income attributable to common stockholders per share	$	0.17	$	(0.04)	$	0.49	$	0.05

The computed net income per share for the three- and nine-month periods ended December 24, 2021 and December 25, 2020 does not assume conversion of securities that would have an antidilutive effect on income per share. As the Company was in a net loss position for the three-month period ended December 25, 2020, common stock equivalents of 57,553,282 were deemed antidilutive.

The following table represents issuable weighted average share information for the respective periods:


	Three-Month Period Ended		Nine-Month Period Ended
	December 24, 2021	December 25, 2020	December 24, 2021	December 25, 2020
Restricted stock units	1,199,816	377,767	1,046,229	125,922
Performance stock units	1,117,532	422,768	959,084	140,923
Employee stock purchase plan	13,973	—	8,314	—
Shares related to Common Stock Conversion	—	56,752,747	—	123,250,916
Total	2,331,321	57,553,282	2,013,627	123,517,761

18. Common Stock and Stock-Based Compensation

The Company accounts for stock-based compensation through the measurement and recognition of compensation expense for share-based payment awards made to employees over the related requisite service period, including stock options, performance share units (“PSUs”), restricted share units (“RSUs”) and restricted shares (all part of our equity incentive plan).

During the nine months ended December 24, 2021, the Company granted 1,030,887 RSUs to employees with an estimated grant date fair value of $25.47. Stock-based compensation expense related to non-vested awards not yet recorded at December 24, 2021 was $25,133, which is expected to be recognized over a weighted-average of 1.34 years. During the nine months ended December 24, 2021, 168,717 shares vested.

PSUs are included at 100% - 200% of target goals. The intrinsic value of the PSU’s that were unvested during the nine months ended December 24, 2021 was $36,708. The total compensation cost related to unvested awards not yet recorded at December 24, 2021 was $13,765, which is expected to be recognized over a weighted average of 1.78 years. No shares vested during the nine months ended December 24, 2021.

During the nine months ended December 24, 2021, 227,530 shares of the Company’s restricted common stock vested. In addition, 24,014 shares were forfeited, which reduced common stock outstanding during the same period. The Company

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Three-Month Period Ended Nine-Month Period Ended
December 25,
2020 December 27,
2019 December 25,
2020 December 27,
2019
Net (loss) income attributable to Allegro MicroSystems, Inc. $ (5,095) $ 8,926 $ 9,309 $ 23,675
Net (loss) income attributable to common stockholders (5,060) 8,958 9,412 23,776
Basic weighted average shares of common stock 124,363,078 10,000,000 48,121,026 10,000,000
Dilutive effect of common stock equivalents 0 0 123,517,761 0
Diluted weighted average shares of common stock 124,363,078 10,000,000 171,638,787 10,000,000
Basic net (loss) income attributable to Allegro MicroSystems, Inc. per share $ (0.04) $ 0.89 $ 0.19 $ 2.37
Basic net (loss) income attributable to common stockholders per share $ (0.04) $ 0.90 $ 0.20 $ 2.38
Diluted net (loss) income attributable to Allegro MicroSystems, Inc. per share $ (0.04) $ 0.89 $ 0.05 $ 2.37
Diluted net (loss) income attributable to common stockholders per share $ (0.04) $ 0.90 $ 0.05 $ 2.38

The computed net loss for the three-month period ended December 25, 2020 does not assume conversion of securities that would have an antidilutive effect on loss per share. As the Company was in a net loss position for the three-month period ended December 25, 2020, all common stock equivalents in this period were antidilutive. There were no such convertible securities to consider for the three- and nine-month periods ended December 27, 2019.

~~The following represents issuable weighted average share information for the respective periods:~~

Three-Month Period Ended Nine-Month Period Ended
December 25,
2020 December 27,
2019 December 25,
2020 December 27,
2019
Unvested restricted stock units (“RSUs”) 377,767 0 125,922 0
Unvested performance stock units (“PSUs”) 422,768 0 140,923 0
Shares related to Common Stock Conversion 56,752,747 0 123,250,916 0
Total 57,553,282 0 123,517,761 0

~~As the Company was in a net loss position for the three-month period ended December 25, 2020, common stock equivalents of 57,553,282 were antidilutive.~~

~~18. Common Stock and Stock-Based Compensation~~

On November 2, 2020, the Company completed its IPO of 28,750,000 shares of its common stock at an offering price of $14.00 per share, of which 25,000,000 shares were sold by the Company and 3,750,000 shares were sold by selling stockholders, resulting in net proceeds to the Company of approximately $321,425, after deducting $20,125 of underwriting discounts and $8,450 of offering costs. The Company’s common stock is now listed on the Nasdaq Global Select Market under the ticker symbol “ALGM.”

~~Prior to the IPO, the Company~~ had 2 classes of common stock, Class A common stock and Class L common stock. The Company’s Board of Directors authorized 12,500,000 shares of Class A common stock at par value of $0.01, out of which the Company issued 6,720,000 to Sanken in exchange for its previous shares of common stock. The previous single class of common stock was retired in full. The Company sold 2,880,000 shares of newly issued Class A common stock, representing a 28.8% ownership interest, to OEP for cash consideration of $291,000 (the “OEP Transaction”). The stock issuance proceeds were recorded net of $9,260 of related transaction costs. The Company’s Board of Directors authorized 1,000,000 shares of Class L common stock at a par value of $0.01.

Both Class A and Class L common stock were entitled to dividends when, and if, declared by the Board of Directors. Holders of shares of Class A common stock were entitled to a priority dividend of 8%. After holders of shares of Class A

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

common stock receive an annualized return on capital of 8%, distributions of the remaining value were split between holders of shares of Class A common stock and Class L common stock based on the achievement of certain return targets.

Each outstanding share of Class A common stock entitled the holder to one vote on each matter submitted to a vote of the stockholders of the Company, including the election of the Board of Directors. Holders of Class L common stock were not entitled to vote.

In the event of voluntary or involuntary liquidation, dissolution or winding-up of the Company, any amounts available for distribution by the Company were to be paid to the holders of Class A common stock and Class L common stock, as if such distribution were a dividend paid, factoring in the priorities as described above.

Upon the earliest of (i) an IPO; (ii) change of control; (iii) the date OEP and its affiliates cease to own any shares of capital stock of the Company; or (iv) at the election of the Board of Directors, any merger transaction involving the Company or its subsidiaries, each outstanding share of Class L common stock would convert into Class A common stock.

~~Also, in connection with the OEP Transaction, the Company granted 400,000~~154,783 unvested shares of Class A common stock and 597,400 unvested shares of Class L common stock to certain Company employees. The shares of Class A common stock vest to the grantees over a service period of 60 months. However, they remain subject to the Company’s repurchase right at par value in the event that either (i) a change in control has not occurred or (ii) the Company has not consummated an IPO by the seventh anniversary of the OEP Transaction. As of March 27, 2020, the Company was not able to determine whether such a change in control or IPO was probable, and therefore, no amount of stock-based compensation was recognized for the unvested shares of Class A common stock at that time. As a result of the Company’s IPO closing on November 2, 2020, the unvested shares of Class A common stock immediately become vested and the Company recognized $40,440 of one-time stock-based compensation (400,000 shares to management at $101.10 per share) at that time.

The Class L unvested shares vested on a straight-line basis over a service period of four years. Class L unvested shares had no other vesting conditions. If an IPO occurred, 25% of the unvested awards would accelerate vesting if 25% or more of the awards are unvested at the time of the IPO. If a change in control occurs, 100% of the then unvested awards would accelerate vesting. Accordingly, based on the Company’s IPO closing on November 2, 2020, the Company accelerated the vesting of the 25% unvested awards at that time.

Prior to the IPO, the Company issued 17,203 shares of Class L common stock during the nine-month period ended December 25, 2020 with a weighted average price per share of $33.83 and issued 30,300 shares of Class L common stock during the nine-month period ended December 27, 2019 with a weighted average price per share of $26.93.

On October 2, 2020, the Company repurchased an aggregate of 1,997 shares of its Class L common stock from certain of its directors and one of its non-executive employees for an aggregate purchase price of $408 in connection with (i) in the case of such directors, the settlement of certain outstanding promissory notes issued by the Company to such directors, and (ii) in the case of such non-executive employee, to satisfy certain withholding tax obligations triggered by the vesting of such shares in accordance with the terms of the applicable award agreement.

Immediately following the pricing of the IPO on November 2, 2020, all outstanding shares of Class A common stock and Class L common stock were automatically converted into an aggregate of 166,500,000 shares of common stock (the “Common Stock Conversion”). Outstanding shares of Class A and Class L common stock were converted to common stock in the Common Stock Conversion at conversion rates of approximately 15.822 and 13.010 shares of common stock to each share of Class A and Class L common stock, respectively. As part of the Common Stock Conversion, 2,066,508 and 1,766 shares of common stock were returned to the Company for tax payments made on behalf of holders of Class A common stock and Class L common stock, respectively, in withhold to cover tax transactions. Outstanding loan amounts related to Class L common stock in the aggregate amount of $753 were extinguished on October 2, 2020.

The following table presents the respective number of shares of common stock and unvested restricted common stock issued in the Common Stock Conversion. The number of shares of common stock and unvested restricted common stock issuable are based upon the vesting provisions of the outstanding shares and reflect the shares vested and unvested at the date of conversion.

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

Shares of
Common Stock Shares of Unvested
Restricted
Common Stock Total Shares of
Common Stock
Class A common stock 156,155,403 0 156,155,403
Class L common stock 7,816,574 459,749 8,276,323
Total 163,971,977 459,749 164,431,726

Prior to the IPO, there were 638,298 shares of Class L common stock outstanding at a weighted average price per share of $11.99. As noted in the above table, as part of the Common Stock Conversion, the Class L common stock was converted to 7,816,574 shares of common stock and 459,749 of unvested restricted common stock at December 24, 2021 with a weighted average ~~prices per share of $14.00.~~

In connection with its IPO, the Company offered certain employees (excluding its named executive officers) who were eligible to receive cash bonuses under the Company’s LTCIP and TRIP the opportunity to elect to receive RSUs under its 2020 Omnibus Incentive Compensation Plan in lieu of cash payouts under the LTCIP and/or TRIP, through the LTCIP/TRIP Award RSU Conversion Program (the “RSU Conversion Program”). The expense related to the LTCIP and TRIP awards elected to be exchanged in the RSU Conversion Program amounted to $607 and $421, respectively. The number of RSUs granted to employees that elected to participate in the RSU Conversion Program is determined as a percentage of the employee’s target bonus under the LTCIP or TRIP, and amounted to 602,490 and 348,911 RSUs on behalf of the LTCIP and TRIP conversion, respectively, at a grant date fair value of ~~$14.00. If an employee elected to not to participate in the RSU Conversion Program, the LTCIP or TRIP award will continue under its existing terms~~$14.00 and ~~conditions.~~remaining vesting period of 1.07 years.

In addition to above, the Company also issued RSUs to its non-employee directors as consideration for their provision of future services. The stock-based compensation expense related to RSUs is measured based on the fair value market price of the Company’s common shares on the grant date and is recognized on a straight-line basis over the requisite service period, which coincides with the vesting period. RSUs can only be exchanged and settled for the Company’s common shares, on a one-to-one basis, upon vesting. RSUs are generally subject to forfeiture prior to the release of vesting restrictions. Included in the table below is a total amount of 54,644 RSUs issued to such non-employee directors.

~~The following table summarizes the RSU activity for the nine-month period ended December 25, 2020:~~

Number of
Shares Weighted-Average Grant-Date Fair Value Weighted-Average Remaining Contractual Life
(In years) Aggregate
Intrinsic
Value
Outstanding - March 27, 2020 0 $ 0 — $ —
Granted 1,426,944 14.04
Vested (376) 14.00
Canceled (28,920) 14.00
Outstanding - December 25, 2020 1,397,648 $ 14.04 1.74 $ 34,648

The weighted-average grant fair value per share for RSUs granted during the nine-month period ended December 25, 2020 was $14.04, and the stock-based compensation expense related to non-vested awards not yet recorded at December 25, 2020 was $17,496, which is expected to be recognized over a weighted-average of 1.74 years. During the nine-month period ended December 25, 2020, 376 shares vested.

The Company also awards PSUs to its senior executive officers based on achievement of medium-term plans (“MTP”) approved in meetings of its Board of Directors for establishing target performances. Each award reflects a target number of shares (“Target Shares”) that may be issued to the award recipient. In fiscal year 2021, these awards are earned upon the completion of a three-year performance period ending March 31, 2023. Whether units are earned at the end of the performance period will be determined based on the achievement of certain performance objectives over the performance period. The performance objectives include achieving certain revenue improvement and cumulative EBITDA levels for the performance period, and also include a performance objective relating to relative total shareholder return (“TSR”). Depending on the results achieved during the three-year performance period, the actual number of shares that a grant recipient may receive at the end of the period ranges from 0% to 200% of the Target Shares granted.

~~The weighted-average fair value of the PSUs was determined using the Monte Carlo simulation model incorporating the following weighted-average assumptions:~~

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~


			~~Fiscal Year 2021~~
~~Performance term~~			~~2.42 years~~
~~Volatility~~			~~49.9%~~
~~Risk-free rate of return~~			~~0.17%~~
~~Dividend yield~~			0%
~~Weighted-average fair value per share~~			~~$14.00~~

~~The following table summarizes the PSU activity for the nine-month period ended December 25, 2020:~~

Number of
Shares Weighted-Average Grant-Date Fair Value Weighted-Average Remaining Contractual Life
(In years) Aggregate
Intrinsic
Value
Outstanding - March 27, 2020 0 $ 0 — $ —
Granted 650,302 15.05
Vested 0 0
Canceled 0 0
Outstanding - December 25, 2020 650,302 $ 15.05 2.90 $ 16,121

PSUs are included at 100% - 200% of target goals. The intrinsic value of the PSU’s vested during the nine-month period ended December 25, 2020 was $16,121. The total compensation cost related to non-vested awards not yet recorded at December 25, 2020 was $9,320, which is expected to be recognized over a weighted average of 2.90 years. NaN shares were vested during the nine-month period ended December 25, 2020.

~~The following table summarizes unvested restricted common stock activity for the nine-month period ended December 25, 2020:~~

Number of
Shares Weighted-Average Grant-Date Fair Value Weighted-Average Remaining Contractual Life
(In years) Aggregate
Intrinsic
Value
Outstanding - March 27, 2020 0 $ 0 — —
Common stock conversion 459,749 14.00
Vested (37,161) 14.00
Canceled 0 0
Outstanding - December 25, 2020 422,588 $ 14.00 2.01 10,476

Upon completion of its IPO, the Company recognized one-time stock-based compensation charges of $40,440 in connection with the vesting of all outstanding shares of Class A common stock, $1,610 in connection with the automatic acceleration of 25% of the standard vesting term of shares of Class L common stock and $1,028 with the RSU Conversion Program (see above and Note 12, “Management Long-Term Cash Incentive Program”). In addition, the Company recognized stock-based compensation charges of $144 and $1,169 for its Class L common stock for the three- and nine-month periods ended December 25, 2020, respectively, and stock-based compensation charges of $2,131, $467 and $73 for its RSUs, PSUs and restricted common stock, respectively, for the three- and nine-month periods ended December 25, 2020. All stock-based compensation charges in fiscal 2020 related to expensing of the Company’s Class L common stock. The Company recorded stock-based compensation expense in the following expense categories of its unaudited consolidated statements of operations:

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~


		Three-Month Period Ended				Nine-Month Period Ended					Three-Month Period Ended				Nine-Month Period Ended
		December 25, 2020		December 27, 2019		December 25, 2020		December 27, 2019			December 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
Cost of sales	Cost of sales	$	4,694	$	47	$	4,844	$	137	Cost of sales	$	742	$	4,694	$	1,992	$	4,844
Research and development	Research and development	2,984		20		3,037		65		Research and development	1,019		2,984		2,814		3,037
Selling, general and administrative	Selling, general and administrative	38,198		236		39,020		849		Selling, general and administrative	5,859		38,198		13,841		39,020
Total stock-based compensation	Total stock-based compensation	$	45,876	$	303	$	46,901	$	1,051	Total stock-based compensation	$	7,620	$	45,876	$	18,647	$	46,901

~~19.~~19. Income Taxes

The Company recorded the following tax (benefit) provision in its unaudited consolidated statements of operations:


		Three-Month Period Ended						Nine-Month Period Ended							Three-Month Period Ended						Nine-Month Period Ended
		December 25, 2020			December 27, 2019			December 25, 2020			December 27, 2019				December 24, 2021			December 25, 2020			December 24, 2021			December 25, 2020
Operating taxes	Operating taxes	$	(12,169)		$	1,703		$	(9,764)		$	5,980		Operating taxes	$	6,517		$	(12,169)		$	17,785		$	(9,764)
Discrete tax items	Discrete tax items	(18,354)			(161)			(18,149)			5,730			Discrete tax items	(236)			(18,354)			(1,098)			(18,149)
(Benefit) provision for income taxes		$	(30,523)		$	1,542		$	(27,913)		$	11,710
Provision (benefit) for income taxes														Provision (benefit) for income taxes	$	6,281		$	(30,523)		$	16,687		$	(27,913)
Annual operating tax rate	Annual operating tax rate	34.2		%	16.2		%	52.8		%	16.9		%	Annual operating tax rate	16.6		%	34.2		%	16.1		%	52.8		%
Effective tax rate	Effective tax rate	85.8		%	14.7		%	150.9		%	33.0		%	Effective tax rate	16.0		%	85.8		%	15.1		%	150.9		%

The Company’s provision (benefit) for income taxes is comprised of the ~~year to date~~year-to-date taxes based on an estimate of the annual effective tax rate plus the tax impact of discrete items.

The Company is subject to tax in the ~~United States (“~~U.S.”) and various foreign jurisdictions. The Company’s effective tax rate can fluctuate primarily based on: the mix of its U.S. and foreign income; the impact of discrete transactions; and the difference between the amount of tax benefit generated by the foreign derived intangible income deduction (“FDII”) and research credits offset by the additional tax from the global intangible low-tax income (“GILTI”~~) and the base erosion tax (“BEAT”~~).

The Company regularly assesses the likelihood of outcomes that could result from the examination of its tax returns by the IRS and other tax authorities to determine the adequacy of its income tax reserves and expense. Should actual events or results differ from the Company’s then-current expectations, charges or credits to the Company’s provision for income taxes may become necessary. Any such adjustments could have a significant effect on the results of operations.

~~For~~Income tax expense and the ~~three months~~effective income tax rate were $6,281, or 16.0%, and $16,687, or 15.1%, for the three- and nine-month periods ended December 24, 2021, respectively. Income tax benefit and the effective income tax rate were $30,523, or 85.8%, and $27,913, or 150.9%, for the three- and nine-month periods ended December 25, 2020, ~~and December 27, 2019, the Company’s effective~~respectively. The increase in income tax ~~(benefit)~~ expense was primarily attributable to tax impacts of the IPO transaction recorded in the prior three- and ~~rates were~~nine-month period. The IPO transaction resulted in excess tax over financial reporting deductions related to a benefit of $30,523 or 85.8% and expense of $1,542 or 14.7% on pre-tax loss of $35,583 and income of $10,500, respectively. For the nine-month period ended December 25, 2020 and December 27, 2019, the Company’s effective income tax (benefit) expense and rates were a benefit of $27,913 or 150.9% and expense of $11,710 or 33.0% on pre-tax loss of $18,501 and income of $35,486, respectively.

~~The change in effective income tax rates is primarily due to the $40,440 IPO related~~$40,440 stock-based compensation charge ~~which significantly reduced U.S. income and was included in~~(and the ~~Company’s~~related incremental tax ~~rate from operations in the quarter. The incremental stock-based compensation windfall was~~deductions), a $16,000 one-time dividend treated as compensation expense for tax purposes, as well as a ~~discrete~~ tax ~~adjustment as an incremental tax deduction in the three months ended December 25, 2020. Additionally, other discrete transactions,~~loss on the divestiture of Polar Semiconductor, LLC (“PSL”). The tax impacts of these transactions and ~~the one-time dividend resulted in additional tax deductions. The reduction in~~other discrete transactions caused an overall U.S. ~~income and the discrete tax deductions resulted in a U.S. tax~~ NOL that ~~can~~will be carried back five years. Additional fluctuations in our effective income tax rate relate primarily to ~~refund prior years’ taxes. In total approximately $18,149 of~~differences in our U.S. taxable income, estimated FDII benefits, GILTI income, research credits, non-deductible stock-based compensation charges, and discrete tax ~~benefits recorded this quarter were partially offset by a reduction in our FDII deduction and an increase in GILTI and BEAT tax.~~

Additionally, in the first quarter of fiscal year 2020, there was a discrete tax expense of approximately $5,500 recorded for the settlement of IRS transfer pricing audits for years 2016, 2017, and 2018.items.

3429

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

20. Related Party Transactions

Transactions involving Sanken

The Company sells products and services to, and purchases in-process products from, Sanken. In addition, prior to March 28, 2020, the Company also sold products for Sanken.

Net sales of the Company’s products and services to Sanken ~~totaled~~totaled $39,461 and $112,079 during the three- and nine-month periods ended December 24, 2021, respectively, and $26,439 and $72,570 during the three- and nine-month periods ended December 25, 2020, ~~respectively, and $16,535 and $49,327 during the three- and nine-month periods ended December 27, 2019,~~ respectively. Trade accounts receivables, net of allowances from Sanken, totaled ~~$17,250~~$28,251 and ~~$30,293~~$21,595 as of December ~~25, 2020~~24, 2021 and March ~~27, 2020,~~26, 2021, respectively. Other accounts receivable from Sanken totaled ~~$374 and $558~~$54 and $198 as of December ~~25, 2020~~24, 2021 and March ~~27, 2020,~~26, 2021, respectively.

During fiscal year 2020, the Company acted as a distributor of Sanken’s products. Net sales of Sanken’s products by the Company to third parties totaled $7,666 and $26,688 during the three- and nine-month periods ended December 27, 2019, respectively. On March 28, 2020, the Company formally terminated its distribution agreement with Sanken to distribute Sanken’s products.

Purchases of various products under the distribution agreement from Sanken totaled $7,356 and $23,835 for the three- and nine-month periods ended December 27, 2019, respectively. Accounts payable to Sanken totaled $4,494 as of March 27, 2020.

~~Joint Development Agreement (“Development Agreement”)~~

The Company, through its former wholly owned subsidiary, PSL, entered into a Development Agreement with Sanken whereby the Company and Sanken jointly own a specific wafer technology and share the reimbursement of development costs incurred by the Company. Sanken reimbursed $360 and $1,080 in the three- and nine-month periods ended December 27, 2019, respectively.

~~Short-term Bridge Loan Receivable to Sanken~~

In March 2019, the Company entered into a short-term bridge loan to Sanken in the amount of $30,000. The loan bore interest at 2.52% and was repaid in April 2019. Interest income related to the loan to Sanken was $55 in the nine-month period ended December 27, 2019.

~~Notes Payable and Line of credit from Sanken~~

The Company, through PSL, its former wholly-owned subsidiary, had related party debt owed to Sanken that included 3 notes payable in the aggregate amount of $17,700 and 2 lines-of-credit agreements in the aggregate amount of $25,000 at March 27, 2020. The interest rates on the related party debt was reset at the beginning of each calendar quarter to LIBOR on the last trading day of the previous month, plus a 1.0% spread. Related party interest expense consisting of amounts due to Sanken for intercompany notes payable, lines-of-credit and miscellaneous charges for the three- and nine-month periods ended December 27, 2019 amounted to $334 and $1,129, respectively, and related party interest paid for the same periods amounted to $81 and $835, respectively.

As of March 27, 2020, the related party notes payable balance of $17,700 was classified in the consolidated balance sheet as long-term, with various maturity dates through March 14, 2025. The line of credit agreements of $25,000 were classified as current at March 27, 2020.

~~In connection with the PSL divestiture, the total $42,700 balance was contributed in-kind for the fair value of the 70% interest that Sanken acquired.~~

Transactions involving PSL

In accordance with the Divestiture Transactions of both PSL and the Sanken distribution business, the Company had both intercompany accounts payable of $1,198 and accounts receivable of $3,368 that were previously eliminated in consolidation. The previous intercompany receivable balance of $3,368 was moved into trade and other accounts receivable due from related party as of March 28, 2020. In addition, as a result of PSL taking over the Sanken distribution business, at December 25, 2020, the Company reflected a related accounts receivable balance of $2,528. This amount includes a reduction of $3,368 from payments made by PSL during the nine-month period ended December 25, 2020.

As previously noted above, the Company, through PSL, entered into a Development Agreement with Sanken whereby the Company and Sanken jointly own a specific wafer technology and share the reimbursement of development costs

~~ALLEGRO MICROSYSTEMS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements – (continued)~~

~~(Amounts in thousands, except share and per share amounts)~~

incurred by the Company. Sanken reimbursed 0 amounts in the three- and nine-month periods ended December 25, 2020 and $360 and $1,080 in the three- and nine-month periods ended December 27, 2019, respectively.

In April 2015, PSL and Sanken entered into a discrete technology development agreement (as amended, the “Discrete Technology Development Agreement”), pursuant to which the parties agreed upon the general terms under which they, from time to time, undertook certain activities (the “Discrete Development Activities”) to develop new technologies to be used by PSL to manufacture products for Sanken, as well as the ownership and use of such technologies following their development. In June 2018, the Company, PSL and Sanken entered into an amendment to the Discrete Technology Development Agreement pursuant to which the parties agreed to the assignment of all rights and obligations of PSL under such agreement to the Company and to certain amendments to the terms of such agreement. The Discrete Technology Development Agreement provided that the expenses for all Discrete Development Activities to be shared equally by the Company and Sanken on an annual basis (subject to any exceptions upon which the parties agreed to from time to time). During the three- and nine-month periods ended December 25, 2020 and December 27, 2019, the Company did 0t pay any fees to PSL pursuant to the Discrete Technology Development Agreement.

In May 2009, the Company entered into a technology development agreement (the “IC Technology Development Agreement”) with Polar Semiconductor, Inc.~~, the predecessor of PSL~~ (“PSI”) (subsequently changed to Polar Semiconductor, LLC), and Sanken, pursuant to which the parties agreed upon the general terms under which they may, from time to time, undertake certain activities (the “IC Process Development Activities”) to develop new technologies to be used by PSI to manufacture products for the Company and Sanken, as well as the ownership and use of such technologies following their development. The IC Technology Development Agreement provides that the expenses for all IC Process Development Activities will be shared equally by the Company and Sanken on an annual basis (subject to any exceptions upon which the parties may agree from time to time), with such expenses being paid to ~~PSI~~PSL by Sanken in the form of an up-front annual fee, with ~~PSI~~PSL being responsible for any expenses that exceed the amount of such fee. The IC Technology Development Agreement will continue in effect until such time as the Company, PSL and Sanken mutually agree to its termination or adopt a successor agreement, or in the event that the companies fail to agree upon the annual fee for athat fiscal year within three months after the commencement of such fiscal year. During ~~both of~~ the three- and nine-month periods ended December ~~25, 2020 and December 27, 2019,~~24, 2021, the Company (through PSL) received no fees ~~of $300 and $900~~ from Sanken pursuant to the IC Technology Development Agreement, and, during the same periods, the Company paid no fees to PSL pursuant to the IC Technology Development Agreement. There are also no expected payments to be made during the remainder of fiscal year 2022. During the three- and ~~nine- month~~nine-month periods ended December 25, 2020, the Company (through PSL) received fees of $300 and $900, respectively, from Sanken pursuant to the IC Technology Development Agreement, and, during the same periods, the Company paid fees of $300 and $900 to PSL pursuant to the IC Technology Development Agreement.

In April 2015, PSL and Sanken entered into a discrete technology development agreement (as amended, the “Discrete Technology Development Agreement”), pursuant to which the parties agreed upon the general terms under which they, from time to time, would undertake certain activities (the “Discrete Development Activities”) to develop new technologies to be used by PSL to manufacture products for Sanken, as well as the ownership and use of such technologies following their development. In June 2018, the Company, PSL and Sanken entered into an amendment to the Discrete Technology Development Agreement pursuant to which the parties agreed to the assignment of all rights and obligations of PSL under such agreement to the Company and to certain amendments to the terms of such agreement. The Discrete Technology Development Agreement provided that the expenses for all Discrete Development Activities were to be shared equally by the Company and Sanken on an annual basis (subject to any exceptions upon which the parties agreed to from time to time). As of March 26, 2021, the Company had accrued $614 included in amounts due to a related party under the Discrete Technology Development Agreement, which was paid in the first quarter of fiscal year 2022. The Discrete Technology Development Agreement terminated on March 31, 2021 in accordance with its terms.

On March 28, 2020, the Company entered into an agreement to divest a majority of its ownership interest in PSL to Sanken, in order to better align with its fabless, asset-lite scalable manufacturing strategy (the “PSL Divestiture”). In addition, this also resulted in PSL taking over the distribution of Sanken products in the U.S. and Europe at the same time.

The Company continues to purchase in-process products from PSL.

Purchases of various products from PSL ~~totaled~~totaled $11,837 and $38,346 for the three- and nine-month periods ended December 24, 2021, respectively, and $11,558 and $33,448 for the three- and nine-month periods ended December 25, 2020, respectively. ~~These amounts include $1,500 and $5,000 of price support payments made for~~For the three- and nine-month periods ended December 25, 2020, these amounts include $1,500 and $5,000, respectively, ~~and the reduction~~ of ~~$1,157 and $1,198 of intercompany balances~~price support payments. The price support payments were for ~~the three- and nine-month periods ended December 25, 2020, respectively.~~fiscal year 2021 only. Accounts payable to PSL included in amounts due to a related party totaled ~~$2,078~~$4,051 and $1,739 as of December ~~25, 2020.~~

~~Note Receivable from PSL~~

On24, 2021 and March 28, 2020, in connection with the PSL divestiture, the Company contributed the forgiveness of the fair value of $15,000 out of the $66,377 total debt owed by PSL to the Company, which was previously eliminated in consolidation as of March 27, 2020. As a result of this divestiture, on March 28, 2020, the $51,377 note receivable from PSL was classified on the Company’s balance sheet as related party note receivable. The related party note receivable held by the Company had a maturity date of March 28, 2027 and bore interest at a rate of 2.70%, which was a market rate determined by IRS guidance at the time of the divestiture. The entire receivable of $51,377 plus accrued interest of $762 was repaid on October 14, 2020.26, 2021, respectively.

3630

ALLEGRO MICROSYSTEMS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements – (continued)

(Amounts in thousands, except share and per share amounts)

Note Receivable from PSL

On December 2, 2021, AML entered into a loan agreement with PSL wherein PSL provided an initial promissory note to AML for a principal amount of $7,500 (“Initial PSL Loan”). The Initial PSL Loan will be repaid in equal installments, comprising of principal and interest accrued at 1.26% per annum, over a term of four years with payments due on the first day of each calendar year quarter (April 1st, July 1st, October 1st, and January 1st). In addition, PSL has the option of borrowing up to an additional $7,500 on or around January 1, 2023 under the same terms of the PSL Loan (“Secondary PSL Loan”, and, collectively with the Initial PSL Loan, the “PSL Promissory Notes”). The loan funds will be used by PSL to procure a deep ultraviolet scanner and other associated manufacturing tools necessary to increase wafer fabrication capacity in support of the Company’s increasing wafer demand.

Transactions involving Sanken Electric Europe Ltd. (“SEEL”)

During fiscal year ended March 26, 2021 (and following the PSL Divestiture), Sanken, through PSL formed SEEL in order to cover its distribution business in Europe. The Company, in connection with the transition services agreement with Sanken and PSL, paid certain costs on behalf of them, and as such, had no related party accounts receivable from SEEL as of December 24, 2021. The Company had related party accounts receivable from SEEL of $1,272 as of March 26, 2021.

Sublease Agreement

In 2014, the Company, through one of its subsidiaries, entered into a sublease agreement with Sanken pursuant to which the subsidiary subleases from Sanken certain office building space in Japan. The sublease automatically renews on an annual basis unless either party provides notice to the other party and can otherwise be terminated by either party upon providing six months’ prior notice. The Company made aggregate payments of approximately $56 and $166 to Sanken under the sublease agreement during the three- and nine-month periods ended December 24, 2021, respectively, and $59 and $173 during the three- and nine-month periods ended December 25, 2020, respectively.

Consulting Agreement

~~The~~In December 2018 and prior to Reza Kazerounian becoming a member of the Company’s board of directors, the Company entered into a board executive advisor agreement (the “Consulting Agreement”) with ~~Reza Kazerounian in December 2017, before~~ Mr. Kazerounian, ~~became a member of the Company’s board of directors,~~ pursuant to which the Company engaged Mr. Kazerounian to serve as executive advisor to the board of directors and the office of Chief Executive Officer. The Consulting Agreement provides for a fee payable to Mr. Kazerounian on a monthly basis in exchange for his services (which fee was reduced from $30 per month to $19 per month in connection with Mr. Kazerounian’s appointment to the board of directors in June 2018), as well as a grant of 12,000 shares of the Company’s Class L common stock and a signing bonus of $54 in connection with the execution of the Consulting Agreement. The Consulting Agreement provides that if Mr. ~~Kazerounian~~Kazerounian’s employment is terminated by the board of directors, he will be entitled to a severance payment in the amount of $180 as well as a six-month vesting acceleration of his shares of Class L common stock. The board of directors and Mr. Kazerounian each have the right to terminate the Consulting Agreement at any time. During the three- and nine-month periods ended December 24, 2021, the Company paid aggregate fees of $69 and $191, respectively, to Mr. Kazerounian pursuant to the Consulting Agreement. During the three- and nine-month periods ended December 25, 2020, ~~and December 27, 2019,~~ the Company paid aggregate fees of ~~$262~~$82 and ~~$270,~~$262, respectively, to Mr. Kazerounian pursuant to the Consulting Agreement.

~~Director and Executive Officer Promissory Notes~~

From time to time, the Company entered into promissory notes with certain of its directors and executive officers to finance all or a part of the income and employment taxes payable by them in connection with grants of the Company’s Class A common stock and/or Class L common stock. The Company had $506 of promissory notes outstanding as of as of March 27, 2020. On October 2, 2020, the Company repurchased an aggregate of 1,997 shares of its Class L common stock from certain of its directors and one of its non-executive employees for an aggregate purchase price of $408 in connection with, (i) in the case of such directors, the settlement of certain outstanding promissory notes issued by the Company to such directors, and (ii) in the case of such non-executive employee, to satisfy certain withholding tax obligations triggered by the vesting of such shares in accordance with the terms of the applicable award agreement. As a result of these transactions, there were 0 promissory notes outstanding as of December 25, 2020.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other information included elsewhere in this Quarterly Report, as well as the audited financial statements and the related notes thereto, and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our ~~Registration Statement~~Annual Report on Form ~~S-1~~10-K filed with the ~~SEC~~Securities and Exchange Commission (“SEC”) on ~~February 2,~~May 19, 2021 (the ~~“Registration Statement”~~“2021 Annual Report”).

In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition and prospects based on current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the section titled “Forward-Looking Statements” and in Part II, Item 5, “Risk Factors” of our 2021 Annual Report and Part II. Item 1A. “Risk Factors” of this Quarterly Report. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.

We operate on a 52- or 53-week fiscal year ending on the last Friday of March. Each fiscal quarter has 13 weeks, except in a 53-week year, when the fourth fiscal quarter has 14 weeks. All references to the three- and nine-month periods ended December ~~25, 2020~~24, 2021 and December ~~27, 2019~~25, 2020 relate to the ~~13- and 26-week~~13-week periods ended December ~~25, 2020~~24, 2021 and December ~~27, 2019,~~25, 2020, respectively. All references to ~~“2020,~~“2021,” “fiscal year ~~2020”~~2021” or similar references relate to the 52-week period ended March ~~27, 2020.~~26, 2021.

Overview

Allegro MicroSystems, Inc., together with its consolidated subsidiaries (“AMI”, “we”, “us” or “our”) is a leading global designer, developer, manufacturer and marketer of sensor integrated circuits (“ICs”) and application-specific analog power ICs enabling the most important emerging technologies in the automotive and industrial markets. We are the number one supplier of magnetic sensor IC solutions worldwide based on market share, driven by our market leadership in ~~automotive.~~the automotive industry. We focus on providing complete IC solutions to sense, regulate and drive a variety of mechanical systems. This includes sensing angular or linear position of a shaft or actuator, driving an electric motor or actuator, and regulating the power applied to sensing and driving circuits so they operate safely and efficiently.

We are headquartered in Manchester, New Hampshire and have a global footprint with 16 locations across four ~~continents.~~continents. Our portfolio includes more than 1,000 products, and we ship over one billion units annually to more than 10,000 customers worldwide. ~~During~~During the three- and nine-month periods ended December 24, 2021, we generated $186.6 million and $568.4 million in total net sales, respectively, with $33.0 million and $93.9 million in net income and $54.9 million and $167.7 million in Adjusted EBITDA in such fiscal periods, respectively. During the three- and nine-month periods ended December 25, 2020, we generated $164.4 million and $416.1 million in total net sales, respectively, with $5.1 million in net loss and $9.4 million in net income and $39.6 million and $98.6 ~~million in Adjusted EBITDA in such fiscal periods, respectively. During the~~ ~~three- and nine-month periods ended~~ ~~December 27, 2019, we generated $159.8 million and $475.5 million in total net sales, respectively, with $9.0 million and $23.8 million in net income and $30.8 million and $89.4~~ million in Adjusted EBITDA in such fiscal periods, respectively.

On November 2, 2020, we completed our initial public offering (“IPO”) of 28,750,000 shares of our common stock at an offering price of $14.00 per share, of which 25,000,000 shares were sold by us and 3,750,000 shares were sold by selling stockholders, resulting in net proceeds to us of approximately, $321.4 million after deducting $20.1 million of underwriting discounts and $8.5 million of offering costs. Our common stock is now listed on the Nasdaq Global Select Market under the ticker symbol “ALGM.”

Our Growth Strategies and Outlook

We plan to pursue the following strategies to continue to grow our sales and enhance our profitability:

•Invest in research and development that is market-aligned and focused on targeted portfolio ~~expansion~~expansion.. We believe that our investments in research and development in the areas of product design, automotive-grade wafer fabrication technology and IC packaging development are critical to maintaining our competitive advantage. In both the automotive and industrial markets, major technology shifts driven by disruptive technologies are creating high-growth opportunities in areas such as ~~xEVs,~~electrified vehicles (“xEVs”), advanced ~~driving~~driver assistance systems (“ADAS”), Industry 4.0, data centers and green energy applications. Our knowledge of customers’ end systems has driven an expansion of our sensor IC and power solutions to enable these new technologies. By aligning our research and

development investments with disruptive technology trends while undergoing a rigorous ROI review, we believe we can deliver an attractive combination of growth and profitability.

•Emphasize the automotive “first” philosophy to align our product development with the most rigorous applications and safety standards. We have been intentional about incorporating support for the stringent automotive operating voltages, temperature ranges and safety and reliability standards into every part of our operations, from design to manufacturing. We believe our focus on meeting or exceeding industry standards as the baseline for product development increases our opportunity in the automotive market as customers look for trusted suppliers to deliver highly reliable solutions for rapidly growing emerging markets, and that our philosophy of designing for automotive safety and reliability gives us a meaningful lead over new entrants attempting to enter the automotive market. For example, we will apply this philosophy of innovation, quality and reliability to our new photonics portfolio which supplies components into safety-critical Light Detection and Ranging (“LiDAR”) applications. We also believe we can use our expertise in designing for the automotive market and our expanding product portfolio to capitalize on increasing demand among industrial customers for ruggedized solutions that meet the highest quality and reliability standards. Additionally, in our experience, demand for solutions that meet or exceed stringent safety and reliability specifications supports higher average ~~selling~~sales prices (“~~ASPs”~~ASP”) and lower ASP declines over time than are typical for our industry.

•Invest to lead in chosen markets and apply our intellectual property and technology to pursue adjacent growth markets. We intend to continue to invest in technology advancements and our intellectual property portfolio to maintain the number one market share position in magnetic sensor ICs and achieve leadership positions in power ICs within our target markets. We believe that leveraging our technology and existing research and development, sales and support efforts will enable us to take advantage of synergistic opportunities in new, adjacent growth markets. We believe this strategy of leveraging our known capabilities to target adjacent growth markets will enable us to enjoy greater returns on our research and development investments.

•Expand our sales channels and enhance our sales operations and customer relationships. Our global sales infrastructure is optimized to support customers through a combination of key account managers and regional technical and support centers near customer locations that enable us to act as an extension of our customers’ design teams, providing us with key insights into product requirements and accelerating the adoption and ramp up of our products in customer designs. We intend to continue strengthening our relationships with our existing customers while also enabling our channel partners to support demand creation and fulfillment for smaller broad-based industrial customers. We believe we will be able to further penetrate the industrial market and efficiently scale our business to accelerate growth by enabling our channel partners to become an extension of our demand generation and customer support efforts.

•Continue to improve our gross margins through product innovation and cost optimization. We strive to improve our profitability by both rapidly introducing new products with value-added features and reducing our manufacturing costs through our fabless, asset-lite manufacturing model. We expect to continue to improve our product mix by developing new products for growth markets where we believe we can generate higher ASPs and/or higher gross margins. We also intend to further our relationships with key foundry suppliers to apply our product and applications knowledge to develop differentiated and cost-efficient wafer processes and packages. We believe we can reduce our manufacturing costs by leveraging the advanced manufacturing capabilities of our strategic suppliers, implementing more cost-effective packaging technologies and leveraging both internal and external assembly and test capacity to reduce our capital requirements, lower our operating costs, enhance reliability of supply and support our continued growth.

•Pursue selective acquisitions and other strategic transactions. We evaluate and pursue selective acquisitions and other transactions to facilitate our entrance into new applications, add to our intellectual property portfolio and design resources, and accelerate our growth. From time to time, we acquire companies, technologies or assets and participate in joint ventures when we believe they will cost effectively and rapidly improve our

product development or manufacturing capabilities or complement our existing product offerings. For example, our August 2020 acquisition of Voxtel ~~Inc.~~ and its affiliate, LadarSystems, Inc., brings together Voxtel’s laser and imaging expertise and our automotive leadership and scale to enable what we believe will be the next generation of ADAS.

•Maintain commitment to ~~sustainability~~sustainability.. We intend to continue to innovate with purpose, addressing critical global challenges related to energy efficiency, vehicle emissions and clean and renewable energy with our sensing and power management product portfolio. In addition, we strive to operate our business in a socially responsible and

environmentally sustainable manner, and we strive to maintain a commitment to social responsibility in our supply chain and disclosure of the environmental impact of our business operations.

Recent Initiatives to Improve Results of Operations

We have recently implemented several initiatives designed to improve our operating results.

On August 28, 2020, we acquired Voxtel, Inc. (“Voxtel”), a privately-held technology company located in Beaverton, Oregon that specializes in components for eye-safe LiDAR used in ADAS, fully autonomous vehicles, and industrial ~~automation. The total preliminary purchase price of the acquisition was~~ ~~$35.1 million, including certain earnouts that have a potential payout of $15.0 million. The fair value of these earn-outs at acquisition date was $7.8 million.~~automation (the “Voxtel Acquisition”). In addition to the laser technology, Voxtel’s capabilities include its Indium Gallium Arsenide (“InGaAs”) Avalanche Photodiode (“APDs”) and APD photoreceivers—highly sensitive in the important eye-safe region around 1550 nanometers (“nm”). This technology enables images to be obtained over a wide range of weather conditions and over a long-distance or a wide field of view using a laser that does not pose an ocular hazard. The combination of these highly sensitive detectors and high-peak-power eye-safe lasers with Voxtel’s custom integrated circuits and electro-optical packaging expertise, allows for cost-effective, compact laser-ranging and 3D-image sensing. In addition, Voxtel holds more than 38 US patents, representing a comprehensive Laser Detection and Ranging (“LADAR”)/LiDAR photonic technology suite.

Through the end of fiscal year 2020, we held a 100% ownership interest in Polar Semiconductor, LLC (“PSL”), a semiconductor wafer fabricator engaged in the manufacturing and testing of foundry wafers. Prior to the divestiture transaction of PSL, foundry revenue accounted for 10.4% and 10.4% of our net sales and supplie~~d 45.8% and 47.7% of~~ our wafer requirements in the three- and nine-month periods ended December 27, 2019, respectively. In addition, through end of fiscal year 2020, we acted as a distributor of Sanken products in North America, South America and Europe on a low-margin, buy-resale basis pursuant to the Sanken Products Distribution Agreement between AML, our wholly owned subsidiary, and Sanken. Our net sales from the distribution of Sanken products in the three- and nine-month periods ended December 27, 2019 were $7.7 million and $26.7 million, respectively. On March 28, 2020, in order to further our strategy for developing a flexible and efficient manufacturing model that minimizes capital requirements, lowers operating costs, enhances reliability of supply and supports our growth going forward:

•~~We divested a majority of our ownership interest in PSL to Sanken in (the “PSL Divestiture”), in connection with which:~~

•Our equity interests in PSL were recapitalized (the “Recapitalization”) in exchange for (i) the contribution by us to PSL of $15.0 million of intercompany debt, representing a portion of the aggregate principal amount of debt owed by PSL to us under certain intercompany loan agreements (the “Existing Allegro Loans”), (ii) the assumption by us of $42.7 million in aggregate principal amount of debt owed by PSL to Sanken under certain intercompany loan and line of credit agreements (the “PSL-Sanken Loans”), that was subsequently forgiven in exchange for our transfer to Sanken of 70% of the issued and outstanding equity interests in PSL, and (iii) the termination of the Existing Allegro Loans and the issuance, pursuant to a consolidated and restructured loan agreement (the “Consolidated Loan Agreement”), of a note payable to us in an aggregate principal amount of $51.4 million (representing the aggregate principal amount of debt outstanding under the Existing Allegro Loans prior to their termination); and

•In exchange for the extinguishment of all outstanding indebtedness owed by us to Sanken under the PSL-Sanken Loans, we (i) divested 70% of the issued and outstanding equity interests in PSL to Sanken, as a

result of which Sanken holds a 70% majority share in PSL and we hold a 30% interest, and (ii) amended and restated the existing limited liability company agreement of PSL to admit Sanken as a member, reflect the Recapitalization and otherwise reflect the rights and obligations of us and Sanken thereunder;

•AML entered into a letter agreement with Sanken providing for, among other things, the termination of AML’s services under the Sanken Products Distribution Agreement, and Sanken and PSL entered into a new distribution agreement providing for PSL to serve as a distributor of Sanken products in North America, South America and Europe; and

•We entered into certain other agreements and transactions with Sanken and PSL as more fully described under “Prospectus Summary—The Divestiture Transactions” in the Registration Statement and elsewhere in this Quarterly Report.

~~As a result of the PSL Divestiture and the transfer of the Sanken products distribution business to PSL, we expect~~ ~~continued~~ ~~material improvement over this fiscal~~ year in gross profit, operating income and net income, as well as reduced capital expenditures and increased net cash provided by operating activities. Strategically, we believe these changes better enable us to focus solely on our core business in sensor and power applications for the automotive and industrial end markets.

•~~PSL foundry revenue is no longer consolidated in our results in fiscal year 2021, however, PSL did supply 40.9% and 37.1% of~~ ~~our wafer requirements in the three- and nine-month periods ended December 25, 2020, respectively.~~

•~~Net sales from the distribution of Sanken products are also no longer consolidated in our results in fiscal year 2021.~~

In February 2020, we announced that we would consolidate our assembly and test facilities into a single site, located at our manufacturing facility in the Philippines (the “AMPI Facility”). As such, we ~~have commenced~~completed the ~~closure of~~transition and closed our manufacturing facility in Thailand (the “AMTC Facility”)~~. We expect to substantially complete this transition by~~ in March 2021 and closed on the ~~end~~sale of ~~March~~the AMTC Facility in August 2021. WeAs a result, we expect to realize a ~~material~~significant reduction in cost of goods sold in subsequent periods.

~~Impact of the COVID-19 Pandemic~~

We continue to monitor the rapidly evolving conditions and circumstances as well as guidance from international and domestic authorities, including public health authorities, and we may need to take additional actions based on their recommendations. There is considerable uncertainty regarding the impact on our business stemming from current measures and potential future measures that could restrict access to our facilities, limit manufacturing and support operations and place restrictions on our workforce and suppliers. The measures implemented by various authorities related to the COVID-19 outbreak have caused us to change our business practices including those related to where employees work, the social distance employees are required to keep in our facilities, limitations on in-person meetings with customers, suppliers, service providers and stakeholders, as well as restrictions on business travel to domestic and international locations or to attend trade shows, investor conferences and other events.

The full extent to which the ongoing COVID-19 pandemic adversely affects our financial performance will depend on future developments, many of which are outside of our control, are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the effectiveness of actions to contain the virus or treat its impact and how quickly and to what extent normal economic and operating conditions can resume. The COVID-19 pandemic could also result in additional governmental restrictions and regulations, which could adversely affect our business and financial results. In addition, a recession, depression or other sustained adverse market impact resulting from COVID-19 could materially and adversely affect our business and our access to needed capital and liquidity. Even after the COVID-19 pandemic has lessened or subsided, we may continue to experience adverse impacts on our business and financial performance as a result of its global economic impact.

To the extent that the COVID-19 pandemic adversely affects our business, results of operations, financial condition or liquidity, it also may heighten many of the other risks; for example, if the business impacts of COVID-19 continue for an extended period, we may be required to recognize impairments for goodwill and certain long-lived assets including amortizable intangible assets. We have taken actions to mitigate our financial risk given the uncertainty in global markets caused by the COVID-19 pandemic. In March 2020, we borrowed $43.0 million under our credit facilities (including $10.0 million borrowed by PSL under the PSL Revolver, the proceeds of which were retained by PSL and are no longer available for use by us following the consummation of the PSL Divestiture). The borrowing was made as part of our ongoing efforts to preserve financial flexibility considering the current uncertainty in the global markets and related effects on our business resulting from the COVID-19 pandemic.

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”). The CARES Act contains numerous tax provisions, including a correction to the applicable depreciation rates available in the Tax Cuts and Jobs Act of 2017 (“TCJA”) for Qualified Improvement Property (“QIP”), temporarily establishes a five year carryback period for current net operating losses (“NOL”), and contains a provision for deferred payment of 2020 employer payroll taxes. We currently estimate cash tax benefits of the NOL and QIP changes to be $8,963 and $1,680, respectively. Additionally, we plan to defer payment of $2,766 of payroll taxes, with $1,383 to be paid back in the third quarter of fiscal year 2022 and the remainder in the third quarter of fiscal year 2023. Additional income tax provisions of the Act are currently being evaluated and not expected to have material impacts.

Other Key Factors and Trends Affecting our Operating Results

Our financial condition and results of operations have been, and will continue to be, affected by numerous other factors and trends, including the following:

Design Wins with New and Existing Customers

Our end customers continually develop new products in existing and new application areas, and we work closely with our significant OEM customers in most of our target markets to understand their product roadmaps and strategies. For new products, the time from design initiation and manufacturing until we generate revenue can be lengthy, typically between two and four years. As a result, our future revenue is highly dependent on our continued success at winning design mandates from our customers. Further, ~~because~~despite current inflationary and pricing conditions, we expect the ASPs of our products to decline over time, and we consider design wins to be critical to our future success and anticipate being increasingly dependent on revenue from newer design wins for our newer products. The selection process is typically lengthy and may require us to incur significant design and development expenditures in pursuit of a design win with no assurance that our solutions will be selected. As a result, the loss of any key design win or any significant delay in the ramp-up of volume production of the customer’s products into which our product is designed could adversely affect our business. In addition, volume production is contingent upon the successful ~~market~~ introduction and acceptance of our ~~customer’s~~customers’ end products, which may be affected by several factors beyond our control.

Customer Demand, Orders and Forecasts

Demand for our products is highly dependent on market conditions in the end markets in which our customers operate, which are generally subject to seasonality, cyclicality and competitive conditions. In addition, a substantial portion of our total net sales is derived from sales to customers that purchase large volumes of our products. These customers generally provide periodic forecasts of their requirements, but these forecasts do not commit such customers to minimum purchases, and customers can revise these forecasts without penalty. In addition, as is customary in the semiconductor industry, customers are generally permitted to cancel orders for our products within a specified period. Cancellations of orders could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses. In addition, changes in forecasts or the timing of orders from customers exposes us to the risks of inventory shortages or excess inventory. We continue to see demand for our products exceed supply and we are operating in a inflationary environment.

Manufacturing Costs and Product Mix

Gross margin, or gross profit as a percentage of total net sales, has been, and will continue to be, affected by a variety of factors, including the ASPs of our products, product mix in a given period, material costs, yields, manufacturing costs and efficiencies. We believe the primary driver of gross margin is the ASP negotiated between us and our customers relative to

material costs and yields. Our pricing and margins depend on the volumes and the features of the products we produce and sell to our customers. As our products mature and unit volumes increase, we expect their ASPs to decline. We continually monitor and work to reduce the cost of our products and improve the potential value our solutions provide to our customers

as we target new design win opportunities and manage the product ~~life cycles~~life-cycles of our existing customer designs. We also maintain a close relationship with our suppliers and subcontractors to improve quality, increase yields and lower manufacturing costs. As a result, these declines often coincide with improvements in manufacturing yields and lower wafer, assembly, and testing costs, which offset some or all of the margin reduction that results from declining ASPs. However, we expect our gross margin to fluctuate on a quarterly basis as a result of changes in ASPs due to product mix, new product introductions, transitions into volume manufacturing and manufacturing costs. Gross margin generally decreases if production volumes are lower as a result of decreased demand, which leads to a reduced absorption of our fixed manufacturing costs. Gross margin generally increases when the opposite occurs.

Cyclical Nature of the Semiconductor Industry

The semiconductor industry is highly cyclical and is characterized by increasingly rapid technological change, product obsolescence, competitive pricing pressures, evolving standards, short product ~~life cycles~~life-cycles and fluctuations in product supply and demand. New technology may result in sudden changes in system designs or platform changes that may render some of our products obsolete and require us to devote significant research and development resources to compete effectively. Periods of rapid growth and capacity expansion are occasionally followed by significant market corrections in which sales decline, inventories accumulate and facilities go underutilized. During periods of expansion, our margins generally improve as fixed costs are spread over higher manufacturing volumes and unit sales. In addition, we may build inventory to meet increasing market demand for our products during these times, which serves to absorb fixed costs further and increase our gross margins. During an expansion cycle, we may increase capital spending and hiring to add to our production capacity. During periods of slower growth or industry contractions, our sales, production and productivity suffer and margins generally decline. ~~We are currently in a period in which our manufacturing volumes are below optimal levels, as a result of the impact of COVID-19 on our primary end-market, i.e., automotive.~~

Components of Our Results of Operations

Net sales

Our total net sales are derived from product sales to direct customers and distributors. We sell products globally through our direct sales force, ~~third party~~third-party and related party distributors and independent sales representatives. Sales are derived from products for different applications. Shutdowns of third-party factories, in connection with COVID-19 or other factors beyond our control, have affected, and are expected to continue to affect our product sales in the next fiscal quarter. Our core applications are focused on the automotive, industrial and other industries. Additionally, until the consummation of the PSL Divestiture following the end of fiscal year 2020, we also manufactured products for other applications such as wafer foundry products and acted as a distributor of Sanken products in North America, South America and Europe.

We sell magnetic sensor ICs, power ICs and photonics in the Americas, EMEA and prior to the consummation of the PSL Divestiture following the end of fiscal year 2020, we also sold wafer foundry products and acted as a distributor for Sanken products in North America, South America and Europe.Asia. Revenue is generally recognized when control of the products is transferred to the customer, which typically occurs at a point in time upon shipment or delivery, depending on the terms of the contract. When we transact with a distributor, our contractual arrangement is with the distributor and not with the end customer. Whether we transact business with and receive the order from a distributor or directly from an end customer through our direct sales force and independent sales representatives, our revenue recognition policy and resulting pattern of revenue recognition for the order are the same. We recognize revenue net of sales returns, price protection adjustments, stock rotation rights and any other discounts or credits offered to our customers.

~~Stock-based compensation~~

In addition to the ratable vesting of our stock-based compensation, upon completion of our IPO we recognized one-time stock-based compensation charges of $40.4 million in connection with the vesting of all outstanding shares of Class A common stock, $1.6 million in connection with the automatic acceleration of 25% of the standard vesting term of shares of Class L common stock and $1.0 million through the LTCIP/TRIP Award RSU Conversion Program (the “RSU Conversion Program”). In the three- and nine-month periods ended ~~December 25, 2020 t~~hese one-time stock based compensation charges were allocated to cost of goods sold, research and development expenses and selling, general and administrative expenses in the amounts of $4.4 million, $2.3 million and $36.3 million, respectively.

Cost of goods sold, gross profit and gross margin

Cost of goods sold consists primarily of costs of purchasing raw materials, costs associated with probe, assembly, test and shipping our products, costs of personnel, including stock-based compensation, costs of equipment associated with manufacturing, procurement, planning and management of these processes, costs of depreciation and amortization, costs of logistics and quality assurance, and costs of royalties, value-added taxes, utilities, repairs and maintenance of equipment, and an allocated portion of our occupancy costs. ~~In addition, prior to the PSL Divestiture, costs of goods sold also consisted of finished silicon wafers processed by internal and independent foundries.~~

Gross profit is calculated as total net sales less cost of goods sold. Gross profit is affected by numerous factors, including average selling price, revenue mix by product, channel and customer, foreign exchange rates, seasonality, manufacturing costs and the effective utilization of our facilities. Another factor impacting gross profit is the time required for the expansion of existing facilities to reach full production capacity. As a result, gross profit varies from period to period and year to year. We expect cost of goods sold to decrease in absolute dollars and as a percentage of total net sales in the

future, primarily ~~due to the PSL Divestiture and~~ as a result of the closure of the AMTC Facility and the transfer of the Sanken products distribution business to PSL.

A significant portion of our costs are fixed, and, as a result, costs are generally difficult to adjust or may take time to adjust in response to changes in demand. In addition, our fixed costs increase as we expand our capacity. If we expand capacity faster than required by our sales growth, our gross margin could be negatively affected. Gross margin is calculated as gross profit divided by total net sales.

Operating Expenses

Research and development (“R&D”) expenses

R&D expenses consist primarily of personnel-related costs of our research and development organization, including stock-based compensation, costs of development of wafers and masks, license fees for computer-aided design software, costs of development testing and evaluation, costs of developing automated test programs, equipment depreciation and related occupancy and equipment costs. While most of the costs incurred are for new product development, a significant portion of these costs are related to process technology development, and proprietary package development. R&D expenses also include costs for technology development by external parties. We expect further increases in R&D expenses, in absolute dollars and as a percentage of total net sales as we continue the development of innovative technologies and processes for new product offerings as well as increase the headcount of our R&D personnel in future years.

Selling, General and Administrative (“SG&A”) expenses

SG&A expenses consist primarily of personnel-related costs, including stock-based compensation, and sales commissions to independent sales representatives, professional fees, including the costs of accounting, audit, legal, regulatory and tax compliance. Additionally, costs related to advertising, trade shows, corporate marketing, as well as an allocated portion of our occupancy costs also comprise SG&A expenses.

We anticipate our selling and marketing expenses to increase in absolute terms as we expand our sales force and increase our sales and marketing activities. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with being a public company.

~~In connection with the closing~~Change in fair value of our IPO during the third fiscal quarter of 2021, we recognized one-time stock-based compensation expense of $40.4 million, consisting of $4.1 million within cost of goods sold, $1.8 million within R&D expenses, and $34.5 million within SG&A expenses, in connection with the vesting of all outstanding shares of our Class A common stock. We also recognized one-time stock-based compensation expense of $1.6 million, consisting of $0.2 million within cost of goods sold, $0.1 million within R&D expenses, and $1.3 million within SG&A expenses, in connection with the automatic acceleration of 25% of the standard vesting term of shares of our Class L common stock at that time. In addition, we recognized one-time stock-based compensation expense of $1.0 million, consisting of $0.1 million within cost of goods sold, $0.4 million within R&D expenses, and $0.5 million within SG&A expenses, in connection with the RSU Conversion Program.

~~Loss on debt extinguishment~~contingent consideration

~~Loss on debt extinguishment~~The change in fair value of contingent consideration represents the ~~loss associated with~~gain recorded in the ~~partial repayment of our Term Loan Facility~~ three months ended December 24, 2021 resulting from the adjustment in contingent consideration related to the~~on November 25, 2020~~. Voxtel Acquisition.

Interest (expense) income, net

Interest (expense) income, net is comprised of interest expense from term loan debt and credit facilities we maintain with various financial institutions and previously on borrowings under the PSL-Sanken Loans (which were forgiven in connection with the PSL Divestiture). Current expense is partially mitigated by income earned on our cash and cash equivalents, consisting primarily of certain investments that have contractual maturities no greater than three months at the time of purchase.

Foreign currency transaction gain (loss) ~~gain~~

We incur transaction gains and losses resulting from intercompany transactions as well as transactions with customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded. The largest contributor of the foreign currency transaction (loss) gain is the result of an intercompany loan to our subsidiary that operates the AMTC Facility where at the end of each reporting period we revalue the amounts due under the loan to the U.S. Dollar.

Income in earnings of equity investment

Income in earnings of equity investment represents our equity investment in connection with the PSL Divestiture.

Other, net

Other, net primarily consists of miscellaneous income and expense items unrelated to our core operations.

Income tax provision (benefit) ~~provision~~

Our provision or benefit for income taxes is comprised of the ~~year to date~~year-to-date taxes based on an estimate of the annual effective tax rate plus the tax impact of discrete items.

We are subject to tax in the U.S. and various foreign jurisdictions. Our effective income tax rate ~~can fluctuate~~fluctuates primarily ~~based on:~~because of: the change in the mix of our U.S. and foreign income; the impact of discrete ~~transactions;~~transactions and law changes; and the difference between the amount of tax ~~benefit~~benefits generated by the foreign derived intangible income deduction (“FDII”) and research credits offset by the additional tax ~~from the~~costs associated with global intangible low-tax income ~~(GILTI) and the base erosion tax~~ (“~~BEAT”~~GILTI”).

We regularly ~~assesses~~assess the likelihood of outcomes that could result from the examination of our tax returns by the IRS, and other tax authorities to determine the adequacy of our income tax reserves and expense. Should actual events or results differ from our then-current expectations, charges or credits to our provision for income taxes may become necessary. Any such adjustments could have a significant effect on ~~the~~our results of operations.

Results of Operations

Three-Month Period Ended December ~~25, 2020~~24, 2021 Compared to Three-Month Period Ended December ~~27, 2019~~25, 2020

The following table summarizes our results of operations for the three-month periods ended December ~~25, 2020~~24, 2021 and December ~~27, 2019.~~25, 2020.


		Three-Month Period Ended				Change				Change Attributable to Divestiture				Operational Change after Divestiture							Three-Month Period Ended								Change
		December 25, 2020		December 27, 2019		$		%				$				%			December 24, 2021				December 25, 2020				$				%
		(Dollars in thousands)																			(Dollars in thousands)
Total net sales(1)	Total net sales(1)	$	164,449	$	159,802	$	4,647	2.9	%			$	24,300			$	28,947			18.1	%	Total net sales(1)	$	186,629			$	164,449			$	22,180			13.5	%
Cost of goods sold	Cost of goods sold	90,024		98,277		(8,253)		(8.4)	%	26,605				18,352				18.7	%	Cost of goods sold	85,464				90,024				(4,560)				(5.1)	%
Gross profit	Gross profit	74,425		61,525		12,900		21.0	%	(2,305)				10,595				17.2	%	Gross profit	101,165				74,425				26,740				35.9	%
Operating expenses:	Operating expenses:																			Operating expenses:
Research and development	Research and development	30,999		25,485		5,514		21.6	%	844				6,358				24.9	%	Research and development	30,297				30,999				(702)				(2.3)	%
Selling, general and administrative	Selling, general and administrative	67,650		24,909		42,741		171.6	%	2,242				44,983				180.6	%	Selling, general and administrative	37,963				67,650				(29,687)				(43.9)	%

Change in fair value of contingent consideration																				Change in fair value of contingent consideration	(2,700)				—				(2,700)				100.0	%
Total operating expenses	Total operating expenses	98,649		50,394		48,255		95.8	%	3,086				51,341				101.9	%	Total operating expenses	65,560				98,649				(33,089)				(33.5)	%
Operating (loss) income		(24,224)		11,131		(35,355)		(317.6)	%	(5,391)				(40,746)				(366.1)	%
Other (expense) income, net:
Operating income (loss)																				Operating income (loss)	35,605				(24,224)				59,829				247.0	%
Other income (expense), net:																				Other income (expense), net:
Loss on debt extinguishment	Loss on debt extinguishment	(9,055)		—		(9,055)		—	%	—				(9,055)				—	%	Loss on debt extinguishment	—				(9,055)				9,055				—	%
Interest (expense) income, net		(2,598)		10		(2,608)		(26,080.0)	%	(803)				(3,411)				(34,110.0)	%
Foreign currency transaction (loss) gain		(145)		(560)		415		(74.1)	%	—				415				(74.1)	%
Interest expense, net																				Interest expense, net	(269)				(2,598)				2,329				(89.6)	%
Foreign currency transaction loss																				Foreign currency transaction loss	(3)				(145)				142				(97.9)	%
Income in earnings of equity investment	Income in earnings of equity investment	949		—		949		—	%	—				949				—	%	Income in earnings of equity investment	287				949				(662)				(69.8)	%
Other, net	Other, net	(510)		(81)		(429)		529.6	%	9				(420)				518.5	%	Other, net	3,634				(510)				4,144				(812.5)	%
Total other (expense) income, net		(11,359)		(631)		(10,728)		1,700.2	%	(794)				(11,522)				1,826.0	%
(Loss) income before (benefit) provision for income taxes		(35,583)		10,500		(46,083)		(438.9)	%	(6,185)				(52,268)				(497.8)	%
Income tax (benefit) provision		(30,523)		1,542		(32,065)		(2,079.4)	%	(1,388)				(33,453)				(2,169.5)	%
Net (loss) income		(5,060)		8,958		(14,018)		(156.5)	%	(4,797)				(18,815)				(210.0)	%
Total other income (expense), net																				Total other income (expense), net	3,649				(11,359)				15,008				132.1	%
Income (loss) before income tax provision (benefit)																				Income (loss) before income tax provision (benefit)	39,254				(35,583)				74,837				210.3	%
Income tax provision (benefit)																				Income tax provision (benefit)	6,281				(30,523)				36,804				(120.6)	%
Net income (loss)																				Net income (loss)	32,973				(5,060)				38,033				751.6	%
Net income attributable to non-controlling interests	Net income attributable to non-controlling interests	35		32		3		9.4	%	—				3				9.4	%	Net income attributable to non-controlling interests	37				35				2				5.7	%
Net (loss) income attributable to Allegro MicroSystems, Inc.		$	(5,095)	$	8,926	$	(14,021)	(157.1)	%	$	(4,797)			$	(18,818)			(210.8)	%
Net income (loss) attributable to Allegro MicroSystems, Inc.																				Net income (loss) attributable to Allegro MicroSystems, Inc.	$	32,936			$	(5,095)			$	38,031			746.4	%

(1)Our total net sales for the ~~three-month period ended December 27, 2019 also~~periods presented above include related party net sales ~~related to the sale of wafer foundry products to Sanken by PSL and net sales related to~~generated through our distribution of Sanken products in North America, South America and Europe which, in each case, we did not recognize during the three-month period ended December 25, 2020 and will not recognize in any future period due to our consummation of the Divestiture Transactions.agreement with Sanken. See our unaudited consolidated financial statements included elsewhere in this Quarterly Report for additional information regarding our related party net sales for the periods set forth above.

4637

The following table sets forth our results of operations as a percentage of total net sales for the periods presented.


		Three-Month Period Ended					Three-Month Period Ended
		December 25, 2020		December 27, 2019			December 24, 2021		December 25, 2020
Total net sales	Total net sales	100.0	%	100.0	%	Total net sales	100.0	%	100.0	%
Cost of goods sold	Cost of goods sold	54.7	%	61.5	%	Cost of goods sold	45.8	%	54.7	%
Gross profit	Gross profit	45.3	%	38.5	%	Gross profit	54.2	%	45.3	%
Operating expenses:	Operating expenses:					Operating expenses:
Research and development	Research and development	18.9	%	15.9	%	Research and development	16.2	%	18.9	%
Selling, general and administrative	Selling, general and administrative	41.1	%	15.6	%	Selling, general and administrative	20.3	%	41.1	%

Change in fair value of contingent consideration						Change in fair value of contingent consideration	(1.4)	%	—	%
Total operating expenses	Total operating expenses	60.0	%	31.5	%	Total operating expenses	35.1	%	60.0	%
(Loss) income from operations		(14.7)	%	7.0	%
Other (expense) income, net:
Operating income (loss)						Operating income (loss)	19.1	%	(14.7)	%
Other income (expense), net:						Other income (expense), net:
Loss on debt extinguishment	Loss on debt extinguishment	(5.5)	%	—	%	Loss on debt extinguishment	—	%	(5.5)	%
Interest (expense) income, net		(1.6)	%	—	%
Interest expense, net						Interest expense, net	(0.1)	%	(1.6)	%
Foreign currency transaction loss	Foreign currency transaction loss	(0.1)	%	(0.3)	%	Foreign currency transaction loss	—	%	(0.1)	%
Income in earnings of equity investment	Income in earnings of equity investment	0.5	%	—	%	Income in earnings of equity investment	0.1	%	0.5	%
Other, net	Other, net	(0.3)	%	(0.1)	%	Other, net	1.9	%	(0.3)	%
Total other (expense) income, net		(7.0)	%	(0.4)	%
(Loss) income before (benefit) provision for income taxes		(21.7)	%	6.6	%
Income tax (benefit) provision		(18.6)	%	1.0	%
Net (loss) income		(3.1)	%	5.6	%
Total other income (expense), net						Total other income (expense), net	1.9	%	(7.0)	%
Income (loss) before income tax provision (benefit)						Income (loss) before income tax provision (benefit)	21.0	%	(21.7)	%
Income tax provision (benefit)						Income tax provision (benefit)	3.4	%	(18.6)	%
Net income (loss)						Net income (loss)	17.6	%	(3.1)	%
Net income attributable to non-controlling interests	Net income attributable to non-controlling interests	—	%	—	%	Net income attributable to non-controlling interests	—	%	—	%
Net (loss) income attributable to Allegro MicroSystems, Inc.		(3.1)	%	5.6	%
Net income (loss) attributable to Allegro MicroSystems, Inc.						Net income (loss) attributable to Allegro MicroSystems, Inc.	17.6	%	(3.1)	%

Total net sales

Total net sales increased by ~~$4.6~~$22.2 million, or ~~2.9%~~13.5%, to $186.6 million in the three-month period ended December 24, 2021 from $164.4 million in the three-month period ended December 25, ~~2020 from $159.8 million in the three-month period ended December 27, 2019.~~2020. This increase was primarily due to ~~automotive production~~the continued economic recovery and ~~increased~~increase in demand across most automotive and industrial solutions. Much of the favorable growth in total net sales was attributable to higher demand for our ADAS, safety, comfort and convenience, xEV, broad-based industrial ~~automation applications, partially offset by the removal of wafer foundry products~~ and ~~Sanken distribution products, respectively, resulting from the PSL Divestiture, more fully described below.~~gaming applications.

Sales Trends by ~~Core End~~ Market ~~and Application~~

The following table summarizes total net sales by ~~core end market and other applications.~~market. The categorization of net sales by market is based on the characteristics of the end product and application into which our product will be designed. ~~Other applications include wafer foundry and distribution sales unrelated to and no longer part of our core business in fiscal year 2021.~~


	Three-Month Period Ended				Change
	December 24, 2021		December 25, 2020		Amount		%
	(Dollars in thousands)

Automotive	$	130,797	$	113,902	$	16,895	14.8	%
Industrial	31,903		23,654		8,249		34.9	%
Other	23,929		26,893		(2,964)		(11.0)	%
Total net sales	$	186,629	$	164,449	$	22,180	13.5	%

4738

Three-Month Period Ended Change
December 25,
2020 December 27,
2019 Amount %
(Dollars in thousands)
Core end markets:
Automotive $ 113,902 $ 99,074 $ 14,828 15.0 %
Industrial 23,654 21,358 2,296 10.8 %
Other 26,893 15,070 11,823 78.5 %
Total core end markets 164,449 135,502 28,947 21.4 %
Other applications:
Wafer foundry products — 16,634 (16,634) — %
Distribution of Sanken products — 7,666 (7,666) — %
Total net sales $ 164,449 $ 159,802 $ 4,647 2.9 %

~~Net~~The increase in net sales ~~to our core end markets increased~~ by ~~$28.9 million, or 21.4%, to $164.4 million in the three-month period ended December 25, 2020 from $135.5 million in the three-month period ended December 27, 2019,~~market was driven by increases in automotive of ~~$14.8~~$16.9 million, or ~~15.0%~~14.8%, and industrial of ~~$2.3~~$8.2 million, or ~~10.8%~~34.9%, ~~and~~partially offset by a decrease in other of ~~$11.8~~$3.0 million, or ~~78.5%~~11.0%.

Automotive net sales increased in the three-month period ended December ~~25, 2020~~24, 2021 compared to the three-month period ended December ~~27, 2019 as~~25, 2020 primarily due to our customers’ increased vehicle production ~~increased as well as inventory restocking in their supply chains.~~across most markets due to the on-going recovery from the COVID-19 pandemic. As a result, we experienced higher demand for our ADAS, safety, comfort and convenience and xEV applications during the third quarter of 2022 compared to the same period last year.

Industrial ~~and other~~ net sales improved in the three-month period ended December ~~25, 2020~~24, 2021 compared to the three-month period ended December ~~27, 2019~~25, 2020 due primarily to ~~increased demand in~~the growth across our industrial ~~automation~~ applications, ~~and~~including data center ~~applications~~ and ~~a COVID-19 related increase in demand for printers and other peripherals.~~factory automation.

Sales Trends by Product

The following table summarizes net sales by product:

Three-Month Period Ended Change
December 25,
2020 December 27,
2019 Amount %
(Dollars in thousands)
Power integrated circuits (“PIC”) $ 54,406 $ 43,665 $ 10,741 24.6 %
Magnetic sensors (“MS”) 109,457 91,837 17,620 19.2 %
Photonics 586 — 586 — %
Wafer foundry products — 16,634 (16,634) — %
Distribution of Sanken products — 7,666 (7,666) — %
Total net sales $ 164,449 $ 159,802 $ 4,647 2.9 %


	Three-Month Period Ended				Change
	December 24, 2021		December 25, 2020		Amount		%
	(Dollars in thousands)
Power integrated circuits	$	62,859	$	54,406	$	8,453	15.5	%
Magnetic sensors	123,543		109,457		14,086		12.9	%
Photonics	227		586		(359)		(61.3)	%


Total net sales	$	186,629	$	164,449	$	22,180	13.5	%

The increase in net sales by product was driven primarily by increases of ~~$17.6~~$14.1 million, or ~~19.2%~~12.9%, in magnetic sensor IC product sales ~~$10.7~~and $8.5 million, or ~~24.6%~~15.5%, in power integrated circuit product sales, and $0.6 million in Photonics sales resulting from the Voxtel acquisition. These increases were partially offset by decreases of $16.6 million and $7.7 million in net sales related to wafer foundry products and Sanken distribution products, respectively, resulting from the PSL Divestiture.

sales.

Sales Trends by Geographic Location

The following table summarizes net sales by geographic location based on ship-to location.


		Three-Month Period Ended				Change					Three-Month Period Ended				Change
		December 25, 2020		December 27, 2019		Amount		%			December 24, 2021		December 25, 2020		Amount		%
		(Dollars in thousands)									(Dollars in thousands)
Americas:	Americas:									Americas:
United States	United States	$	23,934	$	27,498	$	(3,564)	(13.0)	%	United States	$	26,228	$	23,934	$	2,294	9.6	%
Other Americas	Other Americas	5,620		4,722		898		19.0	%	Other Americas	4,921		5,620		(699)		(12.4)	%
EMEA:	EMEA:									EMEA:
Europe	Europe	28,239		24,341		3,898		16.0	%	Europe	29,891		28,239		1,652		5.9	%
Asia:	Asia:									Asia:
Japan	Japan	26,439		46,010		(19,571)		(42.5)	%	Japan	39,461		26,439		13,022		49.3	%
Greater China	Greater China	46,172		35,284		10,888		30.9	%	Greater China	48,696		46,172		2,524		5.5	%
South Korea	South Korea	17,606		14,119		3,487		24.7	%	South Korea	19,935		17,606		2,329		13.2	%
Other Asia	Other Asia	16,439		7,828		8,611		110.0	%	Other Asia	17,497		16,439		1,058		6.4	%
Total net sales	Total net sales	$	164,449	$	159,802	$	4,647	2.9	%	Total net sales	$	186,629	$	164,449	$	22,180	13.5	%

~~The increase in net~~Net sales increased across most geographic locations in the three-month period ended December ~~25, 2020~~24, 2021 compared to the three-month period ended December ~~27, 2019 was~~25, 2020 primarily due ~~primarily~~ to ~~an increase~~content and market share gains as many countries continue to experience economic expansion coming out of ~~$10.9~~the COVID-19 pandemic and demand for many of our products and applications continues to rise.

Net sales in Japan grew $13.0 million, or ~~30.9%~~49.3%, in Greater China related to increases in automotive demand and an increase of $8.6 million, or 110.0%, in Other Asia related to continued strength in data center, other consumer, and printer applications.

~~Excluding the net sales of $7.7 million associated with the PSL Divestiture, net sales were up $5.0 million, or 20.4%, in the United States and Other Americas,~~which was primarily driven by ~~an increase in~~higher demand for our ~~core application products sold in the~~ automotive ~~end market. The predominant country comprising Other Americas is Mexico.~~

applications, particularly safety, comfort and convenience, internal combustion engine (“ICE”), xEV and ADAS. The increase in net sales of ~~$3.9~~$2.5 million, or ~~16.0%~~5.5%, in Greater China and $2.3 million, or 9.6%, in the United States related to

higher demand for our broad-based industrial and ADAS offerings. South Korea experienced sales growth of $2.3 million, or 13.2%, mainly due to higher demand across all automotive sectors, while Other Asia sales growth of $1.1 million, or 6.4%, was attributable primarily to higher data center demand in our industrial sector. The increase in net sales of $1.7 million, or 5.9%, in Europe, predominantly comprised of Germany and France, was primarily driven by increases in ~~automotive~~wireless infrastructure and factory automation demand. ~~The predominant countries comprising Europe are Germany and France.~~

Revenue in Japan totaled $26.4 million in the three-month period ended December 25, 2020 compared to $29.4 million in the three-month period ended December 27, 2019, excluding net sales of $16.6 million in Japan associated with the PSL Divestiture. This decrease of $2.9 million, or 10.0%, was primarily driven by a decrease in core demand due to COVID-19.

Cost of goods sold, gross profit and gross margin

Cost of goods sold decreased by ~~$8.3~~$4.6 million, or ~~8.4%~~5.1%, to $85.5 million in the three-month period ended December 24, 2021 from $90.0 million in the three-month period ended December 25, ~~2020 from $98.3 million in the three-month period ended December 27, 2019.~~2020. The decrease in cost of goods sold was primarily ~~due~~attributable to decreases in amortization of manufacturing cost absorptions and conversion costs and lower Voxtel impacts, mainly from the discontinuation of a ~~$26.6~~product line, partially offset by higher overall production volume in the third quarter of 2022.

Gross profit increased by $26.7 million, ~~decrease~~or 35.9%, to approximately $101.1 million in the three-month period ended December 24, 2021 from $74.4 million in the three-month period ended December 25, 2020. The increase in gross profit was driven by a $22.2 million operational increase in net sales to all markets discussed above coupled with the impacts to cost of goods sold ~~attributable~~discussed above.

R&D expenses

R&D expenses decreased by $0.7 million, or 2.3%, to $30.3 million in the ~~PSL Divestiture. The offsetting $18.4~~three-month period ended December 24, 2021 from $31.0 million in the three-month period ended December 25, 2020. This decrease was primarily due to decreases in stock-based compensation expense of $2.0 million and inventory and supplies of $1.0 million, partially offset by a combined $2.2 million increase in ~~cost~~employee-related variable compensation costs, as well as general operating expenses, including dues and subscriptions.

R&D expenses represented 16.2% of ~~goods sold~~our total net sales for the three-month period ended December 24, 2021, a decrease from 18.9% of our total net sales for the three-month period ended December 25, 2020. This percentage decrease was primarily ~~attributable~~due to ~~increases of $4.7~~the growth in net sales in the three-month period ended December 24, 2021 and, to a lesser extent, the impacts to R&D expenses discussed above.

SG&A expenses

SG&A expenses decreased by $29.7 million, or 43.9%, to $38.0 million in the three-month period ended December 24, 2021 from $67.7 million in the three-month period ended December 25, 2020. This decrease was primarily due to lower stock-based compensation expense of ~~which $4.4~~$32.3 million and combined decrease in facilities, supplies and personnel costs of $5.5 million. These lower costs were partially offset by higher general operating expenses of $8.1 million, particularly higher employee-related variable compensation and personnel costs, professional fees, contract labor costs, as well as severance expense related to the ~~IPO~~departure of an officer in the third quarter of fiscal 2022.

SG&A expenses represented 20.3% of our total net sales for the three-month period ended December 24, 2021, a decrease from 41.1% of our total net sales for the three-month period ended December 25, 2020. This percentage decrease was primarily due to the growth in net sales in the three-month period ended December 24, 2021. In addition, the percentage decrease represents the lower SG&A expenses as discussed above, as those costs were incrementally higher for the three-month period ended December 25, 2020 due in large part to IPO-related costs and accelerated vesting of the Class A and L common stock and RSU Conversion Program , and a combined $13.4 million of increases attributable to decreased standard margins, returns and quality and other related costs, and manufacturing cost absorptions. In addition, there were $0.3 million of Voxtel related impacts, mostly attributable to acquired intangible amortizationincurred during ~~the~~that period.

~~Gross profit increased by $12.9 million, or 21.0%, to $74.4 million in the three-month period ended December 25, 2020 from $61.5 million in the three-month period ended December 27, 2019. The increase in gross profit was driven by a~~ ~~$28.9 million operational increase in net sales to core end markets, partially offset by~~ ~~$2.3 million~~ ~~related to the PSL Divestiture and by the impacts to cost of goods sold discussed above.~~

~~R&D expenses~~

R&D expenses increased by $5.5 million, or 21.6%, to $31.0 million in the three-month period ended December 25, 2020 from $25.5 million in the three-month period ended December 27, 2019. This increase was primarily due to a $3.0

million increase in stock-based compensation, of which $2.3 million related to the IPO and accelerated vesting of the Class A and L common stock and RSU Conversion Program, and a combined $3.3 million increase in employee salaries and inventory and supplies, partially offset by a reduction of $0.8 million of expenses related to the PSL Divestiture and a $0.5 million reduction in travel and meeting costs.

R&D expenses represented 18.9% of our total net sales for the three-month period ended December 25, 2020, an increase from 15.9% of our total net sales for the three-month period ended December 27, 2019. This percentage increase was primarily due to stock-based compensation expenses recorded in the three-month period ended December 25, 2020.

~~SG&A expenses~~

SG&A expenses increased by $42.8 million, or 171.6%, to $67.7 million in the three-month period ended December 25, 2020 from $24.9 million in the three-month period ended December 27, 2019. This increase was primarily due to a $38.0 million increase in stock-based compensation expense, of which $36.3 million related to the IPO and accelerated vesting of the Class A and L common stock and RSU Conversion Program, and a combined $6.6 million of increased employee salaries, insurance and facility costs, partially offset by a reduction of $2.2 million of expenses related to the PSL Divestiture and a combined $2.3 million reduction in severance, professional fees, and travel and meeting costs.

SG&A expenses represented 41.1% of our total net sales for the three-month period ended December 25, 2020, an increase from 15.6% of our total net sales for the three-month period ended December 27, 2019. This percentage increase was primarily due to stock-based compensation expenses recorded in the three-month period ended December 25, 2020.

Loss on debt extinguishment

Loss on debt extinguishment reflected a $9.1 million loss in the three-month period ended December 25, 2020, representing the write-off of unamortized balances of previously deferred financing costs as a result of the $300.0 million Term Loan Facility principal balance repayment on November 25, 2020.

Interest ~~(expense) income,~~expense, net

Interest expense, net ~~increased by~~was $0.3 million in the three-month period ended December 24, 2021 compared to interest expense, net of $2.6 million in the three-month period ended December 25, ~~2020 compared to the three-month period ended December 27, 2019.~~2020. The ~~increase~~decrease in interest expense was primarily due to lower outstanding debt balances during the three-month period ended December 24, 2021 attributable to

mandatory interest payments on the ~~Term Loan Facility~~original $325.0 million senior secured debt before repayment of $300.0 million of this balance after the IPO in the three-month period ended December 25, 2020.

Foreign currency transaction ~~(loss) gain~~loss

We recorded aan insignificant amount of foreign currency transaction loss in the three-month period ended December 24, 2021 compared to a loss of $0.1 million in the three-month period ended December 25, ~~2020 compared to a~~2020. The foreign currency transaction loss ~~of $0.6 million~~ in the three-month period ended December ~~27, 2019.~~24, 2021 was primarily due to the realized and unrealized losses from our UK location of $0.4 million, mostly offset by $0.2 million of realized and unrealized gains from our Philippines location, as well as approximately $0.2 million of unrealized gains on our investments in marketable securities. The foreign currency transaction loss recorded in the three-month period ended December 25, 2020 was primarily due to $0.3 million of realized and unrealized losses from our UK and Philippines locations, partly offset by $0.2 million of realized and unrealized gains from our Thailand location. The currency loss recorded in the three-month period ended December 27, 2019 was primarily attributable to $1.1 million of realized and unrealized losses from our UK location and $0.6 million of realized and unrealized gains from our Thailand location.

Income in earnings of equity investment

Income in earnings of equity investment reflected a $0.3 million gain in the three-month period ended December 24, 2021 compared to a $0.9 million gain in the three-month period ended December 25, 2020, representing the earnings on our 30% investment in ~~PSL during~~PSL.

Other, net

Other, net increased by $4.1 million to $3.6 million of miscellaneous gain in the three-month period ended December ~~25, 2020.~~

24, 2021 from

~~Other, net~~

~~Other, net increased by $0.4 million to approximately~~ $0.5 million of miscellaneous loss in the three-month period ended December 25, 2020 ~~from $0.1~~. This increase was largely attributable to $3.5 million of ~~loss in~~unrealized gains on equity securities and a $0.4 million gain related to the ~~three-month period ended December 27, 2019.~~sale of scrap metal.

Income tax provision (benefit) ~~provision~~

~~The benefit for income taxes~~Income tax expense and the effective income tax rate were $6.3 million, or 16.0%, respectively, in the three-month period December 24, 2021, and income tax benefit and the effective tax rate were $30.5 million ~~and~~, or 85.8%, respectively, in the three-month period ~~ended~~ December 25, 2020. The increase in income tax expense was primarily attributable to tax impacts of the IPO transaction recorded in the prior three-month period. The IPO transaction resulted in excess tax over financial reporting deductions related to a $40.4 million stock-based compensation charge (and the related incremental tax deductions), a $16.0 million one-time dividend treated as compensation expense for tax purposes, as well as a tax loss on the divestiture of PSL. The tax impacts of these transactions and ~~the provision for income taxes and the~~other discrete transactions caused an overall U.S. NOL that will be carried back five years. Additional fluctuations in our effective income tax rate ~~were $1.5 million and 14.7%, respectively,~~relate primarily to differences in ~~the three-month period ended December 27, 2019. The change in effective~~our U.S. taxable income, ~~tax rates is primarily due to the $40.4 million IPO related~~estimated FDII benefits, GILTI income, research credits, non-deductible stock-based compensation ~~charge which significantly reduced U.S.~~charges, and discrete tax items.

5041

income and was included in our tax rate from operations in the three-month period ended December 25, 2020. The incremental stock-based compensation windfall was treated as a discrete tax adjustment as an incremental tax deduction in the three-month period ended December 25, 2020.

Additionally, other discrete transactions, the divestiture of Polar and the one-time dividend resulted in additional tax deductions. The reduction in U.S. income and the discrete tax deductions resulted in a U.S. tax NOL that can be carried back to refund prior years’ taxes. In total approximately $18.1 million of discrete tax benefits recorded in the three-month period ended December 25, 2020 were partially offset by a reduction in our FDII deduction and an increase in GILTI and BEAT tax.

Nine-Month Period Ended December ~~25, 2020~~24, 2021 Compared to Nine-Month Period Ended December ~~27, 2019~~25, 2020

The following table summarizes our results of operations for the nine-month periods ended December ~~25, 2020~~24, 2021 and December ~~27, 2019.~~25, 2020.


		Nine-Month Period Ended				Change				Change Attributable to Divestiture				Operational Change after Divestiture							Nine-Month Period Ended								Change
		December 25, 2020		December 27, 2019		$		%				$				%			December 24, 2021				December 25, 2020				$				%
		(Dollars in thousands)																			(Dollars in thousands)
Total net sales(1)	Total net sales(1)	$	416,099	$	475,485	$	(59,386)	(12.5)	%			$	76,310			$	16,924			3.6	%	Total net sales(1)	$	568,381			$	416,099			$	152,282			36.6	%
Cost of goods sold	Cost of goods sold	224,203		285,967		(61,764)		(21.6)	%	73,176				11,412				4.0	%	Cost of goods sold	270,524				224,203				46,321				20.7	%
Gross profit	Gross profit	191,896		189,518		2,378		1.3	%	3,134				5,512				2.9	%	Gross profit	297,857				191,896				105,961				55.2	%
Operating expenses:	Operating expenses:																			Operating expenses:
Research and development	Research and development	80,509		77,565		2,944		3.8	%	2,479				5,423				7.0	%	Research and development	89,441				80,509				8,932				11.1	%
Selling, general and administrative	Selling, general and administrative	118,677		78,030		40,647		52.1	%	5,844				46,491				59.6	%	Selling, general and administrative	104,115				118,677				(14,562)				(12.3)	%

Change in fair value of contingent consideration																				Change in fair value of contingent consideration	(2,100)				—				(2,100)				100.0	%
Total operating expenses	Total operating expenses	199,186		155,595		43,591		28.0	%	8,323				51,914				33.4	%	Total operating expenses	191,456				199,186				(7,730)				(3.9)	%
Operating (loss) income		(7,290)		33,923		(41,213)		(121.5)	%	(5,189)				(46,402)				(136.8)	%
Other (expense) income, net:
Operating income (loss)																				Operating income (loss)	106,401				(7,290)				113,691				1559.5	%
Other income (expense), net:																				Other income (expense), net:
Loss on debt extinguishment	Loss on debt extinguishment	(9,055)		—		(9,055)		—	%	—				(9,055)				—	%	Loss on debt extinguishment	—				(9,055)				9,055				—	%
Interest (expense) income, net		(1,935)		(60)		(1,875)		3,125.0	%	(2,576)				(4,451)				7,418.3	%
Foreign currency transaction (loss) gain		(1,331)		2,800		(4,131)		(147.5)	%	2				(4,129)				(147.5)	%
Interest expense, net																				Interest expense, net	(1,764)				(1,935)				171				(8.8)	%
Foreign currency transaction loss																				Foreign currency transaction loss	(55)				(1,331)				1,276				(95.9)	%
Income in earnings of equity investment	Income in earnings of equity investment	1,407		—		1,407		—	%	—				1,407				—	%	Income in earnings of equity investment	792				1,407				(615)				(43.7)	%
Other, net	Other, net	(297)		(1,177)		880		(74.8)	%	(228)				652				(55.4)	%	Other, net	5,216				(297)				5,513				1856.2	%
Total other (expense) income, net		(11,211)		1,563		(12,774)		(817.3)	%	(2,802)				(15,576)				(996.5)	%
(Loss) income before (benefit) provision for income taxes		(18,501)		35,486		(53,987)		(152.1)	%	(7,991)				(61,978)				(174.7)	%
Income tax (benefit) provision		(27,913)		11,710		(39,623)		(338.4)	%	3,762				(35,861)				(306.2)	%
Net income (loss)		9,412		23,776		(14,364)		(60.4)	%	(11,753)				(26,117)				(109.8)	%
Total other income (expense), net																				Total other income (expense), net	4,189				(11,211)				15,400				137.4	%
Income (loss) before income tax provision (benefit)																				Income (loss) before income tax provision (benefit)	110,590				(18,501)				129,091				697.8	%
Income tax provision (benefit)																				Income tax provision (benefit)	16,687				(27,913)				44,600				(159.8)	%
Net income																				Net income	93,903				9,412				84,491				897.7	%
Net income attributable to non-controlling interests	Net income attributable to non-controlling interests	103		101		2		2.0	%	—				2				2.0	%	Net income attributable to non-controlling interests	112				103				9				8.7	%
Net income (loss) attributable to Allegro MicroSystems, Inc.		$	9,309	$	23,675	$	(14,366)	(60.7)	%	$	(11,753)			$	(26,119)			(110.3)	%
Net income attributable to Allegro MicroSystems, Inc.																				Net income attributable to Allegro MicroSystems, Inc.	$	93,791			$	9,309			$	84,482			907.5	%

(1)Our total net sales for the ~~nine-month period ended December 27, 2019 also~~periods presented above include related party net sales ~~related to the sale of wafer foundry products to Sanken by PSL and net sales related to~~generated through our distribution of Sanken products in North America, South America and Europe which, in each case, we did not recognize during the nine-month period ended December 25, 2020 and will not recognize in any future period due toagreement with Sanken. See our ~~consummation of the PSL Divestiture. See our~~

unaudited consolidated financial statements included elsewhere in this Quarterly Report for additional information regarding our related party net sales for the periods set forth above.

The following table sets forth our results of operations as a percentage of total net sales for the periods presented.


		Nine-Month Period Ended					Nine-Month Period Ended
		December 25, 2020		December 27, 2019			December 24, 2021		December 25, 2020
Total net sales	Total net sales	100.0	%	100.0	%	Total net sales	100.0	%	100.0	%
Cost of goods sold	Cost of goods sold	53.9	%	60.1	%	Cost of goods sold	47.6	%	53.9	%
Gross profit	Gross profit	46.1	%	39.9	%	Gross profit	52.4	%	46.1	%
Operating expenses:	Operating expenses:					Operating expenses:
Research and development	Research and development	19.3	%	16.3	%	Research and development	15.7	%	19.3	%
Selling, general and administrative	Selling, general and administrative	28.5	%	16.4	%	Selling, general and administrative	18.3	%	28.5	%
Change in fair value of contingent consideration						Change in fair value of contingent consideration	(0.4)	%	—	%
Total operating expenses	Total operating expenses	47.8	%	32.7	%	Total operating expenses	33.6	%	47.8	%
(Loss) income from operations		(1.7)	%	7.2	%
Other (expense) income, net:
Operating income (loss)						Operating income (loss)	18.8	%	(1.7)	%
Other income (expense), net:						Other income (expense), net:
Loss on debt extinguishment	Loss on debt extinguishment	(2.2)	%	—	%	Loss on debt extinguishment	—	%	(2.2)	%
Interest (expense) income, net		(0.5)	%	—	%
Foreign currency transaction (loss) gain		(0.4)	%	0.6	%
Interest expense, net						Interest expense, net	(0.3)	%	(0.5)	%
Foreign currency transaction loss						Foreign currency transaction loss	(0.1)	%	(0.4)	%
Income in earnings of equity investment	Income in earnings of equity investment	0.3	%	—	%	Income in earnings of equity investment	0.1	%	0.3	%
Other, net	Other, net	(0.1)	%	(0.3)	%	Other, net	1.0	%	(0.1)	%
Total other (expense) income, net		(2.9)	%	0.3	%
(Loss) income before (benefit) provision for income taxes		(4.6)	%	7.5	%
Income tax (benefit) provision		(6.8)	%	2.5	%
Total other income (expense), net						Total other income (expense), net	0.7	%	(2.9)	%
Income (loss) before income tax provision (benefit)						Income (loss) before income tax provision (benefit)	19.5	%	(4.6)	%
Income tax provision (benefit)						Income tax provision (benefit)	3.0	%	(6.8)	%
Net income	Net income	2.2	%	5.0	%	Net income	16.5	%	2.2	%
Net income attributable to non-controlling interests	Net income attributable to non-controlling interests	—	%	—	%	Net income attributable to non-controlling interests	—	%	—	%
Net income attributable to Allegro MicroSystems, Inc.	Net income attributable to Allegro MicroSystems, Inc.	2.2	%	5.0	%	Net income attributable to Allegro MicroSystems, Inc.	16.5	%	2.2	%

Total net sales

Total net ~~sales decreased~~sales increased by ~~$59.4~~$152.3 million, or ~~12.5%~~36.6%, to $568.4 million in the nine-month period ended December 24, 2021 from $416.1 million in the nine-month period ended December 25, ~~2020 from $475.5 million in the nine-month period ended December 27, 2019. Of this decrease, $76.3 million~~2020. This increase was ~~attributable~~primarily due to the ~~PSL Divestiture, which was partially offset by increased net sales to our core end markets of $16.9 million, due primarily to increased demand in industrial automation applications~~continued economic recovery and ~~data center applications and a COVID-19-related increase~~increases in demand for ~~printers~~ADAS, safety, comfort and ~~other peripherals.~~convenience, xEV, wireless infrastructure, personal mobility, industrial automation and gaming applications.

Sales Trends by ~~Core End~~ Market ~~and Application~~


	Nine-Month Period Ended				Change
	December 24, 2021		December 25, 2020		Amount		%
	(Dollars in thousands)

Automotive	$	390,351	$	279,759	$	110,592	39.5	%
Industrial	98,533		65,710		32,823		50.0	%
Other	79,497		70,630		8,867		12.6	%




Total net sales	$	568,381	$	416,099	$	152,282	36.6	%

~~applications include wafer foundry and distribution sales unrelated to and no longer part of our core business in fiscal year 2021.~~

Nine-Month Period Ended Change
December 25,
2020 December 27,
2019 Amount %
(Dollars in thousands)
Core end markets:
Automotive $ 279,759 $ 289,681 $ (9,922) (3.4) %
Industrial 65,710 56,095 9,615 17.1 %
Other 70,630 53,399 17,231 32.3 %
Total core end markets 416,099 399,175 16,924 4.2 %
Other applications:
Wafer foundry products 0 49,622 (49,622) — %
Distribution of Sanken products 0 26,688 (26,688) — %
Total net sales $ 416,099 $ 475,485 $ (59,386) (12.5) %

Net sales to our ~~core~~ end markets ~~increased~~increased by ~~$16.9~~$152.3 million, or ~~4.2%~~36.6%, to $568.4 million in the nine-month period ended December 24, 2021 from $416.1 million in the nine-month period ended December 25, ~~2020 from $399.2 million~~2020.

Automotive net sales increased in the nine-month period ended December ~~27, 2019, driven by increases in industrial of $9.6 million, or 17.1%, and other of $17.2 million, or 32.3%, and partially offset by a decline in automotive of $9.9 million, or 3.4%.~~

~~Automotive net sales decreased in~~24, 2021 compared to the nine-month period ended December 25, 2020 due to the continued higher demand for our ADAS, safety, comfort and convenience, xEV and ICE applications.

Industrial and other net sales increased in the nine-month period ended December 24, 2021 compared to the nine-month period ended December ~~27, 2019 as our customers’ vehicle production slowed reflecting factory closures and demand uncertainty related to COVID-19.~~

~~Industrial and other net sales improved in the nine-month period ended December~~ 25, 2020 ~~compared to the nine-month period ended December 27, 2019~~primarily due ~~primarily~~ to increased demand in gaming, industrial automation, ~~applications~~wireless infrastructure and ~~data center applications and a COVID-19 related increase in demand for printers and other peripherals.~~personal mobility.

Sales Trends by Product

The following table summarizes net sales by product:


		Nine-Month Period Ended				Change					Nine-Month Period Ended				Change
		December 25, 2020		December 27, 2019		Amount		%			December 24, 2021		December 25, 2020		Amount		%
		(Dollars in thousands)									(Dollars in thousands)
Power integrated circuits (“PIC”)	Power integrated circuits (“PIC”)	$	146,276	$	123,900	$	22,376	18.1	%	Power integrated circuits (“PIC”)	$	195,054	$	146,276	$	48,778	33.3	%
Magnetic sensors (“MS”)	Magnetic sensors (“MS”)	268,956		275,275		(6,319)		(2.3)	%	Magnetic sensors (“MS”)	371,806		268,956		102,850		38.2	%
Photonics	Photonics	867		0		867		—	%	Photonics	1,521		867		654		75.4	%
Wafer foundry products		0		49,622		(49,622)		—	%
Distribution of Sanken products		0		26,688		(26,688)		—	%

Total	Total	$	416,099	$	475,485	$	(59,386)	(12.5)	%	Total	$	568,381	$	416,099	$	152,282	36.6	%

The ~~decrease~~growth in net sales by product was driven by ~~a decrease of $6.3 million~~increases in magnetic sensor IC product sales ~~consistent with the demand weakness in automotive resulting from reductions in vehicle production related to the COVID-19 pandemic and decreases~~ of ~~$49.6~~$102.9 million and $26.7 million in net sales related to wafer foundry products and Sanken distribution products, respectively, as a result of the PSL Divestiture. These decreases were partially offset by an increase of $22.4 million in power IC product sales ~~driven primarily by growth in data center demand, and $0.9~~of $48.8 million ~~in Photonics product sales resulting from the Voxtel acquisition~~ during the ~~period.~~nine-month period ended December 24, 2021 compared to the same period last year.

Sales Trends by Geographic Location

The following table summarizes net sales by geographic location based on ship-to location.


		Nine-Month Period Ended				Change					Nine-Month Period Ended				Change
		December 25, 2020		December 27, 2019		Amount		%			December 24, 2021		December 25, 2020		Amount		%
		(Dollars in thousands)									(Dollars in thousands)
Americas:	Americas:									Americas:
United States	United States	$	57,892	$	86,746	$	(28,854)	(33.3)	%	United States	$	80,854	$	57,892	$	22,962	39.7	%
Other Americas	Other Americas	10,797		15,930		(5,133)		(32.2)	%	Other Americas	16,697		10,797		5,900		54.6	%
EMEA:	EMEA:									EMEA:
Europe	Europe	70,459		76,622		(6,163)		(8.0)	%	Europe	97,108		70,459		26,649		37.8	%
Asia:	Asia:									Asia:
Japan	Japan	72,570		131,950		(59,380)		(45.0)	%	Japan	112,079		72,570		39,509		54.4	%
Greater China	Greater China	116,178		95,244		20,934		22.0	%	Greater China	142,158		116,178		25,980		22.4	%
South Korea	South Korea	43,733		41,413		2,320		5.6	%	South Korea	61,614		43,733		17,881		40.9	%
Other Asia	Other Asia	44,470		27,580		16,890		61.2	%	Other Asia	57,871		44,470		13,401		30.1	%
Total	Total	$	416,099	$	475,485	$	(59,386)	(12.5)	%	Total	$	568,381	$	416,099	$	152,282	36.6	%

The ~~decrease~~increase in net sales across geographic locations in the nine-month period ended December ~~25, 2020~~24, 2021 compared to the nine-month period ended December ~~27, 2019~~25, 2020 was primarily due ~~primarily~~ to ~~wafer foundry~~content and ~~distribution sales totaling $76.3 million that were divested~~market share gains as many countries continue to experience economic expansion coming out of the COVID-19 pandemic and ~~are unrelated to and no longer a part~~demand for many of our ~~core business, partially offset by automotive recovery~~products and applications rose year-over-year.

The increase in ~~Asia and increased data center and other consumer and peripherals revenue growth globally.~~

~~Excluding the~~ net sales ~~associated with the PSL Divestiture~~in Japan of ~~$26.7~~$39.5 million, or 54.4%, which was primarily driven by higher demand for our ICE, safety, comfort and convenience, ADAS, xEV and personal mobility offerings. The increase in net sales ~~were down $7.3~~of $26.6 million, or ~~9.6%~~37.8%, in Europe, predominantly comprised of Germany and France, was primarily driven by increases in ICE, safety, comfort and convenience, ADAS, xEV and industrial offerings. The increase in net sales of $26.0 million, or 22.4%, in Greater China related to higher automotive demand, primarily in our ADAS and ICE applications, as well as increased demand in our industrial sectors. Net sales were higher by $28.9 million, or 42.0%, in the United States and Other Americas (predominantly Mexico), primarily driven by ~~a decrease in demand for our core application products sold in the automotive end market resulting from the factory shutdowns and demand weakness related to~~ the COVID-19 ~~pandemic. The predominant country comprising Other Americas is Mexico.~~recovery, as well as content and market share gains in ICE,

The decrease in net sales of $6.1 million, or 8.0%, in Europe was primarily driven by a decrease in demand for our core application products sold in the automotive end market. The predominant countries comprising Europe are Germany

ADAS, safety, comfort and ~~France.~~

Revenue in Asia totaled $277.0 million in the nine-month period ended December 25, 2020 compared to $246.6 million in the nine-month period ended December 27, 2019, excluding the net sales associated with the PSL Divestiture of $49.6 million in Japan. This increase of $30.4 million, or 12.3%, was primarily driven by increases in Chinaconvenience and industrial applications. South Korea and Other Asia ~~for~~experienced sales growth of $17.9 million, or 40.9%, and $13.4 million, or 30.1%, respectively, mainly due to higher automotive demand, specifically in ADAS, safety, comfort and convenience, ICE, personal mobility and industrial ~~products, partially offset by a decrease in Japan related to automotive demand weakness.~~motor control applications.

Cost of goods sold, gross profit and gross margin

Cost of goods sold ~~decreased~~increased by ~~$61.8~~$46.3 million, or ~~21.6%~~20.7%, to $270.5 million in the nine-month period ended December 24, 2021 from $224.2 million in the nine-month period ended December 25, ~~2020 from $286.0 million in the nine-month period ended December 27, 2019.~~2020. The ~~decrease in cost of goods sold was primarily due to a $73.2 million decrease in cost of goods sold attributable to the PSL Divestiture. The additional $11.4 million~~ increase in cost of goods sold was primarily attributable to ~~a combined $6.2 million~~higher production volume and increases in amortization of ~~increases related to standard margins, returns and quality and other costs, and~~ manufacturing cost absorptions ~~as well as increases~~and excess inventory reserves, specifically expenses of ~~$4.8 million in stock-based compensation, of which $4.4~~$3.1 million related to the ~~IPO~~discontinuation of a legacy Voxtel product line during the first nine months of 2022.

Gross profit increased by $106.0 million, or 55.2%, to $297.9 million in the nine-month period ended December 24, 2021 from $191.9 million in the nine-month period ended December 25, 2020. The increase in gross profit was driven by a $152.3 million increase in net sales in all markets, partially offset by the impacts to cost of goods sold discussed above.

R&D expenses

R&D expenses increased by $8.9 million, or 11.1%, to $89.4 million in the nine-month period ended December 24, 2021 from $80.5 million in the nine-month period ended December 25, 2020. This increase was primarily due to a combined $6.4 million increase in employee-related variable compensation costs, contract labor, and inventory and supplies costs and a combined $2.5 million increase in office supplies and travel and meeting costs.

R&D expenses represented 15.7% of our total net sales for the nine-month period ended December 24, 2021, a decrease from 19.3% of our total net sales in the nine-month period ended December 25, 2020. This percentage decrease was primarily due to the growth in net sales in the nine-month period ended December 24, 2021.

SG&A expenses

SG&A expenses decreased by $14.6 million, or 12.3%, to $104.1 million in the nine-month period ended December 24, 2021 from $118.7 million in the nine-month period ended December 25, 2020. This decrease was primarily due to a $25.2 million decrease in stock-based compensation expense, partially offset by increases of $6.8 million increase in combined employee-related variable compensation and personnel costs, and inventory and supplies costs and $3.0 million in combined professional fees, severance and travel and meeting costs.

SG&A expenses represented 18.3% of our total net sales in the nine-month period ended December 24, 2021, a decrease from 28.5% of our total net sales in the nine-month period ended December 25, 2020. This percentage decrease was primarily due to the growth in net sales in the nine-month period ended December 24, 2021. In addition, the percentage decrease represents the lower SG&A expenses as discussed above, as those costs were incrementally higher for the nine-month period ended December 25, 2020 due in large part to IPO-related costs and accelerated vesting of the Class A and L common stock and RSU Conversion Program ~~and $0.4 million of Voxtel- related impacts, mostly attributable to acquired intangible amortization occurring~~incurred during ~~the~~that period.

Gross profit increased by $2.4 million, or 1.3%, to $191.9 million in the nine-month period ended December 25, 2020 from $189.5 million in the nine-month period ended December 27, 2019. The increase in gross profit was driven by a $16.9 million operational increase in net sales to core end markets, and the impacts to cost of goods sold discussed above.

~~R&D expenses~~

~~R&D expenses increased by $2.9 million, or 3.8%, to $80.5 million in the nine-month period ended December 25, 2020 from $77.6 million in the nine-month period ended December 27, 2019.~~ ~~This increase was primarily due to a $3.0 million increase in stock-based compensation expense, of which $2.3 million related to the IPO and accelerated vesting of the Class A and L common stock and RSU Conversion Program,~~ and a combined $4.3 million increase in employee salaries, and inventory and supplies costs, partially offset by a reduction of $2.5 million of expenses related to the PSL Divestiture and a combined $1.8 million reduction in office supplies and travel and meeting costs.

R&D expenses represented 19.3% of our total net sales for the nine-month period ended December 25, 2020, an increase from 16.3% of our total net sales for the nine-month period ended December 27, 2019. This percentage increase was primarily due to stock-based compensation expenses recorded for the nine-month period ended December 25, 2020.

~~SG&A expenses~~

~~SG&A expenses increased by $40.7 million, or 52.1%, to $118.7 million in the nine-month period ended December 25, 2020 from $78.0 million in the nine-month period ended December 27, 2019.~~ ~~This increase was primarily due to $38.2 million increase in stock-based compensation expense, of which $36.3 million related to the IPO and accelerated vesting of the Class A and L common stock and RSU Conversion Program,~~ and a combined $11.4 million increase in employee salaries, professional fees, office supplies, and corporate allocations, partially offset by a reduction of $5.8 million of expenses related to the PSL Divestiture, and a combined reduction of $5.8 million in severance and travel and meeting costs.

SG&A expenses represented 28.5% of our total net sales for the nine-month period ended December 25, 2020, an increase from 16.4% of our total net sales for the nine-month period ended December 27, 2019. This percentage increase was primarily due to stock-based compensation expenses recorded for the nine-month period ended December 25, 2020.

Loss on debt extinguishment

Loss on debt extinguishment reflected a $9.1 million loss in the nine-month period ended December 25, 2020, representing the write-off of unamortized balances of previously deferred financing costs as a result of the $300.0 million Term Loan Facility principal balance repayment on November 25, 2020.

Interest ~~(expense) income,~~expense, net

Interest expense, net ~~increased by~~was relatively flat at $1.8 million for the nine months ended December 24, 2021 compared to ~~interest expense, net of $1.9~~$1.9 million infor the ~~nine-month period~~nine months ended December 25, ~~2020 from interest expense, net of~~2020.

Foreign currency transaction loss

Foreign currency transaction loss decreased by $1.2 million to $0.1 million in the nine-month period ended December ~~27, 2019. The increase in interest expense was primarily due~~24, 2021 compared to ~~mandatory interest payments on the Term Loan Facility in the nine-month period ended December 25, 2020.~~

~~Foreign currency transaction (loss) gain~~

~~We recorded a foreign currency transaction loss of~~ $1.3 million in the nine-month period ended December 25, ~~2020 compared to a gain of $2.8 million~~2020. The foreign currency transaction loss recorded in the ~~nine-month period~~nine months ended December ~~27, 2019.~~ 24, 2021 was primarily due to $0.6 million of realized and unrealized losses from our UK location, mostly offset by $0.2 million of realized and unrealized gains from our Philippines location, as well as approximately $0.3 million of unrealized gains on our investments in marketable securities. The foreign

currency transaction loss recorded in the nine-month period ended December 25, 2020 was primarily ~~due~~attributable to $2.2 million of realized and unrealized losses from our UK location, partially offset by $1.4 million of realized and unrealized gains from our Thailand location. The foreign currency transaction gain recorded in the nine-month period ended December 27, 2019 was primarily attributable to $2.4 million and $0.4 million of realized and unrealized gains from our Thailand and UK locations, respectively.

Income in earnings of equity investment

Income in earnings of equity investment ~~reflected~~reflected a $0.8 million gain in the nine-month period ended December 24, 2021 compared to a $1.4 million gain in the nine-month period ended December 25, 2020, representing the earnings on our 30% investment in ~~PSL during~~PSL.

Other, net

Other, net increased by $5.5 million to $5.2 million of miscellaneous gains in the ~~nine-month period~~nine months ended December 24, 2021 from $0.3 million of miscellaneous loss in the nine months ended December 25, ~~2020.~~

~~Other, net~~

~~Other, net decreased by $0.9 million~~2020. This increase was attributable primarily to ~~$0.3~~$4.5 million of ~~loss~~unrealized gains on marketable securities and a $0.4 million gain related to the sale of the AMTC Facility recognized during the first nine months of 2022.

Income tax provision (benefit)

Income tax expense and the effective income tax rate were $16.7 million, or 15.1%, respectively, in the nine-month period ended December 25, 2020 from $1.2 million of loss in the nine-month period ended December 27, 2019. The loss in the nine-month period ended December 27, 2019 was primarily due to expenses incurred associated with a settlement to terminate a relationship with a

~~distributor~~24, 2021, and ~~disposal of equipment from the prior Worcester, Massachusetts facility that sold during the first three-month period in fiscal year 2020.~~

~~Income~~income tax ~~(benefit) provision~~

~~The~~ benefit ~~for income taxes~~ and the effective income tax rate were $27.9 million, ~~and~~or 150.9%, respectively, in the nine-month period ended December 25, ~~2020~~2020. The increase in income tax expense was primarily attributable to tax impacts of the IPO transaction recorded in the prior nine- month period. The IPO transaction resulted in excess tax over financial reporting deductions related to a $40.4 million stock-based compensation charge (and the related incremental tax deductions), a $16.0 million one-time dividend treated as compensation expense for tax purposes, as well as a tax loss on the divestiture of PSL. The tax impacts of these transactions and ~~the provision for income taxes and the~~other discrete transactions caused an overall U.S. NOL that will be carried back five years. Additional fluctuations in our effective income tax rate ~~were $11.7 million and 33.0%, respectively,~~relate primarily to differences in ~~the nine-month period ended December 27, 2019. The change in effective~~our U.S. taxable income, ~~tax rates is primarily due to the $40.4 million IPO related~~estimated FDII benefits, GILTI income, research credits, non-deductible stock-based compensation ~~charge which significantly reduced U.S. income~~charges, and ~~was included in our tax rate from operations in the nine-month period ended December 25, 2020. The incremental stock-based compensation windfall was treated as a~~ discrete tax ~~adjustment as an incremental tax deduction in the nine-month period ended December 25, 2020.~~items.

Additionally, other discrete transactions, the PSL divestiture and the one-time dividend resulted in additional tax deductions. The reduction in U.S. income and the discrete tax deductions resulted in a U.S. tax NOL that can be carried back to refund prior years’ taxes. In total approximately $18.1 million of discrete tax benefits recorded in the nine-month period ended December 25, 2020 were partially offset by a reduction in our FDII deduction and an increase in GILTI and BEAT tax. In the nine-month period ended December 27, 2019, there was a discrete tax expense of approximately $5.5 million recorded for the settlement of IRS transfer pricing audits for years 2016, 2017, and 2018.

Non-GAAP Financial Measures

In addition to the measures presented in our consolidated financial statements, we regularly review other metrics, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions. The key metrics we consider are non-GAAP Gross Profit, non-GAAP Gross Margin, non-GAAP Operating Expenses, non-GAAP Operating Income, non-GAAP Operating Margin, non-GAAP Profit before Tax, non-GAAP Provision for Income Tax, non-GAAP Net Income, non-GAAP Net Income per Share, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin (collectively, the “Non-GAAP Financial Measures”). These Non-GAAP Financial Measures provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a ~~noncash~~non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations, and in the case of non-GAAP Provision for Income Tax, management believes that this non-GAAP measure of income taxes provides it with the ability to evaluate the non-GAAP Provision for Income Taxes across different reporting periods on a consistent basis, independent of special items and discrete items, which may vary in size and frequency. By presenting these Non-GAAP Financial Measures, we provide a basis for comparison of our business operations between periods by excluding items that we do not believe are indicative of our core operating performance, and we believe that investors’ understanding of our performance is enhanced by our presenting these Non-GAAP Financial Measures, as they provide a reasonable basis for comparing our ongoing results of operations. Management believes that tracking and presenting these ~~Non-GAAP~~non-GAAP Financial Measures provides management and the investment community with valuable insight into matters such asas: our ongoing core operations, our ability to generate cash to service our debt and fund our operations; and the underlying business trends that are affecting our performance. These Non-GAAP Financial Measures are used by both management and our board of directors, together with the comparable GAAP information, in evaluating our current performance and planning our future business activities. In particular, management finds it useful to exclude non-cash charges in order to better correlate our operating activities with our ability to generate cash from operations and to exclude certain cash charges as a means of more accurately predicting our liquidity requirements. We believe that these Non-GAAP Financial Measures, when used in conjunction with our GAAP financial information, also allow investors to better evaluate our financial performance in comparison to other periods and to other companies in our industry.

These Non-GAAP Financial Measures have significant limitations as analytical tools. Some of these limitations are that:

•such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

•such measures exclude certain costs which are important in analyzing our GAAP results;

•such measures do not reflect changes in, or cash requirements for, our working capital needs;

•such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

•such measures do not reflect our tax expense or the cash requirements to pay our taxes;

•although depreciation and amortization are ~~noncash~~non-cash charges, ~~excluded from our non-GAAP results,~~ the assets being depreciated and amortized will often have to be replaced in the future;

•such measures do not reflect any cash requirements for such replacements; and

•other companies in our industry may calculate such measures differently than we do, thereby further limiting their usefulness as comparative measures.

~~These~~The Non-GAAP Financial Measures are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP. These Non-GAAP Financial Measures should not be considered as substitutes for GAAP financial measures such as gross profit, gross margin, net income or any other performance measures derived in accordance with GAAP. Also, in the future we may incur expenses or charges such as those ~~added back~~being adjusted in the calculation of these Non-GAAP Financial Measures. Our presentation of these Non-GAAP Financial Measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items.

Our prior disclosure referred to non-GAAP Gross Profit and non-GAAP Gross Margin as Adjusted Gross Profit and Adjusted Gross Margin, respectively. No changes have been made to how we calculate these measures.

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We calculate non-GAAP Gross Profit and non-GAAP Gross Margin excluding the items below from cost of goods sold in applicable ~~periods. We~~periods, and we calculate non-GAAP Gross Margin as non-GAAP Gross Profit divided by total net sales.

•~~PSL and Sanken Distribution Agreement –~~ Voxtel inventory impairment—Represents costs related to the ~~elimination~~discontinuation of ~~inventory~~one of our product lines manufactured by Voxtel.

•Inventory cost amortization ~~and~~- Represents intercompany inventory transactions incurred from purchases made from PSL in fiscal year 2020. Such costs are one-time incurred expenses impacting our operating results during fiscal year 2021 following the disposition of PSL during the fiscal year ended March 26, 2021 (the “PSL Divestiture”). Such costs did not have a continuing impact on our operating results after our second fiscal quarter of fiscal year 2021.

•Foundry service payment - Represents foundry service ~~payment related~~payments incurred under our Price Support Agreement with PSL in respect to the guaranteed capacity at PSL to support our production forecast and are one-time costs incurred ~~in connection with~~impacting our operating results during fiscal year 2021 following the PSL Divestiture. Such costs did have a continuing impact on our operating results after fiscal year 2021.

•Stock-based ~~compensation –~~ compensation—Represents ~~noncash~~non-cash expenses arising from the grant of ~~stock~~stock-based awards.

•AMTC Facility consolidation one-time ~~costs –~~ costs—Represents one-time costs incurred in connection with closing of the AMTC Facility and transitioning of test and assembly functions to the AMPI Facility announced ~~and initiated~~ in fiscal year 2020, consisting ofof: moving equipment between facilities, contract terminations and other non-recurring charges. The closure and transition of the AMTC Facility ~~is expected to be~~was substantially ~~complete by~~completed in March 2021 and closed on the ~~end of March~~sale in August 2021. These costs are in addition to, and not duplicative of, the adjustments noted in note (*) below.

•Amortization of acquisition-related intangible ~~assets –~~ assets—Represents ~~noncash~~non-cash expenses associated with the amortization of intangible assets in connection with the acquisition of Voxtel, ~~Inc.,~~ which closed in August 2020.

•COVID-19 related ~~expenses –~~ expenses—Represents expenses attributable to the COVID-19 pandemic primarily related to increased purchases of masks, gloves and other protective materials, and overtime premium compensation paid for maintaining 24-hour service at the AMPI Facility.

(*) Non-GAAP Gross Profit and the corresponding calculation of non-GAAP Gross Margin ~~in this release~~ do not include adjustments consisting of:

•Additional ~~AMTC related costs –~~ AMTC-related costs—Represents costs ~~related~~relating to the closing of the AMTC Facility and the transitioning of test and assembly functions to the AMPI Facility in the Philippines announced in fiscal year 2020 consisting ~~of:~~of the net savings expected to result from the ~~capacity transition~~movement of work to the AMPI Facility, which facility had duplicative capacity based on the buildouts of the AMPI Facility in fiscal ~~years~~years 2019 and 2018. The elimination of these costs did not reduce our production capacity and therefore did not have direct effects on our ability to generate revenue. The closure and transition of the AMTC Facility ~~is expected to be~~was substantially ~~complete by~~completed in March 2021 and closed on the ~~end of March~~sale in August 2021.

•Out of period adjustment for depreciation expense of giant magnetoresistance assets (“GMR assets”) – —Represents a one-time depreciation expense related to the correction of an immaterial error, related to 2017, for certain manufacturing assets that have reached the end of their useful lives.

•Labor savings – Represents salary and benefit costs related to employees whose positions were eliminated through voluntary separation programs or other reductions in force (not associated with the closure of the AMTC Facility or any other plant or facility) and a restructuring of overhead positions from high-cost to low-cost jurisdictions net of costs for newly hired employees in connection with such restructuring.

Non-GAAP Operating Expenses, non-GAAP Operating Income and non-GAAP Operating Margin

We calculate non-GAAP Operating Expenses and non-GAAP Operating Income excluding the same items excluded above to the extent they are classified as operating expenses, and also excluding the items below in applicable periods. We calculate non-GAAP Operating Margin as non-GAAP Operating Income divided by total net sales.

•Transaction ~~fees –~~ fees—Represents transaction-related legal and consulting fees incurred primarily in connection with ~~(i) the unsuccessful acquisition of a competitor in fiscal year 2019, (ii)~~ (i) the acquisition of Voxtel ~~Inc.~~ in fiscal year 2020, (ii) one-time transaction-related legal and consulting fees in fiscal 2021, (iii) one-time transaction-related legal, consulting and registration fees related to a secondary offering on behalf of certain shareholders in fiscal 2022, and (iv) one-time transaction-related legal and consulting fees in fiscal 2022 not related to (iii).

5748

~~2020, and (iii) the PSL Divestiture and the transfer of the Sanken products distribution business to PSL in fiscal year 2020.~~

•~~Severance –~~ Severance—Represents severance costs associated with (i) labor savings initiatives to manage overall compensation expense as a result of the declining sales volume during the applicable period, including a voluntary separation incentive payment plan for employees near retirement and a reduction in force, ~~and~~ (ii) the closing of the AMTC Facility and the transitioning of test and assembly functions to the AMPI Facility announced and initiated in fiscal year ~~2020.~~2020, (iii) costs related to the discontinuation of one of our product lines manufactured by Voxtel in fiscal year 2022, and (iv) nonrecurring separation costs related to the departure of an officer in fiscal year 2022.

•Change in fair value of contingent consideration—Represents the change in fair value of contingent consideration payable in connection with the acquisition of Voxtel.

(**) Non-GAAP Operating Income does not include adjustments consisting of those set forth in note (*) to the calculation of non-GAAP Gross Profit, and the corresponding calculation of non-GAAP Gross Margin, above or:

•Labor savings—Represents salary and benefit costs related to employees whose positions were eliminated through voluntary separation programs or other reductions in force (not associated with the closure of the AMTC Facility or any other plant or facility) and a restructuring of overhead positions from high-cost to low-cost jurisdictions net of costs for newly hired employees in connection with such restructuring.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin

We calculate EBITDA as net income minus interest income (expense), tax provision (benefit), and depreciation and amortization expenses. We calculate Adjusted EBITDA as EBITDA excluding the same items excluded above and also excluding the items below in applicable periods. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by total net sales.

•Non-core (gain) loss on sale of ~~equipment –~~ equipment—Represents non-core miscellaneous losses and gains on the sale of equipment.

•Miscellaneous legal judgment ~~charge –~~ charge—Represents a one-time charge associated with the final payment of the previously accrued amount payable with respect to a VAT dispute related to the construction of the AMPI Facility.

•Foreign currency translation ~~loss~~ (gain) – loss—Represents losses and gains resulting from the remeasurement and settlement of intercompany debt and operational transactions, as well as transactions with external customers or vendors denominated in currencies other than the functional currency of the legal entity in which the transaction is recorded.

•Income in earnings of equity ~~investment –~~ investment—Represents our equity method investment in PSL.

•~~Inventory cost amortization –~~ Unrealized gains on investments—Represents intercompany inventory transactions incurred from purchases made from PSL in fiscal year 2020. Such costs are one-time incurred expenses impacting our operating results during fiscal year 2021 following the PSL Divestiture. Such costs are not expected to have a continuing impactmark-to-market adjustments on ~~our operating results after our second fiscal quarter of fiscal year 2021.~~

•~~Foundry service payment – Represents foundry service payments incurred under our Price Support Agreement~~equity investments with PSL in respect to the guaranteed capacity at PSL to support our production forecast and are one-time costs incurred impacting our operating results during fiscal year 2021 following the PSL Divestiture. Such costs are not expected to have a continuing impact on our operating results after fiscal year 2021.readily determinable fair values.

Non-GAAP Profit before Tax, Non-GAAP Net Income, and Non-GAAP Basic and Diluted Earnings Per Share

We calculate non-GAAP Profit before Tax as ~~Profit~~Income before Tax Provision excluding the same items excluded above and also excluding the items below in applicable periods. We calculate non-GAAP Net Income as Net Income excluding the same items excluded above and also excluding the items below in applicable periods.

•Loss on debt ~~extinguishment –~~ extinguishment—Represents one-time costs representing deferred financing costs associated with the $300.0 million of our term loan facility repaid during the nine-month period ended December 25, 2020.

•Interest on repaid portion of term loan ~~facility –~~ facility—Represents interest expense associated with the $300.0 million of our term loan facility repaid during the period.

Non-GAAP Provision for Income Tax

In calculating non-GAAP Provision for Income Tax, we ha~~ve added-back~~have added back the following to GAAP ~~Provision for~~ Income ~~Taxes:~~Tax Provision:

•Tax effect of adjustments to GAAP ~~results -~~ results—Represents the estimated income tax effect of the adjustments to non-GAAP Profit Before Tax described above and elimination of discrete tax adjustments.

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		Three-Month Period Ended									Nine-Month Period Ended							Three-Month Period Ended						Nine-Month Period Ended
		December 25, 2020			September 25, 2020			December 27, 2019			December 25, 2020			December 27, 2019				December 24, 2021		September 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
		(Dollars in thousands)																(Dollars in thousands)
Reconciliation of Gross Profit	Reconciliation of Gross Profit																Reconciliation of Gross Profit

GAAP Gross Profit	GAAP Gross Profit	$	74,425		$	61,770		$	61,525		$	191,896		$	189,518		GAAP Gross Profit	$	101,165	$	102,532	$	74,425	$	297,857	$	191,896

PSL and Sanken Distribution Agreement		1,500			2,815			—			7,698			—
Voxtel inventory impairment																	Voxtel inventory impairment	—		271		—		3,106		—
Inventory cost amortization																	Inventory cost amortization	—		—		—		—		2,698
Foundry service payment																	Foundry service payment	—		—		1,500		—		5,000
Stock-based compensation	Stock-based compensation	4,694			53			47			4,844			137			Stock-based compensation	742		722		4,694		1,992		4,844
AMTC Facility consolidation one-time costs	AMTC Facility consolidation one-time costs	607			408			—			1,559			—			AMTC Facility consolidation one-time costs	—		7		607		144		1,559
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	273			105			—			378			—			Amortization of acquisition-related intangible assets	273		273		273		819		378
COVID-19 related expenses	COVID-19 related expenses	65			73			—			138			—			COVID-19 related expenses	137		316		65		796		138
Total		$	7,139		$	3,454		$	47		$	14,617		$	137
Total Non-GAAP Adjustments																	Total Non-GAAP Adjustments	$	1,152	$	1,589	$	7,139	$	6,857	$	14,617

Non-GAAP Gross Profit*	Non-GAAP Gross Profit*	$	81,564		$	65,224		$	61,572		$	206,513		$	189,655		Non-GAAP Gross Profit*	$	102,317	$	104,121	$	81,564	$	304,714	$	206,513
Non-GAAP Gross Margin*		49.6		%	47.7		%	38.5		%	49.6		%	39.9		%
Non-GAAP Gross Margin* (% of net sales)																	Non-GAAP Gross Margin* (% of net sales)	54.8%		53.8%		49.6%		53.6%		49.6%

*Non-GAAP Gross Profit and the corresponding calculation of non-GAAP Gross Margin do not include adjustments for the following components of our net income: (i) additional AMTC ~~related~~related costs of ~~$1,198, $2,281,~~$—, $—, and $—$1,198 for the three months ended December 24, 2021, September 24, 2021, and December 25, 2020, ~~September~~respectively,and (ii) additional AMTC related costs of $— and $6,553 for the nine months ended December 24, 2021 and December 25, 2020, ~~and December 27, 2019,~~ respectively, and out of period adjustment for depreciation expense of GMR assets of $—, and $768 ~~and $— for the three months ended December 25, 2020, September 25, 2020, and December 27, 2019, respectively, and (ii) additional AMTC related costs of $6,553 and $—~~ for the nine months ended December 24, 2021 and December 25, 2020, and December 27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $— for the nine months ended September 25, 2020 and September 27, 2019, respectively.re

spectively.

5950


		Three-Month Period Ended						Nine-Month Period Ended					Three-Month Period Ended						Nine-Month Period Ended
		December 25, 2020		September 25, 2020		December 27, 2019		December 25, 2020		December 27, 2019			December 24, 2021		September 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
		(Dollars in thousands)											(Dollars in thousands)
Reconciliation of Operating Expenses	Reconciliation of Operating Expenses											Reconciliation of Operating Expenses

GAAP Operating Expenses	GAAP Operating Expenses	$	98,649	$	49,368	$	50,394	$	199,186	$	155,595	GAAP Operating Expenses	$	65,560	$	63,978	$	98,649	$	191,456	$	199,186

Research and Development Expenses	Research and Development Expenses											Research and Development Expenses
GAAP Research and Development Expenses	GAAP Research and Development Expenses	30,999		25,130		25,485		80,509		77,565		GAAP Research and Development Expenses	30,297		29,590		30,999		89,441		80,509
Stock-based compensation	Stock-based compensation	2,984		32		20		3,037		65		Stock-based compensation	1,019		1,043		2,984		2,814		3,037
AMTC Facility consolidation one-time costs	AMTC Facility consolidation one-time costs	1		—		—		2		—		AMTC Facility consolidation one-time costs	—		—		1		2		2

COVID-19 related expenses	COVID-19 related expenses	32		—		—		92		—		COVID-19 related expenses	6		8		32		20		92
Transaction fees	Transaction fees	—		—		—		18		—		Transaction fees	—		—		—		—		18

Non-GAAP Research and Development Expenses	Non-GAAP Research and Development Expenses	27,982		25,098		25,465		77,360		77,500		Non-GAAP Research and Development Expenses	29,272		28,539		27,982		86,605		77,360

Selling, General and Administrative Expenses	Selling, General and Administrative Expenses											Selling, General and Administrative Expenses
GAAP Selling, General and Administrative Expenses	GAAP Selling, General and Administrative Expenses	67,650		24,238		24,909		118,677		78,030		GAAP Selling, General and Administrative Expenses	37,963		34,088		67,650		104,115		118,677
Stock-based compensation	Stock-based compensation	38,198		495		236		39,020		849		Stock-based compensation	5,859		4,431		38,198		13,841		39,020
AMTC Facility consolidation one-time costs	AMTC Facility consolidation one-time costs	1,620		1,358		—		4,138		—		AMTC Facility consolidation one-time costs	108		151		1,620		583		4,138
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	71		9		—		80		—		Amortization of acquisition-related intangible assets	23		16		71		68		80
COVID-19 related expenses	COVID-19 related expenses	338		398		—		4,676		—		COVID-19 related expenses	356		551		338		1,288		4,676
Transaction fees	Transaction fees	1,729		1,871		2,335		3,699		3,782		Transaction fees	1,085		6		1,729		1,114		3,699
Severance	Severance	(181)		—		454		156		3,152		Severance	578		—		(181)		746		156
Non-GAAP Selling, General and Administrative Expenses	Non-GAAP Selling, General and Administrative Expenses	25,875		20,107		21,884		66,908		70,247		Non-GAAP Selling, General and Administrative Expenses	29,954		28,933		25,875		86,475		66,908

Change in fair value of contingent consideration												Change in fair value of contingent consideration	(2,700)		300		—		(2,100)		—

Total Non-GAAP Adjustments	Total Non-GAAP Adjustments	44,792		4,163		3,045		54,918		7,848		Total Non-GAAP Adjustments	6,334		6,506		44,792		18,376		54,918

Non-GAAP operating expenses *		$	53,857	$	45,205	$	47,349	$	144,268	$	147,747
Non-GAAP Operating Expenses *												Non-GAAP Operating Expenses *	$	59,226	$	57,472	$	53,857	$	173,080	$	144,268

*Non-GAAP Operating Expenses do not include adjustments for the following components of our net income: (i) additional AMTC ~~related~~related costs of ~~$19, $380,~~$—, $—, and ~~$2,939~~$19 for the three months ended December ~~25, 2020,~~24, 2021, September ~~25, 2020,~~24, 2021, and December ~~27, 2019,~~25, 2020, respectively, and labor savings costs of ~~$109,~~$—, $—, and ~~$1,072~~$109 for the three months ended December ~~25, 2020,~~24, 2021, September ~~25, 2020,~~24, 2021, and December ~~27, 2019,~~25, 2020, respectively, and (ii) additional AMTC related costs of ~~$723~~$— and ~~$8,603~~$723 for the nine months ended December ~~25, 2020~~24, 2021 and December ~~27, 2019,~~25, 2020, respectively, and labor savings costs of ~~$218~~$— and ~~$5,884~~$218 for the nine months ended December ~~25, 2020~~24, 2021 and December ~~27, 2019,~~25, 2020, respectively.

6051


		Three-Month Period Ended									Nine-Month Period Ended							Three-Month Period Ended						Nine-Month Period Ended
		December 25, 2020			September 25, 2020			December 27, 2019			December 25, 2020			December 27, 2019				December 24, 2021		September 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
		(Dollars in thousands)																(Dollars in thousands)
Reconciliation of Operating (Loss) Income
Reconciliation of Operating Income (Loss)																	Reconciliation of Operating Income (Loss)

GAAP Operating (Loss) Income		$	(24,224)		$	12,402		$	11,131		$	(7,290)		$	33,923
GAAP Operating Income (Loss)																	GAAP Operating Income (Loss)	$	35,605	$	38,554	$	(24,224)	$	106,401	$	(7,290)

PSL and Sanken Distribution Agreement		1,500			2,815			—			7,698			—
Voxtel inventory impairment																	Voxtel inventory impairment	—		271		—		3,106		—
Inventory cost amortization																	Inventory cost amortization	—		—		—		—		2,698
Foundry service payment																	Foundry service payment	—		—		1,500		—		5,000
Stock-based compensation	Stock-based compensation	45,876			580			303			46,901			1,051			Stock-based compensation	7,620		6,196		45,876		18,647		46,901
AMTC Facility consolidation one-time costs	AMTC Facility consolidation one-time costs	2,228			1,766			—			5,699			—			AMTC Facility consolidation one-time costs	108		158		2,228		729		5,699
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	344			114			—			458			—			Amortization of acquisition-related intangible assets	296		289		344		887		458
COVID-19 related expenses	COVID-19 related expenses	435			471			—			4,906			—			COVID-19 related expenses	499		875		435		2,104		4,906

Change in fair value of contingent consideration																	Change in fair value of contingent consideration	(2,700)		300		—		(2,100)		—
Transaction fees	Transaction fees	1,729			1,871			2,335			3,717			3,782			Transaction fees	1,085		6		1,729		1,114		3,717
Severance	Severance	(181)			—			454			156			3,152			Severance	578		—		(181)		746		156
Total		$	51,931		$	7,617		$	3,092		$	69,535		$	7,985
Total Non-GAAP Adjustments																	Total Non-GAAP Adjustments	$	7,486	$	8,095	$	51,931	$	25,233	$	69,535

Non-GAAP Operating Income*	Non-GAAP Operating Income*	$	27,707		$	20,019		$	14,223		$	62,245		$	41,908		Non-GAAP Operating Income*	$	43,091	$	46,649	$	27,707	$	131,634	$	62,245
Non-GAAP Operating Margin* (% of net sales)	Non-GAAP Operating Margin* (% of net sales)	16.8		%	14.6		%	8.9		%	15.0		%	8.8		%	Non-GAAP Operating Margin* (% of net sales)	23.1%		24.1%		16.8%		23.2%		15.0%

*Non-GAAP Operating Income and the corresponding calculation of non-GAAP Operating Margin do not include adjustments for the following ~~components~~components of our net income: (i) additional AMTC related costs of ~~$1,217, $2,661,~~$—, $—, and ~~$2,939~~$1,217 for the three months ended December ~~25, 2020,~~24, 2021, September ~~25, 2020,~~24, 2021, and December ~~27, 2019,~~25, 2020, respectively, labor savings costs of ~~$109,~~$—, $—, and ~~$1,072~~$109 for the three months ended December 24, 2021, September 24, 2021, and December 25, 2020, ~~September~~respectively, and (ii) additional AMTC related costs of $— and $7,276 for the nine months ended December 24, 2021 and December 25, 2020, respectively, labor savings costs of $— and $218 for the nine months ended December 24, 2021 and December ~~27, 2019,~~25, 2020, respectively, and out of period adjustment for depreciation expense of GMR assets of $—, and $768 ~~and $— for the three months ended December 25, 2020, September 25, 2020, and December 27, 2019, respectively, and (ii) additional AMTC related costs of $7,276 and $8,603~~ for the nine months ended December ~~25, 2020~~24, 2021 and December ~~27, 2019, respectively, labor savings costs of $218 and $5,884 for the nine months ended December~~ 25, 2020, ~~and December 27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $— for the nine months ended December 25, 2020 and December 27, 2019,~~ respectively.

6152


		Three-Month Period Ended									Nine-Month Period Ended							Three-Month Period Ended						Nine-Month Period Ended
		December 25, 2020			September 25, 2020			December 27, 2019			December 25, 2020			December 27, 2019				December 24, 2021		September 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
		(Dollars in thousands)																(Dollars in thousands)
Reconciliation of EBITDA and Adjusted EBITDA	Reconciliation of EBITDA and Adjusted EBITDA																Reconciliation of EBITDA and Adjusted EBITDA

GAAP Net (Loss) Income		$	(5,060)		$	9,618		$	8,958		$	9,412		$	23,776
GAAP Net Income (Loss)																	GAAP Net Income (Loss)	$	32,973	$	33,223	$	(5,060)	$	93,903	$	9,412

Interest expense (income), net		2,598			(350)			(10)			1,935			60
Income tax (benefit) provision		(30,523)			2,082			1,542			(27,913)			11,710
Interest expense, net																	Interest expense, net	269		1,150		2,598		1,764		1,935
Income tax provision (benefit)																	Income tax provision (benefit)	6,281		6,143		(30,523)		16,687		(27,913)
Depreciation & amortization	Depreciation & amortization	12,199			12,487			16,131			36,225			47,608			Depreciation & amortization	12,011		12,339		12,199		36,522		36,225
EBITDA	EBITDA	$	(20,786)		$	23,837		$	26,621		$	19,659		$	83,154		EBITDA	$	51,534	$	52,855	$	(20,786)	$	148,876	$	19,659

Non-core (gain) loss on sale of equipment	Non-core (gain) loss on sale of equipment	(7)			331			532			286			1,091			Non-core (gain) loss on sale of equipment	(19)		(296)		(7)		(350)		286
Miscellaneous legal judgement charge		574			—			—			574			—
Voxtel inventory impairment																	Voxtel inventory impairment	—		271		—		3,106		—
Miscellaneous legal judgment charge																	Miscellaneous legal judgment charge	—		—		574		—		574
Loss on debt extinguishment	Loss on debt extinguishment	9,055			—			—			9,055			—			Loss on debt extinguishment	—		—		9,055		—		9,055
Foreign currency translation loss (gain)	Foreign currency translation loss (gain)	145			1,318			560			1,331			(2,800)			Foreign currency translation loss (gain)	3		(202)		145		55		1,331
Income in earnings of equity investment	Income in earnings of equity investment	(949)			(246)			—			(1,407)			—			Income in earnings of equity investment	(287)		(226)		(949)		(792)		(1,407)
Unrealized gains on investments																	Unrealized gains on investments	(3,504)		(978)		—		(4,482)		—
Stock-based compensation	Stock-based compensation	45,876			580			303			46,901			1,051			Stock-based compensation	7,620		6,196		45,876		18,647		46,901
AMTC Facility consolidation one-time costs	AMTC Facility consolidation one-time costs	2,228			1,766			—			5,699			—			AMTC Facility consolidation one-time costs	108		158		2,228		729		5,699
COVID-19 related expenses	COVID-19 related expenses	435			471			—			4,906			—			COVID-19 related expenses	499		875		435		2,104		4,906

Change in fair value of contingent consideration																	Change in fair value of contingent consideration	(2,700)		300		—		(2,100)		—
Transaction fees	Transaction fees	1,729			1,871			2,335			3,717			3,782			Transaction fees	1,085		6		1,729		1,114		3,717
Severance	Severance	(181)			—			454			156			3,152			Severance	578		—		(181)		746		156
Inventory cost amortization																	Inventory cost amortization	—		—		—		—		2,698
Foundry service payment																	Foundry service payment	—		—		1,500		—		5,000

PSL and Sanken Distribution Agreement		1,500			2,815			—			7,698			—
Adjusted EBITDA*	Adjusted EBITDA*	$	39,619		$	32,743		$	30,805		$	98,575		$	89,430		Adjusted EBITDA*	$	54,917	$	58,959	$	39,619	$	167,653	$	98,575
Adjusted EBITDA Margin*		24.1		%	24.0		%	19.3		%	23.7		%	18.8		%
Adjusted EBITDA Margin* (% of net sales)																	Adjusted EBITDA Margin* (% of net sales)	29.4%		30.5%		24.1%		29.5%		23.7%

*Adjusted EBITDA and the corresponding calculation of Adjusted EBITDA Margin do not include adjustments for the following ~~components~~components of our net income: (i) additional AMTC related costs of ~~$1,217, $2,661,~~$—, $—, and ~~$2,939~~$1,217 for the three months ended December ~~25, 2020,~~24, 2021, September ~~25, 2020,~~24, 2021, and December ~~27, 2019,~~25, 2020, respectively, and labor savings costs of ~~$109,~~$—, $—, and ~~$1,072~~$109 for the three months ended December ~~25, 2020,~~24, 2021, September ~~25, 2020,~~24, 2021, and December ~~27, 2019,~~25, 2020, respectively, and (ii) additional AMTC related costs of ~~$7,276~~$— and ~~$8,603~~$7,276 for the nine months ended December ~~25, 2020~~24, 2021 and December ~~27, 2019,~~25, 2020, respectively, and labor savings costs of ~~$218~~$— and ~~$5,884~~$218 for the nine months ended December ~~25, 2020~~24, 2021 and December ~~27, 2019,~~25, 2020, respectively.

6253


		Three-Month Period Ended						Nine-Month Period Ended					Three-Month Period Ended						Nine-Month Period Ended
		December 25, 2020		September 25, 2020		December 27, 2019		December 25, 2020		December 27, 2019			December 24, 2021		September 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
		(Dollars in thousands)											(Dollars in thousands)
Reconciliation of (Loss) Profit before Tax
Reconciliation of Income (Loss) before Tax Provision (Benefit)												Reconciliation of Income (Loss) before Tax Provision (Benefit)

GAAP (Loss) Profit before Tax		$	(35,583)	$	11,700	$	10,500	$	(18,501)	$	35,486
GAAP Income (Loss) before Tax Provision (Benefit)												GAAP Income (Loss) before Tax Provision (Benefit)	$	39,254	$	39,366	$	(35,583)	$	110,590	$	(18,501)

Non-core (gain) loss on sale of equipment	Non-core (gain) loss on sale of equipment	(7)		331		532		286		1,091		Non-core (gain) loss on sale of equipment	(19)		(296)		(7)		(350)		286
Voxtel inventory impairment												Voxtel inventory impairment	—		271		—		3,106		—
Miscellaneous legal judgment charge	Miscellaneous legal judgment charge	574		—		—		574		—		Miscellaneous legal judgment charge	—		—		574		—		574
Loss on debt extinguishment	Loss on debt extinguishment	9,055		—		—		9,055		—		Loss on debt extinguishment	—		—		9,055		—		9,055
Foreign currency transaction loss (gain)		145		1,318		560		1,331		(2,800)
Foreign currency translation loss (gain)												Foreign currency translation loss (gain)	3		(202)		145		55		1,331
Income in earnings of equity investment	Income in earnings of equity investment	(949)		(246)		—		(1,407)		—		Income in earnings of equity investment	(287)		(226)		(949)		(792)		(1,407)
PSL and Sanken Distribution Agreement		1,500		2,815		—		7,698		—
Unrealized gains on investments												Unrealized gains on investments	(3,504)		(978)		—		(4,482)		—
Inventory cost amortization												Inventory cost amortization	—		—		—		—		2,698
Foundry service payment												Foundry service payment	—		—		1,500		—		5,000
Stock-based compensation	Stock-based compensation	45,876		580		303		46,901		1,051		Stock-based compensation	7,620		6,196		45,876		18,647		46,901
Interest on repaid portion of Term Loan Facility	Interest on repaid portion of Term Loan Facility	2,163		—		—		2,163		—		Interest on repaid portion of Term Loan Facility	—		—		2,163		—		2,163
AMTC Facility consolidation one-time costs	AMTC Facility consolidation one-time costs	2,228		1,766		—		5,699		—		AMTC Facility consolidation one-time costs	108		158		2,228		729		5,699
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	344		114		—		458		—		Amortization of acquisition-related intangible assets	296		289		344		887		458
COVID-19 related expenses	COVID-19 related expenses	435		471		—		4,906		—		COVID-19 related expenses	499		875		435		2,104		4,906

Change in fair value of contingent consideration												Change in fair value of contingent consideration	(2,700)		300		—		(2,100)		—
Transaction fees	Transaction fees	1,729		1,871		2,335		3,717		3,782		Transaction fees	1,085		6		1,729		1,114		3,717
Severance	Severance	(181)		—		454		156		3,152		Severance	578		—		(181)		746		156
Total		$	62,912	$	9,020	$	4,184	$	81,537	$	6,276
Total Non-GAAP Adjustments												Total Non-GAAP Adjustments	$	3,679	$	6,393	$	62,912	$	19,664	$	81,537

Non-GAAP Profit before Tax*	Non-GAAP Profit before Tax*	$	27,329	$	20,720	$	14,684	$	63,036	$	41,762	Non-GAAP Profit before Tax*	$	42,933	$	45,759	$	27,329	$	130,254	$	63,036

*Non-GAAP Profit before Tax does not include adjustments for the following components of our net income: (i) additional AMTC related costs of ~~$1,217, $2,661,~~$—, $—, and ~~$2,939~~$1,217 for the three months ended December ~~25, 2020,~~24, 2021, September ~~25, 2020,~~24, 2021, and December ~~27, 2019,~~25, 2020, respectively, labor savings costs of ~~$109,~~$—, $—, and ~~$1,072~~$109 for the three months ended December 24, 2021, September 24, 2021, and December 25, 2020, ~~September~~respectively, and (ii) additional AMTC related costs of $— and $7,276 for the nine months ended December 24, 2021 and December 25, 2020, respectively, labor savings costs of $— and $218 for the nine months ended December 24, 2021 and December ~~27, 2019,~~25, 2020, respectively, and out of period adjustment for depreciation expense of GMR assets of $—, and $768 ~~and $— for the three months ended December 25, 2020, September 25, 2020, and December 27, 2019, respectively, and (ii) additional AMTC related costs of $7,276 and $8,603~~ for the nine months ended December ~~25, 2020~~24, 2021 and December ~~27, 2019, respectively, labor savings costs of $218 and $5,884 for the nine months ended December~~ 25, 2020, ~~and December 27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $— for the nine months ended December 25, 2020 and December 27, 2019,~~ respectively.

6354


		Three-Month Period Ended									Nine-Month Period Ended							Three-Month Period Ended						Nine-Month Period Ended
		December 25, 2020			September 25, 2020			December 27, 2019			December 25, 2020			December 27, 2019				December 24, 2021		September 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
		(Dollars in thousands)																(Dollars in thousands)
Reconciliation of (Benefit) Provision for Income Taxes
Reconciliation of Income Tax Provision (Benefit)																	Reconciliation of Income Tax Provision (Benefit)

GAAP (Benefit) Provision for Income Taxes		$	(30,523)		$	2,082		$	1,542		$	(27,913)		$	11,710
GAAP Income Tax Provision (Benefit)																	GAAP Income Tax Provision (Benefit)	$	6,281	$	6,143	$	(30,523)	$	16,687	$	(27,913)
GAAP effective tax rate	GAAP effective tax rate	85.8		%	17.8		%	14.7		%	150.9		%	33.0		%	GAAP effective tax rate	16.0%		15.6%		85.8%		15.1%		150.9%

Tax effect of adjustments to GAAP results	Tax effect of adjustments to GAAP results	34,872			859			992			37,539			(4,497)			Tax effect of adjustments to GAAP results	561		946		34,872		3,598		37,539

Non-GAAP Provision for Income Taxes *	Non-GAAP Provision for Income Taxes *	$	4,349		$	2,941		$	2,534		$	9,626		$	7,213		Non-GAAP Provision for Income Taxes *	$	6,842	$	7,089	$	4,349	$	20,285	$	9,626
Non-GAAP effective tax rate	Non-GAAP effective tax rate	15.9		%	14.2		%	17.3		%	15.3		%	17.3		%	Non-GAAP effective tax rate	15.9%		15.5%		15.9%		15.6%		15.3%

*Non-GAAP Provision for Income Taxes does not include tax adjustments for the following components of our net income: additional AMTC related costs, labor savings costs, and out of period adjustment for depreciation expense of GMR assets. The related tax effect of those adjustments to GAAP ~~results~~results were ~~$297, $768~~$—, $— and ~~$898~~$297 for the three months ended December 24, 2021, September 24, 2021, and December 25, 2020, ~~September 25, 2020, and December 27, 2019,~~ respectively, and ~~$1,851~~$— and ~~$3,245~~$1,851 for the nine months ended December ~~25, 2020~~24, 2021 and December ~~27, 2019,~~25, 2020, respectively.

6455


		Three-Month Period Ended						Nine-Month Period Ended					Three-Month Period Ended						Nine-Month Period Ended
		December 25, 2020		September 25, 2020		December 27, 2019		December 25, 2020		December 27, 2019			December 24, 2021		September 24, 2021		December 25, 2020		December 24, 2021		December 25, 2020
		(Dollars in thousands)											(Dollars in thousands)
Reconciliation of Net (Loss) Income
Reconciliation of Net Income (Loss)												Reconciliation of Net Income (Loss)

GAAP Net (Loss) Income		$	(5,060)	$	9,618	$	8,958	$	9,412	$	23,776
GAAP Net Income (Loss)												GAAP Net Income (Loss)	$	32,973	$	33,223	$	(5,060)	$	93,903	$	9,412
GAAP Basic Earnings (Loss) per Share												GAAP Basic Earnings (Loss) per Share	$	0.17	$	0.18	$	(0.04)	$	0.50	$	0.20
GAAP Diluted Earnings (Loss) per Share												GAAP Diluted Earnings (Loss) per Share	$	0.17	$	0.17	$	(0.04)	$	0.49	$	0.05

Non-core (gain) loss on sale of equipment	Non-core (gain) loss on sale of equipment	(7)		331		532		286		1,091		Non-core (gain) loss on sale of equipment	(19)		(296)		(7)		(350)		286
Miscellaneous legal judgement charge		574		—		—		574		—
Voxtel inventory impairment												Voxtel inventory impairment	—		271		—		3,106		—
Miscellaneous legal judgment charge												Miscellaneous legal judgment charge	—		—		574		—		574
Loss on debt extinguishment	Loss on debt extinguishment	9,055		—		—		9,055		—		Loss on debt extinguishment	—		—		9,055		—		9,055
Foreign currency transaction loss (gain)		145		1,318		560		1,331		(2,800)
Foreign currency translation loss (gain)												Foreign currency translation loss (gain)	3		(202)		145		55		1,331
Income in earnings of equity investment	Income in earnings of equity investment	(949)		(246)		—		(1,407)		—		Income in earnings of equity investment	(287)		(226)		(949)		(792)		(1,407)
PSL and Sanken Distribution Agreement		1,500		2,815		—		7,698		—
Unrealized gains on investments												Unrealized gains on investments	(3,504)		(978)		—		(4,482)		—
Inventory cost amortization												Inventory cost amortization	—		—		—		—		2,698
Foundry service payment												Foundry service payment	—		—		1,500		—		5,000
Stock-based compensation	Stock-based compensation	45,876		580		303		46,901		1,051		Stock-based compensation	7,620		6,196		45,876		18,647		46,901
Interest on repaid portion of Term Loan Facility	Interest on repaid portion of Term Loan Facility	2,163		—		—		2,163		—		Interest on repaid portion of Term Loan Facility	—		—		2,163		—		2,163
AMTC Facility consolidation one-time costs	AMTC Facility consolidation one-time costs	2,228		1,766		—		5,699		—		AMTC Facility consolidation one-time costs	108		158		2,228		729		5,699
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	344		114		—		458		—		Amortization of acquisition-related intangible assets	296		289		344		887		458
COVID-19 related expenses	COVID-19 related expenses	435		471		—		4,906		—		COVID-19 related expenses	499		875		435		2,104		4,906

Change in fair value of contingent consideration												Change in fair value of contingent consideration	(2,700)		300		—		(2,100)		—
Transaction fees	Transaction fees	1,729		1,871		2,335		3,717		3,782		Transaction fees	1,085		6		1,729		1,114		3,717
Severance	Severance	(181)		—		454		156		3,152		Severance	578		—		(181)		746		156
Tax effect of adjustments to GAAP results	Tax effect of adjustments to GAAP results	(34,872)		(859)		(992)		(37,539)		4,497		Tax effect of adjustments to GAAP results	(561)		(946)		(34,872)		(3,598)		(37,539)

Non-GAAP Net Income*	Non-GAAP Net Income*	$	22,980	$	17,779	$	12,150	$	53,410	$	34,549	Non-GAAP Net Income*	$	36,091	$	38,670	$	22,980	$	109,969	$	53,410
Basic weighted average common shares	Basic weighted average common shares	124,363,078		164,431,726		164,431,726		48,121,026		164,431,726		Basic weighted average common shares	189,736,901		189,673,788		124,363,078		189,665,324		48,121,026
Diluted weighted average common shares	Diluted weighted average common shares	181,916,360		164,431,726		164,431,726		171,638,787		164,431,726		Diluted weighted average common shares	192,068,222		191,676,422		181,916,360		191,678,951		171,638,787
Non-GAAP Basic Earnings per Share	Non-GAAP Basic Earnings per Share	$	0.18	$	0.11	$	0.07	$	1.11	$	0.21	Non-GAAP Basic Earnings per Share	$	0.19	$	0.20	$	0.18	$	0.58	$	1.11
Non-GAAP Diluted Earnings per Share	Non-GAAP Diluted Earnings per Share	$	0.13	$	0.11	$	0.07	$	0.31	$	0.21	Non-GAAP Diluted Earnings per Share	$	0.19	$	0.20	$	0.13	$	0.57	$	0.31

*Non-GAAP Net Income does not include adjustments for the following components of our net income: (i) additional AMTC ~~related~~related costs of ~~$1,217, $2,661,~~$—, $—, and ~~$2,939~~$1,217 for the three months ended December ~~25, 2020,~~24, 2021, September ~~25, 2020,~~24, 2021, and December ~~27, 2019,~~25, 2020, respectively, labor savings costs of ~~$109,~~$—, $—, and ~~$1,072~~$109 for the three months ended December 24, 2021, September 24, 2021, and December 25, 2020, ~~September~~respectively, and (ii) additional AMTC related costs of $— and $7,276 for the nine months ended December 24, 2021 and December 25, 2020, respectively, labor savings costs of $— and $218 for the nine months ended December 24, 2021 and December ~~27, 2019,~~25, 2020, respectively, and out of period adjustment for depreciation expense of GMR assets of $—, and $768 ~~and $— for the three months ended December 25, 2020, September 25, 2020, and December 27, 2019, respectively, (ii) additional AMTC related costs of $7,276 and $8,603~~ for the nine months ended December ~~25, 2020~~24, 2021 and December ~~27, 2019, respectively, labor savings costs of $218 and $5,884 for the nine months ended December~~ 25, 2020, ~~and December 27, 2019, respectively, and out of period adjustment for depreciation expense of GMR assets of $768 and $— for the nine months ended December 25, 2020 and December 27, 2019,~~ respectively, and (iii) the related tax effect of adjustments to GAAP results ~~$297, $768~~$—, $—, and ~~$898~~$297 for the three months ended December 24, 2021, September 24, 2021, and December 25, 2020, ~~September 25, 2020, and December 27, 2019,~~ respectively, and ~~$1,851~~$— and ~~$3,245~~$1,851 for the nine months ended December 24, 2021 and December 25, 2020, ~~and December 27, 2019,~~ respectively.

Liquidity and Capital Resources

As of December ~~25, 2020,~~24, 2021, we had ~~$157.7~~$259.2 million of cash and cash equivalents and ~~$289.4~~$368.4 million of working capital compared to ~~$214.5~~$197.2 million of cash and cash equivalents and ~~$298.1~~$313.9 million of working capital as of March ~~27, 2020.~~26, 2021. Working capital is impacted by the timing and extent of our business needs.

Our primary requirements for liquidity and capital are working capital, capital expenditures, principal and interest payments on our outstanding debt and other general corporate needs. Historically, these cash requirements have been met through cash provided by operating activities and cash and cash equivalents. In March 2020, we borrowed an aggregate of $43.0 million under our revolving credit facilities (including $10.0 million that was borrowed by PSL under its revolving credit facility (the “PSL Revolver”)), representing substantially all of our available capacity, in orderequivalents. Our current capital deployment strategy for 2022 is to increase our cash position and help maintain financial flexibility in light of the continued uncertainty surrounding the COVID-19 pandemic. Of this $43.0 million, the $10.0 million of debt borrowed under the PSL Revolver is the obligation of PSL and was no longer included on our consolidated balance sheet as of December 25, 2020. In addition, the proceeds from such borrowings were retained by PSL and are no longer available for use by us following the consummation of the PSL Divestiture.

On September 30, 2020, we entered into a term loan credit agreement with Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and the other agents, arrangers and lenders party thereto, providing for a $325.0 million senior secured term loan facility. On September 30, 2020, we also entered into a revolving facility credit agreement with Mizuho Bank, Ltd., as administrative agent and collateral agent, and the other agents, arrangers and lenders party thereto, providing for a $50.0 million senior secured revolving credit facility. In connection with entering into the revolving credit facility, we usedutilize excess cash on hand to ~~repay all amounts outstanding under~~support our growth initiatives into select markets and planned capital expenditures. As of December 24, 2021, the ~~AML Revolver in~~Company is not party to any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. The cash requirements for the ~~amount~~upcoming fiscal year relate to our leases, operating and capital purchase commitments and expected contributions to our defined benefit and contribution plans. For information regarding the Company’s expected cash requirements and timing of ~~$25.0 million with Mizuho Bank, Ltd.~~payments related to debt and ~~AML’s $8.0 million line of credit agreement with~~borrowing capacity, leases and noncancellable purchase commitments and pension and defined contribution plans, see Note 15, “Commitments and Contingencies”, Note 12, “Debt and Other Borrowings” and Note 14, “Retirement Plans” to the Bank of Mitsubishi UFJ, and terminated all commitments thereunder. On November 25, 2020, we repaid $300.0 million of the outstanding $325.0 million Term Loan Facility using proceeds from our recently completed IPO.Company’s 2021 Annual Report.

We ~~anticipate~~have experienced and expect to continue to experience—to a ~~significant increase~~smaller degree—increases in accounting, legal and professional fees and other costs associated with being a public company. We believe that our existing cash resources, together with ~~the proceeds from our IPO and~~ our access to the capital markets and unutilized loan facilities, will be sufficient to finance our continued operations, growth strategy, planned capital expenditures and the additional expenses we expect to incur as a public company for at least the next 12twelve months. In order to support and achieve our future growth plans, we may need or seek advantageously to obtain additional funding through equity or debt financing. We believe that our current operating structure will facilitate sufficient cash flows from operations to satisfy our expected long-term liquidity requirements beyond the next twelve months. If these resources are not sufficient to satisfy our liquidity requirements due to changes in circumstances, we may be required to seek additional financing. If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Debt financing, if available, may contain covenants that significantly restrict our operations or our ability to obtain additional debt financing in the future. Any additional financing that we raise may contain terms that are not favorable to us or our stockholders. We cannot assure you that we would be able to obtain additional financing on terms favorable to us or our existing stockholders, or at all.

Cash Flows from Operating, Investing and Financing Activities

The following table summarizes our cash flows for the nine-month periods ended December ~~25, 2020~~24, 2021 and December ~~27, 2019:~~25, 2020:


		Nine-Month Period Ended					Nine-Month Period Ended
		December 25, 2020		December 27, 2019			December 24, 2021		December 25, 2020
		(dollars in thousands)					(dollars in thousands)
Net cash provided by operating activities	Net cash provided by operating activities	$	63,534	$	48,770	Net cash provided by operating activities	$	118,558	$	63,534
Net cash used in investing activities	Net cash used in investing activities	(50,401)		(31,061)		Net cash used in investing activities	(50,123)		(50,401)
Net cash (used in) provided by financing activities		(72,186)		30,000
Net cash used in financing activities						Net cash used in financing activities	(6,209)		(72,186)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	3,350		(6,452)		Effect of exchange rate changes on cash and cash equivalents	604		3,350
Net (decrease) increase in cash and cash equivalents and restricted cash		$	(55,703)	$	41,257
Net increase in cash and cash equivalents and restricted cash						Net increase in cash and cash equivalents and restricted cash	$	62,830	$	(55,703)

Operating Activities

Net cash provided by operating activities was $118.6 million in the nine months ended December 24, 2021, resulting primarily from our net income of $93.9 million and noncash charges of $50.0 million, partially offset by a net decrease in operating assets and liabilities of $25.4 million. Net changes in operating assets and liabilities consisted of a $11.9 million increase in prepaid expenses, a $9.9 million decrease in accrued expenses and other current and long-term liabilities, a $6.1 million increase in trade accounts receivable, net, and a $2.8 million increase in net amounts due from related parties, partially offset by a $3.3 million decrease in inventories and a $2.0 million increase in trade accounts payable. The increase in prepaid expenses and other assets were primarily due to an increase in prepaid contracts and deposits and the timing of tax payments, including value-added taxes receivable, insurance and contract costs. The decrease in accrued expenses and other

current and long-term liabilities was primarily due to the release of deposits related to the sale of our AMTC Facility and reduction of the balance due on the Voxtel acquisition, partially offset by higher accrued personnel costs, particularly for management incentive bonuses, and higher income taxes due. The increase in trade accounts receivable, net was primarily a result of increased sales year-over-year, as well as the timing of receipts from customers. The increase in net amounts due from related parties was primarily due to variations in the timing of such payments in the ordinary course of business. The decrease in inventories was primarily a result of the continued drawdown after building inventory up in prior periods to support anticipated sales growth and recovery from the COVID-19 pandemic. Accounts payable increased mainly due to higher operating purchases, including unpaid capital expenditures of $4.9 million, partially offset by the timing of payments to vendors and suppliers.

Net cash provided by operating activities was $63.5 million in the nine-month period ended December 25, 2020, resulting primarily from our net income of $9.4 million and noncash charges of $79.0 million, partially offset by a net increase in operating assets and decrease in operating liabilities of $24.9 million. Net changes in operating assets and liabilities consisted of a $29.7 million increase in prepaid expenses, a $6.0 million increase in trade accounts receivable, net and a $1.2 million decrease in accrued expenses and other current and long-term liabilities, partially offset by a $8.3 million decrease in net amounts due from related parties, a $2.4 million increase in trade accounts payable, a $1.1 million decrease in inventories and a $0.1 million decrease in accounts receivable – other. The increase in prepaid expenses and other assets, excluding the impact of the noncash removal of PSL-related assets of $5.2 million and the acquisition of Voxtel, included an $18.7 million increase in prepaid taxes, a $3.6 million increase in VAT receivables, a $3.5 million increase in prepaid insurance and a $2.8 million increase in amortizable patent costs. Changes related to trade accounts receivable, net, accounts

receivable – other, and due from/to related parties were primarily due to variations in the timing of such payments in the ordinary course of business. The decrease in accrued expenses and other current and long-term liabilities is the result of a $14.9 million increase in balances from March 27, 2020, adjusted for $26.5 million of noncash increases related to the Voxtel acquisition primarily for deferred and contingent consideration, offset by the $7.6 million impact of the noncash removal of PSL and Sanken distribution related assets. Trade accounts payable were impacted by the noncash removal of PSL-related liabilities of $4.2 million, with the difference due to timing of such payments in the ordinary course of business. The $1.1 million inventory ~~increase~~decrease is the result of a $33.2 million reduction in balances from March 27, 2020, offset by a $32.3 million impact of the noncash removal of PSL and Sanken distribution business related assets and $3.0 million of noncash inventory provisions, reduced by $3.1 million of inventory added in the acquisition of Voxtel.

~~Net cash~~ ~~provided by~~ ~~operating activities was~~ ~~$48.8 million~~ ~~in the nine-month period ended December 27, 2019, resulting primarily from our net income of~~ ~~$23.8 million~~ ~~and noncash charges of~~ ~~$52.4 million, partially offset by a net increase in operating assets and decrease in liabilities of~~ ~~$27.4 million. The net changes in operating assets and liabilities consisted of a~~ ~~$21.0 million increase~~ ~~in net amounts due from related parties, a~~ ~~$17.3 million decrease~~ ~~in accrued expenses and other current and long-term liabilities, a~~ ~~$6.2 million increase~~ ~~in prepaid expenses and other assets and a~~ ~~$0.3 million increase~~ ~~in inventories. These decreases to cash were partially offset by a~~ ~~$15.5 million decrease~~ ~~in trade accounts receivable, a~~ ~~$1.1 million increase~~ ~~in trade accounts payable and a~~ ~~$0.7 million decrease~~ in accounts receivable – other. The increase in net amounts due from related parties, trade accounts payable, and the decrease in accounts receivable-other was primarily due to variations in the timing of such payments in the ordinary course of business. The decrease in accrued expenses and other current and long-term liabilities was primarily the result of the payment of ~~$14.5 million~~ in incentive plans and an aggregate net decrease to accrued and other liabilities of $2.8 million, which includes a partial offset of a net increase in certain accrued tax accounts in the amount of $3.7 million primarily related to a fiscal year 2020 IRS settlement for a transfer pricing agreement with PSL. The increase in inventories was a result of reduced sales and was partially offset by a noncash impact of $2.5 million of inventory provisions during the period. The decrease in trade accounts receivable, net was primarily a result of decreased sales year-over-year during the comparable periods and includes $0.8 million of noncash bad debt provisions.

Investing Activities

Net cash used in investing activities primarily consists of purchases and sales of property, plant and equipment, partially offset by proceeds from sales of property, plant and ~~equipment.~~equipment. We expect our multi-year transition from an integrated device manufacturer to our current fabless, asset-lite manufacturing model, including the completion of the PSL Divestiture, ~~following the end of fiscal year 2020,~~ will result in a ~~decrease in~~stabilization of capital expenditures in the future.

Net cash used in investing activities was $50.1 million in the nine months ended December 24, 2021, consisting of purchases of property, plant and equipment of $55.8 million, payments related to the acquisition of Voxtel of $12.5 million, and purchases of marketable securities of $9.2 million, partially offset by $27.4 million of cash received for the sale of the AMTC Facility.

Net cash used in investing activities was $50.4 million in the nine-month period ended December 25, 2020, consisting of $25.9 million of purchases of property, plant and equipment, $8.5 million of cash expended for the acquisition of Voxtel and $16.3 million of cash removed as a result of the PSL Divestiture, partially offset by $0.3 million of proceeds from sales of property, plant and equipment.

Financing Activities

Net cash used in ~~investing~~financing activities was ~~$31.1~~$6.2 million in the ~~nine-month period~~nine months ended December ~~27, 2019,~~24, 2021, consisting of ~~$35.0~~funds loaned to PSL of $7.5 million, ~~of purchases of property, plant and equipment,~~ partially offset by ~~$3.9~~$1.3 million of proceeds ~~obtained from~~received in connection with the ~~sale~~issuance of ~~property, plant and equipment. The $3.9 million of proceeds from sales of property, plant and equipment were primarily attributable to the sale of~~common stock under our ~~Worcester, Massachusetts facility (the “Worcester Facility”) in the first quarter of fiscal 2020.~~

~~Financing Activities~~employee stock purchase plan.

Net cash used in financing activities was $72.2 million in the nine-month period ended December 25, 2020, consisting of $400.0 million of dividends paid prior to our IPO, $300.0 million for repayment of senior secured debt, $27.7 million of payments for taxes related to net share settlement of equity awards, and $33.0 million for repayment of unsecured credit facilities, partially offset by $315.7 million of borrowing of senior secured debt, net of deferred financing costs, $321.4

million of proceeds from initial public offering, net of underwriting discounts and other offering costs, and a $51.4 million related party note receivable.

Net cash provided by financing activities was $30.0 million in the nine-month period ended December 27, 2019, consisting of a repayment of the $30.0 million short-term loan issued to Sanken in the fourth quarter of fiscal year 2019.

Debt Obligations

Description of Credit Facilities

Term Loan Facility

The Term Loan Facility bears interest at a rate per year of, at our option, either (i) the Base Rate (as defined in the credit agreement) plus an applicable margin from 2.75% to 3.00% depending on our net leverage ratio, or (ii) the Eurodollar Rate (as defined in the credit agreement) plus an applicable margin from 3.75% to 4.00% depending on our net leverage ratio. The Eurodollar Rate is subject to a floor of 0.50%. At December ~~25, 2020~~24, 2021, all term loan borrowings were designated as Eurodollar loans and bore interest of ~~4.50%~~4.25%.

We incurred deferred financing costs of ~~$9.4~~$9.4 million in connection with the Term Loan Facility, the total of which was amortized into interest expense or recognized as loss on debt extinguishment as of ~~December 25, 2020.~~March 26, 2021.

The Term Loan Facility contains certain covenants that may, among other things and subject to certain exceptions, restrict the ability of us to:

•create, incur, assume or suffer to exist any ~~Lien~~lien upon any of its property, assets, or revenue;

•create, incur, or assume indebtedness;

•merge, consolidate or amalgamate with or into any other entity;

•purchase or otherwise acquire all or substantially all of the assets, liabilities or properties of any other entity;

•sell, lease, transfer or otherwise dispose of all or substantially all of its assets or properties;

•enter into transactions with affiliates;

•~~Pay~~pay dividends or make other distributions; or

•change the nature of its business activities, its fiscal year, or its governing documents.

Borrowings under the Term Loan Facility are secured by 100% of the stock of our domestic subsidiaries, portions of the stock of certain of our foreign subsidiaries, and substantially all of our and our subsidiaries’ other property and assets, in each case subject to various exceptions.

We may be required to make mandatory prepayments of the Term Loan Facility if we have Excess Cash Flow as(as defined in the credit ~~agreement,~~agreement) if we make certain sales of assets outside the ordinary course of business, or if we suffer certain property loss events. We may make optional prepayments from time to time without premium or penalty.

Revolving Credit Facility

The Revolving Credit Facility bears interest at a rate per year of, at our option, the Base Rate plus ~~1.5%~~1.50%, the Cost of Funds Rate (as defined in the credit agreement) plus ~~2.5%~~2.50%, or the Eurodollar Rate plus ~~2.5%~~2.50%. In addition, commencing on the last business day of December 2020, we are required to pay, on a quarterly basis, a non-refundable commitment fee of 0.50% per year on the average daily unused commitments under the Revolving Credit Facility.

We incurred financing costs of ~~$0.3~~$0.3 million in connection with the Revolving Credit Facility, which we classified the related short-term and long-term portions within ~~“Prepaid~~Prepaid expenses and other current ~~assets”~~assets and ~~“Other assets”~~Other assets on our unaudited

consolidated balance sheet and are amortizing these costs over the term of the facility. The unamortized portion of the deferred financing costs associated with the Revolving Credit Facility was ~~$0.3~~$0.2 million at December ~~25, 2020.~~24, 2021.

The Revolving Credit Facility contains certain financial and non-financial covenants, including a maximum net leverage ratio applicable to the Revolving Credit Facility in the event that utilization exceeds 35% of the revolving loan commitment.

Borrowings under the Revolving Credit Facility are secured by 100% of the stock of our domestic subsidiaries, portions of the stock of certain of our foreign subsidiaries, and substantially all of our subsidiaries’ other property and assets, in each case subject to various exceptions.

~~AML Revolver~~

On January 22, 2019, AML entered into a revolving credit agreement with Mizuho Bank, Ltd., as lender, that provided for a revolving credit facility with a maximum borrowing capacity of $25.0 million (the “AML Revolver”). On January 22, 2020, AML and the lender amended the AML Revolver to extend the termination date for commitments thereunder from January 22, 2020 to January 22, 2021 (the “Commitment Termination Date”). On September 30, 2020, we repaid the AML Revolver in full and in conjunction, terminated it.

Borrowings under the AML Revolver bore interest at a rate per year equal to, at AML’s option, either (i) LIBOR (defined, with respect to the applicable interest period, as the rate per year determined by the lender for making or maintaining such loan at approximately 11:00 a.m. London time on the day that was two London business days prior to the commencement of the applicable interest period), or (ii) the Cost of Funds Rate (defined, with respect to the applicable interest period, as the rate per year determined by the lender to be its effective cost of funding such loan in dollars during such interest period), plus, in each case, a spread of 0.4%. In addition, AML was required to pay, on a quarterly basis in arrears, a non-refundable commitment fee of 0.2% per year on the average daily unused commitments under the AML Revolver during such quarterly period. AML was also required to pay, on the closing date of the AML Revolver, a non-refundable up-front fee of $25 thousand.

The outstanding principal amount of borrowings under the AML Revolver, together with all accrued and unpaid interest thereon, was due and payable on the first to occur of (i) the last day of the applicable interest period, or (ii) the Commitment Termination Date (or, in each case, such earlier date as such borrowings are accelerated or commitments under the AML Revolver are otherwise terminated in accordance with the terms thereof).

AML was permitted to prepay all or any portion of the borrowings outstanding under the AML Revolver from time to time without premium or penalty, provided that any partial prepayment must have been in an aggregate amount not less than $100,000 or an integral multiple thereof, and all prepayments must have been accompanied by accrued and unpaid interest on the amount being prepaid to the date of such prepayment. Amounts prepaid under the AML Revolver may have been subsequently re-borrowed, provided that such prepayment was not accompanied by a termination of the underlying commitment.

Obligations under the AML Revolver were not secured by collateral. The credit agreement governing the AML Revolver contains certain covenants that, among other things and subject to certain exceptions, restricted the ability of AML to:

•~~merge, consolidate or amalgamate with or into any other entity;~~

•~~purchase or otherwise acquire all or substantially all of the assets, liabilities or properties of any other entity;~~

•~~sell, lease, transfer or otherwise dispose of all or substantially all of its assets or properties;~~

•~~change the nature of its business activities;~~

•~~enter into transactions with affiliates; and~~

•~~amend its governing documents.~~

~~The credit agreement also contained a financial covenant that required AML to maintain positive consolidated income before income taxes and consolidated net income for each of its fiscal years.~~

The credit agreement governing the AML Revolver contained certain customary representations and warranties and affirmative covenants. In addition, the lender would have been permitted to accelerate all outstanding borrowings and other obligations, terminate outstanding commitments and exercise other specified remedies upon the occurrence of certain events of default (subject to certain grace periods and exceptions), which included, among other things, payment defaults, breaches of representations and warranties, covenant defaults, cross-accelerations to material debt, certain events of bankruptcy and insolvency, and certain judgments, changes in control and material adverse effects.

~~AML Line of Credit~~

AML had a line of credit with the Bank of Mitsubishi UFJ that provided for a maximum borrowing capacity of $8.0 million at an interest rate of 1.9%. On October 1, 2020, we repaid this line of credit in full and in conjunction, terminated it.

AMPI Credit Facilities

On November 26, 2019, AMPI entered into a line of credit agreement with Union Bank of the Philippines, Inc. that provides for a maximum borrowing capacity of 60.0 million Philippine pesos (approximately $1.2 ~~million~~)million) at the bank’s prevailing interest rate. ~~The~~While this line of credit ~~expires~~initially expired on August ~~31,~~21, 2021 (in connection with certain delays as a result of the COVID-19 pandemic and its impact on bank operations), the line of credit was extended in September 2021 and is now expected to expire on August 21, 2022. There were no borrowings outstanding under this line of credit as of December 24, 2021 and March 26, 2021.

On November 20, 2019, AMPI entered into a line of credit agreement with BDO Unibank that provides for a maximum borrowing capacity of 75.0 million Philippine pesos ~~(approximately $1.6 million~~)(approximately $1.5 million) at the bank’s prevailing interest rate. ~~The~~While this line of credit ~~expires~~initially expired on June 30, ~~2021.~~2021 (in connection with certain delays as a result of the COVID-19 pandemic and its impact on

~~Off-Balance Sheet Arrangements~~

Asbank operations), the line of credit was extended in September 2021 and is now expected to expire on June 30, 2022. There were no borrowings outstanding under this line of credit as of December 25, 2020, we did not have any off-balance sheet arrangements, as defined by applicable regulations of the SEC, that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.24, 2021 and March 26, 2021.

Recent Accounting Pronouncements

See Note 2, “Summary of Significant Accounting ~~Policies,”~~Policies” in the unaudited consolidated financial statements included elsewhere in this Quarterly Report for a full description of recent accounting pronouncements, including the respective dates of adoption or expected adoption and effects on our condensed consolidated financial statements contained in Item 1 of this Quarterly Report.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies” to our consolidated financial statements included in our 2021 Annual Report. There have been no material changes in our critical accounting policies and estimates since March 26, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

~~We are exposed~~There have been no material changes in our exposures to market risk insince March 26, 2021. For details on the ~~ordinary course of business, which consists primarily of~~Company’s interest ~~rates risk associated with our cash and cash equivalents and our debt,~~rate, foreign currency ~~risk~~exchange, and ~~impact of inflation. We do not engage~~inflation risks, see “Item 7A. Quantitative and Qualitative Information About Market Risks” in ~~speculative trading activities. The following analysis provides additional information regarding these risks.~~

~~Interest Rate Risk~~

Our investments have limited exposure to market risk. At December 25, 2020, we maintained a portfolio of cash and cash equivalents, consisting primarily of money market funds. None of these investments have a maturity date in excess of one year. Certain interest rates are variable and fluctuate with current market conditions. Because of the short-term nature of these instruments, we would not expect a sudden change in market interest rates to have a material impact on our ~~financial condition or results of operations.~~

We are also exposed to market risk as a result of increases or decreases in the amount of interest expense we must pay on our Term Loan Facility and borrowings on our bank credit facilities. Although our Term Loan Facility and credit facilities have variable rates, as of December 25, 2020, we do not believe that a 10% change in market interest rates would have a material impact on our financial position or results of operations.

~~Foreign Currency Risk~~

Due to our international operations, a significant portion of our cost of sales and operating expenses is denominated in currencies other than the U.S. Dollar, principally the Euro, the Philippine Peso and the Thai Baht. As a result, our international operations give rise to transactional market risk associated with exchange rate movements of the U.S. Dollar, the Euro, the Philippine Peso and the Thai Baht. Losses on foreign exchange transactions totaled $0.1 million and $1.3 million fo~~r the three- and nine-month periods ended~~ December 25, 2020, respectively. Losses on foreign exchange transactions amounted to $0.6 million for the three-month period ended December 27, 2019, and gains on foreign exchange transactions amounted to $2.8 million for the nine-month period ended December 27, 2019~~. Management does not attempt to minimize these exposures.~~

~~In addition, we are exposed to foreign currency translation risk for those subsidiaries whose functional currency is not the U.S. Dollar as changes in the value of their functional currency relative to the U.S. Dollar can adversely affect the~~

translated amounts of our sales, expenses, net income, assets and liabilities. This can, in turn, affect the reported value and relative growth of sales and net income from one period to the next. In addition, changes in the translated value of assets and liabilities due to changes in functional currency exchange rates relative to the U.S. Dollar result in foreign currency translation adjustments that are a component of other comprehensive income or loss. Foreign currency derivative instruments can be used to hedge exposures and reduce the risks of certain foreign currency transactions; however, these instruments provide only limited protection and can carry significant cost. We have no foreign currency derivative instrument hedges as of December 25, 2020. We will continue to analyze our exposure to currency exchange rate fluctuations and may engage in financial hedging techniques in the future to attempt to minimize the effect of these potential fluctuations. Exchange rate fluctuations may adversely affect our financial results in the future.

~~Impact of Inflation~~

Inflationary factors, such as increases in overhead costs or the costs of other core operating resources, may adversely affect our operating results. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe the effects of inflation, if any, on our historical results of operations and financial condition have been material. We cannot assure that future inflationary or other cost pressures will not have an adverse impact on our results of operations and financial condition in the future.2021 Annual Report.

Item 4. Controls and Procedures.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Senior Vice President, Chief Financial Officer and Treasurer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December ~~25, 2020.~~24, 2021. Based on the evaluation of our disclosure controls and procedures as of December ~~25, 2020,~~24, 2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

7161

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be involved in claims and proceedings arising in the course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. We are not currently party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial condition.

Item 1A. Risk Factors.

~~Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited~~There have been no material changes to ~~those described in~~ the ~~section titled~~ “Risk Factors” ~~of the Registration Statement and described elsewhere~~disclosed in this Quarterly Report, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price. For a discussionItem 1A of our ~~potential risks and uncertainties, see the risk factors previously disclosed in the section titled “Risk Factors” of our~~ ~~Registration Statement, which risk factor section is incorporated herein by reference.~~2021 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On October 28, 2020, the SEC declared effective our Registration Statement on Form S-1 (File No. 333-249348), as amended, filed in connection with our IPO (the “IPO Registration Statement”). Pursuant to the IPO Registration Statement, we registered the offer and sale of 25,000,000 shares of our common stock with an aggregate offering price of $350.0 million. Barclays Capital Inc., Credit Suisse Securities (USA) LLC, Wells Fargo Securities, LLC, Jefferies LLC, Mizuho Securities USA LLC, Needham & Company, LLC and SMBC Nikko Securities America, Inc. served as underwriters for the offering. On November 2, 2020, we issued and sold 25,000,000 shares of our common stock, at a price to the public of $14.00 per share. Upon completion of the IPO on November 2, 2020, we received net proceeds of approximately $321.4 million, after deducting the underwriting discount of $20.1 million and offering expenses of $8.4 million. No payments for such expenses were made directly or indirectly to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities or (iii) any of our affiliates.

~~The~~ ~~offering terminated after the sale of all securities registered pursuant to the IPO Registration Statement. $300.0 million of~~ the net proceeds of approximately $321.4 million from our IPO was used to repay borrowings under our term loan credit facility, and the remainder of the net proceeds were invested in short-term, investment-grade instruments. There has been no material change in the expected use of the net proceeds from our IPO as described in the final prospectus relating to our IPO Registration Statement, filed with the SEC on October 30, 2020 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended.None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

7262

Item 6. ~~Exhibits~~Exhibits.

(a) Exhibits

Exhibit No.

Description of Exhibit

~~Exhibit~~

~~Number~~

~~Exhibit Description~~

~~Form~~

~~File No.~~

~~Exhibit~~

~~Filing Date~~4.1

~~Filed/~~Form of Indenture (incorporated by reference from Exhibit 4.3 to the Company’s Registration Statement on Form S-3ASR filed on November 1, 2021).

10.1

~~Furnished~~Loan Agreement, dated as of December 2 , 202 1 , by and between Allegro MicroSystems, Inc. and Polar Semiconductor, LLC .

10.2

~~Herewith~~Offer Letter, dated as of January 6, 2022, by and between Allegro MicroSystems, Inc. and Derek D’Antilio.*

10.3

Severance Agreement, dated as of January 10, 2022, by and between Allegro MicroSystems, Inc. and Derek D’Antilio.*

10.4

Offer Letter, dated as of October 15, 2021, by and between Allegro MicroSystems, Inc. and Sharon S. Briansky.*

10.5

Severance Agreement, dated as of December 6, 2021, by and between Allegro MicroSystems, Inc. and Sharon S. Briansky.*

10.6

Consulting Agreement, dated as of January 10, 2022, by and between Allegro MicroSystems, Inc. and Paul V. Walsh, Jr.*

31.1

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

32.2

Certification ofPrincipal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS

Inline XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 filed herewith).

* ~~Filed herewith~~Indicates management contract or compensatory plan, contract or arrangement.

** ~~Furnished herewith~~Certification is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certification is not deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent that the registrant specifically incorporates it by reference.

7363

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ALLEGRO MICROSYSTEMS, INC.

Date: February 2, ~~2021~~2022	By:	/s/ Ravi Vig
		Ravi Vig
		President and Chief Executive Officer (principal executive officer)

Date: February 2, ~~2021~~2022	By:	/s/ ~~Paul V. Walsh, Jr.~~Derek P. D’Antilio
		~~Paul V. Walsh, Jr.~~Derek P. D’Antilio
		Senior Vice President, Chief Financial Officer and Treasurer (principal financial and accounting officer)

7464


Remainder of 2021	$	850
2022	3,293
2023	3,139
2024	3,003
2025	2,709
Thereafter	23,426
Total	$	36,420


Description	Current Liabilities		Long-Term Liabilities
Balance at March 27, 2020	$	11,488	$	2,439
Reclassification	1,004		(1,004)
Payments	(11,096)		0
RSU conversion	(640)		0
Removal due to divestiture	(378)		(398)
Accruals	(284)		(843)
Balance at December 25, 2020	$	94	$	194


	December 25, 2020		March 27, 2020
Senior Secured Term Loan	$	25,000	$	0

Unsecured Revolving Credit Facilities	0		43,000
Total Debt	25,000		43,000
Less debt payable within one year	0		43,000
Debt payable after one year	$	25,000	$	0


	Fair Value at December 25, 2020		Level 1		Level 2		Level 3
Assets of non-U.S. defined benefit plan:
Government securities	$	1,826	$	1,826	$	0	$	0
Unit investment trust fund	1,155		0		1,155		0
Loans	562		0		0		562
Bonds	1,193		0		1,193		0
Stocks and other investments	2,353		1,205		1		1,147
Total	$	7,089	$	3,031	$	2,349	$	1,709


	Fair Value at March 27, 2020		Level 1		Level 2		Level 3
Assets of non-U.S. defined benefit plan:
Government securities	$	1,260	$	1,260	$	0	$	0
Unit investment trust fund	897		0		897		0
Loans	756		0		0		756
Bonds	1,094		0		1,094		0
Stocks and other investments	1,572		1,207		1		364
Total	$	5,579	$	2,467	$	1,992	$	1,120


	Shares of Common Stock	Shares of Unvested Restricted Common Stock	Total Shares of Common Stock
Class A common stock	156,155,403	0	156,155,403
Class L common stock	7,816,574	459,749	8,276,323
Total	163,971,977	459,749	164,431,726


	Number of Shares	Weighted-Average Grant-Date Fair Value		Weighted-Average Remaining Contractual Life (In years)	Aggregate Intrinsic Value
Outstanding - March 27, 2020	0	$	0	—	$	—
Granted	1,426,944	14.04
Vested	(376)	14.00
Canceled	(28,920)	14.00
Outstanding - December 25, 2020	1,397,648	$	14.04	1.74	$	34,648