SLAB 10-K & 10-Q changes, risk factors and insider trading
Silicon Laboratories Inc. · Nasdaq · Semiconductors & Related Devices · CIK 1038074 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risk Factors Summary”
New heading “Risks Related to the Proposed Merger”
New heading “Intellectual Property Risks”
New heading “Liquidity and Credit Risks”
New heading “Stock and Governance Risks”
New heading “Risks Related to the Proposed Merger”
New heading “We may not complete the proposed Merger within the time frame we anticipate, or at all, which could have an adverse effect on our business, financial condition, results of operations, cash flows and stock price”
New heading “Uncertainties associated with the Merger could adversely affect our business, results of operations, cash flows and financial condition”
New heading “The Merger Agreement contains provisions that limit our ability to pursue alternatives to the Merger and that could deter or discourage a competing acquirer from making a favorable alternative transaction proposal”
New heading “While the Merger Agreement is in effect, we are subject to restrictions on our business activities”
New heading “Lawsuits may arise in connection with the Merger, which could delay or prevent completion of the Merger and adversely affect our business, results of operations, cash flows and financial condition”
New heading “Global Business Risks”
New heading “Our business, financial condition, and results of operations could be materially and adversely affected by global or industry-specific shortages of memory components or other key components necessary for our customers’ products”
New heading “Our business, financial condition, and results of operations could be materially and adversely affected by tariffs, trade restrictions, and other barriers to international trade”
Removed heading “Public health crises could adversely affect our business, results of operations, and financial condition”
Removed heading “Our products incorporate technology licensed from third parties”
Largest changes
“In addition, the risk of cyber-attacks has increased in connection with the conflicts between Russia and Ukraine and in the Middle East. In light of those and other geopolitical events, nation-state actors or their supporters may launch retaliatory cyber-attacks, and may attempt to cause supply chain and other third-party service provider disruptions, or take other geopolitically motivated retaliatory actions that may disrupt our business operations, result in data compromise, or both. …”see in full comparison
“Restrictions on international trade, such as tariffs and other controls on imports or exports of goods and technology can adversely affect our business and supply chain. These trade restrictions may impact the cost and availability of raw materials, components, and finished goods, which could lead to supply chain disruptions, increased costs, and lower margins. There is currently significant uncertainty about the future relationship between the U.S. and various other countries with respect to trade policies and tariffs. Export restrictions imposed by the U.S. …”see in full comparison
“In addition, the risk of cyber-attacks has increased in recent years in connection with geopolitical events, and nation-state actors or their supporters may launch retaliatory cyber-attacks, and may attempt to cause supply chain and other third-party service provider disruptions, or take other geopolitically motivated retaliatory actions that may disrupt our business operations, result in data compromise, or both. …”see in full comparison
“Information technology system and/or network disruptions, regardless of the cause, but including acts of sabotage, error, or other actions, could harm our operations. Failure to effectively prevent, detect, and recover from security breaches, including cyber-attacks, could result in the misuse of company assets, disruption to the company, diversion of management resources, regulatory inquiries, legal claims or proceedings, reputational damage, loss of sales and other costs to the company. …”see in full comparison
“•Risks that demand and the supply chain may be adversely affected by military conflict (including the ongoing conflict between Russia and Ukraine and tensions in the Middle East), terrorism, sanctions or other geopolitical events globally;”see in full comparison
“•Risks that demand and the supply chain may be adversely affected by military conflict (including the ongoing conflicts in the Middle East and between Russia and Ukraine), terrorism, sanctions or other geopolitical events globally;”see in full comparison
Full comparison: every changed paragraph (183)
Risk Factors Summary
Risks Related to the Proposed Merger
•We may not complete the proposed Merger within the time frame we anticipate, or at all, which could have an adverse effect on our business, financial condition, results of operations, cash flows and stock price
•Uncertainties associated with the Merger could adversely affect our business, results of operations, cash flows and financial condition
•The Merger Agreement contains provisions that limit our ability to pursue alternatives to the Merger and that could deter or discourage a competing acquirer from making a favorable alternative transaction proposal
•While the Merger Agreement is in effect, we are subject to restrictions on our business activities
•Lawsuits may arise in connection with the Merger, which could delay or prevent completion of the Merger and adversely affect our business, results of operations, cash flows and financial condition
•We may be the victim of business disruptions and security breaches, including cyber-attacks, which could lead to liability or could damage our reputation and financial results
•We may be subject to information technology failures that could damage our reputation, business operations and financial condition
•Our business, financial condition, and results of operations could be materially and adversely affected by global or industry-specific shortages of memory components or other key components necessary for our customers’ products
•Competition within the numerous markets we target may reduce sales of our products and reduce our market share
•If we are unable to develop or acquire new and enhanced products that achieve market acceptance in a timely manner, our operating results and competitive position could be harmed
•Our research and development efforts are focused on a limited number of new technologies and products, and any delay in the development, or abandonment, of these technologies or products by industry participants, or their failure to achieve market acceptance, could compromise our competitive position
•We have limited resources compared to some of our current and potential competitors and we may not be able to compete effectively and increase market share
•Our business, financial condition, and results of operations could be materially and adversely affected by tariffs, trade restrictions, and other barriers to international trade
•We rely on third parties to manufacture, assemble and test our products, which subjects us to risks of disruptions in our supply chain
•We are a global company, which subjects us to additional business risks including logistical and financial complexity, supply disruption, political instability and currency fluctuations
•Most of our current manufacturers, assemblers, test service providers, distributors and customers are concentrated in the same geographic region, which increases the risk that a natural disaster, epidemic, labor strike, war or political unrest could disrupt our operations or sales
•We are subject to the cyclical nature of the semiconductor industry, which has been subject to significant fluctuations
•We may not be able to maintain our historical growth and may experience significant period-to-period fluctuations in our revenues and operating results, which may result in volatility in our stock price
•Our inability to manage growth could materially and adversely affect our business
•We depend on our key personnel to manage our business effectively in a rapidly changing market, and if we are unable to retain our current personnel and hire additional personnel, our ability to develop and successfully market our products could be harmed
•Any acquisitions we make could disrupt our business and harm our financial condition
•The average selling prices of our products could decrease rapidly which may negatively impact our revenues and gross profit
•Failure to manage our distribution channel relationships could impede our future growth
•We do not have long-term commitments from our customers
•We are subject to increased inventory risks and costs because we build our products based on forecasts provided by customers before receiving purchase orders for the products
•Our products are complex and may contain errors which could lead to liability, an increase in our costs and/or a reduction in our revenues
•Our customers require our products to undergo a lengthy and expensive qualification process without any assurance of product sales
•We are subject to risks relating to product concentration
•Any dispositions could harm our financial condition
•The semiconductor manufacturing process is highly complex and, from time to time, manufacturing yields may fall below our expectations, which could result in our inability to satisfy demand for our products in a timely manner and may decrease our gross profit due to higher unit costs
•We depend on our customers to support our products, and some of our customers offer competing products
•Changes in the privacy and data security/protection laws could have an adverse effect on our operations
•Our products must conform to industry standards and technology in order to be accepted by end users in our markets
•Any material weaknesses or other deficiencies or otherwise failing to maintain an effective system of internal controls, including disclosure controls and procedures, could result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations
Intellectual Property Risks
•Significant litigation over intellectual property in our industry may cause us to become involved in costly and lengthy litigation which could adversely affect our business
•We may be unable to protect our intellectual property, which would negatively affect our ability to compete
Liquidity and Credit Risks
•Disruptions in the financial services industry could adversely affect our operations and financial condition
•We are subject to credit risks related to our accounts receivable
•Any borrowings under our credit agreement or other indebtedness could adversely affect our operations and financial condition
•We could seek to raise additional debt or equity capital in the future, but additional capital may not be available on terms acceptable to us, or at all
Stock and Governance Risks
•Our stock price may be volatile
•Provisions in our charter documents and Delaware law could prevent, delay or impede a change in control of us and may reduce the market price of our common stock
Risk Factors
Risks Related to the Proposed Merger
We may not complete the proposed Merger within the time frame we anticipate, or at all, which could have an adverse effect on our business, financial condition, results of operations, cash flows and stock price
On February 4, 2026, we entered into the Merger Agreement with Parent and Merger Subsidiary, pursuant to which Merger Subsidiary will be merged with and into us, with us continuing as the surviving company and a wholly owned subsidiary of Parent. If the Merger is completed, we will become a privately held company, meaning that our common stock will be delisted from the NASDAQ National Market and deregistered under the Securities Exchange Act of 1934. Completion of the Merger is subject to a number of closing conditions, including obtaining approval of our stockholders at a special meeting of stockholders and the receipt of required regulatory approvals. The failure to satisfy these closing conditions could jeopardize or delay the consummation of the Merger.
Each party’s obligation to consummate the Merger is also subject to the accuracy of the representations and warranties of the other party (subject to certain materiality qualifications) and the performance in all material respects of the other party’s covenants under the Merger Agreement, including, with respect to us, covenants regarding operation of our business prior to closing. In addition, the Merger Agreement may be terminated under certain specified circumstances. Certain conditions to the completion of the pending Merger are not within our control, and we cannot predict when or if these conditions will be satisfied (or waived, as applicable). As a result, we cannot assure you that the Merger will be completed.
If the Merger is not completed within the expected time frame, or at all, we may be subject to a number of material risks. To the extent that the current market price of our common stock reflects an assumption that the Merger will be completed, the price of our common stock could decrease if the Merger is not completed and stockholders may not recover their investment or receive a price for their shares of our common stock similar to what has been offered under the Merger Agreement. Further, investor confidence in us could decline, and stockholder litigation could be brought against us. Additionally, we may be required to pay a termination fee under certain circumstances that give rise to a termination of the Merger Agreement.
In addition, we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the Merger, including for activities that we would have not undertaken other than to complete the Merger. As a result, to the extent the Merger is not completed, we will receive little or no benefit from incurring these costs.
Even if successfully completed, there are certain risks to our stockholders from the Merger, including: the amount of cash per outstanding share of our common stock to be paid under the Merger Agreement is fixed and will not be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or operating results or in the event of any change in the market price of, analyst estimates of, or projections relating to, our common stock; receipt of the all-cash per share Merger consideration under the Merger Agreement is taxable to stockholders that are treated as U.S. holders for U.S. federal income tax purposes; and if the Merger is completed, our stockholders will forego the opportunity to realize the potential long-term value of the successful execution of our current business strategy as an independent company.
Uncertainties associated with the Merger could adversely affect our business, results of operations, cash flows and financial condition
The announcement and pendency of the Merger, as well as any delays in the expected timeframe, could cause disruption in our business and create uncertainties, which could have an adverse effect on our business, results of operations, cash flows and financial condition, regardless of whether the Merger is completed. These risks and uncertainties include, but are not limited to:
•the possibility that our relationship with suppliers, customers and employees could be adversely affected, including if our suppliers, customers or others attempt to negotiate changes in existing business relationships, consider entering into business relationships with parties other than us, delay or defer decisions concerning their business with us, or terminate their existing business relationships with us during the pendency of the Merger;
•uncertainties caused by any negative sentiment in the marketplace with respect to the Merger, which could adversely impact investor confidence in the Company;
•a diversion of a significant amount of management time and resources toward the completion of the Merger;
Management's Discussion & Analysis (MD&A)
New heading “Recent Developments”
Removed heading “Equity-method Loss”
Largest changes
In recent years, the global economic environment has experienced inflationary pressure, high interest rates, and geopolitical tension, and we have experienced declines in revenues as our customers slowed purchases to reduce existing inventories in a softening market.see in full comparisonWhile certain conditions improved during fiscal 2024, including deceleration of inflation and lowering of interest rates in certain geographies, thereThere continues to be uncertainty regardingoverallinternationalmacroeconomictradeconditions,relations and trade policy, includingincreasedthose related to tariffs. The situation concerning the imposition of additional tariffs and trade restrictions by the U.S. and other jurisdictions continues to evolve, and we cannot be certain of the outcome, which could adversely impact demand for our products, costs, customers, suppliers, and general economic conditions. Additionally, continued geopoliticaltensions,instability, including the ongoing war in Ukraine and conflicts in the Middle East, as well as the risk ofrecessions,inflation, slower GDP growth, or recession, and theeffectsweakening U.S. dollar, have added to the uncertainty. The extent ofpotentialthetradeimpactpoliciesofincludingthetariffs.macroeconomic and geopolitical environment on our operational and financial performance will depend on future developments, which are uncertain, but could materially affect our business, results of operations, access to sources of liquidity, and financial condition. Although we saw sequential improvements in revenues over the course of fiscal2024,2025, the extent of the continued impact, or any new impact, of macroeconomic conditions on our operational and financial performance will depend on future developments, their impact to the business of our suppliers and/or customers, and other items identified under “Risk Factors” above, all of which are uncertain and cannot be predicted.Any extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity, and financial condition.
“As of January 3, 2026, we had a $400 million revolving credit facility. We have an option to increase the size of the borrowing capacity of the revolving credit facility by up to the greater of an aggregate of $250 million and 100% of EBITDA, plus an amount that would not cause a secured net leverage ratio to exceed 3.50 to 1.00, subject to certain conditions. …”see in full comparison
“As of December 28, 2024, we had a $400 million revolving credit facility. We have an option to increase the size of the borrowing capacity of the revolving credit facility by up to the greater of an aggregate of $250 million and 100% of EBITDA, plus an amount that would not cause a secured net leverage ratio to exceed 3.50 to 1.00, subject to certain conditions. As of December 28, 2024, no amounts were outstanding on the revolving credit facility. We were granted a waiver of compliance for the minimum interest coverage ratio through March 29, 2025. …”see in full comparison
“The decrease in research and development expense in fiscal 2024 was primarily due to a decrease of $7.2 million for personnel-related expenses as a result of our workforce reductions implemented in the fourth quarter of fiscal 2023. Other decreases to research and development expense in fiscal 2024 were $2.3 million for the amortization of intangible assets, $2.0 million for technical services, and $1.4 million for IT-related costs, partially offset by an increase of $7.8 million in software expense. …”see in full comparison
“As announced on February 4, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Texas Instruments Incorporated (“Parent”) and Caldwell Merger Corp., a wholly-owned direct subsidiary of Parent (“Merger Subsidiary”), pursuant to which Merger Subsidiary will merge with and into Silicon Laboratories Inc. (the “Merger”), and we will survive the Merger as a wholly-owned direct subsidiary of Parent. …”see in full comparison
Full comparison: every changed paragraph (31)
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and related notes thereto included elsewhere in this report. This discussion contains forward-looking statements. Please see the “Cautionary Statement” and “Risk Factors” above for discussions of the uncertainties, risks and assumptions associated with these statements. Our fiscal year-end financial reporting periods are a 52- or 53-week fiscal year that ends on the Saturday closest to December 31. Fiscal 2024,2025 2023,had 53 weeks with the extra week occurring in the first quarter of the year. Fiscal 2024 and 20222023 had 52 weeks. Fiscal 2025, 2024, 2023, and 20222023 ended on January 3, 2026, December 28, 2024, and December 30, 2023 and December 31, 2022,2023, respectively.
Recent Developments
As announced on February 4, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Texas Instruments Incorporated (“Parent”) and Caldwell Merger Corp., a wholly-owned direct subsidiary of Parent (“Merger Subsidiary”), pursuant to which Merger Subsidiary will merge with and into Silicon Laboratories Inc. (the “Merger”), and we will survive the Merger as a wholly-owned direct subsidiary of Parent. At the effective time of the Merger, each share of our common stock outstanding as of immediately prior to the effective time (other than dissenting shares or any shares of our common stock held by us as treasury stock or owned by Parent or any of our or Parent’s subsidiaries) will be cancelled and converted into the right to receive $231.00 in cash, without interest. The transactions contemplated by the Merger Agreement were unanimously approved by our board of directors, and the Merger is expected to close in the first half of 2027, subject to customary closing conditions, including approval by our stockholders and the receipt of required regulatory approvals.
In connection with the proposed Merger, we have incurred significant costs in the first quarter of fiscal 2026 and expect to continue to incur financial advisory, legal, accounting, and other professional fees prior to the completion of the Merger, which could be significant.
In recent years, the global economic environment has experienced inflationary pressure, high interest rates, and geopolitical tension, and we have experienced declines in revenues as our customers slowed purchases to reduce existing inventories in a softening market. While certain conditions improved during fiscal 2024, including deceleration of inflation and lowering of interest rates in certain geographies, thereThere continues to be uncertainty regarding overallinternational macroeconomictrade conditions,relations and trade policy, including increasedthose related to tariffs. The situation concerning the imposition of additional tariffs and trade restrictions by the U.S. and other jurisdictions continues to evolve, and we cannot be certain of the outcome, which could adversely impact demand for our products, costs, customers, suppliers, and general economic conditions. Additionally, continued geopolitical tensions,instability, including the ongoing war in Ukraine and conflicts in the Middle East, as well as the risk of recessions,inflation, slower GDP growth, or recession, and the effectsweakening U.S. dollar, have added to the uncertainty. The extent of potentialthe tradeimpact policiesof includingthe tariffs.macroeconomic and geopolitical environment on our operational and financial performance will depend on future developments, which are uncertain, but could materially affect our business, results of operations, access to sources of liquidity, and financial condition. Although we saw sequential improvements in revenues over the course of fiscal 2024,2025, the extent of the continued impact, or any new impact, of macroeconomic conditions on our operational and financial performance will depend on future developments, their impact to the business of our suppliers and/or customers, and other items identified under “Risk Factors” above, all of which are uncertain and cannot be predicted. Any extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity, and financial condition.
Revenues decreasedincreased $197.9$200.4 million in fiscal 20242025 compared to fiscal 20232024 due to decreasedincreased revenues from both our Industrial & Commercial products and Home & Life products. Gross margin decreasedincreased to 58.2% in fiscal 2025 compared to 53.4% in fiscal 2024 compared to 58.9% in fiscal 2023 primarily dueas toour variations in customerindirect and productoverhead mix.expenses decreased as a percentage of revenues. Operating expenses decreasedincreased $7.1$49.8 million in fiscal 20242025 compared to fiscal 20232024 due primarily to continuedhigher efforts to containpersonnel-related costs. Operating loss in fiscal 20242025 was $165.5$70.5 million compared to operating loss of $24.2$165.5 million in fiscal 2023.2024. Refer to “Results of Operations” below for further discussion.
We ended fiscal 20242025 with $382.2$443.6 million in cash, cash equivalentsequivalents, and short-term investments. Net cash usedprovided inby operating activities was $13.9$95.7 million during fiscal 2024.2025. Accounts receivable were $54.5$64.5 million at DecemberJanuary 28,3, 2024,2026, representing 2928 days sales outstanding (“DSO”). Inventory was $105.6$95.6 million at DecemberJanuary 28,3, 2024,2026, representing 125113 days of inventory (“DOI”).
During fiscal 2025, 2024, 2023, and 2022,2023, we had no end customer that represented more than 10% of our revenues. In addition to direct sales to customers, some of our end customers purchase products indirectly from us through distributors and contract manufacturers. An end customer purchasing through a contract manufacturer typically instructs such contract manufacturer to obtain our products and incorporate such products with other components for sale by such contract manufacturer to the end customer. Although we actually sell the products to, and are paid by, the distributors and contract manufacturers, we refer to the end customer as our customer. Two of our distributors who sell to our customers, Arrow Electronics and Edom Technology, represented 27%28% and 16%21% of our revenues during fiscal 2025, 27% and 16% during fiscal 2024, and 34% and 15% during fiscal 2023, and 33% and 17% during fiscal 2022, respectively.
Cost of Revenues. Cost of revenues includes the cost of purchasing finished silicon wafers processed by independent foundries; costs associated with assembly, test and shipping of those products; costs of personnel and equipment associated with manufacturing support, logistics and quality assurance; costs of software royalties, other intellectual property license costs and amortization of certain acquired intangible assets; and an allocated portion of our occupancy costs. Our gross margin fluctuates depending on product mix, manufacturing yields, inventory valuation adjustments, average selling prices and other factors.
Equity-method Earnings (Loss). Equity-method earnings (loss) represents income or loss on our equity-method investment.
The decreaseincrease in revenues in fiscal 20242025 was due to decreasedincreased revenues of $158.1$106.4 million from our Industrial & Commercial products and $39.8$94.0 million from our Home & Life products. UnitRevenues increased as a result of increases in unit volumes and average selling prices of our productsproducts, decreased compared to fiscal 2023. The weakness inas the overallcurrent demand environment forhas ourimproved customers’relative products we experienced into the secondprior halfyear, ofwhich fiscalwas 2023impacted continued into fiscal 2024 asby customers sought to reducereducing inventory levels thatrelative hadto becomeamounts elevatedthey asheld aduring resultthe period of thewidespread supply chain disruptions during fiscal 2021 and 2022.disruptions. The average selling prices of our products may fluctuate significantly from period to period due to changes in product mix, customer mix, pricing decisions, and other factors. In general, as our products become more mature, we expect to experience decreases in average selling prices.
Gross profit decreasedincreased in fiscal 2024 due2025 primarily as a result of aan decreaseincrease in revenues in the period. Gross margin decreasedincreased primarilyas dueour to variations in customerindirect and productoverhead mix,expenses withdecreased theas a percentage of revenues attributed to direct customers increasing as compared to revenue from distributors in fiscal 2024.2025 as a result of the increase in revenues.
Research and development expense in fiscal 2025 increased $43.4 million for personnel-related costs as a result of lower expenses in the prior fiscal year due to cost containment measures, offset primarily by $8.5 million of government incentives and decreases of $9.6 million for amortization of intangible assets and $6.2 million for new product introduction and software expense.
The decrease in research and development expense in fiscal 2024 was primarily due to a decrease of $7.2 million for personnel-related expenses as a result of our workforce reductions implemented in the fourth quarter of fiscal 2023. Other decreases to research and development expense in fiscal 2024 were $2.3 million for the amortization of intangible assets, $2.0 million for technical services, and $1.4 million for IT-related costs, partially offset by an increase of $7.8 million in software expense. The increase in research and development expense as a percent of revenues in fiscal 2024 was due to our decreased revenues.
The increase in selling, general and administrative expense in fiscal 2025 was primarily due to $26.4 million for personnel-related costs as a result of lower expenses in the prior fiscal year due to cost containment measures and a $1.8 million increase in IT-related costs.
The decrease in selling, general and administrative expense in fiscal 2024 was primarily due to a $2.0 million decrease in outside services, a $1.4 million decrease in IT-related costs, and a $0.8 million decrease in occupancy costs, partially offset by a $2.9 million increase in personnel-related costs. The increase in selling, general and administrative expense as a percent of revenues in fiscal 2024 was due to our decreased revenues.
Interest income and other, net in fiscal 20242025 was $12.0$13.6 million compared to $19.2$12.0 million in fiscal 2023.2024. The decreaseincrease in interest income and other, net in fiscal 20242025 was primarily due to lower interest-bearing investment balances as a resulthigher ofcash theand salecash ofequivalents investments to fund the settlement of our 2025 convertible senior notesbalance in the second quarter ofcurrent fiscal 2023,year stockas repurchasescompared into the first three quarters ofprior fiscal 2023, and repayment of borrowing from our credit facility in the third quarter of fiscal 2023.year.
Interest expense in fiscal 20242025 was $1.3$1.0 million compared to $5.6$1.3 million in fiscal 2023.2024. The decrease was primarily due to a balance on the settlementrevolving credit facility for a portion of our 2025 convertible senior notes in the second quarter ofprior fiscal 2023.year.
The increasedecrease in the provision for income taxes for fiscal 20242025 as compared to fiscal 20232024 was primarily due to the establishment of a valuationdecrease allowance against the majority of our U.S. and Singapore deferredin tax assetsexpense duringrelated the second quarter of fiscal 2024. There is a need for a valuation allowance into the U.S. and Singapore duevaluation allowance. Because of the valuation allowance, we are unable to arecognize forecastedthe three-yearfull cumulativetax benefit of the pre-tax losslosses incurred in those jurisdictions in the current year. A valuation allowance is required to be established when it is more likely than not that some portion or all of a deferred tax asset will not be realized. We identified a need for the currentvaluation allowance due to the presence of significant negative evidence, including recent operating losses and twouncertainty precedingaround yearsfuture ineconomic conjunctionconditions withwithin the recent downturn inboth the semiconductor industry.industry and the broader economy. We intend to maintain the valuation allowance until our ability to forecast sufficient future sources of taxable income areis forecasted to realize the benefit of the deferred tax assets.reestablished.
Equity-method Loss
Equity-method loss in fiscal 2023 was $16.0 million. Our equity-method investment was sold in the fourth quarter of fiscal 2023.
Our principal sources of liquidity as of DecemberJanuary 28,3, 20242026 consisted of $382.2$443.6 million in cash, cash equivalents and short-term investments, of which $194.1$218.6 million was held by our U.S. entities. The remaining balance was held by our foreign subsidiaries. Our cash equivalents and short-term investments consisted of government debt securities, which include U.S. government securities; corporatetime debt securities, which include asset-backed securities, corporate bonds, and Yankee bondsdeposits; and money market funds.
Net cash usedprovided inby operating activities was $13.9$95.7 million during fiscal 2024,2025, compared to net cash used in operating activities of $30.3$13.9 million during fiscal 2023.2024. Operating cash flows during fiscal 20242025 reflect our net loss of $191.0$64.9 million, adjustments of $139.6$119.3 million for depreciation, amortization, stock-based compensation, and deferred income taxes, and a net cash inflow of $37.5$41.3 million due to changes in our operating assets and liabilities.
Accounts receivable increased to $64.5 million at January 3, 2026 from $54.5 million at December 28, 2024 from $29.3 million at December 30, 2023.2024. The increase in accounts receivable resulted primarily from an increase in shipments during the last quarter of fiscal 20242025 compared to the last quarter of fiscal 2023.2024. Our DSO was 28 days at January 3, 2026 and 29 days at December 28, 2024 and 30 days at December 30, 2023.2024.
Inventory decreased to $95.6 million at January 3, 2026 from $105.6 million at December 28, 2024 from $194.3 million at December 30, 2023, due to an intentional reduction of inventory holding levels in response to reduced demand.2024. Our inventory levels will vary based on the availability of supply and the impact of variations between forecasted demand used for purchasing inventory and actual demand. Our DOI was 113 days at January 3, 2026 and 125 days at December 28, 2024 and 407 days at December 30, 2023.2024.
Net cash providedused byin investing activities was $113.1$12.0 million during fiscal 2024,2025, compared to $469.8$113.1 million net cash provided during fiscal 2023.2024. The decrease in cash inflowsoutflows was principally due to a decrease in cash provided by net purchases, sales, and maturities of marketable securities of $380.1$91.2 million in fiscal 2025. Purchases of property and equipment increased $18.2 million during fiscal 2025 compared to fiscal 2024.
Net cash used in financing activities was $1.1 million during fiscal 2025, compared to $45.1 million during fiscal 2024, compared to $711.9 million during fiscal 2023.2024. The decrease in cash outflows was principally due to $571.2a $45.0 million in debt repayments and $217.1 million for repurchasesrepayment of commonborrowings stock,under partiallythe offsetrevolving bycredit $80.0 millionfacility in proceedsthe from our revolving line of credit, inprior fiscal 2023.year.
As of January 3, 2026, we had a $400 million revolving credit facility. We have an option to increase the size of the borrowing capacity of the revolving credit facility by up to the greater of an aggregate of $250 million and 100% of EBITDA, plus an amount that would not cause a secured net leverage ratio to exceed 3.50 to 1.00, subject to certain conditions. The credit facility contains various conditions, covenants, and representations with which we must be in compliance in order to borrow funds, including financial covenants that we must maintain a consolidated net leverage ratio (funded indebtedness less cash and cash equivalents up to $750 million and divided by EBITDA, as defined within the covenants) of no more than 4.25 to 1, and a minimum interest coverage ratio (EBITDA/interest payments) of no less than 2.50 to 1. As of January 3, 2026, we were in compliance with all of the covenants and no amounts were outstanding on the revolving credit facility.
As of December 28, 2024, we had a $400 million revolving credit facility. We have an option to increase the size of the borrowing capacity of the revolving credit facility by up to the greater of an aggregate of $250 million and 100% of EBITDA, plus an amount that would not cause a secured net leverage ratio to exceed 3.50 to 1.00, subject to certain conditions. As of December 28, 2024, no amounts were outstanding on the revolving credit facility. We were granted a waiver of compliance for the minimum interest coverage ratio through March 29, 2025. In the event we are not able to achieve compliance by the end of the waiver period, we may need to amend the covenant or obtain an additional waiver in order to access the revolving credit facility.
Our future capital requirements will depend on many factors, including the rate of sales growth, market acceptance of our products, the timing and extent of research and development projects, potential acquisitions of companies or technologies and the expansion of our sales and marketing activities. We believe our existing cash, cash equivalents, investments, credit under our credit facility, and cash generated from operations are sufficient to meet our short-term (i.e., over at least the next twelve months) and long-term capital requirements, although we could be required, or could elect, to seek additional funding prior to that time.funding. We may enter into acquisitions or strategic arrangements in the future which also could require us to seek additional equity or debt financing.
Our purchase obligations primarily include contractual arrangements in the form of purchase orders and purchase commitments with suppliers. As of DecemberJanuary 28,3, 2024,2026, such purchase obligations were $39.5$75.8 million. For a description of other contractual obligations, see Note 9, Debt, and Note 10, Leases, to the Consolidated Financial Statements.
What changed in the latest 10-Q
Risk Factors
Largest changes
Changessee in full comparisonin the privacyto and/or our failure to comply with laws and regulations regarding privacy, data security/protectionlawsand cybersecurity could have an adverse effect on our operations
We are or may become subject to a variety of laws and regulations regarding privacy, data protection and data security, and cybersecurity, such as the European Union’s General Data Protection Regulation (“GDPR”)see in full comparison.and Cyber Resilience Act of 2024. There are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regardingprivacytheseandmatters,the collection, sharing, use, processing, disclosure, and protection of personal data. Such laws and regulationswhich often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions. The global data protection landscape continues to evolve, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. We may not be able to monitor and react to all developments in a timely manner. The costs of compliance withthetheseGDPRlaws andsimilar lawsregulations may have an adverse effect on our operations. Given that the scope, interpretation and application of these laws and regulations are often uncertain and may be in conflict across jurisdictions, it is possible they may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us to comply with our privacy or securitypoliciespolicies, laws and regulations, orprivacy-relatedanylegalofobligations,our contractual commitments regarding these matters, or any compromise ofsecurity that results in the unauthorized release or transfer of personal data,security, may result in governmental enforcement actions, litigation or negative publicity, and could have an adverse effect on our operating results and financial condition.
•Changessee in full comparisonin the privacyto and/or our failure to comply with laws and regulations regarding privacy, data security/protectionlawsand cybersecurity could have an adverse effect on our operations
Each party’s obligation to consummate the Merger is also subject to the accuracy of the representations and warranties of the other party (subject to certain materiality qualifications) and the performance in all material respects of the other party’s covenants under the Merger Agreement, including, with respect to us, covenants regarding operation of our business prior to closing. In addition, the Merger Agreement may be terminated under certain specified circumstances.see in full comparisonCertain conditions to the completion of the pending Merger are not within our control, and we cannot predict when or if these conditions will be satisfied (or waived, as applicable). As a result, we cannot assure you that the Merger will be completed.
“Certain conditions to the completion of the pending Merger are not within our control, and we cannot predict when or if these conditions will be satisfied (or waived, as applicable). As a result, we cannot assure you that the Merger will be completed.”see in full comparison
“Additionally, in certain products, some of our customers offer their own competitive products. These customers may find it advantageous to support their own offerings in the marketplace in lieu of promoting or using our products.”see in full comparison
Full comparison: every changed paragraph (12)
•Changes in the privacyto and/or our failure to comply with laws and regulations regarding privacy, data security/protection lawsand cybersecurity could have an adverse effect on our operations
Each party’s obligation to consummate the Merger is also subject to the accuracy of the representations and warranties of the other party (subject to certain materiality qualifications) and the performance in all material respects of the other party’s covenants under the Merger Agreement, including, with respect to us, covenants regarding operation of our business prior to closing. In addition, the Merger Agreement may be terminated under certain specified circumstances. Certain conditions to the completion of the pending Merger are not within our control, and we cannot predict when or if these conditions will be satisfied (or waived, as applicable). As a result, we cannot assure you that the Merger will be completed.
Certain conditions to the completion of the pending Merger are not within our control, and we cannot predict when or if these conditions will be satisfied (or waived, as applicable). As a result, we cannot assure you that the Merger will be completed.
Our products serve as components and solutions in electronic devices in various markets. As a result, we have devoted and expect to continue to devote a large amount of resources to develop products based on new and emerging technologies and standards that will be commercially introduced in the future. Research and development expense during the threesix months ended AprilJuly 4, 2026 was $88.6$183.6 million, or 41.5%41.6% of revenues. A number of companies are actively involved in the development of these new technologies and standards. Should any of these companies delay or abandon their efforts to develop commercially available products based on new technologies and standards, our research and development efforts with respect to these technologies and standards likely would have no appreciable value. In addition, if we do not correctly anticipate new technologies and standards, or if the products that we develop based on these new technologies and standards fail to achieve market acceptance, our competitors may be better able to address market demand than we would. Furthermore, if markets for these new technologies and standards develop later than we anticipate, or do not develop at all, demand for our products that are currently in development would suffer, resulting in lower sales of these products than we currently anticipate.
We have established international subsidiaries and have opened offices in international markets to support our activities in Asia, the Americas and Europe. This has included the establishment of a headquarters in Singapore for non-U.S. operations. During the threesix months ended AprilJuly 4, 2026, the percentage of our revenues derived from outside of the United States was 92%90% (and the revenue associated with end customers in China was 19%, and revenue attributed to China based on shipped-to location was 32%31%). We may not be able to maintain or increase global market demand for our products. Our international operations are subject to a number of risks, including:
We believe our future success will depend in large part upon our ability to attract and retain highly skilled managerial, engineering, sales and marketing personnel. We believe that our future success will be dependent on retaining the services of our key personnel, developing their successors and certain internal processes to reduce our reliance on specific individuals, and on properly managing the transition of key roles when they occur. Competition for qualified personnel with significant experience in the design, development, manufacturing, marketing and sales of analog and mixed-signal products has been, and continues to be, intense. Our key technical personnel represent a significant asset and serve as the primary source for our technological and product innovations. We may not be successful in attracting and retaining sufficient numbers of technical personnel to support our anticipated growth. The loss of any of our key employees or the inability to attract or retain qualified personnel both in the United States and internationally, including engineers, sales, applications and marketing personnel, could delay the development and introduction of, and negatively impact our ability to sell, our products. In addition, changes to immigration laws and visa policies in the United States and other jurisdictions may restrict our ability to recruit or retain foreign nationals in key technical roles. For example, the September 2025 Presidential Proclamation on Restriction on Entry of Certain Nonimmigrant Workers currently imposes a $100,000 filing fee on all new H-1B visa petitions submitted after September 21, 2025, which increases the cost of hiring foreign national employees, and the Department of Homeland Security has implemented a weighted lottery system based on wage levels for H-1B visas, which could disadvantage our ability to hire early-career or entry-level foreign national personnel. These regulatory constraints, including increased scrutiny or delays in visa processing, could limit our access to highly specialized talent and adversely affect our hiring flexibility and long-term innovation capacity.
The future growth of our business will depend in large part on our ability to manage our relationships with current and future distributors and sales representatives, develop additional channels for the distribution and sale of our products and manage these relationships. During the threesix months ended AprilJuly 4, 2026, 75% of our revenue was derived from distributors (and 51% of our revenue was derived from our two largest distributors). As we execute our indirect sales strategy, we must manage the potential conflicts that may arise with our direct sales efforts. For example, conflicts with a distributor may arise when a customer begins purchasing directly from us rather than through the distributor. The inability to successfully execute or manage a multi-channel sales strategy could impede our future growth. In addition, relationships with our distributors often involve the use of price protection and inventory return rights. This often requires a significant amount of sales management’s time and system resources to manage properly.
We rely on our customers to provide hardware, software, intellectual property indemnification and other technical support for the products supplied by them. If our customers do not provide the required functionality or satisfactory support for their products, the demand for these devices that incorporate our products may diminish or we may otherwise be materially adversely affected. Any reduction in the demand for these devices would significantly reduce our revenues. Additionally, in certain products, some of our customers offer their own competitive products. These customers may find it advantageous to support their own offerings in the marketplace in lieu of promoting or using our products.
Additionally, in certain products, some of our customers offer their own competitive products. These customers may find it advantageous to support their own offerings in the marketplace in lieu of promoting or using our products.
Changes in the privacyto and/or our failure to comply with laws and regulations regarding privacy, data security/protection lawsand cybersecurity could have an adverse effect on our operations
We are or may become subject to a variety of laws and regulations regarding privacy, data protection and data security, and cybersecurity, such as the European Union’s General Data Protection Regulation (“GDPR”). and Cyber Resilience Act of 2024. There are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regarding privacythese andmatters, the collection, sharing, use, processing, disclosure, and protection of personal data. Such laws and regulationswhich often vary in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions. The global data protection landscape continues to evolve, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. We may not be able to monitor and react to all developments in a timely manner. The costs of compliance with thethese GDPRlaws and similar lawsregulations may have an adverse effect on our operations. Given that the scope, interpretation and application of these laws and regulations are often uncertain and may be in conflict across jurisdictions, it is possible they may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us to comply with our privacy or security policiespolicies, laws and regulations, or privacy-relatedany legalof obligations,our contractual commitments regarding these matters, or any compromise of security that results in the unauthorized release or transfer of personal data,security, may result in governmental enforcement actions, litigation or negative publicity, and could have an adverse effect on our operating results and financial condition.
Our ability to make the required payments when due on any debt we may incur depends upon our future performance, which will be subject to general economic conditions, industry cycles and other factors affecting our operations, including risk factors described herein, many of which are beyond our control. Our credit facility also contains covenants, including financial covenants. In May 2024, we received a waiver of the requirement that we meet an interest coverage test for each fiscal quarter through the fiscal first quarter of 2025 and in February 2025 we received an extension of the waiver through the third quarter of 2025. We did not have any outstanding indebtedness under the credit facility while the waiver was in effect. We have not renewed or extended the waiver since its expiration as of October 4, 2025. However, if we breach any of the covenants under our credit facility and do not obtain appropriate waivers, then, subject to any applicable cure periods, any outstanding indebtedness thereunder could be declared immediately due and payable.
Management's Discussion & Analysis (MD&A)
Largest changes
The global economic environment has experienced inflationary pressure, high interest rates, and geopolitical tensions. There continues to be uncertainty regarding international trade relations and trade policy, including those related to tariffs. The situation concerning the imposition of additional tariffs and trade restrictions by the U.S. and other jurisdictions continues to evolve, and we cannot be certain of the outcome, which could adversely impact demand for our products, costs, customers, suppliers, and general economic conditions. Continued geopolitical instability, including the ongoing war in Ukraine and the war in Iran and other conflicts in the Middle East, volatility in energy markets and recent increases in oil prices driven by geopolitical conflicts, the risk of inflation, slower GDP growth, or recession, and variations in thesee in full comparisonweakeningrelative strength of the U.S. dollar, have added to the uncertainty. The extent of the impact of the macroeconomic and geopolitical environmenton our operational and financial performance will depend on future developments, which are uncertain, but could materially affect our business, results of operations, access to sources of liquidity, and financial condition. The extent of the impact of macroeconomic conditionson our operational and financial performance will depend on future developments, their impact to the business of our suppliers and/or customers, and other items identified under “Risk Factors” below, all of which are uncertain and cannot bepredicted.predicted, but could materially affect our business, results of operations, access to sources of liquidity, and financial condition. See the section entitled “Risk Factors” in Part II, Item 1A of the Form 10-Q for further discussion.
Research and development expense in the recent three-month period increased, with increases ofsee in full comparison$1.7$3.3 million from costs incurred due to the Merger, $2.7 million from personnel-related costs, and $1.0 million from lower government incentives. Research and development expense in the recent six-month period increased, with increases of $3.3 million from costs incurred due to the Merger, $2.8 million from personnel-related costs, $2.1 million for new product introduction costs,$1.0$2.0 million from lower government incentives, and$0.6$0.8 million for IT-related costs, partially offset by a decrease of$3.1$4.2 million for amortization of intangible assets.
Net cash provided by investing activities wassee in full comparison$14.9$27.2 million during thethreesix months endedAprilJuly 4, 2026, compared to net cash used of$3.9$14.1 million during thethreesix months endedAprilJuly 5, 2025. The increase in cash inflows was principally due toancashincreaseproceedsinfrom maturities of marketable securities of $44.1 million compared to a net cashprovidedoutflowbyofnet$0.5 million from purchases, sales, and maturities of marketable securitiesofin$22.5themillionprior year, and the receipt of$1.3$5.3 million of proceeds from capital-related government incentives in the current period. Purchases of property and equipment increased$5.0$8.6 million during thethreesix months endedAprilJuly 4, 2026 compared to thethreesix months endedAprilJuly 5, 2025.
The increase in revenues in the recent three-month period was due to increased revenues ofsee in full comparison$32.0$25.2 million from our Industrial & Commercial products and increased revenues of$3.8$10.1 million from our Home & Life products. The increase in revenues in the recent six-month period was due to increased revenues of $57.1 million from our Industrial & Commercial products and increased revenues of $14.0 million from our Home & Life products. Revenues increased in the recentthree-monththree and six-month periods as a result of increases in unit volumes of our products relative to the prior year. The average selling prices of our products may fluctuate significantly from period to period due to changes in product mix, pricing decisions and other factors. In general, as our products become more mature, we expect to experience decreases in average selling prices.
The increase in selling, general and administrative expense in the recent three-month period was primarily due tosee in full comparison$11.2a $6.4 million increase in personnel-related costs and $6.3 million from costs incurred due to the Merger. The increase in selling, general and administrative expense in the recent six-month period was primarily due to $17.5 million from costs incurred due to the Merger, and a$2.9$9.2 million increase in personnel-related costs.
Gross profit increased during the recentsee in full comparisonthree-monththree and six-month period primarily as a result of increases in revenues in the periods. Gross margin increased as our indirect and overhead expenses decreased as a percentage of revenues in the recentthree-monththree and six-month period as a result of the increase in revenues. Increased product demand and production capacity constraints may affect the costs of our products, and the prices we pay for inventory may increase in future periods which could reduce our gross margins.
Full comparison: every changed paragraph (24)
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Condensed Consolidated Financial Statements and related notes thereto included elsewhere in this report. This discussion contains forward-looking statements. Please see the “Cautionary Statement” above and “Risk Factors” below for discussions of the uncertainties, risks and assumptions associated with these statements. Our fiscal year-end financial reporting periods are a 52- or 53-week fiscal year that ends on the Saturday closest to December 31. Fiscal 2026 will have 52 weeks. Fiscal 2025 had 53 weeks with the extra week occurring in the first quarter of the year. Our firstsecond quarter of fiscal 2026 ended AprilJuly 4, 2026 and our firstsecond quarter of fiscal 2025 ended AprilJuly 5, 2025.
In connection with the proposed Merger, for the three and six months ended AprilJuly 4, 2026 we have incurred $11.2$9.6 million and $20.8 million of costs, respectively, and expect to continue to incur financial advisory, legal, accounting, and other professionalrelated feescosts prior to the completion of the Merger, which could be significant.
The global economic environment has experienced inflationary pressure, high interest rates, and geopolitical tensions. There continues to be uncertainty regarding international trade relations and trade policy, including those related to tariffs. The situation concerning the imposition of additional tariffs and trade restrictions by the U.S. and other jurisdictions continues to evolve, and we cannot be certain of the outcome, which could adversely impact demand for our products, costs, customers, suppliers, and general economic conditions. Continued geopolitical instability, including the ongoing war in Ukraine and the war in Iran and other conflicts in the Middle East, volatility in energy markets and recent increases in oil prices driven by geopolitical conflicts, the risk of inflation, slower GDP growth, or recession, and variations in the weakeningrelative strength of the U.S. dollar, have added to the uncertainty. The extent of the impact of the macroeconomic and geopolitical environment on our operational and financial performance will depend on future developments, which are uncertain, but could materially affect our business, results of operations, access to sources of liquidity, and financial condition. The extent of the impact of macroeconomic conditions on our operational and financial performance will depend on future developments, their impact to the business of our suppliers and/or customers, and other items identified under “Risk Factors” below, all of which are uncertain and cannot be predicted.predicted, but could materially affect our business, results of operations, access to sources of liquidity, and financial condition. See the section entitled “Risk Factors” in Part II, Item 1A of the Form 10-Q for further discussion.
Revenues increased $35.8$35.3 million in the recent quarter compared to the firstsecond quarter of fiscal 2025 due to increased revenues from our Industrial & Commercial products and our Home & Life products. Gross profit increased $29.2$32.6 million during the same period primarily as a result of the increase in revenues. Gross margin increased to 59.5%61.6% in the recent quarter compared to 55.0%56.1% in the firstsecond quarter of fiscal 2025 as our indirect and overhead expenses decreased as a percentage of revenues. Operating expenses increased by $14.2$20.4 million in the recent quarter compared to the firstsecond quarter of fiscal 2025 primarily due to higher personnel-related costs and costs related to the Merger. Operating loss in the recent quarter was $17.1$10.7 million compared to operating loss of $32.1$22.9 million in the firstsecond quarter of fiscal 2025. Refer to “Results of Operations” below for further discussion.
We ended the firstsecond quarter of fiscal 2026 with $438.9$397.2 million in cash, cash equivalents, and short-term investments. Net cash providedused byin operating activities was $4.9$9.6 million during the current year three-monthsix-month period. Accounts receivable were $77.1$79.8 million at AprilJuly 4, 2026, representing 3331 days sales outstanding (“DSO”). Inventory was $103.2$123.3 million at AprilJuly 4, 2026, representing 107127 days of inventory (“DOI”).
During the threesix months ended AprilJuly 4, 2026, we had no customer that represented more than 10% of our revenues. In addition to direct sales to customers, some of our end customers purchase products indirectly from us through distributors and contract manufacturers. An end customer purchasing through a contract manufacturer typically instructs such contract manufacturer to obtain our products and incorporate such products with other components for sale by such contract manufacturer to the end customer. Although we actually sell the products to, and are paid by, the distributors and contract manufacturers, we refer to such end customer as our customer. Two of our distributors who sell to our customers, Arrow Electronics and Edom Technology, each represented more than 10% of our revenues during the threesix months ended AprilJuly 4, 2026.
The percentage of our revenues derived from outside of the United States was 92%90% during the threesix months ended AprilJuly 4, 2026. All of our revenues to date have been denominated in U.S. dollars. We believe that a majority of our revenues will continue to be derived from customers outside of the United States.
Selling, General and Administrative. Selling, general and administrative expense consists primarily of personnel-related expenses, including stock-based compensation, as well as costs incurred due to the Merger, an allocated portion of our occupancy costs, sales commissions to independent sales representatives, amortization of intangible assets, professional fees, legal fees, and promotional and marketing expenses.
The increase in revenues in the recent three-month period was due to increased revenues of $32.0$25.2 million from our Industrial & Commercial products and increased revenues of $3.8$10.1 million from our Home & Life products. The increase in revenues in the recent six-month period was due to increased revenues of $57.1 million from our Industrial & Commercial products and increased revenues of $14.0 million from our Home & Life products. Revenues increased in the recent three-monththree and six-month periods as a result of increases in unit volumes of our products relative to the prior year. The average selling prices of our products may fluctuate significantly from period to period due to changes in product mix, pricing decisions and other factors. In general, as our products become more mature, we expect to experience decreases in average selling prices.
Gross profit increased during the recent three-monththree and six-month period primarily as a result of increases in revenues in the periods. Gross margin increased as our indirect and overhead expenses decreased as a percentage of revenues in the recent three-monththree and six-month period as a result of the increase in revenues. Increased product demand and production capacity constraints may affect the costs of our products, and the prices we pay for inventory may increase in future periods which could reduce our gross margins.
Research and development expense in the recent three-month period increased, with increases of $1.7$3.3 million from costs incurred due to the Merger, $2.7 million from personnel-related costs, and $1.0 million from lower government incentives. Research and development expense in the recent six-month period increased, with increases of $3.3 million from costs incurred due to the Merger, $2.8 million from personnel-related costs, $2.1 million for new product introduction costs, $1.0$2.0 million from lower government incentives, and $0.6$0.8 million for IT-related costs, partially offset by a decrease of $3.1$4.2 million for amortization of intangible assets.
The increase in selling, general and administrative expense in the recent three-month period was primarily due to $11.2a $6.4 million increase in personnel-related costs and $6.3 million from costs incurred due to the Merger. The increase in selling, general and administrative expense in the recent six-month period was primarily due to $17.5 million from costs incurred due to the Merger, and a $2.9$9.2 million increase in personnel-related costs.
Interest income and other, net for the three and six months ended AprilJuly 4, 2026 was $3.6$2.5 million and $6.1 million, respectively, compared to $3.8 million and $7.6 million, respectively, for the three and six months ended AprilJuly 5, 2025.
Interest expense for the three and six months ended AprilJuly 4, 2026 was $0.2$0.3 million and $0.5 million, respectively, compared to $0.3 million and $0.5 million, respectively, for the three and six months ended AprilJuly 5, 2025.
The decrease in the effective tax rate for the three and six months ended AprilJuly 4, 2026 is primarily due to a decrease in pre-tax book loss, as the impact of permanent items is relatively greater when the pre-tax loss is smaller.
Our principal sources of liquidity as of AprilJuly 4, 2026 consisted of $438.9$397.2 million in cash, cash equivalents and short-term investments, of which $250.3$243.8 million was held by our U.S. entities. The remaining balance was held by our foreign subsidiaries. Our cash equivalents and short-term investments consisted of government debt securities, which include U.S. government securities; time deposits; and money market funds.
Net cash providedused byin operating activities was $4.9$9.6 million during the threesix months ended AprilJuly 4, 2026, compared to net cash provided of $48.1$53.0 million during the threesix months ended AprilJuly 5, 2025. Operating cash flows during the threesix months ended AprilJuly 4, 2026 reflect our net loss of $15.9$26.5 million, adjustments of $30.6$65.1 million for depreciation, amortization, stock-based compensation, and deferred income taxes, and a net cash outflow of $9.7$48.2 million due to changes in our operating assets and liabilities.
Accounts receivable increased to $77.1$79.8 million at AprilJuly 4, 2026 from $64.5 million at January 3, 2026. The increase in accounts receivable resulted primarily from normal variations in the timing of collections and billings. Our DSO was 3331 days at AprilJuly 4, 2026 and 28 days at January 3, 2026.
Inventory increased to $103.2$123.3 million at AprilJuly 4, 2026 from $95.6 million at January 3, 2026. Inventory has increased in order to minimize potential supply disruptions and meet forecasted future demand. Our inventory levels will vary based on the availability of supply and the impact of variations between forecasted demand used for purchasing inventory and actual demand. Our DOI was 107127 days at AprilJuly 4, 2026 and 113 days at January 3, 2026.
Net cash provided by investing activities was $14.9$27.2 million during the threesix months ended AprilJuly 4, 2026, compared to net cash used of $3.9$14.1 million during the threesix months ended AprilJuly 5, 2025. The increase in cash inflows was principally due to ancash increaseproceeds infrom maturities of marketable securities of $44.1 million compared to a net cash providedoutflow byof net$0.5 million from purchases, sales, and maturities of marketable securities ofin $22.5the millionprior year, and the receipt of $1.3$5.3 million of proceeds from capital-related government incentives in the current period. Purchases of property and equipment increased $5.0$8.6 million during the threesix months ended AprilJuly 4, 2026 compared to the threesix months ended AprilJuly 5, 2025.
Net cash used in financing activities was $1.0$19.7 million during the threesix months ended AprilJuly 4, 2026, compared to $1.0$6.1 million during the threesix months ended AprilJuly 5, 2025. The increase in cash outflows was principally due to an increase in payment of taxes withheld for vested stock awards of $13.7 million.
As of AprilJuly 4, 2026, we had a $400 million revolving credit facility. We have an option to increase the size of the borrowing capacity of the revolving credit facility by up to the greater of an aggregate of $250 million and 100% of EBITDA, plus an amount that would not cause a secured net leverage ratio to exceed 3.50 to 1.00, subject to certain conditions. The credit facility contains various conditions, covenants, and representations with which we must be in compliance in order to borrow funds, including financial covenants that we must maintain a consolidated net leverage ratio (funded indebtedness less cash and cash equivalents up to $750 million and divided by EBITDA) of no more than 4.25 to 1, and a minimum interest coverage ratio (EBITDA/interest payments) of no less than 2.50 to 1. As of AprilJuly 4, 2026, we were in compliance with all of the covenants and no amounts were outstanding on the revolving credit facility.
Our investment portfolio includes cash, cash equivalents and short-term investments. Our main investment objective is the preservation of investment capital. Our interest income is sensitive to changes in the general level of U.S. interest rates. A 100 basis point decline in yield on our investment portfolio holdings as of AprilJuly 4, 2026 would decrease our future annual interest income by approximately $3.4$2.7 million. We believe that our investment policy, which defines the duration, concentration, and minimum credit quality of the allowable investments, meets our investment objectives.
We are exposed to interest rate fluctuations in the normal course of our business, including through our credit facility. The interest rate on the credit facility consists of a variable-rate of interest and an applicable margin. While we have drawn from the credit facility in the past, we had no borrowings as of AprilJuly 4, 2026. If we borrow from the credit facility in the future, we will again be exposed to interest rate fluctuations.
SLAB insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 2 filings (2 insiders, 2 trade dates, 14,605 shares, about $3.2M; 1 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -14,605 (purchases minus sales); net value about -$3.2M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-14 | Conrad Robert J |
Open-market sale |
6,581 | $218.21 | $1.4M |
| 2026-05-18 | Johnson Robert Matthew |
Open-market sale | 8,024 | $216.83 | $1.7M |
| 2026-05-15 | Butler Dean Warren |
Shares withheld for tax | 6,291 | $216.59 | $1.4M |
| 2026-05-15 | Conrad Robert J |
Shares withheld for tax | 3,653 | $216.59 | $791.2K |
| 2026-05-15 | Johnson Robert Matthew |
Shares withheld for tax | 10,363 | $216.59 | $2.2M |
| 2026-05-15 | Mauldin Mark D |
Shares withheld for tax | 858 | $216.59 | $185.8K |
| 2026-05-15 | Tolany Brandon |
Shares withheld for tax | 4,160 | $216.59 | $901.0K |
| 2026-04-30 | Mauldin Mark D |
Grant/award | 18 | $86.46 | $1.6K |
| 2026-04-30 | Tolany Brandon |
Grant/award | 45 | $86.46 | $3.9K |
| 2026-04-30 | Butler Dean Warren |
Grant/award | 152 | $86.46 | $13.1K |
| 2026-04-23 | Wyatt Christy |
Grant/award | 962 | — | — |
| 2026-04-23 | Sooch Navdeep S |
Grant/award | 1,226 | — | — |
| 2026-04-23 | Sadana Sumit |
Grant/award | 962 | — | — |
| 2026-04-23 | Richardson Nina |
Grant/award | 962 | — | — |
| 2026-04-23 | Bock William G |
Grant/award | 962 | — | — |
| 2026-04-23 | Lowe Gregg A |
Grant/award | 962 | — | — |
| 2026-04-23 | Luther Sherri R |
Grant/award | 962 | — | — |
Well-known investors holding SLAB (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 1,003,736 | $219.4M | 0.15% | Added 120% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 96,442 | $21.1M | 0.01% | Reduced 72% |
| Renaissance Technologies | 2026-06-30 | 50,498 | $11.0M | 0.02% | Reduced 67% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 42,883 | $9.4M | 0.0% | Reduced 84% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 12,686 | $2.6M | — | Sold out |
| D. E. Shaw & Co. | 2026-06-30 | 5,676 | $1.2M | 0.0% | Reduced 26% |
| Two Sigma Investments | 2026-06-30 | 2,501 | $546.6K | 0.0% | Added 19% |