10-K – 2026-05-21 – mchp-20260331.htm

Other investing 1.3   2.4   0.4  
Proceeds from capital-related government incentives 5.1   0.4   6.0  
Investments in other assets ( 110.8 ) ( 164.6 ) ( 113.4 )
Capital expenditures ( 91.1 ) ( 126.0 ) ( 285.1 )
Net cash used in investing activities ( 195.5 ) ( 287.8 ) ( 392.1 )
Cash flows from financing activities:    
Proceeds from borrowings on Revolving Credit Facility —   68.0   6,271.0  
Repayments of Revolving Credit Facility —   ( 68.0 ) ( 6,371.0 )
Proceeds from borrowings on 2025 Term Loan Facility —   —   750.0  
Repayments of 2025 Term Loan Facility —   ( 750.0 ) —  
Proceeds from issuance of Commercial Paper 6,416.3   13,937.5   9,039.1  
Repayments of Commercial Paper ( 6,242.6 ) ( 15,113.9 ) ( 7,688.7 )
Proceeds from issuance of senior notes —   1,992.2   994.7  
Repayment of senior notes ( 1,200.0 ) ( 1,000.0 ) ( 3,400.0 )

Proceeds from issuance of convertible debt 900.0   1,250.0   —  
Payments on settlement of convertible debt —   ( 672.2 ) ( 132.8 )
Issuance of Series A Preferred Stock —   1,449.5   —  
Deferred financing costs ( 16.6 ) ( 19.7 ) ( 3.0 )
Purchase of capped call options ( 68.0 ) ( 160.1 ) —  
Proceeds from sale of common stock 61.7   65.4   82.1  
Tax payments related to shares withheld for vested RSUs ( 51.4 ) ( 57.6 ) ( 61.1 )
Repurchase of common stock —   ( 96.5 ) ( 982.1 )
Payment of cash dividends on Series A Preferred Stock ( 108.5 ) —   —  
Payment of cash dividends on common stock ( 984.0 ) ( 975.7 ) ( 911.5 )
Capital lease payments ( 1.6 ) ( 1.6 ) ( 1.6 )
Other Financing ( 3.3 ) ( 5.6 ) —  
Net cash used in financing activities ( 1,298.0 ) ( 158.3 ) ( 2,414.9 )

Net (decrease) increase in cash and cash equivalents ( 531.4 ) 452.0   85.7  
Cash and cash equivalents, at beginning of period 771.7   319.7   234.0  

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  Fiscal Year Ended March 31,
  2026 2025 2024
Cash and cash equivalents, at end of period $ 240.3   $ 771.7   $ 319.7  

Supplemental disclosure of cash flow information:

Non-cash activities:

ROU assets obtained in exchange of lease liabilities $ 28.9   $ 10.2   $ 28.0  
Cash paid for:
Interest $ 211.1   $ 236.2   $ 191.2  
Income taxes (1) :
$ 175.2   $ 517.1  
U.S. federal $ 166.4  
U.S. state and local $ 3.4  
Foreign:
Germany $ 15.1  
Malta $ 13.3  
Other foreign jurisdictions $ 46.3  
Operating lease payments in operating cash flows $ 42.3   $ 40.0   $ 39.0  

    
(1) The Company adopted ASU 2023-09 on a prospective basis. As such, cash paid for income taxes for the years ended March 31, 2025 and March 31, 2024 were not adjusted to reflect current year presentation.

See accompanying notes to consolidated financial statements

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MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)

Preferred Stock Par Value Common Stock Par Value Additional Paid-in-Capital Common Stock Held in Treasury Accumulated Other Comprehensive Loss Retained Earnings Total Equity

Balance at March 31, 2023 $ —  $ 0.5   $ 2,413.3   $ ( 1,660.2 ) $ ( 4.1 ) $ 5,764.1   $ 6,513.6  

Net income —  —  —  —  —  1,906.9   1,906.9  
Other comprehensive income —  —  —  —  0.6   —  0.6  

Proceeds from sales of common stock through employee equity incentive plans —  —  82.1   —  —  —  82.1  
RSU withholdings —  —  ( 61.1 ) —  —  —  ( 61.1 )
Treasury stock used for new issuances —  —  ( 67.5 ) 67.5   —  —  —  
Repurchase of common stock —  —  —  ( 988.9 ) —  —  ( 988.9 )

Settlement of convertible debt —  —  ( 65.3 ) —  —  —  ( 65.3 )

Share-based compensation —  —  181.4   —  —  —  181.4  

Dividends on common stock —  —  —  —  —  ( 911.5 ) ( 911.5 )
Balance at March 31, 2024 —  0.5   2,482.9   ( 2,581.6 ) ( 3.5 ) 6,759.5   6,657.8  

Net (loss) —  —  —  —  —  ( 0.5 ) ( 0.5 )
Other comprehensive income —  —  —  —  1.8   —  1.8  
Issuance of Series A Preferred Stock —  —  1,449.5   —  —  —  1,449.5  
Proceeds from sales of common stock through employee equity incentive plans —  —  65.4   —  —  —  65.4  
RSU withholdings —  —  ( 57.6 ) —  —  —  ( 57.6 )
Treasury stock used for new issuances —  0.1   ( 59.7 ) 59.6   —  —  —  
Repurchase of common stock —  —  —  ( 89.6 ) —  —  ( 89.6 )

Purchase of capped call options —  —  ( 160.1 ) —  —  —  ( 160.1 )

Share-based compensation —  —  189.5   —  —  —  189.5  
Dividends on Series A Preferred Stock —  —  —  —  —  ( 2.2 ) ( 2.2 )
Dividends on common stock —  —  —  —  —  ( 975.7 ) ( 975.7 )

Balance at March 31, 2025 —  0.6   3,909.9   ( 2,611.6 ) ( 1.7 ) 5,781.1   7,078.3  

Net income —  —  —  —  —  230.0   230.0  
Other comprehensive loss —  —  —  —  ( 2.5 ) —  ( 2.5 )

Common stock issued for acquisition —  —  19.1   —  —  —  19.1  
Proceeds from sales of common stock through employee equity incentive plans —  —  61.7   —  —  —  61.7  
RSU withholdings —  —  ( 51.4 ) —  —  —  ( 51.4 )
Treasury stock used for new issuances —  —  ( 60.2 ) 60.2   —  —  —  

Purchase of capped call options —  —  ( 68.0 ) —  —  —  ( 68.0 )

Share-based compensation —  —  260.4   —  —  —  260.4  
Dividends on Series A Preferred Stock —  —  —  —  —  ( 111.2 ) ( 111.2 )
Dividends on common stock —  —  —  —  —  ( 984.0 ) ( 984.0 )
Balance at March 31, 2026 $ —  $ 0.6   $ 4,071.5   $ ( 2,551.4 ) $ ( 4.2 ) $ 4,915.9   $ 6,432.4  

See accompanying notes to consolidated financial statements
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MICROCHIP TECHNOLOGY INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Note 1 . Significant Accounting Policies

Nature of Business
 
Microchip Technology Incorporated (Microchip or the Company) develops, manufactures and sells smart, connected and secure embedded control solutions used by its customers for a wide variety of applications. The Company provides cost-effective embedded control solutions that also offer the advantages of small size, high performance, extreme low power usage, wide voltage range operation, mixed-signal integration, and ease of development, thus enabling timely and cost-effective integration of the Company's solutions by its customers in their end products.

Principles of Consolidation
 
The Company prepares its consolidated financial statements in accordance with U.S. GAAP. The consolidated financial statements include the accounts of Microchip and its majority-owned and controlled subsidiaries.  All significant intercompany accounts and transactions have been eliminated in consolidation. All dollar amounts in the financial statements and tables in these notes, except per share amounts, are stated in millions of U.S. dollars unless otherwise noted. For comparative purposes, certain prior year amounts have been reclassified to conform to the current year presentation and such changes are not material to our consolidated financial statements.

Revenue Recognition

The Company generates revenue primarily from sales of semiconductor products to distributors and non-distributor customers (direct customers) and, to a lesser extent, from royalties paid by licensees of intellectual property. The Company applies the following five-step approach to determine the timing and amount of revenue recognition: (i) identify the contract with the customer, (ii) identify performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the performance obligations are satisfied.

Sales of semiconductor products to customers are governed by a purchase order, an order acknowledgment, and a distributor agreement in the case of the Company's distributor customers. Sales to customers do not meet the definition of a contract until the customer has sent in a purchase order, the Company has acknowledged the order, the Company has deemed the collectability of the consideration to be probable, and legally enforceable rights and obligations have been created. As is customary in the semiconductor industry, the Company offers price concessions and stock rotation rights to many of its distributors. As these are forms of variable consideration, the Company estimates the amount of consideration to which they will be entitled using recent historical data and applying the expected value method. Substantially all of the revenue generated from contracts with customers is recognized at, or near to, the time risk and title of the inventory transfers to the customer.

The Company entered into LTSAs with certain of its customers that purchase through distributors or directly from the Company. Under these LTSAs, the Company receives an upfront deposit and minimum purchase commitments from the customer in exchange for assured supply over the contract period, which typically ranges from three years to five years . If the customer meets the minimum purchase commitments defined in the contract, the Company returns the deposit to the customer. If not, the Company may retain all, or a portion of the deposit which will be recognized as revenue as the remaining performance obligations under the LTSAs are satisfied. Upfront deposits collected by the Company are recorded as deferred revenue in accrued liabilities or other long-term liabilities depending on the expected timing of the satisfaction of the underlying performance obligations.

Revenue generated from licensees is governed by licensing agreements. The Company's primary performance obligation related to these agreements is to provide the licensee the right to use the intellectual property. The final transaction price is determined by multiplying the usage of the license by the royalty, which is fixed in the licensing agreement. Revenue is recognized as usage of the license occurs.

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Research and Development
 
Research and development costs are expensed as incurred.  Assets purchased to support the Company's ongoing research and development activities are capitalized when related to products which have achieved technological feasibility or that have alternative future uses and are amortized over their estimated useful lives.  Research and development expenses include expenditures for labor, share-based payments, depreciation, masks, prototype wafers, and expenses for development of process technologies, new packages, and software to support new products and design environments.

Restructuring Charges

Restructuring charges are included within special charges and other, net in the consolidated statements of operations and are primarily comprised of employee separation costs, contract exit costs, costs of facility consolidation and closure, including the related gains or losses associated with the sale of assets. Employee separation costs include one-time termination benefits that are recognized as a liability at estimated fair value at the time of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. Ongoing termination benefits are recognized as a liability at estimated fair value when the amount of such benefits is probable and reasonably estimable. Contract exit costs include contract termination fees. A liability for contract termination fees is recognized in the period in which the Company terminates the contract.

Foreign Currency Translation
 
All of the Company's foreign subsidiaries are considered to be extensions of the U.S. company and any translation gains and losses related to these subsidiaries are included in other income (loss), net in the consolidated statements of income.  As the U.S. dollar is utilized as the functional currency, gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the subsidiaries' functional currency) are also included in income.

Income Taxes
 
As part of the process of preparing its consolidated financial statements, the Company is required to record its income taxes in each of the jurisdictions in which it operates.

Various taxing authorities in the U.S. and other countries in which the Company does business may scrutinize the tax structures employed by businesses.  Companies of a similar size and complexity as the Company are regularly audited by the taxing authorities in the jurisdictions in which they conduct significant operations.  During the fiscal year ended March 31, 2026, various jurisdictions finalized their audits for certain periods. The close of these audits did not have a material adverse impact on the financial statements. The Company is currently being audited by the tax authorities in the United States and various foreign jurisdictions. At this time, the Company does not know what the outcome of these audits will be. The Company records benefits for uncertain tax positions based on an assessment of whether it is more likely than not that the tax positions will be sustained based on their technical merits under currently enacted law. If this threshold is not met, no tax benefit of the uncertain tax position is recognized. If the threshold is met, the Company recognizes the largest amount of the tax benefit that is more than 50 % likely to be realized upon ultimate settlement.

The accounting model related to the measurement of uncertain tax positions requires the Company to presume that the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information and that each tax position will be evaluated without consideration of the possibility of offset or aggregation with other positions.  The recognition requirement for the liability exists even if the Company believes the possibility of examination by a taxing authority or discovery of the related risk matters is remote or where it has a long history of the taxing authority not performing an exam or overlooking an issue.  The Company will record an adjustment to a previously recorded position if new information or facts related to the position are identified in a subsequent period.  Generally, adjustments to the positions are recorded through the income statement.  Generally, adjustments will be recorded in periods subsequent to the initial recognition in light of changing facts and circumstances, such as the closing of a tax audit, the closing of a statutory audit period, changes in applicable law, or interactions with taxing authorities.  Due to the inherent uncertainty in the estimation process, including the complexity involved to interpret and apply tax laws, and in consideration of the criteria of the accounting model, amounts recognized in the financial statements in periods subsequent to the initial recognition may significantly differ from the estimated exposure of the position under the accounting model.

In December 2017, the TCJA was enacted into law and established a new provision designed to tax low-taxed income of foreign subsidiaries known as global intangible low-taxed income (GILTI). The FASB allows taxpayers to make an accounting policy election of either (i) treating taxes due on GILTI inclusions as a current-period expense when incurred or (ii) recognizing
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deferred taxes for temporary basis differences that are expected to reverse as GILTI in future years. The Company has made a policy choice to treat taxes due on GILTI inclusions as a current-period expense when incurred.

Cash and Cash Equivalents
 
All highly liquid investments, including marketable securities with an original maturity to the Company of three months or less when acquired are considered to be cash equivalents.
  
Inventories
 
Inventories are valued at the lower of cost or net realizable value using the first-in, first-out method. Inventory costs generally consist of material, labor, depreciation and overhead costs. The Company records a charge to cost of sales to write down its inventory for estimated excess, obsolete or unmarketable inventory in an amount equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required. Inventory impairment charges establish a new cost basis for inventory and charges are not subsequently reversed to income even if circumstances later suggest that increased carrying amounts are recoverable. In determining whether there is a risk of excess or obsolete inventory, the Company evaluates projected demand over periods that align with demand forecasts used to develop manufacturing plans and inventory build decisions and writes down inventory on hand that is in excess of estimated demand. Management reviews and adjusts the estimates as appropriate based on specific situations. For example, demand can be adjusted up for new products for which historic sales are not representative of future demand. Alternatively, demand can be adjusted down to the extent any existing products are being replaced or discontinued.
 
The valuation of inventory includes determining which fixed production overhead costs can be included in inventory based on the normal operating capacity of the Company's manufacturing facilities. In periods where the Company's production levels are below normal operating capacity, unabsorbed overhead production costs associated with the reduced production levels of the Company's manufacturing facilities are charged directly to cost of sales.
 
Property, Plant and Equipment
 
Property, plant and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful lives, which range from 10 to 30 years for buildings and building improvements and 5 to 7 years for machinery and equipment.  Major renewals and improvements are capitalized, while maintenance and repairs are expensed when incurred.  The Company evaluates the carrying value of its property, plant and equipment when events or changes in circumstances indicate that the carrying value of such assets may be impaired.  Asset impairment evaluations are, by nature, highly subjective.
 
Leases

The Company determines if an arrangement is a lease at its inception. Operating lease arrangements are comprised primarily of real estate and equipment agreements for which the ROU assets are included in other assets and the corresponding lease liabilities, depending on their maturity, are included in accrued liabilities or other long-term liabilities in the consolidated balance sheets.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets also include any initial direct costs and prepayments less lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

As the Company's leases generally do not provide an implicit rate, the Company uses its collateralized incremental borrowing rate based on the information available at the lease commencement date, including lease term, in determining the present value of lease payments. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Debt
 
The Company presents short-term debt obligations, which include debt obligations with a contractual maturity within 12 months of the balance sheet date and Convertible Debt that is convertible as of the balance sheet date, as long-term debt on the consolidated balance sheets when the Company has the intent and ability to utilize proceeds from its Revolving Credit
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Facility to refinance such debt on a long-term basis. Discounts and issuance costs directly related to the issuance of debt are amortized over the term as interest expense under the effective interest rate method or on a straight-line basis in the case of the Company's Revolving Credit Facility.

The Company accounts for its Convertible Debt as a single liability with no separate accounting for embedded conversion features that do not require bifurcation. The Company accounts for privately negotiated settlements of its Convertible Debt as induced conversions, resulting in an inducement loss measured as the difference between the fair value of the consideration transferred and the fair value of the original terms of the instrument on the acceptance date. The remaining consideration transferred, after reducing the carrying amount of the Convertible Debt, is recorded as a reduction to additional paid-in-capital on the Company’s consolidated balance sheets. Prior to conversion of its Convertible Debt, the Company includes, in the diluted net income per common share calculation, the effect of the additional shares that may be issued when the Company's common stock price exceeds the conversion price using the if-converted method. The Company's Convertible Debt has no impact on diluted net income per common share unless the average price of the Company's common stock exceeds the conversion price because the Company is required to settle the principal amount of the Convertible Debt in cash upon conversion.

Defined Benefit Pension Plans

The Company maintains defined benefit pension plans, covering certain of its foreign employees. For financial reporting purposes, net periodic pension costs and pension obligations are determined based upon a number of actuarial assumptions, including discount rates for plan obligations, and assumed rates of compensation increases for employees participating in plans. These assumptions are based upon management's judgment and consultation with actuaries, considering all known trends and uncertainties.

Contingencies

In the ordinary course of business, the Company is exposed to various liabilities as a result of contracts, product liability, customer claims and other matters.  Additionally, the Company is involved in a limited number of legal actions, both as plaintiff and defendant.  Consequently, the Company could incur uninsured liability in any of those actions.  The Company also periodically receives notifications from various third parties alleging infringement of patents or other intellectual property rights, or from customers requesting reimbursement for various costs.  With respect to pending legal actions to which the Company is a party and other claims, although the outcomes are generally not determinable, the Company believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position, cash flows or results of operations.  Litigation and disputes relating to the semiconductor industry are not uncommon, and the Company is, from time to time, subject to such litigation and disputes.  As a result, no assurances can be given with respect to the extent or outcome of any such litigation or disputes in the future.

The Company accrues for claims and contingencies when losses become probable and reasonably estimable. As of the end of each applicable reporting period, the Company reviews each of its matters and, where it is probable that a liability has been or will be incurred, it accrues for all probable and reasonably estimable losses. Where the Company can reasonably estimate a range of losses it may incur regarding such a matter, it records an accrual for the amount within the range that constitutes its best estimate. If the Company can reasonably estimate a range but no amount within the range appears to be a better estimate than any other, it uses the amount that is the low end of such range.  

Goodwill and Other Intangible Assets
 
The Company's intangible assets include goodwill and other intangible assets. Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. Other intangible assets include existing technologies, core and developed technology, in-process research and development, trademarks and trade names, and customer-related intangibles. In-process research and development is capitalized until such time as the related projects are completed or abandoned at which time the capitalized amounts will begin to be amortized or written off. Indefinite-lived intangible assets consist of goodwill and in-process research and development intangible assets that have not yet been placed in service. All other intangible assets are definite-lived intangible assets, including in-process research and development assets that have been placed in service, and are amortized over their respective estimated lives, ranging from 1 to 15 years.

The Company is required to perform an impairment review of indefinite-lived intangible assets, including goodwill annually, and more frequently under certain circumstances. Indefinite-lived intangible assets are subjected to this annual impairment test during the fourth quarter of the Company's fiscal year. The Company engages primarily in the development,
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manufacture and sale of semiconductor products as well as technology licensing. As a result, the Company concluded there are two reporting units, semiconductor products and technology licensing. The Company's impairment evaluation consists of a qualitative impairment assessment in which management evaluates whether it is more likely than not that the indefinite-lived intangible assets are impaired. If it is determined that it is more likely than not, the Company performs a quantitative impairment test, which compares the fair value of the reporting unit or indefinite-lived intangible asset to its carrying value. If the Company determines through the impairment process that the indefinite-lived intangible asset has been impaired, the Company will record the impairment charge in its results of operation. Through March 31, 2026, the Company has never recorded a goodwill impairment charge. In the event that facts and circumstances indicate definite-lived intangible assets may be impaired, the Company evaluates the recoverability and estimated useful lives of such assets. If such indicators are present, recoverability is evaluated based on whether the sum of the estimated undiscounted cash flows attributable to the asset (group) in question is less than their carrying value. If less, the Company measures the fair value of the asset (group) and recognizes an impairment loss if the carrying amount of the assets exceeds their respective fair values.
 
Impairment of Long-Lived Assets
 
The Company assesses whether indicators of impairment of long-lived assets are present.  If such indicators are present, the Company determines whether the sum of the estimated undiscounted cash flows attributable to the asset groups in question is less than their carrying value.  If less, the Company recognizes an impairment loss based on the excess of the carrying amount of the asset groups over their respective fair values.  Fair value is determined by discounted future cash flows, appraisals or other methods.  If the assets determined to be impaired are to be held and used, the Company recognizes an impairment loss through a charge to operating results to the extent the present value of anticipated net cash flows attributable to the asset group are less than the asset's carrying value.  The Company would depreciate the remaining value over the remaining estimated useful life of the asset groups.

Government Incentives

The Company receives government incentives for qualifying capital investments, research and development, and other activities as defined by the relevant government entities awarding the grants. Government grants, including non-income tax incentives, are recognized when there is reasonable assurance that the grant will be received and the Company will comply with the conditions specified in the grant agreement. The Company records capital-related grants as a reduction to property, plant and equipment within the consolidated balance sheets and recognizes a reduction to depreciation expense over the useful life of the corresponding asset. The Company records operating grants as a reduction to expense in the same line item on the consolidated statements of income as the expenditure for which the grant is intended to compensate. As of March 31, 2026, the Company recorded $ 52.2 million of capital-related grants as a reduction to property, plant and equipment with a corresponding offset of $ 1.6 million within other assets and $ 38.6 million as a reduction to income taxes payable within accrued liabilities on the consolidated balance sheets. As of March 31, 2025, the Company recorded $ 46.4 million of capital-related grants as a reduction to property, plant and equipment with a corresponding offset of $ 3.4 million within other assets and $ 36.0 million as a reduction to income taxes payable within accrued liabilities on the consolidated balance sheets. The Company recognized an immaterial benefit to operating income for operating grants and the reduction of depreciation expense for capital-related grants in each of fiscal 2026, fiscal 2025, and fiscal 2024.

Share-Based Compensation
 
The Company has equity incentive plans under which RSUs have been granted to employees and non-employee members of the Board of Directors.  The Company uses RSUs with a service condition as its primary equity incentive compensation instrument for employees and also grants performance-based PSUs to executive officers and employees.  The Company also has employee stock purchase plans for eligible employees. Share-based compensation cost for RSUs with a service condition or performance-based PSUs is measured on the grant date based on the fair market value of the Company’s common stock discounted for expected future dividends and is recognized as expense on a straight-line attribution method over the requisite service periods, with forfeitures recognized as they occur. Share-based compensation cost for performance-based PSUs is recognized if and when the Company concludes that it is probable that the performance condition will be achieved. The Company reassesses the probability of the performance condition at each reporting period and a cumulative catch-up adjustment is recorded to share-based compensation cost for any change in the probability assessment. If there are any modifications of the underlying unvested securities, the Company may be required to accelerate or increase any remaining unearned share-based compensation expense.

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Treasury Shares

From time to time, the Company repurchases shares of its common stock in the open market or in privately negotiated transactions. Shares repurchased are recorded at cost, inclusive of fees, commissions, taxes and other expenses. Treasury shares are re-issued on a first-in, first-out basis to fund share issuance requirements under the Company's equity incentive plans.

Series A Preferred Stock

The Company accounts for its Series A Preferred Stock as permanent equity carried at its par value. The Company computes net income attributable to common stockholders by reducing net income by the dividends on Series A Preferred Stock accumulated during the period. Prior to the conversion of its Series A Preferred Stock, the Company includes, in the diluted net income per common share calculation, the effect of the conversion of the outstanding Series A Preferred Stock into the Company's common stock at the applicable conversion rate using the if-converted method when the effect of including these securities is not anti-dilutive.

Concentrations of Credit Risk
 
The Company is subject to counterparty risks from financial institutions and customers. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposits in excess of federally insured limits and accounts receivables. The Company manages credit risk exposure for cash deposits by limiting counterparties to high-grade financial institutions. Concentrations of credit risk with respect to accounts receivable are generally not significant due to the diversity of the Company's customers and geographic sales areas.  The Company sells its products primarily to OEMs and distributors in the Americas, Europe and Asia.  The Company performs ongoing credit evaluations of its customers' financial condition and, as deemed necessary, may require collateral, primarily letters of credit. With the exception of Arrow Electronics, the Company's largest distributor, which accounted for 14 % of the accounts receivable balance as of March 31, 2026, no other customer accounted for more than 10% of the accounts receivable balance as of March 31, 2026 or March 31, 2025.
 
Distributor advances in the consolidated balance sheets, totaled $ 135.3 million and $ 234.4 million at March 31, 2026 and March 31, 2025, respectively.  On sales to distributors, the Company's payment terms generally require the distributor to settle amounts owed to the Company for an amount in excess of their ultimate cost.  The Company's sales price to its distributors may be higher than the amount that the distributors will ultimately owe the Company because distributors often negotiate price reductions after purchasing the products from the Company and such reductions are often significant.  It is the Company's practice to apply these negotiated price discounts to future purchases, requiring the distributor to settle receivable balances, on a current basis, generally within 30 days, for amounts originally invoiced.  This practice has an adverse impact on the working capital of the Company's distributors.  As such, the Company has entered into agreements with certain distributors whereby it advances cash to the distributors to reduce the distributors' working capital requirements.  The Company provides these advances based on a negotiated percentage of the amount of inventory held by the distributor. Such advances have no impact on revenue recognition or the Company's consolidated statements of income.  The terms of these advances are set forth in binding legal agreements and are unsecured, bear no interest on unsettled balances and are due upon demand.  The agreements governing these advances can be canceled by the Company at any time and, upon cancellation, the amounts are due to the Company.
 
Use of Estimates
 
The Company has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare its consolidated financial statements in conformity with U.S. GAAP.  Actual results could differ from those estimates.

Subsequent Events

The Company evaluated events after March 31, 2026, and through the date the financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these financial statements.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09- Income Taxes (Topic 740): Improvements to Income Tax Disclosures ,
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which modifies the rules on income tax disclosures to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. The amendments are intended to address investors’ requests for income tax disclosures that provide more information to help them better understand an entity’s exposure to potential changes in tax laws and the ensuing risks and opportunities and to assess income tax information that affects cash flow forecasts and capital allocation decisions. The guidance also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The Company adopted this standard in fiscal 2026 with prospective application. See "Note 12. Income Taxes" for further information.

Recently Issued Accounting Pronouncements Pending Adoption

In November 2024, the FASB issued ASU 2024-03- Income Statement (Subtopic 220-40 ): Disaggregation of Income Statement Expenses requiring disaggregated disclosures of certain expense captions into specified categories in the notes to the financial statements. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted with updates to be applied prospectively with the option for retrospective application. The Company is currently evaluating the applicable disclosures.

In December 2025, the FASB issued ASU 2025-10- Government Grants (Topic 832) : Accounting for Government Grants Received by Business Entities, which establishes authoritative guidance on the recognition, measurement and presentation of government grants received by a business entity. ASU 2025-10 is effective for annual reporting periods beginning after December 15, 2028, and interim periods within those annual reporting periods. Early adoption is permitted with updates to be applied using a modified prospective, modified retrospective, or retrospective transition approach. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

Note 2. Net Sales

The following table represents the Company's net sales by product line (in millions):

Fiscal Year Ended March 31,
2026 2025 2024
Mixed-signal Microcontrollers $ 2,355.4   $ 2,249.7   $ 4,272.4  
Analog 1,329.0   1,157.0   2,016.4  

Other 1,028.7   994.9   1,345.6  
Total net sales $ 4,713.1   $ 4,401.6   $ 7,634.4  

The product lines listed above are included entirely in the Company's semiconductor product segment with the exception of the other product line, which includes products from both the semiconductor product and technology licensing segments.

The following table represents the Company's net sales by customer type (in millions):

Fiscal Year Ended March 31,
2026 2025 2024
Distributors $ 2,209.6   $ 1,970.0   $ 3,620.8  
Direct customers 2,339.7   2,300.5   3,910.3  
Licensees 163.8   131.1   103.3  
Total net sales $ 4,713.1   $ 4,401.6   $ 7,634.4  

Distributors are customers that buy products with the intention of reselling them. Distributors generally have a distributor agreement with the Company to govern the terms of the relationship. Direct customers are non-distributor customers, which generally do not have a master sales agreement with the Company. The Company's direct customers primarily consist of OEMs and, to a lesser extent, contract manufacturers. Licensees are customers of the Company's technology licensing segment, which include purchasers of intellectual property and customers that have licensing agreements to use the Company's SuperFlash ®  embedded flash technology. All of the customer types listed in the table above are included in the Company's semiconductor product segment with the exception of licensees, which is included in the technology licensing segment. All of the Company's net sales are recognized from contracts with customers.

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Semiconductor Product Segment

For contracts related to the purchase of semiconductor products, the Company satisfies its performance obligation when control of the ordered product transfers to the customer. The timing of the transfer of control depends on the agreed upon shipping terms with the customer, but generally occurs upon shipment, which is when physical possession of the product has been transferred and legal title of the product transfers to the customer. Payment is generally due within 30 days of the ship date. Payment is generally collected after the Company satisfies its performance obligation. Also, the Company usually does not record contract assets because the Company has an unconditional right to payment upon satisfaction of the performance obligation, and therefore, a receivable is more commonly recorded than a contract asset. Refer to Note 9 for the opening and closing balances of the Company's receivables.

The consideration received from customers is fixed, with the exception of consideration from certain distributors and customers under LTSAs. Certain of the Company's distributors are granted price concessions and return rights, which result in variable consideration. The amount of revenue recognized for sales to these certain distributors is adjusted for estimates of the price concessions and return rights that are expected to be claimed. These estimates are based on the recent history of price concessions and stock rotations, which are recorded as sales related reserves and refund liabilities within accrued liabilities on the Company's consolidated balance sheets.

The Company collects amounts in advance for certain of its contracts with customers. These amounts are deferred until control of the product or service is transferred to the customer at which time it is recognized as revenue. As of March 31, 2026, the Company had approximately $ 461.2  million of deferred revenue, of which $ 179.2  million is included within accrued liabilities and the remaining $ 282.0  million is included within other long-term liabilities on the Company's consolidated balance sheet. As of March 31, 2025, the Company had approximately $ 597.9  million of deferred revenue, of which $ 213.4  million is included within accrued liabilities and the remaining $ 384.5  million is included within other long-term liabilities on the Company's consolidated balance sheets. Deferred revenue represents amounts that have been invoiced in advance which are expected to be recognized as revenue in future periods. Approximately $ 188.6  million of deferred revenue recorded on the Company's consolidated balance sheets as of March 31, 2025 was recognized as revenue during the fiscal year ended March 31, 2026 . Approximately $ 217.2  million of deferred revenue recorded on the Company's consolidated balance sheets as of March 31, 2024 was recognized as revenue during the fiscal year ended March 31, 2025.

Of the $ 461.2  million of deferred revenue as of March 31, 2026, $ 365.7  million is cash collected from customers under LTSAs, of which $ 106.2  million is included within accrued liabilities and $ 259.5  million is included within other long-term liabilities. Under these LTSAs, the Company receives an upfront deposit from the customer in exchange for assured supply over the contract period, which typically ranges from three years to five years . If the customer does not meet the minimum purchase commitments defined in the contract, the Company may retain all, or portions of, the deposit as revenue. The recognition of these amounts as net sales is uncertain because it depends on the satisfaction of commitments made in the LTSAs, which may be affected by the timing and amount of orders placed by customers, contract modifications, variable consideration, sales channels, and manufacturing and supply chain conditions. If the Company fails to assure supply as defined in the contract, the deposit, or portions of it, will be returned to the customer. The remaining $ 95.5  million of deferred revenue as of March 31, 2026 is related to other cash payments received from customers in advance of the Company’s performance obligations being satisfied. Most of the $ 95.5  million will be recognized as net sales within the next 12 months. The amount of other firmly committed orders with performance obligations in excess of 12 months at the time of order is immaterial.

Technology Licensing Segment

The technology licensing segment includes sales and licensing of the Company's intellectual property. For contracts related to the sale of the Company's intellectual property, the Company satisfies its performance obligation and recognizes revenue when control of the intellectual property transfers to the customer. For contracts related to the licensing of the Company's technology, the Company satisfies its performance obligation and recognizes revenue as usage of the license occurs. The transaction price is fixed by the license agreement. Payment is collected after the Company satisfies its performance obligation, and therefore contract liabilities are generally not recorded. The Company generally does not record contract assets due to the fact that the Company has an unconditional right to payment upon satisfaction of the performance obligation, and therefore, the Company recognizes a receivable instead of a contract asset. Refer to Note 9 for the opening and closing balances of the Company's receivables.

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Note 3 . Geographic and Segment Information
 
The Company's business is made up of two operating segments, semiconductor products and technology licensing. These segments represent management's view of the business for which separate financial information is available and evaluated regularly by the Chief Operating Decision Maker (CODM), which is the Company’s Chief Executive Officer.

In the semiconductor products segment, the Company designs, develops, manufactures and markets mixed-signal microcontrollers, development tools and analog, interface, mixed-signal, timing, wired and wireless connectivity devices, and memory products. Under the leadership of the CODM, the Company is structured and organized around standardized roles and responsibilities based on product groups and functional activities. The Company's product groups are responsible for product research, design and development. The Company's functional activities include sales, marketing, manufacturing, information technology, human resources, legal and finance. The Company's product groups have similar products, production processes, types of customers and methods for distribution. In addition, the tools and technologies used in the design and manufacture of the Company's products are shared among the various product groups. The Company's product group leaders, under the direction of the CODM, define the product roadmaps and team with sales personnel to achieve design wins and revenue and other performance targets. Product group leaders also interact with manufacturing and operational personnel who are responsible for the production, prioritization and planning of the Company's manufacturing capabilities to help ensure the efficiency of the Company's operations and fulfillment of customer requirements.

The technology licensing segment includes sales and licensing of the Company's intellectual property.

The CODM uses segment gross profit for evaluating each segment's performance and allocating resources. The Company does not allocate operating expenses, interest income, interest expense, other income or expense, or provision for or benefit from income taxes to these segments for internal reporting purposes, as the Company does not believe that allocating these expenses is beneficial in evaluating segment performance.  Additionally, the Company does not allocate assets to segments for internal reporting purposes as it does not manage its segments by such metrics.

The information that is regularly provided to the Company's CODM includes net sales, cost of sales and gross profit for each segment. The following tables include net sales, cost of sales and gross profit for each segment (in millions):

Fiscal Year Ended March 31, 2026
Semiconductor products Technology licensing Total
Net sales $ 4,549.3   $ 163.8   $ 4,713.1  
Cost of sales 1,992.0   —   1,992.0  
Gross profit $ 2,557.3   $ 163.8   $ 2,721.1  

Fiscal Year Ended March 31, 2025
Semiconductor products Technology licensing Total
Net sales $ 4,270.5   $ 131.1   $ 4,401.6  
Cost of sales 1,933.7   —   1,933.7  
Gross profit $ 2,336.8   $ 131.1   $ 2,467.9  

Fiscal Year Ended March 31, 2024
Semiconductor products Technology licensing Total
Net sales $ 7,531.1   $ 103.3   $ 7,634.4  
Cost of sales 2,638.7   —   2,638.7  
Gross profit $ 4,892.4   $ 103.3   $ 4,995.7  

The Company sells its products to distributors and OEMs in a broad range of market segments, performs on-going credit evaluations of its customers and, as deemed necessary, may require collateral, primarily letters of credit.  The Company's operations outside the U.S. consist of product assembly and final test facilities in Thailand, and sales and support centers and design centers in certain foreign countries.  Domestic operations are responsible for managing the design, development and wafer fabrication of products, as well as the coordination of production planning and shipping to meet worldwide customer commitments.  The Company's Thailand assembly and test facility is reimbursed in relation to value added with respect to assembly and test operations and other functions performed, and certain foreign sales offices receive compensation for sales
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within their territory.  Accordingly, for financial statement purposes, it is not meaningful to segregate sales or operating profits for the assembly and test and foreign sales office operations.  Identifiable long-lived assets (consisting of property, plant and equipment net of accumulated depreciation and ROU assets) by geographic area are as follows (in millions):

March 31,
2026 2025
United States $ 806.0   $ 869.3  
Thailand 101.5   123.7  
Various other countries 336.7   337.0  
Total long-lived assets $ 1,244.2   $ 1,330.0  

Sales to unaffiliated customers located outside the U.S., primarily in Asia and Europe, aggregated approximately 75 % of consolidated net sales for each of fiscal 2026, fiscal 2025 and fiscal 2024. Sales to customers in Europe represented approximately 21 %, 20 % and 24 % of consolidated net sales for fiscal 2026, fiscal 2025 and fiscal 2024, respectively.  Sales to customers in Asia represented approximately 50 %, 50 % and 47 % of consolidated net sales for fiscal 2026, fiscal 2025 and fiscal 2024, respectively.  Within Asia, sales into China represented approximately 18 %, 17 % and 18 % of consolidated net sales for fiscal 2026, fiscal 2025 and fiscal 2024, respectively. Sales into Taiwan represented approximately 15 %, 16 % and 12 % of consolidated net sales for fiscal 2026, fiscal 2025 and fiscal 2024, respectively. Sales into any other individual foreign country did not exceed 10% of the Company's net sales for any of the three fiscal years presented.
 
With the exception of Arrow Electronics, the Company's largest distributor, which accounted for 12 %, 10 % and 12 % of net sales in fiscal 2026, fiscal 2025 and fiscal 2024, respectively, no other distributor or direct customer accounted for more than 10% of net sales in either of fiscal 2026, fiscal 2025 or fiscal 2024.

Note 4 . Net Income (Loss) Per Common Share

The following table sets forth the computation of basic and diluted net income (loss) per common share (in millions, except per share amounts):

Fiscal Year Ended March 31,
2026 2025 2024
Net income (loss) $ 230.0   $ ( 0.5 ) $ 1,906.9  
Dividends on Series A Preferred Stock ( 111.2 ) ( 2.2 ) —  
Net income (loss) attributable to common stockholders 118.8   ( 2.7 ) 1,906.9  
Basic weighted average common shares outstanding 540.4   537.3   542.0  
Dilutive effect of RSUs 4.4   —   5.1  

Dilutive effect of 2015 Senior Convertible Debt —   —   0.2  
Dilutive effect of 2017 Senior Convertible Debt 0.4   —   0.7  

Dilutive effect of Series A Preferred Stock —   —   —  
Diluted weighted average common shares outstanding 545.2   537.3   548.0  
Basic net income (loss) per common share $ 0.22   $ ( 0.01 ) $ 3.52  
Diluted net income (loss) per common share $ 0.22   $ ( 0.01 ) $ 3.48  

The Company computed net income (loss) attributable to common stockholders by reducing net income (loss) by the dividends on Series A Preferred Stock accumulated during the period. The Company computed basic net income (loss) per common share based on the net income (loss) attributable to common stockholders divided by the basic weighted average number of common shares outstanding during the period. The Company computed diluted net income (loss) per common share based on the net income (loss) attributable to common stockholders divided by the basic weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares from employee equity incentive plans are determined by applying the treasury stock method to the assumed vesting of outstanding RSUs. Potentially dilutive common shares from the Series A Preferred Stock are determined by applying the if-converted method on the outstanding Series A Preferred Stock. Prior to conversion of its Convertible Debt, the Company will include, in the diluted net income per common share calculation, the effect of the additional shares that may be issued when the Company's common stock price exceeds the conversion price using the if-converted method. The Company's Convertible Debt has no impact on diluted net income per common share unless the average price of the Company's common stock exceeds the conversion price because the Company is required to settle the principal amount of the Convertible Debt in cash upon conversion. For the fiscal year ended March 31, 2026, the calculation
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of diluted net income per common share excluded 24.7 million common shares issuable upon the exchange of the Company's Series A Preferred Stock as the related impact would have been anti-dilutive. For the fiscal year ended March 31, 2025, the calculation of diluted net loss per common share excluded 4.0 million common shares from equity incentive plans and 0.1 million and 0.5 million common shares issuable upon the exchange of the Company's 2015 Senior Convertible Debt and 2017 Senior Convertible Debt, respectively, and 0.6 million common shares issuable upon the exchange of Company's Series A Preferred Stock as the related impact would have been anti-dilutive as the Company generated a net loss.

The following is the weighted average conversion price per share used in calculating the dilutive effect (see Note 6 for details on the Convertible Debt):

Fiscal Year Ended March 31,
2026 2025 2024

2015 Senior Convertible Debt (1)
$ —   $ 28.49   $ 29.02  
2017 Senior Convertible Debt $ 42.99   $ 44.27   $ 45.26  
2020 Senior Convertible Debt (2)
$ —   $ 91.08   $ 91.91  
2024 Senior Convertible Debt $ 121.81   $ 121.83   $ —  
2026 Senior Convertible Debt $ 104.17   $ —   $ —  
2017 Junior Convertible Debt (3)
$ —   $ —   $ 44.81  

(1) The weighted average conversion price per share for the 2015 Senior Convertible Debt was prior to the settlement of the outstanding principal amount in February 2025.
(2) The weighted average conversion price per share for the 2020 Senior Convertible Debt was prior to the settlement of the outstanding principal amount in November 2024.
(3) The weighted average conversion price per share for the 2017 Junior Convertible Debt was prior to the settlement of the outstanding principal amount in May 2023.

Note 5 . Special Charges (Income) and Other, Net
 
The following table summarizes activity included in the "Special charges (income) and other, net" caption on the Company's consolidated statements of operations (in millions):

Fiscal Year Ended March 31,
2026 2025 2024
Restructuring
Employee separation costs $ 0.9   $ 27.1   $ —  

Impairment charges 0.4   —   —  
Contract exit costs 14.5   45.7   —  
Other restructuring costs 21.8   3.7   6.2  

Legal contingencies 2.1   1.0   ( 1.3 )

Other —   1.7   ( 17.2 )
Total $ 39.7   $ 79.2   $ ( 12.3 )

The Company continuously evaluates its existing operations in an attempt to identify and realize cost savings opportunities and operational efficiencies. In the third and fourth quarters of fiscal 2025, the Company announced restructuring and cost reduction measures, including closure of its Tempe, Arizona wafer fabrication facility, and a reduction in headcount at its manufacturing facilities in Oregon, Colorado Springs and the Philippines. In addition, the Company announced 10 % reductions in employee headcount across the Company to decrease its operating expenses, and cancellation or modification of its LTSAs with certain wafer foundries. In connection with these efforts, the Company incurred costs of $ 14.5 million and $ 45.7 million related to contract exit costs during fiscal 2026 and fiscal 2025, respectively, and incurred costs of $ 0.9 million and $ 27.1 million related to employee separation costs during fiscal 2026 and fiscal 2025, respectively. During fiscal 2026, the Company incurred costs of $ 21.8 million related to the closure of its Fab 2 wafer fabrication facility in Tempe, Arizona. Other than the closure of its Fab 2, the restructuring efforts were substantially completed as of March 31, 2026.

During fiscal 2024, the Company earned special income primarily due to $ 17.2 million related to the favorable resolution of a previously accrued unclaimed property audit matter and incurred expenses of $ 6.2 million related to the restructuring costs of acquired and existing wafer fabrication operations to increase operational efficiency.
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The following is a roll forward of accrued restructuring and other exit cost charges for the fiscal year ended March 31, 2026 (in millions):

Restructuring
Employee Separation Costs Contract Exit Costs Other Total

Balance at March 31, 2025 $ 17.1   $ 4.6   $ 0.4   $ 22.1  

Charges 0.9   14.5   21.8   37.2  
Payments ( 18.7 ) ( 2.0 ) ( 21.2 ) ( 41.9 )
Non-cash - Other 2.1   ( 13.7 ) —   ( 11.6 )

Balance at March 31, 2026 $ 1.4   $ 3.4   $ 1.0   $ 5.8  
Current $ 3.7  
Non-current 2.1  
Total $ 5.8  

The liability for restructuring and other exit costs on the Company's consolidated balance sheet as of March 31, 2026 is $ 5.8 million of which $ 3.7 million is included in accrued liabilities and $ 2.1 million is included in other long-term liabilities.

Note 6 . Debt

Debt obligations included in the consolidated balance sheets consisted of the following (in millions) (1) :

Coupon Interest Rate Effective Interest Rate
March 31,
2026 2025

Commercial Paper $ 349.0   $ 175.0  

4.250% 2025 Notes (2)
4.250 % 4.6 % —   1,200.0  
4.900% 2028 Notes (2)
4.900 % 5.1 % 1,000.0   1,000.0  
5.050% 2029 Notes (2)
5.050 % 5.2 % 1,000.0   1,000.0  
5.050% 2030 Notes (2)
5.050 % 5.2 % 1,000.0   1,000.0  
Total Senior Indebtedness (3)
3,349.0   4,375.0  

2017 Senior Convertible Debt 1.625 % 1.8 % 37.9   38.0  

2024 Senior Convertible Debt 0.750 % 1.0 % 1,250.0   1,250.0  
2026 Senior Convertible Debt 0.000 % 0.5 % 900.0   —  
Total Convertible Debt 2,187.9   1,288.0  

Gross long-term debt including current maturities 5,536.9   5,663.0  
Less: Debt discount (4)
( 9.3 ) ( 13.1 )
Less: Debt issuance costs (5)
( 31.2 ) ( 19.5 )
Net long-term debt including current maturities 5,496.4   5,630.4  
Less: Current maturities (6)
—   —  
Net long-term debt $ 5,496.4   $ 5,630.4  

(1) The Company had no outstanding borrowings under the Revolving Credit Facility at March 31, 2026 and at March 31, 2025 .
(2) The 4.250% 2025 Notes matured on September 1, 2025 and prior to maturity interest accrued at a rate of 4.250% per annum, payable semi-annually in arrears on March 1 and September 1 of each year. The 4.900% 2028 Notes mature on March 15, 2028 and interest accrues at a rate of 4.900% per annum, payable semi-annually in arrears on March 15 and September 15 of each year. The 5.050% 2029 Notes mature on March 15, 2029 and interest accrues at a rate of 5.050% per annum, payable semi-annually in arrears on March 15 and September 15 of each year. The 5.050% 2030 Notes mature on February 15, 2030 and interest accrues at a rate of 5.050% per annum, payable semi-annually in arrears on February 15 and August 15 of each year.
(3) All outstanding Senior Notes and the Revolving Credit Facility are senior unsecured debt.

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(4) The unamortized discount consists of the following (in millions):

March 31,
2026 2025

Commercial Paper $ ( 0.5 ) $ ( 0.1 )

4.250% 2025 Notes —   ( 1.3 )

4.900% 2028 Notes ( 2.2 ) ( 3.3 )
5.050% 2029 Notes ( 3.3 ) ( 4.3 )
5.050% 2030 Notes ( 3.3 ) ( 4.1 )
Total unamortized discount $ ( 9.3 ) $ ( 13.1 )

(5) Debt issuance costs consist of the following (in millions):

March 31,
2026 2025

4.250% 2025 Notes $ —   $ ( 0.2 )

4.900% 2028 Notes ( 1.1 ) ( 1.7 )
5.050% 2029 Notes ( 1.2 ) ( 1.8 )
5.050% 2030 Notes ( 1.4 ) ( 1.7 )
2017 Senior Convertible Debt —   ( 0.1 )

2024 Senior Convertible Debt ( 11.4 ) ( 14.0 )
2026 Senior Convertible Debt ( 16.1 ) —  
Total debt issuance costs $ ( 31.2 ) $ ( 19.5 )

(6) As of March 31, 2026, the outstanding Commercial Paper which matures within the three months ending June 30, 2026, and the 2017 Senior Convertible Debt which is convertible and which matures on February 15, 2027, were excluded from current maturities as the Company has the intent and ability to utilize proceeds from its Revolving Credit Facility to refinance such notes and settle the principal portion of its Convertible Debt upon conversion on a long-term basis. As of March 31, 2025, the outstanding Commercial Paper which matured within the three months ending June 30, 2025, and the 4.250% 2025 Notes which matured on September 1, 2025, were excluded from current maturities as the Company had the intent and ability to utilize proceeds from its Revolving Credit Facility to refinance such notes on a long-term basis.

Expected maturities relating to the Company’s debt obligations based on the contractual maturity dates as of March 31, 2026, are as follows (in millions):

Fiscal year ending March 31, Amount
2027 $ 386.9  
2028 1,000.0  
2029 1,000.0  
2030 1,900.0  
2031 1,250.0  
Thereafter —  
Total $ 5,536.9  

Ranking of Convertible Debt - Each series of Convertible Debt is an unsecured obligation. The 2017 Senior Convertible Debt is subordinated in right of payment to the amounts outstanding under the Company's Senior Indebtedness, the 2024 Senior Convertible Debt and the 2026 Senior Convertible Debt. The 2024 Senior Convertible Debt and the 2026 Senior Convertible Debt ranks senior to the Company's indebtedness that is expressly subordinated in right of payment to it; ranks equal in right of payment to any of the Company's unsubordinated indebtedness that does not provide that it is senior to the 2024 Senior Convertible Debt and the 2026 Senior Convertible Debt; and the Convertible Debt ranks junior in right of payment to any of the Company's secured and unsubordinated indebtedness to the extent of the value of the assets securing such indebtedness; and is structurally subordinated to all indebtedness and other liabilities of the Company's subsidiaries.

Summary of Conversion Features - Upon conversion, we are required to satisfy our conversion obligation with respect to such converted Convertible Debt by delivering cash equal to the principal amount of such converted Convertible Debt and
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cash and shares of common stock or any combination, at our option, with respect to any conversion value in excess thereof. Each series of Convertible Debt is convertible at specified conversion rates (see table below), adjusted for certain events including the declaration of cash dividends. Except during the three-month period immediately preceding the maturity date of the applicable series of Convertible Debt, each series of Convertible Debt is convertible only upon the occurrence of (i) such time as the closing price of the Company's common stock exceeds the applicable conversion price (see table below) by 130 % for 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter, (ii) during the 5 business day period after any 10 consecutive trading day period, or the measurement period, in which the trading price per $ 1,000 principal amount of notes of a given series for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company's common stock and the applicable conversion rate on each such trading day, or (iii) upon the occurrence of certain corporate events specified in the indenture of such series of Convertible Debt. In addition, if at the time of conversion our 2017 Senior Convertible Notes, the price of the Company's common stock exceeds the conversion price for such notes, the conversion rate will be increased by up to an additional maximum incremental shares rate, as determined pursuant to a formula specified in the indenture for the 2017 Senior Convertible Notes, and as adjusted for cash dividends paid since the issuance of such series. However, in no event will the conversion rate for the 2017 Senior Convertible Notes exceed the maximum conversion rate specified in the indenture (see table below).

The following table sets forth the applicable conversion rates adjusted for dividends declared since issuance of such series of Convertible Debt and the applicable incremental share factors and maximum conversion rates as adjusted for dividends paid since the applicable issuance date:

Dividend adjusted rates as of March 31, 2026
Conversion Rate Approximate Conversion Price Incremental Share Factor Maximum Conversion Rate

2017 Senior Convertible Debt (1)
23.5081   $ 42.54   11.7550   33.4991  

2024 Senior Convertible Debt (1)
8.2102   $ 121.80   —   10.4679  
2026 Senior Convertible Debt (1)
9.5993   $ 104.17   —   13.4390  

(1) As of March 31, 2026, the 2024 Senior Convertible Debt and the 2026 Senior Convertible Debt were not convertible. As of March 31, 2026, the holders of the 2017 Senior Convertible Debt have the right to convert their notes between April 1, 2026 and June 30, 2026 because the Company's common stock price has exceeded the applicable conversion price for such series by 130 % for the specified period of time during the quarter ended March 31, 2026.

With the exception of the 2024 Senior Convertible Debt, which may be redeemed by the Company on or after June 5, 2027, and the 2026 Senior Convertible Debt, which may be redeemed by the Company on or after February 20, 2029, the Company may not redeem any series of Convertible Debt prior to the relevant maturity date and no sinking fund is provided for any series of Convertible Debt. The Company may repurchase any series of Convertible Debt in the open market or through privately negotiated exchange offers. Upon the occurrence of a fundamental change, as defined in the applicable indenture of such series of Convertible Debt, holders of such series may require the Company to purchase all or a portion of their Convertible Debt for cash at a price equal to 100 % of the principal amount plus any accrued and unpaid interest.

Additionally, holders of the 2024 Senior Convertible Debt may require the Company to purchase all or a portion of their 2024 Senior Convertible Debt for cash at a price equal to 100 % of the principal amount plus any accrued and unpaid interest if, prior to the close of business on the immediately preceding business day immediately preceding June 1, 2027, the last reported sale price of our common stock is less than the applicable conversion price of the 2024 Senior Convertible Debt. The holders of the 2026 Senior Convertible Debt may require the Company to purchase all or a portion of their 2026 Senior Convertible Debt for cash at a price equal to 100 % of the principal amount plus any accrued and unpaid interest if, prior to the close of business on the immediately preceding business day immediately preceding February 15, 2029, the last reported sale price of our common stock is less than the applicable conversion price of the 2026 Senior Convertible Debt.

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Interest expense consists of the following (in millions):

Fiscal Year Ended March 31,
2026 2025 2024
Debt issuance cost amortization $ 2.5   $ 3.6   $ 4.5  
Debt discount amortization 27.2   64.8   37.5  
Interest expense 174.0   172.2   147.3  
Total interest expense on Senior Indebtedness 203.7   240.6   189.3  
Debt issuance cost amortization 3.4   4.2   2.8  

Coupon interest expense 10.0   8.9   1.7  
Total interest expense on Convertible Debt 13.4   13.1   4.5  
Other interest expense 4.2   5.5   4.5  
Total interest expense $ 221.3   $ 259.2   $ 198.3  

The Company's debt settlement transactions consist of the following (in millions):

Principal Amount Settled Total Cash Consideration Net Loss on Inducements and Settlements
September 2025 (1)

4.250% 2025 Notes $ 1,200.0   $ 1,200.0   $ —  
March 2025 (2)

Revolving Credit Facility $ —   $ —   $ 1.4  
February 2025 (3)

2015 Senior Convertible Debt $ 0.4   $ 0.4   $ —  
December 2024 (4)

2025 Term Loan Facility $ 750.0   $ 750.0   $ 0.3  
November 2024 (5)

2020 Senior Convertible Debt $ 665.5   $ 665.5   $ —  
September 2024 (5)

0.983% 2024 Notes $ 1,000.0   $ 1,000.0   $ —  
February 2024 (6)

0.972% 2024 Notes $ 1,400.0   $ 1,400.0   $ —  
September 2023 (7)

2.670% 2023 Notes $ 1,000.0   $ 1,000.0   $ —  
August 2023 (8)

2017 Senior Convertible Debt $ 18.2   $ 42.7   $ 3.1  
June 2023 (9)

4.333% 2023 Notes $ 1,000.0   $ 1,000.0   $ —  
May 2023 (8)

2015 Senior Convertible Debt $ 5.6   $ 18.9   $ 0.4  
2017 Senior Convertible Debt $ 25.9   $ 56.3   $ 6.6  
2017 Junior Convertible Debt $ 6.5   $ 14.9   $ 2.1  

(1) The Company used proceeds from the issuance of Commercial Paper and cash generated from operations to finance such settlement.
(2) In connection with the amendment and restatement of its Credit Agreement, the Company recognized a loss on settlement of debt of $ 1.4 million.
(3) The Company used cash generated from operations to finance a portion of such settlement.
(4) The Company used proceeds from the issuance of 4.900% 2028 Notes and 5.050% 2030 Notes to finance such settlement.
(5) The Company used proceeds from the issuance of Commercial Paper to finance such settlement.
(6) The Company used proceeds from the issuance of Commercial Paper and borrowings under its Revolving Credit Facility to finance such settlement.
(7) The Company used borrowings under its 2025 Term Loan Facility and its Revolving Credit Facility to finance the settlement.
(8) The Company settled portions of its convertible debt in privately negotiated transactions that are accounted for as induced conversions.
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(9) The Company used borrowings under its Revolving Credit Facility to finance a portion of such settlement.

Convertible Debt

In February 2026, the Company issued $ 900.0 million aggregate principal amount of 2026 Senior Convertible Debt and incurred issuance costs of $ 16.6 million. The 2026 Senior Convertible Debt will mature on February 15, 2030 unless redeemed, repurchased or converted.

In connection with the issuance of the 2026 Senior Convertible Debt, the Company entered into capped call option transactions with several financial institutions at a cost of $ 68.0 million. The capped call options cover, subject to anti-dilution adjustments, the number of shares of the Company's common stock initially underlying the 2026 Senior Convertible Debt. Upon conversion of the 2026 Senior Convertible Debt, the Company may exercise the capped call options subject to a cap price of $ 148.82 per share, subject to certain adjustments under the terms of the capped call options, which are generally expected to reduce the potential dilution to the Company's common stock upon conversion of the 2026 Senior Convertible Debt and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2026 Senior Convertible Debt. Upon conversion of the 2026 Senior Convertible Debt, there will be no economic dilution from the 2026 Senior Convertible Debt until the average market price of the Company's common stock exceeds the cap price of $ 148.82 per share as the exercise of the capped call options will offset any dilution from the 2026 Senior Convertible Debt from the conversion price up to the cap price. As these transactions meet certain accounting criteria, the capped call options are recorded as a reduction of stockholders' equity and are not accounted for as derivatives.

In May 2024, the Company issued $ 1.25 billion aggregate principal amount of 2024 Senior Convertible Debt and incurred issuance costs of $ 16.5 million. Interest on the 2024 Senior Convertible Debt is payable semi-annually in arrears on June 1 and December 1. The 2024 Senior Convertible Debt will mature on June 1, 2030 unless redeemed, repurchased or converted.

In connection with the issuance of the 2024 Senior Convertible Debt, the Company entered into capped call option transactions with several financial institutions at a cost of $ 105.0 million. The capped call options cover, subject to anti-dilution adjustments, the number of shares of the Company's common stock initially underlying the 2024 Senior Convertible Debt. Upon conversion of the 2024 Senior Convertible Debt, the Company may exercise the capped call options subject to a cap price of $ 167.23 per share, subject to certain adjustments under the terms of the capped call options, which are generally expected to reduce the potential dilution to the Company's common stock upon conversion of the 2024 Senior Convertible Debt and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2024 Senior Convertible Debt. Upon conversion of the 2024 Senior Convertible Debt, there will be no economic dilution from the 2024 Senior Convertible Debt until the average market price of the Company's common stock exceeds the cap price of $ 167.23 per share as the exercise of the capped call options will offset any dilution from the 2024 Senior Convertible Debt from the conversion price up to the cap price. As these transactions meet certain accounting criteria, the capped call options are recorded as a reduction of stockholders' equity and are not accounted for as derivatives.

Senior Credit Facilities

In March 2025, the Company entered into a Second Amended and Restated Credit Agreement pursuant to which the Amended and Restated Credit Agreement, dated as of December 16, 2021, was amended and restated in its entirety. The Second Amended and Restated Credit Agreement provides for an unsecured revolving loan facility in an aggregate principal amount of up to $ 2.25 billion in addition to certain other sublimit loans that terminates on March 25, 2030. The Credit Agreement also permits the Company, subject to certain conditions, to add one or more incremental term loan facilities and/or increase the revolving loan commitments up to $ 1.00 billion subject, in each case, to the receipt of additional commitments from existing and/or new lenders and pro forma compliance with the financial covenants as set forth in the Second Amended and Restated Credit Agreement.

The Second Amended and Restated Credit Agreement amended the maximum total leverage ratio financial covenant to the following: 5.50 to 1.00 for period ending March 31, 2025, 5.50 to 1.00 for period ending June 30, 2025, 6.25 to 1.00 for period ending September 30, 2025, 5.75 to 1.00 for period ending December 31, 2025, 4.75 to 1.00 for period ending March 31, 2026, 4.00 to 1.00 for period ending June 30, 2026, 3.75 to 1.00 for period ending September 30, 2026, and 3.50 to 1.00 for any such period ended after the Restatement Effective Date that is not a period ending during the Covenant Relief Period. The Covenant Relief Period means the period following the Restatement Effective Date to (but excluding) the earlier of (a) December 31, 2026 and (b) the date in which the Total Leverage Ratio for the most recently ended fiscal quarter shall not exceed 3.50 to 1.00 and certain other conditions are satisfied.
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The revolving loans bear interest, at the Company’s option, at the base rate plus a spread of 0.00 % to 0.50 %, an adjusted daily simple SOFR rate (or SONIA rate in the case of loans denominated in pounds sterling) plus a spread of 0.875 % to 1.50 %, or an adjusted term SOFR or adjusted EURIBOR rate (based on one, three or six-month interest periods) plus a spread of 0.875 % to 1.50 %, in each case, with such spread being determined based on the credit ratings for certain of the Company’s senior, unsecured debt. The base rate means the highest of the prime rate, the federal funds rate plus a margin equal to 0.50 % and the adjusted term SOFR rate for a one-month interest period plus a margin equal to 1.00 %. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three-month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the adjusted term SOFR or adjusted EURIBOR rates.

The Company's obligations under the Second Amended and Restated Credit Agreement are guaranteed by certain of its subsidiaries meeting materiality thresholds. The Second Amended and Restated Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries' ability to, among other things, incur subsidiary indebtedness, grant liens, merge or consolidate, dispose of substantially all assets of the Company and its subsidiaries, taken as a whole, make investments, make acquisitions, enter into certain transactions with affiliates, pay dividends or make distributions, repurchase stock and enter into restrictive agreements, in each case subject to customary exceptions for a credit facility of this size and type. Upon satisfaction of certain conditions specified in the Second Amended and Restated Credit Agreement and at the Company's election, certain of such negative covenants in the Second Amended and Restated Credit Agreement shall no longer apply. The Company is also required to maintain compliance with a total leverage ratio and an interest coverage ratio, all measured quarterly and calculated on a consolidated basis. As of March 31, 2026, the Company was in compliance with these financial covenants.

Commercial Paper

In September 2023, the Company established a Commercial Paper program under which the Company may issue short-term unsecured promissory notes with a maturity of up to 397 days from the date of issue. The Company's obligations with respect to the payment of the Commercial Paper are guaranteed by certain of its subsidiaries. The Commercial Paper will be sold at a discount from par or alternatively, will be sold at par and bear interest rates that will vary based on market conditions and the time of issuance. Pursuant to the Credit Agreement, the maximum principal amount outstanding at any time under the Commercial Paper program is $ 2.25 billion. The Company's intention is to reduce the amounts that would otherwise be available to borrow under the Company's Revolving Credit Facility by the outstanding amount of Commercial Paper. As of March 31, 2026, the Company had $ 349.0 million of Commercial Paper outstanding. The weighted-average interest rate of the Company's outstanding Commercial Paper was 4.01 % as of March 31, 2026.

Senior Notes

The Company may, at its option, redeem some or all of the applicable series of Senior Notes in the manner set forth in the indenture governing the applicable series of Senior Notes. If the Company experiences a specific change of control triggering event set forth in the indenture governing the applicable series of Senior Notes, the Company must offer to repurchase each of the notes of such series at a price equal to 101 % of the principal amount of each of the notes of such series repurchased, plus accrued and unpaid interest, if any, but excluding, the repurchase date.

Each indenture governing the applicable series of Senior Notes contain certain customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries' ability to, among other things, create or incur certain liens, and enter into sale and leaseback transactions, and consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets, to another person. These covenants are subject to a number of limitations and exceptions set forth in the indenture governing the applicable series of Senior Notes.

Each series of Senior Notes is guaranteed by certain of the Company's subsidiaries that have also guaranteed the obligation under the Second Amended and Restated Credit Agreement and the Company's existing Senior Indebtedness. In the future, each subsidiary of the Company that is a guarantor or other obligor of the Second Amended and Restated Credit Agreement is required to guarantee each series of Senior Notes.

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Note 7 . Fair Value of Financial Instruments

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.  As a basis for considering such assumptions, the Company utilizes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1- Observable inputs such as quoted prices in active markets;
Level 2- Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3- Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
 
The carrying amount of cash equivalents, which include money market funds, approximates fair value because their maturity is less than three months. There were no cash and cash equivalents held by the Company in the form of money-market funds as of March 31, 2026. The amount of cash and cash equivalents held by the Company in the form of money-market funds as of March 31, 2025 was $ 491.1  million. The carrying amount of accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short-term maturity of the amounts and are considered Level 2 in the fair value hierarchy.  

The fair value of the Company's Commercial Paper is estimated using discounted cash flow analysis, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. The fair value of the Company's Commercial Paper approximates the carrying value excluding debt discounts and debt issuance costs and are considered Level 2 in the fair value hierarchy. The Company measures the fair value of its Convertible Debt and Senior Notes for disclosure purposes. These fair values are based on observable market prices for this debt, which is traded in less active markets and are therefore classified as a Level 2 fair value measurement.

The following table shows the carrying amounts and fair values of the Company's debt obligations (in millions):

March 31,
2026 2025
Carrying Amount (1)
Fair Value Carrying Amount (1)
Fair Value

Commercial Paper $ 348.5   $ 349.0   $ 174.9   $ 175.0  

4.250% 2025 Notes —   —   1,198.5   1,196.9  
4.900% 2028 Notes 996.7   1,006.0   995.0   1,002.5  
5.050% 2029 Notes 995.5   1,013.6   993.9   1,005.8  
5.050% 2030 Notes 995.3   1,009.0   994.2   996.9  

2017 Senior Convertible Debt 37.9   62.6   37.9   57.7  

2024 Senior Convertible Debt 1,238.6   1,243.8   1,236.0   1,173.4  

2026 Senior Convertible Debt 883.9   875.0   —   —  
Total $ 5,496.4   $ 5,559.0   $ 5,630.4   $ 5,608.2  

(1) The carrying amounts presented are net of debt discounts and debt issuance costs (see Note 6 for further information).

Note 8 . Intangible Assets and Goodwill

Net amounts excluding fully amortized intangible assets, consist of the following (in millions):

March 31, 2026
Gross Amount Accumulated Amortization Net Amount
Core and developed technology $ 7,039.6   $ ( 5,212.9 ) $ 1,826.7  
Customer-related 202.5   ( 165.3 ) 37.2  

In-process research and development 7.0   —  7.0  
Software licenses 285.9   ( 123.4 ) 162.5  

Total $ 7,535.0   $ ( 5,501.6 ) $ 2,033.4  

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March 31, 2025
Gross Amount Accumulated Amortization Net Amount
Core and developed technology $ 7,149.9   $ ( 4,981.6 ) $ 2,168.3  
Customer-related 199.5   ( 152.8 ) 46.7  

In-process research and development 50.8   —  50.8  
Software licenses 259.3   ( 136.1 ) 123.2  

Total $ 7,659.5   $ ( 5,270.5 ) $ 2,389.0  

During the twelve months ended March 31, 2025, due to acquisitions, the Company acquired $ 50.8 million of in-process research and development, $ 2.8 million of customer-related intangible assets, and $ 1.1  million of software license intangible assets. The $ 50.8 million of acquired in-process research and development was reclassified to core and developed technology during the twelve months ended March 31, 2026.

The following is an expected amortization schedule for the intangible assets for fiscal 2027 through fiscal 2031, absent any future acquisitions or impairment charges (in millions):

Fiscal Year Ending March 31, Amortization Expense
2027 $ 454.8  
2028 $ 344.0  
2029 $ 270.2  
2030 $ 258.1  
2031 $ 231.3  

The Company amortizes intangible assets over their expected useful lives, which range between 1 and 15 years. Amortization expense attributed to intangible assets are assigned to cost of sales and operating expenses as follows (in millions):

Fiscal Year Ended March 31,
2026 2025 2024
Amortization expense charged to cost of sales $ 20.7   $ 18.5   $ 12.2  
Amortization expense charged to operating expense 513.6   565.8   676.9  
Total amortization expense $ 534.3   $ 584.3   $ 689.1  

Goodwill activity by segment was as follows (in millions):

  Semiconductor Products Reporting Unit Technology Licensing Reporting Unit
Balance at March 31, 2024 $ 6,656.2   $ 19.2  
Additions 9.4   —  
Balance at March 31, 2025 $ 6,665.6   $ 19.2  
Additions 10.7   —  
Balance at March 31, 2026 $ 6,676.3   $ 19.2  

At March 31, 2026, the Company applied a qualitative goodwill impairment test to its two reporting units, and concluded that goodwill was not impaired. Through March 31, 2026, the Company has never recorded a goodwill impairment charge.

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Note 9 . Other Financial Statement Details

Accounts Receivable
 
Accounts receivable consists of the following (in millions):

  March 31,
2026 2025
Trade accounts receivable $ 889.7   $ 684.1  
Other 10.3   11.5  
Total accounts receivable, gross 900.0   695.6  
Less: allowance for expected credit losses 5.3   5.9  
Total accounts receivable, net $ 894.7   $ 689.7  

Inventories

The components of inventories consist of the following (in millions):

  March 31,
2026 2025
Raw materials $ 135.1   $ 174.8  
Work in process 731.4   857.6  
Finished goods 168.9   261.1  
Total inventories $ 1,035.4   $ 1,293.5  

Property, Plant and Equipment

Property, plant and equipment consists of the following (in millions):

  March 31,
2026 2025
Land $ 99.7   $ 84.8  
Building and building improvements 711.0   705.9  
Machinery and equipment 2,470.3   2,311.3  
Projects in process 429.5   424.1  
Total property, plant and equipment, gross 3,710.5   3,526.1  
Less: accumulated depreciation and amortization 2,603.8   2,342.4  
Total property, plant and equipment, net $ 1,106.7   $ 1,183.7  

 
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Depreciation expense attributed to property, plant and equipment was $ 155.0 million, $ 165.8 million and $ 190.4 million for the fiscal years ended March 31, 2026, 2025 and 2024, respectively. The changes in depreciation expense in the fiscal years ended March 31, 2026, and 2025, includes the impact of lower production levels, slowing business activity and delays in placing assets into service. As of March 31, 2026, the Company recorded $ 52.2 million of capital-related grants for qualifying capital expenditures as a reduction to property, plant and equipment, compared to $ 46.4 million as of March 31, 2025.

The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amount of such assets may not be recoverable. For each of the fiscal years ended March 31, 2026, 2025 and 2024, the Company’s evaluation of its property, plant and equipment did not result in any material impairments.

Accrued Liabilities

Accrued liabilities consists of the following (in millions):

  March 31,
2026 2025
Accrued compensation and benefits $ 132.1   $ 108.1  
Income taxes payable 24.3   99.1  
Deferred revenue 179.2   213.4  
Sales related reserves and refund liabilities 338.5   329.7  
Current portion of lease liabilities 38.8   35.7  
Accrued expenses and other liabilities 217.8   208.5  
Total accrued liabilities $ 930.7   $ 994.5  

Note 10 . Leases

Operating lease arrangements are comprised primarily of real estate and equipment agreements for which the ROU assets are included in other assets and the corresponding lease liabilities, depending on their maturity, are included in accrued liabilities or other long-term liabilities in the consolidated balance sheets. There are certain immaterial finance leases recorded in the consolidated balance sheets. The Company has elected to account for the lease and non-lease components as a single lease component .

The Company's leases are included as a component of the following balance sheet lines (in millions):

March 31,
2026 2025
Other assets:
ROU assets $ 137.5   $ 146.3  
Total lease assets $ 137.5   $ 146.3  
Accrued liabilities:
Current portion of lease liabilities $ 38.8   $ 35.7  
Other long-term liabilities:
Non-current portion of lease liabilities 107.0   115.1  
Total lease liabilities $ 145.8   $ 150.8  

The following table presents the maturities of lease liabilities as of March 31, 2026 (in millions):

Fiscal year ending March 31, Operating Leases
2027 $ 44.4  
2028 37.3  
2029 26.8  
2030 20.7  
2031 15.5  
Thereafter 17.8  
Total lease payments 162.5  
Less: Imputed lease interests 16.7  
Total lease liabilities $ 145.8  

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The Company's weighted-average remaining lease-term and weighted-average discount rate at March 31, 2026 are as follows:

Weighted average remaining lease-term (years) 4.84
Weighted average discount rate 4.61 %

The Company's total lease expense is as follows (in millions):

  Fiscal Year Ended March 31,
2026 2025 2024
Operating lease expense $ 63.8   $ 61.8   $ 60.4  

Note 11 . Commitments and Contingencies

Purchase Commitments

The Company's purchase commitments primarily consist of agreements for the purchase of goods and services including wafer purchase obligations with the Company's wafer foundries, and manufacturing supply capacity reservation commitments.

Total purchase commitments as of March 31, 2026, are as follows (in millions):

Fiscal Year Ending March 31, Purchase Commitments
2027 $ 344.0  
2028 98.7  
2029 15.6  
2030 9.6  
2031 6.2  
Thereafter 30.0  
Total $ 504.1  

Indemnification Contingencies

The Company's technology license agreements generally include an indemnification clause that indemnifies the licensee against liability and damages (including legal defense costs) arising from any claims of patent, copyright, trademark or trade secret infringement by the Company's proprietary technology.  The terms of these indemnification provisions approximate the terms of the outgoing technology license agreements, which are typically perpetual unless terminated by either party for breach. The possible amount of future payments the Company could be required to make based on agreements that specify indemnification limits, if such indemnifications were required on all of these agreements, is approximately $ 204.0 million. There are some licensing agreements in place that do not specify indemnification limits. As of March 31, 2026, the Company had not recorded any liabilities related to these indemnification obligations and the Company believes that any amounts that it may be required to pay under these agreements in the future will not have a material adverse effect on its financial position, cash flows or results of operations.

Warranty Costs and Product Liabilities

The Company accrues for known product-related claims if a loss is probable and can be reasonably estimated. During the periods presented, there have been no material accruals or payments regarding product warranty or product liability. Historically, the Company has experienced a low rate of payments on product claims. Although the Company cannot predict the likelihood or amount of any future claims, the Company does not believe these claims will have a material adverse effect on its financial condition, results of operations or liquidity.

Legal Matters

In the ordinary course of the Company's business, it is exposed to various legal actions as a result of contracts, product liability, customer claims, pricing or royalty disputes with customers and licensees, governmental investigations and other matters. The Company is involved in a limited number of these legal actions, both as plaintiff and defendant, with respect to
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the foregoing types of matters. Consequently, the Company could incur uninsured liability in any of these legal actions.  The Company also periodically receives notifications from various third parties alleging infringement of patents or other intellectual property rights, or from customers requesting reimbursement for various costs. With respect to pending legal actions to which the Company is a party and other claims, although the outcomes are generally not determinable, the Company believes that the ultimate resolution of these matters (other than certain tax matters in Malaysia as described in Note 12 below) will not have a material adverse effect on its financial position, cash flows or results of operations. Litigation, governmental investigations and disputes relating to the semiconductor industry are not uncommon, and the Company is, from time to time, subject to such litigation, governmental investigations and disputes.  As a result, no assurances can be given with respect to the extent or outcome of any such litigation, governmental investigations or disputes in the future.

The Company accrues for claims and contingencies when losses become probable and reasonably estimable. As of the end of each applicable reporting period, the Company reviews each of its matters and, where it is probable that a liability has been or will be incurred, the Company accrues for all probable and reasonably estimable losses. Where the Company can reasonably estimate a range of losses it may incur regarding such a matter, the Company records an accrual for the amount within the range that constitutes its best estimate. If the Company can reasonably estimate a range but no amount within the range appears to be a better estimate than any other, the Company uses the amount that is the low end of such range. As of March 31, 2026, the Company's estimate of the aggregate potential liability for legal matters that is possible but not probable is approximately $ 25.0  million in excess of amounts accrued.

Note 12 . Income Taxes
 
The income tax provision (benefit) consists of the following (amounts in millions):

  Fiscal Year Ended March 31,
  2026 2025 2024
Income before income taxes:
U.S. $ ( 33.8 ) $ ( 131.5 ) $ 555.5  
Foreign 307.3   170.4   1,810.4  
Total income before income taxes $ 273.5   $ 38.9   $ 2,365.9  
Current provision:      
U.S. federal $ 51.7   $ 127.5   $ 347.5  
State 3.5   —   20.0  
Foreign 52.9   55.2   118.7  
Total current provision $ 108.1   $ 182.7   $ 486.2  
Deferred provision (benefit):      
U.S. federal $ ( 21.6 ) $ ( 101.0 ) $ ( 106.4 )
State ( 2.2 ) ( 5.5 ) ( 12.3 )
Foreign ( 40.8 ) ( 36.8 ) 91.5  
Total deferred provision (benefit) ( 64.6 ) ( 143.3 ) ( 27.2 )
Income tax provision $ 43.5   $ 39.4   $ 459.0  

The Company has elected to prospectively adopt the guidance in ASU 2023-09. The following table presents the required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to the Company's actual global effective amount and rate for the fiscal year ended March 31, 2026 (amounts in millions):

Fiscal Year Ended March 31, 2026
Amount
Percent
U.S. federal statutory income tax rate $ 57.4   21.0   %

Domestic state and local income taxes, net of federal effect (1)
( 1.8 ) ( 0.7 ) %
Domestic federal
Tax credits
Research and development credits ( 24.5 ) ( 9.0 ) %
Cross-border tax laws
GILTI 43.0   15.7   %
Foreign income tax credits ( 16.5 ) ( 6.0 ) %
Other ( 2.6 ) ( 0.9 ) %

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Fiscal Year Ended March 31, 2026
Amount
Percent
Other 8.4   3.1   %
Foreign tax effects
Malta
Statutory income tax rate differential 36.7   13.4   %
Notional interest deduction ( 83.0 ) ( 30.3 ) %
Other ( 3.2 ) ( 1.2 ) %
Canada
Research and development credits ( 13.4 ) ( 4.9 ) %
Imputed interest income 6.8   2.5   %
Other 9.2   3.4   %
Ireland
Statutory income tax rate differential 11.0   4.0   %
Withholding and other taxes 7.7   2.8   %
Other 0.9   0.3   %
Thailand
Nontaxable and nondeductible Items ( 8.8 ) ( 3.2 ) %
Income tax holidays ( 5.1 ) ( 1.9 ) %
Other 1.1   0.4   %
Taiwan
Withholding and other taxes 9.4   3.5   %
Other 0.1   —  
Other foreign jurisdictions 6.0   2.2   %
Change in uncertain tax positions 4.7   1.7   %
Effective tax rate $ 43.5   15.9   %

(1) State taxes in Arizona and California comprise the majority of the tax effect in this category.

The following table presents required disclosures prior to the adoption of ASU 2023-09 and displays the reconciliation between statutory federal income taxes and the total income tax provision (benefit) for the fiscal years ended March 31, 2025 and 2024 (amounts in millions):

  Fiscal Year Ended March 31,
  2025 2024
Computed expected income tax provision $ 8.2   $ 496.8  
State income taxes, net of federal benefit ( 2.1 ) 15.7  
Effects of foreign operations - rate differential ( 19.2 ) ( 149.3 )
Effects of foreign operations - other, net of foreign tax credits 55.0   212.2  

Foreign-derived intangible income (FDII) ( 3.1 ) ( 3.6 )
Business realignment of intellectual property rights 5.7   0.4  

Change in uncertain tax positions 45.1   5.8  
Share-based compensation ( 14.1 ) ( 8.4 )
R&D tax credits ( 60.1 ) ( 69.8 )

Income tax holidays ( 12.0 ) ( 22.5 )

Nondeductible Expenses 6.0   7.7  

Other 13.4   2.6  
Change in valuation allowance 16.6   ( 28.6 )
Income tax provision $ 39.4   $ 459.0  

The foreign tax rate differential benefit primarily relates to the Company's operations in Malta and Ireland. The Company's Thailand manufacturing operations are currently subject to numerous tax holidays granted to the Company based on its investment in property, plant, and equipment in Thailand. The Company's tax holiday periods in Thailand expire between fiscal 2027 and 2034, however, the Company actively seeks to obtain new tax holidays. The Company does not expect the future expiration of any of its tax holiday periods in Thailand to have a material impact on its effective tax rate. The aggregate dollar benefit derived from these tax holidays approximated $ 5.1 million, $ 12.0 million, and $ 22.5 million in
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fiscal 2026, fiscal 2025, and fiscal 2024, respectively. The impact of the tax holidays increased each of the basic and diluted net income per common share by $ 0.01 in fiscal 2026, $ 0.02 in fiscal 2025, and $ 0.04 in fiscal 2024.

The tax effects of temporary differences that give rise to significant portions of the Company's deferred tax assets and deferred tax liabilities are as follows (amounts in millions):

  March 31,
  2026 2025
Deferred tax assets:    
Accrued expenses $ 51.8   $ 51.8  
Capital loss carryforward 10.1   9.8  

Disallowed expense carryforwards 377.5   242.8  
Income tax credits 260.9   266.8  
Intangible assets 1,081.1   1,192.1  
Inventory valuation 144.5   130.4  
Property, plant and equipment 15.4   —  
Lease liabilities 33.4   33.2  
Net operating loss carryforward 62.4   59.3  

Share-based compensation 67.0   53.5  
Other 20.5   25.6  
Gross deferred tax assets 2,124.6   2,065.3  
Valuation allowances ( 291.6 ) ( 287.4 )
Deferred tax assets, net of valuation allowances 1,833.0   1,777.9  
Deferred tax liabilities:    

Intangible assets ( 33.9 ) ( 50.3 )
ROU assets ( 31.7 ) ( 31.7 )
Property, plant and equipment —   ( 1.6 )
Deferred tax liabilities ( 65.6 ) ( 83.6 )
Net deferred tax asset $ 1,767.4   $ 1,694.3  

Reported as:

Non-current deferred tax assets $ 1,792.5   $ 1,728.1  
Non-current deferred tax liability ( 25.1 ) ( 33.8 )
Net deferred tax asset $ 1,767.4   $ 1,694.3  

 
In assessing whether it is more likely than not that deferred tax assets will be realized, the Company considers all available evidence, both positive and negative, including its recent cumulative earnings experience and expectations of future available taxable income of the appropriate character by taxing jurisdiction, tax attribute carryback and carryforward periods available for tax reporting purposes, and prudent and feasible tax planning strategies.

  Additions and deductions related to the valuation allowance for deferred tax assets for the three fiscal years were as follows (amounts in millions):

Balance at Beginning of Year Additions Charged to Costs and Expenses Deductions Balance at End of Year
Fiscal 2026 $ 287.4   $ 36.5   $ ( 32.3 ) $ 291.6  
Fiscal 2025 $ 270.8   $ 22.2   $ ( 5.6 ) $ 287.4  
Fiscal 2024 $ 299.4   $ 6.5   $ ( 35.1 ) $ 270.8  

The Company had federal, state and foreign net operating loss (NOL) carryforwards with an estimated tax effect of $ 62.4 million available at March 31, 2026, which expire at various times between fiscal 2027 and fiscal 2046, of which a portion of the NOL carryforwards do not expire. The Company had capital loss carryforwards with an estimated tax effect of $ 10.1 million available at March 31, 2026, which begin to expire in fiscal 2027. The Company had federal, state and foreign credits of $ 260.9 million available at March 31, 2026, which begin to expire in fiscal 2027. The Company had disallowed expense carryforwards with an estimated tax effect of $ 377.5 million available at March 31, 2026. These expense carryforwards do not expire.
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The enactment of the TCJA imposed a tax on all previously untaxed earnings of non-U.S. subsidiaries of U.S. corporations. Due to this change, the jurisdiction in which the Company's cash is at any given point in time no longer has a significant impact on the Company's liquidity.  The Company intends to invest substantially all of the Company's foreign subsidiary earnings, as well as the Company's capital in the Company's foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which the Company would incur significant, additional costs upon repatriation of such amounts. It is not practical to estimate the additional tax that would be incurred, if any, if the permanently reinvested earnings were repatriated.

During fiscal 2018, the Company recognized a one-time transition tax on accumulated unrepatriated foreign earnings, of which the Company expected cash payments of approximately $ 293.6  million. This tax was payable over a period of eight years, with 8 % of the transition tax payable each year for fiscal 2019 through fiscal 2023, and 15 %, 20 %, and 25 %, respectively, payable during fiscal 2024, fiscal 2025 and fiscal 2026. As of March 31, 2026, the Company had no remaining transition tax payable.

The Company recognizes interest and penalties related to unrecognized tax benefits through income tax expense. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions.  The Company files U.S. federal, U.S. state, and foreign income tax returns.  For U.S. federal, and in general for U.S. state tax returns, the fiscal 2007 and later tax years remain effectively open for examination by tax authorities.  For foreign tax returns, the Company is generally no longer subject to income tax examinations for years prior to fiscal 2007.
 
Significant judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes.  Although the Company believes that it has appropriately reserved for its uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different than expectations.  The Company will adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, tax litigation, interaction with taxing authorities, the closing of a statutory audit period or changes in applicable tax law.  To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences would impact the provision for income taxes in the period in which such determination is made.  The provision for income taxes includes the impact of reserve provisions and changes to the reserves that are considered appropriate, as well as related net interest.

The Company recognizes liabilities for anticipated tax audit issues in the U.S. and other domestic and international tax jurisdictions based on its estimate of whether, and the extent to which, the tax positions are more likely than not to be sustained based on the technical merits.  The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax laws applied to the facts of each matter.  

The Company believes it maintains appropriate reserves to offset potential income tax liabilities for positions that are not more than likely than not to be sustained upon final resolution of matters for open tax years. If such reserve amounts ultimately prove to be unnecessary, the resulting reversal of such reserves could result in tax benefits being recorded in the period the reserves are no longer deemed necessary.  If such amounts prove to be less than an ultimate assessment, a future charge to expense would be recorded in the period in which the assessment is determined. 

The following table summarizes the activity related to the Company's gross unrecognized tax benefits for the last three fiscal years (amounts in millions):  

March 31,
2026 2025 2024
Beginning gross unrecognized tax benefits $ 821.2   $ 792.4   $ 848.0  

Decreases related to settlements with tax authorities ( 62.6 ) ( 0.7 ) ( 5.8 )
Decreases related to statute of limitation expirations ( 8.2 ) ( 6.9 ) ( 3.3 )
Increases related to current year tax positions 16.4   27.1   37.4  
Increases (decreases) related to prior year tax positions ( 87.0 ) 9.3   ( 83.9 )
Ending gross unrecognized tax benefits $ 679.8   $ 821.2   $ 792.4  

 
As of March 31, 2026 and March 31, 2025, the Company had accrued interest and penalties related to tax contingencies of $ 120.1 million and $ 135.8 million, respectively, included within long-term income tax payable on the consolidated balance sheets. During the fiscal year ended March 31, 2026, the Company released previously accrued interest and penalties of $ 15.7 million, compared to the charges in interest and penalties to operations of $ 31.2 million in the fiscal year ended March 31, 2025. The total amount of gross unrecognized tax benefits was $ 679.8 million and $ 821.2 million as of March 31,
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2026, and March 31, 2025, respectively, of which $ 600.1 million and $ 706.4 million, respectively, is estimated to impact the Company's effective tax rate, if recognized.

The Company is currently under income tax examination in various tax jurisdictions in which it operates. The years under examination range from fiscal 2007 through fiscal 2024. In some jurisdictions, the Company has received tax assessments in excess of established reserves. The Company is contesting these tax assessments, and will continue to do so, including pursuing all available remedies such as appeals and litigation, if necessary. During fiscal 2026, additional assessments were received for these issues, and the Company’s position remains unchanged.

In the year ending March 31, 2026, due to settlements reached with tax authorities, the Company determined that certain unrecognized tax positions should be remeasured, including the indirect tax effects, penalties, and interest associated with these unrecognized tax positions. The effect of this change in estimate was to record an income tax benefit of $ 24.4 million, which increased basic net income per common share by $ 0.05 for the fiscal year ended March 31, 2026, and increased diluted net income per common share by $ 0.04 for the fiscal year ended March 31, 2026, both of which are a component of income tax provision from continuing operations.

In September 2021, the Company received a Statutory Notice of Deficiency (2007 to 2012 Notice) from the United States Internal Revenue Service (IRS) for fiscal 2007 through fiscal 2012. The disputed amounts largely relate to transfer pricing matters. In December 2021, the Company filed a petition in the U.S. Tax Court challenging the 2007 to 2012 Notice. In September 2023, the Company received a Revenue Agent Report (RAR) from the IRS for fiscal 2013 and fiscal 2016. In October 2023, the Company received a Statutory Notice of Deficiency (2014 to 2015 Notice) from the IRS for fiscal 2014 and fiscal 2015. The disputed amounts for fiscal 2013 to fiscal 2016 largely relate to transfer pricing matters. In December 2023, the Company filed a petition in the U.S. Tax Court challenging the 2014 to 2015 Notice. In September 2025, the Company reached a settlement with the IRS for fiscal years 2007 through 2015.

In May 2023, the Company received a proposed income adjustment from the Malaysian Inland Revenue Board (IRB) for fiscal 2020. In December 2023, the Company received a Notice of Assessment from the IRB asserting the same proposed income adjustment. In March 2025, the Company entered into a Consent Judgment before the High Court, agreeing that the dispute will be heard before the Special Commissioners of Income Tax (SCIT). It was also agreed that the payment on the taxes assessed is stayed and the IRB will pause all enforcement and proceedings against the collection of the taxes assessed until the appeal before the SCIT is concluded. If the adjustment is upheld by the highest court that has jurisdiction over this matter in Malaysia, it could result in income taxes and penalties up to MYR 1.9  billion (approximately $ 480.2 million based on the exchange rate as of March 31, 2026). The disputed amounts largely relate to the characterization of certain assets. The timing of adjudicating this matter is uncertain but could commence in the next 18 months.

The Company firmly believes that the IRB assessment is without merit and plans to pursue all available administrative and judicial remedies necessary to resolve the matter. The Company intends to vigorously defend its position and the Company is confident in its ability to prevail on the merits. The Company regularly assesses the likelihood of adverse outcomes resulting from examinations such as these to determine the adequacy of the Company's tax reserves. The ultimate outcome of disputes of this nature is uncertain, and if the IRB were to prevail on its assertions, the assessed tax, penalties, and deficiency interest could have a material adverse impact on the Company's financial position, results of operations or cash flows.

During the period ending March 31, 2026, the Company resolved its dispute with the German Tax Authority. The resolution did not have a material impact to the financial statements.

Note 13 . Employee Benefit Plans

Defined Benefit Plans

The Company has defined benefit pension plans that cover certain of its foreign employees. Most of these defined pension plans, which were acquired in prior acquisitions, are unfunded. Plan benefits are provided in accordance with local statutory requirements and are based on years of service and employee compensation levels.

The change in projected benefit obligation and the accumulated benefit obligation was immaterial for fiscal 2026 and fiscal 2025. As of March 31, 2026, the Company has recorded $ 80.2 million related to the pension plans in the consolidated balance sheets.

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Future estimated expected benefit payments for fiscal year 2027 through 2036 are as follows (in millions):

Fiscal Year Ending March 31, Amount
2027 $ 9.9  
2028 8.2  
2029 7.5  
2030 7.5  
2031 8.9  
2032 through 2036
51.1  
Total $ 93.1  

Note 14 . Share-Based Compensation
 
Share-Based Compensation Expense
 
The following table presents the details of the Company's share-based compensation expense (in millions):

Fiscal Year Ended March 31,
2026 2025 2024
Cost of sales (1)
$ 34.9   $ 21.8   $ 25.6  
Research and development 140.0   104.6   94.3  
Selling, general and administrative 80.5   54.0   57.6  

Pre-tax effect of share-based compensation 255.4   180.4   177.5  
Income tax benefit 53.1   37.9   37.5  
Net income effect of share-based compensation $ 202.3   $ 142.5   $ 140.0  

 
(1) During the fiscal year ended March 31, 2026, $ 22.0 million of share-based compensation expense was capitalized to inventory and $ 34.9 million of previously capitalized share-based compensation expense in inventory was sold. During the fiscal year ended March 31, 2025, $ 17.4 million of share-based compensation expense was capitalized to inventory and $ 21.8 million of previously capitalized share-based compensation expense in inventory was sold. During the fiscal year ended March 31, 2024, $ 19.0 million of share-based compensation expense was capitalized to inventory and $ 25.6 million of previously capitalized share-based compensation expense in inventory was sold.

Incentive Plans

The Company has granted RSUs to employees and non-employee members of the Board of Directors under the Company’s 2004 Equity Incentive Plan (the 2004 plan). The Company grants RSUs with a service condition and PSUs under the 2004 plan. Under the 2004 plan, 72,389,717 shares of common stock have been authorized for issuance and 6,668,692 shares of common stock remain available for future grants as of March 31, 2026.

Restricted Stock Units

The Company uses RSUs with a service condition as its primary equity incentive compensation instrument for employees.

RSUs share activity is set forth below:

Number of
Shares Weighted Average Grant Date Fair Value
Nonvested shares at March 31, 2023 8,663,602   $ 58.72  
Granted 2,535,772   $ 77.28  

Forfeited ( 474,397 ) $ 64.37  
Vested ( 2,510,781 ) $ 48.56  
Nonvested shares at March 31, 2024 8,214,196   $ 67.22  
Granted 4,921,190   $ 70.74  
Forfeited ( 1,191,134 ) $ 71.27  
Vested ( 2,365,815 ) $ 60.12  

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Number of
Shares Weighted Average Grant Date Fair Value
Nonvested shares at March 31, 2025 9,578,437   $ 70.28  
Granted 5,036,212   $ 56.23  

Forfeited ( 1,075,449 ) $ 66.14  
Vested ( 2,382,678 ) $ 67.78  
Nonvested shares at March 31, 2026 11,156,522   $ 64.87  

The total intrinsic value of RSUs which vested during the fiscal years ended March 31, 2026, 2025 and 2024 was $ 156.9 million, $ 176.2 million and $ 201.4 million, respectively.  The aggregate intrinsic value of RSUs outstanding at March 31, 2026 was $ 720.8 million, calculated based on the closing price of the Company's common stock of $ 64.61 per share on March 31, 2026.

The amount of unearned share-based compensation currently estimated to be expensed in fiscal 2027 through fiscal 2031 related to unvested RSUs at March 31, 2026 is $ 394.2 million.  The weighted average period over which the unearned RSUs compensation is expected to be recognized is approximately 1.99 years.

Performance Stock Units

The Company has granted performance-based PSUs to a group of executive officers and employees. For the performance-based PSUs, the number of shares of the Company's common stock expected to vest will range from 0 % to 200 % of the target grant amount based on the Company's two-year or three-year cumulative non-GAAP operating margin percentage. Prior to fiscal 2023, the Company granted market-based PSUs to executive officers. For the market-based PSUs, the number of shares of the Company's common stock received at vesting was in the range from 0 % to 200 % of the target grant amount based on the total shareholder return (TSR) of the Company's common stock measured against the TSR of a defined peer group of companies over the applicable two-year or three-year measurement period. TSR is a measure of the stock price appreciation plus any dividends paid in the performance period.

PSUs share activity is set forth below:

Number of
Shares Weighted Average Grant Date Fair Value
Nonvested shares at March 31, 2023 380,870   $ 69.51  
Granted 123,747   $ 77.61  
Forfeited ( 2,883 ) $ 100.20  
Vested —   $ —  
Nonvested shares at March 31, 2024 501,734   $ 71.33  
Granted 183,304   $ 71.92  
Forfeited ( 207,481 ) $ 72.21  
Vested ( 159,293 ) $ 70.71  
Nonvested shares at March 31, 2025 318,264   $ 71.45  
Granted 289,499   $ 61.79  
Forfeited ( 77,372 ) $ 67.22  
Vested ( 74,989 ) $ 80.18  
Nonvested shares at March 31, 2026 455,402   $ 64.34  

The aggregate intrinsic value of PSUs outstanding at March 31, 2026 was $ 29.4  million, calculated based on the closing price of the Company's common stock of $ 64.61 per share on March 31, 2026.

The amount of unearned share-based compensation currently estimated to be expensed in fiscal 2027 through fiscal 2031 related to unvested PSUs at March 31, 2026 is $ 32.0 million.  The weighted average period over which the unearned PSUs compensation is expected to be recognized is approximately 2.64 years.

Employee Stock Purchase Plan

The Company’s 2001 Employee Stock Purchase Plan and the 1994 International Employee Stock Purchase Plan
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(collectively referred to as the employee stock purchase plans) allows eligible employees to purchase shares of the Company's common stock at 85 % of the value of its common stock on specific dates. Since the inception of the employee stock purchase plans, 36,626,514 shares of common stock have been authorized for issuance and 7,386,763 shares remain available for future purchases as of March 31, 2026.

Employees purchased 1,266,202 shares of common stock in the fiscal year ended March 31, 2026 for an aggregate purchase price of $ 61.8 million under the employee stock purchase plans compared to 1,102,689 shares of common stock for an aggregate purchase price of $ 65.5 million in the fiscal year ended March 31, 2025 and 1,375,324 shares of common stock for a purchase price of $ 81.7 million in the fiscal year ended March 31, 2024. As of March 31, 2026, unrecognized share-based compensation costs related to the employee stock plans totaled $ 6.8 million, which will be recognized over a period of approximately five months .

Note 15 . Stockholders' Equity

Changes in Share Balances

The following table shows the changes in each class of shares (in millions):

Series A Preferred Stock Common Stock Treasury Stock
Balance at March 31, 2023 —  577.8   32.3  
Repurchase of common stock —  —  11.9  
Common stock issued under employee equity incentive plans —  4.0   — 
Common stock withheld for tax withholdings on employee equity awards —  ( 0.9 ) — 
Treasury stock used for new issuances —  ( 3.1 ) ( 3.1 )
Balance at March 31, 2024 —  577.8   41.1  
Repurchase of common stock —  —  1.0  
Issuance of Series A Preferred Stock 1.5   —  — 
Common stock issued under employee equity incentive plans —  3.6   — 
Common stock withheld for tax withholdings on employee equity awards —  ( 0.8 ) — 
Treasury stock used for new issuances —  ( 2.8 ) ( 2.8 )
Shares issued to settle convertible debt —  0.2   — 
Balance at March 31, 2025 1.5   578.0   39.3  

Common stock issued for acquisition —  0.4   — 

Common stock issued under employee equity incentive plans —  3.7   — 
Common stock withheld for tax withholdings on employee equity awards —  ( 0.7 ) — 
Treasury stock used for new issuances —  ( 3.0 ) ( 3.0 )

Balance at March 31, 2026 1.5   578.4   36.3  

Treasury Stock

In November 2021, the Company's Board of Directors approved a stock repurchase program to repurchase up to $ 4.00 billion of the Company's common stock in the open market or in privately negotiated transactions. There is no expiration date associated with the repurchase program. There were no repurchases of common stock in the fiscal year ended March 31, 2026, compared to approximately 1.0 million shares of common stock repurchased for a total cost of $ 89.6  million in the fiscal year ended March 31, 2025, including the 1% excise tax on stock repurchases enacted by the Inflation Reduction Act of 2022 (Inflation Reduction Act), and 11.9 million shares of common stock repurchased for a total of cost $ 988.9  million in the fiscal year ended March 31, 2024. As of March 31, 2026, approximately $ 1.56 billion remained available for repurchases under the program. Shares repurchased are recorded as treasury shares and are used to fund share issuance requirements under the Company's equity incentive plans. As of March 31, 2026, the Company had approximately  36.3 million treasury shares.

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Series A Mandatory Convertible Preferred Stock

In March 2025, the Company issued 29.7 million Depositary Shares, representing approximately 1.5 million shares of its Series A Preferred Stock. The Series A Preferred Stock has a $ 1,000.00 per share liquidation preference and a $ 0.001 per share par value. As a result of the transaction, the Company received cash proceeds of $ 1.45 billion, net of underwriting fees and other issuance costs.

Dividends are cumulative at an annual rate of 7.50 % on the liquidation preference of $ 1,000.00 per share of Series A Preferred Stock and may be paid in cash, shares of the Company's common stock or a combination of cash and shares of common stock. Dividends that are declared will be payable on the 15th of March, June, September and December to holders of record on the 1st of each month of the relevant dividend payment date. Dividends are recorded as a reduction to retained earnings and are reflected in accrued liabilities within the consolidated balance sheets until paid. Dividends paid on Series A Preferred Stock in the fiscal year ended March 31, 2026 were an aggregate of $ 108.5 million. A quarterly cash dividend of $ 18.750 per share of Series A Preferred Stock was declared on May 7, 2026 and will be paid on June 15, 2026 to the holders of Series A Preferred Stock of record as of June 1, 2026.

The following table provides the conversion rate per share of our Series A Preferred Stock, subject to certain anti-dilution adjustments:

Applicable Market Value of Common Stock Conversion Rate per share of Series A Preferred Stock
Greater than $ 62.4766
16.0060 shares of common stock

Equal to or less than $ 62.4766 but greater than or equal to $ 50.9996
Between 16.0060 and 19.6080 shares of common stock, determined by dividing $1,000 by the applicable market value

Less than $ 50.9996
19.6080 shares of common stock

Unless earlier converted, each share of Series A Preferred Stock will automatically convert on March 15, 2028, into between 16.0060 shares and 19.6080 shares of the Company's common stock, depending on the applicable market value of the common stock and subject to certain anti-dilution adjustments described in the certificate of designations governing the Series A Preferred Stock (Certificate of Designations). The applicable market value of the Company's common stock will be determined based on the average volume-weighted average price per share of the common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately prior to March 15, 2028.

If a fundamental change, as defined in the Certificate of Designations, occurs on or prior to March 15, 2028, then holders of the Series A Preferred Stock will be entitled to convert all or any portion of their shares into shares of the Company's common stock at the fundamental change conversion rate, as defined in the Certificate of Designations, for a specified period of time and also to receive an amount to compensate such holders for unpaid accumulated dividends and any remaining future scheduled dividend payments. Other than during a fundamental change conversion period, at any time prior to March 15, 2028, holders of Series A Preferred Stock may elect to convert all or any portion of their shares at a conversion rate of 16.0060 shares of common stock per share of Series A Preferred Stock, subject to certain anti-dilution and other adjustments as described in the Certificate of Designations.

In connection with the issuance of the 29.7 million Depositary Shares, representing approximately 1.5 million shares of its Series A Preferred Stock, the Company entered into capped call option transactions with several financial institutions at a cost of $ 55.1 million. Upon conversion of the Series A Preferred Stock, the Company may exercise the capped call options subject to a cap price of $ 71.40 per share, subject to certain adjustments under the terms of the capped call options, which are generally expected to reduce the potential dilution to the Company's common stock upon conversion of the Series A Preferred Stock and/or offset any cash payments the Company is required to make. As these transactions meet certain accounting criteria, the capped call options are recorded as a reduction of stockholders' equity and are not accounted for as derivatives.

Common Stock Dividends

In October 2002, the Company announced that its Board of Directors had approved and instituted a quarterly cash dividend on its common stock and the Company has continued to consistently pay quarterly dividends since then. Cash dividends paid per share were $ 1.820 , $ 1.816 and $ 1.682 during fiscal 2026, 2025 and 2024, respectively. Total dividend payments amounted to $ 984.0 million, $ 975.7 million and $ 911.5 million during fiscal 2026, 2025 and 2024, respectively.

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