Equity

9 Months Ended

May 26, 2023

Equity [Abstract]

Equity

Equity

SGH Shareholders’ Equity

Share Dividend

On January 3, 2022, our Board of Directors declared a share dividend of one ordinary share, $0.03 par value per share, for every one outstanding ordinary share owned to shareholders of record as of January 25, 2022. The dividend was paid on February 1, 2022. The accompanying consolidated financial statements and notes have been restated and adjusted for the impact of the share dividend.

Share Repurchase Authorization

On April 4, 2022, our Board of Directors approved a $75.0 million share repurchase authorization, under which we may repurchase our outstanding ordinary shares from time to time through open market purchases, privately-negotiated transactions or otherwise. The share repurchase authorization has no expiration date but may be suspended or terminated by the Board of Directors at any time. In the first nine months of 2023 and in 2022, we repurchased 0.5 million and 2.6 million shares, respectively, for $8.4 million and $50.0 million, respectively, under the repurchase authorization.

Other Share Repurchases

Ordinary shares withheld as payment of withholding taxes and exercise prices in connection with the vesting or exercise of equity awards are treated as ordinary share repurchases. We repurchased 41 thousand and 217 thousand ordinary shares as payment of withholding taxes for $0.7 million and $3.1 million, respectively, in the third quarter and first nine months of 2023, and 151 thousand and 205 thousand ordinary shares for $3.7 million and $6.6 million, respectively, in the third quarter and first nine months of 2022.

In connection with the Exchange Transactions in the second quarter of 2023, we repurchased 326 thousand ordinary shares for $5.4 million.

Stratus Technologies Earnout

In connection with our acquisition of Status Technologies, the Seller has the right to receive an Earnout of up to $50.0 million based on the gross profit performance of Stratus Technologies during the first full 12 fiscal months following the closing. Pursuant to the terms of the Stratus Purchase Agreement, we had the option to settle the Earnout amount owed to the Seller, if any, in cash, ordinary shares of SGH, or a mix of cash and ordinary shares of SGH. On June 28, 2023, we provided notice to the Seller of our election to settle the Earnout in cash.

Shares that would have been issuable pursuant to the Earnout are contingently issuable shares and are considered in the computation of diluted earnings per share if dilutive. The number of contingently issuable shares included in diluted earnings per share is the number of shares that would have been issuable at the time of settlement based on the assumption that the current fair value of the Earnout remained unchanged until the end of the earnout period. As of May 26, 2023, based on the fair value of the Earnout, the contingently issuable shares were anti-dilutive.

2029 Capped Calls

On January 18, 2023, in connection with the pricing of the 2029 Notes, we entered into privately negotiated capped call transactions (the “2029 Capped Calls”). The 2029 Capped Calls cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2029 Notes, the aggregate number of ordinary shares that initially underlie the 2029 Notes, and are expected generally to reduce potential dilution to our ordinary shares upon any conversion of the 2029 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2029 Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the 2029 Capped Calls. The cap price of the 2029 Capped Calls is initially $29.1375 per share, which represented a premium of 75% over the last reported sale price of our ordinary shares on January 18, 2023. The cost of the 2029 Capped Calls, which are considered capital transactions, was $15.1 million and was recognized as a decrease to additional paid-in capital in the second quarter of 2023.

The 2029 Capped Calls are separate transactions, each between the Company and the counterparties to the 2029 Capped Calls, and are not part of the terms of the 2029 Notes and do not affect any holder’s rights under the 2029 Notes or the 2029 Indenture. Holders of the 2029 Notes do not have any rights with respect to the 2029 Capped Calls.

2026 Capped Calls

In connection with our issuance of the 2026 Notes in February 2020, we entered into capped call transactions (the “2026 Capped Calls”). As part of the Exchange Transactions, we entered into agreements with a number of counterparties to settle a portion of the 2026 Capped Calls in a notional amount corresponding to the amount of the 2026 Notes that were exchanged. The value received in connection with the settlement of a portion of the 2026 Capped Calls was $10.8 million and was recognized as an increase in additional paid-in capital in the second quarter of 2023.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component for the nine months ended May 26, 2023 were as follows:

	Cumulative Translation Adjustment		Gains (Losses) on Derivative Instruments		Gains (Losses) on Investments		Total
As of August 26, 2022	$	(221,655)	$	—	$	—	$	(221,655)
Other comprehensive income (loss) before reclassifications	7,278		112		(8)		7,382
Reclassifications out of accumulated other comprehensive income	—		(112)		—		(112)
Other comprehensive income (loss)	7,278		—		(8)		7,270
As of May 26, 2023	$	(214,377)	$	—	$	(8)	$	(214,385)

Noncontrolling Interest in Subsidiary

In the first nine months of 2023 and 2022, our Cree Joint Venture distributed an aggregate of $4.1 million and $7.7 million to its partners, including $2.1 million and $3.9 million to SGH and $2.0 million and $3.8 million to San’an, respectively. Cash and other assets of our Cree Joint Venture are generally not available for use by us in our other operations.