BUSINESS COMBINATION

9 Months Ended

Jun. 27, 2026

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

Mergers, Acquisitions and Dispositions Disclosures

Business Combination

On the Closing Date, pursuant to the Purchase Agreement, the Company completed its acquisition of all of the equity interests of ZT Systems, a manufacturer of AI and general purpose computer infrastructure for hyperscale computing companies. The purchase consideration paid at closing was $1.62 billion, consisting of cash of $1.356 billion, net of $295 million cash acquired, and 1,151,052 shares of the Company’s common stock valued at $155 million based on the closing stock price of $134.96 per share as of Closing Date, which the Company released out of treasury stock. The shares of the Company’s common stock are subject to a lock-up period, which restricts the transfer of the common stock with one-third of the shares released from such restrictions on each of the first, second, and third anniversaries of the Closing Date. The seller is also entitled up to $450 million in contingent cash consideration upon the achievement of certain gross profit and revenue metrics during the three-year period following the Closing Date. As of the Closing Date, the fair value of the contingent cash consideration was estimated to be $111 million based on a probability-weighted income approach valuation model which uses significant unobservable inputs (Level 3) such as financial forecasts, risk adjusted rates and expected volatility. The contingent consideration is classified as other liabilities in the condensed consolidated balance sheets and is remeasured to fair value at each reporting date, with changes recognized in the statements of income. The estimated range of undiscounted payment in respect of the contingent consideration from no payout to up to $450 million. During the quarter ended June 27, 2026, the Company finalized its post-closing working capital calculation, as a result of a negotiated settlement pursuant to the Purchase Agreement, with the seller which resulted in a $243 million reduction to the total purchase consideration paid at closing. The Company received the $243 million during the current quarter and recorded a corresponding decrease to goodwill.

The Company recognized a fair value adjustment to contingent consideration primarily due to a change in financial forecasts, which was recorded as acquisition, integration and others on the condensed consolidated statements of income. This adjustment resulted in a corresponding increase in other liabilities on the condensed consolidated balance sheets.

The following table presents a reconciliation of the contingent consideration liability.


	Amount
	(In millions)
Balance as of September 27, 2025	$	—
Initial fair value upon acquisition of ZT Systems	111
Change in fair value estimate	59
Balance as of March 28, 2026	$	170
Change in fair value estimate	13
Balance as of June 27, 2026	$	183

The fair value of the components of the purchase consideration are as follows:


	Acquisition Date Amounts Recognized		Adjustments		As Adjusted
	(In millions)
Cash paid to selling shareholder at close	$	1,651	$	(243)	$	1,408
Equity issued to selling shareholder (1)	155		0		155
Fair value of contingent consideration - earnout	111		0		111
Total purchase consideration	$	1,917	$	(243)	$	1,674
Cash acquired from ZT Systems	(295)		0		(295)
Total estimated value of purchase consideration, net of cash acquired	$	1,622	(243)		1,379

(1) Equity issued to selling shareholder includes $64 million that represents Additional Paid-in Capital.

The acquisition meets the criteria to be accounted for as a business combination using the acquisition method of accounting. The following table sets forth the components and the preliminary allocation of the purchase price, net of measurement period adjustments, of assets acquired and liabilities assumed.


	As Originally Reported		Measurement Period Adjustments		As Adjusted
	(In millions)
Accounts receivables, net of allowances	$	1,285	$	—	$	1,285
Inventories	1,295		(16)		1,279
Prepaid expenses and other current assets	185		—		185
Property, plant and equipment, net	242		(2)		240
Deferred income tax assets	206		(43)		163
Other non-current assets (includes intangible assets of $49 million and $51 million as of June 27, 2026 and December 27, 2025, respectively)	169		(2)		167
Total assets	$	3,382	$	(63)	$	3,319

Accounts payable	875		—		875
Accrued liabilities	553		(5)		548
Deferred revenue and customer advances	439		—		439
Other non-current liabilities	$	169	$	—	$	169
Net assets acquired	$	1,346	$	(58)	$	1,288
Goodwill	$	276	$	(185)	$	91

Measurement period adjustments to the preliminary purchase price allocation result from new information about facts and circumstances that existed at the acquisition date, but were identified during the current reporting period. These adjustments combined with the finalized net working capital calculation resulted in a $185 million decrease to goodwill during the nine months ended June 27, 2026.

Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired in addition to liabilities assumed arising from the business combination. There are several strategic benefits to the acquisition, including synergies between the acquired business and the Company, value of the assembled workforce, and the collective experience of the management team with regards to its operations, customers, and industry. These factors contributed to the goodwill that was recorded on the consummation of the transaction and was allocated entirely to the IMS segment. Goodwill is not deductible for tax purposes.

The purchase consideration allocation is based on a preliminary valuation and is subject to revisions as more information about the fair value of assets acquired and liabilities assumed becomes available. The Company may further revise

the preliminary purchase consideration during the remainder of the measurement period, which will not exceed 12 months from the date of the closing of the acquisition. The primary areas that may be subject to revision include fair values of intangible assets, certain tangible assets and liabilities, deferred revenue and income taxes.

The fair values of the identifiable intangible assets acquired were determined using valuation techniques consistent with either the income and/or cost approach, as a multi-period excess earnings method was used for the customer relationships intangible asset, a replacement cost method was used for the internally developed software intangible asset, and a relief from royalty method was used for the trade name/trademark intangible asset. Estimated amounts assigned to intangible assets are being amortized on a straight-line basis over their estimated useful lives and are as follows:


	Weighted-average Amortization Period	Fair Value
	(In years)	(In millions)
Customer relationships	10	$	33

Internally developed software	5	12
Trade name/Trademark	1	4
Total intangible assets		$	49

The identifiable assets acquired and liabilities assumed were recorded at their preliminary fair values as of the acquisition date based on management’s estimates and assumptions, as well as other information compiled by the Company including information from the books and records of ZT Systems. These estimates and assumptions require significant judgment and are subject to change during the measurement period, not to exceed one year from the acquisition date. The primary areas of acquisition accounting that are not yet finalized relate to the following: (i) finalizing the review and valuation of intangible assets, including their appropriate useful lives, (ii) finalizing the review of acquired tangible assets including plant and equipment assets and inventories, (iii) finalizing the review of certain customer arrangements and the associated remaining performance obligations, and (iv) identifying any undisclosed assets or liabilities the Company may not yet be aware of but meet the requirement to qualify for recognition on the acquisition date.

The Company has elected to apply the ASC practical expedient under paragraph ASC 805-20-30-29(b) of the adopted amendments and allocated the transaction price based on the standalone selling price of each performance obligation in the contract with a customer for all contracts acquired in the acquisition.

From the date of acquisition through June 27, 2026, revenue attributable to ZT Systems, included in the Company’s condensed consolidated statements of income for the three and nine months ended June 27, 2026, was $1.1 billion and $4 billion, respectively. It was impracticable to determine the effect on the Company’s net income attributable to ZT Systems as its operations have been integrated into the Company’s ongoing operations since the date of acquisition.

Acquisition, integration and others consist of fair value adjustment for contingent consideration, professional service fees and expenses for acquisition-related activities. The Company incurred acquisition-related costs of $21 million and $137 million during the three and nine months ended June 27, 2026 and $7 million during the three and nine months ended June 28, 2025, which are presented as acquisition, integration and others in the accompanying condensed consolidated statements of income. The condensed consolidated financial statements include the operating results of ZT Systems from the date of the acquisition.

Pro Forma Financial Information

The following pro forma financial information represents a summary of the consolidated results of operations assuming the acquisition had been completed as of September 29, 2024. The pro forma financial information for the three and nine months ended June 28, 2025 combines the Company’s historical results with that of ZT Systems’ results for the period beginning February 1, 2025 through April 30, 2025 and August 1, 2024 through April 30, 2025, respectively, since the Company and ZT Systems have different fiscal years. The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the acquisition had been effective as of that date, or of future results, and includes certain nonrecurring pro forma adjustments related to the accounting effects of the business combination for acquisition, integration and others charges of $137 million and amortization of inventory fair value adjustment of $49 million for the nine months ended June 27, 2026.


	Three Months Ended		Nine Months Ended
	June 28, 2025		June 27, 2026		June 28, 2025
	(In thousands)		(In thousands)
Pro forma combined:
Net sales	$	4,896,391	$	11,201,425	$	15,152,708
Net income attributable to common shareholders	181,454		274,447		943,905