What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-08-22 compared with 2022-08-16 · 78 added, 77 removed, 346 unchanged (31% of the section changed)

6 unchanged sentences

• our belief that we will be able to maintain favorable pricing on our services;

• our expectation that the portion of our future revenues attributable to customers in regions outside of North America will decrease compared with the portion of those revenues for fiscal year 2022;

• our expectation that the portion of our future revenues attributable to customers in regions outside of North America will increase compared with the portion of those revenues for fiscal year 2023;

• our expectation that we will incur incremental costs of revenue as a result of our planned expansion of our business into new geographic markets;

5 unchanged sentences

• our ability, and the ability of our customers and suppliers, to respond successfully to technological or industry developments;

• our expectations regarding the potential impact of the COVID-19 pandemic, macroeconomic conditions and international political instability on our business, financial condition and operating results;

• our expectations regarding the potential impact of macroeconomic conditions and international political instability on our business, financial condition and operating results;

• our suppliers’ estimates regarding future costs;

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For an overview of our business, see PART I – ITEM 1.

We utilize a 52-53 week fiscal year ending on the Friday in June closest to June 30.

Our fiscal years 2022, 2021, and 2020 ended on June 24, 2022, June 25, 2021 and June 26, 2020, respectively, and were each 52-week years.

Our fiscal year 2023 will end on June 30, 2023 and be a 53-week year.

The additional week in a 53-week year is added to the first quarter, making such quarter consist of 14 weeks.

Recent Developments Related to COVID-19

For a discussion of the effects of COVID-19 on our business, see “Recent Developments Related to COVID-19” in PART I – ITEM 1.

We believe our ability to expand our relationships with existing customers and attract new customers is due to a number of factors, including our broad range of complex engineering and manufacturing service offerings, flexible low-cost manufacturing platform, process optimization capabilities, advanced supply chain management, excellent customer service, and experienced management team.

Although we expect the prices we charge for our manufactured products to decrease over time (partly as a result of competitive market forces), we still believe we will be able to maintain favorable pricing for our services because of our ability to reduce cycle time, adjust our product mix by focusing on more complicated products, improve product quality and yields, and reduce material costs for the products we manufacture.

We utilize a 52-53 week fiscal year ending on the last Friday in June.

Our fiscal years 2023, 2022, and 2021 ended on June 30, 2023, June 24, 2022 and June 25, 2021, and consisted of 53 weeks, 52 weeks and 52 weeks, respectively.

We believe we are able to expand our relationships with existing customers and attract new customers due to, among other factors, our broad range of complex engineering and manufacturing service offerings, flexible low-cost manufacturing platform, process optimization capabilities, advanced supply chain management, excellent customer service, and experienced management team.

Although we expect the prices we charge for our manufactured products to decrease over time (partly as a result of competitive market forces), we believe we will be able to continue to maintain favorable pricing for our services because of our ability to reduce cycle time, adjust our product mix by focusing on more complicated products, improve product quality and yields, and reduce material costs for the products we manufacture.

We believe these capabilities have enabled us to help our OEM customers reduce their manufacturing costs while maintaining or improving the design, quality, reliability, and delivery times for their products.

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If we are unable to maintain our relationships with our existing significant customers, our business, financial condition and operating results could be harmed.

We expect that disruptions in our supply chain and fluctuations in the availability of parts and materials will continue to have a significant impact on our ability to generate revenue, despite strong demand from our customers.

These supply chain disruptions have been exacerbated by recent global events, such as (1) COVID-related lockdowns in China, which have caused freight and logistics issues and unforeseen delays, and (2) the armed conflict between Russia and Ukraine.

While we have no significant direct business in Ukraine or Russia, the conflict has negatively impacted demand from some of our automotive customers that have other suppliers in the region.

Moreover, if the facilities of our subsidiary in Fuzhou, China are locked down, we would also be negatively impacted since we and some of our customers rely on the optics components that are manufactured in such facilities.

We expect that disruptions in our supply chain and fluctuations in the availability of parts and materials will continue to have an adverse impact on our ability to generate revenue, despite strong demand from our customers.

Furthermore, in some cases, our efforts to identify and secure alternative supply chain sources has resulted in our customers or their end customers requiring requalification and validation of components, a process that can often be lengthy and has negatively impacted the timing of our revenue.

We expect these supply constraints to continue, and potentially worsen, for at least the next 12 months.

In addition, we expect the near-term inventory correction that our optical communications customers are experiencing to persist, which will have an adverse impact on our ability to generate revenue.

Revenues by Geography

We generate revenues from three geographic regions:

North America, Asia-Pacific, and Europe.

North America, Asia-Pacific and others, and Europe.

Revenues are attributed to a particular geographic area based on the bill-to-location of our customers, notwithstanding that our customers may ultimately ship their products to end customers in a different geographic region.

The substantial majority of our revenues are derived from our manufacturing facilities in Asia-Pacific.

The percentage of our revenues generated from a bill-to-location outside of North America decreased from 52.8% in fiscal year 2021 to 50.7% in fiscal year 2022, which was partially due to a decrease in sales to our customers in Europe by 3.5%.

Based on the short- and medium-term indications and forecasts from our customers, we expect that the portion of our future revenues attributable to customers in regions outside of North America will decrease as compared with the portion of revenues attributable to such customers during fiscal year 2022.

The percentage of our revenues generated from a bill-to location outside of North America increased from 50.7% in fiscal year 2022 to 52.0% in fiscal year 2023, which was partially due to a decrease in sales to our customers in Europe by 4.9%.

Based on the short- and medium-term indications and forecasts from our customers, we expect that the portion of our

future revenues attributable to customers in regions outside of North America will increase as compared with the portion of revenues attributable to such customers during fiscal year 2023.

The following table presents percentages of total revenues by geographic regions:

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dollar, and our ability to retain our employees.

We expect our employee costs to increase as wages continue to increase in Thailand and the

We expect our employee costs to increase as wages continue to increase in Thailand and the PRC.

Wage increases may impact our ability to sustain our competitive advantage and may reduce our profit margin.

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Our depreciation costs include buildings and fixed assets, primarily at our Pinehurst and Chonburi campuses in Thailand, and capital equipment located at each of our manufacturing locations.

We expect to incur incremental costs of revenue as a result of our planned expansion into new geographic markets, though we are not able to determine the amount of these incremental expenses.

During fiscal years 2023, 2022 and 2021, discretionary merit-based bonus awards were made to our non-executive employees.

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Our SG&A expenses primarily consist of corporate employee costs for sales and marketing, general and administrative and other support personnel, including research and development expenses related to the design of customized optics and glass, travel expenses, legal and other professional fees, share-based compensation expense and other general expenses not related to cost of revenues.

In fiscal year 2023, we expect our SG&A expenses will increase compared with our fiscal year 2022 SG&A expenses.

In fiscal year 2024, we expect our SG&A expenses will increase compared with our fiscal year 2023 SG&A expenses, mainly due to increase in employee costs, sales and marketing cost and investing in information technology hardware.

The compensation committee of our board of directors approved a fiscal year 2023 executive incentive plan with quantitative objectives based solely on achieving certain revenue targets and non-U.S.

9 unchanged sentences

Foreign Exchange

As a result of our international operations, we are exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Thai baht.

As a result of our international operations, we are exposed to foreign exchange risk arising from various currency exposures, and primarily with respect to the Thai baht.

Although a majority of our total revenues is denominated in U.S.

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As of June 24, 2022

(amount in thousands, except percentages) Foreign

(in thousands, except percentages) Foreign

Currency $ % Foreign

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As of June 30, 2023 and June 24, 2022, we did not have any derivative contracts denominated in GBP.

For fiscal years 2022 and 2021, we recorded an unrealized loss of $0.8 million and $1.5 million, respectively, related to derivatives that are not designated as hedging instruments in the consolidated statements of operations and comprehensive income.

For fiscal years 2023 and 2022, we recorded an unrealized gain of $0.4 million and unrealized loss of $0.8 million, respectively, related to derivatives that are not designated as hedging instruments in the consolidated statements of operations and comprehensive income.

Currency Regulation and Dividend Distribution

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After June 2020, 50% of our income generated from products manufactured at our Pinehurst campus will be exempted from tax through June 2025.

New preferential tax treatment is available to us for products manufactured at our Chonburi campus Building 9, where income generated will be tax exempt through 2031, capped at our actual investment amount.

Such preferential tax treatment is contingent on various factors, including the export of our customers’ products out of Thailand and our agreement not to move our manufacturing facilities out of our current province in Thailand for at least 15 years from the date on which preferential tax treatment was granted.

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Our critical accounting policies and the adoption of new accounting policies are disclosed in Note 2 – Summary of significant accounting policies.

There were no changes to our accounting policies other than the adoption of ASU 740, “Income taxes (Topic 740).”

There were no changes to our accounting policies.

Revenue Recognition

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Differences in forecasted volume used in calculating excess and obsolete inventory can result in a material adverse effect on our business, financial condition and results of operations.

During fiscal year 2022 and fiscal year 2021, a

change of 10% for excess and obsolete materials, based on product demand and production requirements from our customers, would have affected our net income by approximately $0.7 million and $0.1 million, respectively.

During fiscal year 2023 and fiscal year 2022, a change of 10% for excess and obsolete materials, based on product demand and production requirements from our customers, would have affected our net income by approximately $1.0 million and $0.7 million, respectively.

Deferred Income Taxes

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During fiscal year 2021, our subsidiaries in the U.S.

generated taxable income sufficient for the utilization of loss carryforwards due to better operating performance and effective control of operating expenses and management determined that it was more likely than not that future taxable income would be sufficient to allow utilization of the deferred tax assets.

generated taxable income sufficient for the utilization of loss carryforwards due to better operating performance and effective control of operating expenses.

Management determined that it was more likely than not that future taxable income would be sufficient to allow utilization of the deferred tax assets.

Thus, a full valuation allowance of $2.1 million for the deferred tax assets was released as of June 25, 2021 and no valuation allowances for deferred tax assets of our subsidiaries in the U.S.

have been set up as of June 24, 2022.

have been set up as of June 24, 2022 and June 30, 2023.

During fiscal year 2020, our subsidiary in the U.K.

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A full valuation allowance of $4.9 million and $2.1 million were set up for the fiscal year ended June 24, 2022 and June 25, 2021, respectively.

During fiscal year 2023, our subsidiary in the U.K.

generated taxable income and was able to utilize loss carryforwards.

Management determined that it was more likely than not that future taxable income would be sufficient to allow utilization of the deferred tax assets.

Thus, a full valuation allowance of $1.6 million for the deferred tax assets was released as of June 30, 2023.

Results of Operations

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Note that period-to-period comparisons of operating results should not be relied upon as indicative of future performance.

(amount in thousands) June 24, 2022 June 25, 2021 June 26, 2020

(in thousands) June 30, 2023 June 24, 2022 June 25, 2021

Revenues $ 2,645,237 $ 2,262,224 $ 1,879,350

2 unchanged sentences

Selling, general and administrative expenses (77,673) (73,941) (70,567)

Expenses related to reduction in workforce (135) (43) (329)

Restructuring and other related costs (6,896) (135) (43)

Operating income 251,704 204,518 150,753

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Selling, general and administrative expenses (2.9) (3.3) (3.8)

Expenses related to reduction in workforce 0.0 0.0 0.0

Restructuring and other related costs (0.3) 0.0 0.0

Operating income 9.5 9.0 8.0

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The following table sets forth our revenues by end market for the periods indicated.

(amount in thousands) June 24, 2022 June 25, 2021 June 26, 2020

(in thousands) June 30, 2023 June 24, 2022 June 25, 2021

Optical communications $ 2,008,347 $ 1,782,799 $ 1,441,338

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Our revenues increased by $383.0 million, or 16.9%, to $2,645.2 million for fiscal year 2023, compared with $2,262.2 million for fiscal year 2022.

This increase was primarily due to an increase in customers’ demand for optical communications manufacturing services, particularly telecom manufacturing services, for fiscal year 2022.

This increase was primarily due to an increase in our key customers’ demand for fiscal year 2023.

Revenues from optical communications products represented 75.9% of our revenues for fiscal year 2023, compared with 78.8% for fiscal year 2022.

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Our gross profit increased by $57.7 million, or 20.7%, to $336.3 million, or 12.7% of revenues, for fiscal year 2023, compared with $278.6 million, or 12.3% of revenues, for fiscal year 2022.

The increase was primarily due to sales volume, product mix and foreign exchange gain.

The increase was primarily due to sales volume and product mix.

SG&A expenses .

Our SG&A expenses increased by $3.8 million, or 5.1%, to $77.7 million, or 2.9% of revenues, for fiscal year 2023, compared with $73.9 million, or 3.3% of revenues, for fiscal year 2022.

Our SG&A expenses increased during fiscal year 2022, compared with fiscal year 2021, mainly due to (1) an increase in share-based compensation expenses of $2.8

million from an increase in awards of performance share units and restricted share units;

(2) a net increase in allowance for doubtful accounts of $1.6 million primarily due to a specific provision set up for one customer in fiscal year 2022;

and (3) an increase in executive bonuses of $0.6 million;

offset by actuarial gain on obligation of $1.5 million in fiscal year 2022.

Our SG&A expenses increased during fiscal year 2023, compared with fiscal year 2022, mainly due to (1) recognizing an actuarial loss on obligation of $1.1 million in fiscal year 2023, compared with recognizing an actuarial gain on obligation of $1.5 million in fiscal year 2022;

(2) an increase in executive benefits of $1.0 million;

(3) an increase in R&D expenses of $0.8 million;

(4) an increase in legal and consulting fees of $0.6 million;

and (5) an increase in insurance expenses of $0.3 million;

offset by a net decrease in allowance for doubtful accounts of $1.5 million.

Restructuring and other related costs.

We recorded restructuring and other related costs for fiscal year 2023 of $6.9 million.

Operating income .

Our operating income increased by $53.7 million to $204.5 million, or 9.0% of revenues, for fiscal year 2022, compared with $150.8 million, or 8.0% of revenues, for fiscal year 2021.

Our operating income increased by $47.2 million, or 23.1%, to $251.7 million, or 9.5% of revenues, for fiscal year 2023, compared with $204.5 million, or 9.0% of revenues, for fiscal year 2022.

Interest income .

Our interest income decreased by $1.6 million to $2.2 million for fiscal year 2022, compared with $3.8 million for fiscal year 2021.

The decrease was primarily due to a lower weighted average interest rate in fiscal year 2022 compared with fiscal year 2021.

Our interest income increased by $9.0 million to $11.2 million for fiscal year 2023, compared with $2.2 million for fiscal year 2022.

The increase was primarily due to a higher weighted average interest rate in fiscal year 2023 compared with fiscal year 2022.

Interest expense .

Our interest expense decreased by $0.7 million to $0.4 million for fiscal year 2022, compared with $1.1 million for fiscal year 2021.

The decrease was primarily due to (1) interest expense capitalized to a new manufacturing building at our Chonburi campus of $0.9 million in fiscal year 2022, and (2) lower loan interest expense of $0.2 million in fiscal year 2022;

offset by lower amortization of the fair value of interest rate swaps of $0.4 million in fiscal year 2022.

Our interest expense increased by $1.1 million to $1.5 million for fiscal year 2023, compared with $0.4 million for fiscal year 2022.

The increase was primarily due to (1) lower interest expense capitalized of $0.9 million following the completion of a new manufacturing building at our Chonburi campus in July 2022, and (2) lower amortization of the fair value of interest rate swaps of $0.3 million during fiscal year 2023;

offset by lower interest expense due to a decrease in the amount of outstanding long-term loans.

Foreign exchange gain (loss), net .

We recorded foreign exchange gain, net of $2.3 million for fiscal year 2022, compared with foreign exchange gain, net of $0.5 million for fiscal year 2021.

The increase in foreign exchange gain was mainly due to (1) realized foreign exchange gain from payment/receipt of $1.1 million for fiscal year 2022, as compared to realized foreign exchange loss from payment/receipt of 1.0 million for fiscal year 2021, (2) higher unrealized foreign exchange gain from revaluation of outstanding Thai baht assets and liabilities of $1.6 million, and (3) lower unrealized foreign exchange loss from mark-to-market of forward contracts of $0.7 million, offset by (1) realized foreign exchange loss from subsidiaries in the PRC and the U.K., totaling $1.2 million for fiscal year 2022, as compared to realized foreign exchange gain from subsidiaries in the PRC and the U.K., totaling $1.3 million for fiscal year 2021, and (2) lower unrealized foreign exchange gain from revaluation of other currencies of $0.1 million.

We recorded foreign exchange loss, net of $1.2 million for fiscal year 2023, compared with foreign exchange gain, net of $2.3 million for fiscal year 2022.

The foreign exchange loss was mainly due to (1) unrealized foreign exchange loss from revaluation of outstanding Thai baht assets and liabilities of $3.5 million for fiscal year 2023, and (2) realized foreign exchange loss from payment/receipt of $3.1 million for fiscal year 2023, offset by (1) foreign exchange gain from subsidiaries in the PRC and the U.K., totaling $1.5 million for fiscal year 2023, (2) unrealized foreign exchange gain from mark-to-market of forward contracts of $1.2 million for fiscal year 2023, and (3) unrealized foreign exchange gain from revaluation of other currencies of $0.4 million for fiscal year 2023.

Income before income taxes .

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Our provision for income tax reflects an effective tax rate of 4.7% and 3.2% for fiscal year 2023 and fiscal year 2022, respectively.

The increase was primarily due to higher income subject to tax as well as more income subjected to tax in jurisdictions with a higher tax rate in fiscal year 2022, as compared to fiscal year 2021.

The increase was primarily due to higher income subject to tax in fiscal year 2023, as compared to fiscal year 2022.

We recorded net income of $247.9 million, or 9.4% of revenues, for fiscal year 2023, compared with net income of $200.4 million, or 8.8% of revenues, for fiscal year 2022.

Other comprehensive income (loss) .

We recorded other comprehensive loss of $6.5 million, or 0.3% of revenues, for fiscal year 2022, compared with other comprehensive loss of $5.1 million, or 0.3% of revenues, for fiscal year 2021.

The increase in other comprehensive loss was mainly due to (1) higher unrealized loss from mark-to-market of available-for-sale debt securities of $5.1 million, and (2) unrealized loss from foreign currency translation adjustment of $0.2 million for fiscal year 2022, as compared to unrealized gain from foreign currency translation adjustment of $0.6 million for fiscal year 2021;

offset by lower unrealized loss from mark-to-market of forward contracts and interest rate swap agreement of $4.5 million.

We recorded other comprehensive income of $4.7 million, or 0.2% of revenues, for fiscal year 2023, compared with other comprehensive loss of $6.5 million, or 0.3% of revenues, for fiscal year 2022.

The other comprehensive income was mainly due to (1) unrealized gain from mark-to-market of available-for-sale debt securities of $9.1 million for fiscal year 2023, and (2) unrealized gain from mark-to-market of forward contracts and interest rate swap agreement of $2.1 million for fiscal year 2023.

Comparison of Fiscal Year 2022 with Fiscal Year 2021

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Our SG&A expenses increased during fiscal year 2022, compared with fiscal year 2021, mainly due to (1) an increase in share-based compensation expenses of $2.8 million from an increase in awards of performance share units and restricted share units;

(2) an increase in new business start-up costs related to our subsidiary in Israel of $1.4 million;

and (3) an increase in severance liabilities expense of $0.9 million related to a senior management retirement;

offset by a goodwill impairment loss related to our subsidiary in the U.K.

of $3.5 million in fiscal year 2020.

(2) a net increase in allowance for doubtful accounts of $1.6 million primarily due to a specific provision set up for one customer in fiscal year 2022;

and (3) an increase in executive bonuses of $0.6 million;

offset by actuarial gain on obligation of $1.5 million in fiscal year 2022.

Operating income .

Our operating income increased by $33.4 million to $150.8 million, or 8.0% of revenues, for fiscal year 2021, compared with $117.4 million, or 7.1% of revenues, for fiscal year 2020.

Our operating income increased by $53.7 million, or 35.6%, to $204.5 million, or 9.0% of revenues, for fiscal year 2022, compared with $150.8 million, or 8.0% of revenues, for fiscal year 2021.

Interest income .

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Our interest expense decreased by $0.7 million to $0.4 million for fiscal year 2022, compared with $1.1 million for fiscal year 2021.

The decrease was primarily due to lower unrealized loss from mark-to-market of interest rate swaps recognized to earnings for fiscal year 2021, due to the implementation of cash flow hedge accounting on the interest rate swaps on September 27, 2019 and lower interest expense from loan repayment in fiscal year 2021.

offset by lower amortization of the fair value of interest rate swaps of $0.4 million in fiscal year 2022.

Foreign exchange gain (loss), net .

We recorded foreign exchange gain, net of $0.5 million for fiscal year 2021, compared with foreign exchange loss, net of $3.8 million for fiscal year 2020.

The increase in foreign exchange gain was mainly due to an unrealized foreign exchange gain from revaluation of outstanding Thai baht assets and liabilities of $2.0 million, foreign exchange gain from subsidiaries in the PRC and the U.K., totaling $1.7 million, and realized foreign exchange gain from payment/receipt of $0.5 million in fiscal year 2021, as compared to an unrealized foreign exchange loss from mark-to-market of forward contracts of $1.2 million and realized foreign exchange loss from payment/receipt of $1.6 million in fiscal year 2020.

We recorded foreign exchange gain, net of $2.3 million for fiscal year 2022, compared with foreign exchange gain, net of $0.5 million for fiscal year 2021.

Income before income taxes .

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Our provision for income tax reflects an effective tax rate of 3.2% and 1.4% for fiscal year 2022 and fiscal year 2021, respectively.

The decrease was primarily due to higher income not subject to tax in fiscal year 2021, as compared to fiscal year 2020.

The increase was primarily due to higher income subject to tax as well as more income subjected to tax in jurisdictions with higher tax rate in fiscal year 2022, as compared to fiscal year 2021.

We recorded net income of $200.4 million, or 8.8% of total revenues, for fiscal year 2022, compared with net income of $148.3 million, or 7.9% of total revenues, for fiscal year 2021.

Other comprehensive income (loss) .

We recorded other comprehensive loss of $5.1 million, or 0.3% of revenues, for fiscal year 2021, compared with other comprehensive income of $1.2 million, or 0.1% of revenues, for fiscal year 2020.

The decrease in other comprehensive income was mainly due to (1) unrealized loss from mark-to-market of forward contracts and interest rate swap agreement of $5.1 million for fiscal year 2021, as compared to unrealized gain from mark-to-market of forward contracts and interest rate swap agreement of $0.6 million for fiscal year 2020, and (2) unrealized loss from mark-to-market of available-for-sale debt securities of $1.2 million for fiscal year 2021, as compared to unrealized gain from mark-to-market of available-for-sale debt securities of $0.5 million for fiscal year 2020.

We recorded other comprehensive loss of $6.5 million, or 0.3% of revenues, for fiscal year 2022, compared with other comprehensive loss of $5.1 million, or 0.3% of revenues, for fiscal year 2021.

offset by lower unrealized loss from mark-to-market of forward contracts and interest rate swap agreement of $4.5 million.

Liquidity and Capital Resources

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The following table shows our cash flows for the periods indicated:

(amount in thousands) June 24, 2022 June 25, 2021 June 26, 2020

(in thousands) June 30, 2023 June 24, 2022 June 25, 2021

Net cash provided by operating activities $ 213,310 $ 124,246 $ 122,157

1 unchanged sentence

Net cash used in financing activities $ (80,984) $ (92,934) $ (42,754)

Net increase in cash, cash equivalents and restricted cash $ (104,231) $ 70,469 $ 44,107

Net increase (decrease) in cash, cash equivalents and restricted cash $ 33,609 $ (104,231) $ 70,469

Cash, cash equivalents and restricted cash, beginning of period $ 198,365 $ 303,123 $ 232,832

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Operating Activities

Net cash provided by operating activities of $124.2 million for fiscal year 2022 was primarily due to (1) net income of $200.4 million, (2) an increase in trade accounts payable of $93.5 million, (3) depreciation and amortization of $38.7 million, (4) share-based compensation of $28.0 million, and (5) increase in other current and non-current liabilities of $7.8 million, offset by (1) an increase in inventories of $135.0 million to support new business, (2) an increase in trade accounts receivable of $104.0 million due to higher sales and timing of collection, and (3) increase in other current and non-current assets of $6.4 million.

Net cash provided by operating activities of $122.2 million for fiscal year 2021 was primarily due to (1) net income of $148.3 million, (2) an increase in trade accounts payable of $96.3 million, (3) depreciation and amortization of $36.3 million, and (4) share-based compensation of $25.5 million, offset by (1) an increase in inventories of $112.3 million to support new business, (2) an increase in trade accounts receivable of $63.8 million due to higher sales and timing of collection, and (3) increase in other current and non-current assets of $10.8 million.

Cash provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities.

The increase in cash provided by operating activities for fiscal year 2023 as compared to fiscal year 2022 was primarily driven by higher net income and was also affected by cash-favorable working capital changes.

Investing Activities

Net cash used in investing activities of $135.5 million for fiscal year 2022 was primarily due to (1) purchase of property, plant and equipment of $89.6 million, mainly related to investment in a new manufacturing building at our Chonburi campus, including acquisition of land and equipment and (2) net purchase from sales and maturities of short-term investments of $45.2 million.

Net cash used in investing activities of $8.9 million for fiscal year 2021 was primarily due to (1) purchase of property, plant and equipment of $46.1 million, and (2) purchase of intangibles assets of $2.0 million;

offset by (1) funds repayment from a customer of $24.3 million, and (2) net proceeds from sales and maturities of short-term investments of $14.6 million.

Investing cash flows consist primarily of investment purchases, sales, maturities, and disposals;

and capital expenditures.

Cash used in investing activities was lower for fiscal year 2023 as compared to cash used in investing activities for fiscal year 2022 primarily due to lower capital expenditures and net proceeds from sales and maturities of short-term investments.

Financing Activities

Net cash used in financing activities of $92.9 million for fiscal year 2022 was primarily due to (1) repurchase of ordinary shares of $59.9 million, (2) cash paid for withholding tax related to net share settlement of restricted share units of $20.8 million, and (3) repayment of loans to banks of $12.2 million.

Net cash used in financing activities of $42.8 million for fiscal year 2021 was primarily due to (1) repurchase of ordinary shares of $18.8 million, (2) repayment of loans to banks of $12.2 million, and (3) cash paid for withholding tax related to net share settlement of restricted share units of $11.6 million.

Financing cash flows consist primarily of repayment of long-term debt, share repurchases, and withholding tax related to net share settlement of restricted share units.

Cash used in financing activities was lower for fiscal year 2023 as compared to the fiscal year 2022 primarily due to less cash paid for share repurchases and a decrease in withholding tax related to net share settlement of restricted share units, offset by an increase in the repayment of long-term borrowings due to an additional installment from the additional week in the first quarter of fiscal year 2023.

Material Cash Requirements for Contractual Obligations

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Term Loan and Interest Expenses

As of June 24, 2022, there was $27.4 million outstanding under the term loan that will mature on June 30, 2024 (see Note 13), which consists of scheduled debt payments within one year of $12.2 million and after one year of $15.2 million.

The interest expenses that arise from the term loan have a scheduled debt payment within one year of $0.7 million and after one year of $0.3 million.

As of June 30, 2023, there was $12.2 million outstanding under the term loan that will mature on June 30, 2024 (see Note 13), which only consists of scheduled debt payments within one year of $12.2 million.

Operating Lease

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The following table sets forth our capital expenditures, which include amounts for which payments have been accrued, for the periods indicated.

(amount in thousands) June 24, 2022 June 25, 2021 June 26, 2020

(in thousands) June 30, 2023 June 24, 2022 June 25, 2021

Capital expenditures $ 66,712 $ 80,462 $ 52,054

During fiscal year 2022 and fiscal year 2021, we invested in a new manufacturing building at our Chonburi campus and continued to purchase equipment to support the expansion of our manufacturing facilities in Thailand, the PRC and Israel.

During fiscal year 2020, we purchased equipment to support the expansion of our manufacturing facilities in Thailand.

We expect our capital expenditures for fiscal year 2023 to decrease compared to fiscal year 2022 mainly due to completion of the aforementioned new manufacturing facilities.

During fiscal year 2023, fiscal year 2022, and fiscal year 2021, we invested in a manufacturing building at our Chonburi campus and continued to purchase equipment to support the expansion of our manufacturing facilities in Thailand, the PRC and Israel.

We expect our capital expenditures for fiscal year 2024 to increase compared to fiscal year 2023 mainly due to the purchase of manufacturing equipment to support the expansion of manufacturing facilities and investment in our information technology infrastructure.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis