What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-08-22 compared with 2022-08-16 · 204 added, 249 removed, 1132 unchanged (29% of the section changed)

64 unchanged sentences

531,767 452,670

Contract assets 13,464 11,878

Inventories 519,576 557,145

16 unchanged sentences

Fixed assets payable 13,526 9,085

Contract liabilities 1,982 1,680

Capital lease liability, current portion 10 —

Operating lease liabilities, current portion 1,201 2,319

7 unchanged sentences

Deferred tax liability 4,799 6,001

Capital lease liability, non-current portion 75 —

Operating lease liabilities, non-current portion 66 1,476

13 unchanged sentences

( 194,833 ) ( 147,258 )

Accumulated other comprehensive loss ( 12,793 ) ( 6,266 )

Accumulated other comprehensive income (loss) ( 8,115 ) ( 12,793 )

Retained earnings 1,464,589 1,216,676

9 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

9 unchanged sentences

Change in net unrealized gain (loss) on derivative instruments 1,541 ( 578 ) ( 5,106 )

Change in retirement benefit plan – prior service cost 622 584 528

Change in net retirement benefits plan – prior service cost 473 622 584

Change in foreign currency translation adjustment ( 75 ) ( 245 ) 585

4 unchanged sentences

Diluted 6.73 5.36 3.95

Weighted average number of ordinary shares outstanding

(thousands of shares)

Weighted average number of ordinary shares outstanding (thousands of shares)

Basic 36,515 36,876 36,872

13 unchanged sentences

Net income — — — — — 148,341 148,341

Other comprehensive income — — — — 1,239 — 1,239

Other comprehensive income (loss) — — — — ( 5,119 ) — ( 5,119 )

Cumulative effect adjustment from adoption of ASC 326

— — — — — ( 107 ) ( 107 )

Share-based compensation — — 25,462 — — — 25,462

6 unchanged sentences

Other comprehensive income (loss) — — — — ( 6,527 ) — ( 6,527 )

Cumulative effect adjustment from adoption of ASC 326

— — — — — ( 107 ) ( 107 )

Share-based compensation — — 28,048 — — — 28,048

22 unchanged sentences

Depreciation and amortization 43,832 38,738 36,252

Non-cash restructuring charges and other related costs 2,201 — —

(Gain) loss on disposal and impairment of property, plant and equipment ( 1,506 ) ( 101 ) 13

Loss on impairment of goodwill — — 3,514

(Gain) loss from sales and maturities of available-for-sale securities 92 13 ( 187 )

Amortization of discount (premium) of short-term investment 3,691 2,093 ( 508 )

Amortization of discount (premium) of short-term investments 280 3,691 2,093

Amortization of deferred debt issuance costs 31 32 32

Allowance for doubtful accounts (reversal) 1,171 ( 343 ) 240

(Reversal of) allowance for doubtful accounts ( 307 ) 1,171 ( 343 )

Unrealized loss (gain) on exchange rate and fair value of foreign currency forward contracts 175 ( 2,832 ) ( 859 )

Unrealized loss on fair value of interest rate swaps — — 1,672

Amortization of fair value at hedge inception of interest rate swaps ( 587 ) ( 937 ) ( 1,299 )

4 unchanged sentences

Trade accounts receivable ( 76,917 ) ( 105,550 ) ( 62,314 )

Contract assets ( 1,586 ) 1,378 ( 809 )

Inventories 37,449 ( 135,011 ) ( 112,349 )

1 unchanged sentence

Trade accounts payable ( 58,596 ) 93,499 96,312

Contract liabilities 302 124 ( 683 )

Income tax payable 2,977 ( 761 ) 1,353

12 unchanged sentences

Cash flows from financing activities

Payment of debt issuance costs — — ( 153 )

Proceeds from long-term borrowings — — 60,938

Repayment of long-term borrowings ( 15,233 ) ( 12,188 ) ( 12,188 )

Repayment of finance lease liabilities ( 7 ) ( 100 ) ( 400 )

Repayment of finance lease liability ( 9 ) ( 7 ) ( 100 )

Repurchase of ordinary shares ( 47,575 ) ( 59,915 ) ( 18,842 )

Withholding tax related to net share settlement of restricted share units ( 18,167 ) ( 20,824 ) ( 11,624 )

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

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

Movement in cash, cash equivalents and restricted cash

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

3 unchanged sentences

2022 June 25,

Repurchase of ordinary shares ( 59,915 ) ( 18,842 ) ( 20,722 )

Withholding tax related to net share settlement of restricted share units ( 20,824 ) ( 11,624 ) ( 4,889 )

Net cash used in financing activities ( 92,934 ) ( 42,754 ) ( 35,305 )

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

Movement in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period $ 303,123 $ 232,832 $ 188,241

Increase in cash, cash equivalents and restricted cash ( 104,231 ) 70,469 44,107

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

Increase (decrease) in cash, cash equivalents and restricted cash 33,609 ( 104,231 ) 70,469

Effect of exchange rate on cash, cash equivalents and restricted cash ( 606 ) ( 527 ) ( 178 )

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

Cash, cash equivalents and restricted cash at the end of period $ 231,368 $ 198,365 $ 303,123

Supplemental disclosures

6 unchanged sentences

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sums to the total of the same amounts shown in the consolidated statements of cash flows:

(amount in thousands) June 24,

(in thousands of U.

dollars) June 30,

2023 June 24,

11 unchanged sentences

The “Company” refers to Fabrinet and its subsidiaries as a group.

The Company provides advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers (“OEMs”) of complex products, such as optical communication components, modules and sub-systems, industrial lasers, automotive components, medical devices and sensors.

The Company provides advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, such as optical communication components, modules and sub-systems, industrial lasers, automotive components, medical devices and sensors.

The Company offers a broad range of advanced optical and electro-mechanical capabilities across the entire manufacturing process, including process design and engineering, supply chain management, manufacturing, complex printed circuit board assembly, advanced packaging, integration, final assembly and testing.

3 unchanged sentences

(“Casix”), Fabrinet West, Inc.

(“Fabrinet West”), Fabrinet UK Limited (“Fabrinet UK”) and Fabrinet Israel Ltd.

(“Fabrinet West”) and Fabrinet Israel Ltd.

(“Fabrinet Israel”).

1 unchanged sentence

Principles of consolidation

The Company utilizes a 52-53 week fiscal year ending on the Friday in June closest to June 30.

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

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.

The Company utilizes a 52-53 week fiscal year ending on the last Friday in June.

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

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

6 unchanged sentences

The Company’s reported financial position or results of operations may be materially different under different conditions or when using different estimates and assumptions, particularly with respect to significant accounting policies, which are discussed below.

Significant assumptions are used in accounting for share-based compensation, allowance for doubtful accounts, income taxes, inventory obsolescence, goodwill and valuation of intangible assets related to business acquisitions, among others.

Significant assumptions are used in accounting for share-based compensation, allowance for doubtful accounts, allowance for expected credit losses, income taxes, inventory obsolescence, goodwill and valuation of intangible assets related to business acquisition, among others.

Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates.

In the event that estimates or assumptions prove to be different from actual results, adjustments will be made in subsequent periods to reflect more current information.

Additionally, the extent to which the evolving COVID-19 pandemic impacts the Company’s consolidated financial statements will depend on a number of factors, including the magnitude and duration of the pandemic.

These estimates may change, as new events occur and additional information is obtained, as well as other factors related to COVID-19 that could result in material impacts to our consolidated financial statements in future reporting periods.

In the event that the Company's estimates or assumptions prove to be different from actual results, adjustments will be made in subsequent periods to reflect more current information.

Reclassifications

For presentation purposes, certain prior period amounts have been reclassified to conform to the current period presentation.

The reclassifications have been made to the consolidated balance sheet as of June 24, 2022 and the consolidated statement of cash flows for the year ended June 24, 2022 and June 25, 2021 as follows:

June 24, 2022

(in thousands) As previously reported Reclassification After reclassification

Consolidated Balance Sheet

Current assets

Trade accounts receivable 439,330 13,340 452,670

Contract assets 13,464 ( 13,340 ) 124

Consolidated Statement of Cash Flows

Changes in operating assets and liabilities

Trade accounts receivable ( 103,970 ) ( 1,580 ) ( 105,550 )

Contract assets ( 1,586 ) 1,580 ( 6 )

Contract assets and contract liabilities are presented in the consolidated balance sheets under other current assets and other payables, respectively.

June 25, 2021

(in thousands) As previously reported Reclassification After reclassification

Consolidated Statement of Cash Flows

Changes in operating assets and liabilities

Trade accounts receivable ( 63,810 ) 1,496 ( 62,314 )

Contract assets 1,378 ( 1,496 ) ( 118 )

These reclassifications do not affect the Company’s net income or shareholders’ equity.

Foreign currency transactions and translation

14 unchanged sentences

The short-term investments in debt securities are carried at either amortized cost or fair value.

Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and

classified as held-to-maturity.

Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity.

Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as available-for-sale with any unrealized gains and losses included in AOCI in the consolidated balance sheets.

15 unchanged sentences

A contract asset is recognized when the Company has recognized revenues prior to generating an invoice for payment.

Contract assets are classified separately within the consolidated balance sheets and transferred to accounts receivable when rights to payment become unconditional.

Contract assets are recognized in the consolidated balance sheets under other current assets and transferred to accounts receivable when rights to payment become unconditional.

The Company estimates expected credit losses for the allowance for contract assets based upon its assessment of various factors, including historical experience, the age of the contract assets balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers.

5 unchanged sentences

Cost is estimated using the standard costing method, computed on a first-in, first-out basis, with adjustments for variances to reflect actual costs not in excess of net realizable market value.

Market value is the estimated selling price in the ordinary course of business, less the costs of completion and

selling expenses.

Market value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses.

The Company assesses the valuation of inventory on a quarterly basis and writes down the value for estimated excess and obsolete inventory based upon estimates of future demand.

85 unchanged sentences

Derivatives designated and qualifying as hedges of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges which include foreign currency forward contracts and interest rate swap.

In a cash flow hedging relationship, the change in the fair value of the hedging derivative is initially recorded in AOCI in the consolidated balance sheets, gain or loss on the derivative instrument is reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings.

In a cash flow hedging relationship, the change in the fair value of the hedging derivative is initially

recorded in AOCI in the consolidated balance sheets, gain or loss on the derivative instrument is reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings.

The reclassified amounts are presented in the same income statement line item as the earnings effect of the hedged item.

30 unchanged sentences

Customers generally are obligated to purchase finished goods that the Company has manufactured according to their demand requirements.

Materials that are not consumed by customers within a specified period of time, or are no longer required due to a product’s cancellation or end-of-life, are typically designated as excess or obsolete inventory under the Company’s contracts.

Company’s contracts.

Once materials are designated as either excess or obsolete inventory, customers are typically required to purchase such inventory from the Company even if the customer has chosen to cancel production of the related products.

19 unchanged sentences

Costs that would have been incurred regardless of whether a customer contract was obtained (e.g., costs of pursuing the contract, legal advice, etc.) are expensed as incurred, unless such costs are explicitly chargeable to the customer.

During the years ended June 24, 2022 and June 25, 2021, the Company did not have any incremental costs of obtaining a contract.

During the years ended June 30, 2023, June 24, 2022 and June 25, 2021, the Company did not have any incremental costs of obtaining a contract.

Shipping and Handling

27 unchanged sentences

The defined benefit obligation is calculated using the projected unit credit method.

the Company engages independent actuaries to calculate the obligation.

Annually the Company engages independent actuaries to calculate the obligation.

The present value is determined by discounting the estimated future payments using market yields on high quality corporate bonds that are denominated in sterling and that have terms approximating the estimated period of the future payments (discount rate).

25 unchanged sentences

New Accounting Pronouncements—adopted by the Company

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.” The amendments in this update

simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve consistent application of and simplify U.S.

GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

The Company adopted this standard in the first quarter of fiscal year 2022 with no material impact on the Company's consolidated financial statements.

New Accounting Pronouncements—not yet adopted by the Company

In November 2021, FASB issued ASU 2021-10, “Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance,” which requires annual disclosures that increase the transparency of transactions involving government assistance, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements.

In November 2021, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2021-10, “Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance,” which requires annual disclosures that increase the transparency of transactions involving government assistance, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements.

The amendments in this update are effective for all entities within the ASU's scope for financial statements issued for annual periods beginning after December 15, 2021.

This ASU will be effective for the Company in the first quarter of fiscal year 2023.

Early adoption is permitted.

The Company assessed the preliminary impact from the adoption of this update and expected no material impact on the Company's consolidated financial statements.

The Company adopted this standard in the first quarter of fiscal year 2023 with no material impact on its consolidated financial statements.

Revenues from contracts with customers

1 unchanged sentence

A contract asset is recognized when the Company has recognized revenues prior to an invoice for payment.

Contract assets are classified separately on the consolidated balance sheets and transferred to accounts receivable when rights to payment become unconditional.

Contract assets are recognized in the consolidated balance sheets under other current assets and transferred to accounts receivable when rights to payment become unconditional.

No impairment for contract assets was recorded for the years ended June 30, 2023 and June 24, 2022.

As of June 30, 2023 and June 24, 2022, the contract assets are de minimis .

A contract liability is recognized when the Company has advance payment arrangements with customers.

Contract liabilities are recognized in the consolidated balance sheets under other payables.

The contract liabilities balance is normally recognized as revenue within six months.

The following tables summarize the activity in the Company’s contract assets and contract liabilities during the years ended June 24, 2022 and June 25, 2021:

(amount in thousands) Contract

Balance as of June 26, 2020 $ 13,256

Revenue recognized 65,182

Amounts collected or invoiced ( 66,560 )

Balance as of June 25, 2021 11,878

Revenue recognized 61,086

Amounts collected or invoiced ( 59,500 )

Balance as of June 24, 2022 $ 13,464

(amount in thousands) Contract

The following tables summarize the activity in the Company’s contract liabilities during the years ended June 30, 2023 and June 24, 2022:

(in thousands) Contract

Balance as of June 25, 2021 $ 1,680

11 unchanged sentences

The following table presents total revenues by geographic regions:

(amount in thousands, except percentages) Year ended June 24,

(in thousands, except percentages) Year ended June 30,

Revenues Year ended June 24,

4 unchanged sentences

$ 2,645,237 100.0 % $ 2,262,224 100.0 % $ 1,879,350 100.0 %

(amount in thousands) June 24,

(in thousands, except percentages) June 30,

2023 June 24,

5 unchanged sentences

Asia-Pacific and others

Israel 341,025 101,058 107,584

India 325,478 278,117 152,249

Malaysia 162,599 212,286 157,213

Israel 101,058 107,584 315

Hong Kong 132,136 83,651 87,235

Japan 60,121 69,779 101,588

China 73,094 55,201 51,597

Thailand 58,850 36,489 27,081

Japan 41,105 60,121 69,779

Others 9,223 11,128 15,859

Total revenue in Asia-Pacific and others 1,143,510 838,051 668,597

Ireland 133,225 193,103 110,747

125,082 90,921 60,516

Germany 54,732 40,794 28,163

Ireland 647 133,225 193,103

Others 51,301 44,729 41,435

3 unchanged sentences

The following table presents revenues by end market.

(amount in thousands, except percentages) Year ended June 24,

(in thousands, except percentages) Year ended June 30,

Revenues Year ended June 24,

10 unchanged sentences

After June 2020, 50 % of the Company's income generated from products manufactured at its Pinehurst campus Building 6 will be exempted from tax in Thailand through June 2025.

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.

New preferential tax treatment is available to the Company for products manufactured at its Chonburi campus Building 9, where income generated will be tax exempt through 2031, capped at the Company’s 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.

Currently, the corporate income tax rate for our Thai subsidiary is 20 %.

1 unchanged sentence

and Israel are 25 %, 21 %, 25 % and 23 %, respectively.

At Spring Budget 2021, the UK government announced an increase in the corporation tax main rate from 19% to 25% effective April 1, 2023.

Our provision for income taxes is computed using the asset and liability method, under which deferred income taxes are recognized for differences between the financial statement and tax bases of assets and liabilities at currently enacted statutory tax rates for the years in which the differences are expected to reverse.

1 unchanged sentence

The Company’s income tax expense consisted of the following:

(amount in thousands) June 24,

(in thousands) June 30,

2023 June 24,

4 unchanged sentences

The reconciliation between the Company’s taxes that would arise by applying the statutory tax rate of the country of the Company’s principal operations, Thailand, to the Company’s effective tax charge is shown below:

(amount in thousands) June 24,

(in thousands) June 30,

2023 June 24,

8 unchanged sentences

Income tax on unremitted earnings 2,452 1,417 1,395

Effect of foreign exchange rate adjustment ( 1,165 ) ( 2,855 ) 382

Foreign operations 2,003 ( 1,165 ) ( 2,855 )

Tax rebate from research and development application ( 124 ) ( 873 ) ( 728 )

3 unchanged sentences

( 1,608 ) — ( 2,146 )

641 2,048 2,030

Others 548 641 2,048

Corporate income tax expense $ 12,183 $ 6,586 $ 2,143

3 unchanged sentences

(3) Changes in valuation allowances were due to adjustments based on management's assessment on the realizability of the related deferred tax assets.

(4) Others includes $ 1.2 million of deferred tax assets for a UK subsidiary from temporary differences from prior years, and $ 1.2 million of deferred tax assets due to the change in UK tax rate.

These amounts were fully offset with a corresponding valuation allowance.

The Company’s deferred tax assets and deferred tax liabilities, net of valuation allowance, at each balance sheet date are as follows:

(amount in thousands) June 24,

(in thousands) June 30,

2023 June 24,

15 unchanged sentences

The changes in the valuation allowances of deferred tax assets were as follows:

(amount in thousands) Valuation allowances of

(in thousands) Valuation allowances of

deferred tax assets

1 unchanged sentence

Additional 479

Reduction ( 2,146 )

Balance as of June 25, 2021 2,061

Additional 2,873

Reduction ( 2,146 )

Balance as of June 24, 2022 4,934

Additional 498

Reduction ( 1,608 )

Balance as of June 30, 2023 $ 3,824

4 unchanged sentences

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 30, 2023 and June 24, 2022.

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

3 unchanged sentences

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.

Income tax liabilities have not been established for withholding tax and other taxes that would be payable on the unremitted earnings in Thailand, which are permanently reinvested.

9 unchanged sentences

The following table indicates the changes to the Company’s uncertain income tax positions for the years ended June 30, 2023, June 24, 2022 and June 25, 2021, excluding interest and penalties, were as follows:

(amount in thousands) June 24,

(in thousands) June 30,

2023 June 24,

9 unchanged sentences

Earnings per ordinary share was calculated as follows:

(amount in thousands except per share amounts) June 24,

(in thousands, except per share data) June 30,

2023 June 24,

12 unchanged sentences

The Company’s cash, cash equivalents, and short-term investments by category is as follows:

(amount in thousands) Carrying

(in thousands) Carrying

Cost Unrealized

6 unchanged sentences

Liquidity funds 41,104 — — — 41,104

Certificates of deposit and time deposits 64,278 329 — 64,607 —

Corporate debt securities 161,453 ( 3,375 ) — 158,078 —

6 unchanged sentences

Liquidity funds 31,477 — — — 31,477

Certificate of deposits 10,500 — — — 10,500

Corporate debt securities 234,689 ( 5,671 ) — 229,018 —

4 unchanged sentences

The effective interest rate on short term bank deposits was 2.4 % and 0.5 % per annum for the years ended June 30, 2023 and June 24, 2022, respectively.

As of June 24, 2022, the Company had no investments in certificates of deposit classified as held-to-maturity debt securities.

As of June 25, 2021, the Company had $ 10.5 million of investments in certificate of deposits classified as held-to-maturity debt securities.

All investments mature within one year.

Held-to-maturity debt securities are recorded at amortized cost, which approximates fair value.

No unrecognized gains and losses were recorded during the years ended June 24, 2022 and June 25, 2021.

As of June 30, 2023, the Company had investments in certificates of deposit of $ 44.6 million and term deposit of $ 20.0 million which classified as available-for-sale debt securities.

As of June 24, 2022, the Company had no investments in certificates of deposit.

As of June 30, 2023 and June 24, 2022, 69 % and 59 %, respectively, of our cash and cash equivalents were held by the Parent Company.

1 unchanged sentence

June 30, 2023 June 24, 2022

(amount in thousands) Carrying

(in thousands) Carrying

Cost Fair Value Carrying

3 unchanged sentences

Total $ 322,377 $ 319,100 $ 286,173 $ 280,157

The following table summarizes the carrying cost of short-term investments classified as held-to-maturity securities based on stated effective maturities as of June 24, 2022 and June 25, 2021:

(amount in thousands) As of June 24, 2022 As of June 25, 2021

Due within one year (1)

Due between one to five years — —

Total $ — $ 10,500

(1) Short-term investments classified as held-to-maturity securities as of June 25, 2021 matured in July 2021.

During the year ended June 24, 2022, the Company recognized a realized gain of a de minimis amount from sales of available-for-sale debt securities in interest income in the consolidated statements of operations and comprehensive income.

During the year ended June 25, 2021, the Company recognized a realized gain of $ 0.4 million from sales of available-for-sale debt securities in interest income in the consolidated statements of operations and comprehensive income.

As of June 24, 2022, the Company considered the decline in market value of its available-for-sale debt securities by using the AFS debt security impairment model.

During the year ended June 30, 2023, the Company recognized a realized loss of $ 0.1 million from sales of available-for-sale debt securities in interest income in the consolidated statements of operations and comprehensive income.

During the year ended June 24, 2022, the Company recognized a realized loss of a de minimis amount from sales of available-for-sale debt securities in interest income in the consolidated statements of operations and comprehensive income.

As of June 30, 2023 and June 24, 2022, the Company considered the decline in market value of its available-for-sale debt securities by using the AFS debt security impairment model.

The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer.

4 unchanged sentences

The credit rating of the Company's invested securities are still in compliance with the Company's investment policy.

No impairment losses on available-for-sale debt securities were recorded for the year ended June 24, 2022.

As of June 24, 2022, the Company evaluated the expected credit loss for held-to-maturity debt securities at the individual security level within the scope of CECL model by considering historical information and current and future economic conditions and events.

Additionally, the Company considered qualitative factors such as term and structure of the instrument and credit ratings by rating agencies in determining if a zero-credit loss expectation is supportable.

The credit rating of the Company's invested securities are still in compliance with the Company's investment policy.

No impairment losses on held-to-maturity debt securities were recorded for the year ended June 24, 2022.

As of June 25, 2021, the Company considered the decline in market value of its available-for-sale and held-to-maturity debt securities to be temporary in nature and did not consider any of its securities other-than-temporarily impaired.

When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s cost basis.

No impairment losses were recorded for the year ended June 25, 2021.

No impairment losses on available-for-sale debt securities were recorded for the year ended June 30, 2023 and June 24, 2022.

Fair value of financial instruments

10 unchanged sentences

Fair Value Measurements at Reporting Date

(amount in thousands) Level 1 Level 2 Level 3 Total

(in thousands) Level 1 Level 2 Level 3 Total

As of June 30, 2023

1 unchanged sentence

Liquidity funds — 41,104 — 41,104

Certificates of deposit and time deposits — 64,607 — 64,607

Corporate debt securities — 158,078 — 158,078

4 unchanged sentences

Derivative liabilities - current portion $ — $ ( 5,236 ) $ — $ ( 5,236 )

Derivative liabilities - non-current portion — ( 234 ) — ( 234 )

Total $ — $ ( 5,236 ) (2)

1 unchanged sentence

Fair Value Measurements at Reporting Date

(amount in thousands) Level 1 Level 2 Level 3 Total

(in thousands) Level 1 Level 2 Level 3 Total

As of June 24, 2022

10 unchanged sentences

$ — $ ( 7,579 )

(1) Interest rate swap agreement with notional amount of $ 64.2 million.

(2) Foreign currency forward contracts with an aggregate notional amount of $ 135.0 million and 0.5 million Canadian dollars and interest rate swap agreement with a notional amount of $ 60.9 million.

(3) Foreign currency forward contract with an aggregate notional amount of $ 2.0 million.

(4) Foreign currency forward contracts with an aggregate notional amount of $ 128.0 million and 0.4 million Canadian dollars and two interest rate swap agreements with an aggregate notional amount of $ 125.1 million.

(1) Foreign currency forward contracts with an aggregate notional amount of $ 3.0 million and 0.2 million Canadian dollars and interest rate swap agreement with notional amount of $ 60.9 million.

(2) Foreign currency forward contracts with an aggregate notional amount of $ 140.0 million.

(3) Interest rate swap agreement with a notional amount of $ 64.2 million.

(4) Foreign currency forward contracts with an aggregate notional amount of $ 135.0 million and 0.5 million Canadian dollars and an interest rate swap agreement with a notional amount of $ 60.9 million.

Derivative Financial Instruments

4 unchanged sentences

dollar equivalent values of the Company’s foreign currency denominated assets and liabilities fluctuate.

The Company uses foreign currency forward and option contracts to manage the foreign exchange risk associated with a portion of its foreign currency denominated assets and liabilities and other foreign currency transactions.

The Company uses foreign currency forward and option contracts to manage

the foreign exchange risk associated with a portion of its foreign currency denominated assets and liabilities and other foreign currency transactions.

The Company enters into foreign currency forward and option contracts to hedge fluctuations in the U.S.

12 unchanged sentences

As of June 24, 2022, the Company had 135 outstanding U.S.

dollar foreign currency forward contracts against Thai baht with an aggregate notional amount of $ 130.0 million and with maturity dates ranging from July 2021 through January 2022, and two foreign currency contracts with an aggregate notional amount of 0.4 million Canadian dollars and with maturity dates in September 2021.

dollar foreign currency forward contracts against Thai baht with an aggregate notional amount of $ 135.0 million and with maturity dates ranging from July 2022 through January 2023, and one foreign currency contract with a notional amount of 0.5 million Canadian dollars and with a maturity date in September 2022.

As of June 30, 2023, the hedging relationship over foreign currency forward contracts which were designated for hedge accounting had been tested to be highly effective based on the performance of retrospective and prospective regression testing.

As of June 30, 2023, the amount in AOCI that is expected to be reclassified into earnings within 12 months as loss was $ 4.0 million.

During the year ended June 24, 2022 and June 25, 2021, the Company included an unrealized loss of $ 0.8 million and $ 1.5 million, respectively, from changes in fair value of foreign currency forward and option contracts which were not designated for hedge accounting in earnings as foreign exchange gain (loss), net in the consolidated statements of operations and comprehensive income.

During the year ended June 30, 2023 and June 24, 2022, the Company included an unrealized gain of $ 0.4 million and unrealized loss of $ 0.8 million, respectively, from changes in fair value of foreign currency forward and option contracts which were not designated for hedge accounting in earnings as foreign exchange gain (loss), net in the consolidated statements of operations and comprehensive income.

Interest Rate Swap Agreements

The Company entered into interest rate swap agreements to mitigate interest rate risk and improve the interest rate profile of the Company’s debt obligations.

As of June 24, 2022 and June 25, 2021, the Company had two outstanding interest rate swap agreements with an aggregate notional amount of $ 125.1 million.

On July 25, 2018, Fabrinet Thailand entered into an interest rate swap agreement to effectively convert the floating interest rate of its term loan under the credit facility agreement with Bank of America Credit Facility Agreement to a fixed interest rate of 2.86 % per annum through the scheduled maturity of the term loan in June 2023 (see Note 13).

As of June 30, 2023 and June 24, 2022, the Company had one and two outstanding interest rate swap agreements with an aggregate notional amount of $ 60.9 million, and $ 125.1 million, respectively.

On July 25, 2018, Fabrinet Thailand entered into an interest rate swap agreement to effectively convert the floating interest rate of the term loan under the Company's previous syndicated senior credit facility agreement to a fixed interest rate of 2.86 % per annum through the scheduled maturity of the term loan in June 2023 (see Note 13).

The Company did not designate this interest rate swap for hedge accounting.

On September 3, 2019, the Company entered into a new term loan agreement under a Credit Facility Agreement with the Bank of Ayudhya Public Company Limited (the “Bank”) (see Note 13) and on September 10, 2019, the Company repaid in full the outstanding term loan under the Bank of America Credit Facility (see Note 13).

In conjunction with the funding of the new term loan, the Company entered into a second interest rate swap agreement.

The combination of both

of these interest rate swaps effectively converts the floating interest rate of the Company’s new term loan with the Bank to a fixed interest rate of 4.36 % per annum through the maturity of the term loan in June 2024.

On September 27, 2019, the Company designated these two interest rate swaps as a cash flow hedge for the Company’s term loan under the Credit Facility Agreement with the Bank.

The combination of these two interest rate swaps qualified for hedge accounting because the hedges are highly effective, and the Company has designated and documented contemporaneously the hedging relationships involving these interest rate swaps.

On September 3, 2019, Fabrinet Thailand entered into a term loan agreement under a credit facility agreement with Bank of Ayudhya Public Company Limited, and on September 10, 2019, the Company repaid in full the outstanding term loan under the Company's previous syndicated senior credit facility agreement (see Note 13) In conjunction with the funding of the new term loan, the Company entered into a second interest rate swap agreement.

The combination of both of these interest rate swaps effectively converts the floating interest rate of the Company’s term loan with Bank of Ayudhya Public Company Limited to a fixed interest rate of 4.36 % per annum through the maturity of the term loan in June 2024.

On September 27, 2019, the Company designated these two interest rate swaps as a cash flow hedge for the Company’s term loan under the credit facility agreement with Bank of Ayudhya Public Company Limited.

The combination of these

two interest rate swaps qualified for hedge accounting because the hedges are highly effective, and the Company has designated and documented contemporaneously the hedging relationships involving these interest rate swaps.

While the Company intends to continue to meet the conditions for hedge accounting, if hedges do not qualify as highly effective, the changes in the fair value of the derivatives used as hedges would be reflected in earnings.

1 unchanged sentence

The Company will reclassify a portion of the gains or losses from AOCI into earnings at each reporting period based on either the accrued interest amount or the interest payment.

As of June 24, 2022, the amount in AOCI that is expected to be reclassified into earnings within 12 months as loss is $ 0.5 million.

As of June 30, 2023, the amount in AOCI that is expected to be reclassified into earnings within 12 months as gain is $ 0.4 million.

The following table provides a summary of the impact of derivative gain (loss) of the Company’s foreign currency forward contracts and interest rate swaps which were designated as cash flow hedges on the consolidated statements of operations and other comprehensive income:

(amount in thousands) Financial statements

(in thousands) Financial statements

line item June 30,

14 unchanged sentences

2023 June 24,

(amount in thousands) Derivative

(in thousands) Derivative

Assets Derivative

3 unchanged sentences

Foreign currency forward and option contracts $ 2 $ ( 1,256 ) $ — $ ( 1,561 )

Interest rate swaps — — — —

Derivatives designated as hedging instruments

5 unchanged sentences

Derivative Financial Instruments Balance Sheet line item

Fair Value of Derivative Assets Other current assets

Fair Value of Derivative Liabilities Accrued expenses

Fair Value of Derivative Liabilities Other non-current liabilities

Fair Value of Derivative Assets Other current assets, Other non-current assets

Fair Value of Derivative Liabilities Accrued expenses, Other non-current liabilities

Trade accounts receivable, net

(amount in thousands) As of June 24,

(in thousands) As of June 30,

2023 As of June 24,

2 unchanged sentences

Trade accounts receivable, net $ 531,767 $ 452,670

(amount in thousands) As of June 24,

(in thousands) As of June 30,

2023 As of June 24,

7 unchanged sentences

Certain of these lease arrangements provide the Company the ability to extend the lease from one to five years following the expiration of the current term.

However, the Company may exclude lease extension options from its right of use ("ROU") assets and lease liabilities as the Company is not reasonably assured that it will exercise these options.

However, the Company has excluded all lease extension options from its right of use (“ROU”) assets and lease liabilities as the Company is not reasonably assured that it will exercise these options.

None of the lease agreements contain residual value guarantees provided by the lessee.

1 unchanged sentence

As of June 30, 2023, the maturities of the Company’s operating lease liabilities were as follows:

(amount in thousands)

(in thousands)

Total undiscounted lease payments 1,288

3 unchanged sentences

Rental expense related to the Company’s operating leases is recognized on a straight-line basis over the lease term.

Rental expense for long-term leases for the years ended June 24, 2022, June 25, 2021 and June 26, 2020 was $ 2.2

million, $ 2.6 million and $ 2.1 million, respectively.

Rental expense for short-term leases for the years ended June 24, 2022, June 25, 2021 and June 26, 2020 was $ 0.2 million, $ 0.3 million and a de minimis amount, respectively.

Finance leases

As of June 24, 2022, the Company had one finance lease agreement with a de minimis amount.

Rental expense for long-term leases for the years ended June 30, 2023, June 24, 2022 and June 25, 2021 was $ 2.4 million, $ 2.2 million and $ 2.6 million, respectively.

Rental expense for short-term leases for the years ended June 30, 2023, June 24, 2022 and June 25, 2021 was $ 0.8 million, $ 0.2 million and $ 0.3 million, respectively.

The following summarizes additional information related to the Company’s operating leases:

5 unchanged sentences

The following information represents supplemental disclosure for the statement of cash flows related to operating leases:

(amount in thousands) Year Ended June 24, 2022

(in thousands) Year Ended June 30, 2023

Cash paid for amounts included in the measurement of lease liabilities

4 unchanged sentences

The components of property, plant and equipment, net were as follows:

(amount in thousands) Land and

(in thousands) Land and

Improvements Building

14 unchanged sentences

Net book value $ 58,454 $ 135,460 $ 83,529 $ 1,057 $ 223 $ 5,592 $ 7,962 $ 292,277

Leased assets included in manufacturing equipment comprise certain machine and equipment from finance lease agreements of Fabrinet UK.

(amount in thousands) As of June 24, 2022 As of June 25, 2021

Cost—Finance leases $ 1,839 $ 1,747

Accumulated depreciation ( 1,755 ) ( 1,747 )

Net book value $ 84 $ —

Depreciation expense amounted to $ 42.5 million, $ 37.2 million and $ 34.7 million for the years ended June 30, 2023, June 24, 2022 and June 25, 2021, respectively, and has been allocated between cost of revenues and selling, general and administrative expenses in the consolidated statements of operations and comprehensive income.

The cost of fully depreciated property, plant and equipment written-off during the years ended June 30, 2023, June 24, 2022 and June 25, 2021 amounted to $ 16.5 million, $ 25.1 million and $ 16.3 million, respectively.

During the fiscal year 2022, the Company wrote off impairment reserves of $ 0.2 million due to the disposal of property, plant and equipment.

During the fiscal years 2021 and 2020, the Company recognized impairment reserves for property, plant and equipment of $ 0.8 million.

The Company had borrowing cost capitalized of $ 0.9 million for the years ended June 24, 2022, and the Company had no borrowing costs capitalized for the years ended June 25, 2021 and June 26, 2020.

During the year ended June 30, 2023, June 24, 2022 and June 25, 2021, the Company recognized impairment reserves for property, plant and equipment of $ 0.6 million, $ 0.6 million and $ 0.8 million, respectively.

During the years ended June 30, 2023, and June 25, 2021, the Company had de minimis amount of borrowing costs capitalized.

During year ended June 24, 2022, the Company had capitalized $ 0.9 million of borrowing cost.

The following tables present details of the Company’s intangibles:

(amount in thousands) Gross

(in thousands) Gross

Amount Accumulated

3 unchanged sentences

Software $ 10,533 $ ( 8,139 ) $ — $ 2,394

Customer relationships 4,373 ( 3,610 ) ( 58 ) 705

Backlog 119 ( 119 ) — —

Total intangibles (1)

(amount in thousands) Gross

$ 10,533 $ ( 8,139 ) $ — $ 2,394

(1) Customer relationships and backlog were written-off in March 2023.

(in thousands) Gross

Amount Accumulated

9 unchanged sentences

(years) As of June 30, 2023 As of June 24, 2022

Software 3.1 3.8

Customer relationships — 3.1

Total intangibles 3.1 3.8

Based on the carrying amount of intangibles as of June 30, 2023, and assuming no future impairment of the underlying assets, the estimated future amortization during each fiscal year was as follows:

(amount in thousand)

(in thousands)

Total $ 2,394

The Company’s total borrowings, including current and non-current portions of long-term borrowings, consisted of the following:

(amount in thousands)

(in thousands of U.S.

Rate Conditions Maturity As of June 30, 2023 As of June 24, 2022

2 unchanged sentences

Unamortized debt issuance costs—current portion ( 32 ) ( 32 )

( 32 ) ( 32 )

Long-term borrowings, current portion, net $ 12,156 12,156

6 unchanged sentences

Long-term borrowings, non-current portion, net $ — $ 15,202

(1) We have entered into interest rate swaps that effectively fix a series of our future interest payments on our term loans.

(1) The Company entered into interest rate swaps that effectively fix a series of future interest payments on its term loans.

Refer to Note 7.

The movements of long-term borrowings were as follows for the years ended June 30, 2023 and June 24, 2022:

(amount in thousands) June 24,

(in thousands) June 30,

2023 June 24,

Opening balance $ 27,421 $ 39,609

Borrowings during the period — —

Repayments during the period ( 15,233 ) ( 12,188 )

Closing balance $ 12,188 $ 27,421

As of June 24, 2022, the future maturities of long-term borrowings during each fiscal year were as follows:

(amount in thousand)

2023 $ 12,187

Total $ 27,421

Credit facilities agreements:

Bank of Ayudhya Public Company Limited

On August 20, 2019, Fabrinet Thailand (the “Borrower”) and Bank of Ayudhya Public Company Limited (the “Bank”) entered into a Credit Facility Agreement (the “Credit Facility Agreement”).

The Credit Facility Agreement provides for a facility of 110.0 million Thai baht (approximately $ 3.6 million based on the applicable exchange rate as of September 27, 2019) and $ 160.9 million which may be used for, among other things, an overdraft facility, short-term loans against promissory notes, a letter of guarantee facility, a term loan facility and foreign exchange facilities.

On August 20, 2019, Fabrinet Thailand (the “Borrower”) and Bank of Ayudhya Public Company Limited (the “Bank”) entered into a credit facility agreement (the “2019 Credit Facility Agreement”), which provides for a facility of 110.0 million Thai baht (approximately $ 3.6 million based on the applicable exchange rate as of September 27, 2019) and $ 160.9 million that may be used for, among other things, an overdraft facility, short-term loans against promissory notes, a letter of guarantee facility, a term loan facility and foreign exchange facilities.

The Bank may approve any request for extension of credit under the 2019 Credit Facility Agreement and may increase or decrease any facility amount in its sole discretion.

Under the Credit Facility Agreement, on August 20, 2019, the Borrower and the Bank entered into a Term Loan Agreement pursuant to which the Borrower drew down on September 3, 2019 a term loan in the original principal amount of $ 60.9 million.

The proceeds from the term loan, together with cash on hand, were used to repay outstanding obligations under the BofA Facility Agreement.

Under the 2019 Credit Facility Agreement, on August 20, 2019, the Borrower and the Bank entered into a term loan agreement (the "Term Loan Agreement") pursuant to which the Borrower drew down on September 3, 2019 a term loan in the original principal amount of $ 60.9 million.

The proceeds from the term loan, together with cash on hand, were used to repay outstanding obligations under the Company's previous syndicated senior credit facility agreement.

The term loan accrues interest at 3-month LIBOR plus 1.35 % and is repayable in quarterly installments of $ 3.0 million, commencing on September 30, 2019.

On March 9, 2023, the Borrower and the Bank amended the Term Loan Agreement to replace the interest rate reference from LIBOR to the Secured Overnight Financing Rate ("SOFR") effective from September 29, 2023.

The term loan will mature on June 30, 2024.

The Borrower may prepay the term loan in whole or in part at any time without premium or penalty.

Any portion of the term loan repaid or prepaid may not be re-borrowed.

During the year ended June 24, 2022, the Company recorded $ 2.3 million of interest expense in connection with this term loan, including impact from interest rate swaps.

$ 0.9 million of these interest expenses were capitalized during the year ended June 24, 2022 in a new manufacturing building at the Company's Chonburi campus.

Any portion of the term loan repaid or prepaid may not be borrowed again.

During the year ended June 30, 2023, the Company recorded $ 2.1 million of interest expense in connection with this term loan, including the impact from interest rate swaps.

Any borrowings under the 2019 Credit Facility Agreement, including those borrowings under the Term Loan Agreement, are guaranteed by Fabrinet and secured by land and buildings owned by the Borrower in the Pathumthani and Chonburi Provinces in Thailand.

The Term Loan Agreement contains affirmative and negative covenants applicable to the Borrower, including delivery of financial statements and other information, compliance with laws, maintenance of insurance, restrictions on granting security interests or liens on its assets, disposing of its assets, incurring indebtedness and making acquisitions.

The Term Loan Agreement contains affirmative and negative covenants applicable to the Borrower, including delivery of financial statements and other information, compliance with laws, maintenance of insurance, and restrictions on granting security interests or liens on its assets, disposing of its assets, incurring indebtedness and making acquisitions.

While the term loan is outstanding, the Borrower is required to maintain a loan to value of the mortgaged real property ratio of not greater than 65 %.

3 unchanged sentences

As of June 30, 2023, the Company was in compliance with all of its financial covenants under the Term Loan Agreement.

The events of default in the Term Loan Agreement include failure to pay amounts due under the Term Loan Agreement or the related finance documents when due, failure to comply with the covenants under the Term Loan Agreement or the related finance documents, cross default with other indebtedness of the Borrower, events of bankruptcy or insolvency in respect of the Borrower, and the occurrence of any event or series of events that in the opinion of the Bank has or is reasonably likely to have a material adverse effect.

The events of default under the Term Loan Agreement include failure to timely pay amounts due under the Term Loan Agreement or the related finance documents, failure to comply with the covenants under the Term Loan Agreement or the related finance documents, cross default with other indebtedness of the Borrower, events of bankruptcy or insolvency in respect of the Borrower, and the occurrence of any event or series of events that in the opinion of the Bank has or is reasonably likely to have a material adverse effect.

As of June 30, 2023, there was $ 12.2 million outstanding under the term loan.

On March 9, 2023, Fabrinet Thailand and the Parent Company (the “Borrowers”) and the Bank entered into a credit facility agreement (the “2023 Credit Facility Agreement”), which provides a facility of $ 55.0 million.

Any borrowings under the 2023 Credit Facility Agreement are secured by land and buildings owned by the Borrowers in the Pathumthani and Chonburi Provinces in Thailand.

Under the 2023 Credit Facility Agreement, the Borrowers are required to maintain a loan to value of the mortgaged real property ratio of not greater than 60 %.

The Borrowers are also required to maintain a debt service coverage ratio of at least 1.25 times and a debt-to-equity ratio of less than or equal to 1.0 times.

In the case of any payment of a dividend by the Company, its debt service coverage ratio must be at least 1.50 times.

As of June 30, 2023, there was no amount outstanding under the 2023 Credit Facility Agreement.

Severance liabilities

The following table provides information regarding severance liabilities:

(amount in thousands) June 24,

(in thousands) June 30,

2023 June 24,

12 unchanged sentences

Employer contributions — 38

Benefit paid — ( 34 )

Foreign currency translation 11 ( 43 )

2 unchanged sentences

The following table sets forth our severance liabilities as of June 30, 2023:

(amount in thousand)

(in thousands)

Thereafter 13,824

1 unchanged sentence

The amount recognized in the consolidated balance sheets under non-current liabilities and non-current assets were determined as follows:

(amount in thousands) As of June 24,

(in thousands) As of June 30,

2023 As of June 24,

2 unchanged sentences

The following table provides information regarding accumulated benefit obligations:

(amount in thousands) As of June 24,

(in thousands) As of June 30,

2023 As of June 24,

Accumulated benefit obligations $ 15,168 $ 13,018

The following table sets forth the plan assets at fair value as of June 24, 2022 and June 25, 2021.

(amount in thousands) Fair value measurement as of June 24, 2022

Total Significant

(Level 2) Significant

$ 338 $ 208 $ 130

Total Assets $ 338 $ 208 $ 130

(1) The “Other” category represents the value of assets with Quilter and Royal London.

(amount in thousands) Fair value measurement as of June 25, 2021

Total Significant

(Level 2) Significant

$ 356 $ 211 $ 145

Total Assets $ 356 $ 211 $ 145

(2) The “Other” category represents the value of assets with Old Mutual Wealth and Royal London.

The Trustees have chosen to invest in the following funds:

Fund As of June 24,

2022 As of June 25,

Old Mutual Wealth Creation Balanced Portfolio — % 59 %

Quilter Creation Balanced Portfolio 62 % — %

Royal London Deposit Administration 38 % 41 %

The Quilter and Old Mutual Wealth assets are administered on unit-linked principles and allow access to a range of funds;

these have been treated as Level 2.

The Royal London assets are administered on a deposit administration basis.

This is similar to a with profits fund but with a lower exposure to the stock market.

The policy is invested in a mix of backing assets with a smoothed regular bonus rate being declared every year, which stabilizes the rate of return over the longer term.

These have been treated as Level 3.

The principal actuarial assumptions used were as follows:

17 unchanged sentences

The effect of recording share-based compensation expense for the years ended June 30, 2023, June 24, 2022 and June 25, 2021 was as follows:

(amount in thousands) June 24,

(in thousands) June 30,

2023 June 24,

7 unchanged sentences

Share-based compensation expense was recorded in the consolidated statements of operations and comprehensive income as follows:

(amount in thousands) June 24,

(in thousands) June 30,

2023 June 24,

2 unchanged sentences

Selling, general and administrative expense 20,939 22,081 19,277

Restructuring and other related costs 524 — —

Total share-based compensation expense $ 28,127 $ 28,048 $ 25,462

12 unchanged sentences

The 2020 Plan, 2010 Plan and 2017 Inducement Plan are collectively referred to as the “Equity Incentive Plans.”

The following table summarizes the number of equity awards outstanding and ordinary shares available for grant under each of the Equity Incentive Plans as of June 30, 2023:

(share units) Restricted Share Units outstanding Performance Share Units outstanding Ordinary Shares available for future grant

2020 Plan 341,706 204,016 1,946,938

2010 Plan 27,059 — —

2017 Inducement Plan — — 111,347

Total 368,765 204,016 2,058,285

Restricted share units and performance share units

2 unchanged sentences

Restricted share units granted to non-employee directors generally cliff vest 100 % on the first of January, approximately one year from the grant date, provided the director continues to serve through such date.

Performance share units granted to executives will vest, if at all, at the end of a two-year performance period based on the Company’s achievement of pre-defined performance criteria, which consist of revenue and non-U.S.

GAAP gross margin or operating margin targets.

The actual number of performance share units that may vest at the end of the performance period ranges from 0 % to 100 % of the award grant.

5 unchanged sentences

Granted 230,759 $ 70.53

Issued ( 335,355 ) $ 40.98

Vested ( 358,508 ) $ 45.39

Forfeited ( 28,133 ) $ 57.86

1 unchanged sentence

Granted 186,633 $ 101.25

Issued ( 358,508 ) $ 45.39

Vested ( 323,326 ) $ 52.20

Forfeited ( 45,556 ) $ 71.53

1 unchanged sentence

Granted 165,378 $ 117.35

Issued ( 323,326 ) $ 52.20

Vested ( 233,607 ) $ 67.85

Forfeited ( 22,632 ) $ 94.69

7 unchanged sentences

Granted 184,718 $ 69.85

Vested ( 82,185 ) 48.02

Forfeited ( 115,645 ) $ 48.02

1 unchanged sentence

Granted 110,832 $ 101.05

Issued ( 82,185 ) $ 48.02

Vested ( 190,213 ) $ 48.65

Forfeited ( 61,765 ) $ 53.38

1 unchanged sentence

Granted 97,142 $ 117.35

Issued ( 190,213 ) 48.65

Vested ( 179,008 ) 70.05

Forfeited — $ —

4 unchanged sentences

The aggregate intrinsic value of restricted share units and performance share units outstanding as of June 30, 2023 was $ 74.4 million.

As of June 24, 2022, there was $ 11.2 million and $ 6.4 million of unrecognized share-based compensation expense related to restricted share units and performance share units, respectively, under the Equity Incentive Plans that is expected to be recorded over a weighted-average period of 2.5 years and 1.0 year, respectively.

For the years ended June 24, 2022 and June 25, 2021, the Company withheld an aggregate of 213,884 shares and 163,615 shares, respectively, upon the vesting of restricted share units, based upon the closing share price on the vesting date to settle employee tax withholding obligations.

As of June 30, 2023, there was $ 11.9 million and $ 6.6 million of unrecognized share-based compensation expense related to restricted share units and performance share units, respectively, under the Equity Incentive Plans that is expected to be recorded over a weighted-average period of 2.5 years and 1.1 years, respectively.

For the years ended June 30, 2023 and June 24, 2022, the Company withheld an aggregate of 177,139 shares and 213,884 shares, respectively, upon the vesting of restricted share units and performance shares units, based upon the closing share price on the vesting date to settle employee tax withholding obligations.

For the years ended June 30, 2023 and June 24, 2022, the Company then remitted cash of $ 18.2 million and $ 20.8 million, respectively, to the appropriate taxing authorities, and presented it as a financing activity within the consolidated statements of cash flows.

The payment had the effect of reducing the number of shares that the Company would have issued on the vesting date and was recorded as a reduction of additional paid-in capital.

The payment was recorded as a reduction of additional paid-in capital.

Employee benefit plans

25 unchanged sentences

In August 2017, the Company’s board of directors approved a share repurchase program to permit the Company to repurchase up to $ 30.0 million worth of its issued and outstanding ordinary shares in the open market in accordance with applicable rules and regulations.

In February 2018, May 2019 and August 2020, the Company’s board of directors approved an increase of $ 30.0 million, $ 50.0 million and 58.5 million, respectively, to the original share repurchase authorization, bringing the aggregate authorization to $ 168.5 million.

In February 2018, May 2019, August 2020 and August 2022, the Company’s board of directors approved an increase of $ 30.0 million, $ 50.0 million, $ 58.5 million and $ 78.7 million, respectively, to the original share repurchase authorization, bringing the aggregate authorization to $ 247.2 million.

During the year ended June 30, 2023, the Company repurchased 488,477 shares under the program at an average price per share (excluding other direct costs) of $ 97.38 , totaling $ 47.6 million.

3 unchanged sentences

The changes in AOCI for the years ended June 30, 2023 and June 24, 2022 were as follows:

(amount in thousands) Unrealized Gains

(in thousands) Unrealized Gains

Available-for-sale

7 unchanged sentences

Balance as of June 25, 2021 $ 308 $ ( 4,504 ) $ ( 1,425 ) $ ( 645 ) $ ( 6,266 )

Other comprehensive income before reclassification

( 1,003 ) ( 4,570 ) — 585 ( 4,988 )

Other comprehensive income (loss) before reclassification ( 6,339 ) 157 — ( 245 ) ( 6,427 )

Amounts reclassified from AOCI 13 ( 735 ) 622 — ( 100 )

Tax effects — — — — —

Other comprehensive income ( 1,182 ) ( 5,106 ) 584 585 ( 5,119 )

Other comprehensive income (loss) ( 6,326 ) ( 578 ) 622 ( 245 ) ( 6,527 )

Balance as of June 24, 2022 ( 6,018 ) ( 5,082 ) ( 803 ) ( 890 ) ( 12,793 )

Other comprehensive income before reclassification ( 6,339 ) 157 — ( 245 ) ( 6,427 )

Other comprehensive income (loss) before reclassification 2,646 2,444 — ( 75 ) 5,015

Amounts reclassified from AOCI 93 ( 903 ) 473 — ( 337 )

Tax effects — — — — —

Other comprehensive income ( 6,326 ) ( 578 ) 622 ( 245 ) ( 6,527 )

Other comprehensive income (loss) 2,739 1,541 473 ( 75 ) 4,678

Balance as of June 30, 2023 $ ( 3,279 ) $ ( 3,541 ) $ ( 330 ) $ ( 965 ) $ ( 8,115 )

The following table presents the pre-tax amounts reclassified from AOCI into the consolidated statements of operations and comprehensive income for the years ended June 30, 2023 and June 24, 2022, respectively.

(amount in thousands) Years Ended

(in thousands) Years Ended

AOCI components Financial statements

5 unchanged sentences

Unrealized gains (losses) on derivative instruments Selling, general and administrative expenses 334 303

Unrealized gains(losses)on derivative instruments Foreign exchange loss, net ( 7,384 ) 1,769

Unrealized gains (losses) on derivative instruments Foreign exchange gain (loss), net ( 8,644 ) ( 7,384 )

Unrealized gains (losses) on derivative instruments Interest expense ( 588 ) ( 937 )

2 unchanged sentences

Commitments and contingencies

Letter of Credit and Bank guarantees

As of June 24, 2022, the Company had an outstanding letter of credit totaling $ 0.2 million on behalf of the Company's subsidiary in the PRC to support the subsidiary's operations.

As of June 24, 2022 and June 25, 2021, there were outstanding bank guarantees on behalf of the Company's subsidiary in Thailand for electricity usage and other normal business expenses totaling $ 1.4 million and $ 1.6 million, respectively, or Thai Baht 50.2 million and an outstanding bank guarantee on behalf of the Company's subsidiary in the PRC to support the subsidiary's operations totaling Renminbi 1.0 million, which bank guarantee was backed by cash collateral of $ 0.1 million and $ 0.2 million, respectively.

Bank guarantees

As of June 30, 2023 and June 24, 2022, there were outstanding bank guarantees on behalf of the Company's subsidiary in Thailand for electricity usage and other normal business expenses totaling $ 1.5 million and $ 1.4 million, respectively, or Thai Baht 53.0 million and Thai Baht 50.2 million, respectively.

In addition, there were other immaterial bank guarantees on behalf of the Company's subsidiary in Israel to support the operations related to the Israeli Customs department.

As of June 24, 2022, there was an outstanding bank guarantee on behalf of the Company's subsidiary in the PRC to support the subsidiary's operations totaling RMB 1.0 million, which bank guarantee was backed by cash collateral of $ 0.1 million.

This bank guarantee was released in December 2022.

In addition, there were other immaterial bank guarantees on behalf of the Company's subsidiary in the U.K.

12 unchanged sentences

Fabrinet maintains a director and officer liability insurance policy that may enable it to recover a portion of any future amounts paid under the indemnification agreements.

Restructuring and other related costs

Restructuring and other related costs may consist of voluntary or involuntary severance-related charges, asset-related charges and other costs due to exit activities.

The Company recognizes voluntary severance-related charges when an employee accepts the offered benefit arrangement.

The Company recognizes involuntary severance-related charges depending on whether the termination benefits are provided under an ongoing benefit arrangement or under a one-time benefit arrangement.

If the former, the Company recognizes the charges once they are probable and the amounts are estimable.

If the latter, the Company recognizes the charges once the benefits have been communicated to employees.

Business segments and geographic information

5 unchanged sentences

The following table presents long-lived assets by the country in which they are based:

(amount in thousands) June 24,

(in thousands) June 30,

2023 June 24,

5 unchanged sentences

Israel 2,796 4,025 5,271

1,281 2,223 2,956

Cayman Islands 597 412 373

Others 498 1,878 2,635

310,350 292,277 241,129

6 unchanged sentences

Lumentum Operations LLC 15.4 % 10.3 % 13.6 %

Nvidia Corporation 12.5 % * *

Infinera Corporation 12.4 % 12.5 % 11.6 %

Acacia Communications Inc.

* Represents less than 10% of total revenues.

(1) Inclusive of revenue from Acacia Communications, Inc.

from March 1, 2021

Accounts receivable from individual customers representing 10% or more of accounts receivable as of June 30, 2023 and June 24, 2022, respectively, were as follows:

2 unchanged sentences

Infinera Corporation 20.5 % 17.1 %

Nvidia Corporation 14.0 % *

Lumentum Operations LLC 13.7 % 11.8 %

Cisco Systems Inc.

20.1 % 15.0 %

(1) Includes of Acacia Communications Inc.

as of June 24, 2022 .

* Represents less than 10% of total accounts receivable.

Financial instruments

26 unchanged sentences

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 8. Financial Statements and Supplementary Data