What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-08-20 compared with 2023-08-22 · 95 added, 83 removed, 341 unchanged (34% of the section changed)

19 unchanged sentences

• our plans to execute acquisitions;

• trends in the optical communications, industrial lasers, and sensors markets, including trends to outsource the production of components used in those markets;

• trends in the optical communications, automotive, industrial lasers and other markets, including trends to outsource the production of components used in those markets;

• our ability to attract and retain a qualified management team and other qualified personnel and advisors;

17 unchanged sentences

We generate significant accounts payable and inventory for the services that we provide to our customers, which could expose us to substantial and potentially unrecoverable costs if we do not receive payment from our customers.

Therefore, any financial difficulties that our key customers experience could materially and adversely affect our operating results and financial condition by generating charges for inventory write-offs, provisions for doubtful accounts, and increases in working capital requirements due to increased days inventory and in accounts receivable.

Therefore, any financial difficulties that our key customers experience could materially and adversely affect our operating results and financial condition by generating charges for inventory write-offs, provisions for expected credit losses, and increases in working capital requirements due to increased days inventory and in accounts receivable.

Furthermore, reliance on a small number of customers gives those customers substantial purchasing power and leverage in negotiating contracts with us.

4 unchanged sentences

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.

Furthermore, in some cases, our efforts to identify and secure alternative supply chain sources have 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.

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.

2 unchanged sentences

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.

Revenues are attributed to a particular geographic area based on the bill-to location of our customers, notwithstanding that the products may be shipped to 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 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 percentage of our revenues generated from a bill-to location outside of North America increased from 52.0% in fiscal year 2023 to 63.5% in fiscal year 2024, primarily because of an increase in revenue from a customer in Israel and a decrease in sales to our customers in North America.

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 2024.

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

40 unchanged sentences

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 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.

In fiscal year 2025, we expect our SG&A expenses will increase compared with our fiscal year 2024 SG&A expenses, mainly due to increase in compensation related expenses and investment in information technology hardware.

The compensation committee of our board of directors approved a fiscal year 2024 executive incentive plan with quantitative objectives based solely on achieving certain revenue targets and non-U.S.

36 unchanged sentences

The Thai baht assets represent cash and cash equivalents, trade accounts receivable, deposits and other current assets.

The Thai baht liabilities represent trade accounts payable, accrued expenses, income tax payable and other payables.

The Thai baht liabilities represent trade accounts payable, accrued expenses, income tax payable, accrued employee benefits and other payables.

We manage our exposure to fluctuations in foreign exchange rates by the use of foreign currency contracts and offsetting assets and liabilities denominated in the same currency in accordance with management’s policy.

As of June 30, 2023, there was $143.0 million in foreign currency forward contracts outstanding on the Thai baht payables.

As of June 24, 2022, there was $135.0 million in foreign currency forward contracts outstanding on the Thai baht payables.

The RMB assets represent cash and cash equivalents, trade accounts receivable and other current assets.

The RMB liabilities represent trade accounts payable, accrued expenses, income tax payable and other payables.

As of June 28, 2024, there was $135.0 million of foreign currency forward contracts outstanding on the Thai baht payables.

As of June 30, 2023, there was $143.0 million of foreign currency forward contracts outstanding on the Thai baht payables.

The RMB assets represent cash and cash equivalents, trade accounts receivable, other receivables, and other current assets.

The RMB liabilities represent trade accounts payable, accrued expenses, income tax payable, accrued payroll, bonus and related expenses, and other payables.

As of June 28, 2024 and June 30, 2023, we did not have any derivative contracts denominated in RMB.

The GBP assets represent cash and trade accounts receivable.

The GBP liabilities represent trade accounts payable and other payables.

The GBP assets represent cash, trade accounts receivable, and other current assets.

The GBP liabilities represent trade accounts payable, accrued expenses, and other payables.

As of June 28, 2024 and June 30, 2023, we did not have any derivative contracts denominated in GBP.

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.

For fiscal years 2024 and 2023, we recorded an unrealized gain of $0.7 million and $0.4 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

6 unchanged sentences

Under the Administration Rules, foreign-invested enterprises may only buy, sell, or remit foreign currencies at banks authorized to conduct foreign exchange business after providing valid commercial documents and relevant supporting documents and, in the case of capital account item transactions, obtaining approval from SAFE.

Capital investments by foreign-invested enterprises outside of the PRC are also subject to limitations, which include approvals by the Ministry of Commerce, SAFE and the State Development and Reform Commission.

Capital investments by foreign-

invested enterprises outside of the PRC are also subject to limitations, which include approvals by the Ministry of Commerce, SAFE and the State Development and Reform Commission.

Circular 142 regulates the conversion by a foreign-invested company of foreign currency into RMB by restricting how the converted RMB may be used.

25 unchanged sentences

We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

The evaluation results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Because the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.

25 unchanged sentences

In addition, significant judgment is required in determining the groups of assets for which impairment tests are separately performed.

Allowance for Doubtful Accounts

We perform ongoing credit evaluations of our customers’ financial condition and make provisions for doubtful accounts based on the outcomes of these credit evaluations.

Allowance for Expected Credit Losses

We perform ongoing credit evaluations of our customers’ financial condition and make provisions for expected credit losses based on the outcomes of these credit evaluations.

We evaluate the collectability of our accounts receivable based on specific customer circumstances, current economic trends, historical experience with collections, and the age of past due receivables.

6 unchanged sentences

In addition, unanticipated changes in liquidity or the financial positions of our customers or changes in economic conditions may require additional provisions for inventory due to our customers’ inability to fulfill their contractual obligations.

As the market conditions or our customers’ product demands are inherently difficult to predict, the actual volumes may vary significantly from projected volumes.

As the market conditions or our customers’ product demands are inherently difficult to predict, the actual volumes may vary significantly from

projected volumes.

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.

6 unchanged sentences

If these estimates and related assumptions change in the future, we may be required to increase or decrease our valuation allowance against the deferred tax assets, resulting in additional or lesser income tax expense.

During fiscal year 2020, one of our subsidiaries in the U.S.

generated net operating loss and management expected that such subsidiary would continue to have net operating losses in the foreseeable future;

therefore, management believed it was more likely than not that all of the deferred tax assets of such subsidiary would not be utilized.

Thus, a full valuation allowance of $2.1 million for the deferred tax assets was set up as of the end of fiscal year 2020.

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.

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 and June 30, 2023.

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

During fiscal year 2020, one of our subsidiaries in the U.K.

also generated net operating loss and management expected that such subsidiary would continue to have net operating losses in the foreseeable future.

1 unchanged sentence

Thus, a full valuation allowance of $1.6 million for the deferred tax assets was set up as of the end of fiscal year 2020.

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.

A full valuation allowance of $3.8 million, $4.9 million and $2.1 million were set up for the fiscal year ended June 30, 2023, June 24, 2022 and June 25, 2021, respectively.

During fiscal year 2024, deferred tax assets and valuation allowance were released due to our cessation of operations in the U.K.

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

generated taxable income and was able to utilize loss carryforwards.

1 unchanged sentence

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

However, due to our cessation of operations in the U.K., management believed that it will not generate sufficient taxable income to utilize the remaining deferred tax assets.

Thus, a full valuation allowance of $1.0 million was recorded as of June 28, 2024.

During fiscal year 2024, our subsidiary in Israel generated net operating loss and management expected that such subsidiary would continue to have net operating losses in the foreseeable future;

therefore, management believed it was more likely than not that all of the deferred tax assets of such subsidiary would not be utilized.

Thus, a full valuation allowance of $2.7 million for the deferred tax assets was set up as of the end of fiscal year 2024.

Results of Operations

34 unchanged sentences

Net comprehensive income 10.5 % 9.6 % 8.5 %

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

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

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

(in thousands, except percentages) Year ended June 28, 2024 As a % of Total

Revenues Year ended June 30, 2023 As a % of Total

Revenues Year ended June 24, 2022 As a % of Total

Optical communications

Lasers, sensors, and other 636,890 479,425 438,012

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

We operate and internally manage a single operating segment.

As such, discrete information with respect to separate product lines and segments is not accumulated.

Datacom $ 1,150,307 $ 520,796 $ 361,306

Telecom 1,138,708 1,487,551 1,421,493

Total revenue - Optical communications $ 2,289,015 79.4 % $ 2,008,347 75.9 % $ 1,782,799 78.8 %

Non-optical communications

Automotive $ 327,188 $ 368,581 $ 204,407

Industrial laser 122,722 125,415 149,357

Others 144,042 142,894 125,661

Total revenue - Non-optical communications $ 593,952 20.6 % $ 636,890 24.1 % $ 479,425 21.2 %

Total revenue $ 2,882,967 100.0 % $ 2,645,237 100.0 % $ 2,262,224 100.0 %

Comparison of Fiscal Year 2024 with Fiscal Year 2023

Our revenues increased by $237.8 million, or 9.0%, to $2,883.0 million for fiscal year 2024, compared with $2,645.2 million for fiscal year 2023.

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.

This increase was primarily due to an increase in our key customers’ demand for optical communication products.

Revenues from optical communications products, which represented $2,289.0 million, or 79.4%, of our revenues for fiscal year 2024, increased by $280.7 million, or 14.0%, compared to prior fiscal year, mainly due to an increase in revenues from data communication products, primarily for artificial intelligence applications, offset by a decline in revenues from telecommunication products as inventory absorption within the telecommunication market continued during fiscal year 2024.

Revenues from non-optical communications products, which represented $594.0 million, or 20.6%, of our revenues for fiscal year 2024, decreased by $42.9 million, or 6.7%, compared to prior fiscal year, primarily due to inventory absorption related to certain programs in the automotive market.

Cost of revenues .

6 unchanged sentences

Our SG&A expenses increased by $0.8 million, or 1.0%, to $78.5 million, or 2.8% of revenues, for fiscal year 2024, compared with $77.7 million, or 2.9% of revenues, for fiscal year 2023.

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;

Our SG&A expenses increased during fiscal year 2024, compared with fiscal year 2023, mainly due to (1) an increase in sales and marketing expenses of $1.0 million;

(2) a net increase in allowance for expected credit losses of $0.9 million;

(3) an increase in information technology repair and maintenance expenses of $0.5 million;

(4) an increase in R&D expenses of $0.3 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.

and (5) an increase in share-based compensation expenses of $0.2 million;

offset by (1) recognizing an actuarial gain on obligation of $0.4 million in fiscal year 2024, compared with recognizing an actuarial loss on obligation of $1.1 million in fiscal year 2023;

(2) a decrease in legal and consulting fees of $0.4 million;

and (3) a decrease in customer relationships amortization of $0.2 million.

Restructuring and other related costs.

We recorded a de minimis amount of restructuring costs for fiscal year 2024.

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

2 unchanged sentences

Interest income .

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.

Our interest income increased by $22.0 million, or 196.4% to $33.2 million, or 1.2% of revenues, for fiscal year 2024, compared with $11.2 million, or 0.4% for fiscal year 2023.

The increase was primarily due to a higher weighted average interest rate in fiscal year 2024 and a higher average cash balance and short-term investment of $722.0 million in fiscal year 2024, compared with $468.0 million in fiscal year 2023.

Interest expense .

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.

Our interest expense decreased by $1.4 million to $0.1 million for fiscal year 2024, compared with $1.5 million for fiscal year 2023.

The decrease was primarily due to a decrease in the long-term loan balance.

Foreign exchange gain (loss), net .

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.

We recorded foreign exchange gain, net of $0.4 million for fiscal year 2024, compared with foreign exchange loss, net of $1.2 million for fiscal year 2023.

The foreign exchange gain was mainly due to (1) lower realized loss from payment/receipt of $1.0 million, (2) unrealized gain from revaluation of outstanding Thai baht assets and liabilities of $0.9 million, and (3) higher unrealized gain from mark-to-market of forward contracts of $0.3 million, offset by (1) unrealized loss from revaluation of currencies other than Thai baht of $0.5 million, and (2) lower foreign exchange gain, totaling $0.1 million from our subsidiaries in the PRC and the U.K.

Income before income taxes .

2 unchanged sentences

Our provision for income tax reflects an effective tax rate of 4.9% and 4.7% for fiscal year 2024 and fiscal year 2023, respectively.

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

The increase was primarily due to a full valuation allowance of $3.8 million for deferred tax assets set up in fiscal year 2024.

We recorded net income of $296.2 million, or 10.3% of revenues, for fiscal year 2024, compared with net income of $247.9 million, or 9.4% of revenues, for fiscal year 2023.

Other comprehensive income (loss) .

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.

We recorded other comprehensive income of $5.0 million, or 0.2% of revenues, for fiscal year 2024, compared with other comprehensive income of $4.7 million, or 0.2% of revenues, for fiscal year 2023.

The increase in other comprehensive income was mainly due to higher unrealized gain from mark-to-market of forward contracts and interest rate swap agreement of $1.0 million, offset by (1) lower unrealized gain from mark-to-market of available-for-sale debt securities of $0.6 million, and (2) lower gain from retirement benefits plan of $0.1 million.

Comparison of Fiscal Year 2023 with Fiscal Year 2022

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.

4 unchanged sentences

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 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.

(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 expected credit losses 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 .

1 unchanged sentence

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.

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.

Income before income taxes .

2 unchanged sentences

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 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.

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 increase in 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.

Liquidity and Capital Resources

1 unchanged sentence

We primarily finance our operations through cash flow from operating activities.

As of June 30, 2023 and June 24, 2022, we had cash, cash equivalents, and short-term investments of $550.5 million and $478.2 million, respectively, and outstanding debt of $12.2 million and $27.4 million, respectively.

As of June 28, 2024 and June 30, 2023, we had cash, cash equivalents, and short-term investments of $858.6 million and $550.5 million, respectively, and no outstanding debt and outstanding debt of $12.2 million, respectively.

Our cash and cash equivalents, which primarily consist of cash on hand, demand deposits and liquid investments with original maturities of three months or less, are placed with banks and other financial institutions.

7 unchanged sentences

We determine realized gains or losses on sale of available-for-sale debt securities on a specific identification method and record such gains or losses as interest income in the consolidated statements of operations and comprehensive income.

As of June 30, 2023 and June 24, 2022, we had long-term borrowing under our credit facility agreement of $12.2 million and $27.4 million, respectively (See Note 13 of the Notes to Consolidated Financial Statements for further details).

We anticipate that our internally generated working capital, along with our cash and cash equivalents will be adequate to repay these obligations.

As of June 30, 2023, we had long-term borrowing under our credit facility agreement of $12.2 million.

As of June 28, 2024, we had no outstanding balance under our credit facility agreement (see Note 13 of the Notes to Consolidated Financial Statements for further details).

To better manage our cash on hand, we held short-term investments of $448.6 million as of June 28, 2024.

We believe that our current cash and cash equivalents, short-term investments, cash flow from operations, and funds available through our credit facility will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months following the filing of this Annual Report on Form 10-K.

next 12 months following the filing of this Annual Report on Form 10-K.

Our ability to sustain our working capital position is subject to a number of risks that we discuss in Item 1A of this Annual Report on Form 10-K.

10 unchanged sentences

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.

The increase in cash provided by operating activities for fiscal year 2024 as compared to fiscal year 2023 was primarily driven by efficient cash-favorable working capital changes and higher net income.

Investing Activities

1 unchanged sentence

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.

Cash used in investing activities was higher for fiscal year 2024 as compared to cash used in investing activities for fiscal year 2023 primarily due to an increase in investment purchases partially offset by lower capital expenditures.

Financing Activities

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.

Cash used in financing activities was lower for fiscal year 2024 as compared to the fiscal year 2023 primarily due to lower volume of share repurchases and a decrease in withholding tax related to net share settlement of restricted share units, and lower repayment of long-term borrowings due to one fewer installment from one fewer week in the first quarter of fiscal year 2024 compared to fiscal year 2023.

Material Cash Requirements for Contractual Obligations

1 unchanged sentence

These material cash requirements consisted of the following contractual and other obligations.

Term Loan and Interest Expenses

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

6 unchanged sentences

During fiscal year 2024, fiscal year 2023, and fiscal year 2022, 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.

We expect our capital expenditures for fiscal year 2025 to increase compared to fiscal year 2024 mainly due to investment in the new manufacturing building and building improvements at our Chonburi campus.

Recent Accounting Pronouncements

1 unchanged sentence

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