Fabrinet 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Statements of Fabrinet Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 1194 ) 51 Consolidated Balance Sheets as of June 2 7 , 202 5 and June 28 , 202 4 53 Consolidated Statements of Operations and Comprehensive Income for the Years Ended June 2 7 , 202 5 , June 28 , 202 4 and June 30 , 202 3 54 Consolidated Statements of Shareholders’ Equity for the Years Ended June 2 7 , 202 5 , June 28 , 202 4 and June 30 , 202 3 55 Consolidated Statements of Cash Flows for the Years Ended June 2 7 , 202 5 , June 28 , 202 4 and June 30 , 202 3 56 Notes to Consolidated Financial Statements 58 50 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Fabrinet Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Fabrinet and its subsidiaries (the “Company”) as of June 27, 2025 and June 28, 2024, and the related consolidated statements of operations and comprehensive income, consolidated statements of shareholders’ equity and consolidated statements of cash flows for each of the three years in the period ended June 27, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of June 27, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 27, 2025 and June 28, 2024, and the results of its operations and its cash flows for each of the three years in the period ended June 27, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 27, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 51 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue recognition – Identifying and evaluating terms and conditions in contracts for the timing of revenue recognition. As described in Note 2 to the consolidated financial statements, management applies five-step in their determination of revenue to be recognized and the control of the product is typically transferred to the customer depending on the terms of the contract. The management applies judgment in identifying and evaluating any terms and conditions when the Company has an enforceable right to payment. For the fiscal year ended June 27, 2025, the Company’s revenue was $3.4 billion. The principal considerations for our determination that performing procedures relating to revenue recognition, specifically the identification and evaluation of terms and conditions in contracts for the timing of revenue recognition, is a critical audit matter are that there was a significant amount of judgment exercised by management in identifying and evaluating terms and conditions in contracts that impact the timing of revenue recognition. This in turn led to a high degree of auditor judgment and an increased extent of audit effort in performing our audit procedures to evaluate whether terms and conditions in contracts and point of controls transferred were appropriately identified and evaluated by management. Addressing the matter involved performing procedures and evaluating audit evidence connected with forming our overall opinion on the consolidated financial statements. These procedures involved testing the effectiveness of internal controls relating to the revenue recognition process, including controls related to the identification and evaluation of terms and conditions in contracts and the determination of the appropriate amount and timing of revenue recognition based on the contractual terms. These procedures also included, among others: (i) assessed the terms in the customer contract and evaluated the appropriateness of management’s application of their accounting policies and determination of revenue recognition; (ii) tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements; and; (iii) selected samples of sales transaction from the period within a defined period before and after the Company’s fiscal year ended and obtained the invoices, purchase orders and proof of delivery, to evaluate whether revenue was recognized in the appropriate fiscal year. /s/ PricewaterhouseCoopers ABAS Ltd. Bangkok, Thailand August 19, 2025 We have served as the Company’s auditor since 1999. 52 Table of Contents FABRINET CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars, except share data and par value) June 27, 2025 June 28, 2024 Assets Current assets Cash and cash equivalents $ 306,425 $ 409,973 Short-term investments 627,819 448,630 Trade accounts receivable, net of allowance for expected credit losses of $ 1,344 and $ 1,629 , respectively 758,894 592,452 Inventories 581,015 463,206 Prepaid expenses 38,476 10,620 Other current assets 116,210 87,810 Total current assets 2,428,839 2,012,691 Non-current assets Property, plant and equipment, net 380,640 307,240 Intangibles, net 2,156 2,321 Operating right-of-use assets 5,768 5,336 Deferred tax assets 13,406 10,446 Other non-current assets 623 485 Total non-current assets 402,593 325,828 Total Assets $ 2,831,432 $ 2,338,519 Liabilities and Shareholders’ Equity Current liabilities Trade accounts payable 637,417 441,835 Fixed assets payable 40,781 14,380 Operating lease liabilities, current portion 1,792 1,355 Income tax payable 7,939 3,937 Accrued payroll, bonus and related expenses 24,566 22,116 Accrued expenses 30,630 19,916 Other payables 66,717 54,403 Total current liabilities 809,842 557,942 Non-current liabilities Deferred tax liability 1,595 4,895 Operating lease liabilities, non-current portion 3,679 3,635 Severance liabilities 31,225 24,093 Other non-current liabilities 3,279 2,209 Total non-current liabilities 39,778 34,832 Total Liabilities 849,620 592,774 Commitments and contingencies (Note 18) Shareholders’ equity Preferred shares ( 5,000,000 shares authorized, $ 0.01 par value; no shares issued and outstanding as of June 27, 2025 and June 28, 2024) — — Ordinary shares ( 500,000,000 shares authorized, $ 0.01 par value; 39,602,152 shares and 39,457,462 shares issued as of June 27, 2025 and June 28, 2024, respectively; and 35,728,074 shares and 36,145,242 shares outstanding as of June 27, 2025 and June 28, 2024, respectively) 396 395 Additional paid-in capital 237,881 222,044 Less: Treasury shares ( 3,874,078 shares and 3,312,220 shares as of June 27, 2025 and June 28, 2024, respectively) ( 360,056 ) ( 234,323 ) Accumulated other comprehensive income (loss) 10,294 ( 3,141 ) Retained earnings 2,093,297 1,760,770 Total Shareholders’ Equity 1,981,812 1,745,745 Total Liabilities and Shareholders’ Equity $ 2,831,432 $ 2,338,519 The accompanying notes are an integral part of these consolidated financial statements. 53 Table of Contents FABRINET CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Years Ended (in thousands of U.S. dollars, except per share data) June 27, 2025 June 28, 2024 June 30, 2023 Revenues $ 3,419,327 $ 2,882,967 $ 2,645,237 Cost of revenues ( 3,005,978 ) ( 2,526,849 ) ( 2,308,964 ) Gross profit 413,349 356,118 336,273 Selling, general and administrative expenses ( 87,466 ) ( 78,481 ) ( 77,673 ) Restructuring and other related costs ( 1,436 ) ( 32 ) ( 6,896 ) Operating income 324,447 277,605 251,704 Interest income 40,162 33,204 11,234 Interest expense — ( 124 ) ( 1,472 ) Foreign exchange gain (loss), net ( 9,251 ) 382 ( 1,211 ) Other income (expense), net ( 178 ) 287 ( 159 ) Income before income taxes 355,180 311,354 260,096 Income tax expense ( 22,653 ) ( 15,173 ) ( 12,183 ) Net income 332,527 296,181 247,913 Other comprehensive income (loss), net of tax Change in net unrealized gain (loss) on available-for-sale securities 9,893 2,100 2,739 Change in net unrealized gain (loss) on derivative instruments 2,314 2,561 1,541 Change in net retirement benefits plan – prior service cost — 330 473 Change in foreign currency translation adjustment 1,228 ( 17 ) ( 75 ) Total other comprehensive income (loss), net of tax 13,435 4,974 4,678 Net comprehensive income $ 345,962 $ 301,155 $ 252,591 Earnings per share Basic 9.23 8.17 6.79 Diluted 9.17 8.10 6.73 Weighted average number of ordinary shares outstanding (thousands of shares) Basic 36,017 36,246 36,515 Diluted 36,267 36,564 36,855 The accompanying notes are an integral part of these consolidated financial statements. 54 Table of Contents FABRINET CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in thousands of U.S. dollars, except share data) Ordinary Share Additional Paid-in Capital Treasury Shares Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Shares Amount Balances at June 24, 2022 39,048,700 390 196,667 ( 147,258 ) ( 12,793 ) 1,216,676 1,253,682 Net income — — — — — 247,913 247,913 Other comprehensive income (loss) — — — — 4,678 — 4,678 Share-based compensation — — 28,127 — — — 28,127 Issuance of ordinary shares 235,476 3 ( 3 ) — — — — Repurchase of 488,477 shares held as treasury shares — — — ( 47,575 ) — — ( 47,575 ) Tax withholdings related to net share settlement of restricted share units — — ( 18,167 ) — — — ( 18,167 ) Balances at June 30, 2023 39,284,176 393 206,624 ( 194,833 ) ( 8,115 ) 1,464,589 1,468,658 Net income — — — — — 296,181 296,181 Other comprehensive income (loss) — — — — 4,974 — 4,974 Share-based compensation — — 28,597 — — — 28,597 Issuance of ordinary shares 173,286 2 ( 2 ) — — — — Repurchase of 211,726 shares held as treasury shares — — — ( 39,490 ) — — ( 39,490 ) Tax withholdings related to net share settlement of restricted share units — — ( 13,175 ) — — — ( 13,175 ) Balances at June 28, 2024 39,457,462 395 222,044 ( 234,323 ) ( 3,141 ) 1,760,770 1,745,745 Net income — — — — — 332,527 332,527 Other comprehensive income (loss) — — — — 13,435 — 13,435 Share-based compensation — — 33,004 — — — 33,004 Customer warrant — — 4,109 — — — 4,109 Issuance of ordinary shares 144,690 1 ( 1 ) — — — — Repurchase of 561,858 shares held as treasury shares — — — ( 125,733 ) — — ( 125,733 ) Tax withholdings related to net share settlement of restricted share units — — ( 21,275 ) — — — ( 21,275 ) Balances at June 27, 2025 39,602,152 396 237,881 ( 360,056 ) 10,294 2,093,297 1,981,812 The accompanying notes are an integral part of these consolidated financial statements. 55 Table of Contents FABRINET CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended (in thousands of U. S. dollars) June 27, 2025 June 28, 2024 June 30, 2023 Cash flows from operating activities Net income $ 332,527 $ 296,181 $ 247,913 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 53,433 49,017 43,832 Non-cash restructuring charges and other related costs — — 2,201 (Gain) loss on disposal of property, plant and equipment and intangibles ( 70 ) 62 ( 1,506 ) Amortization of discount (premium) of short-term investments ( 4,563 ) ( 3,399 ) 280 (Reversal of) allowance for expected credit losses ( 285 ) 664 ( 307 ) Unrealized loss (gain) on exchange rate and fair value of foreign currency forward contracts 4,963 ( 849 ) 175 Amortization of fair value at hedge inception of interest rate swaps — ( 220 ) ( 587 ) Share-based compensation 33,004 28,374 28,127 Customer warrant 4,109 — — Deferred income tax expense (benefit) ( 5,726 ) 1,672 ( 3,484 ) Other non-cash expenses 131 310 724 Changes in operating assets and liabilities Trade accounts receivable ( 165,657 ) ( 61,279 ) ( 76,917 ) Inventories ( 117,809 ) 56,370 37,449 Other current assets and non-current assets ( 33,595 ) ( 46,715 ) ( 13,568 ) Trade accounts payable 194,236 60,040 ( 58,596 ) Income tax payable 4,029 ( 1,960 ) 2,977 Accrued expenses 13,036 1,398 785 Other payables 11,522 30,959 ( 4,174 ) Severance liabilities 3,799 2,771 3,753 Other current liabilities and non-current liabilities 1,281 ( 250 ) 4,233 Net cash provided by operating activities 328,365 413,146 213,310 Cash flows from investing activities Purchase of short-term investments ( 444,149 ) ( 435,905 ) ( 217,005 ) Proceeds from sales of short-term investments — 40,000 30,179 Proceeds from maturities of short-term investments 279,417 271,877 150,252 Purchase of property, plant and equipment ( 121,078 ) ( 47,528 ) ( 61,360 ) Purchase of intangibles ( 738 ) ( 889 ) ( 911 ) Proceeds from disposal of property, plant and equipment 252 2,694 128 Net cash used in investing activities ( 286,296 ) ( 169,751 ) ( 98,717 ) Cash flows from financing activities Repayment of long-term borrowings — ( 12,188 ) ( 15,233 ) Repayment of finance lease liability — — ( 9 ) Repurchase of ordinary shares ( 125,733 ) ( 39,490 ) ( 47,575 ) Withholding tax related to net share settlement of restricted share units ( 21,275 ) ( 13,175 ) ( 18,167 ) Net cash used in financing activities ( 147,008 ) ( 64,853 ) ( 80,984 ) Net increase (decrease) in cash and cash equivalents $ ( 104,939 ) $ 178,542 $ 33,609 Movement in cash and cash equivalents Cash and cash equivalents at the beginning of period $ 409,973 $ 231,368 $ 198,365 56 Table of Contents FABRINET CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Years Ended (in thousands of U. S. dollars) June 27, 2025 June 28, 2024 June 30, 2023 Increase (decrease) in cash and cash equivalents ( 104,939 ) 178,542 33,609 Effect of exchange rate on cash and cash equivalents 1,391 63 ( 606 ) Cash and cash equivalents at the end of period $ 306,425 $ 409,973 $ 231,368 Supplemental disclosures Cash paid for Interest $ — $ 312 $ 2,377 Taxes $ 24,302 $ 16,452 $ 14,158 Cash received for interest $ 33,718 $ 29,783 $ 11,048 Non-cash investing and financing activities Construction, software and equipment related payables $ 40,781 $ 14,380 $ 13,526 57 Table of contents FABRINET NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands of U.S. dollars unless otherwise noted) 1. Business and organization General Fabrinet (“Fabrinet” or the “Parent Company”) was incorporated on August 12, 1999, and commenced operations on January 1, 2000. The Parent Company is an exempted company incorporated in the Cayman Islands, British West Indies. 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 of complex products, such as optical communication components, modules and sub-systems, automotive components, industrial lasers, 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. The Company is capable of producing a wide variety of high complexity products in any mix and any volume. The principal subsidiaries of Fabrinet include Fabrinet Co., Ltd. (“Fabrinet Thailand”), Casix, Inc. (“Casix”), Fabrinet West, Inc. (“Fabrinet West”) and Fabrinet Israel Ltd. (“Fabrinet Israel”). 2. Summary of significant accounting policies Principles of consolidation The Company utilizes a 52-53 week fiscal year ending on the last Friday in June. Fiscal years 2025, 2024, and 2023 ended on June 27, 2025, June 28, 2024, and June 30, 2023, respectively, and consisted of 52 weeks, 52 weeks and 53 weeks, respectively. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include Fabrinet and its subsidiaries. All inter-company accounts and transactions have been eliminated. Use of estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amount of total revenues and expenses during the year. The Company bases estimates on historical experience and various assumptions about the future that are believed to be reasonable based on available information. 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, the fair value of warrant shares at grant date, allowance for expected credit losses, income taxes, and inventory obsolescence. 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 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. Foreign currency transactions and translation The consolidated financial statements are presented in United States dollars (“$” or “USD”). The functional currency of Fabrinet and most of its subsidiaries is the USD. With respect to subsidiaries that use USD as their functional currency, transactions denominated in a currency other than USD are translated into USD at the rates of exchange in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate prevailing at the consolidated balance sheet dates. Transaction gains and losses are included in foreign exchange gain (loss) in the accompanying consolidated statements of operations and comprehensive income. Fabrinet translates the assets and liabilities of its subsidiaries that do not use USD as their functional currency into USD using exchange rates in effect at the end of each period. Revenue and expenses for such subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in 58 Table of contents foreign currency translation adjustment included in accumulated other comprehensive income (loss) (“AOCI”) in the Company’s consolidated balance sheets. Cash and cash equivalents All highly liquid investments with original maturities of three months or less from the date of purchase are classified as cash equivalents. Cash and cash equivalents consist of cash deposited in checking accounts, time deposits with maturities of three months or less, money market accounts, and short-term investments with maturities of three months or less at the date of purchase. Short-term investments Management determines the appropriate classification of its investments at the time of purchase. The maturities of the Company’s short-term investments generally range from three months to three years. 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 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. The Company determines realized gains or losses on sale of available-for-sale debt securities on a specific identification method and records such gains or losses as interest income in the consolidated statements of operations and comprehensive income. Held-to-maturity debt securities require the use of the current expected credit losses (“CECL”) impairment model to assess the expected credit loss. According to the CECL model, the Company requires the immediate recognition of estimated expected credit losses over the life of the financial instrument through the allowance for credit losses account. The allowance for credit losses is a valuation account that is deducted from, or added to, the amortized cost basis of the financial asset to present the net amount expected to be collected on the financial asset. In determining expected credit losses, the Company considers relevant qualitative factors including, but not limited to, term and structure of the instrument, credit rating by rating agencies and historic credit losses adjusted for current conditions and reasonable and supportable forecasts. Available-for-sale debt securities are required to be individually evaluated for impairment. A security is considered impaired if the fair value of the security is less than its amortized cost basis. An impairment is considered when (i) the Company has the intent to sell the security, (ii) it is more likely than not that the Company will be required to sell the security before recovery of the entire amortized cost basis, or (iii) the Company does not expect to recover the entire amortized cost basis of the security. If an impairment is considered based on condition (i) or (ii), the entire difference between the amortized cost and the fair value of the debt security is recognized as interest income and other income (expense), net in the consolidated statements of operations and comprehensive income. If an impairment is considered based on condition (iii), the amount representing credit losses (defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis of the debt security) is recognized in interest and other income (expense), net in the consolidated statements of operations and comprehensive income, and any remaining unrealized losses are included in AOCI in the consolidated balance sheets. Trade accounts receivable Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. The Company estimates expected credit losses for the allowance for expected credit losses based upon its assessment of various factors, including historical experience, the age of the accounts receivable 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. The estimated credit loss allowance is recorded as selling, general and administrative expenses in the consolidated statements of operations and comprehensive income. Contract assets A contract asset is recognized when the Company has recognized revenues prior to generating an invoice for payment. 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 59 Table of contents 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. The estimated credit loss allowance is recorded as selling, general and administrative expenses in the Company's consolidated statements of operations and comprehensive income. Contract liabilities A contract liability is recognized when the Company has advance payment arrangements with customers. The contract liabilities balance is normally recognized as revenue within six months. Inventory Inventory is stated at the lower of cost or market value. 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. 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. Leases Operating leases The Company determines if an arrangement contains a lease at inception. The Company applies the guidance in ASC 842 to determine whether a contract is, or contains, a lease. A contract is or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. Operating leases are included in operating lease right of use (“ROU”) assets and operating lease liabilities within the Company’s consolidated balance sheets. The Company rents certain real estate under agreements that are classified as operating leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company's leases generally do not provide an implicit rate, nor is the implicit rate readily determinable. When the implicit rate is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payment. The operating lease ROU assets also include any lease payments made and exclude lease incentives and initial direct costs incurred. Variable lease payments are expensed as incurred and are not included within the ROU asset and lease liability calculation. Variable lease payments primarily include reimbursements of costs incurred by lessors for common area maintenance and utilities. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not account for lease components (e.g., fixed payments including rent) separately from the non-lease components (e.g., common-area maintenance costs). Finance leases Finance leases are accounted for in a manner similar to financed purchases. The right-of-use asset is amortized to amortization expense. Interest expense is recorded in connection with the lease liability. 60 Table of contents Property, plant and equipment Land is stated at historical cost. Other property, plant and equipment, except for construction in process and machinery under installation, are stated at historical cost less accumulated depreciation. Repair and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line method to write-off the cost of each asset to its residual value over its estimated useful life as follows: Land improvements 10 years Building and building improvements 5 - 30 years Leasehold improvements Shorter of useful life or lease term Manufacturing equipment 3 - 7 years Office equipment 3 - 5 years Motor vehicles 3 - 5 years Computer hardware 3 - 5 years Construction in process and machinery under installation is stated at historic cost and depreciation begins after it is constructed and fully installed and is ready for its intended use in the operations of the Company. Gains and losses on disposal are determined by comparing proceeds with carrying amounts and are included in other income in the consolidated statements of operations and comprehensive income. The Company reviews long-lived assets or asset groups for recoverability on a quarterly basis for any events or changes in circumstances that indicate that their carrying amount may not be recoverable. Recoverability of long-lived assets or asset groups is measured by comparing their carrying amount to the projected undiscounted cash flows that the long-lived assets or asset groups are expected to generate. If such assets are considered to be impaired, the impairment loss recognized, if any, is the amount by which the carrying amount of the long-lived assets exceeds its fair value. Intangibles Intangibles are stated at historical cost less amortization. Amortization of other intangibles is calculated using the straight-line method. Intangible assets are reviewed for impairment quarterly or more frequently whenever changes or circumstances indicate the carrying amount of related assets may not be recoverable. Treasury shares Treasury share purchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury shares. Gains and losses in excess of par value on the subsequent reissuance of shares are credited or charged to additional paid-in capital in the consolidated balance sheets using the average-cost method. Borrowing costs Borrowing costs are accounted for on an accrual basis and are charged to the consolidated statements of operations and comprehensive income in the year incurred, except for interest costs on general and specific borrowings attributable to finance certain qualifying assets. Such costs to finance qualifying assets are capitalized during the period of time that is required to complete and prepare the assets for their intended use, as part of the cost of the assets. All other borrowing costs are expensed as incurred. Where funds are not borrowed for a specific acquisition, construction or production of assets, the capitalization rate used to determine the amount of interest to be capitalized is the weighted average interest rate applicable to the Company’s outstanding borrowings during the year. Where funds are borrowed specifically for the acquisition, construction or production of assets, the amount of borrowing costs eligible for capitalization on the respective assets is determined as the actual borrowing costs are incurred on that borrowing during the respective periods. Fair value of financial instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy is established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs for the valuation of an asset or liability as of the measurement date. The three levels of inputs that may be used to measure fair value are defined as follows: 61 Table of contents Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs for similar assets and liabilities in active markets other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 inputs that are significant to the fair value measurement and unobservable (i.e. supported by little or no market activity), which require the reporting entity to develop its own valuation techniques and assumptions. The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The carrying amounts of certain financial instruments, which include cash and cash equivalents, trade accounts receivable, contract assets, trade accounts payable, and contract liabilities, approximate their fair values due to their short maturities. The carrying amounts of borrowings approximate their fair values as the applicable interest rate is based on market interest rates. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. Derivatives The derivative assets and liabilities are measured at fair value and recognized on the consolidated balance sheets by offsetting the fair value amounts under master netting arrangements. For presentation in consolidated balance sheets, the Company may choose to separate a derivative into its current and non-current portion as follows: • A derivative for which the fair value is a net liability is classified in total as current. • A derivative for which the fair value is a net asset and the current portion is an asset is classified in total as non-current. If the current portion is liability, it should be presented as current liability. For presentation in consolidated statements of cash flows are classified in the same line item as the underlying item. The Company applies hedge accounting to arrangements that qualify and are designated for cash flow or fair value hedge accounting treatment. Hedge accounting is discontinued prospectively if the hedging relationship ceases to be effective or the hedging or hedged items cease to exist as a result of maturity, sale, termination or cancellation. 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. The reclassified amounts are presented in the same income statement line item as the earnings effect of the hedged item. In accordance with the fair value measurement guidance, the Company’s accounting policy is to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. The Company executes derivative instruments with financial institutions that are credit-worthy, which the Company defines as institutions that hold an investment grade credit rating. Concentration of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, short-term investments, derivatives, accounts receivable and contract assets. Cash, cash equivalents and short-term investments are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore bear minimal credit risk. The Company seeks to mitigate its credit risks by spreading such risks across multiple counterparties and monitoring the risk profiles of these counterparties. The Company limits its short-term investments in marketable securities to securities with a maturity not in excess of three years and securities that are rated A1, P-1, F1, or better. The Company enters into derivative contracts with financial institutions with reputable credit and monitors the credit profiles of these counterparties. The Company performs ongoing credit evaluations for credit worthiness of its customers and usually does not require collateral from its customers. Management has implemented a program to closely monitor near term cash collection and credit exposures to mitigate any material losses. 62 Table of contents Revenue recognition The Company derives revenues primarily from the assembly of products under supply agreements with its customers and the fabrication of customized optics and glass. The Company recognizes revenue relating to contracts with customers that depicts the transfer of promised goods or services to customers in an amount reflecting the consideration to which the Company expects to be entitled in exchange for such goods or services. In order to meet this requirement, the Company applies the following five steps: (1) identify the contract with a customer, (2) identify the performance obligations under the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations under the contract, and (5) recognize revenue when a performance obligation is satisfied. Revenue is recognized net of any taxes collected from customers, which is subsequently remitted to governmental authorities. A performance obligation is a contractual promise to transfer a distinct good or service to the customer. In contracts with multiple performance obligations, the Company identifies each performance obligation and evaluates whether the performance obligation is distinct within the context of the contract at contract inception. The majority of the Company’s contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises under the contracts and, therefore, is not distinct. Sales of finished goods The Company manufactures products that are customized to customers’ specifications; however, control of the products is typically transferred to the customer at the point in time the product is either shipped or delivered, depending on the terms of the arrangement, as the criteria for over time recognition are not met. On evaluation of the contracts, the Company identified that there were no contractual rights to bill profit for work in progress in the event of a contract termination, which is expected to be infrequent. Further, in limited circumstances, contracts provide for substantive acceptance by the customer, which results in the deferral of revenue until formal notice of acceptance is received from the customer. Judgment may be required in determining if an acceptance clause provides for substantive acceptance. Certain customers may request the Company to store finished products at the Company’s warehouse where customers bear risks of loss themselves. In these instances, the Company receives a written request from the customer asking the Company to hold the inventory at the Company’s warehouse and refrain from using the ordered goods to fulfill other customer orders. In these situations, revenue is only recognized when the completed goods are ready for shipment and transferred to the Company’s warehouse. 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. 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. The excess or obsolete inventory is shipped to the customer and revenue is recognized upon shipment. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. In determining the net consideration to which the Company expects to be entitled, the Company evaluates whether the price is subject to refund or adjustment. The Company generally does not grant return privileges, except for in the case of defective products during the warranty period. The Company generally provides a warranty of between one to five years on any given product. These standard warranties are assurance-type warranties, and the Company does not offer any services in addition to the assurance that the product will continue to work as specified. The Company recognized revenue net of rebates and other similar allowances. Revenues are recognized only if these estimates can be reasonably and reliably determined. The Company estimates expected rebates and other similar allowances based on historical results taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. The Company considers such estimated rebates and other similar allowances as variable consideration when allocating the transaction price to the extent it is probable that there will not be a significant reversal of cumulative revenue recognized. The estimate is primarily based on the most likely level of consideration to be paid to the customer under the specific terms of each arrangement. Services The Company provides services for customers that are related to the Company’s manufacturing activities. In many cases, although the nature of work performed is that of a service, revenue is only recognized upon shipment of the product because the customer has specific requirements as to how many items can be shipped at any given point in time, i.e. at point-in-time. The related costs are expensed as incurred. 63 Table of contents Service revenues of $ 174.8 million, $ 122.6 million and $ 116.2 million were recognized in the consolidated statements of operations and comprehensive income for the years ended June 27, 2025, June 28, 2024 and June 30, 2023, respectively. Contract Costs The incremental costs of obtaining a contract with a customer are recognized as an asset (not expensed as incurred) if such costs are expected to be recovered. Incremental costs of obtaining a contract are costs that the Company would not have incurred if the contract had not been obtained (e.g., sales commissions or similar incentive payments linked directly to new or modified customer contracts). 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 27, 2025, June 28, 2024 and June 30, 2023, the Company did not have any incremental costs of obtaining a contract. Shipping and Handling Shipping costs billed to customers are recorded as revenue. Shipping and handling expense related to costs incurred to deliver product are recognized within cost of goods sold. The Company accounts for shipping and handling activities that occur after control has transferred as a fulfillment cost, as opposed to a separate performance obligation, and the costs of shipping and handling are recognized concurrently with the related revenue. Warranty provision Provisions for estimated expenses relating to product warranties are made at the time the products are sold using historical experience. Generally, this warranty is limited to workmanship and the Company’s liability is capped at the price of the product. The provisions will be adjusted when experience indicates an expected settlement will differ from initial estimates. Warranty cost allowances were recognized in the consolidated statements of operations and comprehensive income for the years ended June 27, 2025, June 28, 2024 and June 30, 2023 with de minimis amount. Share-based compensation Share-based compensation is recognized in the consolidated financial statements based on grant-date fair value. The value of the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service period. For restricted share units and performance share units, the fair values are based on the market value of our ordinary shares on the date of grant. Customer Warrant Warrants issued to customers are accounted for as equity instruments and measured in accordance with ASC 718, Compensation – Stock Compensation. For awards granted to a customer which are not in exchange for distinct goods or services, the fair value of the awards earned based on service or performance conditions is recorded as a reduction of the transaction price, in accordance with ASC 606, Revenue from Contracts with Customers. To determine the fair value of warrants in accordance with ASC 718, the Company uses the Black-Scholes option pricing model, based in part on assumptions for which management is required to use judgment. Based on the fair value of the awards, the Company determines the amount of warrant expense based on the customer’s achievement of vesting conditions, which is recorded as a reduction of revenues on the consolidated statement of operations. The dilutive impact of customer warrants is determined using the treasury stock method. Employee contribution plan The Company operates a defined contribution plan, known as a provident fund, in its subsidiaries in Thailand and the United Kingdom. The assets of these plans are in separate trustee-administered funds. The provident fund is funded by matching payments from employees and by the subsidiaries on a monthly basis. Current contributions to the provident fund are accrued and paid to the fund manager on a monthly basis. The Company sponsors the Fabrinet U.S. 401(k) Retirement Plan, a Defined Contribution Plan under ERISA, at its subsidiaries in the United States, which provides retirement benefits for its eligible employees through tax deferred salary deductions. Severance liabilities Under labor protection laws applicable in Thailand and the Company’s subsidiary in Thailand’s employment policy, all employees of such subsidiary with more than 120 days of service are entitled to severance pay on forced termination or 64 Table of contents retrenchment or in the event that the employee reaches the retirement age of 55. The entitlement to severance pay is determined according to an employee’s individual employment tenure with the Company and is subject to a maximum benefit of 400 days of salary unless otherwise agreed upon in an employee’s employment contract. For employees of other subsidiaries who have a specific termination date, the entitlement to severance pay is determined according to their employment tenure, until their designated termination date. The Company accounts for these severance liabilities based on an actuarial valuation using the Projected Unit Credit Method, which apply the long-term Thai government bond yield as a discount rate. There are no separate plan assets held in respect to these liabilities. The Company’s subsidiary in the U.K. operates a defined benefit pension plan that defines the pension benefit an employee will receive on retirement, usually dependent upon several factors including but not limited to age, length of service and remuneration. The defined benefit obligation is calculated using the projected unit credit method. 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). The plan assets are held separately from those of the Company in independently administered funds and are measured at fair value. Severance liabilities are recognized in the Company’s consolidated balance sheet under non-current liabilities. The related expenses, if incurred during the period, are recognized in the Company’s consolidated statements of operations and comprehensive income as selling, general and administrative expenses. Prior service cost is initially recognized to other comprehensive income (loss) at the date of plan amendment. Such prior service cost is amortized as expenses as a component of net periodic pension cost using the weighted average remaining years of service to full eligibility date for active employees. Annual leave Employee entitlements to annual leave are recognized when earned by the employee. On termination of employment, accrued employee entitlement to annual leave is paid in cash. Income taxes The Company uses the asset and liability method of accounting for income taxes, whereby deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance if, based on the weight of the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Fabrinet’s subsidiaries are subject to income tax audits by the respective tax authorities in all of the jurisdictions in which they operate. The determination of tax liabilities in each of these jurisdictions requires the interpretation and application of complex and sometimes uncertain tax laws and regulations. The Company recognizes liabilities based on its estimate of whether, and the extent to which, additional tax liabilities are more-likely-than-not. If the Company ultimately determines that the payment of such a liability is not probable, then it reverses the liability and recognizes a tax benefit during the period in which the determination is made that the liability is no longer probable. The recognition and measurement of current taxes payable or refundable and deferred tax assets and liabilities requires that the Company makes certain estimates and judgments. Changes to these estimates or a change in judgment may have a material impact on the Company’s tax provision in a future period. The authoritative guidance provides for recognition of deferred tax assets if the realization of such deferred tax assets is more likely than not to occur based on an evaluation of both positive and negative evidence and the relative weight of the evidence. A company shall reduce its deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is “more likely than not” (i.e., a likelihood of greater than 50 percent) that some portion or all of the deferred tax assets will not be realized. The valuation allowance shall be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. The valuation allowance shall be monitored and considered from all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is not needed. The accounting standard clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. 65 Table of contents The Company recognizes a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” to be sustained upon examination by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. The accounting interpretation also provides guidance on measurement methodology, derecognition thresholds, financial statement classification and disclosures, recognition of interest and penalties, and accounting for the cumulative-effect adjustment at the date of adoption. Adoption of New Accounting Standards In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, “Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses. The Company adopted this standard with no impact on the Company's consolidated financial statements. New Accounting Standards—not yet adopted by the Company In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740), Improvements to Income Tax Disclosures,” which requires more detailed income tax disclosures. This ASU requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. This ASU is effective for all entities for fiscal years beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will be effective for the Company in the first quarter of fiscal year 2026. The Company is currently assessing the impact to its disclosures. In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses,” which requires additional notes to financial statements. This ASU requires entities to include certain current disclosures in the same tabular format disclosure as the other disaggregation requirements in the amendments in this ASU. This ASU is effective for all entities for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. This ASU is effective for the Company's annual periods beginning June 26, 2027, and interim periods beginning July 1, 2028, and will be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures. 66 Table of contents 3. Revenues from contracts with customers Contract Assets and Liabilities A contract asset is recognized when the Company has recognized revenues, but has not yet issued an invoice to its customer for payment. 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 27, 2025 and June 28, 2024. As of June 27, 2025 and June 28, 2024, the Company's contract assets were 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 liabilities during the years ended June 27, 2025, June 28, 2024, and June 30, 2023: (in thousands) Contract Liabilities Balance as of June 24, 2022 $ 1,982 Advance payment received during the year 14,124 Revenue recognized ( 13,070 ) Balance as of June 30, 2023 3,036 Advance payment received during the year 11,069 Revenue recognized ( 6,259 ) Balance as of June 28, 2024 7,846 Advance payment received during the year 23,640 Revenue recognized ( 17,019 ) Balance as of June 27, 2025 $ 14,467 Customer Warrant For the year ended June 27, 2025, the Company recognized $ 4.1 million as a reduction to revenue on the consolidated statements of operations. Revenue by Geographic Area and End Market Total revenues are attributed to a particular geographic area based on the bill-to-location of the Company’s customers. The Company operates primarily in three geographic regions: North America; Asia-Pacific and others; and Europe. The following table presents total revenues by geographic regions: (in thousands, except percentages) Year ended June 27, 2025 As a % of Total Revenues Year ended June 28, 2024 As a % of Total Revenues Year ended June 30, 2023 As a % of Total Revenues North America $ 1,480,778 43.4 % $ 1,053,141 36.5 % $ 1,269,965 48.0 % Asia-Pacific 1,656,611 48.4 1,646,055 57.1 1,143,510 43.2 Europe 281,938 8.2 183,771 6.4 231,762 8.8 $ 3,419,327 100.0 % $ 2,882,967 100.0 % $ 2,645,237 100.0 % 67 Table of contents Years Ended (in thousands, except percentages) June 27, 2025 June 28, 2024 June 30, 2023 North America U.S. 1,474,773 1,041,046 1,247,422 Others (1) 6,005 12,095 22,543 Total revenue in North America 1,480,778 1,053,141 1,269,965 Asia-Pacific and others Israel 993,001 1,049,730 341,025 India 323,600 269,304 325,478 Hong Kong 100,859 60,489 132,136 Thailand 57,367 47,339 58,850 China 56,365 65,497 73,094 Singapore 52,538 8,797 6,792 Japan 37,541 25,094 41,105 Malaysia 32,399 117,929 162,599 Others 2,941 1,876 2,431 Total revenue in Asia-Pacific and others 1,656,611 1,646,055 1,143,510 Europe U.K. 156,363 87,051 125,082 Germany 43,889 42,817 54,732 Others 81,686 53,903 51,948 Total revenue in Europe $ 281,938 $ 183,771 $ 231,762 Total revenue $ 3,419,327 $ 2,882,967 $ 2,645,237 (1) Others includes revenues from external customers based in our country of domicile, the Cayman Islands, which for each year presented is $ 0 . The following table presents revenues by end market and product category. (in thousands, except percentages) Year ended June 27, 2025 As a % of Total Revenues Year ended June 28, 2024 As a % of Total Revenues Year ended June 30, 2023 As a % of Total Revenues Optical communications Datacom $ 1,155,944 $ 1,150,307 $ 520,796 Telecom 1,463,411 1,138,708 1,487,551 Total revenue - Optical communications $ 2,619,355 76.6 % $ 2,289,015 79.4 % $ 2,008,347 75.9 % Non-optical communications Automotive $ 464,369 $ 327,188 $ 368,581 Industrial laser 153,068 122,722 125,415 Others 182,535 144,042 142,894 Total revenue - Non-optical communications $ 799,972 23.4 % $ 593,952 20.6 % $ 636,890 24.1 % Total revenue $ 3,419,327 100.0 % $ 2,882,967 100.0 % $ 2,645,237 100.0 % 68 Table of contents 4 . Income taxes Fabrinet ’s effective tax rate is a function of the mix of tax rates in the various jurisdictions in which we conduct business. Fabrinet is domiciled in the Cayman Islands. Under the current laws of the Cayman Islands, Fabrinet is not subject to tax in the Cayman Islands on income or capital gains until March 6, 2039. The majority of the Company’s operations and production take place in Thailand. The Company was not subject to tax in Thailand from July 2012 through June 2020 on income generated from the manufacture of products at its Pinehurst campus Building 6, and is not subject to tax in Thailand from July 2018 through June 2026 on income generated from the manufacture of products at its Chonburi campus. Between June 2020 and June 2025, 50 % of the Company's income generated from products manufactured at its Pinehurst campus Building 6 was exempted from tax in Thailand. 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 %. The corporate income tax rates for our subsidiaries in the PRC, the U.S., the U.K. and Israel are 25 %, 21 %, 25 % and 23 %, respectively. 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. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment. The Company’s income tax expense consisted of the following: Years Ended (in thousands) June 27, 2025 June 28, 2024 June 30, 2023 Current $ 27,812 $ 11,993 $ 15,044 Deferred ( 5,159 ) 3,180 ( 2,861 ) Total income tax expense $ 22,653 $ 15,173 $ 12,183 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: Years Ended (in thousands) June 27, 2025 June 28, 2024 June 30, 2023 Income before income taxes (1) $ 355,180 $ 311,354 $ 260,096 Tax expense calculated at a statutory corporate income tax rate of 20% 71,036 62,271 52,019 Effect of income taxes from locations with tax rates different from Thailand ( 1,197 ) ( 945 ) 659 Income not subject to tax (2) ( 62,032 ) ( 62,940 ) ( 43,685 ) Income tax on unremitted earnings 1,521 1,488 2,452 Non-deductible expenses 9,045 10,347 39 Foreign operations 2,426 ( 600 ) 1,792 Tax rebate from research and development application ( 211 ) 17 ( 124 ) Provision for uncertain income tax position 678 1,131 ( 7 ) Utilization of loss and tax credits carryforward — — ( 80 ) Changes in valuation allowance (3) — 3,759 ( 1,608 ) Others 1,387 645 726 Corporate income tax expense $ 22,653 $ 15,173 $ 12,183 (1) Income before income taxes from domestic operations in the Cayman Islands amounted to $ 263.0 million, $ 306.0 million and $ 196.5 million for the years ended June 27, 2025, June 28, 2024 and June 30, 2023, respectively. 69 Table of contents (2) Income not subject to tax relates to income earned in the Cayman and Mauritius Islands and income subject to an investment promotion privilege in Thailand. Income not subject to tax per ordinary share on a diluted basis was $ 1.71 , $ 1.72 , and $ 1.19 for the years ended June 27, 2025, June 28, 2024, and June 30, 2023, respectively. (3) Changes in valuation allowances were due to adjustments based on management's assessment on the realizability of the related deferred tax assets. The Company’s deferred tax assets and deferred tax liabilities, net of valuation allowance, at each balance sheet date are as follows: As of (in thousands) June 27, 2025 June 28, 2024 Deferred tax assets: Depreciation $ 2,368 $ 1,890 Severance liability 5,981 4,496 Reserves and allowance 5,554 3,735 Net operating loss carryforwards 2,532 3,146 Others 452 792 Total 16,887 14,059 Less: Valuation allowance ( 3,481 ) ( 3,613 ) Net deferred tax assets $ 13,406 $ 10,446 Deferred tax liabilities: Temporary differences from intangibles and changes in the fair value of assets acquired $ ( 1,543 ) $ ( 1,626 ) Deferred tax from unremitted earnings ( 2,141 ) ( 5,303 ) Others 2,089 2,034 Total ( 1,595 ) ( 4,895 ) Net $ 11,811 $ 5,551 The changes in the valuation allowances of deferred tax assets were as follows: (in thousands) Valuation allowances of deferred tax assets Balance as of June 24, 2022 $ 4,934 Additional 498 Reduction ( 1,608 ) Balance as of June 30, 2023 3,824 Additional 3,613 Reduction ( 3,824 ) Balance as of June 28, 2024 3,613 Additional 823 Reduction ( 955 ) Balance as of June 27, 2025 $ 3,481 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. 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 $ 1.6 million for the deferred tax assets was set up as of the end of fiscal year 2020. 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. Management determined that it was more likely than not that future taxable income would be sufficient to 70 Table of contents 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. In fiscal year 2024, due to the planned closure of this entity, management believed that such subsidiary would not generate sufficient taxable income to utilize the remaining deferred tax assets. Thus, a full valuation allowance of $ 1.0 million was recorded. In fiscal year 2025, the remaining deferred tax assets and valuation allowance were written off after the application to dissolve the entity was filed in the U.K. During fiscal year 2024, our subsidiary in Israel continued to generate 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. Full valuation allowance continued to be recorded in fiscal year 2025. 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. Unremitted earnings in Thailand totaled $ 167.9 million and $ 144.4 million as of June 27, 2025 and June 28, 2024, respectively. Unrecognized deferred tax liabilities for such unremitted earnings were $ 16.9 million and $ 11.6 million as of June 27, 2025 and June 28, 2024, respectively. Deferred tax liabilities of $ 1.5 million have been established for withholding tax on the unremitted earnings in China for the years ended June 27, 2025 and June 28, 2024, which are included in non-current deferred tax liability in the consolidated balance sheets. Uncertain income tax positions Interest and penalties related to uncertain income tax positions are recognized in income tax expense. The Company had approximately $ 0.1 million of accrued interest and penalties related to uncertain income tax positions on the consolidated balance sheets as of June 27, 2025. The Company recorded interest and penalties of $ 0.2 million and $ 0.1 million for the years ended June 28, 2024 and June 30, 2023, respectively, in the consolidated statements of operations and comprehensive income. The amount of interest and penalties reversed in fiscal 2025 provision for income taxes is de minimis . With regard to the Thailand jurisdiction, tax years 2019 through 2023 remain open to examination by the local authorities. The changes to the Company’s uncertain income tax positions for the years ended June 27, 2025, June 28, 2024 and June 30, 2023, excluding interest and penalties, were as follows: Years Ended (in thousands) June 27, 2025 June 28, 2024 June 30, 2023 Beginning balance $ 1,249 $ 1,288 $ 1,392 Additions during the year 620 1,091 15 Release of tax positions of prior years ( 23 ) ( 1,130 ) ( 119 ) Ending balance $ 1,846 $ 1,249 $ 1,288 71 Table of contents 5. Earnings per ordinary share Basic earnings per ordinary share is computed by dividing reported net income by the weighted average number of ordinary shares outstanding during each period. Diluted earnings per ordinary share is computed by calculating the effect of potential dilutive ordinary shares outstanding during the year using the treasury stock method. Dilutive ordinary equivalent shares consist of share options, restricted share units and performance share units. Earnings per ordinary share was calculated as follows: Years Ended (in thousands, except per share data) June 27, 2025 June 28, 2024 June 30, 2023 Net income attributable to shareholders $ 332,527 $ 296,181 $ 247,913 Weighted-average number of ordinary shares outstanding 36,017 36,246 36,515 Incremental shares arising from the assumed exercise of share options and vesting of restricted share units and performance share units 241 318 340 Incremental shares arising from the assumed vesting of customer warrant 9 — — Weighted-average number of ordinary shares for diluted earnings per ordinary share 36,267 36,564 36,855 Basic earnings per ordinary share $ 9.23 $ 8.17 $ 6.79 Diluted earnings per ordinary share $ 9.17 $ 8.10 $ 6.73 6. Cash, cash equivalents and short-term investments The Company’s cash, cash equivalents, and short-term investments by category is as follows: Fair Value (in thousands) Carrying Cost Unrealized Gain/ (Loss) Cash and Cash Equivalents Short-term Investments Other Investments As of June 27, 2025 Cash $ 295,242 $ — $ 295,242 $ — $ — Cash equivalents 11,183 — 11,183 — — Certificates of deposit and time deposits 144,730 1,022 — 145,752 — Corporate debt securities 183,076 6,897 — 189,973 — U.S. agency and U.S. Treasury securities 291,295 799 — 292,094 — Total $ 925,526 $ 8,718 $ 306,425 $ 627,819 $ — As of June 28, 2024 Cash $ 409,938 $ — $ 409,938 $ — $ — Cash equivalents 35 — 35 — — Certificate of deposit and time deposits 134,288 ( 5 ) — 134,283 — Corporate debt securities 137,695 ( 932 ) — 136,763 — U.S. agency and U.S. Treasury securities 177,824 ( 240 ) — 177,584 — Total $ 859,780 $ ( 1,177 ) $ 409,973 $ 448,630 $ — The cash equivalents include short-term bank deposits, investments in money market funds, and marketable securities with maturities of three months or less at the date of purchase. The effective interest rate on short term bank deposits was 4.2 % and 4.4 % per annum for the years ended June 27, 2025 and June 28, 2024, respectively. As of June 27, 2025, the Company had investments in certificates of deposit of $ 125.7 million and term deposit of $ 20.0 million which were classified as available-for-sale debt securities. As of June 28, 2024, the Company had investments in certificates of deposit of $ 83.8 million and term deposit of $ 50.5 million. As of June 27, 2025 and June 28, 2024, the Company did not have any held-to-maturity debt securities. As of June 27, 2025 and June 28, 2024, 81 % and 74 %, respectively, of our cash and cash equivalents were held by the Parent Company. 72 Table of contents The following table summarizes the cost and estimated fair value of debt securities classified as available-for-sale securities based on stated effective maturities as of June 27, 2025 and June 28, 2024: June 27, 2025 June 28, 2024 (in thousands) Carrying Cost Fair Value Carrying Cost Fair Value Due within one year $ 128,958 $ 129,977 $ 110,671 $ 110,669 Due between one to five years 490,143 497,842 339,136 337,961 Total $ 619,101 $ 627,819 $ 449,807 $ 448,630 As of June 27, 2025 and June 28, 2024, 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. The policy requires investments generally to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. The Company assessed impairment at the individual security level according to the relevant accounting standard by comparing its fair value/market value with its amortized cost. The Company considered factors such as the failure of the issuer of the security to make scheduled interest and principal payments and any changes to the credit rating of the security by a rating agency. 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 27, 2025 and June 28, 2024. 7. Fair value of financial instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy is established, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs for the valuation of an asset or liability as of the measurement date. The three levels of inputs that may be used to measure fair value are defined as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for assets or liabilities, either directly or indirectly. If the assets or liabilities have a specified (contractual) term, Level 2 inputs must be observable for substantially the full term of assets or liabilities. Level 3 inputs are unobservable inputs for assets or liabilities, which require the reporting entity to develop its own valuation techniques and assumptions. The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. 73 Table of contents The following table provides details of the financial instruments measured at fair value on a recurring basis, including: Fair Value Measurements at Reporting Date Using (in thousands) Level 1 Level 2 Level 3 Total As of June 27, 2025 Assets Cash equivalents $ — $ 11,183 $ — $ 11,183 Certificates of deposit and time deposits — 145,752 — 145,752 Corporate debt securities — 189,973 — 189,973 U.S. agency and U.S. Treasury securities — 292,094 — 292,094 Derivative assets - current portion — 2,961 (1) — 2,961 Total $ — $ 641,963 $ — $ 641,963 Liabilities Derivative liabilities - current portion $ — $ ( 105 ) (2) $ — $ ( 105 ) Total $ — $ ( 105 ) $ — $ ( 105 ) Fair Value Measurements at Reporting Date Using (in thousands) Level 1 Level 2 Level 3 Total As of June 28, 2024 Assets Cash equivalents $ — $ 35 $ — $ 35 Certificates of deposit and time deposits — 134,283 — 134,283 Corporate debt securities — 136,763 — 136,763 U.S. agency and U.S. Treasury securities — 177,584 — 177,584 Derivative assets - current portion — 15 (3) — 15 Total $ — $ 448,680 $ — $ 448,680 Liabilities Derivative liabilities - current portion $ — $ ( 2,244 ) (4) $ — $ ( 2,244 ) Total $ — $ ( 2,244 ) $ — $ ( 2,244 ) (1) Foreign currency forward contracts with an aggregate notional amount of $ 130.0 million and 0.5 million Canadian dollars. (2) Foreign currency forward contracts with an aggregate notional amount of $ 35.0 million. (3) Foreign currency forward contracts with an aggregate notional amount of $ 8.0 million. (4) Foreign currency forward contracts with an aggregate notional amount of $ 127.0 million and 0.4 million Canadian dollars. Derivative Financial Instruments The Company utilizes derivative financial instruments to hedge (i) foreign exchange risk associated with certain foreign currency denominated assets and liabilities and other foreign currency transactions, and (ii) interest rate risk associated with its long-term debt. The Company minimizes the credit risk associated with its derivative instruments by limiting the exposure to any single counterparty and by entering into derivative instruments only with counterparties that meet the Company’s minimum credit quality standard. Foreign Currency Forward and Option Contracts As a result of foreign currency rate fluctuations, the U.S. 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 enters into foreign currency forward and option contracts to hedge 74 Table of contents fluctuations in the U.S. dollar value of forecasted transactions denominated in Thai baht and Canadian dollars with counterparties that meet the Company’s minimum credit quality standard. The Company may enter into foreign currency forward contracts with maturities of up to 12 months to hedge fluctuations in the U.S. dollar value of forecasted transactions denominated in Thai baht, including inventory purchases, payroll and other operating expenses. The Company considers these forward contracts as dual-purpose hedges, that hedge both the foreign exchange fluctuation (i) from inception through the forecasted expenditure, and (ii) any subsequent revaluation of the account payable or accrual. The Company may designate the forward contracts that hedge the foreign exchange fluctuation from inception through the forecasted expenditure as cash flow hedges. The gain or loss on a derivative instrument designated and qualified as a cash flow hedging instrument is recorded as a component of other comprehensive income and 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. Once the forecasted transactions are recorded, the Company will discontinue the hedging relationship by de-designating the derivative instrument and recording subsequent changes in fair value through contract maturity to foreign exchange gain (loss), net in the consolidated statements of operations and comprehensive income as a natural hedge against the Thai baht denominated assets and liabilities. The Company may also enter into non-designated foreign currency forward and option contracts to provide an offset to the re-measurement of foreign currency denominated assets and liabilities and to hedge certain forecasted exposures. Changes in the fair value of these non-designated derivatives are recorded through foreign exchange gain (loss), net in the consolidated statements of operations and comprehensive income. As of June 27, 2025, the Company had 165 outstanding U.S. dollar foreign currency forward contracts against Thai baht with an aggregate notional amount of $ 165.0 million and with maturity dates ranging from July 2025 through December 2025, and one foreign currency contract with a notional amount of 0.5 million Canadian dollars and with a maturity date in September 2025. As of June 28, 2024, the Company had 135 outstanding U.S. dollar foreign currency forward contracts against Thai baht with an aggregate notional amount of $ 135.0 million and with maturity dates ranging from July 2024 through January 2025, and one foreign currency contract with a notional amount of 0.4 million Canadian dollars and with a maturity date in September 2024. As of June 27, 2025, 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 27, 2025, the amount in AOCI that is expected to be reclassified into earnings within 12 months as gain was $ 1.5 million. During the year ended June 27, 2025 and June 28, 2024, the Company included an unrealized gain of $ 1.9 million and $ 0.7 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. 75 Table of contents 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: Year Ended (in thousands) Financial statements line item June 27, 2025 June 28, 2024 Derivatives gain (loss) recognized in other comprehensive income (loss): Foreign currency forward contracts Other comprehensive income (loss) $ 5,075 $ 3,007 Interest rate swaps Other comprehensive income (loss) — ( 215 ) Total derivatives loss (gain) recognized in other comprehensive income $ 5,075 $ 2,792 Derivatives loss (gain) reclassified from accumulated other comprehensive income into earnings: Foreign currency forward contracts Cost of revenues $ ( 1,588 ) $ 8,563 Foreign currency forward contracts Selling, general and administrative expenses ( 122 ) 357 Foreign currency forward contracts Foreign exchange gain (loss), net ( 654 ) ( 9,103 ) Interest rate swaps Interest expense — ( 220 ) Total derivatives (gain) loss reclassified from accumulated other comprehensive income into earnings $ ( 2,364 ) $ ( 403 ) Change in net unrealized gain (loss) on derivative instruments $ 2,711 $ 2,389 Fair value of derivatives The following table provides the fair values of the Company’s derivative financial instruments for the periods presented: June 27, 2025 June 28, 2024 (in thousands) Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities Derivatives not designated as hedging instruments Foreign currency forward and option contracts $ 1,303 $ ( 12 ) $ — $ ( 1,088 ) Derivatives designated as hedging instruments Foreign currency forward contracts 1,658 ( 93 ) 15 ( 1,156 ) Derivatives, gross balances 2,961 ( 105 ) 15 ( 2,244 ) The Company presents its derivatives at gross fair values in the consolidated balance sheets. The Company recorded the fair value of derivative financial instruments in the consolidated balance sheets as follows: Derivative Financial Instruments Balance Sheet line item Fair Value of Derivative Assets Other non-current assets Fair Value of Derivative Liabilities Accrued expenses 8. Trade accounts receivable, net (in thousands) As of June 27, 2025 As of June 28, 2024 Trade accounts receivable $ 760,238 $ 594,081 Less: Allowance for expected credit losses ( 1,344 ) ( 1,629 ) Trade accounts receivable, net $ 758,894 $ 592,452 76 Table of contents The following tables summarize the movement in the Company’s expected credit losses during the years ended June 27, 2025, June 28, 2024, and June 30, 2023: (in thousands) Expected credit Losses Balance as of June 24, 2022 $ 1,271 Provision during the year 1,410 Reversal during the year ( 1,716 ) Balance as of June 30, 2023 965 Provision during the year 2,164 Reversal during the year ( 1,500 ) Balance as of June 28, 2024 1,629 Provision during the year 540 Reversal during the year ( 825 ) Balance as of June 27, 2025 $ 1,344 9. Inventories (in thousands) As of June 27, 2025 As of June 28, 2024 Raw materials $ 145,128 $ 138,488 Work in progress 377,736 266,107 Finished goods 33,016 39,701 Goods in transit 25,135 18,910 Inventories $ 581,015 $ 463,206 10. Leases The Company leases facilities under non-cancelable operating lease agreements. The Company leases a portion of its capital equipment and vehicles, certain land and buildings for its facilities in Thailand, the Cayman Islands, the PRC, the U.S., Israel and Singapore under operating lease arrangements that expire at various dates through 2034. Certain of these lease arrangements provide the Company the ability to extend the lease term following the expiration of the current term. 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. Operating leases As of June 27, 2025, the maturities of the Company’s operating lease liabilities were as follows: (in thousands) 2026 $ 2,082 2027 1,323 2028 838 2029 796 2030 440 Thereafter 979 Total undiscounted lease payments 6,458 Less: imputed interest ( 987 ) Total present value of lease liabilities $ 5,471 (1) (1) Includes current portion of operating lease liabilities of $ 1.8 million. Rental expense related to the Company’s operating leases is recognized on a straight-line basis over the lease term. 77 Table of contents Rental expense for long-term leases for the years ended June 27, 2025, June 28, 2024 and June 30, 2023 was $ 1.9 million, $ 2.4 million and $ 2.4 million, respectively. Rental expense for short-term leases for the years ended June 27, 2025, June 28, 2024 and June 30, 2023 was $ 0.3 million, $ 0.9 million and $ 0.8 million, respectively. The following summarizes additional information related to the Company’s operating leases: As of June 27, 2025 As of June 28, 2024 Weighted-average remaining lease term (in years) 5.5 5.6 Weighted-average discount rate 6.6 % 5.6 % The following information represents supplemental disclosure for the statement of cash flows related to operating leases: (in thousands) Year Ended June 27, 2025 Year Ended June 28, 2024 Year Ended June 30, 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,979 $ 3,027 $ 2,477 Financing cash flows from finance leases $ — $ — $ 9 ROU assets obtained in exchange for lease liabilities $ 2,015 $ 5,797 $ 312 11. Property, plant and equipment, net The components of property, plant and equipment, net were as follows: (in thousands) Land and Land Improvements Building and Building Improvements Manufacturing Equipment Office Equipment Motor Vehicles Computers Construction and Machinery Under Installation Total As of June 27, 2025 Cost $ 61,534 $ 222,640 $ 374,322 $ 6,395 $ 1,296 $ 30,736 $ 51,048 $ 747,971 Less: Accumulated depreciation ( 635 ) ( 92,478 ) ( 248,833 ) ( 5,502 ) ( 904 ) ( 18,690 ) — ( 367,042 ) Less: Impairment reserve — — ( 289 ) — — — — ( 289 ) Net book value $ 60,899 $ 130,162 $ 125,200 $ 893 $ 392 $ 12,046 $ 51,048 $ 380,640 As of June 28, 2024 Cost $ 61,297 $ 208,731 $ 316,867 $ 6,500 $ 1,101 $ 27,660 $ 12,243 $ 634,399 Less: Accumulated depreciation ( 328 ) ( 82,964 ) ( 216,667 ) ( 5,521 ) ( 870 ) ( 20,520 ) — ( 326,870 ) Less: Impairment reserve — — ( 289 ) — — — — ( 289 ) Net book value $ 60,969 $ 125,767 $ 99,911 $ 979 $ 231 $ 7,140 $ 12,243 $ 307,240 Depreciation expense amounted to $ 52.5 million, $ 48.2 million and $ 42.5 million for the years ended June 27, 2025, June 28, 2024 and June 30, 2023, 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 27, 2025, June 28, 2024 and June 30, 2023 amounted to $ 12.5 million, $ 10.7 million and $ 16.5 million, respectively. 78 Table of contents As of June 27, 2025, June 28, 2024 and June 30, 2023, the Company recognized impairment reserves for property, plant and equipment of $ 0.3 million, $ 0.3 million and $ 0.6 million, respectively. 12 . Intangibles The following tables present details of the Company’s intangibles: (in thousands) As of June 27, 2025 As of June 28, 2024 Software Gross carrying amount $ 12,159 $ 11,398 Accumulated amortization ( 10,003 ) ( 9,077 ) Net $ 2,156 $ 2,321 The Company recorded amortization expense relating to intangibles of $ 0.9 million, $ 1.0 million and $ 1.3 million for the years ended June 27, 2025, June 28, 2024 and June 30, 2023, respectively. The weighted-average remaining life of software was: (years) As of June 27, 2025 As of June 28, 2024 Software 3.6 2.1 Based on the carrying amount of intangibles as of June 27, 2025, and assuming no future impairment of the underlying assets, the estimated future amortization during each fiscal year was as follows: (in thousands) 2026 $ 821 2027 595 2028 424 2029 223 2030 93 Total $ 2,156 13. Severance liabilities The following table provides information regarding severance liabilities: Years Ended (in thousands) June 27, 2025 June 28, 2024 Changes in severance liabilities Balance, beginning of the fiscal year $ 24,093 $ 22,370 Current service cost $ 2,975 $ 2,655 Interest cost 966 747 Benefit paid ( 2,001 ) ( 320 ) Unrealized loss (gain) on exchange rate 3,306 ( 837 ) Actuarial (gain) loss on obligation 1,886 ( 310 ) Adjustment defined benefit obligation — ( 212 ) Balance, end of the fiscal year $ 31,225 $ 24,093 Changes in plan assets Balance, beginning of the fiscal year $ — $ 349 Adjustment plan assets — ( 349 ) Balance, end of the fiscal year $ — $ — Underfunded status $ ( 31,225 ) $ ( 24,093 ) 79 Table of contents The following table sets forth our severance liabilities as of June 27, 2025: (in thousands) 2026 $ 2,001 2027 2,017 2028 2,738 2029 2,831 2030 3,562 Thereafter 18,076 Total $ 31,225 The amount recognized in the consolidated balance sheets under non-current liabilities was determined as follows: (in thousands) As of June 27, 2025 As of June 28, 2024 Non-current liabilities $ 31,225 $ 24,093 The following table provides information regarding accumulated benefit obligations: (in thousands) As of June 27, 2025 As of June 28, 2024 Accumulated benefit obligations $ 22,140 $ 16,403 The principal actuarial assumptions used were as follows: Weighted average actuarial assumptions used to determine severance liabilities Years Ended June 27, 2025 June 28, 2024 June 30, 2023 Discount rate 2.9 % - 4.1 % 3.9 % - 5.5 % 3.5 % - 5.4 % Future salary increases 3.5 % - 10.0 % 3.5 % - 10.0 % 3.5 % - 10.0 % Weighted average actuarial assumptions used to determine benefit costs Years Ended June 27, 2025 June 28, 2024 June 30, 2023 Discount rate 5.2 % 5.4 % 3.8 % Expected long-term rate of return on assets 4.2 % 5.2 % 3.4 % 80 Table of contents 14. Share-based compensation Share-based compensation The grant date fair value of restricted share units and performance share units is based on the market value of Fabrinet's ordinary shares on the date of grant. The effect of recording share-based compensation expense for the years ended June 27, 2025, June 28, 2024 and June 30, 2023 was as follows: Years Ended (in thousands) June 27, 2025 June 28, 2024 June 30, 2023 Share-based compensation expense by type of award: Restricted share units $ 21,013 $ 16,839 $ 16,979 Performance share units 11,991 11,535 11,148 Total share-based compensation expense 33,004 28,374 28,127 Tax effect on share-based compensation expense — — — Net effect on share-based compensation expense $ 33,004 $ 28,374 $ 28,127 Share-based compensation expense was recorded in the consolidated statements of operations and comprehensive income as follows: Years Ended (in thousands) June 27, 2025 June 28, 2024 June 30, 2023 Cost of revenue $ 10,456 $ 7,203 $ 6,664 Selling, general and administrative expense 22,548 21,171 20,939 Restructuring and other related costs — — 524 Total share-based compensation expense $ 33,004 $ 28,374 $ 28,127 The Company did not capitalize any share-based compensation expense as part of any asset costs during the years ended June 27, 2025, June 28, 2024 and June 30, 2023. Share-based award activity On December 12, 2019, the Company’s shareholders approved Fabrinet’s 2020 Equity Incentive Plan (the “2020 Plan”). Upon the approval of the 2020 Plan, Fabrinet’s Amended and Restated 2010 Performance Incentive Plan (the “2010 Plan”) was simultaneously terminated. The 2020 Plan provides for the grant of equity awards thereunder with respect to (i) 1,700,000 ordinary shares, plus (ii) up to 1,300,000 ordinary shares that, as of immediately prior to the termination of the 2010 Plan, had been reserved but not issued pursuant to any awards granted under the 2010 Plan and are not subject to any awards thereunder. Upon termination of the 2010 Plan, 1,281,619 ordinary shares were reserved for issuance under the 2020 Plan pursuant to clause (ii) of the preceding sentence. On November 2, 2017, the Company adopted the 2017 Inducement Equity Incentive Plan (the “2017 Inducement Plan”) with a reserve of 160,000 ordinary shares authorized for future issuance solely for the granting of inducement share options and equity awards to new employees. The 2017 Inducement Plan was adopted without shareholder approval in reliance on the “employment inducement exemption” provided under the New York Stock Exchange Listed Company Manual. The 2020 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 27, 2025: (share units) Restricted Share Units outstanding Performance Share Units outstanding Ordinary Shares available for future grant 2020 Plan 263,014 120,916 1,583,646 2017 Inducement Plan — — 111,347 Total 263,014 120,916 1,694,993 81 Table of contents Restricted share units and performance share units Restricted share units and performance share units have been granted under the Equity Incentive Plans. Restricted share units granted to employees generally vest in equal installments over three or four years on each anniversary of the vesting commencement date. 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-GAAP 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. The following table summarizes restricted share unit activity under the Equity Incentive Plans: Number of Shares Weighted- Average Grant Date Fair Value Per Share Balance as of June 24, 2022 459,626 $ 75.14 Granted 165,378 $ 117.35 Vested ( 233,607 ) $ 67.85 Forfeited ( 22,632 ) $ 94.69 Balance as of June 30, 2023 368,765 $ 97.49 Granted 126,934 $ 165.54 Vested ( 171,304 ) $ 88.69 Forfeited ( 17,735 ) $ 124.52 Balance as of June 28, 2024 306,660 $ 129.01 Granted 115,442 $ 257.64 Vested ( 140,040 ) $ 118.33 Forfeited ( 19,048 ) $ 175.73 Balance as of June 27, 2025 263,014 $ 187.00 Expected to vest as of June 27, 2025 232,999 $ 187.00 The following table summarizes performance share unit activity under the Equity Incentive Plans: Number of Shares Weighted- Average Grant Date Fair Value Per Share Balance as of June 24, 2022 285,882 $ 81.64 Granted 97,142 $ 117.35 Vested ( 179,008 ) 70.05 Balance as of June 30, 2023 204,016 $ 108.81 Granted 73,936 $ 158.91 Vested ( 106,874 ) $ 101.05 Balance as of June 28, 2024 171,078 $ 135.31 Granted 46,980 $ 261.84 Vested ( 97,142 ) 117.35 Balance as of June 27, 2025 120,916 $ 198.90 Expected to vest as of June 27, 2025 120,916 $ 198.90 The total fair value of restricted share units and performance share units vested during the years ended June 27, 2025, June 28, 2024 and June 30, 2023 was $ 28.0 million, $ 26.0 million and $ 28.4 million, respectively. The aggregate intrinsic value of restricted share units and performance share units outstanding as of June 27, 2025 was $ 113.5 million. 82 Table of contents As of June 27, 2025, there was $ 17.3 million and $ 7.1 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 27, 2025 and June 28, 2024, the Company withheld an aggregate of 92,492 shares and 104,892 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 27, 2025 and June 28, 2024, the Company then remitted cash of $ 21.3 million and $ 13.2 million, respectively, to the appropriate taxing authorities, and presented it as a financing activity within the consolidated statements of cash flows. The payment was recorded as a reduction of additional paid-in capital. Customer Warrant On March 12, 2025, the Company issued a warrant (the “Warrant”) to Amazon.com NV Investment Holdings LLC to acquire up to 381,922 ordinary shares (the “Warrant Shares”) of the Company at an exercise price of $ 208.48 per share. The Warrant allows for cashless exercise and expires on March 12, 2032. Upon issuance of the Warrant, 38,192 of the Warrant Shares vested. The remainder of the Warrant Shares are subject to vesting in multiple tranches over the term of the Warrant based on payments to the Company from or on behalf of Amazon.com, Inc. ("Amazon") or its affiliates under a commercial agreement or otherwise. Upon the consummation of an acquisition transaction or the termination of the commercial agreement by Amazon for cause, the unvested portion of the Warrant will vest in full. The exercise price and the number of Warrant Shares are subject to customary antidilution adjustments. Using the Black-Scholes option pricing model, the grant date fair value of the Warrant was determined to be $ 102.88 per share, for a total fair value of $ 39.3 million. The grant date fair value of the Warrant was estimated as of the issuance date using the following assumptions: Expected dividend yield — Risk-free interest rate 3.8 % Expected volatility 45.2 % Expected term (in years) 7 years 15 . Employee benefit plans Employee contribution plan The Company operates a defined contribution plan, known as a provident fund, in its subsidiaries in Thailand and the United Kingdom. The assets of these plans are in separate trustee-administered funds. The provident fund is funded by matching payments from employees and by the subsidiaries on a monthly basis. Current contributions to the provident fund are accrued and paid to the fund manager on a monthly basis. The Company’s contributions to the provident fund amounted to $ 8.0 million, $ 7.0 million and $ 6.3 million during the years ended June 27, 2025, June 28, 2024 and June 30, 2023, respectively. The Company sponsors the Fabrinet U.S. 401(k) Retirement Plan (“401(k) Plan”), a Defined Contribution Plan under ERISA, at its subsidiaries in the United States which provides retirement benefits for eligible employees through tax deferred salary deductions. The 401(k) Plan allows employees to contribute up to 80 % of their annual compensation, subject to annual contributions limits established by the Internal Revenue Service. The Company provides for a 100 % match of employees’ contributions to the 401(k) Plan up to the first 6 % of annual compensation. All matching contributions are made in cash and vest immediately. The Company’s matching contributions to the 401(k) Plan were $ 1.1 million, $ 1.0 million and $ 0.8 million during the years ended June 27, 2025, June 28, 2024 and June 30, 2023, respectively. Executive incentive plan and employee performance bonuses For the years ended June 27, 2025 and June 28, 2024, the Company maintained an executive incentive plan with quantitative objectives, based on achieving certain revenue and non-U.S. GAAP operating margin or gross margin targets. During the years ended June 27, 2025, June 28, 2024 and June 30, 2023, discretionary merit-based bonus awards were also available to Fabrinet’s non-executive employees. Bonus distributions to employees were $ 14.5 million, $ 13.5 million and $ 13.0 million for the years ended June 27, 2025, June 28, 2024 and June 30, 2023, respectively. 83 Table of contents 16. Shareholders’ equity Share capital Fabrinet’s authorized share capital is 500,000,000 ordinary shares, par value of $ 0.01 per ordinary share, and 5,000,000 preferred shares, par value of $ 0.01 per preferred share. For the year ended June 27, 2025, Fabrinet issued 144,690 ordinary shares upon the vesting of restricted share units and performance share units under the Equity Incentive Plans, net of shares withheld. For the year ended June 28, 2024, Fabrinet issued 173,286 ordinary shares upon the vesting of restricted share units and performance share units under the Equity Incentive Plans, net of shares withheld. For the year ended June 30, 2023, Fabrinet issued 235,476 ordinary shares upon the vesting of restricted share units and performance share units under the Equity Incentive Plans, net of shares withheld. All such issued shares are fully paid. Treasury shares 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, August 2020, August 2022, August 2023, August 2024, and January 2025, the Company’s board of directors approved an increase of $ 30.0 million, $ 50.0 million, $ 58.5 million, $ 78.7 million, $ 47.6 million, $ 139.5 million, and $ 100.0 million, respectively, to the original share repurchase authorization, bringing the aggregate authorization to $ 534.3 million. During the year ended June 27, 2025, the Company repurchased 561,858 shares under the program at an average price per share (excluding other direct costs) of $ 223.76 , totaling $ 125.7 million. As of June 27, 2025, the Company had a remaining authorization to repurchase up to $ 174.3 million of its ordinary shares under the share repurchase program. Shares repurchased under the share repurchase program are held as treasury shares. 17. Accumulated other comprehensive income (loss) (“AOCI”) The changes in AOCI for the years ended June 27, 2025 and June 28, 2024 were as follows: (in thousands) Unrealized Gains (Losses) on Available-for-sale Securities Unrealized Gains (Losses) on Derivative Instruments Retirement benefit plan - Prior service cost Foreign Currency Translation Adjustment Total Balance as of June 30, 2023 $ ( 3,279 ) $ ( 3,541 ) $ ( 330 ) $ ( 965 ) $ ( 8,115 ) Other comprehensive income (loss) before reclassification 2,099 2,792 — ( 17 ) 4,874 Amounts reclassified from AOCI 1 ( 403 ) 330 — ( 72 ) Tax effects — 172 — — 172 Other comprehensive income (loss) 2,100 2,561 330 ( 17 ) 4,974 Balance as of June 28, 2024 ( 1,179 ) ( 980 ) — ( 982 ) ( 3,141 ) Other comprehensive income (loss) before reclassification 9,893 5,075 — 1,228 16,196 Amounts reclassified from AOCI — ( 2,364 ) — — ( 2,364 ) Tax effects — ( 397 ) — — ( 397 ) Other comprehensive income (loss) 9,893 2,314 — 1,228 13,435 Balance as of June 27, 2025 $ 8,714 $ 1,334 $ — $ 246 $ 10,294 84 Table of contents 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 27, 2025 and June 28, 2024, respectively. (in thousands) Years Ended AOCI components Financial statements line item June 27, 2025 June 28, 2024 Unrealized gains (losses) on available-for-sale securities Interest income $ — $ 1 Unrealized gains (losses) on derivative instruments Cost of revenues ( 1,588 ) 8,563 Unrealized gains (losses) on derivative instruments Selling, general and administrative expenses ( 122 ) 357 Unrealized gains (losses) on derivative instruments Foreign exchange gain (loss), net ( 654 ) ( 9,103 ) Unrealized gains (losses) on derivative instruments Interest expense — ( 220 ) Retirement benefit plan – Prior service cost Selling, general and administrative expenses — 330 Total amounts reclassified from AOCI $ ( 2,364 ) $ ( 72 ) 18. Commitments and contingencies Bank guarantees As of June 27, 2025 and June 28, 2024, there were outstanding bank guarantees on behalf of the Company's subsidiary in Thailand for electricity usage and other normal business expenses totaling $ 2.3 million and $ 2.0 million, respectively, or Thai Baht 75.7 million and Thai Baht 73.2 million, respectively. In addition, there were other immaterial bank guarantees on behalf of the Company's subsidiary in Israel to support the subsidiary's operations related to the Israeli Customs department. Purchase obligations Purchase obligations represent legally binding commitments to purchase inventory and other commitments made in the normal course of business to meet operational requirements. Although open purchase orders are considered enforceable and legally binding, their terms generally give the Company the option to cancel, reschedule and/or adjust its requirements based on its business needs prior to the delivery of goods or performance of services. Obligations to purchase inventory and other commitments are generally expected to be fulfilled within one year. As of June 27, 2025, the Company had purchase obligations and other commitments to third parties of $ 1,409.6 million. Capital expenditure In February 2025, the Company entered into a construction contract with a local contractor for construction of a new manufacturing building at the Company's Chonburi campus. The contract price is approximately $ 132.5 million (Thai baht 4.45 billion). As of June 27, 2025, the Company had total capital expenditure commitments to third parties of $ 201.3 million. Indemnification of directors and officers Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of directors and officers, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Fabrinet’s amended and restated memorandum and articles of association provide for indemnification of directors and officers for actions, costs, charges, losses, damages and expenses incurred in their capacities as such, except that such indemnification does not extend to any matter in respect of any fraud or dishonesty that may attach to any of them. In accordance with Fabrinet’s form of indemnification agreement for its directors and officers, Fabrinet has agreed to indemnify its directors and officers against certain liabilities and expenses incurred by such persons in connection with claims by reason of their being such a director or officer. 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. 85 Table of contents Credit facility agreement On March 9, 2023, Fabrinet Thailand and the Parent Company (collectively, the “Borrowers”) and the Bank of Ayudhya Public Company Limited (the "Bank") entered into a credit facility agreement (the “2023 Credit Facility Agreement”), which provided a facility of $ 55.0 million. During the three months ended December 27, 2024, the Borrowers and the Bank amended the 2023 Credit Facility Agreement to reduce the facility to $ 30.0 million, which may be used for, among other things, an overdraft facility. As of June 27, 2025, there was no amount outstanding under the 2023 Credit Facility Agreement. Under the 2023 Credit Facility Agreement, the Borrowers are required to maintain a debt-to-equity ratio of less than or equal to 1.5 times for Fabrinet Thailand and 1.0 times for the Parent Company. As of June 27, 2025, the Borrowers were in compliance with all of their financial covenants under the 2023 Credit Facility Agreement. Litigation and claim On June 28, 2024, Ngan In Leng and First Laser Limited (collectively, the “Plaintiffs”) filed a complaint in the Fuzhou Intermediate People’s Court (the “Court”) in Fuzhou, China against Fujian Enterprises (Holdings) Co., Ltd. (“FEHC”), Jian An Investment Limited (“Jian”), and Casix, Inc. (“Casix”), the Company's wholly-owned subsidiary located in the PRC. The complaint alleges unjust enrichment related to a purported investment in Casix by the Plaintiffs in 1997, which predates the Company's acquisition of Casix from JDS Uniphase Corporation. The Plaintiffs have requested that the Court order FEHC to return the unjust enrichment to the Plaintiffs in the amount of RMB 400 million, with interest from March 1, 2000, and order Jian and Casix to bear joint and several liability for all payment obligations of FEHC. In September 2024, the Court dismissed the lawsuit in its entirety based on jurisdictional grounds. The Plaintiffs have since appealed the Court’s ruling to the High People's Court of Fujian Province (the "Appellate Court"). In their appeal, the Plaintiffs now claim that Casix is the primary obligor to return the alleged unjust enrichment to the Plaintiffs. On November 24, 2024, the Appellate Court agreed to hear the appeal. At this time, the Company is not able to quantify any potential liability in connection with this litigation because of the early stage of this litigation. 19. Restructuring and other related costs In January 2025, the Company implemented a restructuring initiative aimed at enhancing operational effectiveness and streamlining activities within its subsidiary located in Thailand. As a result of the restructuring, the Company incurred total charges of $ 1.4 million, which were primarily related to employee severance and other termination benefits. These severance-related charges reflect the costs associated with workforce reductions across various functions within the Thailand operations. The restructuring charges have been recognized in the consolidated statements of operations within "Restructuring and other related costs" for the year ended June 27, 2025. The Company recognizes severance-related charges depending on whether the termination benefits are provided under an ongoing benefit arrangement or under a one-time benefit arrangement. The Company recognizes the charges once the benefits have been communicated to employees. As of June 27, 2025, there was no restructuring liability balance. 86 Table of contents 20. Business segments and geographic information The Company manages its business activities on a consolidated basis and operates as a single operating segment. The Company’s chief operating decision maker (“CODM”) is Fabrinet’s Chief Executive Officer. The CODM utilizes GAAP and non-GAAP measures of profit and loss to evaluate the Company’s financial performance, allocate resources, make key operating decisions, and compare actual results to forecasts. Further, the CODM reviews and utilizes functional expenses (cost of revenue, and selling, general and administrative expenses) at the consolidated level to manage the Company’s operations. Other items included in GAAP and non-GAAP net income are interest income, other income (expense), net and income tax expense, which are reflected in the consolidated statements of operations and comprehensive income. The measure of segment assets is reported on the consolidated balance sheets as total assets, although the CODM does not evaluate asset information for purposes of allocating resources or evaluating performance. The following table provides information about the Company's revenue, significant segment expenses and other segment expenses: Years Ended (in thousands of U.S. dollars, except per share data) June 27, 2025 June 28, 2024 June 30, 2023 Revenues $ 3,419,327 $ 2,882,967 $ 2,645,237 Cost of revenues ( 3,005,978 ) ( 2,526,849 ) ( 2,308,964 ) Gross profit 413,349 356,118 336,273 Selling, general and administrative expenses ( 87,466 ) ( 78,481 ) ( 77,673 ) Restructuring and other related costs ( 1,436 ) ( 32 ) ( 6,896 ) Operating income 324,447 277,605 251,704 Interest income 40,162 33,204 11,234 Interest expense — ( 124 ) ( 1,472 ) Foreign exchange gain (loss), net ( 9,251 ) 382 ( 1,211 ) Other income (expense), net ( 178 ) 287 ( 159 ) Income before income taxes 355,180 311,354 260,096 Income tax expense ( 22,653 ) ( 15,173 ) ( 12,183 ) Net income 332,527 296,181 247,913 For the Company’s revenues by geographic region, see “Revenue by Geographic Area and End Market” in Note 3. The following table presents long-lived assets by the country in which they are based: Years Ended (in thousands) June 27, 2025 June 28, 2024 June 30, 2023 Long-Lived Assets: Thailand $ 338,127 $ 261,378 $ 264,452 U.S. 30,374 31,383 25,914 China 14,378 16,618 17,646 Israel 2,727 2,269 3,254 Others 802 928 718 Total 386,408 312,576 311,984 87 Table of contents Significant customers Total revenues, by percentage, from individual customers representing 10% or more of total revenues in the respective periods were as follows: Years Ended June 27, 2025 June 28, 2024 June 30, 2023 NVIDIA Corporation 27.6 % 35.1 % 12.5 % Cisco Systems, Inc. 18.2 % 13.4 % 15.6 % Lumentum Operations LLC * * 15.4 % Infinera Corporation * * 12.4 % * Represents less than 10% of total revenues. Accounts receivable from individual customers representing 10% or more of accounts receivable as of June 27, 2025 and June 28, 2024, respectively, were as follows: As of June 27, 2025 As of June 28, 2024 NVIDIA Corporation 25.5 % 22.7 % Cisco Systems, Inc. 13.7 % 12.4 % Nokia Corporation (1) 12.0 % 19.3 % * Represents less than 10% of total accounts receivable. (1) Includes Infinera Corporation as of June 27, 2025. 21. Financial instruments Objectives and significant terms and conditions The principal financial risks faced by the Company are foreign currency risk and interest rate risk. The Company borrows at floating rates of interest to finance its operations. A minority of sales and purchases and a majority of labor and overhead costs are entered into in foreign currencies. In order to manage the risks arising from fluctuations in currency exchange rates, the Company uses derivative instruments. Trading for speculative purposes is prohibited under Company policies. The Company enters into short-term foreign currency forward and option contracts to manage foreign currency exposures associated with certain assets, liabilities and other forecasted foreign currency transactions and may designate these instruments as hedging instruments. The foreign currency forward and option contracts generally have maturities of up to twelve months . All foreign currency exchange contracts are recognized on the consolidated balance sheets at fair value. Gain or loss on the Company’s derivative instruments generally offset the assets, liabilities under master netting arrangement and transactions economically hedged. Foreign currency risk The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Thai baht, RMB and GBP. 88 Table of contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable.