What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-04-27 compared with 2023-01-26 · 86 added, 82 removed, 232 unchanged (42% of the section changed)

28 unchanged sentences

The semiconductor industry has experienced supply constraints for certain items.

While we have successfully managed through challenges relating to obtaining certain necessary raw materials and production and processing equipment thus far, we expect the supply situation for these items to remain tight for at least the next few quarters.

While we have successfully managed through challenges relating to obtaining certain necessary raw materials and production and processing equipment thus far, and have started to see supply availabilities and lead times stabilize, we expect the supply situation for these items to remain tight for at least the next few quarters.

In addition, the ongoing military conflict between Russia and Ukraine may further exacerbate supply constraints.

17 unchanged sentences

Market participants often undertake pricing strategies to gain or protect market share, increase the utilization of their production capacity and open new applications in the power and RF markets we serve.

• COVID-19 Pandemic.

The global health crisis caused by COVID-19 and its resurgences has impacted and may continue to negatively impact global economic activity, which, despite the effectiveness of vaccines in preventing serious illnesses and hospitalizations, remains uncertain and cannot be predicted with confidence due to the continued emergence of variants and the likelihood that the protection conferred by existing vaccines wanes over time.

The COVID-19 pandemic has affected us in a number of ways including, but not limited to, the impact on employees becoming ill, quarantined, or otherwise unable to work or travel due to illness or governmental restriction, the impact on customers and their related demand and/or purchases, the impact on our suppliers' and contract manufacturers' ability to fulfill our orders on a timely basis, and the overall impact of the aforementioned items that could cause output challenges and increased costs.

The full extent to which the COVID-19 pandemic may impact our results of operations or liquidity remains uncertain.

Our operations have experienced, and likely will continue to experience, supply, labor, demand and output challenges.

We continue to monitor the impact that the COVID-19 pandemic is having on our business, the semiconductor industry, and the economies in which we operate.

• Governmental Trade and Regulatory Conditions .

7 unchanged sentences

Protection of intellectual property is critical.

Therefore, steps such as additional patent applications, confidentiality and non-

disclosure agreements, as well as other security measures are generally taken.

Therefore, steps such as additional patent applications, confidentiality and non-disclosure agreements, as well as other security measures are generally taken.

To enforce or protect intellectual property rights, litigation or threatened litigation is common.

Overview of the six months ended December 25, 2022

The following is a summary of our financial results as of and for the six months ended December 25, 2022 compared to the six months ended December 26, 2021, unless otherwise stated.

• COVID-19 Pandemic.

We continue to monitor the impact that the COVID-19 pandemic is having on our business, the semiconductor industry, and the economies in which we operate.

Overview of the nine months ended March 26, 2023

The following is a summary of our financial results as of and for the nine months ended March 26, 2023 compared to the nine months ended March 27, 2022, unless otherwise stated.

• Our revenue increased $168.4 million to $686.1 million.

3 unchanged sentences

• Diluted loss per share was $1.74 compared to $1.96.

• Combined cash, cash equivalents and short-term investments was $2,484.4 million at December 25, 2022 and $1,198.8 million at June 26, 2022.

• Convertible notes, net was $3,021.0 million at December 25, 2022 and $1,021.6 million at June 26, 2022.

• Combined cash, cash equivalents and short-term investments was $2,248.2 million at March 26, 2023 and $1,198.8 million at June 26, 2022.

• Convertible notes, net was $3,023.3 million at March 26, 2023 and $1,021.6 million at June 26, 2022.

As discussed further below and in Note 9, "Long-term Debt," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, we sold $1,750.0 million aggregate principal amount of 1.875% convertible senior notes due December 1, 2029 in the second quarter of fiscal 2023.

4 unchanged sentences

We believe we are uniquely positioned as an innovator in the global semiconductor industry.

The strength of our balance sheet provides us the ability to invest in our business, as indicated by our new state-of-the-art, automated 200mm Silicon Carbide device fabrication facility in Marcy, New York, where we continue to run qualification lots, an expansion of our materials factory at our U.S campus headquarters in Durham, North Carolina, and the recently announced plan to construct a new materials manufacturing facility in Siler City, North Carolina, all of which is expected to increase our production capacity.

In addition, an expansion of our materials factory at our U.S.

campus headquarters in Durham, North Carolina, the construction of a new materials manufacturing facility in Siler City, North Carolina, and the recently announced plan to construct a new Silicon Carbide device fabrication facility in Saarland, Germany are all expected to increase our production capacity.

In fiscal 2022, we incurred $70.0 million of start-up and pre-production costs related to the ramping of production at the Marcy, New York facility.

10 unchanged sentences

Results of Operations

Selected consolidated statements of operations data for the three and six months ended December 25, 2022 and December 26, 2021 is as follows:

Three months ended Six months ended

December 25, 2022 December 26, 2021 December 25, 2022 December 26, 2021

Selected consolidated statements of operations data for the three and nine months ended March 26, 2023 and March 27, 2022 was as follows:

Three months ended Nine months ended

March 26, 2023 March 27, 2022 March 26, 2023 March 27, 2022

(in millions of U.S.

6 unchanged sentences

Amortization or impairment of acquisition-related intangibles 2.6 1.1 3.4 1.8 8.3 1.2 10.6 2.0

Loss on disposal or impairment of other assets 0.1 — 0.5 0.3 0.2 — 0.3 0.1

Loss (gain) on disposal or impairment of other assets 1.7 0.7 (0.6) (0.3) 1.9 0.3 (0.3) (0.1)

Other operating expense 49.1 21.5 23.9 12.7 134.1 19.5 52.3 10.1

6 unchanged sentences

Revenue was as follows:

Three months ended Six months ended

Three months ended Nine months ended

(in millions of U.S.

Dollars) December 25, 2022 December 26, 2021 Change December 25, 2022 December 26, 2021 Change

Dollars) March 26, 2023 March 27, 2022 Change March 26, 2023 March 27, 2022 Change

Revenue $228.7 $188.0 $40.7 22 % $686.1 $517.7 $168.4 33 %

Revenue for the three and six months ended December 25, 2022 compared to the three and six months ended December 26, 2021 increased due to increased demand across all of our product lines, as well as increased production capacity for our power and materials product lines to meet strong demand during the period and in future periods.

Revenue increased for each period presented primarily due to increased production capacity for our power and materials product lines to meet strong demand, partially offset by lower factory output and softening demand for our RF product line.

Gross Profit and Gross Margin

Gross profit and gross margin were as follows:

Three months ended Six months ended

Three months ended Nine months ended

(in millions of U.S.

Dollars) December 25, 2022 December 26, 2021 Change December 25, 2022 December 26, 2021 Change

Dollars) March 26, 2023 March 27, 2022 Change March 26, 2023 March 27, 2022 Change

Gross profit $68.1 $64.0 $4.1 6 % $214.9 $170.4 $44.5 26 %

Gross margin 29.8 % 34.0 % 31.3 % 32.9 %

The increases in gross profit for the three and six months ended December 25, 2022 compared to the three and six months ended December 26, 2021 were primarily due to increased revenues in the current periods.

The decrease in gross margin for the three months ended December 25, 2022 compared to the three months ended December 26, 2021 was primarily due to impacts from product mix, partially offset by impacts from increased revenues in the current period.

The decrease in gross margin for the six months ended December 25, 2022 compared to the six months ended December 26, 2021 was primarily due to the same factors for the three months ended December 25, 2022 compared to the three months ended December 26, 2021, partially offset by a gross margin improvement in the current period resulting from realizing the full impact of our early fiscal 2022 change in estimate to increase our expected useful lives of certain machinery and equipment assets to more closely reflect the estimated economic lives of those assets.

The increases in gross profit for the three and nine months ended March 26, 2023 compared to the three and nine months ended March 27, 2022 were primarily due to increased revenues, partially offset by increased production costs and unfavorable product mix.

The decrease in gross margin for the three months ended March 26, 2023 compared to the three months ended March 27, 2022 was primarily due to increased production costs and unfavorable product mix.

The decrease in gross margin for the nine months ended March 26, 2023 compared to the nine months ended March 27, 2022 was primarily due to increased production costs and unfavorable product mix, partially offset by a gross margin improvement in the current period resulting from realizing the full impact of our early fiscal 2022 change in estimate to increase our expected useful lives of certain machinery and equipment assets to more closely reflect the estimated economic lives of those assets.

* The change in our expected useful lives was applied in the first quarter of fiscal 2022 but had limited impact on that period's gross profit and gross margin because the majority of the impact in the first quarter of fiscal 2022 resulted in a reduction of inventory.

4 unchanged sentences

Research and development expenses were as follows:

Three months ended Six months ended

Three months ended Nine months ended

(in millions of U.S.

Dollars) December 25, 2022 December 26, 2021 Change December 25, 2022 December 26, 2021 Change

Dollars) March 26, 2023 March 27, 2022 Change March 26, 2023 March 27, 2022 Change

Research and development $56.1 $48.1 $8.0 17 % $168.3 $148.2 $20.1 14 %

9 unchanged sentences

SG&A expenses were as follows:

Three months ended Six months ended

Three months ended Nine months ended

(in millions of U.S.

Dollars) December 25, 2022 December 26, 2021 Change December 25, 2022 December 26, 2021 Change

Dollars) March 26, 2023 March 27, 2022 Change March 26, 2023 March 27, 2022 Change

Sales, general and administrative $60.5 $51.5 $9.0 17 % $171.2 $148.5 $22.7 15 %

Percent of revenue 26 % 27 % 25 % 29 %

The increases in SG&A expenses for the three and six months ended December 25, 2022 compared to the three and six months ended December 26, 2021 were primarily due to increased salaries and benefits from increased headcount, including incentive based stock-based compensation, as well as small increases in travel costs and professional services.

The increase in SG&A expenses for the three months ended March 26, 2023 compared to the three months ended March 27, 2022 were primarily due to increased salaries and benefits from increased headcount, including incentive based stock-based compensation, as well as increases in professional services and sponsorship costs.

The increase in SG&A expenses for the nine months ended March 26, 2023 compared to the nine months ended March 27, 2022 were primarily due to increased salaries and benefits from increased headcount, including incentive based stock-based compensation, as well as increases in professional services, sponsorship, and travel costs.

Amortization or Impairment of Acquisition-Related Intangibles

1 unchanged sentence

Amortization of intangible assets related to our acquisitions was as follows:

Three months ended Six months ended

Three months ended Nine months ended

(in millions of U.S.

Dollars) December 25, 2022 December 26, 2021 Change December 25, 2022 December 26, 2021 Change

Dollars) March 26, 2023 March 27, 2022 Change March 26, 2023 March 27, 2022 Change

Customer relationships $1.5 $1.5 $— — % $4.6 $4.6 $— — %

2 unchanged sentences

Total amortization $2.6 $3.4 ($0.8) (24) % $8.3 $10.6 ($2.3) (22) %

Amortization of acquisition-related intangible assets decreased due to an intangible asset relating to non-compete agreements reaching the end of its useful life in fiscal 2022.

Amortization of acquisition-related intangible assets decreased due to certain intangible assets reaching the end of their useful lives.

No other significant acquisition-related intangible activity or impairments occurred between the periods.

Loss on Disposal or Impairment of Other Assets

Loss (gain) on Disposal or Impairment of Other Assets

We operate a capital-intensive business.

1 unchanged sentence

Due to the risk of technological obsolescence or changes in our production process, we regularly review our long-lived assets and capitalized patent costs for possible impairment.

Loss on disposal or impairment of other assets were as follows:

Three months ended Six months ended

Loss (gain) on disposal or impairment of other assets were as follows:

Three months ended Nine months ended

(in millions of U.S.

Dollars) December 25, 2022 December 26, 2021 Change December 25, 2022 December 26, 2021 Change

Loss on disposal or impairment of other assets $0.1 $0.5 ($0.4) (80) % $0.2 $0.3 ($0.1) (33) %

Loss on disposal or impairment of other assets primarily relate to proceeds from asset sales offset by write-offs of fixed asset projects, as well as the write-offs of impaired or abandoned patents.

Dollars) March 26, 2023 March 27, 2022 Change March 26, 2023 March 27, 2022 Change

Loss (gain) on disposal or impairment of other assets $1.7 ($0.6) $2.3 (383) % $1.9 ($0.3) $2.2 (733) %

Loss (gain) on disposal or impairment of other assets primarily relate to proceeds from asset sales offset by write-offs of fixed asset projects, as well as the write-offs of impaired or abandoned patents.

Other Operating Expense

Other operating expense was as follows:

Three months ended Six months ended

Three months ended Nine months ended

(in millions of U.S.

Dollars) December 25, 2022 December 26, 2021 Change December 25, 2022 December 26, 2021 Change

Dollars) March 26, 2023 March 27, 2022 Change March 26, 2023 March 27, 2022 Change

Factory start-up costs 44.7 21.4 23.3 109 % 120.7 41.0 79.7 194 %

Project, transformation and transaction costs 3.9 1.2 2.7 225 % 11.4 5.3 6.1 115 %

Restructuring costs 0.2 2.1 (1.9) (90) % 0.2 4.7 (4.5) (96) %

Non-restructuring related executive severance 0.3 — 0.3 100 % 1.3 — 1.3 100 %

Factory optimization restructuring costs — 0.8 (0.8) (100) % — 5.5 (5.5) (100) %

Severance costs 0.5 0.5 — — % 2.0 0.5 1.5 300 %

Other operating expense $49.1 $23.9 $25.2 105 % $134.1 $52.3 $81.8 156 %

Factory start-up costs are costs related to expanding our production footprint to support expected growth.

Factory start-up costs relate to expanding our production footprint to support expected growth.

Project, transformation and transaction costs primarily relate to professional services fees associated with completed and potential acquisitions and divestitures, as well as internal transformation programs focused on optimizing our administrative processes.

Restructuring costs relate to facility consolidations, disposals on certain long-lived assets, severance and other restructuring costs related to corporate restructuring plans.

See Note 14, "Restructuring," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information on our restructuring costs.

Other operating expense for the three and six months ended December 25, 2022 compared to the three and six months ended December 26, 2021 increased primarily due to increased start-up costs as we continue our expansion to a new Silicon Carbide device fabrication facility in Marcy, New York.

Factory optimization restructuring costs relate to our multi-year factory optimization restructuring plan, which was implemented in connection with our expansion activities between fiscal 2019 and fiscal 2022.

As part of the factory optimization restructuring plan, we incurred restructuring charges associated with the movement of equipment as well as disposals on certain long-lived assets.

The factory optimization restructuring plan concluded in fiscal 2022.

Other operating expense for the three and nine months ended March 26, 2023 compared to the three and nine months ended March 27, 2022 increased primarily due to increased factory start-up costs as we continue our expansion activities.

Non-Operating (Income) Expense, net

Non-operating (income) expense, net was comprised of the following:

Three months ended Six months ended

Three months ended Nine months ended

(in millions of U.S.

Dollars) December 25, 2022 December 26, 2021 Change December 25, 2022 December 26, 2021 Change

Gain on arbitration proceedings ($0.9) $— ($0.9) (100) % ($50.3) $— ($50.3) (100) %

Loss on debt extinguishment related to conversion of 2023 Notes — 24.8 (24.8) (100) % — 24.8 (24.8) (100) %

Dollars) March 26, 2023 March 27, 2022 Change March 26, 2023 March 27, 2022 Change

Interest income ($22.2) ($2.8) ($19.4) 693 % ($38.1) ($7.8) ($30.3) 388 %

Interest expense, net of capitalized interest 14.1 5.1 9.0 176 % 26.7 17.1 9.6 56 %

Gain on arbitration proceedings — — — — % (50.3) — (50.3) 100 %

Loss on debt extinguishment related to conversion of 2023 Notes — — — — % — 24.8 (24.8) (100) %

Loss on Wafer Supply Agreement 4.8 0.5 4.3 860 % 7.3 1.4 5.9 421 %

Loss on early payment of transaction-related note receivable — 1.2 (1.2) (100) % — 1.2 (1.2) (100) %

Gain on sale of investments, net — — — — % — (0.3) 0.3 (100) %

1 unchanged sentence

Non-operating (income) expense, net ($2.9) $3.8 ($6.7) (176) % ($53.4) $35.7 ($89.1) (250) %

Interest income.

The increase in interest income in both periods was primarily driven by increased short-term investment balances, as well as increased returns on our short-term investments.

Our short-term investment balances increased significantly in the second quarter of fiscal 2023 resulting from the net proceeds we received from the sale of our 1.875% convertible senior notes due December 1, 2029 (the 2029 Notes).

Interest expense, net of capitalized interest .

The increase in interest expense in both periods primarily relate to interest from our 2029 Notes, which were not outstanding as of March 27, 2022.

– for the three months ended March 26, 2023 compared to the three months ended March 27, 2022, an increase in interest expense from our 1.75% convertible senior notes due May 1, 2026 (the 2026 Notes), the interest of which was fully capitalized in the nine months ended March 27, 2022 but fully expensed in the three months ended March 26, 2023, was offset by a decrease in interest expense from our 0.25% convertible senior notes due February 15, 2028 (the 2028 Notes) in connection with the adoption of ASU 2020-06, which removed accretion expense in connection with the 2028 Notes from our current period results;

– for the nine months ended March 26, 2023 compared to the nine months ended March 27, 2022, an increase in interest expense from our 1.75% convertible senior notes due May 1, 2026 (the 2026 Notes), the interest of which was fully capitalized in the nine months ended March 27, 2022 but fully expensed in the nine months ended March 26, 2023, was offset by a decrease in interest expense from our 2023 Notes, which were converted in the second quarter of fiscal 2022.

Gain on arbitration proceedings .

5 unchanged sentences

See Note 9, "Long-term Debt," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information on this loss on debt extinguishment.

Interest income.

The increase in interest income in both periods was primarily driven by increased short-term investment balances, as well as increased returns on our short-term investments.

Interest expense, net of capitalized interest .

The increase in interest expense in both periods related to interest from our 2028 Notes (as defined below) and the 2029 Notes, which were not outstanding as of December 26, 2021.

In addition, interest expense increased from interest on our 1.75% convertible senior notes due May 1, 2026 (the 2026 Notes), the interest of which was fully capitalized in the three and six months ended December 26, 2021 but fully expensed in the three and six months ended December 25, 2022.

These increases were partially offset by a decrease in interest expense from our 2023 Notes, which were converted in the second quarter of fiscal 2022.

Loss on Wafer Supply Agreement.

4 unchanged sentences

Income Tax Expense

Income tax expense and our effective tax rate was as follows:

Three months ended Six months ended

Income tax expense and our effective tax rate were as follows:

Three months ended Nine months ended

(in millions of U.S.

Dollars) December 25, 2022 December 26, 2021 Change December 25, 2022 December 26, 2021 Change

Dollars) March 26, 2023 March 27, 2022 Change March 26, 2023 March 27, 2022 Change

Income tax expense $0.5 $0.4 $0.1 25 % $1.1 $8.7 ($7.6) (87) %

Effective tax rate (1) % (1) % (1) % (4) %

The change in our effective tax rate was primarily due to $7.3 million of income tax expense recognized in the second quarter of fiscal 2022 related to the restructuring of our Luxembourg holding company.

The change in our effective tax rate for the nine months ended March 26, 2023 compared to the nine months ended March 27, 2022 was primarily due to $7.3 million of income tax expense recognized in the second quarter of fiscal 2022 related to the restructuring of our Luxembourg holding company.

In general, the variation between our effective income tax rate and the current U.S.

10 unchanged sentences

(in millions of U.S.

Dollars) December 25, 2022 June 26, 2022 Change

Dollars) March 26, 2023 June 26, 2022 Change

Cash and cash equivalents $795.1 $449.5 $345.6

3 unchanged sentences

In the second quarter of fiscal 2022, all outstanding 2023 Notes were surrendered for conversion following our issuance on December 8, 2021 of a notice to holders of the 2023 Notes calling for the redemption of all outstanding 2023 Notes, resulting in the settlement of the previously outstanding $424.8 million aggregate principal amount of 2023 Notes in approximately 7.1 million shares of our common stock.

In the third quarter of fiscal 2022, we issued and sold a total of $750.0 million aggregate principal amount of 0.25% convertible senior notes due February 15, 2028 (the 2028 Notes), as discussed in Note 9, “Long-term Debt,” in our consolidated financial statements included in Part I, Item 1 of this Quarterly Report.

In the third quarter of fiscal 2022, we issued and sold a total of $750.0 million aggregate principal amount of 2028 Notes, as discussed in Note 9, “Long-term Debt,” in our consolidated financial statements included in Part I, Item 1 of this Quarterly Report.

The total net proceeds of the 2028 Notes was $732.3 million, of which we used $108.2 million to fund the cost of entering into capped call transactions.

6 unchanged sentences

In the first quarter of fiscal 2023, we received an early payment in the amount of $101.8 million in connection with the unsecured promissory note issued in the fourth quarter of fiscal 2022 as an earn-out payment.

We have a $125 million line of credit as discussed in Note 9, “Long-term Debt,” in our consolidated financial statements included in Part I, Item 1 of this Quarterly Report, all of which was available for borrowing as of December 25, 2022.

The purpose of this credit facility is to provide short-term flexibility to optimize returns on our cash and investment portfolio while funding capital expenditures and other general business needs.

As of December 25, 2022, we had unrealized losses on our short-term investments of $26.4 million.

All of our short-term investments had investment grade ratings, and any such investments that were in an unrealized loss position at December 25, 2022 were in such position due to interest rate changes, sector credit rating changes or company-specific rating changes.

As of March 26, 2023, we had unrealized losses on our short-term investments of $21.4 million.

All of our short-term investments had investment grade ratings, and any such investments that were in an unrealized loss position at March 26, 2023 were in such position due to interest rate changes, sector credit rating changes or company-specific rating changes.

We evaluate our short-term investments for expected credit losses.

We believe we are able to and we intend to hold each of the investments held with an unrealized loss as of December 25, 2022 until the investments fully recover in market value.

No allowance for credit losses was recorded as of December 25, 2022.

We believe we are able to and we intend to hold each of the investments held with an unrealized loss as of March 26, 2023 until the investments fully recover in market value.

No allowance for credit losses was recorded as of March 26, 2023.

From time to time, we evaluate strategic opportunities, including potential acquisitions, joint ventures, divestitures, spin-offs or investments in complementary businesses, and we have continued to make such evaluations.

We may also access capital markets through the issuance of debt or additional shares of common stock, which we may use in connection with the acquisition of complementary businesses or other significant assets or for other strategic opportunities or general corporate purposes.

We may also access capital markets through the issuance of debt or equity, which we may use in connection with the acquisition of complementary businesses or other significant assets or for other strategic opportunities or general corporate purposes.

Expected Uses of Liquidity

We recently opened our new Silicon Carbide device fabrication facility in Marcy, New York, to expand capacity for production of our Silicon Carbide devices.

We expect to invest approximately $2.0 billion, an increase from our previously expected $1.0 billion, in construction, equipment and other related costs for the new facility through fiscal 2024, of which approximately $500 million is expected to be reimbursed over time by the State of New York through a grant program administered by the State of New York Urban Development Corporation (doing business as Empire State Development).

We expect to invest approximately $2.0 billion in construction, equipment and other related costs for the new facility through fiscal 2024, of which approximately $500 million is expected to be reimbursed over time by the State of New York through a grant program administered by the State of New York Urban Development Corporation (doing business as Empire State Development).

The increase is primarily due to capacity expansions at the site that have been pulled forward as a result of increased projected demand.

As of December 25, 2022, we have spent approximately $800 million and received $220.4 million in reimbursements.

As of March 26, 2023, we have spent approximately $870 million and received $280.7 million in reimbursements.

Additionally, we recently announced the intention to build a new materials manufacturing facility in Siler City, North Carolina.

3 unchanged sentences

In addition, the facility is also further supported by an approximately $1.0 billion long-term incentive package from state, county and local governments, primarily in the form of property tax reimbursements and sales tax exemptions.

For fiscal 2023, we target approximately $1.0 billion of net capital investment, which is primarily related to capacity and infrastructure projects to support longer-term growth and strategic priorities.

For fiscal 2023, we target approximately $775 million of net capital investment, which is primarily related to capacity and infrastructure projects to support longer-term growth and strategic priorities.

This target is highly dependent on the timing and overall progress on our new Silicon Carbide fabrication facility in New York and the construction of our new materials manufacturing facility in Siler City, North Carolina.

1 unchanged sentence

In addition, we also intend to apply for and potentially sell tax credits as part of the Inflation Reduction Act to further fund our expansion initiatives.

We have a take-or-pay supplier agreement that requires a minimum of $200 million of purchases over the next five years, as outlined further in Note 13, "Commitments and Contingencies," to our unaudited financial statements in Part I, Item 1 of this Quarterly Report.

Given our current cash position, we believe we will be able to fund daily operations for at least the next 12 months but we expect to need additional funding to fully complete our previously announced planned expansion initiatives described above.

1 unchanged sentence

In summary, our cash flows were as follows:

Six months ended

December 25, 2022 December 26, 2021 Change

Nine months ended

March 26, 2023 March 27, 2022 Change

Cash used in operating activities ($90.7) ($123.4) $32.7 26 %

Cash used in investing activities (1,000.7) (378.0) (622.7) (165) %

Cash provided by (used in) financing activities 1,437.3 (15.0) 1,452.3 9,682 %

Cash provided by financing activities 1,437.0 608.3 828.7 136 %

Effect of foreign exchange changes — — — — %

1 unchanged sentence

Cash Flows from Operating Activities

Net cash used in operating activities decreased primarily due to a decrease in net loss during the period, partially offset by increased working capital in the current period primarily related to decreased employee related accruals.

Net cash used in operating activities decreased primarily due to a decrease in net loss during the period and a smaller increase in working capital in the current period compared to the prior period, which was primarily driven by increased customer reserve deposits received.

Cash Flows from Investing Activities

Our investing activities primarily relate to short-term investment transactions, purchases of property and equipment, and property related reimbursements.

Cash used in investing activities increased primarily due to an increase in net purchases of short-term investments of $922.7 million, partially offset by proceeds of an earnout payment related to the LED Business Divestiture of $101.8 million and a decrease in net property and equipment purchases of $183.7 million.

Cash used in investing activities increased primarily due to an increase in net purchases of short-term investments of $650.8 million, partially offset by a decrease in net property and equipment purchases of $52.8 million.

For the nine months ended March 26, 2023, cash from investing activities included $101.8 million of proceeds from an earnout payment related to the LED Business Divestiture.

For the nine months ended March 27, 2022, cash from investing activities included $125.0 million of proceeds from a note receivable related to the LED Business Divestiture.

Cash Flows from Financing Activities

For the six months ended December 25, 2022, cash provided by financing activities primarily consisted of $1,718.6 million in net proceeds from the issuance of the 2029 Notes and $11.2 million of proceeds from the issuance of common stock, partially offset by $273.9 million in cash paid for capped call transactions in connection with the 2029 Notes and $17.3 million in tax withholdings on vested equity awards.

For the six months ended December 26, 2021, cash used in financing activities primarily consisted of $25.3 million in tax withholdings on vested equity awards, partially offset by $11.5 million of proceeds from the issuance of common stock.

For the nine months ended March 26, 2023, cash provided by financing activities primarily consisted of $1,718.6 million in net proceeds from the issuance of the 2029 Notes and $11.4 million of proceeds from the issuance of common stock, partially offset by $273.9 million in cash paid for capped call transactions in connection with the 2029 Notes and $17.7 million in tax withholdings on vested equity awards.

For the nine months ended March 27, 2022, cash provided by financing activities primarily consisted of $732.3 million in net proceeds from the issuance of the 2028 Notes and $11.7 million of proceeds from the issuance of common stock, partially offset by $108.2 million in cash paid for capped call transactions in connection with the 2028 Notes and $26.1 million in tax withholdings on vested equity awards.

Off-Balance Sheet Arrangements

1 unchanged sentence

Accordingly, our liquidity and capital resources are not subject to off-balance sheet risks from unconsolidated entities.

As of December 25, 2022, we did not have any off-balance sheet arrangements.

As of March 26, 2023, we did not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

8 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis