What changed in this filing

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Item 1. Financial Statements

2024-02-01 compared with 2023-11-02 · 224 added, 160 removed, 637 unchanged (38% of the section changed)

Financial Statements (Unaudited)

Consolidated Balance Sheets as of September 24, 2023 and June 2 5 , 2023

Consolidated Statements of Operations for the three months ended September 2 4 , 2023 and September 2 5 , 2022

Consolidated Statements of Comprehensive Loss for the three months ended September 2 4 , 2023 and Se ptember 2 5 , 2022

Consolidated Statements of Shareholders' Equity for the three months ended September 2 4 , 2023 and September 2 5 , 2022

Consolidated Statements of Cash Flows for the three months ended September 2 4 , 2023 and Se ptember 2 5 , 2022

Consolidated Balance Sheets as of December 31, 2023 and June 25, 2023

Consolidated Statements of Operations for the three and six months ended December 31, 2023 and December 25, 2022

Consolidated Statements of Comprehensive Loss for the three and six months ended December 31, 2023 and December 25, 2022

Consolidated Statements of Shareholders' Equity for the six months ended December 31, 2023 and December 25, 2022

Consolidated Statements of Cash Flows for the six months ended December 31, 2023 and December 25, 2022

Notes to Unaudited Consolidated Financial Statements

2 unchanged sentences

in millions of U.S.

Dollars, except share data in thousands September 24, 2023 June 25, 2023

Dollars, except share data in thousands December 31, 2023 June 25, 2023

Current assets:

13 unchanged sentences

Long-term receivables 2.5 2.6

Other long-term investments 66.1 —

Deferred tax assets 1.2 1.2

22 unchanged sentences

Preferred stock, par value $ 0.01 ;

3,000 shares authorized at September 24, 2023 and June 25, 2023;

3,000 shares authorized at December 31, 2023 and June 25, 2023;

none issued and outstanding

Common stock, par value $ 0.00125 ;

200,000 shares authorized at September 24, 2023 and June 25, 2023;

125,321 and 124,794 shares issued and outstanding at September 24, 2023 and June 25, 2023, respectively

400,000 shares authorized at December 31, 2023 and 200,000 shares authorized at June 25, 2023;

125,785 and 124,794 shares issued and outstanding at December 31, 2023 and June 25, 2023, respectively

Additional paid-in-capital 3,766.8 3,711.0

6 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended

Three months ended Six months ended

in millions of U.S.

Dollars, except share data September 24, 2023 September 25, 2022

Dollars, except share data December 31, 2023 December 25, 2022 December 31, 2023 December 25, 2022

Revenue, net $ 208.4 $ 173.8 $ 405.8 $ 363.2

5 unchanged sentences

Factory start-up costs 10.5 37.6 18.9 76.0

Amortization or impairment of acquisition-related intangibles 0.3 0.5

Amortization of acquisition-related intangibles 0.3 0.6 0.6 1.1

Loss on disposal or impairment of other assets 0.3 0.1 0.4 0.2

14 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 24, 2023 September 25, 2022

Dollars) December 31, 2023 December 25, 2022 December 31, 2023 December 25, 2022

Net loss ($ 144.7 ) ($ 90.9 ) ($ 540.4 ) ($ 117.1 )

15 unchanged sentences

Balance at September 24, 2023 125,321 $ 0.2 $ 3,728.6 ($ 2,459.9 ) ($ 23.2 ) $ 1,245.7

Net loss — — — ( 144.7 ) — ( 144.7 )

Unrealized gain on available-for-sale securities — — — — 11.0 11.0

Tax withholding on vested equity awards — — ( 2.0 ) — — ( 2.0 )

Stock-based compensation 104 — 29.8 — — 29.8

Exercise of stock options and issuance of shares 360 — 10.4 — — 10.4

Balance at December 31, 2023 125,785 $ 0.2 $ 3,766.8 ($ 2,604.6 ) ($ 12.2 ) $ 1,150.2

The accompanying notes are an integral part of the consolidated financial statements

12 unchanged sentences

Balance at September 25, 2022 124,210 $ 0.2 $ 3,902.2 ($ 1,760.5 ) ($ 32.3 ) $ 2,109.6

Net loss — — — ( 90.9 ) — ( 90.9 )

Unrealized gain on available-for-sale securities — — — — 3.7 3.7

Tax withholding on vested equity awards — — ( 0.4 ) — — ( 0.4 )

Stock-based compensation — — 21.4 — — 21.4

Exercise of stock options and issuance of shares 203 — 10.7 — — 10.7

Capped call transactions related to the issuance of convertible notes due December 1, 2029 — — ( 273.9 ) — — ( 273.9 )

Balance at December 25, 2022 124,413 $ 0.2 $ 3,660.0 ($ 1,851.4 ) ($ 28.6 ) $ 1,780.2

The accompanying notes are an integral part of the consolidated financial statements

1 unchanged sentence

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended

Six months ended

(in millions of U.S.

Dollars) September 24, 2023 September 25, 2022

Dollars) December 31, 2023 December 25, 2022

Operating activities:

2 unchanged sentences

Net loss from continuing operations ( 249.8 ) ( 86.2 )

Adjustments to reconcile net loss to cash used in operating activities:

Adjustments to reconcile net loss to cash used in operating activities from continuing operations:

Depreciation and amortization 88.7 68.0

1 unchanged sentence

Stock-based compensation 42.1 38.9

Gain on equity investment ( 5.4 ) —

Loss on disposal or impairment of long-lived assets, including loss on disposal portion of factory start-up costs 0.4 2.0

19 unchanged sentences

Reimbursement of property and equipment purchases from long-term incentive agreement 79.4 70.7

Proceeds from sale of business resulting from the receipt of transaction related note receivable — 101.8

Net cash (used in) provided by investing activities of continuing operations ( 784.2 ) 106.6

Proceeds from sale of business 75.6 101.8

Net cash used in investing activities of continuing operations ( 1,446.7 ) ( 717.7 )

Net cash used in investing activities of discontinued operations ( 3.1 ) ( 4.3 )

Cash (used in) provided by investing activities ( 785.9 ) 102.8

Cash used in investing activities ( 1,449.8 ) ( 722.0 )

Financing activities:

Proceeds from long-term debt borrowings 1,000.0 —

Proceeds from convertible notes — 1,750.0

Payments of debt issuance costs ( 46.0 ) ( 31.4 )

Cash paid for capped call transactions — ( 273.9 )

Proceeds from issuance of common stock 10.9 11.2

2 unchanged sentences

Commitment fees on long-term incentive agreement ( 1.0 ) ( 1.0 )

Cash provided by (used in) financing activities 938.4 ( 17.6 )

Cash provided by financing activities 947.0 1,437.3

Effects of foreign exchange changes on cash and cash equivalents 0.1 —

17 unchanged sentences

Wolfspeed, Inc.

(the Company) is an innovator of wide bandgap semiconductors, focused on silicon carbide and gallium nitride (GaN) materials and devices for power and radio-frequency (RF) applications.

The Company’s product families include silicon carbide and GaN materials, power devices and RF devices targeted for various applications such as electric vehicles, fast charging, 5G, renewable energy and storage, and aerospace and defense.

As discussed more fully below in Note 2, “Discontinued Operations,” on August 22, 2023, the Company entered into a definitive agreement to sell certain assets comprising its RF product line (the RF Business Divestiture).

The RF Business Divestiture represents a strategic shift that will have a major effect on the Company's operations and financial results.

As a result, the Company has classified the results and cash flows of the RF product line as discontinued operations in its consolidated statements of operations and consolidated statements of cash flows for all periods presented.

Additionally, the related assets and liabilities associated with the transaction are classified as held for sale in the consolidated balance sheets.

(the Company) is an innovator of wide bandgap semiconductors, focused on silicon carbide materials and devices for power applications.

The Company’s product families include silicon carbide materials and power devices targeted for various applications such as electric vehicles, fast charging and renewable energy and storage.

Previously, the Company designed, manufactured and sold radio-frequency (RF) devices.

As discussed more fully below in Note 2, “Discontinued Operations,” on December 2, 2023, the Company completed its previously announced sale of certain assets comprising its RF product line.

The Company has classified the results and cash flows of the RF product line as discontinued operations in its consolidated statements of operations and consolidated statements of cash flows for all periods presented.

Additionally, the related assets and liabilities associated with the discontinued operations are classified as held for sale as of June 25, 2023 in the consolidated balance sheets.

Unless otherwise noted, discussion within these notes to the consolidated financial statements relates to the Company's continuing operations.

The Company’s continuing operations consist of power devices, which are used in electric vehicles, motor drives, power supplies, solar and transportation applications, and silicon carbide and GaN materials, which are targeted for customers who use them to manufacture products for RF, power and other applications.

The majority of the Company's products are manufactured at production facilities located in North Carolina, New York and Arkansas for continuing operations and in California for discontinued operations.

The Company also uses contract manufacturers for certain products and aspects of product fabrication, assembly and packaging for both continuing and discontinued operations.

The Company operates research and development facilities in North Carolina, Arkansas and New York for continuing operations and in California and Arizona for discontinued operations.

The majority of the Company's products are manufactured at production facilities located in North Carolina, New York and Arkansas.

The Company also uses contract manufacturers for certain products and aspects of product fabrication, assembly and packaging.

The Company operates research and development facilities in North Carolina, Arkansas and New York.

Wolfspeed, Inc.

2 unchanged sentences

The consolidated financial statements presented herein have been prepared by the Company and have not been audited.

In the opinion of management, all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations, comprehensive loss, shareholders' equity and cash flows at September 24, 2023, and for all periods presented, have been made.

In the opinion of management, all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations, comprehensive loss, shareholders' equity and cash flows at December 31, 2023, and for all periods presented, have been made.

All material intercompany accounts and transactions have been eliminated.

7 unchanged sentences

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 25, 2023 (fiscal 2023).

The results of operations for the three months ended September 24, 2023 are not necessarily indicative of the operating results that may be attained for the entire fiscal year ending June 30, 2024 (fiscal 2024).

The results of operations for the three and six months ended December 31, 2023 are not necessarily indicative of the operating results that may be attained for the entire fiscal year ending June 30, 2024 (fiscal 2024).

Recently Adopted Accounting Pronouncements

Accounting Pronouncements Pending Adoption

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Tax Disclosures, which requires disaggregated information about an entity’s income tax rate reconciliation as well as information regarding cash taxes paid both in the United States and foreign jurisdictions.

The amendments should be applied prospectively, with retrospective application permitted.

The amendments are effective for annual periods beginning after December 15, 2024 with early adoption permitted.

The Company is currently evaluating the impacts of adopting this guidance on its financial statement disclosures.

In December 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Segment Reporting Disclosures, to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance.

In addition, this amendment will require annual disclosures to be provided on an interim basis.

These disclosures are also required for entities with a single reportable segment.

The amendments require retrospective application to all periods presented.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impacts of adopting this guidance on its financial statement disclosures.

Note 2 – Discontinued Operations

RF Business Divestiture

On August 22, 2023, the Company entered into a definitive agreement (the RF Purchase Agreement) to sell its RF product line (the RF Business) to MACOM Technology Solutions Holdings, Inc.

(MACOM) for approximately $ 75 million in cash, subject to a customary purchase price adjustment, and 711,528 shares of MACOM common stock (the MACOM Shares), valued at $ 50 million based on the 30 trading day trailing average closing price for MACOM’s common stock through August 21, 2023 (the RF Business Divestiture).

The Company expects to close the transaction by the end of calendar 2023.

In connection with the RF Business Divestiture, MACOM will assume control of Wolfspeed’s 100mm gallium nitride wafer fabrication facility in Research Triangle Park, North Carolina (the RTP Fab) approximately two years following the closing of the transaction (the Closing) (the RTP Fab Transfer).

The RTP Fab Transfer will occur after the Closing to accommodate the Company’s relocation of certain production equipment currently located in the RTP Fab to its fabrication facility in Durham, North Carolina.

Prior to the RTP Fab Transfer, the MACOM Shares will be subject to restrictions on transfer.

The Company will forfeit one-quarter of the MACOM Shares if the RTP Fab Transfer has not occurred by the fourth anniversary of the Closing.

The Company and MACOM will also enter into certain ancillary and related agreements, including (i) an Intellectual Property Assignment and License Agreement, which will assign to MACOM certain intellectual property owned by the Company and its affiliates and license to MACOM certain additional intellectual property owned by the Company, (ii) a Transition Services Agreement, pursuant to which the Company will provide MACOM certain limited transition services following the Closing, (iii) a Master Supply Agreement, pursuant to which Wolfspeed will continue to operate the RTP Fab and supply MACOM with Epi-wafers and fabrication services between the date of the Closing and the date on which the RTP Fab Transfer is complete (the RTP Fab Transfer Date), (iv) a Long-Term Epi Supply Agreement (the LTA), pursuant to which MACOM will purchase from the Company Epi-wafers from the RTP Fab Transfer Date until the fifth anniversary of the RTP Fab Transfer Date, (v) an Epi Research and Development Agreement, pursuant to which the Company will provide MACOM certain research and development activities and other technical manufacturing support services related to the RF Business during the period between the Closing and expiration of the LTA, (vi) a Real Estate License Agreement, which will allow MACOM to use certain portions of the RTP Fab to conduct the RF Business between the Closing and the RTP Fab Transfer Date, and (vii) a Lease Agreement, which will allow MACOM to lease the premises of the RTP Fab for a period of 15 years after the RTP Fab Transfer Date.

The completion of the RF Business Divestiture is subject to the satisfaction or waiver of a number of conditions set forth in the RF Purchase Agreement.

Because the RF Business Divestiture represents a strategic shift that will have a major effect on the Company’s operations and financial results, the Company has classified the results of the RF Business as discontinued operations in the Company’s consolidated statements of operations for all periods presented.

The Company ceased recording depreciation and amortization of long-lived assets conveying in the RF Purchase Agreement upon classification as discontinued operations in August 2023.

Additionally, the related assets and liabilities associated with the RF Business Divestiture, with the exception of current and long-term assets associated with the RTP Fab, are classified as held for sale in the consolidated balance sheets.

The assets and liabilities held for sale as of September 24, 2023 are classified as current in the consolidated balance sheet as the Company expects the transaction to close within one year.

The RTP Fab is not considered within the RF Business Divestiture disposal group and the current and long-term assets associated with the RTP Fab are not classified as held for sale in the consolidated balance sheets.

On December 2, 2023, the Company completed the sale of its RF product line (the RF Business) to MACOM Technology Solutions Holdings, Inc.

(MACOM) pursuant to the terms of the previously reported Asset Purchase Agreement (the RF Purchase Agreement).

Pursuant to the RF Purchase Agreement, the Company received approximately $ 75 million in cash, subject to a customary purchase price adjustment, and 711,528 shares of MACOM common stock (the MACOM Shares), which shares had a market value of approximately $ 60.8 million based on the closing price for MACOM’s common stock on December 1, 2023, the last trading day prior to the closing of the transaction (the RF Closing), as reported on the Nasdaq Global Select Market (the RF Business Divestiture).

The RTP Fab Transfer will occur in the future to accommodate the Company’s relocation of certain production equipment currently located in the RTP Fab to its fabrication facility in Durham, North Carolina.

Prior to the RTP Fab Transfer, the MACOM Shares are subject to restrictions on transfer.

The Company will forfeit one-quarter of the MACOM Shares if the RTP Fab Transfer has not occurred by the fourth anniversary of the RF Closing.

The Company and MACOM also entered into certain ancillary and related agreements, including (i) an Intellectual Property Assignment and License Agreement, which assigned to MACOM certain intellectual property owned by the Company and its affiliates and license to MACOM certain additional intellectual property owned by the Company, (ii) a Transition Services Agreement (the RF TSA), pursuant to which the Company provides MACOM certain limited transition services following the RF Closing, (iii) a Master Supply Agreement, pursuant to which Wolfspeed will continue to operate the RTP Fab and supply MACOM with Epi-wafers and fabrication services (the RF Master Supply Agreement) through the date on which the RTP Fab Transfer is complete (the RTP Fab Transfer Date), (iv) a Long-Term Epi Supply Agreement (the Long-Term Epi Supply Agreement), pursuant to which MACOM will purchase from the Company Epi-wafers from the RTP Fab Transfer Date until the fifth anniversary of the RTP Fab Transfer Date, (v) an Epi Research and Development Agreement, pursuant to which the Company will provide MACOM certain research and development activities and other technical manufacturing support services related to the RF Business during the period between the RF Closing and expiration of the Long-Term Epi Supply Agreement, and (vi) a Real Estate License Agreement (the RF RELA), which allows MACOM to use certain portions of the RTP Fab to conduct the RF Business through the RTP Fab Transfer Date.

In connection with the RTP Fab Transfer, the Company and MACOM will enter into a Lease Agreement (the RTP Fab Lease Agreement), which allows MACOM to lease the premises of the RTP Fab for a period of 15 years after the RTP Fab Transfer Date.

Because the RF Business Divestiture represented a strategic shift that will have a major effect on the Company’s operations and financial results, the Company has classified the results of the RF Business as discontinued operations in the Company’s consolidated statements of operations for all periods presented.

The Company ceased recording depreciation and amortization of long-lived assets that conveyed in the RF Purchase Agreement upon classification as discontinued operations in August 2023.

The following table presents the financial results of the RF Business as loss from discontinued operations, net of income taxes in the Company's consolidated statements of operations:

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 24, 2023 September 25, 2022

Dollars) December 31, 2023 December 25, 2022 December 31, 2023 December 25, 2022

Revenue, net $ 26.8 $ 42.3 $ 59.6 $ 94.2

5 unchanged sentences

Amortization of intangibles — 2.2 1.5 4.6

Impairment on assets held for sale 144.6 —

Excess loss liability on assets held for sale 75.4 —

Loss on disposal of assets 0.3 — 0.3 —

Other operating expense 7.2 3.4 24.3 5.5

Operating loss ( 27.9 ) ( 18.3 ) ( 79.6 ) ( 30.5 )

Non-operating income — ( 0.2 )

Non-operating expense — 0.2 — —

Loss before income taxes and loss on sale ( 27.9 ) ( 18.5 ) ( 79.6 ) ( 30.5 )

(Gain) loss on sale ( 16.0 ) — 204.0 —

Loss before income taxes ( 11.9 ) ( 18.5 ) ( 283.6 ) ( 30.5 )

1 unchanged sentence

Net loss ($ 18.5 ) ($ 18.8 ) ($ 290.6 ) ($ 30.9 )

As of September 24, 2023, the Company recorded an impairment to assets held for sale associated with the pending RF Business Divestiture of $ 144.6 million and an excess loss liability on assets held for sale of $ 75.4 million.

The following table presents the assets and liabilities of the RF Business classified as discontinued operations:

In the first quarter of fiscal 2024, the Company recorded an impairment to assets held for sale associated with the pending RF Business Divestiture of $ 144.6 million and an excess loss liability on assets held for sale of $ 75.4 million.

During the first six months of fiscal 2024, the Company recorded a total loss on sale of $ 204.0 million, which was net against the impairments and excess loss liability on assets held for sale in the first quarter of fiscal 2024 and resulted in a gain on sale for the three months ended December 31, 2023.

This gain primarily consisted of an increase in fair value of the MACOM Shares between the date of the RF Purchase Agreement and the RF Closing.

Total cost of selling the RF Business was $ 25.4 million, which was recognized throughout fiscal 2023 and 2024.

At the inception of the RF Master Supply Agreement, the Company recorded a supply agreement liability of $ 95.0 million, of which $ 92.9 million was outstanding as of December 31, 2023.

The supply agreement liability is recognized in other current liabilities and other long-term liabilities on the consolidated balance sheets.

A receivable of $ 1.0 million in connection with the RF Master Supply Agreement is included in other current assets in the consolidated balance sheet as of December 31, 2023.

Additionally, the Company recorded a supply agreement liability of $ 58.0 million for the Long-Term Epi Supply Agreement and a liability of $ 38.0 million for the future transfer of assets in connection with the RTP Fab Transfer.

These liabilities are recognized in other long-term liabilities on the consolidated balance sheets.

The following table presents the assets and liabilities of the RF Business classified as discontinued operations as of June 25, 2023:

(in millions of U.S.

Dollars) September 24, 2023 June 25, 2023

Dollars) June 25, 2023

Assets (current and long-term)

4 unchanged sentences

Other assets 6.7

Valuation allowance on held for sale assets ( 144.6 ) —

Assets held for sale from discontinued operations 167.3

5 unchanged sentences

Other long-term liabilities 5.3

Excess loss liability on held for sale assets 75.4 —

Liabilities held for sale of discontinued operations 13.9

(1) Assets and liabilities of discontinued operations as of September 24, 2023 are classified as current on the consolidated balance sheet as the Company expects the transaction to close within twelve months of the balance sheet date .

LED Business Divestiture

2 unchanged sentences

(CreeLED and collectively with SGH, SMART) (the LED Business Divestiture) pursuant to the terms of the Asset Purchase Agreement (the LED Purchase Agreement), dated October 18, 2020, as amended.

In connection with the closing of the LED Business Divestiture, the Company and CreeLED also entered into certain ancillary and related agreements, including (i) an Intellectual Property Assignment and License Agreement, which assigned to CreeLED certain intellectual property owned by the Company and its affiliates and licensed to CreeLED certain additional intellectual property owned by the Company, (ii) a Transition Services Agreement (the LED TSA), (iii) a Wafer Supply and Fabrication Services Agreement (the Wafer Supply Agreement), pursuant to which the Company will supply CreeLED with certain silicon carbide materials and fabrication services for up to four years , and (iv) a Real Estate License Agreement (the LED RELA), which will allow CreeLED to use certain premises owned by the Company to conduct the LED Business for a period of up to 24 months after closing.

For the three months ended September 25, 2022, the Company recognized $ 0.9 million in administrative fees related to the LED RELA.

In connection with the closing of the LED Business Divestiture, the Company and CreeLED also entered into certain ancillary and related agreements, including (i) an Intellectual Property Assignment and License Agreement, which assigned to CreeLED certain intellectual property owned by the Company and its affiliates and licensed to CreeLED certain additional intellectual property owned by the Company, (ii) a Transition Services Agreement (the LED TSA), (iii) a Wafer Supply and Fabrication Services Agreement (the Wafer Supply Agreement), pursuant to which the Company will supply CreeLED with certain silicon carbide materials and fabrication services for up to four years , and (iv) a Real Estate License Agreement (the LED RELA), which allowed CreeLED to use certain premises owned by the Company to conduct the LED Business for a period of up to 24 months after closing.

For the three and six months ended December 25, 2022, the Company recognized $ 0.9 million and $ 1.8 million in administrative fees related to the LED RELA.

Fees related to the LED RELA were recorded as lease income, see Note 4, "Leases." The LED RELA concluded in the third quarter of fiscal 2023.

For the three months ended September 25, 2022, the Company recognized $ 1.9 million in administrative fees related to the LED TSA.

For the three and six months ended December 25, 2022, the Company recognized $ 1.8 million and $ 3.7 million in administrative fees related to the LED TSA.

Fees related to the LED TSA were recorded as a reduction in expense within the line item in the consolidated statements of operations in which costs were incurred.

The LED TSA concluded in the fourth quarter of fiscal 2023.

At the inception of the Wafer Supply Agreement, the Company recorded a supply agreement liability of $ 31.0 million, none of which was outstanding as of September 24, 2023.

For the three months ended September 24, 2023 and September 25, 2022, the Company recognized a net loss of $ 6.9 million and a net gain of $ 0.1 million, respectively, in non-operating expense (income), net related to the Wafer Supply Agreement, of which a receivable of $ 0.9 million is included in other assets in the consolidated balance sheet as of September 24, 2023.

At the inception of the Wafer Supply Agreement, the Company recorded a supply agreement liability of $ 31.0 million, none of which was outstanding as of December 31, 2023.

For the three and six months ended December 31, 2023, the Company recognized a net loss of $ 6.6 million and $ 13.5 million, respectively in non-operating expense (income), net related to the Wafer Supply Agreement, of which a receivable of $ 0.9 million is included in other current assets in the consolidated balance sheet as of December 31, 2023.

For the three and six months ended December 25, 2022, the Company recognized a net loss of $ 2.6 million and $ 2.5 million, respectively, in non-operating income, net related to the Wafer Supply Agreement.

Note 3 – Revenue Recognition

6 unchanged sentences

Contract liabilities primarily include various rights of return and customer deposits, as well as a reserve on the Company's "ship and debit" program.

Contract liabilities were $ 75.6 million as of September 24, 2023 and $ 69.8 million as of June 25, 2023.

Contract liabilities were $ 84.8 million as of December 31, 2023 and $ 69.8 million as of June 25, 2023.

The increase was primarily due to increased ship and debit reserves.

Contract liabilities are recorded within accrued contract liabilities and other long-term liabilities on the consolidated balance sheets.

For the three months ended September 24, 2023, the Company did not recognize any material revenue that was included in contract liabilities as of June 25, 2023.

Product Line Revenue

2 unchanged sentences

Revenue from these two product lines is as follows:

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 24, 2023 September 25, 2022

Dollars) December 31, 2023 December 25, 2022 December 31, 2023 December 25, 2022

Power Products $ 107.7 $ 96.0 $ 208.9 $ 200.5

5 unchanged sentences

Disaggregated continuing operations revenue from external customers by geographic area is as follows:

Three months ended

September 24, 2023 September 25, 2022

Three months ended Six months ended

December 31, 2023 December 25, 2022 December 31, 2023 December 25, 2022

(in millions of U.S.

Dollars) Revenue % of Revenue Revenue % of Revenue

Dollars) Revenue % of Revenue Revenue % of Revenue Revenue % of Revenue Revenue % of Revenue

Europe $ 72.7 34.9 % $ 60.7 34.9 % $ 148.0 36.5 % $ 131.2 36.1 %

Asia Pacific (excluding China and Hong Kong) 44.6 22.6 % 35.7 18.8 %

Asia Pacific (1)

58.6 28.1 % 37.5 21.6 % 103.2 25.4 % 73.2 20.2 %

Hong Kong 39.3 18.9 % 33.2 19.1 % 73.4 18.1 % 74.7 20.6 %

3 unchanged sentences

Total $ 208.4 $ 173.8 $ 405.8 $ 363.2

(1) Excluding China and Hong Kong

Note 4 – Leases

7 unchanged sentences

Operating Leases:

September 24, 2023 June 25, 2023

December 31, 2023 June 25, 2023

Right-of-use asset (1)

13 unchanged sentences

Statement of Operations

Operating lease expense was $ 3.3 million and $ 1.8 million for the three months ended September 24, 2023 and September 25, 2022, respectively.

Finance lease amortization was $ 0.2 million and interest expense was $ 0.1 million for the three months ended September 24, 2023.

Finance lease amortization was $ 0.2 million and interest expense was $ 0.1 million for the three months ended September 25, 2022.

Operating lease expense was $ 3.9 million and $ 7.2 million for the three and six months ended December 31, 2023, respectively, and $ 2.0 million and $ 3.8 million for the three and six months ended December 25, 2022, respectively.

Finance lease amortization was $ 0.2 million and $ 0.4 million for the three and six months ended December 31, 2023, respectively, and $ 0.2 million and $ 0.4 million for the three and six months ended December 25, 2022, respectively.

Interest expense for all periods presented was immaterial.

Cash flow information consisted of the following (1) :

Three months ended

Six months ended

(in millions of U.S.

Dollars) September 24, 2023 September 25, 2022

Cash (used in) provided by operating activities:

Dollars) December 31, 2023 December 25, 2022

Cash (used in) provided by operating activities from continuing operations:

Cash paid for operating leases ($ 5.6 ) ($ 2.1 )

5 unchanged sentences

Lease Liability Maturities

Maturities of operating and finance lease liabilities as of September 24, 2023 were as follows (in millions of U.S.

Maturities of operating and finance lease liabilities as of December 31, 2023 were as follows (in millions of U.S.

Fiscal Year Ending Operating Leases Finance Leases Total

16 unchanged sentences

(2) Weighted average discount rate of finance leases without the 49-year ground lease is 3.40 %.

As mentioned in Note 2, "Discontinued Operations", on March 1, 2021 and in connection with the LED Business Divestiture, the Company entered into the LED RELA pursuant to which the Company leased to CreeLED approximately 58,000 square feet of the Company’s property and certain facilities in Durham, North Carolina for a total of $ 3.6 million per year.

On December 1, 2023 and in connection with the RF Business Divestiture discussed in Note 2, “Discontinued Operations,” the Company entered into the RF RELA pursuant to which the Company leases to MACOM approximately 25,659 square feet of its property and certain facilities in the Research Triangle Park, North Carolina for a total of $ 0.7 million per year.

The lease term is the earlier of (i) 24 full fiscal months following the RF Closing or (ii) the date on which the Company and MACOM enter into the RTP Fab Lease Agreement.

The Company in its sole discretion may extend the term for two additional periods of 12 months by providing notice to MACOM at least six months prior to the last day of the then-current term.

Additionally, as mentioned in Note 2, "Discontinued Operations," on March 1, 2021 and in connection with the LED Business Divestiture, the Company entered into the LED RELA pursuant to which the Company leased to CreeLED approximately 58,000 square feet of the Company’s property and certain facilities in Durham, North Carolina for a total of $ 3.6 million per year.

The lease term was 24 months and expired on February 26, 2023.

In addition, the Company leases space to a third party at one of its owned facilities.

The Company recognized lease income of $ 0.2 million and $ 0.9 million for the three months ended September 24, 2023 and September 25, 2022, respectively.

The Company recognized lease income of $ 0.2 million and $ 0.4 million for the three and six months ended December 31, 2023, respectively.

The Company recognized lease income of $ 0.9 million and $ 1.8 million for the three and six months ended December 25, 2022, respectively.

Note 5 – Financial Statement Details

2 unchanged sentences

(in millions of U.S.

Dollars) September 24, 2023 June 25, 2023

Dollars) December 31, 2023 June 25, 2023

Billed trade receivables $ 129.5 $ 152.1

3 unchanged sentences

Accounts receivable, net $ 132.6 $ 154.8

Expected credit losses for the Company's receivables are evaluated on a collective (pool) basis and aggregated on the basis of similar risk characteristics.

These aggregated risk pools are reassessed at each measurement date.

A combination of factors is considered in determining the appropriate estimate of expected credit losses, including broad-based economic indicators as well as customers' financial strength, credit standing, payment history and any historical defaults.

Inventories consisted of the following:

(in millions of U.S.

Dollars) September 24, 2023 June 25, 2023

Dollars) December 31, 2023 June 25, 2023

Raw material $ 110.6 $ 90.7

2 unchanged sentences

Inventories $ 370.2 $ 284.9

In addition to inventory held by the Company associated with the power and materials product lines, the Company holds inventory related to a master supply agreement that will be entered into in connection with the RF Business Divestiture (the Master Supply Agreement).

Of the total inventory noted above, $ 30.7 million and $ 29.7 million relates to the future Master Supply Agreement as of September 24, 2023 and June 25, 2023, respectively.

In addition to inventory held by the Company associated with the power and materials product lines, the Company holds inventory associated with the Company's former RF product line (pursuant to the RF Master Supply Agreement).

At the RF Closing, this inventory was reclassified to other current assets.

As of June 25, 2023, $ 25.7 million of the total inventory in the above table was related to the RF Master Supply Agreement.

Other Current Assets

1 unchanged sentence

(in millions of U.S.

Dollars) September 24, 2023 June 25, 2023

Dollars) December 31, 2023 June 25, 2023

Reimbursement receivable on long-term incentive agreement $ 116.4 $ 91.3

Receivables in connection with short-term investment maturities 40.0 —

Inventory related to the RF Master Supply Agreement 27.5 —

Accrued interest receivable 14.2 10.1

Other receivables 11.0 2.2

Short-term deposit on long-term incentive agreement 10.0 10.0

VAT receivables 9.8 4.8

Insurance deposit 4.2 6.3

Inventory related to the Wafer Supply Agreement 3.6 3.9

Receivable on the Wafer Supply Agreement 0.9 1.3

Other 20.8 20.1

Other current assets $ 228.9 $ 131.5

Other assets consisted of the following:

(in millions of U.S.

Dollars) December 31, 2023 June 25, 2023

Investment tax credit receivable $ 378.4 $ 167.4

Right-of-use assets 95.4 98.0

Long-term advances to suppliers 36.3 8.7

Cloud computing assets, net 16.4 17.6

Other 14.6 11.6

Other assets $ 541.1 $ 303.3

Accounts Payable and Accrued Expenses

1 unchanged sentence

(in millions of U.S.

Dollars) September 24, 2023 June 25, 2023

Dollars) December 31, 2023 June 25, 2023

Accounts payable, trade $ 46.1 $ 44.9

5 unchanged sentences

Other operating expense consisted of the following:

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 24, 2023 September 25, 2022

Dollars) December 31, 2023 December 25, 2022 December 31, 2023 December 25, 2022

Project, transformation and transaction costs 4.6 1.1 $ 7.2 $ 2.0

Executive severance costs — 0.3 — 1.3

Restructuring costs — 0.2 — 0.2

Other operating expense $ 4.6 $ 1.6 $ 7.2 $ 3.5

Accumulated Other Comprehensive Loss, net of taxes

Accumulated other comprehensive loss, net of taxes, consisted of $ 23.2 million and $ 25.1 million of net unrealized losses on available-for-sale securities as of September 24, 2023 and June 25, 2023, respectively.

Accumulated other comprehensive loss, net of taxes, consisted of $ 12.2 million and $ 25.1 million of net unrealized losses on available-for-sale securities as of December 31, 2023 and June 25, 2023, respectively.

Amounts for both periods include a $ 2.4 million loss related to tax on unrealized loss on available-for-sale securities.

Reclassifications Out of Accumulated Other Comprehensive Loss

Reclassifications out of accumulated other comprehensive loss was a less than $ 0.1 million gain for both the three months ended September 24, 2023 and the three months ended September 25, 2022.

Amounts were reclassified to non-operating expense (income), net on the consolidated statements of operations.

Reclassifications out of accumulated other comprehensive loss were immaterial for all periods presented.

Non-Operating Expense (Income), net

The following table summarizes the components of non-operating expense (income), net:

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 24, 2023 September 25, 2022

Dollars) December 31, 2023 December 25, 2022 December 31, 2023 December 25, 2022

Interest income ( 38.2 ) ( 11.6 ) ( 78.8 ) ( 15.9 )

1 unchanged sentence

Gain on arbitration proceedings (1)

Loss (gain) on Wafer Supply Agreement 6.9 ( 0.1 )

— ( 0.9 ) — ( 50.3 )

Loss on Wafer Supply Agreement 6.6 2.6 13.5 2.5

Gain on equity investment ( 5.4 ) — ( 5.4 ) —

Other, net 0.5 1.1 1.0 0.6

1 unchanged sentence

(1) In the first quarter of fiscal 2023, the Company received an arbitration award in relation to a former customer failing to fulfill contractual obligations to purchase a certain amount of product over a period of time.

In the second quarter of fiscal 2023, a final payment, net of legal fees, was received.

The arbitration award is recognized as non-operating income, net of legal fees incurred.

Statements of Cash Flows - non-cash activities

Three months ended

Six months ended

(in millions of U.S.

Dollars) September 24, 2023 September 25, 2022

Lease asset and liability additions $ 1.0 $ 0.4

Lease asset and liability modifications, net 1.8 —

Dollars) December 31, 2023 December 25, 2022

Decrease in property, plant and equipment from investment tax credit receivables $ 211.0 $ 24.3

Decrease in property, plant and equipment from long-term incentive related receivables 104.3 49.8

Accrued property and equipment as of September 24, 2023 and September 25, 2022 was $ 340.2 million and $ 146.3 million, respectively.

Proceeds on sale of business received in US corporation common stock 60.8 —

Receivables in connection with short-term investment maturities 40.0 —

Lease asset and liability additions 1.2 12.7

Lease asset and liability modifications, net 1.9 0.2

Lease terminations ( 1.4 ) —

Accrued property and equipment as of December 31, 2023 and December 25, 2022 was $ 368.0 million and $ 156.8 million, respectively.

Note 6 – Investments

Short-term investments consisted of the following (in millions of U.S.

September 24, 2023

December 31, 2023

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Credit Loss Allowance Estimated Fair Value

3 unchanged sentences

Commercial paper 90.1 — — — 90.1

agency securities 72.8 — ( 0.2 ) — 72.6

Certificates of deposit 60.1 — — — 60.1

agency securities 58.5 — ( 0.1 ) — 58.4

Variable rate demand notes 27.3 — — — 27.3

11 unchanged sentences

All short-term investments are classified as available-for-sale.

The Company did not have any long-term investments as of September 24, 2023 and June 25, 2023.

The following tables present the gross unrealized losses and estimated fair value of the Company’s short-term investments, aggregated by investment type and the length of time that individual securities have been in a continuous unrealized loss position (in millions of U.S.

September 24, 2023

December 31, 2023

Less than 12 Months Greater than 12 Months Total

Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

treasury securities $ 631.5 ($ 0.7 ) $ 26.3 ($ 0.7 ) $ 657.8 ($ 1.4 )

Corporate bonds $ 47.6 ($ 0.1 ) $ 280.8 ($ 9.2 ) $ 328.4 ($ 9.3 )

treasury securities 119.1 ( 0.1 ) 19.6 ( 0.3 ) 138.7 ( 0.4 )

Municipal bonds 17.1 ( 0.1 ) 84.0 ( 2.5 ) 101.1 ( 2.6 )

agency securities 58.5 — — — 58.5 —

Commercial Paper 4.0 — — — 4.0 —

Total $ 242.3 ($ 0.3 ) $ 384.4 ($ 12.0 ) $ 626.7 ($ 12.3 )

10 unchanged sentences

Number of securities with an unrealized loss 95 234 329

Additionally, the Company held cash equivalent securities in unrealized loss positions as of September 24, 2023 and June 25, 2023.

As of September 24, 2023, the Company held six cash equivalent securities in an unrealized loss position with a fair value of $ 92.6 million and an unrealized loss of less than $ 0.1 million.

Additionally, the Company held cash equivalent securities in unrealized loss positions as of June 25, 2023.

As of June 25, 2023, the Company held two cash equivalent securities in unrealized loss positions with an aggregate fair value of $ 18.5 million and an aggregate unrealized loss of less than $ 0.1 million.

All cash equivalents in unrealized loss positions as of September 24, 2023 and June 25, 2023 have been in unrealized loss positions for less than 12 months.

All cash equivalents in unrealized loss positions as of June 25, 2023 had been in unrealized loss positions for less than 12 months.

The Company did not hold cash equivalent securities in an unrealized loss position as of December 31, 2023.

The Company does not include accrued interest in estimated fair values of short-term investments and does not record an allowance for credit losses on receivables related to accrued interest.

Accrued interest receivable was $ 13.3 million and $ 10.1 million as of September 24, 2023 and June 25, 2023, respectively, and is recorded in other current assets on the consolidated balance sheets.

Accrued interest receivable was $ 14.2 million and $ 10.1 million as of December 31, 2023 and June 25, 2023, respectively, and is recorded in other current assets on the consolidated balance sheets.

When necessary, write-offs of noncollectable interest income are recorded as a reversal to interest income.

There were no write-offs of noncollectable interest income during the three months ended September 24, 2023 and September 25, 2022.

There were no write-offs of noncollectable interest income during the three and six months ended December 31, 2023 and December 25, 2022.

The Company utilizes specific identification in computing realized gains and losses on the sale of investments.

Realized gains and losses are included in non-operating (income) expense, net in the consolidated statements of operations.

Realized gains and losses are included in non-operating expense (income), net in the consolidated statements of operations.

Unrealized gains and losses are included as a separate component of equity, net of tax, unless the Company determines there is an expected credit loss.

The Company evaluates its investments for expected credit losses.

The Company believes it is able to and intends to hold each of the investments held with an unrealized loss as of September 24, 2023 until the investments fully recover in market value.

No allowance for credit losses was recorded as of September 24, 2023.

The contractual maturities of short-term investments as of September 24, 2023 were as follows:

The Company believes it is able to and intends to hold each of the investments held with an unrealized loss as of December 31, 2023 until the investments fully recover in market value.

No allowance for credit losses was recorded as of December 31, 2023.

The contractual maturities of short-term investments as of December 31, 2023 were as follows:

(in millions of U.S.

4 unchanged sentences

Commercial paper 90.1 — — — 90.1

agency securities 72.6 — — — 72.6

Certificates of deposit 60.1 — — — 60.1

agency securities 58.4 — — — 58.4

Variable rate demand notes — — 10.7 16.6 27.3

11 unchanged sentences

The financial assets for which the Company performs recurring fair value remeasurements are cash equivalents and short-term investments.

As of September 24, 2023 and June 25, 2023, financial assets utilizing Level 1 inputs included U.S.

treasury securities and money market funds, and financial assets utilizing Level 2 inputs included municipal bonds, corporate bonds, U.S.

As of December 31, 2023 and June 25, 2023, financial assets utilizing Level 1 inputs included U.S.

treasury securities, money market fund and U.S.

corporation common stock, and financial assets utilizing Level 2 inputs included municipal bonds, corporate bonds, U.S.

agency securities, commercial paper, certificates of deposit and variable rate demand notes.

1 unchanged sentence

These sources determine prices utilizing market income models which factor in, where applicable, transactions of similar assets in active markets, transactions of identical assets in infrequent markets, interest rates, bond or credit default swap spreads and volatility.

The Company did not have any financial assets requiring the use of Level 3 inputs as of September 24, 2023 and June 25, 2023.

The Company did not have any financial assets requiring the use of Level 3 inputs as of December 31, 2023 and June 25, 2023.

The following table sets forth financial instruments carried at fair value within the U.S.

GAAP hierarchy:

September 24, 2023 June 25, 2023

December 31, 2023 June 25, 2023

(in millions of U.S.

2 unchanged sentences

Money market funds $ 307.3 $ — $ 307.3 $ 230.4 $ — $ 230.4

Corporate bonds — 4.0 4.0 — — —

treasury securities 44.8 — 44.8 20.7 — 20.7

Commercial paper — 6.9 6.9 — 7.0 7.0

Certificates of deposit — 3.8 3.8 — — —

Total cash equivalents 352.1 10.9 363.0 251.1 7.0 258.1

8 unchanged sentences

Total short-term investments 889.4 841.9 1,731.3 260.4 937.5 1,197.9

Total cash equivalents and short-term investments $ 1,185.8 $ 906.6 $ 2,092.4 $ 511.5 $ 944.5 $ 1,456.0

Other long-term investments:

US corporation common stock 66.1 — 66.1 — — —

Total assets $ 1,307.6 $ 852.8 $ 2,160.4 $ 511.5 $ 944.5 $ 1,456.0

Other long-term investments consists of the MACOM Shares which the Company received as partial consideration in connection with the RF Business Divestiture.

These shares are accounted for utilizing the fair value option and changes in the fair value of the shares are recognized in non-operating expense (income), net.

Note 8 – Goodwill and Intangible Assets

There were no changes to goodwill during the three months ended September 24, 2023.

There were no changes to goodwill during the six months ended December 31, 2023.

Intangible Assets, net

The following table presents the components of intangible assets, net:

September 24, 2023 June 25, 2023

December 31, 2023 June 25, 2023

(in millions of U.S.

5 unchanged sentences

(1) Relates to developed technology

Total amortization of acquisition-related intangibles assets was $ 0.3 million for the three months ended September 24, 2023 and $ 0.5 million for the three months ended September 25, 2022.

Total amortization of patents and licensing rights was $ 1.0 million for the three months ended September 24, 2023, and $ 1.0 million for the three months ended September 25, 2022.

Total amortization of acquisition-related intangibles assets was $ 0.3 million and $ 0.6 million for the three and six months ended December 31, 2023, respectively, and $ 0.6 million and $ 1.1 million for the three and six months ended December 25, 2022, respectively.

Total amortization of patents and licensing rights was $ 1.3 million and $ 2.3 million for the three and six months ended December 31, 2023, respectively, and $ 1.1 million and $ 2.1 million for the three and six months ended December 25, 2022, respectively.

Total future amortization expense of intangible assets is estimated to be as follows:

44 unchanged sentences

(in millions of U.S.

Dollars) September 24, 2023 June 25, 2023

Dollars) December 31, 2023 June 25, 2023

Principal $ 3,075.0 $ 3,075.0

1 unchanged sentence

Net carrying amount $ 3,030.3 $ 3,025.6

The last reported sale price of the Company's common stock was not greater than or equal to 130 % of the applicable conversion price for any of the Outstanding Convertible Notes for at least 20 trading days in the 30 consecutive trading days ended on September 30, 2023.

As a result, none of the Outstanding Convertible Notes are convertible at the option of the holders through December 31, 2023.

As a result, none of the Outstanding Convertible Notes are convertible at the option of the holders through March 31, 2024.

2030 Senior Notes

13 unchanged sentences

Upon the Company’s achieving 50 % utilization at its Marcy, New York facility and generating at least $ 450.0 million of revenue from MVF Products, in each case over a six-month period, the Liquidity Covenant will be permanently reduced to zero .

As of September 24, 2023, the Company was in compliance with all covenants relating to the 2030 Senior Notes.

As of December 31, 2023, the Company was in compliance with all covenants relating to the 2030 Senior Notes.

The 2030 Senior Notes are superior in right of payment to the Company's unsecured indebtedness to the extent of the collateral securing the 2030 Senior Notes.

16 unchanged sentences

(in millions of U.S.

Dollars) September 24, 2023 June 25, 2023

Dollars) December 31, 2023 June 25, 2023

Principal $ 2,250.0 $ 1,250.0

3 unchanged sentences

The interest expense, net recognized related to the Corporate Debt Holdings and the deposits under the CRD Agreement is as follows:

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 24, 2023 September 25, 2022

Dollars) December 31, 2023 December 25, 2022 December 31, 2023 December 25, 2022

Interest expense, net of capitalized interest $ 56.0 $ 5.7 $ 109.7 $ 8.7

2 unchanged sentences

The Company capitalizes interest in connection with ongoing capacity expansions.

For the three months ended September 24, 2023, the Company capitalized $ 2.3 million of interest expense and $ 0.3 million of amortization of issuance costs.

The Company did not capitalize interest expense for the three months ended September 25, 2022.

For the three and six months ended December 31, 2023, the Company capitalized $ 5.2 million and $ 7.5 million of interest expense, respectively, and $ 0.7 million and $ 1.0 million of amortization of issuance costs, respectively.

The Company did not capitalize interest expense for the three and six months ended December 25, 2022.

Note 10 – Loss Per Share

The details of the computation of basic and diluted loss per share are as follows:

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars, except share data) September 24, 2023 September 25, 2022

Dollars, except share data) December 31, 2023 December 25, 2022 December 31, 2023 December 25, 2022

Net loss from continuing operations ($ 126.2 ) ($ 72.1 ) ($ 249.8 ) ($ 86.2 )

5 unchanged sentences

Diluted net loss per share is the same as basic net loss per share for the periods presented due to potentially dilutive items being anti-dilutive given the Company's net loss.

For the three months ended September 24, 2023 and September 25, 2022, 3.3 million and 2.6 million of weighted average shares, respectively, were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive.

For the three and six months ended December 31, 2023, 3.9 million and 3.8 million of weighted average shares, respectively, were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive.

For the three and six months ended December 25, 2022, 2.8 million and 2.8 million, respectively, of weighted average shares were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive.

Future earnings per share of the Company are also subject to dilution from conversion of its Outstanding Convertible Notes under certain conditions as described in Note 9, “Long-term Debt.”

1 unchanged sentence

Overview of Employee Stock-Based Compensation Plans

During the three months ended September 24, 2023 and September 25, 2022, the Company had one equity-based compensation plan, the 2013 Long-Term Incentive Compensation Plan (2013 LTIP), from which stock-based compensation awards can be granted to employees and directors.

The 2013 LTIP provides for awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other awards.

The Company currently has one equity-based compensation plan, the 2023 Long-Term Incentive Compensation Plan (the 2023 LTIP), from which stock-based compensation awards can be granted to employees and directors.

In October 2023, the 2023 LTIP replaced the Company's previous equity-based compensation plan, the 2013 Long-Term Incentive Compensation Plan (the 2013 LTIP, and together with the 2023 LTIP, the LTIPs).

The LTIPs provide awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other awards.

The Company also has an Employee Stock Purchase Plan (ESPP) that provides employees with the opportunity to purchase common stock at a discount.

The ESPP limits employee contributions to 15 % of each employee’s compensation (as defined in the plan) and allows employees to purchase shares at a 15 % discount, subject to IRS limitations.

The ESPP limits employee contributions to 15 % of each employee’s compensation (as defined in the ESPP) and allows employees to purchase shares at a 15 % discount, subject to IRS limitations.

The ESPP provides for a twelve-month participation period, divided into two equal six-month purchase periods, and also provides for a look-back feature.

At the end of each six-month period in April and October, participants may purchase the Company’s common stock through the ESPP at a 15 % discount to the fair market value of the common stock on the first day of the twelve-month participation period or the purchase date, whichever is lower.

The plan also provides for an automatic reset feature to start participants on a new twelve-month participation period if the fair market value of common stock declines during the first six-month purchase period.

The ESPP also provides for an automatic reset feature to start participants on a new twelve-month participation period if the fair market value of common stock declines during the first six-month purchase period.

Restricted Stock Units

A summary of nonvested restricted stock unit awards (RSUs) outstanding as of September 24, 2023 and changes during the three months then ended is as follows:

A summary of nonvested restricted stock unit awards (RSUs) outstanding as of December 31, 2023 and changes during the six months then ended is as follows:

(unit awards in thousands) Number of RSUs Weighted Average Grant-Date Fair Value

3 unchanged sentences

Forfeited ( 363 ) $ 79.78

Nonvested at September 24, 2023 3,155 $ 77.72

Nonvested at December 31, 2023 3,021 $ 74.56

Stock-Based Compensation Valuation and Expense

15 unchanged sentences

Total stock-based compensation expense was classified in the consolidated statements of operations as follows:

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 24, 2023 September 25, 2022

Dollars) December 31, 2023 December 25, 2022 December 31, 2023 December 25, 2022

Cost of revenue, net $ 6.4 $ 5.5 $ 12.4 $ 11.3

9 unchanged sentences

The Company assesses all available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets by jurisdiction.

As of September 24, 2023, the Company has concluded that it is necessary to recognize a full valuation allowance against its U.S.

As of December 31, 2023, the Company has concluded that it is necessary to recognize a full valuation allowance against its U.S.

deferred tax assets.

3 unchanged sentences

As of June 25, 2023, the Company's liability for unrecognized tax benefits was $ 9.8 million.

During the three months ended September 24, 2023, the Company recognized a $ 1.3 million decrease to the liability for unrecognized tax benefits due to statute expiration and a $ 0.3 million increase to the liability for unrecognized tax benefits due to an increase in generated research and development credits.

As a result, the total liability for unrecognized tax benefits as of September 24, 2023 was $ 8.8 million.

During the six months ended December 31, 2023, the Company recognized a $ 1.3 million decrease to the liability for unrecognized tax benefits due to statute expiration and a $ 0.4 million increase to the liability for unrecognized tax benefits due to an increase in generated research and development credits.

As a result, the total liability for unrecognized tax benefits as of December 31, 2023 was $ 8.9 million.

If any portion of this $ 8.9 million is recognized, the Company will then include that portion in the computation of its effective tax rate.

19 unchanged sentences

Patent & Trademark Office.

The litigation with Purdue is in the middle of fact discovery, and trial is currently scheduled to begin in November 2024.

The litigation with Purdue is in the middle of fact discovery, and the trial date has not yet been finalized but is expected to take place in 2025.

Due to the stage of the case, the Company is unable to estimate the possible range of loss, if any, at this time.

5 unchanged sentences

Additionally, the Company has agreed, under a separate agreement (the SUNY Agreement), to sponsor the creation of two endowed faculty chairs and fund a scholarship program at SUNY Polytechnic Institute.

As of September 24, 2023, the annual cost of satisfying the objectives of the GDA and the SUNY Agreement, excluding the direct and indirect costs associated with employment, varies from $ 2.7 million to $ 5.2 million per year through fiscal 2031.

As of September 24, 2023, the Company has reduced property and equipment, net by a total of $ 446.9 million as a result of GDA reimbursements, of which $ 344.8 million has been received in cash and an additional $ 102.1 million in receivables are recorded in other current assets and in other assets in the consolidated balance sheet.

As of December 31, 2023, the annual cost of satisfying the objectives of the GDA and the SUNY Agreement, excluding the direct and indirect costs associated with employment, varies from $ 2.7 million to $ 5.2 million per year through fiscal 2031.

As of December 31, 2023, the Company has reduced property and equipment, net by a total of $ 500.0 million as a result of GDA reimbursements, of which $ 384.0 million has been received in cash and an additional $ 116.0 million in receivables are recorded in other current assets and in other assets in the consolidated balance sheet.

The Company started receiving cash reimbursements in the fourth quarter of fiscal 2021.

1 unchanged sentence

From time to time, the Company may enter into agreements with its suppliers which require the Company to commit to a minimum of product purchases or make capacity reservation deposits.

In the third quarter of fiscal 2023, the Company entered into an agreement with a supplier which requires a minimum commitment of product purchases on a take-or-pay basis of $ 200.0 million over the next five years .

During the three months ended September 24, 2023, the Company purchased $ 6.3 million of product under this agreement.

As of September 24, 2023, minimum future product purchases have been satisfied for fiscal 2024, and minimum future product purchases for fiscal years 2025, 2026, 2027 and 2028 are $ 26.8 million, $ 36.0 million, $ 50.1 million and $ 73.7 million, respectively.

During the three and six months ended December 31, 2023, the Company purchased $ 6.3 million and $ 12.6 million of product under this agreement, respectively.

As of December 31, 2023, minimum future product purchases have been satisfied for fiscal 2024, and minimum future product purchases for fiscal years 2025, 2026, 2027 and 2028 are $ 26.8 million, $ 36.0 million, $ 50.1 million and $ 73.7 million, respectively.

In addition, the Company will pay quarterly capacity reservation deposits through the second quarter of fiscal 2026.

The capacity reservation deposits will total $ 60.0 million and are refundable through credits on future product purchases.

As of September 24, 2023, the Company has paid $ 13.0 million in connection with the agreement, which is recognized in prepaid expenses on the consolidated balance sheet.

As of December 31, 2023, the Company has paid $ 26.2 million in connection with the agreement, which is recognized in prepaid expenses and other long-term assets on the consolidated balance sheet.

In the second quarter of fiscal 2024, the Company entered into an agreement with a supplier which requires a minimum commitment of product purchases on a take-or-pay basis of $ 86.4 million over the life of the contract.

In the second quarter of fiscal 2024, the Company purchased $ 4.8 million of product under this agreement, which satisfied the minimum future product purchases for the period.

Minimum future product purchase for the remainder of fiscal 2024 and fiscal years 2025, 2026 and 2027 are $ 14.4 million, $ 28.8 million, $ 28.8 million and $ 9.6 million, respectively.

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 1. Financial Statements