What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-08-22 compared with 2023-08-23 · 266 added, 304 removed, 1146 unchanged (33% of the section changed)

21 unchanged sentences

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the United States federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

19 unchanged sentences

Certain distributors are provided customer pricing arrangements under the Company’s “ship and debit” program.

Distributor sales approximate a third of total net revenue of $921.9 million for the year ended June 25, 2023.

Distributor sales approximate a quarter of total net revenue of $807.2 million for the year ended June 30, 2024.

Management makes estimates of changes in selling prices when the corresponding product ships.

1 unchanged sentence

Accordingly, estimates for these rights are recognized at the time of sale as a contract liability and a reduction of product revenue.

The associated reserves for ship and debit program to distributors make up a significant portion of the accrued contract liabilities account balance of $43.0 million.

The associated reserves for ship and debit program to distributors make up a significant portion of the contract liabilities and distributor-related reserves account balance of $62.3 million.

The principal considerations for our determination that performing procedures relating to ship and debit reserves for distributor programs is a critical audit matter are the high degree of auditor effort in performing procedures and evaluating management’s significant assumptions related to current economic conditions, historical experience and on-hand inventory at the distributor.

21 unchanged sentences

Other current assets 179.8 131.5

Current assets held for sale — 1.6

Current assets held for sale from discontinued operations — 42.8

Total current assets 2,999.6 3,606.5

3 unchanged sentences

Long-term receivables 2.3 2.6

Other long-term investments 79.3 —

Deferred tax assets 1.1 1.2

Other assets 866.9 303.3

Long-term assets held for sale from discontinued operations — 124.5

Total assets $ 7,984.6 $ 6,586.7

2 unchanged sentences

Accounts payable and accrued expenses $ 523.6 $ 534.5

Accrued contract liabilities 43.0 37.0

Contract liabilities and distributor-related reserves 62.3 39.0

Income taxes payable 1.0 9.6

1 unchanged sentence

Other current liabilities 77.9 35.7

Current liabilities held for sale from discontinued operations — 8.6

Total current liabilities 665.3 627.9

5 unchanged sentences

Other long-term liabilities 256.4 143.4

Long-term liabilities held for sale from discontinued operations — 5.3

Total long-term liabilities 6,437.2 4,336.9

5 unchanged sentences

Common stock, par value $ 0.00125 ;

200,000 shares authorized at June 25, 2023 and June 26, 2022;

400,000 shares authorized at June 30, 2024 and 200,000 shares authorized at June 25, 2023;

126,409 and 124,794 shares issued and outstanding at June 30, 2024 and June 25, 2023, respectively

18 unchanged sentences

Factory start-up costs 53.8 160.2 70.0

Amortization or impairment of acquisition-related intangibles 10.9 13.6 14.5

Abandonment of long-lived assets — — 73.9

Amortization of acquisition-related intangibles 1.1 1.7 2.2

Loss (gain) on disposal or impairment of other assets 1.2 2.0 ( 0.3 )

1 unchanged sentence

Operating loss ( 445.3 ) ( 311.8 ) ( 203.1 )

Non-operating (income) expense, net ( 52.1 ) 38.3 26.3

Non-operating expense (income), net 127.2 ( 52.0 ) 38.8

Loss before income taxes ( 572.5 ) ( 259.8 ) ( 241.9 )

1 unchanged sentence

Net loss from continuing operations ( 573.6 ) ( 260.5 ) ( 250.1 )

Net income (loss) from discontinued operations — 94.2 ( 181.2 )

Net (loss) income from discontinued operations ( 290.6 ) ( 69.4 ) 49.2

Net loss ($ 864.2 ) ($ 329.9 ) ($ 200.9 )

Net income from discontinued operations attributable to noncontrolling interest — — 1.4

Net loss attributable to controlling interest ($ 329.9 ) ($ 200.9 ) ($ 523.9 )

Basic and diluted loss per share

Continuing operations ($ 4.56 ) ($ 2.09 ) ($ 2.08 )

Net loss attributable to controlling interest ($ 2.65 ) ($ 1.67 ) ($ 4.66 )

Net loss ($ 6.88 ) ($ 2.65 ) ($ 1.67 )

Weighted average shares - basic and diluted (in thousands) 125,693 124,374 120,120

7 unchanged sentences

Other comprehensive income (loss):

Reclassification of currency translation gain to loss on sale of discontinued operations — — ( 9.5 )

Net unrealized gain (loss) on available-for-sale securities 13.5 0.2 ( 28.0 )

Comprehensive loss ($ 850.7 ) ($ 329.7 ) ($ 228.9 )

Net income from discontinued operations attributable to noncontrolling interest — — 1.4

Comprehensive loss attributable to controlling interest ($ 329.7 ) ($ 228.9 ) ($ 537.2 )

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

6 unchanged sentences

Net loss ($ 864.2 ) ($ 329.9 ) ($ 200.9 )

Net income (loss) from discontinued operations — 94.2 ( 181.2 )

Net (loss) income from discontinued operations ( 290.6 ) ( 69.4 ) 49.2

Net loss from continuing operations ( 573.6 ) ( 260.5 ) ( 250.1 )

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 181.0 145.6 111.5

2 unchanged sentences

Stock-based compensation 84.9 72.7 53.7

Abandonment of long-lived assets — — 73.9

Loss on disposal or impairment of long-lived assets, including loss on disposal portion of factory optimization and start-up costs 3.8 1.0 5.0

Gain on equity investment ( 18.5 ) — —

Loss on disposal or impairment of long-lived assets, including loss on disposal portion of factory start-up costs 1.2 3.8 1.0

Amortization of (premium) discount on investments, net ( 27.5 ) ( 4.7 ) 6.1

Realized gain on sale of investments — — ( 0.3 )

Gain on equity investment — — ( 8.3 )

Foreign exchange gain on equity investment — — ( 2.2 )

Deferred income taxes 0.2 0.5 0.7

3 unchanged sentences

Prepaid expenses and other assets ( 124.7 ) ( 20.8 ) ( 1.1 )

Accounts payable, trade 30.0 29.2 21.7

Accounts payable ( 45.8 ) 27.0 30.3

Accrued salaries and wages and other liabilities ( 50.2 ) ( 0.7 ) ( 9.6 )

Accrued contract liabilities 26.0 2.6 ( 2.8 )

Contract liabilities and distributor-related reserves 18.2 25.1 1.6

Net cash used in operating activities of continuing operations ( 671.3 ) ( 102.2 ) ( 124.8 )

4 unchanged sentences

Purchases of patent and licensing rights ( 5.9 ) ( 4.9 ) ( 4.8 )

Proceeds from sale of property and equipment, including insurance proceeds 1.7 3.1 2.3

Proceeds from sale of property and equipment 0.4 1.7 3.1

Purchases of short-term investments ( 1,601.1 ) ( 1,191.0 ) ( 475.0 )

2 unchanged sentences

Reimbursement of property and equipment purchases from long-term incentive agreement 178.5 155.5 139.0

Proceeds from sale of business resulting from the receipt of transaction related note receivable 101.8 125.0 43.7

Proceeds from sale of long-term investment — — 66.4

Proceeds from sale of business 75.6 101.8 125.0

Net cash used in investing activities of continuing operations ( 1,940.2 ) ( 1,139.2 ) ( 382.0 )

9 unchanged sentences

Payments on long-term debt borrowings, including finance lease obligations ( 0.4 ) ( 0.5 ) ( 20.5 )

Incentive-related escrow refunds — — 1.5

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

7 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income Total Equity - Controlled Interest Non-controlling Interest from Discontinued Operations Total Equity

Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Equity

Share data in thousands, U.S.

1 unchanged sentence

Balance at June 27, 2021 115,691 $ 0.1 $ 3,676.8 ($ 1,563.1 ) $ 2.7 $ 2,116.5

Net (loss) income — — — ( 523.9 ) — ( 523.9 ) 1.4 ( 522.5 )

Reclassification of currency translation gain to loss on sale of discontinued operations — — — — ( 9.5 ) ( 9.5 ) — ( 9.5 )

Unrealized loss on available-for-sale securities — — — — ( 3.8 ) ( 3.8 ) — ( 3.8 )

Tax withholding on vested equity awards — — ( 36.2 ) — — ( 36.2 ) — ( 36.2 )

Stock-based compensation — — 67.1 — — 67.1 — 67.1

Exercise of stock options and issuance of shares 2,238 — 50.6 — — 50.6 — 50.6

Issuance of shares under the at-the-market offering program, net of issuance costs 4,223 — 489.1 — — 489.1 — 489.1

Reclassification of noncontrolling interest to loss on sale of discontinued operations — — — — — — ( 7.5 ) ( 7.5 )

Balance at June 27, 2021 115,691 $ 0.1 $ 3,676.8 ($ 1,563.1 ) $ 2.7 $ 2,116.5 $ — $ 2,116.5

Net loss — — — ( 200.9 ) — ( 200.9 )

15 unchanged sentences

Balance at June 25, 2023 124,794 $ 0.2 $ 3,711.0 ($ 2,064.2 ) ($ 25.1 ) $ 1,621.9

Net loss — — — ( 864.2 ) — ( 864.2 )

Unrealized gain on available-for-sale securities — — — — 13.5 13.5

Tax withholding on vested equity awards — — ( 18.0 ) — — ( 18.0 )

Stock-based compensation — — 105.5 — 105.5

Exercise of stock options and issuance of shares 1,615 — 23.4 — — 23.4

Balance at June 30, 2024 126,409 $ 0.2 $ 3,821.9 ($ 2,928.4 ) ($ 11.6 ) $ 882.1

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

13 unchanged sentences

Concentrations of Credit Risk

Subsequent Events

Note 1 – Business

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 17, “Subsequent Events,” on August 22, 2023, the Company entered into a definitive agreement to sell certain assets and subsidiaries comprising its RF products lines.

The Company’s materials products and power devices are used in electric vehicles, motor drives, power supplies, solar and transportation applications.

The Company’s materials products and RF devices are used in military communications, radar, satellite and telecommunication applications.

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

(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 3, “Discontinued Operations,” on December 2, 2023, the Company completed its previously announced sale of certain assets and subsidiaries comprising its RF product line.

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.

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 sheet.

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 gallium nitride (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 its 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.

Additionally, the Company recently opened its silicon carbide device fabrication facility in New York.

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

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

Wolfspeed, Inc.

5 unchanged sentences

The Company’s fiscal year is a 52 or 53-week period ending on the last Sunday in the month of June.

The Company's 2024 fiscal year was a 53-week fiscal year.

The Company’s 2023 and 2022 fiscal years were 52-week fiscal years.

The Company's 2024 fiscal year will be a 53-week fiscal year.

The next 53-week fiscal year will be for the Company's 2030 fiscal year.

Reclassifications

Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year presentation.

These reclassifications had no effect on previously reported net loss or shareholders’ equity.

Use of Estimates

1 unchanged sentence

GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities.

The Company evaluates its estimates on an ongoing basis, including those related to revenue recognition, valuation of inventories, tax related contingencies, valuation of stock-based compensation, valuation of long-lived and intangible assets, other contingencies and litigation, among others.

The Company evaluates its estimates on an ongoing basis, including those related to revenue recognition, valuation of inventories, tax related contingencies, valuation of refundable tax credits, valuation of stock-based compensation, valuation of long-lived and intangible assets, other contingencies and litigation, among others.

The Company generally bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

27 unchanged sentences

The Company does not record an allowance for credit losses on receivables related to accrued interest.

For the fiscal years ended June 25, 2023, June 26, 2022 and June 27, 2021, no allowance for credit losses was recorded.

For the fiscal years ended June 30, 2024 and June 25, 2023, no allowance for credit losses was recorded.

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

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

Realized gains and losses on the sale of investments are reported 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.

Investments in marketable securities with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such securities represent the investment of cash that is available for current operations.

Fair Value of Financial Instruments

7 unchanged sentences

In general, the Company’s policy for useful lives is as follows:

Furniture and fixtures 5 years

Buildings and building improvements 5 to 40 years

Machinery and equipment 3 to 10 years

Furniture and fixtures 5 years

Vehicles 5 years

3 unchanged sentences

The costs for major renewals and improvements are capitalized and depreciated over their estimated useful lives.

The cost and related accumulated depreciation of the assets are removed from the accounts upon disposition and any resulting gain or loss is reflected in operating income.

The cost and related accumulated depreciation of the assets are removed from the accounts upon disposition and any resulting gain or loss is reflected in operating income or loss.

The Company considers a long-lived asset to be abandoned after the Company has ceased use of such asset and there is no longer intent to use or repurpose the asset in the future.

5 unchanged sentences

Government assistance related to reimbursing fixed asset purchases, such as reimbursement grants and refundable federal investment tax credits, are recorded as a reduction to the related asset(s), which then reduces depreciation expense over the expected useful life of the asset on a straight-line basis.

If some, or all, of the amount of government assistance becomes repayable (e.g.

due to non-fulfillment of the grant conditions) or there is no longer reasonable assurance the amount will be received (e.g.

due to additional interpretive guidance) then the adjustment is accounted for prospectively as a change in accounting estimate.

The effect of the change in estimate is recognized in the period in which management concludes that it is no longer reasonably assured that all of the grant conditions will be met.

A corresponding financial liability is recognized for the amount of the repayment, if any.

Silicon Carbide Device Facility in Marcy, New York

5 unchanged sentences

Manufacturing Facility in Siler City, North Carolina

In connection with the construction of a planned materials manufacturing facility in Siler City, North Carolina, the Company expects to receive a long-term incentive package from state, county and local governments, primarily in the form of property tax reimbursements and sales tax exemptions on purchased machinery and equipment.

In connection with the construction of a new materials manufacturing facility in Siler City, North Carolina, the Company expects to receive incentives over the next 20 years from state, county and local governments, primarily in the form of property tax reimbursements and sales tax exemptions on purchased machinery and equipment.

In order to receive property tax reimbursements, the Company is required to comply with investment and job targets.

The facility is under construction and the Company anticipates beginning to recognize incentives starting in fiscal 2024.

CHIPS and Science Act of 2022 (the CHIPS Act)

The Company expects to receive refundable federal investment tax credits and capital grants through the CHIPS Act in connection with ongoing expansion projects.

As of June 30, 2024, the Company has reduced property and equipment, net by $ 67.3 million as a result of expected and received reimbursements from the North Carolina Department of Commerce and the Town of Siler City, of which $ 57.5 million has been received in cash and $ 9.8 million in receivables are recorded in other current assets in the consolidated balance sheet.

The Company started receiving cash reimbursements in the third quarter of fiscal 2024.

United States CHIPS and Science Act of 2022 (the CHIPS Act)

The Company expects to receive refundable federal investment tax credits and is in negotiation with respect to capital grants through the CHIPS Act in connection with ongoing expansion projects.

As of June 30, 2024, the Company has reduced property and equipment, net by $ 641.8 million as a result of expected refundable tax credits in connection with the CHIPS Act.

2 unchanged sentences

Goodwill and Intangible Assets

The Company recognizes the assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recognized as goodwill.

Valuation of intangible assets entails significant estimates and assumptions including, but not limited to, estimating future cash flows from product revenue, developing appropriate discount rates, continuation of customer relationships and renewal of customer contracts, and approximating the useful lives of the intangible assets acquired.

The Company recognizes assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recognized as goodwill.

Valuation of intangible assets entails significant estimates and assumptions including, but not limited to, an estimate of future cash flows from product revenue, the use of appropriate discount rates, the continuation of customer relationships and the renewal of customer contracts, and the assessment of appropriate useful lives of intangible assets acquired.

The Company recognizes goodwill as an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

3 unchanged sentences

Reporting units may be operating segments as a whole, or an operation one level below an operating segment, referred to as a component.

The Company has determined that it has one reporting unit, Wolfspeed.

The Company has determined that it has one reporting unit.

The Company may initiate goodwill impairment testing by considering qualitative factors to determine whether it is more likely than not that a reporting unit’s carrying value is greater than its fair value.

2 unchanged sentences

a sustained, significant decline in the Company ’ s stock price and market capitalization;

a significant adverse change in legal factors or in the business climate;

unanticipated competition;

and slower growth rates;

a significant adverse change in legal factors or in the business climate, such as unanticipated competition or slower growth rates;

as well as changes in management, key personnel, strategy and customers .

10 unchanged sentences

GAAP requires that intangible assets, other than goodwill and indefinite-lived intangibles, must be amortized over their useful lives.

The Company is currently amortizing its acquired intangible assets with finite lives over periods ranging from 10 to 15 years.

The Company is currently amortizing its acquired intangible assets with finite lives over periods up to 10 years.

Patent rights reflect costs incurred by the Company in applying for and maintaining patents owned by the Company and costs incurred in purchasing patents and related rights from third parties.

17 unchanged sentences

Revenue is recognized at a point in time based on the Company’s evaluation of when the customer obtains control of the products, and all performance obligations under the terms of the contract are satisfied.

If customer acceptance clauses are present and it cannot be objectively determined that control has been transferred based on the contract and shipping terms, revenue is only recorded when customer acceptance is received and all performance obligations have been satisfied.

Sales of products typically do not include more than one performance obligation.

16 unchanged sentences

The Company believes that it can reasonably and reliably estimate the allowance for distributor credits at the time of sale.

Accordingly, estimates for these rights are recognized at the time of sale as a contract liability and a reduction of product revenue.

Accordingly, estimates for these rights are recognized at the time of sale as a distributor reserve and a reduction of product revenue.

Under the ship and debit program, products are sold to distributors at negotiated prices and the distributors are required to pay for the products purchased within the Company’s standard commercial terms.

20 unchanged sentences

The exercise of the renewal option is at the Company's sole discretion and the Company considers these options in determining the lease term used to establish its right-of-use assets and lease liabilities.

The Company will remeasure its lease liability and adjust the related right-of-use asset upon the occurrence of the following:

The Company remeasures its lease liability and adjusts the related right-of-use asset upon the occurrence of the following:

lease modifications not accounted for as a separate contract;

3 unchanged sentences

Because most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

The Company would use the implicit rate when readily determinable.

The Company uses the implicit rate when readily determinable.

Operating lease expense is generally recognized on a straight-line basis over the lease term.

14 unchanged sentences

The Company sponsors one employee benefit plan (the 401(k) Plan) pursuant to Section 401(k) of the Internal Revenue Code.

employees are eligible to participate under the 401(k) Plan on the first day of a new fiscal month after the date of hire.

All United States employees are eligible to participate under the 401(k) Plan on the first day of a new fiscal month after the date of hire.

Under the 401(k) Plan, there is no fixed dollar amount of retirement benefits;

7 unchanged sentences

Earnings (Loss) Per Share

Basic earnings/loss per share is computed by dividing net income/loss by the weighted average number of shares of common stock outstanding for the applicable period.

Diluted earnings per share is determined in the same manner as basic earnings/loss per share except that the impacts from interest expense and dividends on net income/loss are removed and the number of shares is increased to assume exercise of potentially dilutive stock options, nonvested restricted stock, contingently issuable shares using the treasury stock method and the potential issuance of shares in connection with the Company's convertible notes, unless the effect of such increases would be anti-dilutive.

Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefits that would be recognized in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares.

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average shares of common stock outstanding.

Diluted earnings per share is determined in the same manner as basic earnings per share except that the number of shares is increased to assume exercise of potentially dilutive stock options, nonvested restricted stock, contingently issuable shares using the treasury stock method and the potential issuance of shares in connection with the Company's convertible notes using the if-converted method, unless the effect of such increases would be anti-dilutive.

Stock-Based Compensation

14 unchanged sentences

See Note 13, "Stock-based Compensation," for more information about the Company's stock-based compensation plans.

The Company uses the asset and liability method to account for income taxes.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases.

10 unchanged sentences

Dollar and as such, the Company experiences varying amounts of foreign currency exchange gains and losses.

Joint Venture

Effective July 17, 2017, the Company entered into a Shareholders Agreement with San’an Optoelectronics Co., Ltd.

(San’an) and Cree Venture LED Company Limited (Cree Venture LED) pursuant to which the Company and San’an funded their contributions to Cree Venture LED and agreed upon the management and operation of Cree Venture LED.

The Company contributed $ 5.1 million of cash for a 51 % ownership interest and San’an contributed $ 4.9 million of cash for a 49 % ownership interest.

The Company's interest in Cree Venture LED was included in the LED Business Divestiture and its related activity is classified as discontinued operations.

Supplemental Cash Flow Information

Cash paid for interest was $ 29.5 million, $ 13.1 million, and $ 14.1 million for the fiscal years ended June 25, 2023, June 26, 2022 and June 27, 2021, respectively.

Cash paid for interest, net of capitalized interest, was $ 213.5 million, $ 28.7 million, and $ 3.2 million for the fiscal years ended June 30, 2024, June 25, 2023 and June 26, 2022, respectively.

Cash paid (received) for taxes, net of refunds received, was $ 9.8 million, $ 2.9 million and $( 4.4 ) million for the fiscal years ended June 30, 2024, June 25, 2023 and June 26, 2022, respectively.

Recently Adopted Accounting Pronouncements

Convertible Debt Instruments

In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity

(Subtopic 815-40).

This standard simplifies the accounting for convertible instruments by eliminating the cash conversion and the beneficial conversion accounting models.

This update also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity.

The update requires an entity to use the if-converted method for all convertible instruments in the diluted earnings per share calculation.

The Company adopted this standard on June 27, 2022, the first day of its 2023 fiscal year, under the modified retrospective approach.

The adoption resulted in (i) a reduction of additional paid in capital by $ 333.0 million for the recombination of the equity conversion component of the convertible notes outstanding, which was initially separated and recorded in equity, (ii) an increase in the cumulative convertible note carrying value of $ 277.9 million as a result of removing previously recorded debt discounts, (iii) a decrease in property, plant and equipment for previously capitalized non-cash interest of $ 25.4 million and (iv) a decrease to beginning accumulated deficit as of June 27, 2022 of $ 29.7 million to recognize the cumulative gain on adoption.

The Company did not recognize a discrete tax impact related to the opening deferred tax balances as of June 27, 2022 due to a full U.S.

valuation allowance.

Government Assistance

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance.

This standard requires entities to provide annual disclosures regarding government assistance.

More specifically, the amendments in the standard improve financial reporting by requiring disclosures that increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions;

(2) the accounting for those transactions;

and (3) the effect of those transactions on an entity's financial statements.

The Company adopted this standard on June 27, 2022 under the prospective approach.

Recently Issued Accounting Pronouncements Pending Adoption

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 3 – Discontinued Operations

On March 1, 2021, the Company completed the sale of certain assets and subsidiaries comprising its former LED Products segment to SMART Global Holdings, Inc.

(SGH) and its wholly owned subsidiary CreeLED, Inc.

(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.

Pursuant to the LED Purchase Agreement, (i) the Company completed the sale to SMART of (a) certain equipment, inventory, intellectual property rights, contracts, and real estate comprising the Company’s former LED Products segment, (b) all of the issued and outstanding equity interests of Cree Huizhou Solid State Lighting Company Limited (Cree Huizhou), a limited liability company organized under the laws of the People’s Republic of China and an indirect wholly owned subsidiary of the Company, and (c) the Company’s ownership interest in Cree Venture LED, the Company’s joint venture with San’an Optoelectronics Co., Ltd.

(collectively, the LED Business);

and (ii) SMART assumed certain liabilities related to the LED Business.

The Company retained certain assets used in and pre-closing liabilities associated with the former LED Products segment.

The purchase price for the LED Business consisted of (i) a payment of $ 50 million in cash, subject to customary adjustments, (ii) an unsecured promissory note issued to the Company by SGH in the amount of $ 125 million (the Purchase Price Note), (iii) the potential to receive an earn-out payment between $ 2.5 million and $ 125 million based on the revenue and gross profit performance of the LED Business in the first four full fiscal quarters following the closing, also payable in the form of a unsecured promissory note of SGH (the Earnout Note), and (iv) the assumption of certain liabilities.

The Purchase Price Note had a maturity date of August 15, 2023, and as explained further below, was prepaid by SGH in full pursuant to its terms, along with outstanding accrued and unpaid interest as of the payment date, in the third quarter of fiscal 2022.

The Earnout Note was issued by CreeLED in the fourth quarter of 2022, had a maturity date of March 27, 2025 and as explained further below, was prepaid by CreeLED in full pursuant to its terms, in connection with the forgiveness by the Company of outstanding accrued and unpaid interest as of the payment date, in the first quarter of fiscal 2023.

In fiscal 2021, the Company recognized a loss on sale of the LED Business of $ 29.1 million.

The cost of selling the LED Business was $ 27.4 million, which was recognized throughout fiscal 2020 and 2021.

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 (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 (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.

In the third quarter of fiscal 2022, the Company received an early payment for the Purchase Price Note.

The principal amount of $ 125.0 million was paid in full, along with outstanding accrued interest as of the payment date.

In the fourth quarter of fiscal 2022, the Company received the Earnout Note with a principal amount of $ 101.8 million.

As a result, the Company recorded a net gain of $ 94.2 million within discontinued operations, net in the consolidated statements of operations for fiscal year ended June 26, 2022.

The gain recorded is net of $ 3.9 million in taxes and $ 1.2 million in transaction fees.

Additionally, the amount is less a previously recorded gain of $ 2.5 million, which was recorded in fiscal 2021 as part of the total loss on sale to account for the minimum amount of the Earnout Note.

In the first quarter of fiscal 2023, the Company received an early payment for the Earnout Note for the full principal amount of $ 101.8 million and the Company agreed to forgo payment by CreeLED of the outstanding accrued interest as of the payment date.

In addition to the $ 94.2 million net gain from discontinued operations recognized in fiscal year ended June 26, 2022 as a result of receiving the Earnout Note, the following table presents the financial results of the LED Business as loss from discontinued operations, net of income taxes in the Company's consolidated statements of operations for the fiscal year ended June 27, 2021:

RF Business Divestiture

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 Asset Purchase Agreement (the RF Purchase Agreement) dated August 22, 2023.

Pursuant to the RF Purchase Agreement, the Company received approximately $ 75 million in cash and 711,528 shares of MACOM common stock (the MACOM Shares), which 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).

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 RF Closing (the RTP Fab Transfer).

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 licensed to MACOM certain additional intellectual property owned by the Company, (ii) a Transition Services Agreement, pursuant to which the Company provides MACOM certain limited transition services following the RF Closing, (iii) a Master Supply Agreement, pursuant to which the Company will continue to operate the RTP Fab and supply MACOM with Epi wafers and fabrication services (the RF Master Supply Agreement) through the date the RTP Fab Transfer is completed (the RTP Fab Transfer Date), (iv) a Long-Term Epi Supply Agreement (the Long-Term Epi Supply Agreement), pursuant to which MACOM will purchase Epi wafers from the Company 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, 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, 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 had and will continue to 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.

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 from discontinued operations in the consolidated balance sheet as of June 25, 2023.

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 from discontinued operations in the consolidated balance sheets.

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:

Fiscal Year Ended

(in millions of U.S.

Dollars) June 27, 2021

Dollars) June 30, 2024 June 25, 2023 June 26, 2022

Revenue, net $ 59.6 $ 163.4 $ 174.1

Cost of revenue, net 68.7 126.8 132.9

Gross profit 59.5

Gross (loss) profit ( 9.1 ) 36.6 41.2

Operating expenses:

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Sales, general and administrative 13.9 21.0 20.5

Goodwill impairment 112.6

Impairment on assets held for sale 19.5

Gain on disposal or impairment of long-lived assets ( 1.6 )

Amortization of intangibles 1.5 9.2 11.4

Loss on disposal of assets 0.3 — —

Other operating expense 24.3 15.5 0.2

Operating loss ( 79.6 ) ( 68.8 ) ( 44.7 )

Non-operating income ( 0.3 )

Non-operating expense — ( 0.1 ) ( 0.5 )

Loss before income taxes and loss on sale ( 79.6 ) ( 68.7 ) ( 44.2 )

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Net loss ($ 290.6 ) ($ 69.4 ) ($ 45.0 )

Net income attributable to noncontrolling interest 1.4

Net loss attributable to controlling interest ($ 182.6 )

As of September 27, 2020, the Company determined it would more likely than not sell all or a portion of the assets comprising the LED Products segment below carrying value.

As a result, the Company recorded an impairment to goodwill of $ 105.7 million.

As of December 27, 2020, the Company recorded an additional impairment to goodwill of $ 6.9 million and an impairment to assets held for sale associated with the LED Business Divestiture of $ 19.5 million.

For the fiscal years ended June 26, 2022 and June 27, 2021, the Company recognized $ 3.9 million and $ 11.0 million, respectively, of income tax expense related to discontinued operations, which primarily related to the foreign operations of the

LED Business.

Income tax expense related to discontinued operations for the fiscal year ended June 26, 2022 and June 27, 2021 includes $ 2.4 million and $ 4.1 million, respectively, of income tax expense related to the sale of the issued and outstanding equity interests of Cree Huizhou in the third quarter of fiscal 2021.

The income tax impact of the U.S.

operations of the LED Business for all periods presented were offset with a valuation allowance as described in Note 14, "Income Taxes."

For the fiscal years ended June 25, 2023, June 26, 2022 and June 27, 2021, the Company recognized $ 2.4 million, $ 3.6 million and $ 1.2 million in administrative fees related to the LED RELA, respectively, none of which is included in accounts receivable, net in the consolidated balance sheets as of June 25, 2023.

During 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.

The total cost of selling the RF Business was $ 25.4 million, of which $ 12.2 million was recognized in fiscal 2024.

At the inception of the RF Master Supply Agreement, the Company recorded a supply agreement liability of $ 95.0 million, of which $ 67.0 million was outstanding as of June 30, 2024.

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

A receivable of $ 4.6 million in connection with the RF Master Supply Agreement is included in other current assets in the consolidated balance sheet as of June 30, 2024.

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 in the consolidated balance sheet as of June 30, 2024.

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) June 25, 2023

Assets (current and long-term)

Inventories $ 42.6

Other current assets 0.2

Property and equipment, net 25.9

Intangible assets, net 92.0

Other assets 6.6

Assets held for sale from discontinued operations 167.3

Liabilities (current and long-term)

Accounts payable and accrued expenses 2.4

Contract liabilities and distributor-related reserves 4.0

Other current liabilities 2.2

Other long-term liabilities 5.3

Liabilities held for sale of discontinued operations $ 13.9

LED Business Divestiture

On March 1, 2021, the Company completed the sale of certain assets and subsidiaries comprising its former LED Products segment to SMART Global Holdings, Inc.

(SGH) and its wholly owned subsidiary CreeLED, Inc.

(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 the third quarter of fiscal 2022, the Company received an early payment for the unsecured promissory note issued to the Company by SGH at the closing of the LED Business Divestiture.

The principal amount of $ 125.0 million was paid in full, along with outstanding accrued interest as of the payment date.

In the fourth quarter of fiscal 2022, the Company received an unsecured promissory note from CreeLED as additional consideration to satisfy the earnout obligations pursuant to the LED Purchase Agreement (the Earnout Note) with a principal amount of $ 101.8 million.

As a result, the Company recorded a net gain of $ 94.2 million within discontinued operations, net in the consolidated statements of operations for fiscal year ended June 26, 2022.

The gain recorded is net of $ 3.9 million in taxes and $ 1.2 million in transaction fees.

For the fiscal year ended June 26, 2022, the Company recognized $ 3.9 million of income tax expense related to discontinued operations, which primarily related to the foreign operations of the LED Business, inclusive of $ 2.4 million of income tax expense related to the sale of the issued and outstanding equity interests of Cree Huizhou Solid State Lighting Company Limited in the third quarter of fiscal 2021.

The income tax impact of the United States operations of the LED Business for all periods presented were offset with a valuation allowance as described in Note 14, "Income Taxes."

For the fiscal years ended June 25, 2023 and June 26, 2022, the Company recognized $ 2.4 million and $ 3.6 million, respectively, in administrative fees related to the LED RELA.

Fees related to the LED RELA were recorded as lease income.

See Note 5, "Leases" below for additional information.

For the fiscal years ended June 25, 2023, June 26, 2022 and June 27, 2021, the Company recognized $ 6.0 million, $ 9.2 million and $ 4.0 million in administrative fees related to the LED TSA, respectively, of which $ 0.2 million are included in accounts receivable, net in the consolidated balance sheets as of June 25, 2023.

For the fiscal years ended June 25, 2023 and June 26, 2022, the Company recognized $ 6.0 million and $ 9.2 million, respectively, 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.

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A receivable of $ 0.6 million was included in other assets in the consolidated balance sheets as of June 30, 2024.

In the fourth quarter of fiscal 2024, the Company entered into an amendment to the Wafer Supply Agreement to terminate the agreement as of September 30, 2024.

Note 4 – Revenue Recognition

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and (5) recognize revenue when, or as, the entity satisfies a performance obligation.

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 $ 73.8 million and $ 47.8 million as of June 25, 2023 and June 26, 2022, respectively.

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

Contract liabilities and distributor-related reserves were $ 88.0 million and $ 69.8 million as of June 30, 2024 and June 25, 2023, respectively.

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

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

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

Practical Expedients and Exemptions

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Sales tax, value-added tax, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue, and shipping and handling costs are treated as fulfillment activities and are included in cost of revenue in the Company’s consolidated statements of operations.

For the fiscal years ended June 25, 2023 and June 26, 2022, the Company did no t recognize any material revenue that was included in contract liabilities at the start of each respective fiscal year.

For the fiscal years ended June 30, 2024 and June 25, 2023, the Company did no t recognize any material revenue from contract liability balances at the start of each respective fiscal year.

Product Line Revenue

The Company sells products from within three product lines:

Power Products, silicon carbide and GaN materials (Materials Products) and RF Products.

Revenue from these three product lines is as follows:

The Company sells products from within two product lines:

Power Products and Materials Products.

Revenue from these two product lines is as follows:

Fiscal Years Ended

3 unchanged sentences

Materials Products 391.6 349.3 295.5

RF Products 163.7 174.3 151.2

Total $ 807.2 $ 758.5 $ 572.1

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Europe $ 295.2 36.6 % $ 271.9 35.8 % $ 226.6 39.6 %

Hong Kong 214.1 23.2 % 162.6 21.8 % 80.7 15.4 %

Asia Pacific (excluding China and Hong Kong) 237.4 29.4 % 164.2 21.6 % 97.3 17.0 %

Hong Kong 116.4 14.4 % 159.1 21.0 % 129.1 22.6 %

United States 115.0 14.2 % 137.0 18.1 % 89.3 15.6 %

6 unchanged sentences

Lease agreements frequently include renewal provisions and require the Company to pay real estate taxes, insurance and maintenance costs.

Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, as well as non-lease components incurred with respect to actual terms rather than contractually fixed amounts.

Variable costs include lease payments that are volume or usage-driven in accordance with the use of the underlying asset, as well as non-lease components incurred with respect to actual terms rather than contractually fixed amounts.

For details on the Company's lease policies, see the significant accounting policy disclosures in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies."

20 unchanged sentences

Operating lease expense was $ 13.9 million, $ 9.3 million and $ 6.3 million in fiscal 2024, 2023 and 2022, respectively.

Short-term lease expense was immaterial in fiscal 2023, 2022 and 2021.

Finance lease amortization was $ 0.8 million, $ 0.8 million and $ 1.2 million, and interest expense was $ 0.3 million, $ 0.3 million and $ 0.3 million, in fiscal 2024, 2023 and 2022, respectively.

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Reimbursement receivable on long-term incentive agreement $ 85.8 $ 91.3

Non-trade receivables 30.6 2.2

Inventory related to the RF Master Supply Agreement 17.6 —

Accrued interest receivable 11.6 10.1

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

Insurance deposit 6.3 —

VAT receivables 8.7 4.8

Insurance deposit 6.0 6.3

Receivable on RF Master Supply Agreement 4.6 —

Inventory related to the Wafer Supply Agreement 2.9 3.9

Other receivables 2.2 2.2

Receivable on the Wafer Supply Agreement 1.3 2.7

Other 1.4 1.6

Receivable on the Wafer Supply Agreement 0.6 1.3

Other current assets $ 179.8 $ 131.5

15 unchanged sentences

Depreciation of property and equipment totaled $ 175.5 million, $ 139.7 million and $ 94.5 million for the years ended June 30, 2024, June 25, 2023 and June 26, 2022, respectively.

During the years ended June 25, 2023, June 26, 2022 and June 27, 2021, the Company recognized approximately $ 3.7 million, $ 1.0 million and $ 4.3 million, respectively, as losses on disposals or impairments of property and equipment of which $ 1.8 million, $ 1.3 million, and $ 3.4 million are related to the Company's start-up and factory optimization activities and are reflected in other operating expense for the years ended June 25, 2023, June 26, 2022 and June 27, 2021, respectively.

During the years ended June 30, 2024, June 25, 2023 and June 26, 2022, the Company recognized approximately $ 0.8 million, $ 3.7 million and $ 1 million, respectively, as losses on disposals or impairments of property and equipment of which $ 1.8 million, and $ 1.3 million are related to the Company's start-up and factory optimization activities and are reflected in other operating expense for the years ended June 25, 2023 and June 26, 2022, respectively.

There were no losses recognized for disposals of property and equipment related to the Company's start-up and factory optimization activities for the year ended June 30, 2024.

The remaining amount of these charges are reflected in loss on disposal or impairment of other assets in the consolidated statements of operations.

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As of June 30, 2024 and June 25, 2023, the Company held $ 162.0 million and $ 55.8 million, respectively, of property and equipment, net outside of the United States, primarily related to assets held at contract manufacturing space in Malaysia.

Other assets consisted of the following:

(in millions of U.S.

Dollars) June 30, 2024 June 25, 2023

Investment tax credit receivable (1)

$ 641.8 $ 167.4

Right-of-use assets 99.2 98.0

Long-term advances to suppliers 50.1 8.7

Cloud computing assets, net 13.5 17.6

Other 62.3 11.6

Other assets $ 866.9 $ 303.3

(1) The Company expects to receive refundable federal investment tax credits through the CHIPS Act in connection with ongoing expansion projects.

The Company has reduced property and equipment by $ 641.8 million and $ 167.4 million as of June 30, 2024 and June 25, 2023, respectively.

The receivable recorded is an estimate based on the Company's interpretation of the Section 48D Advanced Manufacturing Investment Credit under the CHIPS Act.

The final guidance from the Internal Revenue Service and Department of Treasury may update the definition of qualifying capital expenditures to either exclude certain qualified property included in the estimate or include additional such property not currently reflected in the estimate.

The Company may record a change in estimate in the period when final guidance is issued.

Accounts Payable and Accrued Expenses

26 unchanged sentences

Interest expense, net of capitalized interest 246.3 42.6 25.1

Gain on arbitration proceedings (1)

Loss (gain) on legal proceedings (1)(2)

7.7 ( 50.3 ) —

Loss on debt extinguishment (3)

1 unchanged sentence

Loss on Wafer Supply Agreement 25.3 13.6 0.8

Gain on sale of investments, net — ( 0.3 ) ( 0.4 )

Other, net 0.2 ( 0.3 ) ( 1.1 )

Non-operating (income) expense, net ($ 52.1 ) $ 38.3 $ 26.3

(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.

Other expense, net 1.4 0.3 ( 0.6 )

Non-operating expense (income), net $ 127.2 ($ 52.0 ) $ 38.8

(1) In fiscal 2024, the Company recognized customs duties totaling approximately $ 7.7 million for alleged undervaluation of duties related to transactions by the Company's former Lighting Products business unit from 2012 to 2017.

(2) In 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.

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

(3) As discussed further in Note 10, "Long-term Debt," in the second quarter of fiscal 2022, all outstanding 2023 Notes (as defined below) were surrendered for conversion, resulting in the settlement of all outstanding 2023 Notes in shares, with fractional shares paid in cash.

Accumulated Other Comprehensive (Loss) Income, net of taxes

Accumulated other comprehensive (loss) income, net of taxes, consisted of $ 25.1 million of net unrealized losses on available-for-sale securities and $ 25.3 million of net unrealized gains on available-for-sale securities as of June 25, 2023 and June 26, 2022, respectively.

Accumulated Other Comprehensive Loss net of taxes

Accumulated other comprehensive loss, net of taxes, consisted of $ 11.6 million and $ 25.1 million of net unrealized losses on available-for-sale securities as of June 30, 2024 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 Income

The Company reclassified a net loss of less than $ 0.1 million and a net gain of $ 0.3 million and $ 0.4 million on available for sale securities out of accumulated other comprehensive income for the fiscal years ended June 25, 2023, June 26, 2022, and June 27, 2021, respectively.

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

Additionally, in fiscal 2021, $ 9.5 million of currency translation gain related to the former LED Products segment was reclassified out of accumulated other comprehensive income and recognized in the consolidated statements of operations as part of the loss on sale of discontinued operations.

Statements of Cash Flows - non-cash activities

3 unchanged sentences

Lease asset and liability modifications, net 4.4 0.4 3.8

Transfer of finance lease liability to accounts payable and accrued expenses (1)

Receivables for property, plant and equipment related insurance proceeds 2.2 — —

1 unchanged sentence

Decrease in property, plant and equipment from investment tax credit receivables 474.4 167.4 —

Proceeds from sale of business received in common stock 60.8 — —

Receivable in connection with short-term investment maturities 25.0 — —

Decrease in property, plant and equipment from long-term incentive related receivables 114.3 114.0 119.0

Accrued property and equipment as of the fiscal year end date 366.0 328.4 132.1

(1) In the first quarter of fiscal 2021, the Company executed the available bargain purchase option for certain finance leases relating to property and equipment, net, in order to purchase the assets.

(2) As discussed further in Note 10, "Long-term Debt," in the second quarter of fiscal 2022, all outstanding 0.875 % convertible senior notes due September 1, 2023 (the 2023 Notes) were surrendered for conversion, resulting in the settlement of all outstanding 2023 Notes in shares, with fractional shares paid in cash.

(1) As discussed further in Note 10, "Long-term Debt," in the second quarter of fiscal 2022, all outstanding 0.875 % convertible senior notes due September 1, 2023 were surrendered for conversion, resulting in the settlement of all outstanding 2023 Notes in shares, with fractional shares paid in cash.

Note 7 – Investments

Investments consist of municipal bonds, corporate bonds, U.S.

agency securities, U.S.

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

agency securities, commercial paper and certificates of deposit.

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

The Company did not have any long-term investments as of June 25, 2023 and June 26, 2022.

Other long-term investments consist of the MACOM Shares.

Short-term investments as of June 30, 2024 consist of the following:

8 unchanged sentences

Commercial paper 16.7 — — — 16.7

Variable rate demand notes 27.3 — — — 27.3

Total short-term investments $ 1,137.8 $ 0.2 ($ 9.3 ) $ — $ 1,128.7

8 unchanged sentences

agency securities 14.9 — 10.0 — 24.9 —

Commercial Paper 3.9 — — — 3.9 —

Total $ 666.5 ($ 0.6 ) $ 303.6 ($ 8.7 ) $ 970.1 ($ 9.3 )

9 unchanged sentences

agency securities 77.0 — ( 0.2 ) — 76.8

Commercial paper 50.2 — — — 50.2

Certificates of deposit 112.3 — — — 112.3

Total short-term investments 1,220.6 — ( 22.7 ) — 1,197.9

8 unchanged sentences

agency securities 74.8 ( 0.2 ) 2.0 — 76.8 ( 0.2 )

Commercial paper 3.9 — — — 3.9 —

Total $ 520.9 ($ 1.6 ) $ 463.1 ($ 21.1 ) $ 984.0 ($ 22.7 )

Number of securities with an unrealized loss 95 234 329

Additionally, the Company held cash equivalent securities in unrealized loss positions as of June 25, 2023 and June 26, 2022.

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.

As of June 26, 2022, the Company held six cash equivalent securities in unrealized loss positions with an aggregate fair value of $ 69.0 million and an aggregate unrealized loss of less than $ 0.1 million.

All cash equivalents in unrealized loss positions as of June 25, 2023 and June 26, 2022 have been in unrealized loss positions for less than 12 months.

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.

14 unchanged sentences

Commercial paper 16.7 — — — 16.7

Variable rate demand notes — — 9.7 17.6 27.3

Total short-term investments $ 901.5 $ 224.8 $ — $ 2.4 $ 1,128.7

9 unchanged sentences

• Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

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

As of 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.

agency securities, commercial paper and variable rate demand notes.

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

As of June 30, 2024, financial assets utilizing Level 1 inputs included United States Treasury securities, money market funds and United States corporation common stock, and financial assets utilizing Level 2 inputs included municipal bonds, corporate bonds, United States agency securities, commercial paper, certificates of deposit and variable rate demand notes.

Level 2 assets are valued based on quoted prices in active markets for instruments that are similar or using a third-party pricing service’s consensus price, which is a weighted average price based on multiple sources.

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Total short-term investments 552.7 576.0 1,128.7 260.4 937.5 1,197.9

Other long-term investments:

Common stock of U.S.

corporation 79.3 — 79.3 — — —

Total other long-term investments 79.3 — 79.3 — — —

Total assets $ 729.3 $ 576.0 $ 1,305.3 $ 511.5 $ 944.5 $ 1,456.0

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

These shares are remeasured to fair value each period with changes in the fair value of the shares recognized in non-operating expense (income), net.

Note 9 – Goodwill and Intangible Assets

9 unchanged sentences

Developed technology 24.0 ( 22.8 ) 1.2 24.0 ( 21.7 ) 2.3

Non-compete agreements — — — 12.2 ( 12.2 ) —

Acquisition related intangible assets 24.0 ( 22.8 ) 1.2 28.8 ( 26.5 ) 2.3

1 unchanged sentence

Total intangible assets $ 73.8 ($ 49.9 ) $ 23.9 $ 84.3 ($ 60.4 ) $ 23.9

Total amortization of acquisition-related intangibles assets was $ 10.9 million, $ 13.6 million and $ 14.5 million and total amortization of patents and licensing rights was $ 5.0 million, $ 5.4 million and $ 5.9 million for the years ended June 25, 2023, June 26, 2022 and June 27, 2021, respectively.

Total amortization of acquisition-related intangible assets was $ 1.1 million, $ 1.7 million and $ 2.2 million and total amortization of patents and licensing rights was $ 4.4 million, $ 4.2 million and $ 5.1 million for the years ended June 30, 2024, June 25, 2023 and June 26, 2022, respectively.

The Company invested $ 5.9 million, $ 4.9 million and $ 4.8 million for the years ended June 30, 2024, June 25, 2023 and June 26, 2022, respectively, for patent and licensing rights.

12 unchanged sentences

Note 10 – Long-term Debt

Revolving Line of Credit

On June 23, 2023, the Company terminated its previously held $ 125.0 million secured revolving line of credit (the Credit Agreement) under which the Company was able to borrow, repay and reborrow loans from time to time prior to its scheduled maturity date of January 9, 2026.

The Company did not have any borrowings under the Credit Agreement during the fiscal year ended June 25, 2023.

Under the agreement, the Company paid an unused line fee on available borrowings of 25 basis points.

2023 Convertible Notes

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Upon conversion, the Company will pay or deliver cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company's election.

The Company used approximately $ 144.3 million of the net proceeds from the sale of the 2026 Notes in April 2020 to repurchase approximately $ 150.2 million aggregate principal amount of the 2023 Notes, including approximately $ 0.2 million of accrued interest on such notes, in privately negotiated transactions.

2028 Convertible Notes

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The total net proceeds from the 2028 Notes offering was approximately $ 732.3 million.

The Company used approximately $ 108.2 million of the net proceeds from the 2028 Notes to fund the cost of entering into capped call transactions, as described below.

The Company used approximately $ 108.2 million of the net proceeds from the 2028 Notes to fund the cost of entering into capped call transactions.

The conversion rate will initially be 7.8602 shares of common stock per one thousand dollars in principal amount of 2028 Notes (equivalent to an initial conversion price of approximately $ 127.22 per share of common stock).

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The total net proceeds from the 2029 Notes offering was approximately $ 1,718.6 million.

The Company used approximately $ 273.9 million of the net proceeds from the 2029 Notes to fund the cost of entering into capped call transactions, as described below.

The Company used approximately $ 273.9 million of the net proceeds from the 2029 Notes to fund the cost of entering into capped call transactions.

The conversion rate will initially be 8.4118 shares of common stock per one thousand dollars in principal amount of 2029 Notes (equivalent to an initial conversion price of approximately $ 118.88 per share of common stock).

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Holders of the 2029 Notes do not have any rights with respect to the 2029 Notes Capped Call Transactions.

Accounting for the 2023 Notes, 2026 Notes, 2028 Notes and 2029 Notes

In accounting for the issuance of the 2023 Notes, 2026 Notes and 2028 Notes, the Company separated such notes into liability and equity components.

The carrying amount of the equity component representing the conversion option was $ 110.6 million, $ 145.4 million and $ 187.6 million for the 2023 Notes, 2026 Notes and 2028 Notes, respectively.

The amounts were determined by deducting the fair value of the liability component from the par value of each of the 2023 Notes, 2026 Notes and 2028 Notes.

Due to the partial extinguishment of the 2023 Notes in connection with the issuance of the 2026 Notes, the equity component of the 2023 Notes was reduced by $ 27.7 million during the fourth quarter of fiscal 2020.

As a result of the full conversion of all outstanding 2023 Notes, the Company remeasured the outstanding liability for the 2023 Notes using a market rate for debt without a conversion option (the Market Rate) as of the Redemption Notice Date.

The Company performed a present value calculation using the Market Rate and determined the fair value of the debt as of the Redemption Notice Date was $ 416.1 million, $ 24.7 million higher than the carrying value of the 2023 Notes as of the Redemption Notice Date.

As a result, the Company recorded a loss on extinguishment of $ 24.8 million, which included a $ 0.1 million loss on extinguishment expense related to third party fees.

Additionally, the equity component of the 2023 Notes was reduced to zero .

Accounting for the Convertible Notes

In accounting for the initial issuance of the 2026 Notes and 2028 Notes, the Company separated such notes into liability and equity components.

The carrying amount of the equity component representing the conversion option was $ 145.4 million and $ 187.6 million for the 2026 Notes and 2028 Notes, respectively.

The amounts were determined by deducting the fair value of the liability component from the par value of each of the 2026 Notes and 2028 Notes.

Upon adoption of ASU 2020-06 on June 27, 2022, the first day of fiscal 2023, the unamortized discounts on the 2026 Notes and 2028 Notes were eliminated and the liability and equity components relating to the debt issuance costs for the 2026 Notes and 2028 Notes are now presented as a single liability.

Debt issuance costs for the 2026 Notes and 2028 Notes will be amortized to interest expense over their respective terms at an effective annual interest rate of 2.2 % and 0.6 %, respectively.

Debt issuance costs in relation to the 2029 Notes were accounted for as a reduction of the principal balance and will be amortized to interest expense over the term of the 2029 Notes at an effective interest rate of 2.1 %.

The net carrying amount of the liability component of the Outstanding Convertible Notes is as follows:

Debt issuance costs for the 2026 Notes, 2028 Notes and 2029 Notes are amortized to interest expense over their respective terms at an effective annual interest rate of 2.2 %, 0.6 % and 2.1 % respectively.

The net carrying amount of the liability component of the 2026 Notes, the 2028 Notes and the 2029 Notes (collectively, the Outstanding Convertible Notes) is as follows:

(in millions of U.S.

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Net carrying amount $ 3,034.9 $ 3,025.6

The net carrying amount of the equity component of the Outstanding Convertible Notes is as follows:

(in millions of U.S.

Dollars) June 25, 2023 (1)

June 26, 2022

Discount related to value of conversion option $ — $ 341.1

Debt issuance costs — ( 8.1 )

Net carrying amount $ — $ 333.0

(1) As discussed above, the equity components of the 2026 Notes and 2028 Notes were eliminated upon adoption of ASU 2020-06 on June 27, 2022, the first day of fiscal 2023.

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 June 30, 2024.

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The Indenture related to the 2030 Senior Notes (the 2030 Senior Notes Indenture) requires the Company to make an offer to repurchase the 2030 Senior Notes with 100 % of the net cash proceeds of (x) certain core asset sales and casualty events and (y) certain non-core asset sales and casualty events, in either case in excess of $ 25.0 million since the Issue Date, subject to the ability to (so long as no default or event of default exists under the 2030 Senior Notes Indenture), reinvest the proceeds of such casualty events and asset sales (other than the proceeds of sales of certain core assets of the Company), at a price equal to the lesser of (i) 109.875 % of the principal amount of the 2030 Senior Notes being repurchased and (ii) if such disposition or casualty event occurred (x) during the fourth year after the Issue Date, 109.40625 % of the principal amount of such 2030 Senior Notes being repurchased, (y) during the fifth year after the Issue Date, 104.9375 % of the principal amount of such 2030 Senior Notes being repurchased and (z) during and after the sixth year after the Issue Date, 100 % of the principal amount of such 2030 Senior Notes being repurchased (this clause (ii), the Applicable Redemption Price).

The Company is also required to offer to

repurchase the 2030 Senior Notes upon a change in control, at a price equal to, (i) if the change of control occurs during the first three years after the Issue Date, a customary make-whole redemption price minus 3.00 % of the principal amount of Senior Notes being purchased and (ii) if such change of control occurs after the third anniversary of the Issue Date, the Applicable Redemption Price.

The Company is also required to offer to repurchase the 2030 Senior Notes upon a change in control, at a price equal to, (i) if the change of control occurs during the first three years after the Issue Date, a customary make-whole redemption price minus 3.00 % of the principal amount of Senior Notes being purchased and (ii) if such change of control occurs after the third anniversary of the Issue Date, the Applicable Redemption Price.

The Company may prepay the 2030 Senior Notes at any time, subject to:

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The 2030 Senior Notes Indenture contains certain customary affirmative covenants, negative covenants and events of default, including a liquidity maintenance financial covenant requiring the Company to have an aggregate amount of unrestricted cash and cash equivalents maintained in accounts over which the trustee and collateral agent has been granted a perfected first lien security interest of at least $ 500.0 million as of the last day of any calendar month (the Liquidity Covenant).

Upon the Company achieving 30 % utilization at its silicon carbide device fabrication facility in Marcy, New York and generating at least $ 240.0 million of revenue from the Company's Power product line, that are manufactured or produced on wafers that are fabricated at the Marcy, New York facility (the MVF Products), in each case over a six month period, the level of the Liquidity Covenant shall be permanently reduced to $ 325.0 million.

Company achieving 30 % utilization at its silicon carbide device fabrication facility in Marcy, New York and generating at least $ 240.0 million of revenue from the Company's Power product line, that are manufactured or produced on wafers that are fabricated at the Marcy, New York facility (the MVF Products), in each case over a six month period, the level of the Liquidity Covenant shall be permanently reduced to $ 325.0 million.

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 .

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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.

Beyond the value of the collateral securing the 2030 Notes, the 2026 Notes, 2028 Notes, 2029 Notes and 2030 Senior Notes (Corporate Debt Holdings) are equal in right of payment to any of the Company’s unsecured indebtedness;

Beyond the value of the collateral securing the 2030 Senior Notes, the 2026 Notes, 2028 Notes, 2029 Notes and 2030 Senior Notes (Corporate Debt Holdings) are equal in right of payment to any of the Company’s unsecured indebtedness;

senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Corporate Debt Holdings;

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and structurally subordinated to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

Debt issuance costs in relation to the 2030 Senior Notes were accounted for as a reduction of the principal balance and, along with the original issue discount, will be amortized over the term of the 2030 Senior Notes at an effective interest rate of 12.4 %.

The net carrying amount of the liability component of the 2030 Senior Notes is as follows:

Debt issuance costs in relation to the 2030 Senior Notes were accounted for as a reduction of the principal balance and, along with the original issue discount, amortized over the term of the 2030 Senior Notes at an effective interest rate of 12.4 %.

CRD Agreement Deposits

In July 2023, the Company entered into an Unsecured Customer Refundable Deposit Agreement (the CRD Agreement) with a customer, pursuant to which the customer agreed to provide the Company up to $ 2 billion in unsecured deposits.

Under the CRD Agreement, the Company received an initial deposit of $ 1 billion in the first quarter of fiscal 2024 with the option to receive additional deposits up to $ 1 billion at the Company's request, subject to certain conditions during the 2024 calendar year.

On February 27, 2024, the Company received an additional deposit of $ 500 million (the second draw), and on June 26, 2024, the Company received the final deposit of $ 500 million (the third draw).

Unless previously terminated in accordance with its terms, the CRD Agreement will mature on July 5, 2033, and the amount of the deposits, together with accrued and unpaid interest, will be required to be repaid to the customer at such time.

The deposits under the CRD Agreement bear interest, payable on a semi-annual basis, at a base rate of 6 % per annum, with the potential for an increased variable rate of either 10 % or 15 % in connection with any inability of the Company to satisfy supply targets under a ten-year wafer supply agreement with the same customer.

The Company may voluntarily prepay the deposits, in whole or in part, at any time at a price equal to 106 % of the principal amount of the deposits prepaid.

Upon the occurrence of a change of control, the customer may require the Company to prepay the deposits in whole at a variable prepayment price depending on the day of prepayment.

Debt issuance costs in relation to the CRD Agreement deposits were accounted for as a reduction of the principal balance and will be amortized over the term of the deposit at an effective interest rate of 6.3 %.

The CRD Agreement contains certain customary affirmative covenants, negative covenants and events of default.

As of June 30, 2024, the Company was in compliance with all covenants related to this agreement.

The net carrying amount of the liability of the 2030 Senior Notes and the deposits under the CRD Agreement is as follows:

(in millions of U.S.

Dollars) June 25, 2023

Dollars) June 30, 2024 June 25, 2023

Principal $ 3,250.0 $ 1,250.0

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Net carrying amount $ 3,126.2 $ 1,149.5

Interest Expense for the Corporate Debt Holdings

The interest expense, net recognized related to the Corporate Debt Holdings is as follows:

Interest Expense

The interest expense, net recognized is as follows:

Fiscal Years Ended

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For the fiscal year ended June 26, 2022, the Company capitalized $ 9.9 million of interest expense and $ 23.2 million of amortization of discount and issuance costs.

Fair Value of the Corporate Debt Holdings

The estimated fair value of Corporate Debt is $ 3.9 billion as of June 25, 2023, as determined by a Level 2 valuation.

The estimated fair value of the Outstanding Convertible Notes is $ 1.9 billion as of June 30, 2024, as determined by a Level 2 valuation.

The estimated fair value of the 2030 Senior Notes is $ 1.2 billion and the estimated fair value of the deposits under the CRD Agreement is $ 1.1 billion as of June 30, 2024, as determined by Level 3 valuations.

Note 11 – Shareholders’ Equity

At June 30, 2024, the Company had reserved a total of approximately 57.4 million shares of its common stock for future issuance as follows (in thousands):

For exercise of outstanding common stock options 25

For vesting of outstanding stock units 3,038

For future equity awards under 2013 Long-Term Incentive Compensation Plan 4,022

For future equity awards under the 2023 Long-Term Incentive Compensation Plan 6,193

For future issuance under the Non-Employee Director Stock Compensation and Deferral Program 40

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Note 12 – Loss Per Share

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

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

Fiscal Years Ended

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Net loss from continuing operations $ ( 573.6 ) $ ( 260.5 ) $ ( 250.1 )

Net income (loss) from discontinued operations — 94.2 ( 181.2 )

Net income from discontinued operations attributable to noncontrolling interest — — 1.4

Net income (loss) from discontinued operations attributable to controlling interest — 94.2 ( 182.6 )

Net (loss) income from discontinued operations ( 290.6 ) ( 69.4 ) 49.2

Weighted average number of common shares - basic and diluted (in thousands) 125,693 124,374 120,120

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Continuing operations $ ( 4.56 ) $ ( 2.09 ) $ ( 2.08 )

Discontinued operations attributable to controlling interest $ — $ 0.78 $ ( 1.63 )

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 from continuing operations.

For the fiscal years ended June 25, 2023, June 26, 2022 and June 27, 2021, 2.7 million, 2.5 million and 3.4 million, respectively, of dilutive shares were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive.

Discontinued operations $ ( 2.31 ) $ ( 0.56 ) $ 0.41

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

For the fiscal years ended June 30, 2024, June 25, 2023 and June 26, 2022, 4.4 million, 2.7 million and 2.5 million, respectively, of dilutive shares were excluded from the calculation of diluted (loss) earnings 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 convertible notes under certain conditions as described in Note 10, “Long-term Debt.”

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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.

Stock Option Awards

The following table summarizes option activity as of June 25, 2023 and changes during the fiscal year then ended (shares in thousands):

Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Total Intrinsic Value (in millions of U.S.

Outstanding at June 26, 2022 69 $ 25.12

Exercised ( 42 ) 25.38

Forfeited or expired ( 2 ) 27.09

Outstanding at June 25, 2023 25 24.55 0.25 $ 0.6

Vested and expected to vest at June 25, 2023 25 24.55 0.25 $ 0.6

Exercisable at June 25, 2023 25 24.55 0.25 $ 0.6

The total intrinsic value in the table above represents the total pretax intrinsic value, which is the total difference between the closing price of the Company’s common stock on June 23, 2023 (the last trading day of fiscal 2023) of $ 49.45 and the exercise price for in-the-money options that would have been received by the holders if all instruments had been exercised on June 25, 2023.

As of June 25, 2023, there was no unrecognized compensation cost related to nonvested stock options.

The following table summarizes information about stock options outstanding and exercisable at June 25, 2023 (shares in thousands):

Options Outstanding Options Exercisable

Range of Exercise Price Number Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Weighted Average Exercise Price

$ 0.01 to $ 25.00

22 0.2 $ 24.26 22 $ 24.26

$ 25.01 to $ 35.00

3 0.5 26.71 3 26.71

Total intrinsic value of options exercised for the fiscal years ended June 25, 2023, June 26, 2022 and June 27, 2021 was $ 2.6 million, $ 5.6 million and $ 30.8 million, respectively.

Restricted Stock Units

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Risk-free interest rate 4.52 %

0.11 - 1.66 %

Expected life, in years 3.0

Average volatility of peer companies 65.9 %

48.9 - 60.5 %

Average correlation coefficient of peer companies 0.44

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Awards are valued using the Monte Carlo model.

All performance-based awards with market conditions for the fiscal years ended June 25, 2023 and June 26, 2022 were issued on a single date each year and therefore no range is shown.

All performance-based awards with market conditions for each fiscal year presented were issued on a single date each year and therefore no range is shown.

The following describes each of these assumptions and the Company’s methodology for determining each assumption:

Risk-Free Interest Rate

The Company estimates the risk-free interest rate using the U.S.

Treasury bill rate with a remaining term equal to the expected life of the award.

The Company estimates the risk-free interest rate using the United States Treasury bill rate with a remaining term equal to the expected life of the award.

Expected Life

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Income tax expense $ 1.1 $ 0.7 $ 8.2

Actual income tax expense differed from the amount computed by applying each period's U.S.

federal statutory tax rate to pre-tax earnings as a result of the following:

Actual income tax expense differed from the amount computed by applying each period's United States federal statutory tax rate to pre-tax earnings as a result of the following:

Fiscal Years Ended

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0.4 — % ( 0.4 ) — % 6.8 ( 3 ) %

Other foreign adjustments — — % — — % ( 0.1 ) — %

Provision to return adjustments ( 0.4 ) — % 0.1 — % 0.3 — %

Impact of rate changes 0.4 — % — — % 0.5 — %

Expiration of state credits 0.2 — % 0.1 — % 0.7 — %

Expiration of attributes 2.0 — % 0.2 — % 0.1 — %

Corporate restructuring adjustment — — % — — % 129.1 ( 53 ) %

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Convertible notes 62.6 73.7

Nondeductible interest carryforward 27.7 2.4

Other 3.0 4.5

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Intangible assets ( 58.6 ) ( 22.7 )

Prepaid taxes and other ( 0.5 ) ( 0.6 )

Other long-term investments ( 4.0 ) —

Prepaid taxes ( 0.5 ) ( 0.5 )

Foreign earnings recapture ( 4.2 ) ( 4.3 )

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Lease assets ( 23.8 ) ( 24.9 )

Convertible notes — ( 38.0 )

Other ( 0.3 ) —

Total gross deferred liability ( 222.1 ) ( 166.0 )

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

The Company has concluded that it is necessary to recognize a full valuation allowance against its U.S.

deferred tax assets as of June 25, 2023.

As of June 26, 2022, the U.S.

valuation allowance was $ 339.2 million.

For the fiscal year ended June 25, 2023, the Company increased the U.S.

valuation allowance by $ 204.7 million due to a decrease in deferred tax liabilities related to convertible notes upon adoption of ASU 2020-06, increase in deferred tax assets related to the 2029 Notes Capped Call Transactions, and increases in deferred tax assets related to the current year domestic loss and domestic capitalized research and development.

As of June 25, 2023, the Company had approximately $ 2.2 million of foreign net operating loss carryovers, of which less than $ 0.1 million are offset by a valuation allowance.

Of the Company's foreign net operating loss carryovers, $ 2.1 million have no carry forward limitation.

As of June 25, 2023, the Company had approximately $ 1.7 billion of federal net operating loss carryovers and $ 331.7 million of state net operating loss carryovers which are fully offset by a valuation allowance.

Additionally, the Company had $ 97.6 million of federal and $ 1.0 million of state income tax credit carryforwards which are fully offset by a valuation allowance.

The federal and state net operating loss carryovers will begin to expire in fiscal 2038 and fiscal 2024, respectively.

The Company has concluded that it is necessary to recognize a full valuation allowance against its United States deferred tax assets as of June 30, 2024.

As of June 25, 2023, the United States valuation allowance was $ 543.9 million.

For the fiscal year ended June 30, 2024, the Company increased the United States valuation allowance by $ 190.1 million due to increases in deferred tax assets related to the current year domestic loss and domestic capitalized research and development.

The Company has immaterial valuation allowances against deferred tax assets in international jurisdictions which increased $ 0.1 million during the fiscal year ended June 30, 2024.

As of June 30, 2024, the Company had approximately $ 2.3 billion of federal net operating loss carryovers which are fully offset by liabilities for unrecognized tax benefits and valuation allowance.

Of the Company's federal net operating loss carryovers, $ 145.0 million begin to expire in fiscal 2038 while the remaining carryovers have no carry forward limitation.

The Company has $ 495.1 million of state net operating loss carryovers which are fully offset due to a valuation allowance.

The Company's state net operating loss carryovers begin to expire in fiscal 2025.

Additionally, the Company had $ 110.0 million of federal credit carryforwards, which are fully offset by liabilities for unrecognized tax benefits and a valuation allowance, and $ 0.7 million of state income tax credit carryforwards, which are fully offset by a valuation allowance.

The federal and state income tax credit carryforwards will begin to expire in fiscal 2031 and fiscal 2026, respectively.

As of June 30, 2024, the Company had approximately $ 1.9 million of foreign net operating loss carryovers, of which $ 0.3 million are offset by a valuation allowance.

The Company's foreign net operating loss carryovers have no carry forward limitation.

GAAP requires a two-step approach to recognizing and measuring uncertain tax positions.

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

During the fiscal year ended June 25, 2023, the Company recognized a $ 2.6 million increase to the liability for unrecognized tax benefits primarily due to an increase in generated research and development credits.

During the fiscal year ended June 30, 2024, the liability for unrecognized tax benefits decreased $ 0.4 million, primarily due to a decrease of $ 2.0 million for expiration of statute of limitations, offset by an increase of $ 1.7 million due to generated research and development credits.

As a result, the total liability for unrecognized tax benefits as of June 30, 2024 was $ 9.4 million.

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The Company accrued less than $ 0.1 million for interest and penalties relating to unrecognized tax benefits in the consolidated balance sheets as of June 30, 2024 and June 25, 2023.

The Company files U.S.

federal, U.S.

state and foreign tax returns.

federal purposes, the Company is generally no longer subject to tax examinations for fiscal years prior to 2018.

state tax returns, the Company is generally no longer subject to tax examinations for fiscal years prior to 2019.

The Company files United States federal, United States state and foreign tax returns.

For United States federal purposes, the Company is generally no longer subject to tax examinations for fiscal years prior to 2018.

For United States state tax returns, the Company is generally no longer subject to tax examinations for fiscal years prior to 2019.

For foreign purposes, the Company is generally no longer subject to examination for tax periods prior to 2014.

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The Company provides for income taxes on the earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered indefinitely reinvested outside the United States.

As of June 25, 2023, the Company has approximately $ 205.7 million of undistributed earnings for certain non-U.S.

subsidiaries.

As of June 30, 2024, the Company has approximately $ 206.6 million of undistributed earnings for certain non-United States subsidiaries.

The Company has determined that $ 189.7 million of the $ 206.6 million of undistributed foreign earnings are expected to be repatriated in the foreseeable future.

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District Court for the Middle District of North Carolina, alleging infringement of U.S.

7,498,633 (the '633 Patent), entitled "High-voltage power semiconductor device," and 8,035,112 (the '112 Patent), entitled "SIC power DMOSFET with self-aligned source contact." In the complaint, Purdue also alleges willful infringement, and seeks unspecified monetary damages and attorneys’ fees.

7,498,633 (the '633 Patent), entitled "High-voltage power semiconductor device," and 8,035,112 (the '112 Patent), entitled "SIC power DMOSFET with self-aligned source contact." In the complaint, Purdue also alleges willful infringement, and seeks approximately $ 30 million in monetary damages, pre- and post-judgment interest, treble damages for willful infringement and attorneys’ fees.

In August 2022, Purdue voluntarily withdrew all allegations as to the '112 Patent after having disclaimed all rights to that patent.

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Patent & Trademark Office.

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

The Company expects discovery in this matter to conclude in August 2024, with a trial date most likely 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.

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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 fiscal year ended June 25, 2023, the Company purchased $ 12.3 million of product under this agreement.

As of June 25, 2023, minimum future product purchases for fiscal years 2024, 2025, 2026, 2027 and 2028 are $ 1.1 million, $ 26.8 million, $ 36.0 million, $ 50.1 million and $ 73.7 million, respectively.

In 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 five years .

During the fiscal years ended June 30, 2024 and June 25, 2023, the Company purchased $ 36.7 million and $ 12.3 million of product under this agreement.

As of June 30, 2024, minimum future product purchases for fiscal years 2025, 2026, 2027 and 2028 are $ 8.2 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.

The Company paid $ 5.5 million in fiscal 2023 in connection with the agreement, which is recognized in prepaid expenses on the consolidated balance sheet.

The Company paid $ 32.9 million in fiscal 2024 and $ 5.5 million in fiscal 2023 in connection with the agreement.

In the second quarter of fiscal 2024, the Company entered into an agreement with another 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.

During the fiscal year ended June 30, 2024, the Company purchased $ 19.2 million of product under this agreement which satisfied the minimum future product purchases for the period.

Minimum future product purchases for fiscal years 2025, 2026 and 2027 are $ 28.8 million, $ 28.8 million and $ 9.6 million, respectively.

Note 16 – Concentrations of Risk

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agency securities, U.S.

treasury securities, commercial paper, certificates of deposit, and variable rate demand notes at interest rates that vary by security.

treasury securities, commercial paper and certificates of deposit.

The Company’s cash equivalents consist primarily of money market funds.

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No other customers accounted for more than 10% of the accounts receivable balance as of June 30, 2024 and June 25, 2023.

Note 17 - Subsequent Events

2033 CRD Notes

In July 2023, the Company entered into an Unsecured Customer Refundable Deposit Agreement (the CRD Agreement) with a customer, pursuant to which the customer will provide the Company up to $ 2 billion in unsecured deposits.

Under the CRD Agreement, the Company received an initial deposit of $ 1 billion with additional deposits of up to an additional $ 1 billion at the Company's request, subject to certain conditions during the 2024 calendar year.

The deposits under the CRD Agreement will bear interest, payable on a semi-annual basis, at a base rate of 6 % per annum, with the potential for an increased variable rate of either 10 % or 15 % in connection with any inability of the Company to satisfy supply targets under a ten-year wafer supply agreement with the same customer.

The Company may voluntarily prepay the deposits, in whole or in part, at any time at a price equal to 106 % of the principal amount of the deposits prepaid.

Upon the occurrence of a change of control, the customer may require the Company to prepay the deposits in whole at a variable prepayment price depending on the day of prepayment.

RF Business Divestiture

On August 22, 2023, the Company entered into a definitive agreement (the RF Purchase Agreement) to sell its radio frequency product line (RF Products) 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 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.

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

The Company will forfeit one-quarter of the 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 (RF TSA), 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 (RTP Fab Transfer Date), (iv) a Long-Term Epi Supply Agreement (LTA), pursuant to which MACOM will purchase from the Company Epi-wafers from the Closing 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.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data