What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-05-02 · 272 added, 454 removed, 424 unchanged (63% of the section changed)

Financial Statements (Unaudited)

Consolidated Balance Sheets as of March 31, 2024 and June 25, 2023

Consolidated Statements of Operations for the three and nine months ended March 31, 202 4 and March 2 6 , 202 3

Consolidated Statements of Comprehensive Loss for the three and nine months ended March 31, 202 4 and March 2 6 , 202 3

Consolidated Statements of Shareholders' Equity for the nine months ended March 31, 202 4 and March 2 6 , 202 3

Consolidated Statements of Cash Flows for the nine months ended March 31, 202 4 and March 2 6 , 202 3

Consolidated Balance Sheets as of September 29, 2024 and June 30, 2024

Consolidated Statements of Operations for the three months ended September 29 , 2024 and September 24 , 2023

Consolidated Statements of Comprehensive Loss for the three months ended September 29, 2024 and September 24, 2023

Consolidated Statements of Shareholders' Equity for the three months ended September 29, 2024 and September 24, 2023

Consolidated Statements of Cash Flows for the three months ended September 29, 2024 and September 24, 2023

Notes to Unaudited Consolidated Financial Statements

2 unchanged sentences

in millions of U.S.

Dollars, except share data in thousands March 31, 2024 June 25, 2023

Dollars, except share data in thousands September 29, 2024 June 30, 2024

Current assets:

7 unchanged sentences

Other current assets 98.9 179.8

Current assets held for sale from discontinued operations — 42.8

Total current assets 2,458.4 2,999.6

5 unchanged sentences

Deferred tax assets 1.1 1.1

Investment tax credit receivable 723.5 641.8

Other assets 251.1 225.1

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

Total assets $ 7,857.8 $ 7,984.6

2 unchanged sentences

Accounts payable and accrued expenses $ 600.4 $ 523.6

Accrued contract liabilities 55.8 39.0

Contract liabilities and distributor-related reserves 62.9 62.3

Income taxes payable 1.3 1.0

1 unchanged sentence

Other current liabilities 117.8 77.9

Current liabilities held for sale from discontinued operations — 8.6

Total current liabilities 782.9 665.3

5 unchanged sentences

Other long-term liabilities 256.5 256.4

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

Total long-term liabilities 6,446.0 6,437.2

2 unchanged sentences

Preferred stock, par value $ 0.01 ;

3,000 shares authorized at March 31, 2024 and June 25, 2023;

3,000 shares authorized at September 29, 2024 and June 30, 2024;

none issued and outstanding

Common stock, par value $ 0.00125 ;

400,000 shares authorized at March 31, 2024 and 200,000 shares authorized at June 25, 2023;

125,833 and 124,794 shares issued and outstanding at March 31, 2024 and June 25, 2023, respectively

400,000 shares authorized at September 29, 2024 and June 30, 2024;

126,888 and 126,409 shares issued and outstanding at September 29, 2024 and June 30, 2024, respectively

Additional paid-in-capital 3,843.6 3,821.9

6 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended Nine months ended

Three months ended

in millions of U.S.

Dollars, except share data March 31, 2024 March 26, 2023 March 31, 2024 March 26, 2023

Dollars, except share data September 29, 2024 September 24, 2023

Revenue, net $ 194.7 $ 197.4

9 unchanged sentences

Operating loss ( 230.1 ) ( 94.9 )

Non-operating expense (income), net 42.4 ( 2.9 ) 98.7 ( 53.4 )

Non-operating expense, net 51.7 28.5

Loss before income taxes ( 281.8 ) ( 123.4 )

10 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three months ended Nine months ended

Three months ended

(in millions of U.S.

Dollars) March 31, 2024 March 26, 2023 March 31, 2024 March 26, 2023

Dollars) September 29, 2024 September 24, 2023

Net loss ($ 282.2 ) ($ 395.7 )

Other comprehensive (loss) income:

Net unrealized (loss) gain on available-for-sale securities ( 0.5 ) 5.5 12.4 2.2

Other comprehensive income:

Net unrealized gain on available-for-sale securities 7.3 1.9

Comprehensive loss ( 274.9 ) ( 393.8 )

10 unchanged sentences

Stock-based compensation 479 — 25.3 — — 25.3

Exercise of stock options and issuance of shares 21 — 0.5 — — 0.5

Balance at September 29, 2024 126,888 $ 0.2 $ 3,843.6 ($ 3,210.6 ) ($ 4.3 ) $ 628.9

Net loss — — — ( 144.7 ) — ( 144.7 )

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

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

Stock-based compensation 104 — 29.8 — — 29.8

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

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

Net loss — — — ( 148.9 ) — ( 148.9 )

Unrealized loss on available-for-sale securities — — — — ( 0.5 ) ( 0.5 )

Tax withholding on vested equity awards — — ( 0.7 ) — — ( 0.7 )

Stock-based compensation 48 — 22.5 — — 22.5

Balance at March 31, 2024 125,833 $ 0.2 $ 3,788.6 ($ 2,753.5 ) ($ 12.7 ) $ 1,022.6

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

6 unchanged sentences

Net loss — — — ( 395.7 ) — ( 395.7 )

Unrealized loss on available-for-sale securities — — — — ( 7.0 ) ( 7.0 )

Tax withholding on vested equity awards — — ( 16.9 ) — — ( 16.9 )

Stock-based compensation 395 — 23.2 — — 23.2

Exercise of stock options and issuance of shares 20 — 0.5 — — 0.5

Adoption of ASU 2020-06 — — ( 333.0 ) 29.7 — ( 303.3 )

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

Net loss — — — ( 90.9 ) — ( 90.9 )

Unrealized gain on available-for-sale securities — — — — 1.9 1.9

2 unchanged sentences

Exercise of stock options and issuance of shares 21 — 0.5 — — 0.5

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

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

Net loss — — — ( 99.5 ) — ( 99.5 )

Unrealized gain on available-for-sale securities — — — — 5.5 5.5

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

Stock-based compensation — — 20.8 — — 20.8

Exercise of stock options and issuance of shares 24 — 0.2 — — 0.2

Balance at March 26, 2023 124,437 $ 0.2 $ 3,680.6 ($ 1,950.9 ) ($ 23.1 ) $ 1,706.8

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

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

1 unchanged sentence

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended

Three months ended

(in millions of U.S.

Dollars) March 31, 2024 March 26, 2023

Dollars) September 29, 2024 September 24, 2023

Operating activities:

6 unchanged sentences

Stock-based compensation 23.7 19.7

Gain on equity investment ( 7.3 ) —

Loss on disposal or impairment of long-lived assets, including loss on disposal portion of factory start-up costs 1.0 3.7

Amortization of premium on investments, net ( 21.4 ) ( 1.3 )

Loss on disposal or impairment of long-lived assets 0.6 —

Amortization of (premium) discount on investments, net ( 3.8 ) ( 5.3 )

Realized loss on sale of investments 0.1 —

Deferred income taxes — 0.3

5 unchanged sentences

Accrued salaries and wages and other liabilities 65.1 45.3

Accrued contract liabilities 11.7 23.5

Contract liabilities and distributor-related reserves 0.6 5.8

Net cash used in operating activities of continuing operations ( 132.0 ) ( 112.7 )

4 unchanged sentences

Purchases of patent and licensing rights ( 1.2 ) ( 1.3 )

Proceeds from sale of property and equipment 0.4 1.7

Purchases of short-term investments ( 56.1 ) ( 775.3 )

2 unchanged sentences

Reimbursement of property and equipment purchases from long-term incentive agreement 42.0 39.6

Proceeds from sale of business 75.6 101.8

Net cash used in investing activities of continuing operations ( 193.0 ) ( 784.2 )

3 unchanged sentences

Proceeds from long-term debt borrowings — 1,000.0

Proceeds from convertible notes — 1,750.0

Payments of debt issuance costs — ( 46.0 )

Cash paid for capped call transactions — ( 273.9 )

Proceeds from issuance of common stock — 0.5

1 unchanged sentence

Payments on long-term debt borrowings, including finance lease obligations ( 0.1 ) ( 0.1 )

Incentive-related escrow refunds 10.0 —

Commitment fees on long-term incentive agreement ( 1.5 ) ( 1.0 )

10 unchanged sentences

Revenue Recognition

Financial Statement Details

Commitments and Contingencies

Fair Value of Financial Instruments

3 unchanged sentences

Stock-Based Compensation

Commitments and Contingencies

Restructuring

S ubsequent Events

Note 1 – Basis of Presentation and New Accounting Standards

3 unchanged sentences

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

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

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

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

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

The Company 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 fiscal 2024.

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 production facilities located in North Carolina, New York and Arkansas.

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

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

Wolfspeed, Inc.

is a North Carolina corporation established in 1987, and its headquarters are in Durham, North Carolina.

Basis of Presentation

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

In the opinion of management, all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations, comprehensive loss, shareholders' equity and cash flows at March 31, 2024, and for all periods presented, have been made.

In the opinion of management, all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations, comprehensive loss, shareholders' equity and cash flows at September 29, 2024, and for all periods presented, have been made.

All material intercompany accounts and transactions have been eliminated.

The consolidated balance sheet at June 30, 2024 has been derived from the audited financial statements as of that date.

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

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

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.

3 unchanged sentences

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (fiscal 2024).

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

The results of operations for the three months ended September 29, 2024 are not necessarily indicative of the operating results that may be attained for the entire fiscal year ending June 29, 2025 (fiscal 2025).

Summary of Significant Accounting Policies

There were no material changes to our significant accounting policies during the three months ended September 29, 2024 compared to the significant accounting policies described in our fiscal 2024 Form 10-K.

Financial Statement Details

Accounts Receivable, net

(in millions of U.S.

Dollars) September 29, 2024 June 30, 2024

Billed trade receivables $ 142.1 $ 143.3

Unbilled contract receivables 2.5 3.5

Royalties 1.5 1.3

Allowance for bad debts ( 0.7 ) ( 0.7 )

Accounts receivable, net $ 145.4 $ 147.4

(in millions of U.S.

Dollars) September 29, 2024 June 30, 2024

Raw material $ 150.4 $ 138.7

Work-in-progress 313.5 290.5

Finished goods 4.0 11.5

Inventories $ 467.9 $ 440.7

Other Current Assets

(in millions of U.S.

Dollars) September 29, 2024 June 30, 2024

Reimbursement receivable on long-term incentive agreement $ 33.1 $ 85.8

Other 65.8 94.0

Other current assets $ 98.9 $ 179.8

Investment Tax Credit Receivable

The Company expects to receive refundable federal investment tax credits through the United States CHIPS and Science Act of 2022 (the CHIPS Act) in connection with ongoing expansion projects.

As of September 29, 2024, the Company has recorded a receivable for and reduced property and equipment, net by $ 723.5 million as a result of the expected refundable tax credits in connection with the CHIPS Act.

Accounts Payable and Accrued Expenses

(in millions of U.S.

Dollars) September 29, 2024 June 30, 2024

Accounts payable, trade $ 73.5 $ 53.0

Accrued property and equipment 385.9 366.0

Accrued salaries and wages 100.3 64.2

Accrued expenses 40.7 40.4

Accounts payable and accrued expenses $ 600.4 $ 523.6

Other Operating Expense

Three months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Restructuring costs and other exit costs $ 52.8 $ —

Project, transformation and transaction costs 6.0 2.6

Other operating expense $ 60.2 $ 2.6

Accumulated Other Comprehensive Loss, net of taxes

Accumulated other comprehensive loss, net of taxes, consisted of $ 4.3 million and $ 11.6 million of net unrealized losses on available-for-sale securities as of September 29, 2024 and June 30, 2024, respectively.

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

Non-Operating Expense, net

Three months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Interest income ( 22.2 ) ( 40.6 )

Interest expense, net of capitalized interest 64.5 61.7

Other, net 9.4 7.4

Non-operating expense, net

$ 51.7 $ 28.5

Statements of Cash Flows - non-cash activities

Three months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Decrease in property, plant and equipment from investment tax credit receivables $ 81.8 $ 73.5

Decrease in property, plant and equipment from long-term incentive related receivables — 47.7

Lease asset and liability additions 11.0 1.0

Lease asset and liability modifications, net 0.2 1.8

Accrued property and equipment as of September 29, 2024 and September 24, 2023 was $ 385.9 million and $ 340.2 million, respectively.

Recently Adopted Accounting Pronouncements

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

In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220):

Disaggregation of Income Statement Expenses, to require additional disclosures of certain amounts included in the expense captions presented on the Statement of Operations as well as disclosures about selling expenses.

The ASU is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and early adoption is permitted.

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

Note 2 – Discontinued Operations

RF Business Divestiture

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

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

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

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

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).

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).

In connection with the divestiture of the RF Business (the RF Business Divestiture), MACOM will assume control of the Company’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.

1 unchanged sentence

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

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

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 (the RF TSA), pursuant to which the Company provides MACOM certain limited transition services following the RF Closing, (iii) a Master Supply Agreement, pursuant to which 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 on which the RTP Fab Transfer is complete (the RTP Fab Transfer Date), (iv) a Long-Term Epi Supply Agreement (the Long-Term Epi Supply Agreement), pursuant to which MACOM will purchase from the Company Epi-wafers from the RTP Fab Transfer Date until the fifth anniversary of the RTP Fab Transfer Date, (v) an Epi Research and Development Agreement, pursuant to which the Company will provide MACOM certain research and development activities and other technical manufacturing support services related to the RF Business during the period between the RF Closing and expiration of the Long-Term Epi Supply Agreement, and (vi) a Real Estate License Agreement (the RF RELA), which allows MACOM to use certain portions of the RTP Fab to conduct the RF Business through the RTP Fab Transfer Date.

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

Because the RF Business Divestiture represented a strategic shift that 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.

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 classified the results of the RF Business as discontinued operations in the Company’s consolidated statements of operations for fiscal 2024.

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 sheets 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:

Three months ended Nine months ended

Three months ended

(in millions of U.S.

Dollars) March 26, 2023 March 31, 2024 March 26, 2023

Dollars) September 24, 2023

Revenue, net $ 32.8

5 unchanged sentences

Amortization of intangibles 1.5

Loss on disposal of assets — 0.3 —

Impairment on assets held for sale 144.6

Excess loss liability on assets held for sale 75.4

Other operating expense 17.1

Loss before income taxes and loss on sale ( 16.2 ) ( 79.6 ) ( 46.7 )

Loss on sale — 204.0 —

Loss before income taxes ( 271.7 )

1 unchanged sentence

Net loss ($ 272.1 )

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

During the first nine months of fiscal 2024, the Company recorded a total loss on sale of $ 204.0 million, which was net against the impairments and excess loss liability on assets held for sale in the first quarter of fiscal 2024.

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 $ 79.2 million was outstanding as of March 31, 2024.

At the inception of the RF Master Supply Agreement, the Company recorded a supply agreement liability of $ 95.0 million, of which $ 57.5 million was outstanding as of September 29, 2024.

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

A receivable of $ 6.1 million in connection with the RF Master Supply Agreement is included in other current assets in the consolidated balance sheet as of March 31, 2024.

A receivable of $ 5.2 million in connection with the RF Master Supply Agreement is included in other current assets in the consolidated balance sheet as of September 29, 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 on the consolidated balance sheets.

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

(in millions of U.S.

Dollars) 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

Accrued contract liabilities 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

2 unchanged sentences

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

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

For the three and nine months ended March 26, 2023, the Company recognized $ 0.6 million and $ 2.4 million in administrative fees related to the LED RELA.

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

For the three and nine months ended March 26, 2023, the Company recognized $ 1.5 million and $ 5.2 million in administrative fees related to the LED TSA, respectively.

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

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

At the inception of the Wafer Supply Agreement, the Company recorded a supply agreement liability of $ 31.0 million, none of which was outstanding as of March 31, 2024.

For the three and nine months ended March 31, 2024, the Company recognized a net loss of $ 6.9 million and $ 20.4 million, respectively, in non-operating expense (income), net related to the Wafer Supply Agreement, of which a receivable of $ 2.0 million is included in other current assets in the consolidated balance sheet as of March 31, 2024.

For the three and nine months ended March 26, 2023, the Company recognized a net loss of $ 4.8 million and $ 7.3 million, respectively, in non-operating expense (income), net related to the Wafer Supply Agreement.

In connection with the closing of the LED Business Divestiture, the Company and CreeLED also entered into certain ancillary and related agreements, including 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 .

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

For the three months ended September 29, 2024, the Company recognized a net loss of $ 9.2 million in non-operating expense (income), net related to the Wafer Supply Agreement.

For the three months ended September 24, 2023, the Company recognized a net loss of $ 6.9 million in non-operating expense (income), net related to the Wafer Supply Agreement.

Note 3 – Revenue Recognition

The Company follows a five-step approach for recognizing revenue, consisting of the following:

(1) identify the contract with a customer;

(2) identify the performance obligations in the contract;

(3) determine the transaction price;

(4) allocate the transaction price to the performance obligations in the contract;

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 $ 81.6 million as of March 31, 2024 and $ 69.8 million as of June 25, 2023.

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

Contract liabilities and distributor-related reserves were $ 88.6 million as of September 29, 2024 and $ 88.0 million as of June 30, 2024.

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

3 unchanged sentences

Revenue from these two product lines is as follows:

Three months ended Nine months ended

Three months ended

(in millions of U.S.

Dollars) March 31, 2024 March 26, 2023 March 31, 2024 March 26, 2023

Dollars) September 29, 2024 September 24, 2023

Power Products $ 97.1 $ 101.2

5 unchanged sentences

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

Three months ended Nine months ended

March 31, 2024 March 26, 2023 March 31, 2024 March 26, 2023

Three months ended

September 29, 2024 September 24, 2023

(in millions of U.S.

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

Europe $ 79.7 39.7 % $ 67.9 35.3 % $ 227.7 37.5 % $ 199.1 35.8 %

Dollars) Revenue % of Revenue Revenue % of Revenue

Asia Pacific (1)

$ 94.9 48.7 % $ 44.6 22.6 %

Europe 38.8 19.9 % 75.3 38.1 %

Hong Kong 33.6 17.3 % 34.1 17.3 %

12 unchanged sentences

Operating Leases:

March 31, 2024 June 25, 2023

September 29, 2024 June 30, 2024

Right-of-use asset (1)

13 unchanged sentences

Statement of Operations

Operating lease expense was $ 3.3 million and $ 10.5 million for the three and nine months ended March 31, 2024, respectively, and $ 2.3 million and $ 6.1 million for the three and nine months ended March 26, 2023, respectively.

Finance lease amortization was $ 0.2 million and $ 0.6 million for the three and nine months ended March 31, 2024, respectively, and $ 0.2 million and $ 0.6 million for the three and nine months ended March 26, 2023, respectively.

Interest expense for all periods presented was immaterial.

Three months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Operating lease expense

Finance lease amortization

Interest expense for finance leases

Cash flow information consisted of the following (1) :

Nine months ended

Three months ended

(in millions of U.S.

Dollars) March 31, 2024 March 26, 2023

Dollars) September 29, 2024 September 24, 2023

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

4 unchanged sentences

Cash paid for principal portion of finance leases ( 0.1 ) ( 0.1 )

(1) See Note 5, "Financial Statement Details," for non-cash activities related to leases.

(1) See Note 1, "Statements of Cash Flows - non-cash activities," for non-cash activities related to leases.

Lease Liability Maturities

Maturities of operating and finance lease liabilities as of March 31, 2024 were as follows (in millions of U.S.

Maturities of operating and finance lease liabilities as of September 29, 2024 were as follows (in millions of U.S.

Fiscal Year Ending Operating Leases Finance Leases Total

19 unchanged sentences

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

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

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

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

The Company recognized lease income of $ 0.3 million and $ 0.7 million for the three and nine months ended March 31, 2024, respectively.

The Company recognized lease income of $ 0.6 million and $ 2.4 million for the three and nine months ended March 26, 2023, respectively.

Note 5 – Financial Statement Details

Accounts Receivable, net

Accounts receivable, net consisted of the following:

(in millions of U.S.

Dollars) March 31, 2024 June 25, 2023

Billed trade receivables $ 121.7 $ 152.1

Unbilled contract receivables 2.1 2.3

Royalties 1.1 1.1

Allowance for bad debts ( 0.6 ) ( 0.7 )

Accounts receivable, net $ 124.3 $ 154.8

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

These aggregated risk pools are reassessed at each measurement date.

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

Inventories consisted of the following:

(in millions of U.S.

Dollars) March 31, 2024 June 25, 2023

Raw material $ 122.4 $ 90.7

Work-in-progress 274.2 179.6

Finished goods 24.6 14.6

Inventories $ 421.2 $ 284.9

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

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

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

Other Current Assets

Other current assets consisted of the following:

(in millions of U.S.

Dollars) March 31, 2024 June 25, 2023

Reimbursement receivable on long-term incentive agreement $ 75.7 $ 91.3

Receivables in connection with short-term investment maturities 15.0 —

Inventory related to the RF Master Supply Agreement 20.9 —

Accrued interest receivable 12.7 10.1

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

Other 28.4 20.1

Other current assets $ 162.7 $ 131.5

Other assets consisted of the following:

(in millions of U.S.

Dollars) March 31, 2024 June 25, 2023

Investment tax credit receivable (1)

$ 515.4 $ 167.4

Right-of-use assets 94.3 98.0

Long-term advances to suppliers 44.0 8.7

Cloud computing assets, net 15.0 17.6

Other 19.6 11.6

Other assets $ 688.3 $ 303.3

(1) The Company expects to receive refundable federal investment tax credits through the U.S.

CHIPS and Science Act of 2022 (CHIPS) in connection with ongoing expansion projects.

The Company has reduced property and equipment by $ 515.4 million and $ 167.4 million as of March 31, 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.

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.

The impact to cost of revenue from the investment tax credit as a result of a change in estimate is expected to have an immaterial impact to depreciation expense.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

(in millions of U.S.

Dollars) March 31, 2024 June 25, 2023

Accounts payable, trade $ 52.4 $ 44.9

Accrued salaries and wages 61.3 63.9

Accrued property and equipment 407.2 328.4

Accrued expenses 35.1 97.3

Accounts payable and accrued expenses $ 556.0 $ 534.5

Other Operating Expense

Other operating expense consisted of the following:

Three months ended Nine months ended

(in millions of U.S.

Dollars) March 31, 2024 March 26, 2023 March 31, 2024 March 26, 2023

Project, transformation and transaction costs 5.3 0.9 $ 12.5 $ 2.9

Executive severance costs — 0.6 — 1.9

Restructuring costs — — — 0.2

Other operating expense $ 5.3 $ 1.5 $ 12.5 $ 5.0

Accumulated Other Comprehensive Loss, net of taxes

Accumulated other comprehensive loss, net of taxes, consisted of $ 12.7 million and $ 25.1 million of net unrealized losses on available-for-sale securities as of March 31, 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 Loss

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

Non-Operating Expense (Income), net

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

Three months ended Nine months ended

(in millions of U.S.

Dollars) March 31, 2024 March 26, 2023 March 31, 2024 March 26, 2023

Interest income ( 30.1 ) ( 22.2 ) ( 108.9 ) ( 38.1 )

Interest expense, net of capitalized interest 59.5 14.1 185.5 26.7

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

7.7 — 7.7 ( 50.3 )

Loss on Wafer Supply Agreement 6.9 4.8 20.4 7.3

Gain on equity investment ( 1.9 ) — ( 7.3 ) —

Other, net 0.3 0.4 1.3 1.0

Non-operating expense (income), net $ 42.4 ($ 2.9 ) $ 98.7 ($ 53.4 )

(1) In the third quarter of fiscal 2024, the Company accrued a liability for payment of customs duties totaling approximately $ 7.7 million for alleged undervalued 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.

Statements of Cash Flows - non-cash activities

Nine months ended

(in millions of U.S.

Dollars) March 31, 2024 March 26, 2023

Decrease in property, plant and equipment from investment tax credit receivables $ 348.0 $ 106.0

Decrease in property, plant and equipment from long-term incentive related receivables 107.3 85.2

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

Receivables in connection with short-term investment maturities 15.0 —

Decrease in property, plant and equipment from insurance receivable 2.2 —

Lease asset and liability additions 1.8 26.7

Lease asset and liability modifications, net 0.9 0.2

Accrued property and equipment as of March 31, 2024 and March 26, 2023 was $ 407.2 million and $ 306.0 million, respectively.

Note 5 – Commitments and Contingencies

The Company is currently a party to various legal proceedings, including the case described below.

While management presently believes that the ultimate outcome of such proceedings, individually and in the aggregate, will not materially harm the Company’s financial position, cash flows, or overall trends in results of operations, legal proceedings are subject to inherent uncertainties, and unfavorable rulings could occur.

An unfavorable ruling could include monetary damages or, in matters for which injunctive relief or other conduct remedies may be sought, an injunction prohibiting the Company from selling one or more products at all or in particular ways.

Were unfavorable final outcomes to occur, there exists the possibility of a material adverse impact on the Company’s business, results of operations, financial position and overall trends.

The outcomes in these matters are not reasonably estimable.

In October 2021, The Trustees of Purdue University (Purdue) filed a complaint against the Company in the U.S.

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.

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

The Company denies Purdue’s remaining allegations and has developed numerous defenses, including non-infringement, multiple invalidity grounds, and unenforceability due to inequitable conduct before the U.S.

Patent & Trademark Office.

Discovery in this matter concluded in September 2024;

the parties are currently in the middle of summary judgment briefing, and the trial will most likely occur in the second half of 2025.

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

Grant Disbursement Agreement (GDA) with the State of New York

The Company currently has a GDA with the State of New York Urban Development Corporation (doing business as Empire State Development).

The GDA provides a potential total grant amount of $ 500.0 million to partially and fully reimburse the Company for certain property, plant and equipment costs related to the Company's construction of its silicon carbide device fabrication facility in Marcy, New York.

The GDA was signed in the fourth quarter of fiscal 2020 and requires the Company to satisfy a number of objectives for the Company to receive reimbursements through the span of the 13 -year agreement.

These objectives include maintaining a certain level of local employment, investing a certain amount in locally administered research and development activities and the payment of an annual commitment fee for the first six years .

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

As of September 29, 2024, the annual cost of satisfying the objectives of the GDA and the SUNY Agreement, excluding the direct and indirect costs associated with employment, varies from $ 2.7 million to $ 5.2 million per year through fiscal 2031.

As of September 29, 2024, the Company has reduced property and equipment, net by a total of $ 500.0 million as a result of GDA reimbursements, of which $ 467.2 million has been received in cash and an additional $ 32.8 million in receivables are recorded in other current assets and in other assets in the consolidated balance sheet.

Supply Commitments

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 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 life of the contract.

During the three months ended September 29, 2024, the Company purchased $ 6.7 million of product under this agreement.

As of September 29, 2024, minimum future product purchases for fiscal years 2025, 2026, 2027 and 2028 are $ 1.4 million, $ 36.0 million, $ 50.1 million and $ 73.7 million, respectively.

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

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

As of September 29, 2024, the Company has paid $ 44.9 million in connection with the agreement, which is recognized in prepaid expenses and other long-term assets on the consolidated balance sheet.

In 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 three months ended September 29, 2024, the Company purchased $ 7.2 million of product under this agreement which satisfied the minimum future product purchases for the period.

Minimum future product purchase for the remainder of fiscal 2025 and fiscal years 2026 and 2027 are $ 21.6 million, $ 28.8 million and $ 9.6 million, respectively.

Note 6 – Investments

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

March 31, 2024

(in millions of U.S.

September 29, 2024

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

2 unchanged sentences

Municipal bonds 89.3 0.3 ( 1.0 ) — 88.6

Commercial paper 53.2 — — — 53.2

Certificates of deposit 17.0 — — — 17.0

agency securities 15.0 — — — 15.0

Variable rate demand notes 27.2 — — — 27.2

Commercial paper 9.9 — — — 9.9

Total short-term investments $ 963.4 $ 2.5 ($ 4.4 ) $ — $ 961.5

June 30, 2024

(in millions of U.S.

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

Corporate bonds $ 512.3 $ — ($ 16.7 ) $ — $ 495.6

treasury securities $ 553.3 $ — ($ 0.6 ) $ — $ 552.7

Corporate bonds 423.5 0.2 ( 6.7 ) — 417.0

Municipal bonds 102.8 — ( 2.0 ) — 100.8

Certificates of deposit 31.5 — — — 31.5

agency securities 77.0 — ( 0.2 ) — 76.8

Commercial paper 16.7 — — — 16.7

Variable rate demand notes 27.3 — — — 27.3

agency securities 10.0 — — — 10.0

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

1 unchanged sentence

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

March 31, 2024

September 29, 2024

Less than 12 Months Greater than 12 Months Total

3 unchanged sentences

Municipal bonds 2.5 — 67.7 ( 1.0 ) 70.2 ( 1.0 )

agency securities 19.7 — 10.0 — 29.7 —

Total $ 31.6 $ — $ 235.3 ($ 4.4 ) $ 266.9 ($ 4.4 )

7 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 )

Number of securities with an unrealized loss 141 66 207

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

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

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

The Company did not hold cash equivalent securities in an unrealized loss position as of March 31, 2024.

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

Accrued interest receivable was $ 12.7 million and $ 10.1 million as of March 31, 2024 and June 25, 2023, respectively, and is recorded in other current assets on the consolidated balance sheets.

Accrued interest receivable was $ 10.7 million and $ 11.6 million as of September 29, 2024 and June 30, 2024, respectively, and is recorded in other current assets on the consolidated balance sheets.

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

There were no write-offs of noncollectable interest income during the three and nine months ended March 31, 2024 and March 26, 2023.

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

Realized gains and losses are included in non-operating 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.

There were no write-offs of noncollectable interest income during the three months ended September 29, 2024 and September 24, 2023.

The Company evaluates its investments for expected credit losses.

The Company believes it is able to and intends to hold each of the investments held with an unrealized loss as of March 31, 2024 until the investments fully recover in market value.

No allowance for credit losses was recorded as of March 31, 2024.

The contractual maturities of short-term investments as of March 31, 2024 were as follows:

The Company believes it is able to and intends to hold each of the investments held with an unrealized loss as of September 29, 2024 until the investments fully recover in market value.

No allowance for credit losses was recorded as of September 29, 2024.

The contractual maturities of short-term investments as of September 29, 2024 were as follows:

(in millions of U.S.

Dollars) Within One Year After One, Within Five Years After Five, Within Ten Years After Ten Years Total

Dollars) Within One Year After One, Within Five Years After Ten Years Total

treasury securities $ 444.2 $ 24.9 $ — $ 469.1

1 unchanged sentence

Municipal bonds 41.2 45.0 2.4 88.6

Commercial paper 53.2 — — — 53.2

Certificates of deposit 17.0 — — 17.0

agency securities 15.0 — — — 15.0

Variable rate demand notes — — 10.7 16.5 27.2

Commercial paper 9.9 — — 9.9

Total short-term investments $ 787.0 $ 172.1 $ 2.4 $ 961.5

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 and long-term investments.

As of March 31, 2024 and June 25, 2023, financial assets utilizing Level 1 inputs included U.S.

treasury securities, money market fund and U.S.

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

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

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.

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

The Company did not have any financial assets requiring the use of Level 3 inputs as of March 31, 2024 and June 25, 2023.

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

GAAP hierarchy:

March 31, 2024 June 25, 2023

September 29, 2024 June 30, 2024

(in millions of U.S.

3 unchanged sentences

treasury securities 8.0 — 8.0 10.0 — 10.0

Commercial paper — — — — 7.0 7.0

Total cash equivalents 151.1 — 151.1 97.3 — 97.3

6 unchanged sentences

Certificates of deposit — 17.0 17.0 — 31.5 31.5

Variable rate demand notes — 27.2 27.2 — 27.3 27.3

Total short-term investments 469.1 492.4 961.5 552.7 576.0 1,128.7

5 unchanged sentences

Note 8 – Goodwill and Intangible Assets

There were no changes to goodwill during the nine months ended March 31, 2024.

There were no changes to goodwill during the three months ended September 29, 2024.

Intangible Assets, net

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

March 31, 2024 June 25, 2023

September 29, 2024 June 30, 2024

(in millions of U.S.

5 unchanged sentences

(1) Relates to developed technology

Total amortization of acquisition-related intangibles assets was $ 0.3 million and $ 0.9 million for the three and nine months ended March 31, 2024, respectively, and $ 0.2 million and $ 1.3 million for the three and nine months ended March 26, 2023, respectively.

Total amortization of patents and licensing rights was $ 1.0 million and $ 3.3 million for the three and nine months ended March 31, 2024, respectively, and $ 1.1 million and $ 3.2 million for the three and nine months ended March 26, 2023, respectively.

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

(in millions of U.S.

Fiscal Year Ending

Acquisition Related Intangibles Patents Total

June 30, 2024 (remainder of fiscal 2024) $ 0.3 $ 1.0 $ 1.3

June 29, 2025 1.1 3.4 4.5

June 28, 2026 — 2.1 2.1

June 27, 2027 — 1.6 1.6

June 25, 2028 — 1.7 1.7

Thereafter — 12.5 12.5

Total future amortization expense $ 1.4 $ 22.3 $ 23.7

Note 9 – Long-term Debt

September 29, 2024 June 30, 2024

(in millions of U.S.

Dollars) Effective Interest Rate

Unamortized Discount

Net Principal

Unamortized Discount

1.75 % Convertible Notes (1)

On April 21, 2020, the Company sold $ 500.0 million aggregate principal amount of 1.75 % convertible senior notes due May 1, 2026 to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the Securities Act) and an additional $ 75.0 million aggregate principal amount of such notes pursuant to the exercise in full of the over-allotment options of the underwriters (the 2026 Notes).

The total net proceeds from the 2026 Notes offering was approximately $ 561.4 million.

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 then outstanding 0.875 % convertible senior notes due September 1, 2023, including approximately $ 0.2 million of accrued interest on such notes, in privately negotiated transactions.

2.2 % $ 575.0 ($ 3.7 ) $ 571.3 $ 575.0 ($ 4.3 ) $ 570.7

0.25 % Convertible Notes (1)

On February 3, 2022, the Company sold $ 650.0 million aggregate principal amount of 0.25 % convertible senior notes due February 15, 2028 to qualified institutional buyers pursuant to Rule 144A under the Securities Act and an additional $ 100.0 million aggregate principal amount of such notes pursuant to the exercise in full of the over-allotment options of the underwriters (the 2028 Notes).

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.

Capped Call Transactions in relation to the 2028 Notes

On January 31, 2022, in connection with the pricing of the 2028 Notes, the Company entered into privately negotiated capped call transactions with certain of the initial purchasers or affiliates thereof (the 2028 Notes Capped Call Counterparties).

In connection with the exercise by the initial purchasers of their option to purchase additional notes, the Company entered into additional privately negotiated capped call transactions (such transactions, collectively, the 2028 Notes Capped Call Transactions) with each of the 2028 Notes Capped Call Counterparties.

The 2028 Notes Capped Call Transactions initially cover, subject to customary anti-dilution adjustments, the aggregate number of shares of the Company’s common stock that initially underlie the 2028 Notes.

The 2028 Notes Capped Call Transactions are expected generally to reduce the potential dilutive effect on the common stock upon any conversion of 2028 Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2028 Notes, as the case may be, with such reduction and/or offset subject to a cap which initially is $ 212.04 per share, representing a premium of 125 % over the last reported sale price per share of the Company's common stock on January 31, 2022, subject to certain adjustments under the terms of the 2028 Notes Capped Call Transactions.

The 2028 Notes Capped Call Transactions are separate transactions entered into by the Company with each of the 2028 Notes Capped Call Counterparties, are not part of the terms of the 2028 Notes, and do not affect any holder’s rights under the 2028 Notes.

Holders of the 2028 Notes do not have any rights with respect to the 2028 Notes Capped Call Transactions.

0.6 % 750.0 ( 10.1 ) 739.9 750.0 ( 10.9 ) 739.1

1.875 % Convertible Notes (1)

On November 21, 2022, the Company sold $ 1,525.0 million aggregate principal amount of 1.875 % convertible senior notes due December 1, 2029 to qualified institutional buyers pursuant to Rule 144A under the Securities Act and an additional $ 225.0 million aggregate principal amount of such notes pursuant to the exercise in full of the over-allotment options of the underwriters (the 2029 Notes).

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.

Capped Call Transactions in relation to the 2029 Notes

On November 16, 2022, in connection with the pricing of the 2029 Notes, the Company entered into privately negotiated capped call transactions with certain of the initial purchasers or their affiliates and another financial institution (the 2029 Notes Capped Call Counterparties).

In connection with the exercise by the initial purchasers of their option to purchase additional notes, the Company entered into additional privately negotiated capped call transactions (such transactions, collectively, the 2029 Notes Capped Call Transactions) with each of the 2029 Notes Capped Call Counterparties.

The 2029 Notes Capped Call Transactions initially cover, subject to customary anti-dilution adjustments, the aggregate number of shares of the Company’s common stock that initially underlie the 2029 Notes.

The 2029 Notes Capped Call Transactions are expected generally to reduce the potential dilutive effect on the common stock upon any conversion of 2029 Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2029 Notes, as the case may be, with such reduction and/or offset subject to a cap which initially is $ 202.538 per share, representing a premium of 130 % over the last reported sale price per share of our common stock on November 16, 2022, subject to certain adjustments under the terms of the 2029 Notes Capped Call Transactions.

The 2029 Notes Capped Call Transactions are separate transactions entered into by the Company with each of the 2029 Notes Capped Call Counterparties, are not part of the terms of the 2029 Notes, and do not affect any holder’s rights under the 2029 Notes.

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

Accounting for the 2026 Notes, 2028 Notes and 2029 Notes

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 2026 Notes, 2028 Notes and 2029 Notes (the Outstanding Convertible Notes) 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 Outstanding Convertible Notes;

effectively subordinated in right of payment of any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness;

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

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

(in millions of U.S.

Dollars) March 31, 2024 June 25, 2023

Principal $ 3,075.0 $ 3,075.0

Unamortized discount and issuance costs ( 42.4 ) ( 49.4 )

Net carrying amount $ 3,032.6 $ 3,025.6

The last reported sale price of the Company's common stock was not greater than or equal to 130 % of the applicable conversion price for any of the Outstanding Convertible Notes for at least 20 trading days in the 30 consecutive trading days ended on March 31, 2024.

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

2.1 % 1,750.0 ( 23.9 ) 1,726.1 1,750.0 ( 24.9 ) 1,725.1

2030 Senior Notes (2)

On June 23, 2023 (the Issue Date), the Company sold $ 1,250 million aggregate principal amount of senior secured notes due 2030 (the 2030 Senior Notes).

The total net proceeds from the 2030 Senior Notes was approximately $ 1,149.3 million.

The total net proceeds are net of debt issuance costs and an original issue discount of $ 50.0 million.

The 2030 Senior Notes bear interest (i) during the first three years after the Issue Date at a rate of 9.875 % per annum, (ii) during the fourth year after the Issue Date at a rate of 10.875 % per annum, and (iii) at all times thereafter, 11.875 % per annum, and

will mature on the earlier of (x) June 23, 2030 and (y) September 1, 2029, if more than $ 175.0 million in aggregate principal amount of the 2029 Notes remain outstanding on such date.

Subject to the fulfillment of certain conditions precedent, the Company may, at its discretion, issue and sell additional 2030 Senior Notes in an amount not to exceed $ 750.0 million.

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

(i) if the prepayment occurs prior to the third anniversary of the Issue Date, by paying a customary make-whole premium and (ii) if the prepayment occurs on or after the third anniversary of the Issue Date, by paying the Applicable Redemption Price.

Further, the Company has the right, prior to the third anniversary of the Issue Date, to make an optional redemption of up to 35 % of the aggregate principal amount of the 2030 Senior Notes with the proceeds of qualified equity issuances, at a redemption price equal to 109.875 %.

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.

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

As of March 31, 2024, the Company was in compliance with all covenants relating to the 2030 Senior Notes.

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

Beyond the value of the collateral securing the 2030 Notes, the 2026 Notes, 2028 Notes, 2029 Notes and 2030 Senior Notes (the 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;

effectively subordinated in right of payment of any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness;

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 %.

12.4 % 1,250.0 ( 74.8 ) 1,175.2 1,250.0 ( 80.3 ) 1,169.7

CRD Agreement Deposits (2)

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 the option to receive additional deposits up to an additional $ 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).

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 for the CRD Agreement related to the full deposit capacity under the agreement.

A portion of the debt issuance costs were accounted for on a pro rata basis as a reduction of the principal balance for the initial deposit and the second draw, and will be amortized over the term of the deposit at an effective interest rate of 6.3 %.

During the third quarter of fiscal 2024, the debt issuance costs allocated to the second draw were $ 11.4 million and these costs were reclassified from prepaid expense and recorded as a reduction of principal related to the additional deposit received.

The remaining debt issuance costs of approximately $ 11.4 million are recorded as a prepaid expense and will be recorded as a reduction of the principal balance, on a pro rata basis, if additional deposits are drawn under the CRD Agreement.

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

As of March 31, 2024, the Company was in compliance with all covenants related to this agreement.

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

(in millions of U.S.

Dollars) March 31, 2024 June 25, 2023

Principal $ 2,750.0 $ 1,250.0

Unamortized discount and issuance costs ( 118.3 ) ( 100.5 )

Net carrying amount $ 2,631.7 $ 1,149.5

6.3 % 2,000.0 ( 42.6 ) 1,957.4 2,000.0 ( 43.5 ) 1,956.5

$ 6,325.0 ($ 155.1 ) $ 6,169.9 $ 6,325.0 ($ 163.9 ) $ 6,161.1

(1) Presented in convertible notes

(2) Presented in long-term debt

As of September 29, 2024, the Company was in compliance with all covenants relating to the senior secured notes due 2030 (the 2030 Senior Notes) and the Unsecured Customer Refundable Deposit Agreement entered into in July 2023 with a customer (the CRD Agreement).

Interest Expense

The interest expense, net recognized related to the corporate debt holdings and the deposits under the CRD Agreement is as follows:

Three months ended Nine months ended

Three months ended

(in millions of U.S.

Dollars) March 31, 2024 March 26, 2023 March 31, 2024 March 26, 2023

Dollars) September 29, 2024 September 24, 2023

Interest expense, net of capitalized interest $ 56.8 $ 53.7

2 unchanged sentences

The Company capitalizes interest in connection with ongoing capacity expansions.

For the three and nine months ended March 31, 2024, the Company capitalized $ 8.6 million and $ 16.1 million of interest expense, respectively, and $ 1.1 million and $ 2.1 million of amortization of issuance costs, respectively.

For both the three and nine months ended March 26, 2023, the Company capitalized $ 0.2 million of interest expense and less than $ 0.1 million of amortization of issuance costs.

Three months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Interest expense capitalized

Amortization of discount and debt issuance costs capitalized

Total interest expense capitalized

Note 10 – Loss Per Share

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

Three months ended Nine months ended

Three months ended

(in millions of U.S.

Dollars, except share data) March 31, 2024 March 26, 2023 March 31, 2024 March 26, 2023

Dollars, except share data) September 29, 2024 September 24, 2023

Net loss from continuing operations ($ 282.2 ) ($ 123.6 )

5 unchanged sentences

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

For the three and nine months ended March 31, 2024, 4.0 million and 3.9 million of weighted average shares, respectively, were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive.

For both the three and nine months ended March 26, 2023, 2.9 million of weighted average shares were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive.

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

For the three months ended September 29, 2024, 8.4 million of weighted average shares were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive.

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

Note 11 – Stock-Based Compensation

Overview of Employee Stock-Based Compensation Plans

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

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

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

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

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

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

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

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

Restricted Stock Units

A summary of nonvested restricted stock unit awards (RSUs) outstanding as of March 31, 2024 and changes during the nine months then ended is as follows:

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

Nonvested at June 25, 2023 2,340 $ 85.32

Granted 2,119 $ 61.55

Vested ( 973 ) $ 78.33

Forfeited ( 371 ) $ 77.25

Nonvested at March 31, 2024 3,115 $ 72.29

Stock-Based Compensation Valuation and Expense

The Company accounts for its employee stock-based compensation plans using the fair value method.

The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of the Company’s ESPP awards.

The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables.

These variables include the expected stock price volatility over the term of the awards, the risk-free interest rate and expected dividends.

Due to the inherent limitations of option-valuation models, future events that are unpredictable and the estimation process utilized in determining the valuation of the stock-based awards, the ultimate value realized by award holders may vary significantly from the amounts expensed in the Company’s financial statements.

For service-based RSUs and performance-based RSUs with internal metrics, the grant-date fair value is based upon the market price of the Company’s common stock on the date of the grant.

For performance-based RSUs, the Company reassesses the probability of the achievement of the performance condition at each reporting period and adjusts the compensation expense for subsequent changes in the estimate or actual outcome.

This fair value is then amortized to compensation expense over the requisite service period or vesting term.

For performance-based awards with market conditions, the Company estimates the grant date fair value using the Monte Carlo valuation model and expenses the awards over the vesting period regardless of whether the market condition is ultimately satisfied.

Stock-based compensation expense is recognized net of estimated forfeitures such that expense is recognized only for those stock-based awards that are expected to vest.

A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates.

The Black-Scholes and Monte Carlo option pricing models require the input of highly subjective assumptions.

These assumptions represent management's best estimates, but these estimates involve inherent uncertainties and the application of management judgment.

As a result, if other assumptions had been used, recorded share-based compensation expense could have been materially different from that depicted below.

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

Three months ended Nine months ended

Three months ended

(in millions of U.S.

Dollars) March 31, 2024 March 26, 2023 March 31, 2024 March 26, 2023

Dollars) September 29, 2024 September 24, 2023

Cost of revenue, net $ 8.5 $ 6.0

9 unchanged sentences

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

As of March 31, 2024, the Company has concluded that it is necessary to recognize a full valuation allowance against its U.S.

As of September 29, 2024, the Company has concluded that it is necessary to recognize a full valuation allowance against its U.S.

deferred tax assets.

3 unchanged sentences

As of June 30, 2024, the Company's liability for unrecognized tax benefits was $ 9.4 million.

During the nine months ended March 31, 2024, the Company recognized a $ 1.3 million decrease to the liability for unrecognized tax benefits due to statute expiration and a $ 0.5 million increase to the liability for unrecognized tax benefits due to an increase in generated research and development credits.

As a result, the total liability for unrecognized tax benefits as of March 31, 2024 was $ 9.0 million.

During the three months ended September 29, 2024, the Company recognized a $ 0.5 million increase to the liability for unrecognized tax benefits due to an

increase in generated research and development credits.

As a result, the total liability for unrecognized tax benefits as of September 29, 2024 was $ 9.9 million.

If any portion of this $ 9.9 million is recognized, the Company will then include that portion in the computation of its effective tax rate.

7 unchanged sentences

Certain carryforward tax attributes generated in prior years remain subject to examination, adjustment and recapture.

Note 13 – Commitments and Contingencies

The Company is currently a party to various legal proceedings, including the case described below.

Were unfavorable final outcomes to occur, there exists the possibility of a material adverse impact on the Company’s business, results of operations, financial position and overall trends.

The outcomes in these matters are not reasonably estimable.

In October 2021, The Trustees of Purdue University (Purdue) filed a complaint against the Company in the U.S.

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

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

Patent & Trademark Office.

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.

Grant Disbursement Agreement (GDA) with the State of New York

The Company currently has a GDA with the State of New York Urban Development Corporation (doing business as Empire State Development).

The GDA was signed in the fourth quarter of fiscal 2020 and requires the Company to satisfy a number of objectives for the Company to receive reimbursements through the span of the 13-year agreement.

As of March 31, 2024, the annual cost of satisfying the objectives of the GDA and the SUNY Agreement, excluding the direct and indirect costs associated with employment, varies from $ 2.7 million to $ 5.2 million per year through fiscal 2031.

As of March 31, 2024, the Company has reduced property and equipment, net by a total of $ 500.0 million as a result of GDA reimbursements, of which $ 425.4 million has been received in cash and an additional $ 74.6 million in receivables are recorded in other current assets and in other assets in the consolidated balance sheet.

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

Supply Commitments

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 life of the contract.

During the three and nine months ended March 31, 2024, the Company purchased $ 3.4 million and $ 16.0 million of product under this agreement, respectively.

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

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

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

As of March 31, 2024, the Company has paid $ 31.9 million in connection with the agreement, which is recognized in prepaid expenses and other long-term assets on the consolidated balance sheet.

In the second quarter of fiscal 2024, the Company entered into an agreement with 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 three and nine months ended March 31, 2024, the Company purchased $ 7.2 million and $ 12.0 million of product under this agreement, respectively, which satisfied the minimum future product purchases for the period.

Minimum future product purchase for the remainder of fiscal 2024 and fiscal years 2025, 2026 and 2027 are $ 7.2 million, $ 28.8 million, $ 28.8 million and $ 9.6 million, respectively.

Note 13 - Restructuring

During the first quarter of fiscal 2025, the Company initiated a headcount reduction and facility closure and consolidation plan intended to optimize its cost structure as the Company accelerates its transition from 150mm to 200mm silicon carbide devices (the 2025 Restructuring Plan).

The actions taken under the 2025 Restructuring Plan will ultimately result in the closure of the Company's 150mm device fabrication facility in Durham, North Carolina as well as a realignment of related activities across the geographic regions in which the Company operates.

The Company also recently initiated plans to consolidate its manufacturing footprint for epitaxy products by winding down operations at its facility in Farmer's Branch, Texas during fiscal 2025.

Refer to Note 14, "Subsequent Events" for additional discussion of actions related to the consolidation of the Company's manufacturing activities.

The Company is also taking steps to optimize the allocation of resources across various functional groups.

The Company expects these actions will result in a total headcount reduction of approximately 20 % over the next six months to one year .

The costs that will be incurred as a result of the 2025 Restructuring Plan include severance and employee benefit costs, voluntary termination benefits, and other exit costs that qualify as exit and disposal costs under U.S.

T he severance costs incurred during the first quarter of fiscal 2025 were provided under an ongoing benefit arrangement and were therefore recorded once they were both probable and reasonably estimable in accordance with the provisions of ASC 712-10, “Nonretirement Postemployment Benefits”.

Additionally, the Company has incurred, and over the next 12 months will continue to incur, additional facility closure-related costs related to these activities, including asset-related charges and fixed manufacturing costs that will be eliminated as a result of this plan and other incremental costs to exit facilities.

Including these additional facility closure-related costs, the Company expects to incur approximately $ 400 million to $ 450 million of total costs, including approximately $ 60 million of involuntary and voluntary severance costs, $ 125 million of other closure-related cash costs, and approximately $ 250 million of asset-related charges and other non-cash costs.

The Company expects to realize approximately $ 200 million of annualized cost savings upon completion of these initiatives.

A summary of the charges recognized in the consolidated statements of operations during the first quarter of fiscal 2025 resulting from these restructuring activities is shown below:

(in millions of U.S.

Dollars) Severance

Accelerated Depreciation

Other Closure-Related Costs

Cost of revenue, net $ — $ 11.7 $ 22.6 $ 34.3

Other operating expense

36.5 7.1 9.2 52.8

$ 36.5 $ 18.8 $ 31.8 $ 87.1

A summary of the balance sheet activity related to these restructuring activities recognized in accounts payable and accrued expenses in the unaudited consolidated balance sheet as of September 29, 2024 follows:

(in millions of U.S.

Dollars) As of June 30, 2024

As of September 29, 2024

Employee severance and benefit costs

$ — $ 36.5 $ — $ 36.5

Note 14 - Subsequent Events

Preliminary Memorandum of Terms under the CHIPS and Science Act

On October 11, 2024, the Company signed a non-binding preliminary memorandum of terms (PMT) with the United States Department of Commerce for up to $ 750.0 million in proposed direct funding under the CHIPS Act.

The PMT outlines key terms for the funding including the proposed amount and form of the award.

The disbursement of the funds will be conditioned upon the achievement of certain operational and construction milestones and other requirements.

Receipt of the proposed direct funding set forth in the PMT is subject to negotiation, completion and execution of the direct funding agreement with the Department of Commerce, and the negotiation and execution of an intercreditor agreement between the Department of Commerce and the Company's lenders, which may contain different or additional conditions not contained in the PMT.

The PMT includes an obligation for the Company to raise an aggregate of $ 750.0 million in debt financing and revise certain terms under the 2030 Senior Notes, restructure or refinance its outstanding convertible notes at specified intervals and defer a total of $ 120.0 million in cash interest payments due prior to June 30, 2025 under the CRD Agreement.

In addition, the Company has agreed to raise up to $ 300.0 million of additional capital from non-debt sources over the next 12 months.

2030 Senior Notes Amended and Restated Indenture

Also on October 11, 2024, the Company entered into the Amended and Restated Indenture (the 2030 Senior Notes Indenture), which amends certain terms and conditions of the 2030 Senior Notes and permits the Company to issue and sell $ 750.0 million of additional notes, subject to the fulfillment of certain conditions precedent.

Pursuant to the 2030 Senior Notes Indenture, the 2030 Senior Notes bear interest (a) for the period from the effectiveness of the Existing Indenture to October 11, 2024 at a rate of 9.875 % per annum;

(b) for the period from October 11, 2024 through and including June 22, 2025 at a rate of 9.875 % per annum (payable in cash), plus 2 % per annum (payable at the Company's option, in cash or in-kind);

(c) for the period commencing on June 23, 2025 through June 22, 2026 (i) if the Interest Rate Step-Down Condition (as defined below) is satisfied as of June 23, 2025, at a rate of 10.875 % per annum (payable in cash) plus 2 % per annum (payable at the Company's option in cash or in-kind) and (ii) if the Interest Rate Step-Down Condition is not satisfied as of June 23, 2025 at a rate of 11.875 % per annum (payable in cash), plus 2 % per annum (payable at the Company's option, in cash or in-kind);

and (d) for the period commencing on June 23, 2026 and at all times thereafter, (i) if the Interest Rate Step-Down Condition is satisfied as of June 23 of the most recent year, at a rate of 13.875 % per annum (payable in cash) and (ii) if the Interest Rate Step-Down Condition is not satisfied, at a rate of 15.875 % per annum (payable in cash).

The Interest Rate Step-Down Condition is met if (a)(i) the Company redeems or repurchases (other than redemptions or repurchases with the proceeds of dispositions) the 2030 Senior Notes, resulting in the aggregate principal amount of 2030 Senior Notes outstanding being less than $ 1.0 billion and (ii) the Company receives at least $ 450.0 million of awards under the CHIPS Act or (b) as of the most recent June 23rd, the ratio of outstanding principal amount of the 2030 Senior Notes to EBITDA (as defined in the 2030 Senior Notes Indenture) for the most recently ended four fiscal quarter period for which financial statements have been or are required to have been delivered under the 2030 Senior Notes Indenture is less than or equal to 2 :1.

The 2030 Senior Notes will mature on the earlier of (x) June 23, 2030 and (y) September 1, 2029, if more than $ 175 million in aggregate principal amount of the Company's 1.875 % convertible senior notes due December 1, 2029 remains outstanding on such date.

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 perfect first lien security interest of at least (a) $ 630.0 million as of the last day of any calendar month ending on or prior to March 31, 2025 and (b) $ 750.0 million as of April 1, 2025 and as of the last day of any calendar month ending thereafter.

Upon the Company having received at least $ 450.0 million of award disbursements pursuant to governmental grants under the CHIPS Act, the level of minimum liquidity shall be permanently reduced to $ 250.0 million.

On October 22, 2024, the Company issued $ 250.0 million in aggregate principal amount of 2030 Senior Notes pursuant to the 2030 Senior Notes Indenture.

The Company may issue up to an additional $ 500.0 million in aggregate principal amount of 2030 Senior Notes, subject to certain conditions.

2033 CRD Notes Amendment

On October 15, 2024, the Company entered into Amendment No.

1 to the CRD Agreement, which amends the existing agreement to, among other things, permit the Company to pay the accrued interest on the outstanding loans payable under the existing agreement on the last business day of each of December 2024 and June 2025 (together, the PIK Amounts) by adding the PIK Amounts to the then outstanding principal amount of the loans rather than in cash.

The interest rate on the PIK Amounts will accrue at a rate of 15.0 % per annum.

The amendment also permits the Company to grant liens on additional assets in Siler City, North Carolina in connection with disbursements pursuant to governmental grants or awards under the CHIPS Act, and permits the Company to pay a portion of interest on the 2030 Senior Notes in-kind subject to the limitations set forth in the amendment to the CRD Agreement.

Saarland Project

During October 2024, the Company notified the relevant governmental authorities that it has indefinitely suspended its plans to construct a silicon carbide fabrication facility in Saarland, Germany.

The estimated financial impact of this action is included in the total estimated costs of the 2025 Restructuring Plan discussed in Note 13, "Restructuring".

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

What changed 10-Q

Item 1. Financial Statements