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Item 1. Financial Statements

2025-01-30 compared with 2024-11-07 · 208 added, 139 removed, 557 unchanged (38% of the section changed)

Financial Statements (Unaudited)

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

Consolidated Balance Sheets as of Dec ember 29, 2024 and June 30, 2024

Consolidated Statements of Operations for the three and six months ended Dec ember 29, 2024 and Dec ember 31 , 2023

Consolidated Statements of Comprehensive Loss for the three and si x months ended D e c ember 29, 2024 and Dec ember 31 , 2023

Consolidated Statements of Shareholders' Equity for the six months ended Dec ember 29, 2024 and Dec ember 31 , 2023

Consolidated Statements of Cash Flows for the six months ended Dec ember 29, 2024 and Dec ember 31 , 2023

Notes to Unaudited Consolidated Financial Statements

2 unchanged sentences

(in millions of U.S.

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

Dollars, except share data in thousands)

December 29, 2024 June 30, 2024

Current assets:

35 unchanged sentences

Preferred stock, par value $ 0.01 ;

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

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

none issued and outstanding

Common stock, par value $ 0.00125 ;

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

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

138,679 and 126,409 shares issued and outstanding at December 29, 2024 and June 30, 2024, respectively

Additional paid-in-capital 3,960.9 3,821.9

6 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended

Three months ended Six months ended

(in millions of U.S.

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

Dollars, except share data)

December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Revenue, net $ 180.5 $ 208.4 $ 375.2 $ 405.8

Cost of revenue, net 217.7 180.6 448.6 353.3

Gross profit ( 36.2 ) 24.7

Gross (loss) profit ( 37.2 ) 27.8 ( 73.4 ) 52.5

Operating expenses:

3 unchanged sentences

Amortization of acquisition-related intangibles 0.3 0.3 0.6 0.6

Loss on disposal or impairment of other assets 0.6 0.1

Loss on disposal or impairment of long-lived assets 125.8 0.3 126.4 0.4

Other operating expense 41.4 4.6 101.6 7.2

2 unchanged sentences

Loss before income taxes ( 372.3 ) ( 125.9 ) ( 654.1 ) ( 249.3 )

Income tax expense 0.4 0.2

Income tax (benefit) expense ( 0.1 ) 0.3 0.3 0.5

Net loss from continuing operations ( 372.2 ) ( 126.2 ) ( 654.4 ) ( 249.8 )

8 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Dollars) December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Net loss ($ 372.2 ) ($ 144.7 ) ($ 654.4 ) ($ 540.4 )

Other comprehensive income:

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

Net unrealized (loss) gain on available-for-sale securities ( 1.4 ) 11.0 5.9 12.9

Comprehensive loss ( 373.6 ) ( 133.7 ) ( 648.5 ) ( 527.5 )

11 unchanged sentences

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

Net loss — — — ( 372.2 ) — ( 372.2 )

Net unrealized loss on available-for-sale securities — — — — ( 1.4 ) ( 1.4 )

Tax withholding on vested equity awards — — ( 0.1 ) — — ( 0.1 )

Stock-based compensation 99 — 19.7 — — 19.7

Exercise of stock options and issuance of shares 773 — 8.8 — — 8.8

Issuance of shares under the at-the-market offering program, net of issuance costs 10,919 — 88.9 — — 88.9

Balance at December 29, 2024 138,679 $ 0.2 $ 3,960.9 ($ 3,582.8 ) ($ 5.7 ) $ 372.6

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

8 unchanged sentences

Tax withholding on vested equity awards — — ( 15.0 ) — — ( 15.0 )

Repurchased shares — — — — — —

Stock-based compensation 506 — 32.1 — — 32.1

1 unchanged sentence

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

Net loss — — — ( 144.7 ) — ( 144.7 )

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

Comprehensive loss ( 133.7 )

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

Stock-based compensation 104 — 29.8 — — 29.8

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

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

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

1 unchanged sentence

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended

Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Dollars) December 29, 2024 December 31, 2023

Operating activities:

6 unchanged sentences

Stock-based compensation 43.9 42.1

Unrealized gain on equity investment ( 15.7 ) ( 5.4 )

Loss on disposal or impairment of long-lived assets 126.4 0.4

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

Realized loss on sale of investments 0.1 —

Premium discount on investments, net ( 6.2 ) ( 13.8 )

Paid-in-kind interest on long-term debt 5.9 —

Deferred income taxes — 0.1

12 unchanged sentences

Purchases of patent and licensing rights ( 2.4 ) ( 3.2 )

Proceeds from sale of property and equipment 1.0 0.4

Purchases of short-term investments ( 172.4 ) ( 1,307.2 )

2 unchanged sentences

Reimbursement of property and equipment purchases from long-term incentive agreement 42.0 79.4

Proceeds from sale of business — 75.6

Net cash used in investing activities of continuing operations ( 423.2 ) ( 1,446.7 )

27 unchanged sentences

Restructuring

S ubsequent Events

Shareholders' Equity

Note 1 – Basis of Presentation and New Accounting Standards

8 unchanged sentences

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

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

All material intercompany accounts and transactions have been eliminated.

5 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 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).

The results of operations for the three and six months ended December 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).

In accordance with U.S.

GAAP, management considers whether there are conditions or events that raise substantial doubt about the Company's ability to continue as a going concern for the twelve months following the issuance date of its financial statements.

Based on the Company's current cash flow projections, the Company has concluded that the entity will be able to meet its obligations as they become due during that period.

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.

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

Financial Statement Details

1 unchanged sentence

(in millions of U.S.

Dollars) September 29, 2024 June 30, 2024

Dollars) December 29, 2024 June 30, 2024

Billed trade receivables $ 149.9 $ 143.3

4 unchanged sentences

(in millions of U.S.

Dollars) September 29, 2024 June 30, 2024

Dollars) December 29, 2024 June 30, 2024

Raw material $ 163.8 $ 138.7

4 unchanged sentences

(in millions of U.S.

Dollars) September 29, 2024 June 30, 2024

Dollars) December 29, 2024 June 30, 2024

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

3 unchanged sentences

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.

As of December 29, 2024, the Company has recorded a receivable for and reduced property and equipment, net by $ 865.0 million as a result of the expected refundable tax credits in connection with the CHIPS Act.

In the second quarter of fiscal 2025, the United States Department of Treasury released final regulations related to the Advanced Manufacturing Investment Credit under Section 48D of the Internal Revenue Code, and the Internal Revenue Service issued Announcement 2024-40 confirming the treatment of CHIPS Act grants for purposes of Section 48D.

The Company accounted for the impact of the final regulations and the announcement as part of a change in estimate and increased the investment tax credit receivable by $ 68.6 million and recorded $ 5.8 million of contra-depreciation expense which is the cumulative amount that would have been recognized had the receivable been recorded at the time the corresponding assets were placed in service.

Accounts Payable and Accrued Expenses

(in millions of U.S.

Dollars) September 29, 2024 June 30, 2024

Dollars) December 29, 2024 June 30, 2024

Accounts payable, trade $ 54.2 $ 53.0

4 unchanged sentences

Other Operating Expense

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Dollars) December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Restructuring costs and other exit costs $ 32.2 $ — $ 85.0 $ —

Executive severance costs 1.4 — 1.4 —

Project, transformation and transaction costs 7.8 4.6 13.8 7.2

Other — — 1.4 —

Other operating expense $ 41.4 $ 4.6 $ 101.6 $ 7.2

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.

Accumulated other comprehensive loss, net of taxes, consisted of $ 5.7 million and $ 11.6 million of net unrealized losses on available-for-sale securities as of December 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

Three months ended Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Dollars) December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Interest income ( 17.0 ) ( 38.2 ) ( 39.2 ) ( 78.8 )

Interest expense, net of capitalized interest 80.5 64.3 145.0 126.0

Loss on Wafer Supply Agreement — 6.6 9.2 13.5

Unrealized gain on equity investment ( 15.7 ) ( 5.4 ) ( 15.7 ) ( 5.4 )

Other, net 1.5 0.5 1.7 1.0

2 unchanged sentences

Statements of Cash Flows - non-cash activities

Three months ended

Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Dollars) December 29, 2024 December 31, 2023

Decrease in property, plant and equipment from investment tax credit receivables $ 223.3 $ 211.0

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

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

Receivables in connection with short-term investment maturities — 40.0

Lease asset and liability additions 25.0 1.2

Lease asset and liability modifications, net 2.6 1.9

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

Lease terminations — ( 1.4 )

Commitment fee payable for 2030 Senior Notes 29.3 —

Fees payable in connection with at-the-market program 2.4 —

Recently Adopted Accounting Pronouncements

Accounting Pronouncements Pending Adoption

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

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

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

11 unchanged sentences

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 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.

In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03.

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

4 unchanged sentences

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).

In connection with the divestiture of the RF Business (the RF Business Divestiture), MACOM will assume control of the Company’s 100mm gallium nitride (GaN) 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.

7 unchanged sentences

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

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 24, 2023

Dollars) December 31, 2023 December 31, 2023

Revenue, net $ 26.8 $ 59.6

5 unchanged sentences

Amortization of intangibles — 1.5

Impairment on assets held for sale 144.6

Excess loss liability on assets held for sale 75.4

Loss on disposal of assets 0.3 0.3

Other operating expense 7.2 24.3

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

(Gain) loss on sale ( 16.0 ) 204.0

Loss before income taxes ( 11.9 ) ( 283.6 )

1 unchanged sentence

Net loss ($ 18.5 ) ($ 290.6 )

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 $ 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.

At the inception of the RF Master Supply Agreement, the Company recorded a supply agreement liability of $ 95.0 million, of which $ 45.2 million was outstanding as of December 29, 2024.

The supply agreement liability is recognized in other current liabilities on the consolidated balance sheet as of December 29, 2024 and in other current liabilities and other long-term liabilities on the consolidated balance sheet as of June 30, 2024.

A receivable of $ 5.8 million in connection with the RF Master Supply Agreement is included in other current assets in the consolidated balance sheet as of December 29, 2024.

Additionally, the Company recorded a supply agreement liability of $ 58.0 million for the Long-Term Epi Supply Agreement, which is recognized in other long-term liabilities in the consolidated balance sheets.

The Company recorded a liability of $ 38.0 million for the future transfer of assets in connection with the RTP Fab Transfer.

This liability is recognized in other current liabilities on the consolidated balance sheet as of December 29, 2024 and in other long-term liabilities on the consolidated balance sheet as of June 30, 2024.

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 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 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 supplied CreeLED with certain silicon carbide materials and fabrication services.

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.

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

For the three and six months ended December 31, 2023, the Company recognized a net loss of $ 6.6 million and $ 13.5 million in non-operating expense, net related to the Wafer Supply Agreement.

Note 3 – Revenue Recognition

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.

Contract liabilities and distributor-related reserves were $ 67.9 million as of December 29, 2024 and $ 88.0 million as of June 30, 2024.

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

Product Line Revenue

2 unchanged sentences

Revenue from these two product lines is as follows:

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Dollars) December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Power Products $ 90.8 $ 107.7 $ 187.9 $ 208.9

5 unchanged sentences

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

Three months ended

September 29, 2024 September 24, 2023

Three months ended Six months ended

December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

(in millions of U.S.

Dollars) Revenue % of Revenue Revenue % of Revenue

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

Asia Pacific (1)

15 unchanged sentences

Operating Leases:

September 29, 2024 June 30, 2024

December 29, 2024 June 30, 2024

Right-of-use asset (1)

14 unchanged sentences

Three months ended

Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Dollars) December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Operating lease expense

$ 4.1 $ 3.9 $ 8.1 $ 7.2

Finance lease amortization

Interest expense for finance leases

0.2 0.2 0.4 0.4

Interest expense for finance leases was immaterial for all periods presented.

Cash flow information consisted of the following (1) :

Three months ended

Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Dollars) December 29, 2024 December 31, 2023

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

6 unchanged sentences

Lease Liability Maturities

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

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

Fiscal Year Ending Operating Leases Finance Leases Total

21 unchanged sentences

Note 5 – Commitments and Contingencies

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

The Company is currently a party to various legal proceedings, including the cases 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.

11 unchanged sentences

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

On November 15, 2024, the Company and certain current and former executive officers were named as defendants in a securities class action lawsuit captioned Gary Zagami v Wolfspeed, Inc., et al., Case No.

6:24-cv-01395, which was filed in the United States District Court for the Northern District of New York.

The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder.

The complaint seeks unspecified compensatory damages and other relief.

On January 8, 2025, two additional lawsuits were filed in the United States District Court for the Northern District of New York by shareholders regarding these same matters and name as defendant the Company and current and former officers.

The Company denies allegations of wrongdoing and intends to vigorously defend against the claims in the above-referenced actions.

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

4 unchanged sentences

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

As of September 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.

As of December 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 $ 2.2 million to $ 5.2 million per year through fiscal 2031.

As of December 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

1 unchanged sentence

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.

During the three and six months ended December 29, 2024, the Company purchased $ 5.8 million and $ 12.5 million, respectively, of product under this agreement.

As of December 29, 2024, the minimum future product purchases have been satisfied for fiscal 2025, and the remaining future product purchases for fiscal years 2026, 2027 and 2028 are $ 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.

As of December 29, 2024, the Company has paid $ 48.9 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.

During the three and six months ended December 29, 2024, the Company purchased $ 7.2 million and $ 14.4 million, respectively, 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 $ 14.4 million, $ 28.8 million and $ 9.6 million, respectively.

1 unchanged sentence

(in millions of U.S.

September 29, 2024

December 29, 2024

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

3 unchanged sentences

Certificates of deposit 12.0 — — — 12.0

Commercial paper 9.9 — — — 9.9

Total short-term investments $ 793.9 $ 1.1 ($ 4.2 ) $ — $ 790.8

11 unchanged sentences

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

September 29, 2024

December 29, 2024

Less than 12 Months Greater than 12 Months Total

14 unchanged sentences

Number of securities with an unrealized loss 141 66 207

Additionally, the Company held six cash equivalent securities with an aggregate fair value of $ 14 million in unrealized loss positions as of December 29, 2024.

The aggregate unrealized loss was less than $ 0.1 million.

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 $ 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.

Accrued interest receivable was $ 9.9 million and $ 11.6 million as of December 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 months ended September 29, 2024 and September 24, 2023.

There were no write-offs of noncollectable interest income during the three and six months ended December 29, 2024 and December 31, 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 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:

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

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

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

(in millions of U.S.

4 unchanged sentences

Certificates of deposit 12.0 — — 12.0

Commercial paper 9.9 — — 9.9

Total short-term investments $ 616.4 $ 172.0 $ 2.4 $ 790.8

11 unchanged sentences

GAAP hierarchy:

September 29, 2024 June 30, 2024

December 29, 2024 June 30, 2024

(in millions of U.S.

2 unchanged sentences

Money market funds $ 149.1 $ — $ 149.1 $ 87.3 $ — $ 87.3

Corporate bonds — 14.0 14.0 — — —

treasury securities — — — 10.0 — 10.0

Commercial paper — 15.0 15.0 — — —

Total cash equivalents 149.1 29.0 178.1 97.3 — 97.3

13 unchanged sentences

Note 8 – Goodwill and Intangible Assets

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

There were no changes to goodwill during the three and six months ended December 29, 2024.

The Company performs an annual assessment of its goodwill during the fourth quarter of each calendar year or more frequently if indicators of potential impairment exist, such as an adverse change in business climate, declines in market capitalization or a decline in the overall industry demand, that would indicate it is more likely than not that the fair value of its single reporting

unit is less than its carrying value.

If the Company determines that it is more likely than not that the fair value of its single reporting unit is less than the carrying value, the Company measures the amount of impairment as the amount the carrying value of its single reporting unit exceeds the fair value, up to the carrying value of goodwill, by using a discounted cash flow method and market approach method.

Although the Company’s market capitalization further declined in the second quarter of fiscal 2025, the Company does not believe that it is more likely than not that the fair value of its single reporting unit is less than its carrying value.

Using the market capitalization approach, which the Company expects would be similar to the discounted cash flow method, the fair value of the single reporting unit is estimated based on the trading price of the Company’s stock at the test date, which is further adjusted by an acquisition control premium representing the synergies a market participant would obtain when obtaining control of the business.

If the Company's market capitalization continues to decline or future performance falls below the Company’s current expectations, assumptions, or estimates, including assumptions related to current macroeconomic uncertainties, this may trigger a future material non-cash impairment charge, which could have a material adverse effect on the Company’s business, financial condition, and results of operations in the reporting period in which a charge would be necessary.

The Company will continue to monitor developments, including updates to the Company’s forecasts and market capitalization.

An update of the Company’s assessment and related estimates may be required in the future.

Intangible Assets, net

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

September 29, 2024 June 30, 2024

December 29, 2024 June 30, 2024

(in millions of U.S.

6 unchanged sentences

Note 9 – Long-term Debt

September 29, 2024 June 30, 2024

December 29, 2024 June 30, 2024

(in millions of U.S.

16 unchanged sentences

(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).

As of December 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).

2030 Senior Notes Amended and Restated Indenture

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 original Indenture related to the 2030 Senior Notes entered into on June 23, 2023 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 perfected 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 $ 500.0 million.

Upon the Company having received at least $ 750.0 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 Agreement 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.

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

Three months ended Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Dollars) December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Interest expense, net of capitalized interest $ 66.6 $ 56.0 $ 123.4 $ 109.7

2 unchanged sentences

The Company capitalizes interest in connection with ongoing capacity expansions.

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Dollars) December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Interest expense capitalized

$ 17.4 $ 5.2 $ 33.3 $ 7.5

Amortization of discount and debt issuance costs capitalized

3.5 0.7 5.5 1.0

Total interest expense capitalized

$ 20.9 $ 5.9 $ 38.8 $ 8.5

Note 10 – Loss Per Share

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

Three months ended

Three months ended Six months ended

(in millions of U.S.

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

Dollars, except share data) December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Net loss from continuing operations ($ 372.2 ) ($ 126.2 ) ($ 654.4 ) ($ 249.8 )

5 unchanged sentences

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

For the three months ended September 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.

For the three and six months ended December 29, 2024, 9.5 million and 9.2 million of weighted average shares, respectively, were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive.

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

Note 11 – Stock-Based Compensation

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

Three months ended

Three months ended Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023

Dollars) December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Cost of revenue, net $ 9.0 $ 6.4 $ 17.5 $ 12.4

9 unchanged sentences

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

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

As of December 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 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.

During the six months ended December 29, 2024, the Company recognized a $ 0.9 million increase to the liability for unrecognized tax benefits primarily due to an increase in generated research and development credits.

As a result, the total liability for unrecognized tax benefits as of December 29, 2024 was $ 10.3 million.

If any portion of this $ 10.3 million is recognized, the Company will then include that portion in the computation of its effective tax rate.

11 unchanged sentences

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 Company is 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 three to nine months .

In the second quarter of fiscal 2025, the Company implemented an early exit program for a limited number of eligible employees based on their age and years of service.

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”.

The 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 9 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.

1 unchanged sentence

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:

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

Three months ended Six months ended

(in millions of U.S.

Dollars) Severance

Dollars) December 29, 2024 December 29, 2024

Accelerated depreciation

$ 11.7 $ 23.4

Other closure-related costs

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

Other operating expense

Total cost of revenue, net

$ 31.4 $ 65.7

Impairments on abandoned assets (1)

$ 124.5 $ 124.5

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:

Severance (2)

$ 15.0 $ 51.5

Accelerated depreciation

Other closure-related costs

Total other operating expense

$ 32.2 $ 85.0

$ 188.1 $ 275.2

(1) Presented in loss on disposal or impairment of other assets

(2) Employee severance and benefit costs include the early exit program payments

(in millions of U.S.

Dollars) As of June 30, 2024

As of September 29, 2024

December 29, 2024

Employee severance and benefit costs (1)

$ — $ 51.5 ($ 23.4 ) $ 28.1

Contract termination liability

$ — $ 52.6 ($ 23.4 ) $ 29.2

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;

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.

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.

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

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".

(1) Employee severance and benefit costs includes the early exit program activity

Note 14 - Shareholders' Equity

On December 9, 2024, the Company established an "at-the-market" offering program (the ATM Program) pursuant to which the Company could offer and sell, from time to time through sales agents, up to $ 200 million of the Company's common stock.

The ATM Program was conducted pursuant to an equity distribution agreement (the Equity Distribution Agreement) entered into by the Company and J.P.

Morgan Securities LLC and Wells Fargo Securities, LLC (the Managers).

As of December 29, 2024, the Company sold approximately 10.9 million shares of common stock under the ATM Program and received proceeds of approximately $ 91.4 million.

The program concluded on January 14, 2025 and the Company completed the sale of approximately $ 200 million of common stock and, as such, the ATM automatically terminated in accordance with the terms of the Equity Distribution Agreement.

In total, the Company sold and received payment for 27.8 million additional shares of common stock at a weighted average price of $ 7.20 per share through the ATM Program for total gross proceeds of approximately $ 200.0 million and net proceeds of approximately $ 195.5 million, after $ 4 million in commissions to the Mangers and $ 0.5 million in other offering costs.

The Company intends to use the net proceeds for general corporate purposes.

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