What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-01-30 compared with 2024-11-07 · 89 added, 80 removed, 196 unchanged (46% of the section changed)

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These uncertainties make demand difficult to forecast for us and our customers.

Recently, we and other semiconductor companies have been experiencing softening demand for power products in industrial and energy applications.

We continue to experience increased mid- and long-term demand for our power products designed for electrical vehicle applications, and we are working closely with our customer base to best match our supply to their near-term demand.

Recently, we and other semiconductor companies have been experiencing softening demand for our products.

We continue to experience increased mid- and long-term demand for our power products designed for electrical vehicle applications, though at a slower pace than initially expected.

We believe the increased demand for our power products reflects the value that the industry places on a transition to silicon carbide materials and devices while also evidencing the growing global focus on adopting higher efficiency energy solutions, including electric vehicle and related technologies.

We believe these trends could have a significant positive impact on revenues in future periods as we increase capacity to meet this increased demand.

• Supply Constraints.

The semiconductor industry has experienced supply constraints for certain items, although constraints appear to be alleviating in recent months.

We have successfully managed through challenges relating to obtaining certain necessary production and processing equipment thus far, and we have continued to see supply availabilities and lead times stabilize across many direct materials.

In addition, although we have not experienced significant impacts to date, the ongoing military conflict between Russia and Ukraine and the ongoing conflicts in the Middle East may further exacerbate global supply constraints.

• Intense and Constantly Evolving Competitive Environment.

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

Overview of the three months ended September 29, 2024

The following is a summary of our continuing operations financial results as of and for the three months ended September 29, 2024 compared to the three months ended September 24, 2023, unless otherwise stated.

Overview of the six months ended December 29, 2024

The following is a summary of our continuing operations financial results as of and for the six months ended December 29, 2024 compared to the six months ended December 31, 2023, unless otherwise stated.

• Our year-over-year revenue decreased ($30.6) million to $375.2 million.

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• Diluted loss per share was $5.12 compared to $1.99.

• Combined cash, cash equivalents and short-term investments was $1,687.6 million at September 29, 2024 and $2,174.6 million at June 30, 2024.

• Long-term debt, net was $6,169.9 million at September 29, 2024 and $6,161.1 million at June 30, 2024.

• Combined cash, cash equivalents and short-term investments was $1,404.8 million at December 29, 2024 and $2,174.6 million at June 30, 2024.

• Long-term debt, net was $6,423.8 million at December 29, 2024 and $6,161.1 million at June 30, 2024.

• Cash used in operating activities was $327.1 million compared to $295.6 million.

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

The strength of our balance sheet provides us the ability to invest in our business and increase production capacity, as indicated by the Mohawk Valley Fab, where we started revenue production in late fiscal 2023.

In addition, an expansion of our materials factory in Durham, North Carolina and the construction of a new materials manufacturing facility in Siler City, North Carolina are expected to increase our production capacity.

We are committed to a plan to invest in our business and increase production capacity, as indicated by the Mohawk Valley Fab, where we started revenue production in late fiscal 2023, and an expansion of our materials factory in Durham, North Carolina and the construction of a new materials manufacturing facility in Siler City, North Carolina.

We are primarily focused on investing in our business to expand the scale of production, further develop the technologies, and accelerate the growth opportunities of silicon carbide materials, silicon carbide power devices and modules.

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

Refer to Note 13, "Restructuring," and Note 14, "Subsequent Events" to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional discussion of the financial impact of these activities.

We believe we have the ability to navigate the current environment while maintaining our capital expenditure plans to support future growth to meet long-term demand, although demand in the mid-term appears to be ahead of the industry's supply capabilities.

Refer to Note 13, "Restructuring," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional discussion of the financial impact of these activities.

We believe we have the ability to navigate the current environment while maintaining our capital expenditure plans to support future growth to meet long-term demand.

For fiscal 2025, we have targeted approximately $1.1 billion to $1.3 billion of net capital investment.

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Results of Operations

Selected consolidated statements of operations data for the three months ended September 29, 2024 and September 24, 2023 were as follows:

Three months ended

September 29, 2024 September 24, 2023

Selected consolidated statements of operations data for the three and six months ended December 29, 2024 and December 31, 2023 were as follows:

Three months ended Six months ended

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

(in millions of U.S.

Dollars, except share data) Amount % of Revenue Amount % of Revenue

Dollars, except share data) Amount % of Revenue Amount % of Revenue Amount % of Revenue Amount % of Revenue

Revenue, net $180.5 100.0 % $208.4 100.0 % $375.2 100.0 % $405.8 100.0 %

Cost of revenue, net 217.7 120.6 % 180.6 86.7 % 448.6 119.6 % 353.3 87.1 %

Gross profit (36.2) (18.6) % 24.7 12.5 %

Gross (loss) profit (37.2) (20.6) % 27.8 13.3 % (73.4) (19.6) % 52.5 12.9 %

Research and development 44.4 24.6 % 45.3 21.7 % 95.3 25.4 % 89.4 22.0 %

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Amortization of acquisition-related intangibles 0.3 0.2 % 0.3 0.1 % 0.6 0.2 % 0.6 0.1 %

Loss on disposal or impairment of other assets 0.6 0.3 % 0.1 0.1 %

Loss on disposal or impairment of long-lived assets 125.8 69.7 % 0.3 0.1 % 126.4 33.7 % 0.4 0.1 %

Other operating expense 41.4 22.9 % 4.6 2.2 % 101.6 27.1 % 7.2 1.8 %

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Loss before income taxes (372.3) (206.3) % (125.9) (60.4) % (654.1) (174.3) % (249.3) (61.4) %

Income tax expense 0.4 0.2 % 0.2 0.1 %

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

Net loss from continuing operations (372.2) (206.2) % (126.2) (60.6) % (654.4) (174.4) % (249.8) (61.6) %

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Discontinued operations — (0.15) — (2.32)

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(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023 Change

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

Power Products $90.8 $107.7 ($16.9) (16) % $187.9 $208.9 ($21.0) (10) %

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Revenue $180.5 $208.4 ($27.9) (13) % $375.2 $405.8 ($30.6) (8) %

Revenue for the three months ended September 29, 2024 as compared to the three months ended September 24, 2023 decreased due to the softening of demand in industrial and energy applications, which has been largely fulfilled from our North Carolina fab.

This decrease has been partially offset by growth in demand for automotive applications.

Revenue for the three and six months ended December 29, 2024 as compared to the three and six months ended December 31, 2023 for our power product line decreased due to the softening of demand in industrial and energy applications.

This decrease has been partially offset by growth in demand for automotive applications, though we are beginning to experience slower growth for automotive applications than we previously expected.

The decrease in our materials products revenue for all periods is primarily driven by weakening demand across end markets.

Gross Profit and Gross Margin

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(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023 Change

Gross profit ($36.2) $24.7 ($60.9) (247) %

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

Gross (loss) profit

($37.2) $27.8 ($65.0) (234) % ($73.4) $52.5 ($125.9) (240) %

Gross margin (20.6) % 13.3 % (19.6) % 12.9 %

Gross profit and gross margin were impacted by a less favorable product mix resulting from the softening of demand in industrial and energy applications.

Production capacity in the North Carolina fab shifted from industrial and energy products to automotive products, which have a higher production cost in that fab.

Gross profit for the three months ended September 29, 2024 includes restructuring costs of $11.7 million of non-cash asset-related charges from accelerated depreciation and $22.6 million of other exit costs for our restructuring plan adopted in the first quarter of fiscal 2025 as discussed in Note 13, "Restructuring," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Gross profit and gross margin for both periods include underutilization costs incurred within cost of revenue in connection with the start of production at our Mohawk Valley Fab.

Underutilization costs for the three months ended September 29, 2024 were $26.4 million as compared to $34.4 million for the three months ended September 24, 2023.

Gross profit and gross margin were impacted by a less favorable product mix resulting from the softening of demand for our products.

Production capacity in the Durham fab shifted from industrial and energy products to automotive products, which have a higher production cost in that fab.

Gross profit for the three and six months ended December 29, 2024 includes:

• $31.4 million and $65.7 million, respectively, of costs in connection with the 2025 Restructuring Plan as discussed in Note 13, "Restructuring," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

• $28.9 million and $55.3 million, respectively, of underutilization costs in connection with the start of production at our Mohawk Valley Fab.

Underutilization costs were $35.6 million and $70.0 million for the three and six months ended December 31, 2023, respectively.

Research and Development

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(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023 Change

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

Research and development $44.4 $45.3 ($0.9) (2) % $95.3 $89.4 $5.9 7 %

Percent of revenue 25 % 22 % 25 % 22 %

The increase in Research and development expenses for the three months ended September 29, 2024 as compared to the three months ended September 24, 2023 was primarily due to increases in product material costs.

The increase in research and development expenses for the six months ended December 29, 2024 as compared to the six months ended December 31, 2023 was primarily due to increases in product material costs, partially offset by a decrease in salary and benefits costs related to the reduction in headcount.

The decrease in research and development expenses for the three months ended December 29, 2024 as compared to the three months ended December 31, 2023 was immaterial.

Sales, General and Administrative

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(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023 Change

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

Sales, general and administrative $51.1 $64.9 ($13.8) (21) % $113.3 $129.0 ($15.7) (12) %

Percent of revenue 28 % 31 % 30 % 32 %

The decrease in Sales, general and administrative expenses for the three months ended September 29, 2024 as compared to the three months ended September 24, 2023 was primarily driven by a decrease in people costs.

The decrease in sales, general and administrative expenses for the three and six months ended December 29, 2024 as compared to the three and six months ended December 31, 2023 was primarily driven by a decrease in salary and benefits costs of approximately $11.0 million and $13.6 million, respectively, due to reduced headcount and a decrease in travel and professional services of $3 million as compared to the six months ended December 31, 2023, resulting from cost optimization.

Factory Start-up Costs

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(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023 Change

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

Factory start-up costs $22.8 $10.5 $12.3 117 % $42.5 $18.9 $23.6 125 %

Start-up costs increased for the three months ended September 29, 2024 as compared to the three months ended September 24, 2023 due to increased costs incurred in connection with the construction of our materials manufacturing facility in Siler City, North Carolina.

Loss on Disposal or Impairment of Other Assets

Three months ended

Start-up costs increased for the three and six months ended December 29, 2024 as compared to the three and six months ended December 31, 2023 due to increased costs incurred in connection with the construction of our materials manufacturing facility in Siler City, North Carolina.

Loss on Disposal or Impairment of Long-Lived Assets

Three months ended Six months ended

(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023 Change

Loss on disposal or impairment of other assets $0.6 $0.1 $0.5 500 %

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

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

Loss on disposal or impairment of long-lived assets $125.8 $0.3 $125.5 41,833 % $126.4 $0.4 $126.0 31,500 %

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

Loss on disposal or impairment of long-lived assets for the three and six months ended December 29, 2024 consist of impairments of abandoned assets totaling $124.5 million related to the 2025 Restructuring Plan as discussed in Note 13, "Restructuring," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Other Operating Expense

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(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023 Change

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

Restructuring costs and other exit costs $ 32.2 $ — $ 32.2 100 % $ 85.0 $ — $ 85.0 100 %

Project, transformation and transaction costs 7.8 $ 4.6 $ 3.2 70 % $ 13.8 $ 7.2 6.6 92 %

Executive severance costs 1.4 — 1.4 100 % $ 1.4 $ — 1.4 100 %

Other — — — — % 1.4 — 1.4 100 %

Other operating expense $41.4 $4.6 $36.8 800 % $101.6 $7.2 $94.4 1,311 %

Restructuring and other closure-related costs for the three months ended September 29, 2024 consist of:

• $36.5 million of employee severance and benefit costs;

• $7.1 million of non-cash asset-related charges from accelerated depreciation;

• $9.2 million of other closure-related costs related to our restructuring plan adopted in the first quarter of fiscal 2025 as discussed in Note 13, "Restructuring," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Restructuring and other closure-related costs for the three and six months ended December 29, 2024 consist of:

• $15.0 million and $51.5 million, respectively, of employee severance and benefit costs;

• $5.7 million and $12.8 million, respectively, of non-cash asset-related charges from accelerated depreciation;

• $11.5 million and $20.7 million of other closure-related costs related to the 2025 Restructuring Plan as discussed in Note 13, "Restructuring," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Non-Operating Expense, net

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(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023 Change

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

Interest income ($17.0) ($38.2) $21.2 (55) % ($39.2) ($78.8) $39.6 (50) %

Interest expense, net of capitalized interest 80.5 64.3 16.2 25 % 145.0 126.0 19.0 15 %

Loss on Wafer Supply Agreement — 6.6 (6.6) (100) % 9.2 13.5 (4.3) (32) %

Unrealized gain on equity investment (15.7) (5.4) (10.3) 191 % (15.7) (5.4) (10.3) 191 %

Other expense, net 1.5 0.5 1.0 200 % 1.7 1.0 0.7 70 %

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Interest income.

The decrease in interest income for the three months ended September 29, 2024 as compared to the three months ended September 24, 2023 was primarily due to lower short-term investment balances.

The decrease in interest income for the three and six months ended December 29, 2024 as compared to the three and six months ended December 31, 2023 was primarily due to lower short-term investment balances.

Interest expense, net of capitalized interest .

The increase in interest expense for the three months ended September 29, 2024 as compared to the three months ended September 24, 2023 was primarily due to higher average debt outstanding offset, in part, by increased interest capitalization in the three months ended September 29, 2024.

The increase in interest expense for the three and six months ended December 29, 2024 as compared to the three and six months ended December 31, 2023 was primarily due to higher average debt outstanding offset, in part, by increased interest capitalization in the three and six months ended December 29, 2024.

Refer to Note 9 "Long-term Debt," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report for the summary of outstanding debt.

Income Tax Expense

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(in millions of U.S.

Dollars) September 29, 2024 September 24, 2023 Change

Income tax expense $0.4 $0.2 $0.2 100 %

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

Income tax (benefit) expense ($0.1) $0.3 ($0.4) (133) % $0.3 $0.5 ($0.2) (40) %

Effective tax rate — % — % — % — %

The change in our effective tax rate for the three months ended September 29, 2024 compared to the three months ended September 24, 2023 was immaterial.

The change in our effective tax rate for the three and six months ended December 29, 2024 compared to the three and six months ended December 31, 2023 was immaterial.

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

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Based on past performance and current expectations, we believe our current working capital will be adequate to meet our cash needs for at least the next 12 months.

With the strength of our working capital position, we believe that we have the ability to continue to invest in the completion of our near-term expansion of our production capacity, further develop our product portfolio and, when necessary or appropriate, make selective acquisitions or other strategic investments to strengthen our product portfolio or secure key intellectual properties.

However, even with the strength of our working capital position, we expect to need additional funding to fully complete all of our intended capacity expansions.

We believe that we have the ability to continue to invest in the completion of our near-term expansion of our production capacity, further develop our product portfolio and, when necessary or appropriate, make selective acquisitions or other strategic investments to strengthen our product portfolio or secure key intellectual properties.

However, we expect to need additional funding to fully complete all of our intended capacity expansions.

Further, we may need to reduce capital expenditures and/or take other steps to preserve working capital in the future in order to ensure that we can meet our needs and obligations and maintain compliance with our debt covenants.

We obtained additional funding of $250.0 million in October 2024 through the issuance of additional senior secured notes due 2030 (the 2030 Senior Notes) and have the ability to issue an additional $500.0 million of additional tranches under the Amended and Restated Indenture governing the 2030 Senior Notes (the 2030 Senior Notes Indenture), subject to certain conditions.

In accordance with the terms of the non-binding preliminary memorandum of terms (PMT) with the United States Department of Commerce that require us to restructure or refinance our outstanding 1.75% convertible senior notes due May 1, 2026 (2026 Notes), we are actively evaluating our options, including the refinancing of the 2026 Notes through the near-term issuance of equity-linked securities and/or other financing options, subject to market conditions and other considerations.

In accordance with the terms of the non-binding preliminary memorandum of terms (PMT) with the United States Department of Commerce that require us to restructure or refinance our outstanding 1.75% convertible senior notes due May 1, 2026 (the 2026 Notes), we are actively evaluating our options, including the refinancing of the 2026 Notes through the near-term issuance of equity-linked securities and/or other financing options, subject to market conditions and other considerations.

In the second quarter of fiscal 2025, we filed a shelf registration statement on Form S-3 to register for possible future sale shares of our common stock.

The registration statement became automatically effective upon filing with the SEC on December 9, 2024.

Under this shelf registration statement, we implemented an at-the-market program (the ATM Program) as described in the prospectus supplement filed with the SEC on December 9, 2024.

As discussed further in Note 14, "Shareholders' Equity", the ATM Program was conducted pursuant to an equity distribution agreement (the Equity Distribution Agreement) with J.P.

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

The ATM Program concluded on January 14, 2025 and we completed the sale of approximately 27.8 million additional shares of common stock for total gross proceeds of approximately $200.0 million and net proceeds of approximately $195.5 million, after $4 million in commissions to the Managers and $0.5 million in other offering costs.

Sources of Liquidity

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(in millions of U.S.

Dollars) September 29, 2024 June 30, 2024 Change

Dollars) December 29, 2024 June 30, 2024 Change

Cash and cash equivalents $614.0 $1,045.9 ($431.9)

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We received an initial deposit of $1 billion in the first quarter of fiscal 2024, a second deposit of $500 million in the third quarter of fiscal 2024 and the third and final deposit in the fourth quarter of fiscal 2024.

As discussed in Note 14, "Subsequent Events" to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, we entered into an amendment to the CRD Agreement in October 2024 to permit us to pay the accrued interest on the outstanding loans payable on the last business day of each of December 2024 and June 2025 by adding those amounts to the outstanding principal amount of the loans rather than in cash, reducing our expected cash interest payments in fiscal 2025 by $120.0 million.

As also discussed in Note 14, "Subsequent Events", to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, in the second quarter of fiscal 2025, we issued an additional $250.0 million aggregate principal amount of 2030 Senior Notes.

As discussed in Note 9, "Long-term Debt" to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, we entered into an amendment to the CRD Agreement in October 2024 to permit us to pay the accrued interest on the outstanding loans payable on the last business day of each of December 2024 and June 2025 by adding those amounts to the outstanding principal amount of the loans rather than in cash, reducing our expected cash interest payments in fiscal 2025 by approximately $120.0 million.

As also discussed in Note 9, "Long-term Debt", to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, in the second quarter of fiscal 2025, we issued an additional $250.0 million aggregate principal amount of 2030 Senior Notes.

The 2030 Senior Notes Indenture permits us to issue additional tranches up to $500.0 million subject to certain conditions.

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In the third quarter of fiscal 2024, we received a $57.5 million Land Acquisition Business Investment Grant from the North Carolina Department of Commerce.

As of September 29, 2024, we had unrealized losses on our short-term investments of $4.4 million.

All of our short-term investments had investment grade ratings, and any such investments that were in an unrealized loss position at September 29, 2024 were in such position due to interest rate changes, sector credit rating changes or company-specific rating changes.

As of December 29, 2024, we had unrealized losses on our short-term investments of $4.2 million.

All of our short-term investments had investment grade ratings, and any such investments that were in an unrealized loss position at December 29, 2024 were in such position due to interest rate changes, sector credit rating changes or company-specific rating changes.

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

We believe we are able and intend 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.

We believe we are able and intend 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.

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

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We expect to invest approximately $2.0 billion in total construction, equipment and other related costs for the new facility, of which approximately $500 million is expected to be reimbursed over time by the State of New York Urban Development Corporation (doing business as Empire State Development) under a Grant Disbursement Agreement (the GDA).

As of September 29, 2024, we have spent approximately $1.2 billion and received $467.2 million in reimbursements.

As of December 29, 2024, we have spent approximately $1.2 billion and received $467.2 million in reimbursements.

We started construction on a new materials manufacturing facility in Siler City, North Carolina in September 2022.

We expect to invest approximately $2.3 billion in total construction, equipment and other related costs for the facility through fiscal 2025.

As of September 29, 2024, we have spent approximately $1.6 billion.

As of December 29, 2024, we have spent approximately $1.9 billion.

For fiscal 2025, we target approximately $1.1 billion to $1.3 billion of capital investment, which is primarily related to capacity and infrastructure projects to support longer-term growth and strategic priorities.

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Given our current cash position, we believe we will be able to fund daily operating expenses, debt service, working capital and capital requirements for at least the next 12 months, but we expect to need additional funding to complete our previously announced expansion initiatives.

As discussed in Note 14 "Subsequent Events," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, we have obtained additional funding of $250.0 million through the issuance of additional 2030 Senior Notes, and expect to pursue additional funding through the United States CHIPS and Science Act of 2022 (the CHIPS Act) in accordance with the terms of a definitive direct funding award agreement with the United States Department of Commerce as contemplated by the PMT, equity offerings or other non-debt capital sources, and debt financings (which may involve refinancing, modifying or retiring some of our existing debt).

In addition, we may also apply for and potentially sell tax credits as part of the IRA to further fund our expansion initiatives.

As discussed in Note 9 "Long-term Debt," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, we have obtained additional funding of $250.0 million through the issuance of additional 2030 Senior Notes, and expect to pursue additional funding through the United States CHIPS and Science Act of 2022 (the CHIPS Act) in accordance with the terms of a definitive direct funding award agreement with the United States Department of Commerce as contemplated by the PMT, equity offerings or other non-debt capital sources, and debt financings (which may involve refinancing, modifying or retiring some of our existing debt).

In summary, our cash flows were as follows:

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in millions of U.S.

September 29, 2024 September 24, 2023 Change

December 29, 2024 December 31, 2023 Change

Net cash used in operating activities of continuing operations ($327.1) ($295.6) ($31.5) (11) %

5 unchanged sentences

Cash Flows from Operating Activities

Net cash used in operating activities of continuing operations decreased primarily due to increased working capital resulting from lower inventory growth and timing of payables.

Net cash used in operating activities of continuing operations increased primarily due to an increased net loss, offset in part by increased working capital resulting from lower inventory growth and timing of payables.

Cash Flows from Investing Activities

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Cash Flows from Financing Activities

For the three months ended September 29, 2024, cash provided by financing activities primarily consisted of a $10.0 million refund of escrow deposit, partially offset by $3.6 million in tax withholdings on vested equity awards.

For the six months ended December 29, 2024, cash provided by financing activities primarily consisted of proceeds of $240 million from the issuance of additional 2030 Senior Notes, net proceeds of $100 million from issuances of common stock and a $10.0 million refund of escrow deposit, partially offset by $26.1 million of debt issuance costs and $3.7 million in tax withholdings on vested equity awards.

Off-Balance Sheet Arrangements

As of September 29, 2024, we did not have any off-balance sheet arrangements.

As of December 29, 2024, we did not have any off-balance sheet arrangements.

We do not use off-balance sheet arrangements with unconsolidated entities or related parties, nor do we use any other forms of off-balance sheet arrangements.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis