WOLFSPEED, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Information set forth in this Quarterly Report on Form 10-Q (this "Quarterly Report") contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All information contained in this report relative to future markets for our products, trends in and anticipated levels of revenue, gross margins and expenses, and ability to access funding as well as other statements containing words such as “believe,” “project,” “may,” “will,” “anticipate,” “target,” “plan,” “estimate,” “expect” and “intend” and other similar expressions constitute forward-looking statements. These forward-looking statements are subject to business, economic and other risks and uncertainties, both known and unknown, and actual results may differ materially from those contained in the forward-looking statements. Any forward-looking statements we make are as of the date made, and except as required under the U.S. federal securities laws and the rules and regulations of the Securities and Exchange Commission (the "SEC"), we have no duty to update them if our views later change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Quarterly Report. Examples of risks and uncertainties that could cause actual results to differ materially from historical performance and any forward-looking statements include, but are not limited to, those described in “Risk Factors” in Part II, Item 1A of this Quarterly Report. The following discussion is designed to provide a better understanding of our unaudited consolidated financial statements, including a brief discussion of our business and products, key factors that impacted our performance and a summary of our operating results. The following discussion should be read in conjunction with the unaudited consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report, and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended June 29, 2025 (the "2025 Form 10-K"). Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods. Unless otherwise noted, the following information and discussion relates to our continuing operations. Recent Events Prepackaged Chapter 11 Cases On June 30, 2025 (the “Petition Date”), Wolfspeed, Inc. (the "Company," "we," "us," or "our") and its wholly owned subsidiary, Wolfspeed Texas LLC (together with the Company, the “Debtors”), voluntarily filed petitions (the "Chapter 11 Cases") for relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) to implement a prepackaged Chapter 11 plan of reorganization (the "Plan"). The Chapter 11 Cases were administered jointly under the caption In re Wolfspeed, Inc., et al , case number 25-90163 (CML). The Chapter 11 filings, including the Plan and the Disclosure Statement filed on June 30, 2025, were intended to facilitate a comprehensive balance sheet restructuring pursuant to a Restructuring Support Agreement (the “Restructuring Support Agreement”) executed on June 22, 2025, with key stakeholders, including (i) holders of more than 97% of the Company’s Senior Secured Notes due 2030 (the "Existing Senior Secured Notes"), (ii) holders of more than 67% of the Company’s outstanding 1.75% Convertible Senior Notes due 2026, 0.25% Convertible Senior Notes due 2028, and 1.875% Convertible Senior Notes due 2029 (collectively, the “Convertible Notes”), and (iii) Renesas Electronics America Inc. (“Renesas”). On September 8, 2025, the Court entered the Order (I) Approving the Disclosure Statement, (II) Confirming Joint Prepackaged Chapter 11 Plan of Reorganization of Wolfspeed, Inc. and Its Debtor Affiliate, and (III) Approving Entry into the Backstop Agreement (Docket No. 285) (the “Confirmation Order”), which, among other things, confirmed the Plan. On September 29, 2025 (the "Effective Date"), the Company emerged from the Chapter 11 Cases upon all the conditions to the effectiveness of the Plan being satisfied or waived and the Plan becoming effective. Refer to Note 1, "Basis of Presentation and New Accounting Standards" and Note 2, “Emergence from Voluntary Reorganization under Chapter 11,” to our consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information. Upon the Company’s emergence from the Chapter 11 Cases, the Company adopted fresh start accounting, which resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan, the consolidated financial statements after the Effective Date are not comparable with the consolidated financial statements on or before that date. Refer to Note 3, “Fresh Start Accounting,” to our consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information. 52 T able of Contents References to “Successor” or “Successor Company” relate to the financial position and results of operations of the Company after the Effective Date. References to “Predecessor” or “Predecessor Company” refer to the financial position and results of operations of the Company on or before the Effective Date. Industry Dynamics and Trends There are a number of industry factors that affect our business which include, among others: • Overall Demand for Products and Applications Using Our Wolfspeed Materials and Devices . Our potential for growth depends significantly on the continued adoption of silicon carbide materials and device products in the power market, and our ability to adapt to evolving competitive dynamics to retain and grow market share for these applications. We have been experiencing softening demand for our products and continued price pressure in certain applications. We continue to expect increased mid- and long-term demand growth, however the timing and extent of these increases remains uncertain. We also continue to explore opportunities to expand adoption of our products in new and growing industries, such as AI and datacenters, grid modernization and renewable energy and storage. • Intense and Constantly Evolving Competitive Environment. Competition in the industries we serve is intense. Many companies have made significant investments in product development, production equipment and production facilities. To remain competitive, market participants must continuously increase product performance, reduce costs and develop improved ways to serve their customers. In addition, market participants often undertake pricing strategies to gain or protect market share, increase the utilization of their production capacity and develop new applications in the power markets we serve. Innovations and advancements in materials and power technologies continue to expand the potential commercial application for our products. However, new technologies or standards could emerge or improvements could be made in existing technologies that could reduce or limit the demand for our products in certain markets. To address these competitive pressures, we have invested in new production facilities, as well as research and development activities to support new product development, lower product costs and increase levels of product performance to differentiate our products in the market. In addition, we invest in systems, people and new processes to improve our ability to deliver a better overall experience for our customers. • Governmental Trade and Regulatory Conditions . Our potential for growth, as with most multi-national companies, depends on a balanced and stable trade, political, geopolitical, economic and regulatory environment in the countries where we do business. We continue to monitor the recent changes in global trade policy, including tariffs and related trade actions announced by the United States, China and other countries. The degree to which such tariffs and other related actions impact our business, financial condition and results of operations will depend on future developments, which are uncertain. • Intellectual Property Issues. Market participants rely on patented and non-patented proprietary information associated with product development, manufacturing capabilities and other core competencies of their business. Protection of intellectual property is critical. Therefore, steps such as additional patent applications, confidentiality and non-disclosure agreements, as well as other security measures are generally taken. To enforce or protect intellectual property rights, litigation or threatened litigation is common. Business Outlook We believe we are uniquely positioned as a vertically integrated supplier of U.S.-made silicon carbide products in the global semiconductor industry. We are currently focused on three key priorities designed to put us on a path toward long-term growth and profitability: • Accelerating our path to profitability; • Advancing our technology leadership; and • Driving operational excellence. We believe these efforts will support our goals of delivering long-term growth and profitability, while enabling us to continue to invest in our business to further develop the technologies and accelerate the growth opportunities of silicon carbide materials and silicon carbide power devices and modules. 53 T able of Contents Results of Operations Basis of Presentation Beginning on the Effective Date, we adopted fresh start accounting, which resulted in a new basis of accounting and we became a new entity for financial reporting purposes. As a result of the adoption of fresh start accounting and the effects of the implementation of the Plan, the consolidated financial statements after September 29, 2025 are not comparable with the consolidated financial statements on or prior to that date. Refer to Note 3, "Fresh Start Accounting," to our consolidated financial statements in Part I, Item 1 of this Quarterly Report for further details. References to "Successor" relate to the financial position and results of operations of the Company after the Effective Date. References to "Predecessor" refer to the financial position and results of operations of the Company on or before the Effective Date. Fiscal Quarters Our fiscal quarters end on the last Sunday of the month in September, December, March and June. Each fiscal quarter is generally 13 weeks as part of a 52-week fiscal year. Occasionally, we have a 53-week fiscal year, and in those instances, one quarter within the fiscal year is comprised of 14 weeks instead of 13 weeks. Our 2026 and 2025 fiscal years are 52-week fiscal years. The next 53-week fiscal year will be for our 2030 fiscal year. Period from September 30, 2025 to December 28, 2025 (Successor) and September 29, 2025 (Predecessor) Compared to Three Months Ended December 29, 2024 (Predecessor) Consolidated statements of operations for the period from September 30, 2025 to December 28, 2025 (Successor), period of September 29, 2025 (Predecessor) and the three months ended December 29, 2024 (Predecessor), along with the change between the Successor period as compared to the three months ended December 29, 2024 were as follows: Successor Predecessor Period from September 30, 2025 to December 28, 2025 September 29, 2025 Three months ended December 29, 2024 Change (in millions of U.S. Dollars, except share data) Amount % Revenue Amount % Revenue Amount % Revenue $ % Power products $118.3 70.2 % $— — % $90.8 50.3 % $27.5 30.3 % Materials products 50.2 29.8 % — — % 89.7 49.7 % (39.5) (44.0) % Revenue, net 168.5 100.0 % — — % 180.5 100.0 % (12.0) (6.6) % Cost of revenue, net 246.8 146.5 % — — % 217.7 120.6 % 29.1 13.4 % Gross (loss) profit (78.3) (46.5) % — — % (37.2) (20.6) % (41.1) 110.5 % Research and development 24.9 14.8 % — — % 44.4 24.6 % (19.5) (43.9) % Sales, general and administrative 29.4 17.4 % — — % 51.1 28.3 % (21.7) (42.5) % Factory start-up costs — — % — — % 22.8 12.6 % (22.8) (100.0) % Gain on disposal of property and equipment (2.4) (1.4) % — — % (0.8) (0.4) % (1.6) 200.0 % Restructuring and other expenses 28.2 16.7 % — — % 168.3 93.2 % (140.1) (83.2) % Operating loss (158.4) (94.0) % — — % (323.0) (178.9) % 164.6 (51.0) % Reorganization items, net — — % (1,067.3) (100.0) % — — % — — % Interest expense, net of capitalized interest 58.0 34.4 % — — % 80.5 44.6 % (22.5) (28.0) % Non-operating income, net (67.0) (39.8) % — — % (31.2) (17.3) % (35.8) 114.7 % (Loss) income before income taxes (149.4) (88.7) % 1,067.3 100.0 % (372.3) (206.3) % 222.9 (59.9) % Income tax expense (benefit) 1.2 0.7 % 3.5 100.0 % (0.1) (0.1) % 1.3 (1,300.0) % Net (loss) income ($150.6) (89.4) % $1,063.8 100.0 % ($372.2) (206.2) % $221.6 (59.5) % Revenue The $12 million decrease in net sales for the Successor period ended December 28, 2025, compared to three months ended December 29, 2024 was primarily due to: 54 T able of Contents • Net sales of our Materials Product offerings decreased primarily due to lower volumes as our substrate customers continue to adjust the timing and size of their orders to rebalance supply to match weaker end market demand. The proportion of Materials Products revenue attributable to long-term supply agreements with customers has decreased compared to the same periods in fiscal 2025, resulting in more volatility in the timing and pricing of our materials orders. • Net sales of our Power Product offerings increased for both automotive and industrial applications. End-of-life buys from our distributors associated with the planned shutdown of our 150mm device fab in Durham, North Carolina also contributed to revenue growth during the first and second quarters of fiscal 2026. The revenue growth from our industrial applications was partially attributable to emerging opportunities for our AI and data center applications, a relatively small but growing vertical for our Power Products. Cost of Revenue, Net and Gross Margin The primary drivers of the $41 million decrease in gross profit for the Successor period ended December 28, 2025 compared to the three months ended December 29, 2024 included the following: • Lower revenues as discussed above and unfavorable sales mix attributable to growth in lower margin Power Product offerings. • $23 million increase in the carrying value of work-in-progress ("WIP") and finished goods inventory upon adoption of fresh start accounting, the entirety of which was recognized in cost of revenue, net in the second quarter of fiscal 2026 as the related inventory was sold. • $16 million increase in intangible-related amortization expense presented in Cost of revenue, net, related to additional intangible assets recognized upon adoption of fresh start accounting. • $20 million increase in underutilization costs, primarily related to the achievement of production readiness at our Siler City Fab at the end of fiscal 2025. Prior to the substantial completion of the facility, these costs were included in start-up costs within Operating Expenses. We expect to continue to incur significant underutilization costs until market demand for our products meets or exceeds our production capacity. • $16 million increase in write-downs related to obsolete customer-specific inventory we intend to scrap. • $10 million decrease in depreciation expense related to the adoption of fresh start accounting. The favorable impact of lower depreciation expense will increase in future quarters as additional inventory is sold. • $16 million decrease in restructuring and other closure-related costs. Research and Development The $19 million decrease in research and development expenses for the Successor period ended December 28, 2025 compared to three months ended December 29, 2024, was primarily due to: • $8 million attributable to planned decreases in the amount of research and development wafer spend from product transfers and technology qualifications related to the Mohawk Valley Fab ramp; • $6 million attributable to decreases in personnel costs, driven by lower headcount and lower estimated bonus attainment, and lower stock-based compensation costs attributable to the cancellation of unvested restricted stock unit ("RSU") and performance stock unit ("PSU") awards upon emergence from the Chapter 11 Cases; and • $4 million attributable to lower depreciation expense from the adoption of fresh start accounting, Sales, General and Administrative The $22 million decrease in sales, general and administrative expenses for the Successor period ended December 28, 2025 compared to the three months ended December 29, 2024 was primarily due to: • $16 million attributable to decreases in personnel costs related to lower headcount and lower estimated bonus attainment, and lower stock-based compensation costs attributable to the cancellation of unvested RSU and PSU awards upon emergence from the Chapter 11 Cases; and • $5 million attributable to planned reductions in marketing and outside services related to cost optimization efforts. 55 T able of Contents Factory Start-up Costs The $23 million decrease in factory start-up costs for the Successor period ended December 28, 2025 compared to the three months ended December 29, 2024, related to the substantial completion of the initial phase of construction of our materials manufacturing facility in Siler City, North Carolina. Refer to Note 1, "Basis of Presentation and New Accounting Standards," to our consolidated financial statements in Part I, Item 1 of this Quarterly Report for further details on the change in accounting policy due to the adoption of fresh start accounting. Restructuring and Other Operating Expense Successor Predecessor Change (in millions of U.S. Dollars) Period from September 30, 2025 to December 28, 2025 September 29, 2025 Three months ended December 29, 2024 $ % Restructuring and other exit costs $9.6 $— $156.7 ($147.1) (94) % Project, transformation and transaction costs 14.1 — 7.8 6.3 81 % Executive severance costs — — 1.4 (1.4) (100) % Amortization or impairment of fresh start accounting and acquisition-related intangibles 4.0 — 0.3 3.7 1,233 % Other 0.5 — 2.1 (1.6) (76) % Restructuring and other expenses $28.2 $— $168.3 ($140.1) (83) % The decrease in Restructuring and other operating expenses during the Successor period ended December 28, 2025 compared to the three months ended December 29, 2024, was primarily driven by a decrease in restructuring charges related to our headcount reduction and facility consolidation plans, partially offset by an increase in costs related to our Chapter 11 Cases that did not qualify as reorganization items, net, and a $4 million increase in amortization expense, related to intangible assets recognized upon adoption of fresh start accounting. Reorganization items, net Reorganization items, net for the Predecessor period of September 29, 2025 related to our emergence from Chapter 11 bankruptcy and primarily consisted of the gain on settlement of liabilities subject to compromise and the impacts of fresh start valuation adjustments. Refer to Note 2 - Emergence from Voluntary Reorganization Under Chapter 11 for additional details on the items included within Reorganization items, net. Interest Expense, net The decrease in interest expense during the Successor period ended December 28, 2025 compared to the three months ended December 29, 2024 was primarily related to decreases in our outstanding debt obligations upon emergence from the Chapter 11 Cases. Non-Operating Expense, net Successor Predecessor Change (in millions of U.S. Dollars) Period from September 30, 2025 to December 28, 2025 September 29, 2025 Three months ended December 29, 2024 $ % Changes in fair value of liability classified derivative contracts ($59.1) — $— ($59.1) (100) % Interest income (9.6) — (17.0) 7.4 (44) % Realized gain on MACOM Shares — — (15.7) 15.7 (100) % Other expense, net 1.7 — 1.5 0.2 13 % Non-operating expense, net ($67.0) $— ($31.2) ($35.8) 115 % The decrease in interest income during the Successor period ended December 28, 2025 compared to the three months ended December 29, 2024 was primarily due to lower short-term investment balances and a lower interest rate environment. The changes in fair value of derivatives are primarily related to the mark-to-market fair value impact on our equity forward contracts, fair value conversion option derivative and the warrant issued to Renesas. 56 T able of Contents Period from September 30, 2025 to December 28, 2025 (Successor) and June 30, 2025 to September 29, 2025 (Predecessor) compared with Six months ended December 29, 2024 (Predecessor) Successor Predecessor Predecessor Period from September 30, 2025 to December 28, 2025 Period from June 30, 2025 to September 29, 2025 Six months ended December 29, 2024 (in millions of U.S. Dollars) Amount % Revenue Amount % Revenue Amount % Revenue Power products $118.3 70.2 % $131.8 67.0 % $187.9 50.1 % Material products 50.2 29.8 % 65.0 33.0 % 187.3 49.9 % Revenue, net 168.5 100.0 % 196.8 100.0 % 375.2 100.0 % Cost of revenue, net 246.8 146.5 % 273.9 139.2 % 448.6 119.6 % Gross loss (78.3) (46.5) % (77.1) (39.2) % (73.4) (19.6) % Research and development 24.9 14.8 % 31.7 16.1 % 95.3 25.4 % Sales, general and administrative 29.4 17.4 % 37.9 19.3 % 113.3 30.2 % Factory start-up costs — — % — — % 42.5 11.3 % Gain on disposal of property and equipment (2.4) (1.4) % (5.7) (2.9) % (0.8) (0.2) % Restructuring and other expenses 28.2 16.7 % 20.4 10.4 % 229.4 61.1 % Operating loss (158.4) (94.0) % (161.4) (82.0) % (553.1) (147.4) % Reorganization items, net — — % (563.4) (286.3) % — — % Interest expense, net of capitalized interest 58.0 34.4 % 0.7 0.4 % 145.0 38.6 % Non-operating income, net (67.0) (39.8) % (22.4) (11.4) % (44.0) (11.7) % (Loss) income before income taxes (149.4) (88.7) % 423.7 215.3 % (654.1) (174.3) % Income tax expense (benefit) 1.2 0.7 % 3.5 1.8 % 0.3 0.1 % Net (loss) income ($150.6) (89.4) % $420.2 213.5 % ($654.4) (174.4) % The primary drivers of changes in the financial statement line items noted below, for the periods from September 30, 2025 to December 28, 2025 (Successor) and June 30, 2025 to September 29, 2025 (Predecessor) compared with the period of the six months ended December 29, 2024 (Predecessor) included the following: • Revenue, net - Decreases in net sales of our Materials Products offerings driven by lower revenue attributable to long-term supply agreements and our customers' rebalancing supply to match weaker end market demand were partially offset by increases in net sales of our Power Product offerings for both automotive and industrial applications, partially attributable to end-of-life buys associated with the shutdown of our 150mm device fab in Durham, North Carolina, and growth in emerging applications for silicon carbide devices such as AI and data center applications. • Cost of Revenue, net and Gross loss - Increases in cost of revenue, net and the corresponding decrease in Gross loss and Gross margin were primarily attributable to the following: ◦ $23 million of additional product costs related to fair value step-ups on WIP and Finished Goods recorded upon adoption of fresh start accounting, which was fully recognized as the products were sold in the Successor period ended December 28, 2025. ◦ $15 million of additional amortization expenses related to the recognition of developed technology and changes in the fair value of other intangibles upon the adoption of fresh start accounting, recognized in the Successor period ended December 28, 2025. ◦ Higher underutilization costs during the Predecessor and Successor periods of fiscal 2026, related to the achievement of production readiness at our Siler City Fab. Prior to the substantial completion of the facility in late fiscal 2025, these costs were included in start-up costs. We expect to continue to incur significant underutilization costs until market demand for our products meets or exceeds our production capacity. 57 T able of Contents ◦ Specific reserves and inventory write-offs related to obsolete products as well as the planned shutdown of our 150mm device fab completed in the Successor period. ◦ Unfavorable changes in product mix for Power devices and pricing pressure for certain product lines. ◦ The items above were partially offset by lower restructuring and closure-related charges related to our 2025 Restructuring Plan, as well as lower depreciation expense in the Successor period attributable to the fair value adjustments to property, plant, and equipment as part of our adoption of fresh start accounting. A portion of the $45 million favorable benefit from this reduction in depreciation expense was absorbed into inventory and will benefit future periods. • Research and Development - The changes in researches in development costs were attributable to expected decreases in wafer spend from product transfers and technology qualifications, related to the timing of the Mohawk Valley Fab ramp in the prior period, as well as lower personnel costs related to the 2025 Restructuring Plan and the cancellation of unvested stock awards upon emergence from the Chapter 11 Cases. Additionally, the adoption of fresh start accounting reduced depreciation expense by $4 million. • Sales, General & Administrative - The changes in sales, general and administrative expenses were primarily attributable to a decreases in personnel costs related to lower headcount and lower estimated bonus attainment. Additionally, planned reductions in marketing and outside service spend related to cost optimization efforts. • Factory Start-up Costs - The decrease in start-up costs for the Predecessor and Successor periods of fiscal 2026 related to the attainment of production readiness at the Siler City Fab, described above. These costs are now included within Cost of Revenue, net. • Restructuring and Other Operating Expenses - The changes in Restructuring and Other Operating Expenses primarily related to a significant decrease in Restructuring and other exit costs compared to the prior period, due to the timing of the 2025 Restructuring Plan and closure of the Farmer's Branch facility in December 2025. These decreases were partially offset by a $4 million increase in intangible-related amortization expense during the Successor period, related to the adoption of fresh start accounting. Additionally, we incurred higher project, transformation, and transaction costs which primarily includes certain personnel and professional service costs related to the implementation of the Chapter 11 Cases and other internal optimization efforts. • Reorganization Items, net - The increase in Reorganization Items, net related to the filing and subsequent emergence from our Chapter 11 Cases during the Predecessor period of fiscal 2026, and primarily consisting of professional fees, gain on settlement of liabilities subject to compromise, and fair value adjustments related to the adoption of fresh start accounting. • Interest Expense, net - The changes in interest expense, net primarily related to the Chapter 11 Cases. Certain payments made prior to the Effective Date that would have otherwise been presented as Interest expense, were considered adequate protection payments and presented in Reorganization items, net. Furthermore, after the Effective Date, interest expense was lower than the prior period as a result of a decrease in outstanding debt obligations upon emergence from the Chapter 11 Cases. • Non-Operating Income/Expense - The changes in non-operating income (expense), net primarily related to the remeasurement of certain liability-classified derivatives in the Successor period, as further described in Note 3 and Note 9 of the Notes to Consolidated Financial Statements. The gains from mark-to-market adjustments on the liability-classified derivatives were partially offset by lower interest income attributable to lower average cash balances and less favorable yields. • Income Tax Expense - The changes in Income Tax Expense for the period primarily related to the income tax-related impacts of the Chapter 11 Cases and adoption of fresh start accounting. 58 T able of Contents Liquidity and Capital Resources The following sections discuss material changes in our financial condition from the end of fiscal 2025, including the effects of changes in our Consolidated Balance Sheets, and the effects of the Chapter 11 Cases on our liquidity and capital resources. There continues to be uncertainty around the extent of market volatility, demand for our products, increased competition, the impact of tariffs, inflationary pressures, interest rate changes, recessionary concerns, uncertainty in the financial and banking industry, and geopolitical tension, which may impact our liquidity and working capital needs in future periods. On September 29, 2025, we emerged from the Chapter 11 Cases. On the Effective Date, we issued new secured financing in an aggregate amount of $2.1 billion, consisting of (i) new Senior Secured Notes due 2030 (the "New Senior Secured Notes") in an aggregate principal amount of $1.3 billion, (ii) 7%/12% second lien senior secured PIK toggle notes due 2031 (the "New 2L Non-Convertible Notes") in an aggregate principal amount of $296.4 million, (iii) new 2.5% Convertible Second-Lien Senior Secured Notes due 2031 in an aggregate principal amount of $203.6 million to Renesas (the "New 2L Renesas Convertible Notes") and (iv) new 2.5% Convertible Second-Lien Senior Secured Notes due 2031 (the "New 2L Non-Renesas Convertible Notes") in an aggregate principal amount of $331.4 million, including the payment of the $30.25 million under the Rights Offering Backstop Commitment Agreement, dated June 22, 2025, between the Company, the rights offering backstop parties and the rights offering backstop parties thereto. Refer to Note 11, "Long-term Debt," for additional information on our debt obligations and Note 1, "Basis of Presentation and New Accounting Standards," Note 2 "Emergence from Voluntary Reorganization under Chapter 11," and Note 3, "Fresh Start Accounting," to our consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information on our Chapter 11 Cases and the adoption of fresh start accounting. Overview The following table sets forth our cash, cash equivalents and short-term investments: Successor Predecessor (in millions of U.S. Dollars) December 28, 2025 June 29, 2025 Change Cash and cash equivalents $1,028.8 $467.2 $561.6 Short-term investments 263.5 488.2 (224.7) Total cash, cash equivalents and short-term investments $1,292.3 $955.4 $336.9 In summary, our cash flows were as follows: Successor Predecessor Predecessor in millions of U.S. Dollars Period from September 30, 2025 to December 28, 2025 Period from June 30, 2025 to September 29, 2025 Six months ended December 29, 2024 Net cash used in operating activities ($42.6) ($22.4) ($327.1) Net cash provided by (used in) investing activities 787.6 136.9 (423.2) Net cash (used in) provided by financing activities (197.0) (101.5) 318.5 Effects of foreign exchange changes on cash and cash equivalents (0.2) 0.8 (0.1) Net change in cash and cash equivalents $547.8 $13.8 ($431.9) The net increase in cash and cash equivalents of $337 million between December 28, 2025 and June 29, 2025 was primarily driven by cash flows from the following activities: • Operating activities — Cash used in operating activities results from net (loss) income adjusted for certain non-cash items and changes in assets and liabilities. Cash used in operating activities for the period from June 30, 2025 to September 29, 2025 (Predecessor) and the period from September 30, 2025 to December 28, 2025 (Successor) compared to the six months ended December 29, 2024, decreased by approximately $262 million. This decrease was primarily driven by lower interest payments due to the Chapter 11 Cases, the timing of severance payments, decreases in payroll and other operating costs attributable to our restructuring initiatives, and favorable changes in working capital, partially offset by higher professional service costs attributable to the Chapter 11 Cases. 59 T able of Contents • Investing activities — Investing cash flows consist primarily of capital expenditures and short-term investment activity. Cash provided by investing activities for the period from June 30, 2025 to September 29, 2025 (Predecessor) and the period from September 30, 2025 to December 28, 2025 (Successor) compared to the six months ended December 29, 2024 increased by $1.3 billion, primarily attributable to a planned decrease in gross capital expenditures and the receipt of approximately $700 million in Advanced Manufacturing Investment Credit refundable tax credits. Additional increases in cash proceeds received from the disposal of non-core buildings and equipment and the MACOM Shares were primarily offset by lower proceeds from the net sale and maturity of short-term investments. • Financing activities — Financing cash flows consist primarily of debt transactions and debt-related payments related to the Chapter 11 cases, tax payments related to the net share settlement of restricted stock units, and proceeds from the exercise of options to acquire common stock. Net cash used in financing activities for the period from June 30, 2025 to September 29, 2025 (Predecessor) and the period from September 30, 2025 to December 28, 2025 (Successor), compared to the six months ended December 29, 2024 increased by $617 million, primarily attributable to $565 million used in fiscal 2026 to repay our pre- and post-bankruptcy senior secured notes, per the terms of those agreements and the Chapter 11 claims settlements, and a net decrease of approximately $47 million attributable in cash proceeds received from debt issuances and our at-the-market offering in fiscal 2025. Sources and Uses of Liquidity Under the terms of the Restructuring Support Agreement and the Plan, following the emergence from the Chapter 11 Cases, we reduced our overall debt by approximately 70%, or $4.6 billion. We expect that our current operating forecast over the next 12 months will allow us to maintain operations and meet our obligations to customers, vendors and employees in the ordinary course of business. Cash on hand during the first half of fiscal 2026 was primarily used for the following: • normal recurring operating expenses; • professional service fees associated with our Chapter 11 Cases; • implementation of the restructuring plans described in Note 15, "Restructuring," to our consolidated financial statements in Part I, Item 1 of this Quarterly Report ; and • repayments of principal for the Existing and New Senior Secured Notes. Our currently anticipated sources of liquidity for the remainder of fiscal 2026 include: • receipts from customers and other operating activities; • expected receipts under government incentive programs; and • proceeds from the sale of our non-core assets and other short-term investments. Our currently anticipated cash flow needs, both in the short-term and long-term, may include the following: • normal recurring operating expenses; • planned and discretionary capital expenditures; and • repayments of debt and interest. The initial phases of our major expansion projects at the Mohawk Valley Fab and the Siler City Fab were substantially completed as of late fiscal 2025. Consequently, we expect gross capital investment to decrease significantly, to approximately $49 million during the remainder of fiscal 2026. We also believe our ability to modulate capital investment up or down in response to expected production capacity demand requirements will continue to increase. We also continue to actively pursue opportunities for federal funding, including but not limited to awards that may be made available through the CHIPS Act or other programs, including the recently established United States Investment Accelerator Office ("federal funding opportunities"). We will continue to have take-or-pay inventory supplier agreements that require a minimum of $174 million of purchases over the next four years, as outlined further in Note 7, "Commitments and Contingencies," to our consolidated financial statements in Part I, Item 1 of this Quarterly Report. We will also be required to purchase electricity for our facility in Siler City, North Carolina and Durham, North Carolina under a long-term electricity supply agreement with minimum volume and spend requirements of approximately $59 million over the next 4 years and approximately $24 million over the next 8 years, respectively. 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. We may also access capital markets through the issuance of debt or equity, which we may use in connection with the acquisition of complementary businesses or other significant assets or for other strategic opportunities or general corporate purposes. 60 T able of Contents Off-Balance Sheet Arrangements As of December 28, 2025, 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. Accordingly, our liquidity and capital resources are not subject to off-balance sheet risks from unconsolidated entities. Critical Accounting Policies and Estimates For information on critical accounting policies and estimates, see the “Critical Accounting Policies and Estimates” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2025 Form 10-K. Refer to Note 1, "Basis of Presentation and New Accounting Standards", Note 2 "Emergence from Voluntary Reorganization under Chapter 11", and Note 3 "Fresh Start Accounting" for additional information about critical accounting policies and estimates during fiscal 2026. Recent Accounting Pronouncements For a description of recent accounting pronouncements pending adoption, including the expected dates of adoption and the estimated effects, if any, on our consolidated financial statements, see Note 1, “Basis of Presentation and New Accounting Standards,” to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. Item 3. Quantitative and Qualitative Disclosures About Market Risk For quantitative and qualitative disclosures about our market risks, see “Part II. Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of the 2025 Form 10-K.