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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 24, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 001-40863
__________________________________________ 
WOLFSPEED, INC.
(Exact name of registrant as specified in its charter)
North Carolina 56-1572719
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
4600 Silicon Drive 
DurhamNorth Carolina27703
(Address of principal executive offices) (Zip Code)
(919) 407-5300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00125 par valueWOLFNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
The number of shares outstanding of the registrant’s common stock, par value $0.00125 per share, as of October 27, 2023, was 125,325,315.


WOLFSPEED, INC.
FORM 10-Q
For the Quarterly Period Ended September 24, 2023

2

PART I - FINANCIAL INFORMATION
3

WOLFSPEED, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
in millions of U.S. Dollars, except share data in thousandsSeptember 24, 2023June 25, 2023
Assets
Current assets:
Cash and cash equivalents$1,762.0 $1,757.0 
Short-term investments1,585.6 1,197.9 
Total cash, cash equivalents and short-term investments3,347.6 2,954.9 
Accounts receivable, net154.2 154.8 
Inventories340.9 288.8 
Income taxes receivable0.4 0.8 
Prepaid expenses69.2 36.8 
Other current assets153.7 131.5 
Current assets held for sale from discontinued operations13.7 38.9 
Total current assets4,079.7 3,606.5 
Property and equipment, net2,453.3 2,164.3 
Goodwill359.2 359.2 
Intangible assets, net24.7 24.6 
Long-term receivables2.6 2.6 
Deferred tax assets1.2 1.2 
Other assets392.1 303.3 
Long-term assets held for sale from discontinued operations 125.0 
Total assets$7,312.8 $6,586.7 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses$548.9 $534.5 
Accrued contract liabilities44.8 39.0 
Income taxes payable9.8 9.6 
Finance lease liabilities0.4 0.4 
Other current liabilities56.3 35.7 
Current liabilities held for sale from discontinued operations89.1 8.6 
Total current liabilities749.3 627.8 
Long-term liabilities:
Long-term debt2,131.5 1,149.5 
Convertible notes, net3,027.9 3,025.6 
Deferred tax liabilities4.2 3.9 
Finance lease liabilities - long-term9.1 9.2 
Other long-term liabilities145.1 143.5 
Long-term liabilities held for sale from discontinued operations 5.3 
Total long-term liabilities5,317.8 4,337.0 
Commitments and contingencies
Shareholders’ equity:
Preferred stock, par value $0.01; 3,000 shares authorized at September 24, 2023 and June 25, 2023; none issued and outstanding
  
Common stock, par value $0.00125; 200,000 shares authorized at September 24, 2023 and June 25, 2023; 125,321 and 124,794 shares issued and outstanding at September 24, 2023 and June 25, 2023, respectively
0.2 0.2 
Additional paid-in-capital3,728.6 3,711.0 
Accumulated other comprehensive loss(23.2)(25.1)
Accumulated deficit(2,459.9)(2,064.2)
Total shareholders’ equity1,245.7 1,621.9 
Total liabilities and shareholders’ equity$7,312.8 $6,586.7 
The accompanying notes are an integral part of the consolidated financial statements
4

WOLFSPEED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Three months ended
in millions of U.S. Dollars, except share dataSeptember 24, 2023September 25, 2022
Revenue, net$197.4 $189.4 
Cost of revenue, net172.7 121.7 
Gross profit24.7 67.7 
Operating expenses:
Research and development44.1 40.3 
Sales, general and administrative64.1 50.0 
Factory start-up costs8.4 38.4 
Amortization or impairment of acquisition-related intangibles0.3 0.5 
Loss on disposal or impairment of other assets0.1 0.1 
Other operating expense2.6 1.9 
Operating loss(94.9)(63.5)
Non-operating expense (income), net28.5 (49.5)
Loss before income taxes(123.4)(14.0)
Income tax expense0.2 0.1 
Net loss from continuing operations(123.6)(14.1)
Net loss from discontinued operations(272.1)(12.1)
Net loss($395.7)($26.2)
Basic and diluted loss per share
Continuing operations($0.99)($0.11)
Net loss($3.16)($0.21)
Weighted average shares - basic and diluted (in thousands)125,105 124,035 
The accompanying notes are an integral part of the consolidated financial statements
5

WOLFSPEED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 Three months ended
(in millions of U.S. Dollars)September 24, 2023September 25, 2022
Net loss($395.7)($26.2)
Other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale securities1.9 (7.0)
Comprehensive loss (393.8)(33.2)
The accompanying notes are an integral part of the consolidated financial statements
6

WOLFSPEED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal Shareholders' Equity
(in millions of U.S. Dollars, except share data in thousands)Number of SharesPar Value
Balance at June 25, 2023124,794 $0.2 $3,711.0 ($2,064.2)($25.1)$1,621.9 
Net loss— — — (395.7)— (395.7)
Unrealized gain on available-for-sale securities— — — — 1.9 1.9 
Tax withholding on vested equity awards— — (15.0)— — (15.0)
Stock-based compensation506 — 32.1 — — 32.1 
Exercise of stock options and issuance of shares21 — 0.5 — — 0.5 
Balance at September 24, 2023125,321 $0.2 $3,728.6 ($2,459.9)($23.2)$1,245.7 
The accompanying notes are an integral part of the consolidated financial statements
7

WOLFSPEED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal Shareholders' Equity
(in millions of U.S. Dollars, except share data in thousands)Number of SharesPar Value
Balance at June 26, 2022123,795 $0.2 $4,228.4 ($1,764.0)($25.3)$2,439.3 
Net loss— — — (26.2)— (26.2)
Unrealized loss on available-for-sale securities— — — — (7.0)(7.0)
Tax withholding on vested equity awards— — (16.9)— — (16.9)
Stock-based compensation395 — 23.2 — — 23.2 
Exercise of stock options and issuance of shares20 — 0.5 — — 0.5 
Adoption of ASU 2020-06— — (333.0)29.7 — (303.3)
Balance at September 25, 2022124,210 $0.2 $3,902.2 ($1,760.5)($32.3)$2,109.6 
The accompanying notes are an integral part of the consolidated financial statements
8

WOLFSPEED, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three months ended
(in millions of U.S. Dollars)September 24, 2023September 25, 2022
Operating activities:
Net loss($395.7)($26.2)
Net loss from discontinued operations(272.1)(12.1)
Net loss from continuing operations(123.6)(14.1)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization40.1 33.5 
Amortization of debt issuance costs and discount, net of non-cash capitalized interest7.2 1.3 
Stock-based compensation19.7 19.8 
Loss on disposal or impairment of long-lived assets, including loss on disposal portion of factory start-up costs 1.9 
Amortization of (premium) discount on investments, net(5.3)1.4 
Deferred income taxes0.3 0.2 
Changes in operating assets and liabilities:
Accounts receivable, net0.6 (8.2)
Inventories(50.0)(13.5)
Prepaid expenses and other assets(34.7)0.6 
Accounts payable(18.1)(4.8)
Accrued salaries and wages and other liabilities45.3 (25.2)
Accrued contract liabilities5.8 0.4 
Net cash used in operating activities of continuing operations(112.7)(6.7)
Net cash used in operating activities of discontinued operations(34.7)(6.0)
Cash used in operating activities(147.4)(12.7)
Investing activities:
Purchases of property and equipment(442.0)(107.7)
Purchases of patent and licensing rights(1.3)(1.1)
Proceeds from sale of property and equipment 1.6 
Purchases of short-term investments(775.3)(28.9)
Proceeds from maturities of short-term investments370.0 68.8 
Proceeds from sale of short-term investments24.8 25.4 
Reimbursement of property and equipment purchases from long-term incentive agreement39.6 46.7 
Proceeds from sale of business resulting from the receipt of transaction related note receivable 101.8 
Net cash (used in) provided by investing activities of continuing operations(784.2)106.6 
Net cash used in investing activities of discontinued operations(1.7)(3.8)
Cash (used in) provided by investing activities(785.9)102.8 
Financing activities:
Proceeds from long-term debt borrowings1,000.0  
Payments of debt issuance costs(46.0) 
Proceeds from issuance of common stock0.5 0.5 
Tax withholding on vested equity awards(15.0)(16.9)
Payments on long-term debt borrowings, including finance lease obligations(0.1)(0.2)
Commitment fees on long-term incentive agreement(1.0)(1.0)
Cash provided by (used in) financing activities938.4 (17.6)
Effects of foreign exchange changes on cash and cash equivalents(0.1)(0.4)
Net change in cash and cash equivalents5.0 72.1 
Cash and cash equivalents, beginning of period1,757.0 449.5 
Cash and cash equivalents, end of period$1,762.0 $521.6 
The accompanying notes are an integral part of the consolidated financial statements
9

WOLFSPEED, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


10

Note 1 – Basis of Presentation and New Accounting Standards
Overview
Wolfspeed, Inc. (the Company) is an innovator of wide bandgap semiconductors, focused on silicon carbide and gallium nitride (GaN) materials and devices for power and radio-frequency (RF) applications. The Company’s product families include silicon carbide and GaN materials, power devices and RF devices targeted for various applications such as electric vehicles, fast charging, 5G, renewable energy and storage, and aerospace and defense.
As discussed more fully below in Note 2, “Discontinued Operations,” on August 22, 2023, the Company entered into a definitive agreement to sell certain assets comprising its RF product line (the RF Business Divestiture).
The RF Business Divestiture represents a strategic shift that will have a major effect on the Company's operations and financial results. As a result, the Company has classified the results and cash flows of the RF product line as discontinued operations in its consolidated statements of operations and consolidated statements of cash flows for all periods presented. Additionally, the related assets and liabilities associated with the transaction are classified as held for sale in the consolidated balance sheets. Unless otherwise noted, discussion within these notes to the consolidated financial statements relates to the Company's continuing operations.
The Company’s continuing operations consist of power devices, which are used in electric vehicles, motor drives, power supplies, solar and transportation applications, and silicon carbide and GaN materials, which are targeted for customers who use them to manufacture products for RF, power and other applications.
The majority of the Company's products are manufactured at production facilities located in North Carolina, New York and Arkansas for continuing operations and in California for discontinued operations. The Company also uses contract manufacturers for certain products and aspects of product fabrication, assembly and packaging for both continuing and discontinued operations. The Company operates research and development facilities in North Carolina, Arkansas and New York for continuing operations and in California and Arizona for discontinued operations.
Wolfspeed, Inc. is a North Carolina corporation established in 1987, and its headquarters are in Durham, North Carolina.
Basis of Presentation
The consolidated financial statements presented herein have been prepared by the Company and have not been audited. In the opinion of management, all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations, comprehensive loss, shareholders' equity and cash flows at September 24, 2023, and for all periods presented, have been made. All material intercompany accounts and transactions have been eliminated. The consolidated balance sheet at June 25, 2023 has been derived from the audited financial statements as of that date.
Certain prior period amounts in the accompanying consolidated financial statements and notes have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported net loss or shareholders’ equity.
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. 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 25, 2023 (fiscal 2023). The results of operations for the three months ended September 24, 2023 are not necessarily indicative of the operating results that may be attained for the entire fiscal year ending June 30, 2024 (fiscal 2024).
Recently Adopted Accounting Pronouncements
None.
Accounting Pronouncements Pending Adoption
None.
11

Note 2 – Discontinued Operations
RF Business Divestiture
On August 22, 2023, the Company entered into a definitive agreement (the RF Purchase Agreement) to sell its RF product line (the RF Business) to MACOM Technology Solutions Holdings, Inc. (MACOM) for approximately $75 million in cash, subject to a customary purchase price adjustment, and 711,528 shares of MACOM common stock (the MACOM Shares), valued at $50 million based on the 30 trading day trailing average closing price for MACOM’s common stock through August 21, 2023 (the RF Business Divestiture). The Company expects to close the transaction by the end of calendar 2023.
In connection with the RF Business Divestiture, MACOM will assume control of Wolfspeed’s 100mm gallium nitride wafer fabrication facility in Research Triangle Park, North Carolina (the RTP Fab) approximately two years following the closing of the transaction (the Closing) (the RTP Fab Transfer). The RTP Fab Transfer will occur after the Closing to accommodate the Company’s relocation of certain production equipment currently located in the RTP Fab to its fabrication facility in Durham, North Carolina. Prior to the RTP Fab Transfer, the MACOM Shares will be subject to restrictions on transfer. The Company will forfeit one-quarter of the MACOM Shares if the RTP Fab Transfer has not occurred by the fourth anniversary of the Closing.
The Company and MACOM will also enter into certain ancillary and related agreements, including (i) an Intellectual Property Assignment and License Agreement, which will assign to MACOM certain intellectual property owned by the Company and its affiliates and license to MACOM certain additional intellectual property owned by the Company, (ii) a Transition Services Agreement, pursuant to which the Company will provide MACOM certain limited transition services following the Closing, (iii) a Master Supply Agreement, pursuant to which Wolfspeed will continue to operate the RTP Fab and supply MACOM with Epi-wafers and fabrication services between the date of the Closing and the date on which the RTP Fab Transfer is complete (the RTP Fab Transfer Date), (iv) a Long-Term Epi Supply Agreement (the LTA), pursuant to which MACOM will purchase from the Company Epi-wafers from the RTP Fab Transfer Date until the fifth anniversary of the RTP Fab Transfer Date, (v) an Epi Research and Development Agreement, pursuant to which the Company will provide MACOM certain research and development activities and other technical manufacturing support services related to the RF Business during the period between the Closing and expiration of the LTA, (vi) a Real Estate License Agreement, which will allow MACOM to use certain portions of the RTP Fab to conduct the RF Business between the Closing and the RTP Fab Transfer Date, and (vii) a Lease Agreement, which will allow MACOM to lease the premises of the RTP Fab for a period of 15 years after the RTP Fab Transfer Date.
The completion of the RF Business Divestiture is subject to the satisfaction or waiver of a number of conditions set forth in the RF Purchase Agreement.
Because the RF Business Divestiture represents a strategic shift that will have a major effect on the Company’s operations and financial results, the Company has classified the results of the RF Business as discontinued operations in the Company’s consolidated statements of operations for all periods presented. The Company ceased recording depreciation and amortization of long-lived assets conveying in the RF Purchase Agreement upon classification as discontinued operations in August 2023. Additionally, the related assets and liabilities associated with the RF Business Divestiture, with the exception of current and long-term assets associated with the RTP Fab, are classified as held for sale in the consolidated balance sheets. The assets and liabilities held for sale as of September 24, 2023 are classified as current in the consolidated balance sheet as the Company expects the transaction to close within one year.
The RTP Fab is not considered within the RF Business Divestiture disposal group and the current and long-term assets associated with the RTP Fab are not classified as held for sale in the consolidated balance sheets.
12

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
(in millions of U.S. Dollars)September 24, 2023September 25, 2022
Revenue, net$32.8 $51.9 
Cost of revenue, net37.9 39.7 
Gross (loss) profit(5.1)12.2 
Operating expenses:
Research and development20.3 14.9 
Sales, general and administrative7.7 5.0 
Amortization of intangibles1.5 2.4 
Impairment on assets held for sale144.6  
Excess loss liability on assets held for sale75.4  
Other operating expense17.1 2.1 
Operating loss(271.7)(12.2)
Non-operating income (0.2)
Loss before income taxes(271.7)(12.0)
Income tax expense0.4 0.1 
Net loss($272.1)($12.1)
As of September 24, 2023, the Company recorded an impairment to assets held for sale associated with the pending RF Business Divestiture of $144.6 million and an excess loss liability on assets held for sale of $75.4 million.
The following table presents the assets and liabilities of the RF Business classified as discontinued operations:
(in millions of U.S. Dollars)September 24, 2023June 25, 2023
Assets (current and long-term)
Inventories35.5 38.7 
Other current assets0.1 0.2 
Property and equipment, net26.5 27.1 
Intangible assets, net89.9 91.2 
Other assets6.3 6.7 
Valuation allowance on held for sale assets(144.6) 
Assets held for sale from discontinued operations (1)
13.7 163.9 
Liabilities (current and long-term)
Accounts payable and accrued expenses1.9 2.4 
Accrued contract liabilities4.5 4.0 
Finance lease liabilities0.1 0.1 
Other current liabilities2.3 2.1 
Other long-term liabilities4.9 5.3 
Excess loss liability on held for sale assets75.4  
Liabilities held for sale of discontinued operations (1)
89.1 13.9 
(1) Assets and liabilities of discontinued operations as of September 24, 2023 are classified as current on the consolidated balance sheet as the Company expects the transaction to close within twelve months of the balance sheet date.
LED Business Divestiture
On March 1, 2021, the Company completed the sale of certain assets and subsidiaries comprising its former LED Products segment (the LED Business) to SMART Global Holdings, Inc. (SGH) and its wholly owned subsidiary CreeLED, Inc. (CreeLED and collectively with SGH, SMART) (the LED Business Divestiture) pursuant to the terms of the Asset Purchase Agreement (the LED Purchase Agreement), dated October 18, 2020, as amended.
13

In connection with the closing of the LED Business Divestiture, the Company and CreeLED also entered into certain ancillary and related agreements, including (i) an Intellectual Property Assignment and License Agreement, which assigned to CreeLED certain intellectual property owned by the Company and its affiliates and licensed to CreeLED certain additional intellectual property owned by the Company, (ii) a Transition Services Agreement (the LED TSA), (iii) a Wafer Supply and Fabrication Services Agreement (the Wafer Supply Agreement), pursuant to which the Company will supply CreeLED with certain silicon carbide materials and fabrication services for up to four years, and (iv) a Real Estate License Agreement (the LED RELA), which will allow CreeLED to use certain premises owned by the Company to conduct the LED Business for a period of up to 24 months after closing.
For the three months ended September 25, 2022, the Company recognized $0.9 million in administrative fees related to the LED RELA. Fees related to the LED RELA were recorded as lease income, see Note 4, "Leases." The LED RELA concluded in the third quarter of fiscal 2023.
For the three months ended September 25, 2022, the Company recognized $1.9 million in administrative fees related to the LED TSA. Fees related to the LED TSA were recorded as a reduction in expense within the line item in the consolidated statements of operations in which costs were incurred. The LED TSA concluded in the fourth quarter of fiscal 2023.
At the inception of the Wafer Supply Agreement, the Company recorded a supply agreement liability of $31.0 million, none of which was outstanding as of September 24, 2023.
For the three months ended September 24, 2023 and September 25, 2022, the Company recognized a net loss of $6.9 million and a net gain of $0.1 million, respectively, in non-operating expense (income), net related to the Wafer Supply Agreement, of which a receivable of $0.9 million is included in other assets in the consolidated balance sheet as of September 24, 2023.

Note 3 – Revenue Recognition
The Company follows a five-step approach for recognizing revenue, consisting of the following: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation.
Contract liabilities primarily include various rights of return and customer deposits, as well as a reserve on the Company's "ship and debit" program. Contract liabilities were $75.6 million as of September 24, 2023 and $69.8 million as of June 25, 2023. The increase was primarily due to increased ship and debit reserves. Contract liabilities are recorded within accrued contract liabilities and other long-term liabilities on the consolidated balance sheets.
For the three months ended September 24, 2023, the Company did not recognize any material revenue that was included in contract liabilities as of June 25, 2023.
Product Line Revenue
The Company's continuing operations sells products from within two product lines: Power Products and silicon carbide and GaN materials (Materials Products). Revenue from these two product lines is as follows:
 Three months ended
(in millions of U.S. Dollars)September 24, 2023September 25, 2022
Power Products$101.2 $104.5 
Materials Products96.2 84.9 
Total$197.4 $189.4 
14

Geographic Information
The Company conducts business in several geographic areas. Revenue is attributed to a particular geographic region based on the shipping address for the products. Disaggregated continuing operations revenue from external customers by geographic area is as follows:
 Three months ended
 September 24, 2023September 25, 2022
(in millions of U.S. Dollars)Revenue% of RevenueRevenue% of Revenue
Europe$75.3 38.1 %$70.5 37.2 %
Asia Pacific (excluding China and Hong Kong)44.6 22.6 %35.7 18.8 %
Hong Kong34.1 17.3 %41.5 21.9 %
United States30.7 15.6 %35.6 18.8 %
China12.0 6.1 %4.7 2.5 %
Other0.7 0.3 %1.4 0.8 %
Total$197.4 $189.4 

Note 4 – Leases
The Company primarily leases manufacturing and office spaces. The Company also has a number of bulk gas leases. Lease agreements frequently include renewal provisions and require the Company to pay real estate taxes, insurance and maintenance costs. Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, as well as non-lease components incurred with respect to actual terms rather than contractually fixed amounts.
The Company's finance lease obligations primarily relate to contract manufacturing space in Malaysia and a 49-year ground lease on the Company's silicon carbide device fabrication facility in New York.
Balance Sheet
Lease assets and liabilities and the corresponding balance sheet classifications are as follows (in millions of U.S. Dollars):
Operating Leases:September 24, 2023June 25, 2023
Right-of-use asset (1)
$98.9 $98.0 
Current lease liability (2)
6.6 6.4 
Non-current lease liability (3)
113.9 112.0 
Total operating lease liabilities$120.5 $118.4 
Finance Leases:
Finance lease assets (4)
$9.4 $9.5 
Current portion of finance lease liabilities0.4 0.4 
Finance lease liabilities, less current portion9.1 9.2 
Total finance lease liabilities$9.5 $9.6 
(1) Within other assets on the consolidated balance sheets.
(2) Within other current liabilities on the consolidated balance sheets.
(3) Within other long-term liabilities on the consolidated balance sheets.
(4) Within property and equipment, net on the consolidated balance sheets.

Statement of Operations
Operating lease expense was $3.3 million and $1.8 million for the three months ended September 24, 2023 and September 25, 2022, respectively.
15

Finance lease amortization was $0.2 million and interest expense was $0.1 million for the three months ended September 24, 2023. Finance lease amortization was $0.2 million and interest expense was $0.1 million for the three months ended September 25, 2022.
Cash Flows
Cash flow information consisted of the following (1):
Three months ended
(in millions of U.S. Dollars)September 24, 2023September 25, 2022
Cash (used in) provided by operating activities:
Cash paid for operating leases($2.4)($1.0)
Cash received for tenant allowance on operating lease0.4  
Cash paid for interest portion of financing leases(0.1)(0.1)
Cash used in financing activities:
Cash paid for principal portion of finance leases(0.1)(0.2)
(1) See Note 5, "Financial Statement Details," for non-cash activities related to leases.
Lease Liability Maturities
Maturities of operating and finance lease liabilities as of September 24, 2023 were as follows (in millions of U.S. Dollars):
Fiscal Year EndingOperating LeasesFinance LeasesTotal
June 30, 2024 (remainder of fiscal 2024)$12.5 $0.5 $13.0 
June 29, 202511.2 0.7 11.9 
June 28, 202614.0 0.7 14.7 
June 27, 202711.9 0.4 12.3 
June 25, 202811.5 0.2 11.7 
Thereafter104.4 14.0 118.4 
Total lease payments165.5 16.5 182.0 
Future tenant improvement allowances(4.7) (4.7)
Imputed lease interest(40.3)(7.0)(47.3)
Total lease liabilities$120.5 $9.5 $130.0 
Supplemental Disclosures
Operating LeasesFinance Leases
Weighted average remaining lease term (in months) (1)
154475
Weighted average discount rate (2)
4.35 %2.67 %
(1) Weighted average remaining lease term of finance leases without the 49-year ground lease is 37 months.
(2) Weighted average discount rate of finance leases without the 49-year ground lease is 3.51%.
Lease Income
As mentioned in Note 2, "Discontinued Operations", on March 1, 2021 and in connection with the LED Business Divestiture, the Company entered into the LED RELA pursuant to which the Company leased to CreeLED approximately 58,000 square feet of the Company’s property and certain facilities in Durham, North Carolina for a total of $3.6 million per year. The lease term was 24 months and expired on February 26, 2023.
In addition, the Company leases space to a third party at one of its owned facilities.
The Company recognized lease income of $0.2 million and $0.9 million for the three months ended September 24, 2023 and September 25, 2022, respectively.
16

Note 5 – Financial Statement Details
Accounts Receivable, net
Accounts receivable, net consisted of the following:
(in millions of U.S. Dollars)September 24, 2023June 25, 2023
Billed trade receivables$150.6 $152.1 
Unbilled contract receivables3.1 2.3 
Royalties1.2 1.1 
154.9 155.5 
Allowance for bad debts(0.7)(0.7)
Accounts receivable, net$154.2 $154.8 
Inventories
Inventories consisted of the following:
(in millions of U.S. Dollars)September 24, 2023June 25, 2023
Raw material$105.2 $90.7 
Work-in-progress218.9 183.2 
Finished goods16.8 14.9 
Inventories$340.9 $288.8 
In addition to inventory held by the Company associated with the power and materials product lines, the Company holds inventory related to a master supply agreement that will be entered into in connection with the RF Business Divestiture (the Master Supply Agreement). Of the total inventory noted above, $30.7 million and $29.7 million relates to the future Master Supply Agreement as of September 24, 2023 and June 25, 2023, respectively.
Other Current Assets
Other current assets consisted of the following:
(in millions of U.S. Dollars)September 24, 2023June 25, 2023
Reimbursement receivable on long-term incentive agreement$99.5 $91.3 
Accrued interest receivable13.3 10.1 
Other receivables11.0 2.2 
Short-term deposit on long-term incentive agreement10.0 10.0 
VAT receivables9.8 4.8 
Insurance deposit4.2 6.3 
Inventory related to the Wafer Supply Agreement3.6 3.9 
Receivable on the Wafer Supply Agreement0.9 1.3 
Other1.4 1.6 
Other current assets$153.7 $131.5 
17

Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following:
(in millions of U.S. Dollars)September 24, 2023June 25, 2023
Accounts payable, trade$64.9 $44.9 
Accrued salaries and wages89.6 63.9 
Accrued property and equipment340.2 328.4 
Accrued expenses54.2 97.3 
Accounts payable and accrued expenses$548.9 $534.5 
Other Operating Expense
Other operating expense consisted of the following:
Three months ended
(in millions of U.S. Dollars)September 24, 2023September 25, 2022
Project, transformation and transaction costs$2.6 $0.9 
Executive severance costs 1.0 
Other operating expense$2.6 $1.9 
Accumulated Other Comprehensive Loss, net of taxes
Accumulated other comprehensive loss, net of taxes, consisted of $23.2 million and $25.1 million of net unrealized losses on available-for-sale securities as of September 24, 2023 and June 25, 2023, respectively. Amounts for both periods include a $2.4 million loss related to tax on unrealized loss on available-for-sale securities.
Reclassifications Out of Accumulated Other Comprehensive Loss
Reclassifications out of accumulated other comprehensive loss was a less than $0.1 million gain for both the three months ended September 24, 2023 and the three months ended September 25, 2022. Amounts were reclassified to non-operating expense (income), net on the consolidated statements of operations.
18

Non-Operating Expense (Income), net
The following table summarizes the components of non-operating expense (income), net:
Three months ended
(in millions of U.S. Dollars)September 24, 2023September 25, 2022
Interest income(40.6)(4.3)
Interest expense, net of capitalized interest61.7 4.8 
Gain on arbitration proceedings (1)
 (49.4)
Loss (gain) on Wafer Supply Agreement6.9 (0.1)
Other, net0.5 (0.5)
Non-operating expense (income), net$28.5 ($49.5)
(1) In the first quarter of fiscal 2023, the Company received an arbitration award in relation to a former customer failing to fulfill contractual obligations to purchase a certain amount of product over a period of time. The arbitration award is recognized as non-operating income, net of legal fees incurred.
Statements of Cash Flows - non-cash activities
Three months ended
(in millions of U.S. Dollars)September 24, 2023September 25, 2022
Lease asset and liability additions$1.0 $0.4 
Lease asset and liability modifications, net1.8  
Decrease in property, plant and equipment from investment tax credit receivables73.5  
Decrease in property, plant and equipment from long-term incentive related receivables47.7 22.1 
Accrued property and equipment as of September 24, 2023 and September 25, 2022 was $340.2 million and $146.3 million, respectively.
19

Note 6 – Investments
Short-term investments consisted of the following (in millions of U.S. Dollars):
 September 24, 2023
 Amortized CostGross Unrealized GainsGross Unrealized LossesCredit Loss AllowanceEstimated Fair Value
U.S. treasury securities$691.6 $ ($1.3)$ $690.3 
Corporate bonds483.8  (15.0) 468.8 
Municipal bonds146.0  (4.3) 141.7 
Commercial paper127.9    127.9 
U.S. agency securities72.8  (0.2) 72.6 
Certificates of deposit57.1    57.1 
Variable rate demand notes27.2    27.2 
Total short-term investments$1,606.4 $ ($20.8)$ $1,585.6 
 June 25, 2023
 Amortized CostGross Unrealized GainsGross Unrealized LossesCredit Loss AllowanceEstimated Fair Value
Corporate bonds$512.3 $ ($16.7)$ $495.6 
U.S. treasury securities261.8  (1.4) 260.4 
Municipal bonds179.7  (4.4) 175.3 
Certificates of deposit112.3    112.3 
U.S. agency securities77.0  (0.2) 76.8 
Commercial paper50.2    50.2 
Variable rate demand notes27.3    27.3 
Total short-term investments$1,220.6 $ ($22.7)$ $1,197.9 
All short-term investments are classified as available-for-sale. The Company did not have any long-term investments as of September 24, 2023 and June 25, 2023.
20

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. Dollars):
September 24, 2023
Less than 12 MonthsGreater than 12 MonthsTotal
Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized Loss
U.S. treasury securities$631.5 ($0.7)$26.3 ($0.7)$657.8 ($1.4)
Corporate bonds157.5 (0.5)292.2 (14.4)449.7 (14.9)
Municipal bonds43.2 (0.2)93.7 (4.1)136.9 (4.3)
U.S. agency securities70.6 (0.2)2.0  72.6 (0.2)
Commercial Paper4.0    4.0  
Total$906.8 ($1.6)$414.2 ($19.2)$1,321.0 ($20.8)
Number of securities with an unrealized loss119 209 328 
June 25, 2023
Less than 12 MonthsGreater than 12 MonthsTotal
Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized Loss
Corporate bonds$151.5 ($0.5)$324.1 ($16.2)$475.6 ($16.7)
U.S. treasury securities229.3 (0.5)31.1 (0.9)260.4 (1.4)
Municipal bonds61.4 (0.4)105.9 (4.0)167.3 (4.4)
U.S. agency securities74.8 (0.2)2.0  76.8 (0.2)
Commercial Paper3.9    3.9  
Total$520.9 ($1.6)$463.1 ($21.1)$984.0 ($22.7)
Number of securities with an unrealized loss95 234 329 
Additionally, the Company held cash equivalent securities in unrealized loss positions as of September 24, 2023 and June 25, 2023. As of September 24, 2023, the Company held six cash equivalent securities in an unrealized loss position with a fair value of $92.6 million and an unrealized loss of less than $0.1 million. As of June 25, 2023, the Company held two cash equivalent securities in unrealized loss positions with an aggregate fair value of $18.5 million and an aggregate unrealized loss of less than $0.1 million. All cash equivalents in unrealized loss positions as of September 24, 2023 and June 25, 2023 have been in unrealized loss positions for less than 12 months.
The Company does not include accrued interest in estimated fair values of short-term investments and does not record an allowance for credit losses on receivables related to accrued interest. Accrued interest receivable was $13.3 million and $10.1 million as of September 24, 2023 and June 25, 2023, 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 24, 2023 and September 25, 2022.
The Company utilizes specific identification in computing realized gains and losses on the sale of investments. Realized gains and losses are included in non-operating (income) expense, net in the consolidated statements of operations. Unrealized gains and losses are included as a separate component of equity, net of tax, unless the Company determines there is an expected credit loss.
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 24, 2023 until the investments fully recover in market value. No allowance for credit losses was recorded as of September 24, 2023.
21

The contractual maturities of short-term investments as of September 24, 2023 were as follows:

 
(in millions of U.S. Dollars)Within One YearAfter One, Within Five YearsAfter Five, Within Ten YearsAfter Ten YearsTotal
U.S. treasury securities$591.4 $98.9 $ $ $690.3 
Corporate bonds218.1 250.7   468.8 
Municipal bonds58.1 81.2  2.4 141.7 
Commercial paper127.9    127.9 
U.S. agency securities72.6    72.6 
Certificates of deposit57.1    57.1 
Variable rate demand notes  9.7 17.5 27.2 
Total short-term investments$1,125.2 $430.8 $9.7 $19.9 $1,585.6 

Note 7 – Fair Value of Financial Instruments
Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. U.S. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy is categorized into three levels based on the reliability of inputs as follows:
Level 1 - Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Because valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
Level 2 - Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The financial assets for which the Company performs recurring fair value remeasurements are cash equivalents and short-term investments. As of September 24, 2023 and June 25, 2023, financial assets utilizing Level 1 inputs included U.S. treasury securities and money market funds, and financial assets utilizing Level 2 inputs included municipal bonds, corporate bonds, U.S. agency securities, commercial paper, certificates of deposit and variable rate demand notes. Level 2 assets are valued based on quoted prices in active markets for instruments that are similar or using a third-party pricing service’s consensus price, which is a weighted average price based on multiple sources. These sources determine prices utilizing market income models which factor in, where applicable, transactions of similar assets in active markets, transactions of identical assets in infrequent markets, interest rates, bond or credit default swap spreads and volatility. The Company did not have any financial assets requiring the use of Level 3 inputs as of September 24, 2023 and June 25, 2023.
22

The following table sets forth financial instruments carried at fair value within the U.S. GAAP hierarchy:
 September 24, 2023June 25, 2023
(in millions of U.S. Dollars)Level 1Level 2TotalLevel 1Level 2Total
Cash equivalents:
Money market funds$388.0 $ $388.0 $230.4 $ $230.4 
U.S. treasury securities107.5  107.5 20.7  20.7 
Commercial paper 7.5 7.5  7.0 7.0 
Certificates of deposit 3.8 3.8    
Total cash equivalents495.5 11.3 506.8 251.1 7.0 258.1 
Short-term investments:
U.S. treasury securities690.3  690.3 260.4  260.4 
Corporate bonds 468.8 468.8  495.6 495.6 
Municipal bonds 141.7 141.7  175.3 175.3 
Commercial paper 127.9 127.9  50.2 50.2 
U.S. agency securities 72.6 72.6  76.8 76.8 
Certificates of deposit 57.1 57.1  112.3 112.3 
Variable rate demand notes 27.2 27.2  27.3 27.3 
Total short-term investments690.3 895.3 1,585.6 260.4 937.5 1,197.9 
Total cash equivalents and short-term investments$1,185.8 $906.6 $2,092.4 $511.5 $944.5 $1,456.0 

Note 8 – Goodwill and Intangible Assets
Goodwill
There were no changes to goodwill during the three months ended September 24, 2023.
Intangible Assets, net
The following table presents the components of intangible assets, net:
September 24, 2023June 25, 2023
(in millions of U.S. Dollars)GrossAccumulated AmortizationNetGrossAccumulated AmortizationNet
Acquisition related intangible assets (1)
24.0 (22.0)2.0 24.0 (21.7)2.3 
Patent and licensing rights49.0 (26.3)22.7 56.7 (34.4)22.3 
Total intangible assets$73.0 ($48.3)$24.7 $80.7 ($56.1)$24.6 
(1) Relates to developed technology
Total amortization of acquisition-related intangibles assets was $0.3 million for the three months ended September 24, 2023 and $0.5 million for the three months ended September 25, 2022.
Total amortization of patents and licensing rights was $1.0 million for the three months ended September 24, 2023, and $1.0 million for the three months ended September 25, 2022.
23

Total future amortization expense of intangible assets is estimated to be as follows:
(in millions of U.S. Dollars)

Fiscal Year Ending
Acquisition Related IntangiblesPatentsTotal
June 30, 2024 (remainder of fiscal 2024)$0.9 $3.0 $3.9 
June 29, 20251.1 3.1