Table of ~~this Annual Report and our other reports is available without charge upon written request to Investor Relations, Cree, Inc., 4600 Silicon Drive, Durham, North Carolina 27703.~~Contents

Item 1A. Risk Factors

Described below are various risks and uncertainties that may affect our business. If any of the risks described below actually occurs, our business, financial condition or results of operations could be materially and adversely affected.

~~Our operating results are substantially dependent on~~Risk categories:

–Risks related to our global operations, including global macroeconomic and market risks

–Risks related to the ~~acceptance~~effects of ~~new products.~~COVID-19 and other potential future public health crises, pandemics or similar events

–Risks related to sales, product development and manufacturing

–Risks associated with our strategic transactions

–Risks associated with cybersecurity, intellectual property and litigation

–Risks related to legal, regulatory, accounting, tax and compliance matters

–General risk factors

Risks related to our global operations, including global macroeconomic and market risks

Our ~~future success~~business may ~~depend on our ability to deliver new, higher performing and lower cost solutions for existing and new~~be adversely affected by the state of the global economy, uncertainties in global financial markets, and ~~for~~possible trade tariffs and trade restrictions.

Our operations and performance depend significantly on worldwide economic and geopolitical conditions. Uncertainty about global economic conditions could result in customers to accept those solutions. We must introduce new products in a timely and cost-effective manner, and we must secure production orders for those products from our customers. The development of new products is a highly complex process, and we have in some instances experienced delays in completing the development and introduction of new products which has impacted our results in the past, such as in our fiscal 2016 third quarter and beyond. Our research and development efforts are aimed at solving increasingly complex problems, and we do not expect that all of our projects will be successful. The successful development, introduction and acceptance of new products depend on a number of factors, including the following:

~~achievement of technology breakthroughs required to make commercially viable products;~~

~~the accuracy of our predictions for market requirements;~~

~~our ability to predict, influence and/or react to evolving standards;~~

~~acceptance of our new product and systems designs;~~

~~acceptance of new technology in certain markets;~~

~~the availability of qualified research and development personnel;~~

~~our timely completion of product designs and development;~~

~~our ability to develop repeatable processes to manufacture new products in sufficient quantities, with the desired specifications and at competitive costs;~~

~~our ability to effectively transfer increasingly complex products and technology from development to manufacturing;~~

~~our customers’ ability to develop competitive products incorporating our products; and~~

~~market acceptance~~postponing purchases of our products and services in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values and other macroeconomic factors, which could have a material negative effect on demand for our ~~customers’~~products and services and, accordingly, on our business, results of operations or financial condition. For example, current global financial markets continue to reflect uncertainty, which has been heightened by the COVID-19 pandemic and the ongoing military conflict between Russia and Ukraine. Given these uncertainties, there could be further disruptions to the global economy, financial markets and consumer confidence. If economic conditions deteriorate unexpectedly, our business and results of operations could be materially and adversely affected. For example, our customers, including our distributors and their customers, may experience difficulty obtaining the working capital and other financing necessary to support historical or projected purchasing patterns, which could negatively affect our results of operations.

Recent global economic slowdowns could continue and potentially result in certain economies dipping into economic recessions, including in the United States. Additionally, increased inflation around the world, including in the United States, applies pressure to our costs. Continued economic slowdowns or recessions and inflationary pressures could have a negative impact on our business, including decreased demand, increased costs, and other challenges. Government actions to address economic slowdowns and increased inflation, including increased interest rates, also could result in negative impacts to our growth.

General trade tensions between the United States and China have been escalating, and any economic and political uncertainty caused by the United States tariffs imposed on goods from China, among other potential countries, and any corresponding tariffs or currency devaluations from China or such other countries in response, has negatively impacted, and may in the future, negatively impact, demand and/or increase the cost for our products. Additionally, Russia’s invasion of Ukraine in early 2022 triggered significant sanctions from U.S. and European countries. Resulting changes in U.S. trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a potential trade war. Furthermore, if the conflict between Russia and Ukraine continues for a prolonged period of time, or if other countries, including the U.S., become involved in the conflict, we could face significant adverse effects to our business and financial condition. For example, if our supply or customer arrangements are disrupted due to expanded sanctions or involvement of countries where we have operations or relationships, our business could be materially disrupted. Further, the use of cyberattacks could expand as part of the conflict, which could adversely affect our ability to maintain or enhance our cyber-security and data protection measures.

~~If any~~Although we believe we have adequate liquidity and capital resources to fund our operations internally and under our existing line of ~~these~~credit, our inability to access the capital markets on favorable terms in the future, or ~~other similar factors becomes problematic,~~at all, may adversely affect our financial performance. The inability to obtain adequate financing from debt or capital sources in the future could force us to self-fund strategic initiatives or even forego certain opportunities, which in turn could potentially harm our performance.

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We are subject to risks related to international sales and purchases.

We expect that revenue from international sales will continue to represent a significant portion of our total revenue. As such, a significant slowdown or instability in relevant foreign economies or lower investments in new infrastructure, could have a negative impact on our sales. We also purchase a portion of the materials included in our products from overseas sources.

Our international sales and purchases are subject to numerous United States and foreign laws and regulations, including, without limitation, tariffs, trade sanctions, trade barriers, trade embargoes, regulations relating to import-export control, technology transfer restrictions, the International Traffic in Arms Regulation promulgated under the Arms Export Control Act, the Foreign Corrupt Practices Act and the anti-boycott provisions of the U.S. Export Administration Act. The U.S. Government has imposed, and in the future may impose, restrictions on shipments to some of our current customers. Government restrictions on sales to certain foreign customers will reduce company revenue and profit related to those customers in the short term and could have a potential long-term impact.

Our international sales are subject to variability as our selling prices become less competitive in countries with currencies that are declining in value against the U.S. Dollar and more competitive in countries with currencies that are increasing in value against the U.S. Dollar. In addition, our international purchases can become more expensive if the U.S. Dollar weakens against the foreign currencies in which we are billed. We may in the future enter into foreign currency derivative financial instruments in an effort to manage or hedge some of our foreign exchange rate risk. We may not be able to ~~deliver~~engage in hedging transactions in the future, and, ~~introduce new~~even if we do, foreign currency fluctuations may still have a material adverse effect on our results of operations.

Our operations in foreign countries expose us to certain risks inherent in doing business internationally, which may adversely affect our business, results of operations or financial condition.

We have revenue, operations and contract manufacturing arrangements in foreign countries that expose us to certain risks. For example, fluctuations in exchange rates may affect our revenue, expenses and results of operations as well as the value of our assets and liabilities as reflected in our financial statements. We are also subject to other types of risks, including the following:

•protection of intellectual property and trade secrets;

•tariffs, customs, trade sanctions, trade embargoes and other barriers to importing/exporting materials and products in a cost-effective and timely manner, or ~~cost-effective manner.~~changes in applicable tariffs or custom rules;

•the burden of complying with and changes in United States or international taxation policies;

•timing and availability of export licenses;

•rising labor costs;

•disruptions in or inadequate infrastructure of the countries where we operate;

•the impact of public health epidemics on employees and the global economy, such as COVID-19;

•difficulties in collecting accounts receivable;

•difficulties in staffing and managing international operations; and

•the burden of complying with foreign and international laws and treaties.

For example, the United States has imposed significant tariffs on Chinese-made goods, which the Biden administration has previously indicated will largely remain in place. The tariffs imposed on Chinese goods, among other potential countries and any corresponding tariffs from China or such other countries in response has, and may in the future, negatively impact demand and/or increase the costs for our products. In some instances, we have received and may continue to receive incentives from foreign governments to encourage our investment in certain countries, regions or areas outside of the United States. Government incentives may include tax rebates, reduced tax rates, favorable lending policies and other measures, some or all of which may be available to us due to our foreign operations. Any of these incentives could be reduced or eliminated by governmental authorities at any time or as a result of our inability to maintain minimum operations necessary to earn the incentives. Any reduction or elimination of incentives currently provided for our operations could adversely affect our business and results of operations. These same governments also may provide increased incentives to or require production processes that favor local companies, which could further negatively impact our business and results of operations.

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Changes in regulatory, geopolitical, social, economic, or monetary policies and other factors, including those which may result from the Biden administration and Democratic control of Congress, if any, may have a material adverse effect on our business in the future, or may require us to exit a particular market or significantly modify our current business practices. For example, President Biden has proposed, among other changes to the tax code, an increase in the U.S. corporate income tax rate from 21% to 28% and an increase of the U.S. tax rate on foreign income from 10% to 21%. In addition, the U.S. Treasury Department supports the adoption of a global minimum corporate tax rate of at least 15%, which is under consideration in the U.S. Congress following approval by the leaders of the G-20 in October 2021. The plan, if enacted by the U.S. and other nations, could result in a higher effective tax rate than is currently enacted. Abrupt political change, terrorist activity and armed conflict pose a risk of general economic disruption in affected countries, which could also result in an adverse effect on our business and results of operations.

Risks related to the effects of COVID-19 and other potential future public health crises, pandemics or similar events.

We may be subject to volatility and uncertainty in customer demand, supply chains, worldwide economies and financial markets resulting from the COVID-19 pandemic or other outbreak of infectious disease or similar public health threat.

We have significant manufacturing operations in the United States and contract manufacturing agreements in Asia, which were affected by the COVID-19 pandemic and the measures to try to contain it. We initially experienced some limited disruptions in supply from some of our suppliers, although the disruptions to date have not been significant. At some of our contract manufacturers in Asia, which include captive lines and contract packaging facilities, we have experienced, and may experience in the future, some disruptions in supply from containment measures.

The emergence of fast-spreading variants and the potential waning effectiveness of vaccines have introduced renewed uncertainty into whether additional measures will be implemented to combat the spread of COVID-19. Restrictions on access to our manufacturing facilities or on our support operations or workforce, or similar limitations for our vendors and suppliers, and restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures, could limit our ability to meet customer demand, lead to increased costs and have a material adverse effect on our financial condition and results of operations.

The COVID-19 pandemic has significantly increased economic and demand uncertainty. These uncertainties also make it more difficult for us to assess the quality of our product order backlog and to estimate future financial results. The COVID-19 pandemic initially caused an economic slowdown, and the continued spread of COVID-19 and its variants could contribute to or exacerbate a global economic slowdown or recession, which could have a material adverse effect on demand for our products and on our financial condition and results of operations.

The spread of COVID-19 and its variants has caused us to modify our business practices (including employee travel, employee work locations, and cancellation of physical participation in meetings, events, and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus and its variants, and our ability to perform critical functions could be harmed. In addition, in light of concerns about the spread of COVID-19 and its variants, our workforce has at times been operating at reduced levels at our manufacturing facilities and at the facilities of some of our contract manufacturers, which may continue to have an adverse impact on our ability to timely meet future customer orders.

The duration of the business disruption and related financial impact of the COVID-19 pandemic cannot be reasonably estimated at this time. However, it may materially affect our ability to obtain raw materials, manage input costs, manage customer credit risk, manufacture products or deliver inventory in a timely manner, and it also may impair our ability to meet customer demand for products, result in lost sales, additional costs, or penalties, or damage our reputation. The extent to which COVID-19, its variants or an outbreak of any other infectious disease, such as monkeypox, will further impact our operations and results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and its variants, the efficacy and effectiveness of vaccines, and the actions to contain the virus or treat its impact, among others.

Risks related to sales, product development and manufacturing

We face significant challenges managing our growth strategy.

Our potential for growth depends significantly on the adoption of our products within the markets we serve and for other applications, and our ability to affect this rate of adoption. In order to manage our growth and business strategy effectively relative to the uncertain pace of adoption, we must continue to:

~~expand the capability~~

Table of ~~information systems to support a more complex business;~~Contents

•maintain, expand, construct and purchase adequate manufacturing facilities and equipment, as well as secure sufficient third-party manufacturing resources, to meet customer ~~demand;~~demand, including specifically the expansion of our Silicon Carbide capacity with the opening of a state-of-the-art, automated 200mm capable Silicon Carbide device fabrication facility and an expansion of our materials factory;

•manage an increasingly complex supply chain (including managing the impacts of ongoing supply constraints in the semiconductor industry) that has the ability to supply an increasing number of raw materials, subsystems and finished products with the required specifications and quality, and deliver on time to our manufacturing facilities, our ~~third party~~third-party manufacturing facilities, our logistics operations, or our ~~logistics operations;~~customers;

•access capital markets to fund our growth initiatives, including our ongoing capacity expansions;

•expand the capability of our information systems to support a more complex business, such as our current initiative to implement a new company-wide enterprise resource planning (ERP) system;

•be successful in securing design-ins across our end markets, including automotive applications;

•expand research and development, sales and marketing, technical support, distribution capabilities, manufacturing planning and administrative functions;

•safeguard confidential information and protect our intellectual property;

•manage organizational complexity and communication;

•expand the skills and capabilities of our current management team;

•add experienced senior level managers and executives;

•attract and retain qualified employees; and

~~adequately~~•execute, maintain and adjust the operational and financial controls that support our business.

We are also increasingly dependent on information technology to enable us to improve the effectiveness of our operations and to maintain financial accuracy and efficiency. For example, the implementation of a new information technology platform at our Racine operations in our 2016 fiscal third quarter led to service interruptions that resulted in lower commercial lighting orders and revenues during that quarter and beyond. Allocation and effective management of the resources necessary to successfully implement, integrate, train personnel and sustain this new platform will remain critical to ensure that we are not subject to transaction errors, processing inefficiencies, loss of customers, business disruptions or loss of or damage to intellectual property through a security breach in the near term. Additionally, we face these same risks if we fail to allocate and effectively manage the resources necessary to build, implement, upgrade, integrate and sustain appropriate technology infrastructure over the longer term.

While we intend to continue to focus on managing our costs and expenses, ~~over the long term~~ we expect to invest to support our growth and may have additional unexpected costs. Such investments take time to become fully operational, and we may not be able to expand quickly enough to exploit targeted market opportunities. In connection with our efforts to cost-effectively manage our growth, we have increasingly relied on contractors for production capacity, logistics support and certain administrative functions including hosting of certain information technology software applications. If our contract manufacturers ~~original design manufacturers (ODMs)~~(including those at which we maintain captive lines) or other service providers do not perform effectively, we may not be able to achieve the expected cost savings and may incur additional costs to correct errors or fulfill customer demand. Depending on the function involved, such errors may also lead to business disruption, processing inefficiencies, the loss of or damage to intellectual property through security breach, or an impact on employee morale. Our operations may also be negatively impacted if any of these contract manufacturers ~~ODMs~~ or other service providers do not have the financial capability to meet our growing needs.

There are also inherent execution risks in starting up a new factory or expanding production capacity, whether one of our own factories or that of our contract manufacturers, ~~or ODMs, or~~as well as risks to moving production to different contract manufacturers, ~~or ODMs,~~ that could increase costs and reduce our operating ~~results,~~results. In the fourth quarter of fiscal 2022, we opened a new Silicon Carbide device fabrication facility in Marcy, New York to complement the materials factory expansion underway at our United States campus headquarters in Durham, North Carolina. The establishment and operation of a new manufacturing facility or expansion of an existing facility involves significant risks and challenges, including, but not limited to, the following:

•design and construction delays and cost ~~overruns,~~ overruns;

•issues in installing and qualifying new equipment and ramping production;

•poor production process yields and reduced quality ~~control.~~control; and

•insufficient personnel with requisite expertise and experience to operate a Silicon Carbide device fabrication facility.

We ~~operate in industries~~are also increasingly dependent on information technology to enable us to improve the effectiveness of our operations and to maintain financial accuracy and efficiency. Allocation and effective management of the resources necessary to successfully implement, integrate, train personnel and sustain our information technology platforms will remain critical to ensure that we are not subject to ~~significant fluctuation in supply and demand and ultimately pricing that affects our revenue and profitability.~~

~~The industries we serve are in different stages~~transaction errors, processing inefficiencies, loss of ~~adoption and are characterized by constant and rapid technological change, rapid product obsolescence and price erosion, evolving standards, short product life-cycles~~customers, business disruptions or loss of or damage to intellectual property through a security breach in the ~~case~~near term. Additionally, we face these same risks if we fail to allocate and effectively manage the resources necessary to build, implement, upgrade, integrate and sustain appropriate technology infrastructure over the longer term.

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Our operating results are substantially dependent on the ~~LED industry~~acceptance of new products.

Our future success may depend on our ability to deliver new, higher performing and/or lower cost solutions for existing and ~~fluctuations~~new markets and for customers to accept those solutions. The development of new products is a highly complex process, and we have in ~~product supply~~some instances experienced delays in completing the development, introduction and ~~demand. The LED, power and RF industries have experienced significant fluctuations, often in connection with, or in anticipation~~qualification of product cycles and changes in general economic conditions. The semiconductor industry is characterized by rapid technological change, high capital expenditures, short product life cycles and continuous advancements in process technologies and manufacturing facilities. As the markets fornew products which has impacted our products mature, additional fluctuations may result from variability and consolidations within the industry’s customer base. These fluctuations have been characterized by lower product demand, production overcapacity, higher inventory levels and increased pricing pressure. These fluctuations have also been characterized by higher demand for key components and equipment used in, orresults in the ~~manufacture~~past. Our research and development efforts are aimed at solving increasingly complex problems, and we do not expect that all our projects will be successful. The successful development, introduction and acceptance of ~~our~~new products ~~resulting in longer lead times, supply delays and production disruptions.~~

We have experienced these conditions in our business and may experience such conditions in the future, which could have a material negative impact on our business, results of operations or financial condition. For example, in the fourth quarter of fiscal 2015, we commenced a restructuring plan for our LED business that reduced excess capacity and overhead as well as increased reserves as the result of a more aggressive pricing environment. The restructuring activity ended in the second quarter of fiscal 2016.

In addition, as we diversify our product offerings and as pricing differences in the average selling prices among our product lines widen, a change in the mix of sales among our product lines may increase volatility in our revenue and gross margin from period to period.

~~If we are unable to effectively develop, manage and expand our sales channels for our products, our operating results may suffer.~~

We have expanded into business channels that are different from those in which we have historically operated as we grow our business and sell more lighting, LED, power and RF products. Our sales agents have in the past and may in the future choose to drop our product lines from their portfolio to avoid losing access to our competitors’ products, resulting in a disruption in the project pipeline and lower than targeted sales for our products. Our sales agents have the ability to shift business to different suppliers within their product portfolio baseddepend on a number of factors, including ~~customer service~~the following:

•qualification and acceptance of our new product ~~availability. We sell~~and systems designs, specifically entering into automotive applications which require even more stringent levels of qualification and standards;

•our ability to effectively transfer increasingly complex products and technology from development to manufacturing, including the transition to 200mm substrates;

•our ability to introduce new products in a ~~portion~~timely and cost-effective manner;

•our ability to secure volume purchase orders related to new products;

•achievement of technology breakthroughs required to make commercially viable products;

•our ability to convert customer design-ins to sales of significant volume, and, if customer design-in activity does result in such sales, when such sales will ultimately occur and what the amount of such sales will be;

•the accuracy of our ~~lighting~~predictions for market requirements;

•our ability to predict, influence and/or react to evolving standards;

•acceptance of new technology in certain markets;

•our ability to protect intellectual property developed in new products;

•the availability of qualified research and development personnel;

•our timely completion of product designs and development;

•our ability to develop repeatable processes to manufacture new products ~~through retailers who~~in sufficient quantities, with the desired specifications and at competitive costs;

•our customers’ ability to develop competitive products incorporating our products; and

•market acceptance of our products and our customers’ products.

If any of these or other similar factors becomes problematic, we may ~~alter their promotional pricing~~not be able to deliver and introduce new products in a timely or ~~inventory strategies, which~~cost-effective manner.

Variations in our production could impact our ~~targeted sales~~ability to reduce costs and could cause our margins to decline and our operating results to suffer.

All of our products are manufactured using technologies that are highly complex. The number of usable items, or yield, from our production processes may fluctuate as a result of many factors, including but not limited to the following:

•variability in our process repeatability and control;

•contamination of the manufacturing environment;

•equipment failure, power outages, fires, flooding, information or other system failures or variations in the manufacturing process;

•lack of consistency and adequate quality and quantity of piece parts, other raw materials and other bill of materials items;

•inventory shrinkage or human errors;

•defects in production processes (including system assembly) either within our facilities or at our suppliers; and

•any transitions or changes in our production process, planned or unplanned.

In the past, we have experienced difficulties in achieving acceptable yields on certain products, which has adversely affected our operating results. We may experience similar problems in the future, and we cannot predict when they may occur or their severity.

In some instances, we may offer products for future delivery at prices based on planned yield improvements or increased cost efficiencies from other production advances. Failure to achieve these ~~products. If~~planned improvements or advances could have a significant impact on our margins and operating results.

In addition, our ability to convert volume manufacturing to larger diameter substrates can be an important factor in providing a more cost-effective manufacturing process. We continue to prepare for production using 200mm substrates and if we are unable to ~~effectively penetrate these channels~~make this transition in a timely or ~~develop alternate channels to ensure~~cost-effective manner, our products are reaching the intended customer base, our financial results may be adversely impacted. In addition, if we successfully penetrate or develop these channels, we cannot guarantee that customers will accept our products or that we will be able to manufacture and deliver them in the timeline established by our customers.

We sell a substantial portion of our products to distributors. We rely on distributors to develop and expand their customer base as well as anticipate demand from their customers. If they are not successful, our growth and profitability may be adversely impacted. Distributors must balance the need to have enough products in stock in order to meet their customers’ needs against their internal target inventory levels and the risk of potential inventory obsolescence. The risks of inventory obsolescence are especially relevant to technological products. The distributors’ internal target inventory levels vary depending on market cycles and a number of factors within each distributor over which we have very little, if any, control. Distributors also have the ability to shift business to different manufacturers within their product portfolio based on a number of factors, including new product availability and performance.

We typically recognize revenue on products sold to distributors when the item is shipped and title passes to the distributor (sell-in method). Certain distributors have limited rights to return inventory under stock rotation programs and have limited price protection rights for which we make estimates. We evaluate inventory levels in the distribution channel, current economic trends and other related factors in order to account for these factors in our judgments and estimates. As inventory levels and product return trends change, we may have to revise our estimates and incur additional costs, and our gross margins and operating results could be ~~adversely~~negatively impacted.

~~The markets in which we operate are highly competitive and have evolving technical requirements.~~

The markets for our products are highly competitive. In the LED market, we compete with companies that manufacture and sell LED chips and LED components. In the lighting market, we compete with companies that manufacture and sell traditional and LED lighting products, manyTable of which have larger and more established sales channels. In the semiconductor market, we compete with companies that have greater market share, name recognition and technical resources than we do. Competitors continue to offer new products with aggressive pricing, additional features and improved performance. Competitive pricing pressures remain a challenge and continue to accelerate the rate of decline in our sales prices, particularly in our LED Products and Wolfspeed segments. Aggressive pricing actions by our competitors in our businesses could reduce margins if we are not able to reduce costs at an equal or greater rate than the sales price decline.Contents

With the growth potential for LEDs, we will continue to face increased competition in the future across our businesses. If the investment in capacity exceeds the growth in demand, such as exists in the current LED market, the LED market is likely to become more competitive with additional pricing pressures. Additionally, new technologies could emerge or improvements could be made in existing technologies that may also reduce the demand for lighting and LEDs in certain markets. There are also new technologies, such as organic LEDs (OLEDs), which could potentially reduce LED demand for backlighting, potentially impacting the overall LED market.

As competition increases, we need to continue to develop new products that meet or exceed the needs of our customers. Therefore, our ability to continually produce more efficient and lower cost LEDs, lighting products and power and RF products that meet the evolving needs of our customers will be critical to our success. Competitors may also try to align with some of our strategic customers. This could lead to lower prices for our products, reduced demand for our products and a corresponding reduction in our ability to recover development, engineering and manufacturing costs. Any of these developments could have an adverse effect on our business, results of operations or financial condition.

Our results of operations, financial condition and business could be harmed if we are unable to balance customer demand and capacity.

As customer demand for our products changes, we must be able to adjust our production capacity to meet demand. We are continually taking steps to address our manufacturing capacity needs for our products. Currently, we are focusing on increasing production capacity. If we are not able to increase ~~or decrease~~ our production capacity at our targeted rate, or if there are unforeseen costs associated with ~~adjusting~~increasing our capacity levels, or if we are unable to obtain advanced semiconductor manufacturing equipment in a timely manner, we may not be able to achieve our financial targets. For example, our Wolfspeed business is currently experiencing demand in excess of our production capacity, which is resulting in longer manufacturing lead times to customers as we manage our constrained capacity. While we began in fiscal 2016 making significant investments to expand our materials, power and RF device capacity and continue to do so, these investments take time to bring in, install and get fully qualified. As a result, weWe may be unable to build or qualify ~~such~~ new capacity on a timely basis to meet customer demand and customers may fulfill their orders with one of our competitors instead. In addition, as we introduce new products and change product generations, we must balance the production and inventory of prior generation products with the production and inventory of new generation products, whether manufactured by us or our contract manufacturers, to maintain a product mix that will satisfy customer demand and mitigate the risk of incurring cost write-downs on the previous generation products, related raw materials and tooling. Significant or prolonged shortages or delivery delays of our products to our customers could delay their manufacturing and negatively impact our relationships with these customers.

Due to the proportionately high fixed cost nature of our business (such as facility costs), if demand does not materialize at the rate forecasted, we may not be able to scale back our manufacturing expenses or overhead costs quickly enough to correspond to the lower than expected demand. This could result in lower margins and adversely impact our business and results of operations. Additionally, if product demand decreases or we fail to forecast demand accurately, our results may be adversely impacted due to higher costs resulting from lower factory utilization, causing higher fixed costs per unit produced. For example, in the third quarter of fiscal 2017, we had lower overall lighting demand which led to higher costs per unit produced from our Racine factory, thereby reducing gross margins for our Lighting Products segment. Further, we may be required to recognize impairments on our long-lived assets or recognize excess inventory write-off charges, ~~as we did in the fourth quarter of fiscal 2015. We may in the future be required to recognize~~or excess capacity charges, which would have a negative impact on our results of operations.

With the opening of our new Silicon Carbide device fabrication facility in Marcy, New York, we may experience increased pressure on margins during the period when production begins but before the facility is at full utilization. Additionally, our large upfront investment in the facility to increase capacity does not guarantee we will need the capacity and we may experience lower than expected capacity once the facility is in production, which could result in further margin pressures.

In addition, our efforts to improve quoted delivery lead-time performance may result in corresponding reductions in order backlog. A decline in backlog levels could result in more variability and less predictability in our quarter-to-quarter ~~net~~ revenue and operating results.

~~If our products fail to perform or fail to meet customer requirements or expectations, we could incur significant additional costs, including costs associated with the recall of those items.~~

The manufacture of our products involves highly complex processes. Our customers specify quality, performance and reliability standards that we must meet. If our products do not meet these standards, we may be required to replace or rework the products. In some cases, our products may contain undetected defects or flaws that only become evident after shipment and installation. For example, during the second and third quarters of fiscal 2017, we determined that the quality of several of our commercial lighting products were possibly impacted by third party supplied drivers that did not meet specifications. Therefore, we increased our product warranty reserves for potential future warranty claims. Even if our products meet standard specifications, our customers may attempt to use our products in applications for which they were not designed or in products that were not designed or manufactured properly, resulting in product failures and creating customer satisfaction issues.

~~costs associated with the removal, collection and destruction of the product;~~

~~payments made to replace product;~~

~~costs associated with repairing the product;~~

~~the write-down or destruction of existing inventory;~~

~~insurance recoveries that fail to cover the full costs associated with product recalls;~~

~~lost sales due to the unavailability of product for a period of time;~~

~~delays, cancellations or rescheduling of orders for our products; or~~

~~increased product returns.~~

~~A significant product recall could also result in adverse publicity, damage~~face risks relating to our reputation and a loss of customer or consumer confidence in our products. We also may be the target of product liability lawsuits or regulatory proceedings by the Consumer Product Safety Commission (CPSC) and could suffer losses from a significant product liability judgment or adverse CPSC finding against us if the use of our products at issue is determined to have caused injury or contained a substantial product hazard.

We provide warranty periods ranging from 90 days to 10 years on our products. The standard warranty on nearly all of our new LED lighting products, which now represent the majority of our revenue, is 10 years. Althoughsuppliers, including that we believe our reserves are appropriate, we are making projections about the future reliability of new products and technologies, and we may experience increased variability in warranty claims. Increased warranty claims could result in significant losses due to a rise in warranty expense and costs associated with customer support.

We rely on a number of key sole source and limited source suppliers, ~~and~~ are subject to high price volatility on certain commodity inputs, variations in parts quality, and raw material consistency and ~~availability.~~availability, and rely on independent shipping companies for delivery of our products.

We depend on a number of sole source and limited source suppliers for certain raw materials, components, services and equipment used in manufacturing our products, including key materials and equipment used in critical stages of our manufacturing processes. Although alternative sources generally exist for these items, qualification of many of these alternative sources could take up to six months or longer. Where possible, we attempt to identify and qualify alternative sources for our sole and limited source suppliers.

We generally purchase these sole or limited source items with purchase orders, and we have limited guaranteed supply arrangements with such suppliers. Some of our sources can have variations in attributes and availability which can affect our ability to produce products in sufficient volume or quality. We do not control the time and resources that these suppliers devote to our business, and we cannot be sure that these suppliers will perform their obligations to us. Additionally, general shortages in the marketplace of certain raw materials or key components may adversely impact our business. In the past, we have experienced decreases in our production yields when suppliers have varied from previously agreed upon specifications or made other modifications we do not specify, which impacted our cost of revenue.

Additionally, the inability of our suppliers to access capital efficiently could cause disruptions in their businesses, thereby negatively impacting ours. This risk may increase ~~if an~~from unpredictable and unstable changes in economic ~~downturn~~conditions, including recession, inflation, or other changes, which may negatively ~~affects~~affect key suppliers or a significant number of our other suppliers. Any delay in product delivery or other interruption or variation in supply from these suppliers could prevent us from meeting commercial demand for our products. If we were to lose key suppliers, if our key suppliers were unable to support our demand for any reason or if we were unable to identify and qualify alternative suppliers, our manufacturing operations could be interrupted or hampered significantly.

We rely on arrangements with independent shipping companies for the delivery of our products from vendors and to customers both in the United States and abroad. The failure or inability of these shipping companies to deliver products or the

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unavailability of shipping or port services, even temporarily, could have a material adverse effect on our business. We may also be adversely affected by an increase in freight surcharges due to rising fuel costs, oil costs and added security.

The risks mentioned above, including our sole source or limited source suppliers' ability to produce products and adequately access capital, and our ability to arrange effective shipping arrangements, have increased and may further increase due to the ongoing COVID-19 pandemic.

In our fabrication process, we consume a number of precious metals and other commodities, which are subject to high price ~~volatility.~~volatility and the potential impacts of increased inflation. Our operating margins could be significantly affected if we are not able to pass along price increases to our customers. In addition, production could be disrupted by the unavailability of the resources used in production such as water, silicon, electricity and gases. Future environmental regulations could restrict supply or increase the cost of certain of those materials.

We operate in industries that are subject to significant fluctuation in supply and demand and ultimately pricing, which affects our revenue and profitability.

The industries we serve are in different stages of adoption and are characterized by constant and rapid technological change, rapid product obsolescence and price erosion, evolving standards and fluctuations in product supply and demand. The semiconductor industry is characterized by rapid technological change, high capital expenditures, short product life cycles and continuous advancements in process technologies and manufacturing facilities. As the markets for our products mature, additional fluctuations may result from variability and consolidations within the industry’s customer base. These fluctuations have been characterized by lower product demand, production overcapacity, higher inventory levels and aggressive pricing actions by our competitors. These fluctuations have also been characterized by higher demand for key components and equipment used in, or in the manufacture of, our products resulting in longer lead times, supply delays and production disruptions. We have experienced these conditions in our business and may experience such conditions in the future, which could have a material negative impact on our business, results of operations or financial condition.

The markets in which we operate are highly competitive and have evolving technical requirements.

The markets for our products are highly competitive. In the semiconductor market, we compete with companies that have greater market share, name recognition, distribution and sales channels, and/or technical resources than we do. Competitors continue to offer new products with aggressive pricing, additional features and improved performance. Aggressive pricing actions by our competitors in our businesses could reduce margins if we are not able to reduce costs at an equal or greater rate than the sales price decline.

As competition increases, we need to continue to develop new products that meet or exceed the needs of our customers. Therefore, our ability to continually produce more efficient and lower cost power and RF products that meet the evolving needs of our customers will be critical to our success. Competitors may also try to align with some of our strategic customers. This could lead to lower prices for our products, reduced demand for our products and a corresponding reduction in our ability to recover development, engineering and manufacturing costs. Any of these developments could have an adverse effect on our business, results of operations or financial condition.

We depend on a limited number of customers, including distributors, ~~and retailers,~~ for a substantial portion of our revenue, and the loss of, or a significant reduction in purchases by, one or more of these customers could adversely affect our operating results.

We receive a significant amount of our revenue from a limited number of customers ~~including~~and distributors, ~~and retailers, one~~two of which individually represented ~~12%~~more than 10% of our consolidated revenue in fiscal ~~2017. Most~~2022. Many of our customer orders are made on a purchase order basis, which does not generally require any long-term customer commitments. Therefore, these customers may alter their purchasing behavior with little or no notice to us for various reasons, including developing, or, in the case of our distributors, their customers developing, their own product solutions; choosing to purchase or distribute product from our competitors; incorrectly forecasting end market demand for their products; or experiencing a reduction in their market share in the markets for which they purchase our products. In the case of retailers, these customers may alter their promotional pricing; increase promotion of competitors' products over our products; or reduce their inventory levels; all of which could negatively impact our financial condition and results of operations. If our customers alter their purchasing behavior, if our customers’ purchasing behavior does not match our expectations or if we encounter any problems collecting amounts due from them, our financial condition and results of operations could be negatively impacted.

Our revenue is highly dependent on our customers’ ability to produce, market and sell more integrated products.

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Our revenue depends on getting our products designed into a larger number of our customers’ products and in turn, our customers’ ability to produce, market and sell their products. For example, we have current and prospective customers that create, or plan to create, power and RF products or systems using our substrates, die, components or modules. Even if our customers are able to develop and produce products or systems that incorporate our substrates, die, components or modules, there can be no assurance that our customers will be successful in marketing and selling these products or systems in the marketplace.

Our results may be negatively impacted if customers do not maintain their favorable perception of our ~~brand~~brands and products.

~~We have a developing brand with increasing value.~~ Maintaining and continually enhancing the value of ~~this brand~~our brands is critical to the success of our business. Brand value is based in large part on customer perceptions. Success in promoting and enhancing brand value depends in large part on our ability to provide high-quality products. Brand value could diminish significantly due to a number of factors, including adverse publicity about our products (whether valid or not), our corporate name change from "Cree, Inc." to "Wolfspeed, Inc.," a failure to maintain the quality of our products (whether perceived or real), the failure of our products ~~or Cree~~ to deliver consistently positive consumer experiences, the products becoming unavailable to consumers or consumer perception that we have acted in an irresponsible manner. Damage to our brand, reputation or loss of customer confidence in our brand or products could result in decreased demand for our products and have a negative impact on our business, results of operations or financial condition.

~~Variations in~~If our ~~production~~products fail to perform or fail to meet customer requirements or expectations, we could ~~impact our ability to reduce~~incur significant additional costs, ~~and could cause our margins to decline and our operating results to suffer.~~including costs associated with the recall of those items.

~~All~~The manufacture of our products ~~are~~involves highly complex processes. Our customers specify quality, performance and reliability standards that we must meet. If our products do not meet these standards, we may be required to replace or rework the products. In some cases, our products may contain undetected defects or flaws that only become evident after shipment and installation. Even if our products meet standard specifications, our customers may attempt to use our products in applications for which they were not designed or in products that were not designed or manufactured ~~using technologies that are highly complex. The~~properly, resulting in product failures and creating customer satisfaction issues.

We have experienced product quality, performance or reliability problems from time to time and defects or failures may occur in the future. If failures or defects occur, they could result in significant losses or product recalls. A significant product recall could also result in adverse publicity, damage to our reputation and a loss of customer confidence in our products. We also may be the target of product liability lawsuits against us if the use of our products at issue is determined to have caused injury or contained a substantial product hazard.

We provide standard warranty periods of 90 days on our products, with longer periods under a limited number of ~~usable items, or yield, from~~customer contracts. Although we believe our ~~production processes~~reserves are appropriate, we are making projections about the future reliability of new products and technologies, and we may ~~fluctuate as a result of many factors, including but not limited to the following:~~

experience increased variability in ~~our process repeatability~~warranty claims. Increased warranty claims could result in significant losses due to a rise in warranty expense and ~~control;~~costs associated with customer support.

~~contamination of the manufacturing environment;~~

~~equipment failure, power outages, fires, flooding, information or other system failures or variations in the manufacturing process;~~

~~lack of consistency and adequate quality and quantity of piece parts, other raw materials and other bill of materials items;~~

~~inventory shrinkage or human errors;~~

~~defects in production processes (including system assembly) either within our facilities or at our suppliers; and~~

~~any transitions or changes in our production process, planned or unplanned.~~

In some instances, we may offer products for future delivery at prices based on planned yield improvements or increased cost efficiencies from other production advances. Failure to achieve these planned improvements or advances could have a significant impact on our margins and operating results.

~~In addition, our ability to convert volume manufacturing to larger diameter substrates can be an important factor in providing a more cost effective manufacturing process.~~ If we are unable to effectively develop, manage and expand our sales channels for our products, our operating results may suffer.

We sell a portion of our products to distributors, including a distributor that represented more than 10% of our revenue in fiscal 2022. We rely on distributors to develop and expand their customer base as well as to anticipate demand from their customers. If they are not successful, our growth and profitability may be adversely impacted. Distributors must balance the need to have enough products in stock in order to meet their customers’ needs against their internal target inventory levels and the risk of potential inventory obsolescence. The risks of inventory obsolescence are especially relevant to technological products. The distributors’ internal target inventory levels vary depending on market cycles and a number of factors within each distributor over which we have very little, if any, control. Distributors also have the ability to shift business to different manufacturers within their product portfolio based on a number of factors, including new product availability and performance. Similarly, we have the ability to add, consolidate, or remove distributors.

We typically recognize revenue on products sold to distributors when the item is shipped and title passes to the distributor (sell-in method). Certain distributors have limited rights to return inventory under stock rotation programs and have limited price protection rights for which we make ~~this transition~~estimates. We evaluate inventory levels in ~~a timely~~the distribution channel, current economic trends and other related factors in order to account for these factors in our judgments and estimates. As inventory levels and product return trends change or ~~cost effective manner,~~we make changes to our distributor roster, we may have to revise our estimates and incur additional costs, and our gross margins and operating results could be ~~negatively~~adversely impacted.

~~Global economic conditions could materially adversely impact demand~~

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As a result of our continued expansion into new markets, we may compete with existing customers who may reduce their orders.

We continue to expand into new markets and new market segments. Many of our existing customers who purchase our Silicon Carbide substrate materials develop and manufacture devices, die and components using those wafers that are offered in the same power and RF markets. As a result, some of our current customers perceive us as a competitor in these market segments. In response, our customers may reduce or discontinue their orders for our ~~products and services.~~

~~Our operations and performance depend significantly on worldwide economic conditions. Uncertainty about global economic conditions~~substrate materials. This reduction in or discontinuation of orders could ~~result~~occur faster than our sales growth in customers postponing purchases of our products and services in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values and other macroeconomic factors,these new markets, which could ~~have a material negative effect on demand for our products and services and, accordingly, on~~adversely affect our business, results of operations or financial condition. ~~For example, any economic and political uncertainty caused by the United Kingdom's impending exit from the European Union may negatively impact demand for~~

Risks associated with our ~~products.~~

Additionally, our international sales are subject to variability as our selling prices become less competitive in countries with currencies that are declining in value against the U.S. Dollar and more competitive in countries with currencies that are increasing in value against the U.S. Dollar. In addition, our international purchases can become more expensive if the U.S. Dollar weakens against the foreign currencies in which we are billed.strategic transactions

If we fail to evaluate and execute strategic opportunities successfully, our business may suffer.

From time to time, including the present, we evaluate strategic opportunities available to us for product, technology or business transactions, such as business acquisitions, investments or capacity expansions, joint ventures, divestitures, or spin-offs. If we choose to enter into such strategic transactions, we face certain risks including:

•the failure of an acquired business, investee or joint venture to meet our performance and financial expectations;

•identification of additional liabilities relating to an acquired business;

•loss of ~~existing~~ customers ~~of our current and acquired businesses~~ due to ~~concerns that new product lines may be in~~perceived conflicts or competition with such customers or due to regulatory actions taken by governmental agencies;

•that we are not able to enter into acceptable contractual arrangements in connection with the ~~customers’ existing product lines;~~transaction;

•difficulty integrating an acquired business's operations, personnel and financial and operating systems into our current business;

•that we are not able to develop and expand customer bases and accurately anticipate demand from end customers, which can result in increased inventory and reduced orders if we experience wide fluctuations in supply and demand;

•diversion of management attention;

•difficulty separating the operations, personnel and financial and operating systems of a spin-off or divestiture from our current business;

•the possibility we are unable to complete the transaction and expend substantial resources without achieving the desired benefit;

•the inability to obtain required regulatory agency approvals;

•reliance on a transaction counterparty for transition services for an extended period of time, which may result in additional expenses and delay the integration of the acquired business and realization of the desired benefit of the transaction;

•uncertainty of the financial markets or circumstances that cause conditions that are less favorable and/or different than expected; and

•expenses incurred to complete a transaction may be significantly higher than anticipated.

We may not be able to adequately address these risks or any other problems that arise from our prior or future acquisitions, investments, joint ventures, divestitures or spin-offs. Any failure to successfully evaluate strategic opportunities and address risks or other problems that arise related to any such business transaction could adversely affect our business, results of operations or financial condition.

We are subject to a number of risks associated with the sale of our former LED Products segment, and these risks could adversely impact our operations, financial condition and business.

On March 1, 2021, we completed the sale of our former LED Products segment to SMART pursuant to the Asset Purchase Agreement dated October 18, 2020 (the LED Purchase Agreement). We are subject to a number of risks associated with this transaction, including risks associated with:

•the restrictions on and obligations with respect to our business set forth in the transition services agreement and the Wafer Supply and Fabrication Services Agreement (the Wafer Supply Agreement), in each case between us and CreeLED;

•any required payments of indemnification obligations under the LED Purchase Agreement for retained liabilities and breaches of representations, warranties or covenants; and

•the ability of SMART to pay the unsecured promissory note issued to us as the earnout payment.

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As a result of ~~our continued expansion into new markets,~~these risks, we may ~~compete~~be unable to realize the anticipated benefits of the transaction, including the total amount of cash we expect to receive. Our failure to realize the anticipated benefits of the transaction would adversely impact our operations, financial condition and business and could limit our ability to pursue additional strategic transactions.

We are subject to risks associated with ~~existing customers who may reduce their orders.~~

~~Through acquisitions and organic growth, we continue to expand into new markets and new market segments. Many~~the sale of our ~~existing customers who purchase~~former Lighting Products business unit, and these risks could adversely impact our ~~LED products~~financial condition.

On May 13, 2019, we closed the sale of our former Lighting Products business unit to IDEAL Industries, Inc. (IDEAL). We are subject to risks associated with this transaction, including risks associated with any required payments of indemnification obligations under the Purchase Agreement with IDEAL for retained liabilities and breaches of representations, warranties or ~~Wolfspeed substrate materials develop and manufacture products using those wafers, chips and components that are offered into the same lighting, power and RF markets.~~ covenants.

As a result, ~~some~~we may be unable to realize the anticipated benefits of the transaction. Our failure to realize the anticipated benefits of the transaction would adversely impact our ~~current customers perceive us as a competitor in these market segments. In response,~~financial condition and could limit our customers may reduce or discontinue their orders for our LED or Wolfspeed substrate materials products. This reduction in or discontinuation of orders could occur faster than our sales growth in these new markets, which could adversely affect our business, results of operations or financial condition.

~~Our revenue is highly dependent on our customers’~~ ability to ~~produce, market and sell more integrated products.~~pursue additional strategic transactions.

Our revenue in our LED Products and Wolfspeed segments depends on getting our products designed into a larger number of our customers’ products and in turn, our customers’ ability to produce, market and sell their products. For example, we have current and prospective customers that create, or plan to create, lighting systems using our LED components. Even if our customers are able to develop and produce LED lighting products or products that incorporate our power and RF products, there can be no assurance that our customers will be successful in marketing and selling these products in the marketplace.

~~Our operations in foreign countries expose us to certain risks inherent in doing business internationally, which may adversely affect our business, results of operations or financial condition.~~

We have revenue, operations, manufacturing facilities and contract manufacturing arrangements in foreign countries that expose us to certain risks. For example, fluctuations in exchange rates may affect our revenue, expenses and results of operations as well as the value of our assets and liabilities as reflected in our financial statements. We are also subject to other types of risks, including the following:

~~protection of~~Risks associated with cybersecurity, intellectual property and ~~trade secrets;~~litigation

tariffs, customs, trade sanctions, trade embargoes and other barriers to importing/exporting materials and products in a cost effective and timely manner, or changes in applicable tariffs or custom rules;

~~the burden of complying with and changes in U.S. or international taxation policies;~~

~~timing and availability of export licenses;~~

~~rising labor costs;~~

~~disruptions in or inadequate infrastructure of the countries where we operate;~~

~~difficulties in collecting accounts receivable;~~

~~difficulties in staffing and managing international operations; and~~

~~the burden of complying with foreign and international laws and treaties.~~

In some instances, we have received and may continue to receive incentives from foreign governments to encourage our investment in certain countries, regions or areas outside of the United States. In particular, we have received and may continue to receive such incentives in connection with our operations in Asia, as Asian national and local governments seek to encourage the development of the technology industry. Government incentives may include tax rebates, reduced tax rates, favorable lending policies and other measures, some or all of whichWe may be ~~available~~subject to ~~us due to our foreign operations. Any of these incentives could be reduced~~confidential information theft or eliminated by governmental authorities at any time or as a result of our inability to maintain minimum operations necessary to earn the incentives. Any reduction or elimination of incentives currently provided for our operations could adversely affect our business and results of operations. These same governments also may provide increased incentives to or require production processes that favor local companies, which could further negatively impact our business and results of operations.

Changes in regulatory, geopolitical, social, economic, or monetary policies and other factors, including those which may result from the new U.S. presidential administration and the U.S. Congress, if any, may have a material adverse effect on our business in the future, or may require us to exit a particular market or significantly modify our current business practices. Abrupt political change, terrorist activity and armed conflict pose a risk of general economic disruption in affected countries, which could also result in an adverse effect on our business and results of operations. For example, the results of the United Kingdom’s referendum on whether to remain a part of the European Union have created political and economic uncertainty not only in the United Kingdom, but in many European countries in which we do business. There could be further uncertainty as the United Kingdom negotiates the future terms of its relationship with the European Union following its withdrawal.

~~In order to compete, we must attract, motivate and retain key employees, and our failure to do so could harm our results of operations.~~

Hiring and retaining qualified executives, scientists, engineers, technical staff and sales personnel is critical to our business, and competition for experienced employees in our industry can be intense. As a global company, this issue is not limited to the United States, but includes our other locations such as Europe and China. For example, there is substantial competition in China for qualified and capable personnel, particularly experienced engineers and technical personnel, which may make it difficult for us to recruit and retain qualified employees. Also, within Huizhou, China, there are other large companies building manufacturing plants that will likely compete for qualified employees. If we are unable to staff sufficient and adequate personnel at our China facilities, we may experience lower revenue or increased manufacturing costs, which would adversely affect our results of operations.

To help attract, motivate and retain key employees, we use benefits such as stock-based compensation awards. If the value of such awards does not appreciate, as measured by the performance of the price of our common stock or if our stock-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain and motivate employees could be weakened,misuse, which could harm our business and results of operations.

~~On May 19, 2017,~~We face attempts by others to gain unauthorized access to our information technology systems on which we ~~announced that we were accelerating~~maintain proprietary and other confidential information and such attempts may increase in terms of frequency and severity in light of the ~~succession planning process for our chief executive officer and that Charles M. Swoboda will step down from his executive positions~~sanctions imposed on Russia in response to its invasion of Ukraine. Our security measures may be breached as the result of industrial or other espionage actions of outside parties, employees, employee error, malfeasance or otherwise, and as a ~~member~~result, an unauthorized party may obtain access to our systems. The risk of a security breach or disruption, particularly through cyber-attacks, ransomware, or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as cyber-attacks have become more prevalent and harder to detect and fight against. Additionally, outside parties may attempt to access our confidential information through other means, for example by fraudulently inducing our employees to disclose confidential information. We actively seek to prevent, detect and investigate any unauthorized access, which sometimes occurs. To date, we do not believe that such unauthorized access has caused us any material damage. We might be unaware of any such access or unable to determine its magnitude and effects. In addition, these threats are constantly evolving, thereby increasing the ~~Board~~difficulty of Directors following a transition period. Our CEO search process, which is being led by a search committee of the Board, to identify a candidate for a permanent Chief Executive Officer and President continues, and we are working with an executive search firm to assist with the process of identifying and evaluating both internal and external candidates. There are no assurances concerning the timingsuccessfully defending against them or ~~outcome~~implementing adequate preventative measures. The theft and/or unauthorized use or publication of our ~~search for~~trade secrets and other confidential business information as a new Chief Executive Officer. Our ability to execute our business strategies and attract and retain key executives may be adversely affected by the uncertainty associated with the transition to a successor Chief Executive Officer.

~~The adoption~~result of ~~or changes in government and/or industry policies, standards or regulations relating to the efficiency, performance, use or other aspects of our products could impact the demand for our products.~~

The adoption of or changes in government and/or industry policies, standards or regulations relating to the efficiency, performance or other aspects of our products may impact the demand for our products. Demand for our products may also be impacted by changes in government and/or industry policies, standards or regulations that discourage the use of certain traditional lighting technologies. These constraints may be eliminated or delayed by legislative action, which could have a negative impact on demand for our products. Our ability and the ability of our competitors to meet these new requirements could impact competitive dynamics in the market.

~~If governments, their agencies or utilities reduce their demand for our products or discontinue or curtail their funding, our business may suffer.~~

~~Changes in governmental budget priorities~~such an incident could adversely affect our ~~business and results~~competitive position, result in a loss of ~~operations. U.S. and foreign government agencies have purchased products directly from us and products from our customers, and U.S. government agencies have historically funded a portion~~confidence in the adequacy of our ~~research~~threat mitigation and ~~development activities. When~~detection processes and procedures, cause us to incur significant costs to remedy the ~~government changes budget priorities, such as in times of war or financial crisis, or reallocates its research~~damage caused by the incident, divert management's attention and ~~development spending to areas unrelated to our business, our research~~other resources, and development funding and our product sales to government entities and government-funded customers are at risk. For example, demand and payment for our products and our customers’ products may be affected by public sector budgetary cycles, funding authorizations or utility rebates. Funding reductions or delays could negatively impact demand for our products. If government or utility funding is discontinued or significantly reduced, our business and results of operations could be adversely affected.

~~We are exposed to fluctuations in~~reduce the ~~market~~ value of our investment ~~portfolio~~in research and ~~in interest rates, and therefore, impairment~~development. In addition, as a result of ~~our investments or lower investment income~~the COVID-19 pandemic, the increased prevalence of employees working from home may exacerbate the aforementioned cybersecurity risks. Our business could ~~harm our earnings.~~

We are exposed to market value and inherent interest rate risk related to our investment portfolio. We have historically invested portions of our available cash in fixed interest rate securities such as high-grade corporate debt, commercial paper, municipal bonds, certificates of deposit, government securities and other fixed interest rate investments. The primary objective of our cash investment policy is preservation of principal. However, these investments are generally not Federal Deposit Insurance Corporation insured and may lose value and/or become illiquid regardless of their credit rating.

From time to time, we have also made investments in public and private companies that engage in complementary businesses. For example, during fiscal 2015 we made an investment in Lextar Electronics Corporation (Lextar), a public company in Taiwan. An investment in another company isbe subject to ~~the risks inherent in the business~~significant disruption and we could suffer monetary or other losses.

Our disclosure controls and procedures address cybersecurity and include elements intended to ensure that there is an analysis of ~~that company and to trends affecting the equity markets as a whole. Investments in publicly held companies~~potential disclosure obligations arising from security breaches. In addition, we are subject to ~~market risks~~data privacy, protection and ~~like~~security laws and regulations, including the European General Data Protection Act (GDPR) that governs personal information of European persons. We also maintain compliance programs to address the potential applicability of restrictions against trading while in possession of material, nonpublic information generally and in connection with a cyber-security breach. However, a breakdown in existing controls and procedures around our ~~investment~~cyber-security environment may prevent us from detecting, reporting or responding to cyber incidents in ~~Lextar, may not be liquidated easily. As~~ a result, we may not be able to reduce the size of our position or liquidate our investments when we deem appropriate to limit our downside risk. Should the value of any such investments we hold decline, the related write-down in valuetimely manner and could have a material adverse effect on our financial ~~condition~~position and ~~results of operations. For example, the~~ value of our ~~Lextar investment declined~~stock.

There are limitations on our ability to protect our intellectual property.

Our intellectual property position is based in part on patents owned by us and patents licensed to us. We intend to continue to file patent applications in the future, where appropriate, and to pursue such applications with U.S. and certain foreign patent authorities.

Our existing patents are subject to expiration and re-examination and we cannot be sure that additional patents will be issued on any new applications around the covered technology or that our existing or future patents will not be successfully contested by third parties. Also, because issuance of a valid patent does not prevent other companies from ~~the date~~using alternative, non-infringing technology, we cannot be sure that any of our ~~investment in December 2014 through~~patents, or patents issued to others and licensed to us, will provide significant commercial protection, especially as new competitors enter the ~~end~~market.

Table of ~~fiscal 2017 with variability between quarters,~~Contents

We periodically discover products that are counterfeit reproductions of our products or that otherwise infringe on our intellectual property rights. The actions we take to establish and protect trademarks, patents and other intellectual property rights may ~~continue~~not be adequate to ~~decline~~prevent imitation of our products by others, and therefore, may adversely affect our sales and our brand and result in the ~~future. As required~~shift of customer preference away from our products. Further, the actions we take to establish and protect trademarks, patents and other intellectual property rights could result in significant legal expense and divert the efforts of our technical personnel and management, even if the litigation or other action results in a determination favorable to us.

We also rely on trade secrets and other non-patented proprietary information relating to our product development and manufacturing activities. We try to protect this information through appropriate efforts to maintain its secrecy, including requiring employees and third parties to sign confidentiality agreements. We cannot be sure that these efforts will be successful or that the confidentiality agreements will not be breached. We also cannot be sure that we would have adequate remedies for any breach of such agreements or other misappropriation of our trade secrets, or that our trade secrets and proprietary know-how will not otherwise become known or be independently discovered by Rule 3-09 of Regulation S-X, we filed Lextar’s financial statements, prepared by Lextar and audited by its independent public accounting firm, as of and for the years ended December 31, 2015 and 2014 as an exhibit to this Annual Report.others.

Litigation could adversely affect our operating results and financial condition.

We are often involved in litigation, primarily patent litigation. Defending against existing and potential litigation will likely require significant attention and resources and, regardless of the outcome, result in significant legal expenses, which could adversely affect our results unless covered by insurance or recovered from third parties. If our defenses are ultimately unsuccessful or if we are unable to achieve a favorable resolution, we could be liable for damage awards that could materially affect our results of operations and financial condition.

Where necessary, we may initiate litigation to enforce our patent or other intellectual property rights, which could adversely impact our relationship with certain customers. Any such litigation may require us to spend a substantial amount of time and money and could distract management from our day-to-day operations. Moreover, there is no assurance that we will be successful in any such litigation.

Our business may be impaired by claims that we, or our customers, infringe the intellectual property rights of others.

Vigorous protection and pursuit of intellectual property rights characterize our industry. These traits have resulted in significant and often protracted and expensive litigation. Litigation to determine the validity of patents or claims by third parties of infringement of patents or other intellectual property rights could result in significant legal expense and divert the efforts of our technical personnel and management, even if the litigation results in a determination favorable to us. In the event of an adverse result in such litigation, we could be required ~~to:~~

to pay substantial damages;

indemnify our customers;

stop the manufacture, use and sale of products found to be infringing;

incur asset impairment charges;

discontinue the use of processes found to be infringing;

expend significant resources to develop non-infringing products or processes; or

obtain a license to use third party technology.

There can be no assurance that third parties will not attempt to assert infringement claims against us, or our customers, with respect to our products. In addition, our customers may face infringement claims directed to the customer’s products that incorporate our products, and an adverse result could impair the customer’s demand for our products. We have also promised certain of our customers that we will indemnify them in the event they are sued by our competitors for infringement claims directed to the products we supply. Under these indemnification obligations, we may be responsible for future payments to resolve infringement claims against them.

From time to time, we receive correspondence asserting that our products or processes are or may be infringing patents or other intellectual property rights of others. If we believe the assertions may have merit or in other appropriate circumstances, we may take steps to seek to obtain a license or to avoid the infringement. We cannot predict, however, whether a license will be available; that we would find the terms of any license offered acceptable; or that we would be able to develop an alternative solution. Failure to obtain a necessary license or develop an alternative solution could cause us to incur substantial liabilities and costs and to suspend the manufacture of affected products.

~~There are limitations on our ability~~Risks related to ~~protect our intellectual property.~~

~~Our intellectual property position is based in part on patents owned by us~~legal, regulatory, accounting, tax and ~~patents licensed to us. We intend to continue to file patent applications in the future, where appropriate, and to pursue such applications with U.S. and certain foreign patent authorities.~~

Our existing patents are subject to expiration and re-examination and we cannot be sure that additional patents will be issued on any new applications around the covered technology or that our existing or future patents will not be successfully contested by third parties. Also, since issuance of a valid patent does not prevent other companies from using alternative, non-infringing technology, we cannot be sure that any of our patents, or patents issued to others and licensed to us, will provide significant commercial protection, especially as new competitors enter the market.

We periodically discover products that are counterfeit reproductions of our products or that otherwise infringe on our intellectual property rights. The actions we take to establish and protect trademarks, patents and other intellectual property rights may not be adequate to prevent imitation of our products by others, and therefore, may adversely affect our sales and our brand and result in the shift of customer preference away from our products. Further, the actions we take to establish and protect trademarks, patents and other intellectual property rights could result in significant legal expense and divert the efforts of our technical personnel and management, even if the litigation or other action results in a determination favorable to us.

We may be required to recognize a significant charge to earnings if our goodwill or other ~~intangible~~ assets become impaired.

Goodwill and ~~purchased intangible~~other assets ~~with indefinite lives are not amortized, but~~ are reviewed for impairment annually and ~~more frequently~~ when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. ~~We assess the recoverability of the unamortized balance of our finite-lived intangible assets when indicators of potential impairment are present.~~ Factors that may indicate that the carrying value of our goodwill ~~or other intangible assets~~ may not be recoverable include a significant decline in our stock price and market capitalization and slower growth rates in our industry. For other assets such as finite-lived intangible assets and fixed assets, we assess the recoverability of the asset balance when indicators of potential impairment are present. The recognition of a significant charge to earnings in our consolidated financial statements resulting from any impairment of our goodwill or other ~~intangible~~ assets could adversely impact our results of operations.

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The adoption of or changes in government and/or industry policies, standards or regulations relating to the efficiency, performance, vehicle range or other aspects of our products and the products in which they are utilized or integrated may impact the demand for our products. For example, efforts to change, eliminate or reduce industry or regulatorystandards could negatively impact our business. These constraints may be ~~subject to confidential information theft~~eliminated or ~~misuse,~~delayed by legislative action, which ~~could harm our business and results of operations.~~

We face attempts by others to gain unauthorized access to our information technology systems on which we maintain proprietary and other confidential information. Our security measures may be breached as the result of industrial or other espionage actions of outside parties, employee error, malfeasance or otherwise, and as a result, an unauthorized party may obtain access to our systems. Additionally, outside parties may attempt to access our confidential information through other means, for example by fraudulently inducing our employees to disclose confidential information. We actively seek to prevent, detect and investigate any unauthorized access, which sometimes occurs. We might be unaware of any such access or unable to determine its magnitude and effects. The theft and/or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an incident could adversely affect our competitive position and the value of our investment in research and development could be reduced. Our business could be subject to significant disruption and we could suffer monetary or other losses.

~~We are subject to risks related to international sales and purchases.~~

We expect that revenue from international sales will continue to represent a significant portion of our total revenue. As such, a significant slowdown or instability in relevant foreign economies, including economic instability in Europe, or lower investments in new infrastructure could have a negative impact on demand for our ~~sales. We also purchase a portion of the materials included in our products from overseas sources.~~

products. Our international sales and purchases are subject to numerous U.S. and foreign laws and regulations, including, without limitation, tariffs, trade sanctions, trade barriers, trade embargoes, regulations relating to import-export control, technology transfer restrictions, the International Traffic in Arms Regulation promulgated under the Arms Export Control Act, the Foreign Corrupt Practices Actability and the ~~anti-boycott provisions~~ability of ~~the U.S. Export Administration Act. If we fail~~our competitors to ~~comply with these laws and regulations, we~~meet evolving government and/or industry requirements could ~~be liable for administrative, civil or criminal liabilities, and,~~impact competitive dynamics in the ~~extreme case, we could be suspended or debarred from government contracts or have our export privileges suspended, which could have a material adverse effect on our business.~~

International sales and purchases are also subject to a variety of other risks, including risks arising from currency fluctuations, collection issues and taxes. We have entered and may in the future enter into foreign currency derivative financial instruments in an effort to manage or hedge some of our foreign exchange rate risk. We may not be able to engage in hedging transactions in the future, and, even if we do, foreign currency fluctuations may still have a material adverse effect on our results of operations.

~~Our business may be adversely affected by uncertainties in the global financial markets and our or our customers’ or suppliers’ ability to access the capital markets.~~

Global financial markets continue to reflect uncertainty. Given these uncertainties, there could be future disruptions in the global economy, financial markets and consumer confidence. If economic conditions deteriorate unexpectedly, our business and results of operations could be materially and adversely affected. For example, our customers, including our distributors and their customers, may experience difficulty obtaining the working capital and other financing necessary to support historical or projected purchasing patterns, which could negatively affect our results of operations.

Although we believe we have adequate liquidity and capital resources to fund our operations internally and under our existing line of credit, our inability to access the capital markets on favorable terms in the future, or at all, may adversely affect our financial performance. The inability to obtain adequate financing from debt or capital sources in the future could force us to self-fund strategic initiatives or even forego certain opportunities, which in turn could potentially harm our performance.market.

Changes in our effective tax rate may affect our results.

Our future effective tax rates may be affected by a number of factors including:

•the jurisdiction in which profits are determined to be earned and taxed;

~~changes in government administrations, such as the new U.S. presidential administration and U.S. Congress, as well as in the states and countries in which we operate;~~

•potential changes in tax laws proposed by the Biden administration and Democratic controlled Congress or alterations in the interpretation of such tax laws and changes in generally accepted accounting ~~principles;~~principles, for example interpretations and U.S. regulations issued as a result of the significant changes to the U.S. tax law included within the Tax Cuts and Jobs Act of 2017 (the TCJA) and the Coronavirus Aid, Relief and Economic Security Act of 2020;

•the imposition of the proposed global corporate minimum tax rate;

•the resolution of issues arising from tax audits with various authorities;

•changes in the valuation of our deferred tax assets and ~~liabilities. For example, in~~ liabilities;

•the ~~third quarter~~ongoing restructuring of ~~fiscal 2017 we recognized a full valuation allowance against~~ our ~~U.S. deferred tax assets and other deferred charges primarily due to~~existing legal entities, including the restructuring of our ~~three-year cumulative pre-tax loss position in the U.S. and the termination of the Wolfspeed sale transaction, which was anticipated to generate U.S. taxable income;~~Luxembourg holding company;

•adjustments to estimated taxes upon finalization of various tax returns;

•increases in expenses not deductible for tax purposes, including impairment of goodwill in connection with acquisitions;

•changes in available tax credits;

•the recognition and measurement of uncertain tax positions;

•variations in realized tax deductions for certain stock-based compensation awards (such as non-qualified stock options and restricted stock) from those originally anticipated; and

•the repatriation of non-U.S. earnings for which we have not previously provided for ~~U.S.~~ taxes or any changes in legislation that may result in these earnings being taxed, ~~within the U.S.,~~ regardless of our decision regarding repatriation of funds. For example, the TCJA included a one-time tax on deemed repatriated earnings of non-U.S. subsidiaries.

Any significant increase or decrease in our future effective tax rates could impact net ~~loss~~(loss) income for future periods. In addition, the determination of our income tax provision requires complex estimations, significant judgments and significant knowledge and experience concerning the applicable tax laws. To the extent our income tax liability materially differs from our income tax provisions due to factors, including the above, which were not anticipated at the time we estimated our tax provision, our net (loss) income ~~(loss)~~ or cash flows could be affected.

Failure to comply with applicable environmental laws and regulations worldwide could harm our business and results of operations.

The manufacturing, assembling and testing of our products require the use of hazardous materials that are subject to a broad array of environmental, health and safety laws and regulations. Our failure to comply with any of these applicable laws or regulations could result ~~in:~~

in regulatory penalties, fines, legal liabilities and the forfeiture of certain tax benefits;

suspension of production;

alteration of our fabrication, assembly and test processes; and

curtailment of our operations or sales.

In addition, our failure to manage the use, transportation, emission, discharge, storage, recycling or disposal of hazardous materials could subject us to ~~increased~~significant costs or future liabilities. Existing and future environmental laws and regulations could also require us to acquire pollution abatement or remediation equipment, modify our product designs or incur other expenses, such as permit costs, associated with such laws and regulations. Many new materials that we are evaluating for use in our operations may be subject to regulation under existing or future environmental laws and regulations that may restrict our use of one or more of such materials in our manufacturing, assembly and test processes or products. Any of these restrictions could harm our business and results of operations by increasing our expenses or requiring us to alter our manufacturing processes.

New climate change laws and regulations could require us to change our manufacturing processes or procure substitute raw materials that may cost more or be more difficult to procure. Various jurisdictions in which we do business have implemented,

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or in the future could implement or amend, restrictions on emissions of carbon dioxide or other greenhouse gases, limitations or restrictions on water use, regulations on energy management and waste management, and other climate change-based rules and regulations, which may increase our expenses and adversely affect our operating results. We expect increased worldwide regulatory activity relating to climate change in the future. Future compliance with these laws and regulations may adversely affect our business and results of operations.

Our results could vary as a result of the methods, estimates and judgments that we use in applying our accounting policies, including changes in the accounting standards to be applied.

The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on our results (see “Critical Accounting ~~Policies and~~ Estimates” in ~~Management’s~~Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations included~~Operations" in ~~Part II, Item 7 of~~ this Annual Report). Such methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions, and factors may arise over time that lead us to change our methods, estimates and judgments. Changes in those methods, estimates and judgments could significantly affect our results of operations or financial ~~condition.~~condition, such as the change in estimated useful lives of certain assets applied in the first quarter of fiscal 2022.

Likewise, our results may be impacted due to changes in the accounting standards to be applied, such as the ~~increased use of fair value measurement standards and~~ changes in ~~revenue~~convertible debt recognition requirements.

Regulations related to conflict-free minerals may force us to incur additional expenses.

Rules adopted by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act impose annual disclosure and reporting requirements for those companies who may use “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries in their products. We may face challenges with government regulators, our customers and our suppliers if we are unable to sufficiently verify that the metals used in our products are conflict free. Our most recent disclosure regarding our due diligence was filed on May 31, 2022 for calendar year 2021.

General risk factors

Catastrophic events and disaster recovery may disrupt ~~our business.~~business continuity.

A disruption or failure of our systems or operations in the event of a natural disaster or severe weather event, including, but not limited to, earthquakes, wildfires, droughts, flooding, tornadoes, hurricanes or tsunamis, health pandemic, such as an influenza outbreak within our workforce, or man-made catastrophic event could cause delays in completing sales, continuing production or performing other critical functions of our business, particularly if a catastrophic event ~~occurred~~were to occur at our primary manufacturing locations or our subcontractors' locations. Global climate change could result in certain natural disasters occurring more frequently or with greater intensity. Any of these events could severely affect our ability to conduct normal business operations and, as a result, our operating results could be adversely affected. There may also be secondary impacts that are unforeseeable as well, such as impacts to our customers, which could cause delays in new orders, delays in completing sales or even order cancellations.

In order to compete, we must attract, motivate and retain key employees, and our failure to do so could harm our results of operations.

Hiring and retaining qualified executives, scientists, engineers, technical staff, sales personnel and production personnel is critical to our business, and competition for experienced employees in our industry can be intense. As a global company, this issue is not limited to the United States, but includes our other locations such as Europe and Asia. For example, there is substantial competition for qualified and capable personnel, particularly experienced engineers and technical personnel, which may make it difficult for us to recruit and retain qualified employees. If we are unable to staff sufficient and adequate personnel at our facilities, we may experience lower revenue or increased manufacturing costs, which would adversely affect our results of operations.

To help attract, motivate and retain key employees, we use benefits such as stock-based compensation awards. If the value of such awards does not appreciate, as measured by the performance of the price of our common stock or if our stock-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain and motivate employees could be weakened, which could harm our business and results of operations.

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Our stock price may be volatile.

Historically, our common stock has experienced substantial price volatility, particularly as a result of significant fluctuations in our revenue, earnings and margins over the past few years, and variations between our actual financial results and the published expectations of analysts. For example, the closing price per share of our common stock on Nasdaq (until October 1, 2021) and the ~~NASDAQ Global Select Market~~NYSE (on and after October 4, 2021) ranged from a low of ~~$21.12~~$58.67 to a high of ~~$28.98~~$141.87 during the 12twelve months ended June ~~25, 2017.~~26, 2022. If our future operating results or margins are below the expectations of stock market analysts or our investors, our stock price will likely decline.

Speculation and opinions in the press or investment community about our strategic position, financial condition, results of operations or significant transactions can also cause changes in our stock price. In particular, ~~speculation around~~competition in some of the markets we address such as electric vehicles and 5G, the ramp up of our ~~market opportunities for energy efficient lighting~~business, and the effect of tariffs or COVID-19 on our business, may have a dramatic effect on our stock price.

Additionally, actions taken by the option counterparties in the capped call transactions entered into in connection with our 0.25% convertible senior notes due February 15, 2028 (the 2028 Notes) may affect our stock price, ~~especially~~including the potential modifications of their hedge positions by entering into or unwinding various derivatives with respect to our common stock.

We are exposed to fluctuations in the market value of our investment portfolio and in interest rates, and therefore, impairment of our investments or lower investment income could harm our earnings.

We are exposed to market value and inherent interest rate risk related to our investment portfolio. We have historically invested portions of our available cash in fixed interest rate securities such as ~~various~~high-grade corporate debt, commercial paper, municipal bonds, certificates of deposit, government ~~agencies announce~~securities and other fixed interest rate investments. The primary objective of our cash investment policy is preservation of principal. However, these investments are generally not Federal Deposit Insurance Corporation insured and may lose value and/or become illiquid regardless of their ~~planned~~credit rating.

From time to time, we have also made investments in ~~energy efficient technology, including lighting.~~public and private companies that engage in complementary businesses.

We have outstanding debt which could materially restrict our business and adversely affect our financial condition, liquidity and results of operations.

~~Our~~As of June 26, 2022, our indebtedness ~~consists~~consisted of $575.0 million aggregate principal amount of our 1.75% convertible senior notes due May 1, 2026 (the 2026 Notes and collectively with the 2028 Notes, the Outstanding Notes) and $750.0 million aggregate principal amount of the 2028 Notes and potential borrowings from our revolving line of credit. Our ability to pay interest and repay the principal for any outstanding indebtedness under our ~~indebtedness~~line of credit and the Outstanding Notes is dependent upon our ability to manage our business operations and generate sufficient cash flows to service such debt. There can be no assurance that we will be able to manage any of these risks successfully.

The level of our outstanding debt ~~under this line of credit~~ may adversely affect our operating results and financial condition by, among other things:

•increasing our vulnerability to downturns in our business, to competitive pressures and to adverse general economic and industry conditions;

•requiring the dedication of an increased portion of our expected cash flows from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures, research and development and stock repurchases;

•limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

•placing us at a competitive disadvantage compared to our peers that may have less indebtedness than we have by limiting our ability to borrow additional funds needed to operate and grow our business; and

•increasing our interest expense if interest rates increase.

Our line of credit requires us to maintain compliance with ~~certain financial ratios.~~an asset coverage ratio. In addition, our line of credit contains certain restrictions that could limit our ability to, among other things: incur additional indebtedness, dispose of assets, create liens on assets, make acquisitions or engage in mergers or consolidations, and engage in certain transactions with our subsidiaries and affiliates. ~~These~~The Indentures governing the Outstanding Notes require us to repurchase the Outstanding Notes upon certain fundamental changes relating to our common stock, and also prohibit our consolidation, merger, or sale of all or substantially all of our assets except with or to a successor entity assuming our obligations under the Indentures. The restrictions imposed by our line of credit and by the Indentures governing the Outstanding Notes could limit our ability to plan for or react to changing business conditions, or could otherwise restrict our business activities and plans.

Our ability to comply with our loan covenants and the provisions of the Indentures governing the Outstanding Notes may also be affected by events beyond our control and if any of these restrictions or terms is breached, it could lead to an event of default

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under our line of ~~credit.~~credit or the Outstanding Notes. A default, if not cured or waived, may permit acceleration of our indebtedness. In addition, our lenders could terminate their commitments to make further extensions of credit under our line of credit. If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds to pay the accelerated indebtedness or that we will have the ability to refinance accelerated indebtedness on terms favorable to us or at all.

~~Regulations related to conflict-free minerals~~The capped call transactions may ~~force us to incur additional expenses.~~

~~The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve transparency and accountability concerning the supply~~not prevent dilution of ~~minerals originating from the conflict zones~~our common stock upon conversion of the ~~Democratic Republic~~2028 Notes.

In connection with the pricing of ~~Congo (DRC)~~the 2028 Notes, we entered into privately negotiated capped call transactions with the option counterparties. The capped call transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of the 2028 Notes and/or offset any potential cash payments we are required to make in excess of the principal amount of the converted 2028 Notes, as the case may be, upon conversion of the 2028 Notes. If, however, the market price per share of our common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions (currently $212.04), there would nevertheless be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that such market price exceeds the cap price of the capped call transactions.

Our amended and ~~adjoining countries. As~~restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the state courts of North Carolina will be the sole and exclusive forum for substantially all disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a ~~result,~~favorable judicial forum for disputes with us or our directors, officers, or employees or agents.

Our amended and restated bylaws provide that, unless we consent in ~~August 2012~~writing to the ~~SEC established new annual disclosure~~selection of an alternative forum, the sole and ~~reporting requirements~~exclusive forum for ~~those companies who may use “conflict” minerals mined from~~all litigation relating to our internal affairs, including without limitation (i) any derivative action or proceeding brought on behalf of Wolfspeed, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of Wolfspeed to Wolfspeed or our shareholders, (iii) any action asserting a claim arising pursuant to any provision of the ~~DRC~~North Carolina Business Corporation Act (the NCBCA), our restated articles of incorporation, as amended, or our amended and ~~adjoining countries~~restated bylaws, (iv) any action to interpret, apply, enforce, or determine the validity of our restated articles of incorporation, as amended, or our amended and restated bylaws, or (v) any action asserting a claim governed by the internal affairs doctrine, shall be the state courts of North Carolina, or if such courts lack jurisdiction, a federal court located within the State of North Carolina, in ~~their products. Our most recent disclosure regarding our due diligence was~~all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. Any such action filed in ~~May 2017 for calendar year 2016. These requirements could affect the sourcing and availability of certain minerals used in the manufacture of our products. As~~ a ~~result, we may not~~North Carolina state court shall be ~~able to obtain the relevant minerals at competitive prices and there will likely be additional costs associated with complying with the due diligence procedures as required~~designated by the ~~SEC.~~party filing the action as a mandatory complex business case. In ~~addition, because our supply chain is complex,~~any such action where the NCBCA specifies the division or county wherein the action must be brought, the action shall be brought in such division or county. Our amended and restated bylaws also provide that, notwithstanding the foregoing, (x) the provisions described above will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, and (y) unless we ~~may face reputational challenges with our customers~~consent in writing to the selection of an alternative forum, the federal district courts shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action against Wolfspeed or any director, officer, employee, or agent of Wolfspeed and ~~other stakeholders if we are unable~~arising under the Securities Act.

If a court were to ~~sufficiently verify~~find the ~~origins~~choice of ~~all minerals used~~forum provision contained in our ~~products through the due diligence procedures,~~amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs asassociated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a ~~result of changes~~distraction to ~~product, processes or sources of supply as a consequence of these requirements.~~management and other employees.

Item 1B.Unresolved Staff Comments

Not applicable.

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Item 2.Properties

The table below sets forth information with respect to our significant owned and leased facilities as of June 25, 2017. The sizes of the locations represent the approximate gross square footage of each site’s buildings.

Size (approximate gross square footage)
Location
Segment Utilization¹
Total Production
Facility
Services and
Warehousing

Administrative
Function

Housing /
Other
Owned Facilities
Durham, NC All 966,844
536,169
83,860
346,815
—
Research Triangle Park, NC 3 203,995
90,613
62,855
50,527
—
Racine, WI 1 802,845
160,000
418,000
224,845
—
Huizhou, China 2 823,951
332,271
116,568
41,764
333,348
Total owned 2,797,635
1,119,053
681,283
663,951
333,348

Leased Facilities
Durham, NC 1 189,430
15,200
167,584
6,646
—
Laredo, TX 1 100,545
—
97,545
3,000
—
Goleta, CA 1,2 25,623
—
1,882
23,741
—
Yorkville, WI 1 79,016
—
77,316
1,700
—
Pleasant Prairie, WI 1
147,877

—

145,477

2,400

—
Fayetteville, AR 3 26,265
10,956
—
15,309

Sesto Fiorentino, Italy 1,2 63,670
20,672
24,998
18,000
—
Hong Kong All 38,913
—
8,958
29,955
—
Misc. sales and support offices All 66,189
—
15,477
50,712
—
Total leased 737,528
46,828
539,237
151,463
—

Total gross square footage 3,535,163
1,165,881
1,220,520
815,414
333,348

¹ ~~Segments listed in the “Segment Utilization” column above are identified as follows: 1) Lighting Products; 2) LED Products and 3) Wolfspeed.~~

~~In the United States, our~~Our corporate headquarters, ~~as well as our~~ primary research and development operations, and primary manufacturing operations are located atwithin the Durham, North Carolina facilities that we ~~own. These Durham facilities~~own and sit on ~~149~~141 acres of ~~land that we own.~~ owned land.

Our ~~power and RF~~ products are ~~primarily~~also produced at our owned manufacturing facility located in Research Triangle Park (RTP), North ~~Carolina. This~~Carolina, and at leased facilities in Morgan Hill, California and Fayetteville, Arkansas. Our RTP facility sits on 55 acres of owned land.

In addition, we recently opened a new Silicon Carbide device fabrication facility on 55 acres of leased land ~~that we own. Domestically,~~in Marcy, New York, to expand capacity for our ~~lighting~~Silicon Carbide device business.

Some of our products are ~~primarily~~also produced at ~~our owned facility in Racine, Wisconsin, which sits on 33 acres of land that we own, and a leased facility in Durham, North Carolina.~~

~~LED products are produced at our owned~~contract manufacturing facilities ~~located in Huizhou, Guangdong Province, China.~~throughout Asia. We ~~also own dormitories for housing~~maintain captive lines at some of our Chinese employees near and adjacent to the owned manufacturing facilities. The owned manufacturing facilities, dormitories, and support buildings are located on land that is leased from the Chinese government through two leases. The first land lease is for twelve acres that expires in June 2057 and supports the manufacturing facilities. The second land lease is for five acres that expires in December 2082 and is used for dormitory buildings.contract manufacturers.

We also maintain sales and support offices ~~through our subsidiaries,~~ in leased office premises in North America, Asia, and Europe. ~~In addition, we lease a facility in Goleta, California that is used for research~~

Details on our significant owned and ~~development and administrative functions.~~leased facilities as of June 26, 2022 are as follows:

Location

Principal Use

Approximate square footage

Owned Facilities

Durham, North Carolina

Administrative, Production and R&D

995,000

Marcy, New York

Production

557,000

Research Triangle Park, North Carolina

Production

189,000

Leased Facilities

Morgan Hill, California

Production

84,000

Fayetteville, Arkansas

R&D/Production

33,000

Item 3.Legal Proceedings

The information required by this item is set forth under Note ~~13,~~15, “Commitments and Contingencies,” in our consolidated financial statements included in Item 8 of this Annual Report and is incorporated herein by reference.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Common Stock Market Information

Our common stock is traded on the ~~NASDAQ Global Select Market and is quoted~~New York Stock Exchange under the trading symbol ~~CREE.~~WOLF. There were ~~324~~239 holders of record of our common stock as of August ~~18, 2017. The following table sets forth, for the quarters indicated, the high and low closing sales prices~~17, 2022. Holders of record are defined as ~~reported by NASDAQ.~~

Fiscal 2017 Fiscal 2016
High Low High Low
First Quarter
$28.98

$23.19

$27.56

$23.95
Second Quarter 27.58
21.12
28.16
22.12
Third Quarter 28.83
25.56
32.44
24.07
Fourth Quarter 27.24
21.70
30.14
22.43

~~We have never paid cash dividends on~~those shareholders whose shares are registered in their names in our ~~common~~ stock records and do not ~~anticipate that we will do so~~include beneficial owners of common stock whose shares are held in the foreseeable future. Our credit agreement with Wells Fargo Bank, National Association and other lenders party thereto, contains certain dividend distribution restrictions. Applicable state laws may also limit the paymentnames of ~~dividends. Our present policy is to retain earnings, if any, to provide funds to invest in our business.~~

brokers, dealers or clearing agencies.

Stock Performance Graph

The following information in this Item 5 of this Annual Report on Form 10-K is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such filing.

The following graph ~~compares~~and related table compare the cumulative total return on our common stock with the cumulative total returns of the ~~NASDAQ~~Nasdaq Composite Index, ~~and~~ the ~~NASDAQ Electronic Components Index for the five-year period commencing June 24, 2012. The stock price performance shown on the graph below is not necessarily indicative of future price performance.~~

Comparison of Five-Year Cumulative Total Return*

~~Among Cree, Inc., the NASDAQ Composite Index and the NASDAQ Electronic Components Index~~

* Assumes (1) $100 invested on June 24, 2012 in Cree, Inc. Common Stock, the NASDAQ Composite Index and the NASDAQNasdaq Electronic Components Index, and ~~(2)~~ the ~~immediate~~Philadelphia Semiconductor Index, assuming an investment of $100.00 on June 25, 2017 and the reinvestment of ~~all~~ dividends. The Philadelphia Semiconductor Index has replaced the Nasdaq Electronic Components Index in this analysis as data from the Nasdaq Electronic Components Index is no longer accessible. The use of the Philadelphia Semiconductor Index is aligned with Wolfspeed's transition to a more focused semiconductor company. Data from the Nasdaq Electronic Components Index has been included through June 27, 2021.


	6/25/2017	6/24/2018	6/30/2019	6/28/2020	6/27/2021	6/26/2022
Wolfspeed, Inc.	$100.00	$188.01	$221.62	$227.77	$388.92	$281.66
Nasdaq Composite Index	100.00	124.09	130.59	160.79	238.37	194.02
Nasdaq Electronic Components Index	100.00	141.67	141.92	174.03	261.89	—
Philadelphia Semiconductor Index	100.00	128.11	139.31	186.85	319.39	271.29

6/24/2012 6/30/2013 6/29/2014 6/28/2015 6/26/2016 6/25/2017
Cree, Inc.
$100.00

$261.06

$198.28

$110.43

$94.85

$100.60
NASDAQ Composite Index 100.00
119.38
156.20
182.53
167.12
225.01
NASDAQ Electronic Components Index 100.00
118.23
150.86
166.70
163.71
232.96

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Sale of Unregistered Securities

There were no unregistered securities sold during fiscal ~~2017~~.2022.

~~Stock Repurchase Program~~Dividends

On August 24, 2016, our Board of Directors approved our fiscal 2017 stock repurchase program authorizing us to repurchase shares of common stock having an aggregate purchase price not exceeding $300 million for all purchases from August 24, 2016 throughIn the ~~expiration of the program on June 25, 2017. There were no shares repurchased under the stock repurchase program in the~~ ~~fourth~~ ~~quarter of fiscal~~ ~~2017~~.

~~Since the inception of our stock repurchase program in January 2001 through June 25, 2017,~~past, we have ~~repurchased 38.7 million shares of~~not declared or paid cash dividends on our common stock. We do not expect to pay dividends on our common stock ~~at an average price~~for the foreseeable future. Instead, we anticipate that all of ~~$28.66 per share with an aggregate value~~our earnings, if any, will be used for the operation and growth of ~~$1.1 billion. The repurchase program could~~our business. Any future determinations to declare cash dividends would be ~~implemented through open market or privately negotiated transactions at~~subject to the discretion of our ~~management.~~ board of directors and would depend upon various factors, including our results of operations, financial condition and capital requirements, restrictions that may be imposed by applicable law and our indebtedness, and other factors deemed relevant by our board of directors.

On June 14, 2017, our Board of Directors approved our fiscal 2018 stock repurchase program authorizing us to repurchase shares of common stock having an aggregate purchase price not exceeding $200 million for all purchases from June 26, 2017 through the expiration of the program on June 24, 2018.

Item 6.~~Selected Financial Data~~

~~The consolidated statement of (loss) income data set forth below with respect to the fiscal years ended~~ ~~June 25, 2017~~, ~~June 26, 2016, and~~ ~~June 28, 2015~~ ~~and the consolidated balance sheet data at~~ ~~June 25, 2017~~ ~~and~~ ~~June 26, 2016~~ are derived from, and are qualified by reference to, the audited consolidated financial statements included in Item 8 of this Annual Report and should be read in conjunction with those financial statements and notes thereto. The consolidated statement of income data for the fiscal years ended ~~June 29, 2014~~ ~~and~~ ~~June 30, 2013~~ ~~and the consolidated balance sheet data at~~ ~~June 28, 2015~~, ~~June 29, 2014, and~~ ~~June 30, 2013~~ ~~are derived from audited consolidated financial statements not included herein.~~

~~Selected Consolidated Financial Data~~

~~(In thousands, except per share data)~~Reserved

Fiscal Years Ended
June 25,
2017 June 26,
2016 June 28,
2015 June 29,
2014 June 30,
2013
Consolidated Statement of (Loss) Income
Revenue, net
$1,473,000

$1,616,627

$1,632,505

$1,647,641

$1,385,982
Operating (loss) income (18,672 ) (10,471 ) (73,550 ) 133,236
95,454
Net (loss) income (98,118 ) (21,536 ) (64,692 ) 123,490
86,227
(Loss) earnings per share
Basic
($1.00 )
($0.21 )
($0.57 )
$1.02

$0.74
Diluted
($1.00 )
($0.21 )
($0.57 )
$1.00

$0.73
Weighted average shares used in per share calculation:
Basic 98,487
101,783
113,022
120,623
116,621
Diluted 98,487
101,783
113,022
122,914
117,979

June 25,
2017 June 26,
2016 June 28,
2015 June 29,
2014 June 30,
2013
Consolidated Balance Sheet Data
Total cash, cash equivalents and short-term investments
$610,938

$605,305

$713,191

$1,162,466

$1,023,915
Working capital 888,607
933,708
1,053,464
1,467,236
1,308,355
Total assets 2,649,867
2,766,060
2,948,033
3,338,981
3,048,062
Total long-term liabilities 215,039
175,237
231,295
45,943
37,061
Total shareholders’ equity 2,222,805
2,367,824
2,461,952
2,986,383
2,803,590

Table of Contents

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

The following discussion is designed to provide a better understanding of our audited consolidated financial statements and notes thereto, 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 our consolidated financial statements included in Item 8 of this Annual Report. 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.

~~Overview~~

~~Cree, Inc. (Cree, we, our, or us) is a leading innovator of lighting-class light emitting diode (LED) products, lighting products~~ Unless otherwise noted, the following information and wide bandgap semiconductor products for power and radio-frequency (RF) applications. Our products are targeted for applications such as indoor and outdoor lighting, video displays, transportation, electronic signs and signals, power supplies, inverters and wireless systems. As discussed more fully below, we operate in three reportable segments: Lighting Products, LED Products and Wolfspeed.

~~Our lighting products primarily consist of LED lighting systems and lamps. We design, manufacture and sell lighting fixtures and lamps for the commercial, industrial and consumer markets.~~

Our LED products consist of LED chips and LED components. Our LED products enable our customers to develop and market LED-based products for lighting, video screens, automotive and other industrial applications.

Our Wolfspeed business consists of silicon carbide (SiC) materials, power devices and RF devices based on wide bandgap semiconductor materials such as SiC and gallium nitride (GaN). Our materials products and power devices are used in solar, electric vehicles, motor drives, power supplies and transportation applications. Our RF devices are used in military communications, radar, satellite and telecommunication applications.

As discussed more fully in Note 1, “Business,” in our consolidated financial statements included in Item 8 of this Annual Report, on July 13, 2016, we executed a definitive agreement to sell the Wolfspeed business to Infineon Technologies AG (Infineon). Beginning in July 2016, the Company classified the results of the Wolfspeed business as discontinued operations in the Company’s consolidated statements of loss for all periods presented and classified the related assets and liabilities associated with the discontinued operations as held for sale in the consolidated balance sheets. On March 6, 2017, the definitive agreement with Infineon was terminated. As a result of the termination of the agreement, we have reclassified the results of the Wolfspeed business as continuing operations in our consolidated statements of loss, and presented it as a separate reportable segment, for all periods presented. Additionally, the related assets and liabilities associated with the discontinued operations were reclassified as held and used in the consolidated balance sheets for all periods presented.

The majority of our products are manufactured at our production facilities located in North Carolina, Wisconsin and China. We also use contract manufacturers for certain products and aspects of product fabrication, assembly and packaging. We operate research and development facilities in North Carolina, Arkansas, California, Wisconsin, India, Italy and China (including Hong Kong).

Cree, Inc. is a North Carolina corporation established in 1987, and our headquarters are in Durham, North Carolina. For further information about our consolidated revenue and earnings, please see our consolidated financial statements included in Item 8 of this Annual Report.

~~Reportable Segments~~

~~Our three reportable segments are:~~

~~Lighting Products~~

~~LED Products~~

~~Wolfspeed~~

Reportable segments are components of an entity that have separate financial data that the entity’s Chief Operating Decision Maker (CODM) regularly reviews when allocating resources and assessing performance. Our CODM is the Chief Executive Officer.

Our CODM does not review inter-segment transactions when evaluating segment performance and allocating resources to each segment, and inter-segment transactions are not included in our segment revenue disclosure. As such, total segment revenue is equaldiscussion relates to our ~~consolidated revenue.~~continuing operations.

Our CODM reviews gross profit as the lowest and only level of segment profit. As such, all items below gross profit in the Consolidated Statements of Loss must be included to reconcile the consolidated gross profit to our consolidated loss before income taxes.

~~For financial results by reportable segment, please refer to Note 14, “Reportable Segments,” in our consolidated financial statements included in Item 8 of this Annual Report.~~

Industry Dynamics and Trends

There are a number of industry factors that affect our business which include, among others:

•COVID-19 Pandemic. The global health crisis caused by COVID-19 and its resurgences has impacted and may continue to negatively impact global economic activity, which, despite progress in vaccination efforts, remains uncertain and cannot be predicted with confidence. In addition, variants of COVID-19 continue to emerge. While vaccines have proven effective in preventing serious illnesses and hospitalizations, there is no assurance that such vaccines will remain effective against new variants or that the protection conferred by existing vaccines will not wane over time. Since its beginning in the early months of 2020, the COVID-19 pandemic has affected us in a number of ways including, but not limited to, the impact on employees becoming ill, quarantined, or otherwise unable to work or travel due to illness or governmental restriction, the impact on customers and their related demand and/or purchases, the impact on our suppliers' and contract manufacturers' ability to fulfill our orders on a timely basis, and the overall impact of the aforementioned items that could cause output challenges and increased costs. The full extent to which the COVID-19 pandemic may impact our results of operations or liquidity remains uncertain. Our operations have experienced, and likely will continue to experience, supply, labor, demand and output challenges. We continue to monitor the impact that the COVID-19 pandemic is having on our business, the semiconductor industry, and the economies in which we operate.

•Overall Demand for Products and Applications ~~using LEDs, SiC power devices~~Using Our Wolfspeed Materials and ~~GaN RF devices.~~Devices. Our potential for growth depends significantly on the ~~continued~~ adoption of ~~LEDs, the adoption of SiC~~Silicon Carbide and GaN ~~substrate~~materials and device products in the power and RF markets, the continued use of silicon devices in the RF telecommunications market and our ability to win new designs for these applications. Demand also fluctuates based on various market cycles, continuously evolving industry supply chains, trade and tariff terms, inflationary impacts, as well as evolving competitive dynamics in each of the respective markets. These uncertainties make demand difficult to forecast for us and our customers.

Lately, we have seen demand increase across all our product lines, which we believe reflects the value that the industry places on a transition to Silicon Carbide materials and devices. Particularly, we have seen significantly higher demand for our power products as the world has continued to focus on and adopt higher efficiency energy solutions, including electrical vehicle (EV) and related technologies. We believe these trends could have a significant positive impact on revenues in future periods as we increase capacity to meet increased demand.

•Supply Constraints. The semiconductor industry has experienced supply constraints for certain items. While we have successfully managed through challenges relating to obtaining certain necessary raw materials and production and processing equipment thus far, we expect the supply situation for these items to remain tight for at least the next few quarters. In addition, the ongoing military conflict between Russia and Ukraine may further exacerbate supply constraints. The current high demand for our products has also led to supply constraints for our customers. We are working closely with our customer base to best match our supply to their demand. We have taken steps to provide continuity to our customers, to the extent possible, although we expect that constraints may continue to limit our shipments in the near term.

•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 among the countries where we do business. Changes in trade policy such as the imposition or extension of tariffs or export bans to specific customers or countries could reduce or limit demand for our products in certain markets.

•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 equipment. Product pricing pressures exist as market participants often undertake pricing strategies to gain or protect market share, increase the utilization of their production capacity and open new applications to the LED, lighting, power and RF markets we serve.facilities. To remain competitive, market participants must continuously increase product performance, reduce costs and develop improved ways to serve their customers. To address these competitive pressures, we ~~invest~~have invested in research and development activities to support new product development, lower product costs and deliver higher levels of 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.

~~The accompanying notes are an integral part~~

Table of ~~the consolidated financial statements.~~

~~CREE, INC.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS~~

Contents

Fiscal Years Ended
June 25,
2017 June 26,
2016 June 28,
2015
(In thousands)
Net loss
($98,118 )
($21,536 )
($64,692 )
Other comprehensive (loss) income:
Currency translation loss, net of tax benefit of $0, $0 and $0, respectively (153 ) (362 ) (3,563 )
Net unrealized (loss) gain on available-for-sale securities, net of tax (expense) benefit of $0, ($1,936), and $1,284, respectively (2,666 ) 3,292
(2,044 )
Other comprehensive (loss) income (2,819 ) 2,930
(5,607 )
Comprehensive loss
($100,937 )
($18,606 )
($70,299 )

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

~~CREE, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Fiscal Years Ended

June 25,
2017 June 26,
2016 June 28,
2015
(In thousands)
Cash flows from operating activities:
Net loss
($98,118 )
($21,536 )
($64,692 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 150,508
159,145
173,323
Stock-based compensation 47,725
58,728
64,299
Excess tax benefit from share-based payment arrangements 2
(12 ) (1,395 )
Impairment of acquisition-related intangibles —
—
254
Loss on disposal or impairment of long-lived assets 2,521
16,913
47,722
Amortization of premium/discount on investments 5,427
5,314
6,152
(Gain)/loss on equity method investment (7,543 ) 15,357
22,624
Foreign exchange (gain)/loss on equity method investment (2,644 ) 2,057
347
Deferred income taxes 74,918
(15,839 ) (21,346 )
Changes in operating assets and liabilities, net of effect of acquisition:
Accounts receivable, net 16,955
21,800
37,853
Inventories 17,918
(23,269 ) 3,528
Prepaid expenses and other assets 17,438
8,103
(11,112 )
Accounts payable, trade (4,818 ) (12,090 ) (44,796 )
Accrued salaries and wages and other liabilities (4,389 ) (11,355 ) (31,507 )
Net cash provided by operating activities 215,900
203,316
181,254
Cash flows from investing activities:
Purchases of property and equipment (86,928 ) (120,018 ) (206,160 )
Purchases of patent and licensing rights (12,405 ) (14,443 ) (19,491 )
Proceeds from sale of property and equipment 1,392
5,296
285
Purchases of short-term investments (200,405 ) (220,823 ) (349,802 )
Proceeds from maturities of short-term investments 125,922
312,524
419,802
Proceeds from sale of short-term investments 27,174
42,074
219,795
Purchase of other long-term investments —
—
(80,566 )
Purchase of acquired business, net of cash acquired —
(12,513 ) —
Net cash used in investing activities (145,250 ) (7,903 ) (16,137 )
Cash flows from financing activities:
Payment of acquisition-related contingent consideration (2,775 ) —
—
Proceeds from long-term debt borrowings 468,000
653,000
695,000
Payments on long-term debt borrowings (483,000 ) (693,000 ) (495,000 )
Net proceeds from issuance of common stock 17,716
21,682
36,929
Excess tax benefit from share-based payment arrangements (2 ) 12
1,395
Repurchases of common stock (104,017 ) (149,553 ) (549,677 )
Net cash used in financing activities (104,078 ) (167,859 ) (311,353 )
Effects of foreign exchange changes on cash and cash equivalents (129 ) (1,110 ) (878 )
Net (decrease) increase in cash and cash equivalents (33,557 ) 26,444
(147,114 )
Cash and cash equivalents:
Beginning of period 166,154
139,710
286,824
End of period
$132,597

$166,154

$139,710
Supplemental disclosure of cash flow information:
Cash paid for interest
$3,588

$3,110

$1,002
Cash paid for income taxes
$8,494

$14,722

$28,834
Significant non-cash transactions:
Accrued property and equipment
$10,173

$3,721

$24,243

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

~~CREE, INC.~~

~~CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY~~

Common Stock
Additional
Paid-in
Capital

(Accumulated deficit)/Retained
Earnings

Accumulated
Other
Comprehensive
Income

Total
Shareholders’
Equity

Number
of Shares
Par Value
(In thousands)
Balance at June 29, 2014 120,114

$149

$2,190,011

$784,818

$11,405

$2,986,383
Net loss —
—
—
(64,692 ) —
(64,692 )
Currency translation loss, net of tax benefit of $0 —
—
—
—
(3,563 ) (3,563 )
Unrealized loss on available-for-sale securities, net of tax benefit of $1,284 —
—
—
—
(2,044 ) (2,044 )
Comprehensive income (70,299 )
Income tax expense from stock option exercises —
—
(1,010 ) —
—
(1,010 )
Repurchased shares (16,034 ) (20 ) —
(549,657 )

(549,677 )
Stock-based compensation —
—
64,720
—
—
64,720
Exercise of stock options and issuance of shares 1,427
2
31,833
—
—
31,835
Balance at June 28, 2015 105,507

$131

$2,285,554

$170,469

$5,798

$2,461,952
Net loss —
—
—
(21,536 ) —
(21,536 )
Currency translation loss, net of tax benefit of $0 —
—
—
—
(362 ) (362 )
Unrealized gain on available-for-sale securities, net of tax expense of $1,936 —
—
—
—
3,292
3,292
Comprehensive income (18,606 )
Income tax expense from stock option exercises —
—
(3,525 ) —
—
(3,525 )
Repurchased shares (5,842 ) (7 ) —
(149,546 ) —
(149,553 )
Stock-based compensation —
—
58,425
—
—
58,425
Exercise of stock options and issuance of shares 1,164
1
19,130
—
—
19,131
Balance at June 26, 2016 100,829

$125

$2,359,584

($613 )
$8,728

$2,367,824
Net loss —
—
—
(98,118 ) —
(98,118 )
Currency translation loss, net of tax benefit of $0 —
—
—
—
(153 ) (153 )
Unrealized loss on available-for-sale securities, net of tax expense of $0 —
—
—
—
(2,666 ) (2,666 )
Comprehensive loss (100,937 )
Income tax expense from stock option exercises —
—
(253 ) —
—
(253 )
Repurchased shares (4,460 ) (6 ) —
(104,011 )

(104,017 )
Stock-based compensation —
—
46,813
—
—
46,813
Exercise of stock options and issuance of shares 1,305
2
13,373
—
—
13,375
Balance at June 25, 2017 97,674

$121

$2,419,517

($202,742 )
$5,909

$2,222,805

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

~~CREE,~~WOLFSPEED, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

Note 1 – Business

Overview

~~Cree,~~Wolfspeed, Inc. (the Company), formerly known as Cree, Inc., is ~~a leading~~an innovator of ~~lighting-class light emitting diode (LED) products, lighting products and~~ wide bandgap ~~semiconductor products~~semiconductors, focused on Silicon Carbide and gallium nitride (GaN) materials and devices for power and radio-frequency (RF) applications. The ~~Company's products are targeted for applications such as indoor~~Company’s product families include Silicon Carbide and ~~outdoor lighting, video displays, transportation, electronic signs and signals, power supplies, inverters and wireless systems.~~

The Company's lighting products primarily consist of LED lighting systems and lamps. The Company designs, manufactures and sells lighting fixtures and lamps for the commercial, industrial and consumer markets.

The Company's LED products consist of LED chips and LED components. The Company's LED products enable its customers to develop and market LED-based products for lighting, video screens, automotive and other industrial applications.

~~The Company’s Wolfspeed business consists of silicon carbide (SiC)~~GaN materials, power devices and RF devices ~~based on wide bandgap semiconductor materials~~targeted for various applications such as ~~SiC~~electric vehicles, fast charging, 5G, renewable energy and ~~gallium nitride (GaN)~~storage, and aerospace and defense.

Previously, the Company designed, manufactured and sold specialty lighting-class light emitting diode (LED) products targeted for use in indoor and outdoor lighting, electronic signs and signals and video displays. As discussed more fully below in Note 3, “Discontinued Operations,” on March 1, 2021, the Company completed the sale of certain assets and subsidiaries comprising its former LED Products segment (the LED Business Divestiture) to SMART Global Holdings, Inc. (SGH) and its wholly owned newly-created acquisition subsidiary CreeLED, Inc. (CreeLED and collectively with SGH, SMART).

Unless otherwise noted, discussion within these notes to the consolidated financial statements relates to the Company's continuing operations.

The Company’s materials products and power devices are used in ~~solar,~~ electric vehicles, motor drives, power supplies, solar and transportation applications. The Company’s materials products and RF devices are used in military communications, radar, satellite and telecommunication applications.

On October 4, 2021, the Company changed its corporate name from Cree, Inc. to Wolfspeed, Inc. In addition, the Company transferred the listing of its common stock to the New York Stock Exchange (NYSE) from The Nasdaq Global Select Market (Nasdaq). The Company ceased trading as a Nasdaq-listed company at the end of the day on October 1, 2021 and commenced trading as a NYSE-listed company at market open on October 4, 2021 under the new ticker symbol ‘WOLF’.

The majority of the Company's products are manufactured at its production facilities located in North Carolina, ~~Wisconsin~~California and ~~China.~~Arkansas. The Company also uses contract manufacturers for certain products and aspects of product fabrication, assembly and packaging. Additionally, the Company recently opened its Silicon Carbide device fabrication facility in New York. The Company operates research and development facilities in North Carolina, California, Arkansas, ~~California, Wisconsin, India, Italy~~Arizona and ~~China (including Hong Kong).~~New York.

~~Cree,~~Wolfspeed, Inc. is a North Carolina corporation established in 1987, and ~~is headquartered~~its headquarters are in Durham, North Carolina.

~~The Company's three reportable segments are:~~

~~Lighting Products~~

~~LED Products~~

~~Wolfspeed~~

~~For financial results by reportable segment, please refer to Note 14, “Reportable Segments.”~~

~~Termination~~Table of ~~Wolfspeed Sale Transaction~~Contents

On July 13, 2016, the Company executed an Asset Purchase Agreement (the APA) with Infineon, which was approved by both the Company’s Board of Directors and Infineon’s Supervisory Board. Pursuant to the APA, the Company agreed to sell to Infineon, and Infineon agreed to (i) purchase from the Company (a) the assets comprising the Company’s power and RF product lines (formerly the Company's Power and RF Products segment), including manufacturing facilities and equipment, inventory, intellectual property rights, contracts, real estate, and the outstanding equity interests of Cree Fayetteville, Inc, one of the Company’s wholly-owned subsidiaries, and (b) certain related portions of the Company’s SiC materials and gemstones business previously included within the LED Products segment and (ii) assume certain liabilities related to the Wolfspeed business.

Beginning in July 2016, the Company classified the results of the Wolfspeed business as discontinued operations in the Company’s consolidated statements of loss for all periods presented. The Company also ceased recording depreciation and amortization of long-lived assets of the Wolfspeed business upon classification as discontinued operations in July 2016. Additionally, the related assets and liabilities associated with the discontinued operations were classified as held for sale in the consolidated balance sheets.

On February 16, 2017, the Company announced that the APA would be terminated as the Company and Infineon were unable to identify alternatives to modify the transaction to address the national security concerns of, and obtain approval from, the Committee on Foreign Investment in the United States, one of the closing conditions under the APA. On March 6, 2017, the Company and Infineon entered into a Termination Agreement pursuant to which the APA was terminated. Pursuant to the APA and the Termination Agreement, Infineon paid the Company a termination fee of $12.5 million in cash on March 10, 2017, which is included in Wolfspeed transaction termination fee in the Company’s consolidated statements of loss and in net cash provided by operating activities in the Company’s consolidated statements of cash flows.

As a result of the announcement of the termination of the APA and the Company’s decision to continue operating the Wolfspeed business, as of February 16, 2017, the Company reclassified the results of the Wolfspeed business as continuing operations in the Company’s consolidated statements of loss, and presented it as a separate reportable segment for all periods presented. Additionally, the related assets and liabilities of the Wolfspeed business were reclassified as held and used in the consolidated balance sheets for all periods presented. The long-lived assets were measured at the lower of their carrying amount before being classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had the assets been continuously classified as held and used, or their fair value at the date of the subsequent decision not to sell.

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany accounts and transactions have been ~~eliminated in consolidation.~~eliminated.

Fiscal Year

The Company’s fiscal year is a 52 or 53~~-week~~53-week period ending on the last Sunday in the month of June. The Company’s ~~2017, 2016~~2022, 2021 and ~~2015~~2020 fiscal years were 52-week fiscal years. The ~~Company’s~~ ~~2018~~Company's 2023 fiscal year will be a 52-week fiscal year. The next 53-week fiscal year will be for the Company's 2024 fiscal year.

Reclassifications

Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported net loss or shareholders’ equity.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities. The Company evaluates its estimates on an ongoing basis, including those related to revenue recognition, ~~product warranty obligations,~~ valuation of inventories, tax related contingencies, valuation of stock-based compensation, valuation of long-lived and intangible assets, other contingencies and litigation, among others. The Company generally bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates.

Certain accounting matters that generally require consideration of forecasted financial information were assessed regarding impacts from the COVID-19 pandemic as of June 26, 2022 and through the date of this Annual Report using reasonably available information as of those dates. The accounting matters assessed included, but were not limited to, allowance for doubtful accounts, the carrying value of goodwill and other long-lived tangible and intangible assets, the potential impact to earnings of unrealized losses on investments and valuation allowances for deferred tax assets. While the assessments resulted in no material impacts to the consolidated financial statements as of June 26, 2022 and June 27, 2021 and for the years ended June 26, 2022, June 27, 2021 and June 28, 2020, the Company believes the full impact of the pandemic remains uncertain and will continue to assess if ongoing developments related to the pandemic may cause future material impacts to its consolidated financial statements.

Change in Estimate

As a result of the LED Business Divestiture and the Company's continued investment in 200mm technology, the Company evaluated the useful lives applied to certain machinery and equipment assets by considering industry standards and reviewing the assets' historical and estimated future use. In the first quarter of fiscal 2022, the Company increased the expected useful lives of these assets by two to five years to more closely reflect the estimated economic lives of those assets. This change in estimate was applied prospectively effective for the first quarter of fiscal 2022 and resulted in a decrease in depreciation expense of $33.3 million for the fiscal year ended June 26, 2022. Approximately $10.4 million of the decrease in year-to-date depreciation expense resulted in a net reduction of inventory as of June 26, 2022 and the remaining $22.9 million resulted in an improvement in both loss before income taxes and net loss, of which $19.6 million related to an improvement in gross profit. This change in estimate resulted in an improvement in year-to-date basic and diluted loss per share of $0.19 per share.

Segment Information

~~U.S. GAAP requires segmentation based on an entity’s internal organization and~~The Company operates as a single reporting ~~of revenue and operating income based upon internal accounting methods commonly referred to as~~segment. Accordingly, the ~~“management approach.”~~Chief Operating ~~segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker~~Decision Maker (CODM)~~, or decision making group, in deciding how to allocate~~ allocates resources and ~~in assessing performance.~~assesses performance on a consolidated basis. The ~~Company’s~~Company's identified CODM is ~~its~~the Chief Executive Officer. ~~The Company has determined that it currently has~~ ~~three~~ ~~operating and reportable segments.~~

Table of Contents

Cash and Cash Equivalents

Cash and cash equivalents consist of unrestricted cash accounts and highly liquid investments with an original maturity of three months or less when purchased. Cash and cash equivalents are stated at cost, which approximates fair value. The Company holds cash and cash equivalents at several major financial institutions, which often exceed insurance limits set by the Federal Deposit Insurance Corporation (FDIC). The Company has not historically experienced any losses due to such concentration of credit risk.

Accounts Receivable

For product revenue, the Company typically invoices its customers at the time of shipment for the sales order value of products shipped. Accounts receivable are recognized at the invoiced amount and are not subject to any interest or finance charges. The Company does not have any off-balance sheet credit exposure related to any of its customers.

Allowance for Doubtful Accounts

On June 29, 2020, the first day of the 2021 fiscal year, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standard Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13) using the modified retrospective transition method, which replaced the incurred loss impairment methodology in U.S. GAAP with a methodology that reflects expected credit losses. Upon adoption, prior period balances were not adjusted and the Company determined no cumulative-effect adjustment to retained earnings as of June 29, 2020 was required.

Under this new standard, expected credit losses for the Company's receivables are evaluated on a collective (pool) basis and aggregated on the basis of similar risk characteristics. These aggregated risk pools are reassessed at each measurement date. A combination of factors is considered in determining the appropriate estimate of expected credit losses, including broad-based economic indicators as well as customers' financial strength, credit standing, payment history and any historical defaults.

Investments

Investments in certain securities may be classified into three categories:

•Held-to-Maturity – Debt securities that the entity has the positive intent and ability to hold to maturity, which are reported at amortized cost.

•Trading – Debt ~~and equity~~ securities that are bought and held principally for the purpose of selling in the near term, which are reported at fair value, with unrealized gains and losses included in earnings.

•Available-for-Sale – Debt ~~and equity~~ securities not classified as either held-to-maturity or trading securities, which are reported at fair value with unrealized gains or losses excluded from earnings and reported as a separate component of shareholders’ equity. However, as explained further below, the Company evaluates each individual security in an unrealized loss position for expected credit losses and if it is evaluated as having an expected credit loss, unrealized losses of that security are included in earnings.

The Company reassesses the appropriateness of the classification (i.e., held-to-maturity, trading or available-for-sale) of its investments at the end of each reporting period.

~~When~~Upon adoption of ASU 2016-13, available-for-sale debt securities in an unrealized loss position at each measurement date are individually evaluated for expected credit losses. The Company evaluates whether the ~~fair value of~~unrealized loss is due to market factors or changes in the investment holdings' credit rating. An expected credit loss will be recorded when an investment ~~declines~~in an unrealized loss position is determined to have lost value from a decreased credit rating. The Company does not record an allowance for credit losses on receivables related to accrued interest. For the fiscal years ended June 26, 2022 and June 27, 2021, no allowance for credit losses was recorded.

Before the adoption of ASU 2016-13, the Company evaluated investments that experienced a decline below its original cost ~~the Company considers all available evidence~~ to ~~evaluate~~determine whether the decline is other-than-temporary. Among other things, the Company ~~considers~~considered the duration and extent of the decline and the economic factors ~~influencing~~that influenced the capital markets. For the fiscal ~~years~~year ended ~~June 25, 2017~~, ~~June 26, 2016, and~~ June 28, ~~2015~~,2020, the Company had no other-than-temporary declines below the cost basis of its investments.

The Company utilizes specific identification in computing realized gains and losses on the sale of investments. Realized gains and losses on the sale of investments are reported in ~~other income and expense.~~non-operating expense (income), net.

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Investments in marketable securities with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

~~Other long-term investments consist~~Fair Value of ~~the Company's approximately 15% common stock ownership interest in Lextar Electronics Corporation (Lextar), which the~~Financial Instruments

The Company ~~acquired in December 2014. This investment was accounted for under the equity method from the date of investment until June 2016 when the Company chose~~performs recurring fair value measurements for its ~~representative not to stand for re-election~~cash equivalents and short-term investments, as ~~a member~~discussed further in Note 8, "Fair Value of ~~the Lextar board of directors. The Company utilizes the~~Financial Instruments." In addition, cash, accounts and interest receivable, accounts payable and other liabilities approximate their fair ~~value option in accounting for its investment in Lextar. The Company has determined that for its fiscal years ended~~values at June 26, ~~2016~~2022 and June 28, 2015, Lextar has met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X for which the Company is required, pursuant to Rule 3-09 of Regulation S-X, to file separate financial statements as an exhibit to its Annual Report on Form 10-K. As such, separate financial statements for Lextar~~, prepared by Lextar and audited by its independent public accounting firm,~~ ~~are filed as Exhibit 99.1~~27, 2021 due to the ~~Company's Annual Report.~~short-term nature of these instruments.

Inventories

Inventories are stated at the lower of cost or ~~market,~~net realizable value, with cost determined on a first-in, first-out (FIFO) method or an average cost ~~method; and with market not to exceed net realizable value.~~method. The Company writes down its inventory balances for estimates of excess and obsolete amounts. These write-downs are recognized as a component of cost of revenue. At the point of the write-down, a new ~~lower-cost~~lower cost basis for that inventory is established, and any subsequent improvements in facts and circumstances do not result in the restoration or increase in that newly established ~~lower-cost~~lower cost basis. ~~The Company recognized charges for write-downs in inventories~~If that inventory is subsequently sold, the sale is recorded at the actual selling price and the related cost of ~~$7.3 million,~~ ~~$3.6 million~~ ~~and~~ ~~$15.2 million, for fiscal~~ ~~2017~~, ~~2016~~ ~~and~~ ~~2015, respectively.~~

revenue is recorded at the new lower cost basis.

Property and Equipment

Property and equipment are stated at cost and depreciated on a straight-line basis over the assets’ estimated useful lives. Leasehold improvements are amortized over the lesser of the asset life or the ~~life~~term of the related lease. In general, the Company’s policy for useful lives is as follows:



Furniture and fixtures		5 years
Buildings and building improvements		5 to 40 years
Machinery and equipment			3 to 15 years
~~Buildings and building improvements~~Vehicles				~~5 to 40 years~~
~~Furniture and fixtures~~	~~3 to~~ 5 years
~~Aircraft and vehicles~~Computer hardware/software				~~5 to 20~~3 years
Leasehold improvements				Shorter of estimated useful life or lease term

Expenditures for repairs and maintenance are charged to expense as incurred. The costs for major renewals and improvements are capitalized and depreciated over their estimated useful lives. The cost and related accumulated depreciation of the assets are removed from the accounts upon disposition and any resulting gain or loss is reflected in operating income.

The Company considers a long-lived asset to be abandoned after the Company has ceased use of such asset and there is no longer intent to use or repurpose the asset in the future. Abandoned long-lived assets are recorded at their salvage value, if any.

Government Grant Disbursements

Government grant disbursements are recognized when there is reasonable assurance that: (1) the Company will comply with the relevant conditions and (2) the grant disbursement will be received. The Company receives grant disbursements from the State of New York Development Corporation relating to property, plant and equipment purchases in connection with its construction of a new Silicon Carbide device fabrication facility in Marcy, New York. Grant disbursements are recorded as a reduction to the related asset(s), which then reduces depreciation expense over the expected useful life of the asset on a straight-line basis.

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Shipping and Handling Costs

Shipping and handling costs are included in ~~Cost~~cost of revenue, net in the ~~Consolidated Statements~~consolidated statements of ~~Loss~~operations and are recognized as a period expense during the period in which they are incurred.

Goodwill and Intangible Assets

The Company recognizes the assets acquired and liabilities assumed in business combinations at their respective fair values at the date of acquisition, with any excess purchase price recognized as goodwill. Valuation of intangible assets entails significant estimates and assumptions including, but not limited to, estimating future cash flows from product revenue, developing appropriate discount rates, continuation of customer relationships and renewal of customer contracts, and approximating the useful lives of the intangible assets acquired.

Goodwill

The Company recognizes goodwill as an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The Company tests goodwill for impairment at least annually as of the first day of ~~the~~ its fiscal fourth quarter, or when indications of potential impairment exist. The Company monitors for the existence of potential impairment indicators throughout the fiscal year.

The Company conducts impairment testing for goodwill at the reporting unit level. Reporting units may be operating segments as a whole, or an operation one level below an operating segment, referred to as a component. The Company has determined that ~~its~~it has 1 reporting ~~units are its~~ ~~three~~ ~~operating and reportable segments.~~unit, Wolfspeed.

The Company may initiate goodwill impairment testing by considering qualitative factors to determine whether it is more likely than not that a reporting unit’s carrying value is greater than its fair value. Such factors may include the following, among others: a significant decline in the reporting unit’s expected future cash flows; a sustained, significant decline in the Company’s stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates; as well as changes in management, key personnel, strategy and customers. If the ~~Company’s~~Company's qualitative assessment indicates ~~that goodwill impairment~~it is more likely than not that the Company performs the two-step goodwill impairment test. Alternatively, the Company may bypass the qualitative test and initiate goodwill impairment testing with the first step of the two-step goodwill impairment test.

~~During the first step of the goodwill impairment test, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. The Company derives a reporting unit~~’s fair value through a combination of the market approach (a guideline transaction method) and the income approach (a discounted cash flow analysis). The income approach utilizes a discount rate from the capital asset pricing model. If all reporting units are analyzed during the first step of the goodwill impairment test, their respective fair values are reconciled back to the Company’~~s consolidated market capitalization.~~

~~If the~~estimated fair value of a reporting unit exceeds its carrying value, ~~then~~no further analysis is required and goodwill is not impaired. Otherwise, the Company ~~concludes that no~~performs a quantitative goodwill impairment ~~has occurred.~~test to determine if goodwill is impaired. The quantitative test compares the fair value of a reporting unit with its carrying amount, including goodwill.

If the fair value of the reporting unit exceeds the carrying value of the net assets associated with the reporting unit, goodwill is not considered impaired. If the carrying value of the net assets associated with the reporting unit exceeds ~~its fair value,~~ the ~~Company performs the second step of the goodwill impairment test to measure possible goodwill impairment loss. During the second step, the Company hypothetically values the reporting unit~~’~~s tangible and intangible assets and liabilities as if the reporting unit had been acquired in a business combination. Then, the implied~~ fair value of the reporting unit,’~~s goodwill is compared to the carrying value of its goodwill. If the carrying value of the reporting unit~~’~~s goodwill exceeds the implied fair value of the goodwill,~~ the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the carrying value of the reporting ~~unit~~’sunit's goodwill. Once an impairment loss is recognized, the adjusted carrying value of the goodwill becomes the new accounting basis of the goodwill for the reporting unit.

~~Indefinite-Lived Intangible Assets~~

~~The Company~~’~~s indefinite-lived intangible assets are tested for impairment at least annually in the fiscal fourth quarter or when indications of potential impairment exist.~~ The Company ~~monitors for~~derives a reporting unit’s fair value through a combination of the ~~existence of potential impairment indicators throughout~~market approach (guideline transaction method and guideline public company method) and the ~~fiscal year.~~

income approach (a discounted cash flow analysis). The ~~Company~~’~~s impairment test may begin with~~income approach utilizes a ~~qualitative test to determine whether it is more likely than not that an~~ ~~indefinite-lived intangible~~discount rate from a capital asset’~~s carrying~~ pricing model. The fair value is ~~greater than its fair value.~~ ~~In performing this test,~~reconciled back to the Company ~~may consider the following qualitative factors, among others: a significant decline in expected future cash flows; changes in industry and~~’s consolidated market conditions such as the deterioration in the environment in which the Company operates or an increased competitive environment; changes in management, key personnel, strategy, or customers; as well as other economic factors. If the Company’s qualitative assessment indicates that asset impairment is more likely than not, the Company performs a quantitative impairment test by ~~comparing the fair value of the~~ ~~indefinite-lived intangible asset~~ ~~to its carrying value. Alternatively, the Company may bypass the qualitative test and initiate impairment testing with the quantitative impairment test. Determining the fair value~~ of indefinite-lived intangible assets entails significant estimates and assumptions including, but not limited to, determining the timing and expected costs to complete development projects, estimating future cash flows from product revenue, developing appropriate discount rates, estimating probability rates for the successful completion of development projects, continuation of customer relationships and renewal of customer contracts, and approximating the useful lives of the intangible assets acquired.

If the fair value of the indefinite-lived intangible asset exceeds its carrying value, then the Company concludes that no impairment has occurred. If the carrying value of the indefinite-lived intangible asset exceeds its fair value, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the carrying value. Once an impairment loss is recognized, the adjusted carrying value becomes the new accounting basis of the indefinite-lived intangible asset.capitalization.

Finite-Lived Intangible Assets

U.S. GAAP requires that intangible assets, other than goodwill and indefinite-lived intangibles, must be amortized over their useful lives. The Company is currently amortizing its acquired intangible assets with finite lives over periods ranging from ~~one~~seven to 2015 years.

Patent rights reflect costs incurred by the Company in applying for and maintaining patents owned by the Company and costs incurred in purchasing patents and related rights from third parties. Licensing rights reflect costs incurred by the Company in acquiring licenses under patents owned by others. The Company amortizes both on a straight-line basis over the expected useful life of the associated patent rights, which is generally the lesser of 20 years from the date of the patent application or the license period. Royalties payable under licenses for patents owned by others are generally expensed as incurred. The Company reviews its capitalized patent portfolio and recognizes impairment charges when circumstances warrant, such as when patents have been abandoned or are no longer being pursued.

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Long-Lived Assets

The Company reviews long-lived assets such as property and equipment for impairment based on changes in circumstances that indicate their carrying amounts may not be recoverable. In making these determinations, the Company uses certain assumptions, including but not limited to: (1) estimations of the fair market value of the assets and (2) estimations of future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization, length of service the asset will be used in the Company’s operations and estimated salvage values.

Contingent Liabilities

The Company recognizes contingent liabilities when it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Disclosure in the notes to the financial statements is required for loss contingencies that do not meet both these conditions if there is a reasonable possibility that a loss may have been incurred. See Note ~~13,~~15, “Commitments and Contingencies,” for a discussion of loss contingencies in connection with pending and threatened litigation. The ~~Company expenses as incurred the~~ costs of defending legal claims against the ~~Company.~~Company are expensed as incurred.

Revenue Recognition

~~The Company recognizes~~Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. Substantially all of the Company's revenue is derived from product ~~revenue~~sales. Revenue is recognized at a point in time based on the Company’s evaluation of when the ~~earnings process is complete, as evidenced by persuasive evidence~~customer obtains control of ~~an arrangement (typically in~~ the ~~form~~products, and all performance obligations under the terms of ~~a purchase order), when~~ the ~~sales price is fixed or determinable, collection of~~contract are satisfied. If customer acceptance clauses are present and it cannot be objectively determined that control has been transferred based on the contract and shipping terms, revenue is ~~reasonably assured,~~only recorded when customer acceptance is received and ~~title and risk~~all performance obligations have been satisfied. Sales of ~~loss have passed to the customer.~~

The Company provides its customers with limited rights of return for non-conforming shipments and product warranty claims. The Company estimates an allowance for anticipated sales returns based upon an analysis of historical sales returns and other relevant data. The Company recognizes an allowance for non-conforming returns at the time of sale as a reduction of product revenue and as a reduction to the related accounts receivable balance. The Company recognizes a liability for product warranty claims at the time of sale as an increase to cost of revenue.products typically do not include more than one performance obligation.

A ~~substantial~~ portion of the Company’s products are sold through distributors. Distributors stock inventory and sell the Company’s products to their own customer base, which may include: value added resellers; manufacturers who incorporate the Company’s products into their own manufactured goods; or ultimate end users of the Company’s products. The Company recognizes revenue upon shipment of its products to its distributors. This arrangement is often referred to as a “sell-in” or “point-of-purchase” model as opposed to a “sell-through” or “point-of-sale” model, where revenue is deferred and not recognized until the distributor sells the product through to their customer.

~~Certain~~Master supply or distributor agreements are in place with many of the Company's customers and contain terms and conditions including, but not limited to, payment, delivery, incentives and warranty. These agreements sometimes require minimum purchase commitments and/or involve potential penalties to the Company if a defined supply schedule is not met. If a master supply, distributor or other similar agreement is not in place with a customer, the Company considers a purchase order, which is governed by the Company’s standard terms and conditions, to be the contract governing the relationship with that customer.

Pricing terms are negotiated independently on a stand-alone basis. Revenue is measured based on the amount of net consideration to which the Company expects to be entitled to receive in exchange for products or services. Variable consideration is recognized as a reduction of net revenue with a corresponding reserve at the time of revenue recognition, and consists primarily of sales incentives, volume discounts, price concessions and return allowances. Variable consideration is estimated based on contractual terms, historical analysis of customer purchase volumes, or historical analysis using specific data for the type of consideration being assessed.

Some of the Company’s distributors are provided limited rights that allow them to return a portion of inventory (product exchange rights or stock rotation rights) and receive credits for changes in selling prices (price protection rights) or customer pricing arrangements under the Company’s “ship and debit” program or other targeted sales incentives. These estimates are calculated based upon historical experience, product shipment analysis, current economic conditions, on-hand inventory at the distributor, and customer contractual arrangements. The Company believes that it can reasonably and reliably estimate the allowance for distributor credits at the time of sale. Accordingly, estimates for these rights are recognized at the time of sale as a contract liability and a reduction of product ~~revenue and as a reduction to the related accounts receivable balance.~~revenue.

From time to time, the Company will issue a new price book for its products, and provide a credit to certain distributors for inventory quantities on hand if required by the Company’s agreement with the distributor. This practice is known as price protection. These credits are applied against the reserve that the Company establishes upon initial shipment

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Under the ship and debit program, products are sold to distributors at negotiated prices and the distributors are required to pay for the products purchased within the Company’s standard commercial terms. Subsequent to the initial product purchase, a distributor may request a price allowance for a particular part number(s) for certain target customers, prior to the distributor reselling the particular part to that customer. If the Company approves an allowance and the distributor resells the product to the target customer, the Company credits the distributor according to the allowance the Company approved. These credits are applied against the reserve that the Company establishes upon initial shipment of product to the distributor.

~~In addition,~~The Company also has inventory consignment agreements in which revenue is recognized at a point in time, when the customer or distributor pulls product from consignment inventory that the Company ~~runs sales incentive programs with certain distributors~~stores at designated locations. Delivery and ~~retailers, such as product rebates~~transfer of control occur at that point, when title and ~~cooperative advertising campaigns. The~~risk of loss transfers and the customer or distributor becomes obligated to pay for the products pulled from inventory. Until the products are pulled for use or sale by the customer or distributor, the Company ~~recognizes these incentives at~~retains control over the ~~time they are offered~~products’ disposition, including the right to ~~customers and records a credit to their account with an offsetting expense as either a reduction to revenue, increase to cost of revenue,~~pull back or ~~marketing expense depending on~~relocate the ~~type of sales incentive.~~products.

From time to time, the Company may enter into licensing arrangements related to its intellectual property. Revenue from licensing arrangements is recognized when earned and estimable. The timing of revenue recognition is dependent on the terms of each license agreement. Generally, the Company will recognize non-refundable upfront licensing fees related to patent licenses immediately upon receipt of the funds if the Company has no significant future obligations to perform under the arrangement. However, the Company will defer recognition for licensing fees where the Company has significant future performance requirements, the fee is not fixed (such as royalties earned as a percentage of future revenue), or the fees are otherwise contingent.

Leases

~~Accounts Receivable~~

~~For product revenue,~~At lease inception, the Company ~~typically invoices its customers at~~determines an arrangement is a lease if the ~~time~~contract involves the use of ~~shipment for~~a distinct identified asset, the ~~sales order value~~lessor does not have substantive substitution rights and the lessee obtains control of ~~products shipped. Accounts receivable~~the asset throughout the period by obtaining substantially all of the economic benefit of the asset and the right to direct the use of the asset. Depending on the terms, leases are ~~recognized at the invoiced amount and are not subject to any interest~~classified as either operating or finance ~~charges.~~leases, if the Company is the lessee, or as operating, sales-type or direct financing leases, if the Company is the lessor. The Company does not have any ~~off-balance sheet credit exposure related to any of~~sales-type or direct financing leases. Lease agreements frequently include other services such as maintenance, electricity, security, janitorial and reception services. The Company accounts for the lease and non-lease components in its ~~customers.~~

~~Allowance for Doubtful Accounts~~arrangements as a single lease component.

The Company ~~evaluates~~adopted FASB Accounting Standards Codification 842 "Leases" (ASC 842) on July 1, 2019 under the ~~collectability~~modified retrospective transition approach with the cumulative effect of ~~accounts receivable~~application recognized at the effective date, without adjustment to prior comparative periods. The Company did not have a cumulative-effect adjustment to retained earnings as a result of the adoption of the new standard.

Accounting for Leases as a Lessee

Right-of-use assets represent the Company's right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Assets and liabilities are recognized based on ~~a combination~~the present value of ~~factors. In cases where~~lease payments over the lease term. Most leases include 1 or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of the renewal option is at the Company's sole discretion and the Company ~~becomes aware of circumstances that may impair a specific customer’s ability~~considers these options in determining the lease term used to ~~meet~~establish its ~~financial obligations subsequent to the original sale, the~~right-of-use assets and lease liabilities. The Company will ~~recognize~~remeasure its lease liability and adjust the related right-of-use asset upon the occurrence of the following: lease modifications not accounted for as a separate contract; a triggering event that changes the certainty of the lessee exercising an ~~allowance against amounts due, and thereby reduce~~option to renew or terminate the ~~net recognized receivable~~lease, or purchase the underlying asset; a change to the amount probable of being owed by the Company ~~reasonably believes will be collected. For all other customers,~~under a residual value guarantee; or the resolution of a contingency upon which the variable lease payments are based such that those payments become fixed.

Because most of the Company's leases do not provide an implicit rate, the Company ~~recognizes an allowance for doubtful accounts~~uses its incremental borrowing rate based on the ~~length~~information available at the lease commencement date in determining the present value of ~~time~~lease payments. The Company would use the ~~receivables~~implicit rate when readily determinable. Operating lease expense is generally recognized on a straight-line basis over the lease term. Finance lease assets are ~~past due~~generally amortized over the term of the lease. If the finance lease transfers ownership of the underlying asset to the Company or the Company is reasonably certain it will exercise an option to purchase the underlying asset, the finance lease assets are amortized on a straight-line basis over the useful life of the asset. Interest expense on the finance lease liability is recognized using the effective interest rate method and ~~consideration~~is presented within interest expense on the Company’s consolidated statements of ~~other factors~~operations.

Operating leases with a lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Variable lease payment amounts that cannot be determined

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at the commencement of the lease, such as ~~industry conditions,~~increases in lease payments based on changes in index rates, are not included in the ~~current business environment~~right-of-use assets or liabilities. These variable lease payments are expensed as incurred.

Accounting for Leases as a Lessor

In accordance with FASB ASC 842, "Leases," lease income is recognized on a straight-line basis over the lease term. Variable lease payments, if any, are recognized as income in the period received. The underlying asset in an operating lease is carried at depreciated cost and ~~the Company’s historical experience.~~is included in property and equipment.

Advertising

The Company expenses the costs of producing advertisements at the time production occurs and expenses the cost of communicating the advertising in the period in which the advertising is used. Advertising costs are included in ~~Sales,~~sales, general and administrative expenses in the ~~Consolidated Statements~~consolidated statements of ~~Loss~~operations and amounted to approximately ~~$13.0~~$7.5 million, ~~$12.6~~$5.1 million,, and ~~$25.6~~$3.8 million for the years ended ~~June 25, 2017~~, June 26, ~~2016~~2022, June 27, 2021 and June 28, ~~2015~~,2020, respectively.

Research and Development

Research and development expenses consist primarily of employee salaries and related compensation costs, occupancy costs, consulting costs and the cost of development equipment and supplies. Research and development activities are expensed when incurred.

Loss Per Share

Basic loss per share is computed by dividing net loss attributable to controlling interest by the weighted average number of shares of common stock outstanding for the applicable period. Diluted loss per share is determined in the same manner as basic loss per share except that the number of shares is increased to assume exercise of potentially dilutive stock options, nonvested restricted stock and contingently issuable shares using the treasury stock method, unless the effect of such increases would be anti-dilutive. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefits that would be recognized in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares.

Stock-Based Compensation

The Company recognizes compensation expense for all share-based payments granted based on the fair value of the shares on the date of grant. Compensation expense is then recognized over the award’s vesting period.

~~Fair Value of Financial Instruments~~

~~Cash and cash equivalents, short-term investments, accounts and interest receivable, accounts payable and other liabilities approximate their fair values at~~ ~~June 25, 2017~~ ~~and~~ ~~June 26, 2016~~ ~~due to the short-term nature of these instruments.~~

Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for deductible temporary differences, along with net operating loss carryforwards and credit carryforwards, if it is more likely than not that the tax benefits will be realized. To the extent a deferred tax asset cannot be recognized under the preceding criteria, valuation allowances are established. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

Taxes payable which are not based on income are accrued ratably over the period to which they apply. For example, payroll taxes are accrued each period end based upon the amount of payroll taxes that are owed as of that date; whereas taxes such as property taxes and franchise taxes are accrued over the fiscal year to which they apply if paid at the end of a period, or they are amortized ratably over the fiscal year if they are paid in advance.

~~Sales Taxes~~

~~The Company presents sales taxes collected from customers and remitted to governmental authorities on a net basis (i.e. excluded from revenue and expenses).~~

Foreign Currency Translation

~~Foreign~~The Company does not have operations with a functional currency other than the U.S. Dollar and therefore no foreign currency translation adjustments are recognized in ~~Other~~other comprehensive ~~(loss) income~~loss in the ~~Consolidated Statements~~consolidated statements of Comprehensive Loss for changes between the foreign subsidiaries’ functional currency and the United States (U.S.) dollar. Foreign currency translation gains and losses are included in the Company’s equity account balance of Accumulated other comprehensive ~~income, net of taxes in the Consolidated Balance Sheets until such time that the subsidiaries are either sold or substantially liquidated.~~

~~Because the~~loss. The Company and its subsidiaries transact business in currencies other than the U.S. Dollar and as such, the Company ~~will continue to experience~~experiences varying amounts of foreign currency exchange gains and ~~losses~~losses.

Joint Venture

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Effective July 17, 2017, the Company entered into a Shareholders Agreement with San’an Optoelectronics Co., Ltd. (San’an) and Cree Venture LED Company Limited (Cree Venture LED) pursuant to which the Company and San’an funded their contributions to Cree Venture LED and agreed upon the management and operation of Cree Venture LED. The Company contributed $5.1 million of cash for ~~subsidiaries with U.S. dollar functional currency.~~a 51% ownership interest and San’an contributed $4.9 million of cash for a 49% ownership interest.

The Company's interest in Cree Venture LED was included in the LED Business Divestiture and its related activity is classified as discontinued operations.

Supplemental Cash Flow Information

Cash paid for interest was $13.1 million, $14.1 million, and $5.9 million for the fiscal years ended June 26, 2022, June 27, 2021 and June 28, 2020, respectively.

Cash paid for taxes, net of refunds received, was $4.4 million, $11.0 million and $3.6 million for the fiscal years ended June 26, 2022, June 27, 2021 and June 28, 2020, respectively.

Recently Adopted Accounting Pronouncements

None.

Recently Issued Accounting Pronouncements Pending Adoption

~~Revenue from Contracts with Customers~~Convertible Debt Instruments

In ~~May 2014,~~August 2020, FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). This standard simplifies the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09: Revenue from Contracts with Customers (Topic 606). The FASB has subsequently issued multiple ASUs which amendaccounting for convertible instruments by eliminating the cash conversion and ~~clarify~~the beneficial conversion accounting models. This update also amends the guidance for the derivatives scope exception for contracts in ~~Topic 606.~~an entity’s own equity. The ~~ASU establishes~~update requires an entity to use the if-converted method for all convertible instruments in the diluted earnings per share calculation. An entity may use either a ~~principles-based~~modified or full retrospective approach for adoption.

The Company will adopt this standard on June 27, 2022, the first day of its 2023 fiscal year, under the modified retrospective approach. The adoption is expected to result in (i) a reduction of additional paid in capital by approximately $330 million for the recombination of the equity conversion component of the convertible notes outstanding, which was initially separated and recorded in equity, (ii) an increase in the cumulative convertible note carrying value of approximately $275 million as a result of removing previously recorded debt discounts, (iii) a decrease in property, plant and equipment for previously capitalized interest of approximately $25 million and (iv) a decrease to beginning accumulated deficit as of June 27, 2022 of approximately $30 million to recognize the cumulative gain on adoption. The Company does not expect to recognize a discrete tax impact related to the opening deferred tax balances as of June 27, 2022 due to a full U.S valuation allowance.

Government Assistance

In November 2021, FASB issued ASU 2021-10, Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance. This standard will require entities to provide annual disclosures regarding government assistance. More specifically, the amendments in the standard improve financial reporting by requiring disclosures that increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions; (2) the accounting for those transactions; and (3) the effect of those transactions on an entity's financial statements. An entity can apply the amendments prospectively or retrospectively. The Company will adopt this standard on June 27, 2022, as required.

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Note 3 – Discontinued Operations

On March 1, 2021, the Company completed the LED Business Divestiture pursuant to the terms of the Asset Purchase Agreement (the LED Purchase Agreement), dated October 18, 2020, as amended. Pursuant to the LED Purchase Agreement, (i) the Company completed the sale to SMART of (a) certain equipment, inventory, intellectual property rights, contracts, and real estate comprising the Company’s former LED Products segment, (b) all of the issued and outstanding equity interests of Cree Huizhou Solid State Lighting Company Limited (Cree Huizhou), a limited liability company organized under the laws of the People’s Republic of China and an indirect wholly owned subsidiary of the Company, and (c) the Company’s ownership interest in Cree Venture LED., the Company’s joint venture with San’an Optoelectronics Co., Ltd. (collectively, the LED Business); and (ii) SMART assumed certain liabilities related to the LED Business. The Company retained certain assets used in and pre-closing liabilities associated with the former LED Products segment.

The purchase price for the LED Business consisted of (i) a payment of $50 million in cash, subject to customary adjustments, (ii) an unsecured promissory note issued to the Company by SGH in the amount of $125 million (the Purchase Price Note), (iii) the potential to receive an earn-out payment between $2.5 million and $125 million based on the revenue ~~arising~~and gross profit performance of the LED Business in the first four full fiscal quarters following the closing (the Earnout Period), also payable in the form of a unsecured promissory note of SGH (the Earnout Note), and (iv) the assumption of certain liabilities. The Purchase Price Note had a maturity date of August 15, 2023, and as explained further below, was prepaid by SGH in full pursuant to its terms, along with outstanding accrued and unpaid interest as of the payment date, in the third quarter of fiscal 2022. The Earnout Note was issued in the fourth quarter of 2022 and will mature on March 27, 2025. The Earnout Note will accrue interest at a rate of three-month LIBOR plus 3.0% with interest paid every three months. One bullet payment of principal and all accrued and unpaid interest will be payable on the maturity date of the Earnout Note. In fiscal 2021, the Company recognized a loss on sale of the LED Business of $29.1 million. The cost of selling the LED Business was $27.4 million, which was recognized throughout fiscal 2020 and 2021.

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 (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 (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.

In the third quarter of fiscal 2022, the Company received an early payment for the Purchase Price Note. The principal amount of $125.0 million was paid in full, along with outstanding accrued interest as of the payment date (the Early Payment). In conjunction with the Early Payment, the Company transferred naming rights and trademarks related to Cree, Inc. and the CREE brand to SMART (the Trademark Transfer), resulting in a write-off of trademarks of $1.1 million and recorded within (gain) loss on disposal or impairment of other assets in the consolidated statements of operations.

Because the Early Payment did not include additional consideration in exchange for the Trademark Transfer, the Company allocated consideration from ~~contracts~~the principal amount to the value of the trademarks transferred to SMART. The Company allocated $1.8 million of the Early Payment to the value of trademarks transferred to SMART, resulting in a gain recorded in (gain) loss on disposal or impairment of other assets in the consolidated statements of operations. The remaining unallocated portion of the Early Payment of $123.2 million was then applied to the note receivable balance of $124.4 million at the time of payment, resulting in a loss of $1.2 million recorded in non-operating expense, net on the consolidated statements of operations. The net impact to the consolidated statements of operations from the Early Payment was a loss of $0.5 million.

In the fourth quarter of fiscal 2022, the Company received the Earnout Note with ~~customers~~a principal amount of $101.8 million. As a result, the Company recorded a net gain of $94.2 million within discontinued operations, net in the consolidated statements of operations for fiscal year ended June 26, 2022. The gain recorded is net of $3.9 million in taxes and ~~supersedes existing revenue recognition guidance.~~ $1.2 million in transaction fees. Additionally, the amount is less a previously recorded gain of $2.5 million, which was recorded in fiscal 2021 as part of the total loss on sale to account for the minimum amount of the Earnout Note.

In addition to the $94.2 million net gain from discontinued operations recognized in fiscal year ended June 26, 2022 as a result of receiving the Earnout Note, the following table presents the financial results of the LED Business as (loss) income from

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discontinued operations, net of income taxes in the Company's consolidated statements of operations for the fiscal years ended June 27, 2021 and June 28, 2020:


	Fiscal Years Ended
(in millions of U.S. Dollars)	June 27, 2021	June 28, 2020
Revenue, net	$272.8	$433.2
Cost of revenue, net	213.3	343.4
Gross profit	59.5	89.8
Operating expenses:
Research and development	22.3	32.2
Sales, general and administrative	29.4	29.7
Goodwill impairment	112.6	—
Impairment on assets held for sale	19.5	—
Gain on disposal or impairment of long-lived assets	(1.6)	(0.1)
Other operating expense	18.7	13.3
Operating (loss) income	(141.4)	14.7
Non-operating income	(0.3)	(0.5)
(Loss) income before income taxes and loss on sale	(141.1)	15.2
Loss on sale	29.1	—
(Loss) income before income taxes	(170.2)	15.2
Income tax expense	11.0	8.2
Net (loss) income	(181.2)	7.0
Net income attributable to noncontrolling interest	1.4	1.1
Net (loss) income attributable to controlling interest	($182.6)	$5.9

As of September 27, 2020, the Company determined it would more likely than not sell all or a portion of the assets comprising the LED Products segment below carrying value. As a result, the Company recorded an impairment to goodwill of $105.7 million.

As of December 27, 2020, the Company recorded an additional impairment to goodwill of $6.9 million and an impairment to assets held for sale associated with the LED Business Divestiture of $19.5 million.

For the fiscal years ended June 26, 2022, June 27, 2021 and June 28, 2020, the Company recognized $3.9 million, $11.0 million and $8.2 million, respectively, of income tax expense related to discontinued operations, which primarily related to the foreign operations of the LED Business. Income tax expense related to discontinued operations for the fiscal year ended June 26, 2022 and June 27, 2021 includes $2.4 million and $4.1 million, respectively, of income tax expense related to the sale of the issued and outstanding equity interests of Cree Huizhou in the third quarter of fiscal 2021.

The ~~ASU provides that an entity should apply~~income tax impact of the U.S. operations of the LED Business for all periods presented were offset with a valuation allowance as described in Note 14, "Income Taxes."

For the fiscal years ended June 26, 2022 and June 27, 2021, the Company recognized $3.6 million and $1.2 million in administrative fees related to the LED RELA, respectively, of which $0.3 million are included in accounts receivable, net in the consolidated balance sheets as of June 26, 2022. Fees related to the LED RELA were recorded as lease income. See Note 5, "Leases" below for additional information.

For the fiscal years ended June 26, 2022 and June 27, 2021, the Company recognized $9.2 million and $4.0 million in administrative fees related to the LED TSA, respectively, of which $0.6 million are included in accounts receivable, net in the consolidated balance sheets as of June 26, 2022. 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.

At the inception of the Wafer Supply Agreement, the Company recorded a supply agreement liability of $31.0 million, of which $6.4 million was outstanding as of June 26, 2022. The supply agreement liability is recognized in other current liabilities on the consolidated balance sheets.

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The Company recognized a net loss of $0.8 million and $0.8 million in non-operating expense, net for the fiscal years ended June 26, 2022 and June 27, 2021, respectively, related to the Wafer Supply Agreement. A receivable of $2.7 million was included in other assets in the consolidated balance sheets as of June 26, 2022.

Note 4 – Revenue Recognition

The Company follows a five-step approach for recognizing revenue, ~~including~~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. ~~Also,~~

Contract liabilities primarily include various rights of return and customer deposits, as well as a reserve on the ~~entity must provide various disclosures concerning~~Company's "ship and debit" program. Contract liabilities were $47.8 million and $45.2 million as of June 26, 2022 and June 27, 2021, respectively. The increase was primarily due to increased reserves on the ~~nature, amount~~Company's "ship and ~~timing~~debit" program, partially offset by decreased customer deposits. Contract liabilities are recorded within accrued contract liabilities and other long-term liabilities on the consolidated balance sheets.

Practical Expedients and Exemptions

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

Incidental contract costs that are not material in context of the delivery of products are expensed as incurred. Sales commissions are expensed when the amortization period is less than one year. Contract assets, such as costs to obtain or fulfill contracts, are an insignificant component of the Company’s revenue recognition process. The majority of the Company’s fulfillment costs as a manufacturer consist of inventory, fixed assets, and intangible assets, all of which are accounted for under the respective guidance for those asset types.

The Company’s accounts receivable balance represents the Company’s unconditional right to receive consideration from its customers with contracts. Payments are typically due within 30 days of the completion of the performance obligation and invoicing, and therefore do not contain significant financing components.

Sales tax, value-added tax, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue, and shipping and handling costs are treated as fulfillment activities and are included in cost of revenue in the Company’s consolidated statements of operations.

For the fiscal years ended June 26, 2022 and ~~cash flows arising from contracts with customers. The Company’s evaluation of ASU 2014-09 is ongoing and not complete; however,~~June 27, 2021, the Company ~~anticipates~~did not recognize any material revenue that was included in contract liabilities at the ~~primary changes~~start of each respective fiscal year.

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 revenue ~~recognition~~from external customers by geographic area is as follows:


	For the Years Ended
	June 26, 2022				June 27, 2021				June 28, 2020
(in millions of U.S. Dollars)	Revenue		% of Revenue		Revenue		% of Revenue		Revenue		% of Revenue
Europe	$	260.4	34.9	%	$	188.9	35.9	%	$	171.4	36.4	%
China	211.2		28.3	%	100.1		19.0	%	65.0		13.8	%
United States	142.7		19.1	%	117.3		22.3	%	106.5		22.6	%
Japan	30.5		4.1	%	42.5		8.1	%	52.1		11.1	%
South Korea	22.4		3.0	%	32.1		6.1	%	47.7		10.1	%
Other	79.0		10.6	%	44.7		8.6	%	28.0		6.0	%
Total	$	746.2			$	525.6			$	470.7

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Note 5 – Leases

The Company primarily leases manufacturing and office space. The Company also has a number of bulk gas leases. Lease agreements frequently include renewal provisions and require the Company to bepay 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. For details on the Company's lease policies, see the significant accounting policy disclosures in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies."

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:	June 26, 2022	June 27, 2021
Right-of-use asset (1)	$48.5	$12.1

Current lease liability (2)	4.6	4.5
Non-current lease liability (3)	43.6	7.5
Total operating lease liabilities	48.2	12.0

Finance Leases:
Finance lease assets (4)	$10.3	$15.5

Current portion of finance lease liabilities	0.5	5.2
Finance lease liabilities, less current portion	9.6	10.0
Total finance lease liabilities	10.1	15.2

(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 $8.1 million, $5.5 million and $5.4 million in fiscal 2022, 2021 and 2020, respectively.

Short-term lease expense was $0.8 million in fiscal 2022. In fiscal 2021 and 2020, short-term lease expense was immaterial.

Finance lease amortization was $1.2 million, $1.0 million and $0.7 million, and interest expense was $0.3 million, $0.3 million and $0.2 million, in fiscal 2022, 2021 and 2020, respectively.

Cash Flows

Cash flow information consisted of the following (1):


	Fiscal Years Ended
(in millions of U.S. Dollars)	June 26, 2022	June 27, 2021	June 28, 2020
Cash used in operating activities:
Cash paid for operating leases	$8.1	$5.7	$5.5
Cash paid for interest portion of financing leases	0.3	0.3	0.1
Cash used in financing activities:
Cash paid for principal portion of finance leases	0.5	0.4	0.8

(1) See Note 6, "Financial Statement Details," for non-cash activities related to leases.

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Lease Liability Maturities

Maturities of operating and finance lease liabilities as of June 26, 2022 were as follows (in millions of U.S. Dollars):


Fiscal Year Ending	Operating Leases	Finance Leases	Total
June 25, 2023	$5.5	$0.7	$6.2
June 30, 2024	7.3	0.7	8.0
June 29, 2025	7.9	0.7	8.6
June 28, 2026	7.8	0.7	8.5
June 27, 2027	6.8	0.4	7.2
Thereafter	53.8	14.2	68.0
Total lease payments	89.1	17.4	106.5
Future tenant improvement allowances	(19.0)	—	(19.0)
Imputed lease interest	(21.9)	(7.3)	(29.2)
Total lease liabilities	$48.2	$10.1	$58.3

Supplemental Disclosures


	Operating Leases		Finance Leases
Weighted average remaining lease term (in months) (1)	134		562
Weighted average discount rate (2)	4.22	%	2.68	%

(1) Weighted average remaining lease term of finance leases without the 49-year ground lease is 51 months.

(2) Weighted average discount rate of finance leases without the 49-year ground lease is 3.33%.

Lease Income

As mentioned in Note 3, "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 leases to CreeLED approximately 58,000 square feet of the Company’s property and certain ~~patent license arrangements.~~facilities in Durham, North Carolina for a total of $3.6 million per year. The ~~FASB has issued~~lease term is 24 months and ~~may issue~~expires on February 28, 2023. Subject to certain provisions in the LED RELA, CreeLED may terminate its rights or a portion of its rights under the agreement at any time with sixty days written notice. A notice of thirty days is permitted under certain circumstances as defined in the agreement. The agreement does not contain any renewal provisions.

The Company recognized lease income of $3.6 million and $1.2 million for the fiscal years ended June 26, 2022 and June 27, 2021, respectively. The Company did not recognize any variable lease income for the fiscal year ended June 28, 2020.

Total future ~~interpretive guidance,~~minimum rental income relating to the LED RELA is $2.4 million, all of which ~~may cause our evaluation~~is expected to ~~change. The effective date will be~~occur in the ~~first quarter of the Company's~~ fiscal year ending June ~~30, 2019 and the Company currently expects to use the modified retrospective method.~~25, 2023.

~~Leases~~

In February 2016, the FASB issued ASU No. 2016-02: Leases (Topic 842). The ASU requires that a lessee recognize in its statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. For income statement purposes, leases are still required to be classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. The effective date will be the first quarter of the Company's fiscal year ending June 28, 2020, using a modified retrospective approach. The Company is currently analyzing the impact of this new pronouncement.

~~Stock Compensation~~

In March 2016, the FASB issued ASU No. 2016-09: Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU simplifies the current stock compensation guidance for tax consequences. The ASU requires an entity to recognize all excess tax benefits and tax deficiencies as income tax expense or benefit in its income statement. The ASU also eliminates the requirement to defer recognition of an excess tax benefit until the benefit is realized through a reduction to taxes payable. For cash flows statement purposes, excess tax benefits should be classified as an operating activity and cash payments made to taxing authorities on the employee’s behalf for withheld shares should be classified as financing activity. The effective date will be the first quarter of the Company's fiscal year ending June 24, 2018. The Company's adoption of this ASU is not expected to impact its consolidated financial statements.

~~Goodwill Impairment Testing~~

In January 2017, the FASB issued ASU No. 2017-04: Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU simplifies the manner in which an entity is required to test for goodwill impairment by eliminating Step 2 from the goodwill impairment test. Additionally, the ASU removes the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. The effective date will be the first quarter of the Company's fiscal year ending June 27, 2021. The Company’s adoption of this guidance is not expected to have a significant impact on its consolidated financial statements.

~~Note 3 – Acquisition~~

On July 8, 2015, the Company closed on the acquisition of Arkansas Power Electronics International, Inc. (APEI), a global leader in power modules and power electronics applications, pursuant to a merger agreement with APEI and certain shareholders of APEI, whereby the Company acquired all of the outstanding share capital of APEI in exchange for a base purchase price of $13.8 million, subject to certain adjustments. In addition, if certain goals are achieved over the subsequent two years, additional cash payments totaling up to $4.6 million may be made to the former APEI shareholders. Payments totaling $2.8 million were made to the former APEI shareholders in July 2016 based on achievement of the first year goals. Payments totaling $1.8 million were made to the former APEI shareholders in July 2017 based on achievement of the second year goals. In connection with this acquisition, APEI became a wholly owned subsidiary of the Company, renamed Cree Fayetteville, Inc. (Cree Fayetteville). Cree Fayetteville is not considered a significant subsidiary of the Company and its results from operations are reported as part of the Company's Wolfspeed segment.

~~The total purchase price for this acquisition was as follows (in thousands):~~



~~Cash consideration paid to shareholders~~		~~$13,797~~
~~Post closing adjustments~~	~~181~~
~~Contingent consideration~~	~~4,625~~
~~Total purchase price~~		~~$18,603~~

~~The purchase price for this acquisition has been allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows (in thousands):~~



~~Tangible assets:~~
~~Cash and cash equivalents~~		~~$1,284~~
~~Accounts receivable~~	~~1,006~~
~~Inventories~~	~~143~~
~~Property and equipment~~	~~935~~
~~Other assets~~	~~270~~
~~Total tangible assets~~	~~3,638~~
~~Intangible assets:~~
~~Patents~~	40
~~Customer relationships~~	~~4,500~~
~~Developed technology~~	~~11,403~~
~~In-process research & development~~	~~7,565~~
~~Non-compete agreements~~	~~231~~
~~Goodwill~~	~~2,483~~
~~Total intangible assets~~	~~26,222~~
~~Liabilities assumed:~~
~~Accounts payable~~	55
~~Accrued expenses and liabilities~~	~~1,911~~
~~Other long-term liabilities~~	~~9,291~~
~~Total liabilities assumed~~	~~11,257~~
~~Net assets acquired~~		~~$18,603~~

~~The identifiable intangible assets acquired as a result of the acquisition will be amortized over their respective estimated useful lives as follows (in thousands, except for years):~~

Asset Amount Estimated Life in Years
Patents
$40
20
Customer relationships 4,500
4
Developed technology
11,403
10
In-process research and development¹
7,565
7
Non-compete agreements 231
3
Total identifiable intangible assets
$23,739

⁽¹⁾In-process research and development (IPR&D) is initially classified as indefinite-lived assets and tested for impairment at least annually or when indications of potential impairment exist. The IPR&D was completed in January 2016.

Goodwill largely consists of expansion of product offerings of power modules and power electronics applications, manufacturing and other synergies of the combined companies, and the value of the assembled workforce.

The assets, liabilities and operating results of APEI have been included in the Company's consolidated financial statements from the date of acquisition and are not significant to the Company as a whole.

Note 46 – Financial Statement Details

Accounts Receivable, net

~~The following table summarizes the components of accounts~~Accounts receivable, net ~~(in thousands):~~ consisted of the following:


(in millions of U.S. Dollars)	June 26, 2022	June 27, 2021
Billed trade receivables	$148.0	$95.6
Unbilled contract receivables	2.7	0.6
Royalties	0.7	0.5
	151.4	96.7

Allowance for bad debts	(1.2)	(0.8)
Accounts receivable, net	$150.2	$95.9

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June 25,
2017 June 26,
2016
Billed trade receivables
$205,516

$217,691
Unbilled contract receivables 912
2,135
206,428
219,826
Allowance for sales returns, discounts and other incentives (49,425 ) (48,710 )
Allowance for bad debts (8,611 ) (5,505 )
Accounts receivable, net
$148,392

$165,611

~~The following table summarizes the changes in the Company’s allowance for sales returns, discounts and other incentives (in thousands):~~

Fiscal Years Ended
June 25,
2017 June 26,
2016 June 28,
2015
Balance at beginning of period
$48,710

$58,094

$29,010
Current period claims (191,325 ) (163,523 ) (148,715 )
Provision for sales returns, discounts and other incentives 192,040
154,139
177,799
Balance at end of period
$49,425

$48,710

$58,094

~~The following table summarizes the changes~~Changes in the Company’s allowance for bad debts ~~(in thousands):~~were as follows:


										Fiscal Years Ended
	Fiscal Years Ended
	June 25, 2017			June 26, 2016		June 28, 2015
(in millions of U.S. Dollars)									(in millions of U.S. Dollars)	June 26, 2022	June 27, 2021	June 28, 2020
Balance at beginning of period		$5,505			$4,941		$2,761		Balance at beginning of period	$0.8	$0.7	$0.2
Current period provision	3,541			564		2,184
Current period provision change									Current period provision change	0.4	0.1	0.6
Write-offs, net of recoveries	(435		)	—		(4		)	Write-offs, net of recoveries	—	—	(0.1)
Balance at end of period		$8,611			$5,505		$4,941		Balance at end of period	$1.2	$0.8	$0.7

~~LED Products~~

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~~Wolfspeed~~

The ~~Company’s CODM reviews segment performance~~GDA was signed in the fourth quarter of fiscal 2020 and ~~allocates resources based upon segment revenue and segment gross profit.~~

~~Reportable Segments Description~~

~~Lighting Products Segment~~

~~The Company’s Lighting Products segment primarily consists of LED lighting systems and lamps. The~~requires the Company designs, manufactures and sells lighting systems for indoor and outdoor applications, with its primary focus on LED lighting systems for the commercial, industrial and consumer markets. Lighting products are sold to distributors, retailers and direct to customers. The Company's portfolio of lighting products is designed for use in settings such as office and retail space, restaurants and hospitality, schools and universities, manufacturing, healthcare, airports, municipal, residential, street lighting and parking structures, among other applications.

~~LED Products Segment~~

~~The Company’s LED Products segment includes LED chips and LED components.~~

~~LED Chips~~

~~The Company's LED chip products include blue and green LED chips based on GaN and related materials. LED chips or die are solid-state electronic components used in~~satisfy a number of applications and are currently available in a variety of brightness levels, wavelengths (color) and sizes. The Company uses LED chips internally in the manufacturing of its LED components. Customers use the blue and green LED chips in a variety of applications including video screens, gaming displays, function indicator lights, and automotive backlights, headlamps and directional indicators. Customers may also combine blue LED chips with phosphors to create white LEDs, which are used in various applications for indoor and outdoor illumination and backlighting, full-color display screens, liquid crystal displays (LCD) backlighting, white keypads and the camera flash function.

~~LED Components~~

~~The Company's LED components include a range of packaged LED products from the Company’s XLamp~~^® ~~LED components and LED modules for lighting applications to the Company’s high-brightness LED components.~~

The Company’s XLamp LED components and LED modules are designed to meet a broad range of market needs for lighting applications including general illumination (both indoor and outdoor applications), portable, architectural, signal and transportation lighting. The Company uses XLamp LED components in its own lighting products. The Company also sells XLamp LED components externally to customers and distributors for use in a variety of products, primarily for lighting applications.

The Company’s high-brightness LED components consist of surface mount (SMD) and through-hole packaged LED products. The SMD LED component products are available in a full range of colors designed to meet a broad range of market needs, including video, signage, general illumination, transportation, gaming and specialty lighting. The Company's through-hole packaged LED component products are available in a full range of colors, primarily designedobjectives for the ~~signage market and provide users with color and brightness consistency across~~Company to receive reimbursements through the span of the 13-year agreement. These objectives include maintaining a ~~wide viewing area.~~

~~Wolfspeed Segment~~

~~The Company’s Wolfspeed segment includes SiC materials, power devices and RF devices.~~

~~SiC Materials~~

~~The Company’s SiC materials products consist~~certain level of crystals, bare and epitaxial wafers. The Company’s SiC materials are targeted for customers who use them to manufacture products for RF, power switching, gemstones and other applications. Corporate, government and university customers also buy SiC materials forlocal employment, investing a certain amount in locally administered research and development ~~directed~~activities and the payment of an annual commitment fee for the first six years. Additionally, the Company has agreed, under a separate agreement (the SUNY Agreement), to sponsor the creation of 2 endowed faculty chairs and fund a scholarship program at RFSUNY Polytechnic Institute.

As of June 26, 2022, the annual cost of satisfying the objectives of the GDA and ~~high power devices.~~the SUNY Agreement, excluding the direct and indirect costs associated with employment, varies from $2.7 million to $5.2 million per year through fiscal 2031.

~~Power Devices~~

~~The Company’s power device products consist~~As of ~~SiC Schottky diodes, metal oxide semiconductor field effect transistors (MOSFETs), power modules~~June 26, 2022, the Company has reduced property and ~~gate driver boards. The Company's power products provide increased efficiency, faster switching speeds~~equipment, net by $285.1 million as a result of GDA reimbursements, of which $149.7 million has been received in cash and ~~reduced system size~~an additional $132.5 million and ~~weight over comparable silicon-based power devices. Power products~~$2.9 million are ~~sold primarily to customers and distributors for use~~recorded as receivables in ~~power supplies used in computer servers, solar inverters, uninterruptible power supplies, industrial power supplies~~other current assets and other ~~applications.~~

~~RF Devices~~

The Company’s RF devices consist of GaN die, high-electron mobility transistors (HEMT) and monolithic microwave integrated circuits (MMICs), which are optimized for military, telecommunications and other commercial applications. The Company's RF devices are made from SiC and GaN and provide improved efficiency, bandwidths and frequency of operation as compared to silicon or GaAs. The Company also provides custom die manufacturing for GaN HEMTs and MMICs that allow a customer to design its own custom RF circuits to be fabricated by the Company, or have the Company design and fabricate products that meet the customer's specific requirements.

~~Financial Results by Reportable Segment~~

The table below reflects the results of the Company’s reportable segments as reviewed by the CODM for fiscal 2017, 2016 and 2015. The Company used the same accounting policies to derive the segment results reported below as those used in the Company’s consolidated financial statements.

The Company’s CODM does not review inter-segment transactions when evaluating segment performance and allocating resources to each segment, and inter-segment transactions are not included in the segment revenue presented in the table below. As such, total segment revenue in the table below is equal to the Company’s consolidated revenue.

~~The Company’s CODM reviews gross profit as the lowest and only level of segment profit. As such, all items below gross profit~~assets, respectively, in the consolidated ~~statements of loss must be included to reconcile the consolidated gross profit presented~~balance sheets. The Company started receiving cash reimbursements in the ~~table below to the Company’s consolidated loss before income taxes.~~fourth quarter of fiscal 2021.

In order to determine gross profit for each reportable segment, the Company allocates direct costs and indirect costs to each segment’s cost of revenue. The Company allocates indirect costs, such as employee benefits for manufacturing employees, shared facilities services, information technology, purchasing, and customer service, when the costs are identifiable and beneficial to the reportable segment. The Company allocates these indirect costs based on a reasonable measure of utilization that considers the specific facts and circumstances of the costs being allocated.

Unallocated costs in the table below consisted primarily of manufacturing employees’ stock-based compensation, expenses for profit sharing and quarterly or annual incentive plans and matching contributions under the Company’s 401(k) plan. These costs were not allocated to the reportable segments' gross profit because the Company’s CODM does not review them regularly when evaluating segment performance and allocating resources.

~~Revenue, gross profit and gross margin for each of the Company's segments were as follows (in thousands, except percentages):~~

Revenue Gross Profit and Gross Margin
Year Ended Year Ended
June 25,
2017 June 26, 2016 June 28, 2015 June 25, 2017 June 26, 2016 June 28, 2015
Lighting Products
$701,467

$889,133

$906,502

$196,218

$238,242

$235,542
Lighting Products gross margin 28 % 27 % 26 %
LED Products 550,302
551,156
554,987
151,675
173,814
158,955
LED Products gross margin 28 % 32 % 29 %
Wolfspeed 221,231
176,338
171,016
103,465
94,622
99,721
Wolfspeed gross margin 47 % 54 % 58 %
Total segment reporting
$1,473,000

$1,616,627

$1,632,505
451,358
506,678
494,218
Unallocated costs (16,786 ) (19,604 ) (20,299 )
Consolidated gross profit
$434,572

$487,074

$473,919
Consolidated gross margin 30 % 30 % 29 %

~~Assets by Reportable Segment~~

Inventories are the only assets reviewed by the Company’s CODM when evaluating segment performance and allocating resources to the segments. The CODM reviews all of the Company's assets other than inventories on a consolidated basis. The following table sets forth the Company’s inventories by reportable segment for the fiscal years ended June 25, 2017 and June 26, 2016.

Unallocated inventories in the table below were not allocated to the reportable segments because the Company’s CODM does not review them when evaluating performance and allocating resources to each segment. Unallocated inventories consisted primarily of manufacturing employees’ stock-based compensation, profit sharing and quarterly or annual incentive compensation and matching contributions under the Company’s 401(k) plan.

~~Inventories for each of the Company's segments were as follows (in thousands):~~

June 25, 2017 June 26, 2016
Lighting Products $ 145,710
$ 172,261
LED Products 108,297
104,544
Wolfspeed 26,453
21,871
Total segment inventories 280,460
298,676
Unallocated inventories 3,925
4,866
Consolidated inventories
$284,385

$303,542

~~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. The following table sets forth the percentage of revenue from external customers by geographic area:

For the Years Ended
June 25, 2017 June 26, 2016 June 28, 2015
United States 56 % 59 % 57 %
China 22 % 20 % 21 %
Europe 10 % 8 % 9 %
South Korea 2 % 1 % 1 %
Japan 4 % 4 % 4 %
Malaysia 1 % 1 % 1 %
Taiwan 1 % 1 % 1 %
Other 4 % 6 % 6 %
Total percentage of revenue 100 % 100 % 100 %

~~The following table sets forth the Company’s tangible long-lived assets by country (in thousands):~~

June 25,
2017 June 26,
2016
United States
$483,953

$488,342
China 94,022
108,183
Other 3,288
3,198
Total tangible long-lived assets
$581,263

$599,723

Note 1516 – Concentrations of Risk

Financial instruments, which may subject the Company to a concentration of risk, consist principally of short-term investments, cash equivalents, accounts receivable and ~~accounts receivable.~~long-term receivables. Short-term investments consist primarily of municipal bonds, corporate bonds, U.S. agency securities, U.S. treasury securities, commercial paper, ~~and~~ certificates of deposit, and variable rate demand notes at interest rates that vary by security. The Company’s cash equivalents consist primarily of money market funds. Certain bank deposits may at times be in excess of the FDIC insurance limits.

The Company sells its products on account to manufacturers, distributors ~~retailers~~ and others worldwide and generally requires no collateral.

~~Revenue from Arrow Electronics, Inc.~~For the fiscal year ended June 26, 2022, two customers represented ~~12%, 10%~~20% and ~~12%~~18% of revenue, ~~for~~respectively. For the fiscal ~~2017, 2016~~year ended June 27, 2021, three customers represented 18%, 13% and ~~2015, respectively. Revenue from The Home Depot, Inc. represented 5%, 8% and 11%~~10% of revenue, ~~for~~respectively. For the fiscal ~~2017, 2016~~year ended June 28, 2020, two customers represented 19% and ~~2015,~~14% of revenue, respectively.

No other customers individually accounted for more than 10% of revenue for the ~~consolidated~~fiscal years ended June 26, 2022, June 27, 2021 and June 28, 2020.

Three customers accounted for 18%, 16% and 14% of the accounts receivable balance atas of June ~~25, 2017~~26, 2022, respectively. Two customers accounted for 16% and 16% of the accounts receivable balance as of June 27, 2021, respectively. No other customers accounted for more than 10% of the accounts receivable balance as of June 26, 2022 and June ~~26, 2016.~~27, 2021.

~~Arrow Electronics, Inc. is a customer of the LED Products and Wolfspeed segments. The Home Depot, Inc. is a customer of the Lighting Products segment.~~

Note 1617 – Retirement Savings Plan

The Company sponsors ~~one~~1 employee benefit plan (the 401(k) Plan) pursuant to Section 401(k) of the Internal Revenue ~~Code of 1986, as amended.~~Code. All U.S. employees are eligible to participate under the 401(k) Plan on the first day of a new fiscal month after the date of hire. Under the 401(k) Plan, there is no fixed dollar amount of retirement benefits; rather, the Company matches a defined percentage of employee deferrals, and employees vest in these matching funds over time. Employees choose their investment elections from a list of available investment options. During the fiscal years ended ~~June 25, 2017~~, June 26, ~~2016~~2022, June 27, 2021 and June 28, ~~2015~~,2020, the Company contributed approximately ~~$7.3~~$10.3 million, ~~$7.0~~$8.0 million and ~~$6.9~~$7.7 million to the 401(k) Plan, respectively. The Pension Benefit Guaranty Corporation does not insure the 401(k) Plan.

Note ~~17 – Related Party Transactions~~18 - Restructuring

The Company has approved various operational plans that include restructuring costs. All restructuring costs are recorded in other operating expense on the consolidated statement of operations.

Corporate Restructuring

In July ~~2010, Mark Swoboda was appointed Chief Executive Officer of Intematix Corporation (Intematix). Mark Swoboda is~~2019, the ~~brother~~Company realigned its sales resources as part of the ~~Company’s Chairman, Chief Executive Officer and President, Charles M. Swoboda. For~~Company's transition to a ~~number of years~~more focused semiconductor company. As a result, the Company recorded $0.6 million in contract termination costs during the fiscal year ended June 28, 2020. The plan has ~~purchased raw materials from Intematix pursuant to standard purchase orders in the ordinary course~~concluded and all expenses have been paid as of ~~business.~~June 27, 2021.

~~During fiscal~~ ~~2017~~,In September 2020, the Company ~~purchased $2.3 million of raw materials from Intematix, and~~realigned certain resources to further focus on areas vital to the Company's growth while driving efficiencies. As a result, the Company ~~had $0.0~~recorded $2.8 million ~~outstanding payable to Intematix~~in severance-related costs for the fiscal year ended June 27, 2021. The plan has concluded and all expenses have been paid as of June ~~25, 2017. During fiscal~~ ~~2016~~,27, 2021.

Table of Contents

In February 2021, the Company ~~purchased~~ ~~$3.9 million~~realigned the structure of ~~raw materials from Intematix, and~~its Asia sales presence. As a result, the Company ~~had~~ ~~$0.3~~recorded $0.6 million ~~outstanding payable to Intematix~~ in severance related costs for the fiscal year ended June 27, 2021. The plan has concluded and all expenses have been paid as of June 27, 2021.

In January 2022, the Company commenced a plan to open a global IT shared services hub in Belfast, Northern Ireland in partnership with the Northern Ireland government. As a result, the Company recorded $1.2 million in severance-related costs for the fiscal year ended June 26, ~~2016~~.

~~The Company currently owns approximately 15%~~2022, all of ~~the common stock of Lextar, an investment that was purchased in December 2014. As discussed in Note 1, “Business,” this investment was accounted~~which is accrued for under the equity method from the date of investment until June 2016 when the Company chose for its representative not to stand for re-election as a member of the Lextar board of directors. During fiscal 2016, the Company purchased approximately $31.7 million of inventory from Lextar and the Company had $7.6 million outstanding payable to Lextar as of June 26, ~~2016.~~2022.

~~Note 18 - Costs Associated with LED Business~~Factory Optimization Restructuring

In ~~June 2015, our Board of Directors approved~~May 2019, the Company started a significant, multi-year factory optimization plan ~~to restructure the LED Products business. The restructuring reduced excess capacity~~anchored by a state-of-the-art, automated 200mm capable Silicon Carbide and ~~overhead~~GaN fabrication facility and a large materials factory at its U.S. campus headquarters in ~~order to improve the cost structure moving forward. The primary components~~Durham, North Carolina. As part of the ~~restructuring include~~plan, the planned sale or abandonment of certain manufacturing equipment, facility consolidation and the elimination of certain positions. The restructuring activity ended in the second quarter of fiscal 2016. During fiscal 2016, the company realized $18.8 million in LEDCompany has incurred restructuring charges ~~which were partially offset by~~associated with the movement of equipment as well as disposals on certain long-lived assets.

In September 2019, the Company announced its intent to build a ~~$1.1~~new Silicon Carbide device fabrication facility in Marcy, New York to complement the expansion of the Company's Silicon Carbide materials production capacity at its U.S. campus headquarters in Durham, North Carolina.

The factory optimization restructuring plan concluded in fiscal 2022. For the fiscal years ended June 26, 2022, June 27, 2021 and June 28, 2020, the Company expensed $4.8 million, ~~gain on~~$5.2 million and $9.0 million, respectively, of restructuring charges associated with the ~~sale~~movement of ~~long-lived assets~~equipment related to the factory optimization plan, of which $0.2 million was accrued for as of June 26, 2022. Additionally, the Company expensed $1.3 million and $3.4 million of restructuring ~~which were sold for a value in excess of their estimated net realizable value during fiscal 2016.~~

~~The following table summarizes the actual~~ charges ~~incurred (in thousands):~~

Capacity and overhead cost reductions Amounts incurred during fiscal year 2015 Amounts incurred during fiscal year 2016 Cumulative amounts incurred through fiscal year 2016 Affected Line Item in the Consolidated Statements of Loss
Loss on disposal or impairment of long-lived assets
$42,716

$15,506

$58,222
Loss on disposal or impairment of long-lived assets
Severance expense 2,019
264
2,283
Sales, general and administrative expenses
Lease termination and facility consolidation costs 1,246
3,079
4,325
Sales, general and administrative expenses
Increase in channel inventory reserves 26,479
—
26,479
Revenue, net
Increase in inventory reserves 11,091
—
11,091
Cost of revenue, net
Total restructuring charges
$83,551

$18,849

$102,400

~~In the table above, the lease termination costs relate to the relocation~~associated with disposals of certain manufacturing operations from a leased facility in Huizhou, China to a company-owned facility which is also in Huizhou, China. In June 2015, the Company ceased using the leased facility and recognized a $0.5 million chargelong-lived assets for the ~~lease contract termination cost.~~fiscal years ended June 26, 2022 and June 27, 2021, respectively. The Company incurred less expense in connection with the plan than previously projected due to strategic changes in the Company's capacity expansion plans at its Durham and RTP facilities.

In the table above, the severance expense relates to a reduction in manufacturing and support positions. There is not a significant retention period for impacted employees and all severance was paid in fiscal 2016.

Note 19 - Subsequent ~~Event~~Events

~~On April 25, 2017,~~In July 2022, the Company ~~announced that it intended~~received an arbitration award in relation to ~~form~~ a ~~joint venture,~~former customer failing to ~~be called Cree Venture LED Company, Ltd. (Cree Venture LED), with San’an Optoelectronics Co., Ltd. (San’an)~~fulfill contractual obligations to ~~produce and deliver to market high performing, mid-power lighting class LEDs in an exclusive arrangement to serve the expanding markets~~purchase a certain amount of ~~North and South America, Europe and Japan, and serve China and the rest~~product over a period of ~~the world on a non-exclusive basis.~~

~~Effective July 17, 2017,~~time. In August 2022, the Company ~~entered into a Shareholders Agreement with San’an and Cree Venture LED pursuant to which~~received payment for the Company and San’an funded their contributions to Cree Venture LED and agreed upon the management and operation of Cree Venture LED. The Company contributed $5.1 million for a 51% ownership interest and San’an contributed $4.9 million for a 49% ownership interest. Cree Venture LED will have a five-member board of directors, three of which will be designated by the Company and two of which will be designated by San’an.

In connection with forming Cree Venture LED and entering into the Shareholders Agreement, Cree Venture LED and San’an also entered into a manufacturing agreement pursuant to which San’an will supply Cree Venture LED with mid-power LED products, and Cree Venture LED and the Company entered into a sales agency agreement pursuant to which the Company will be the independent sales representative of Cree Venture LEDarbitration award in the ~~exclusive markets, among certain~~amount of $49.0 million, net of estimated attorneys' fees and other ~~ancillary agreements related to~~costs, and will recognize a corresponding gain from arbitration in the ~~transaction.~~

~~The Company targets that Cree Venture LED will finish becoming fully established and begin~~ first ~~product qualifications with customers by the end~~quarter of ~~calendar 2017.~~

~~Note 20 – Quarterly Results of Operations - Unaudited~~

~~The following is a summary of the Company’s consolidated quarterly results of operations for each of the~~ fiscal ~~years ended~~ ~~June 25, 2017~~ ~~and~~ ~~June 26, 2016~~ ~~(in thousands, except per share data):~~2023.

September 25,
2016 December 25, 2016 March 26, 2017 June 25,
2017 Fiscal Year 2017
Revenue, net
$371,231

$401,325

$341,505

$358,939

$1,473,000
Cost of revenue, net 261,302
260,759
255,429
260,938
1,038,428
Gross profit 109,929
140,566
86,076
98,001
434,572
Net loss 566
6,219
(99,013 ) (5,890 ) (98,118 )
Earnings (loss) per share:
Basic
$—

$0.06

($1.02 )
($0.06 )
($1.00 )
Diluted
$—

$0.06

($1.02 )
($0.06 )
($1.00 )

September 27,
2015 December 27,
2015 March 27,
2016 June 26,
2016 Fiscal Year 2016
Revenue, net
$425,489

$435,806

$366,919

$388,413

$1,616,627
Cost of revenue, net 294,916
301,361
257,886
275,390
1,129,553
Gross profit 130,573
134,445
109,033
113,023
487,074
Net (loss) income (24,489 ) 13,442
152
(10,641 ) (21,536 )
(Loss) earnings per share:
Basic
($0.24 )
$0.13

$—

($0.11 )
($0.21 )
Diluted
($0.24 )
$0.13

$—

($0.11 )
($0.21 )

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Annual Report, our disclosure controls and procedures are effective in that they provide reasonable assurances that the information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes to Internal Control Over Financial Reporting

There have been no changes to our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the fourth quarter of fiscal ~~2017~~2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In the course of our ongoing preparations for making management’s report on internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002, from time to time we have identified areas in need of improvement and have taken remedial actions to strengthen the affected controls as appropriate. We make these and other changes to enhance the effectiveness of our internal controls over financial reporting, which do not have a material effect on our overall internal control.

We will continue to evaluate the effectiveness of our disclosure controls and procedures and internal control over financial reporting on an ongoing basis and will take action as appropriate.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements.

Our internal control over financial reporting includes those policies and procedures that:


~~(i)~~	~~pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;~~


~~(ii)~~	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and


~~(iii)~~	~~provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.~~

(i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

In making the assessment of internal control over financial reporting, our management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Based on that assessment and those criteria, management has concluded that our internal control over financial reporting was effective as of June ~~25, 2017~~.26, 2022.

The effectiveness of our internal control over financial reporting as of June ~~25, 2017~~26, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report in Item 8 of this Annual Report.

Table of Contents

Item 9B.Other Information

Not applicable.

Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Table of Contents

PART III

Certain information called for in Items 10, 11, 12, 13 and 14 is incorporated by reference from our definitive proxy statement relating to our annual meeting of shareholders, which will be filed with the SEC within 120 days after the end of fiscal ~~2017~~.2022.

Item 10.Directors, Executive Officers and Corporate Governance

Item 11.Executive Compensation

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13.Certain Relationships and Related Transactions, and Director Independence

Item 14.Principal Accountant Fees and Services

Table of Contents

PART IV

Item 15.Exhibits and Financial Statement Schedules

(a)(1) and (2) The financial statements and reports of independent registered public accounting firm are filed as part of this Annual Report (see “Index to Consolidated Financial Statements” at Item 8). The financial statement schedules are not included in this item as they are either not applicable or are included as part of the consolidated financial statements.

(a)(3) The following exhibits have been or are being filed herewith and are numbered in accordance with Item 601 of Regulation S-K:

Incorporated by Reference

Exhibit No.

Description

Filed Herewith

Form

Exhibit

Filing Date

2.1^

Purchase Agreement, dated March 14, 2019, by and between Cree, Inc. and IDEAL Industries, Inc., as amended

8-K

2.1

5/16/2019

2.2^

Asset Purchase Agreement, dated October 18, 2020, between Cree, Inc., SMART Global Holdings, Inc. and Chili Acquisition, Inc., as amended

8-K

2.1

3/2/2021

3.1

Restated Articles of Incorporation, as amended

10-Q

3.1

10/28/2021

3.2

Amended and Restated Bylaws, dated October 25, 2021

8-K

3.1

10/26/2021

4.1

Description of the Registered Securities

10-Q

4.1

10/28/2021

4.2

Indenture, dated as of April 21, 2020, between Cree, Inc. and U.S. Bank National Association

8-K

4.1

4/21/2020

4.3

Form of 1.75% Convertible Senior Note due 2026 (included in Exhibit 4.2)

8-K

4.2

4/21/2020

4.4

Indenture, dated as of February 3, 2022, between Wolfspeed, Inc. and U.S. Bank National Association

8-K

4.1

2/3/2022

4.5

Form of 0.25% Convertible Senior Note due 2028 (included in Exhibit 4.4)

8-K

4.2

2/3/2022

10.1*

2013 Long-Term Incentive Compensation Plan, as amended ("2013 LTIP")

10-Q

10.3

10/28/2021

10.2*

Form of Nonqualified Stock Option Award Agreement under the 2013 LTIP

10-Q

10.4

1/22/2014

10.3*

Form of Restricted Stock Unit Award Agreement under the 2013 LTIP

10-Q

10.5

1/22/2014

10.4*

Form of Master Performance Unit Award Agreement under the 2013 LTIP

8-K

10.4

8/29/2014

10.5*

Form of Performance Share Award Agreement - Section 16 Officer under the 2013 LTIP

10-Q

10.6

10/21/2015

10.6*

Form of Stock Unit Award Agreement (Performance-Based) for Gregg A. Lowe, dated September 27, 2017, under the 2013 LTIP

8-K

10.3

9/28/2017

10.7*

Form of Stock Unit Award Agreement (Performance-Based) under the 2013 LTIP

10-K

10.41

8/20/2018

10.8*

Form of Stock Unit Award Agreement (Time-Based) under the 2013 LTIP

10-K

10.42

8/20/2018

10.9*

Form of Performance Share Award Agreement for Gregg A. Lowe

8-K

10.1

9/8/2020

10.10*

Form of Restricted Stock Unit Award Agreement under the 2013 LTIP for Gregg Lowe

10-Q

10.4

10/28/2021

10.11*

Form of Restricted Stock Unit Award Agreement under the 2013 LTIP for Executive Officers other than Gregg Lowe

10-Q

10.5

10/28/2021

10.12*

Form of Restricted Stock Unit Award Agreement under the 2013 LTIP for Non-Employee Directors

10-Q

10.6

10/28/2021

10.13*

Form of Performance Share Award Agreement under the 2013 LTIP for Gregg Lowe

10-Q

10.7

10/28/2021

10.14*

Form of Performance Share Award Agreement under the 2013 LTIP for Executive Officers other than Gregg Lowe

10-Q

10.8

10/28/2021

Table of Contents

10.15*

Notice of Grant to Gregg A. Lowe, dated August 23, 2021

8-K

10.1

8/27/2021

10.16*

Notice of Grant to Neill P. Reynolds, dated November 21, 2021

8-K

10.1

11/21/2021

10.17*

2020 Employee Stock Purchase Plan

10-Q

10.9

10/28/2021

10.18*

Change of Control Agreement for Chief Executive Officer between Cree, Inc. and Gregg A. Lowe, dated September 22, 2017

8-K

10.1

9/28/2017

10.19*

First Amendment to Change in Control Agreement (for Chief Executive Officer), dated May 4, 2018

8-K

10.3

5/4/2018

10.20*

Cree Severance Plan - Senior Leadership Team, Plan Document and Summary Plan Description, effective as of April 30, 2018

8-K

10.1

5/4/2018

10.21*

Form of Participation Agreement Under Cree Severance Plan - Senior Leadership Team

8-K

10.2

5/4/2018

10.22*

Schedule of Compensation of Non-Employee Directors

8-K

10.1

1/26/2021

10.23*

Non-Employee Director Stock Compensation and Deferral Program, as amended and restated

10-Q

10.10

10/28/2021

10.24*

Form of Cree, Inc. Indemnification Agreement for Directors and Officers

8-K

10.1

10/29/2010

10.25

Credit Agreement, dated January 9, 2015, by and among Cree, Inc., Wells Fargo Bank, National Association, as administrative agent and lender, E-conolight LLC, a domestic subsidiary of Cree, Inc., as guarantor, and the other lenders party thereto

8-K

10.1

1/12/2015

10.26

First Amendment to the Credit Agreement, dated September 10, 2015, by and among Cree, Inc., Wells Fargo Bank, National Association, as administrative agent, E-conolight LLC, a domestic subsidiary of Cree, Inc., as guarantor, and the other lenders party thereto

10-Q

10.4

1/24/2018

10.27

Credit Agreement Consent, dated as of July 13, 2016, by and among Cree, Inc., Wells Fargo Bank, National Association, as administrative agent and lender, E-conolight LLC, a domestic subsidiary of Cree, Inc., as guarantor, and the other lenders party to the Credit Agreement

10-Q

10.2

10/19/2016

10.28

Second Amendment to Credit Agreement, dated November 13, 2017, by and among Cree, Inc., Wells Fargo Bank, National Association, as administrative agent, E-conolight LLC, a domestic subsidiary of Cree, Inc., as guarantor, and the other lenders party thereto

8-K

10.1

11/16/2017

10.29

Third Amendment to the Credit Agreement, dated as of August 21, 2018, by and among Cree, Inc., Wells Fargo Bank, National Association, as administrative agent, E-conolight LLC, as guarantor, and the other lenders party thereto

10-Q

10.1

10/17/2018

10.30

Credit Agreement Consent, dated as of March 14, 2019, by and among Cree, Inc., Wells Fargo Bank, National Association, as administrative agent and lender, E-conolight LLC, a domestic subsidiary of Cree, Inc., as guarantor, and the other lenders party to the Credit Agreement

10-Q

10.1

5/3/2019

10.31

Fourth Amendment to the Credit Agreement, dated as of December 16, 2019, by and among Cree, Inc., Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto

8-K

10.1

12/19/2019

10.32

Fifth Amendment to the Credit Agreement, dated as of March 27, 2020, by and among Cree, Inc., Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto

10-Q

10.1

4/30/2020

10.33

Sixth Amendment to the Credit Agreement, dated as of October 26, 2021, by and among Wolfspeed, Inc., Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto

10-Q

10.1

1/27/2022

10.34

Seventh Amendment to the Credit Agreement, dated as of January 25, 2022, by and among Wolfspeed, Inc., Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto

8-K

10.1

1/26/2022

10.35

Equity Distribution Agreement by and among Cree, Inc. and Wells Fargo Securities, LLC, BMO Capital Markets Corp., BofA Securities Inc., Canaccord Genuity LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and Truist Securities, Inc., dated February 11, 2021

8-K

1.1

2/11/2021

10.36

Form of Confirmation of Call Option Transactions

8-K

10.1

2/3/2022

21.1

Subsidiaries of the Company

Table of Contents

~~EXHIBIT NO.~~

23.1

Consent of PricewaterhouseCoopers LLP

~~DESCRIPTION~~X

~~2.1~~

Asset Purchase Agreement, dated as of July 13, 2016, by and among Infineon Technologies AG, Cree, Inc., and Cree Sweden AB (incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K/A, dated July 13, 2016, filed with the Securities and Exchange Commission on July 18, 2016)

~~3.1~~

Articles of Incorporation, as amended (incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2002, as filed with the Securities and Exchange Commission on August 19, 2002)

~~3.2~~

Bylaws, as amended and restated (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, dated January 27, 2015, filed with the Securities and Exchange Commission on January 28, 2015)

~~4.1~~

~~Specimen Common Stock Certificate~~

10.1*

2004 Long-Term Incentive Compensation Plan, as amended (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated October 23, 2012, as filed with the Securities and Exchange Commission on October 25, 2012)

10.2*

Addendum to Form of Master Stock Option Award Agreement Terms and Conditions for Grants of Nonqualified Stock Options to Non-Employee Directors (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2009, as filed with the Securities and Exchange Commission on October 21, 2009)

10.3*

Form of Nonqualified Stock Option Award Agreement for Non-Employee Directors (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 23, 2012, as filed with the Securities and Exchange Commission on October 17, 2012)

10.4*

Form of Master Stock Option Award Agreement for Grants of Nonqualified Stock Options (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 24, 2006, as filed with the Securities and Exchange Commission on November 2, 2006)

10.5*

Form of Master Stock Option Award Agreement for Grants of Nonqualified Stock Options (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 26, 2010, as filed with the Securities and Exchange Commission on January 19, 2011)

10.6*

Form of Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 23, 2012, as filed with the Securities and Exchange Commission on October 17, 2012)

10.7*

Form of Master Restricted Stock Award Agreement (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 24, 2006, as filed with the Securities and Exchange Commission on November 2, 2006)

10.8*

Form of Restricted Stock Award Agreement (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 23, 2012, as filed with the Securities and Exchange Commission on October 17, 2012)

10.9*

Non-Employee Director Stock Compensation and Deferral Program (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2009, as filed with the Securities and Exchange Commission on October 21, 2009)



10.10* 31.1		Amendment One to Non-Employee Director Stock Compensation and Deferral Program (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 26, 2010, as filed with the Securities and Exchange Commission on January 19, 2011)

10.11*	Cree, Inc. Severance Plan for Section 16 Officers, as amended (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated October 28, 2013, as filed with the Securities and Exchange Commission on October 31, 2013)

10.12*	Change in Control Agreement for Chief Executive Officer, effective December 17, 2012, between Cree, Inc. and Charles M. Swoboda (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated December 17, 2012, as filed with the Securities and Exchange Commission on December 20, 2012)

10.13*	Form of Cree, Inc. Change in Control Agreement for Section 16 Officers other than the Chief Executive Officer (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, dated December 17, 2012, as filed with the Securities and Exchange Commission on December 20, 2012)

10.14*	Form of Cree, Inc. Indemnification Agreement for Directors and Officers (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated October 25, 2010, as filed with the Securities and Exchange Commission on October 29, 2010)

10.15*	Form of Master Performance Unit Award Agreement (incorporated herein by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K, dated August 30, 2013, as filed with the Securities and Exchange Commission on September 5, 2013)

10.16*	Form of Stock Unit Award Agreement (Time-Based) (incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2013, as filed with the Securities and Exchange Commission on October 23, 2013)

10.17*	Form of Stock Unit Award Agreement (Performance-Based) (incorporated herein by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2013, as filed with the Securities and Exchange Commission on October 23, 2013)

10.18*	2005 Employee Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, dated October 29, 2013, as filed with the Securities and Exchange Commission on October 29, 2013)

10.19*	Form of Nonqualified Stock Option Award Agreement (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2013, as filed with the Securities and Exchange Commission on January 22, 2014)

10.20*	Form of Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2013, as filed with the Securities and Exchange Commission on January 22, 2014)

10.21*	Form of Master Performance Unit Award Agreement (incorporated herein by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, dated August 25, 2014, filed with the Securities and Exchange Commission on August 29, 2014)

10.22*	2013 Long-Term Incentive Compensation Plan, as amended (incorporated herein by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, dated October 25, 2016, filed with the Securities and Exchange Commission on October 28, 2016)

~~10.23~~	Credit Agreement, dated January 9, 2015, by and between Cree, Inc., Wells Fargo Bank, National Association, as administrative agent and lender, E-conolight LLC, a domestic subsidiary of the Company, as guarantor, and the other lenders party thereto (incorporated herein by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, dated January 9, 2015, filed with the Securities and Exchange Commission on January 12, 2015)

~~10.24~~	Credit Agreement Consent, dated as of July 13, 2016, by and between Cree, Inc., Wells Fargo Bank, National Association, as administrative agent and lender, E-conolight LLC, a domestic subsidiary of the Company, as guarantor, and the other lenders party to the Credit Agreement (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 25, 2016, as filed with the Securities and Exchange Commission on October 19, 2016)

10.25*	Notice of Grant to Charles M. Swoboda (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated August 23, 2016, filed with the Securities and Exchange Commission on August 25, 2016)

10.26*

Notice of Grant to Michael E. McDevitt (incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, dated August 23, 2016, filed with the Securities and Exchange Commission on August 25, 2016)

10.27*

Management Incentive Compensation Plan, as amended and restated (incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K, dated August 23, 2016, as filed with the Securities and Exchange Commission on August 25, 2016)

10.28*

Schedule of Compensation for Non-Employee Directors (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2015, as filed with the Securities and Exchange Commission on October 21, 2015)

10.29*

Form of Performance Share Award Agreement - Section 16 Officer (incorporated herein by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2015, as filed with the Securities and Exchange Commission on October 21, 2015)

10.30*

Change in Control Agreement for Section 16 Officers other than the Chief Executive Officer, dated July 13, 2016, by and between Cree, Inc. and Franco Plastina (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated July 13, 2016, filed with the Securities and Exchange Commission on July 18, 2016)

~~10.31~~

Termination Agreement, dated as of March 6, 2017, by and between Cree, Inc. and Infineon Technologies AG (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, March 6, 2017, filed with the Securities and Exchange Commission on March 7, 2017)

10.32*

Separation, General Release and Consulting Agreement, dated May 18, 2017, between Cree, Inc. and Charles M. Swoboda (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated May 18, 2017, as filed with the Securities and Exchange Commission on May 24, 2017)

~~21.1~~

~~Subsidiaries of the Company~~

~~23.1~~

~~Consent of PricewaterhouseCoopers LLP~~

~~23.2~~

~~Consent of KPMG~~

~~31.1~~

Certification by Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

~~31.2~~

Certification by Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

~~32.1~~

Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

~~32.2~~

Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

99.1**

~~Audited financial statements of Lextar Electronics Corporation as of and for the years ended December 31, 2015 and 2014.~~

~~101~~

The following materials from ~~Cree,~~Wolfspeed, Inc.’s Annual Report on Form 10-K for the fiscal year ended June ~~25, 2017~~26, 2022 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of ~~Loss;~~Operations; (iii) Consolidated Statements of Comprehensive Loss; (iv) Consolidated Statements of Cash Flows; (v) Consolidated Statements of Shareholders' Equity; and (vi) Notes to Consolidated Financial Statements

*104

The cover page from the Wolfspeed, Inc.'s Annual Report on Form 10-K for the fiscal year ended June 26, 2022 formatted in Inline XBRL (included in Exhibit 101)


*		Management contract or compensatory plan or arrangement
^
**	~~The financial statements as~~Portions of ~~and for the years ended December 31, 2015 and 2014 of Lextar Electronics Corporation, prepared by Lextar and audited by its independent public accounting firm,~~ ~~are included in~~ this ~~Annual Report~~exhibit have been omitted pursuant to Rule ~~3-09~~601(b)(2) of Regulation ~~S-X.~~ S-K. The omitted information is not material and is the type of information that the Company customarily and actually treats as private and confidential.

Item 16.Form 10-K Summary

None.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


WOLFSPEED, INC.
Date:		August 22, 2022

~~CREE, INC.~~
~~Date:~~	~~August 23, 2017~~

By:	/s/ C~~HARLES~~ ~~M. SWOBODA~~ Gregg A. Lowe
		~~Charles M. Swoboda~~Gregg A. Lowe
		~~Chairman,~~ Chief Executive Officer and President
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ GREGG A. LOWE

Chief Executive Officer and President

August 22, 2022

Gregg A. Lowe

(Principal Executive Officer)

~~Signature~~

~~Title~~

~~Date~~

/s/ C~~HARLES~~ ~~M. SWOBODA~~ NEILL P.REYNOLDS

~~Chairman, Chief Executive Officer and President~~

~~August 23, 2017~~

~~Charles M. Swoboda~~

~~/s/ MICHAEL~~ ~~E. M~~CD~~EVITT~~

Executive Vice President and Chief Financial Officer

August ~~23, 2017~~22, 2022

~~Michael E. McDevitt~~Neill P. Reynolds

(Principal Financial and ~~Chief~~Principal Accounting Officer)

/s/ C~~LYDE~~DARREN R. H~~OSEIN~~ JACKSON

Chairman and Director

August ~~23, 2017~~22, 2022

~~Clyde R. Hosein~~

~~/s/ ROBERT~~ ~~A. INGRAM~~

~~Director~~

~~August 23, 2017~~

~~Robert A. Ingram~~

~~/s/ DARREN~~ ~~R. JACKSON~~

~~Director~~

~~August 23, 2017~~

Darren R. Jackson

~~/s/ C. HOWARD~~ NYE

~~Director~~

~~August 23, 2017~~

~~C. Howard Nye~~

~~/s/ JOHN~~ ~~B. REPLOGLE~~

~~Director~~

~~August 23, 2017~~

~~John B. Replogle~~

~~/s/ THOMAS~~ ~~H. WERNER~~

~~Director~~

~~August 23, 2017~~

~~Thomas H. Werner~~

~~/s/ ANNE~~ ~~C. WHITAKER~~

~~Director~~

~~August 23, 2017~~

~~Anne C. Whitaker~~

~~EXHIBIT INDEX~~

~~EXHIBIT NO.~~

~~DESCRIPTION~~

/s/ GLENDA DORCHAK

Director

August 22, 2022

~~2.1~~Glenda Dorchak

~~3.1~~

~~3.2~~

~~4.1~~

~~Specimen Common Stock Certificate~~

10.1*

10.2*

10.3*

10.4*

10.5*

Form of Master Stock Option Award Agreement for Grants of Nonqualified Stock Options (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 26, 2010, as filed with the Securities and Exchange Commission on January 19, 2011)

10.6*

10.7*

10.8*

10.9*

10.10*

Amendment One to Non-Employee Director Stock Compensation and Deferral Program (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 26, 2010, as filed with the Securities and Exchange Commission on January 19, 2011)

10.11*

Cree, Inc. Severance Plan for Section 16 Officers, as amended (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated October 28, 2013, as filed with the Securities and Exchange Commission on October 31, 2013)

10.12*

Change in Control Agreement for Chief Executive Officer, effective December 17, 2012, between Cree, Inc. and Charles M. Swoboda (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated December 17, 2012, as filed with the Securities and Exchange Commission on December 20, 2012)

10.13*

Form of Cree, Inc. Change in Control Agreement for Section 16 Officers other than the Chief Executive Officer (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, dated December 17, 2012, as filed with the Securities and Exchange Commission on December 20, 2012)

10.14*

Form of Cree, Inc. Indemnification Agreement for Directors and Officers (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated October 25, 2010, as filed with the Securities and Exchange Commission on October 29, 2010)

/s/ JOHN C. HODGE

Director

August 22, 2022

10.15*John C. Hodge

Form of Master Performance Unit Award Agreement (incorporated herein by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K, dated August 30, 2013, as filed with the Securities and Exchange Commission on September 5, 2013)

10.16*

Form of Stock Unit Award Agreement (Time-Based) (incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2013, as filed with the Securities and Exchange Commission on October 23, 2013)

10.17*

Form of Stock Unit Award Agreement (Performance-Based) (incorporated herein by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 29, 2013, as filed with the Securities and Exchange Commission on October 23, 2013)

10.18*

2005 Employee Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, dated October 29, 2013, as filed with the Securities and Exchange Commission on October 29, 2013)

10.19*

Form of Nonqualified Stock Option Award Agreement (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2013, as filed with the Securities and Exchange Commission on January 22, 2014)

10.20*

Form of Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2013, as filed with the Securities and Exchange Commission on January 22, 2014)

10.21*

Form of Master Performance Unit Award Agreement (incorporated herein by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, dated August 25, 2014, filed with the Securities and Exchange Commission on August 29, 2014)

10.22*

2013 Long-Term Incentive Compensation Plan, as amended (incorporated herein by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, dated October 25, 2016, filed with the Securities and Exchange Commission on October 28, 2016)

~~10.23~~

Credit Agreement, dated January 9, 2015, by and between Cree, Inc., Wells Fargo Bank, National Association, as administrative agent and lender, E-conolight LLC, a domestic subsidiary of the Company, as guarantor, and the other lenders party thereto (incorporated herein by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, dated January 9, 2015, filed with the Securities and Exchange Commission on January 12, 2015)

~~10.24~~

Credit Agreement Consent, dated as of July 13, 2016, by and between Cree, Inc., Wells Fargo Bank, National Association, as administrative agent and lender, E-conolight LLC, a domestic subsidiary of the Company, as guarantor, and the other lenders party to the Credit Agreement (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 25, 2016, as filed with the Securities and Exchange Commission on October 19, 2016)

10.25*

Notice of Grant to Charles M. Swoboda (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated August 23, 2016, filed with the Securities and Exchange Commission on August 25, 2016)

10.26*

10.27*

10.28*

10.29*

10.30*

~~10.31~~

/s/ CLYDE R. HOSEIN

August 22, 2022

Clyde R. Hosein

10.32*

~~21.1~~

~~Subsidiaries of the Company~~

~~23.1~~

~~Consent of PricewaterhouseCoopers LLP~~

~~23.2~~

~~Consent of KPMG~~

~~31.1~~

~~Certification by Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

~~31.2~~

~~Certification by Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

~~32.1~~

~~Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

~~32.2~~

~~Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

99.1**

~~Audited financial statements of Lextar Electronics Corporation as of and for the years ended December 31, 2015 and 2014.~~

~~101~~

The following materials from Cree, Inc.’s Annual Report on Form 10-K for the fiscal year ended June 25, 2017 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Loss; (iii) Consolidated Statements of Comprehensive Loss; (iv) Consolidated Statements of Cash Flows; (v) Consolidated Statements of Shareholders' Equity; and (vi) Notes to Consolidated Financial Statements

~~Management contract or compensatory plan~~

/s/ DUY-LOAN T. LE

Director

August 22, 2022

Duy-Loan T. Le

~~The financial statements as of and for the years ended December 31, 2015 and 2014 of Lextar Electronics Corporation, prepared by Lextar and audited by its independent public accounting firm,~~ ~~are included in this Annual Report pursuant to Rule 3-09 of Regulation S-X.~~/s/ JOHN B. REPLOGLE

Director

August 22, 2022

John B. Replogle

/s/ MARVIN A. RILEY

Director

August 22, 2022

Marvin A. Riley

/s/ THOMAS H. WERNER

Director

August 22, 2022

Thomas H. Werner



North Carolina		56-1572719
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4600 Silicon Drive ~~Durham, North Carolina~~		27703
Durham	North Carolina
(Address of principal executive offices)		(Zip Code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00125 par value	WOLF	~~The NASDAQ~~New York Stock ~~Market LLC~~Exchange


Large accelerated filer		☒			Accelerated filer		☐

~~Large accelerated filer~~		ý	~~Accelerated filer~~	¨

Non-accelerated filer	¨ ~~(Do not check if a smaller reporting company)~~ ☐		Smaller reporting company			¨☐

					Emerging growth company		¨ ☐


	Fiscal Years Ended
	June 26, 2022			June 27, 2021			June 28, 2020
(in millions of U.S. Dollars, except share data)	Amount	% of Revenue		Amount	% of Revenue		Amount	% of Revenue
Revenue, net	$746.2	100.0	%	$525.6	100.0	%	$470.7	100.0	%
Cost of revenue, net	496.9	66.6	%	361.0	68.7	%	312.2	66.3	%
Gross profit	249.3	33.4	%	164.6	31.3	%	158.5	33.7	%
Research and development	196.4	26.3	%	177.8	33.8	%	152.0	32.3	%
Sales, general and administrative	203.5	27.3	%	181.6	34.6	%	181.7	38.6	%
Amortization or impairment of acquisition-related intangibles	13.6	1.8	%	14.5	2.8	%	14.5	3.1	%
Abandonment of long-lived assets	—	—	%	73.9	14.1	%	—	—	%
(Gain) loss on disposal or impairment of other assets	(0.3)	—	%	1.6	0.3	%	1.5	0.3	%

Other operating expense	83.9	11.2	%	29.1	5.5	%	32.9	7.0	%
Operating loss	(247.8)	(33.2)	%	(313.9)	(59.7)	%	(224.1)	(47.6)	%
Non-operating expense (income), net	38.3	5.1	%	26.3	5.0	%	(18.5)	(3.9)	%
Loss before income taxes	(286.1)	(38.3)	%	(340.2)	(64.7)	%	(205.6)	(43.7)	%
Income tax expense (benefit)	9.0	1.2	%	1.1	0.2	%	(8.0)	(1.7)	%
Net loss from continuing operations	(295.1)	(39.5)	%	(341.3)	(64.9)	%	(197.6)	(42.0)	%
Net income (loss) from discontinued operations	94.2	12.6	%	(181.2)	(34.5)	%	7.0	1.5	%
Net loss	(200.9)	(26.9)	%	(522.5)	(99.4)	%	(190.6)	(40.5)	%
Net income attributable to noncontrolling interest	—	—	%	1.4	0.3	%	1.1	0.2	%
Net loss attributable to controlling interest	($200.9)	(26.9)	%	($523.9)	(99.7)	%	($191.7)	(40.7)	%

Basic and diluted loss per share
Continuing operations	($2.46)			($3.04)			($1.83)

Net loss attributable to controlling interest	($1.67)			($4.66)			($1.78)



	Fiscal Years Ended									Year-Over-Year Change
	June 25, 2017			June 26, 2016			June 28, 2015			2016 to 2017					2015 to 2016
Research and development		$158,549			$168,848			$182,797			($10,299	)	(6	)%		($13,949	)	(8	)%
Percent of revenue	11		%	10		%	11		%



ý☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended	June ~~25, 2017~~26, 2022



¨☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to



Part I
Item 1.			Business			4
Item 1A.			Risk Factors			10
Item 1B.			Unresolved Staff Comments			24
Item 2.			Properties			25
Item 3.			Legal Proceedings			25
Item 4.			Mine Safety Disclosures			25

Part II						~~Page~~
~~Part I~~
Item 1.	~~Business~~5.	5

~~Item 1A.~~	~~Risk Factors~~	11

~~Item 1B.~~	~~Unresolved Staff Comments~~	25

~~Item 2.~~	~~Properties~~	26

~~Item 3.~~	~~Legal Proceedings~~	26

~~Item 4.~~	~~Mine Safety Disclosures~~	26

~~Part II~~
~~Item 5.~~	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2726

Item 6.	~~Selected Financial Data~~	29Reserved			27

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			3028

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk			4943

Item 8.	Financial Statements and Supplementary Data			5044

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			90

Item 9A.	Controls and Procedures			90

Item 9B.	Other Information			91
Item 9C.			Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			91
~~Part III~~
Part III
Item 10.			Directors, Executive Officers and Corporate Governance			92

Item 11.	Executive Compensation			92

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			92

Item 13.	Certain Relationships and Related Transactions, and Director Independence			92

Item 14.	Principal Accountant Fees and Services			92

PART IV
Item 15.			Exhibits and Financial Statement Schedules			93
Item 16.			Form 10-K Summary			95
~~SIGNATURES~~			96



		Size (approximate gross square footage)
Location	Segment Utilization¹	Total	Production	Facility Services and Warehousing	Administrative Function	Housing / Other
Owned Facilities
Durham, NC	All	966,844	536,169	83,860	346,815	—
Research Triangle Park, NC	3	203,995	90,613	62,855	50,527	—
Racine, WI	1	802,845	160,000	418,000	224,845	—
Huizhou, China	2	823,951	332,271	116,568	41,764	333,348
Total owned		2,797,635	1,119,053	681,283	663,951	333,348

Leased Facilities
Durham, NC	1	189,430	15,200	167,584	6,646	—
Laredo, TX	1	100,545	—	97,545	3,000	—
Goleta, CA	1,2	25,623	—	1,882	23,741	—
Yorkville, WI	1	79,016	—	77,316	1,700	—
Pleasant Prairie, WI	1	147,877	—	145,477	2,400	—
Fayetteville, AR	3	26,265	10,956	—	15,309
Sesto Fiorentino, Italy	1,2	63,670	20,672	24,998	18,000	—
Hong Kong	All	38,913	—	8,958	29,955	—
Misc. sales and support offices	All	66,189	—	15,477	50,712	—
Total leased		737,528	46,828	539,237	151,463	—

Total gross square footage		3,535,163	1,165,881	1,220,520	815,414	333,348



	Fiscal 2017				Fiscal 2016
	High		Low		High		Low
First Quarter		$28.98		$23.19		$27.56		$23.95
Second Quarter	27.58		21.12		28.16		22.12
Third Quarter	28.83		25.56		32.44		24.07
Fourth Quarter	27.24		21.70		30.14		22.43



	6/24/2012		6/30/2013		6/29/2014		6/28/2015		6/26/2016		6/25/2017
Cree, Inc.		$100.00		$261.06		$198.28		$110.43		$94.85		$100.60
NASDAQ Composite Index	100.00		119.38		156.20		182.53		167.12		225.01
NASDAQ Electronic Components Index	100.00		118.23		150.86		166.70		163.71		232.96



Capacity and overhead cost reductions	Amounts incurred during fiscal year 2015		Amounts incurred during fiscal year 2016		Cumulative amounts incurred through fiscal year 2016		Affected Line Item in the Consolidated Statements of Loss
Loss on disposal or impairment of long-lived assets		$42,716		$15,506		$58,222	Loss on disposal or impairment of long-lived assets
Severance expense	2,019		264		2,283		Sales, general and administrative expenses
Lease termination and facility consolidation costs	1,246		3,079		4,325		Sales, general and administrative expenses
Increase in channel inventory reserves	26,479		—		26,479		Revenue, net
Increase in inventory reserves	11,091		—		11,091		Cost of revenue, net
Total restructuring charges		$83,551		$18,849		$102,400



			Payments Due by Period
	Total		Less than One Year		One to Three Years		Three to Five Years		More Than Five Years
Operating lease obligations		$14,462		$4,905		$6,256		$2,042		$1,259
Purchase obligations	124,733		111,576		4,374		4,058		4,725
Long-term debt	145,000		—		145,000		—		—
Interest payments on long-term debt¹	11,012		3,031		6,062		1,919		—
Other long-term liabilities²	—		—		—		—		—
Total contractual obligations		$295,207		$119,512		$161,692		$8,019		$5,984



	June 25, 2017		June 26, 2016		Change
Cash and cash equivalents		$132,597		$166,154		($33,557	)
Short-term investments	478,341		439,151		39,190
Total cash, cash equivalents and short-term investments		$610,938		$605,305		$5,633



	Three Months Ended
	June 25, 2017		June 26, 2016		Change
Days of sales outstanding (a)	37		38		(1	)
Days of supply in inventory (b)	98		99		(1	)
Days in accounts payable (c)	(46	)	(43	)	(3	)
Cash conversion cycle	89		94		(5	)



	Fiscal Years Ended								Year-Over-Year Change
	June 25, 2017		June 26, 2016			June 28, 2015			2016 to 2017					2015 to 2016
Gain on sale of investments, net		$93		$238			$925			($145	)	(61	)%		($687	)	(74	)%
Gain (loss) on equity investment	7,543		(15,357		)	(22,624		)	22,900			(149	)%	7,267			(32	)%
Dividends from equity investment	16		1,655			2,581			(1,639		)	(99	)%	(926		)	(36	)%
Interest income, net	3,696		4,472			9,086			(776		)	(17	)%	(4,614		)	(51	)%
Foreign currency gain (loss), net	2,460		(4,500		)	(929		)	6,960			(155	)%	(3,571		)	384	%
Other, net	200		457			572			(257		)	(56	)%	(115		)	(20	)%
Non-operating income (expense), net		$14,008		($13,035	)		($10,389	)		$27,043		(207	)%		($2,646	)	25	%


a)	Days of sales outstanding (DSO) measures the average collection period of our receivables. DSO is based on the ending net trade receivables and the revenue, net for the quarter then ended. DSO is calculated by dividing ending accounts receivable, net of applicable allowances and reserves, by the average net revenue per day for the respective 90 day period.


b)	Days of supply in inventory (DSI) measures the average number of days from procurement to sale of our product. DSI is based on ending inventory and cost of revenue, net for the quarter then ended. DSI is calculated by dividing ending inventory by average cost of revenue, net per day for the respective 90 day period.


c)	Days in accounts payable (DPO) measures the average number of days our payables remain outstanding before payment. DPO is based on ending accounts payable and cost of revenue, net for the quarter then ended. DPO is calculated by dividing ending accounts payable by the average cost of revenue, net per day for the respective 90 day period.



		~~Page~~

Report of Independent Registered Public Accounting Firm (PCAOB ID 238)		5145

Consolidated Balance Sheets as of ~~June 25, 2017 and~~ June 26, ~~2016~~2022 and June 27, 2021	5247

Consolidated Statements of ~~Loss~~Operations for the years ended ~~June 25, 2017,~~ June 26, ~~2016~~2022, June 27, 2021 and June 28, ~~2015~~2020	5348

Consolidated Statements of Comprehensive Loss for the years ended ~~June 25, 2017,~~ June 26, ~~2016~~2022, June 27, 2021 and June 28, ~~2015~~2020	5449

Consolidated Statements of Cash Flows for the years ended ~~June 25, 2017,~~ June 26, ~~2016~~2022, June 27, 2021 and June 28, ~~2015~~2020	5550

Consolidated Statements of Shareholders’ Equity for the years ended ~~June 25, 2017,~~ June 26, ~~2016~~2022, June 27, 2021 and June 28, ~~2015~~2020	5651

Notes to Consolidated Financial Statements	5752



/s/PricewaterhouseCoopers LLP
Raleigh, North Carolina
August ~~23, 2017~~22, 2022


	June 26, 2022	June 27, 2021
in millions of U.S. Dollars, except share data in thousands
Assets
Current assets:
Cash and cash equivalents	$449.5	$379.0
Short-term investments	749.3	775.6
Total cash, cash equivalents and short-term investments	1,198.8	1,154.6
Accounts receivable, net	150.2	95.9
Inventories	227.0	166.6
Income taxes receivable	1.3	6.4

Prepaid expenses	32.1	25.7
Other current assets	151.4	27.9
Current assets held for sale	1.6	1.6

Total current assets	1,762.4	1,478.7
Property and equipment, net	1,481.1	1,292.3
Goodwill	359.2	359.2
Intangible assets, net	125.4	140.5
Long-term receivables	104.7	138.4

Deferred tax assets	1.0	1.0
Other assets	83.7	35.5
Long-term assets of discontinued operations	—	1.2
Total assets	$3,917.5	$3,446.8

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$307.7	$381.1
Accrued contract liabilities	37.0	22.9
Income taxes payable	11.6	0.4
Finance lease liabilities	0.5	5.2
Other current liabilities	31.7	38.6
Current liabilities of discontinued operations	—	0.6
Total current liabilities	388.5	448.8
Long-term liabilities:

Convertible notes, net	1,021.6	823.9
Deferred tax liabilities	3.2	2.5
Finance lease liabilities - long-term	9.6	10.0
Other long-term liabilities	55.3	44.5
Long-term liabilities of discontinued operations	—	0.6
Total long-term liabilities	1,089.7	881.5
Commitments and contingencies	0	0
Shareholders’ equity:
Preferred stock, par value $0.01; 3,000 shares authorized at June 26, 2022 and June 27, 2021; none issued and outstanding	—	—
Common stock, par value $0.00125; 200,000 shares authorized at June 26, 2022 and June 27, 2021; 123,795 and 115,691 shares issued and outstanding at June 26, 2022 and June 27, 2021, respectively	0.2	0.1
Additional paid-in-capital	4,228.4	3,676.8
Accumulated other comprehensive (loss) income	(25.3)	2.7
Accumulated deficit	(1,764.0)	(1,563.1)
Total shareholders’ equity	2,439.3	2,116.5


Total liabilities and shareholders’ equity	$3,917.5	$3,446.8



	June 25, 2017			June 26, 2016
	(In thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents		$132,597			$166,154
Short-term investments	478,341			439,151
Total cash, cash equivalents and short-term investments	610,938			605,305
Accounts receivable, net	148,392			165,611
Income tax receivable	8,040			6,304
Inventories	284,385			303,542
Prepaid expenses	23,305			26,810
Other current assets	23,390			44,788
Current assets held for sale	2,180			4,347
Total current assets	1,100,630			1,156,707
Property and equipment, net	581,263			599,723
Goodwill	618,828			618,828
Intangible assets, net	274,315			302,810
Other long-term investments	50,366			40,179
Deferred income taxes	11,763			38,564
Other assets	12,702			9,249
Total assets		$2,649,867			$2,766,060
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable, trade		$133,185			$132,286
Accrued salaries and wages	41,860			44,642
Other current liabilities	36,978			46,071
Total current liabilities	212,023			222,999
Long-term liabilities:
Long-term debt	145,000			160,000
Deferred income taxes	49,860			943
Other long-term liabilities	20,179			14,294
Total long-term liabilities	215,039			175,237
Commitments and contingencies (Note 13)
Shareholders’ equity:
Preferred stock, par value $0.01; 3,000 shares authorized at June 25, 2017 and June 26, 2016; none issued and outstanding	—			—
Common stock, par value $0.00125; 200,000 shares authorized at June 25, 2017 and June 26, 2016; 97,674 and 100,829 shares issued and outstanding at June 25, 2017 and June 26, 2016, respectively	121			125
Additional paid-in-capital	2,419,517			2,359,584
Accumulated other comprehensive income, net of taxes	5,909			8,728
Accumulated deficit	(202,742		)	(613		)
Total shareholders’ equity	2,222,805			2,367,824
Total liabilities and shareholders’ equity		$2,649,867			$2,766,060


	Fiscal Years Ended
in millions of U.S. Dollars	June 26, 2022	June 27, 2021	June 28, 2020
Operating activities:
Net loss	($200.9)	($522.5)	($190.6)
Net income (loss) from discontinued operations	94.2	(181.2)	7.0
Net loss from continuing operations	(295.1)	(341.3)	(197.6)
Adjustments to reconcile net loss from continuing operations to cash used in operating activities:
Depreciation and amortization	129.8	120.9	97.1
Amortization of debt issuance costs and discount, net of non-cash capitalized interest	20.1	32.8	26.2
Loss (gain) on extinguishment of debt	24.8	—	(11.0)
Stock-based compensation	60.9	53.2	47.2

Abandonment of long-lived assets	—	73.9	—

Loss on disposal or impairment of long-lived assets	1.0	5.0	4.5
Amortization of premium/discount on investments	6.1	6.9	1.7
Realized gain on sale of investments	(0.3)	(0.4)	(1.5)
Gain on equity investment	—	(8.3)	(14.2)
Foreign exchange gain on equity investment	—	(2.2)	(2.2)
Deferred income taxes	0.7	0.9	(0.5)
Changes in operating assets and liabilities:
Accounts receivable, net	(54.3)	(23.5)	(3.2)
Inventories	(68.8)	(44.6)	(8.5)
Prepaid expenses and other assets	(0.4)	(20.0)	(3.0)
Accounts payable, trade	29.2	21.7	(7.2)
Accrued salaries and wages and other liabilities	(10.5)	15.3	(24.9)
Accrued contract liabilities	2.6	(2.8)	5.5
Net cash used in operating activities of continuing operations	(154.2)	(112.5)	(91.6)
Net cash (used in) provided by operating activities of discontinued operations	—	(13.0)	62.6
Cash used in operating activities	(154.2)	(125.5)	(29.0)
Investing activities:
Purchases of property and equipment	(644.9)	(570.5)	(229.9)
Purchases of patent and licensing rights	(5.7)	(5.9)	(4.4)
Proceeds from sale of property and equipment, including insurance proceeds	3.1	2.3	2.6
Purchases of short-term investments	(475.0)	(475.0)	(821.4)
Proceeds from maturities of short-term investments	242.3	428.3	460.6
Proceeds from sale of short-term investments	225.2	51.7	118.0
Reimbursement of property and equipment purchases from long-term incentive agreement	139.0	10.7	—
Proceeds from sale of business, net, including receipt of note receivable	125.0	43.7	—
Proceeds from sale of long-term investment	—	66.4	—
Net cash used in investing activities of continuing operations	(391.0)	(448.3)	(474.5)
Net cash used in investing activities of discontinued operations	—	(0.3)	(12.4)
Cash used in investing activities	(391.0)	(448.6)	(486.9)
Financing activities:


Proceeds from long-term debt borrowings	20.0	30.0	—
Payments on long-term debt borrowings, including finance lease obligations	(20.5)	(30.4)	(145.1)
Proceeds from issuance of common stock	22.4	539.7	76.4
Tax withholding on vested equity awards	(29.1)	(36.2)	(16.9)
Proceeds from convertible notes	750.0	—	575.0
Payments of debt issuance costs	(17.7)	—	(13.6)
Cash paid for capped call transactions	(108.2)	—	—
Incentive-related escrow refunds/(deposits)	—	1.5	(11.5)

Commitment fees on long-term incentive agreement	(1.0)	(0.5)	—


Cash provided by financing activities	615.9	504.1	464.3
Effects of foreign exchange changes on cash and cash equivalents	(0.2)	0.2	(0.1)
Net change in cash and cash equivalents	70.5	(69.8)	(51.7)

Cash and cash equivalents, beginning of period	379.0	448.8	500.5
Cash and cash equivalents, end of period	$449.5	$379.0	$448.8


	Common Stock		Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Total Equity - Controlled Interest	Non-controlling Interest from Discontinued Operations	Total Equity
	Number of Shares	Par Value
Share data in thousands, U.S. Dollar information in millions
Balance at June 30, 2019	106,570	$0.1	$2,874.1	($847.5)	$9.5	$2,036.2	$5.0	$2,041.2
Net (loss) income	—	—	—	(191.7)	—	(191.7)	1.1	(190.6)

Unrealized gain on available-for-sale securities	—	—	—	—	6.5	6.5	—	6.5
Comprehensive (loss) income						(185.2)	1.1	(184.1)
Tax withholding on vested equity awards	—	—	(16.9)	—	—	(16.9)	—	(16.9)
Stock-based compensation	—	—	54.9	—	—	54.9	—	54.9
Exercise of stock options and issuance of shares	2,660	—	76.4	—	—	76.4	—	76.4
Issuance of convertible notes due May 1, 2026	—	—	145.4	—	—	145.4	—	145.4
Partial extinguishment of convertible notes due September 1, 2023	—	—	(27.7)	—	—	(27.7)	—	(27.7)
Balance at June 28, 2020	109,230	$0.1	$3,106.2	($1,039.2)	$16.0	$2,083.1	$6.1	$2,089.2
Net (loss) income	—	—	—	(523.9)	—	(523.9)	1.4	(522.5)
Reclassification of currency translation gain to loss on sale of discontinued operations	—	—	—	—	(9.5)	(9.5)	—	(9.5)
Unrealized loss on available-for-sale securities	—	—	—	—	(3.8)	(3.8)	—	(3.8)
Comprehensive (loss) income						(537.2)	1.4	(535.8)
Tax withholding on vested equity awards	—	—	(36.2)	—	—	(36.2)	—	(36.2)
Stock-based compensation	—	—	67.1	—	—	67.1	—	67.1
Exercise of stock options and issuance of shares	2,238	—	50.6	—	—	50.6	—	50.6
Issuance of shares under the at-the-market offering program, net of issuance costs	4,223	—	489.1	—	—	489.1	—	489.1
Reclassification of noncontrolling interest to loss on sale of discontinued operations	—	—	—	—	—	—	(7.5)	(7.5)
Balance at June 27, 2021	115,691	$0.1	$3,676.8	($1,563.1)	$2.7	$2,116.5	$—	$2,116.5
Net loss	—	—	—	(200.9)	—	(200.9)	—	(200.9)


Unrealized loss on available-for-sale securities	—	—	—	—	(28.0)	(28.0)	—	(28.0)
Comprehensive loss						(228.9)	—	(228.9)
Tax withholding on vested equity awards	—	—	(29.1)	—	—	(29.1)	—	(29.1)
Stock-based compensation	—	—	62.8	—		62.8	—	62.8
Exercise of stock options and issuance of shares	978	—	22.4	—	—	22.4	—	22.4
Issuance of shares related to the extinguishment of convertible notes due September 1, 2023	7,126	0.1	416.1	—	—	416.2	—	416.2
Issuance of convertible notes due February 15, 2028	—	—	187.6	—	—	187.6	—	187.6
Capped call transactions related to the issuance of convertible notes due February 15, 2028	—	—	(108.2)	—	—	(108.2)	—	(108.2)
Balance at June 26, 2022	123,795	$0.2	$4,228.4	($1,764.0)	($25.3)	$2,439.3	$—	$2,439.3



	Common Stock					Additional Paid-in Capital			(Accumulated deficit)/Retained Earnings			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
	Number of Shares		Par Value			Additional Paid-in Capital			(Accumulated deficit)/Retained Earnings			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
	(In thousands)
Balance at June 29, 2014	120,114			$149			$2,190,011			$784,818			$11,405			$2,986,383
Net loss	—		—			—			(64,692		)	—			(64,692		)
Currency translation loss, net of tax benefit of $0	—		—			—			—			(3,563		)	(3,563		)
Unrealized loss on available-for-sale securities, net of tax benefit of $1,284	—		—			—			—			(2,044		)	(2,044		)
Comprehensive income															(70,299		)
Income tax expense from stock option exercises	—		—			(1,010		)	—			—			(1,010		)
Repurchased shares	(16,034	)	(20		)	—			(549,657		)				(549,677		)
Stock-based compensation	—		—			64,720			—			—			64,720
Exercise of stock options and issuance of shares	1,427		2			31,833			—			—			31,835
Balance at June 28, 2015	105,507			$131			$2,285,554			$170,469			$5,798			$2,461,952
Net loss	—		—			—			(21,536		)	—			(21,536		)
Currency translation loss, net of tax benefit of $0	—		—			—			—			(362		)	(362		)
Unrealized gain on available-for-sale securities, net of tax expense of $1,936	—		—			—			—			3,292			3,292
Comprehensive income															(18,606		)
Income tax expense from stock option exercises	—		—			(3,525		)	—			—			(3,525		)
Repurchased shares	(5,842	)	(7		)	—			(149,546		)	—			(149,553		)
Stock-based compensation	—		—			58,425			—			—			58,425
Exercise of stock options and issuance of shares	1,164		1			19,130			—			—			19,131
Balance at June 26, 2016	100,829			$125			$2,359,584			($613	)		$8,728			$2,367,824
Net loss	—		—			—			(98,118		)	—			(98,118		)
Currency translation loss, net of tax benefit of $0	—		—			—			—			(153		)	(153		)
Unrealized loss on available-for-sale securities, net of tax expense of $0	—		—			—			—			(2,666		)	(2,666		)
Comprehensive loss															(100,937		)
Income tax expense from stock option exercises	—		—			(253		)	—			—			(253		)
Repurchased shares	(4,460	)	(6		)	—			(104,011		)				(104,017		)
Stock-based compensation	—		—			46,813			—			—			46,813
Exercise of stock options and issuance of shares	1,305		2			13,373			—			—			13,375
Balance at June 25, 2017	97,674			$121			$2,419,517			($202,742	)		$5,909			$2,222,805



Note 1	Business	53
Note 2	Basis of Presentation and Summary of Significant Accounting Policies	54
Note 3	Discontinued Operations	62
Note 4	Revenue Recognition	64
Note 5	Leases	65
Note 6	Financial Statement Details	66
Note 7	Investments	70
Note 8	Fair Value of Financial Instruments	72
Note 9	Goodwill and Intangible Assets	73
Note 10	Long-term Debt	74
Note 11	Shareholders' Equity	78
Note 12	Loss Per Share	79
Note 13	Stock-Based Compensation	79
Note 14	Income Taxes	83
Note 15	Commitments and Contingencies	87
Note 16	Concentrations of Credit Risk	88
Note 17	Retirement Savings Plan	88
Note 18	Restructuring	88
Note 19	Subsequent Events	89



	Asset Amount		Estimated Life in Years
Patents		$40	20
Customer relationships	4,500		4
Developed technology	11,403		10
In-process research and development¹	7,565		7
Non-compete agreements	231		3
Total identifiable intangible assets		$23,739



	June 25, 2017		June 26, 2016
Raw material		$73,410		$83,299
Work-in-progress	100,402		96,779
Finished goods	110,573		123,464
Inventories		$284,385		$303,542



	June 25, 2017		June 26, 2016
Accrued taxes		$11,148		$12,720
Accrued professional fees	5,545		7,980
Accrued warranty	13,631		20,207
Accrued other	6,654		5,164
Other current liabilities		$36,978		$46,071



	June 25, 2017		June 26, 2016
Currency translation gain		$4,471		$4,624
Net unrealized (loss) gain on available-for-sale securities	1,438		4,104
Accumulated other comprehensive income, net of taxes		$5,909		$8,728



Accumulated Other Comprehensive Income Component	Amount Reclassified from Accumulated Other Comprehensive Income						Affected Line Item in the Consolidated Statements of Loss
	Fiscal Years Ended
	June 25, 2017		June 26, 2016		June 28, 2015
Net unrealized gain on available-for-sale securities, net of taxes		$93		$238		$925	Non-operating income (expense), net
	93		238		925		Loss before income taxes
	—		20		210		Income tax expense (benefit)
		$93		$218		$715	Net loss



	June 25, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Municipal bonds		$177,890		$2,219		($68	)		$180,041
Corporate bonds	175,991		1,925		(195		)	177,721
Non-U.S. certificates of deposit	120,379		—		—			120,379
U.S. certificates of deposit	—		—		—			—
Commercial paper	200		—		—			200
Total short-term investments		$474,460		$4,144		($263	)		$478,341



	June 25, 2017
	Less than 12 Months					Greater than 12 Months				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Municipal bonds		$26,816		($68	)		$—		$—		$26,816		($68	)
Corporate bonds	57,404		(195		)	—		—		57,404		(195		)
Total		$84,220		($263	)		$—		$—		$84,220		($263	)
Number of securities with an unrealized loss			67					—				67


	June 27, 2021
(in millions of U.S. Dollars)	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
Municipal bonds	139.4	1.9	—	141.3
Corporate bonds	456.5	3.3	(0.3)	459.5
U.S. agency securities	15.8	—	—	15.8
U.S. treasury securities	72.3	0.3	(0.1)	72.5
Certificates of deposit	16.5	—	—	16.5

Commercial paper	50.0	—	—	50.0
Variable rate demand notes	20.0	—	—	20.0

Total short-term investments	770.5	5.5	(0.4)	775.6


(in millions of U.S. Dollars)	Within One Year	After One, Within Five Years	After Five, Within Ten Years	After Ten Years	Total
Municipal bonds	$40.3	$121.9	$—	$—	$162.2
Corporate bonds	116.2	331.8	—	—	448.0
U.S. agency securities	2.0	1.9	—	—	3.9
U.S. treasury securities	34.4	31.4	—	—	65.8



Variable rate demand notes	—	—	14.7	54.7	69.4

Total short-term investments	$192.9	$487.0	$14.7	$54.7	$749.3