COHERENT CORP.

Previous wording

Operating segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which discrete financial information is available and is evaluated regularly by CODM in deciding how to allocate resources and in assessing performance. Aggregation of similar operating segments into reportable operating segments is permitted if the businesses have similar economic characteristics and meet established qualitative criteria. Effective July 1, 2025, we realigned our organizational structure and identified multiple operating segments which have been aggregated into two reportable segments based on our internal management structure and CODM oversight: (i) Datacenter & Communications, and (ii) Industrial. See Note 13. Segment Reporting for further information.

Current wording

Operating segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which discrete financial information is available and is evaluated regularly by the CODM in deciding how to allocate resources and in assessing performance. Aggregation of similar operating segments into reportable operating segments is permitted if the businesses have similar economic characteristics and meet established qualitative criteria. Effective July 1, 2025, we realigned our organizational structure and identified multiple operating segments which have been aggregated into two reportable segments based on our internal management structure and CODM oversight: (i) Datacenter & Communications, and (ii) Industrial. See Note 13. Segment Reporting for further information.

Previous wording

In the three months ended September 30, 2025, these activities resulted in charges of $7 million. The current quarter costs are primarily for site move and employee termination costs. In fiscal 2025, these activities resulted in charges of charges of $53 million, primarily for impairment losses associated with the sale of our Newton Aycliffe business, impairment of right-of-use (“ROU”) assets, employee termination costs, site move costs and accelerated depreciation, with $24 million of those charges in the three months ended September 30, 2024. In fiscal 2024, these activities resulted in $119 million of charges primarily for employee termination costs, and the write-off of property and equipment, net of $65 million from reimbursement arrangements. In fiscal 2023, these activities resulted in $119 million of charges primarily for employee termination costs, and the write-off of property and equipment, net of $65 million from reimbursement arrangements. See Note 17. Restructuring Plans for further information.

Current wording

In the three and six months ended December 31, 2025, these activities resulted in recoveries of $12 million and $5 million, respectively. The current quarter recoveries are primarily for adjustments to employee termination costs and the current year-to-date recoveries are primarily for adjustments to employee termination costs partially offset by site move costs. In fiscal 2025, these activities resulted in charges of $53 million, primarily for impairment losses associated with the sale of our Newton Aycliffe business, impairment of right-of-use (“ROU”) assets, employee termination costs, site move costs and accelerated depreciation. In fiscal 2024, these activities resulted in $119 million of charges primarily for employee termination costs, and the write-off of property and equipment, net of $65 million from reimbursement arrangements. See Note 17. Restructuring Plans for further information.

Previous wording

Commencing in the quarter ended March 31, 2025, and as part of the ongoing strategic review of the Company’s business, the Company’s management approved the 2025 Plan (and together with the 2023 Plan, the Restructuring Plans) to take a number of restructuring actions, including site consolidations, facilities moves and closures, workforce reductions, contract terminations, and certain other associated cost reductions.

Current wording

Commencing in the quarter ended March 31, 2025, and as part of the ongoing strategic review of the Company’s business, the Company’s management approved the 2025 Plan to take a number of restructuring actions, including site consolidations, facilities moves and closures, workforce reductions, contract terminations, and certain other associated cost reductions. The 2023 Plan and the 2025 Plan are collectively referred to as the“Restructuring Plans.”

Previous wording

In the three months ended September 30, 2025, these activities resulted in $13 million of charges primarily related to employee termination and site closure costs. In fiscal 2025, these activities resulted in $107 million of charges primarily for the write-off of property and equipment and ROU assets, employee and contract termination costs. We expect the restructuring actions to be substantially completed by the end of fiscal 2026. However, the actual timing and costs associated with these restructuring actions may differ from our current expectations and estimates and such differences may be material. See Note 17. Restructuring Plans for further information.

Current wording

In the three and six months ended December 31, 2025, these activities resulted in $15 million and $28 million, respectively, of charges primarily related to employee termination and site closure costs. In fiscal 2025, these activities resulted in $107 million of charges primarily for the write-off of property and equipment and ROU assets, employee and contract termination costs. We expect the restructuring actions to be substantially completed by the end of fiscal 2026. However, the actual timing and costs associated with these restructuring actions may differ from our current expectations and estimates and such differences may be material. See Note 17. Restructuring Plans for further information.

Previous wording

In the fourth quarter of fiscal 2025, management entered into non-binding agreements to sell several entities. As a result of classifying these entities as held-for-sale, we recorded non-cash impairment charges of $85 million within the Industrial segment. These charges were recognized in Impairment of assets held-for-sale in our Consolidated Statements of Earnings (Loss) for the fourth quarter of fiscal 2025 to reduce the carrying values of the entities to their estimated fair value. We recorded an additional non-cash impairment charge of $9 million within the Industrial segment. The charge was recorded in Impairment of assets held-for-sale in the Condensed Consolidated Statements of Earnings (Loss) for the first quarter of fiscal 2026 to reduce the carrying values of the entities that continue to meet the held-for-sale criteria during this period to their estimated fair value.

Current wording

In the fourth quarter of fiscal 2025, management entered into non-binding agreements to sell several entities. As a result of classifying these entities as held-for-sale, we recorded non-cash impairment charges of $85 million within the Industrial segment. These charges were recognized in Impairment of assets held-for-sale in our Consolidated Statements of Earnings (Loss) for the fourth quarter of fiscal 2025 to reduce the carrying values of the entities to their estimated fair value. In the three and six months ended December 31, 2025, we recorded additional non-cash impairment charges of $11 million and $20 million, respectively, within the Industrial segment. The charges were recorded in Impairment of assets held-for-sale in the Condensed Consolidated Statements of Earnings (Loss) to reduce the carrying values of the entities that continue to meet the held-for-sale criteria during these periods to their estimated fair value.

Previous wording

On September 2, 2025, we completed the sale our aerospace and defense business, which is part of our Industrial segment, for approximately $400 million and recorded a gain of $115 million to Gain on sale of business in our Condensed Consolidated Statements of Earnings for the first quarter of fiscal 2026.

Current wording

On September 2, 2025, we completed the sale of our aerospace and defense business, which is part of our Industrial segment, for approximately $400 million and recorded a gain of $115 million to Gain on sale of business in our Condensed Consolidated Statements of Earnings for the first quarter of fiscal 2026.

Previous wording

These tariffs, trade sanctions, and/or restrictions on the export of certain rare earth minerals used in our products did not have a material impact on our business, financial condition, operational results and/or cash flows in the first quarter of fiscal 2026.

Current wording

These tariffs, trade sanctions, and/or restrictions on the export of certain rare earth minerals used in our products did not have a material impact on our business, financial condition, operational results and/or cash flows in the second quarter of fiscal 2026.

Previous wording

See Note 2. Recently Issued Financial Accounting Standards to our unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements.

Current wording

See Note 2. Recently Issued Financial Accounting Standards for a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements.

Previous wording

The following tables set forth select items from our Condensed Consolidated Statements of Earnings (Loss) for the three months ended September 30, 2025 and 2024 ($ in millions)(1):

Current wording

The following tables set forth select items from our Condensed Consolidated Statements of Earnings (Loss) for the three and six months ended December 31, 2025 and 2024 ($ in millions, except per share data)(1):

Previous wording

Revenues. Revenues for the three months ended September 30, 2025 increased 17% to $1,581 million, compared to $1,348 million for the same period last fiscal year. Revenues increased $226 million (26%) in the Datacenter & Communications segment. Revenue growth in our Datacenter business was fueled by continued strong AI datacenter demand, while our Communications business benefited from increased demand in both data center interconnect and traditional telecom applications. In the Industrial segment, revenue increased $7 million (1%) primarily due to increased volumes in our precision manufacturing, semiconductor capital equipment and automotive markets. This growth was partially offset by the divestiture of our aerospace and defense business on September 2, 2025.

Current wording

Revenues for the six months ended December 31, 2025 increased 17% to $3,267 million, compared to $2,783 million for the same period last fiscal year. Revenues increased $530 million (30%) in the Datacenter & Communications segment. Revenue growth in our Datacenter business was fueled by continued strong AI datacenter demand, while our Communications business benefited from increased demand in both data center interconnect and traditional telecom applications. In the Industrial segment, revenue decreased $46 million (4%) primarily due to the divestiture of our aerospace and defense business on September 2, 2025 partially offset by increased volumes in our semiconductor capital equipment market.

Previous wording

Gross margin. Gross margin for the three months ended September 30, 2025 was $579 million, or 37% of total revenues, compared to $460 million, or 34% of total revenues, for the same period last fiscal year, an increase of 252 basis points. The increase as a percent of revenue for the three months ended September 30, 2025 was primarily due to higher revenue volume, product cost reductions and yield improvements in the Datacenter & Communications segment. In addition, gross margin was favorably impacted by pricing optimization in both the Datacenter & Communications and Industrial segments.

Current wording

Gross margin. Gross margin for the three months ended December 31, 2025 was $623 million, or 37% of revenues, compared to $509 million, or 36% of revenues, for the same period last fiscal year, an increase of 140 basis points. The increase as a percent of revenue for the three months ended December 31, 2025 was primarily due to higher revenue volume, cost reductions in product input costs and efficiency gains from improved cycle times in the manufacturing process as well as yield improvements in the Datacenter & Communications segment. In addition, gross margin was favorably impacted by pricing optimization in the Datacenter & Communications businesses and the divestiture of our aerospace and defense business on September 2, 2025. Gross margin for the six months ended December 31, 2025 was $1,202 million, or 37% of revenues, compared to $970 million, or 35% of revenues, for the same period last fiscal year, an increase of 200 basis points. The increase as a percent of revenue for the six months ended December 31, 2025 was primarily due to cost reductions in product input costs, efficiency gains from improved cycle times in the manufacturing process as well as yield improvements in the Datacenter & Communications segment. In addition, gross margin was favorably impacted by pricing optimization in both the Datacenter & Communications and Industrial segments and the divestiture of our aerospace and defense business on September 2, 2025.

Previous wording

Research and development. Research and development (“R&D”) expenses for the three months ended September 30, 2025 were $155 million, or 10% of revenues, compared to $132 million, or 10% of revenues, for the same period last fiscal year. The increase of $23 million in R&D expenses was primarily related to continued investment in our product portfolios, particularly in our Datacenter & Communications segment. We continue to prioritize R&D investments in projects with the highest expected return-on-investment, supporting our long-term growth strategy.

Current wording

Research and development. Research and development (“R&D”) expenses for the three months ended December 31, 2025 were $166 million, or 10% of revenues, compared to $144 million, or 10% of revenues, for the same period last fiscal year. R&D expenses for the six months ended December 31, 2025 were $321 million, or 10% of revenues, compared to $275 million, or 10% of revenues, for the same period last fiscal year. The increases in R&D expenses were primarily related to continued investment in our product portfolios, particularly in our Datacenter & Communications segment. We continue to prioritize R&D investments in projects with the highest expected return-on-investment, supporting our long-term growth strategy.

Previous wording

Selling, general and administrative. Selling, general and administrative (“SG&A”) expenses for the three months ended September 30, 2025 were $252 million, or 16% of revenues, compared to $229 million, or 17% of revenues, for the same period last fiscal year. The decrease in SG&A as a percentage of revenue for the three months ended September 30, 2025 was primarily the result of higher sales volumes and efficiencies achieved from cost reduction initiatives partially offset by higher integration and divestiture-related consulting costs, as well as higher share-based compensation expense.

Current wording

Selling, general and administrative. Selling, general and administrative (“SG&A”) expenses for the three months ended December 31, 2025 were $258 million, or 15% of revenues, compared to $221 million, or 15% of revenues, for the same period last fiscal year. SG&A expenses for the six months ended December 31, 2025 were $511 million, or 16% of revenues, compared to $450 million, or 16% of revenues, for the same period last fiscal year. Although flat as a percentage of revenue for both the three and six months ended December 31, 2025, the increases in SG&A expenses in both periods were primarily the result of higher legal, integration and divestiture-related consulting costs, higher facility exit costs and higher share-based compensation expense, partially offset by efficiencies achieved from cost reduction initiatives.

Previous wording

Restructuring charges. Restructuring charges for the three months ended September 30, 2025 were $19 million and consisted primarily of employee termination costs and move costs due to the consolidation and closure of certain manufacturing sites. Restructuring charges for the three months ended September 30, 2024 were $24 million and consisted of impairment losses associated with the sale of our Newton Aycliffe business, accelerated depreciation, and move costs due to the consolidation of certain manufacturing sites. See Note 17. Restructuring Plans included in Item 1 of this Quarterly Report on Form 10-Q for further information.

Current wording

Restructuring charges. Restructuring charges for the three and six months ended December 31, 2025 were $4 million and $23 million, respectively, and consisted primarily of employee termination costs and move and other costs due to the consolidation and closure of certain manufacturing sites. Restructuring charges for the three and six months ended December 31, 2024 were $8 million and $32 million, respectively, and consisted of impairment losses associated with the sale of our Newton Aycliffe business as well as move costs, accelerated depreciation, and employee termination costs due to the consolidation of certain manufacturing sites. See Note 17. Restructuring Plans for further information.

Previous wording

Impairment of assets held-for-sale. Impairment of assets held-for-sale for the three months ended September 30, 2025 were $9 million, or 1% of revenues and represented non-cash impairment charges to reduce our carrying value in entities that continue to meet the held-for-sale criteria at September 30, 2025 to their estimated fair value. See Note 18. Assets Held-for-Sale and Sale of Business included in Item 1 of this Quarterly Report on Form 10-Q for further information.

Current wording

Impairment of assets held-for-sale. Impairment of assets held-for-sale for the three and six months ended December 31, 2025 was $11 million and $20 million, respectively, and represented non-cash impairment charges to reduce our carrying value in entities that continue to meet the held-for-sale criteria at December 31, 2025 to their estimated fair value. See Note 18. Assets Held-for-Sale and Sale of Business for further information.

Previous wording

Gain on sale of business. Gain on sale of business for the three months ended September 30, 2025 was $115 million, or 7% of revenues and represented the gain on the sale of our aerospace and defense business. See Note 18. Assets Held-for-Sale and Sale of Business included in Item 1 of this Quarterly Report on Form 10-Q for further information.

Current wording

Gain on sale of business. Gain on sale of business for the six months ended December 31, 2025 was $115 million and represented the gain on the sale of our aerospace and defense business. See Note 18. Assets Held-for-Sale and Sale of Business for further information.

Previous wording

Interest and other, net. Interest and other, net expense for the three months ended September 30, 2025 was $42 million, compared to $56 million for the same period in the prior fiscal year, a decrease of $14 million. Included in Interest and other, net, were interest expense on borrowings, foreign currency gains and losses, amortization of debt issuance costs, losses on debt extinguishment, equity gains and losses from unconsolidated investments, and interest and dividend income on cash balances. For the three months ended September 30, 2025, the decrease of $14 million in comparison to the same period last fiscal year was driven by $11 million lower foreign exchange net losses, $8 million lower interest expense and a $7 million gain on sale from an equity investment partially offset by $5 million lower interest income and $5 million higher debt extinguishment and debt transaction fees. The $11 million lower foreign exchange net losses were primarily due to lower volatility of exchange rates during the three months ended September 30, 2025. The $8 million lower interest expense was primarily due to lower interest expense on our Term Loans resulting from lower balances and lower interest rates partially offset by lower interest expense benefit from our interest rate cap and swap. The $5 million lower interest and dividend income was primarily due to decreases in interest rates earned on investments as well as the decrease in average cash and restricted cash balances.

Current wording

Interest and other, net. Interest and other, net expense for the three months ended December 31, 2025 was $16 million, compared to $8 million for the same period in the prior fiscal year, an increase of $8 million. Included in Interest and other, net, were interest expense on borrowings, foreign currency gains and losses, amortization of debt issuance costs, equity gains and losses from unconsolidated investments, and interest and dividend income on cash balances. For the three months ended December 31, 2025, the increase of $8 million in comparison to the same period last fiscal year was driven by $33 million lower foreign exchange net gains and $4 million lower interest income partially offset by $18 million lower interest expense and $15 million gains on sales from an equity investment. The $33 million lower foreign exchange net gains were primarily due to lower volatility of exchange rates during the three months ended December 31, 2025. The $18 million lower interest expense was primarily due to lower interest expense on our Term Loans resulting from lower balances and lower interest rates, partially offset by lower interest expense benefit from our interest rate cap and swap. The $4 million lower interest and dividend income was primarily due to decreases in interest rates earned on investments as well as the decrease in average cash and restricted cash balances. Interest and other, net expense for the six months ended December 31, 2025 was $58 million, compared to $64 million for the same period in the prior fiscal year, a decrease of $6 million. Included in Interest and other, net, were interest expense on borrowings, foreign currency gains and losses, amortization of debt issuance costs, losses on debt extinguishment, equity gains and losses from unconsolidated investments, and interest and dividend income on cash balances. For the six months ended December 31, 2025, the decrease of $6 million in comparison to the same period last fiscal year was driven by $26 million lower interest expense and $22 million gains on sale from an equity investment, partially offset by $22 million lower foreign exchange net gains, $9 million lower interest income and $5 million higher debt extinguishment and debt transaction fees. The $26 million lower interest expense was primarily due to lower interest expense on our Term Loans resulting from lower balances and lower interest rates partially offset by lower interest expense benefit from our interest rate cap and swap. The $22 million lower foreign exchange net gains were primarily due to lower volatility of exchange rates during the six months ended December 31, 2025. The $9 million lower interest and dividend income was primarily due to decreases in interest rates earned on investments as well as the decrease in average cash and restricted cash balances.

Previous wording

Income taxes. The Company’s year-to-date effective income tax rate at September 30, 2025 was a 4% benefit compared to a benefit of 29% for the same period in the prior fiscal year. The variance from the U.S. statutory rate of 21% was primarily due to discrete benefits related to German tax law changes, an uncertain tax position release and differences in tax rates between U.S. and foreign jurisdictions.

Current wording

Income taxes. The Company’s year-to-date effective income tax rate at December 31, 2025 was 4% compared to 14% for the same period in the prior fiscal year. The variance from the U.S. statutory federal income tax rate of 21% was primarily driven by differences between U.S. and foreign tax rates and discrete tax benefits related to German tax law changes, releases of uncertain tax positions, and stock-based compensation windfalls.

Previous wording

Net loss attributable to noncontrolling interests. Net loss attributable to noncontrolling interests for the three months ended September 30, 2025 was $1 million, consistent with the same period in the prior fiscal year. This amount represents the noncontrolling interest holders’ shares of losses of Silicon Carbide LLC. See Note 11. Noncontrolling Interests included in Item 1 of this Quarterly Report on Form 10-Q for further information.

Current wording

Net loss attributable to noncontrolling interests. Net loss attributable to noncontrolling interests for the three and six months ended December 31, 2025 was $3 million and $4 million, respectively, compared to $2 million and $3 million, respectively, in the same periods in the prior fiscal year. This amount represents the noncontrolling interest holders’ shares of losses of Silicon Carbide LLC. See Note 11. Noncontrolling Interests for further information.

Previous wording

Revenues and segment profit for the Company’s reportable segments are discussed below. Our CODM evaluates each segment’s operations for decision-making and performance assessment based on segment revenue and segment profit, as our CODM believes segment profit is a more comprehensive profitability measure for each operating segment. Segment profit includes operating expenses directly managed by operating segments, including research and development, direct sales, marketing and administrative expenses. Segment profit does not include share-based compensation, acquisition or integration related costs, amortization and impairment of acquisition-related intangible assets, restructuring charges, impairment charges on assets held-for-sale, gain on sale of businesses and certain other charges. Additionally, we do not allocate Corporate strategic research and development, strategic marketing and sales expenses and shared general and administrative expenses, as these expenses are not directly attributable to our operating segments. Management believes segment profit to be a useful measure for investors, as it reflects the results of segment performance over which management has direct control and is used by management in its evaluation of segment performance. See Note 13. Segment Reporting, to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on the Company’s reportable segments and for the reconciliation of the Company’s segment profit to earnings (loss) before income taxes, which is incorporated herein by reference. Effective July 1, 2025, we report our financial results in the following two designated segments: (i) Datacenter & Communications and (ii) Industrial.

Current wording

Revenues and segment profit for the Company’s reportable segments are discussed below. Our CODM evaluates each segment’s operations for decision-making and performance assessment based on segment revenue and segment profit, as our CODM believes segment profit is a more comprehensive profitability measure for each operating segment. Segment profit includes operating expenses directly managed by operating segments, including research and development, direct sales, marketing and administrative expenses. Segment profit does not include share-based compensation, acquisition or integration related costs, amortization and impairment of acquisition-related intangible assets, restructuring charges, impairment charges on assets held-for-sale, gain on sale of businesses and certain other charges. Additionally, we do not allocate Corporate strategic research and development, strategic marketing and sales expenses and shared general and administrative expenses, as these expenses are not directly attributable to our operating segments. Management believes segment profit to be a useful measure for investors, as it reflects the results of segment performance over which management has direct control and is used by management in its evaluation of segment performance. See Note 13. Segment Reporting for further information on the Company’s reportable segments and for the reconciliation of the Company’s segment profit to earnings (loss) before income taxes, which is incorporated herein by reference. Effective July 1, 2025, we report our financial results in the following two designated segments: (i) Datacenter & Communications and (ii) Industrial.

Previous wording

Segment profit for the three months ended September 30, 2025 increased 23% to $269 million, compared to segment profit of $219 million for the same period last fiscal year. The increase in segment profit for the three months ended September 30, 2025 was primarily driven by higher revenues, partially offset by increased R&D investments in our product portfolio.

Current wording

Segment profit for the three months ended December 31, 2025 increased 44% to $306 million, compared to segment profit of $212 million for the same period last fiscal year. Segment profit for the six months ended December 31, 2025 increased 33% to $576 million, compared to segment profit of $432 million for the same period last fiscal year. The increases in segment profit for the three and six months ended December 31, 2025 were primarily driven by higher revenues, partially offset by increased R&D investments in our product portfolio.

Previous wording

Revenues for the three months ended September 30, 2025 increased 1% to $491 million, compared to revenues of $484 million for the same period in the prior fiscal year. Compared to the three months ended September 30, 2024, Industrial revenues increased $7 million year-over-year, primarily due to increased volumes in our precision manufacturing, semiconductor capital equipment and automotive markets. The revenue growth was partially offset by the divestiture of our aerospace and defense business on September 2, 2025.

Current wording

Revenues for the three months ended December 31, 2025 decreased 10% to $478 million, compared to revenues of $530 million for the same period in the prior fiscal year. Revenues for the six months ended December 31, 2025 decreased 4% to $969 million, compared to revenues of $1,015 million for the same period in the prior fiscal year. Compared to the three months ended December 31, 2024, Industrial revenues decreased $52 million year-over-year, primarily due to the divestiture of our aerospace and defense business on September 2, 2025. Compared to the six months ended December 31, 2024, Industrial revenues decreased $46 million year-over-year, primarily due to the divestiture of our aerospace and defense business on September 2, 2025. The revenue decrease was partially offset by increased volumes in our semiconductor capital equipment market.

Previous wording

Segment profit for the three months ended September 30, 2025 increased 69% to $117 million, compared to segment profit of $69 million for the same period last fiscal year, primarily driven by lower manufacturing costs, improvements in pricing optimization and favorable product mix.

Current wording

Segment profit for the three months ended December 31, 2025 decreased 4% to $112 million, compared to segment profit of $116 million for the same period last fiscal year, primarily driven by the divestiture of our aerospace and defense business on September 2, 2025 and increased R&D investments in our product portfolio. These impacts were partially offset by lower manufacturing costs. Segment profit for the six months ended December 31, 2025 increased 23% to $228 million, compared to segment profit of $185 million for the same period last fiscal year, primarily driven by lower manufacturing costs as well as favorable product mix and improvements in pricing optimization.

Previous wording

Net cash provided by operating activities was $46 million for the three months ended September 30, 2025 compared to $153 million for the same period in the prior fiscal year. The decrease in cash flows provided by operating activities during the three months ended September 30, 2025 compared to the same period in the prior fiscal year was primarily due to increases in inventories and accounts receivable as a result of higher revenues partially offset by higher accounts payable and higher net earnings.

Current wording

Net cash provided by operating activities was $104 million for the six months ended December 31, 2025 compared to $340 million for the same period in the prior fiscal year. The decrease in cash flows provided by operating activities during the six months ended December 31, 2025 compared to the same period in the prior fiscal year was primarily due to increases in inventories and accounts receivable as a result of higher revenues partially offset by higher accounts payable and higher net earnings.

Previous wording

Net cash provided by investing activities was $297 million for the three months ended September 30, 2025, compared to net cash used of $66 million for the same period in the prior fiscal year. The increase was primarily due to $391 million cash received from the sale of a business, net of fees.

Current wording

Net cash provided by investing activities was $158 million for the six months ended December 31, 2025, compared to net cash used of $172 million for the same period in the prior fiscal year. The increase was primarily due to $386 million cash received from the sale of a business, net of fees, and cash received from the sale of an equity investment, partially offset by higher cash used to fund capital expenditures.

Previous wording

Net cash used in financing activities was $421 million for the three months ended September 30, 2025, compared to $126 million for the same period in the prior fiscal year. Net cash outflows for both periods were primarily attributable to payments on existing debt obligations.

Current wording

Net cash used in financing activities was $378 million for the six months ended December 31, 2025, compared to $266 million for the same period in the prior fiscal year. Net cash outflows for both periods were primarily attributable to payments on existing debt obligations.

Previous wording

On September 26, 2025, the Company entered into Amendment No. 4 (“Amendment No. 4”) and Amendment No. 5 (“Amendment No. 5”) to the Credit Agreement. Under Amendment No. 4, (i) the existing revolving credit commitments were refinanced and replaced with new senior secured revolving credit commitments, (ii) $350 million of senior secured incremental revolving credit commitments were added, increasing the total revolving credit facility to $700 million (the “2025 Revolving Loans”), including a letter of credit sub-facility of up to $100 million, and (iii) a $1,250 million new tranche of senior secured incremental term A loans was added (the “2025 Incremental Term A Loans”), the proceeds of which were used, in part, to repay all outstanding principal, interest and fees under the initial term A loans. As amended, the 2025 Revolving Loans and the 2025 Incremental Term A Loans each bear interest at an adjusted SOFR rate subject to a 0.00% floor plus a range of 1.25% to 2.25% based on the Company’s total net leverage ratio. The interest rate applicable to the 2025 Revolving Loans and the 2025 Incremental Term A Loans is initially a SOFR-based rate plus 1.50% as of September 30, 2025. The 2025 Revolving Loans and the 2025 Incremental Term A Loans mature on the earlier of September 26, 2030 or a “Springing Maturity Date,” which is a date that is 91 days prior to the stated maturity of either (i) the Company’s unsecured senior notes or (ii) the term B loans then outstanding if, on such 91st day, the applicable senior notes or term B loans remain outstanding and liquidity is less than (x) $250 million plus (y) the aggregate outstanding principal amount of such notes or term B loans, as applicable. Under Amendment No. 5, the outstanding New Term B-2 Loans were replaced with an equal amount of new term loans (the “New Term B-3 Loans”) having substantially similar terms as the New Term B-2 Loans, except with respect to the interest rate applicable to the New Term B-3 Loans and certain other provisions. As further amended, the New Term B-3 Loans bear interest at a SOFR-based rate (subject to a 0.50% floor) plus 1.75% as of September 30, 2025. The New Term B-3 Loans will mature on July 1, 2029.

Current wording

On September 26, 2025, the Company entered into Amendment No. 4 and Amendment No. 5 to the Credit Agreement. Under Amendment No. 4, (i) the existing revolving credit commitments were refinanced and replaced with the 2025 Revolving Loans, including the 2025 Incremental Term A Loans, the proceeds of which were used, in part, to repay all outstanding principal, interest and fees of the Existing Term A Loans. As amended, the 2025 Revolving Loans and the 2025 Incremental Term A Loans each bear interest at an adjusted SOFR rate subject to a 0.00% floor plus a range of 1.25% to 2.25% based on the Company’s total net leverage ratio. The interest rate applicable to the 2025 Revolving Loans and the 2025 Incremental Term A Loans is initially a SOFR-based rate plus 1.50% as of December 31, 2025. The 2025 Revolving Loans and the 2025 Incremental Term A Loans mature on the earlier of September 26, 2030 or a “Springing Maturity Date,” which is a date that is 91 days prior to the stated maturity of either (i) the Company’s unsecured senior notes or (ii) the term B loans then outstanding if, on such 91st day, the applicable senior notes or term B loans remain outstanding and liquidity is less than (x) $250 million plus (y) the aggregate outstanding principal amount of such notes or term B loans, as applicable. Under Amendment No. 5, the outstanding New Term B-2 Loans were replaced with the New Term B-3 Loans having substantially similar terms as the New Term B-2 Loans, except with respect to the interest rate applicable to the New Term B-3 Loans and certain other provisions. As further amended, the New Term B-3 Loans bear interest at a SOFR-based rate (subject to a 0.50% floor) plus 1.75% as of December 31, 2025. The New Term B-3 Loans will mature on July 1, 2029.

Previous wording

In relation to the Term Facilities, the Company incurred expense of $41 million for the three months ended September 30, 2025, which is included in Interest expense in the Condensed Consolidated Statements of Earnings (Loss). On July 1, 2023, our interest rate cap became effective, which together with our interest rate swap (through September 30, 2024), reduced interest expense by $6 million during the three months ended September 30, 2025.

Current wording

In relation to the Term Facilities, the Company incurred expense of $33 million and $79 million, respectively, for the three and six months ended December 31, 2025, which is included in Interest expense in the Condensed Consolidated Statements of Earnings (Loss). On July 1, 2023, our interest rate cap became effective, which reduced interest expense by $5 million and $11 million, respectively, during the three and six months ended December 31, 2025.

Previous wording

During the three months ended September 30, 2025, the Company made payments of $400 million for the Term Facilities, all of which were voluntary payments.

Current wording

During the six months ended December 31, 2025, the Company made payments of $408 million for the Term Facilities, $400 million of which were voluntary payments.

Previous wording

As of September 30, 2025, the Company had $10 million in borrowings outstanding under the Revolving Credit Facility.

Current wording

As of December 31, 2025, the Company had $60 million in borrowings outstanding under the Revolving Credit Facility.

Previous wording

Our cash and cash equivalent balances are generated and held in numerous locations throughout the world, including amounts held outside the United States. As of September 30, 2025, the Company held approxim ately $802 million of cash, cash equivalents and restricted cash outside of the United States. Generally, cash balances held outside the United States could be repatriated to the United States.

Current wording

Our cash and cash equivalent balances are generated and held in numerous locations throughout the world, including amounts held outside the United States. As of December 31, 2025, the Company held approxim ately $770 million of cash, cash equivalents and restricted cash outside of the United States. Generally, cash balances held outside the United States could be repatriated to the United States.

Previous wording

At September 30, 2025, we had $700 million of restricted cash, which includes $697 million at our Silicon Carbide LLC that is restricted for use by only that subsidiary.

Current wording

At December 31, 2025, we had $665 million of restricted cash, which includes $661 million at Silicon Carbide LLC that is restricted for use by only that subsidiary.