COHERENT CORP.

Previous wording

We continue to experience strong demand in our Datacenter and Communications markets. The increasing investments by hyperscale and other cloud providers in AI datacenter infrastructures have significantly boosted demand for our datacenter transceivers. Elevated demand for our new ZR/ZR+ transceivers and sustained growth in traditional telecom transport products drove higher shipment volumes for our telecom and other communications solutions.

Current wording

Coherent is a global leader in photonic technology, which is foundational to the performance and scalability of AI datacenters and critical to many important industrial applications. We are at the center of a significant expansion in optical networking infrastructure, driven by the rapid growth of AI and the increasing need for bandwidth and energy efficiency. We continue to experience strong demand in our Datacenter and Communications markets. The increasing investments by hyperscale and other cloud providers in AI datacenter infrastructures have significantly boosted demand for our datacenter transceivers. Elevated demand for our new ZR/ZR+ transceivers and sustained growth in traditional telecom transport products drove higher shipment volumes for our telecom and other communications solutions. We are investing in manufacturing capacity for the Datacenter and Communications markets, including expanding our indium phosphide capacity in Sherman, Texas, to address our increased customer demand and industry-wide shortage. In our Industrial markets, we are experiencing strong demand in semiconductor capital equipment.

Previous 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.

Current wording

In the three and nine months ended March 31, 2026, these activities resulted in net charges of $4 million and net recoveries of $2 million, respectively. The current quarter charges are primarily for site closure and move costs and 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 10. Restructuring Plans for further information.

Previous 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.

Current wording

In the three and nine months ended March 31, 2026, these activities resulted in $31 million and $59 million, respectively, of charges primarily related to write-off of property and equipment, 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 10. 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. 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.

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 nine months ended March 31, 2026, we recorded additional non-cash impairment charges of $20 million, 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 to their estimated fair value.

Previous 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.

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 (Loss) for the first quarter of fiscal 2026.

Previous wording

In early 2025, the United States implemented significant new tariffs and export restrictions affecting a broad range of countries, commodities and industries. These actions have prompted retaliatory measures from certain foreign governments, including the imposition of tariffs and export controls. As of December 2025, while some of these measures have been delayed, a number of the new tariffs remain in effect, including substantial trade sanctions between the United States and China. China has imposed restrictions on the export of certain rare earth minerals which are critical to our products.

Current wording

In early 2025, the United States implemented significant new tariffs and export restrictions affecting a broad range of countries, commodities and industries. These actions have prompted retaliatory measures from certain foreign governments, including the imposition of tariffs and export controls. On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (“EEPA”) were not authorized by the statute. The Company is the importer of record for certain raw materials and products that were previously subject to such tariffs under IEEPA. Significant uncertainty remains regarding how and when any amounts may be recovered. We are evaluating the ruling and potential actions available to us. Because the process, timing, and amount of any recovery are uncertain, we have not recorded any potential benefit from a refund at this time.

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 second quarter of fiscal 2026.

Current wording

These tariffs and export restrictions did not have a material impact on our business, financial condition, operational results and/or cash flows in the third quarter of fiscal 2026.

Previous wording

As a global company with a substantial and diversified manufacturing footprint our diverse manufacturing footprint provides us with some insulation against these tariffs, trade sanctions, and other geopolitical challenges. Our geographically diverse supply chain combined with the internal production of many of our most critical technology in-feeds provides adaptability and optionality that benefits our customers. As the tariff, trade sanctions, and export restrictions become clearer, we expect to identify opportunities to mitigate their impact. However, we operate in a dynamic geopolitical environment, and we are not immune to any sustained disruption in global trade conditions. Such disruptions could create future headwinds for the Company and may result in revenue reduction, cost increases on material used in our products or significant production delays, which could adversely affect our business, financial condition, results of operations and cash flows.

Current wording

As a global company with a substantial and diversified manufacturing footprint, this footprint provides us with some insulation against these tariffs, trade sanctions, and other geopolitical challenges. Our geographically diverse supply chain combined with the internal production of many of our most critical technological in-feeds provides adaptability and optionality that benefits our customers. As the tariff, trade sanctions, and export restrictions become clearer, we expect to identify opportunities to mitigate their impact. However, we operate in a dynamic geopolitical environment, and we are not immune to any sustained disruption in global trade conditions. Such disruptions could create future headwinds for the Company and may result in revenue reduction, cost increases on material used in our products or significant production delays, which could adversely affect our business, financial condition, results of operations and cash flows.

Previous wording

Note 1 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K dated August 15, 2025 describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements.

Current wording

Note 1 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025 describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements.

Previous 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):

Current wording

The following tables set forth select items from our Condensed Consolidated Statements of Earnings (Loss) for the three and nine months ended March 31, 2026 and 2025 ($ in millions, except per share data)(1):

Previous wording

Revenues. Revenues for the three months ended December 31, 2025 increased 17% to $1,686 million, compared to $1,435 million for the same period last fiscal year. Revenues increased $303 million (34%) 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 $52 million (10%) primarily due to the divestiture of our aerospace and defense business on September 2, 2025.

Current wording

Revenues. Revenues for the three months ended March 31, 2026 increased 21% to $1,806 million, compared to $1,498 million for the same period last fiscal year. Revenues increased $393 million, or 41%, 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 data center interconnect, scale across and traditional telecom applications. In the Industrial segment, revenue decreased $85 million, or 16%, primarily due to the divestitures of our aerospace and defense business on September 2, 2025 and our Munich, Germany business on January 30, 2026.

Previous 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.

Current wording

Revenues for the nine months ended March 31, 2026 increased 19% to $5,073 million, compared to $4,281 million for the same period last fiscal year. Revenues increased $923 million, or 34%, 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 data center interconnect, scale across and traditional telecom applications. In the Industrial segment, revenue decreased $131 million, or 8%, primarily due to the divestitures of our aerospace and defense business on September 2, 2025 and our Munich, Germany business on January 30, 2026.

Previous 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.

Current wording

Gross margin. Gross margin for the three months ended March 31, 2026 was $680 million, or 38% of revenues, compared to $528 million, or 35% of revenues, for the same period in the prior fiscal year, representing an increase of 243 basis points. The improvement in gross margin percentage was primarily driven by higher revenue volume, cost reductions in product input costs and efficiency gains from improved cycle times in the manufacturing process and yield improvements within the Datacenter & Communications segment. Gross margin also benefited from pricing optimization in the Datacenter & Communications segment, as well as the divestitures of our aerospace and defense business on September 2, 2025 and our Munich, Germany business on January 30, 2026. Gross margin for the nine months ended March 31, 2026 was $1,882 million, or 37% of revenues, compared to $1,497 million, or 35% of revenues, for the same period in the prior year, representing an increase of 213 basis points. The increase was primarily driven by cost reductions in product input costs, efficiency gains from improved cycle times in the manufacturing process and yield improvements in the Datacenter & Communications segment. In addition, gross margin benefited from pricing optimization in both the Datacenter & Communications and Industrial segments and the divestitures of our aerospace and defense business on September 2, 2025 and our Munich, Germany business on January 30, 2026.

Previous 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.

Current wording

Research and development. Research and development (“R&D”) expenses for the three months ended March 31, 2026 were $186 million, or 10% of revenues, compared to $151 million, or 10% of revenues, for the same period last fiscal year. R&D expenses for the nine months ended March 31, 2026 were $507 million, or 10% of revenues, compared to $426 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 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.

Current wording

Selling, general and administrative. Selling, general and administrative (“SG&A”) expenses for the three months ended March 31, 2026 were $268 million, or 15% of revenues, compared to $231 million, or 15% of revenues, for the same period last fiscal year. SG&A expenses for the nine months ended March 31, 2026 were $778 million, or 15% of revenues, compared to $681 million, or 16% of revenues, for the same period last fiscal year. Although flat for the three months ended March 31, 2026 and slightly decreased for the nine months ended March 31, 2026 as a percentage of revenue, the increases in SG&A expenses in both periods were primarily driven by 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 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.

Current wording

Restructuring charges. Restructuring charges for the three and nine months ended March 31, 2026 were $34 million and $57 million, respectively, and consisted primarily of employee termination costs, asset write-offs and move and other costs due to the consolidation and closure of certain manufacturing sites. Restructuring charges for the three and nine months ended March 31, 2025 were $74 million and $106 million, respectively, and consisted of asset write-offs, employee termination costs, move costs and accelerated depreciation due to the consolidation of certain manufacturing sites as well as impairment losses associated with the sale of our Newton Aycliffe business. See Note 10. Restructuring Plans for further information.

Previous 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.

Current wording

Impairment of assets held-for-sale. Impairment of assets held-for-sale for the nine months ended March 31, 2026 was $20 million, 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 7. 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 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.

Current wording

Gain on sale of business. Gain on sale of business for the three and nine months ended March 31, 2026 was $9 million and $124 million, respectively, and relates to the sales of our aerospace and defense and our Munich, Germany businesses. See Note 7. 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 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.

Current wording

Interest and other, net. Interest and other, net expense for the three months ended March 31, 2026 was $16 million, compared to $62 million for the same period in the prior fiscal year, representing a decrease of $45 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 March 31, 2026, the decrease of $45 million in comparison to the same period last fiscal year was driven by $16 million lower foreign exchange net losses, $14 million gains on sales from an equity investment and $13 million lower interest expense. The $16 million lower foreign exchange net losses were primarily due to lower volatility of exchange rates during the three months ended March 31, 2026. The $13 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. Interest and other, net expense for the nine months ended March 31, 2026 was $75 million, compared to $126 million for the same period in the prior fiscal year, a decrease of $52 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 nine months ended March 31, 2026, the decrease of $52 million in comparison to the same period last fiscal year was driven by $39 million lower interest expense and $36 million gains on sale from an equity investment, partially offset by $10 million lower interest income, $6 million lower foreign exchange net gains and $5 million higher debt extinguishment and debt transaction fees. The $39 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 $10 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. The $6 million lower foreign exchange net gains were primarily due to lower volatility of exchange rates during the nine months ended March 31, 2026.

Previous 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.

Current wording

Income taxes. The Company’s year-to-date effective income tax rate at March 31, 2026 was 3% compared to 19% 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, as well as discrete tax benefits related to changes in German tax law, releases of uncertain tax positions, and excess tax benefits associated with stock-based compensation.

Previous 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.

Current wording

Net loss attributable to noncontrolling interests. Net loss attributable to noncontrolling interests for the three and nine months ended March 31, 2026 was $10 million and $14 million, respectively, compared to $14 million and $17 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 13. Noncontrolling Interests for further information.

Previous wording

Revenues for the three months ended December 31, 2025 increased 34% to $1,208 million, compared to $905 million for the same period in the prior fiscal year. Revenues for the six months ended December 31, 2025 increased 30% to $2,298 million, compared to $1,768 million for the same period in the prior fiscal year. The increases in revenue of $303 million and $530 million during the three and six months ended December 31, 2025, respectively, were primarily driven by growth in our Datacenter business reflecting continued strong AI datacenter demand as well as higher Communications business revenue due to increased demand for data center interconnect and traditional telecom applications.

Current wording

Revenues for the three months ended March 31, 2026 increased 41% to $1,362 million, compared to $969 million for the same period in the prior fiscal year. Revenues for the nine months ended March 31, 2026 increased 34% to $3,660 million, compared to $2,737 million for the same period in the prior fiscal year. The increases in revenue of $393 million and $923 million during the three and nine months ended March 31, 2026, respectively, were primarily driven by growth in our Datacenter business reflecting continued strong AI datacenter demand as well as higher Communications business revenue due to increased demand for data center interconnect, scale across and traditional telecom applications.

Previous 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.

Current wording

Segment profit for the three months ended March 31, 2026 increased 49% to $348 million, compared to $233 million for the same period last fiscal year. Segment profit for the nine months ended March 31, 2026 increased 39% to $923 million, compared to $665 million for the same period last fiscal year. The increases in segment profit for the three and nine months ended March 31, 2026 were primarily driven by higher revenues, partially offset by increased R&D investments to support expansion of our product portfolio.

Previous 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.

Current wording

Segment profit for the three months ended March 31, 2026 decreased 12% to $101 million, compared to $115 million for the same period last fiscal year, primarily driven by the divestiture of our aerospace and defense business on September 2, 2025 and our Munich, Germany business on January 30, 2026 as well as increased R&D investments to support our product portfolio, partially offset by lower manufacturing and SG&A costs. Segment profit for the nine months ended March 31, 2026 increased 10% to $329 million, compared to $300 million for the same period last fiscal year. The increase was primarily driven by lower manufacturing costs, favorable product mix and improvements in pricing optimization as well as lower SG&A costs partially offset by increased R&D investments.

Previous 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.

Current wording

Net cash provided by operating activities was $10 million for the nine months ended March 31, 2026 compared to $503 million for the same period in the prior fiscal year. The decrease in cash flows provided by operating activities during the nine months ended March 31, 2026 compared to the same period in the prior fiscal year was primarily driven by a significant increase in inventories to support higher revenue levels, which resulted in increased working capital usage. This impact was partially offset by higher accounts payable and higher net earnings.

Previous 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.

Current wording

Net cash used in investing activities was $891 million for the nine months ended March 31, 2026, compared to net cash used of $284 million for the same period in the prior fiscal year. The increase was primarily due to $825 million purchases of short-term investments and higher cash used to fund capital expenditures partially offset by $437 million cash received from the sale of businesses, net of fees, and cash received from the sale of an equity investment.

Previous 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.

Current wording

In relation to the Term Facilities, the Company incurred expense of $32 million and $111 million, respectively, for the three and nine months ended March 31, 2026, 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 $3 million and $14 million, respectively, during the three and nine months ended March 31, 2026.

Previous 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.

Current wording

During the nine months ended March 31, 2026, the Company made payments of $509 million for the Term Facilities, $502 million of which were voluntary payments.

Previous wording

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

Current wording

As of March 31, 2026, the Company had no borrowings outstanding under the Revolving Credit Facility.

Previous wording

On December 4, 2023, the Company completed two investment agreements under which Silicon Carbide LLC, a Company subsidiary, received$1.0 billion cash in exchange for 25% of the equity of that entity. Such funds have and will continue to be used primarily to fund future capital expansion in our silicon carbide business and will enableus to increase our available free cash flow to provide greater financial and operational flexibility to execute our capital allocation priorities. See Note 11. Noncontrolling Interests included in Item 1 of this Quarterly Report on Form 10-Q for further information.

Current wording

On December 4, 2023, the Company completed two investment agreements under which Silicon Carbide LLC, a Company subsidiary, received$1.0 billion cash in exchange for 25% of the equity of that entity. Such funds have and will continue to be used primarily to fund future capital expansion in our silicon carbide business and will enableus to increase our available free cash flow to provide greater financial and operational flexibility to execute our capital allocation priorities. See Note 13. Noncontrolling Interests included in Item 1 for further information.

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 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.

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 March 31, 2026, the Company held approxim ately $808 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 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.

Current wording

At March 31, 2026, we had $633 million of restricted cash, which includes $630 million at Silicon Carbide LLC that is restricted for use by only that subsidiary.