ALLEGRO MICROSYSTEMS INC

Previous wording

We operate on a 52- or 53-week fiscal year ending on the last Friday of March. Each fiscal quarter has 13 weeks, except in a 53-week year, when the fourth fiscal quarter has 14 weeks. All references to the three-month periods ended June 28, 2024 and June 30, 2023 relate to the 13-week periods ended June 28, 2024 and June 30, 2023, respectively. All references to “2025,” “fiscal year 2025” or similar references relate to the 52-week period ended March 28, 2025. All references to “2024,” “fiscal year 2024” or similar references relate to the 52-week period ended March 29, 2024.

Current wording

We operate on a 52- or 53-week fiscal year ending on the last Friday of March. Each fiscal quarter has 13 weeks, except in a 53-week year, when the fourth fiscal quarter has 14 weeks. All references to the three- and six-month periods ended September 27, 2024 and September 29, 2023 relate to the 13- and 26-week periods ended September 27, 2024 and September 29, 2023, respectively. All references to “2025,” “fiscal year 2025” or similar references relate to the 52-week period ending March 28, 2025. All references to “2024,” “fiscal year 2024” or similar references relate to the 52-week period ended March 29, 2024.

Previous wording

We are headquartered in Manchester, New Hampshire and have a global footprint across multiple continents. Our portfolio now includes more than 1,000 products, and we ship over 1.5 billion units annually to more than 10,000 customers worldwide. During the three-month period ended June 28, 2024 and June 30, 2023, we generated $166.9 million and $278.3 million in total net sales, respectively, with $(17.6) million and $60.9 million in net (loss) income, respectively.

Current wording

We are headquartered in Manchester, New Hampshire and have a global footprint across multiple continents. Our portfolio includes more than 1,000 products, and we ship over 1.5 billion units annually to more than 10,000 customers worldwide. During the three- and six-month periods ended September 27, 2024, we generated $187.4 million and $354.3 million in total net sales, respectively, with $(33.6) million and $(51.2) million in net loss, respectively. During the three- and six-month periods ended September 29, 2023, we generated $275.5 million and $553.8 million in total net sales, respectively, with $65.7 million and $126.6 million in net income, respectively.

Previous wording

On July 26, 2024, we completed an underwritten equity offering of 28,750,000 shares of its common stock at a public offering price of $24.00 per share (the “Equity Offering”) resulting in net proceeds to us of approximately $665.9 million, after deducting $24.2 million of underwriting discounts. As described above, Sanken reimbursed us for its offering fees and expenses, including the facilitation fee described above. The Equity Offering completed on July 26, 2024 included the exercise of the underwriters’ option to purchase 3,750,000 additional shares of our common stock. As described above, we used the net proceeds of the Equity Offering to complete the First Closing under the Share Repurchase Agreement.

Current wording

On July 26, 2024, we completed the Equity Offering pursuant to the Underwriting Agreement of 28,750,000 shares of our common stock at a public offering price of $24.00 per share resulting in net proceeds to us of approximately $665.9 million, after deducting approximately $24.2 million of underwriting discounts. As described above, we used the net proceeds of the Equity Offering to complete the First Closing under the Share Repurchase Agreement.

Previous wording

On July 23, 2024, we entered into a share repurchase agreement with Sanken (the “Share Repurchase Agreement”) pursuant to which we agreed to repurchase 38,767,315 shares of our common stock from Sanken in a privately negotiated transaction. Pursuant to the terms of the Share Repurchase Agreement, Sanken has agreed to reimburse us for the expenses incurred in connection with the transactions contemplated by the Share Repurchase Agreement, including a facilitation fee of $35.0 million. On July 29, 2024, we completed the first closing under the Share Repurchase Agreement, repurchasing 28,750,000 shares of our common stock for $621.5 million, which was the public offering price in the Equity Offering that closed on July 26, 2024 (as described below), minus the discount to the underwriters and transaction expenses and fees, including the $35.0 million facilitation fee paid to us as described above (the “First Closing”). We used the net proceeds of the Equity Offering to fund the purchase price payable to Sanken at the First Closing, and the shares repurchased in the First Closing were retired. The repurchase of the remainder of the shares of our common stock that we expect to repurchase from Sanken is expected to occur substantially concurrently with the receipt by us of borrowings under the 2023 Revolving Credit Agreement or, otherwise, on another date of our choosing (the “Second Closing”). We expect to fund the purchase price payable to Sanken at the Second Closing with cash on hand or additional borrowings under the 2023 Revolving Credit Agreement.

Current wording

On July 29, 2024, we completed the First Closing under the Share Repurchase Agreement, repurchasing 28,750,000 shares of our common stock for aggregate consideration of $628.3 million, which was the Equity Offering price, less the facilitation fee of $35.0 million, underwriting discounts, and reimbursable transaction expenses. The shares repurchased in the First Closing were retired.

Previous wording

Our end customers continually develop new products in existing and new application areas, and we work closely with our significant original equipment manufacturer customers in most of our target markets to understand their product roadmaps and strategies. For new products, the time from design initiation and manufacturing until we generate sales can be lengthy, typically between two and four years. As a result, our future sales are highly dependent on our continued success at winning design mandates from our customers. Further, despite current inflationary conditions, we expect the average sales prices (“ASPs”) of our products to decline over time, and we consider design wins to be critical to our future success. We anticipate being increasingly dependent on revenue from newer design wins for our newer products. The selection process is typically lengthy and may require us to incur significant design and development expenditures in pursuit of a design win, with no assurance that our solutions will be selected. As a result, the loss of any key design win or any significant delay in the ramp-up of volume production of the customer’s products into which our product is designed could adversely affect our business. In addition, volume production is contingent upon the successful introduction and market acceptance of our customers’ end products, which may be affected by several factors beyond our control.

Current wording

Our end customers continually develop new products in existing and new application areas, and we work closely with our significant original equipment manufacturer customers in most of our target markets to understand their product roadmaps and strategies. For new products, the time from design initiation and manufacturing until we generate sales can be lengthy, typically between two and four years. As a result, our future sales are highly dependent on our continued success at winning design mandates from our customers. Further, despite current inflationary conditions, we expect the average sales prices (“ASPs”) of our products to decline over time, and we consider design wins to be critical to our future success as they help mitigate declines in ASPs. We anticipate being increasingly dependent on revenue from newer design wins for our newer products. The selection process is typically lengthy and may require us to incur significant design and development expenditures in pursuit of a design win, with no assurance that our solutions will be selected. As a result, the loss of any key design win or any significant delay in the ramp-up of volume production of the customer’s products into which our product is designed could adversely affect our business. In addition, volume production is contingent upon the successful introduction and market acceptance of our customers’ end products, which may be affected by several factors beyond our control.

Previous wording

Demand for our products is highly dependent on market conditions in the end markets in which our customers operate, which are generally subject to seasonality, cyclicality and competitive conditions. In addition, a substantial portion of our total net sales is derived from sales to customers that purchase large volumes of our products. These customers generally provide periodic forecasts of their requirements. However, these forecasts do not commit such customers to minimum purchases, and customers can revise these forecasts without penalty. In addition, as is customary in the semiconductor industry, customers are generally permitted to cancel orders for our products within a specified period. Cancellation of orders could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses. In addition, changes in forecasts or the timing of orders from customers expose us to the risks of inventory shortages or excess inventory. We are currently operating in an inflationary environment for our products.

Current wording

Demand for our products is highly dependent on market conditions in the end markets in which our customers operate, which are generally subject to seasonality, cyclicality and competitive conditions. In addition, a substantial portion of our total net sales is derived from sales to customers that purchase large volumes of our products. These customers generally provide periodic forecasts of their requirements. However, these forecasts do not commit such customers to minimum purchases, and customers can revise these forecasts without penalty. In addition, as is customary in the semiconductor industry, customers are generally permitted to cancel orders for our products within a specified period. Cancellations of orders could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses. In addition, changes in forecasts or the timing of orders from customers expose us to the risks of inventory shortages or excess inventory. We are currently operating in an inflationary environment for our products.

Previous wording

Gross margin has been, and will continue to be, affected by a variety of factors, including the ASPs of our products, product mix in a given period, material costs, yields, manufacturing costs and efficiencies. We believe the primary driver of gross margin is the ASP negotiated between us and our customers relative to material costs and yields. Our pricing and margins depend on the volumes and the features of the products we produce and sell to our customers. As our products mature and unit volumes increase, despite current price leverage, we expect their ASPs to decline in the long term. We continually monitor and work to reduce the cost of our products and improve the potential value our solutions provide to our customers, as we target new design win opportunities and manage the product life cycles of our existing customer designs. We also maintain a close relationship with our suppliers and subcontractors to improve quality, increase yields and lower manufacturing costs. As a result, these declines often coincide with improvements in manufacturing yields and lower wafer, assembly, and testing costs, which offset some or all of the margin reduction that results from declining ASPs. However, we expect our gross margin to fluctuate on a quarterly basis as a result of changes in ASPs due to product mix, new product introductions, transitions into volume manufacturing and manufacturing costs. Gross margin generally decreases if production volumes are lower as a result of decreased demand, which leads to a reduced absorption of our fixed manufacturing costs. Gross margin generally increases when the opposite occurs.

Current wording

Gross margin has been, and will continue to be, affected by a variety of factors, including the ASPs of our products, product mix in a given period, material costs, yields, manufacturing costs and efficiencies. We believe the primary driver of gross margin is the ASP negotiated between us and our customers relative to material costs and yields. Our pricing and margins depend on the volumes and the features of the products we produce and sell to our customers. As our products mature and unit volumes increase, we expect their ASPs to decline in the long term. We continually monitor and work to reduce the cost of our products and improve the potential value our solutions provide to our customers, as we target new design win opportunities and manage the product life cycles of our existing customer designs. We also maintain a close relationship with our suppliers and subcontractors to improve quality, increase yields and lower manufacturing costs. As a result, these declines often coincide with improvements in manufacturing yields and lower wafer, assembly, and testing costs, which offset some or all of the margin reduction that results from declining ASPs. However, we expect our gross margin to fluctuate on a quarterly basis as a result of changes in ASPs due to product mix, new product introductions, transitions into volume manufacturing and manufacturing costs. Gross margin generally decreases if production volumes are lower as a result of decreased demand as it did in the first quarter, which leads to a reduced absorption of our fixed manufacturing costs. Gross margin generally increases when the opposite occurs.

Previous wording

Pursuant to the 2017 Tax Cuts and Jobs Act, beginning in fiscal year 2023, U.S. tax law now requires us to capitalize and amortize domestic and foreign research and development expenditures over five and 15 years, for domestic and foreign research, respectively (“174 Capitalization”). The impact of 174 Capitalization for fiscal year 2025 is an increase in annual cash taxes of approximately $15.8 million and a foreign derived intangible income (“FDII”) benefit of $7.7 million. Additionally, the Internal Revenue Service has issued Notice 2024-12 and is expected to issue final guidance which may modify this law or change its impact.

Current wording

Pursuant to the 2017 Tax Cuts and Jobs Act, beginning in fiscal year 2023, U.S. tax law now requires us to capitalize and amortize domestic and foreign research and development expenditures over five and 15 years, for domestic and foreign research, respectively (“174 Capitalization”). The impact of 174 Capitalization for fiscal year 2025 is an increase in annual cash taxes of approximately $5.0 million and a foreign derived intangible income benefit of $5.5 million. Additionally, the Internal Revenue Service has issued Notice 2024-12 and is expected to issue final guidance which may modify this law or change its impact.

Previous wording

Automotive net sales decreased in the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023, primarily due to inventory rebalancing with our automotive contract manufacturing customers looking to manage excess supply, as well as mix across all general markets.

Current wording

Automotive net sales decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to inventory rebalancing with our automotive contract manufacturing customers looking to manage excess supply, as well as changes in product mix across all general applications.

Previous wording

Americas net sales decreased in the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023, primarily due to the decline in the United States automotive and industrial markets across all applications. In addition, Europe and Other Asia net sales declined in industrial and other markets across all applications, South Korea net sales declined in the automotive industries, primarily safety, comfort and convenience applications, and Greater China net sales declined in automotive markets across all applications which are served through distributors currently managing inventory levels.

Current wording

Americas net sales decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to the decline in demand in the United States automotive and industrial and other markets across all applications. In addition, Greater China net sales declined in automotive markets primarily driven by reduced net sales of electric vehicles and advanced driver assistance systems applications. Europe net sales declined in automotive and industrial and other markets, primarily driven by lower net sales across all applications.

Previous wording

Cost of goods sold decreased in the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023, primarily due to a reduction in production volume as well as product mix, offset by an increase in amortization of intangible assets in relation to the acquisition of Crocus Technology International Corp. (“Crocus”).

Current wording

Cost of goods sold decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to a reduction in shipped volume, as well as change in product mix, partially offset by an increase in amortization of intangible assets in relation to the acquisition of Crocus Technology International Corp. (“Crocus”).

Previous wording

Cost of goods sold as a percentage of our total net sales was 55.2% and 43.2% for the three-month period ended June 28, 2024 and June 30, 2023, respectively. The increase was primarily due to the reduction in production volume, as well as product mix noted above.

Current wording

Cost of goods sold as a percentage of our total net sales was 54.3% and 42.1% for the three-month period ended September 27, 2024 and September 29, 2023, respectively. The increase was primarily due to the reduction in production volume, as well as a change in product mix noted above.

Previous wording

Gross profit decreased in the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023, due to the decrease in net sales and product mix noted above.

Current wording

Gross profit decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to the decrease in net sales and a change in product mix noted above.

Previous wording

Gross margin was 44.8% and 56.8% for the three-month period ended June 28, 2024 and June 30, 2023, respectively. The decrease was primarily due to the decline in net sales and product mix noted above.

Current wording

Gross margin was 45.7% and 57.9% for the three-month period ended September 27, 2024 and September 29, 2023, respectively. The decrease was primarily due to the decline in net sales and product mix noted above.

Previous wording

Selling, general and administrative (“SG&A”) expenses decreased in the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023, primarily due to a decrease in general operating expenses and outside service costs, partially offset by a combined increase in personnel and severance expenses.

Current wording

Selling, general and administrative (“SG&A”) expenses decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to a decrease in the annual incentive program and outside service costs, partially offset by an increase in personnel and severance expenses.

Previous wording

SG&A expenses as a percentage of our total net sales was 24.1% and 15.9% in the three-month periods ended June 28, 2024 and June 30, 2023, respectively. The increase as a percentage of total net sales was primarily due to the factors noted above in addition to the decline in net sales.

Current wording

SG&A expenses as a percentage of our total net sales was 20.3% and 15.7% in the three-month periods ended September 27, 2024 and September 29, 2023, respectively. The increase as a percentage of total net sales was primarily due to a decrease in the annual incentive program and outside service costs, partially offset by an increase in personnel and severance expenses in addition to the decline in net sales.

Previous wording

Interest expense increased in the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023, due to higher interest payments on the 2023 Term Loan Facility, which was used to finance the acquisition of Crocus.

Current wording

Interest expense increased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, due to higher interest payments on the Refinanced 2023 Term Loan Facility, which increased our total outstanding debt balance.

Previous wording

Interest income decreased in the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023, primarily due to lower cash balances.

Current wording

Interest income decreased in the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, primarily due to lower cash and cash equivalent balances.

Previous wording

We recorded a foreign currency loss in both of the three-month periods ended June 28, 2024 and June 30, 2023. The foreign currency loss recorded in the three-month period ended June 28, 2024 was primarily due to realized and unrealized gains from our Philippines location. The foreign currency loss recorded in the three-month period ended June 30, 2023, was primarily due to realized and unrealized losses from our United Kingdom location due to the strengthening of the British Pound.

Current wording

The foreign currency gain recorded in the three-month period ended September 27, 2024 was primarily due to U.S. Dollar strengthening against the Philippine Peso. The foreign currency gain recorded in the three-month period ended September 29, 2023, was primarily due to realized and unrealized gains from the British Pound strengthening against the Euro in our United Kingdom location, partially offset by the U.S. Dollar strengthening against the Philippine Peso.

Previous wording

Income tax provision and the effective income tax rate were $1.0 million and (6.3)%, respectively, in the three-month period ended June 28, 2024 and $7.2 million and 10.6%, respectively, in the three-month period ended June 30, 2023. The decline in the effective tax rate (“ETR”) year-over-year relates primarily to the change in (Loss) income before income taxes, discrete transactions, and the impact of FDII benefits and research credits; offset by non-deductible stock-based compensation charges.

Current wording

Income tax benefit and the effective income tax rate were $(9.5) million and 22.0%, respectively, in the three-month period ended September 27, 2024, compared to income tax provision and effective income tax rate of $7.4 million and 10.1%, respectively, in the three-month period ended September 29, 2023. The increase in the effective tax rate (“ETR”) was mainly due to a decrease in forecasted GAAP income before taxes, less tax deductions for share-based compensation, and an increase in nondeductible expenses primarily related to the Sanken Transaction and PSL Transaction.

Previous wording

Total net sales decreased in the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023. The decrease was driven by an overall reduction in inventory levels maintained by customers and corresponding decline in shipments across all end markets. The decline in shipments impacted all applications including e-Mobility products, safety comfort and convenience applications, and broad-based and other industrial applications, including clean energy and automation, data center applications and consumer and smart home products.

Current wording

Total net sales decreased in the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023. The decrease was primarily driven by an overall reduction in customer held inventory and corresponding to a decline in shipments across all end markets. The decline in shipments impacted all applications including e-Mobility products, safety comfort and convenience applications, and broad-based and other industrial applications, including clean energy and automation, data center applications and consumer and smart home products.

Previous wording

Industrial and other net sales decreased in the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023, primarily due to a decrease in demand of our broad-based and other industrial applications, in addition to distribution inventory reductions.

Current wording

Industrial and other net sales decreased in the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023, primarily due to a decrease in demand for our broad-based and other industrial applications, in addition to distributor inventory reductions.

Previous wording

The decline in PIC sales was driven by a decrease in demand for our motor products. The decrease in MS and other sales was due to a decline in current and isolator products, as well as our magnetic speed and position sensors.

Current wording

The decline in PIC sales was primarily driven by a decrease in demand for our motor products. The decrease in MS and other sales was due to a decline in demand for our current and isolator products, as well as our magnetic speed and position sensors, partially offset by an increase in sales of our TMR solutions.

Previous wording

Research and development (“R&D”) expenses increased in the three-month period ended June 28, 2024 in comparison to the comparable period in fiscal year 2024, primarily due to a combined increase in personnel costs.

Current wording

Research and development (“R&D”) expenses increased in the six-month period ended September 27, 2024 in comparison to the comparable period in fiscal year 2024, primarily due to an increase in R&D supplies and personnel costs partially offset by a reduction from R&D tax credits.

Previous wording

R&D expenses as a percentage of our total net sales was 27.1% and 15.4% for the three-month periods ended June 28, 2024 and June 30, 2023, respectively. The increase was primarily due to the increased costs noted above in addition to the decline in net sales.

Current wording

R&D expenses as a percentage of our total net sales was 25.0% and 15.6% for the six-month periods ended September 27, 2024 and September 29, 2023, respectively. The increase was primarily due to the increase in R&D supplies and personnel costs partially offset by a reduction from R&D tax credits noted above in addition to the decline in net sales.

Previous wording

As of June 28, 2024, we had $173.1 million of cash and cash equivalents and $384.7 million of working capital, compared to $212.1 million of cash and cash equivalents and $454.3 million of working capital as of March 29, 2024. Working capital is impacted by the timing and extent of our business needs.

Current wording

As of September 27, 2024, we had $188.8 million of cash and cash equivalents and $399.6 million of working capital, compared to $212.1 million of cash and cash equivalents and $454.3 million of working capital as of March 29, 2024. Working capital is impacted by the timing and extent of our business needs.

Previous wording

The following table summarizes our cash flows for the three-month periods ended June 28, 2024 and June 30, 2023:

Current wording

The following table summarizes our cash flows for the six-month periods ended September 27, 2024 and September 29, 2023:

Previous wording

Net cash provided by operating activities was $34.2 million in the three-month period ended June 28, 2024, resulting primarily from net loss of $17.6 million and noncash charges of $24.7 million, partially offset by a net increase in cash from a decrease in net operating assets and liabilities of $27.1 million. The net decrease in operating assets and liabilities consisted of a $55.1 million decrease in trade accounts receivable, net, a $16.0 million increase in inventories, a $14.0 million decrease in accrued expenses and other current and long-term liabilities, and a $1.7 million increase in prepaid expenses and other assets, partially offset by a $3.4 million increase in net amounts due to related party and a $0.2 million increase in trade accounts payable. The increase in inventories was primarily the result of inventory builds to support anticipated sales growth for the remainder of fiscal year 2025. The decrease in accrued expenses and other current and long-term liabilities was primarily the result of a reduction in accrued personnel costs due to the timing of payments pursuant to our annual incentive compensation plan. The increase in prepaid expenses and other assets was mostly due to higher long-term deposits and the timing of tax payments. The decrease in trade accounts receivable, net was primarily a result of decreased sales year-over-year. Trade accounts payable decreased primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $5.5 million. The increase in net amounts due to related parties was primarily due to variations in the timing of such payments in the ordinary course of business.

Current wording

Net cash provided by operating activities was $49.7 million in the six-month period ended September 27, 2024, resulting primarily from a net loss of $51.2 million and noncash charges of $93.2 million, further adjusted by a net increase in cash from a decrease in net operating assets and liabilities of $7.7 million. Noncash charges include increases for $34.8 million for loss on change in fair value of forward repurchase contract, $32.5 million of depreciation and amortization, $21.7 million of stock-based compensation and $6.6 million of other non-cash reconciling items, partially offset by $7.8 million of deferred income taxes. The net decrease in operating assets and liabilities consisted of a $41.4 million decrease in trade accounts receivable, net, a $13.7 million increase in trade accounts payable and a $4.1 million increase in net amounts due to related party partially offset by an $18.8 million increase in inventories, a $15.8 million increase in prepaid expenses and other assets, and a $16.8 million decrease in accrued expenses and other current and long-term liabilities. The decrease in trade accounts receivable, net was primarily a result of decreased sales year-over-year. Trade accounts payable increased primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $4.1 million. The increase in net amounts due to related parties was primarily due to variations in the timing of such payments in the ordinary course of business. The increase in inventories was primarily the result of inventory builds of standard products to support anticipated sales growth. The increase in prepaid expenses and other assets was mostly due to higher long-term deposits and the timing of tax payments. The decrease in accrued expenses and other current and long-term liabilities was primarily the result of a reduction in accrued personnel costs due to the timing of payments pursuant to our annual incentive compensation plan.

Previous wording

Net cash provided by operating activities was $49.7 million in the three-month period ended June 30, 2023, resulting primarily from net income of $60.9 million and noncash charges of $25.8 million, partially offset by a net decrease in cash from an increase in net operating assets and liabilities of $37.0 million. The net increase in operating assets and liabilities consisted of a $27.9 million increase in inventories, a $10.2 million increase in prepaid expenses and other assets, a $17.1 million decrease in accrued expenses and other current and long-term liabilities, and a $10.3 million increase in trade accounts receivable, net, partially offset by a $18.4 million increase in trade accounts payable, and a $10.1 million increase in net amounts due from related parties. The increase in inventories was primarily the result of inventory builds to support anticipated sales growth for the remainder of fiscal year 2024. The increase in prepaid expenses and other assets were mostly due to higher long-term deposits and the timing of tax payments, including value-added taxes receivable, insurance and contract costs. The decrease in accrued expenses and other current and long-term liabilities was primarily the result of a reduction in accrued personnel costs due to timing of payments pursuant to our annual incentive compensation plan. The increase in trade accounts receivable, net, was primarily a result of increased sales year-over-year, as well as timing of receipts. Accounts payable increased primarily due to the timing of payments to suppliers and vendors, partially offset by higher operating purchases, including unpaid capital expenditures of $11.7 million. The increase in net amounts due to related parties was primarily due to variations in the timing of such payments in the ordinary course of business.

Current wording

Net cash provided by operating activities was $96.4 million in the six-month period ended September 29, 2023, resulting primarily from net income of $126.6 million and noncash charges of $46.3 million, partially offset by a net decrease in cash from an increase in net operating assets and liabilities of $76.5 million. The net increase in operating assets and liabilities consisted of a $31.2 million increase in inventories, a $29.9 million decrease in accrued expenses and other current and long-term liabilities, a $16.5 million increase in prepaid expenses and other assets, and a $7.6 million increase in trade accounts receivable, net, partially offset by a $2.7 million increase in trade accounts payable and a $6.1 million increase in net amounts due from related parties. The increase in inventories was primarily the result of inventory builds to support anticipated sales growth for the remainder of fiscal year 2024. The increase in prepaid expenses and other assets were mostly due to higher long-term deposits and the timing of tax payments, including value-added taxes receivable, insurance and contract costs. The decrease in accrued expenses and other current and long-term liabilities was primarily the result of a reduction in accrued personnel costs due to timing of payments pursuant to our annual incentive compensation plan. The increase in trade accounts receivable, net, was primarily a result of increased sales year-over-year, as well as timing of receipts. Accounts payable increased primarily due to the timing of payments to suppliers and vendors, partially offset by higher operating purchases, including unpaid capital expenditures of $20.0 million. The increase in net amounts due to related parties was primarily due to variations in the timing of such payments in the ordinary course of business.

Previous wording

Net cash used in investing activities was $11.0 million in the three-month period ended June 28, 2024, consisting of purchases of property, plant and equipment.

Current wording

Net cash used in investing activities was $20.9 million in the six-month period ended September 27, 2024, consisting of purchases of property, plant and equipment.

Previous wording

Net cash used in investing activities was $34.9 million in the three-month period ended June 30, 2023, consisting of purchases of property, plant and equipment of $44.9 million and proceeds from the sale of marketable securities of $10.0 million.

Current wording

Net cash used in investing activities was $59.9 million in the six-month period ended September 29, 2023, consisting of purchases of property, plant and equipment of $76.1 million, partially offset by proceeds from the sale of marketable securities of $16.2 million.

Previous wording

Net cash used in financing activities was $60.4 million in the three-month period ended June 28, 2024, consisting of a $50.0 million payment on our 2023 Term Loan Facility and $11.2 million of taxes related to the net settlement of equity awards.

Current wording

Net cash used in financing activities was $53.3 million in the six-month period ended September 27, 2024, consisting of $853.8 million of repurchases of our common stock, $50.0 million of payment on our 2023 Term Loan Facility and $12.3 million of taxes related to the net settlement of equity awards, offset by the issuance of common stock of $665.9 million, net proceeds of $193.5 million from the Refinanced 2023 Term Loan Facility, proceeds received in connection with the issuance of common stock under our employee stock purchase plan and proceeds received related to the quarterly payment from PSL on our related party loan.

Previous wording

Net cash used in financing activities was $11.0 million in the three-month period ended June 30, 2023, primarily consisting of taxes related to the net settlement of equity awards and payments of debt issuance costs in connection with the 2023 Revolving Credit Facility, partially offset by proceeds received in connection with the issuance of common stock under our employee stock purchase plan.

Current wording

Net cash used in financing activities was $15.8 million in the six-month period ended September 29, 2023, primarily consisting of taxes related to the net settlement of equity awards, additional funds loaned under the Note Purchase Agreement between us and Crocus and payments of debt issuance costs in connection with the 2023 Revolving Credit Facility, partially offset by proceeds received in connection with the issuance of common stock under our employee stock purchase plan and proceeds received related to the quarterly payment from PSL on our related party loan.

Previous wording

See Note 9, “Debt and Other Borrowings” in the unaudited condensed consolidated financial statements included in this Quarterly Report for information regarding our debt obligations.

Current wording

See Note 9, “Debt and Other Borrowings” to the unaudited condensed consolidated financial statements included in this Quarterly Report for information regarding our debt obligations.

Previous wording

See Note 2, “Summary of Significant Accounting Policies” in the unaudited condensed consolidated financial statements included in this Quarterly Report for a full description of recent accounting pronouncements, including the respective dates of adoption or expected adoption and effects on our condensed consolidated financial statements contained in Item 1 of this Quarterly Report.

Current wording

See Note 2, “Summary of Significant Accounting Policies” to the unaudited condensed consolidated financial statements included in this Quarterly Report for a full description of recent accounting pronouncements, including the respective dates of adoption or expected adoption and effects on our condensed consolidated financial statements contained in Item 1 of this Quarterly Report.