Wolfspeed (WOLF) risk factors, FY2025 10-K

Other

1. 01Described below are various risks and uncertainties that may affect our business. If any of the risks described below actually occurs, our business, financial condition or results of operations could be materially and adversely affected

Risks related to our Chapter 11 Cases

1. 02We are subject to risks and uncertainties associated with our Chapter 11 Cases
2. 03We may not be able to obtain confirmation of the Plan as outlined in the Restructuring Support Agreement
3. 04If the Restructuring Support Agreement is terminated, our ability to confirm and consummate the Plan could be materially and adversely affected
4. 05The Restructuring Support Agreement is subject to significant conditions and milestones that may be difficult for us to satisfy
5. 06Trading in our securities during the pendency of our Chapter 11 Cases is highly speculative and poses substantial risks. If the Plan becomes effective, the ownership interests of holders of our existing common stock will be substantially diluted
6. 07stock when desired, or the prices that an investor may obtain for the shares of the common stock. The Restructuring Support Agreement contemplates the transactions set forth therein to be implemented through the Chapter 11 Cases and the Plan
7. 08Following the effectiveness of the Plan, certain Consenting Convertible Noteholders and Renesas, if they choose to act together, will have the ability to significantly influence all matters submitted to shareholders of the reorganized company for approval
8. 09Our business could suffer from a long and protracted restructuring
9. 10As a result of the Chapter 11 Cases, our historical financial information will not be indicative of our future performance
10. 11We are subject to claims that will not be discharged in the Chapter 11 Cases, which could have a material adverse effect on our financial condition and results of operations
11. 12The Chapter 11 Cases will consume a substantial portion of the time and attention of our management, which may have an adverse effect on our business and results of operations, and we may experience increased levels of employee attrition
12. 13Upon our emergence from bankruptcy, if at all, the composition of our board of directors is expected to change
13. 14The Chapter 11 Cases raise substantial doubt regarding our ability to continue as a going concern
14. 15Our planned Reincorporation from the State of North Carolina to the State of Delaware could have significant legal, tax, and governance implications for us and our stockholders, could expose us to additional risks and uncertainties and we may not realize the expected benefits of the Reincorporation
15. 16We cannot assure you that we will be able to achieve our goals after the Plan is consummated and we emerge from the protection of the Bankruptcy Court
16. 17We will be required to reduce certain of our tax attributes due to the exclusion of COD income from gross income upon emergence from Chapter 11

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

1. 18We are subject to risks related to international sales and purchases
2. 19Our operations in foreign countries expose us to certain risks inherent in doing business internationally, which may adversely affect our business, results of operations or financial condition

Risks related to sales, product development and manufacturing

1. 20We face significant challenges managing our growth strategy
2. 21Our results of operations, financial condition and business could be harmed if we are unable to balance customer demand and capacity
3. 22Variations in our production could impact our ability to reduce costs and could cause our margins to decline and our operating results to suffer
4. 23In the past, we have experienced difficulties in achieving acceptable yields on certain products, which has adversely affected our operating results. We may experience similar problems in the future, and we cannot predict when they may occur or their severity
5. 24Our operating results are substantially dependent on the acceptance of new products
6. 25We operate in industries that are subject to significant fluctuation in supply and demand and ultimately pricing, which affects our revenue and profitability
7. 26If we are unable to effectively develop, manage and expand our sales channels for our products, our operating results may suffer
8. 27We depend on a limited number of customers, including distributors, for a substantial portion of our revenue, and the loss of, or a significant reduction in purchases by, one or more of these customers could adversely affect our operating results
9. 28The markets in which we operate are highly competitive and have evolving technical requirements
10. 29Our revenue is highly dependent on our customers’ ability to produce, market and sell more integrated products
11. 30Our results may be negatively impacted if customers do not maintain their favorable perception of our brands and products
12. 31If our products fail to perform or fail to meet customer requirements or expectations, we could incur significant additional costs, including costs associated with the recall of those items
13. 32As a result of our continued expansion into new markets, we may compete with existing customers who may reduce their orders
14. 33If we fail to evaluate and execute strategic opportunities successfully, our business may suffer
15. 34We are subject to a number of risks associated with our restructuring plan, and these risks could impact our operations, financial condition and ability to realize expected cost savings
16. 35We are subject to risks associated with the sale of our former Lighting Products, LED Products and RF business units, and these risks could adversely impact our financial condition
17. 36We have outstanding debt which could materially restrict our business and adversely affect our financial condition, liquidity and results of operations
18. 37We may be unable to comply with the restrictions imposed by the Cash Collateral Order
19. 38We may be subject to confidential information theft or misuse, which could harm our business and results of operations
20. 39Our intellectual property position is based in part on patents owned by us and patents licensed to us. We intend to continue to file patent applications in the future, where appropriate, and to pursue such applications with United States and certain foreign patent authorities
21. 40Litigation could adversely affect our operating results and financial condition
22. 41Our business may be impaired by claims that we, or our customers, infringe the intellectual property rights of others

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

1. 42We and certain of our former executive officers have been named as defendants in securities class action lawsuits. This lawsuit may require significant time and attention from our management and may result in significant legal expenses, which could materially adversely affect our results and financial condition
2. 43We may be required to recognize a significant charge to earnings if our assets become impaired
3. 44The adoption of or changes in government and/or industry policies, standards or regulations relating to the efficiency, performance, vehicle range or other aspects of our products and the products in which they are utilized could impact the demand for our products
4. 45Changes in our effective tax rate or the ability to obtain future tax credits may affect our results and financial condition
5. 46We have substantial NOL carryforwards, the utilization of which may be limited annually due to certain change in ownership provisions of Section 382 of the Code
6. 47Failure to comply with applicable environmental laws and regulations worldwide could harm our business and results of operations
7. 48Our results could vary as a result of the methods, estimates and judgments that we use in applying our accounting policies, including changes in the accounting standards to be applied
8. 49Regulations related to conflict-free minerals may force us to incur additional expenses
9. 50Catastrophic events and disaster recovery may disrupt business continuity
10. 51In order to compete, we must attract, motivate and retain key employees, and our failure to do so could harm our results of operations
11. 52Our stock price has experienced and may continue to experience volatility
12. 53We are exposed to fluctuations in the market value of our investment portfolio and in interest rates, and therefore, impairment of our investments or lower investment income could harm our earnings
13. 54We may be subject to volatility and uncertainty in customer demand, supply chains, worldwide economies and financial markets resulting from the outbreak of infectious disease or similar public health threat
14. 55Risks relating to the adoption, use or application of emerging technologies, including AI, by our customers and in our business, may impact financial results and could result in reputational and financial harm and liability