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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 0-21154
__________________________________________ 
CREE, INC.
(Exact name of registrant as specified in its charter)
North Carolina 56-1572719
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
4600 Silicon Drive 
DurhamNorth Carolina27703
(Address of principal executive offices) (Zip Code)
(919) 407-5300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00125 par value CREEThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
The number of shares outstanding of the registrant’s common stock, par value $0.00125 per share, as of April 23, 2021, was 115,470,771.


Table of Contents
CREE, INC.
FORM 10-Q
For the Quarterly Period Ended March 28, 2021
Table of Contents

2

Table of Contents
PART I - FINANCIAL INFORMATION
Item 1.    Financial Statements (Unaudited)

3

Table of Contents
CREE, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
in millions of U.S. Dollars, except share data in thousandsMarch 28, 2021June 28, 2020
Assets
Current assets:
Cash and cash equivalents$531.6 $448.8 
Short-term investments761.7 790.9 
Total cash, cash equivalents and short-term investments1,293.3 1,239.7 
Accounts receivable, net84.1 72.4 
Inventories147.5 121.9 
Income taxes receivable9.1 6.6 
Prepaid expenses23.8 26.2 
Other current assets38.5 8.7 
Current assets held for sale2.0 1.3 
Current assets of discontinued operations 116.0 
Total current assets1,598.3 1,592.8 
Property and equipment, net1,165.1 770.8 
Goodwill359.2 349.7 
Intangible assets, net144.6 156.9 
Long-term receivables137.8  
Other long-term investments67.2 55.9 
Deferred tax assets1.2 1.2 
Other assets33.0 33.6 
Long-term assets of discontinued operations1.3 270.1 
Total assets$3,507.7 $3,231.0 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses$319.5 $189.8 
Accrued contract liabilities24.5 14.2 
Income taxes payable 1.2 
Finance lease liabilities0.4 3.6 
Other current liabilities37.8 22.2 
Current liabilities of discontinued operations0.6 60.2 
Total current liabilities382.8 291.2 
Long-term liabilities:
Convertible notes, net813.7 783.8 
Deferred tax liabilities2.3 1.8 
Finance lease liabilities - long-term10.1 11.4 
Other long-term liabilities51.1 43.8 
Long-term liabilities of discontinued operations0.7 9.8 
Total long-term liabilities877.9 850.6 
Commitments and contingencies
Shareholders’ equity:
Preferred stock, par value $0.01; 3,000 shares authorized at March 28, 2021 and June 28, 2020; none issued and outstanding
  
Common stock, par value $0.00125; 200,000 shares authorized at March 28, 2021 and June 28, 2020; 115,425 and 109,230 shares issued and outstanding at March 28, 2021 and June 28, 2020, respectively
0.1 0.1 
Additional paid-in-capital3,658.9 3,106.2 
Accumulated other comprehensive income3.5 16.0 
Accumulated deficit(1,415.5)(1,039.2)
Total shareholders’ equity2,247.0 2,083.1 
Noncontrolling interest from discontinued operations 6.1 
Total equity2,247.0 2,089.2 
Total liabilities and shareholders’ equity$3,507.7 $3,231.0 
The accompanying notes are an integral part of the consolidated financial statements
4

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CREE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Three months endedNine months ended
 March 28, 2021March 29, 2020March 28, 2021March 29, 2020
in millions of U.S. Dollars, except share data
Revenue, net$137.3 $113.9 $379.8 $362.3 
Cost of revenue, net93.3 72.6 259.0 232.9 
Gross profit44.0 41.3 120.8 129.4 
Operating expenses:
Research and development46.0 38.6 132.7 112.5 
Sales, general and administrative44.2 41.7 135.0 135.7 
Amortization or impairment of acquisition-related intangibles3.7 3.7 10.9 10.9 
Loss on disposal or impairment of other assets0.1 0.1 0.8 1.7 
Other operating expense11.4 5.2 22.6 22.2 
Operating loss(61.4)(48.0)(181.2)(153.6)
Non-operating expense, net8.1 14.7 18.9 8.1 
Loss before income taxes(69.5)(62.7)(200.1)(161.7)
Income tax benefit(3.0)(6.5)(4.0)(8.3)
Net loss from continuing operations(66.5)(56.2)(196.1)(153.4)
Net (loss) income from discontinued operations(41.6)(3.7)(178.8)1.7 
Net loss(108.1)(59.9)(374.9)(151.7)
Net income from discontinued operations attributable to noncontrolling interest0.8 0.2 1.4 0.5 
Net loss attributable to controlling interest($108.9)($60.1)($376.3)($152.2)
Basic and diluted loss per share
Continuing operations($0.59)($0.52)($1.75)($1.42)
Net loss attributable to controlling interest($0.96)($0.56)($3.35)($1.41)
Weighted average shares - basic and diluted (in thousands)112,891 108,115 112,330 107,718 
The accompanying notes are an integral part of the consolidated financial statements
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CREE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 Three months endedNine months ended
(in millions of U.S. Dollars)March 28, 2021March 29, 2020March 28, 2021March 29, 2020
Net loss($108.1)($59.9)($374.9)($151.7)
Other comprehensive loss:
Reclassification of currency translation gain to loss on sale of discontinued operations(9.5) (9.5) 
Net unrealized loss on available-for-sale securities(2.5)(1.9)(3.0)(1.7)
Comprehensive loss (120.1)(61.8)(387.4)(153.4)
Net income from discontinued operations attributable to noncontrolling interest0.8 0.2 1.4 0.5 
Comprehensive loss attributable to controlling interest($120.9)($62.0)($388.8)($153.9)
The accompanying notes are an integral part of the consolidated financial statements
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CREE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive IncomeTotal Equity - Controlled InterestNon-controlling Interest from Discontinued OperationsTotal Equity
(in millions of U.S Dollars, except share data)Number of SharesPar Value
Balance at June 28, 2020109,230 $0.1 $3,106.2 ($1,039.2)$16.0 $2,083.1 $6.1 $2,089.2 
Net loss— — — (184.4)— (184.4)0.3 (184.1)
Unrealized gain on available-for-sale securities— — — —   —  
Comprehensive loss(184.4)0.3 (184.1)
Tax withholding on vested equity awards— — (22.7)— — (22.7)— (22.7)
Stock-based compensation— — 16.2 — — 16.2 — 16.2 
Exercise of stock options and issuance of shares1,066 — 16.5 — — 16.5 — 16.5 
Balance at September 27, 2020110,296 $0.1 $3,116.2 ($1,223.6)$16.0 $1,908.7 $6.4 $1,915.1 
Net (loss) income— — — (83.0)— (83.0)0.3 (82.7)
Unrealized loss on available-for-sale securities— — — — (0.5)(0.5)— (0.5)
Comprehensive (loss) income(83.5)0.3 (83.2)
Tax withholding on vested equity awards— — (1.6)— — (1.6)— (1.6)
Stock-based compensation— — 18.6 — — 18.6 — 18.6 
Exercise of stock options and issuance of shares681 — 22.7 — — 22.7 — 22.7 
Balance at December 27, 2020110,977 $0.1 $3,155.9 ($1,306.6)$15.5 $1,864.9 $6.7 $1,871.6 
Net (loss) income— — — (108.9)— (108.9)0.8 (108.1)
Reclassification of currency translation gain to loss on sale of discontinued operations— — — — (9.5)(9.5)— (9.5)
Unrealized loss on available-for-sale securities— — — — (2.5)(2.5)— (2.5)
Comprehensive (loss) income(120.9)0.8 (120.1)
Tax withholding on vested equity awards— — (7.4)— — (7.4)— (7.4)
Stock-based compensation— — 19.5 — — 19.5 — 19.5 
Exercise of stock options and issuance of shares225 — 1.8 — — 1.8 — 1.8 
Issuance of shares under the at-the-market offering program, net of issuance costs4,223 — 489.1 — — 489.1 — 489.1 
Reclassification of noncontrolling interest to loss on sale of discontinued operations— — — — — — (7.5)(7.5)
Balance at March 28, 2021115,425 $0.1 $3,658.9 ($1,415.5)$3.5 $2,247.0 $ $2,247.0 
The accompanying notes are an integral part of the consolidated financial statements
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CREE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive IncomeTotal Equity - Controlled InterestNon-controlling Interest from Discontinued OperationsTotal Equity
(in millions of U.S. Dollars, except share data)Number of SharesPar Value
Balance at June 30, 2019106,570 $0.1 $2,874.1 ($847.5)$9.5 $2,036.2 $5.0 $2,041.2 
Net loss— — — (37.8)— (37.8)— (37.8)
Unrealized gain on available-for-sale securities— — — — 0.5 0.5 — 0.5 
Comprehensive loss(37.3)— (37.3)
Tax withholding on vested equity awards— — (14.3)— — (14.3)— (14.3)
Stock-based compensation— — 17.4 — — 17.4 — 17.4 
Exercise of stock options and issuance of shares1,127 — 18.6 — — 18.6 — 18.6 
Balance at September 29, 2019107,697 $0.1 $2,895.8 ($885.3)$10.0 $2,020.6 $5.0 $2,025.6 
Net (loss) income— — — (54.3)— (54.3)0.3 (54.0)
Unrealized loss on available-for-sale securities— — — — (0.3)(0.3)— (0.3)
Comprehensive (loss) income(54.6)0.3 (54.3)
Tax withholding on vested equity awards— — (0.4)— — (0.4)— (0.4)
Stock-based compensation— — 13.4 — — 13.4 — 13.4 
Exercise of stock options and issuance of shares334 — 10.7 — — 10.7 — 10.7 
Balance at December 29, 2019108,031 $0.1 $2,919.5 ($939.6)$9.7 $1,989.7 $5.3 $1,995.0 
Net (loss) income— — — (60.1)— (60.1)0.2 (59.9)
Unrealized loss on available-for-sale securities— — — — (1.9)(1.9)— (1.9)
Comprehensive (loss) income(62.0)0.2 (61.8)
Tax withholding on vested equity awards— — (1.5)— — (1.5)— (1.5)
Stock-based compensation— — 11.6 — — 11.6 — 11.6 
Exercise of stock options and issuance of shares122 — 1.7 — — 1.7 — 1.7 
Balance at March 29, 2020108,153 $0.1 $2,931.3 ($999.7)$7.8 $1,939.5 $5.5 $1,945.0 
The accompanying notes are an integral part of the consolidated financial statements
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CREE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine months ended
(in millions of U.S. Dollars)March 28, 2021March 29, 2020
Operating activities:
Net loss($374.9)($151.7)
Net (loss) income from discontinued operations(178.8)1.7 
Net loss from continuing operations(196.1)(153.4)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Depreciation and amortization88.6 73.7 
Amortization of debt issuance costs and discount, net of capitalized interest26.1 17.2 
Stock-based compensation40.3 36.9 
Loss on disposal or impairment of long-lived assets3.7 1.7 
Amortization of premium/discount on investments4.9 0.5 
Realized gain on sale of investments(0.3)(1.0)
(Gain) loss on equity investment(7.9)9.2 
Foreign exchange gain on equity investment(3.4)(1.2)
Deferred income taxes0.5 (0.8)
Changes in operating assets and liabilities:
Accounts receivable, net(11.7)(31.7)
Inventories(25.4)2.2 
Prepaid expenses and other assets(28.2)0.9 
Accounts payable, trade27.2 (6.3)
Accrued salaries and wages and other liabilities12.5 (18.7)
Accrued contract liabilities10.3 5.9 
Net cash used in operating activities of continuing operations(58.9)(64.9)
Net cash (used in) provided by operating activities of discontinued operations(16.6)25.4 
Cash used in operating activities(75.5)(39.5)
Investing activities:
Purchases of property and equipment(394.0)(166.9)
Purchases of patent and licensing rights(3.6)(2.8)
Proceeds from sale of property and equipment0.2 1.8 
Purchases of short-term investments(342.1)(421.2)
Proceeds from maturities of short-term investments335.6 342.5 
Proceeds from sale of short-term investments28.1 96.4 
Proceeds from sale of business, net36.6  
Net cash used in investing activities of continuing operations(339.2)(150.2)
Net cash used in investing activities of discontinued operations(0.3)(2.0)
Cash used in investing activities(339.5)(152.2)
Financing activities:
Proceeds from long-term debt borrowings30.0  
Payments on long-term debt borrowings, including finance lease obligations(30.3)(0.4)
Proceeds from issuance of common stock530.1 31.0 
Tax withholding on vested equity awards(31.7)(16.2)
Commitment fee on long-term incentive agreement(0.5) 
Cash provided by financing activities497.6 14.4 
Effects of foreign exchange changes on cash and cash equivalents0.2 (0.2)
Net change in cash and cash equivalents82.8 (177.5)
Cash and cash equivalents, beginning of period448.8 500.5 
Cash and cash equivalents, end of period$531.6 $323.0 
The accompanying notes are an integral part of the consolidated financial statements
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CREE, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



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Note 1 – Basis of Presentation and New Accounting Standards
Overview
Cree, Inc. (the Company) is an innovator of wide bandgap semiconductors, focused on silicon carbide and gallium nitride (GaN) materials and devices for power and radio-frequency (RF) applications. The Company's silicon carbide and GaN materials and devices are targeted for applications such as transportation, power supplies, inverters and wireless systems.
Previously, the Company designed, manufactured and sold specialty lighting-class light emitting diode (LED) products targeted for use in indoor and outdoor lighting, electronic signs and signals and video displays. As discussed more fully below in Note 2, “Discontinued Operations,” on March 1, 2021, the Company completed its previously announced sale of certain assets and subsidiaries comprising its former LED Products segment to SMART Global Holdings, Inc. (SGH) and its wholly owned newly-created acquisition subsidiary CreeLED, Inc. (CreeLED and collectively with SGH, SMART) for up to $300 million, including fixed upfront and deferred payments and contingent consideration (the LED Business Divestiture).
As a result, the Company has classified the results and cash flows of the former LED Products segment as discontinued operations in its consolidated statements of operations and consolidated statements of cash flows for all periods presented. Additionally, the related assets and liabilities associated with the discontinued operations are classified as held for sale as of June 28, 2020 in the consolidated balance sheets. Unless otherwise noted, discussion within these notes to the consolidated financial statements relates to the Company's continuing operations.
The Company’s continuing operations consist of the Wolfspeed business, which includes silicon carbide and GaN materials, power devices and RF devices based on wide bandgap semiconductor materials and silicon. The Company’s materials products and power devices are used in electric vehicles, motor drives, power supplies, solar and transportation applications. The Company’s materials products and RF devices are used in military communications, radar, satellite and telecommunication applications.
The majority of the Company's products are manufactured at its production facilities located in North Carolina, California and Arkansas. The Company also uses contract manufacturers for certain products and aspects of product fabrication, assembly and packaging. Additionally, the Company is in the process of building a silicon carbide device fabrication facility in New York. The Company operates research and development facilities in North Carolina, California, Arkansas, Arizona and New York.
Cree, Inc. is a North Carolina corporation established in 1987, and its headquarters are in Durham, North Carolina.
Basis of Presentation
The consolidated financial statements presented herein have been prepared by the Company and have not been audited. In the opinion of management, all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations, comprehensive loss, shareholders' equity and cash flows at March 28, 2021, and for all periods presented, have been made. All material intercompany accounts and transactions have been eliminated. The consolidated balance sheet at June 28, 2020 has been derived from the audited financial statements as of that date.
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 28, 2020 (fiscal 2020) (the 2020 Form 10-K) and the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 11, 2021, which recast the relevant financial information in the 2020 Form 10-K to present the financial results of the LED Business as discontinued operations and held for sale in the Company’s consolidated financial statements for all periods presented in the 2020 Form 10-K. The results of operations for the three and nine months ended March 28, 2021 are not necessarily indicative of the operating results that may be attained for the entire fiscal year ending June 27, 2021 (fiscal 2021). Additionally, the impact of the COVID-19 pandemic to the results of operations is uncertain.
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities. Actual amounts could differ materially from those estimates.
The Company revised income tax expense for the three months ended March 29, 2020 to correct the income tax provision calculation for the third quarter of fiscal 2020. The Company decreased income tax expense for the three months ended March 29, 2020, resulting in a net decrease to net loss of $1.5 million for the three months ended March 29, 2020. No revision was
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made to income tax expense for the nine months ended March 29, 2020. The Company concluded this error was not material individually or in the aggregate.
Certain accounting matters that generally require consideration of forecasted financial information were assessed regarding impacts from the COVID-19 pandemic as of March 28, 2021 and through the date of this Quarterly Report using reasonably available information as of those dates. The accounting matters assessed included, but were not limited to, allowance for doubtful accounts, the carrying value of goodwill and other long-lived tangible and intangible assets, the potential impact to earnings of unrealized losses on investments, valuation allowances for tax assets and the ability to estimate an annual effective tax rate. While the assessments resulted in no material impacts to the consolidated financial statements as of and for the quarter ended March 28, 2021, the Company believes the full impact of the pandemic remains uncertain and will continue to assess if ongoing developments related to the pandemic may cause future material impacts to its consolidated financial statements.
Segment Reporting
On March 1, 2021, the Company completed the LED Business Divestiture, and, as a result, now operates a single reporting segment within continuing operations, Wolfspeed. Accordingly, the Chief Operating Decision Maker (CODM) allocates resources and assesses performance on a consolidated basis. The Company's identified CODM is the Chief Executive Officer.
Recently Adopted Accounting Pronouncements
Credit Losses
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). This standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses.
The Company adopted this standard using the modified retrospective transition method on June 29, 2020, the first day of its 2021 fiscal year. Upon adoption, prior period balances were not adjusted and the Company determined no cumulative-effect adjustment to retained earnings as of June 29, 2020 was required.
Under this new standard, expected credit losses for the Company's receivables are evaluated on a collective (pool) basis and aggregated on the basis of similar risk characteristics. These aggregated risk pools are reassessed at each measurement date. A combination of factors is considered in determining the appropriate estimate of expected credit losses, including broad-based economic indicators as well as customers' financial strength, credit standing, payment history and any historical defaults.
Available-for-sale debt securities in an unrealized loss position at each measurement date are individually evaluated for expected credit losses. The Company evaluates whether the unrealized loss is due to market factors or changes in the investment holdings' credit rating. An expected credit loss will be recorded when an investment in an unrealized loss position is determined to have lost value from a decreased credit rating and the Company does not expect to recover the fair value of the security.
Accounting Pronouncements Pending Adoption
Convertible Debt Instruments
In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). This standard simplifies the accounting for convertible instruments by eliminating the cash conversion and the beneficial conversion accounting models. This update also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity. The update requires an entity to use the if-converted method for all convertible instruments in the diluted earnings per share calculation. An entity may use either a modified or full retrospective approach for adoption. The Company expects to adopt this standard by June 27, 2022 and is currently evaluating the impact on its consolidated financial statements.

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Note 2 – Discontinued Operations
On March 1, 2021, the Company completed the LED Business Divestiture pursuant to the terms of the previously reported Asset Purchase Agreement (the Purchase Agreement), dated October 18, 2020, as amended. Pursuant to the Purchase Agreement, (i) the Company completed the sale to SMART of (a) certain equipment, inventory, intellectual property rights, contracts, and real estate comprising the Company’s LED Products segment, (b) all of the issued and outstanding equity interests of Cree Huizhou Solid State Lighting Company Limited (Cree Huizhou), a limited liability company organized under the laws of the People’s Republic of China and an indirect wholly owned subsidiary of the Company, and (c) the Company’s ownership interest in Cree Venture LED Company Limited, the Company’s joint venture with San’an Optoelectronics Co., Ltd. (collectively, the LED Business); and (ii) SMART assumed certain liabilities related to the LED Business. The Company retained certain assets used in and pre-closing liabilities associated with the LED Products segment.
The purchase price for the LED Business consisted of (i) a payment of $50 million in cash, subject to customary adjustments, (ii) an unsecured promissory note issued to the Company by SGH in the amount of $125 million (the Purchase Price Note), (iii) the potential to receive an earn-out payment between $2.5 million and $125 million based on the revenue and gross profit performance of the LED Business in the first four full fiscal quarters following the closing (the Earnout Period), also payable in the form of a unsecured promissory note of SGH (the Earnout Note), and (iv) the assumption of certain liabilities. The Purchase Price Note and the Earnout Note will accrue interest at a rate of three-month LIBOR plus 3.0% with interest paid every three months and one bullet payment of principal and all accrued and unpaid interest will be payable on the maturity date of the Purchase Price Note and Earnout Note. The Purchase Price Note will mature on August 15, 2023, and the Earnout Note will mature on March 27, 2025. The Company recognized a loss on sale of the LED Business of $26.3 million. The cost of selling the LED Business was $27.4 million, which was recognized throughout fiscal 2020 and 2021.
In connection with the closing of the LED Business Divestiture, the Company and CreeLED also entered into certain ancillary and related agreements, including (i) an Intellectual Property Assignment and License Agreement, which assigned to CreeLED certain intellectual property owned by the Company and its affiliates and licensed to CreeLED certain additional intellectual property owned by the Company, (ii) a Transition Services Agreement (LED TSA), (iii) a Wafer Supply and Fabrication Services Agreement (the Wafer Supply Agreement), pursuant to which the Company will supply CreeLED with certain silicon carbide materials and fabrication services for up to four years, and (iv) a Real Estate License Agreement (LED RELA), which will allow CreeLED to use certain premises owned by the Company to conduct the LED Business for a period of up to 24 months after closing.
Because the LED Business Divestiture represented a strategic shift that will have a major effect on the Company’s operations and financial results, the Company has classified the results of the LED Business as discontinued operations in the Company’s consolidated statements of operations for all periods presented. The Company ceased recording depreciation and amortization of long-lived assets conveying in the Purchase Agreement upon classification as discontinued operations in October 2020. Additionally, the related assets and liabilities associated with discontinued operations are classified as held for sale in the consolidated balance sheets as of June 28, 2020.
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The following table presents the financial results of the LED Business as (loss) income from discontinued operations, net of income taxes in the Company's consolidated statements of operations:
Three months endedNine months ended
(in millions of U.S. Dollars)March 28, 2021March 29, 2020March 28, 2021March 29, 2020
Revenue, net$66.5 $101.7 $272.8 $336.0 
Cost of revenue, net50.3 81.5 213.3 267.8 
Gross profit16.2 20.2 59.5 68.2 
Operating expenses:
Research and development5.9 8.1 22.3 25.2 
Sales, general and administrative12.5 8.1 29.4 24.5 
Goodwill impairment  112.6  
Impairment on assets held for sale  19.5  
(Gain) loss on disposal or impairment of long-lived assets(0.6)0.2 (1.6)0.4 
Other operating expense6.2 5.6 18.7 9.6 
Operating (loss) income(7.8)(1.8)(141.4)8.5 
Non-operating income(0.3)(0.2)(0.3)(0.3)
(Loss) income before income taxes and loss on sale(7.5)(1.6)(141.1)8.8 
Loss on sale26.3  26.3  
(Loss) income before income taxes(33.8)(1.6)(167.4)8.8 
Income tax expense7.8 2.1 11.4 7.1 
Net (loss) income(41.6)(3.7)(178.8)1.7 
Net income attributable to noncontrolling interest0.8 0.2 1.4 0.5 
Net (loss) income attributable to controlling interest($42.4)($3.9)($180.2)$1.2 
As of September 27, 2020, the Company determined it would more likely than not sell all or a portion of the assets comprising the LED Products segment below carrying value. As a result, the Company recorded an impairment to goodwill of $105.7 million.
As of December 27, 2020, the Company recorded an additional impairment to goodwill of $6.9 million and an impairment to assets held for sale associated with the pending LED Business Divestiture of $19.5 million.
For the three and nine months ended March 28, 2021, the Company recognized $7.8 million and $11.4 million of income tax expense related to discontinued operations, respectively, which primarily related to the foreign operations of the LED Business. Income tax expense related to discontinued operations for the three and nine months ended March 28, 2021 includes $4.1 million of income tax expense related to the sale of the issued and outstanding equity interests of Cree Huizhou in the third quarter of fiscal 2021.
For the three and nine months ended March 29, 2020, the Company recognized $2.1 million and $