WOLF filing — read by section

Item 1. Financial Statements

Item 1. Financial Statements (Unaudited) 
 
 Consolidated Balance Sheets as of March 29, 2020 and June 30, 2019 
 4 
 
 Consolidated Statements of Operations for the three and nine months ended March 29, 2020 and March 31, 2019 
 5 
 
 Consolidated Statements of Comprehensive Loss for the three and nine months ended March 29, 2020 and March 31, 2019 
 6 
 
 Consolidated Statement s of Shareholders' Equity for the nine months ended March 29, 2020 and March 31, 2019 
 7 
 
 Consolidated Statements of Cash Flows for the nine months ended March 29, 2020 and March 31, 2019 
 9 
 
 Notes to Unaudited Consolidated Financial Statements 
 10 
 

 
 
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 CREE, INC. 
 UNAUDITED CONSOLIDATED BALANCE SHEETS 
 
 (in millions of U.S. Dollars, except share data) March 29, 2020 June 30, 2019 
 Assets 
 Current assets: 
 Cash and cash equivalents $ 323.0 $ 500.5 
 Short-term investments 529.9 550.9 
 Total cash, cash equivalents and short-term investments 852.9 1,051.4 
 Accounts receivable, net 161.0 128.9 
 Inventories 170.1 187.4 
 Income taxes receivable 6.1 0.2 
 
 Prepaid expenses 27.7 23.3 
 Other current assets 12.2 19.7 
 Current assets held for sale 0.2 1.9 
 
 Total current assets 1,230.2 1,412.8 
 Property and equipment, net 737.6 625.2 
 Goodwill 530.0 530.0 
 Intangible assets, net 183.6 197.9 
 Other long-term investments 31.5 39.5 
 Deferred tax assets 6.7 5.6 
 
 Other assets 18.3 5.9 
 Total assets $ 2,737.9 $ 2,816.9 
 
 Liabilities and Shareholders' Equity 
 Current liabilities: 
 Accounts payable and accrued expenses $ 184.8 $ 200.9 
 Accrued contract liabilities 45.1 45.8 
 Income taxes payable 1.2 3.0 
 Finance lease liabilities 0.6 — 
 Other current liabilities 19.7 18.5 
 
 Total current liabilities 251.4 268.2 
 Long-term liabilities: 
 
 Convertible notes, net 486.3 469.1 
 Deferred tax liabilities 2.3 2.0 
 Finance lease liabilities - long-term 2.2 — 
 Other long-term liabilities 50.7 36.4 
 Total long-term liabilities 541.5 507.5 
 Commitments and contingencies 
 Shareholders’ equity: 
 Preferred stock, par value $ 0.01 ; 3,000 shares authorized at March 29, 2020 and June 30, 2019; none issued and outstanding 
 — — 
 Common stock, par value $ 0.00125 ; 200,000 shares authorized at March 29, 2020 and June 30, 2019; 108,153 and 106,570 shares issued and outstanding at March 29, 2020 and June 30, 2019, respectively 
 0.1 0.1 
 Additional paid-in-capital 2,931.3 2,874.1 
 Accumulated other comprehensive income 7.8 9.5 
 Accumulated deficit ( 999.7 ) ( 847.5 ) 
 Total shareholders’ equity 1,939.5 2,036.2 
 Non-controlling interest 5.5 5.0 
 Total equity 1,945.0 2,041.2 
 Total liabilities and shareholders’ equity $ 2,737.9 $ 2,816.9 

 The accompanying notes are an integral part of the consolidated financial statements 
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 CREE, INC. 
 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS 
 
 
 Three months ended Nine months ended 
 March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 
 (in millions of U.S. Dollars, except share data) 
 Revenue, net $ 215.5 $ 274.0 $ 698.2 $ 828.7 
 Cost of revenue, net 154.1 173.5 500.7 526.4 
 Gross profit 61.4 100.5 197.5 302.3 
 Operating expenses: 
 Research and development 46.7 40.7 137.7 117.2 
 Sales, general and administrative 49.7 50.6 160.1 143.7 
 Amortization or impairment of acquisition-related intangibles 3.7 3.9 10.9 11.7 
 Loss on disposal or impairment of other assets 0.3 5.3 2.1 5.7 
 
 
 Other operating expense 10.8 11.1 31.8 14.3 
 
 Operating (loss) income ( 49.8 ) ( 11.1 ) ( 145.1 ) 9.7 
 Non-operating expense, net 14.5 8.4 7.8 23.7 
 Loss before income taxes ( 64.3 ) ( 19.5 ) ( 152.9 ) ( 14.0 ) 
 Income tax (benefit) expense ( 2.9 ) 2.8 ( 1.2 ) 9.3 
 Net loss from continuing operations ( 61.4 ) ( 22.3 ) ( 151.7 ) ( 23.3 ) 
 Net loss from discontinued operations — ( 205.4 ) — ( 218.0 ) 
 Net loss ( 61.4 ) ( 227.7 ) ( 151.7 ) ( 241.3 ) 
 Net income attributable to noncontrolling interest 0.2 0.1 0.5 0.1 
 Net loss attributable to controlling interest ($ 61.6 ) ($ 227.8 ) ($ 152.2 ) ($ 241.4 ) 
 
 Basic and diluted loss per share 
 Continuing operations attributable to controlling interest ($ 0.57 ) ($ 0.22 ) ($ 1.41 ) ($ 0.23 ) 
 
 Net loss attributable to controlling interest ($ 0.57 ) ($ 2.20 ) ($ 1.41 ) ($ 2.35 ) 
 
 
 
 
 
 
 Weighted average shares - basic and diluted (in thousands) 108,115 103,659 107,718 102,807 
 
 
 

 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 ended Nine months ended 
 (in millions of U.S. Dollars) March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 
 Net loss ($ 61.4 ) ($ 227.7 ) ($ 151.7 ) ($ 241.3 ) 
 Other comprehensive loss: 
 Currency translation loss — ( 0.3 ) — ( 0.8 ) 
 Net unrealized (loss) gain on available-for-sale securities ( 1.9 ) 2.0 ( 1.7 ) 2.8 
 
 Comprehensive loss ( 63.3 ) ( 226.0 ) ( 153.4 ) ( 239.3 ) 
 Net income attributable to non-controlling interest 0.2 0.1 0.5 0.1 
 Comprehensive loss attributable to controlling interest ($ 63.5 ) ($ 226.1 ) ($ 153.9 ) ($ 239.4 ) 

 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 Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income Total Equity - Controlled Interest Non-controlling Interest Total Equity 
 (in millions of U.S Dollars, except share data) Number of Shares Par Value 
 Balance at June 30, 2019 106,570 $ 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 shares 1,127 — 18.6 — — 18.6 — 18.6 
 
 
 
 Balance at September 29, 2019 107,697 $ 0.1 $ 2,895.8 ($ 885.3 ) $ 10.0 $ 2,020.6 $ 5.0 $ 2,025.6 
 Net (loss) income — — — ( 52.8 ) — ( 52.8 ) 0.3 ( 52.5 ) 
 
 Unrealized loss on available-for-sale securities — — — — ( 0.3 ) ( 0.3 ) — ( 0.3 ) 
 Comprehensive (loss) income ( 53.1 ) 0.3 ( 52.8 ) 
 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 shares 334 — 10.7 — — 10.7 — 10.7 
 
 
 
 Balance at December 29, 2019 108,031 $ 0.1 $ 2,919.5 ($ 938.1 ) $ 9.7 $ 1,991.2 $ 5.3 $ 1,996.5 
 Net (loss) income — — — ( 61.6 ) — ( 61.6 ) 0.2 ( 61.4 ) 
 
 Unrealized loss on available-for-sale securities — — — — ( 1.9 ) ( 1.9 ) — ( 1.9 ) 
 Comprehensive (loss) income ( 63.5 ) 0.2 ( 63.3 ) 
 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 shares 122 — 1.7 — — 1.7 — 1.7 
 
 
 
 Balance at March 29, 2020 108,153 $ 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 SHAREHOLDERS' EQUITY 
 
 
 
 Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income Total Equity - Controlled Interest Non-controlling Interest Total Equity 
 (in millions of U.S. Dollars, except share data) Number of Shares Par Value 
 Balance at June 24, 2018 101,488 $ 0.1 $ 2,549.1 ($ 482.7 ) $ 0.6 $ 2,067.1 $ 5.0 $ 2,072.1 
 Net loss — — — ( 11.1 ) — ( 11.1 ) — ( 11.1 ) 
 Currency translation gain — — — — 0.3 0.3 — 0.3 
 Unrealized loss on available-for-sale securities — — — — ( 0.3 ) ( 0.3 ) — ( 0.3 ) 
 Comprehensive loss ( 11.1 ) — ( 11.1 ) 
 Tax withholding on vested equity awards — — ( 10.8 ) — — ( 10.8 ) — ( 10.8 ) 
 
 Stock-based compensation — — 12.1 — — 12.1 — 12.1 
 Exercise of stock options and issuance of shares 1,032 — 15.5 — — 15.5 — 15.5 
 Convertible note issuance — — 110.6 — — 110.6 — 110.6 
 Adoption of ASC 606 — — — 10.3 — 10.3 — 10.3 
 
 Balance at September 23, 2018 102,520 $ 0.1 $ 2,676.5 ($ 483.5 ) $ 0.6 $ 2,193.7 $ 5.0 $ 2,198.7 
 Net loss — — — ( 2.5 ) — ( 2.5 ) — ( 2.5 ) 
 Currency translation loss — — — — ( 0.9 ) ( 0.9 ) — ( 0.9 ) 
 Unrealized gain on available-for-sale securities — — — — 1.1 1.1 — 1.1 
 Comprehensive loss ( 2.3 ) — ( 2.3 ) 
 Tax withholding on vested equity awards — — ( 1.1 ) — — ( 1.1 ) — ( 1.1 ) 
 Repurchased shares — — — — — — — — 
 Stock-based compensation — — 13.6 — — 13.6 — 13.6 
 Exercise of stock options and issuance of shares 553 — 14.6 — — 14.6 — 14.6 
 
 
 
 Balance at December 30, 2018 103,073 $ 0.1 $ 2,703.6 ($ 486.0 ) $ 0.8 $ 2,218.5 $ 5.0 $ 2,223.5 
 Net (loss) income — — — ( 227.8 ) — ( 227.8 ) 0.1 ( 227.7 ) 
 Currency translation loss — — — — ( 0.3 ) ( 0.3 ) — ( 0.3 ) 
 Unrealized gain on available-for-sale securities — — — — 2.0 2.0 — 2.0 
 Comprehensive loss ( 226.1 ) 0.1 ( 226.0 ) 
 Tax withholding on vested equity awards — — ( 0.5 ) — — ( 0.5 ) — ( 0.5 ) 
 
 Stock-based compensation — — 15.6 — — 15.6 — 15.6 
 Exercise of stock options and issuance of shares 1,442 — 53.3 — — 53.3 — 53.3 
 
 
 
 Balance at March 31, 2019 104,515 $ 0.1 $ 2,772.0 ($ 713.8 ) $ 2.5 $ 2,060.8 $ 5.1 $ 2,065.9 

 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 29, 2020 March 31, 2019 
 Operating activities: 
 Net loss from continuing operations ($ 151.7 ) ($ 23.3 ) 
 Adjustments to reconcile net loss to net cash (used in) provided by operating activities: 
 Depreciation and amortization 90.9 93.1 
 Amortization of debt issuance costs and discount 17.2 12.7 
 Stock-based compensation 41.3 34.5 
 
 
 
 
 Loss on disposal or impairment of long-lived assets 2.1 5.7 
 Amortization of premium/discount on investments 0.5 2.0 
 Realized (gain) loss on sale of investments ( 1.3 ) 0.1 
 Loss on equity investment 9.2 12.4 
 Foreign exchange (gain) loss on equity investment ( 1.2 ) 0.9 
 Deferred income taxes ( 0.8 ) ( 1.7 ) 
 Changes in operating assets and liabilities: 
 Accounts receivable, net ( 31.9 ) ( 63.6 ) 
 Inventories 18.4 ( 20.2 ) 
 Prepaid expenses and other assets 1.9 ( 4.6 ) 
 Accounts payable, trade ( 19.2 ) 18.4 
 Accrued salaries and wages and other liabilities ( 20.6 ) 81.4 
 Accrued contract liabilities 5.7 31.9 
 Net cash (used in) provided by operating activities of continuing operations ( 39.5 ) 179.7 
 Net cash provided by operating activities of discontinued operations — 9.3 
 Cash (used in) provided by operating activities ( 39.5 ) 189.0 
 Investing activities: 
 Purchases of property and equipment ( 168.9 ) ( 93.3 ) 
 Purchases of patent and licensing rights ( 5.2 ) ( 7.0 ) 
 Proceeds from sale of property and equipment 1.8 0.3 
 Purchases of short-term investments ( 425.2 ) ( 251.7 ) 
 Proceeds from maturities of short-term investments 342.5 146.4 
 Proceeds from sale of short-term investments 102.8 28.2 
 
 
 
 Net cash used in investing activities of continuing operations ( 152.2 ) ( 177.1 ) 
 Net cash used in investing activities of discontinued operations — ( 15.4 ) 
 Cash used in investing activities ( 152.2 ) ( 192.5 ) 
 Financing activities: 
 
 
 Proceeds from long-term debt borrowings — 95.0 
 Payments on long-term debt borrowings, including finance lease obligations ( 0.4 ) ( 387.0 ) 
 Proceeds from convertible notes — 575.0 
 Payments of debt issuance costs — ( 12.9 ) 
 Proceeds from issuance of common stock 31.0 83.3 
 Tax withholding on vested equity awards ( 16.2 ) ( 12.4 ) 
 
 
 Net cash provided by financing activities of continuing operations 14.4 341.0 
 Net cash provided by financing activities of discontinued operations — — 
 Cash provided by financing activities 14.4 341.0 
 Effects of foreign exchange changes on cash and cash equivalents ( 0.2 ) ( 0.2 ) 
 Net change in cash and cash equivalents ( 177.5 ) 337.3 
 Cash and cash equivalents, beginning of period 500.5 118.9 
 Cash and cash equivalents, end of period $ 323.0 $ 456.2 
 
 
 

 The accompanying notes are an integral part of the consolidated financial statements 
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 CREE, INC. 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 
 
 
 
 
 
 
 Note 1 
 Basis of Presentation and New Accounting Standards 
 11 
 
 Note 2 
 Discontinued Operations 
 13 
 
 Note 3 
 Revenue Recognition 
 14 
 
 Note 4 
 Leases 
 14 
 
 Note 5 
 Financial Statement Details 
 16 
 
 Note 6 
 Investments 
 18 
 
 Note 7 
 Fair Value of Financial Instruments 
 21 
 
 Note 8 
 Goodwill and Intangible Assets 
 22 
 
 Note 9 
 Long-term Debt 
 23 
 
 Note 10 
 Loss Per Share 
 25 
 
 Note 11 
 Stock-Based Compensation 
 25 
 
 Note 12 
 Income Taxes 
 27 
 
 Note 13 
 Commitments and Contingencies 
 28 
 
 Note 14 
 Reportable Segments 
 28 
 
 Note 15 
 Restructuring 
 31 
 
 Note 16 
 Subsequent Events 
 31 
 

 
 
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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 materials, products for power and radio-frequency (RF) applications and specialty lighting-class light emitting diode (LED) products. The Company's silicon carbide and gallium nitride (GaN) materials and products are targeted for applications such as transportation, power supplies, inverters, wireless systems, and the Company's LEDs are targeted for indoor and outdoor lighting, electronic signs and signals and video displays. 
 The Company operates in two reportable segments: 
 • Wolfspeed , which consists of 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. 
 • LED Products , which consists of LED chips and LED components. The Company's LED products enable its customers to develop and market LED-based products for lighting, video screens, automotive and specialty lighting applications. 
 Previously, the Company designed, manufactured and sold LED lighting fixtures and lamps for the commercial, industrial and consumer markets. The Company referred to these product lines as the Lighting Products business unit. As discussed in Note 2, “Discontinued Operations,” on May 13, 2019, the Company sold its Lighting Products business unit to IDEAL Industries, Inc. (IDEAL). Unless otherwise noted, discussion within these notes to the consolidated financial statements relates to the Company's continuing operations. 
 The majority of the Company's products are manufactured at its production facilities located in North Carolina, California, Arkansas and China. The Company also uses contract manufacturers for certain products and aspects of product fabrication, assembly and packaging. The Company operates research and development facilities in North Carolina, Arizona, Arkansas, California and China (including Hong Kong). 
 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 29, 2020, and for all periods presented, have been made. All material intercompany accounts and transactions have been eliminated. The consolidated balance sheet at June 30, 2019 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 30, 2019 (fiscal 2019). The results of operations for the three and nine months ended March 29, 2020 are not necessarily indicative of the operating results that may be attained for the entire fiscal year ending June 28, 2020 (fiscal 2020). Additionally, the impact of the COVID-19 pandemic to the results of operations is uncertain. Historical periods presented include reclassifications to reflect discontinued operations (see Note 2, "Discontinued Operations"). 
 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. 
 Certain accounting matters that generally require consideration of forecasted financial information were assessed regarding impacts from the COVID-19 outbreak as of March 29, 2020 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 
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 ended March 29, 2020, the Company believes the full impact of the outbreak remains uncertain and will continue to assess if ongoing developments related to the outbreak may cause future material impacts to our consolidated financial statements. 
 The Company revised net cash provided by operating activities and net cash provided by financing activities for the nine months ended March 31, 2019 to correct the presentation of tax withholding for stock option exercises. The Company increased net cash provided by operating activities by $ 12.4 million and decreased net cash provided by financing activities by the same amount. The Company concluded this error was not material individually or in the aggregate to any of the periods impacted. 
 Certain prior period amounts related to the Lighting Products business unit in the accompanying statements of cash flows have been reclassified to conform to the current year presentation. These reclassifications pertain to the presentation of discontinued operations within operating, investing and financing activities. This reclassification did not impact cash provided by (used in) operating, investing, or financing activities. 
 Recently Adopted Accounting Pronouncements 
 Leases 
 In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02: Leases (Topic 842) (ASC 842), and ASU 2018-10: Codification Improvements to ASC 842, Leases. These ASUs require that a lessee recognize in its statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term and requires enhanced disclosures about an entity’s leasing arrangements. The Company adopted this standard on July 1, 2019, under the modified retrospective transition approach with the cumulative effect of application recognized at the effective date, without adjustment to prior comparative periods. The Company elected to utilize the transition package of practical expedients that allows the Company to not reassess (1) whether any expired or existing contracts are leases, or contain leases, (2) the lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases. Further, the Company elected the practical expedient to not separate lease and non-lease components for all leases and account for the combined lease and non-lease components as a single lease component. The Company also made an accounting policy election to exclude leases with an initial term of 12 months or less from the consolidated balance sheets. 
 The adoption of the new standard resulted in the recognition of $ 12.2 million of lease liabilities with corresponding right-of-use assets of $ 12.3 million as of July 1, 2019. As required, the right-of-use assets include the effect of reclassifying certain balances including deferred and prepaid rent, a portion of facilities-related restructuring accrual reserves, and a favorable lease intangible asset previously recognized in connection with an acquisition. The Company did not have a cumulative-effect adjustment to retained earnings as a result of the adoption of the new standard. The standard did not materially impact the Company's results from operations and had no impact on cash flows. See Note 4, "Leases," for additional disclosures, as required by the new standard. 
 The reported results as of and for the three and nine months ended March 29, 2020 reflect the application of the new accounting guidance, while the reported results for prior periods have not been adjusted and continue to be reported in accordance with the Company's historical accounting under ASC 840, Leases. 
 Accounting Pronouncements Pending Adoption 
 Credit Losses 
 In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU introduces a new accounting model known as Current Expected Credit Losses (“CECL”). CECL requires earlier recognition of credit losses, while also providing additional transparency about credit risk. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. This model replaces the multiple existing impairment models in current GAAP, which generally require that a loss be incurred before it is recognized. The new standard will also apply to receivables arising from revenue transactions such as contract assets and accounts receivables. There are other provisions within the standard affecting how impairments of other financial assets may be recorded and presented, as well as expanded disclosures. The Company will adopt this standard on June 29, 2020 and is currently evaluating the impact on its consolidated financial statements. 
 Income Taxes 
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 In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The ASU also improves consistent application and simplifies other areas of Topic 740 by clarifying and amending existing guidance. Early adoption is permitted, provided that the Company reflects any adjustments as of the beginning of the annual period that includes the interim period for which such early adoption occurs. Additionally, the Company must adopt all the amendments in the same period if early adoption is elected. The Company will adopt this standard on or before June 28, 2021 and does not expect this standard to have a material impact on its consolidated financial statements. 
 
 Note 2 – Discontinued Operations 
 On May 13, 2019, the Company completed the sale of (a) certain manufacturing facilities and equipment, inventory, intellectual property rights, contracts, and real estate of the Company used by the Company's Lighting Products business unit, which includes LED lighting fixtures, lamps and corporate lighting solutions for commercial, industrial and consumer applications, and (b) all of the issued and outstanding equity interests of E-conolight LLC (E-conolight), Cree Canada Corp. and Cree Europe S.r.l., each a wholly owned subsidiary of the Company (collectively, the Lighting Products business unit) to IDEAL, pursuant to the Purchase Agreement, dated March 14, 2019, as amended, between the Company and IDEAL (the Purchase Agreement). The Company retained certain liabilities associated with the Lighting Products business unit arising prior to the closing of the sale. The Lighting Products business unit represented the Lighting Products segment disclosed in the Company's historical financial statements. 
 The aggregate net proceeds from the sale of the Lighting Products business unit was $ 219.0 million in cash, which is subject to certain adjustments. Additionally, the Company is entitled to an earnout payment subject to the future performance of the Lighting Products business unit. In connection with the transaction, the Company and IDEAL entered into certain ancillary and related agreements, including (i) an Intellectual Property Assignment and License Agreement, which assigned to IDEAL certain intellectual property owned by the Company and licensed to IDEAL certain additional intellectual property owned by the Company; (ii) a Transition Services Agreement (the TSA), which is designed to ensure a smooth transition of the Lighting Products business unit to IDEAL; (iii) an LED Supply Agreement (the LED Supply Agreement), pursuant to which the Company will supply IDEAL with certain LED chip and component products for three years; and (iv) a Real Estate License Agreement, which will allow IDEAL to use certain premises owned by the Company to conduct certain operations of the Lighting Products business unit after closing. The Company recognized a loss on the sale of $ 66.2 million. 
 The Company has classified the results of the Lighting Products business unit as discontinued operations, the results of which for the three and nine months ended March 31, 2019 are as follows: 
 
 Three months ended Nine months ended 
 (in millions of U.S. Dollars) March 31, 2019 March 31, 2019 
 Revenue, net $ 109.4 $ 376.0 
 Cost of revenue, net 82.5 287.5 
 Gross profit 26.9 88.5 
 Operating expenses: 
 Research and development 8.8 27.4 
 Sales, general and administrative 21.2 68.2 
 Amortization or impairment of acquisition-related intangibles 2.0 9.1 
 Goodwill impairment charges 197.6 197.6 
 Loss on disposal or impairment of long-lived assets 1.8 2.1 
 Other operating expense 0.5 1.9 
 Operating loss ( 205.0 ) ( 217.8 ) 
 Non-operating income ( 0.2 ) ( 0.5 ) 
 
 
 Loss before income taxes ( 204.8 ) ( 217.3 ) 
 Income tax expense 0.6 0.7 
 Net loss ($ 205.4 ) ($ 218.0 ) 

 The Company did not have any discontinued operations activity for the three and nine months ended March 29, 2020. 
 The Company recognized $ 2.5 million and $ 8.1 million in administrative fees for the three and nine months ended March 29, 2020 relating to the TSA, of which $ 1.7 million are included in accounts receivable, net in the consolidated balance sheets as of 
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 March 29, 2020. These fees were recorded as a reduction of sales, general and administrative expense in the consolidated statements of operations. 
 The Company recognized $ 3.2 million and $ 9.7 million in revenue for the three and nine months ended March 29, 2020 related to the LED Supply Agreement, of which $ 0.8 million was included in accounts receivable, net in the consolidated balance sheets as of March 29, 2020. Additionally, the Company recorded a contract liability of $ 10.5 million relating to the LED Supply Agreement as of March 29, 2020. The contract liability is recognized in contract liabilities and other long-term liabilities on the consolidated balance sheets. 
 
 Note 3 – Revenue Recognition 
 In accordance with ASC 606, the Company follows a five-step approach defined by the new standard for recognizing revenue, consisting of the following: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. 
 Contract liabilities primarily include various rights of return and customer deposits, as well as deferred revenue, price protection guarantees and the Company's liability under the LED Supply Agreement. Contract liabilities were $ 86.1 million as of March 29, 2020 and $ 80.4 million as of June 30, 2019. The increase was primarily due to increased net customer deposits. Contract liabilities are recorded within accrued contract liabilities and other long-term liabilities on the balance sheet. Before the adoption of ASC 606, liabilities relating to various rights of return were recorded as a deduction to accounts receivable. 
 Disaggregated revenue by geography is presented in Note 14, "Reportable Segments". For the three and nine months ended March 29, 2020, the Company recognized revenue of $ 1.1 million and $ 3.3 million that was included in contract liabilities as of June 30, 2019. The amount recognized primarily related to the recognition of contingent liabilities related to the LED Supply Agreement and deferred revenue. Revenue recognized related to performance obligations that were satisfied or partially satisfied in previous periods was not material for the three and nine months ended March 29, 2020. 
 
 Note 4 – Leases 
 The Company primarily leases manufacturing, office and warehousing space. Lease agreements frequently include renewal provisions and require the Company to pay real estate taxes, insurance and maintenance costs. Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, as well as non-lease components incurred with respect to actual terms rather than contractually fixed amounts. 
 The Company's finance lease obligations primarily relate to Wolfspeed manufacturing space in Malaysia. 
 Accounting Policy 
 At lease inception, the Company determines an arrangement is a lease if the contract involves the use of a distinct identified asset, the lessor does not have substantive substitution rights and the Company obtains control of the asset throughout the period by obtaining substantially all of the economic benefit of the asset and the right to direct the use of the asset. 
 Right-of-use assets represent the Company's right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Assets and liabilities are recognized based on the present value of lease payments over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of the renewal option is at the Company's sole discretion and the Company considers these options in determining the lease term used to establish its right-of-use assets and lease liabilities. The Company will remeasure its lease liability and adjust the related right-of-use asset upon the occurrence of the following: lease modifications not accounted for as a separate contract; a triggering event that changes the certainty of the lessee exercising an option to renew or terminate the lease, or purchase the underlying asset; a change to the amount probable of being owed by the Company under a residual value guarantee; or the resolution of a contingency upon which the variable lease payments are based such that those payments become fixed. 
 Because most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The Company would use the implicit rate when readily determinable. Operating lease expense is generally recognized on a straight-line basis over the lease term. Finance lease assets are amortized on a straight-line basis over the shorter of the useful life of the asset or the lease term. Interest expense on the finance lease liability is recognized using the effective interest rate method and is presented within interest expense on the Company’s consolidated statements of operations. 
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 The Company has agreements with lease and non-lease components, which are accounted for as a single lease component. Leases with a lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Variable lease payment amounts that cannot be determined at the commencement of the lease, such as increases in lease payments based on changes in index rates, are not included in the right-of-use assets or liabilities. These variable lease payments are expensed as incurred. 
 Balance Sheet 
 Lease assets and liabilities as of March 29, 2020, and the corresponding balance sheet classifications, are as follows (in millions of U.S. Dollars): 
 
 Operating Leases: 
 Right-of-use asset (1) 
 $ 12.9 
 
 Current lease liability (2) 
 4.4 
 Non-current lease liability (3) 
 8.1 
 Total operating lease liabilities 12.5 
 
 Finance Leases: 
 Finance lease assets (4) 
 3.5 
 
 Current portion of finance lease liabilities 0.6 
 Finance lease liabilities, less current portion 2.2 
 Total finance lease liabilities 2.8 

 (1) Within other assets on the consolidated balance sheets. 
 (2) Within other current liabilities on the consolidated balance sheets. 
 (3) Within other long-term liabilities on the consolidated balance sheets. 
 (4) Within property and equipment, net on the consolidated balance sheets. 
 
 
 Statement of Operations 
 Operating lease expense was $ 1.5 million and $ 4.5 million for three and nine months ended March 29, 2020. Short-term lease expense, variable lease expense and lease income were immaterial for the three and nine months ended March 29, 2020. 
 Finance lease amortization was $ 0.2 million and interest expense was less than $ 0.1 million for the three and nine months ended March 29, 2020. 
 Cash Flows 
 Cash flow information consisted of the following: 
 
 Nine months ended 
 (in millions of U.S. Dollars) March 29, 2020 
 Cash used in operating activities: 
 Cash paid for operating leases $ 4.8 
 Cash paid for interest portion of financing leases (1) 
 — 
 Cash used in financing activities: 
 Cash paid for principal portion of finance leases 0.4 
 Non-cash operating activities: 
 Operating lease additions due to adoption of ASC 842 12.2 
 Operating lease additions and modifications, net 4.7 
 Finance lease additions 3.3 

 (1) Less than $0.1 million for the nine months ended March 29, 2020. 
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 Lease Liability Maturities 
 Maturities of operating and finance lease liabilities as of March 29, 2020 were as follows (in millions of U.S. Dollars): 
 
 Fiscal Year Ending Operating Leases Finance Leases Total 
 June 28, 2020 (remainder of fiscal 2020) $ 1.6 $ 0.4 $ 2.0 
 June 27, 2021 4.4 0.4 4.8 
 June 26, 2022 3.4 0.4 3.8 
 June 25, 2023 1.8 0.4 2.2 
 June 30, 2024 0.9 0.4 1.3 
 Thereafter 1.2 1.1 2.3 
 Total lease payments 13.3 3.1 16.4 
 Imputed lease interest ( 0.8 ) ( 0.3 ) ( 1.1 ) 
 Total lease liabilities $ 12.5 $ 2.8 $ 15.3 

 Supplemental Disclosures 
 
 Operating Leases Finance Leases 
 Weighted average remaining lease term (in months) 43 80 
 Weighted average discount rate 3.59 % 3.40 % 

 
 As previously disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2019 and under the previous lease accounting standard ASC 840, the aggregate future non-cancelable minimum rental payments on its operating leases as of June 30, 2019, were as follows: 
 
 Fiscal Years Ending (in millions of U.S. Dollars) 
 June 28, 2020 $ 4.1 
 June 27, 2021 2.3 
 June 26, 2022 1.2 
 June 25, 2023 0.7 
 June 30, 2024 — 
 Thereafter — 
 Total future minimum rental payments $ 8.3 

 
 
 
 Note 5 – Financial Statement Details 
 Accounts Receivable, net 
 Accounts receivable, net consisted of the following: 
 
 (in millions of U.S. Dollars) March 29, 2020 June 30, 2019 
 Billed trade receivables $ 156.7 $ 125.8 
 Unbilled contract receivables 1.0 0.7 
 Royalties 3.7 2.8 
 161.4 129.3 
 
 Allowance for bad debts ( 0.4 ) ( 0.4 ) 
 Accounts receivable, net $ 161.0 $ 128.9 

 Inventories 
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 Inventories consisted of the following: 
 
 (in millions of U.S. Dollars) March 29, 2020 June 30, 2019 
 Raw material $ 45.0 $ 42.4 
 Work-in-progress 92.0 101.1 
 Finished goods 33.1 43.9 
 Inventories $ 170.1 $ 187.4 

 Accounts Payable and Accrued Expenses 
 Accounts payable and accrued expenses consisted of the following: 
 
 (in millions of U.S. Dollars) March 29, 2020 June 30, 2019 
 Accounts payable, trade $ 90.8 $ 90.7 
 Accrued salaries and wages 59.1 70.9 
 Accrued expenses 31.2 34.0 
 Other 3.7 5.3 
 Accounts payable and accrued expenses $ 184.8 $ 200.9 

 Other Operating Expense 
 Other operating expense consisted of the following: 
 
 Three months ended Nine months ended 
 (in millions of U.S. Dollars) March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 
 Factory optimization restructuring $ 1.1 $ — $ 3.5 $ — 
 
 Severance and other restructuring — — 0.8 2.6 
 Total restructuring costs 1.1 — 4.3 2.6 
 Project, transformation and transaction costs 7.0 10.1 20.4 10.7 
 Factory optimization start-up costs 2.1 — 5.0 — 
 
 Non-restructuring related executive severance 0.6 1.0 2.1 1.0 
 
 Other operating expense $ 10.8 $ 11.1 $ 31.8 $ 14.3 

 Accumulated Other Comprehensive Income, net of taxes 
 Accumulated other comprehensive income, net of taxes, consisted of the following: 
 
 (in millions of U.S. Dollars) March 29, 2020 June 30, 2019 
 Currency translation gain $ 9.5 $ 9.5 
 Net unrealized loss on available-for-sale securities ( 1.7 ) — 
 Accumulated other comprehensive income, net of taxes $ 7.8 $ 9.5 

 Reclassifications Out of Accumulated Other Comprehensive Income 
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 The Company reclassified a net gain of $ 1.2 million and $ 1.3 million out of accumulated other comprehensive income for the three and nine months ended March 29, 2020 and reclassified a net loss of $ 0.0 million and $ 0.1 million out of accumulated other comprehensive income for the three and nine months ended March 31, 2019. Amounts were reclassified to non-operating expense, net on the consolidated statements of operations. 
 Non-Operating Expense, net 
 The following table summarizes the components of non-operating expense, net: 
 
 Three months ended Nine months ended 
 (in millions of U.S. Dollars) March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 
 Foreign currency loss (gain), net $ 0.3 $ 0.5 ($ 0.8 ) $ 1.1 
 (Gain) loss on sale of investments, net ( 1.2 ) — ( 1.3 ) 0.1 
 Gain on arbitration proceeding ( 8.0 ) — ( 8.0 ) — 
 Loss on equity investment, net 19.1 3.8 9.2 12.4 
 Interest expense 7.5 7.4 22.6 18.8 
 Interest income ( 3.1 ) ( 3.6 ) ( 13.5 ) ( 9.0 ) 
 Other, net ( 0.1 ) 0.3 ( 0.4 ) 0.3 
 Non-operating expense, net $ 14.5 $ 8.4 $ 7.8 $ 23.7 

 The change in loss on equity investment, net is due to the increase in the Lextar Electronics Corporation (Lextar) stock price. The gain on arbitration proceeding is due to an award from an arbitration proceeding related to defective inventory. 
 Statements of Cash Flows - non-cash activities 
 
 Nine months ended 
 Non-cash operating activities March 29, 2020 March 31, 2019 
 Lease asset and liability additions (1) 
 $ 15.8 $ — 
 Lease asset and liability modifications, net 4.4 — 
 
 
 
 

 (1) $ 12.2 million relates to the increase of right-of-use assets and matching lease liabilities as a result of adopting ASC 842. See Note 4, "Leases", for further information. 
 Accrued property and equipment as of March 29, 2020 and March 31, 2019 was $ 6.8 million and $ 15.2 million, respectively. 
 
 Note 6 – Investments 
 Investments consist of municipal bonds, corporate bonds, U.S. agency securities, U.S. treasury securities, variable rate demand notes, commercial paper and certificates of deposit. All short-term investments are classified as available-for-sale. Other long-term investments consist of the Company's ownership interest in Lextar. 
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 Short-term investments as of March 29, 2020 and June 30, 2019 consisted of the following: 
 
 March 29, 2020 
 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value 
 Municipal bonds $ 74.3 $ 0.7 ($ 0.2 ) $ 74.8 
 Corporate bonds 315.3 0.9 ( 2.2 ) 314.0 
 U.S. agency securities 21.5 0.1 — 21.6 
 U.S. treasury securities 68.8 0.8 — 69.6 
 Non-U.S. certificates of deposit 31.8 0.7 — 32.5 
 U.S. certificates of deposit 5.2 — — 5.2 
 
 Variable rate demand note 2.5 — — 2.5 
 Commercial paper 9.7 — — 9.7 
 Total short-term investments $ 529.1 $ 3.2 ($ 2.4 ) $ 529.9 
 
 June 30, 2019 
 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value 
 Municipal bonds $ 78.2 $ 0.4 ($ 0.1 ) $ 78.5 
 Corporate bonds 256.0 1.0 — 257.0 
 U.S. agency securities 25.6 — — 25.6 
 U.S. treasury securities 92.4 0.1 — 92.5 
 Non-U.S. certificates of deposit 49.1 1.1 — 50.2 
 U.S. certificates of deposit 22.4 — — 22.4 
 Variable rate demand note 16.9 — — 16.9 
 Commercial paper 7.8 — — 7.8 
 
 Total short-term investments $ 548.4 $ 2.6 ($ 0.1 ) $ 550.9 

 
 
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 The following tables present the gross unrealized losses and estimated fair value of the Company’s short-term investments, aggregated by investment type and the length of time that individual securities have been in a continuous unrealized loss position: 
 
 March 29, 2020 
 Less than 12 Months Greater than 12 Months Total 
 Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss 
 Municipal bonds $ 20.6 ($ 0.2 ) $ — $ — $ 20.6 ($ 0.2 ) 
 Corporate bonds 213.0 ( 2.2 ) — — 213.0 ( 2.2 ) 
 U.S. agency securities 2.0 — — — 2.0 — 
 
 
 
 Total $ 235.6 ($ 2.4 ) $ — $ — $ 235.6 ($ 2.4 ) 
 Number of securities with an unrealized loss 263 — 263 
 
 June 30, 2019 
 Less than 12 Months Greater than 12 Months Total 
 Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss 
 Municipal bonds $ 4.3 $ — $ 29.8 ($ 0.1 ) $ 34.1 ($ 0.1 ) 
 Corporate bonds 41.8 — 14.7 — 56.5 — 
 U.S. agency securities 7.7 — — — 7.7 — 
 U.S. treasury securities 2.0 — 3.9 — 5.9 — 
 
 
 Total $ 55.8 $ — $ 48.4 ($ 0.1 ) $ 104.2 ($ 0.1 ) 
 Number of securities with an unrealized loss 46 47 93 

 The Company utilizes specific identification in computing realized gains and losses on the sale of investments. Realized gains of $ 1.2 million and $ 1.3 million for the three and nine month periods ended March 29, 2020 and realized losses of $ 0.0 million and $ 0.1 million for the three and nine month periods ended March 31, 2019 are included in non-operating expense in the consolidated statements of operations. Unrealized gains and losses are included as a separate component of equity, net of tax, unless the loss is determined to be other-than-temporary. 
 The Company evaluates its investments for possible impairment or a decline in fair value below cost basis that is deemed to be other-than-temporary on a periodic basis. It considers such factors as the length of time and extent to which the fair value has been below the cost basis, the financial condition of the investee, and its ability and intent to hold the investment for a period of time that may be sufficient for an anticipated full recovery in market value. The Company's unrealized losses as of March 29, 2020 are impacted significantly from negative market conditions surrounding the COVID-19 outbreak. Given the speed and frequency of continuously evolving developments with respect to this outbreak, the Company's believes the full extent of the outbreak is uncertain as of March 29, 2020. Due to the short-term nature of these losses and the Company's ability to satisfy current obligations using cash already on hand, which will allow the Company to hold on to the investment for a period of time that may be sufficient for an anticipated full recovery in market value, the Company does not consider the decline in its investments to be impaired as of March 29, 2020. The Company will continue to assess if ongoing developments related to the outbreak may cause these unrealized losses to become other-than-temporary. 
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 The contractual maturities of short-term investments as of March 29, 2020 were as follows: 
 
 
 Within One Year After One, Within Five Years After Five, Within Ten Years After Ten Years Total 
 Municipal bonds $ 15.8 $ 59.0 $ — $ — $ 74.8 
 Corporate bonds 158.7 155.3 — — 314.0 
 U.S. agency securities 10.5 11.1 — — 21.6 
 U.S. treasury securities 48.6 21.0 — — 69.6 
 Non-U.S. certificates of deposit 31.5 1.0 — — 32.5 
 U.S. certificates of deposit 5.2 — — — 5.2 
 
 Variable rate demand note — — — 2.5 2.5 
 Commercial paper 9.7 — — — 9.7 
 Total short-term investments $ 280.0 $ 247.4 $ — $ 2.5 $ 529.9 

 
 
 
 Note 7 – Fair Value of Financial Instruments 
 Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. U.S. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy is categorized into three levels based on the reliability of inputs as follows: 
 • Level 1 - Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. 
 • Level 2 - Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. 
 • Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. 
 The financial assets for which the Company performs recurring fair value remeasurements are cash equivalents, short-term investments and long-term investments. As of March 29, 2020 and June 30, 2019, financial assets utilizing Level 1 inputs included money market funds and U.S. treasury securities. Financial assets utilizing Level 2 inputs included municipal bonds, corporate bonds, certificates of deposit, commercial paper, U.S. agency securities, variable rate demand notes and common stock of non-U.S. corporations. Level 2 assets are valued based on quoted prices in active markets for instruments that are similar or using a third-party pricing service’s consensus price, which is a weighted average price based on multiple sources. These sources determine prices utilizing market income models which factor in, where applicable, transactions of similar assets in active markets, transactions of identical assets in infrequent markets, interest rates, bond or credit default swap spreads and volatility. The Company did not have any financial assets requiring the use of Level 3 inputs as of March 29, 2020 and June 30, 2019. 
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 The following table sets forth financial instruments carried at fair value within the U.S. GAAP hierarchy: 
 
 March 29, 2020 June 30, 2019 
 (in millions of U.S. Dollars) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 
 Assets: 
 Cash equivalents: 
 Money market funds $ 68.2 $ — $ — $ 68.2 $ 95.0 $ — $ — $ 95.0 
 
 Corporate bonds — — — — — 15.0 — 15.0 
 U.S. agency securities — 11.6 — 11.6 — 18.8 — 18.8 
 U.S. treasury securities — — — — 2.5 — — 2.5 
 
 Non-U.S. certificates of deposit — 43.2 — 43.2 — 105.8 — 105.8 
 Commercial paper — — — — — 1.0 — 1.0 
 
 
 Total cash equivalents 68.2 54.8 — 123.0 97.5 140.6 — 238.1 
 Short-term investments: 
 Municipal bonds — 74.8 — 74.8 — 78.5 — 78.5 
 Corporate bonds — 314.0 — 314.0 — 257.0 — 257.0 
 U.S. agency securities — 21.6 — 21.6 — 25.6 — 25.6 
 U.S. treasury securities 69.6 — — 69.6 92.5 — — 92.5 
 U.S. certificates of deposit — 5.2 — 5.2 — 22.4 — 22.4 
 Non-U.S. certificates of deposit — 32.5 — 32.5 — 50.2 — 50.2 
 Commercial paper — 9.7 — 9.7 — 7.8 — 7.8 
 Variable rate demand note — 2.5 — 2.5 — 16.9 — 16.9 
 
 Total short-term investments 69.6 460.3 — 529.9 92.5 458.4 — 550.9 
 Other long-term investments: 
 Common stock of non-U.S. corporations — 31.5 — 31.5 — 39.5 — 39.5 
 
 Total assets $ 137.8 $ 546.6 $ — $ 684.4 $ 190.0 $ 638.5 $ — $ 828.5 

 
 
 
 Note 8 – Goodwill and Intangible Assets 
 Goodwill 
 Goodwill by reporting unit as of March 29, 2020 was as follows: 
 
 (in millions of U.S. Dollars) March 29, 2020 
 Wolfspeed $ 349.7 
 LED Products 180.3 
 Total $ 530.0 

 
 
 There were no changes in goodwill during the nine months ended March 29, 2020. 
 Intangible Assets, net 
 The following table presents the components of intangible assets, net: 
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 March 29, 2020 June 30, 2019 
 (in millions of U.S. Dollars) Gross Accumulated Amortization Net Gross Accumulated Amortization Net 
 
 Customer relationships $ 147.8 ($ 68.4 ) $ 79.4 $ 147.8 ($ 63.8 ) $ 84.0 
 Developed technology 74.9 ( 28.4 ) 46.5 75.9 ( 24.5 ) 51.4 
 
 Non-compete agreements 12.2 ( 6.4 ) 5.8 12.2 ( 4.1 ) 8.1 
 Trade names, finite-lived 0.5 ( 0.5 ) — 0.5 ( 0.5 ) — 
 
 Acquisition related intangible assets 235.4 ( 103.7 ) 131.7 236.4 ( 92.9 ) 143.5 
 Patent and licensing rights 112.9 ( 61.0 ) 51.9 120.4 ( 66.0 ) 54.4 
 Total intangible assets $ 348.3 ($ 164.7 ) $ 183.6 $ 356.8 ($ 158.9 ) $ 197.9 

 
 Total amortization of acquisition-related intangibles assets was $ 3.7 million and $ 10.9 million for the three and nine months ended March 29, 2020 and $ 3.9 million and $ 11.7 million for the three and nine months ended March 31, 2019, respectively. Total amortization of patents and licensing rights was $ 2.3 million and $ 6.8 million for the three and nine months ended March 29, 2020 and $ 2.4 million and $ 7.3 million for the three and nine months ended March 31, 2019. 
 In the first quarter of fiscal 2020, $ 0.9 million of developed technology, net relating to a favorable lease was reclassified as a right-of-use asset in accordance with the Company's adoption of ASC 842, Leases. 
 Total future amortization expense of intangible assets is estimated to be as follows: 
 
 (in millions of U.S. Dollars) 
 
 
 Fiscal Year Ending 
 Acquisition Related Intangibles Patents Total 
 June 28, 2020 (remainder of fiscal 2020) $ 3.6 $ 2.2 $ 5.8 
 June 27, 2021 14.5 8.3 22.8 
 June 26, 2022 13.5 7.5 21.0 
 June 25, 2023 11.0 6.5 17.5 
 June 30, 2024 10.4 5.6 16.0 
 Thereafter 78.7 21.8 100.5 
 Total future amortization expense $ 131.7 $ 51.9 $ 183.6 

 
 
 
 Note 9 – Long-term Debt 
 Revolving Line of Credit 
 As of March 29, 2020, the Company had a $ 125.0 million secured revolving line of credit (the Credit Agreement) under which the Company can borrow, repay and reborrow loans from time to time prior to its scheduled maturity date of January 9, 2023. On March 27, 2020, the Company entered into an amendment to the Credit Agreement to reduce the aggregate amount of the revolving line of credit available from $ 250.0 million to $ 125.0 million and to replace the Credit Agreement's financial covenants with a single covenant requiring the Company to maintain a ratio of certain cash equivalents and marketable securities to outstanding loans and letter of credit obligations greater than 1.25 :1. 
 The Company classifies balances outstanding under the Credit Agreement as long-term debt in the consolidated balance sheets. As of March 29, 2020, the Company had no outstanding borrowings under the Credit Agreement, $ 125.0 million in available commitments under the Credit Agreement and $ 87.6 million available for borrowing. For the three and nine months ended March 29, 2020, the average interest rate was 0.00 %. As of March 29, 2020, the unused line fee on available borrowings is 25 basis points. 
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 Convertible Notes 
 On August 24, 2018, the Company sold $ 500.0 million aggregate principal amount of 0.875 % convertible senior notes due September 1, 2023 to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the Securities Act), and an additional $ 75.0 million aggregate principal amount of such notes pursuant to the exercise in full of the over-allotment options of the underwriters (the 2023 Notes). The total net proceeds from the debt offering was approximately $ 562.1 million. 
 The conversion rate will initially be 16.6745 shares of common stock per one thousand dollars in principal amount of 2023 Notes (equivalent to an initial conversion price of approximately $ 59.97 per share of common stock). The conversion rate will be subject to adjustment for some events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, or following the Company's issuance of a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its 2023 Notes in connection with such a corporate event, or who elects to convert any 2023 Notes called for redemption during the related redemption period in certain circumstances. The Company may not redeem the 2023 Notes prior to September 1, 2021. The Company may redeem for cash all or any portion of the 2023 Notes, at its option, on a redemption date occurring on or after September 1, 2021 and on or before the 40th scheduled trading day immediately before the maturity date, if the last reported sales price of its common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides a notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The redemption price will be 100 % of the principal amount of the 2023 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company undergoes certain fundamental changes related to the Company's common stock, holders may require the Company to repurchase for cash all or any portion of their 2023 Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the 2023 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. 
 Holders may convert their 2023 Notes at their option at any time prior to the close of business on the business day immediately preceding March 1, 2023 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending December 31, 2018 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period in which the trading price per one thousand dollars in principal amount of 2023 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of its common stock and the conversion rate on each such trading day; (3) if the Company calls such 2023 Notes for redemption, at any time prior to the close of business on the second business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after March 1, 2023 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2023 Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company's election. 
 In accounting for the issuance of the convertible senior notes, the Company separated the 2023 Notes into liability and equity components. The carrying amount of the liability of the equity component representing the conversion option was $ 110.6 million and was determined by deducting the fair value of the liability component from the par value of the 2023 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount (the debt discount), along with related issuance fees are amortized to interest expense over the term of the 2023 Notes at an effective interest rate of 0.49 %. 
 The net carrying amount of the liability component of the 2023 Notes is as follows: 
 
 (in millions of U.S. Dollars) March 29, 2020 June 30, 2019 
 Principal $ 575.0 $ 575.0 
 Unamortized discount and issuance costs ( 88.7 ) ( 105.9 ) 
 Net carrying amount $ 486.3 $ 469.1 

 The net carrying amount of the equity component of the 2023 Notes is as follows: 
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 Table of Contents 

 
 (in millions of U.S. Dollars) March 29, 2020 June 30, 2019 
 Discount related to value of conversion option $ 113.3 $ 113.3 
 Debt issuance costs ( 2.7 ) ( 2.7 ) 
 Net carrying amount $ 110.6 $ 110.6 

 
 The interest expense recognized related to the 2023 Notes is as follows: 
 
 Three months ended Nine months ended 
 (in millions of U.S. Dollars) March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 
 Interest expense $ 1.3 $ 1.2 $ 3.8 $ 2.9 
 Amortization of discount and issuance costs 5.8 5.5 17.2 12.7 
 Total interest expense $ 7.1 $ 6.7 $ 21.0 $ 15.6 

 The estimated fair value of the 2023 Notes is $ 540.8 million as of March 29, 2020, as determined by a Level 2 valuation. 
 
 Note 10 – Loss Per Share 
 The details of the computation of basic and diluted loss per share are as follows: 
 
 Three months ended Nine months ended 
 (in millions of U.S. Dollars, except share data) March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 
 Net loss from continuing operations ($ 61.4 ) ($ 22.3 ) ($ 151.7 ) ($ 23.3 ) 
 Net income attributable to noncontrolling interest 0.2 0.1 0.5 0.1 
 Loss from continuing operations attributable to controlling interest ( 61.6 ) ( 22.4 ) ( 152.2 ) ( 23.4 ) 
 Net loss from discontinued operations — ( 205.4 ) — ( 218.0 ) 
 Net loss attributable to controlling interest ($ 61.6 ) ($ 227.8 ) ($ 152.2 ) ($ 241.4 ) 
 
 Weighted average shares - basic and diluted (in thousands) 108,115 103,659 107,718 102,807 
 
 Loss per share - basic and diluted: 
 Continuing operations attributable to controlling interest ($ 0.57 ) ($ 0.22 ) ($ 1.41 ) ($ 0.23 ) 
 Discontinued operations $ — ($ 1.98 ) $ — ($ 2.12 ) 
 
 
 
 

 Diluted net loss per share is the same as basic net loss per share for the periods presented due to potentially dilutive items being anti-dilutive given the Company's net loss. 
 For the three and nine months ended March 29, 2020, 5.2 million and 5.5 million of weighted average shares were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive. For the three and nine months ended March 31, 2019, 9.1 million and 9.8 million of weighted average shares were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive. 
 Future earnings per share of the Company are also subject to dilution from conversion of its convertible notes under certain conditions as described in Note 9, “Long-term Debt.” 
 
 Note 11 – Stock-Based Compensation 
 Overview of Employee Stock-Based Compensation Plans 
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 The Company currently has one equity-based compensation plan, the 2013 Long-Term Incentive Compensation Plan (2013 LTIP), from which stock-based compensation awards can be granted to employees and directors. The 2013 LTIP provides for awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other awards. The Company has other equity-based compensation plans that have been terminated so that no future grants can be made under those plans, but under which stock options, restricted stock and restricted stock units are currently outstanding. 
 The Company’s stock-based awards can be either service-based or performance-based. Performance-based conditions are generally tied to future financial and/or operating performance of the Company and/or external based market metrics. The compensation expense with respect to performance-based grants is recognized if the Company believes it is probable that the performance condition will be achieved. The Company reassesses the probability of the achievement of the performance condition at each reporting period, and adjusts the compensation expense for subsequent changes in the estimate or actual outcome. As with non-performance based awards, compensation expense is recognized over the vesting period. For performance awards with market conditions, the Company estimates the grant date fair value using the Monte Carlo valuation model and expenses the awards over the vesting period regardless of whether the market condition is ultimately satisfied. 
 The Company also has an Employee Stock Purchase Plan (ESPP) that provides employees with the opportunity to purchase common stock at a discount. The ESPP limits employee contributions to 15 % of each employee’s compensation (as defined in the plan) and allows employees to purchase shares at a 15 % discount to the fair market value of common stock on the purchase date two times per year. The ESPP provides for a twelve-month participation period, divided into two equal six-month purchase periods, and also provides for a look-back feature. At the end of each six-month period in April and October, participants purchase the Company’s common stock through the ESPP at a 15 % discount to the fair market value of the common stock on the first day of the twelve-month participation period or the purchase date, whichever is lower. The plan also provides for an automatic reset feature to start participants on a new twelve-month participation period if the fair market value of common stock declines during the first six-month purchase period. 
 Stock Option Awards 
 A summary of stock option awards outstanding as of March 29, 2020 and changes during the nine months then ended is as follows: 
 
 (shares in thousands) Number of Shares Weighted Average Exercise Price 
 Outstanding at June 30, 2019 2,418 $ 39.81 
 Granted — $ — 
 Exercised ( 595 ) $ 35.78 
 Forfeited or expired ( 34 ) $ 50.40 
 Outstanding at March 29, 2020 1,789 $ 40.96 

 Restricted Stock Awards and Units 
 A summary of nonvested restricted stock awards (RSAs) and restricted stock unit awards (RSUs) outstanding as of March 29, 2020 and changes during the nine months then ended is as follows: 
 
 (awards and units in thousands) Number of RSAs/RSUs Weighted Average 
Grant-Date Fair Value 
 Nonvested at June 30, 2019 3,081 $ 34.99 
 Granted 994 $ 57.56 
 Vested ( 1,085 ) $ 30.38 
 Forfeited ( 168 ) $ 33.66 
 Nonvested at March 29, 2020 2,822 $ 44.79 

 Stock-Based Compensation Valuation and Expense 
 The Company accounts for its employee stock-based compensation plans using the fair value method. The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term. 
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 The Company uses the Black-Scholes option-pricing model to estimate the fair value of the Company’s stock option and ESPP awards. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, projected employee stock option exercise term, the risk-free interest rate and expected dividends. Due to the inherent limitations of option-valuation models, future events that are unpredictable and the estimation process utilized in determining the valuation of the stock-based awards, the ultimate value realized by award holders may vary significantly from the amounts expensed in the Company’s financial statements. 
 For RSAs and RSUs, the grant-date fair value is based upon the market price of the Company’s common stock on the date of the grant. This fair value is then amortized to compensation expense over the requisite service period or vesting term. Compensation expense for awards that have performance-based conditions is recognized if the Company believes it is probable that the performance condition will be achieved. The Company reassesses the probability of the achievement of the performance condition at each reporting period and adjusts the compensation expense for subsequent changes in the estimate or actual outcome. For performance awards with market conditions, the Company estimates the grant date fair value using the Monte Carlo valuation model and expenses the awards over the vesting period regardless of whether the market condition is ultimately satisfied. The Monte Carlo option pricing models require the input of highly subjective assumptions. The estimates involve inherent uncertainties and the application of judgment. As a result, if other assumptions had been used, recorded stock-based compensation expense could have been materially different from that depicted below. 
 Stock-based compensation expense is recognized net of estimated forfeitures such that expense is recognized only for those stock-based awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. 
 Total stock-based compensation expense was classified in the consolidated statements of operations as follows: 
 
 Three months ended Nine months ended 
 (in millions of U.S. Dollars) March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 
 Cost of revenue, net $ 2.8 $ 2.2 $ 7.5 $ 5.6 
 Research and development 2.4 1.9 7.2 5.6 
 Sales, general and administrative 6.2 9.4 26.6 23.3 
 Total stock-based compensation expense $ 11.4 $ 13.5 $ 41.3 $ 34.5 
 
 

 Stock-based compensation expense may differ from the impact of stock-based compensation to additional paid in capital due to manufacturing related stock-based compensation capitalized within inventory. 
 
 Note 12 – Income Taxes 
 The change in our effective tax rate for the three months ended March 29, 2020 was primarily due to impacts from the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). In general, the variation between the Company's effective income tax rate and the U.S. statutory rate of 21% is primarily due to: (i) changes in the Company’s valuation allowances against deferred tax assets in the U.S. and Luxembourg, (ii) projected income for the full year derived from international locations with differing tax rates than the U.S. and (iii) projected tax credits generated. 
 On March 27, 2020, the U.S. government enacted the CARES Act, which contained changes to the U.S. tax law that included, among other items, the temporary removal of the taxable income limitation on the utilization of net operating losses, the ability for a five-year carryback of certain net operating losses, and the adjustment to the carryforward period of certain net operating losses. For the three and nine months ended March 29, 2020, the Company recognized a net $ 5.1 million discrete tax benefit due to the net operating loss provisions of the CARES Act. 
 The Company assesses all available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets by jurisdiction. The Company has concluded that it is necessary to recognize a full valuation allowance against its U.S. and Luxembourg deferred tax assets, as of the nine months ended March 29, 2020. 
 As of June 30, 2019, the U.S. valuation allowance was $ 177.6 million. During the nine months ended March 29, 2020, the Company decreased the U.S. valuation allowance by $ 0.6 million primarily due to impacts from the CARES Act and the expiration of certain statutes of limitations on the Company's liability for unrecognized tax benefits. As of June 30, 2019, the Luxembourg valuation allowance was $ 7.6 million. During the nine months ended March 29, 2020, the Company increased this valuation allowance by $ 2.0 million due to year-to-date losses in Luxembourg. 
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 U.S. GAAP requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is cumulatively more than 50% likely to be realized upon ultimate settlement. 
 As of June 30, 2019, the Company's liability for unrecognized tax benefits was $ 8.2 million. During the nine months ended March 29, 2020, the Company decreased its unrecognized tax benefits by $ 0.7 million primarily due to the expiration of statute requirements. As a result, the total liability for unrecognized tax benefits as of March 29, 2020 was $ 7.5 million. If any portion of this $ 7.5 million is recognized, the Company will then include that portion in the computation of its effective tax rate. Although the ultimate timing of the resolution and/or closure of audits is highly uncertain, the Company believes it is reasonably possible that $ 0.5 million of gross unrecognized tax benefits will change in the next 12 months as a result of statute requirements or settlement with tax authorities. 
 The Company files U.S. federal, U.S. state and foreign tax returns. For U.S. federal purposes, the Company is generally no longer subject to tax examinations for fiscal years prior to 2017. For U.S. state tax returns, the Company is generally no longer subject to tax examinations for fiscal years prior to 2016. For foreign purposes, the Company is generally no longer subject to examination for tax periods prior to 2009. Certain carryforward tax attributes generated in prior years remain subject to examination, adjustment and recapture. 
 
 Note 13 – Commitments and Contingencies 
 Litigation 
 The Company is currently a party to various legal proceedings. While management presently believes that the ultimate outcome of such proceedings, individually and in the aggregate, will not materially harm the Company’s financial position, cash flows, or overall trends in results of operations, legal proceedings are subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or, in matters for which injunctive relief or other conduct remedies may be sought, an injunction prohibiting the Company from selling one or more products at all or in particular ways. Were unfavorable final outcomes to occur, there exists the possibility of a material adverse impact on the Company’s business, results of operations, financial position and overall trends. The outcomes in these matters are not reasonably estimable. 
 As a result of a Focused Compliance Inspection and a Compliance Evaluation Inspection at the Company's Durham, North Carolina facility, the United States Environmental Protection Agency (“EPA”) raised a potential non-compliance issue with certain requirements of the North Carolina Waste Management Law. The Company is currently negotiating a settlement with the EPA to resolve the issue and pay a penalty, which is expected to be approximately $ 0.3 million. 
 
 Note 14 – Reportable Segments 
 Reportable segments are components of the Company that the Chief Operating Decision Maker (CODM) regularly reviews when allocating resources and assessing performance. The Company’s CODM reviews segment performance and allocates resources based upon segment revenue and segment gross profit. The Company's identified CODM is the Chief Executive Officer. 
 The Company’s operating and reportable segments are: 
 • Wolfspeed 
 • LED Products 
 The Wolfspeed segment includes silicon carbide materials, power devices and RF devices and the LED Products segment includes LED chips and LED components. 
 Financial Results by Reportable Segment 
 The tables below reflect the results of the Company's reportable segments as reviewed by the CODM for the three and nine month periods ended March 29, 2020 and March 31, 2019. The Company used the same accounting policies to derive the segment results reported below as those used in the Company’s consolidated financial statements. 
 The Company’s CODM does not review inter-segment transactions when evaluating segment performance and allocating resources to each segment, and inter-segment transactions are not included in the segment revenue presented in the table below. As such, total segment revenue in the table below is equal to the Company’s consolidated revenue. 
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 The Company’s CODM reviews gross profit as the lowest and only level of segment profit. As such, all items below gross profit in the consolidated statements of operations must be included to reconcile the consolidated gross profit presented in the table below to the Company’s consolidated loss before income taxes. 
 In order to determine gross profit for each reportable segment, the Company allocates direct costs and indirect costs to each segment’s cost of revenue. The Company allocates indirect costs, such as employee benefits for manufacturing employees, shared facilities services, information technology, purchasing, and customer service, when the costs are identifiable and beneficial to the reportable segment. The Company allocates these indirect costs based on a reasonable measure of utilization that considers the specific facts and circumstances of the costs being allocated. 
 Unallocated costs in the table below consisted primarily of manufacturing employees’ stock-based compensation, expenses for profit sharing and quarterly or annual incentive plans, and matching contributions under the Company’s 401(k) plan. These costs were not allocated to the reportable segments' gross profit because the Company’s CODM does not review them regularly when evaluating segment performance and allocating resources. 
 The cost of goods sold (COGS) acquisition related cost adjustment includes acquisition costs related to our acquisition of the RF Power (RF Power) business of Infineon Technologies AG (Infineon) impacting cost of revenue for fiscal 2019. These costs were not allocated to the reportable segments' gross profit for fiscal 2019 because they represent an adjustment which does not provide comparability to the corresponding prior period and therefore were not reviewed by the Company's CODM when evaluating segment performance and allocating resources. 
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 Revenue, gross profit and gross margin for each of the Company's segments were as follows: 
 
 Three months ended Nine months ended 
 March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 
 Revenue: 
 Wolfspeed revenue $ 113.9 $ 141.2 $ 362.3 $ 403.9 
 LED Products revenue 101.6 132.8 335.9 424.8 
 Total revenue $ 215.5 $ 274.0 $ 698.2 $ 828.7 
 
 Gross Profit and Gross Margin: 
 Wolfspeed gross profit $ 45.5 $ 68.8 $ 146.3 $ 193.9 
 Wolfspeed gross margin 39.9 % 48.7 % 40.4 % 48.0 % 
 LED Products gross profit 20.3 37.0 68.9 121.8 
 LED Products gross margin 20.0 % 27.9 % 20.5 % 28.7 % 
 Total segment gross profit 65.8 105.8 215.2 315.7 
 Unallocated costs ( 4.4 ) ( 3.9 ) ( 17.7 ) ( 10.8 ) 
 COGS acquisition related costs — ( 1.4 ) — ( 2.6 ) 
 Consolidated gross profit $ 61.4 $ 100.5 $ 197.5 $ 302.3 
 Consolidated gross margin 28.5 % 36.7 % 28.3 % 36.5 % 

 Geographic Information 
 The Company conducts business in several geographic areas. Revenue is attributed to a particular geographic region based on the shipping address for the products. Disaggregated revenue from external customers by geographic area is as follows: 
 
 Three months ended Nine months ended 
 March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019 
 (in millions of U.S. Dollars) Revenue % of Revenue Revenue % of Revenue Revenue % of Revenue Revenue % of Revenue 
 United States $ 45.3 21.0 % $ 68.8 25.1 % $ 161.4 23.1 % $ 197.8 23.9 % 
 China 55.4 25.7 % 83.0 30.3 % 200.8 28.8 % 289.6 34.9 % 
 Europe 64.8 30.1 % 63.2 23.1 % 188.3 27.0 % 197.1 23.8 % 
 Other 50.0 23.2 % 59.0 21.5 % 147.7 21.2 % 144.2 17.4 % 
 Total $ 215.5 $ 274.0 $ 698.2 $ 828.7 

 
 Assets by Reportable Segment 
 Inventories are the only assets reviewed by the Company’s CODM when evaluating segment performance and allocating resources to the segments. The CODM reviews all of the Company's assets other than inventories on a consolidated basis. 
 Unallocated inventories in the table below were not allocated to the reportable segments because the Company’s CODM does not review them when evaluating performance and allocating resources to each segment. Unallocated inventories consisted primarily of manufacturing employees’ stock-based compensation, profit sharing and quarterly or annual incentive compensation, matching contributions under the Company’s 401(k) plan, and acquisition related costs. 
 Inventories for each of the Company's segments were as follows: 
 
 March 29, 2020 June 30, 2019 
 Wolfspeed $ 90.1 $ 81.6 
 LED Products 74.2 99.2 
 Total segment inventories 164.3 180.8 
 Unallocated inventories 5.8 6.6 
 Consolidated inventories $ 170.1 $ 187.4 

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 Note 15 - Restructuring 
 The Company has approved various operational plans that include restructuring costs. All restructuring costs are recorded in other operating expense on the consolidated statement of operations. 
 Corporate Restructuring 
 In April 2018, the Company approved a corporate restructuring plan. The purpose was to restructure and realign the Company's cost base with the long-range business strategy that was announced in February 2018. The restructuring activity was completed in the second quarter of fiscal 2019. For the three and nine months ended March 31, 2019, $ 0.0 million and $ 2.6 million was expensed relating to this corporate restructuring plan. 
 Factory Optimization Restructuring 
 In May 2019, the Company started a significant, multi-year factory optimization plan anchored by a state-of-the-art, automated 200mm capable silicon carbide and GaN fabrication facility and a large materials factory at its U.S. campus headquarters in Durham, North Carolina. As part of the plan, the Company will incur restructuring charges associated with the movement of equipment as well as disposals on certain long-lived assets. 
 The Company expects approximately $ 70.0 million in restructuring charges related to the factory optimization plan to be incurred through 2024. For the three and nine months ended March 29, 2020, the Company expensed and paid $ 1.1 million and $ 3.5 million of restructuring charges related to the factory optimization plan. 
 In September 2019, the Company announced its intent to build the new fabrication facility in Marcy, New York to complement the factory expansion underway at its U.S. campus headquarters in Durham, North Carolina. The Company has not started building the facility and is currently evaluating the impact of this decision on future restructuring charges. 
 Sales Representatives Restructuring 
 In July 2019, the Company realigned its sales resources as part of the Company's transition to a more focused semiconductor company. As a result, the Company recorded $ 0.0 million and $ 0.8 million in contract termination costs during the three and nine months ended March 29, 2020, of which $ 0.3 million is accrued in other current liabilities as of March 29, 2020. 
 
 Note 16 - Subsequent Events 
 On April 21, 2020, the Company issued and sold $ 500.0 million aggregate principal amount of 1.75 % convertible senior notes due May 1, 2026 to qualified institutional buyers pursuant to Rule 144A under the Securities Act and an additional $ 75.0 million aggregate principal amount of such notes pursuant to the exercise in full of the over-allotment options of the initial purchasers (the 2026 Notes). The total net proceeds from the debt offering was approximately $ 561.4 million. 
 The 2026 Notes are unsecured, senior obligations of the Company, and interest will be payable semi-annually in arrears. The 2026 Notes are convertible, at a holder's election, in multiples of $1,000 principal amount, into cash, shares of the Company’s common stock, or a combination thereof, at the Company’s election, at the applicable conversion rate only under certain circumstances or certain periods specified within the Indenture governing the 2026 Notes. The initial conversion rate for the 2026 Notes is 21.1346 shares of common stock per $1,000 principal amount of notes, subject to adjustment as provided in the Indenture. 
 The Company used approximately $ 144.3 million of the net proceeds from the offering to repurchase approximately $ 150.2 million aggregate principal amount of the 2023 Notes, including approximately $ 0.2 million of accrued interest on such notes, in privately negotiated transactions. The Company intends to use the remainder of the net proceeds from the offering for general corporate purposes. 
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
WOLFSPEED, INC. 10-Q

Item 1. Financial Statements
