among SMART Modular Technologies (LX) S.à r.l. (our wholly owned subsidiary, the “Brazil Seller”), Lexar Europe B.V. (the “Brazil Purchaser”), Shenzhen Longsys Electronics Co., Ltd. (“Longsys”), solely with respect to certain provisions therein, Shanghai Intelligent Memory Semiconductor Co., Ltd., and, solely with respect to certain provisions therein, Penguin Solutions.

Pursuant to the Brazil Purchase Agreement, we sold to Brazil Purchaser 81% of our right, title and interest in and to the outstanding quotas of SMART Brazil, with us retaining a 19% interest in SMART Brazil (the “Retained Interest”) (the “Brazil Divestiture”).

At the closing of the Brazil Divestiture, Brazil Purchaser paid to Brazil Seller (based on a total enterprise value of $204.6 million for SMART Brazil) an upfront cash purchase price, subject to certain customary adjustments as set forth in the Brazil Purchase Agreement. In addition, pursuant to the Brazil Purchase Agreement, Brazil Seller was provided a right to receive, and Brazil Purchaser was obligated to pay, (i) a deferred payment due 18 months following the closing and (ii) subject to and at the time of exercise of the Put/Call Option (as defined below), an additional deferred cash adjustment equal to 19% of the amount of SMART Brazil’s net cash as of the closing (as calculated pursuant to the Brazil Purchase Agreement).

Total consideration for the 81% interest in SMART Brazil amounted to $194.1 million, which included cash at closing of $164.9 million, a deferred payment with fair value of $25.4 million, and a deferred cash adjustment with a fair value of $3.7 million. The Brazil Purchase Agreement provided us with a right to receive from Brazil Purchaser (i) a deferred payment due 18 months following the closing and (ii) subject to and at the time of exercise of the Put/Call Option (as defined below), an additional deferred cash adjustment equal to 19% of the amount of SMART Brazil’s net cash as of the closing (as calculated pursuant to the Brazil Purchase Agreement).

The deferred payment, comprised of a notional amount of $28.4 million discounted at 7.5%, was received in May 2025 and is included in other current assets in the accompanying consolidated balance sheets for fiscal 2025. The fair value of the deferred cash adjustment, comprised of a notional amount of $4.8 million discounted at 7.5%, is equal to 19% of SMART Brazil’s net cash as of the closing. The deferred cash adjustment, which is accounted for as a derivative financial instrument, is due at the time of exercise of the Put/Call Option (as defined below) and is included in other noncurrent assets in the accompanying consolidated balance sheet for fiscal 2025.

Put/Call Option: Pursuant to the Brazil Purchase Agreement, at the closing, SMART Brazil, Brazil Seller, Brazil Purchaser and Longsys entered into a Quotaholders Agreement, which provided Brazil Seller with a put option to sell the Retained Interest in SMART Brazil to Brazil Purchaser (the “Put Option”) during three exercise windows following SMART Brazil’s fiscal years ending December 31, 2026, December 31, 2027 or December 31, 2028 (the “Exercise Windows”), with such Exercise Windows beginning on June 15, 2027 and ending on July 15, 2027, beginning on June 15, 2028 and ending on July 15, 2028 and beginning on June 15, 2029 and ending on July 15, 2029, respectively. A call option had also been granted to Brazil Purchaser to require Brazil Seller to sell the Retained Interest to Brazil Purchaser during the Exercise Windows (together with the Put Option, the “Put/Call Option”). The price for the Put/Call Option was based on a 100% enterprise value of 7.5x net income for SMART Brazil for the preceding fiscal year at the time of exercise. On March 30, 2026, we sold our remaining 19% interest in SMART Brazil pursuant to a Stock Transfer Agreement dated December 29, 2025, completing our divestiture of the business.

As of August 25, 2023, we concluded that the net assets of SMART Brazil met the criteria for classification as held for sale. In addition, the divestiture of SMART Brazil was expected to have a major effect on our operations and financial results. As a result, we have presented the results of operations, cash flows and financial position of SMART Brazil as discontinued operations in the accompanying consolidated financial statements and notes for all periods presented.

A disposal group classified as held for sale is measured at the lower of its carrying amount or fair value less costs to sell. Accordingly, we evaluated the carrying value of the net assets of SMART Brazil (including $206.3 million recognized within stockholders’ equity related to the cumulative translation adjustment from SMART Brazil), estimated costs to sell and expected proceeds and concluded the net assets were impaired as of August 25, 2023. As a result, we recognized an impairment charge of $153.0 million in the fourth quarter of 2023 to write

down the carrying value of the net assets of SMART Brazil. In addition, we concluded that the outside basis of SMART Brazil inclusive of any withholding taxes should be recognized upon the classification as held for sale as of August 25, 2023. Accordingly, we recognized withholding taxes on the expected capital gain and deferred tax liabilities of $28.6 million in 2023.


As of	November 29, 2023
Cash and cash equivalents	$	40,927
Accounts receivable, net	16,482
Inventories	26,103
Other current assets	17,800
Total current assets	101,312
Property and equipment, net	66,870
Operating lease right-of-use assets	6,912
Goodwill	19,856
Other noncurrent assets	27,490
Total assets	222,440
Impairment of SMART Brazil assets	(153,036)
Total assets, net of impairment	69,404

Accounts payable and accrued expenses	20,576
Current debt	3,872
Other current liabilities	1,023
Total current liabilities	25,471
Long-term debt	11,938
Noncurrent operating lease liabilities	5,686
Noncurrent deferred tax liabilities	28,564
Other noncurrent liabilities	93
Total liabilities	71,752

Net liabilities of discontinued operations	$	(2,348)


Year ended	August 30, 2024
Net sales	$	55,159
Cost of sales	50,560
Gross profit	4,599

Operating expenses:
Research and development	157
Selling, general and administrative	5,421
Other operating (income) expense	64
Total operating expenses	5,642
Operating loss	(1,043)

Non-operating expense:
Loss from divestiture of 81% interest in SMART Brazil	10,888
Interest income, net	(1,262)
Other non-operating expense	138
Total non-operating expense	9,764
Loss before taxes	(10,807)
Income tax benefit	2,659
Net loss from discontinued operations	$	(8,148)


Proceeds, less costs to sell and other expenses:
Consideration	$	194,092
Costs to sell and other expenses	(4,150)
	189,942

Basis in 81% interest in SMART Brazil:
Net assets of SMART Brazil	145,194
Cumulative translation adjustment (1)	212,397
	357,591

Gain on revalue of 19% Retained Interest in SMART Brazil (2)	3,725
Pre-tax loss on divestiture of 81% interest in SMART Brazil	163,924
Income tax provision	26,580
Loss on divestiture of 81% interest in SMART Brazil	$	190,504

(1)The sale of an 81% interest in SMART Brazil resulted in the de-consolidation of SMART Brazil and, accordingly, the release of the related cumulative translation adjustment. Included in the basis calculation above is the balance of cumulative translation adjustment for SMART Brazil as of the closing. The release of the cumulative translation adjustment is included in net income (loss) from discontinued operations in the accompanying consolidated statement of operations.


	Three Months Ended
	December 1, 2023		August 25, 2023		Total
Pre-tax loss on divestiture of 81% interest in SMART Brazil	$	10,888	$	153,036	$	163,924
Income tax provision (benefit)	(1,984)		28,564		26,580
Loss on divestiture of 81% interest in SMART Brazil	$	8,904	$	181,600	$	190,504