Wolfspeed (WOLF) 8-K Cree Reports Record Revenue for the Fourth Quarter and Fiscal Year 2008

Exhibit 99.1

For Immediate Release Press Release

Contact:	Raiford Garrabrant
	Cree, Inc.
	Director, Investor Relations
	Ph: 919-287-7895
	Fax: 919-313-5615
	Email: raiford_garrabrant@cree.com

Cree Reports Record Revenue for the Fourth Quarter and Fiscal Year 2008

Annual Revenue Increased 25% to $493 Million

DURHAM, N.C., August 12, 2008 – Cree, Inc. (Nasdaq: CREE), a market leader in LED lighting, today announced revenue of $135.9 million for its fiscal fourth quarter ended June 29, 2008.  This represents a 9% increase compared to the fiscal third quarter of 2008 and a 22% increase compared to revenue of $111.2 million reported for the fourth fiscal quarter last year.  GAAP net income for the fourth quarter was $8.4 million, or $0.09 per diluted share, compared to net income of $6.4 million or $0.08 per diluted share for the fourth quarter of fiscal 2007.

The remainder of this press release highlights the company’s financial results on both a GAAP and a non-GAAP basis.  The GAAP results include certain costs, charges, gains and losses which are excluded from non-GAAP results.  By publishing the non-GAAP measures, management intends to provide investors with additional information to further analyze the company's performance, core results and underlying trends.  Cree’s management evaluates results and makes operating decisions using both GAAP and non-GAAP measures included in this press release.  Non-GAAP results are not prepared in accordance with GAAP and non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP.  Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures attached to this press release.

GAAP net income from continuing operations was $0.07 per diluted share for the fourth quarter of fiscal 2008.  This amount excludes a gain from discontinued operations of $0.02 per diluted share, and includes expenses totaling $7.9 million, net of tax, or $0.09 per diluted share related to amortization of acquired intangibles and stock-based compensation expense.  On a non-GAAP basis, adjusted to exclude these items, net income from continuing operations for the fourth quarter of fiscal 2008 was $14.5 million, or $0.16 per diluted share.  Included in non-GAAP earnings is a $0.03 per diluted share benefit primarily due to a state franchise tax credit that reduced G&A for the quarter.  Excluding this $0.03 per diluted share benefit, non-GAAP earnings were consistent with the company’s previously announced target range.  On a non-GAAP basis, net income from continuing operations for the fourth quarter of fiscal 2007 was $7.4 million, or $0.09 per diluted share.

For fiscal year 2008, Cree reported revenue of $493.3 million, which represents a 25% increase compared to revenue of $394.1 million for fiscal 2007.  GAAP net income was $33.4 million, or $0.38 per diluted share, compared to $57.3 million, or $0.72 per diluted share for fiscal 2007.

On a non-GAAP basis net income for fiscal year 2008 was $47.2 million, or $0.54 per diluted share, compared to $35.4 million, or $0.44 per diluted share, for fiscal 2007.

“Q4 represented a strong finish to a very successful year,” stated Chuck Swoboda, Cree Chairman and CEO.  “Revenue exceeded our previously announced guidance due to strong LED sales, which grew 11% sequentially and 27% from a year ago.   We have executed our strategy to transform Cree into a broad-based LED company with chips, components and systems that are leading the LED lighting revolution.  While we recognize that there is caution in the market about the global economic environment, we remain optimistic about the year ahead as the momentum continues to build for our new products and energy efficient lighting.”

Recent Business Highlights:

Ø   Introduced several new LED lighting products:

·   Announced a new version of the LR6 designed for 220V to 240V electrical systems to address Europe, Asia and other major markets.

·   Released the LR4, a four-inch architectural recessed LED down light for new construction and renovation projects.  The LR4 delivers up to 540 lumens of high-quality, dimmable light from less than 11 watts of power.

·   Demonstrated the XLamp® MC-E LED at LIGHTFAIR International.  The multi-chip LED retains the same footprint as Cree’s existing XLamp XR family LEDs while providing four times the light output of the existing XR-E.

·   Announced a new standard for lighting-class LEDs with the introduction of the XLamp XP-E and XP-C LEDs.  These breakthrough LEDs have the smallest footprint in the industry for lighting-class LEDs—providing the same high-quality lighting performance and proven reliability as Cree XR-E and XR-C LEDs in an 80-percent smaller package.

Ø   Cree’s flagship LED recessed down light, the LR6, won a prestigious Silver International Design Excellence Award (IDEA) in the EcoDesign category.  IDEA is one of the most prominent design competitions in the world, celebrating cutting-edge products and product concepts.

Ø   Announced the LED UniversityTM program with North Carolina State University, Marquette University, University of California at Santa Barbara, University of Arkansas and Tianjin Polytechnic University.  Each of the participating universities is conducting LED lighting pilots to determine the cost and environmental benefits of switching to LED lighting in campus applications.

Ø   Welcomed Anchorage, Alaska, into the LED City® program.  Anchorage Mayor Mark Begich announced his city’s participation in conjunction with an energy-related initiative for the retrofit of all 16,000 municipal roadway lights with high-efficiency LED fixture.

Ø   Entered into an agreement with Toyoda Gosei providing each company with access to the other’s patents relating to LED chip and packaged LED technology.

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Q4 2008 Financial Metrics:

Ø   Gross margin was 34% of revenue.

Ø   Inventory decreased $3.2 million from Q3 to $80.2 million, and represents 80 days of inventory (DOI), a decrease of 12 days from Q3.

Ø   Accounts receivable decreased $1.2 million from Q3 to $110.4 million, resulting in days sales outstanding of 73, a decrease of 7 days from Q3.

Ø   Cash flow from operations was $36.7 million.

Ø   Cash and investments decreased $27.3 million to $371.0 million from Q3, as we used $51.1 million to repurchase approximately 2 million shares at an average cost of $25.96 per share.

Business Outlook:

For its first quarter of fiscal 2009 ending September 28, 2008, Cree targets revenue in a range of $138 million to $142 million with GAAP earnings of $0.06 to $0.08 per diluted share and non-GAAP earnings of $0.13 to $0.15 per diluted share, based on an estimated 89.5 million diluted weighted average shares.  Targeted non-GAAP earnings exclude expenses related to the amortization of acquired intangibles of $0.03 per diluted share, and stock-based compensation expense of $0.04 per diluted share.  

Cree will host a conference call at 5:00 p.m. Eastern time today to review the highlights of the fiscal fourth quarter 2008 results and the fiscal first quarter 2009 business outlook, including significant factors and assumptions underlying the targets noted above. The conference call will be available to the public through a live audio web broadcast via the Internet. Log on to Cree’s website at www.cree.com and go to “Investor Relations — Overview” for webcast details. The call will be archived and available on the website through August 26, 2008.

Supplemental financial information, including the non-GAAP reconciliation attached to this press release, is available in the “Investor Relations” section of Cree’s website, under “Financial Metrics,” “Quarter ending June 29, 2008”, at www.cree.com.

About Cree, Inc.

Cree is leading the LED lighting revolution and setting the stage to obsolete the incandescent light bulb through the use of energy-efficient, environmentally friendly LED lighting. Cree is a market-leading innovator of lighting-class LEDs, LED lighting solutions, and semiconductor solutions for wireless and power applications.

Cree’s product families include recessed LED down lights, lighting-class power LEDs, high-brightness LEDs, blue and green LED chips, power-switching devices and radio-frequency/wireless devices. Cree solutions are driving improvements in applications such as general illumination, backlighting, electronic signs and signals, variable-speed motors, and wireless communications.

For additional product and company information, please refer to www.cree.com.

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The schedules attached to this release are an integral part of the release. This press release contains forward-looking statements involving risks and uncertainties, both known and unknown, that may cause actual results to differ materially from those indicated. Actual results, including with respect to our targets and prospects, could differ materially due to a number of factors, including our ability to complete development and commercialization of products under development, such as our pipeline of brighter LED chips, LED components and LED lighting retrofit solutions; our ability to lower costs; potential changes in demand; increasing price competition in key markets; the risk that, due to the complexity of our manufacturing processes and transition of production to larger wafers, we may experience production delays that preclude us from shipping sufficient quantities to meet customer orders or that result in higher production costs and lower margins; risks associated with the ramp-up of our production for our new products, as well as production at our Huizhou facility and subcontractors; risks resulting from the concentration of our business among few customers, including the risk that customers may reduce or cancel orders or fail to honor purchase commitments; the rapid development of new technology and competing products that may impair demand or render our products obsolete; the potential lack of customer acceptance for our products; risks associated with our recent acquisitions; risks associated with ongoing litigation; and other factors discussed in our filings with the Securities and Exchange Commission (SEC), including our report on Form 10-K for the fiscal year ended June 24, 2007, and subsequent reports filed with the SEC. Except as required under the U.S. federal securities laws and the rules and regulations of the SEC, Cree disclaims any obligation to update any forward-looking statements after the date of this release, whether as a result of new information, future events, developments, changes in assumptions or otherwise.

Cree, the Cree logo, XLamp and LED City are registered trademarks, and LED University is a trademark, of Cree, Inc.

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CREE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
	Three Months Ended							Years Ended
		June 29, 2008			June 24, 2007			June 29, 2008			June 24, 2007
		(Unaudited)						(Unaudited)
Product revenue	$	129,443		$	103,459		$	464,907		$	364,718
Contract revenue		6,482			7,709			28,389			29,403
Total revenue		135,925			111,168			493,296			394,121
Cost of product revenue		84,897			73,350			304,663			237,125
Cost of contract revenue		5,286			6,073			22,806			23,008
Total cost of revenue		90,183			79,423			327,469			260,133
Gross margin		45,742			31,745			165,827			133,988
Gross margin percentage		33.7	%		28.6	%		33.6	%		34.0	%
Operating expenses:
Research and development		15,763			14,564			58,846			58,836
Sales, general and administrative		19,158			15,471			76,607			53,105
Amortization of acquisition related intangibles		4,806			3,664			17,127			4,192
Loss on disposal and impairment of long-lived assets		719			1,170			1,206			1,199
Total operating expenses		40,446			34,869			153,786			117,332
Operating income		5,296			(3,124	)		12,041			16,656
Operating income percentage		3.9	%		-2.8	%		2.4	%		4.2	%
Non-operating income:
Gain on sale of investments, net		-			7,822			14,117			19,233
Interest and other non-operating income, net		2,699			3,384			14,891			15,222
Income from continuing operations before income taxes		7,995			8,082			41,049			51,111
Income tax expense		1,352			1,566			9,237			918
Net income from continuing operations		6,643			6,516			31,812			50,193
Income (loss) from discontinued operations, net of related tax effect		1,803			(83	)		1,627			7,141
Net income	$	8,446		$	6,433		$	33,439		$	57,334
Diluted earnings per share:
Income from continuing operations	$	0.07		$	0.08		$	0.36		$	0.63
Income (loss) from discontinued operations	$	0.02		$	(0.00	)	$	0.02		$	0.09
Net income	$	0.09		$	0.08		$	0.38		$	0.72
Weighted average shares of common
stock outstanding, basic		88,380			83,815			86,366			78,560
Weighted average shares of common
stock outstanding, diluted		89,615			84,929			88,077			79,496

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CREE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
	June 29, 2008		March 30, 2008		June 24, 2007
	(Unaudited)		(Unaudited)
Assets:
Current assets:
Cash, cash equivalents and short term investments	$	312,428	$	336,965	$	242,655
Accounts receivable, net		110,376		111,604		79,668
Inventory, net		80,161		83,328		71,068
Income taxes receivable		9,825		2,000		7,947
Deferred income taxes		4,578		20,886		23,573
Prepaid expenses and other current assets		12,900		11,918		8,920
Assets of discontinued operations		2,600		133		301
Total current assets		532,868		566,834		434,132
Property and equipment, net		348,013		351,222		372,345
Long-term investments		58,604		61,369		68,363
Intangible assets, net		126,037		129,644		96,138
Goodwill		244,003		187,873		141,777
Deferred income taxes		-		7,053		1,227
Other assets		3,882		2,296		2,248
Total assets	$	1,313,407	$	1,306,291	$	1,116,230
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable, trade	$	37,402	$	44,797	$	32,940
Accrued salaries and wages		13,471		14,337		10,241
Income taxes payable		5,314		-		4,504
Deferred income taxes		-		3,343		844
Other current liabilities		7,938		4,758		5,415
Contingent payment due related to COTCO acquisition		60,000		-		-
Liabilities of discontinued operations		550		541		505
Total current liabilities		124,675		67,776		54,449
Long-term liabilities:
Deferred income taxes		38,048		55,937		38,758
Other long-term liabilities		4,199		5,014		5,921
Long-term liabilities of discontinued operations		745		835		1,103
Total long-term liabilities		42,992		61,786		45,782
Shareholders' Equity:
Common stock		110		112		106
Additional paid-in-capital		811,015		851,362		713,778
Accumulated other comprehensive income		8,923		8,008		9,826
Retained earnings		325,692		317,247		292,289
Total shareholders' equity		1,145,740		1,176,729		1,015,999
Total liabilities and shareholders' equity	$	1,313,407	$	1,306,291	$	1,116,230

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The following is a reconciliation showing how Cree, Inc.'s fourth quarter income statements for fiscal 2008 and 2007 would appear if they were adjusted for the items noted below.
CREE, INC.
Reconciling Items to Q4 2008 & 2007 Financial Statements - GAAP to Non-GAAP
(in thousands, except per share amounts)
(Unaudited)
	Three Months Ended										Three Months Ended
	June 29, 2008										June 24, 2007
	GAAP			Adjustments				Non-GAAP			GAAP			Adjustments				Non-GAAP
Product revenue	$	129,443		$	-			$	129,443		$	103,459		$	-			$	103,459
Contract revenue		6,482			-				6,482			7,709			-				7,709
Total revenue		135,925			-				135,925			111,168			-				111,168
Cost of product revenue		84,897			(703	)	(a)		84,194			73,350			(3,541	)	(a), (d)		69,809
Cost of contract revenue		5,286			-				5,286			6,073			-				6,073
Total cost of sales		90,183			(703	)			89,480			79,423			(3,541	)			75,882
Gross margin		45,742			703				46,445			31,745			3,541				35,286
Gross margin percentage		33.7	%						34.2	%		28.6	%						31.7	%
Operating expenses:
Research and development		15,763			(1,331	)	(a)		14,432			14,564			(1,680	)	(a), (e)		12,884
Sales, general and administrative		19,158			(2,638	)	(a)		16,520			15,471			(1,272	)	(a)		14,199
Amortization of acquisition related intangibles		4,806			(4,806	)	(b)		-			3,664			(3,664	)	(b)		-
Loss on disposal and impairment of long-lived assets		719			-				719			1,170			-				1,170
Total operating expenses		40,446			(8,775	)			31,671			34,869			(6,616	)			28,253
Operating income		5,296			9,478				14,774			(3,124	)		10,157				7,033
Operating income percentage		3.9	%						10.9	%		-2.8	%						6.3	%
Non-operating income:
Gain (loss) on investments in securities		-			-				-			7,822			(7,822	)	(f)		-
Interest and other non-operating income, net		2,699			-				2,699			3,384			-				3,384
Income from continuing operations before income taxes		7,995			9,478				17,473			8,082			2,335				10,417
Income tax expense (benefit)		1,352			1,603		(c)		2,955			1,566			1,323		(c)		2,889
Net income from continuing operations		6,643			7,875				14,518			6,516			1,012				7,528
(Loss) gain from discontinued operations, net of related tax		1,803			(1,820	)	(g)		(17	)		(83	)		-				(83	)
Net income	$	8,446		$	6,055			$	14,501		$	6,433		$	1,012			$	7,445
Earnings per diluted share:
From continuing operations	$	0.07		$	0.09			$	0.16		$	0.08		$	0.01			$	0.09
From discontinued operations	$	0.02		$	(0.02	)		$	(0.00	)	$	(0.00	)	$	-			$	(0.00	)
From net income	$	0.09		$	0.07			$	0.16		$	0.08		$	0.01			$	0.09
Weighted average shares of common
stock outstanding, basic		88,380			-				88,380			83,815			-				83,815
Weighted average shares of common
stock outstanding, diluted		89,615			-				89,615			84,929			-				84,929
(a) Non-cash stock-based compensation expense of $703,000 in costs of product revenue, $1,331,000 in research and development and $2,638,000 in sales, general and administrative for the three months ended June 29, 2008 and $550,000 in costs of product revenue, $730,000 in research and development and $1,272,000 in sales, general and administrative for the three months ended June 24, 2007.
(b) Amortization expense of $4,806,000 for the three months ended June 29, 2008 and $3,664,000 for the three months ended June 24, 2007 recognized on intangible assets resulting from acquisitions.
(c) Tax effects of non-cash stock-based compensation expense, amortization related to acquisition related intangible assets and other non-GAAP adjustments.
(d) FAS 141 adjustment of $3.0 million related to the valuation of inventory in connection with the purchase of COTCO.
(e) IPR&D charge of $950,000 specifically related to the COTCO acquisition.
(f) Gain on the sale of shares of Color Kinetics common stock.
(g) Net gain on sale of certain patents related to the discontinued Cree Microwave segment.

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The following is a reconciliation showing how Cree, Inc.'s income statements for fiscal years 2008 and 2007 would appear if they were adjusted for the items noted below.
CREE, INC.
Reconciling Items to Annual Financial Statements - GAAP to Non-GAAP
(in thousands, except per share amounts)
(Unaudited)
	Year Ended										Year Ended
	June 29, 2008										June 24, 2007
	GAAP			Adjustments				As Adjusted			GAAP			Adjustments				As Adjusted
Product revenue	$	464,907		$	-			$	464,907		$	364,718		$	-			$	364,718
Contract revenue		28,389			-				28,389			29,403			-				29,403
Total revenue		493,296			-				493,296			394,121			-				394,121
Cost of product revenue		304,663			(2,913	)	(a)		301,750			237,125			(6,328	)	(a), (i)		230,797
Cost of contract revenue		22,806			-				22,806			23,008			-				23,008
Total cost of sales		327,469			(2,913	)			324,556			260,133			(6,328	)			253,805
Gross margin		165,827			2,913				168,740			133,988			6,328				140,316
Gross margin percentage		33.6	%						34.2	%		34.0	%						35.6	%
Operating expenses:
Research and development		58,846			(4,362	)	(a)		54,484			58,836			(4,286	)	(a), (e)		54,550
Sales, general and administrative		76,607			(9,758	)	(a)(b)		66,849			53,105			(5,047	)	(a)		48,058
Amortization of acquisition related intangibles		17,127			(17,127	)	(c)		-			4,192			(4,192	)	(c)		-
Loss on disposal and impairment of long-lived assets		1,206			-				1,206			1,199			-				1,199
Total operating expenses		153,786			(31,247	)			122,539			117,332			(13,525	)			103,807
Operating income		12,041			34,160				46,201			16,656			19,853				36,509
Operating income percentage		2.4	%						9.4	%		4.2	%						9.3	%
Non-operating income:
Gain (loss) on investments in securities		14,117			(14,117	)	(d)		-			19,233			(19,233	)	(d)		-
Interest and other non-operating income, net		14,891			-				14,891			15,222			-				15,222
Income from continuing operations before income taxes		41,049			20,043				61,092			51,111			620				51,731
Income tax expense		9,237			4,510		(f)		13,747			918			15,029		(f)		15,947
Net income from continuing operations		31,812			15,533				47,345			50,193			(14,409	)			35,784
(Loss) gain from discontinued operations, net of related tax		1,627			(1,820	)	(g)		(193	)		7,141			(7,566	)	(h)		(425	)
Net income	$	33,439		$	13,713			$	47,152		$	57,334		$	(21,975	)		$	35,359
Earnings per diluted share:
From continuing operations	$	0.36		$	0.18			$	0.54		$	0.63		$	(0.18	)		$	0.45
From discontinued operations	$	0.02		$	(0.02	)		$	(0.00	)	$	0.09		$	(0.10	)		$	(0.01	)
From net income	$	0.38		$	0.16			$	0.54		$	0.72		$	(0.28	)		$	0.44
Weighted average shares of common
stock outstanding, basic		86,366			-				86,366			78,560			-				78,560
Weighted average shares of common
stock outstanding, diluted		88,077			-				88,077			79,496			-				79,496
(a) Non-cash stock-based compensation expense of $2,913,000 in costs of product revenue, $4,362,000 in research and development and $8,710,000 in sale, general and administrative for the year ended June 29, 2008 and $3,300,000 in costs of product revenue, $3,400,000 in research and development and $5,047,000 in sale, general and administrative for the year ended June 24, 2007.
(b) Personal property assessment of $1,048,000 related to finalizing the audits of our 2002 through 2007 property tax returns.
(c) Amortization expense of $17,127,000 for the year ended June 29, 2008 and $4,192,000 for the year ended June 24, 2007 recognized on acquisition related intangibles.
(d) Gain on the sale of shares of Color Kinetics common stock during the respective periods.
(e) IPR&D charge of $950,000 specifically related to the COTCO acquisition.
(f) Tax effects of non-cash stock-based compensation expense, amortization related to acquisition related intangible assets and other non-GAAP adjustments.
(g) Net gain on sale of certain patents related to the discontinued Cree Microwave segment.
(h) Tax benefit related to the the release of contingent tax reserves associated with the completion of Internal Revenue Service audits of fiscal 2003, 2004 and 2005 Federal tax returns, and gain realized as a result of entering into a sublease agreement at Cree Microwave.
(i) FAS 141 adjustment of $3.0 million related to the valuation of inventory in connection with the purchase of COTCO.

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