Wolfspeed (WOLF) 8-K Cree Reports Record Quarterly Revenue for the Second Quarter of Fiscal Year 2009

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 Quarterly Revenue for the Second Quarter of Fiscal Year 2009

Q2 2009 Revenue Increased 24% year-over-year to $148 Million
 

DURHAM, N.C., January 20, 2009– Cree, Inc. (Nasdaq: CREE), a market leader in LED lighting, today announced revenue of $147.6 million for its second quarter of fiscal 2009, ended December 28, 2008.  This represents a 24% increase compared to revenue of $119.0 million reported for the second fiscal quarter last year and a 5% increase compared to the fiscal first quarter of 2009.  Revenue included $5.6 million in patent licensing fees which were not factored into previously announced targets.  GAAP net income for the second quarter was $10.7 million, or $0.12 per diluted share, compared to net income of $6.6 million, or $0.08 per diluted share, for the second quarter of fiscal 2008.  Net income included approximately $4.4 million, or $0.05 per diluted share, related to the patent licensing fees, as well as a franchise tax benefit, which was not factored into previously announced targets.

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 EPS of $0.12 per diluted share for the second quarter of fiscal 2009 includes expenses totaling $7.1 million, net of tax, or $0.08 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 for the second quarter of fiscal 2009 was $17.8 million, or $0.20 per diluted share.  On a non-GAAP basis, adjusted to exclude comparable items, net income for the second quarter of fiscal 2008 was $12.2 million, or $0.14 per diluted share.

“Cree delivered excellent financial results again despite challenging economic conditions, driven by strength in LED product sales for lighting applications” stated Chuck Swoboda, Cree Chairman and CEO.  “In the third quarter of fiscal 2009, we expect that lower demand for our products in consumer, mobile and automotive applications will be partially offset by growth in

LED sales for commercial lighting applications.  As we look ahead to calendar 2009, we are targeting that LED lighting adoption will continue to gain momentum as product availability increases and recognition of the benefits grows from new installations like the Federal Reserve and the planned Pentagon renovation.”

Recent Business Highlights:

Ø   Announced volume availability of the LR24, a recessed LED luminaire that offers high-quality, energy-efficient light for the largest commercial lighting market, suspended-ceiling applications traditionally addressed by linear fluorescents.  The LR24 has already been installed at the U.S. Federal Reserve in Washington, D.C., as part of their ongoing energy-efficiency program, and the Pentagon plans to install 4,200 of the luminaires as part of a major renovation currently underway.

Ø   Announced the high-volume availability of XLamp XP-E LEDs with output up to 122 lumens, the highest commercially available minimum flux for a single-die LED, at 350mA, in the industry today.  The volume availability of these XLamp LEDs is aimed at further stimulating the LED lighting market, driving applications in outdoor and indoor general illumination as well as portable and retail display lighting.

Ø   Achieved industry-best reported R&D results of 161 lumens per watt for a white power LED.  These results demonstrate Cree’s continued commitment to deliver industry-leading performance through a constant focus on innovation and R&D.

Ø   Entered into a patent license agreement granting Mitsubishi Chemical Corporation (MCC) an exclusive license (subject to certain exceptions) to manufacture and sell freestanding GaN substrates, with Cree to receive over the life of the agreement a combination of guaranteed payments and royalties on the sale of GaN substrates.

Ø   Agreed with Bridgelux, Inc. to settle the parties' patent infringement litigation and to dismiss all claims and counterclaims in the suits.  As part of the settlement, Cree granted Bridgelux a license to the Cree and Boston University patents at issue in the litigation, and Bridgelux agreed to pay a license fee and royalties.  In addition, Bridgelux and Cree have entered into a supply agreement under which Cree will become a significant supplier to Bridgelux.

Ø   Welcomed Indian Wells, California, to the LED City® Program.  The city has replaced much of the lighting in City Hall, with all circular recessed lighting converted to the Cree LR6 LED light, reducing electricity consumption by 80%.  The city plans to evaluate LED lighting for other municipal lighting applications to further increase energy savings.

Ø   Welcomed Notre Dame, Madison Area Technical College, and the University of California, Davis to the LED University™ Program.  Notre Dame is implementing four pilot installations to evaluate the feasibility of LED lighting across the campus, and is already realizing energy savings of 81% compared to incandescent lighting in the Hesburgh Library.

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Q2 2009 Financial Metrics:

Ø   GAAP gross margin was 38% of revenue compared to 35% in Q2 of fiscal 2008, and non-GAAP gross margin was 39% compared to 36% in Q2 of fiscal 2008.  Q2 gross margin included approximately 200 basis points of benefit related to the MCC and Bridgelux license agreements.

Ø   Accounts receivable increased $5.1 million from Q1 of fiscal 2009 to $108.6 million, resulting in days sales outstanding of 66, the same as Q1 of fiscal 2009.

Ø   Inventory decreased $0.4 million from Q1 of fiscal 2009 to $78.8 million, and represents 78 days of inventory, the same as Q1 of fiscal 2009.

Ø   Cash and investments increased $26.5 million to $365.5 million, with cash flow from operations of $40.7 million and free cash flow (cash flow from operations less capital expenditures) of $23.2 million.

Business Outlook:

Current uncertainty in global economic conditions makes it particularly difficult to predict demand and makes it more likely that Cree’s actual results could differ materially from expectations.  For its third quarter of fiscal 2009 ending March 29, 2009, Cree targets revenue in a range of $128 million to $135 million with GAAP earnings of $0.02 to $0.05 per diluted share and non-GAAP earnings of $0.10 to $0.13 per diluted share, based on an estimated 89 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 $0.05 per diluted share.  

Cree will host a conference call at 5:00 p.m. Eastern time today to review the highlights of the fiscal second quarter 2009 results and the fiscal third 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 February 3, 2009.

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 December 28, 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.

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

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 current uncertainty in global economic conditions that could negatively affect product demand, collectability of receivables and other related matters as consumers and businesses may defer purchases or payments, or default on payments, in response to tighter credit and negative financial news; 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; 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 29, 2008, 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						Six Months Ended
	December 28,			December 30,			December 28,			December 30,
	2008			2007			2008			2007
	(Unaudited)						(Unaudited)
Product revenue	$	137,595		$	111,341		$	272,288		$	217,304
Contract revenue		4,446			7,658			10,131			15,081
Up-front license fees		5,582			-			5,582			-
Total revenue		147,623			118,999			288,001			232,385
Cost of product revenue		86,831			71,251			173,475			143,831
Cost of contract revenue		3,790			5,952			8,161			12,018
Up-front license fees		506			-			506			-
Total cost of revenue		91,127			77,203			182,142			155,849
Gross profit		56,496			41,796			105,859			76,536
Gross margin percentage		38.3	%		35.1	%		36.8	%		32.9	%
Operating expenses:
Research and development		18,441			14,901			35,716			27,678
Sales, general and administrative		21,843			18,211			44,761			36,373
Amortization of acquisition related intangibles		4,062			4,048			8,124			8,096
Loss on disposal and impairment of long-lived assets		645			474			1,050			1,209
Total operating expenses		44,991			37,634			89,651			73,356
Operating income		11,505			4,162			16,208			3,180
Operating income percentage		7.8	%		3.5	%		5.6	%		1.4	%
Non-operating income:
Gain on sale of investments, net		53			-			65			14,117
Interest and other non-operating income, net		2,507			4,582			5,484			8,309
Income from continuing operations before income taxes		14,065			8,744			21,757			25,606
Income tax expense		3,218			2,104			4,972			6,098
Net income from continuing operations		10,847			6,640			16,785			19,508
Loss from discontinued operations, net of related tax effect		(151	)		(20	)		(170	)		(174	)
Net income	$	10,696		$	6,620		$	16,615		$	19,334
Diluted earnings per share:
Income from continuing operations	$	0.12		$	0.08		$	0.19		$	0.22
Loss from discontinued operations	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Net income	$	0.12		$	0.08		$	0.19		$	0.22
Weighted average shares of common
stock outstanding, basic		88,057			85,190			87,954			84,936
Weighted average shares of common
stock outstanding, diluted		88,511			86,848			88,619			86,713

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CREE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
	December 28,		June 29,
	2008		2008
	(Unaudited)
Assets:
Current assets:
Cash, cash equivalents and short term investments	$	322,193	$	312,428
Accounts receivable, net		108,552		110,376
Inventory, net		78,816		80,161
Income taxes receivable		18,064		9,825
Deferred income taxes		5,032		4,578
Prepaid expenses and other current assets		14,125		13,000
Assets of discontinued operations		2,002		2,600
Total current assets		548,784		532,968
Property and equipment, net		339,793		348,013
Long-term investments		43,325		58,604
Intangible assets, net		118,890		125,037
Goodwill		248,365		244,003
Other assets		7,342		4,782
Total assets	$	1,306,499	$	1,313,407
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable, trade	$	43,988	$	37,402
Accrued salaries and wages		15,206		13,471
Income taxes payable		9,780		5,314
Deferred income taxes		1,178		-
Other current liabilities		4,631		7,938
Contingent payment due related to LLF acquisition		4,400		-
Contingent payment due related to COTCO acquisition		-		60,000
Liabilities of discontinued operations		480		550
Total current liabilities		79,663		124,675
Long-term liabilities:
Deferred income taxes		45,123		38,048
Other long-term liabilities		4,212		4,199
Long-term liabilities of discontinued operations		834		745
Total long-term liabilities		50,169		42,992
Shareholders' Equity:
Common stock		110		110
Additional paid-in-capital		823,762		811,015
Accumulated other comprehensive income		10,488		8,923
Retained earnings		342,307		325,692
Total shareholders' equity		1,176,667		1,145,740
Total liabilities and shareholders' equity	$	1,306,499	$	1,313,407

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The following is a reconciliation showing how Cree, Inc.'s second quarter income statements for fiscal 2009 and 2008 would appear if they were adjusted for the items noted below.
CREE, INC.
Reconciling Items to Q2 2009 & 2008 Financial Statements - GAAP to Non-GAAP
(in thousands, except per share amounts)
(Unaudited)
	Three Months Ended										Three Months Ended
	December 28, 2008										December 30, 2007
	GAAP			Adjustments				Non-GAAP			GAAP			Adjustments				Non-GAAP
Product revenue	$	137,595		$	-			$	137,595		$	111,341		$	-			$	111,341
Contract revenue		4,446			-				4,446			7,658			-				7,658
Up-front license fees		5,582			-				5,582			-			-				-
Total revenue		147,623			-				147,623			118,999			-				118,999
Cost of product revenue		86,831			(883	)	(a)		85,948			71,251			(726	)	(a)		70,525
Cost of contract revenue		3,790			-				3,790			5,952			-				5,952
Cost of up-front license fees		506			-				506			-			-				-
Total cost of sales		91,127			(883	)			90,244			77,203			(726	)			76,477
Gross margin		56,496			883				57,379			41,796			726				42,522
Gross margin percentage		38.3	%						38.9	%		35.1	%						35.7	%
Operating expenses:
Research and development		18,441			(1,247	)	(a)		17,194			14,901			(1,039	)	(a)		13,862
Sales, general and administrative		21,843			(2,979	)	(a)		18,864			18,211			(1,492	)	(a), (d)		16,719
Amortization of acquisition related intangibles		4,062			(4,062	)	(b)		-			4,048			(4,048	)	(b)		-
Gain on disposal of assets		645			-				645			474			-				474
Total operating expenses		44,991			(8,288	)			36,703			37,634			(6,579	)			31,055
Operating income		11,505			9,171				20,676			4,162			7,305				11,467
Operating income percentage		7.8	%						14.0	%		3.5	%						9.6	%
Non-operating income:
Gain on investments in securities		53			-				53			-			-				-
Interest and other non-operating income, net		2,507			-				2,507			4,582			-				4,582
Income from continuing operations before income taxes		14,065			9,171				23,236			8,744			7,305				16,049
Income tax expense		3,218			2,098		(c)		5,316			2,104			1,753		(e)		3,857
Net income from continuing operations		10,847			7,073				17,920			6,640			5,552				12,192
Loss from discontinued operations, net of related tax		(151	)		-				(151	)		(20	)		-				(20	)
Net income	$	10,696		$	7,073			$	17,769		$	6,620		$	5,552			$	12,172
Earnings per diluted share:
From continuing operations	$	0.12		$	0.07			$	0.20		$	0.08		$	0.06			$	0.14
From discontinued operations	$	(0.00	)	$	-			$	(0.00	)	$	(0.00	)	$	-			$	(0.00	)
From net income	$	0.12		$	0.07			$	0.20		$	0.08		$	0.06			$	0.14
Weighted average shares of common
stock outstanding, basic		88,057			-				88,057			85,190			-				85,190
Weighted average shares of common
stock outstanding, diluted		88,511			-				88,511			86,848			-				86,848
(a) Non-cash stock-based compensation expense of $883 in costs of product revenue, $1,247 in research and development and $2,979 in sales, general and administrative for the three months ended December 28, 2008 and $726 in costs of product revenue, $1,039 in research and development and $2,174 in sales, general and administrative for the three months ended December 30, 2007.
(b) Amortization expense of $4,062 for the three months ended December 28, 2008 and $4,048 for the three months ended December 30, 2007 recognized on intangible assets resulting from acquisitions.
(c) Estimated tax effects of non-cash stock-based compensation expense and amortization related to acquisition related intangible assets based upon the Company's effective tax rate for the given period.
(d) Reversal of $682 in personal property assessment related to settling the audits of the Company's 2002 through 2007 property tax returns with the County of Durham, NC.
(e) Estimated tax effects of non-cash stock-based compensation expense, amortization related to acquisition related intangible assets and the reversal of a portion of the amount accrued related to our personal property tax assessments based upon the Company's overall consolidated effective tax rate for the given period.

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The following is a reconciliation showing how Cree, Inc.'s year to date income statements for fiscal 2009 and 2008 would appear if they were adjusted for the items noted below.
CREE, INC.
Reconciling Items to Six Months Financial Statements - GAAP to Non-GAAP
(in thousands, except per share amounts)
(Unaudited)
	Six Months Ended										Six Months Ended
	December 28, 2008										December 30, 2007
	GAAP			Adjustments				As Adjusted			GAAP			Adjustments				As Adjusted
Product revenue	$	272,288		$	-			$	272,288		$	217,304		$	-			$	217,304
Contract revenue		10,131			-				10,131			15,081			-				15,081
Up-front license fees		5,582			-				5,582			-			-				-
Total revenue		288,001			-				288,001			232,385			-				232,385
Cost of product revenue		173,475			(2,185	)	(a)		171,290			143,831			(1,640	)	(a)		142,191
Cost of contract revenue		8,161			-				8,161			12,018			-				12,018
Cost of up-front license fees		506			-				506			-			-				-
Total cost of sales		182,142			(2,185	)			179,957			155,849			(1,640	)			154,209
Gross margin		105,859			2,185				108,044			76,536			1,640				78,176
Gross margin percentage		37	%						38	%		33	%						34	%
Operating expenses:
Research and development		35,716			(2,693	)	(a)		33,023			27,678			(1,936	)	(a)		25,742
Sales, general and administrative		44,761			(5,664	)	(a)		39,097			36,373			(4,656	)	(a), (d)		31,717
Amortization of acquisition related intangibles		8,124			(8,124	)	(b)		-			8,096			(8,096	)	(b)		-
Loss on disposal and impairment of long-lived assets		1,050			-				1,050			1,209			-				1,209
Total operating expenses		89,651			(16,481	)			73,170			73,356			(14,688	)			58,668
Operating income		16,208			18,666				34,874			3,180			16,328				19,508
Operating income percentage		5.6	%						12.1	%		1.4	%						8.4	%
Non-operating income:
Gain (loss) on investments in securities		65			-				65			14,117			(14,117	)	(e)		-
Interest and other non-operating income, net		5,484			-				5,484			8,309			-				8,309
Income from continuing operations before income taxes		21,757			18,666				40,423			25,606			2,211				27,817
Income tax expense		4,972			4,338		(c)		9,310			6,098			547		(f)		6,645
Net income from continuing operations		16,785			14,328				31,113			19,508			1,664				21,172
Loss from discontinued operations, net of related tax		(170	)		-				(170	)		(174	)		-				(174	)
Net income	$	16,615		$	14,328			$	30,943		$	19,334		$	1,664			$	20,998
Earnings per diluted share:
From continuing operations	$	0.19		$	0.16			$	0.35		$	0.22		$	0.02			$	0.24
From discontinued operations	$	(0.00	)	$	-			$	(0.00	)	$	(0.00	)	$	-			$	(0.01	)
From net income	$	0.19		$	0.16			$	0.35		$	0.22		$	0.02			$	0.24
Weighted average shares of common
stock outstanding, basic		87,954			-				87,954			84,936			-				84,936
Weighted average shares of common
stock outstanding, diluted		88,619			-				88,619			86,713			-				86,713
(a) Non-cash stock-based compensation expense of $2,185 in costs of product revenue, $2,693 in research and development and $5,664 in sales, general and administrative for the six months ended December 28, 2008 and $1,640 in costs of product revenue, $1,936 in research and development and $3,068 in sales, general and administrative for the six months ended December 30, 2007.
(b) Amortization expense of $8,124 for the six months ended December 28, 2008 and $8,096 for the six months ended December 30, 2007 recognized on intangible assets resulting from prior year acquisitions.
(c) Estimated tax effects of non-cash stock-based compensation expense and amortization related to acquisition related intangible assets based upon the Company's effective tax rate for the given period.
(d) Personal property assessment of $1,048 related to finalizing the audits of the Company's 2002 through 2007 property tax returns.
(e) Gain on the sale of 500,000 shares of Color Kinetics Incorporated common stock during the six months ended December 30, 2007.
(f) Estimated tax effects of non-cash stock-based compensation expense, personal property tax assessment, amortization related to acquisition related intangible assets and gain on sale of Color Kinetics Incorporated common stock based upon the Company's overall consolidated effective tax rate for the given period.

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