EXHIBIT 99.01
FOR IMMEDIATE RELEASE NEWS RELEASE
Contact: Fran Barsky
Manager, Investor Relations and
Corporate Communications
Cree, Inc.
(T) 919-313-5397
(F) 919-313-5615
Fran_Barsky@Cree.com
CREE REPORTS RECORD REVENUE AND EARNINGS FOR
FOURTH QUARTER AND FISCAL YEAR 2004
Quarterly EPS Increases 40% Sequentially to $0.28 Per Diluted Share
Gross Margin Increases to 52% of Fourth Quarter Revenue
Durham, NC, July 27, 2004 - Cree, Inc. (Nasdaq: CREE) today reported quarterly
revenue for its fiscal year 2004 fourth quarter of $90,862,000, a 42 percent
increase over the $64,061,000 reported in the fourth quarter of fiscal 2003. Net
income for the fourth quarter increased 84 percent to $20,985,000, or $0.28 per
diluted share, compared to $11,391,000, or $0.15 per diluted share reported for
the fourth quarter of fiscal 2003. Operating income grew 98 percent to
$29,059,000 compared to $14,651,000 reported in the comparable prior year
period. Overall gross margin for the fourth quarter of fiscal 2004 increased to
52 percent compared to 50 percent reported in the third quarter of fiscal 2004,
while after tax net margin increased to 23 percent of revenue. The fourth
quarter results include routine year-end adjustments that benefited net income
by approximately $500,000 net of tax.
For the year ended June 27, 2004, Cree reported revenue of $306,870,000, an
increase of 34 percent over the $229,822,000 reported for the year ended June
29, 2003. Net income for the year increased 66 percent to $57,960,000, or $0.77
per diluted share, compared to $34,901,000, or $0.46 per diluted share, in the
year ago period.
Chuck Swoboda, President and CEO of Cree stated, "We reported record revenue and
earnings for the quarter and year which exceeded our targets. Our 18 percent
sequential growth in revenue was led by very strong LED chip demand from our
customers. We are particularly pleased that these higher sales, combined with
lower LED unit costs, provided our highest gross margin in over three years at
52 percent of revenue. As we move forward, we believe our business has the
opportunity for strong revenue and profitability growth based on our pipeline of
brighter LED products currently in development, anticipated lower LED costs due
to our three-inch wafer conversion and other cost reduction efforts. With over
85 percent of our Q1 sales target already booked, we believe the company is well
positioned for a strong start to fiscal year 2005."
Business Outlook
- ----------------
Cree provided guidance for its first quarter of fiscal 2005 indicating that it
currently targets revenue in a range of $95 to $97 million with earnings of
$0.26 to $0.28 per diluted share. These targets are higher than the current
First Call analyst consensus estimates for the first quarter of fiscal 2005 of
$90.8 million for revenue and $0.23 per diluted share for earnings.
Cree will host a conference call at 5:00 p.m. Eastern Time today to review the
highlights of the fourth quarter and year end fiscal 2004 results. The
conference call will be available to the public through a live audio web
broadcast via the Internet. Log onto Cree's website at www.cree.com and go to
"News & Investor--Overview" for webcast details. The call will be archived and
available on the website through August 9, 2004.
Supplemental financial information is available under "Q4 '04 Financial Metrics"
in the "Investor Info" section of Cree's web site at http://www.cree.com/
News/metrics.asp.
Cree is an advanced semiconductor company that leverages its expertise in
silicon carbide (SiC), gallium nitride (GaN) and silicon (Si) materials
technology to produce new and enabling semiconductors. The products include
blue, green and near ultraviolet (UV) light emitting diodes (LEDs), near UV
lasers, radio frequency (RF) and microwave devices, and power switching devices.
Targeted applications for these products include solid state illumination,
optical storage, wireless infrastructure and power switching. For more
information on Cree, please visit www.cree.com.
The schedules attached to this release are an integral part of this 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 LEDs; our ability to lower
costs; potential changes in demand; the risk that price stability, improved
operational efficiencies, and the favorable product mix we have recently
experienced will not continue ; the risk that, due to the complexity of our
manufacturing processes, 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; 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 pending securities litigation; and other factors
discussed in our filings with the Securities and Exchange Commission, including
our report on Form 10-K for the fiscal year ended June 29, 2003 and subsequent
reports filed with the SEC.
Cree, and the Cree logo are registered trademarks of Cree, Inc.
-- Tables Follow --
CREE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
6/27/2004 6/29/2003 6/27/2004 6/29/2003
(Unaudited) (Unaudited) (Audited) (Audited)
----------- ----------- ----------- -----------
Product revenue $ 82,792 $ 57,813 $ 279,923 $ 202,962
Contract revenue 8,070 6,248 26,947 26,860
----------- ----------- ----------- -----------
Total revenue 90,862 64,061 306,870 229,822
Cost of product sales 37,132 30,063 136,112 109,726
Cost of contract sales 6,206 5,103 22,342 20,926
----------- ----------- ----------- -----------
Total cost of sales 43,338 35,166 158,454 130,652
Gross profit 47,524 28,895 148,416 99,170
Operating expenses:
Research and development 9,689 8,834 36,886 31,203
Sales, general and administrative 7,986 5,333 31,654 26,326
Severance expense - - - 400
Loss on disposal of fixed assets 790 77 1,016 1,569
----------- ----------- ----------- -----------
Operating expenses 18,465 14,244 69,556 59,498
Gain on termination of supply agreement - - - 5,000
Income from operations 29,059 14,651 78,860 44,672
Non-operating income (expense):
(Loss) gain on investments in marketable securities - - - (2,067)
Other non-operating income (expense) 1 488 1,008 442
Net interest income 946 254 3,725 4,117
----------- ----------- ----------- -----------
Income before income taxes 30,006 15,393 83,593 47,164
Income taxes 9,021 4,002 25,633 12,263
----------- ----------- ----------- -----------
Net income $ 20,985 $ 11,391 $ 57,960 $ 34,901
=========== =========== =========== ===========
Net income per share, diluted $ 0.28 $ 0.15 $ 0.77 $ 0.46
=========== =========== =========== ===========
Weighted average shares of common
stock outstanding, basic 73,603 73,719 74,008 73,196
Weighted average shares of common
stock outstanding, diluted 75,643 76,194 75,745 75,303
CREE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
Balance Sheet
6/27/2004 6/29/2003
(Audited) (Audited)
--------- ---------
Assets:
Current assets:
Cash & equivalents & short term investments $ 158,163 $ 140,037
Accounts receivable, net 47,766 43,901
Inventory 19,428 17,674
Current portion of deferred income taxes 2,560 1,863
Other current assets & prepaid expenses 6,976 5,880
--------- ---------
Total current assets 234,893 209,355
Property, plant & equipment, net 273,342 251,346
Long-term investments held to maturity 72,730 58,794
Long term portion deferred income taxes 13,709 38,528
Patents and license rights, net 19,831 7,146
Long-term marketable securities 22,002 -
Other assets 5,202 16,119
--------- ---------
Total assets $ 641,709 $ 581,288
========= =========
Liabilities & Shareholders' Equity:
Current liabilities:
Accounts payable trade $ 25,103 $ 14,916
Accrued salaries & other expenses 11,442 7,843
Deferred revenue 8,437 5,533
--------- ---------
Total current liabilities 44,982 28,292
Long term liabilities:
Long term deferred tax liability 17,594 17,594
Other long term liabilities - 31
--------- ---------
Total long term liabilities 17,594 17,625
Shareholders' Equity:
Common stock 91 92
Additional paid in capital 506,275 526,318
Comprehensive income 5,627 -
Deferred compensation - (218)
Retained earnings 67,140 9,179
--------- ---------
Total shareholders' equity 579,133 535,371
--------- ---------
Total liabilities & shareholders' equity $ 641,709 $ 581,288
========= =========
CREE, INC.
OPERATING SEGMENT INFORMATION
(in thousands)
Three Months Ended Twelve Months Ended
6/27/2004 6/29/2003 6/27/2004 6/29/2003
(Unaudited) (Unaudited) (Audited) (Audited)
----------- ----------- --------- ---------
Revenue:
Cree* $ 88,354 $ 63,361 $ 299,152 $ 227,025
Cree Microwave 2,508 700 7,718 2,797
----------- ----------- --------- ---------
Total revenue $ 90,862 $ 64,061 $ 306,870 $ 229,822
=========== =========== ========= =========
Net income (loss) before income taxes:
Cree* $ 31,699 $ 18,831 $ 93,560 $ 59,050
Cree Microwave (1,693) (3,438) (9,967) (11,886)
----------- ----------- --------- ---------
Total net income before income taxes $ 30,006 $ 15,393 $ 83,593 $ 47,164
=========== =========== ========= =========
* Includes interest income and other segment operating results