EXHIBIT 99.01
Contact: Cynthia Merrell
Chief Financial Officer
Cree, Inc.
cynthia_merrell@cree.com
(T) 919-313-5300
(F) 919-313-5615
CREE REPORTS RECORD REVENUE, GROSS MARGIN AND
EARNINGS FOR THE FIRST QUARTER OF FISCAL YEAR 2005
Quarterly EPS Increases 14% Sequentially to $0.32 Per Diluted Share;
Gross Margin Increases to 56% of Revenue
Durham, NC, October 14, 2004 - Cree, Inc. (Nasdaq: CREE) today announced revenue
of $95,897,000 for the first quarter of fiscal 2005, representing a 45 percent
increase over the Company's comparable year ago period revenue of $66,211,000.
Gross margin for the first quarter of fiscal 2005 increased to 56 percent of
revenue, which sets a new high for the Company, and compares to 43 percent in
the prior year period and to 52 percent reported for the fourth quarter of
fiscal 2004. Operating income nearly tripled to $34,917,000 compared to
$11,974,000 reported in the comparable prior year period. Net income for the
first quarter was $24,428,000 or $0.32 per share, compared to $8,879,000 or
$0.12 per share, as reported for the first quarter of fiscal 2004. After tax net
margins were 25 percent of revenue for the first quarter.
LED product sales represented 82% of the Company's revenue in the first quarter
and continued to drive higher financial results. LED revenue increased 56% from
the comparable year ago period and 9% from the previous quarter to $78.9
million. Profitability of the LED business also increased in the first quarter
as compared to the fourth quarter of fiscal 2004 as the average LED cost
declined 11% while the average selling price declined 1%.
"These results demonstrate once again the power of our business model and our
ability to develop new products while reducing costs. In addition to our record
revenue and earnings for the third consecutive quarter, we are extremely pleased
about our 56% gross margin result," stated Chuck Swoboda, Cree President and
CEO. "Our factory continues to improve its efficiency and although we have
started the 3" conversion for LEDs, we really haven't seen the benefit yet. We
expect the 3" migration to be a more important cost driver over the next several
quarters that should enable us to continue to aggressively pursue new business.
These dynamics position us well for another solid quarter."
Business Outlook:
- -----------------
Cree provides guidance for its second quarter of fiscal 2005 indicating that it
currently targets revenue in a range of $98 to $100 million with earnings of
$0.30 to $0.32 per diluted share. The target for earnings per share is higher
than the current First Call analyst consensus estimate of $0.28 per diluted
share for the second quarter of fiscal 2005.
Cree will host a conference call at 5:00 p.m. Eastern time today to review the
highlights of the first quarter fiscal 2005 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
October 28, 2004.
Supplemental financial information is available under "Q1 '05 Financial Metrics"
in the "Investor Info" section of Cree's web site at
http://www.cree.com/News/metrics.asp.
About Cree, Inc.
- ----------------
Cree is an advanced semiconductor company that leverages its expertise in
silicon carbide (SiC) and gallium nitride (GaN) materials technology to produce
new and enabling semiconductors. The products include blue, green and near
ultraviolet (UV) light emitting diodes (LEDs), power switching devices, and
radio frequency (RF) and microwave devices. The Company is currently developing
near UV lasers. Targeted applications for these products include solid-state
illumination, power switching, wireless infrastructure and optical storage. Cree
understands the important convergence of science, technology and creativity,
placing high value on ideas, as well as the energy and ability of its people.
For more information on Cree, please visit 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 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 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 27, 2004 and subsequent reports filed
with the SEC.
Cree and the Cree logo are registered trademarks of Cree, Inc.
###
CREE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended
9/26/2004 9/28/2003
(Unaudited) (Unaudited)
----------- -----------
Product revenue $ 90,186 $ 59,163
Contract revenue 5,711 7,048
----------- -----------
Total revenue 95,897 66,211
Cost of product revenue 37,936 32,503
Cost of contract revenue 4,291 5,492
----------- -----------
Total cost of sales 42,227 37,995
Gross profit 53,670 28,216
Operating expenses:
Research and development 11,015 8,327
Sales, general and administrative 7,660 7,912
Other expense 78 3
----------- -----------
Operating expenses 18,753 16,242
Income from operations 34,917 11,974
Non-operating income:
Gain on investments in marketable securities 118 -
Other non-operating income 5 2
Net interest income 1,149 892
----------- -----------
Income before income taxes 36,189 12,868
Income tax expense 11,761 3,989
----------- -----------
Net income $ 24,428 $ 8,879
=========== ===========
Earnings per share, diluted $ 0.32 $ 0.12
=========== ===========
Weighted average shares of common
stock outstanding, basic 73,503 74,174
Weighted average shares of common
stock outstanding, diluted 75,600 75,754
CREE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
9/26/2004 6/27/2004
(Unaudited) (Audited)
----------- ---------
Assets:
Current assets:
Cash and equivalents and short term investments $ 176,008 $ 158,163
Accounts receivable, net 46,110 47,766
Inventory 22,813 19,428
Current portion of deferred income taxes 2,560 2,560
Other current assets and prepaid expenses 6,946 6,976
----------- ---------
Total current assets 254,437 234,893
Property, plant and equipment, net 293,918 273,342
Long-term investments held to maturity 76,914 72,730
Patents and license rights, net 20,491 19,831
Long-term marketable securities 33,191 22,002
Other assets 4,073 5,202
----------- ---------
Total assets $ 683,024 $ 628,000
=========== =========
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable trade $ 31,097 $ 25,102
Accrued salaries and other expenses 10,338 11,443
Income tax payable 11,504 -
Deferred revenue 7,142 8,437
----------- ---------
Total current liabilities 60,081 44,982
Long term liabilities:
Long term deferred tax liability 8,305 3,886
----------- ---------
Total long term liabilities 8,305 3,886
Shareholders' Equity:
Common stock 92 91
Additional paid in capital 510,583 506,275
Comprehensive income 12,396 5,627
Retained earnings 91,567 67,139
----------- ---------
Total shareholders' equity 614,638 579,132
----------- ---------
Total liabilities and shareholders' equity $ 683,024 $ 628,000
=========== =========
CREE, INC.
Operating Segment Information
(in thousands)
Three Months Ended
9/26/2004 9/28/2003
(Unaudited) (Unaudited)
----------- -----------
Revenue:
Cree* $ 94,461 $ 65,161
Cree Microwave 1,436 1,050
----------- -----------
Total revenue $ 95,897 $ 66,211
=========== ===========
Net income (loss) before income taxes:
Cree* $ 39,360 $ 16,271
Cree Microwave (3,171) (3,403)
----------- -----------
Total net income before income taxes $ 36,189 $ 12,868
=========== ===========
* Includes interest income and other segment operating results