EXHIBIT 99.01
Contact: Cynthia Merrell
Chief Financial Officer
Cree, Inc.
cynthia_merrell@cree.com
(T) 919-313-5300
(F) 919-313-5995
CREE REPORTS FINANCIAL RESULTS FOR THE SECOND
QUARTER OF FISCAL YEAR 2005
Revenue Increases to $97.5 Million with
EPS of $0.32 Per Diluted Share
Durham, NC, January 13, 2005 - Cree, Inc. (Nasdaq: CREE) today announced revenue
of $97,451,000 for the second quarter of fiscal 2005 which ended on December 26,
2004, representing a 34 percent increase over the Company's comparable year ago
period revenue of $72,684,000. Net income for the second quarter increased 92
percent to $25,022,000, or $0.32 per share, compared to $13,007,000, or $0.17
per share, as reported for the second quarter of fiscal 2004. Gross margin for
the second quarter of fiscal 2005 was 50.4 percent of revenue and compares to
46.6 percent in the prior year period and to 56.0 percent reported for the first
quarter of fiscal 2005. Gross margin decreased sequentially due to increased LED
costs associated with the three-inch wafer conversion and X class product ramp
up, lower than expected December LED shipments and lower LED average sales
prices due to changes in product and customer mix.
During the second quarter of fiscal 2005, net income benefited from $3.9
million, or $0.05 per share, of net non-operating and other tax adjustments.
These adjustments included a tax benefit associated with the Company's
investment in a public company offset by other tax adjustments and a charge
recorded for the decline in the value of a private equity investment. EPS was
negatively impacted by approximately $0.01 per share due to an increase in the
number of fully diluted shares outstanding resulting from the increase in the
Company's stock price and employee stock option exercises during the second
quarter.
For the six-month period ended December 26, 2004, Cree reported revenue of
$193,348,000, an increase of 39 percent over the $138,895,000 reported for the
comparable period in fiscal year 2004. Net income for the six-month period more
than doubled to $49,450,000, or $0.64 per share, compared to $21,886,000, or
$0.29 per share, in the year ago period.
"Our fundamentals remain strong and we continue to see strength in the demand
for our new products which has enabled us to continue to deliver solid financial
results. Overall gross margin decreased in our second quarter, but still
remained healthy at 50 percent of our sales, particularly in light of the
three-inch chip conversion and product ramp up costs experienced during the
quarter," stated Chuck Swoboda, Cree President and CEO. "Our focus in the third
quarter will be to increase market share with our new X class LED products to
offset the forecasted seasonal slow down in mobile phone production and we
believe that we are well positioned based on our current backlog of orders."
Business Outlook:
For its third quarter of fiscal 2005, Cree currently targets revenue in a range
of $94 to $98 million with earnings of $0.24 to $0.27 per diluted share.
Cree will host a conference call at 5:00 p.m. Eastern time today to review the
highlights of the second quarter fiscal 2005 results and the third quarter
fiscal 2005 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 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 January
27, 2005.
Supplemental financial information is available under "Q2 '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 experienced will
not continue; the risk that, due to the complexity of our manufacturing
processes and transition of production to three-inch 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; 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; our ability to utilize tax loss
carryforwards in future periods; 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 INCOME
(in thousands, except per share data)
Three Months Ended Six Months Ended
12/26/2004 12/28/2003 12/26/2004 12/28/2003
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Product revenue $ 91,446 $ 66,585 $181,632 $125,748
Contract revenue 6,005 6,099 11,716 13,147
----------- ----------- ----------- -----------
Total revenue 97,451 72,684 193,348 138,895
Cost of product revenue 43,275 33,216 81,211 65,719
Cost of contract revenue 5,053 5,623 9,344 11,115
----------- ----------- ----------- -----------
Total cost of sales 48,328 38,839 90,555 76,834
Gross profit 49,123 33,845 102,793 62,061
Operating expenses:
Research and development 11,428 8,336 22,443 16,662
Sales, general and administrative 7,827 7,868 15,487 15,781
Loss on disposal of property and equipment 248 143 326 146
----------- ----------- ----------- -----------
Operating expenses 19,503 16,347 38,256 32,589
Income from operations 29,620 17,498 64,537 29,472
Non-operating income:
Gain (loss) on investments in securities (1,992) - (1,874) -
Other non-operating income 123 407 128 410
Net interest income 1,139 945 2,288 1,837
----------- ----------- ----------- -----------
Income before income taxes 28,890 18,850 65,079 31,719
Income tax expense 3,868 5,843 15,629 9,833
----------- ----------- ----------- -----------
Net income $ 25,022 $ 13,007 $ 49,450 $ 21,886
=========== =========== =========== ===========
Earnings per share, diluted $ 0.32 $ 0.17 $ 0.64 $ 0.29
=========== =========== =========== ===========
Weighted average shares of common
stock outstanding, basic 75,383 74,206 74,443 74,190
Weighted average shares of common
stock outstanding, diluted 78,298 76,005 77,020 75,881
CREE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
12/26/2004 6/27/2004
(Unaudited) (Audited)
----------- ----------
Assets:
Current assets:
Cash and equivalents and short term
investments held to maturity $ 200,987 $ 158,163
Accounts receivable, net 53,732 47,766
Inventories, net 25,110 19,428
Deferred income taxes 2,560 2,560
Prepaid expenses and other current assets 9,394 6,976
----------- ----------
Total current assets 291,783 234,893
Property and equipment, net 324,182 273,342
Long-term investments held to maturity 85,692 72,730
Patents and license rights, net 20,835 19,831
Marketable securities available for sale 35,195 22,002
Other assets 2,187 5,202
----------- ----------
Total assets $ 759,874 $ 628,000
=========== ==========
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable trade $ 38,639 $ 25,102
Accrued salaries and other expenses 10,840 11,443
Income tax payable 15,842 -
Deferred revenue 7,955 8,437
----------- ----------
Total current liabilities 73,276 44,982
Long term liabilities:
Deferred income taxes 1,857 3,886
----------- ----------
Total long term liabilities 1,857 3,886
Shareholders' Equity:
Common stock 95 91
Additional paid in capital 554,448 506,275
Other comprehensive income, net of tax 13,609 5,627
Retained earnings 116,589 67,139
----------- ----------
Total shareholders' equity 684,741 579,132
----------- ----------
Total liabilities and shareholders' equity $ 759,874 $ 628,000
=========== ==========
CREE, INC.
OPERATING SEGMENT INFORMATION
(in thousands)
Three Months Ended Six Months Ended
12/26/2004 12/28/2003 12/26/2004 12/28/2003
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Revenue:
Cree* $ 95,937 $ 70,701 $190,398 $135,861
Cree Microwave 1,514 1,983 2,950 3,034
----------- ----------- ----------- -----------
Total revenue $ 97,451 $ 72,684 $193,348 $138,895
=========== =========== =========== ===========
Net income (loss) before income taxes:
Cree* $ 31,973 $ 21,440 $ 71,333 $ 37,711
Cree Microwave (3,083) (2,590) (6,254) (5,992)
----------- ----------- ----------- -----------
Total net income before income taxes $ 28,890 $ 18,850 $ 65,079 $ 31,719
=========== =========== =========== ===========
* Includes interest income and other segment operating results