EXHIBIT 99.01
FOR IMMEDIATE RELEASE Press Release
Contact: Raiford Garrabrant
Director, Investor Relations
Cree, Inc.
raiford_garrabrant@cree.com
(T) 919-313-5397
(F) 919-313-5615
CREE REPORTS FINANCIAL RESULTS FOR THE THIRD
QUARTER OF FISCAL YEAR 2005
Revenue of $96.7 Million
Earnings Per Share of $0.27
Durham, NC, April 14, 2005 - Cree, Inc. (Nasdaq: CREE) today announced revenue
of $96,710,000 for the third quarter of fiscal 2005 which ended on March 27,
2005, representing a 25 percent increase over the Company's comparable year ago
period revenue of $77,223,000. Net income for the third quarter increased 37
percent to $20,683,000, or $0.27 per share, compared to $15,089,000, or $0.20
per share, as reported for the third quarter of fiscal 2004. Gross margin for
the third quarter of fiscal 2005 was 53 percent of revenue and compares to 49
percent in the prior year period and 50 percent in the second quarter of fiscal
2005.
During the third quarter of fiscal 2005, net income included approximately
$25,000 of net adjustments for changes in estimates to the Company's sales
return provision to better reflect product return history and tax adjustments
that did not change reported earnings per share. The adjustments included a $1.2
million after-tax benefit to gross profit related to the change recorded to the
Company's sales return provision which increased third quarter gross margin by
two percentage points. The sales return provision benefit was mostly offset by
non-operating adjustments, which negatively impacted net income by $1.2 million.
The non-operating adjustments were related primarily to tax adjustments
associated with the decline in the value of the Company's marketable securities
and offset partly by a gain on the sale of a portion of these securities.
For the nine-month period ended March 27, 2005, Cree reported revenue of
$290,181,000, an increase of 34 percent over the $216,497,000 reported for the
comparable period in fiscal year 2004. Net income for the nine-month period rose
90 percent to $70,132,000, or $0.91 per share, compared to $36,975,000, or $0.49
per share, in the year ago period.
"The fact that our LED business grew sequentially in what is normally a
seasonally down quarter for the industry is a testament to the strength of our
product offering," stated Chuck Swoboda, Cree President and CEO. "As we enter
the final quarter of our fiscal year, I believe that we are in a favorable
competitive position. Based on current orders and customer forecasts, we are
optimistic that our revenue should grow sequentially in the fourth quarter."
Today the Company also announced that as part of its ongoing stock buyback
program, it had repurchased 1.45 million shares in the third quarter at an
average price of $24.32.
Business Outlook:
For its fourth quarter of fiscal 2005, Cree currently targets revenue in a range
of $98 to $102 million with earnings of $0.25 to $0.28 per share.
Cree will host a conference call at 5:00 p.m. Eastern time today to review the
highlights of the third quarter fiscal 2005 results and the fourth 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 April
28, 2005.
Supplemental financial information is available under "Q3 '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; 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 Nine Months Ended
3/27/2005 3/28/2004 3/27/2005 3/28/2004
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Product revenue $ 91,236 $ 71,493 $272,990 $197,620
Contract revenue 5,474 5,730 17,191 18,877
----------- ----------- ----------- -----------
Total revenue 96,710 77,223 290,181 216,497
Cost of product revenue 41,210 33,992 123,224 100,838
Cost of contract revenue 4,260 5,021 13,604 16,136
----------- ----------- ----------- -----------
Total cost of sales 45,470 39,013 136,828 116,974
Gross profit 51,240 38,210 153,353 99,523
Operating expenses:
Research and development 11,505 10,481 33,144 26,988
Sales, general and administrative 9,025 7,210 24,512 22,019
Loss on disposal of property and equipment 277 80 603 226
----------- ----------- ----------- -----------
Operating expenses 20,807 17,771 58,259 49,233
Income from operations 30,433 20,439 95,094 50,290
Non-operating income:
Gain (loss) on investments in securities 2,808 (1) 935 -
Other non-operating income - 488 4 518
Net interest income 1,404 942 3,691 2,779
----------- ----------- ----------- -----------
Income before income taxes 34,645 21,868 99,724 53,587
Income tax expense 13,962 6,779 29,592 16,612
----------- ----------- ----------- -----------
Net income $ 20,683 $ 15,089 $ 70,132 $ 36,975
=========== =========== =========== ===========
Earnings per share, diluted $ 0.27 $ 0.20 $ 0.91 $ 0.49
=========== =========== =========== ===========
Weighted average shares of common
stock outstanding, basic 75,694 74,050 74,860 74,143
Weighted average shares of common
stock outstanding, diluted 77,428 76,399 77,256 75,979
CREE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
3/27/2005 6/27/2004
(Unaudited) (Audited)
----------- -----------
Assets:
Current assets:
Cash and equivalents and short term
investments held to maturity $ 142,102 $ 158,163
Accounts receivable, net 50,274 47,766
Inventories, net 29,346 19,428
Deferred income taxes 2,270 2,560
Prepaid Insurance 3,356 2,304
Prepaid expenses and other current assets 10,122 4,672
----------- -----------
Total current assets 237,470 234,893
Property and equipment, net 343,521 273,342
Long-term investments held to maturity 86,982 72,730
Patents and license rights, net 21,344 19,831
Marketable securities available for sale 18,613 22,002
Other assets 7,367 5,202
----------- -----------
Total assets $ 715,297 $ 628,000
=========== ===========
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable trade $ 27,706 $ 25,102
Accrued salaries and other expenses 11,818 11,443
Income tax payable 4,297 -
Deferred revenue - 8,437
----------- -----------
Total current liabilities 43,821 44,982
Long term liabilities:
Deferred income taxes 9,484 3,886
----------- -----------
Total long term liabilities 9,484 3,886
Shareholders' Equity:
Common stock 94 91
Additional paid in capital 519,853 506,275
Other comprehensive income, net of tax 4,773 5,627
Retained earnings 137,272 67,139
----------- -----------
Total shareholders' equity 661,992 579,132
----------- -----------
Total liabilities and shareholders' equity $ 715,297 $ 628,000
=========== ===========
CREE, INC.
OPERATING SEGMENT INFORMATION
(in thousands)
Three Months Ended Nine Months Ended
3/27/2005 3/28/2004 3/27/2005 3/28/2004
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Revenue:
Cree* $ 95,753 $ 75,048 $ 286,275 $ 211,288
Cree Microwave 957 2,175 3,906 5,209
----------- ----------- ----------- ----------
Total revenue $ 96,710 $ 77,223 $ 290,181 $ 216,497
=========== =========== =========== ==========
Net income (loss) before income taxes:
Cree* $ 37,593 $ 24,149 $ 108,927 $ 61,861
Cree Microwave (2,948) (2,281) (9,203) (8,274)
----------- ----------- ----------- ----------
Total net income before income taxes $ 34,645 $ 21,868 $ 99,724 $ 53,587
=========== =========== =========== ==========
* Includes interest income and other segment operating results