EX-99.01 3 f8k_011504exh.txt PRESS RELEASE, JANUARY 15, 2004 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 FOR SECOND QUARTER OF FISCAL YEAR 2004 Reported EPS of $0.17 Per Diluted Share Generated $52.4 Million in Cash From Operations Durham, NC, January 15, 2004 - Cree, Inc. (Nasdaq: CREE) today reported revenue for its second quarter of fiscal year 2004 of $72,684,000, a 28 percent increase over the $56,727,000 reported in the comparable quarter in fiscal 2003. Net income for the second quarter increased 45 percent to $13,007,000, or $0.17 per diluted share, compared to $8,996,000, or $0.12 per diluted share, as reported for the second quarter of fiscal 2003. Overall gross margin for the second quarter increased to 47 percent of revenue as compared to 43 percent reported in the first quarter of fiscal 2004, while net margin increased to 18 percent of revenue. For the six-month period ended December 28, 2003, Cree reported revenue of $138,895,000, an increase of 32 percent over the $105,539,000 reported for the comparable period in fiscal year 2003. Net income for the six-month period increased 70 percent to $21,886,000, or $0.29 per diluted share, compared to $12,879,000, or $0.17 per share, in the year ago period. Chuck Swoboda, Chief Executive Officer and President of Cree stated, "Our record revenue and higher profitability were driven by strong LED sales as we benefited from increased demand for LEDs in mobile phone applications. The combination of a favorable product mix, reduced pricing pressure and improved operational efficiencies resulted in a significant increase in product gross margin, which drove our net income for the quarter to the highest level in several years. Our cash position also grew significantly during the quarter as we generated a record $52.4 million of cash from operations. As we begin the third quarter of our fiscal year, we remain focused on our strategy of delivering industry-leading new products and we now target an even stronger second half." Business Outlook Cree provided guidance for its third quarter of fiscal 2004 indicating that it currently targets increased revenue in a range of $75 to $76 million with earnings of $0.17 to $0.19 per diluted share. Cree also aims for gross margin to be in a range of the mid to high 40's as a percentage of revenue with higher research and development expenses to support the new product pipeline. Cree will host a conference call at 5:00 p.m. Eastern Time today to review the highlights of the second quarter 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 January 29, 2004. Supplemental financial information is available under "Q2 '04 Financial Metrics" in the "Investor Info" section of Cree's web site at http://www.cree.com/about/share.htm. 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 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 third quarter targets, could differ materially due to a number of factors, including 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; 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 and other litigation and SEC inquiry; 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 Six Months Ended 12/28/2003 12/29/2002 12/28/2003 12/29/2002 (Unaudited) (Unaudited) (Unaudited) (Unaudited) ----------- ----------- ----------- ----------- Product revenue $ 66,585 $ 49,222 $125,748 $ 91,376 Contract revenue 6,099 7,505 13,147 14,163 ----------- ----------- ----------- ----------- Total revenue 72,684 56,727 138,895 105,539 Cost of product sales 33,216 27,510 65,719 52,627 Cost of contract sales 5,623 5,677 11,115 10,666 ----------- ----------- ----------- ----------- Total cost of sales 38,839 33,187 76,834 63,293 Gross profit 33,845 23,540 62,061 42,246 Operating expenses: Research and development 8,336 7,667 16,662 14,231 Sales, general and administrative 7,869 6,474 15,781 14,300 Severance expense - - - 400 Loss on disposal of fixed assets 142 1,423 146 1,491 ----------- ----------- ----------- ----------- Operating expenses 16,347 15,564 32,589 30,422 Gain on termination of supply agreement - 5,000 - 5,000 Income from operations 17,498 12,976 29,472 16,824 Non-operating income (expense): (Loss) gain on investments in marketable securities - (2,067) - (2,067) Other non operating income (expense) 407 (17) 410 (16) Net interest income 945 1,265 1,837 2,663 ----------- ----------- ----------- ----------- Income before income taxes 18,850 12,157 31,719 17,404 Income taxes 5,843 3,161 9,833 4,525 ----------- ----------- ----------- ----------- Net income $ 13,007 $ 8,996 $ 21,886 $ 12,879 =========== =========== =========== =========== Net income per share, diluted $ 0.17 $ 0.12 $ 0.29 $ 0.17 =========== =========== =========== =========== Weighted average shares of common stock outstanding, basic 74,206 73,051 74,190 72,899 Weighted average shares of common stock outstanding, diluted 76,005 75,259 75,881 74,849
CREE, INC. CONSOLIDATED BALANCE SHEETS (in thousands) Balance Sheet 12/28/2003 (Unaudited) 06/29/2003 ----------- ---------- Assets: Current assets: Cash & equivalents & short term investments $ 154,684 $ 140,037 Accounts receivable, net 39,201 43,901 Inventory 16,756 17,674 Current portion of deferred taxes 1,863 1,863 Other current assets & prepaid expenses 4,402 5,880 ----------- ---------- Total current assets 216,906 209,355 Property, plant & equipment, net 263,229 251,346 Long-term investments held to maturity 62,953 58,794 Long term portion deferred income taxes 13,504 20,934 Patents and license rights, net 11,036 7,146 Other assets 15,894 16,119 ----------- ---------- Total assets $ 583,522 $ 563,694 =========== ========== Liabilities & Shareholders' Equity: Current liabilities: Accounts payable trade $ 17,913 $ 14,916 Accrued salaries & other expenses 8,597 7,843 Deferred revenue 8,271 5,533 ----------- ---------- Total current liabilities 34,781 28,292 Long term liabilities: Other long term liabilities - 31 ----------- ---------- Total long term liabilities - 31 Shareholders' Equity: Common stock 92 92 Additional paid in capital 517,596 526,318 Deferred compensation (13) (218) Retained earnings 31,066 9,179 ----------- ---------- Total shareholders' equity 548,741 535,371 ----------- ---------- Total liabilities & shareholders' equity $ 583,522 $ 563,694 =========== ========== CREE, INC. Operating Segment Information (in thousands)
Three Months Ended Six Months Ended 12/28/2003 12/29/2002 12/28/2003 12/29/2002 (Unaudited) (Unaudited) (Unaudited) (Unaudited) ----------- ----------- ----------- ----------- Revenue: Cree* $ 70,701 $ 55,974 $135,861 $104,086 Cree Microwave 1,983 753 3,034 1,453 ----------- ----------- ----------- ----------- Total revenue $ 72,684 $ 56,727 $138,895 $105,539 =========== =========== =========== =========== Net income (loss) before income taxes: Cree* $ 21,440 $ 11,819 $ 37,711 $ 22,338 Cree Microwave (2,590) 338 (5,992) (4,934) ----------- ----------- ----------- ---------- Total net income before income taxes $ 18,850 $ 12,157 $ 31,719 $ 17,404 =========== =========== =========== ==========
* Includes interest income and other segment operating results